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Exhibit 4.13  

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.

August 14, 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$4.00 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 (the "Original Offer") dated July 19, 2007 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, among other things: (i) increase the cash component of the consideration offered for Shares by Cdn$0.85 per Share;
(ii) extend the Original Offer to 8:00 p.m. (Toronto time) on September 7, 2007; (iii) delete the condition to the Original Offer that Yamana be provided with access to
non-public information and be satisfied that no state of facts exists that would have a material adverse effect on Meridian; and (iv) provide additional disclosure with respect to certain
matters, including certain financial information. 

THE OFFER HAS BEEN AMENDED AND EXTENDED AND IS NOW OPEN FOR ACCEPTANCE UNTIL 8:00 P.M. (TORONTO TIME) ON SEPTEMBER 7, 2007, UNLESS FURTHER EXTENDED
OR WITHDRAWN.  

This Notice of Variation and Extension should be read in conjunction with the Original Offer and accompanying circular (the "Original
Circular") dated July 19, 2007 (which together constitute 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 Circular, the Letter of Transmittal, the Notice of Guaranteed Delivery and this Notice of Variation and Extension mean the Original Offer as amended hereby, and
all references in such documents to the "Circular" mean the Original Circular as amended hereby. 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, 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 August 30, 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, as amended by this Notice of Variation and Extension, 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 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, as amended by this Notice of Variation and Extension 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 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 

i

 

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, as amended by this Notice of Variation and Extension, 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
an 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 (as defined) that is not an Eligible UK Shareholder
(as hereinafter defined). 

        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, the Depositary and the 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 or the Depositary and Information Agent at their respective
addresses shown on the last page of this document. 

        This document does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not
being made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Offeror may, in its sole discretion, take such action as it may deem necessary to extend the Offer to Shareholders in any such jurisdiction.

ii

 

 
 

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION    
    

        This Offer and Circular, including the Schedules attached hereto, the pro forma consolidated financial statements of the Offeror and some of the
information incorporated by reference in this Offer and Circular, contains "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 and Meridian (collectively, the
"Combined Company") 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, that the shareholders of Northern Orion will approve
the Northern Orion Transaction, that all required third party regulatory and governmental approvals to the transactions will be obtained 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, as amended by this Notice of Variation and Extension, 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, as amended by this Notice of Variation and Extension, and has not confirmed the accuracy and completeness of the information in respect of Meridian contained in the Offer and
Circular, as amended by this Notice of Variation and Extension. 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 Resources Inc. ("Northern Orion") contained in the Offer and Circular, as
amended by this Notice of Variation and Extension, including information incorporated herein 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, as amended by this Notice of Variation and Extension, 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, as amended by this Notice of Variation and Extension, 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. 

iv

 

 
 

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$" in this Notice of Variation and Extension refer to United States dollars. Yamana's financial statements that are incorporated by reference in the Offer and Circular, as amended by this
Notice of Variation and Extension, are reported in United States dollars and are prepared in accordance with Canadian GAAP. Financial statements of Desert Sun Mining Corp.
("DSM") that are incorporated by reference in the Offer and Circular, as amended by this Notice of Variation and Extension, are reported in Canadian
dollars and are prepared in accordance with Canadian GAAP. Financial statements of Northern Orion that are incorporated by reference in the Offer and Circular, as amended by this Notice of Variation
and Extension, 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, 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 in the Offer and Circular, as amended by this Notice of Variation and Extension, 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 this 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. 

v

 

 
 

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 August 13, 2007, the noon rate of exchange as reported by the Bank of Canada for one US dollar expressed in Canadian dollars
was $1.0509. 

vi

  

 
 

NOTICE OF VARIATION AND EXTENSION  
  

        August 14, 2007 

TO: THE SHAREHOLDERS OF MERIDIAN  

        This Notice of Variation and Extension amends and supplements the Offer and Circular dated July 19, 2007 pursuant to which the Offeror is offering to
purchase, on the terms and subject to the conditions contained therein, 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
as amended hereby and all references in such documents to the "'Circular" mean the Original Circular as amended hereby. 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 Offer Price  

        The Offeror has varied the Offer by increasing it from 2.235 Yamana Common Shares and Cdn.$3.15 in cash for each Share to 2.235 Yamana Common Shares
and Cdn.$4.00 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 price now represents a premium of approximately 26.3%. The Offer price also now represents a premium of approximately 27.7% 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 price for their Shares. 

2.     Extension of the Offer  

        The Offeror has amended the Original Offer by extending the time for acceptance of the Offer to 8:00 p.m. (Toronto time) on September 7, 2007,
unless the Offer is further extended or withdrawn. Accordingly, the definitions of "Expiry Date" in the "Definitions" section of the Offer and Circular (found at page 22 of the Offer and
Circular) is deleted and replaced by the following: 

""Expiry
Date" means September 7, 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 August 27, 2007 in the Offer and Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery are amended to refer to
September 7, 2007. 

1

 

3.     Deletion of Meridian Due Diligence Condition of the Offer  

        The following subsection 4(m) of the Offer, "Conditions of the Offer" (found at page 35 of the Offer and Circular), is deleted in
its entirety: 

"(m)
the Offeror shall have been provided with, or been given access to, in a timely manner, all non-public information and data relating to Meridian, including without limitation access
to Meridian's mineral project sites, and the Offeror shall be satisfied upon completion of its review of such information and data and upon the advice of its legal counsel, that such information and
data does not reveal a change, event, occurrence or state of facts that is or would reasonably be expected to have a Material Adverse Effect on Meridian or any of its affiliates, either individually
or collectively, whether or not the Offer were completed". 

4.     Amendments to Pro Forma Financial Information  

        The Summary Historical and Unaudited Pro Forma Consolidated Financial Information in the Summary of the Offer (found at pages 15-18 of
the Offer and Circular) and Section 10 of the Circular, "Summary Historical and Unaudited Pro Forma Consolidated Financial Information" (found at pages 56-59 of the
Offer and Circular), are deleted and replaced by the following: 

 
 

"SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
  CONSOLIDATED FINANCIAL INFORMATION    
    

        The tables set out below include a summary of (i) the Offeror's historical consolidated financial information for the years ended December 31, 2006
and 2005 and the ten months ended December 31, 2004 and for the six months ended June 30, 2007 and (ii) unaudited pro forma consolidated financial information for the
Offeror for the six months ended June 30, 2007 and for the year ended December 31, 2006. The historical financial information for the years ended December 31, 2006 and 2005 and
for the ten months ended December 31, 2004 has been derived from the Offeror's audited consolidated financial statements. The historical financial information for the six months ended
June 30, 2007 has been derived from the Offeror's unaudited consolidated financial statements. The unaudited pro forma consolidated financial information for the Offeror has been derived
from: (i) the unaudited comparative interim consolidated financial statements of the Offeror, Northern Orion and Meridian, respectively, for the six months ended June 30, 2007; of DSM
for the three months ended March 31, 2006; and of Viceroy for the nine months ended September 30, 2006; and (ii) the audited comparative consolidated financial statements of the
Offeror, Northern Orion and Meridian, respectively, for the year ended December 31, 2006, and such other supplementary information as was available to the Offeror and considered necessary to
give pro forma effect to the acquisition of each of Northern Orion and Meridian by the Offeror. 

