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Exhibit 10.3  

 Execution Copy  

FIRST AMENDED AND RESTATED OMNIBUS AGREEMENT  

 AMONG  

 ABRAXAS PETROLEUM CORPORATION,  

 ABRAXAS GENERAL PARTNER, LLC,  

 ABRAXAS OPERATING, LLC  

 AND  

 ABRAXAS ENERGY PARTNERS, L.P.  

 September 19, 2007  

FIRST AMENDED AND RESTATED OMNIBUS AGREEMENT  

        THIS FIRST AMENDED AND RESTATED OMNIBUS AGREEMENT ("Agreement") is entered into on September 19, 2007, but
is effective as of the Effective Date (as defined herein), and is by and among Abraxas Petroleum Corporation, a Nevada corporation ("APC"), Abraxas
General Partner, LLC, a Delaware limited liability company (the "General Partner"), Abraxas Operating, LLC, a Texas limited liability company
("Operating LLC"), and Abraxas Energy Partners, L.P., a Delaware limited partnership (the  "Partnership"). The above-named entities are
sometimes referred to in this Agreement each as a "Party"
and collectively as the "Parties."

RECITALS:  

        The Parties have previously entered into an Omnibus Agreement effective as of May 25, 2007 (the "Original Omnibus
Agreement"). 

        The
Parties desire to amend and restate the Original Omnibus Agreement in its entirety as of the Effective Date, in accordance with the terms and provisions set forth in this Agreement. 

        In
consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows: 

 
 

Article I
  DEFINITIONS    
    

Section 1.1    Definitions.    

        (a)   Capitalized
terms used herein but not defined shall have the meanings given them in the Partnership Agreement. 

        (b)   As
used in this Agreement, the following terms shall have the respective meanings set forth below: 

        "Agreement" has the meaning given to such term in the introduction to this Agreement, as it may be amended, modified or supplemented from
time to time in accordance with the terms hereof. 

        "Annual Fee" has the meaning given to such term in Section 3.2(a). 

        "APC" has the meaning given to such term in the introduction to this Agreement and any successor to such entity. 

        "Assets" means all of the assets conveyed, contributed or otherwise transferred by APC to the Partnership Group (or any member thereof)
prior to or on the Closing Date. 

        "Assignment" shall have the meaning set forth in the Contribution Agreement. 

        "Applicable Period" has the meaning given to such term in Section 3.2(a). 

        "Bankrupt" with respect to any Person means such Person shall generally be unable to pay its debts as such debts become due, or shall so
admit in writing or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against such Person seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case
of any such proceeding instituted against it (but not instituted by it), shall remain undismissed or unstayed for a period of 30 days; or such Person shall take any action to authorize any of
the actions set forth above. 

        "Closing Date" means May 25, 2007. 

        "Common Unit" has the meaning given to such term in the Partnership Agreement. 

 

        "Commission" means the U.S. Securities and Exchange Commission. 

        "Conflicts Committee" has the meaning given to such term in the Partnership Agreement. 

        "Contribution Agreement" has the meaning given to such term in the Partnership Agreement. 

        "Covered Environmental Losses" means all Environmental Losses by reason of or arising out of any violation, event, circumstance, action,
omission or condition, which occurred or existed on or before the Closing Date. 

        "Effective Date" means the date of the consummation of the Initial Public Offering. 

        "Environmental Activities" shall mean any investigation, study, assessment, evaluation, sampling, testing, monitoring, containment,
removal, disposal, closure, corrective action, remediation (regardless of whether active or passive), natural attenuation, restoration, bioremediation, response, repair, corrective measure, cleanup or
abatement that is required or necessary under any applicable Environmental Law, including, but not limited to, institutional or engineering controls or participation in a governmental voluntary
cleanup program to conduct voluntary investigatory and remedial actions for the clean-up, removal or remediation of Hazardous Substances that exceed actionable levels established pursuant
to Environmental Laws, or participation in a supplemental environmental project in partial or whole mitigation of a fine or penalty. 

        "Environmental Laws" means all applicable Laws and Environmental Permits relating to (a) pollution, health, safety or protection of
the environment or natural resources, (b) any Release or threatened Release of, or any exposure of any Person or property to, any Hazardous Substances and (c) the generation,
manufacture, processing, distribution, use, treatment, storage, transport or handling of any Hazardous Substances including, without limitation, the federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Superfund Amendments and Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, Occupational Safety and Health Act, the Hazardous Materials Transportation Act,
the Marine Mammal
Protection Act, the Endangered Species Act, the National Environmental Policy Act and other environmental conservation and protection laws, each as amended through the Closing Date. 

        "Environmental Losses" means all losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines,
penalties, costs and expenses (including, without limitation, costs and expenses of any Environmental Activity, court costs and reasonable attorney's and experts' fees) of any and every kind or
character, by reason of or arising out of: 

        (i)    any
violation or correction of violation of Environmental Laws occurring on or before the Closing Date associated with the ownership or operation of the Assets; 

        (ii)   any
Environmental Activities performed to address a Release of Hazardous Substances with respect to or arising out of ownership or operation of the Assets; or 

        (iii)  any
event, omission or condition associated with ownership or operation of the Assets (including, without limitation, the exposure to or presence of Hazardous
Substances on, under, about or Released to or from the Assets or the exposure to or Release of Hazardous Substances arising out of operation of the Assets or at non-Asset locations)
including, without limitation, (A) the cost and expense of any Environmental Activities, (B) the cost and expense of the preparation and implementation of any closure, remedial or
corrective action or other plans required or necessary under Environmental Laws and (C) the cost and expense for any environmental or toxic tort pre-trial, trial or appellate legal
or litigation support work; but only to the extent that such violation complained of under clause (i), or such events, circumstances, actions, omissions or conditions included in clauses
(ii) and (iii) occurred or existed on or before the Closing Date. 

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        "Environmental Permit" means any permit, approval, identification number, license, registration, consent, exemption, variance or other
authorization required under or issued pursuant to any applicable Environmental Law. 

        "Existing Operating Agreement" has the meaning given to such term in Section 3.6. 

        "Expenses" has the meaning given to such term in Section 3.1(b). 

        "General Partner" has the meaning given to such term in the introduction to this Agreement and any successor to such entity. 

        "Governmental Authority" means any nation and any political subdivision thereof, and any government, department, court, commission, board,
bureau, ministry, agency, or other instrumentality of such a nation or political subdivision exercising or entitled to exercise administrative, executive, judicial, legislative, police, regulatory or
taxing authority. 

        "Hazardous Substance" means (a) any substance that is designated, defined or classified under any applicable Environmental Law as a
hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic or hazardous substance, or terms of similar meaning, or that is otherwise regulated under any applicable Environmental
Law, including, without limitation, any hazardous substance as defined under CERCLA, as amended, (b) oil as defined in the Oil Pollution Act of 1990, as amended through the Closing Date
including, without limitation, oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel and other refined petroleum hydrocarbons and petroleum products and
(c) radioactive materials, asbestos containing materials, polychlorinated biphenyls or radon. 

        "Hydrocarbons" means oil, gas, other liquid or gaseous hydrocarbons, and/or other minerals, or any of them or any combination thereof. 

        "Indemnified Party" means either the Partnership Group or APC, as the case may be, in their capacity as the parties entitled to
indemnification in accordance with Article II. 

        "Indemnifying Party" means either the Partnership Group or APC, as the case may be, in their capacity as the parties from whom
indemnification may be required in accordance with Article II. 

        "Initial Public Offering" means the initial public offering of the Common Units of the Partnership, as contemplated by the Partnership's
Registration Statement on Form S-1, No. 333-144537, originally filed with the Commission on July 13, 2007. 

        "Investments" means Abraxas Energy Investments, LLC and any successor to such entity. 

        "Laws" means all federal, state, and local laws, statutes, rules, regulations, orders, judgments, ordinances, codes, injunctions, decrees
and other legally enforceable requirements and rules of common law, including without limitation, all rules and regulations of the Railroad Commission of Texas, the Internal Revenue Service and such
other rules and regulations promulgated or enforced by any other Governmental Authority in effect as of the date hereof. 

        "Losses" means any actual losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs
and expenses (including, without limitation, court costs and reasonable attorney's and experts' fees) of any and every kind or character. 

        "Master Operating Agreement" has the meaning given to such term in Section 3.6. 

        "Operating LLC" has the meaning given to such term in the introduction to this Agreement and any successor to such entity. 

        "Partnership" has the meaning given to such term in the introduction to this Agreement and any successor to such entity. 

3

 

        "Partnership Agreement" means the Second Amended and Restated Agreement of Limited Partnership of the Partnership, as may be amended in
accordance with its terms and in effect on the Effective Date, to which reference is hereby made for all purposes of this Agreement. 

        "Partnership Entities" means the General Partner and each member of the Partnership Group. 

        "Partnership Group" means the Partnership, Operating LLC and any other Subsidiary of the Partnership. 

        "Partnership Indemnitee" means any Person who is an Indemnitee (as defined in the Partnership Agreement); provided, that the term
"Partnership Indemnitee" shall exclude APC, Investments and any other Affiliate of APC (as the term Affiliate is defined in the Partnership Agreement) which is not a member of the Partnership Group. 

        "Party" or "Parties" have the meaning given to such terms in the introduction to this
Agreement. 

        "Person" means an individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or
any other entity. 

        "Purchase Agreement" means the Purchase Agreement, dated as of the Closing Date, by and among APC, Partnership, the General Partner and
the purchasers listed therein. 

        "Release" means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging,
migrating, injecting, escaping, leaching, dumping or disposing into the environment. 

        "Services" has the meaning given to such term in Section 3.1(a). 

        "Subsidiary" has the meaning given to such term in the Partnership Agreement. 

        "Tax" means all taxes, including income tax, surtax, margin tax, remittance tax, presumptive tax, net worth tax, special contribution tax,
production tax, pipeline transportation tax, value added tax, withholding tax, gross receipts tax, windfall profits tax, profits tax, severance tax, personal property tax, ad valorem tax, real
property tax, sales tax, service tax, transfer tax, use tax, excise tax, premium tax, customs duties, stamp tax, motor vehicle tax, entertainment tax, insurance tax, capital stock tax, franchise tax,
occupation tax, payroll tax, employment tax, social security, unemployment tax, disability tax, alternative or add-on minimum tax, estimated tax, and any other assessments, duties, fees,
levies or other charges imposed by a Governmental Authority, together with any interest, fine or penalty thereon, or in addition thereto. 

Section 1.2    Construction.    

        Unless
the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa; (b) references to Articles, Sections and Exhibits refer to Articles and Sections and Exhibits of this Agreement; (c) the terms
"include", "includes", "including" and words of like import shall be deemed to be followed by the words "without limitation"; and (d) the terms "hereof," "herein" and "hereunder" refer to this
Agreement as a whole and not to any particular provision of this Agreement. The headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or
interpretation of this Agreement. All Exhibits referenced as exhibits to this Agreement are deemed incorporated into, and made a part of, this Agreement for all purposes. 

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Article II
  INDEMNIFICATION    
    

Section 2.1    Environmental Indemnification.    

        (a)   Subject
to the provisions of Section 2.3 and Section 2.4,
APC shall indemnify, defend and hold harmless the Partnership Group and the Partnership Indemnitees from and against any Covered Environmental Losses suffered or incurred by the Partnership Group or
any Partnership Indemnitee relating to the Assets for a period of three years from the Closing Date. 

        (b)   The
Partnership Group shall indemnify, defend and hold harmless APC, and its Subsidiaries and Affiliates, other than any Subsidiary constituting part of the Partnership
Group, from and against any Environmental Losses suffered or incurred by APC, and its Subsidiaries and Affiliates, other than any Subsidiary constituting part of the Partnership Group, relating to the
Assets except to the extent that the Partnership Group is indemnified with respect to any Covered Environmental Losses under Section 2.1(a). 

Section 2.2    Tax Liability Indemnity.    Subject to the provisions of  Section 2.3(b)
 and Section 2.4, APC shall indemnify, defend and hold harmless the
Partnership Group and the Partnership Indemnitees from and against any Losses suffered or incurred by the Partnership Group or any Partnership Indemnitee by reason of or arising out of all Taxes and,
if applicable, any right-of-way fees, attributable to the ownership or operation of the Assets on or before the Closing Date, including any such Taxes that may result from the
consummation of the formation transactions for the Partnership Group occurring on or prior to the Closing Date, but excluding any Taxes reserved on the books of the Partnership Group as of the Closing
Date if applicable; provided, however, that any Taxes (other than Taxes measured by gross proceeds,
income, profits or capital gains), including, without limitation, ad valorem and property taxes assessed for the 2007 tax year and other similar Taxes, as well as right-of-way
fees, if applicable, in each case, that are paid periodically shall be prorated based on the number of days in the applicable period falling before, and at or after, the Closing Date, except that
production, severance and similar Taxes (which for purposes hereof shall not include ad valorem taxes) shall be prorated based on the amount of Hydrocarbons actually produced, purchased or sold, as
applicable, before, and at or after, the Closing Date. In each case, the Partnership Group shall be responsible for the portion of the Taxes (and right of way fees, if applicable) allocated to the
period after the Closing Date and APC shall be responsible for the portion of such Taxes and fees allocated to the period on or before the Closing Date. 

Section 2.3    Limitations Regarding Indemnification.    

        (a)   The
aggregate liability of APC in respect of all Covered Environmental Losses under Section 2.1(a) shall not
exceed $5 million, and APC shall not have any indemnification obligation for Covered Environmental Losses unless the aggregate dollar amount of the Covered Environmental Losses exceeds
$500,000, and provided, that in such event, APC shall be liable for the full amount of such Losses. 

        (b)   Notwithstanding
anything herein to the contrary, in no event shall APC have any indemnification obligations under this Agreement for claims made as a result of additions
to, modifications or amendments of, any Laws, including Environmental Laws, promulgated, amended or modified after the Closing Date. 

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Section 2.4    Indemnification Procedures.    

        (a)   The
Indemnified Party agrees that within a reasonable period of time after it becomes aware of facts giving rise to a claim for indemnification pursuant to this  Article II, it will provide notice
thereof in writing to the Indemnifying Party specifying the nature of and specific basis for such claim;  provided, however, that (i) the Indemnified
Party shall not submit claims more frequently than
once a calendar quarter (or twice in the case of the last calendar quarter prior to the expiration of the applicable indemnity coverage under this Agreement) and (ii) the omission to so notify
the Indemnifying Party shall not relieve it from any liability which it may have to the Indemnified Party unless and to the extent the Indemnifying Party did not otherwise learn of such action and
such failure results in the forfeiture by the Indemnifying Party of substantial rights and defenses. 

        (b)   The
Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Indemnified
Party that are covered by the indemnification set forth in this Article II, including, without limitation, the selection of counsel,
determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided,  however, that no
such settlement shall be entered into without the consent (which consent shall not be unreasonably withheld, conditioned or delayed) of
the Indemnified Party (with the concurrence of the Conflicts Committee in the case of the Partnership Group) unless it includes a full release of the Indemnified Party from such matter or issues, as
the case may be. 

        (c)   The
Indemnified Party agrees to cooperate fully with the Indemnifying Party with respect to all aspects of the defense of any claims covered by the indemnification set
forth in Article II, including, without limitation, the prompt furnishing to the Indemnifying Party of any correspondence or other notice
relating thereto that the Indemnified Party may receive, permitting the names of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of
any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and the making available to the Indemnifying Party of any employees of
the Indemnified Party; provided, however, that in connection therewith the Indemnifying Party agrees to
use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records and other information
furnished by the Indemnified Party pursuant to this Section 2.4. In no event shall the obligation of the Indemnified Party to cooperate with the
Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of
any claims covered by the indemnification set forth in this Article II; provided,  however, that the
Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense. The
Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party reasonably informed as to the status of any such defense, but the Indemnifying Party shall have the right to retain
sole control over such defense. 

        (d)   In
determining the amount of any loss, cost, damage or expense for which the Indemnified Party is entitled to indemnification under this Agreement, the gross amount of
the indemnification will be reduced by (i) any insurance proceeds realized by the Indemnified Party, and such correlative insurance benefit shall be net of any incremental insurance premium
that becomes due and payable by the Indemnified Party as a result of such claim, (ii) the amount of tax benefits received by the Indemnified Party with respect to such loss, cost, damage or
expense and (iii) all amounts recovered by the Indemnified Party under contractual indemnities from third Persons. 

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Article III
  SERVICE FEES AND EXPENSES    
    

Section 3.1    Fees for General and Administrative Services; Reimbursement of
Expenses.    

        (a)   APC
hereby agrees to continue to provide, or cause to be provided, to the Partnership Group those general and administrative services necessary or useful for the conduct
of the business of the Partnership Group, including, but not limited to, legal, accounting, treasury, insurance administration and claims processing, risk management, health, safety and environmental,
information technology, human resources, credit, payroll, internal audit, taxes, and engineering services (collectively, "Services"), in substantially
similar nature and quality to the services of such type as previously provided by APC in connection with its management and operation of the Assets during the one-year period prior to the
Closing Date. 

        (b)   The
Partnership, on behalf of the Partnership Group, hereby agrees to reimburse APC for all reasonable direct and indirect third party expenses actually incurred by APC
to the Partnership Group (collectively, "Expenses") including, without limitation, third party expenses incurred by APC on behalf of the Partnership
Group for (i) insurance and (ii) incremental public company expenses of the Partnership Group including, without limitation, third party expenses incurred in connection with preparation
and filing of Commission reports, registration statements and other filings, external audit, internal audit, transfer agent and registrar, legal, printing, unitholder or member reports and other
related costs and expenses. 

