Yamana Gold Inc. Annual Report 2018

FY2018 Annual Report · Yamana Gold Inc.

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Yamana Annual Report 2018

The
beginning
of whaT’s
nexT

With an upgraded
Americas focused
portfolio and with the
right management
team in place, we
are well-positioned
for the beginning of
what’s next.

Financial and Operational
Highlights

Executive Chairman Message

Achievements

President and CEO Message

10 Our People

Sustainability

Review of Operations

Exploration

Mineral Reserves and
Mineral Resources

2018 Financial Review

174

Corporate Governance &
Committees of the Board

175 Corporate Information

Yamana Annual
Yamana Annual
Report 2018
Report 2018

1
1

941M oz
Gold

Exceeded 2018 guidance for gold

8.02M oz
Silver

Exceeded 2018 revised guidance
for silver

129M lbs
Copper

Exceeded 2018 guidance
for copper

financial and operational highlights

Revenue
(in millions of US dollars)

Cost of Sales
(in millions of US dollars)

4
0
8
,
1
$

9
9
7
,
1
$

8
8
7
,
1
$

2
4
0
,
1
$

9
2
0
,
1
$

0
1
0
,
1
$

2016

2017

2018

2016

2017

2018

Expansionary Capital
Spending
(in millions of US dollars)

Net Free Cash Flow
(in millions of US dollars)

0
2
3
$

2
5
2
$

4
8
1
$

5
3
1
$

6
1
2
$

1
1
2
$

2016

2017

2018

2016

2017

2018

* A non-GAAP measure.
A reconciliation of the IFRS measure
to this non-GAAP measure can be
found at www.yamana.com/Q42018

Yamana Annual
Report 2018

executive Chairman Message

The strategy
behind the
performance

On July 31, 2003, Yamana Gold
was founded. Earlier stage
Brazilian mining assets became
the foundation of the Company
as it was taken public in that
year. Fifteen years later, our
mission remains the same – to
mine precious metals profitably
and responsibly. Our vision has
not changed – to be a dominant
intermediate sized company
operating in the Americas. Our
commitment to health, safety,
environmental sensitivity and
working with communities remains
steadfast. Our success over the
past years, including last year,
is due to Yamana’s relentless
focus on that mission, vision and
commitment. The Company
established strategic priorities,
and by all measures, has made
excellent progress against them.

peter marrone

Executive Chairman

achievements

Yamana Annual
Yamana Annual
Report 2018
Report 2018

3 3

By many measures, 2018 was a successful year for
Yamana Gold. Here are some of the highlights from
the year:

•

20% improvement in Total Recordable Injury Frequency
Rate from 2017. A number of our mines demonstrated the

•

Completed business combination between Leagold
Mining Corporation and Brio Gold Inc., resulting in the

possibility of achieving Yamana’s goal of “One Team,

Company’s 20.5% ownership interest in Leagold with

One Goal: Zero” vision for sustainability, which reflects

warrants offering upside potential from the combined

the Company’s commitment to zero harm to employees,

synergies and strong production platform.

the environment, and communities near mine operations.

•

Strong operational performance exceeding the
increased production guidance of 920,000 ounces of

•

Successfully increased gold mineral reserves to replace
2018 mineral depletion, excluding assets that were

disposed of in 2018. Measured and indicated mineral

gold set in October. Gold production for Yamana Mines

resources and inferred mineral resources for gold

increased by 14% in 2018.

increased by 5% and 7% respectively.

•

record gold production from Canadian Malartic and
Jacobina and gold production above expectations from

•

awarded the “Argentinian Mining Company of the Year”
by the industry magazine Panorama Minero at the 3rd

Chapada and El Peñón.

International Seminar of Metals and Mining.

•

exceeded guidance for copper by 3% which was
revised higher in October and exceeded guidance

•

Signed an exploration agreement with Red Sucker
Lake First Nations in relation to the Monument Bay

for silver by 6% which had been revised lower.

exploration site in Northern Manitoba. This is an

•

Delivered production at all-in sustaining costs that were
lower than the guided cost ranges for gold and silver.

•

Built our newest mine Cerro Moro on time and on budget.

•

In its first six months of production Cerro moro
exceeded production guidance for gold and silver at
costs lower than the guided ranges.

•

Completed and advanced certain strategic initiatives of
the Company including the sale of the jointly-owned CMC

exploration properties, the sales of the Gualcamayo mine in

Argentina to Mineros S.A., an option agreement on La Pepa

gold project in Chile, and further evaluations relating to

the various development scenarios for Agua Rica.

important step allowing the Company to solidify a

strategic collaboration with this community, as it

continues to advance the project.

•

enhanced management structure and bench strength
of the management team, including the appointment of

Daniel Racine to President and CEO and Peter Marrone

to Executive Chairman. These changes will ensure both

operational excellence and long-term strategic focus.

•

Celebrated the very significant milestone of Yamana
Gold’s 15th Year anniversary.

Yamana Annual
Report 2018

executive Chairman Message cont.

As part of our multi-year strategy,

The Company also upgraded and

we concentrated on improving

right-sized its portfolio of assets.

management, board, governance and

Core mines contributed more

mine plans, making our operations

to overall performance, and

more efficient while providing scope

management focused on the assets

for production increases.

and opportunities that can deliver the

The success of 2018 and the

momentum carried into 2019 are the

by-product of years of improvements

designed to position the Company

for success into the future – this is our

vision for the next 15 years.

In 2018, the Company identified

its strategic priorities and executed

against them. Our first priority was to

continue to enhance the Company’s

management structure. We continued

to centralize our senior management

team at Yamana’s head office and

to ensure that reporting from mine

sites was directly to corporate

office. This structure has improved

communication and efficiency, and

provides senior management with a

direct line of sight into our operations
and projects. Enhancing the efficacy

of the structural changes has been

a marked upgrade to the bench

strength of the management team,

from mine to corporate office. These

changes have brought diversity in

approach from a management team

with experience across a range of

mine types and jurisdictions and the

skillsets that support the Company’s

pursuit of operational excellence.

We have removed bureaucracy and

created efficiency.

most value for the Company. Certain

assets, like El Peñón, were right-sized

to deliver sustainable and predictable

performance, while Jacobina, for

example, was repositioned and

delivered a marked increase in

production and mine profitability.

Certain non-core assets were divested

or placed under stewardship of other

companies intent on focusing on

them, while we remain a significant

stakeholder. The sale of Gualcamayo,

by end of year, reflects the Company’s

strategy to focus on operations

and projects where there is greater

certainty on production, costs, mine

life and capital requirements.

The successful completion of

Cerro Moro was another priority last

year. The project was completed on

time and on budget, benefitting from

the aforementioned management

improvements and management

oversight. In that context, we changed

the way we undertook project

development activities by focusing

on enhanced detailed engineering

before heavy capital deployment.

Cerro Moro is already a strong

contributor to overall performance

and production ramp up in the

coming year will further support the

Company’s other strategic objectives.

“ Our strategy to carry
the Company into
the future is centred
on five key areas of
focus: enhancements
to our management
construct, changes
to the structure and
make-up of the board
and management
teams, upgrading
and right-sizing our
portfolio, successful
project delivery and,
ultimately, realizing
improvements to our
balance sheet.”

Yamana Annual
Report 2018

$209M

Net debt reduction since 2014

941k oz

2018 gold production

20%

Improvement in TRIR

Another strategic imperative

our projects, notably Cerro Moro,

undertaken by the Company was to

have served to underline the success

continue to improve the effectiveness

of the program.

of our board of directors to better

provide stewardship and strategic

direction. The efforts to refresh our

board have been aimed at improving

the diversity of perspectives to ensure

we have the skills and expertise to

provide effective oversight. Five of

our current ten independent directors

joined since 2014. Gender equality

and diversity has been a part of our

larger focus in ensuring a diverse range

of perspectives are represented by our

directors. Four of our ten independent

directors are women, in line with the

goal of having female directors make

up at least 40 per cent of the board.

As a result of the successful

execution against these strategies,

the Company also made meaningful

improvements to its balance sheet.

Yamana has reduced net debt by

$209 million since 2014 while also

building Cerro Moro. Imagine, we

experienced that level of balance

sheet improvement while we were

pursuing a development plan for

a major asset. It is expected that

the Company will see higher cash

flow and free cash flow generation

moving forward.

Yamana is focused on continuing

as a sustainable mining company.

To achieve that sustainability, we

apply rigorous Environmental, Social,

and Governance (ESG) analysis in

our decision-making. In addition to

enhancements to our governance

structure, other ESG and health

and safety initiatives demonstrate

our commitment to responsible

operations.

In 2018, great progress was made

at all sites in the area of health

and safety. The Company met its

2018 target in reporting and closing

out on High Potential Incidents

(HPIs). Excellent progress was

made on the implementation

of the Fatal Risk Protocols. The

overall Total Recordable Injury Rate

(TRIR) decreased by 20 per cent.

Unfortunately, despite our ongoing
commitment to health and safety, we

experienced a double fatality at our

Gualcamayo operation, where a light

vehicle carrying two maintenance

contractors reversed off of an

elevated exploration drill platform

that was under construction and fell

into a ravine below. A substantial

These adjustments have been

internal investigation was conducted

significant, and have taken time to

and a number of key lessons learned

coalesce. The results in 2017 showed

from the event were incorporated

the early benefits, while 2018 results

at all of our sites that are exposed to

at our mines and the execution at

similar hazards and risks.

Yamana Annual
Report 2018

executive Chairman Message cont.

With regard to environmental and

Looking ahead, Yamana is well

On a personal note, I will continue

social initiatives, Yamana is proud

positioned to create value for our

in my new role to help define our

to report there were no significant

many stakeholders. We have a

strategic direction and ensure that our

environmental or social incidents

high-quality portfolio of assets that

longer-term prospects are realized.

In the course of fifteen years, we

have created a vibrant and successful

company, and I look forward to

working with our management,

board, stakeholders and employees

on continuing our successes.

“Peter Marrone”

peter marrone

Executive Chairman

and all sites began developing

provides significant opportunities

quantitative scores for their Social

to build on our current production

License to Operate.

In August 2018, I felt that sufficient

changes had been made to our

management, board, governance

policies and procedures and

operations to recommend a further

change – a promotion actually. With

completed succession plans for

executive officers, we felt comfortable

separating the roles of Chairman

and Chief Executive Officer and

promoted our Chief Operating

Officer to President and Chief

platform and current financial run-

rates. Our production is diversified

across four countries in the Americas,

each with a history of mining and

within some of the best mining

practices in the world. Furthermore,

with production diversified across

these countries and our three metals,

we also have natural hedges to absorb

commodity and input price volatility.

This truly is the beginning of what

comes next, and I hope you will be

excited as I am to be a part of it.

Executive Officer. With that change,

I would like to thank Yamana’s

I took on the newly created role of

employees across the Americas

Executive Chairman. The Company’s

whose talent, commitment and hard

board of directors made this change

work has contributed to fifteen

to ensure that responsibilities for

outstanding years. It’s a privilege to

both strategic planning for the future

share their efforts and contributions

and operational expertise for today

to our success with you. I am excited

remained synergistic priorities. To

and confident looking ahead to

ensure our success moving forward,

Yamana’s next fifteen years

we must look to the future while

and beyond.

remaining diligently focused on the

task-at-hand. This change to the

Company’s management structure

will allow us to do both, responsively

and responsibly, and is consistent

with the Company’s ongoing review

of management effectiveness.

I have passed on the mantle of

Chief Executive Officer and feel

energized by the challenge of

focusing my time and attention on

spearheading the strategic business

and corporate development efforts

for longer-term value creation.

President and Ceo Message

Yamana is well
positioned

Yamana Annual
Report 2018

2018 was, by all measures,
an exciting and successful
year for Yamana. We executed
well against our strategies.
Our production and cost results
show the tangible benefits
of our focus on operational
excellence. And our safety and
environmental performance are
testament to the commitment
of our people. We are truly
proud of their efforts.

Daniel raCine

President and Chief Executive Officer

Yamana Annual
Report 2018

President and Ceo Message cont.

Yamana’s multi-year strategic

was seamless and the operation

initiatives delivered real benefits to

exceeded guidance expectations for

the Company and its stakeholders

production and costs.

in 2018. The portfolio has been

upgraded with the construction of

the high-grade Cerro Moro mine.

It has also been right-sized, with

core mines contributing more to the

overall performance of our operations.