        The
summary unaudited pro forma consolidated financial statement information set forth below should be read in conjunction with the unaudited  pro forma consolidated financial statements of the
Offeror, the accompanying notes thereto included in the Circular. The summary unaudited
pro forma consolidated financial statement information for the Offeror gives effect to the proposed acquisition of Northern Orion and Meridian as if each had occurred as at June 30, 2007
for the purposes of the pro forma consolidated balance sheet information and as at January 1, 2006 for the purposes of the pro forma consolidated statements of income for the
periods ended December 31, 2006 and June 30, 2007. In preparing the unaudited pro forma consolidated financial statement information, management of the Offeror has made certain
assumptions that affect the amounts reported in the unaudited pro forma consolidated financial statement information. The summary unaudited pro forma consolidated financial information
is not intended to be indicative of the results that would actually have occurred, or the results expected in future periods, had the events reflected herein occurred on the dates indicated. Actual
amounts recorded upon consummation of the transaction contemplated by the Northern Orion Transaction and Offer will differ from the pro forma information presented below. No attempt has been
made to calculate or estimate the effect of harmonization of accounting policies or practices between the Offeror and each of Northern Orion and Meridian due to the limited publicly available
information. Any potential synergies that may be realized after consummation of the transaction have been excluded from the unaudited pro forma financial statement information. The unaudited
pro forma consolidated financial statement information set forth below is extracted from and should be read in conjunction with the unaudited pro forma 

2

 

consolidated
financial statements of the Offeror and accompanying notes included in Schedule "A" to this Notice of Variation and Extension. 

 
 

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

	 
	 	Six months ended June 30,
	 	Twelve months ended December 31,
	 	 
	 
	Canadian GAAP
 
	 	Ten months ended December 31, 2004
	 
	 	2007
	 	2006
	 	2006
	 	2005
	 
	Consolidated Statement of Operations	 	 	 	 	 	 	 	 	 	 	 
	Sales	 	328,800	 	58,956	 	169,206	 	46,038	 	32,298	 
	Mine operating earnings	 	183,034	 	16,660	 	35,056	 	8,569	 	10,377	 
	Operating earnings (loss)	 	144,585	 	(23,969	)	(33,725	)	(3,775	)	3,808	 
	Net earnings for the period (loss)	 	80,186	 	(64,219	)	(70,163	)	(4,111	)	2,783	 
	Earnings (loss) per share — basic	 	0.23	 	(0.27	)	(0.25	)	(0.03	)	0.03	 
	— diluted	 	0.22	 	(0.27	)	(0.25	)	(0.03	)	0.02	 
	
Consolidated Balance Sheet Data	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	Cash and cash equivalents	 	88,956	 	 	 	69,680	 	151,633	 	87,054	 
	Other current assets	 	178,188	 	 	 	83,780	 	14,402	 	9,107	 
	Property, plant and equipment	 	370,144	 	 	 	134,792	 	24,992	 	17,938	(3)
	Assets under construction	 	1,060	 	 	 	224,650	 	158,717	 	12,085	 
	Mineral properties	 	1,556,187	 	 	 	1,496,732	 	61,506	 	38,256	(3)
	Other non-current assets	 	212,644	 	 	 	171,558	 	51,529	 	7,253	 
	Total assets	 	2,407,179	 	 	 	2,181,192	 	468,446	 	177,106	 
	Current liabilities	 	146,569	 	 	 	100,461	 	31,442	 	7,225	 
	Total long-term liabilities	 	430,303	 	 	 	364,141	 	122,030	 	9,572	 
	Book value per share	 	5.15	 	 	 	—	 	—	 	—	 
	Ratio of earnings to fixed charges	 	 	 	 	 	 	 	 	 	 	 
	 	Ratio(1)	 	58.44	 	 	 	—	 	—	 	—	 
	 	Deficiency(2)	 	—	 	 	 	(100,358	)	(17,059	)	—	 

	 
	 	Twelve months ended December 31,
	 	 
	 
	US GAAP
 
	 	Ten months ended December 31, 2004
	 
	 	2006
	 	2005
	 
	Consolidated Statement of Operations	 	 	 	 	 	 	 
	Sales	 	169,206	 	46,038	 	32,298	 
	Operating loss	 	(57,637	)	(17,109	)	(786	)
	Net loss for the period	 	(88,072	)	(12,911	)	(636	)
	Loss per share — basic	 	(0.32	)	(0.09	)	(0.01	)
	— diluted	 	(0.32	)	(0.09	)	(0.01	)
	
Consolidated Balance Sheet Data	
 	

 	
 	

 	
 	

 	
 
	Cash and cash equivalents	 	69,680	 	151,633	 	87,054	 
	Other current assets	 	83,744	 	14,536	 	9,164	 
	Property, plant and equipment	 	134,792	 	24,992	 	17,938	(3)
	Assets under construction	 	224,650	 	158,717	 	12,085	 
	Mineral properties	 	1,448,698	 	37,215	 	27,376	(3)
	Other non-current assets	 	177,641	 	56,135	 	7,253	 
	Total assets	 	2,139,205	 	448,895	 	166,283	 
	Current liabilities	 	100,461	 	31,442	 	7,225	 
	Total long-term liabilities	 	361,219	 	119,108	 	6,578	 
	Book value per share	 	4.87	 	—	 	—	 
	Ratio of earnings to fixed charges	 	 	 	 	 	 	 
	 	Ratio(1)	 	—	 	—	 	—	 
	 	Deficiency(2)	 	(124,270	)	(30,393	)	—	 

3

 
 
 

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)	 	268,334	 	268,334	 	170,406	 	170,406
	Operating earnings	 	206,885	 	208,853	 	40,345	 	28,613
	Net earnings (loss) for the period	 	113,086	 	137,680	 	(59,784	)	5,697
	Earnings (loss) per share from continuing operations	 	0.19	 	0.21	 	(0.11	)	0.01
	Net earnings (loss) per share	 	0.19	 	0.20	 	(0.11	)	0.01

	 
	 	As at June 30, 2007
	 	 
	 	 

	 
	 	Yamana

and Meridian
	 	Yamana, Meridian and Northern Orion
	 	 
	 	 

	Pro Forma Consolidated Balance Sheet Data	 	 	 	 	 	 	 	 
	Cash and cash equivalents	 	252,390	 	469,597	 	 	 	 
	Other current assets	 	293,188	 	296,079	 	 	 	 
	Property, plant and equipment	 	668,244	 	668,467	 	 	 	 
	Assets under construction	 	1,060	 	1,060	 	 	 	 
	Mineral properties	 	5,444,675	 	6,526,644	 	 	 	 
	Total assets	 	6,903,201	 	8,546,721	 	 	 	 
	Current liabilities	 	215,669	 	235,535	 	 	 	 
	Total long-term liabilities	 	2,315,874	 	2,743,922	 	 	 	 

	 
	 	 
	 	 
	 	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	 	 	 	 	 	(5,731	)	(33,073	)
	Net loss for the period	 	 	 	 	 	(99,251	)	(47,380	)
	Loss per share from continuing operations	 	 	 	 	 	(0.18	)	(0.07	)
	Net loss per share — basic and diluted	 	 	 	 	 	(0.18	)	(0.07	)
	Book value per share	 	 	 	 	 	7.34	 	8.23	 
	Ratio of earnings to fixed charges	 	 	 	 	 	 	 	 	 
	 	Ratio(1)	 	 	 	 	 	—	 	—	 
	 	Deficiency(2)	 	 	 	 	 	(101,259	)	(60,588	)

	(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. 