Section 3.2    Amount of Annual Fee; Payment Mechanics.    

        (a)   During
the period beginning on the Closing Date and ending on the date that is two (2) years from the Effective Date (the "Applicable
Period"), the aggregate fee payable by the Partnership, on behalf of the Partnership Group, to APC for all Services performed on behalf of the Partnership Group pursuant to  Section 3.1(a)
 of this Agreement shall be $1.5 million per year (the "Annual Fee"), and
shall be payable in arrears on a monthly basis. Notwithstanding the foregoing, beginning on the first anniversary of the Closing Date, the Annual Fee shall be adjusted annually until the end of the
Applicable Period by an amount equal to the percentage increase or decrease from the immediately preceding year in the "Consumer Price Index—All Urban Consumers, U.S. City Average, Not
Seasonally Adjusted" as compiled by the Bureau of Labor Statistics of the United States Department of Labor. After the Applicable Period, the Conflicts Committee will determine the Annual Fee for the
Services provided to the Partnership Group in accordance with the terms of the Partnership Agreement. Notwithstanding the foregoing, if any member of the Partnership Group (i) acquires assets
or businesses or if the business of the Partnership Group otherwise expands following the Effective Date, or (ii) transfers, sells, disposes or otherwise gives effect to a divestiture of any
asset or business or if the business of the Partnership Group otherwise declines following the Effective Date, then the Annual Fee will be correspondingly increased or decreased, as applicable, in
order to account for adjustments in the resulting nature or extent of the Services provided by APC to the Partnership Group, with any such adjustment in the Annual Fee subject to the approval of the
Conflicts Committee. 

        (b)   Reimbursements
for Expenses incurred by APC on behalf of the Partnership Group shall be payable as incurred by APC on behalf of the Partnership Group. 

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Section 3.3    Performance of Services by Affiliates and Third Parties.    

        The
Parties hereby agree that in discharging its obligations under this Article III, APC may engage any of its current or future
Affiliates or any qualified third party to perform such obligations on its behalf, and that the performance of such obligations by any such Affiliate or third party shall be treated as if performed by
APC; provided, that notwithstanding the performance by any such third party of APC's obligations hereunder, APC shall remain primarily responsible for the discharge of such obligations. 

Section 3.4    Appointment of Independent Accounting Firm and Independent Petroleum Engineering
Firm.    

        Notwithstanding
anything to the contrary in this Agreement, the Parties hereby recognize and agree that the General Partner shall have the exclusive authority to appoint an independent
accounting firm to audit the financial statements of the Partnership Group and an independent petroleum engineering firm to provide reports to the Partnership Group relating to estimates of oil and
gas reserves for Commission and other reporting purposes. 

Section 3.5    Books and Records; Audits; Reports.    

        APC
shall cause accurate books and records regarding the performance of its obligations hereunder and its calculation of amounts payable or reimbursable to APC hereunder, and shall
maintain such books and records for the period required by applicable accounting practices or law. The Partnership shall have the right, upon reasonable notice, and at all reasonable times during
usual business hours, to audit, examine and make copies of such books and records. Such right may be exercised through any agent or employee of the Partnership Group designated in writing by it or by
an independent public accountant, engineer, attorney or other agent so designated. The Partnership shall bear all costs and expenses incurred in any inspection, examination or audit. APC shall review
and respond in a timely manner to any claims or inquiries made by the Partnership regarding matters revealed by any such inspection, examination or audit. APC shall cause to be prepared and delivered
to the Partnership any reports as the Partnership may reasonably request from time to time regarding the performance of Services or incurrence of Expenses pursuant to this Agreement. 

Section 3.6    Master Operating Agreement.    

        APC
and Operating LLC have entered into a Master Operating Agreement, effective as of the Closing Date (the "Master Operating Agreement"),
which provides for the terms and conditions under which APC will operate the Assets that were not subject to an existing operating agreement (an "Existing Operating
Agreement") prior to the Closing Date, and under which the Partnership Group will reimburse APC for such operating services. Any Assets that are subject to an Existing
Operating Agreement will continue to be operated in accordance with the terms set forth in any such agreement. APC and the Partnership Group hereby agree that for so long as an Existing Operating
Agreement may be in effect, with respect to Assets that are subject to Existing Operating Agreements in which APC is the operator, APC will not by virtue of this Agreement, charge additional
administrative costs to the Partnership Group with respect to such Assets; provided, however, that with
respect to Assets that are subject to Existing Operating Agreements in which APC is not the operator, the Partnership Group will be responsible for the share of any operating costs and expenses
attributable to the operation of such Assets in accordance with the terms set forth in any such Existing Operating Agreement. 

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Article IV
  MISCELLANEOUS    
    

Section 4.1    Choice of Law; Submission to Jurisdiction.    This Agreement
shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this
Agreement to the laws of another state. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Texas. 

Section 4.2    Notice.    All notices, requests or consents provided for or
permitted to be given pursuant to this Agreement must be in writing and must be given by depositing same in the United States mail, addressed to the Person to be notified, postpaid, and registered or
certified with return receipt requested or by delivering such notice in person or by telecopier or telegram to such Party. Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business
day after receipt if not received during the recipient's normal business hours. All notices to be sent to a Party pursuant to this Agreement shall be sent to or made at the address set forth below or
at such other address as such Party may stipulate to the other Parties in the manner provided in this Section 4.2. 

For
notices to APC: 

Abraxas
Petroleum Corporation

500 North Loop 1604 East, Suite 100

San Antonio, Texas 78232

Attention: President 

For
notices to the General Partner or the Partnership: 

Abraxas
Energy Partners, L.P.

500 North Loop 1604 East, Suite 100

San Antonio, Texas 78232

Attention: General Partner 

For
notices to Operating LLC: 

Abraxas
Operating, LLC

500 North Loop 1604 East, Suite 100

San Antonio, Texas 78232

Attention: President 

Section 4.3    Entire Agreement.    On the Effective Date, this Agreement
shall expressly supersede and replace the Original Omnibus Agreement in its entirety, and shall constitute the entire agreement of the Parties relating to the matters contained herein, superseding all
prior contracts or agreements, whether oral or written, relating to the matters contained herein. 

Section 4.4    Effect of Waiver or Consent.    No waiver or consent, express
or implied, by any Party to or of any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any
other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder. Failure on the part of a Party to complain of any act of any Person or to
declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such Party of its rights hereunder until the applicable statute of limitations period
has run. 

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Section 4.5    Amendment or Modification.    This Agreement may be amended or
modified from time to time only by the written agreement of all the Parties; provided, however, that the
Partnership may not, without the prior approval of the Conflicts Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the General Partner, will
adversely affect the holders of Common Units. Each such instrument shall be reduced to writing and shall be designated on its face an "Amendment" or an "Addendum" to this Agreement. 

Section 4.6    Assignment; Third Party Beneficiaries.    Except as set forth
in Section 3.4, no Party shall have the right to assign its rights or obligations under this Agreement without the consent of the other Parties.
Each of the Parties hereto specifically intends that APC and each entity comprising the Partnership Entities, as applicable, whether or not a Party to this Agreement, shall be entitled to assert
rights and remedies hereunder as third-party beneficiaries hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to any such entity. 

Section 4.7    Counterparts.    This Agreement may be executed in any number
of counterparts with the same effect as if all signatory Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument. 

Section 4.8    Severability.    If any provision of this Agreement or the
application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or
circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 

Section 4.9    Gender, Parts, Articles and Sections.    Whenever the context
requires, the gender of all words used in this Agreement shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural. All references to Article
numbers and Section numbers refer to Articles and Sections of this Agreement. 

Section 4.10    Further Assurances.    In connection with this Agreement and
all transactions contemplated by this Agreement, each Party agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions. 

Section 4.11    Withholding or Granting of Consent.    Each Party may, with
respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause,
and subject to such conditions as it shall deem appropriate. 

Section 4.12    Laws and Regulations.    Notwithstanding any provision of
this Agreement to the contrary, no Party shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such Party to be in violation of any
applicable law, statute, rule or regulation. 

Section 4.13    Negation of Rights of Limited Partners, Assignees and Third
Parties.    The provisions of this Agreement are enforceable solely by the Parties, and no limited partner, member, or assignee of APC, the Partnership, Operating
LLC, the General Partner or any other Person shall have the right, separate and apart from APC, the Partnership, Operating LLC or the General Partner to enforce any provision of this Agreement or to
compel any Party to comply with the terms of this Agreement. 

Section 4.14    No Recourse Against Officers or Directors.    For the
avoidance of doubt, the provisions of this Agreement shall not give rise to any right of recourse against any officer or director of APC or any Partnership Entity. 

10

 

Section 4.15    Termination.    

        (a)   Subject
to Section 4.15(b), the Partnership may terminate  Article III of this Agreement on behalf of the Partnership Group at any time by giving notice
of such termination to APC. Any termination under
this Section 4.15(a) shall become effective 90 days after delivery of such notice, or such later time (not to exceed the first anniversary
of the delivery of such notice) as may be specified by the Partnership. 

        (b)   If
Article III of this Agreement is terminated in accordance with  Section 4.15(a), all rights and obligations of the parties under Article III shall cease
except for (i) any obligations that expressly survive termination of this Agreement, if applicable; and (ii) liabilities and obligations that have accrued prior to such termination,
including without limitation, the obligation by the Partnership to pay to APC, any then accrued or outstanding portion of the Annual Fee, or amount reimbursable to APC in connection with Expenses
incurred on behalf of the Partnership Group in accordance with Article III. 

[Signature Page on Following Page]

11

 

        IN
WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the Effective Date. 

	 	 	APC
	

 	
 	

ABRAXAS PETROLEUM CORPORATION
	

 	
 	

By:	

/s/ Barbara M. Stuckey
 Name: Barbara M. Stuckey

Title: Vice President—Corporate Development
	

 	
 	
GENERAL PARTNER
	

 	
 	

ABRAXAS GENERAL PARTNER, LLC
	

 	
 	

By:	

/s/ Barbara M. Stuckey
 Name: Barbara M. Stuckey

Title: President and Chief Operating Officer
	

 	
 	
OPERATING LLC
	

 	
 	

ABRAXAS OPERATING, LLC
	

 	
 	

By:	

/s/ Barbara M. Stuckey
 Name: Barbara M. Stuckey

Title: President and Chief Operating Officer
	

 	
 	
PARTNERSHIP
	

 	
 	

ABRAXAS ENERGY PARTNERS, L.P.
	

 	
 	

By:	

Abraxas General Partner, LLC,

its General Partner
	

 	
 	

By:	

/s/ Barbara M. Stuckey
 Name: Barbara M. Stuckey

Title: President and Chief Operating Officer

12

QuickLinks

Article I DEFINITIONS

Article II INDEMNIFICATION

Article III SERVICE FEES AND EXPENSES

Article IV MISCELLANEOUSQuickLinks
 -- Click here to rapidly navigate through this document
Exhibit 4.39  

This document is important and requires your immediate attention. If you are in any doubt as to how to deal with it, you should consult
your investment dealer, stock broker, bank manager trust company manager, accountant, lawyer or other professional advisor. No securities regulatory authority has expressed an opinion about the
securities that are subject to this Offer and it is an offence to claim otherwise.

This Offer has not been approved or disapproved by any securities regulatory authority nor has any securities regulatory authority passed upon the fairness or merits of the
Offer or upon the adequacy of the information contained in this document. Any representation to the contrary is an offence.

September 20, 2007 

NOTICE OF VARIATION AND EXTENSION  

by

  

YAMANA GOLD INC.  

of its
  OFFER TO PURCHASE
  all of the outstanding common shares of
  MERIDIAN GOLD INC.
  on the revised basis of 2.235 Yamana common shares

and Cdn$6.50 in cash (the "Offer Consideration")

for each common share of Meridian Gold Inc.  

Yamana Gold Inc. (the "Offeror" or "Yamana") hereby gives notice that
it is amending its offer, originally dated July 19, 2007, as varied and extended by the Notice of Variation and Extension (the "First Variation
and Extension") dated August 14, 2007 and the Notice of Extension (the "First Notice of Extension") dated
September 12, 2007 (collectively referred to herein as the "Offer") to purchase all of the outstanding common shares of Meridian
Gold Inc. ("Meridian"), which includes common shares that may become outstanding after the date of the Offer but before the expiry time of the
Offer upon exercise of stock options ("Options") or other securities of Meridian that are convertible into or exchangeable or exercisable for common
shares, together with the associated rights (the "SRP Rights") issued under the Shareholder Rights Plan of Meridian (collectively, the
"Shares"), in order to : (i) increase the cash component of the Offer Consideration for the Shares by Cdn$2.50 per Share, (ii) amend the
Minimum Deposit Condition from a minimum of 662/3% to a minimum of 50.1% of the Shares outstanding (calculated on a fully diluted basis) as further described in this Notice of Variation
and Extension and (iii) extend the expiry of the Offer to 8:00 p.m. (Toronto time) on October 2, 2007. 

THE OFFER HAS BEEN AMENDED TO INCREASE THE CASH COMPONENT OF THE OFFER CONSIDERATION TO Cdn$6.50 PER SHARE. YAMANA HAS ALSO AMENDED THE MINIMUM DEPOSIT CONDITION FROM
662/3% TO 50.1% OF THE SHARES OUTSTANDING. THE OFFER HAS NOW BEEN EXTENDED AND IS OPEN FOR ACCEPTANCE UNTIL 8:00 P.M. (TORONTO TIME) ON OCTOBER 2, 2007, UNLESS FURTHER EXTENDED
OR WITHDRAWN.  

Based on the closing price of the Shares and the Yamana Common Shares on the TSX on June 27, 2007 (the date of the Offeror's announcement
after the close of market of its intention to make the Offer), the Offer Consideration now represents a premium of approximately 36%. Yamana's increased Offer Consideration also represents a premium
of approximately 37% over the average closing price of the Shares on the TSX for the 20 trading days immediately preceding the Offeror's announcement of its intention to make the Offer (based
on the average closing price of the Shares and the Yamana Common Shares on the TSX for the same period).  

This Notice of Variation and Extension should be read in conjunction with the Offer and Circular dated July 19, 2007, as amended by the First Variation and Extension and
the First Notice of Extension (collectively referred to herein as the "Offer and Circular"). Except as otherwise set forth herein, the terms and
conditions previously set forth in the Offer and Circular and the related Letter of Transmittal and Notice of Guaranteed Delivery continue to be applicable in all respects. All references to the
"Offer" in the Offer and Circular, the Letter of Transmittal, the Notice of Guaranteed
Delivery and this Notice of Variation and Extension mean the original offer, as amended by the First Variation and Extension, the First Notice of Extension and this Notice of Variation and Extension,
and all references in such documents to the "Circular" mean the original circular, as amended by the First Variation and Extension, the First Notice of Extension and this Notice of Variation and
Extension. Unless the context requires otherwise, capitalized terms used herein but not defined herein have the respective meanings given to them in the Offer and Circular. 

The Dealer Managers for the Offer are:  

	In Canada	 	In the United States
	
 	
 	

 
	Genuity Capital Markets

Canaccord Capital Corporation	 	Genuity Capital Markets USA Corp.

Canaccord Adams Inc.

  

 
 

NOTICE TO SHAREHOLDERS IN THE UNITED STATES    
    

        The Offer is being made for the securities of a Canadian issuer and by a Canadian issuer that is permitted, under a multijurisdictional
disclosure system adopted by the United States, to prepare the Offer and Circular, and this Notice of Variation and Extension, in accordance with the disclosure requirements of Canada.
Shareholders should be aware that such requirements are different from those of the United States. The financial statements included or incorporated by reference in the Offer and Circular and
this Notice of Variation and Extension have been prepared in accordance with Canadian generally accepted accounting principles, and may be subject to Canadian auditing and auditor independence
standards, and thus may not be comparable to financial statements of United States companies.

        Shareholders in the United States should be aware that the disposition of Shares and the acquisition of Yamana Common Shares by them as described in the
Offer and Circular may have tax consequences both in the United States and in Canada. Such consequences may not be fully described herein and such Shareholders are encouraged to consult their
tax advisors. See "Canadian Federal Income Tax Considerations" in Section 23 of the Circular and "United States Federal Income Tax Considerations" in Section 24 of
the Circular.

        The enforcement by Shareholders of civil liabilities under the United States federal securities laws may be affected adversely by the fact that the Offeror
is incorporated under the laws of Canada, that some or all of its officers and directors may be residents of jurisdictions outside the United States, that the Canadian Dealer Managers for the
Offer and some or all of the experts named in the Offer and Circular may be residents of jurisdictions outside the United States and that all or a substantial portion of the assets of the
Offeror and said persons may be located outside the United States.

        The Offeror has filed with the SEC a Registration Statement on Form F-10, as amended by Amendment No. 1 dated August 14, 2007,
Amendment No. 2 dated August 21, 2007, Amendment No. 3 dated August 30, 2007, Amendment No. 4 dated September 12, 2007 and Amendment No. 5 dated
September 20, 2007(collectively, the "Amended Regulation Statements") and expects to mail this Notice of Variation and Extension to Shareholders concerning the proposed business combination
with Meridian. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND OFFER AND CIRCULAR AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov. In addition, documents
filed with the SEC by the Offeror will be available free of charge from the Offeror. You should direct requests for documents to the Vice President, Legal, General Counsel and Assistant Corporate
Secretary of Yamana, 150 York Street, Suite 1102, Toronto,
Ontario M5H 3S5, telephone 416-815-0220. To obtain timely delivery, such documents should be requested not later than September 25, 2007, five business days
before the Expiry Date.