Each of these initiatives on its own

has been a significant change, but it

has been their combined effect that

has boosted performance – both

operationally and financially – in 2018.

production and Costs Better

than Guidance

Our efforts towards operational

excellence also included improving

mining plans and future development

work. These efforts give us more

certainty on production goals,

including for 2019, and allowed us

to increase guidance last year. 2018

represents the fourth year in a row

where gold production has met

guidance and the second year in

a row where production has

exceeded guidance.

As important as production volumes

Indeed, 2018 was another strong year

are costs. This same work has

for Yamana. We finished the year by

delivered improvements to all-in

delivering production and improving

sustaining costs, both in the direction

our costs, thanks to our relentless

and predictability, over the last

focus on operational excellence.

several years.

We realized the highest-ever gold

production this year from Canadian

Malartic and Jacobina and above

expectation gold production from

Chapada and El Peñón. We also

exceeded guidance for silver and

copper. And, importantly, production

was delivered at all-in sustaining
costs that were lower than the guided

cost ranges.

the portfolio

Yamana’s portfolio of high-quality

assets is a core strength. Our portfolio

of mines consists of six high-quality

operations in four countries – Canada,

Brazil, Chile, and Argentina. We also

have a portfolio of non-producing

strategic assets that provide

opportunities for value accretion.

80% of the revenue from these mines

2018 also saw the completion of

comes from precious metals, with

Cerro Moro on time and on budget.

the balance being copper.

This new high-grade gold and

silver mine has already delivered

above expectation – the ramp-up

Our portfolio strikes a balance

between diversification and
concentration. It’s this balance that

“ We have right-
sized our portfolio,
focusing on the
assets that contribute
most meaningfully
to production and
financial metrics.
We’ve also right-sized
specific assets to
ensure their production
contributes to cash
flow and ultimately
free cash flow. Our
portfolio provides
significant opportunity
to build on our current
production platform
to create value.”

Yamana Annual
Report 2018

contributes to our strong production

Financial performance

a Word of thanks

Our operational performance

Once again, I’d like to commend our

has translated to strong financial

employees at our mine sites across

performance for 2018. Here are

the Americas. It is their expertise and

track record and strong positioning

as we move into the next cycle.

Fundamental to our diversification

approach is for our mines to be

right-sized. Right-sizing creates

some highlights:

•

We’ve lowered net debt by $209

more opportunities to enhance our

million since 2014 – while we were

performance while still keeping an

building Cerro Moro.

eye on the optimization of costs.

mineral reserves and

resources estimates

Mineral reserves, resources, and

exploration are the lifeblood of a

mining company. Gold and silver

mineral reserves for Yamana mines,

excluding assets that were disposed

of in 2018, were maintained while

copper reserves were up 6.4%

•

Capital expenditures for the year

were consistent with our plan, and

total expenditures decreased from

$ 607.5 million in 2017 to $ 446.9

million in 2018.

•

Net free cash flow was $216

million in 2018. We anticipate

demonstrable growth in free cash

flow beginning in 2019 that will

accelerate into 2020.

year-on-year. Jacobina, Chapada,

With increasing free cash flow, we

and Canadian Malartic delivered

have prioritized our capital allocation

significant increases in gold measured

towards further improving our

and indicated and inferred mineral

balance sheet. With an optimized

resource categories. Copper mineral

portfolio of mines that are executing

resources increased by 79%.

on plan, a declining capex intensity

and a favourable debt maturity profile,

Yamana is well positioned to meet

its balance sheet commitments

moving forward.

With long-life assets in the portfolio

and even before consideration of

certain development opportunities,

such as Agua Rica, our mineral

reserves total 12.5 million ounces,

with another 26 million ounces in the

measured and indicated and inferred

resource categories.

Yamana’s mineral reserves equate to

approximately 12 years of reserve life,

and gives us a long runway to deliver

on value maximization initiatives.

incredible commitment to Yamana

that has made our success possible.

I also want to thank them for their

relentless pursuit of our HSEC goal –

One Team, One Goal. Zero.

looking ahead to 2019

With a right-sized production

platform, operations that are

executing on or better than plan,

long mine life to drive net asset value

accretion, strategic assets that offer

monetization opportunities and a

step-change in free cash flow for

2019, Yamana is well positioned going

forward. We’ll continue to focus on

operational excellence, a disciplined

approach to production and costs,

free cash flow and debt reduction.

We’re ready for the beginning of

what’s next.

“Daniel Racine”

Daniel raCine

President and Chief Executive Officer

Yamana Annual
Report 2018

Our People

At Yamana, we work to create an environment where our
people can thrive. Over the last 15 years, we’ve worked hard
to promote diversity, provide opportunities for training and
personal development and hire locally whenever possible.
We believe employees are motivated to contribute to our
collective success when they have the resources they need
to achieve their individual goals.

99%

Workforce from host countries

9,500+

Employees and contractors
throughout the Americas

Today, we directly employ over

where an operation is located.

4,500 employees across our company

Hiring locally is one of key ways

and benefit from the expertise of

that we contribute to the economic

over 5,000 local contractors. These

health of the communities in which

numbers do not include the Canadian

we operate.

Malartic mine, our very successful

jointly owned operation with

Diversity

Agnico-Eagle.

Supporting a local Workforce

We are an equal opportunity

employer. We hire without

discrimination based on, race, gender,

We prioritize local and regional

sexuality, disability, ethnicity or

employment across our operations.

religion, throughout all levels of the

In each of the jurisdictions where we

company. Our diversity mandate

operate, we provide employment

extends from our mine operations

opportunities at all levels of our

to our board room. We are actively

operations – from entry level positions

seeking to diversify our workforce,

through to management. In total,

and our commitment to diversity is

over 99% of our employees come

reflected in our values. In fact, our

from within the specific countries

Code of Conduct ensures that there

Yamana Annual
Report 2018

is no distinction between each gender,

and in practice there is no distinction

between each gender’s salaries within

the same employee category.

(See Cristina’s story on this page.)

training

Yamana is focused on training

and development in all regions

where we operate. Performance

management and the identification

of high-potential candidates

support our commitment to our

global workforce development

programs. Our successful Learning

Management System (LMS) has

helped us integrate and automate

the management of training to all of

our offices and operations, offering

multiple learning opportunities in

areas such as safety, compliance,

leadership training and executive

development.

Every employee should be able

to develop the skills needed to

achieve their career aspirations. We

promote a dynamic environment

that encourages professional growth,

and use tools to provide individual

assessment, identify training

opportunities and create individual

development plans. We also provide

financial support for external courses

and grant sabbatical leaves with

guaranteed professional reintegration.

“ Yamana is a good
company to work for.
They make sure we
work safely. I have
grown professionally,
and I am proud to be
part of this company
and proud of everything
I have achieved.”

aGuS tín ChaCón moreno

El Peñón,

Loading and Transport
Equipment Operator
8 Years of Service

“ I love my job. I am
the first woman to
have worked in the
underground mine
here and I thank
the Company for
having given me this
opportunity. I want to
thank everyone that
supported me, devoted
their time to me and
who trained me to
operate the equipment.
That is my passion.
I love working in the
underground mine.”

CriStina Soto

Cerro Moro,

Heavy Machinery Operator
6 Years of Service

Yamana Annual
Report 2018

our People cont.

Through Yamana’s training programs,

probability of success at Yamana;

We also engage with our contractors

employees at an Operator level

both today and in future.

in many of the same ways we engage

receive on average 75 hours of

with our employees.

additional training per year, while

engaging and rewarding employees

those at the Supervisor and Senior

levels receive approximately 30 hours

per year. This role specific training

allows employees to excel at their

current positions and opens new

opportunities through capacity

development. Ultimately, this allows

our employees to have greater

Our employees are engaged through

many formal and informal methods

including management meetings,

union briefings, daily meetings

between employees and health and

safety teams, and participation and

feedback from employee surveys.

All full-time Yamana employees

are provided with benefits that are

designed at a site level to mirror

competitive best practices for each

location in which we operate. These

include coverage on healthcare,

life insurance, pension, short- and

long-term disability coverage and

parental leave.

Yamana Annual
Report 2018

“ Yamana is a renowned
company. I have
achieved professional
growth and many
opportunities over the
years. Congratulations
to Yamana Gold for
its 15 years of success;
I am proud of, and
love working for this
company.”

ronalDo alveS GaBriel

Chapada,

Operator III
11 Years of Service

“ I have been working at
Yamana for 14 years;
this company is very
important for both
my professional and
personal development.
I started here as a
miner in 2005, and now
I am a geo-mechanics
supervisor. I really like
working here and am
proud to wear the
Company shirt.”

rommel GraSSi

Jacobina ,

Geo-mechanics Supervisor
14 Years of Service

“ My name is Bárbara
Abello; I have been with
the Company for ten
years. My experience
with Yamana Gold has
been great throughout
these years. The
Company has not only
helped me develop
professionally but
enriched my personal
life too. Everything
that I have achieved
is thanks to this job.
I started as an entry-
level worker and now I
am a supervisor. They
gave me the chance to
grow professionally.”

BárBara aBello

Minera Florida,

Quality Analyst in Chemical Laboratory
10 Years of Service

Yamana Annual
Report 2018

sustainability

In 2018, we continued to deliver on our sustainability
commitments to our employees, our communities and all
our other stakeholders. We completed the roll out of our
HSEC vision of “One Team, One Goal: Zero” across all sites
and made key progress on our sustainability goals.

20%

Reduction in total
recordable incident rate

94%

Host country procurement rate

OHSAS
18001

Certified

Our commitments to sustainability

has the knowledge and practice of

include continuously evolving our

applying it to meet the high standards

approach to Environmental, Social

we have set for ourselves.

and Governance (ESG) practices as

well as improving our disclosure on

ESG topics to ensure our stakeholders

are able to clearly see what we do and

understand why we do it.

Our Total Recordable Incident Rate

(TRIR) was 0.6% in 2018, representing

a 20% decrease from 2017. This is a

key metric and one that we watch

closely as a proxy for how effectively

The following are some highlights

we are managing health and safety

from our 2018 efforts and, for more

risks. While our TRIR declined in 2018

detailed discussions, we encourage

we unfortunately experienced a double

you to read our annual sustainability

fatality at our Gualcamayo operation

report, which will be available in

where a light vehicle carrying two

mid-2019.

health and Safety

We enhanced and refined our

standards and protocols for health

and safety, through the completed

introduction of our Fatal Risk

Protocols, and increased reporting

of High Potential Incidents, as well

as maintaining our OHSAS 18001

certification in 2018. Our efforts

have emphasized training of both

employees and contractors to

ensure everyone on our sites

maintenance contractors reversed

off of an elevated exploration drill

platform that was under construction
and fell into a ravine below. A

substantial internal investigation

was conducted and a number of key

lessons learned from the event were

incorporated at all of our sites that are

exposed to similar hazards and risks.

Specific sites also delivered impressive

accomplishments, including:

El Peñón completing the year without

the occurrence of a lost time injury;

and four sites, Minera Florida,

Yamana Annual
Report 2018

El Peñón, Jacobina and Chapada

Community

all completed at least one month

without a health and safety injury.

environment

We continue to work with our

stakeholders to ensure they are aware

of the nature of our operations in their

communities and are able to share in

We are proud of our environmental

the benefits of responsible mining.

performance and in 2018 we again

completed a year without a significant

environmental event.

We prioritize local and regional

employment across our operations.

Approximately 50% of our workforce

This performance extends a trend

is comprised of local employees, with

and reflects our continued efforts to

an additional 20% coming from the

implement best practices, such as

regions where we operate. In total,

retaining ISO 14001 and International

over 99% of our employees come

Cyanide Management Code

certifications.

from within the specific countries

where an operation is located.

Similar to previous years, in 2018 we

Along with in-country employment

had no major incidents at our Tailings

we strive to maintain high levels of

Management Facilities (TMFs).

We credit this to the extensive

procurement within an operation’s

minera Florida Community monitoring

country. In 2018 we achieved a host

program: Community members and

management of our TMFs by our

country procurement rate of 94%.

Yamana personnel jointly test the water

of a nearby estuary.

Yamana emergency preparedness

Workshop: Employees participate in a

workshop focused on accident response

as well as fire control and suppression.

employees as well as our robust

internal management and reporting

external recognition

system, designed specifically for

TMFs. This management and

reporting system includes monthly

reports of each tailings facility to be

submitted to senior management

in order to ensure accountability

throughout the organization. In 2018

all TMFs underwent two external

reviews, the first by in-country

tailings specialists and the second

by a renowned global expert. The

reviewers concluded there were

no significant weaknesses or

discrepancies from international best

practices at Yamana tailings facilities.

Our goal is to have our sustainability

performance speak for itself and

clearly indicate how we are applying

our vision on a daily basis. However,

we appreciate when third party

organizations recognize our work and

in 2018 we were again recognized both

as a corporation and at a site level.