4

  

 
 

Summary of Principal Differences Between Canadian GAAP and US GAAP    
    

Yamana  

        Yamana's interim consolidated financial statements incorporated by reference into this Offer and Circular for the six-month period ended
June 30, 2007 have been prepared in accordance with Canadian GAAP. Material variations in the accounting principles, practices and methods used in preparing these consolidated financial
statements from principles, practices and methods accepted by US GAAP are described and quantified below to enable a reader to assess material differences for the six-month period ended
June 30, 2007. The following is intended to supplement and complement the interim consolidated financial statements under Canadian GAAP for the six-month period ended
June 30, 2007 and should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2006. Readers are encouraged to refer to
Note 30 "Summary of Principal Differences Between Canadian GAAP and United States Generally Accepted Accounting Principles (US GAAP)" in the annual audited consolidated financial
statements of Yamana. 

Mineral Properties  

        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, acquisition costs and 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.
Exploration costs of US$24.5 million (US$20.9 million net of income tax) would have been expensed under US GAAP during the six-month period ended June 30, 2007. An
additional depletion expense is required
to be recognized under US GAAP in the amount of US$3.1 million (US$2.8 million net of income tax) for the six-month period ended June 30, 2007. For the purposes
of the consolidated statements of cash flows, these costs are classified as cash used in investing activities under Canadian GAAP and cash used in operations under US GAAP. 

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. An additional expense for pre-operating costs is required to be recognized under US GAAP in the amount of US$0.5 million (US$0.3 million
net of income tax) for the six-month period ended June 30, 2007. 

Recently Released Accounting Standards  

        In June 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation Number No. 48
"Accounting for Uncertainty in Tax Positions" ("FIN 48"). This interpretation addresses the recognition and measurement of all tax positions. The
recognition process involves determining whether it is more likely than not that a tax position would be sustained on audit based solely on its technical merits. The amount of benefit recognized in
the financial statements is the maximum amount which is more likely than not to be realized based on a cumulative probability approach. FIN 48 is effective for all fiscal years beginning after
December 15, 2006. Yamana is currently evaluating the impact that adoption of FIN 48 will have on its financial condition and results of operations. 

        In
September 2006, the SEC issued Staff Accounting Bulletin No. 108 ("SAB 108"). SAB 108 provides guidance on
the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 permits existing public companies to
record the cumulative effect of initially applying this approach in the fiscal year ending after November 15, 2006 by recording necessary correcting adjustments to the carrying values of assets
and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings. The adoption of SAB 108 had no impact on Yamana's financial
condition and results of operations. 

5

 

        The
SEC and the FASB have issued recent interpretations for US GAAP that suggest warrants with an exercise price that is different from the entity's functional currency cannot be
classified as equity. As a result, these instruments should be treated as derivatives and recorded as liabilities which are carried at their fair value, with changes in the fair value from period to
period recorded as a gain or loss in the statement of operations. Yamana's functional currency is the US dollar and it has outstanding warrants that have an exercise price that is denominated in
Canadian dollars. The recent SEC and FASB interpretations relate to
FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities and Emerging Issue Task Force ("EITF")
"EITF 00-19 Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company's Own Stock". The FASB has initiated a project to determine the
accounting treatment for certain equity instruments with elements of foreign currency risk. This project is expected to provide further guidance with respect to US GAAP accounting for such items.
Yamana is awaiting the results of the FASB's project and has therefore not recorded warrants outstanding that have an exercise price in Canadian dollars as derivatives. Accordingly the issued and
outstanding warrants continue to be classified in shareholders' equity at their historical issue price. Upon the issuance of authoritative guidance from the FASB project Yamana will assess the impact
this may have on the consolidated financial statements and record an adjustment in accordance with the guidance provided in the FASB project. 

Northern Orion  

        Northern Orion's interim consolidated financial statements incorporated by reference into this Offer and Circular, as amended by this Notice of Variation and
Extension, for the six-month period ended June 30, 2007 have been prepared in accordance with Canadian GAAP. Material variations in the accounting principles, practices and methods
used in preparing these consolidated financial statements from principles, practices and methods accepted by US GAAP are described and quantified below to enable a reader to assess material
differences for the six-month period ended June 30, 2007. The following is intended to supplement and complement the interim consolidated financial statements under Canadian GAAP
for the six-month period ended June 30, 2007 and should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2006.
Readers are encouraged to refer to Note 16 "Differences in Generally Accepted Accounting Principles Between Canada and the United States" in the annual audited consolidated financial
statements of Northern Orion. 

Exploration Expenses  

        Canadian GAAP allows exploration costs and costs of acquiring mineral rights to be capitalized during the search for a commercially mineable body of ore. Under US
GAAP, exploration expenditures can only be deferred subsequent to the establishment of mining reserves. Northern Orion obtained the equivalent of mining reserves through the completion of a positive
feasibility study as at October 31, 2006. For US GAAP purposes, Northern Orion was required to expense its exploration expenditures through to October 31, 2006. 

Recently Released Accounting Standards  

        In June 2006, the FASB issued FIN No. 48. FIN 48 addresses the recognition and measurement of all tax positions. The recognition
process involves determining whether it is more likely than not that a tax position would be sustained on audit based solely on its technical merits. The amount of benefit recognized in the financial
statements is the maximum amount which is more likely than not to be realized based on a cumulative probability approach. FIN 48 is effective for all fiscal years beginning after
December 15, 2006.
Northern Orion is currently evaluating the impact that adoption of FIN 48 will have on its condition and results of operations. 

        In
September 2006, the SEC issued SAB 108. SAB 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year
misstatements for the purpose of a materiality assessment. SAB 108 permits existing public companies to record the cumulative effect of initially applying this approach in the fiscal year
ending after November 15, 2006 by recording necessary correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment
recorded to the opening balance of retained earnings. The adoption of SAB 108 had no impact on Northern Orion's financial condition and results of operations. 

6

 

        The
SEC and the FASB have issued recent interpretations for US GAAP that suggest warrants with an exercise price that is different from the entity's functional currency cannot be
classified as equity. As a result, these instruments should be treated as derivatives and recorded as liabilities which are carried at their fair value, with changes in the fair value from period to
period recorded as a gain or loss in the statement of operations. Northern Orion's functional currency is the US dollar and it has issued and outstanding warrants that have an exercise price that is
denominated in Canadian dollars. The recent SEC and FASB interpretations relate to FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities and Emerging Issue
Task Force "EITF 00-19 Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company's Own Stock". The FASB has initiated a project to
determine the accounting treatment for certain equity instruments with elements of foreign currency risk. This project is expected to provide further guidance with respect to US GAAP accounting for
such items. Northern Orion is awaiting the results of the FASB's project and has therefore not recorded warrants outstanding that have an exercise price in Canadian dollars as derivatives. Accordingly
the issued and outstanding warrants continue to be classified in shareholders' equity at their historical issue price. Upon the issuance of authoritative guidance from the FASB project Northern Orion
will assess the impact this may have on the consolidated financial statements and record an adjustment in accordance with the guidance provided in the FASB project". 

5.     Documents Incorporated by Reference  

        The following additional documents of the Offeror are added to Section 12 of the Circular, "Documents Incorporated by Reference" (found at page 65
of the Offer and Circular): 

	"(h)
	the
comparative unaudited consolidated financial statements of the Offeror and the notes thereto as at June 30, 2007 and for the six months ended June 30, 2007 and
2006, together with management's discussion and analysis of financial results found at pages 2 through 28 of the Offeror's second quarter report in respect of the quarter ended
June 30, 2007;

	(i)
	the
material change report dated July 19, 2007 relating to the Offeror's announcement of having entered into a definitive business combination agreement with Northern Orion and
the announcement of its formal Offer for all of the outstanding common shares of Meridian". 