        THE SECURITIES OFFERED PURSUANT TO THE OFFER AND CIRCULAR HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY UNITED STATES STATE SECURITIES COMMISSION NOR
HAS THE SEC OR ANY UNITED STATES SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

 
 

NOTICE TO SHAREHOLDERS IN THE UNITED KINGDOM    
    

        The Offer and Circular does not constitute a prospectus for the purposes of the Prospectus Rules published by the Financial Services Authority of the
United Kingdom (the "FSA"). Accordingly, the Offer and Circular, as supplemented and amended by this Notice of Variation and Extension,
have not been, and will not be, approved by the FSA or by London Stock Exchange plc. No action has been or is intended to be taken by Yamana or by Genuity Capital Markets or Canaccord Capital
Corporation, or any of their affiliated entities, that would permit a public offer of Yamana Common Shares to be made in the United Kingdom, which would require an approved prospectus to be
made available to the public in the United Kingdom (in accordance with the United Kingdom Financial Services and Markets Act 2000
("FSMA") and the Prospectus Rules (as hereinafter defined)) before such an offer was made. Accordingly, as regards Shareholders resident in, or
receiving the Offer or the Offer and Circular in the United Kingdom ("UK Shareholders"), the Offer is only being made to or directed at, and
deposits of Shares will only be accepted from, a UK Shareholder who is, and is able to establish to the 

i

 

satisfaction
of the Offeror that it is: (i) a Qualified Investor acting as principal; (ii) a Qualified Investor which operates in the financial markets acting on behalf of a person, not
being a Qualified Investor, on a discretionary basis concerning the acceptance of offers on that person's behalf; or (iii) acting on behalf, and on the instructions, of a Qualified Investor
(in which case the Offer is made to or directed at that Qualified Investor). In addition, in the United Kingdom, the Offer and Circular are being distributed only to, and are directed
only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the "Order") and Qualified Investors falling within Article 49(2)(a) to (d) of the
Order. A "Qualified Investor" is (i) a legal entity which is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely
to invest in securities; (ii) a legal entity which has two or more of: (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of
more than € 43,000,000; and (3) an annual net turnover of more than €50,000,000, in each case as shown in its last annual or consolidated accounts;
(iii) a person entered on the register of Qualified Investors maintained by the FSA for this purpose pursuant to section 87R of FSMA; or (iv) an investor authorized by a European
Economic Area ("EEA") State other than the United Kingdom to be considered as a qualified investor for the purposes of the Prospectus Directive
(as defined herein), in each case within the meaning and as more particularly described in section 86(7) of FMSA. Accordingly, any UK Shareholder purporting to accept the Offer must
provide supporting evidence satisfactory to the Offeror that it is entitled to do so, and the Offeror shall in its sole discretion be entitled to reject any such purported acceptance of the Offer, as
further described in the Offer and Circular and in the Letter of Transmittal. Shareholders receiving the Offer in the United Kingdom should consult with their legal advisers to determine
whether they (or any person on whose behalf they act) are able to receive and accept the Offer. Further details in connection with the Offer and its acceptance by UK Shareholders are set out in
the Offer and Circular. 

        The
Offer is not being made to or directed at, and deposits of Shares will not be accepted from, any UK Shareholder that is not an Eligible UK Shareholder. 

        Shareholders who have validly deposited and not withdrawn their Shares need take no further action to accept the Offer. Shareholders who
wish to accept the Offer must properly complete and execute the Letter
of Transmittal (printed on yellow paper in the case of all Shareholders other than Eligible UK Shareholders and on green paper in the case of Eligible UK Shareholders)
(the "Letter of Transmittal") that accompanied the Offer and Circular (or a manually signed facsimile thereof) and deposit it, together
with the certificates representing their Shares and all other required documents, with Kingsdale Shareholder Services Inc.
(the "Depositary" and the "Information Agent"), at the office set out in the Letter of
Transmittal in accordance with the instructions in the Letter of Transmittal. Alternatively, Shareholders may (1) accept the Offer in the United States by following the procedures for
book-entry transfer of Shares described under "Manner of Acceptance — Acceptance by Book-Entry Transfer in the United States" in
Section 3 of the Offer; or (2) accept the Offer where the certificates representing the Shares are not immediately available, or if the certificates and all of the required documents
cannot be provided to the Depositary before the Expiry Time, by following the procedures for guaranteed delivery described under "Manner of Acceptance — Procedure
for Guaranteed Delivery" in Section 3 of the Offer using the accompanying notice of guaranteed delivery (the "Notice of Guaranteed
Delivery") (printed on pink paper) (or a manually signed facsimile thereof) that accompanied the Offer and Circular. Shareholders will not be required to pay any fee or
commission if they accept the Offer by depositing their Shares directly with the Depositary or if they make use of the services of a member of the Soliciting Dealer Group to accept the Offer. 

        Questions
and requests for assistance may be directed to the Dealer Managers and/or Kingsdale Shareholder Services Inc. or Innisfree M&A Incorporated, who are each acting
as Information Agent. Additional copies of this document, the Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained without charge on request from
the Dealer Managers, the Depositary and Information Agents at their respective addresses shown on the last page of this document. 

ii

 

 
 

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION    
    

        The Offer and Circular and this Notice of Variation and Extension, including Schedule "A" attached hereto and some of the information incorporated by reference in
the Offer and Circular, contain "forward-looking statements" and "forward-looking information" under applicable United States and Canadian securities laws concerning the proposed transaction
and the business, operations and financial performance and condition of the Offeror, Northern Orion Resources Inc. ("Northern Orion") and
Meridian and estimated production and mine life of the various mineral projects of the Offeror, Northern Orion or Meridian. Statements concerning mineral reserve and resource estimates may also be
deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if the property is developed. Except for statements of historical
fact relating to the companies, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect,"
"project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those projected in the forward-looking statements. Assumptions upon which such forward-looking statements are based include that the Offeror
will be successful in acquiring 100% of the issued and outstanding Meridian shares and all other conditions to completion of the transactions will be satisfied or waived. Many of these assumptions are
based on factors and events that are not within the control of the Offeror and there is no assurance they will prove to be correct. Factors that
could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, variations in ore grade or recovery rates, risks
relating to international operations, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses,
labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, the Yamana Common Shares issued in connection with the Offer having a market
value lower than expected, the businesses of the Offeror, Meridian and Northern Orion not being integrated successfully or such integration may be more difficult, time-consuming and costly
than expected and the expected combined benefit from the Northern Orion Transaction and/or the Offer not being fully realized or realized within the expected time frame. See "Strategic Rationale" in
Section 5 of the Circular, "Purpose of the Offer" in Section 6 of the Circular, "Plans for Meridian" in Section 6 of the Circular and "Business Combination Risks" in
Section 8 of the Circular as well as those risk factors discussed or referred to in the annual Management's Discussion and Analysis and Annual Information Form for each of the Offeror, Northern
Orion and Meridian filed with the securities regulatory authorities in all provinces of Canada and available under each of the company's respective profiles at
www.sedar.com, and the Annual Report on Form 40-F of each of the Offeror, Northern Orion and Meridian filed with the United States Securities and
Exchange Commission (the "SEC") under each of the company's respective profile at www.sec.gov. These factors are not
intended to represent a complete list of the factors that could affect the Offeror and the combination of the Offeror, Meridian and Northern Orion. Additional factors are noted elsewhere in the Offer
and Circular and in the documents incorporated by reference. 

        Although
the Offeror has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from those anticipated in such statements. The Offeror undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
Any forward-looking statements of facts related to Meridian are derived from Meridian's publicly filed reports. 

iii

 

 
 

INFORMATION CONCERNING MERIDIAN    
    

        Except as otherwise indicated, the information concerning Meridian contained in the Offer and Circular has been taken from or is based upon publicly available
documents and records on file with the SEC, the Canadian securities regulatory authorities and other public sources. Meridian has not reviewed the Offer and Circular and has not confirmed the accuracy
and completeness of the information in respect of Meridian contained in the Offer and Circular. Although the Offeror has no knowledge that would indicate that any statements contained herein
concerning Meridian taken from or based upon such documents and records are untrue or incomplete, neither the Offeror nor any of its directors or officers assumes any responsibility for the accuracy
or completeness of such information, including any of Meridian's financial statements, or for any failure by Meridian to disclose events or facts which may have occurred or which may affect the
significance or accuracy of any such information but which are unknown to Meridian. 

 
 

INFORMATION CONCERNING NORTHERN ORION    
    

        Except as otherwise indicated, the information concerning Northern Orion contained in the Offer and Circular including information incorporated by reference, has
been taken from or is based upon publicly available documents and records on file with the SEC, the Canadian securities regulatory authorities and other public sources. Northern Orion has reviewed the
Offer and Circular and confirmed the accuracy and completeness of the information in respect of Northern Orion herein. Although the Offeror has no knowledge that would indicate that any statements
contained herein concerning Northern Orion taken from or based upon such documents and records are untrue or incomplete, neither the Offeror nor any of its directors or officers assumes any
responsibility for the accuracy or completeness of such information, including any of Northern Orion's financial statements, or for any failure by Northern Orion to disclose events or facts which may
have occurred or which may affect the significance or accuracy of any such information but which are unknown to Northern Orion. 

 
 

NOTICE TO HOLDERS OF OPTIONS    
    

        The Offer is made only for Shares and is not made for any Options exercisable to acquire Shares. Any holder of Options who wishes to accept the Offer should, to
the extent permitted by the terms of the security and applicable Law, exercise the Options in order to obtain certificates representing Shares and deposit those Shares pursuant to the Offer. Any such
exercise must be completed sufficiently in advance of the Expiry Time to assure the holder of such Options will have certificates representing the Shares received on such exercise available for
deposit before the Expiry Time, or in sufficient time to comply with the procedures referred to under "Manner of Acceptance — Procedure for Guaranteed Delivery"
in Section 3 of the Offer. If a holder of Options does not exercise such Options before the Expiry Time, such Options will remain outstanding in accordance with their terms and conditions,
including with respect to term to expiry, vesting and exercise prices, except that, to the extent permitted, after completion of a Compulsory Acquisition or Subsequent Acquisition Transaction, an
option to acquire Shares will become an option or right to acquire a number of Yamana Common Shares, as determined in accordance with the terms of the Option. The tax consequences to holders of
Options of exercising their Options are not described in "Canadian Federal Income Tax Considerations" in Section 23 of the Circular or "United States Federal Income Tax Considerations"
in Section 24 of the Circular. Holders of the Options should consult their tax advisors for advice with respect to potential income tax consequences to them in connection with the decision to
exercise or not exercise their Options. 

 
 

REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES    
    

        Unless otherwise indicated, all references to "Cdn$", "$" or "dollars" in this Notice of Variation and Extension refer to Canadian dollars and all references to
"US$" refer to United States dollars. Yamana's financial statements that are incorporated by reference in the Offer and Circular, and attached as Schedule "A" to this Notice of Variation and
Extension, are reported in United States dollars and are prepared in accordance with Canadian GAAP. Financial statements of Northern Orion that are incorporated by reference in the Offer and
Circular are reported in United States dollars and are prepared in accordance with Canadian GAAP. Certain of the financial information in the financial statements is reconciled to US GAAP. For
a discussion of the material measurement differences between US GAAP and Canadian GAAP: (i) in the context of Yamana, 

iv

 

see
Note 30 to Yamana's audited consolidated financial statements as at and for the year ended December 31, 2006; (ii) in the context of Viceroy, see Note 11
to Viceroy's audited consolidated financial statements as at and for the year ended December 31, 2005; and (iii) in the context of Northern Orion, see Note 16
to Northern Orion's audited consolidated financial statements as at and for the year ended December 31, 2006. 

 
 

NOTE CONCERNING MINERAL RESOURCE CALCULATIONS    
    

        Information contained in the Offer and Circular, by incorporation by reference or otherwise, and disclosure documents of Yamana and Northern Orion that are filed
with securities regulatory authorities concerning mineral properties have been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements
of United States securities laws. 

        Without
limiting the foregoing, these documents use the terms "measured resources", "indicated resources" and "inferred resources". United States investors are advised that, while
such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under United States standards, mineralization may not be classified as a "reserve" unless
the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. United States investors are
cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. Further, inferred resources have a great amount of uncertainty as to their
existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher category. Therefore,
United States investors are also cautioned not to assume that all or any part of the inferred resources exist, or that they can be mined legally or economically. Disclosure of contained ounces
is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report resources as in place tonnage and grade without reference to unit measures. Accordingly,
information concerning descriptions of mineralization and resources contained in these documents may not be comparable to information made public by United States companies subject to the
reporting and disclosure requirements of the SEC. 

        National
Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") is a
rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.
Unless otherwise indicated, all resource estimates contained in the Offer and Circular, by incorporation by reference or otherwise, have been prepared in accordance with NI 43-101
and the Canadian Institute of Mining, Metallurgy and Petroleum Classification System. 

 
 

EXCHANGE RATES    
    

        On June 27, 2007, the date of the announcement of the Offeror's intention to make the Offer, the exchange rate for one US dollar expressed in Canadian
dollars based upon the noon buying rates provided by the Bank of Canada was $1.0702. 

        The
closing, high, low and average exchange rates for the US dollar in terms of Canadian dollars for the six months ended June 30, 2007, and the calendar years ended
December 31, 2006, December 31, 2005 and December 31, 2004, as reported by the Bank of Canada, were as follows: 

	 
	 	Six Months Ended June 30, 2007
	 	Year Ended December 31, 2006
	 	Year Ended December 31, 2005
	 	Year Ended December 31, 2004

	Closing	 	$	1.06	 	$	1.17	 	$	1.16	 	$	1.20
	High	 	 	1.18	 	 	1.17	 	 	1.27	 	 	1.40
	Low	 	 	1.06	 	 	1.10	 	 	1.15	 	 	1.18
	Average(1)	 	 	1.14	 	 	1.13	 	 	1.21	 	 	1.30

	(1)
	Calculated
as an average of the daily noon rates for each period. 

        On September 19, 2007, the noon rate of exchange as reported by the Bank of Canada for one US dollar expressed in Canadian dollars
was $1.01. 

v

  

 
 

NOTICE OF VARIATION AND EXTENSION  
  

        September 20, 2007 

TO: THE SHAREHOLDERS OF MERIDIAN  

        This Notice of Variation and Extension amends the Offer pursuant to which the Offeror is offering to purchase, on the terms and subject to the conditions
contained in the Offer and Circular, all of the outstanding Shares, which includes Shares that may become outstanding after the date of the Offer but before the Expiry Time of the Offer upon exercise
of Options or other securities of Meridian that are convertible into or exchangeable or exercisable for Shares, as well as the Letter of Transmittal and Notice of Guaranteed Delivery. 

        Except
as otherwise set forth in this Notice of Variation and Extension, the terms and conditions previously set forth in the Offer and Circular, Letter of Transmittal and Notice of
Guaranteed Delivery continue to be applicable in all respects. This Notice of Variation and Extension should be read in conjunction with the Offer and Circular, the Letter of Transmittal and the
Notice of Guaranteed Delivery. 

        All
references to the "Offer" in the Offer and Circular, the Letter of Transmittal, the Notice of Guaranteed Delivery and this Notice of Variation and Extension mean the original offer
dated July 19, 2007 as amended by the First Variation and Extension, the First Notice of Extension and this Notice of Variation and Extension and all references in such documents to the
"Circular" mean the original circular dated July 19, 2007 as amended by the First Variation and Extension, the First Notice of Extension and this Notice of Variation and Extension.
Capitalized terms used in this Notice of Variation and Extension and not defined herein that are defined in the Offer and Circular have the respective meanings ascribed thereto in the Offer
and Circular. 

1.     Increase in Cash Component of Offer Consideration  

        The Offeror has amended the Offer by increasing it from 2.235 Yamana Common Shares and Cdn$4.00 in cash for each Share to 2.235 Yamana Common Shares
and Cdn$6.50 in cash for each Share. 

        All
references in the Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery to the price offered by the Offeror are amended to reflect the foregoing
changes. 

        Based
on the closing price of the Shares and the Yamana Common Shares on the TSX on June 27, 2007 (the date of the Offeror's announcement after the close of market of its
intention to make the Offer), the Offer Consideration now represents a premium of approximately 36%. The Offer Consideration also now represents a premium of approximately 37% over the average closing
price of the Shares on the TSX for the 20 trading days immediately preceding the Offeror's announcement of its intention to make the Offer (based on the average closing price of the Shares and
the Yamana Common Shares on the TSX for the 20 trading days ending June 27, 2007). 

        Assuming
that all of the conditions to the Offer are satisfied or waived, all Shareholders whose Shares are taken up under the Offer, including Shareholders who have already deposited
their Shares to the Offer, will receive the increased Offer Consideration for their Shares. 

2.     Amendment of the Minimum Deposit Condition  

        Yamana has varied the Offer by amending the Minimum Deposit Condition in paragraph (a) of Section 4 of the Offer, "Conditions of the Offer" from
662/3% to 50.1%. 