Many of our sites received recognition

within the regions or countries they

are located, and more information on

these awards will be included in our

full sustainability results later this year.

Yamana Annual
Report 2018

Review of operations

Canadian Malartic (50% interest)

Chapada

349k oz

Gold Production 2018

$711/oz

Gold Co-Product AISC 2018

121k oz

Gold Production 2018

$399/oz

Gold Co-Product AISC 2018

• Canadian Malartic delivered record annual
production and exceeded guidance in 2018
at 10% higher production and costs lower
than expected and lower than those observed
in 2017.

• 2019 production forecast is 330k oz

(50% basis), in line with guidance for 2018,
with costs forecast to be similar to 2018
reported costs.

• Gold and copper mineral reserves increased
by 6% and 7%, respectively, over prior year,
representing a significant overall improvement
over depletion in 2018.

• Annual gold production exceeded

expectations in 2018. Underpinned by an
11% increase in the mill recovery rate for gold,
production was higher compared to 2017 at
below guidance costs.

• 2019 expansionary capex is $37M (50% basis),
of which $34M is earmarked for the Extension
Project. Work continues to focus on the
highway 117 road deviation, pit preparation
and tailings expansion.

• Phase 1 of the development plan which is

targeting a further ~2% increase in copper and
gold recoveries, remains on schedule for mid
year completion. Scope of work includes the
installation of six new DFR flotation cells.

Yamana Annual
Report 2018

El Peñón

Cerro Moro

152k oz

Gold Production 2018

$995/oz

Gold Co-Product AISC 2018

93k oz

Gold Production 2018

$600/oz

Gold Co-Product AISC 2018

• Gold production at El Peñón exceeded

guidance in 2018.

• GEO production in 2019 is forecast to be in
line with production guidance for 2018, with
cash costs and AISC expected to be lower to
those reported in 2018.

• Underground mine development activities

in H1 2019 are expected to provide access to
higher gold and silver grades in H2 2019, which
will afford the operation greater flexibility.

• 56% of the gold production and 62% of

the silver are expected in H2 2019. Unit costs
are expected to be commensurately lower in
H2 2019.

• Completed its successful ramp up at costs
below guidance, while exceeding 2018
production guidance as throughput and grades
increased according to plan.

• GEO production for 2019 is expected to
be in line with plan and prior guidance.
The operation will focus on optimizing the
underground mining design and processing
practices, building on the successes
delivered in 2018, the first six months of
commercial production.

• The exploration budget has been increased
by 33% over 2018 which will be used for an
aggressive drill program designed to test major
structures with potential to host a significant
new mineralized zone, while continuing
to generate new targets through multi-
disciplinary fieldwork.

Yamana Annual
Report 2018

Review of operations cont.

Jacobina

Minera Florida

145k oz

Gold Production 2018

$802/oz

Gold Co-Product AISC 2018

82k oz

Gold Production 2018

$1,099/oz

Gold Co-Product AISC 2018

• Jacobina delivered record annual production
and exceeded guidance in 2018. Production
was 7% higher than guidance with cost metrics
approximately 11% lower and also lower
compared to 2017.

• 2019 is forecast to be similar to that of 2018

for production and operating costs.

• 2019 includes an additional $8M of

expansionary capex for the internalization of
development activities with expected benefits
to operating costs starting in 2020.

• With significant underground development
work complete and a surface stockpile of
approximately 100,000 tonnes grading 2.0 g/t
the mine continues to be well positioned to
deliver on its production and cost targets.

• Higher mining rates are expected in the PVS
and Pataguas zones, with overall production
expected to improve modestly over 2018.

• Several cost containment initiatives planned
for 2019 are expected to continue to lower
costs overall.

• Exploration is expected to focus on infill

drilling to extend mineral reserves. Prior year
programs have generated new potential, which
is being reviewed in the context of the mine
plan updates and optimization efforts.

exploration

Yamana Annual
Report 2018

The Company’s exploration programs continue to deliver on
mineral resources discovery and mineral reserve replacement
and growth. Overall, the exploration program successfully
increased mineral reserves to replace 2018 mineral depletion,
excluding assets that were disposed of in 2018.

2018 Exploration Highlights

Chapada: Gold and copper mineral reserves increased
by 6% and 7% respectively, over prior year, representing a

Jacobina: Replaced production depletion in 2018 and
increased gold mineral reserves by 11%, significantly higher

significant overall improvement over depletion in 2018. The

than 2017. Importantly, gold grades in the mineral reserve

Sucupira and Baru zones at Chapada provided significant

and mineral resource categories have trended higher, which

contributions to the increases in gold and copper mineral

was a strategic objective of the 2018 drill program. In terms

reserves with the Suruca deposit adding further increases to

of further additions to mineral inventory, the 2018 program

gold. The Corpo Sul and Santa Cruz zones contributed to

was also successful with additions of over 800,000 ounces

the significant increase in the mineral resource categories.

to inferred mineral resources.

Measured and Indicated resources for Gold and Copper

increased 19% and 54% respectively while inferred mineral

resources for Gold and Copper were neutral and increased

214% respectively.

el peñón: In 2018, mineral reserves increased by 5% for gold
and 6% for silver, increasing over depletion in 2018. In addition,
inferred mineral resources were maintained at similar grades

Cerro moro: Gold and silver mineral reserves increases
were offset by depletion associated with the 2018

production at the site. The Veronica vein as well as sectors

in the Escondida FE and FW contributed to the reserve

increases. Several new mineralized zones have been

identified in the core mine area and regionally. With an
increased exploration budget in 2019, these areas will be

through further drilling and modelling on secondary vein

points of focus moving forward.

structures such as Dorada Este and Aleste SS.

Canadian malartic: Gold mineral reserves reflect depletion
associated with 2018 production. Additional drilling at East

minera Florida: For 2018, total gold mineral reserves reflect
depletion associated with 2018 production and an updated

block model. The year was highlighted by adding new

Malartic and Odyssey zones, which represent potential

mineral reserves and mineral resources in the core mine

underground opportunities at Malartic, contributed to the

adjacent mine infrastructure, especially on the PV Sur and

increase in ounces in the measured and indicated mineral

Fantasma zones.

resource categories. Exploration programs are ongoing to

evaluate zones along the Canadian Malartic trend, including

the Odyssey, East Malartic, Midway and East Amphi zones.

These opportunities have the potential to provide new

sources of ore for the Canadian Malartic mill.

Yamana Annual
Report 2018

Mineral
Reserves
and Mineral
Resources

Mineral Reserves (Proven and Probable)

Yamana Annual
Report 2018

gold

Yamana gold Projects
alumbrera (12.5%)
Canadian Malartic (50%)
Cerro Moro
Chapada Zones
Suruca Zones
Total Chapada

El Peñón Ore
El Peñón Stockpiles
Total el Peñón

Jacobina
Jeronimo (57%)
Minera Florida Ore
Minera Florida Tailings
Total Minera florida

Total gold Mineral Reserves

agua Rica

silver

Yamana gold Projects
Cerro Moro
El Peñón Ore
El Peñón Stockpiles
Total el Peñón

Minera Florida Ore
Minera Florida Tailings
Total Minera florida

Total silver Mineral Reserves

agua Rica

Copper

Yamana gold Projects
Alumbrera (12.5%)
Chapada Zones
Suruca Zones
Total Chapada

Total Copper Mineral Reserves

agua Rica

Zinc

Yamana gold Projects
Minera florida ore
Minera florida Tailings
Total Zinc Mineral Reserves

Molybdenum

Yamana gold Projects
Alumbrera (12.5%)
Total Molybdenum Mineral Reserves

agua Rica

Totals may not add due to rounding

Proven Mineral Reserves

Probable Mineral Reserves

Total – Proven and Probable

Tonnes
(000’s)

Grade Contained
oz. (000’s)

(g/t)

Tonnes
(000’s)

Grade Contained
oz. (000’s)

(g/t)

Tonnes
(000’s)

Grade Contained
oz. (000’s)

(g/t)

8,435
23,029
43
388,701
11,454
400,155

693
17
710

18,565
6,350
690
-
690

457,977

384,871

0.39
0.89
10.57
0.17
0.42
0.18

5.11
2.41
5.04

2.32
3.91
3.61
-
3.61

0.37

0.25

106
658
15
2,103
153
2,256

114
1
115

1,385
798
80
-
80

5,413

3,080

294
55,799
1,766
275,928
53,741
329,669

3,738
1,029
4,768

9,290
2,331
2,512
1,248
3,760

407,677

524,055

0.37
1.18
11.64
0.16
0.53
0.22

5.38
1.18
4.47

2.39
3.79
3.54
0.94
2.68

0.54

0.21

4
2,122
661
1,381
908
2,289

646
39
685

714
284
286
38
324

8,728
78,829
1,809
664,629
65,195
729,824

4,431
1,047
5,478

27,855
8,681
3,202
1,248
4,449

7,083

3,479

865,653

908,926

0.39
1.10
11.61
0.16
0.51
0.19

5.33
1.20
4.55

2.34
3.88
3.56
0.94
2.82

0.45

0.22

109
2,780
675
3,484
1,062
4,546

760
40
800

2,099
1,082
366
38
404

12,496

6,559

Tonnes
(000’s)

Grade Contained
oz. (000’s)

(g/t)

Tonnes
(000’s)

Grade Contained
oz. (000’s)

(g/t)

Tonnes
(000’s)

Grade Contained
oz. (000’s)

(g/t)

43
693
17
710

690
-
690

620.7
166.1
107.2
164.7

28.1
-
28.1

1,443

112.9

384,871

3.7

857
3,700
60
3,760

623
-
623

5,240

46,176

1,766
3,738
1,029
4,768

2,512
1,248
3,760

653.3
171.7
15.2
137.9

21.9
14.6
19.5

10,294

183.1

524,055

3.3

37,102
20,630
502
21,133

1,770
584
2,353

60,588

56,070

1,809
4,431
1,046
5,478

3,202
1,248
4,449

652.6
170.8
16.7
141.3

23.2
14.6
20.8

37,959
24,330
562
24,893

2,393
584
2,976

11,736

174.5

65,828

908,926

3.5

102,246

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

8,435
388,701
-
388,701

397,136

384,871

0.40
0.25
-
0.25

0.25

0.56

74
2,138
-
2,138

2,212

4,779

294
275,928
-
275,928

276,222

524,055

0.38
0.26
-
0.26

0.26

0.43

3
1,568
-
1,568

1,571

5,011

8,728
664,629
-
664,629

673,357

908,926

0.40
0.25
-
0.25

0.25

0.49

77
3,707
-
3,707

3,784

9,790

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

690
-
690

1.53
-
1.53

23
-
23

2,512
1,248
3,760

1.13
0.58
0.94

62
16
78

3,202
1,248
4,449

1.21
0.58
1.04

85
16
102

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

Tonnes
(000’s)

Grade Contained
lbs (mm)

(%)

8,435
8,435

0.013
0.013

384,871

0.033

2.45
2.45

279

294
294

0.014
0.014

524,055

0.030

0.09
0.09

350

8,728
8,728

908,926

0.013
0.013

0.031

2.54
2.54

629

Yamana Annual
Report 2018

Mineral Resources (Measured, Indicated and Inferred)

(exclusive of Mineral Reserves)

gold

Yamana gold Projects
alumbrera (12.5%)
arco sul
Canadian Malartic (50%)
Cerro Moro
Chapada Zones
Suruca Zones
Total Chapada

El Peñón Mine
El Peñón Tailings
El Peñón Stockpiles
el Peñón Total

Jacobina
Jeronimo (57%)
La Pepa
Lavra Velha
Minera florida
Monument bay
suyai
Total gold Mineral Resources

agua Rica

silver

Yamana gold Projects
Cerro Moro
El Peñón Mine
El Peñón Tailings
El Peñón Stockpiles
el Peñón Total

Minera florida
suyai
Total silver Mineral Resources

agua Rica

Totals may not add due to rounding

Measured Mineral Resources

Indicated Mineral Resources

Total – Measured and Indicated

Inferred Mineral Resources

Tonnes
(000’s)

Grade
(g/t)

Contained
oz. (000’s)

Tonnes
(000’s)

Grade
(g/t)

Contained
oz. (000’s)

Tonnes

(000’s)

Grade

(g/t)

Contained

oz. (000’s)

Tonnes

(000’s)

Grade

(g/t)

Contained

oz. (000’s)

6,792
-
1,885
18
58,885
1,284
60,169

232
-
-
232

24,999
772
15,750
-
1,207
-
-
111,823

27,081

Tonnes
(000’s)