        The
following additional documents of Northern Orion are added to Section 12 of the Circular, "Documents Incorporated by Reference" (found at page 65 of the Offer
and Circular): 

	"(d)
	the
comparative unaudited consolidated financial statements of Northern Orion and the notes thereto as at June 30, 2007 and for the three months ended June 30, 2007
and 2006". 

6.     Source of Funds  

        Section 9 of the Circular, "Source of Funds" (found at page 55 of the Offer and Circular), is deleted and replaced 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 $17 million in
the aggregate, will be approximately $400 million. 

        The
Offeror intends to pay the cash consideration under the Offer through a committed acquisition financing (the "Term Credit
Facility") of US$400 million pursuant to a senior secured credit facility commitment letter dated August 13, 2007 between Yamana and a syndicate of lenders. The
Term Credit Facility, which is secured by guarantees from, and pledge of shares of, certain operating subsidiaries, matures in 2012. Amounts drawn or undrawn under the Term Credit Facility 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. The Term Credit Facility also contains customary conditions precedent to the first drawdown as well as the requirement that at least
662/3% of the Shares in the capital of both Northern Orion and Meridian 

7

 

shall
have been acquired by the Offeror or otherwise tendered in connection with the Northern Orion Transaction and Offer, as applicable. 

        A
copy of the Term 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 exhibit for a more complete description of the terms and conditions of the Term Credit Facility. 

        The
Offeror does not intend to use the Loan from Northern Orion to fund any portion of the cash consideration". 

7.     Amendments to Consolidated Capitalization Table  

        The Consolidated Capitalization section (found at page 63 of Section 11 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, 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 and to 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 this Offer and Circular. 

	 
	 	As at December 31, 2006
	 	As at December 31, 2006
	 	As at December 31, 2006
	 
	 
	 	 
	 	After Giving Effect to the Offer(1)
 
	 	After Giving Effect to Northern Orion Transaction and the Offer(1)
 
	 
	 
	 	 
	 	(unaudited)

	 	 
	 
	Debt	 	 	—	 	$	400,000	(2)	$	400,000	 
	Common shares(4)(5)	 	$	1,619,850	 	$	4,123,232	 	$	5,066,444	 
	 	(Authorized — unlimited)	 	 	(344,595,000	)	 	(570,532,000	)	 	(653,365,000	)
	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)(5)	 	 	—	 	 	—	 	 	—	 
	 	 	 	(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	 	$	71,444	 	$	106,847	 
	(Deficit) retained earnings	 	$	(80,334	)	$	(80,334	)	$	(80,334	)
	Total capitalization	 	$	1,716,590	 	$	4,629,838	 	$	5,815,968	 

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

	(2)
	Debt
includes the Term Credit Facility. See "Source of Funds" in Section 9 of the Circular.

	(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. See "Authorized and Outstanding Share Capital — Pro Forma Yamana Common Shares
Outstanding and Ownership" in Section 11 of the Circular.

	(4)
	Assumes
no exercise of the currently outstanding Options of Meridian, as well as the termination of the Shareholder Rights Plan, prior to completion of the Offer. See "Authorized and
Outstanding Share Capital — Pro Forma Yamana Common Shares Outstanding and Ownership" in Section 11 of the Circular". 

8.     Recent Developments  

        On July 27, 2007, the Offeror formally engaged J.P. Morgan Securities Inc. as a financial advisor with respect to the Offer. 

8

 

        On
July 31, 2007, Meridian filed a Directors Circular recommending that the Meridian Shareholders reject the Offer and not tender any of their Shares. 

        On
July 31, 2007, Yamana released a response to Meridian's rejection of the Offer which confirmed the several compelling reasons why the combination of Meridian, Northern Orion
and Yamana would generate significant value for the shareholders of all three companies. 

        The
board of directors of Northern Orion have re-confirmed its recommendation, following consideration of the terms of variation of the Offer, that shareholders of Northern Orion vote in
favour of the Northern Orion Transaction at a special meeting of Northern Orion shareholders to be held on August 22, 2007. 

9.     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 and Circular, "Right to Withdraw Deposited Shares", for additional detail regarding withdrawal of deposited Shares." 

10.   Other Changes to the Offer and Circular  

Regulatory Matters  

        Yamana made its regulatory filing with the Mexican Federal Competition Commission. Yamana has determined that, based on the available public information, the
Offer is not subject to pre-merger notification under the Competition Act, or under the HSR Act. 

Stock Exchange Listings  

        Yamana received conditional approval of the Toronto Stock Exchange for the listing of the Yamana Common Shares. 

11.   Time for Acceptance  

        The Offer is now open for acceptance until 8:00 p.m. (Toronto time) on September 7, 2007, unless further extended or withdrawn as a result of
any one or more of the conditions of the Offer not having been satisfied or waived by the Offeror at or before the Expiry Time. 

12.   Manner of Acceptance  

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

13.   Take up of and Payment for Deposited Shares  

        Upon the terms and subject to the conditions of the Offer, the Offeror will take up and pay for Shares validly deposited to the Offer and not withdrawn as set
forth in "Take up of and Payment for Deposited Shares" in Section 6 of the Offer. 

14.   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. 

9

 

15.   Offerees' Statutory Rights  

        Securities legislation in certain of the provinces and territories of Canada provides Shareholders with, in addition to any other rights they may have at law,
rights of rescission or to damages, or both, if there is a misrepresentation in a circular or a notice that is required to be delivered to Shareholders. However, such rights must be exercised within
prescribed time limits. Shareholders should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with
a lawyer. 

16.   Directors' Approval  

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

10

  

 
 

AUDITORS' CONSENTS    
    

        We have read the Notice of Variation and Extension of Yamana Gold Inc. (the "Company") dated
August 14, 2007, relating to the Offer and Circular furnished with the Company's Offer dated July 19, 2007 (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
	August 14, 2007	 	Independent Registered Chartered Accountants

        We
have read the Notice of Variation and Extension of Yamana Gold Inc. (the "Company") dated August 14, 2007,
relating to the Offer and Circular furnished with the Company's Offer dated July 19, 2007 (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
	August 14, 2007	 	Chartered Accountants

11

 

        We
have read the Notice of Variation and Extension of Yamana Gold Inc. (the "Company") dated August 14, 2007,
relating to the Offer and Circular furnished with the Company's Offer dated July 19, 2007 (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 retained earnings
(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
	August 14, 2007	 	Independent Registered Chartered Accountants

12

  

 
 

APPROVAL AND CERTIFICATE OF YAMANA GOLD INC.    
    