        As
a result of the amendment of the Minimum Deposit Condition, upon at least 50.1% of the Shares outstanding (calculated on a fully diluted basis) having been validly deposited under the
Offer and not withdrawn and upon all other conditions to the Offer having been satisfied or waived at the Expiry Time, Yamana will take up and pay for all of the Shares validly deposited and not
withdrawn as of the Expiry Time. 

        It
is Yamana's current intention that if it takes up and pays for Shares deposited under the Offer, it will enter into one or more transactions to enable it to acquire all of the Shares
not acquired under the Offer. Yamana currently intends to acquire all of the outstanding Shares not tendered under the Offer by the Expiry Time by way of a Compulsory Acquisition or a Subsequent
Acquisition Transaction, as described in "Acquisition of Shares Not Deposited pursuant to the Offer" in Section 22 of the Circular. There is no assurance that such 

1

 

transaction
will be completed, in particular if Yamana acquires less than 662/3% of the outstanding Shares on a fully diluted basis pursuant to the Offer. 

        The
Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery are each hereby amended to reflect the foregoing. 

3.     Extension of the Offer  

        The Offeror has extended the expiry of the Offer to 8:00 p.m. (Toronto time) on October 2, 2007, unless the Offer is further extended or withdrawn.
Accordingly, the definition of "Expiry Date" in the "Definitions" section of the Offer and Circular is deleted and replaced by the following: 

"Expiry
Date" means October 2, 2007 or such later date or dates as may be fixed by the Offeror from time to time as provided under "Extension, Variation or Change in the Offer" in
Section 5 of the Offer, unless the Offer is withdrawn by the Offeror". 

        In
addition, all references to September 24, 2007 in the Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery are amended to refer to
October 2, 2007. 

4.     Amendments to Pro Forma Financial Information  

        The Summary of Pro Forma Consolidated Financial Information of Yamana in the Summary of the Offer and Section 10 of the Circular, "Summary
Historical and Unaudited Pro Forma Consolidated Financial Information" is deleted and replaced by the following: 

 
 

"Summary of Pro Forma Consolidated Financial Information of Yamana
  (in thousands of US dollars except for per share information)    

	 
	 	Six months ended June 30, 2007
	 	Twelve months ended December 31, 2006
	 
	Canadian GAAP
 
	 	Yamana

and Meridian
	 	Yamana, Meridian and Northern Orion
	 	Yamana

and Meridian
	 	Yamana, Meridian and Northern Orion
	 
	Pro Forma Consolidated Statement of Operations	 	 	 	 	 	 	 	 	 
	Sales(4)	 	479,500	 	479,500	 	418,692	 	418,692	 
	Mine operating earnings(4)	 	219,934	 	219,934	 	73,406	 	73,406	 
	Operating earnings (loss)	 	158,485	 	160,453	 	(56,655	)	(68,387	)
	Net earnings (loss) for the period	 	76,211	 	100,805	 	(133,534	)	(68,053	)
	Earnings (loss) per share from continuing operations	 	0.13	 	0.15	 	(0.24	)	(0.11	)
	Net earnings (loss) per share	 	0.13	 	0.15	 	(0.24	)	(0.11	)

	 
	 	As at June 30, 2007
	 	 
	 	 

	 
	 	Yamana

and Meridian
	 	Yamana, Meridian and Northern Orion
	 	 
	 	 

	Pro Forma Consolidated Balance Sheet Data	 	 	 	 	 	 	 	 
	Cash and cash equivalents	 	245,730	 	462,937	 	 	 	 
	Other current assets	 	293,188	 	296,079	 	 	 	 
	Property, plant and equipment	 	370,144	 	370,367	 	 	 	 
	Assets under construction	 	1,060	 	1,060	 	 	 	 
	Mineral properties	 	3,811,057	 	4,263,243	 	 	 	 
	Total assets	 	6,693,237	 	8,128,929	 	 	 	 
	Current liabilities	 	218,669	 	238,535	 	 	 	 
	Total long-term liabilities	 	1,889,772	 	2,109,992	 	 	 	 

2

 

	 
	 	 
	 	 
	 	Twelve months ended December 31, 2006
	 
	US GAAP(5)
 
	 	 
	 	 
	 	Yamana

and Meridian
	 	Yamana, Meridian and Northern Orion
	 
	Pro Forma Consolidated Statement of Operations	 	 	 	 	 	 	 	 	 
	Sales	 	 	 	 	 	418,692	 	418,692	 
	Operating loss	 	 	 	 	 	(102,731	)	(130,073	)
	Net loss for the period	 	 	 	 	 	(173,001	)	(121,130	)
	Loss per share from continuing operations	 	 	 	 	 	(0.30	)	(0.19	)
	Net loss per share — basic and diluted	 	 	 	 	 	(0.30	)	(0.19	)
	Book value per share	 	 	 	 	 	4.56	 	5.12	 
	Ratio of earnings to fixed charges	 	 	 	 	 	 	 	 	 
	 	Ratio(1)	 	 	 	 	 	—	 	—	 
	 	Deficiency(2)	 	 	 	 	 	(217,009	)	(176,338	)

	(1)
	For
purposes of calculating the ratio of earnings of fixed charges, earnings represent earnings from continuing operations before provision for income taxes plus fixed charges less
interest capitalized. Fixed charges consist of interest expensed and capitalized plus amortization of debt discount.

	(2)
	For
purposes of calculating the deficiency, earnings from continuing operations is adjusted for the same items and fixed charges are determined in the same manner as described in
footnote (1). The deficiency represents the dollar amount of earnings that would be required to result in a ratio of 1:1.

	(3)
	Amounts
shown have been adjusted to exclude assets held for sale.

	(4)
	The
addition of Northern Orion does not impact Sales or Mine operating earnings as its interest in Alumbrera is accounted for on an equity basis.

	(5)
	The
US GAAP pro forma information presented is for the twelve months ended December 31, 2006. US GAAP pro forma information as at and for the six months ended
June 30, 2007 is not presented as the information is not available." 

5.     Source of Funds  

        Section 9 of the Circular, "Source of Funds", as amended by the First Variation and Extension, is deleted and replace with the following: 

        "According
to Meridian, as at July 16, 2007, Meridian had 101,203,037 Meridian Common Shares outstanding. As at June 30, 2007, Meridian had 791,383 Options
outstanding under its Stock Option Plan. If all of these Options were exercised, Meridian would have to issue 791,383 Shares. The Offeror estimates that if it acquires all of the Shares on a
fully diluted basis pursuant to the Offer, the total amount of cash required for the purchase of such Shares and to cover related fees and expenses, estimated to be approximately US$20 million,
in the aggregate, will be approximately US$664 million. 

        The
Offeror intends to pay the cash consideration under the Offer from the following facilities: 

	(i)
	a
committed non-revolving term credit facility of up to US$400 million pursuant to a senior secured credit facility commitment letter dated
August 10, 2007, as amended September 19, 2007 between Yamana and a syndicate of lenders (collectively, the "US$400 million Credit
Facility"); and

	(ii)
	a
committed revolving term credit facility of up to US$300 million pursuant to a senior secured credit facility commitment letter dated August 10, 2007,
as amended September 19, 2007 between Yamana and a syndicate of lenders (collectively, the "US$300 million Credit Facility"). 

        Each
of the US$400 million Credit Facility and US$300 million Credit Facility is secured by guarantees from, and pledge of shares of, certain operating subsidiaries, and
will mature in 2012. Amounts drawn under the respective facilities bear an interest rate of LIBOR plus 0.95% to 1.50% per annum, depending on the Offeror's debt to Earnings before Interest, Taxes,
Depreciation and Amortization ("EBITDA") ratio. 

        A
copy of each credit facility has been filed as an exhibit to the Schedule TO filed by the Offeror with the SEC in connection with the Offer, pursuant to
Rule 14d-3 under the US Exchange Act. Reference is made to such respective exhibits for a more complete description of the terms and conditions of each facility." 

3

 

6.     Amendments to Consolidated Capitalization Table  

        The Consolidated Capitalization section of the Offer and circular is deleted and replaced by the following: 

        "The
following table sets forth the Offeror's consolidated capitalization as at December 31, 2006, expressed in US dollars and adjusted to give effect to the material
changes in the share and loan capital of the Offeror since December 31, 2006, the date of the Offeror's most recent audited consolidated financial statements, and further adjusted to give
effect to the Offer only and to both the Northern Orion Transaction and the Offer. The table should be read in conjunction with the audited consolidated financial statements of the Offeror as at and
for the year ended December 31, 2006, including the notes thereto, and management's discussion and analysis thereof and the other financial information contained in or incorporated by reference
in the Offer and Circular. 

	(in US dollars)
 
	 	As at December 31, 2006
	 	As at December 31, 2006

After Giving Effect to the Offer(1)
	 	As at December 31, 2006

After Giving Effect to the Northern Orion Transaction and the Offer(1)
	 
	 
	 	 
	 	(unaudited)

	 	(unaudited)

	 
	Debt	 	 	—	 	$	650,000	(2)	$	650,000	(2)
	Common shares(4)	 	$	1,619,850	 	$	4,335,613	 	$	5,331,180	 
	 	(Authorized — unlimited)	 	 	(344,595,000	)	 	(570,532,000	)	 	(653,356,000	)
	Common shares reserved for issuance	 	$	42,492	 	$	42,492	 	$	42,492	 
	 	 	 	(4,378,000	)	 	(4,378,000	)	 	(4,378,000	)
	Preference shares	 	 	  —  	 	 	  —  	 	 	  —  	 
	(Authorized — 8,000,000)	 	 	( — )	 	 	( — )	 	 	( — )	 
	Common share purchase options(4)	 	 	  —  	 	 	  —  	 	 	  —  	 
	 	 	 	(16,127,000	)	 	(17,976,000	)	 	(24,152,000	)
	Common share purchase warrants(4)	 	$	73,004	 	$	73,004	 	$	280,519	 
	 	 	 	(16,890,000	)	 	(16,890,000	)	 	(48,153,000	)
	Contributed surplus	 	$	61,578	 	$	72,883	 	$	108,286	 
	Deficit	 	$	(80,334	)	$	(80,334	)	$	(80,334	)
	Total capitalization	 	$	1,716,590	 	$	5,093,658	 	$	6,332,142	 

	(1)
	Before
deducting fees and expenses of the Offer and/or the Northern Orion Transaction.

	(2)
	Debt
includes the US$400 million Credit Facility and the US$300 million Credit Facility, of which it is assumed that US$650 million is drawn down to complete the
Offer. See "Source of Funds" in Section 5 of this Notice of Variation and Extension.

	(3)
	Assumes
no currently outstanding options and warrants of Northern Orion will be exercised prior to completion of the Northern Orion Transaction, and the underlying Northern
Orion Shares will not be exchanged under the Northern Orion Transaction.

	(4)
	Assumes
no exercise of the currently outstanding Options of Meridian prior to completion of the Offer." 

7.     Recent Developments  

        On September 13, 2007, the Offeror engaged Innisfree M&A Incorporated ("Innisfree") to act as an
information agent under the Offer. As information agent, Innisfree will act as a resource for information for Shareholders, and the Offeror has agreed to pay reasonable and customary compensation,
include certain out-of-pocket expenses, to Innisfree in connection with its services. The Offeror has also agreed to indemnify Innisfree for certain liabilities, including
liabilities under securities law and expenses of the Offer. 

        As
a result the engagement of Innisfree, all references to the "Information Agent" in the Offer and Circular, the Letter of Transmittal, the Notice of Guaranteed Delivery and this Notice
of Variation and Extension shall include Innisfree. 

        The
Offeror and Northern Orion have agreed to amend the mutual condition that not less than 662/3% of Shares (calculated on a fully diluted basis) be deposited
under the Offer, as set out in the Business Combination Agreement, to reduce such Minimum Deposit Condition to 50.1% of the Shares (calculated on a fully diluted basis), and the Offeror and
Northern Orion have further agreed to complete the Northern Orion Transaction on 

4

 

the
business day following the satisfaction of the Minimum Tender Condition provided that all other conditions to the Offer have been satisfied or waived. 

8.     Manner of Acceptance  

        Shares may be deposited to the Offer in accordance with the provisions of Section 3 of the Offer, "Manner of Acceptance". 

9.     Take up of and Payment for Deposited Shares  

        If all the conditions referred to under "Conditions of the Offer" in Section 4 of the Offer have been satisfied or waived at or before the Expiry Time, the
Offeror will become obligated to take up and pay for Shares validly deposited under the Offer and not properly withdrawn promptly following the Expiry Time. Any Shares deposited to the Offer after the
first date on which Shares have been taken up by the Offeror but before the Expiry Date will be taken up and paid for promptly. See Section 6 of the Offer, "Take up and payment for deposited
Shares", for additional detail. 

10.   Right to Withdraw Deposited Shares  

        Shares may be withdrawn by or on behalf of a depositing Shareholder (unless otherwise required or permitted by applicable law) (i) at any time when the
Shares have not been taken up; (ii) if the Shares have not been paid for within three business days after having taken them up; (iii) at any time before the expiration of ten days from
the date upon which either a notice of change or a notice of variation is mailed or otherwise communicated to Shareholders; (iv) during a Subsequent Offering Period with respect to the Offer;
or (v) as required by the US Exchange Act at any time after 60 days from the commencement of the Offer. See Section 7 of the Offer, "Right to Withdraw Deposited Shares", for
additional detail regarding withdrawal of deposited Shares. 

11.   Consequential Amendments to the Offer and Circular and Other Documents  

        The Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery are amended to the extent necessary to reflect the amendments contemplated
by, and the information contained in this Notice of Variation and Extension. 

12.   Offerees' Statutory Rights  

        In the event that there is a misrepresentation contained in a take-over bid circular or a notice of change or variation that is required to be
delivered to securityholders in connection with a take-over bid, subject to certain defences, the securities legislation in the provinces of Ontario, Alberta, British Columbia, Manitoba,
New Brunswick, Newfoundland, Nova Scotia and Saskatchewan provides securityholders with, in addition to any other rights they may have at law, rights of rescission against an offeror and/or a
right of action for damages against each of: (i) an offeror, (ii) every person who was a director of the offeror at the time the circular or notice was signed, (iii) every person
whose consent has been filed, as prescribed, regarding a report, opinion or statement made by such person in connection with the circular or notice; and (iv) each person who signed the
certificate in the circular or notice, excluding persons included in (ii) above. The securities legislation in Quebec provides that a person who has transferred securities in response to a
take-over bid effected with a circular or exemption, as proscribed by such legislation, containing a misrepresentation may apply to have the transfer rescinded or the price revised, and
such person may also claim damages from the offeror, its officers and its directors, and from those experts whose opinions, containing a misrepresentation, appeared in the circular with such person's
consent. 

        The foregoing is a summary only of the rights of rescission and rights of action that may be available to a Shareholder and is qualified by the specific
provisions of the securities legislation in each of the provinces of Canada. Shareholders should refer to the applicable provision of the securities legislation in their province and consult their own
legal advisors with respect to their rights based on their particular circumstances.

13.   Directors' Approval  

        The contents of this Notice of Variation and Extension has been approved, and the sending thereof to the securityholders of Meridian has been authorized, by the
Board of Directors of the Offeror. 

5

  

 
 

AUDITORS' CONSENTS    
    

        We have read the Notice of Variation and Extension of Yamana Gold Inc. (the "Company") dated
September 20, 2007, relating to the Offer and Circular furnished with the Company's Offer dated July 19, 2007, as amended by the First Variation and Extension, the First Notice of
Extension and this Notice of Variation and Extension (collectively, the "Offer and Circular") to purchase all the issued and outstanding common shares
of Meridian Gold Inc. We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents. 

        We
consent to the incorporation by reference in the Offer and Circular of our report to the shareholders of the Company on the consolidated balance sheets of the Company as at
December 31, 2006 and 2005 and the consolidated statements of operations and retained earnings (deficit), and cash flows for the years ended December 31, 2006 and 2005 and the ten month
period ended December 31, 2004, prepared in accordance with Canadian generally accepted accounting principles. Our report is dated March 26, 2007. 

Vancouver,
British Columbia (Signed) DELOITTE & TOUCHE LLP

September 20, 2007 Independent Registered Chartered Accountants 

        We
have read the Notice of Variation and Extension of Yamana Gold Inc. (the "Company") dated September 20, 2007,
relating to the Offer and Circular furnished with the Company's Offer dated July 19, 2007, as amended by the First Variation and Extension, the First Notice of Extension and this Notice of
Variation and Extension (collectively, the "Offer and Circular") to purchase of all the issued and outstanding common shares of Meridian
Gold Inc. We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents. 

        We
consent to the incorporation by reference in the Offer and Circular of our report to the shareholders of Viceroy Exploration Ltd.
("Viceroy") on the consolidated balance sheets of Viceroy as at December 31, 2005 and 2004 and the consolidated statements of operations and
deficit and cash flows for the years then ended. Our report is dated March 10, 2006. 

Vancouver,
British Columbia (Signed) PRICEWATERHOUSECOOPERS LLP

September 20, 2007 Chartered Accountants 

        We
have read the Notice of Variation and Extension of Yamana Gold Inc. (the "Company") dated September 20, 2007,
relating to the Offer and Circular furnished with the Company's Offer dated July 19, 2007, as amended by the First Variation and Extension, the First Notice of Extension and this Notice of
Variation and Extension (collectively, the "Offer and Circular") to purchase of all the issued and outstanding common shares of Meridian
Gold Inc. We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents. 