18
232
-
-
232

1,207
-
1,457

27,081

0.39
-
1.36
10.83
0.12
0.39
0.12

8.02
-
-
8.04

2.48
3.77
0.61
-
5.87
-
-
0.86

0.14

85
-
83
6
222
16
238

60
-
-
60

1,994
94
308
-
228
-
-
3,095

120

1,917
-
13,615
1,224
363,929
81,039
444,968

1,579
-
1,019
2,598

15,711
385
133,682
-
3,829
36,581
4,700
659,210

173,917

0.54
-
1.80
5.14
0.14
0.54
0.22

5.88
-
1.13
4.0

2.45
3.69
0.57
-
4.79
1.52
15.00
0.61

0.14

33
-
786
202
1,676
1,416
3,092

298
-
37
336

1,238
46
2,452
-
590
1,787
2,286
12,849

776

Grade
(g/t)

Contained
oz. (000’s)

Tonnes
(000’s)

Grade
(g/t)

Contained
oz. (000’s)

Tonnes

(000’s)

Grade

(g/t)

Contained

oz. (000’s)

Tonnes

(000’s)

Grade

(g/t)

Contained

oz. (000’s)

1,253.0
194.6
-
-
194.6

41.0
-
80.1

2.4

707
1,450
-
-
1,450

1,592
-
3,749

2,042

1,224
1,579
-
1,019
2,598

3,829
4,700
12,351

173,917

381.2
207.1
-
28.8
137.1

29.2
23.0
84.5

2.9

14,997
10,512
-
942
11,454

3,594
3,523
33,568

16,158

8,709

15,500

1,241

422,814

82,323

505,137

1,811

1,019

2,830

40,710

1,157

149,432

5,036

36,581

4,700

771,033

200,998

1,241

1,811

1,019

2,830

5,036

4,700

13,807

200,998

0.42

1.74

5.22

0.14

0.54

0.21

6.15

1.13

4.35

2.47

3.74

0.57

5.05

1.52

15.00

0.64

0.14

393.5

205.4

28.8

141.8

32.0

23.0

84.1

2.8

118

869

208

1,898

1,432

3,330

358

396

3,232

139

2,760

817

1,787

2,286

15,941

896

15,704

11,962

942

12,904

5,186

3,523

37,317

18,200

848

5,000

36,210

1,706

156,081

12,565

168,646

2,953

13,767

16,719

12,145

1,118

37,900

3,934

6,445

41,946

900

333,516

642,110

1,706

2,953

13,767

16,719

6,445

900

25,770

642,110

0.46

4.02

1.99

3.84

0.08

0.48

0.11

7.25

0.55

1.74

2.58

4.49

0.50

4.29

5.01

1.32

9.90

0.95

0.12

257.8

254.8

18.9

60.6

29.4

21.0

64.4

2.3

646

2,319

211

422

194

616

689

245

933

1,008

161

620

543

1,038

1,781

274

10,162

2,444

14,139

24,190

8,380

32,570

6,093

575

53,377

48,124

NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

Yamana Annual
Report 2018

Measured Mineral Resources

Indicated Mineral Resources

Total – Measured and Indicated

Inferred Mineral Resources

Tonnes

(000’s)

Grade

(g/t)

Contained

oz. (000’s)

Tonnes

(000’s)

Grade

(g/t)

Contained

oz. (000’s)

Tonnes
(000’s)

Grade
(g/t)

Contained
oz. (000’s)

Tonnes
(000’s)

Grade
(g/t)

Contained
oz. (000’s)

8,709
-
15,500
1,241
422,814
82,323
505,137

1,811
-
1,019
2,830

40,710
1,157
149,432
-
5,036
36,581
4,700
771,033

200,998

0.42
-
1.74
5.22
0.14
0.54
0.21

6.15
-
1.13
4.35

2.47
3.74
0.57
-
5.05
1.52
15.00
0.64

0.14

118
-
869
208
1,898
1,432
3,330

358
-
37
396

3,232
139
2,760
-
817
1,787
2,286
15,941

896

848
5,000
36,210
1,706
156,081
12,565
168,646

2,953
13,767
-
16,719

12,145
1,118
37,900
3,934
6,445
41,946
900
333,516

642,110

0.46
4.02
1.99
3.84
0.08
0.48
0.11

7.25
0.55
-
1.74

2.58
4.49
0.50
4.29
5.01
1.32
9.90
0.95

0.12

13
646
2,319
211
422
194
616

689
245
-
933

1,008
161
620
543
1,038
1,781
274
10,162

2,444

Grade

(g/t)

Contained

oz. (000’s)

Tonnes

(000’s)

Grade

(g/t)

Contained

oz. (000’s)

Tonnes
(000’s)

Grade
(g/t)

Contained
oz. (000’s)

Tonnes
(000’s)

Grade
(g/t)

Contained
oz. (000’s)

1,241
1,811
-
1,019
2,830

5,036
4,700
13,807

200,998

393.5
205.4
-
28.8
141.8

32.0
23.0
84.1

2.8

15,704
11,962
-
942
12,904

5,186
3,523
37,317

18,200

1,706
2,953
13,767
-
16,719

6,445
900
25,770

642,110

257.8
254.8
18.9
-
60.6

29.4
21.0
64.4

2.3

14,139
24,190
8,380
-
32,570

6,093
575
53,377

48,124

NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

gold

Yamana gold Projects

alumbrera (12.5%)

arco sul

Canadian Malartic (50%)

Cerro Moro

Chapada Zones

Suruca Zones

Total Chapada

El Peñón Mine

El Peñón Tailings

El Peñón Stockpiles

el Peñón Total

Jacobina

Jeronimo (57%)

La Pepa

Lavra Velha

Minera florida

Monument bay

suyai

agua Rica

silver

Total gold Mineral Resources

Yamana gold Projects

Cerro Moro

El Peñón Mine

El Peñón Tailings

El Peñón Stockpiles

el Peñón Total

Minera florida

suyai

Total silver Mineral Resources

agua Rica

Totals may not add due to rounding

1,207

5.87

6,792

1,885

58,885

1,284

60,169

232

24,999

772

15,750

111,823

27,081

Tonnes

(000’s)

232

1,207

1,457

27,081

0.39

1.36

10.83

0.12

0.39

0.12

8.02

8.04

2.48

3.77

0.61

0.86

0.14

1,253.0

194.6

41.0

80.1

2.4

222

238

1,994

308

228

3,095

120

707

1,450

1,592

3,749

2,042

1,917

13,615

1,224

363,929

81,039

444,968

1,579

1,019

2,598

15,711

385

133,682

3,829

36,581

4,700

659,210

173,917

1,224

1,579

1,019

2,598

3,829

4,700

12,351

173,917

0.54

1.80

5.14

0.14

0.54

0.22

5.88

1.13

4.0

2.45

3.69

0.57

4.79

1.52

15.00

0.61

0.14

381.2

207.1

28.8

137.1

29.2

23.0

84.5

2.9

786

202

1,676

1,416

3,092

298

336

1,238

2,452

590

1,787

2,286

12,849

776

14,997

10,512

942

11,454

3,594

3,523

33,568

16,158

Yamana Annual
Report 2018

Copper

Yamana gold Projects
alumbrera (12.5%)
Chapada Zones
Suruca Zones
Total Chapada

Total Copper Mineral Resources

agua Rica

Zinc

Yamana gold Projects
Minera florida
Total Zinc Mineral Resources

Molybdenum

Yamana gold Projects
alumbrera (12.5%)
Total Molybdenum Mineral Resources

agua Rica

Totals may not add due to rounding

Measured Mineral Resources

Indicated Mineral Resources

Total – Measured and Indicated

Inferred Mineral Resources

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

6,792
58,885
-
58,885

65,676

27,081

Tonnes
(000’s)

0.37
0.20
-
0.20

0.22

0.45

55
261
-
261

316

266

1,917
363,929
-
363,929

365,846

173,917

0.24
0.22
-
0.22

0.22

0.38

10
1,765
-
1,765

1,775

1,447

8,709

422,814

431,522

200,998

0.34

0.22

0.39

2,025

2,090

1,714

848

156,081

156,928

642,110

0.21

0.23

0.34

781

785

4,853

Grade
(%)

Contained
lbs (mm)

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

1,207
1,207

2.22
2.22

62
62

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

6,192
6,192

0.014
0.014

27,081

0.049

1.94
1.94

3,829
3,829

Tonnes
(000’s)

462
462

173,917

1.63
1.63

138
138

Grade
(%)

Contained
lbs (mm)

0.013
0.013

0.037

0.13
0.13

142

5,036

Tonnes

(000’s)

1.77

197

Grade

(%)

Contained

lbs (mm)

6,445

Tonnes

(000’s)

1.32

187

Grade

(%)

Contained

lbs (mm)

6,654

200,998

0.014

0.039

2.07

172

642,110

0.014

0.034

0.03

480

NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

Yamana Annual
Report 2018

Copper

Yamana gold Projects

alumbrera (12.5%)

Chapada Zones

Suruca Zones

Total Chapada

agua Rica

Zinc

Total Copper Mineral Resources

Yamana gold Projects

Minera florida

Total Zinc Mineral Resources

Molybdenum

Yamana gold Projects

alumbrera (12.5%)

Total Molybdenum Mineral Resources

agua Rica

Totals may not add due to rounding

Measured Mineral Resources

Indicated Mineral Resources

Total – Measured and Indicated

Inferred Mineral Resources

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

6,792

58,885

65,676

27,081

Tonnes

(000’s)

0.37

0.20

0.22

0.45

261

316

266

1,917

363,929

365,846

173,917

0.24

0.22

0.38

1,765

1,775

1,447

8,709
422,814
-
422,814

431,522

200,998

0.34
0.22
-
0.22

0.22

0.39

65
2,025
-
2,025

2,090

1,714

848
156,081
-
156,081

156,928

642,110

0.21
0.23
-
0.23

0.23

0.34

4
781
-
781

785

4,853

Grade

(%)

Contained

lbs (mm)

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

Tonnes
(000’s)

Grade
(%)

Contained
lbs (mm)

1,207

2.22

Tonnes

(000’s)

Grade

(%)

Contained

lbs (mm)

6,192

0.014

27,081

0.049

1.94

3,829

Tonnes

(000’s)

462

173,917

1.63

138

Grade

(%)

Contained

lbs (mm)

0.013

0.037

0.13

142

5,036
5,036

Tonnes
(000’s)

1.77
1.77

197
197

Grade
(%)

Contained
lbs (mm)

6,445
6,445

Tonnes
(000’s)

1.32
1.32

187
187

Grade
(%)

Contained
lbs (mm)

6,654
6,654

200,998

0.014
0.014

0.039

2.07
2.07

172

85
85

642,110

0.014
0.014

0.034

0.03
0.03

480

NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

Yamana Annual
Report 2018

Year end 2018 Mineral Reserves and Mineral Resources
Reporting notes

1. Metal Price, Cut-off Grade, Metallurgical Recovery

Mine

Mineral Reserves

Mineral Resources

Yamana gold Projects

alumbrera Projects (12.5%)

alumbrera Deposit

Price assumption: $1,250 gold, $2.91 copper.

Price assumption: $1,250 gold, $2.95 copper.

Underground cut-off at 0.5% copper equivalent.

Underground cut-off at 0.43% copper equivalent.

Metallurgical recoveries average 87.85% for copper and
72.31% for gold.

bajo el Durazno Deposit

N/A

arco sul

N/A

Price assumption: $1,250 gold, $2.95 copper.

0.74 g/t Aueq cutoff within underground economic
envelope.

Price assumption: $1,500 gold.

2.5 g/t Au cutoff.

Canadian Malartic (50%)

Price assumption: $1,200 gold.

Price assumption: $1,200 gold

Open pit cut-off grades range from 0.374 to 0.384 g/t Au.

Metallurgical recoveries for gold range from 87% to 96.7%
depending on zone.

Cut-off grades range from 0.37 g/t Au inside pit to
1.0 g/t Au outside or below pit.

Underground Cut-off grade at Odyssey is 1.15 g/t Au
(stope optimized) and at East Malartic Underground is
1.25 g/t Au (stope optimized).

Cerro Moro

Price assumption: $1,250 gold and $18.00 silver.

Price assumption: $1,600 gold and $24.00 silver.

Open pit cut-off at 3.27 g/t gold and Underground
cut-off at 5.71 g/t gold.

Metallurgical recoveries average 95% for gold and 93%
for silver.

3.0 g/t Aueq cut-off.

Chapada

Chapada Zone

Price assumption: $1,250 gold, $3.00 copper.

Price assumption: $1,600 gold, $4.00 copper.