        The contents of this Notice of Variation and Extension have 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:
August 14, 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) PATRICK MARS	(Signed) JOHN BEGEMAN
	Director	Director

13

  

 
 

SCHEDULE "A"
  
    TABLE OF CONTENTS    
    

	 
	 	Page

	 PRO FORMA CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2007	 	A-2
	 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2007	 	A-3
	 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006	 	A-4
	 NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS	 	A-5 – A-15
	 SCHEDULES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS	 	A-16 – A-18

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)(vi)	$	23,934	 	$	252,390	 	$	237,207	(b)(ii)	$	(20,000	)	$	469,597	 
	 	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	 	 	23,934	 	 	545,578	 	 	240,098	 	 	(20,000	)	 	765,676	 
	Property, plant and equipment	 	 	370,144	 	 	298,100	 	 	—	 	 	668,244	 	 	223	 	 	—	 	 	668,467	 
	Assets under construction	 	 	1,060	 	 	—	 	 	—	 	 	1,060	 	 	—	 	 	—	 	 	1,060	 
	Mineral properties	 	 	1,556,187	 	 	—

	
(a)(i)	 	3,888,488	 	 	5,444,675	 	 	122,532	(b)(i)(ii)	 	959,437	 	 	6,526,644	 
	 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	 	 	—	 	 	—	 	 	55,000	 	 	—	 	 	—	 	 	55,000	 
	Restricted cash	 	 	—	 	 	—	 	 	—	 	 	—	 	 	752	 	 	—	 	 	752	 
	Equity investment in Minera Alumbrera Ltd.	 	 	—	 	 	—	 	 	—	 	 	—	 	 	100,478	(b)(ii)	 	240,000	 	 	340,478	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	$	2,407,179	 	$	583,600	 	$	3,912,422	 	$	6,903,201	 	$	464,083	 	$	1,179,437	 	$	8,546,721	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	
Liabilities	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	Current liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Accounts payable and accrued liabilities	 	 	65,134	 	 	19,900	(a)(i)	 	17,000	 	 	102,034	 	 	2,866	(b)(i)	 	17,000	 	 	121,900	 
	 	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	 	 	17,000	 	 	215,669	 	 	2,866	 	 	17,000	 	 	235,535	 
	Long-term liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Asset retirement obligations	 	 	22,626	 	 	—	 	 	—	 	 	22,626	 	 	1,201	 	 	—	 	 	23,827	 
	 	Future income tax liabilities	 	 	389,198	 	 	23,600	(d)(ii)	 	1,360,971	 	 	1,773,769	 	 	23,603	(d)(ii)	 	389,214	 	 	2,186,586	 
	 	Long-term liabilities	 	 	18,479	 	 	101,000	(a)(vi)	 	400,000	 	 	519,479	 	 	—	 	 	—	 	 	519,479	 
	 	Royalty and net proceeds interest payable	 	 	—	 	 	—	 	 	—	 	 	—	 	 	14,030	 	 	—	 	 	14,030	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	$	576,872	 	$	176,700	 	$	1,777,971	 	$	2,531,543	 	$	41,700	 	$	406,214	 	$	2,979,457	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Non-controlling interest	 	 	—	 	 	15,300	 	 	—	 	 	15,300	 	 	—	 	 	—	 	 	15,300	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	
Shareholders' equity	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	Capital stock	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Common stock	 	 	1,715,654	 	 	403,500	(a)(i)	 	2,122,551	 	 	4,241,705	 	 	294,244	(b)(i)	 	658,444	 	 	5,194,393	 
	 	Warrants	 	 	72,915	 	 	—	 	 	—	 	 	72,915	 	 	11,329	(b)(i)	 	196,186	 	 	280,430	 
	 	Additional paid-in capital including contributed surplus	 	 	43,117	 	 	8,200	(a)(i)	 	(8,200	)	 	43,117	 	 	14,476	(b)(i)	 	20,927	 	 	78,520	 
	 	Accumulated other comprehensive income	 	 	5,844	 	 	54,300	(a)(i)	 	(54,300	)	 	5,844	 	 	(2,635)	(b)(i)	 	2,635	 	 	5,844	 
	(Deficit) retained earnings	 	 	(7,223	)	 	(74,400)	(a)(i)	 	74,400	 	 	(7,223)	(b)(i)	 	104,969	 	 	(104,969	)	 	(7,223	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	1,830,307	 	 	391,600	 	 	2,134,451	 	 	4,356,358	 	 	422,383	 	 	773,233	 	 	5,551,964	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	$	2,407,179	 	$	583,600	 	$	3,912,422	 	$	6,903,201	 	$	464,083	 	$	1,179,437	 	$	8,546,721	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 

A-2

 
 
 

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 (a)(vi))

	 	 
	 	 
	 	(Note 6 (b)(ii))

	 	 
	 
	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	)	 	—	 	 	(41,204	)	 	—	 	 	—	 	 	(41,204	)
	Accretion of asset retirement obligation	 	 	(707	)	 	—	 	 	—	 	 	(707	)	 	—	 	 	—	 	 	(707	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Mine operating earnings	 	 	183,034	 	 	85,300	 	 	—	 	 	268,334	 	 	—	 	 	—	 	 	268,334	 
	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	 	 	—	 	 	206,885	 	 	1,968	 	 	—	 	 	208,853	 
	Investment and other business income	 	 	5,016	 	 	4,900	 	 	—	 	 	9,916	 	 	5,311	 	 	—	 	 	15,227	 
	Equity earnings of Minera Alumbrera Ltd.	 	 	—	 	 	—	 	 	—	 	 	—	 	 	27,208	 	 	(13,300	)	 	13,908	 
	Interest expense	 	 	(6,025	)	 	—	 	 	(15,000	)	 	(21,025	)	 	—	 	 	—	 	 	(21,025	)
	Gain on sale of assets	 	 	—	 	 	600	 	 	—	 	 	600	 	 	—	 	 	—	 	 	600	 
	Unrealized loss on derivatives	 	 	(28,700	)	 	—	 	 	—	 	 	(28,700	)	 	—	 	 	—	 	 	(28,700	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Earnings before income taxes expense	 	 	114,876	 	 	67,800	 	 	(15,000	)	 	167,676	 	 	34,487	 	 	(13,300	)	 	188,863	 
	Income tax expense	 	 	(34,690	)	 	(24,400	)	 	4,500	 	 	(54,590	)	 	(593	)	 	4,000	 	 	(51,183	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Net earnings	 	$	80,186	 	$	43,400	 	$	(10,500	)	$	113,086	 	$	33,894	 	$	(9,300	)	$	137,680	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Earnings per share (Note 7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Basic	 	$	0.23	 	 	 	 	 	 	 	$	0.19	 	 	 	 	 	 	 	$	0.21	 
	 	Diluted	 	$	0.22	 	 	 	 	 	 	 	$	0.19	 	 	 	 	 	 	 	$	0.20	 
	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 

A-3

 
 
 

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 (a)(vi))

	 	 
	 	 
	 	(Note 6 (b)(ii))

	 	 
	 
	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	)	 	—	 	 	(65,420	)	 	—	 	 	—	 	 	(65,420	)
	Accretion of asset retirement obligation	 	 	(636	)	 	—	 	 	—	 	 	(636	)	 	—	 	 	—	 	 	(636	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Mine operating earnings	 	 	34,606	 	 	135,800	 	 	—	 	 	170,406	 	 	—	 	 	—	 	 	170,406	 
	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	 	 	—	 	 	40,345	 	 	(11,732	)	 	—	 	 	28,613	 
	Investment and other business income	 	 	7,423	 	 	12,300	 	 	—	 	 	19,723	 	 	7,846	 	 	—	 	 	27,569	 
	Equity earnings of Minera Alumbrera Ltd.	 	 	—	 	 	—	 	 	—	 	 	—	 	 	93,167	 	 	(30,500	)	 	62,667	 
	Interest expense	 	 	(28,935	)	 	—	 	 	(30,000	)	 	(58,935	)	 	—	 	 	—	 	 	(58,935	)
	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	 	 	(30,000	)	 	(49,125	)	 	88,781	 	 	(30,500	)	 	9,156	 
	Income tax recovery (expense)	 	 	25,941	 	 	(45,600	)	 	9,000	 	 	(10,659	)	 	(2,000	)	 	9,200	 	 	(3,459	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Net (loss) earnings	 	$	(87,384	)	$	48,600	 	$	(21,000	)	$	(59,784	)	$	86,781	 	$	(21,300	)	$	5,697	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	(Loss) earnings per share (Note 7)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Basic and diluted	 	$	(0.26	)	 	 	 	 	 	 	$	(0.11	)	 	 	 	 	 	 	$	0.01	 
	 	 	