        We
consent to the incorporation by reference in the Offer and Circular of our report to the shareholders of Northern Orion Resources Inc. ("Northern
Orion") on the consolidated balance sheets of Northern Orion as at December 31, 2006 and 2005 and the consolidated statements of operations and deficit and cash flows
for the years ended December 31, 2006, 2005 and 2004, prepared in accordance with Canadian generally accepted accounting principles. Our report is dated March 29, 2007. 

Vancouver,
British Columbia (Signed) DELOITTE & TOUCHE LLP

September 20, 2007 Independent Registered Chartered Accountants 

6

  

 
 

APPROVAL AND CERTIFICATE OF YAMANA GOLD INC.    
    

        The contents of this Notice of Variation and Extension has been approved, and the sending thereof to the securityholders of Meridian Gold Inc. has been
authorized, by the Board of Directors of Yamana Gold Inc. 

        The
foregoing, together with the Offer and Circular, contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in the light of the circumstances in which it was made. In addition, the foregoing, together with the Offer and Circular, does not contain any
misrepresentation likely to affect the value or the market price of the securities subject to the Offer or the securities to be distributed. 

DATED:
September 20, 2007 

	(Signed) PETER MARRONE	(Signed) CHARLES MAIN
	Chairman and Chief Executive Officer	Vice President, Finance and

Chief Financial Officer
	
 	

 
	On behalf of the Board of Directors
	
 	

 
	(Signed) VICTOR BRADLEY	(Signed) JOHN BEGEMAN
	Director	Director

7

  

 
 

SCHEDULE "A"
  
    TABLE OF CONTENTS    
    

	 
	 	Page

	 PRO FORMA CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2007	 	A-2 – A-3
	 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2007	 	A-4
	 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006	 	A-5
	 NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS	 	A-6 – A-18
	 SCHEDULES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS	 	A-19 – A-21

A-1

   YAMANA GOLD INC.  

 PRO FORMA CONSOLIDATED BALANCE SHEET  

 June 30, 2007

(Unaudited)

(Expressed in thousands of U.S. dollars)  

	 
	 	Yamana Gold Inc.
	 	Meridian Gold Inc.
	 	 
	 	Initial Pro forma adjustments
	 	Initial Yamana pro forma
	 	Northern Orion Resources Inc.
	 	 
	 	Pro forma adjustments
	 	Yamana consolidated pro forma

	 
	 	$

	 	$

	 	 
	 	$

	 	$

	 	$

	 	 
	 	$

	 	$

	 
	 	 
	 	 
	 	 
	 	(Note 6)

	 	 
	 	 
	 	 
	 	(Note 6)

	 	 

	Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cash and cash equivalents	 	88,956	 	139,500	 	(a)(viii)	 	650,000	 	245,730	 	237,207	 	(d)(i)	 	(20,000	)	462,937
	 	 	 	 	 	 	(a)(ii)	 	11,491	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(a)(viii)	 	(644,217	)	 	 	 	 	 	 	 	 	 
	 	Short term investments	 	—	 	67,500	 	 	 	—	 	67,500	 	1,333	 	 	 	—	 	68,833
	 	Restricted cash	 	—	 	13,800	 	 	 	—	 	13,800	 	—	 	 	 	—	 	13,800
	 	Accounts receivable	 	72,081	 	9,700	 	 	 	—	 	81,781	 	—	 	 	 	—	 	81,781
	 	Advances and deposits	 	29,685	 	—	 	 	 	—	 	29,685	 	409	 	 	 	—	 	30,094
	 	Inventory	 	62,325	 	8,600	 	 	 	—	 	70,925	 	—	 	 	 	—	 	70,925
	 	Income taxes recoverable	 	39	 	500	 	 	 	—	 	539	 	—	 	 	 	—	 	539
	 	Marketable securities	 	—	 	—	 	 	 	—	 	—	 	—	 	 	 	—	 	—
	 	Derivative related assets	 	14,058	 	—	 	 	 	—	 	14,058	 	—	 	 	 	—	 	14,058
	 	Other current assets	 	—	 	14,900	 	 	 	—	 	14,900	 	1,149	 	 	 	—	 	16,049
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	

	 	 	267,144	 	254,500	 	 	 	17,274	 	538,918	 	240,098	 	 	 	(20,000	)	759,016
	Property, plant and equipment	 	370,144	 	—	 	 	 	—	 	370,144	 	223	 	 	 	—	 	370,367
	Assets under construction	 	1,060	 	—	 	 	 	—	 	1,060	 	—	 	 	 	—	 	1,060
	Mineral properties	 	1,556,187	 	298,100	 	(a)(i)	 	1,956,770	 	3,811,057	 	122,532	 	(b)(i)	 	309,654	 	4,263,243
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(d)(i)	 	20,000	 	 
	 Available-for-sale securities	 	29,852	 	—	 	 	 	—	 	29,852	 	—	 	 	 	—	 	29,852
	Share purchase warrants held	 	389	 	—	 	 	 	—	 	389	 	—	 	 	 	—	 	389
	Other assets	 	43,806	 	31,000	 	 	 	—	 	74,806	 	—	 	 	 	—	 	74,806
	Future income tax assets	 	83,597	 	—	 	 	 	—	 	83,597	 	—	 	 	 	—	 	83,597
	Goodwill	 	55,000	 	—	 	(a)(i)	 	1,728,414	 	1,783,414	 	—	 	(b)(i)	 	421,955	 	2,205,369
	Restricted cash	 	—	 	—	 	 	 	—	 	—	 	752	 	 	 	—	 	752
	Equity investment in Minera Alumbrera Ltd.	 	—	 	—	 	 	 	—	 	—	 	100,478	 	(b)(i)	 	240,000	 	340,478
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	

	 	 	2,407,179	 	583,600	 	 	 	3,702,458	 	6,693,237	 	464,083	 	 	 	971,609	 	8,128,929
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	

A-2

 

	 
	 	Yamana Gold Inc.
	 	Meridian Gold Inc.
	 	 
	 	Initial Pro forma adjustments
	 	Initial Yamana pro forma
	 	Northern Orion Resources Inc.
	 	 
	 	Pro forma adjustments
	 	Yamana consolidated pro forma
	 
	 
	 	$

	 	$

	 	 
	 	$

	 	$

	 	$

	 	 
	 	$

	 	$

	 
	 
	 	 
	 	 
	 	 
	 	(Note 6)

	 	 
	 	 
	 	 
	 	(Note 6)

	 	 
	 
	
Liabilities	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	Current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Accounts payable and accrued liabilities	 	65,134	 	19,900	 	(a)(vi)	 	20,000	 	105,034	 	2,866	 	(b)(vi)	 	17,000	 	124,900	 
	 	Income taxes payable	 	9,608	 	—	 	 	 	—	 	9,608	 	—	 	 	 	—	 	9,608	 
	 	Derivative related liabilities	 	70,801	 	—	 	 	 	—	 	70,801	 	—	 	 	 	—	 	70,801	 
	 	Current portion of long-term debt	 	1,026	 	—	 	 	 	—	 	1,026	 	—	 	 	 	—	 	1,026	 
	 	Other current liabilities	 	—	 	32,200	 	 	 	—	 	32,200	 	—	 	 	 	—	 	32,200	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	 	 	146,569	 	52,100	 	 	 	20,000	 	218,669	 	2,866	 	 	 	17,000	 	238,535	 
	Long-term liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Asset retirement obligations	 	22,626	 	—	 	 	 	—	 	22,626	 	1,201	 	 	 	—	 	23,827	 
	 	Future income tax liabilities	 	389,198	 	23,600	 	(a)(i)	 	684,869	 	1,097,667	 	23,603	 	(b)(i)	 	181,386	 	1,302,656	 
	 	Long-term liabilities	 	18,479	 	101,000	 	(a)(viii)	 	650,000	 	769,479	 	—	 	 	 	—	 	769,479	 
	 	Royalty and net proceeds interest payable	 	—	 	—	 	 	 	—	 	—	 	14,030	 	 	 	—	 	14,030	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	 	 	576,872	 	176,700	 	 	 	1,354,869	 	2,108,441	 	41,700	 	 	 	198,386	 	2,348,527	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	 Non-controlling interest	 	—	 	15,300	 	 	 	—	 	15,300	 	—	 	 	 	—	 	15,300	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	
Shareholders' equity	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	Capital stock	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Common stock	 	1,715,654	 	403,500	 	(a)(v)	 	2,739,189	 	4,454,843	 	294,244	 	(b)(iii)	 	952,688	 	5,407,531	 
	 	 	 	 	 	 	(a)(iv)	 	(403,500	)	 	 	 	 	(b)(ii)	 	(294,244	)	 	 
	 	Warrants	 	72,915	 	—	 	 	 	—	 	72,915	 	11,329	 	(b)(iv)	 	207,515	 	280,430	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(b)(ii)	 	(11,329	)	 	 
	 	Additional paid-in capital including contributed surplus	 	43,117	 	8,200	 	(a)(iv)	 	(8,200	)	43,117	 	14,476	 	(b)(iv)	 	35,403	 	78,520	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(b)(ii)	 	(14,476	)	 	 
	 	Accumulated other comprehensive income	 	5,844	 	54,300	 	(a)(iv)	 	(54,300	)	5,844	 	(2,635	)	(b)(ii)	 	2,635	 	5,844	 
	(Deficit) retained earnings	 	(7,223	)	(74,400	)	(a)(iv)	 	74,400	 	(7,223	)	104,969	 	(b)(ii)	 	(104,969	)	(7,223	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	 	 	1,830,307	 	391,600	 	 	 	2,347,589	 	4,569,496	 	422,383	 	 	 	773,223	 	5,765,102	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	 	 	2,407,179	 	583,600	 	 	 	3,702,458	 	6,693,237	 	464,083	 	 	 	971,609	 	8,128,929	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 

A-3

  

 
 

YAMANA GOLD INC.
  
  
  PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
  
  
  Six month period ended June 30, 2007
  (Unaudited)
  (Expressed in thousands of U.S. dollars except per share
amounts)    
    

	 
	 	Yamana Gold Inc.
	 	Meridian Gold Inc.
	 	 
	 	Initial Pro forma adjustments
	 	Initial Yamana pro forma
	 	Northern Orion Resources Inc.
	 	 
	 	Pro forma adjustments
	 	Yamana consolidated pro forma
	 
	 
	 	$

	 	$

	 	 
	 	$

	 	$

	 	$

	 	 
	 	$

	 	$

	 
	 
	 	 
	 	 
	 	 
	 	(Note 6)

	 	 
	 	 
	 	 
	 	(Note 6)

	 	 
	 
	Sales	 	328,800	 	150,700	 	 	 	—	 	479,500	 	—	 	 	 	—	 	479,500	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Cost of sales	 	(120,955	)	(48,300	)	 	 	—	 	(169,255	)	—	 	 	 	—	 	(169,255	)
	Depreciation, amortization and depletion	 	(24,104	)	(17,100	)	(a)(vii)	 	(48,400	)	(89,604	)	—	 	 	 	—	 	(89,604	)
	Accretion of asset retirement obligation	 	(707	)	—	 	 	 	—	 	(707	)	—	 	 	 	—	 	(707	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Mine operating earnings	 	183,034	 	85,300	 	 	 	(48,400	)	219,934	 	—	 	 	 	—	 	219,934	 
	Corporate administration	 	(18,909	)	(9,100	)	 	 	—	 	(28,009	)	(1,445	)	 	 	—	 	(29,454	)
	Property maintenance and exploration	 	—	 	(15,400	)	 	 	—	 	(15,400	)	(1,268	)	 	 	—	 	(16,668	)
	Professional and consulting	 	—	 	—	 	 	 	—	 	—	 	(866	)	 	 	—	 	(866	)
	Other	 	—	 	1,500	 	 	 	—	 	1,500	 	—	 	 	 	—	 	1,500	 
	Foreign exchange (loss) gain	 	(6,693	)	—	 	 	 	—	 	(6,693	)	6,946	 	 	 	—	 	253	 
	Loss on impairment of mineral properties	 	(1,821	)	—	 	 	 	—	 	(1,821	)	—	 	 	 	—	 	(1,821	)
	 Non-production costs during business interruption	 	(10,465	)	—	 	 	 	—	 	(10,465	)	—	 	 	 	—	 	(10,465	)
	Arrangement transaction costs	 	—	 	—	 	 	 	—	 	—	 	(325	)	 	 	—	 	(325	)
	Stock-based compensation	 	(561	)	—	 	 	 	—	 	(561	)	(1,074	)	 	 	—	 	(1,635	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Operating earnings (loss)	 	144,585	 	62,300	 	 	 	(48,400	)	158,485	 	1,968	 	 	 	—	 	160,453	 
	Investment and other business income	 	5,016	 	4,900	 	 	 	—	 	9,916	 	5,311	 	 	 	—	 	15,227	 
	Equity earnings of Minera Alumbrera Ltd.	 	—	 	—	 	 	 	—	 	—	 	27,208	 	(b)(vii)	 	(13,300	)	13,908	 
	Interest expense	 	(6,025	)	—	 	(a)(viii)	 	(24,375	)	(30,400	)	—	 	 	 	—	 	(30,400	)
	Gain on sale of assets	 	—	 	600	 	 	 	—	 	600	 	—	 	 	 	—	 	600	 
	Unrealized loss on derivatives	 	(28,700	)	—	 	 	 	—	 	(28,700	)	—	 	 	 	—	 	(28,700	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Earnings before income tax expense	 	114,876	 	67,800	 	 	 	(72,775	)	109,901	 	34,487	 	 	 	(13,300	)	131,088	 
	Income tax expense	 	(34,690	)	(24,400	)	(d)(ii)	 	25,400	 	(33,690	)	(593	)	(d)(ii)	 	4,000	 	(30,283	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Net earnings	 	80,186	 	43,400	 	 	 	(47,375	)	76,211	 	33,894	 	 	 	(9,300	)	100,805	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Earnings per share (Note 7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Basic	 	0.23	 	 	 	 	 	 	 	0.13	 	 	 	 	 	 	 	0.15	 
	 	Diluted	 	0.22	 	 	 	 	 	 	 	0.13	 	 	 	 	 	 	 	0.14	 
	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 

A-4

  

 
 

YAMANA GOLD INC.
  
    PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
  
    Year ended December 31, 2006
  (Unaudited)
  (Expressed in thousands of U.S. dollars except per share amounts)    

	 
	 	Pro forma Yamana Gold Inc.
	 	Meridian Gold Inc.
	 	 
	 	Initial Pro forma adjustments
	 	Initial Yamana pro forma
	 	Northern Orion Resources Inc.
	 	 
	 	Pro forma adjustments
	 	Yamana consolidated pro forma
	 
	 
	 	$

(Schedule 1)

	 	$

	 	 
	 	$

(Note 6)

	 	$

	 	$

	 	 
	 	$

(Note 6)

	 	$

	 
	Sales	 	178,692	 	240,000	 	 	 	—	 	418,692	 	—	 	 	 	—	 	418,692	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Cost of sales	 	(106,130	)	(76,100	)	 	 	—	 	(182,230	)	—	 	 	 	—	 	(182,230	)
	Depreciation, amortization and depletion	 	(37,320	)	(28,100	)	(a)(vii)	 	(97,000	)	(162,420	)	—	 	 	 	—	 	(162,420	)
	Accretion of asset retirement obligation	 	(636	)	—	 	 	 	—	 	(636	)	—	 	 	 	—	 	(636	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Mine operating earnings	 	34,606	 	135,800	 	 	 	(97,000	)	73,406	 	—	 	 	 	—	 	73,406	 
	Corporate administration	 	(28,606	)	(22,700	)	 	 	—	 	(51,306	)	(2,777	)	 	 	—	 	(54,083	)
	Take-over bid expenses	 	(4,054	)	—	 	 	 	—	 	(4,054	)	—	 	 	 	—	 	(4,054	)
	Property maintenance and exploration	 	—	 	(26,600	)	 	 	—	 	(26,600	)	(1,825	)	 	 	—	 	(28,425	)
	Professional and consulting	 	—	 	—	 	 	 	—	 	—	 	(2,087	)	 	 	—	 	(2,087	)
	Foreign exchange gain	 	5,216	 	—	 	 	 	—	 	5,216	 	122	 	 	 	—	 	5,338	 
	Loss on impairment of mineral properties	 	(3,675	)	(4,600	)	 	 	—	 	(8,275	)	—	 	 	 	—	 	(8,275	)
	Stock-based compensation	 	(45,042	)	—	 	 	 	—	 	(45,042	)	(5,165	)	 	 	—	 	(50,207	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Operating (loss) earnings	 	(41,555	)	81,900	 	 	 	(97,000	)	(56,655	)	(11,732	)	 	 	—	 	(68,387	)
	Investment and other business income	 	7,423	 	12,300	 	 	 	—	 	19,723	 	7,846	 	 	 	—	 	27,569	 
	Equity earnings of Minera Alumbrera Ltd.	 	—	 	—	 	 	 	—	 	—	 	93,167	 	(b)(vii)	 	(30,500	)	62,667	 
	Interest expense	 	(28,935	)	—	 	(a)(viii)	 	(48,750	)	(77,685	)	—	 	 	 	—	 	(77,685	)
	Unrealized loss on derivatives	 	(35,773	)	—	 	 	 	—	 	(35,773	)	—	 	 	 	—	 	(35,773	)
	Loss arising from assets sold	 	(2,186	)	—	 	 	 	—	 	(2,186	)	—	 	 	 	—	 	(2,186	)
	Write-off of other receivables and other business loss	 	(12,299	)	—	 	 	 	—	 	(12,299	)	(500	)	 	 	—	 	(12,799	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	(Loss) earnings before income taxes	 	(113,325	)	94,200	 	 	 	(145,750	)	(164,875	)	88,781	 	 	 	(30,500	)	(106,594	)
	Income tax recovery (expense)	 	25,941	 	(45,600	)	(d)(ii)	 	51,000	 	31,341	 	(2,000	)	(d)(ii)	 	9,200	 	38,541	 
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	Net (loss) earnings	 	(87,384	)	48,600	 	 	 	(94,750	)	(133,534	)	86,781	 	 	 	(21,300	)	(68,053	)
	 	 	
	 	
	 	 	 	
	 	
	 	
	 	 	 	
	 	
	 
	(Loss) earnings per share (Note 7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Basic and diluted	 	(0.26	)	 	 	 	 	 	 	(0.24	)	 	 	 	 	 	 	(0.11	)
	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 

A-5

   YAMANA GOLD INC.  

 NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS  

 June 30, 2007

(Unaudited)

(Expressed in thousands of U.S. dollars, unless otherwise noted)  

1.     BASIS OF PRESENTATION  

The
unaudited pro forma consolidated financial statements have been prepared in connection with the proposed acquisitions of Meridian Gold Inc. ("Meridian") and Northern Orion
Resources Inc. ("Northern Orion") by Yamana Gold Inc. ("Yamana"). The unaudited pro forma consolidated financial statements have been prepared for illustrative purposes only and
give effect to the proposed transactions and recent acquisitions completed by Yamana pursuant to the assumptions described in Note 6 to these pro forma consolidated financial
statements. The unaudited pro forma consolidated balance sheet as at June 30, 2007 gives effect to the proposed transactions by Yamana as if they had occurred as of June 30, 2007.
The unaudited pro forma consolidated statements of operations for the six month period ended June 30, 2007 and for the year ended December 31, 2006 give effect to the proposed
transactions and recent acquisitions completed by Yamana as if they were completed on January 1, 2006. 

The
pro forma consolidated financial statements are not necessarily indicative of the operating results or financial condition that would have been achieved if the proposed transaction had been
completed on the dates or for the periods presented, nor do they purport to project the results of operations or financial position of the consolidated entities for any future period or as of any
future date. The pro forma consolidated financial statements do not reflect any special items such as payments pursuant to change of control provisions or integration costs or operating
synergies that may be incurred as a result of the acquisitions. 

The
pro forma adjustments and allocations of the purchase price for Northern Orion and Meridian are based in part on estimates of the fair value of assets acquired and liabilities to be
assumed. The final purchase price allocations will be completed after asset and liability
valuations are finalized as of the date of the completion of the acquisitions. In addition, the allocations of the purchase price for recently completed acquisitions by Yamana are based in part on
preliminary estimates of the fair values of the respective assets acquired and liabilities assumed and are open for subsequent adjustment based on valuations to be completed at a later date. Any final
adjustments may change the allocation of purchase price which could affect the fair value assigned to the assets and liabilities in these unaudited pro forma consolidated financial statements. 

In
preparing the unaudited pro forma consolidated balance sheet and the unaudited pro forma consolidated statements of operations, the following historical information, that was prepared
in accordance with Canadian GAAP, was used: 

	(a)
	the
unaudited consolidated balance sheet of Yamana as at June 30, 2007, and the unaudited consolidated statement of operations for the six month period ended
June 30, 2007;

	(b)
	the
unaudited consolidated balance sheet of Northern Orion as at June 30, 2007, and the unaudited consolidated statement of operations for the six month period ended
June 30, 2007;

	(c)
	the
unaudited consolidated balance sheet of Meridian as at June 30, 2007, and the unaudited consolidated statement of operations for the six month period ended
June 30, 2007;

	(d)
	the
audited consolidated financial statements of Yamana for the year ended December 31, 2006;

	(e)
	the
audited consolidated financial statements of Northern Orion for the year ended December 31, 2006;

	(f)
	the
audited consolidated financial statements of Meridian for the year ended December 31, 2006;

	(g)
	the
unaudited consolidated statement of operations of Desert Sun Mining Corporation ("DSM") for the period from January 1, 2006 to March 31, 2006; and

	(h)
	the
unaudited consolidated statement of operations of Viceroy Exploration Ltd. ("Viceroy") for the period from January 1, 2006 to September 30, 2006. 

The
unaudited pro forma consolidated balance sheet and the unaudited pro forma consolidated statements of operations should be read in conjunction with the June 30, 2007 unaudited
interim consolidated financial statements and the December 31, 2006 audited consolidated financial statements including the notes thereto, as listed above. 

The
accounting policies used in preparing the pro forma financial statements are set out in Yamana's consolidated financial statements for the year ended December 31, 2006. While
management believes that accounting policies of Northern Orion and recently acquired entities are consistent in all material respects, accounting policy differences may be identified upon consummation
of the proposed acquisition. Management has not had the opportunity to assess the impact, if any, of Meridian accounting policy differences with those of Yamana. Accounting policy differences may be
identified upon consummation of the proposed acquisition. 

A-6

 

2.     CONVERSION OF HISTORICAL FINANCIAL STATEMENTS TO U.S. DOLLARS  

The
unaudited pro forma consolidated financial statements are presented in U.S. dollars and, accordingly, Viceroy's unaudited statement of operations for the nine months ended
September 30, 2006 and for the period from October 1, 2006 to October 13, 2006, and DSM's unaudited statement of operations for the three months ended March 31, 2006 were
converted from Canadian dollars to U.S. dollars using the average exchange rate for each period. 

The
exchange rates used for conversion to U.S. dollars from Canadian dollars are as follows: 

	 
	 	$

	As at September 18, 2007	 	1.0291
	As at June 27, 2007	 	1.0705
	Average for the nine months ended September 30, 2006	 	1.1327
	Average for the period from October 1, 2006 to October 13, 2006	 	1.1277
	Average for the three months ended March 31, 2006	 	1.1546

3.     ACQUISITION OF MERIDIAN  

On
June 27, 2007, Yamana announced a proposal to acquire all the outstanding common shares of Meridian (the "Original Offer"). Under the Original Offer, the shareholders of Meridian were
to receive 2.235 Yamana shares plus $2.94 (Cdn$3.15) in cash. Based on a volume adjusted share price of $11.39 (Cdn$12.19), determined with reference to the share price of Yamana common shares
for the two days prior to, the day of, and the two days subsequent to the date of announcement, the purchase price equated to total consideration of $28.40 (Cdn$30.39) per share. On August 13,
2007, Yamana announced an amended offer (the "Second Offer") to acquire all the outstanding shares of Meridian. Under the Second Offer the shareholders of Meridian were to receive
2.235 Yamana shares plus $3.80 (Cdn$4.00) in cash. Based on a volume adjusted share price of $11.08 (Cdn$11.67) determined with reference to the share price of Yamana common shares for the
three day period ended August 9, 2007, the purchase price equated to total consideration of $28.56 (Cdn$30.08) per share. On September 20, 2007, Yamana announced a further amendment to
the Offer (the "Third Offer") whereby the shareholders of Meridian will receive 2.235 Yamana shares plus $6.32 (Cdn$6.50) in cash. Based on a volume adjusted share price of $12.016
(Cdn$12.37) determined with reference to the share price of Yamana common shares for the three day period ended September 18, 2007, the purchase price now equates to total consideration of
$33.17 (Cdn$34.14) per share. As at June 30, 2007, there were 101,203,037 common shares of Meridian outstanding. 

The
business combination, if completed, will be accounted for as a purchase transaction with Yamana as the acquirer of Meridian. Yamana is not making an offer to acquire or substitute any options
outstanding to acquire common shares of Meridian ("Meridian options"). For purposes of these pro forma financial statements it has been assumed that all Meridian options are exercised prior to
the closing date and that Yamana will acquire the Meridian shares issued pursuant to the exercise of the Meridian options under the Offer. 

The
Company has estimated the fair value of Meridian's assets and liabilities. As Yamana has not had access to information relative to the respective fair value of Meridian's mineral property, plant
and equipment, the allocation at this time is very preliminary in nature. 

The
Company expects the accounting for the acquisition to result in a significant amount of goodwill. Goodwill is the excess cost of the acquired company over the sum of the amounts assigned to assets
acquired less liabilities assumed. Generally accepted accounting principles in the U.S. require that goodwill not be amortized, but instead allocated to a level within the reporting entity
referred to as the reporting unit and tested for impairment, at least annually. There is currently diversity in the mining industry associated with certain aspects of the accounting for business
combinations and related goodwill. This diversity includes how companies define Value Beyond Proven and Probable reserves ("VBPP"), what an appropriate reporting unit is and how goodwill is allocated
among reporting units. The methods of allocating goodwill have included allocations primarily to a single exploration reporting unit and allocations among individual mine reporting units depending on
the relevant circumstances. We understand the industry is also evaluating other methodologies for allocating goodwill. The method of allocating goodwill will likely have an impact on the amount and
timing of any future goodwill impairment, if any. Yamana has not completed its determination of the combined company's reporting units nor its method of allocating goodwill to those reporting units.
The ultimate accounting for VBPP and goodwill may not be comparable to other companies within the mining industry. 

The
allocation of the purchase price is based upon management's preliminary estimates and certain assumptions with respect to the fair value increment associated with the assets to be acquired and the
liabilities to be assumed. The actual fair values of the assets and liabilities will be determined as of the date of acquisition and may differ materially from the amounts disclosed above in the
assumed pro forma purchase price allocation because of changes in fair values of the assets and liabilities to the date of the transaction, and as 

A-7

 

further
analysis (including of identifiable intangible assets, for which no amounts have been estimated and included in the preliminary amounts shown above) is completed. Consequently, the actual
allocation of the purchase price will likely result in different adjustments in the unaudited pro forma consolidated statements of operations. Following completion of the transaction, the
earnings of the combined company will reflect the impact of purchase accounting adjustments, including the effect of changes in the cost bases of both tangible and identifiable intangible assets and
liabilities on production costs and depreciation, depletion and amortization expense. 

The
fair value of the net assets of Meridian to be acquired pursuant to the Third Offer will ultimately be determined after the closing of the transaction. The Company will complete a full and
detailed valuation of the Meridian assets using an independent party. Therefore, it is likely that the fair values of assets and liabilities acquired will vary from those shown below and the
differences may be material. 

The
preliminary purchase price allocation is subject to change and is summarized as follows: 

	 
	 	 
	 	$

	Purchase of Meridian shares (226,188,788 Yamana common shares)	 	 	 	2,717,935
	Yamana shares issuable on exercise of Meridian options (1,768,741 Yamana common shares)	 	 	 	21,254
	Cash consideration (including cash of $4,999 payable due to exercise of Meridian options)	 	 	 	644,217
	Estimated transaction costs	 	 	 	20,000
	 	 	 	 	

	Purchase consideration	 	 	 	3,403,406
	 	 	 	 	

The
purchase price was allocated as follows: 

	 
	 	$
	 	$
	 
	Net working capital acquired (including cash of $102.1 million)	 	 	 	213,891	 
	Mineral property, plant and equipment	 	 	 	 	 
	 	Producing	 	1,635,385	 	 	 
	 	Non-producing	 	619,485	 	2,254,870	 
	 	 	
	 	 	 
	Other long-term assets	 	 	 	31,000	 
	Long-term liabilities	 	 	 	(101,000	)
	Future income tax liability	 	 	 	(708,469	)
	Non-controlling interest	 	 	 	(15,300	)
	 	 	 	 	
	 
	Net identifiable assets	 	 	 	1,674,992	 
	Excess of purchase price allocated to goodwill	 	 	 	1,728,414	 
	 	 	 	 	
	 
	 	 	 	 	3,403,406	 
	 	 	 	 	
	 

For
information purposes only, using a reference date of June 27, 2007, the date of the original announcement, Yamana's share price was $12.15 (Cdn$13.02) per share, which equated to total
consideration of $30.09 (Cdn$32.25) per Meridian common share. 

4.     ACQUISITION OF NORTHERN ORION  

Also
on June 27, 2007, Yamana announced that it had entered into a business combination arrangement to acquire all the outstanding common shares of Northern Orion. Under the proposed
transaction, the shareholders of Northern Orion will receive 0.543 of a Yamana common share for each Northern Orion common share outstanding. As at June 30, 2007, there were
154,087,161 common shares of Northern Orion outstanding. The volume adjusted share price of Yamana common shares for the period of two days prior to the day of the announcement, the day of the
announcement, and the two days after the date of the announcement was $11.39 (Cdn$12.19). 

The
business combination, if completed, will be accounted for as a purchase transaction, with Yamana as the acquirer of Northern Orion. Yamana will also exchange all outstanding options and share
purchase warrants of Northern Orion for similar securities of Yamana which, for purposes of these pro forma consolidated financial statements, have been assumed to be at an exchange ratio of
0.543 and at a price equivalent to the original price divided by 0.543. The fair value of the net assets of Northern Orion to be acquired 

A-8

 

will
ultimately be determined at the closing of the transaction. Therefore, it is likely that the fair values of assets and liabilities acquired will vary from those shown below and the differences
may be material. 

Yamana
has estimated the fair value of Northern Orion's interest in Minera Alumbrera Ltd. at $340,000 and the fair value of Northern Orion's non-producing properties at $432,000.
The remainder of the purchase price over the carrying value of the assets acquired and liabilities assumed of $421,955 has been assigned as goodwill. 

The
Company expects the accounting for the acquisition to result in a significant amount of goodwill. Goodwill is the excess cost of the acquired company over the sum of the amounts assigned to assets
acquired less liabilities assumed. Generally accepted accounting principles in the U.S. require that goodwill not be amortized, but instead allocated to a level within the reporting entity
referred to as
the reporting unit and tested for impairment, at least annually. There is currently diversity in the mining industry associated with certain aspects of the accounting for business combinations and
related goodwill. This diversity includes how companies define Value Beyond Proven and Probable reserves ("VBPP"), what an appropriate reporting unit is and how goodwill is allocated among reporting
units. The methods of allocating goodwill have included allocations primarily to a single exploration reporting unit and allocations among individual mine reporting units depending on the relevant
circumstances. We understand the industry is also evaluating other methodologies for allocating goodwill. The method of allocating goodwill will likely have an impact on the amount and timing of any
future goodwill impairment, if any. Yamana has not completed its determination of the combined company's reporting units nor its method of allocating goodwill to those reporting units. The ultimate
accounting for VBPP and goodwill may not be comparable to other companies within the mining industry. 

The
allocation of the purchase price is based upon management's preliminary estimates and certain assumptions with respect to the fair value increment associated with the assets to be acquired and the
liabilities to be assumed. The actual fair values of the assets and liabilities will be determined as of the date of acquisition and may differ materially from the amounts disclosed above in the
assumed pro forma purchase price allocation because of changes in fair values of the assets and liabilities to the date of the transaction, and as further analysis (including of identifiable
intangible assets, for which no amounts have been estimated and included in the preliminary amounts shown above) is completed. Consequently, the actual allocation of the purchase price may result in
different adjustments in the unaudited pro forma condensed combined statements of income. Following completion of the transaction, the earnings of the combined company will reflect the impact
of purchase accounting adjustments, including the effect of changes in the cost bases of both tangible and identifiable intangible assets and liabilities on production costs and depreciation,
depletion and amortization expense. 

The
preliminary purchase price allocation is subject to change and is summarized as follows: 

	 
	 	$

	Purchase of Northern Orion shares (83,669,328 Yamana common shares)	 	952,688
	Fair value of options and warrants acquired	 	242,918
	Estimated transaction costs	 	17,000
	 	 	

	Purchase consideration	 	1,212,606
	 	 	

The
purchase price was allocated as follows: 

	 
	 	$
	 
	Net working capital acquired (including cash of $237.2 million)	 	237,984	 
	Property plant and equipment, net	 	223	 
	Mineral properties and other assets	 	432,186	 
	Equity investment in Minera Alumbrera Ltd.	 	340,478	 
	Long-term liabilities	 	(15,231	)
	Future income tax liability	 	(204,989	)
	 	 	
	 
	Net identifiable assets	 	790,651	 
	Excess of purchase price allocated to goodwill	 	421,955	 
	 	 	
	 
	 	 	1,212,606	 
	 	 	
	 

A-9

 

For
information purposes only, using a reference date of June 27, 2007, the date of the original announcement, Yamana's share price was $12.15 (Cdn$13.02) per share which equates to total
consideration of $6.60 (Cdn$7.07) per Northern Orion common share. 

5.     RECENT ACQUISITION OF DSM AND VICEROY BY YAMANA  

	(a)
	Acquisition of DSM

On
April 5, 2006, Yamana completed the acquisition of DSM which owns the Jacobina gold mine in the Bahia state of Brazil. Total consideration paid was approximately $632 million
comprised of approximately 63.9 million common shares, transaction costs and substitution of issued options and share purchase warrants. Yamana exchanged all outstanding shares, options and
share purchase warrants of DSM for similar securities of Yamana at an exchange ratio of 0.6 of a Yamana common share for 1 DSM common share or equivalent. 

Yamana
has consolidated the results of operations from the Jacobina mine from the date of acquisition. 