Open pit cut-off at $4.06/t (Main Pit, Corpo Sul,
Cava Norte and Sucupira).

Open pit cut-off at $4.06/t (Chapada pits and
Suruca SW).

Metallurgical recoveries at Chapada are dependent on
zone and average 83.11% for copper and 56.94% for gold.

suruca Zone

Price assumption: $1,300 gold.

Price assumption: $1,600 gold.

Cut-off grade 0.19 g/t gold for Suruca oxide.

Cut-off grade 0.16 g/t gold for Suruca oxide.

Cut-off grade 0.3 g/t gold for Suruca sulphide.

Cut-off grade 0.23 g/t gold for Suruca sulphide.

Metallurgical recoveries for Suruca oxide average 85%
for gold.

Metallurgical recoveries for Suruca sulphide average 88%
for gold.

Yamana Annual
Report 2018

1. Metal Price, Cut-off Grade, Metallurgical Recovery (continued)

Mine

Mineral Reserves

Mineral Resources

Yamana gold Projects

el Peñón

Price Assumption:$1,250 gold, $18.00 silver.

Price Assumption:$1,600 Au, $24.00 Ag.

Open Pit cut-off at 1.75 g/t gold equivalent.

Underground cut-off ranging from 3.57 g/t gold equivalent
to 3.70 g/t gold equivalent.

Low grade stockpiles cut-off 0.95 g/t gold equivalent.

Underground cut-off at 2.78 g/t gold equivalent except
for Pampa Agusta Victoria (2.88 g/t), Chiquilla Chica
(2.87 g/t), Laguna (2.85 g/t ) and Fortuna-Dominador
zones (2.84 g/t). Mill recoveries of 95% and 86.5% used
for Mineral Resource Estimation.

Mineral Resources contained in tailings and stockpiles
reported at cut-offs of 05.0 g/t and 0.79 g/t gold
equivalent respectively.

Metallurgical recoveries for open pit ores range from
89.0% to 95.6% for gold and from 80.7% to 97.7% for silver.

Metallurgical recoveries range from 87.2% to 99.0% for
gold and from 59.8% to 92.6% for silver.

Metallurgical recoveries for underground ores range from
87.2% to 99.0% for gold and from 59.8% to 92.6% for silver.

Metallurgical recoveries for tailings estimated to be 60%
for gold and 30% for silver.

Metallurgical recoveries for low grade stockpiles are 95.2%
for gold and 83.0% for silver.

Metallurgical recoveries for stockpiles estimated to be
88.0% for gold and 80.8% for silver.

Jacobina

Price assumptions: $1,250 gold.

Price assumptions: $1,500 gold.

Underground cut-off grade is 1.20 g/t gold.

Underground cut-off grade is 1.0 g/t gold with a minimum
mining width of 1.5 meters.

Metallurgical recovery is 96%.

Jeronimo (57%)

Price Assumption:$900 Au.

Cut-off grade at 2.0 g/t gold.

Metallurgical recovery for Au is 86%.

La Pepa

Lavra Velha

Minera florida

N/A

Price Assumption: $780 Au.

Cut-off grade at 0.30 g/t gold.

Price assumption: $1,300 gold and $3.50 copper.

Cut-off grade at 0.2 g/t gold and 0.1% copper.

Price assumption: $1,250/oz gold, $18.00/oz silver and
$1.25/lb Zn.

Underground cut-offs for Las Petaguas Zone USD90.75/t
and for the Core Mine Zones USD94.79/t.

Underground cut-off grade is 2.50 g/t gold.

Metallurgical recoveries are 90.16% for gold, 52.31% for
silver and 68.80% for zinc.

Monument bay

N/A

Price Assumption: $1,200 Au.

suyai

agua Rica

N/A

Price assumption: $1,000/oz gold, $2.25/lb copper,
$17.00/oz silver and $12.00/lb molybdenum.

Metallurgical recoveries are 84.9% for copper, 52.7%
for gold, 67.6% for silver, 65.9% for zinc and 68.0%
for molybdenum.

Cut-off grades are 0.4 g/t gold and 0.7 g/t gold for the
open pits and 4.0 g/t gold for underground.

5.0 g/t Au cut-off inside mineralized wireframe modeling.

Cut-off grade at 0.2% Copper.

Yamana Annual
Report 2018

2018 financial Review

29 management’s Discussion and analysis

29 Highlights and Relevant Updates

Core Business, Strategy and Outlook

Review of Financial Results

51 Operating Segments Performance

Construction, Development and Exploration

65 Mineral Reserve and Mineral Resource Estimates

Financial Condition and Liquidity

Economic Trends, Business Risks and Uncertainties

Contingencies

Critical Accounting Policies and Estimates

Non-GAAP Financial Measures and Additional
Subtotals in Financial Statements

90 Disclosure Controls and Procedures

96 management’s responsibility for Financial reporting

97 reports of independent registered public accounting Firm

99 Consolidated Financial Statements

104 notes to the Consolidated Financial Statements

Yamana Annual
Report 2018

MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION

This Management’s Discussion and Analysis of Operations and Financial Condition ("MD&A") should be read in conjunction with Yamana Gold
Inc.'s (the "Company" or "Yamana") most recently issued annual Consolidated Financial Statements for the year ended December 31, 2018
("Consolidated Financial Statements"). (All figures are in United States Dollars ("US Dollars") unless otherwise specified and are in accordance
with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

The Company has included certain non-GAAP financial measures, which the Company believes, that together with measures determined in
accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial
measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures
employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with IFRS. The non-GAAP financial measures included in this MD&A include:

• Cash costs per ounce produced on a co-product and by-product basis, for gold and silver;
• Co-product cash costs per pound of copper produced;
• All-in sustaining costs per ounce produced on a co-product and by-product basis, for gold and silver;
• All-in sustaining co-product costs per pound of copper produced;
• Net debt;
• Net free cash flow;
• Average realized price per ounce of gold/silver sold; and
• Average realized price per pound of copper sold.

Definitions and reconciliations associated with the above metrics can be found in Section 11: Non-GAAP Financial Measures and Additional
Subtotals in Financial Statements of this MD&A.

Cautionary statements regarding forward-looking information and mineral reserves and mineral resources are included in this MD&A.

HIGHLIGHTS AND RELEVANT UPDATES

For the year ended December 31, 2018 (unless otherwise noted)

•

The Company exceeded production expectations, and achieved this at total production costs for gold, silver, and copper that were
either in line with or better than guided ranges for the cost metrics for the full year. Relative to guidance for the Company's six mines
("Yamana mines"), production performance was as follows:

Production

Total gold production (ounces)
Total silver production (ounces)
Total copper production (pounds) - Chapada

2018 Actual 2018 Guidance (i)
920,000
7,550,000
125,000,000

940,619
8,023,046
129,151,441

% increase

2%
6%
3%

(i)

2018 guidance for gold, and copper production reflects the increases that were applied during the year. For gold, it represents an increase of 20,000 ounces to
the initially guided 900,000 ounces for Yamana mines. For copper, it represents an increase of 5 million pounds to the initially guided 120 million pounds. Silver
reflects the revision applied to El Peñón guidance in the third quarter of 2018 from the initially guided 8.15 million ounces for Yamana Mines.

• Successful first six months of operations at Cerro Moro mine resulted in gold production above expectations at an average mill feed
grade of 15.85 g/t and recovery rate of 93.1%. Silver production was also above expectations at an average mill feed grade of 725
g/t and recovery rate of 89.4%. Additionally, all per unit costs were below guidance for both gold and silver.

Yamana Annual
Report 2018

• Strong operating performance was also attributed to above-expectation gold production at Chapada and El Peñón, and record

production at Canadian Malartic and Jacobina.

• Completion and advancement of several strategic initiatives during the year including:

◦ Closing of the previously announced transaction with Mineros S.A. ("Mineros") to sell 100% of the Company's interest in
the Gualcamayo Mine in Argentina and completion of the option agreement on the La Pepa gold project in Chile. The
transaction was structured to provide both immediate payments and value, and future payments and value (Refer to Note
6: Divestitures to the Company's Consolidated Financial Statements for additional details).

◦ Completion of the business combination between Leagold Mining Corporation ("Leagold") and Brio Gold Inc. ("Brio Gold"),
resulting in the Company’s ownership percentage interest in Leagold of 20.5% and warrants offering upside potential from
the combined synergies and strong production platform.

◦ Evaluation of and engagement in discussions relating to various development scenarios for Agua Rica. This includes an
integration scenario between Agua Rica and Alumbrera pursuant to which a joint pre-feasibility study has started, and for
which results are expected in the first half of 2019. Concurrently, the Company continues the engagement with the other
partners of Alumbrera and with various other stakeholders at the national and provincial level.

•

The Company's exploration programs continue to deliver on mineral resources discovery and mineral reserve replacement and
growth. Overall, the exploration program successfully increased mineral reserves to replace 2018 mineral depletion, excluding assets
that were disposed of in 2018. Measured and indicated mineral resources and inferred mineral resources increased by 5% and 7%,
respectively. For additional details, refer to Section 4: Operating Segments Performance and Section 6: Mineral Reserve and Mineral
Resource Estimates of this MD&A.

• Cash flows from operating activities of $404.2 million and cash flows from operating activities before net change in working capital
during the year of $566.3 million. These amounts include amortization of deferred revenue of $41.7 million in the third quarter and
$33.3 million in the fourth quarter, which are related to deferred revenue attributable to deliveries under the Company’s copper
advanced sales program during the respective quarters. The Company's copper advanced sales program's deliveries began in the
third quarter of 2018 and will continue through the second quarter of 2019. If not for the timing difference of cash proceeds attributable
to this transaction, the Company’s cash flows from operating activities before net change in working capital would have been higher
by those amounts during the quarters as follows:

(In millions of US Dollars, unless otherwise noted)
Illustration of impact due to copper advanced
sales program
Copper pounds to be delivered per contract (millions)

Cash flows from operating activities before net
change in working capital (i)
Impact due to copper advanced sales program

Cash flows from operating activities before net
change in working capital, normalized for the
copper advanced sales program (i)

For the three months ended

March 31,
2018

June 30,
2018

September
30, 2018
13.2

December
31, 2018
10.7

March 31,
2019 (ii)
8.2

June 30,
2019 (ii)
8.2

Cumulative
impact

40.3

206.4 $

157.5 $

86.6 $

115.8 $

(125.0)

—

41.7

33.3

—
25.1

— $

24.9

81.4 $

157.5 $

128.3 $

149.1 $

—

— $

—

(i)

(ii)

A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A.
For illustration purposes only. The Company intends to provide information each subsequent period reflecting the impact due to copper advanced sales program over its
term.

•

The Company's financial position continues to remain strong and is expected to improve further into 2019 with the continuation of
strong operating results, planned declines in expansionary capital expenditures, a full year of operations at Cerro Moro, the sale of
unrefined gold and silver carried over from 2018, and the mid-year completion of the advanced copper sales agreement.
Lower debt by 5%, compared to December 31, 2017, although affected by one-time payments and the timing of shipments; the
Company remains committed to lowering overall debt.

Yamana Annual
Report 2018

Other Financial Updates

• Significant events having a non-cash accounting impact during the fourth quarter that are not reflective of ongoing operations include

(Refer to Section 3: Review of Financial Results of this MD&A for additional details):
◦ An impairment reversal of $150.0 million in respect of Jacobina following the significant increase in mineral reserves and mineral

resources, which extends the life of the mine, and other operational improvements.

◦ An impairment of $151.0 million in respect of Minera Florida and $45.0 million in respect of goodwill on acquisition of Canadian

Malartic.

OPERATING

• Gold production for Yamana Mines(viii), as shown in the table below, increased by 14% in 2018, compared to 2017. Individual mine
results included increases of 10% at Canadian Malartic, 7% at Jacobina and 1% at Chapada, in addition to the contribution of 92,793
ounces of gold from Cerro Moro, which reached commercial production towards the end of the second quarter of 2018. The
aforementioned increases more than offset the lower production at other mines.