	 	 	 	 	 	 	 	
	 	 	 	 	 	 	 	
	 

A-4

   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-5

 

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 August 9, 2007	 	1.0527
	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 equates to total consideration of $28.40 (Cdn$30.39) per share. On August 13,
2007, Yamana announced an amended offer (the "Amended Offer") to acquire all the outstanding shares of Meridian. Under the Amended Offer the shareholders of Meridian will 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 equates to total consideration of $28.56 (Cdn$30.08) 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 that the fair value of Meridian's non-mineral property, plant and equipment approximates carrying value. As Yamana has not had access to information relative to the
respective fair value of Meridian's mineral property, plant and equipment, no allocation at this time is possible to specific properties, included acquired goodwill. The Company does not have any
basis upon which to estimate the potential impact of the allocation on future earnings. 

The
fair value of the net assets of Meridian to be acquired pursuant to the Offer will ultimately be determined at 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)	 	$	2,506,451
	Yamana shares issuable on exercise of Meridian options (1,768,741 Yamana common shares)	 	 	19,600
	Cash consideration (including cash of $3,007 payable due to exercise of Meridian options)	 	 	387,557
	Estimated transaction costs	 	 	17,000
	 	 	

	Purchase consideration	 	$	2,930,608
	 	 	

A-6

 

The
purchase price was allocated as follows: 

	 
	 	 
	 
	Net working capital acquired (including cash of $102.1 million)	 	$	213,891	 
	Mineral property, plant and equipment, net	 	 	4,186,588	 
	Other long-term assets	 	 	31,000	 
	Long-term liabilities	 	 	(101,000	)
	Future income taxes	 	 	(1,384,571	)
	Non-controlling interest	 	 	(15,300	)
	 	 	
	 
	 	 	$	2,930,608	 
	 	 	
	 

For
the purposes of the pro forma financial statements, the excess of $3,888,488 of the purchase price over the carrying value of the assets acquired and the liabilities assumed has been
allocated to mineral properties. 

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 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. 

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	 	 	1,061,969	 
	Equity investment in Minera Alumbrera Ltd.	 	 	340,478	 
	Long-term liabilities	 	 	(15,231	)
	Future income tax liability at 33%	 	 	(412,817	)
	 	 	
	 
	 	 	$	1,212,606	 
	 	 	
	 

A-7

 

Yamana
has estimated the fair value of Northern Orion's interest in Minera Alumbrera at $340,000. The remainder of the purchase price over the carrying value of the assets acquired and liabilities
assumed of $939,437 has been assigned to Northern Orion's non-producing properties. 

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 taxes, net	 	 	(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-8

 

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 at 30%	 	 	(170,288	)
	 	 	
	 
	 	 	$	549,147	 
	 	 	
	 

6.     EFFECT OF TRANSACTIONS ON THE CONSOLIDATED PRO FORMA 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 Amended Offer. As per Note 3, this gives rise to
an increase of mineral properties of $3,888,488. On consolidation, all equity accounts of Meridian are eliminated with a net increase to common stock of $2,122,551 reflecting the net increase
attributable to the issue of Yamana common shares. Accounts payable increase by $17 million to provide for the transaction costs.

	(ii)
	The
assumption that all of the stock options of Meridian that were outstanding are exercised and converted into Meridian common shares which are acquired by Yamana
pursuant to the Amended 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;

	(iv)
	It
has been assumed that Meridian's accounting policies conform to those of Yamana;

	(v)
	There
has been no depletion adjustment calculated on the excess of the purchase price over the assets acquired as the allocation of the fair value adjustment is not
known and cannot be estimated at this time; and

	(vi)
	It
has been assumed that Yamana drew down $400 million of a revolving line of credit in order to finance the $387 million cash component of the acquisition of
Meridian. The balance of loan proceeds of $12,443 plus the $11,491 assumed to have been received upon exercise of Meridian options have been added to the cash balance. Interest expense has been
recorded in the amount of $15 million and $30 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 $500.

 

	(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 of mineral properties of $939,437. (Total increase in mineral properties is $959,437 after giving effect to transaction costs of Northern Orion. See 6(d)(i).) On consolidation all
equity accounts of 

A-9

 

Northern
Orion are eliminated with a net increase to common stock of $658,610 reflecting the net increase attributable to the issue of Yamana common shares. Accounts payable increase by
$17 million to provide for transaction costs; 

	(ii)
	The
fair value of Minera Alumbrera Ltd. has been estimated at $340 million (an increase to Northern Orion's carrying value of $240 million). Amortization
of this increase in fair value has been provided in the amount of $13,300 and $30,500 for the six months ended June 30,2007 and the year ended December 31, 2006, respectively;

	(iii)
	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;

	(iv)
	There
has been no depletion adjustment calculated on the excess of the purchase price over the assets acquired as the allocation of the fair value adjustment is not
known and cannot be estimated at this time;

	(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.

 

	(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 

	(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.

	(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 the estimated tax basis (Meridian — $1,360,971 and Northern Orion — $402,721). 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 statement of operations is provided. 

A-10

 

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 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
	 	 	
	 	

	 	 	696,949,283	 	677,143,648
	 	 	
	 	

A-11

 

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)

	 	(Note 6)

	 	 
	 
	Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cash and cash equivalents	$	69,680	 	$	92,800	 	$	178,956	 	$	3,934	 	$	345,370	 
	 	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	 	 	3,934	 	 	557,918	 
	
 Assets under construction	
 	

224,650	
 	
 	

—	
 	
 	

—	
 	
 	

—	
 	
 	

224,650	
 
	Mineral properties and property, plant and equipment	 	1,583,490	 	 	276,100	 	 	34,037	 	 	5,061,379	 	 	6,955,006	 
	Other assets	 	122,641	 	 	31,900	 	 	360	 	 	—	 	 	154,901	 
	Goodwill	 	55,000	 	 	—	 	 	—	 	 	—	 	 	55,000	 
	Equity investment in Minera Alumbrera Ltd.	 	—	 	 	—	 	 	128,914	 	 	240,000	 	 	368,914	 
	 	
	 	
	 	
	 	
	 	
	 
	 	$	2,139,205	 	$	528,000	 	$	343,871	 	$	5,305,313	 	$	8,316,389	 
	 	
	 	
	 	
	 	
	 	
	 
	Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current liabilities	 	100,461	 	 	45,500	 	 	3,106	 	 	34,000	 	 	183,067	 
	
 Long-term liabilities	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	Asset retirement obligations	 	18,720	 	 	—	 	 	1,155	 	 	—	 	 	19,875	 
	 	Future income tax liabilities	 	325,450	 	 	17,600	 	 	—	 	 	1,822,040	 	 	2,165,090	 
	 	Long-term liabilities	 	17,049	 	 	104,000	 	 	—	 	 	400,000	 	 	521,049	 
	 	Royalty and net proceeds interest payable	 	—	 	 	—	 	 	12,826	 	 	—	 	 	12,826	 
	 	
	 	
	 	
	 	
	 	
	 
	 	 	461,680	 	 	167,100	 	 	17,087	 	 	2,256,040	 	 	2,901,907	 
	 	
	 	
	 	