The
purchase price was calculated as follows: 

	 
	 	$

	Common shares issued to acquired 100% of DSM (63,746,381 Yamana common shares)	 	534,852
	Fair value of options and warrants issued	 	92,658
	Transaction costs	 	3,094
	Shares issued for employee severance (174,068 common shares)	 	1,361
	 	 	

	Purchase consideration	 	631,965
	 	 	

The
purchase price was allocated as follows: 

	 
	 	$
	 
	Net working capital acquired (including cash of $18.1 million)	 	26,944	 
	Property plant and equipment, net	 	37,792	 
	Mineral properties and other assets	 	665,867	 
	Other assets	 	3,548	 
	Silicosis liability	 	(17,154	)
	Long-term liabilities	 	(6,954	)
	Future income tax liability	 	(133,078	)
	 	 	
	 
	Net identifiable assets	 	576,965	 
	Residual purchase price allocated to goodwill	 	55,000	 
	 	 	
	 
	 	 	631,965	 
	 	 	
	 

As
a result of this acquisition, the unaudited pro forma consolidated statements of operations for the year ended December 31, 2006 have been adjusted to include operations of DSM for
the three month period ended March 31, 2006. 

	(b)
	Acquisition of Viceroy

On
October 14, 2006, the Company acquired approximately 95% of the outstanding common shares of Viceroy. The Company offered Viceroy shareholders 0.97 of a Yamana common share for each Viceroy
common share. Subsequently, the Company commenced and completed the compulsory acquisition of the remaining Viceroy common shares not already owned at the same ratio of 0.97 of a Yamana common share
for each Viceroy common share. Yamana exchanged all outstanding shares, options and share purchase warrants of Viceroy for similar securities of Yamana at an exchange ratio of 0.97 of a Yamana common
share for 1 Viceroy common share or equivalent. Total consideration paid was approximately $549.1 million. Yamana has consolidated the results of operations from
October 13, 2006. 

A-10

 

The
business combination was accounted for as a purchase transaction with Yamana as acquirer of Viceroy. The preliminary purchase price allocation is subject to change and is summarized
as follows: 

	 
	 	$

	Purchase of Viceroy shares (52,542,397 Yamana common shares)	 	509,842
	Fair value of options and warrants issued	 	35,230
	Estimated transaction costs	 	4,075
	 	 	

	Purchase consideration	 	549,147
	 	 	

The
purchase price was allocated as follows: 

	 
	 	$
	 
	Net working capital acquired	 	53,881	 
	Property plant and equipment, net	 	1,666	 
	Mineral properties	 	661,094	 
	Other assets	 	2,794	 
	Future income tax liability	 	(170,288	)
	 	 	
	 
	 	 	549,147	 
	 	 	
	 

6.     EFFECT OF TRANSACTIONS ON THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS  

The
pro forma consolidated financial statements incorporate the following pro forma assumptions: 

	(a)
	Meridian assumptions

	(i)
	The
assumption that Yamana acquires 100% of the outstanding common shares of Meridian as a result of the Third Offer. As per Note 3, this gives rise to an
increase to fair value of assets and related future income tax liabilities as follows: 

	 
	 	$
	 
	Mineral property, plant and equipment	 	1,956,770	 
	Goodwill	 	1,728,414	 
	Future income tax liabilities	 	(684,869	)
	 	 	
	 
	 	 	3,000,315	 
	Book value of assets	 	403,091	 
	 	 	
	 
	Total purchase consideration	 	3,403,406	 
	 	 	
	 

	(ii)
	The
assumption that all of the stock options of Meridian that were outstanding are exercised and converted into Meridian common shares for proceeds of $11,491, which
are acquired by Yamana pursuant to the Third Offer;

	(iii)
	The
pro forma consolidated financial statements include information from the financial statements of Meridian as at June 30, 2007 and for the six month
period ended June 30, 2007 and the year ended December 31, 2006. It has been assumed that asset classifications are consistent with those used by Yamana in their presentation and that
Meridian's accounting policies conform to those of Yamana;

	(iv)
	These
pro forma adjustments eliminate the historical equity accounts of Meridian;

	(v)
	This
pro forma adjustment reflects the issuance of 228.0 million shares of Yamana for $2,739,189 in connection with the Third Offer. This includes the
shares issuable in connection with the assumed exercise of Meridian stock options;

	(vi)
	This
assumption provides for the recording of expenses of the transaction totaling $20 million; 

A-11

 

	(vii)
	This
pro forma adjustment represents the estimated increase to depreciation, depletion and amortization expense (six months to June 30,
2007 — $48,400; year ended December 31, 2006 — $97,000) associated with the preliminary fair value adjustment of
approximately $1.4 billion allocated to mineral property, plant and equipment. Yamana has not completed an assessment of the fair values of assets and liabilities and the related business
integration plans and synergies. The ultimate purchase price allocation will include possible adjustments to the fair values of depreciable tangible assets, proven and probable reserves, reserves
related to current development projects, value beyond proven and probable reserves (referred to in this document as VBPP) and intangible assets after a full review has been completed. The concept of
VBPP is described in Financial Accounting Standards Board Emerging Issue Task Force Issue No. 04-3 ("EITF 04-3") and has been interpreted differently by mining
companies. Our preliminary adjustment to plant, equipment and development costs, as discussed below, includes VBPP attributable to mineralized material that Yamana believes could be brought into
production should market conditions warrant. Mineralized material is a mineralized body that has been delineated by appropriately spaced drilling and/or underground sampling to support reported
tonnage and average grade of metals. Such a deposit may not qualify as proven and probable reserves until legal and economic feasibility are concluded based upon a comprehensive evaluation of unit
costs, grade, recoveries and other material factors. Our preliminary adjustments to mineral property, plant, equipment and development costs do not include adjustments attributable to inferred mineral
resources or exploration potential referred to in the EITF 04-3 Working Group Report No. 1. We intend to allocate a portion of the purchase price to all VBPP,
including inferred mineral resources and exploration potential, in accordance with EITF 04-3 after performing a more thorough analysis to determine the fair value of
these assets. 

The
preliminary allocation of $1.4 billion to mineral property, plant, equipment and development costs is primarily based on a fair value assessment of estimated cash flows. Yamana has not
completed an assessment of the fair values of assets and liabilities and the related business integration plans and synergies. The ultimate purchase price allocation will include possible adjustments
to fair values of depreciable tangible assets, proven and probable reserves, reserves related to current development projects, mill and leach stockpiles, product inventories, VBPP and intangible
assets after a full review has been completed. 

For
the purpose of preparing the unaudited pro forma consolidated statements of operations, Yamana assumed an average estimated remaining useful life of 16 years for the El Penon Mine
and 7 years for the Minera Florida Mine, which was based on an analysis of publicly available information. A one-year change in the estimated useful life would have an approximate
$6 million impact on the pro forma depreciation, depletion and amortization expense on an annual basis. Additionally, for each $100 million that the final fair value of property,
plant, equipment and development costs differs from the pro forma fair value, related depreciation, depletion and amortization expense would increase or decrease by approximately
$7 million annually, assuming a weighted average 15-year life; and 

	(viii)
	It
has been assumed that Yamana drew down $650 million from existing credit facilities to finance the $644 million cash component of the acquisition of
Meridian. Interest expense has been recorded in the amount of $24.4 million and $48.8 million during the six month period ended June 30, 2007 and the year ended
December 31, 2006 respectively. Interest expense has been provided at 7.5%, which approximates the current rate under the facility and amortization of debt issue costs. A 1/8%
change to the effective interest rate would change the interest expense by $800.

	(b)
	Northern Orion assumptions

	(i)
	The
assumption that Yamana acquires 100% of the outstanding common shares of Northern Orion as a result of the transaction. As per Note 4 this gives rise to an
increase to fair value of assets and related future income tax liabilities as follows: 

	 
	 	$
	 
	Mineral properties	 	309,654	 
	Investment in Minera Alumbrera Ltd. ("Alumbrera")	 	240,000	 
	Goodwill	 	421,955	 
	Future income tax liabilities	 	(181,386	)
	 	 	
	 
	 	 	790,223	 
	Book value of assets	 	422,383	 
	 	 	
	 
	Total purchase consideration	 	1,212,606	 
	 	 	
	 

A-12

 

	(ii)
	These
pro forma adjustments eliminate the historical equity accounts of Northern Orion;

	(iii)
	This
pro forma adjustment reflects the issuance of 83.7 million shares of Yamana for $952,688 in connection with the Offer;

	(iv)
	The
assumption that, as at June 27, 2007, 12,567,500 stock options and 56,571,850 share purchase warrants of Northern Orion were outstanding and
were exchanged for 6,824,153 stock options and 30,718,515 share purchase warrants of Yamana with fair values of $35,403 and $207,515, respectively. We have assumed that all options vest
immediately upon completion of the transaction;

	(v)
	The
cash component of the Northern Orion acquisition is approximately $200 (Cdn$0.001 per common share of Northern Orion) and has not been reflected in these
pro forma financial statements;

	(vi)
	This
assumption provides for the recording of expenses of the transaction totaling $17 million; and

	(vii)
	This
pro forma adjustment represents the estimated increase to amortization expense (six months to June 30,
2007 — $13,300; year ended December 31, 2006 — $30,500) associated with the preliminary fair value adjustment of
approximately $240 million allocated to Alumbrera, resulting in a reduction to reported equity income. Fair value increases to non producing properties do not give rise to any pro forma
earnings adjustment. Yamana has not completed an assessment of the fair values of assets and liabilities and the related business integration plans and synergies. The ultimate purchase price
allocation will include possible adjustments to the fair values of Alumbrera, depreciable tangible assets, proven and probable reserves, reserves related to current development projects, value beyond
proven and probable reserves and intangible assets after a full review has been completed. The concept of VBPP is described in Financial Accounting Standards Board Emerging Issue Task Force Issue
No. 04-3 ("EITF 04-3") and has been interpreted differently by mining companies. Our preliminary adjustment to plant, equipment and development costs, as
discussed below, includes VBPP attributable to mineralized material that Yamana believes could be brought into production should market conditions warrant. Mineralized material is a mineralized body
that has been delineated by appropriately spaced drilling and/or underground sampling to support reported tonnage and average grade of metals. Such a deposit may not qualify as proven and probable
reserves until legal and economic feasibility are concluded based upon a comprehensive evaluation of unit costs, grade, recoveries and other material factors. Our preliminary adjustments to property,
plant, equipment and development costs do not include adjustments attributable to inferred mineral resources or exploration potential referred to in the EITF 04-3 Working
Group Report No. 1. We intend to allocate a portion of the purchase price to all VBPP, including inferred mineral resources and exploration potential, in accordance with
EITF 04-3 after performing a more thorough analysis to determine the fair value of these assets. 

The
preliminary allocation of $240 million to Alumbrera is primarily based on a fair value assessment of estimated cash flows. Yamana has not completed an assessment of the fair values of
assets and liabilities and the related business integration plans and synergies. The ultimate purchase price allocation will include possible adjustments to fair values after a full review has
been completed. 

For
the purpose of preparing the unaudited pro forma condensed combined statements of operations, Yamana assumed an estimated remaining useful life of 10 years for the Alumbrera Mine,
which was based on an analysis of publicly available information. A one-year change in the estimated useful life would have an approximate $20 million impact on the pro forma
equity accounted earnings on an annual basis. Additionally, for each $100 million that the final fair value of Alumbrera costs differs from the pro forma fair value, related equity
accounted earnings would increase or decrease by approximately $10 million annually, assuming a 10-year life. 

	(c)
	Viceroy and DSM assumptions

	(i)
	Including
operating expenses for Viceroy for the period from October 1 to October 13, 2006;

	(ii)
	Depreciation,
amortization and depletion expense 

It
is assumed that the addition to mineral properties related to the excess of the purchase price over the assets acquired of DSM would be amortized on a unit-of-production
basis over the proven, probable and possible reserves. In relation to DSM, the additional amortization for year ended December 31, 2006 would be $2,371; and 

A-13

 

	(iii)
	Tax
effect 

The
tax effect of the additional mineral property amortization of DSM above for the year ended December 31, 2006 would be a pro forma recovery of $806. 

	(d)
	Other assumptions

	(i)
	Transaction
costs of Northern Orion, estimated to be in the amount of $20 million, have been given effect in these pro forma financial statements. Yamana
has no knowledge of the costs incurred by Meridian with respect to this transaction; and

	(ii)
	The
pro forma balance sheet reflects adjustments for future income taxes based on temporary differences between assigned values of assets and liabilities
acquired and of estimated tax basis (Meridian — $684,869 and Northern Orion — $181,386). Adjustments to the pro forma
statements of operations have an associated tax effect when it is appropriate. All tax effects have been calculated with reference to the statutory rate in effect during the current periods for which
a statement of operations is provided. 

7.     YAMANA SHARES OUTSTANDING AND LOSS PER SHARE  

The
average number of shares used in the computation of pro forma basic and diluted earnings (loss) per share has been determined as follows: 

	 
	 	June 30,

2007
	 	December 31,

2006

	Basic	 	 	 	 
	Weighted average shares outstanding for the period	 	353,611,000	 	276,617,000
	Issued to acquire Viceroy	 	—	 	41,742,000
	Issued to acquire DSM	 	—	 	16,822,000
	 	 	
	 	

	Weighted average pro forma shares of Yamana	 	353,611,000	 	335,181,000
	Issued to acquire Meridian	 	227,957,530	 	227,911,395
	 	 	
	 	

	 	 	581,568,530	 	563,092,395
	Issued to acquire Northern Orion	 	83,669,330	 	83,669,330
	 	 	
	 	

	Pro forma basic weighted average shares of Yamana	 	665,237,860	 	646,761,725
	 	 	
	 	

	 
	 	June 30,

2007
	 	December 31,

2006

	Diluted	 	 	 	 
	Weighted average pro forma shares of Yamana	 	353,611,000	 	335,181,000
	Issued to acquire Meridian	 	227,957,530	 	227,911,395
	Dilutive effect of Yamana options and warrants	 	13,297,000	 	11,967,500
	 	 	
	 	

	 	 	594,865,530	 	575,059,895
	Issued to acquire Northern Orion	 	83,669,330	 	83,669,330
	Dilutive effect of Northern Orion options and warrants	 	18,414,423	 	18,414,423
	 	 	
	 	

	Pro forma diluted weighted average shares of Yamana	 	696,949,283	 	677,143,648
	 	 	
	 	

A-14

 

8.     DIFFERENCES IN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES BETWEEN CANADA AND THE UNITED STATES OF AMERICA  

These
pro forma consolidated financial statements have been prepared in accordance with Canadian GAAP. The pro forma financial statements prepared in accordance with US GAAP as at
December 31, 2006 and for the year then ended are summarized as follows: 

 Pro forma consolidated balance sheet in accordance with US GAAP  

	 
	 	Yamana Gold Inc.
	 	Meridian

Gold Inc.
	 	Northern Orion

Resources Inc.
	 	Pro forma

adjustments
	 	Yamana

consolidated

pro forma
	 
	 
	 	$

	 	$

	 	$

	 	$

	 	$

	 
	 
	 	

(As reported)

	 	

(As reported)

	 	

(As reported)

	 	 
	 	 
	 
	Assets	 	 	 	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 	 	 	 
	 	Cash and cash equivalents	 	69,680	 	92,800	 	178,956	 	(2,726	)	338,710	 
	 	Short term investments	 	—	 	84,000	 	—	 	—	 	84,000	 
	 	Restricted cash	 	—	 	13,800	 	—	 	—	 	13,800	 
	 	Accounts receivable, advances and deposits	 	30,280	 	6,200	 	144	 	—	 	36,624	 
	 	Inventory	 	51,216	 	7,000	 	—	 	—	 	58,216	 
	 	Other current assets	 	2,248	 	16,200	 	1,460	 	—	 	19,908	 
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	153,424	 	220,000	 	180,560	 	(2,726	)	551,258	 
	Assets under construction	 	224,650	 	—	 	—	 	—	 	224,650	 
	Mineral properties and property, plant and equipment	 	1,583,490	 	276,100	 	34,037	 	2,452,661	 	4,346,288	 
	Other assets	 	122,641	 	31,900	 	360	 	—	 	154,901	 
	Goodwill	 	55,000	 	—	 	—	 	2,200,318	 	2,255,318	 
	Equity investment in Minera Alumbrera Ltd.	 	—	 	—	 	128,914	 	211,564	 	340,478	 
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	2,139,205	 	528,000	 	343,871	 	4,861,817	 	7,872,893	 
	 	 	
	 	
	 	
	 	
	 	
	 
	
Liabilities	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	Current liabilities	 	100,461	 	45,500	 	3,106	 	37,000	 	186,067	 
	Long-term liabilities	 	 	 	 	 	 	 	 	 	 	 
	 	Asset retirement obligations	 	18,720	 	—	 	1,155	 	—	 	19,875	 
	 	Future income tax liabilities	 	325,450	 	17,600	 	—	 	912,406	 	1,255,456	 
	 	Long-term liabilities	 	17,049	 	104,000	 	—	 	650,000	 	771,049	 
	 	Royalty and net proceeds interest payable	 	—	 	—	 	12,826	 	—	 	12,826	 
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	461,680	 	167,100	 	17,087	 	1,599,406	 	2,245,273	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Non-controlling interest	 	—	 	15,300	 	—	 	—	 	15,300	 
	 	 	
	 	
	 	
	 	
	 	
	 
	