For the three months ended December 31,

For the years ended December 31,

2018

2017

2018

2017

Gold

Production - Yamana Mines (ounces) (viii)
Production - Total Yamana (ounces) (i)
Sales - Yamana Mines (ounces) (viii)
Sales - Total Yamana (ounces)
Sales - consolidated (ounces)

Per ounce data (ii)

Revenue
Average realized price (iii)(iv)
Average market price (v)
Total cost of sales - Yamana Mines (vi) (viii)
Total cost of sales - Total Yamana (vi)
Total cost of sales - consolidated (vi)
Co-product cash costs - Yamana Mines (iii) (viii)
Co-product cash costs - Total Yamana (iii)
Co-product AISC - Yamana Mines (iii) (viii)
Co-product AISC - Total Yamana (iii)
By-product cash costs - Yamana Mines (iii) (viii)
By-product AISC - Yamana Mines (iii) (viii)

270,193
292,484
261,929
284,420
284,420

1,223 $
1,226 $
1,226 $
999 $
1,010 $
1,010 $
570 $
610 $
763 $
801 $
420 $
657 $

214,828
259,606
217,754
261,057
301,513

1,269 $
1,286 $
1,277 $
929 $
966 $
980 $
612 $
660 $
884 $
899 $
476 $
800 $

940,619
1,032,903
910,485
1,004,462
1,075,214

823,263
977,315
818,468
971,148
1,147,204

1,263 $
1,267 $
1,268 $
1,008 $
1,031 $
1,042 $
614 $
649 $
816 $
843 $
445 $
696 $

1,250
1,264
1,259
973
1,023
1,038
621
672
869
888
490
788

$
$
$
$
$
$
$
$
$
$
$
$

Yamana Annual
Report 2018

• Silver production was 60% higher than in 2017, mainly from the contribution of Cerro Moro:

Silver (vii)

Production (ounces)
Sales (ounces)
Per ounce data (ii)

Revenue
Average realized price (iii)(iv)
Average market price (v)
Total cost of sales (vi)
Co-product cash costs (iii)
Co-product AISC (iii)
By-product cash costs (iii)
By-product AISC (iii)

For the three months ended December 31,

For the years ended December 31,

2018

2017

2018

2017

3,264,695
3,065,102

1,171,042
1,081,731

8,023,046
7,000,887

5,004,761
5,125,689

$
$
$
$
$
$
$
$

14.59 $
14.59 $
14.56 $
14.23 $
7.12 $
9.57 $
4.99 $
7.99 $

16.46 $
16.49 $
16.71 $
13.26 $
8.86 $
11.90 $
7.44 $
11.05 $

15.37 $
15.37 $
15.71 $
15.58 $
8.25 $
10.81 $
5.90 $
9.11 $

16.80
16.83
17.08
13.63
10.01
13.48
8.58
12.65

• Copper production was 1.5% higher than in 2017 and 4% above guidance.

Copper

Production (millions of pounds)
Sales (millions of pounds)

Per pound data (ii)

Revenue
Average realized price (iii)(iv)
Average market price (v)
Total cost of sales (vi)
Co-product cash costs (iii)
Co-product AISC (iii)

For the three months ended December 31,

For the years ended December 31,

2018

39.0
35.5

2.56 $
2.90 $
2.80 $
1.87 $
1.50 $
1.86 $

2017

34.7
33.2

2.36 $
3.02 $
3.09 $
1.68 $
1.51 $
1.85 $

2018

129.2
123.6

2.70 $
2.99 $
2.96 $
1.80 $
1.51 $
1.90 $

2017

127.3
120.1

2.36
2.78
2.80
1.74
1.54
1.89

$
$
$
$
$
$

_____________________________________________

(i)

(ii)
(iii)

Total Yamana includes Gualcamayo's gold production of 22,291 and 92,284 ounces for the fourth quarter of 2018 and year ended December 31, 2018, respectively (44,778
and 154,052 ounces for the fourth quarter and year ended December 31, 2017, respectively).
Cost of sales are per ounce/pound sold and cash costs and AISC are per ounce/pound produced.
A cautionary note regarding non-GAAP financial measures and their respective reconciliations, as well as additional subtotals in financial statements are included in Section
11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this MD&A.

Source of information: Bloomberg.

(iv) Realized prices based on gross sales compared to market prices for metals may vary due to the timing of the sales.
(v)
(vi) Cost of sales consists of the sum of 'cost of sales excluding Depletion, Depreciation and Amortization' ("DDA") plus DDA.
(vii) Beginning January 1, 2018, silver production and related KPIs for Chapada and Minera Florida no longer meet the minimum significance threshold in accordance with the

Company's policy.

(viii) Yamana Mines includes Chapada, El Peñón, Canadian Malartic, Jacobina, Minera Florida and Cerro Moro.

HEALTH, SAFETY, ENVIRONMENT AND CORPORATE RESPONSIBILITY

•

The Company's Total Recordable Injury Frequency Rate was 0.6(i) for 2018, which represents a 20% improvement over 2017. A
number of mines demonstrated the possibility of achieving the Company's goal of One Team, One Goal: Zero throughout 2018.
In addition to the previously disclosed awards received in 2018, in November, the Company was awarded the "Argentinian Mining
Company of the Year" by the industry magazine Panorama Minero at the 3rd International Seminar of Metals and Mining.

(i) Calculated on 200,000 hours worked and includes employees and contractors.

Yamana Annual
Report 2018

FINANCIAL

For the three months ended December 31, 2018

• Revenue for the three-month period ended December 31, 2018 was comparable to that of the same period in 2017, as 5% lower
realized gold prices were partly offset by higher silver and copper sales compared to December 31, 2017. Revenue was impacted
by lower attributable ounces following the sale of Brio Gold and Gualcamayo. At Cerro Moro, elevated silver grades above plan led
to capacity constraints at the mine furnace, resulting in an increase in gold and silver precipitate at the end of the year, which impacted
sales volumes. Precipitate inventory levels are expected to be drawn down to normalized levels in the first half of 2019.

• Net loss attributable to the Company's equity holders for the three months ended December 31, 2018 was $61.4 million or $0.06 per
share basic and diluted, compared to a net loss of $188.6 million or $0.20 per share basic and diluted for the three months ended
December 31, 2017. This includes certain non-cash and other items that may not be reflective of current and ongoing operations
reducing the Company's earnings by $87.6 million or $0.09 per share and included:
◦ An impairment reversal of $150.0 million in respect of Jacobina following the significant increase in mineral reserves and mineral

resources, which extends the life of the mine, and other operational improvements.

◦ The reversal was offset by non-cash accounting impairments of $151.0 million in respect of Minera Florida and $45.0 million in

respect of goodwill on acquisition of Canadian Malartic.

◦ A higher income tax expense of $33.3 million due to a non-recurring tax payment made in the quarter.
◦ A non-cash unrealized foreign exchange gain on income taxes resulting from the US Dollar weakening during the quarter against
local currencies. (Refer to Note 13: Income taxes to the Company's Consolidated Financial Statements for additional details).
Despite the fluctuations in respect of non-cash unrealized foreign exchange loss, cash taxes paid are in line with expectations
and benefiting from the annual depreciation of the local currencies.

◦ Other provisions, write-downs and adjustments and other assets. (Refer to Section 3: Review of Financial Results of this MD&A

for additional details).

In addition to the Company's ongoing cost reduction efforts, continued weaker local currencies against the US Dollar positively
impacted costs.

For the year ended December 31, 2018

• Revenue for the year ended December 31, 2018 was lower than December 31, 2017 due to lower consolidated gold sales quantities,
as there were more attributable ounces from Brio Gold and Gualcamayo in 2017. This was partly offset by an additional 3.5 million
pounds of copper sold at an 8% higher average realized price. As aforementioned, the build up of unsold metal inventory at Cerro
Moro also negatively impacted revenue for the year.

• Net loss attributable to the Company's equity holders for the year ended December 31, 2018 was $284.6 million or $0.30 per share
basic and diluted, compared to net loss of $188.5 million or $0.20 per share basic and diluted for the year ended December 31, 2017.
This includes certain non-cash and other items that may not be reflective of current and ongoing operations reducing the Company's
earnings by $396.5 million or $0.42 per share. The more notable items are related to the non-cash accounting impairment and
reversal recorded during the year, the gains on the disposition of Brio Gold and the Canadian exploration properties, the non-cash
unrealized foreign exchange loss and provisions, the one-time charge associated with payment to the Brazilian tax authorities
described above, and other write-downs and adjustments. (See Section 3: Review of Financial Results of this MD&A for additional
details).

Yamana Annual
Report 2018

(In millions of US Dollars; unless otherwise noted)

Revenue
Cost of sales excluding DDA

Gross margin excluding DDA
Depletion, depreciation and amortization
Impairment of mining properties and goodwill, net

Mine operating earnings (loss)
General and administrative
Exploration and evaluation
Share of earnings of associate
Other operating (expenses) income, net
Impairment of non-operating mining properties

Operating earnings (loss)
Finance costs
Other costs (income), net

Net loss before income taxes
Income tax (expense) recovery, net

Net loss from continuing operations
Net loss from discontinued operations

Net loss

Attributable to:
Yamana Gold Inc. equity holders
Non-controlling interests

Per share data
Loss per share - basic and diluted (iv)
Loss per share from continuing operations -
basic and diluted (iv)
Dividends declared per share
Dividends paid per share
Weighted average number of common shares outstanding
(thousands)
Basic and diluted
Cash flows (ii)

Cash flows from operating activities (v)
Cash flows from operating activities
before net change in working capital (iii)
Cash flows used in investing activities
Cash flows (used in) from financing activities

For the three months
ended December 31,

2018

483.4 $
(266.2)

217.2 $
(130.9)
(46.0)

40.3 $
(21.0)
(3.6)
4.5
(11.0)
14.0

23.2 $
(32.0)
0.2

(8.6)$
(52.8)$

(61.4)$
— $

(61.4)$

(61.4)$
— $

(61.4)$

2017 (i)

478.8 $
(264.7)

214.1 $
(100.9)
(256.9)

(143.7) $
(34.0)
(7.0)
—
(16.4)
(99.6)

(300.7) $
(28.7)
(7.4)

(336.8) $
138.5 $

(198.3) $
— $

(198.3) $

(188.6) $
(9.7) $

(198.3) $

For the year ended December 31,

2018
1,798.5 $
(1,010.0)

2017 (i)

1,803.8 $
(1,042.4 )

2016

1,787.7
(1,029.0)

788.5 $
(438.3)
(149.0)
201.2 $
(91.8)
(13.0)
5.5
9.3
(153.0)

(41.8)$
(137.4)
2.5
(176.7)$
(121.0)$

(297.7)$
— $
(297.7)$

(284.6)$
(13.1)$

(297.7)$

761.4 $
(426.8 )
(256.9 )

77.7 $

(113.6 )
(21.2 )
—
(23.6 )
(99.6 )

(180.3) $
(110.8 )
(20.9 )

(312.0) $
113.9 $

(198.1) $
— $

(198.1) $

(188.5) $
(9.6) $

(198.1) $

758.7
(462.3)
(711.3)

(414.9)
(100.2)
(14.9)
—
(39.7)
96.2

(473.5)
(110.2)
(32.0)

(615.7)
324.9

(290.8)
(17.5)

(308.3)

(307.9)
(0.4)

(308.3)

(0.06)$

(0.20) $

(0.30)$

(0.20) $

(0.32)

(0.06)$

0.005 $
0.005 $

(0.20) $

0.005 $
0.005 $

(0.30)$
0.020 $
0.020 $

(0.20) $

0.020 $
0.020 $

(0.31)

0.020
0.030

949,337

948,468

949,030

948,187

947,443

114.7 $

158.5 $

115.8 $

(91.4)$
(49.3)$

122.3 $

(196.9) $
68.3 $

404.2 $

566.3

(329.6)$
(134.3)$

484.0 $

651.9

498.0 $

(644.2) $
217.9 $

626.6

(407.7)
(267.5)

$
$

(i)

(ii)
(iii)

(iv)
(v)

The Company has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated except for certain
hedging requirements. Accordingly, the 2017 comparative periods have been restated for the changes in hedging requirements; however, the 2016 results have not been
restated. Refer to Note 5: Recent Accounting Pronouncements to the Company's Consolidated Financial Statements.
For further information on the Company's liquidity and cash flow position, refer to Section 7: Financial Condition and Liquidity of this MD&A.
A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A.
Attributable to Yamana Gold Inc. equity holders.
Cash flows from operating activities for the three months ended December 31, 2018 include the impact of $37.5 million in non-cash deferred revenue recognized in respect
of metal sales agreements, including $33.3 million associated with the copper advanced sales program.