	 	
	 	
	 
	Non-controlling interest	 	—	 	 	15,300	 	 	—	 	 	—	 	 	15,300	 
	 	
	 	
	 	
	 	
	 	
	 
	
Shareholders' equity	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	Capital stock	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Common stock	 	1,619,850	 	 	402,000	 	 	288,682	 	 	2,788,057	 	 	5,098,589	 
	 	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	 	 	3,049,273	 	 	5,399,182	 
	 	
	 	
	 	
	 	
	 	
	 
	 	$	2,139,205	 	$	528,000	 	$	343,871	 	$	5,305,313	 	$	8,316,389	 
	 	
	 	
	 	
	 	
	 	
	 

A-12

 

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

	 
	 	 
	 
	Yamana net loss as reported	 	$	(88,072	)
	Meridian net income as reported	 	 	49,200	 
	Northern Orion net income as reported	 	 	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 revolving line of credit (Note 6 (a) vi)	 	 	(30,000	)
	Additional depletion expense on equity investment in Minera Alumbrera Ltd.	 	 	(30,500	)
	Income tax impact of the above adjustments	 	 	19,708	 
	 	 	
	 
	Pro forma net loss — US GAAP	 	$	(47,380	)
	 	 	
	 
	
 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	 	$	(52,387	)
	 	 	
	 
	Loss per share — basic	 	 	(0.07	)
	Comprehensive loss per share — basic	 	 	(0.07	)
	 	 	
	 

The
pro forma financial information can be reconciled as follows: 

	 
	 	As at

December 31,

2006
	 
	Total Pro forma Assets	 	 	 	 
	 	Under Canadian GAAP	 	$	8,358,340	 
	 	Exploration assets capitalization for Canadian GAAP	 	 	(40,630	)
	 	Unrealized loss on investments	 	 	(4,526	)
	 	Additional depletion charges	 	 	(7,404	)
	 	Future Income taxes	 	 	10,609	 
	 	 	
	 
	 	Under US GAAP	 	$	8,316,389	 
	 	 	
	 
	
 Total Pro forma liabilities	
 	
 	

 	
 
	 	Under Canadian GAAP	 	$	2,904,829	 
	 	Future Income taxes	 	 	(2,922	)
	 	 	
	 
	 	Under US GAAP	 	$	2,901,907	 
	
 Pro forma Non-controlling interest under Canadian and US GAAP	
 	
$	

15,300	
 
	 	 	
	 
	
 Total Pro forma Shareholders' Equity	
 	
 	

 	
 
	 	Under Canadian GAAP	 	$	5,438,133	 
	 	Adjustments to mineral property assets	 	 	(34,503	)
	 	Net Unrealized loss on investments	 	 	(4,526	)
	 	 	
	 
	 	Under US GAAP	 	$	5,399,182	 
	 	 	
	 

A-13

 

	 
	 	Year ended

December 31,

2006
	 
	Income on a pro forma basis under Canadian GAAP	 	5,697	 
	 	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	 	(47,380	)
	 	 	
	 

If
the transaction with Northern Orion is not completed, the pro forma net loss in accordance with US GAAP would be approximately $99,250. 

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, acquisition costs and 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-14

 

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

	 
	 	June 30,

2007
	 	December 31,

2006
	 	June 30,

2007
	 	December 31,

2006

	In accordance with	 	 	 	 	 	 	 	 	 	 	 	 
	 	Canadian GAAP	 	$	7.47	 	 	N/A	 	$	8.37	 	 	N/A
	 	US GAAP	 	 	N/A	 	$	7.34	 	 	N/A	 	$	8.23

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

 

	(b)
	Ratio of earnings to fixed charges

	 
	 	Yamana and Meridian
	 	Yamana, Meridian and

Northern Orion
	 
	 
	 	June 30,

2007
	 	December 31,

2006
	 	June 30,

2007
	 	December 31,

2006
	 
	In accordance with	 	 	 	 	 	 	 	 	 	 
	 	Canadian GAAP	 	 	 	 	 	 	 	 	 	 
	 	 	Ratio	 	10.86	 	 	—	 	12.11	 	1.11	 
	 	 	Deficiency	 	—	 	$	(54,281	)	—	 	—	 
	 	US GAAP	 	 	 	 	 	 	 	 	 	 
	 	 	Ratio	 	N/A	 	 	—	 	N/A	 	—	 
	 	 	Deficiency	 	N/A	 	 	(101,259	)	N/A	 	(60,588	)

A-15

  

 
 
 

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 US 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-16

  

 
 

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-17

  

 
 

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-18

Any questions and requests for assistance may be directed to

Kingsdale Shareholder Services Inc. and the Dealer Managers for the Offer

at the telephone numbers and location set out below: 

  

The
Exchange Tower

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

Toronto, Ontario

M5X 1E2 

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 

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

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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 HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

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

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

Summary of Principal Differences Between Canadian GAAP and US GAAP

AUDITORS' CONSENTS

APPROVAL AND CERTIFICATE OF YAMANA GOLD INC.

SCHEDULE "A" TABLE OF CONTENTS

YAMANA GOLD INC. PRO FORMA CONSOLIDATED BALANCE SHEET June 30, 2007 (Unaudited) (Expressed in thousands of U.S. dollars)

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)

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS OF YAMANA GOLD INC.

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

YAMANA GOLD INC. STATEMENT OF OPERATIONS OF VICEROY EXPLORATION LTD. Nine month period ended September 30, 2006 (Unaudited) (Expressed in thousands of dollars)QuickLinks
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Exhibit 4.23  

         

  

 
 
 

NEWS RELEASE    
    

YAMANA EXTENDS OFFER FOR MERIDIAN GOLD AND INCREASES CASH

CONSIDERATION TO C$4.00 PER SHARE  

	 

Toronto, Ontario, August 14, 2007 — YAMANA GOLD INC. (TSX:YRI; NYSE:AUY;
LSE:YAU) today announced that it has increased the cash component of its offer to acquire all of the outstanding common shares of Meridian Gold Inc., waived the due diligence access condition
and extended the offer deadline to September 7, 2007. 

Yamana
has raised the cash component of the offer by C$0.85 per share to a total of C$4.00 per share, which represents an approximate 27% increase in the cash portion of the consideration. Meridian
Gold shareholders will now be entitled to receive 2.235 Yamana common shares plus C$4.00 in cash for each Meridian common share tendered and taken up by Yamana. The cash portion of the
consideration will now be funded from a new $400 million acquisition five-year credit facility obtained specifically for the purposes of this offer. Yamana no longer intends to rely
on the funds previously made available from Northern Orion to fund the cash portion of its offer. 

Based
on the respective closing prices on the Toronto Stock Exchange on June 27, 2007 (the date of Yamana's original proposal to Meridian) Yamana's offer now represents a spot premium of
approximately 26.3%. The premium is approximately 27.6% based on the then 20-day average closing prices on the Toronto Stock Exchange. 

"We
have listened to shareholders and, equally, we have made it clear that we would be prudent and disciplined. This is a full, fair and final price," said Peter Marrone, Yamana's chairman and chief
executive officer. "The offer provides Meridian shareholders with considerable value including a significant cash payment and a stake in a gold-focused mid-tier producer with
significant share liquidity, strong returns, a proven ability to deliver on development projects and meaningful growth potential from an extensive gold only exploration and development pipeline." 

"We
believe that our offer is the most compelling choice for Meridian's shareholders," continued Mr. Marrone. "We encourage Meridian's shareholders to consider these benefits and tender their
shares to the offer." 