Shareholders' equity	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	Capital stock	 	 	 	 	 	 	 	 	 	 	 
	 	Common stock	 	1,619,850	 	402,000	 	288,682	 	3,001,195	 	5,311,727	 
	 	Shares to be issued	 	42,492	 	—	 	—	 	—	 	42,492	 
	 	Warrants	 	—	 	—	 	11,926	 	195,589	 	207,515	 
	 	Additional paid-in capital including contributed surplus	 	129,215	 	7,000	 	12,434	 	15,969	 	164,618	 
	 	Accumulated other comprehensive income	 	(4,632	)	53,500	 	2,029	 	(55,529	)	(4,632	)
	(Deficit) surplus	 	(109,400	)	(116,900	)	11,713	 	105,187	 	(109,400	)
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	1,677,525	 	345,600	 	326,784	 	3,262,411	 	5,612,320	 
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	2,139,205	 	528,000	 	343,871	 	4,861,817	 	7,872,893	 
	 	 	
	 	
	 	
	 	
	 	
	 

A-15

 

 Pro forma results of operations for the year ended December 31, 2006 in accordance with US GAAP  

	 
	 	$
	 
	Net loss (income) as reported under US GAAP as per 2006 consolidated financial statements	 	 	 
	 	Yamana net loss	 	(88,072	)
	 	Meridian net income	 	49,200	 
	 	Northern Orion net income	 	73,171	 
	DSM net loss for the three months ended March 31, 2006 in accordance with US GAAP	 	(12,993	)
	Viceroy net loss from January 1, 2006 to October 13, 2006 in accordance with US GAAP	 	(27,894	)
	Interest expense on credit facilities (Note 6 (a)(viii))	 	(48,750	)
	Additional depletion expense on mineral properties, and property, plant and equipment	 	(97,000	)
	Additional amortization expense on equity investment in Minera Alumbrera Ltd.	 	(30,500	)
	Income tax impact of the above adjustments	 	61,708	 
	 	 	
	 
	Pro forma net loss — US GAAP	 	(121,130	)
	 	 	
	 
	Other comprehensive (loss) income	 	 	 
	 	Unrealized loss on available-for-sale securities	 	(3,907	)
	 	Future employee benefits	 	(1,000	)
	 	Foreign currency translation adjustments	 	(100	)
	 	 	
	 
	Pro forma comprehensive loss	 	(126,137	)
	 	 	
	 
	Loss per share — basic	 	(0.19	)
	Comprehensive loss per share — basic	 	(0.20	)
	 	 	
	 

The
pro forma financial information can be reconciled as follows: 

	 
	 	As at December 31, 2006
	 
	 
	 	$

	 
	Total pro forma assets	 	 	 
	 	Under Canadian GAAP	 	7,914,844	 
	 	Exploration costs capitalized for Canadian GAAP	 	(40,630	)
	 	Unrealized loss on investments	 	(4,526	)
	 	Additional depletion charges	 	(7,404	)
	 	Future income taxes	 	10,609	 
	 	 	
	 
	 	Under US GAAP	 	7,872,893	 
	 	 	
	 
	Total pro forma liabilities	 	 	 
	 	Under Canadian GAAP	 	2,248,195	 
	 	Future income taxes	 	(2,922	)
	 	 	
	 
	 	Under US GAAP	 	2,245,273	 
	 	 	
	 
	Pro forma non-controlling interest under Canadian and US GAAP	 	15,300	 
	 	 	
	 
	Total pro forma shareholders' equity	 	 	 
	 	Under Canadian GAAP	 	5,651,349	 
	 	Adjustments to mineral property costs	 	(34,503	)
	 	Net unrealized loss on investment	 	(4,526	)
	 	 	
	 
	 	Under US GAAP	 	5,612,320	 
	 	 	
	 

A-16

 

	 
	 	Year ended

December 31, 2006
	 
	 
	 	$

	 
	Loss on a pro forma basis under Canadian GAAP	 	(68,053	)
	 	Write-off of deferred mineral property costs	 	(57,212	)
	 	Adjustment for depreciation, amortization and depletion	 	(5,882	)
	 	Pre-operating costs	 	1,478	 
	 	Other	 	(70	)
	 	Tax effect of reconciling items	 	8,609	 
	 	 	
	 
	Net loss on a pro forma basis under US GAAP	 	(121,130	)
	 	 	
	 

If
the transaction with Northern Orion is not completed, the pro forma net loss in accordance with US GAAP would be approximately $173,001. 

Significant
differences between Canadian GAAP pro forma information and US GAAP pro forma information reflect the undernoted. 

	(i)
	Mineral properties — exploration costs and depletion

Under
Canadian GAAP, resource property acquisition costs and exploration costs may be deferred and amortized to the extent they meet certain criteria. Capitalized costs under Canadian GAAP are
amortized on a unit-of-production basis based on proven, probable and possible reserves. 

Under
US GAAP, exploration costs must be expensed as incurred unless the resource properties have proven and probable reserves at which time costs incurred to bring the mine into production are
capitalized as development costs. Capitalized costs are then amortized on a unit-of-production basis based on proven and probable reserves. An additional depletion and
exploration expense is required to be recognized under US GAAP. 

	(ii)
	Pre-operating costs

US
GAAP requires pre-operating costs to be expensed as incurred. Canadian GAAP allows pre-operating costs to be capitalized until commercial production is established. 

	(iii)
	Investments

Under
US GAAP, items such as unrealized gains and losses on investments classified as available for sale are required to be shown separately in the derivation of comprehensive income. Under US GAAP,
investments classified as available for sale are carried at the quoted market values. Under Canadian GAAP, gains and losses on marketable equity securities are noted in the footnotes and recognized in
the statement of operations only when the investment is sold. 

	(iv)
	Comprehensive loss

In
May 1993, the FASB issued SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities
("SFAS No. 115"). Under SFAS No. 115, management determines the appropriate classification of investments in debt and equity securities at the time of purchase
and re-evaluates such designation as of each balance sheet date. Under SFAS No. 115, equity securities and long-term investments are classified as
available-for-sale securities and accordingly, the Company is required to include the net unrealized holding gain or loss on these securities in other comprehensive income.
SFAS No. 130, Reporting Comprehensive Income, establishes standards for the reporting and display of comprehensive income and its components
(revenue, expenses, gains and losses) in a full set of general purpose financial statements. 

	(v)
	Pension costs

In
September 2006, the FASB issued FAS 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, which requires
the recognition in the Company's financial statements the funding status of a benefit plan and that the plan assets and benefit obligations be measured as of the date of the employer's fiscal
year-end statement of financial position. Under FAS 158 

A-17

 

the
Company is required to recognize unamortized actuarial gains and losses, prior service cost and remaining transitional amounts not recognized under Canadian GAAP, with the offset to comprehensive
income. 

Management
has not provided a reconciliation to US GAAP for the financial position at June 30, 2007 and the results of operations for the six month period ended June 30, 2007. The
information required to complete the reconciliation is not available. In the opinion of management, the material variation in accounting principles, practices and methods at June 30, 2007 and
for the six month period then ended would be consistent with those disclosed with respect to December 31, 2006. In addition, Yamana, Northern Orion and Meridian were required to adopt
FIN No. 48, Accounting for Uncertainty in Tax Positions, an Interpretation of FASB Statement No. 109, with effect from
January 1, 2007. Management cannot determine if adoption of FIN No. 48 will give rise to a significant or material Canadian-United States GAAP difference due to limited
access to information as at the time of preparation of these pro forma financial statements. 

9.     SUPPLEMENTARY INFORMATION  

	(a)
	Book value per share(1) 

	 
	 	Yamana and Meridian
	 	Yamana, Meridian and Northern Orion

	In accordance with:
 
	 	June 30, 2007
	 	December 31, 2006
	 	June 30, 2007
	 	December 31, 2006

	 
	 	$

	 	$

	 	$

	 	$

	Canadian GAAP	 	4.78	 	N/A	 	5.34	 	N/A
	US GAAP	 	N/A	 	4.56	 	N/A	 	5.12

	(1)
	Calculated
based on common shares outstanding at the respective dates. Book value is determined by deducting total liabilities from total tangible assets.

 

	(b)
	Ratio of earnings to fixed charges

	 
	 	Yamana and Meridian
	 	Yamana, Meridian and

Northern Orion
	 
	In accordance with:
 
	 	June 30,

2007
	 	December 31,

2006
	 	June 30,

2007
	 	December 31,

2006
	 
	Canadian GAAP	 	 	 	 	 	 	 	 	 	 	 
	 	Ratio	 	5.17	 	 	—	 	5.97	 	 	—	 
	 	Deficiency	 	—	 	($	170,031	)	—	 	($	111,750	)
	US GAAP	 	 	 	 	 	 	 	 	 	 	 
	 	Ratio	 	N/A	 	 	—	 	N/A	 	 	—	 
	 	Deficiency	 	N/A	 	($	217,009	)	N/A	 	($	176,338	)

A-18

  

 
 

YAMANA GOLD INC.    
    
    PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS OF YAMANA GOLD INC.    
    
    Adjusted for recent acquisitions
  Year ended December 31, 2006
  (Unaudited)
  (Expressed
in thousands of U.S. dollars)    
    
    Schedule 1    
    

	 
	 	Yamana Gold Inc.
	 	Desert Sun Mining Corp.
	 	Viceroy Exploration Ltd.
	 	Pro forma adjustments
	 	Pro forma Yamana Gold Inc.
	 
	 
	 	$

	 	$

	 	$

	 	$

	 	$

	 
	 
	 	 
	 	(3 months)

(Schedule 2)

	 	(9 months)

(Schedule 3)

	 	(Note 6 (c))

	 	 
	 
	Sales	 	169,206	 	9,486	 	—	 	—	 	178,692	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Cost of sales	 	(100,004	)	(6,126	)	—	 	—	 	(106,130	)
	Depreciation, amortization and depletion	 	(33,510	)	(1,403	)	(30	)	(2,377	)	(37,320	)
	Accretion of asset retirement obligation	 	(636	)	—	 	—	 	—	 	(636	)
	 	 	
	 	
	 	
	 	
	 	
	 
	Mine operating earnings (loss)	 	35,056	 	1,957	 	(30	)	(2,377	)	34,606	 
	Corporate administration	 	(24,350	)	(1,995	)	(1,693	)	(568	)	(28,606	)
	Take-over bid expenses	 	—	 	—	 	(1,230	)	(2,824	)	(4,054	)
	Foreign exchange gain (loss)	 	343	 	4,884	 	(20	)	9	 	5,216	 
	Loss on impairment of mineral properties	 	(3,675	)	—	 	—	 	—	 	(3,675	)
	Stock-based compensation	 	(41,099	)	(1,542	)	(2,401	)	—	 	(45,042	)
	 	 	
	 	
	 	
	 	
	 	
	 
	Operating (loss) earnings	 	(33,725	)	3,304	 	(5,374	)	(5,760	)	(41,555	)
	Investment and other business income	 	5,328	 	245	 	1,638	 	212	 	7,423	 
	Interest expense	 	(28,846	)	(89	)	—	 	—	 	(28,935	)
	Unrealized loss on commodity contracts	 	(35,773	)	—	 	—	 	—	 	(35,773	)
	Loss arising from assets sold	 	(2,186	)	—	 	—	 	—	 	(2,186	)
	Write-off of other receivables and other business loss	 	—	 	(12,299	)	—	 	—	 	(12,299	)
	 	 	
	 	
	 	
	 	
	 	
	 
	Loss before income taxes	 	(95,202	)	(8,839	)	(3,736	)	(5,548	)	(113,325	)
	Income tax recovery	 	25,039	 	96	 	—	 	806	 	25,941	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Net loss	 	(70,163	)	(8,743	)	(3,736	)	(4,742	)	(87,384	)
	 	 	
	 	
	 	
	 	
	 	
	 

A-19

  

 
 

YAMANA GOLD INC.    
    
    STATEMENT OF OPERATIONS OF DESERT SUN MINING CORP.    
    
    Three month period ended March 31, 2006
  (Expressed in thousands of dollars)    
    
    Schedule 2

    

	 
	 	As reported Cdn$
	 	US$
	 
	 
	 	 
	 	(Note 2)

	 
	Sales	 	10,953	 	9,486	 
	 	 	
	 	
	 
	Cost of sales	 	(7,074	)	(6,126	)
	Depreciation, amortization and depletion	 	(1,620	)	(1,403	)
	 	 	
	 	
	 
	Mine operating earnings	 	2,259	 	1,957	 
	Corporate administration	 	(2,304	)	(1,995	)
	Foreign exchange gain	 	5,639	 	4,884	 
	Stock-based compensation	 	(1,780	)	(1,542	)
	 	 	
	 	
	 
	Operating earnings	 	3,814	 	3,304	 
	 	 	
	 	
	 
	Investment and other business income	 	283	 	245	 
	Interest expense	 	(103	)	(89	)
	Write-off of other receivables and other business loss	 	(14,201	)	(12,299	)
	 	 	
	 	
	 
	Loss before income taxes	 	(10,207	)	(8,839	)
	Income tax recovery	 	111	 	96	 
	 	 	
	 	
	 
	Net loss	 	(10,096	)	(8,743	)
	 	 	
	 	
	 

A-20

 
 
 

YAMANA GOLD INC.    
    
    STATEMENT OF OPERATIONS OF VICEROY EXPLORATION LTD.    
    
    Nine month period ended September 30, 2006
  (Unaudited)
  (Expressed in thousands of dollars)    
    

   Schedule 3    
    

	 
	 	As reported Cdn$
	 	US$
	 
	 
	 	 
	 	(Note 2)

	 
	Depreciation, amortization and depletion	 	(33	)	(30	)
	 	 	
	 	
	 
	Corporate administration	 	(1,918	)	(1,693	)
	Take-over bid expenses	 	(1,394	)	(1,230	)
	Foreign exchange loss	 	(23	)	(20	)
	Stock-based compensation	 	(2,720	)	(2,401	)
	 	 	
	 	
	 
	Operating loss	 	(6,088	)	(5,374	)
	Investment and other business income	 	1,856	 	1,638	 
	 	 	
	 	
	 
	Net loss for the period	 	(4,232	)	(3,736	)
	 	 	
	 	
	 

A-21

Any questions and requests for assistance may be directed to

Kingsdale Shareholder Services Inc., Innisfree M&A Incorporated and the Dealer Managers for the Offer

at the telephone numbers and locations set out below: 

	

 

 

The Exchange Tower

130 King Street West, Suite 2950, P.O. Box 361

Toronto, Ontario

M5X 1E2	

 INNISFREE M&A
 INCORPORATED

501 Madison Avenue, 20th Floor

New York, New York 10022

	

 North American Toll Free Phone:

 1-866-879-7644
  Email: contactus@kingsdaleshareholder.com

Facsimile: 416-867-2271

Toll Free Facsimile: 1-866-545-5580

Outside North America, Banks and Brokers

Call Collect: 416-867-2272	

 Noth American Toll Free Phone:
  1-888-750-5834

Outside North America, Banks and Brokers

Call Collect: 212-750-5833

The Dealer Managers for the Offer May be Contacted at

the Following Telephone Numbers and Location:  

	In Canada:	In the United States:
	
 	

 
	Genuity Capital Markets

Scotia Plaza, Suite 4900

40 King Street West, PO Box 1007

Toronto, ON M5H 3Y2	Genuity Capital Markets USA Corp.

717 Fifth Avenue, Suite 1403

New York, New York 10022
	
 Telephone: 416-603-6000

Toll Free: 877-603-6001

Fax: 416-603-3099	

Telephone: 212-644-0001

Fax: 212-644-1341
	
 	

 
	
Canaccord Capital Corporation

BCE PLACE

161 Bay Street, Suite 2900

P.O. Box 516

Toronto, ON

Canada M5J 2S1

Telephone: 416-869-7368

Toll Free (Canada): 1-800-382-9280

Toll Free (US): 1-800-896-1058	
Canaccord Adams Inc.

99 High Street, Suite 1200

Boston, MA 02110

United States

Telephone: 617-371-3900

Toll Free: 1-800-225-6201

Fax: 617-371-3798

QuickLinks

NOTICE TO SHAREHOLDERS IN THE UNITED STATES

NOTICE TO SHAREHOLDERS IN THE UNITED KINGDOM

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

INFORMATION CONCERNING MERIDIAN

INFORMATION CONCERNING NORTHERN ORION

NOTICE TO HOLDERS OF OPTIONS

REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES

NOTE CONCERNING MINERAL RESOURCE CALCULATIONS

EXCHANGE RATES

NOTICE OF VARIATION AND EXTENSION

"Summary of Pro Forma Consolidated Financial Information of Yamana (in thousands of US dollars except for per share information)

AUDITORS' CONSENTS

APPROVAL AND CERTIFICATE OF YAMANA GOLD INC.

SCHEDULE "A" TABLE OF CONTENTS

YAMANA GOLD INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Six month period ended June 30, 2007 (Unaudited) (Expressed in thousands of U.S. dollars except per share amounts)

YAMANA GOLD INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Year ended December 31, 2006 (Unaudited) (Expressed in thousands of U.S. dollars except per share amounts)

YAMANA GOLD INC. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS OF YAMANA GOLD INC. Adjusted for recent acquisitions Year ended December 31, 2006 (Unaudited) (Expressed in thousands of U.S. dollars) Schedule
1

YAMANA GOLD INC. STATEMENT OF OPERATIONS OF DESERT SUN MINING CORP. Three month period ended March 31, 2006 (Expressed in thousands of dollars) Schedule 2

YAMANA GOLD INC. STATEMENT OF OPERATIONS OF VICEROY EXPLORATION LTD. Nine month period ended September 30, 2006 (Unaudited) (Expressed in thousands of dollars) Schedule 3

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