Yamana Annual
Report 2018

• Net free cash flow for the following periods ended December 31, 2018 was as follows:

(In millions of US Dollars)

Net free cash flow (i) (ii)

Cash flows from operating activities before income taxes paid
and net change in working capital
Income taxes paid
Payments made to Brazilian tax authorities

Cash flows from operating activities before
net change in working capital (ii)
Net change in working capital (iii)

Cash flows from operating activities
Adjustments to operating cash flows:

Unearned revenue recognized on copper prepay and streaming
arrangement net of advance payments received (iv)
Payments made to Brazilian tax authorities
Other cash payments

Non-discretionary items related to the current period

Sustaining capital expenditures
Interest and other finance expenses paid

Net free cash flow

For the three months ended December 31,

For the year ended December 31,

2018

155.3 $

(6.1)
(33.3)

115.9 $

(1.1)

114.8 $

37.5

33.3
(0.1)

(52.5)
(27.6)

105.4 $

2017

170.3 $

(1.4)
(46.6)

122.3 $

36.2

158.5 $

(6.6)

46.6
—

(57.0)
(34.3)

107.2 $

2018

708.4

(40.8)
(101.3)

566.3

(162.1)
404.2 $

(28.3)
101.3
6.7

(187.8)
(80.1)
216.0 $

2017

593.7

(19.0)
(76.7)

498.0

(14.0)

484.0

(6.6)

76.7
6.0

(204.7)
(103.8)

251.6

(i)
(ii)

Sustaining; for further information on the Company's liquidity and cash flow position, refer to Section 7: Financial Condition and Liquidity of this MD&A.
A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A. Net Free Cash Flow is adjusted for payments not reflective of current period operations, advance payments received pursuant to metal purchase agreements, non-
discretionary expenditures from sustaining capital expenditures and interest and financing expenses paid related to the current period.

(iii) Notable movements in working capital from December 31, 2017 include: the payment of year-end related accruals at the beginning of the first quarter, one-time operational
inventory buildup at Cerro Moro and other inventory increases at other mines, timing of regular trade payments for the Company's operating mines throughout 2018, and
indirect tax credit buildup at certain of the Company's operations throughout 2018. Refer to Section 7: Financial Condition and Liquidity of this MD&A for further details.
Adjustment represents non-cash deferred revenue recognized in respect of metal sales agreements, the cash payments for which were received in previous periods and
were similarly reduced for comparability.

(iv)

Balance Sheet and Liquidity

• As at December 31, 2018, the Company had cash and cash equivalents of $98.5 million and available credit of $705.0 million, for

total liquidity of $803.5 million.

As at,
(In millions of US Dollars)

Total assets
Total long-term liabilities
Total equity
Working capital (i)
Cash and cash equivalents
Debt (current and long-term)
Net debt (ii)

December 31,
2018
8,012.9 $
3,492.5 $
4,024.0 $
(67.2)$
98.5 $
1,758.7 $
1,660.2 $

December 31,
2017
8,763.3 $
3,535.3 $
4,447.3 $
58.7 $
148.9 $
1,857.7 $
1,708.8 $

December 31,
2016
8,801.7
3,746.6
4,580.0
77.3
97.4
1,592.4
1,495.0

$
$
$
$
$
$
$

(i) Working capital is defined as the excess of current assets over current liabilities, which includes the current portion of long-term debt and assets and liabilities of disposal
groups held for sale. Accordingly, working capital is being impacted by the deferred revenue balance from the advanced copper sales agreement of $52.3 million, which is
classified as a current liability; however, this balance will decline in future reporting periods with remaining copper deliveries scheduled in March 2019 and June 2019. The
Company also has $192.0 million in stockpile inventory classified as other non-current assets as it is not expected to be processed within one year, but is readily available
for processing.
A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A.

(ii)

Yamana Annual
Report 2018

CAPITAL EXPENDITURES

• Capital expenditures for the three months ended December 31, 2018 were consistent with plan, broken down as follows:

For the three months ended December 31,

2018

2017

2018

2017

2018

2017

2018

2017

Chapada
El Peñón
Canadian Malartic
Jacobina
Cerro Moro
Minera Florida
Other (i)

Sustaining and other
9.4 $
$
7.4
11.4
5.1
9.4
4.4
5.4

5.6 $
8.1
15.6
7.0
—
5.4
15.3

Expansionary
2.4 $
1.1
8.9
9.4
1.7
10.5
2.2

3.4 $
—
20.2
5.7
48.3
3.0
24.1

52.5 $

57.0 $

36.2 $

104.7 $

Exploration
1.3 $
4.7
0.4
1.7
3.0
3.9
3.5
18.5 $

1.6 $
2.3 $
2.6 $
1.8 $
2.2 $
3.3 $
4.1 $
17.9 $

Total (ii)
13.1 $
13.2 $
20.7 $
16.2 $
14.1 $
18.8 $
11.1 $

10.6
10.4
38.4
14.5
50.5
11.7
43.5

107.2 $

179.6

(i)

(ii)

Included in Other are capital expenditures relating to Gualcamayo and Brio Gold, which were separately disclosed in the comparative period, as well as capitalized interest
in 2017 of $4.1 million. Comparatives have been reclassified to reflect the change in presentation adopted in the current period.
Net of movement in accounts payable, as applicable, for projects under construction and including applicable borrowing costs. Totals do not include the costs to add to the
low-grade long-term ore stockpiles at Chapada of $15.0 million, Canadian Malartic of $6.8 million and Jacobina of $1.4 million for the three months ended December 31,
2018.

• Capital expenditures for the year ended December 31, 2018 were consistent with plan, broken down as follows:

For the year ended December 31,

2018

2017

2018

2017

2018

2017

2018

2017

Chapada
El Peñón
Canadian Malartic
Jacobina
Minera Florida
Cerro Moro
Other (i)

Sustaining and other
$

35.2 $
31.8
46.4
21.0
14.5
15.0
23.9

Expansionary
4.1 $
1.1
31.4
20.6
32.2
61.3
33.0

13.4 $
—
31.0
17.6
17.8
172.0
68.5

27.9 $
38.5
48.2
21.7
24.6
—
43.8

187.8 $

204.7 $

183.7 $

320.3 $

Exploration
4.8 $
17.9
4.0
5.9
14.0
11.3
17.5
75.4 $

5.4 $
17.8 $
10.2 $
5.8 $
10.2 $
7.7 $
25.4 $
82.5 $

Total (ii)
44.1 $
50.8 $
81.8 $
47.5 $
60.7 $
87.6 $
74.4 $

446.9 $

46.7
56.3
89.4
45.1
52.6
179.7
137.7

607.5

(i)

(ii)

Included in Other are capital expenditures relating to Gualcamayo and Brio Gold, which were separately disclosed in the comparative period, as well as capitalized interest
of $8.3 million (2017: $11.3 million). Comparatives have been reclassified to reflect the change in presentation adopted in the current period.
Net of movement in accounts payable, as applicable, for projects under construction and including applicable borrowing costs. Totals do not include the costs to add to the
low-grade long-term ore stockpiles at Chapada of $43.0 million, Canadian Malartic of $27.0 million and Jacobina of $1.4 million for the year ended December 31, 2018.

CORE BUSINESS, STRATEGY AND OUTLOOK

Yamana is a Canadian-based gold, silver and copper producer with a significant portfolio comprised of operating mines, development stage
projects, and exploration and mineral properties throughout the Americas, mainly in Canada, Brazil, Chile and Argentina. Yamana plans to
continue to build on this base through expansion and optimization initiatives at existing operating mines, development of new mines, the
advancement of its exploration properties and, at times, by targeting other consolidation opportunities with a primary focus in the Americas.
The Company is listed on the Toronto Stock Exchange (trading symbol "YRI") and the New York Stock Exchange (trading symbol "AUY").

The Company’s principal mining properties comprise the Chapada and Jacobina mines in Brazil, the Canadian Malartic mine (50% interest) in
Canada, the Cerro Moro mine in Argentina, and the El Peñón and Minera Florida mines in Chile. The Company’s portfolio also includes a
20.5% interest in Leagold Mining Corporation ("Leagold") with mining properties in Brazil and Mexico, as well as a 100% interest in Agua Rica,
a large-scale copper, gold, silver and molybdenum deposit located in the province of Catamarca, Argentina.

Over the years, the Company has grown through phases of strategic acquisitions to upgrade its portfolio and by pursuing organic growth to
increase cash flows and unlock value at both existing mines and non-producing assets. Looking ahead, the Company’s primary objectives
include the following:

Yamana Annual
Report 2018

• Continued focus on the Company’s operational excellence program, advancing near-term and ongoing optimizations related to

production, operating costs, and the Company’s key performance objectives in health, safety, environment and community;

• Maximizing per share metrics related to the Net Asset Values ("NAV"), profitability and free cash flow of Yamana Mines, and cash

returns on invested capital, first on producing and then non-producing assets:

◦ Within the producing portfolio, attention remains on per share metrics related to the growth and quality of mineral reserves
and mineral resources. Primary objectives include mine life extensions, scope for throughput increases, metal grade and
recovery improvements, and cost reductions that are expected to improve margins and cash flow returns;

◦ For non-producing assets, the focus is on improving NAV through exploration, drilling and technical/financial reviews, the
advancements of exploration and mining permits, and community engagement. Over time, the Company will also consider
strategic alternatives to enhance returns from the non-producing assets. This may include advancing the projects to
producing assets, developing the assets through a joint venture or other strategic arrangements, or through monetization;
• Continuing balance sheet and financial performance improvements, with a targeted Net Debt leverage ratio of 1.5 or better with a
coincident reduction in gross debt to $1.2 to $1.3 billion or better. The Company’s revolver is to be addressed first and fully repaid.
In time, the objective is to reduce Net Debt further with a targeted Net Debt leverage ratio at or below 1.0. The Company also focuses
on tenor of debt preferring long-term debt that is consistent with life of mines;

• Optimizing and increasing mine life at the Company’s existing operating mines through exploration targeted on the most prospective

properties, including:

◦ Chapada, Canadian Malartic, Cerro Moro, Jacobina, and Minera Florida as a result of exploration success and prospective

geological settings;

◦ Minera Florida, El Peñón, Chapada, and Jacobina with the objectives of increasing mine life while also improving grade

and delivering potential for production increases through further delineation and infill drilling;

• Maximizing value from the long-life Chapada mine and the vast exploration opportunities through the evaluation of a phased approach

to a plant expansion and the targeting of higher grades and higher plant recoveries;

• Advancing several value realization and monetization initiatives over the guidance period, through the ongoing strategic and technical

reviews of its asset portfolio; and

• Pursuing the above with health and safety at the core to the Company's values, evidenced by the Company's continued commitment
to the "One Team, One Goal: Zero" vision for sustainability, which reflects the Company's commitment to zero harm to employees,
the environment and communities near mine operations.

In 2018, Yamana delivered on a number of strategic objectives, including:

•
•

•

the development and ramp up of the high-grade Cerro Moro gold and silver mine in Argentina,
further progress with Company portfolio rationalization initiatives with the sale of the Kirkland Lake exploration and assets, and
Gualcamayo mine, the latter of which achieved various corporate objectives and provides both immediate and periodic future
payments. Future payments from currently identified opportunities, new discoveries, mine life extensions and higher metal prices,
are expected to provide upside in value in relation to its current carrying value.
the transaction with Leagold Mining Corporation for the purchase of Brio Gold Corp which provides Yamana with exposure to a
combined equity with greater scale in terms of production and market capitalization.

These changes, together with a right-sized production platform, strong cash flows from operations, and the transition to a period of lower capital
requirements will position the Company to achieve one of its main objectives, which is to strengthen the balance sheet. With the completion
of Cerro Moro and after completion of the Canadian Malartic Extension project, which is in progress, there will be a reduction in expansionary
capital. This, when considered with the outlook for continued strong operating results, positions the Company well to deliver near-term step up
changes in cash flow and net free cash flow with this effect becoming more pronounced in mid-2019 with the completion of the advanced
copper sales agreement.

The Company is focused on increasing value through improving cash flows and returns on invested capital and increasing net asset value. In
that context, the Company’s development opportunities will be managed towards such increases and improvements, although within the
framework of the Company's balance sheet objectives. In addition to the usual project gating items, project scheduling and expenditures will
be largely sequential so as not to interfere with the Company’s balance sheet objectives and also the period of cash flow harvesting referred
to above. Monetization of certain assets or other strategic alternatives may ultimately provide additional flexibility to both the balance sheet and

Yamana Annual
Report 2018

project timing. Agua Rica and the Company’s interest in Leagold are two notable examples of opportunities over the 2019-2021 guidance
period. The Company expects that progress on technical studies, stakeholder contributions and other factors such as commercial agreements
will contribute to enhance the value of Agua Rica. The Company also expects that Leagold will continue to deliver on its development assets
and business plan, ultimately generating value accretion to the Company.