In
addition, Yamana has waived the due diligence condition. While Yamana would have preferred to conduct due diligence, it has relied on Meridian's public disclosure and believes the benefits of
certainty with proceeding on an unconditional basis outweigh the need for due diligence. 

The
timeline for acceptance of the offer is also extended to 8:00 p.m. (Toronto time) on September 7, 2007, the 50th day following its commencement of the offer, in
order to provide Meridian shareholders with an opportunity to fully consider the offer and tender to it. In the event that the Board of Meridian does not take the necessary steps to waive the Meridian
rights plan, Yamana intends to apply to the applicable securities regulatory authorities for a cease trade order prohibiting the trading and exercise of the rights. 

The
terms of Yamana's consensual deal with Northern Orion remain unchanged and the Board of Northern Orion continue to support the transaction and unanimously recommend that their shareholders vote in
favour of the Plan of Arrangement at the special meeting scheduled to take place on August 22, 2007. Following an affirmative vote, it is Yamana's intention to close the Plan of Arrangement
with Northern Orion as soon as practical after the successful tender for the Meridian shares. 

"We
are providing increased certainty for both Northern Orion and Meridian shareholders by eliminating the due diligence access condition and securing the approval of Northern Orion shareholders well
in advance of the expiry date," continued Mr. Marrone. "There is a strategic fit and logic to this combination and we believe the rapid pace of change in our industry and capital markets
further underscores the merits of this combination." 

Full
details of the new Yamana offer are included in a Notice of Change, Variation and Extension that will be filed on SEDAR (www.sedar.com) and on the SEC's website
(www.sec.gov) and will be made available on Yamana's website (www.yamana.com). The Notice of Change, Variation and Extension is in the process
of being mailed to Meridian shareholders. 

Genuity
Capital Markets, Canaccord Capital Corporation and JP Morgan are financial advisors to Yamana. Yamana's Canadian legal advisor is Cassels Brock & Blackwell LLP and its US legal
advisor is Dorsey & Whitney LLP. 

For
the purposes of U.S. tender offer rules, Yamana hereby discloses that approximately 21,611 Meridian common shares have been tendered to the offer as at August 13, 2007. The
original expiry date of the offer before the extension was August 27, 2007. 

Conference Call  

Yamana
will host a conference call and webcast to discuss the proposed transaction on August 14, 2007 at 11 a.m. (ET). A slide presentation will accompany the conference call and
webcast. To view the slide presentation and webcast, please visit the Events section of the web site at www.yamana.com. The slide presentation is also available by
clicking on the link provided on the home page for documents relating to the proposed transaction. 

	Conference Call Information:	 	 
	Toll Free:	 	800-814-4857
	

Conference Call REPLAY:	
 	

 
	Replay Call:	 	416-640-1917 Passcode 21243800#
	Replay Toll Free Call:	 	877-289-8525 Passcode 21243800#

The
conference call replay will be available from 9:00 am ET on August 15, 2007 until 11:59 pm ET on August 22, 2007. 

About Yamana  

Yamana
is a Canadian gold producer with significant gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina and Central America. Yamana is
producing gold at intermediate company production levels in addition to significant copper production. Yamana's management plans to continue to build on this base through the advancement of its
exploration properties and by targeting other gold consolidation opportunities in Brazil, Argentina and elsewhere in the Americas. 

	FOR INVESTOR QUESTIONS, CONTACT:	 	 
	Kingsdale Shareholder Services

Toll-free: 1-866-897-7644

Banks and brokers call collect: (416) 867-2272

Email: contactus@kingsdaleshareholder.com	 	 
	
MEDIA CONTACT:

Mansfield Communications Inc.

Hugh Mansfield

(416) 599-0024	
 	

 
	
FOR FURTHER INFORMATION:	
 	

 
	Peter Marrone	 	Jodi Peake
	Chairman & Chief Executive Officer	 	Director, Investor Relations
	(416) 815-0220	 	(416) 815-0220
	Email: investor@yamana.com	 	Email: investor@yamana.com
	www.yamana.com	 	www.yamana.com

IMPORTANT NOTICE:    This press release does not constitute an offer to buy or an invitation to sell, any of the securities of Yamana,
Northern Orion or Meridian. Such an offer may only be made pursuant to a registration statement and prospectus filed with the U.S. Securities and Exchange Commission and an offer to purchase
and circular filed with
Canadian securities regulatory authorities. Yamana has filed with the U.S. Securities and Exchange Commission a Registration Statement on Form F-10 as well as a
Schedule TO tender offer statement both of which include the offer and take-over bid circular relating to the Meridian offer and is mailing the offer and take-over
circular to Meridian shareholders. Investors and security holders are urged to read the Registration Statement, the offer and take-over bid circular and any other relevant documents filed
wit the SEC and Canadian securities regulators, regarding the proposed business combination transaction because they contain important information. Investors may obtain a free copy of the offer and
take-over bid circular and other documents filed by Yamana with the SEC at the SEC's website at www.sec.gov. The offer and take-over bid circular and other documents may also
be obtained for free on Yamana's website at www.yamana.com or by directing a request to Yamana's investor relations department. 

Persons
who are resident in the United Kingdom should note the following points: 

	(i)
	the
formal offering and takeover-bid circular to be issued to Meridian shareholders ("Offer and Circular") will not
constitute a prospectus for the purposes of the Prospectus Rules ("Prospectus Rules") published by the Financial Services Authority of the
United Kingdom (the "FSA"). Accordingly, the Offer and Circular has 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 before such an offer
was made.

	(ii)
	The
Offer will be made to or directed at, and deposits of Meridian shares will be accepted from, only those shareholders in the United Kingdom who are (or who are
acting on behalf of), and who are able to establish to the satisfaction of Yamana that they are (or are acting on behalf of): "qualified investors" within the meaning of section 86(7) of
FSMA, and who are also persons falling within Article 19(5) or Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. UK
shareholders receiving the Offer and Circular should consult with their legal advisors to determine whether they are eligible to receive and accept the Offer. 

FORWARD-LOOKING STATEMENTS:    This news release contains certain "forward-looking statements" and "forward-looking information" under
applicable Canadian securities laws concerning the proposed transaction between Yamana, Northern Orion and Meridian. 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 Yamana will be successful in acquiring 100%
of the issued and outstanding Meridian shares, that the shareholders of Northern Orion will approve the transaction, that all required third party regulatory and governmental approvals to the
transactions will be obtained 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 Yamana 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 business of the companies not being integrated successfully or such integration proving more difficult, time consuming or costly than expected 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 Yamana filed with the securities regulatory authorities in all provinces of Canada and
available at www.sedar.com, and the Annual Report on Form 40-F of Yamana filed with the United States Securities and Exchange
Commission. Although Yamana 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. Yamana 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. 

CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES  

This news release uses the terms "Measured", "Indicated" and "Inferred" Resources. United States investors are advised that while such terms are recognized and required
by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and
as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of
Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated
Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is
economically or legally mineable.

CAUTIONARY LANGUAGE REGARDING RESERVES AND RESOURCES  

Readers are advised that National Instrument 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral
resources be reported separately. Mineral resources are not mineral reserves and have not demonstrated economic viability. Other than as disclosed, the effective date, details of key assumptions,
parameters and methods used in the foregoing estimates and other information is disclosed in the Annual Information Form of Yamana for the year ended December 31, 2006 available under Yamana's
profile at www.sedar.com, for this detailed information, which is subject to the qualifications and notes set forth therein.

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