In terms of the Company’s approach to capital allocation, priority is to be given to the aforementioned balance sheet objectives. At current spot
metal prices, both the leverage ratio and gross debt targets are expected to be met during the guidance period, excluding consideration from
any potential monetization. Going forward, the Company’s strategic objective is to maintain these balance sheet targets through the metal price
cycle as a means to enhance financial flexibility. Importantly, this approach also affords the Company the ability to be opportunistic, such as
to build or buy assets off cycle, with consideration to shareholder returns including dividends and buy-backs, while balancing these initiatives
with the sustainability of cash flows through portfolio optimizations.

In the evaluation and assessment of projects, the Company’s approach is to target projects for which it has the technical expertise to develop
and operate. The Company is targeting after-tax returns of a multiple of its weighted average cost of capital and, as a rule of thumb,
approximately 15%. These returns may be adjusted to reflect the complexity of the construction and operation, whether technical or geopolitical.
The timing of any construction activity would follow detailed engineering to mitigate against late-cycle design and scope changes. This
approach was fundamental to the success of Cerro Moro and remains the template for the Company going forward.

As aforementioned, the Company is an Americas company operating in mining friendly jurisdictions with adherence to best practices for mining.
Presently, Yamana operates in Canada, Brazil, Chile, and Argentina. Consideration will be given to operating in other jurisdictions in North and
South America, so long as there are established protocols for permitting and adherence to best practices. Given the significant exploration
and expansion opportunities, along with advancing projects in jurisdictions in which the Company presently operates it is unlikely that Yamana
will be in other jurisdictions in the foreseeable future.

Yamana intends to remain a significant intermediate-sized company. It considers an optimal portfolio consisting of six to eight mines with a
production platform of 1 to 2 million ounces. In that context, Yamana considers copper production as an equivalent only for determination of
size and scale. Presently, Yamana produces approximately 1.4 million gold equivalent ounces on this basis from six mines. This means that
the Company remains a dominant intermediate-sized company, and has room for substantial further growth.

On size of mines, Yamana prefers each mine to produce at least 130,000 ounces as that represents sufficient size and scale by mine. Presently,
four mines exceed 200,000 gold equivalent ounces (again, treating copper as a gold equivalent on for purposes of determining scale) and two
of those are over 300,000 gold equivalent ounces. Five mines exceed, or soon will exceed, 150,000 gold equivalent ounces. Only one mine
produces below a threshold of 130,000 ounces, although with exploration success, this may change.

PERFORMANCE MEASURES - Going forward

Beginning January 1, 2019, the Company has realigned its performance measures or key performance indicators ("KPIs"), in particular, non-
GAAP financial measures, other financial measures and non-financial/operational measures to support its objective of financial and operating
predictability, transparency, and comparability. In line with these objectives, the Company's performance measures will be reported using the
voluntary guidance provided by the Accounting Standards Board's "Framework for Reporting Performance Measures" (First Edition; December
2018). Additionally, as an active member of the World Gold Council, the Company has adopted the updated version of the Guidance Note on
All-in Sustaining Costs ("AISC").

With this realignment, the significant changes to the KPIs or revised methodology includes:

• Production - Silver production will be treated as a gold equivalent in determining a combined precious metal production unit
commonly referred to as gold equivalent ounces ("GEO"). Specifically, guidance GEO produced are calculated by converting silver
production to its gold equivalent using relative gold/silver metal prices at an assumed ratio and adding the converted silver production

Yamana Annual
Report 2018

expressed in gold ounces to the ounces of gold production. Actual production GEO calculations are based on an average realized
gold to silver price ratio for the current quarter.

• Cash costs - Calculated on a per GEO sold basis. Following the Company's objective of more closely aligning with GAAP financial
measures, the total costs used as the numerator of the unitary calculation represent Cost of Sales excluding DDA, net of treatment
and refining charges. In the case of Chapada, costs directly attributable to GEO and copper will be allocated on that attributable
basis. Non-attributable costs will be allocated based on the relative value of revenues for each metal, which will be determined
annually at the beginning of each year.

• AISC - calculated on a per GEO sold basis (and in the case of Chapada, also calculated for copper) and reflects the changes in the
recently updated Guidance Note. A complete listing of such changes, and a reconciliation to current AISC metrics is noted below.

Production Guidance

The following table presents the Company's total gold equivalent ounces ("GEO"), gold, silver and copper production expectations for Yamana
Mines in 2019, 2020 and 2021.

Total GEO production (ounces) (i)
Total gold production (ounces)
Total silver production (ounces)
Total copper production (millions of pounds) - Chapada

2018 Actual (ii)

2019 Guidance

2020 Guidance

2021 Guidance

1,041,350
940,619
8,023,046
129.2

1,060,000
940,000
10,000,000
120.0

1,100,000
955,000
12,000,000
120.0

(i)

(ii)

Includes gold plus silver at a ratio of 79.6 for 2018 and a ratio of 82.5 for 2019, 2020 and 2021.

Excluding any attribution from Yamana’s interest in Leagold Mining Corporation and Gualcamayo (sold during the year).

With the development and ramp-up in 2018 of the high-grade Cerro Moro project, the Company’s newest mine, in the near and medium-term
the Company remains focused on optimizing the existing portfolio of six operating mines while also advancing studies for various expansion
projects and longer term development assets.

Gold and silver production are expected to increase in the guidance period, increasing to 955,000 ounces and 12 million ounces, respectively,
by 2020. Gold production is expected to benefit from continued strong performance across the portfolio, led by production increases at
Canadian Malartic, while silver production is expected to benefit from grade and production increases at Cerro Moro, in line with current mine
plans. Copper production, all of which is from Chapada, is expected to remain constant throughout the guidance period.

The Company expects to continue its established trend of delivering stronger production in the second half of the year compared to the first
half of the year.

The following table presents mine-by-mine production results for 2018 and expectations for 2019.

Production Expectation by
Mine

Chapada
Canadian Malartic (50%)
El Peñón
Cerro Moro
Jacobina
Minera Florida

GEO

Gold

Silver

2018 Actual
121,003
348,600
201,065
144,352
144,695
81,635

2019 E

100,000
330,000
198,500
203,000
145,000
85,000

2018 Actual
121,003
348,600
151,893
92,793
144,695
81,635

2019 Guidance

2018 Actual

2019 Guidance

100,000
330,000
150,000
130,000
145,000
85,000

—
—
3,903,961
4,119,085
—
—

—
—
4,000,000
6,000,000
—
—

Yamana Annual
Report 2018

Cost Outlook

Costs are forecasts to remain in the indicated ranges through the guidance period. Despite the changes to unitary costs as previously
described, cash flows of the operations would not be affected as these items have always impacted cash flows. To facilitate year-on-year
comparisons of cost guidance 2018 actuals have been adjusted for these changes guidance:

Total Cost of Sales
per unit sold

By-Product Cash
Costs
per GEO sold

By-Product AISC
per GEO sold

Cash Costs
per unit sold

AISC
per unit sold

2018
Actual

2019
Guidance

2018
Actual

2019
Guidance

2018
Actual

2019
Guidance

2018
Actual

2019
Guidance

2018
Actual

2019
Guidance

Gold Equivalent (i)

Copper (Chapada) (ii)

1,028

1.78

$1,020 -
$1,060 $
$1.75 -
$1.95

501

—

$510 -
$550 $

—

835

—

$850 -
$890 $

656

— $

1.74

$640 -
$680 $

$1.60 -
$1.80 $

931

2.06

$920 -
$960
$1.90 -
$2.10

(i)

(ii)

A cautionary note regarding non-GAAP financial measures and additional subtotals in financial statements are included in Section 11: Non-GAAP Financial Measures and
Additional Subtotals in Financial Statements of this MD&A. Excluding any attribution from Yamana’s interest in Leagold Mining Corporation and Gualcamayo (sold during
the year).
Cash costs and AISC for Copper are on a co-product basis.

The following tables provide the adjustments to reconcile Cash Costs and All-in Sustaining as defined in 2018, to the revised methodology:

Cash Costs (co-product, current methodology, per ounce/lb produced)

Production vs. sales
Inventory movement and adjustments
Commercial costs
Sales tax
Others

Subtotal
Cash Costs (co-product, revised methodology)
Less: by-product credit
Cash Costs (by-product, revised methodology)

All-in Sustaining Costs (co-product, current methodology, per ounce/lb produced)
Production vs. sales
Inventory movement and adjustments
Commercial costs
Sales tax
G&A stock based comp
Exploration CAPEX
Community social programs
Closure related expenses
Closure depletion
Others

Subtotal
All-in Sustaining Costs (co-product, revised methodology)
Less: by-product credit
All-in Sustaining Costs (by-product, revised methodology)

2018 Actual
$/GEO oz sold
614

2018 Actual
$/copper lb sold
1.51

0.07
0.01
0.09
0.06
—

0.23
1.74

11
13
3
11
4

42
656
(155)
501

2018 Actual
$/copper lb sold
1.76
0.08
0.01
0.09
0.06
—
0.03
—
0.03
—
—

0.30
2.06

2018 Actual
$/GEO oz sold
816
17
13
3
11
4
59
1
6
5
(5)

114
931
(96)
835

The following table presents cost of sales, cash costs and AISC results in 2018 and guidance by mine for 2019. 2018 actuals are adjusted to
reflect changes to the reporting methodology to facilitate direct comparisons:

Yamana Annual
Report 2018

Reflecting new
methodology

Chapada
Canadian Malartic (50%)
El Peñón
Cerro Moro (iii)
Jacobina
Minera Florida

$
$
$
$
$
$

2018 Actual
420 $
967 $
1,314 $
1,096 $
967 $
1,398 $

Total cost of sales per GEO sold (ii)
2019 Guidance

Cash costs per GEO sold (i)

2018 Actual

2019 Guidance

AISC per GEO sold (i) (ii)
2018 Actual

2019 Guidance

490 $
965 $
1,100 $
1,240 $
1,005 $
1,225 $

388 $
573 $
851 $
629 $
675 $
917 $

430 $
560 $
800 $
690 $
700 $
760 $

473 $
732 $
1,117 $
848 $
891 $
1,327 $

525
730
1,050
890
890
990

(i)

A cautionary note regarding non-GAAP financial measures and additional subtotals in financial statements are included in Section 11: Non-GAAP Financial Measures and
Additional Subtotals in Financial Statements of this MD&A. Also included is a reconciliation of 2018 actuals for cash costs and AISC per GEO demonstrating the full adoption
the World Gold Council methodology for AISC. Additionally, the Argentinean export tax in respect of Cerro Moro and certain Brazilian export taxes are included as
components of cost of sales. Previously, these items were treated as deductions to sales and not reflected in either cash costs or AISC.

(ii) Mine site AISC includes cash costs, mine site general and administrative expense, sustaining capital capitalized exploration and expensed exploration. Consolidated AISC

(iii)

incorporates additional non-mine site costs including corporate general and administrative expense.
For 2019, the most notable increase in Cerro Moro unitary costs is related to the introduction of the export tax of approximately $130 per GEO sold and the historical
Bocamina tax of approximately $40 per GEO sold, now both disclosed as part of Cost of Sales reflecting the Company's new methodology for cost reporting.

The following table presents sustaining capital and exploration spend results for 2018 and expectations by mine for 2019:

Expansionary capital

Sustaining capital

Total exploration (i)

(In millions of US Dollars)

Chapada
Canadian Malartic (50%)
El Peñón
Cerro Moro
Jacobina
Minera Florida
Other capex
Other exploration and
overhead

Total

2018 Actual
4.1 $
31.4
1.1
61.3
20.6
32.2
18.6

—

169.3 $

2019 Guidance

2018 Actual

2019 Guidance

2018 Actual

2019 Guidance

13.0 $
37.0
2.0
2.0
28.0
10.0
3.0

—

95.0 $

35.2 $
46.4
31.8
15.0
21.0
14.5
3.4

—

35.0 $
47.0
27.0
28.0
21.0
14.0
10.0

—

167.3 $

182.0 $

7.8 $
4.3
17.9
11.3
6.1
14.0
—

17.1

78.5 $

4.0
2.0
17.0
15.0
5.0
5.0
—

20.0

68.0

(i)

The Company expects approximately 77% of exploration spending will be capitalized in 2019.

Capital expenditure totals for 2019 do not include costs to add to long-term ore stockpiles, as part of the mine sequencing, at Chapada and
Canadian Malartic (50%). These costs are estimated at $57 million and $40 million, respectively, for 2019, compared to expenditures of $43.0
million and $27.0 million for the year ended December 31, 2018.

The lower-grade stockpile at Chapada measures approximately 99 million tonnes grading 0.22% copper and 0.16 g/t gold for contained pre-
recovery metal of 513,880 ounces of gold and 487 million pounds of copper. With mining costs already incurred and metallurgical recoveries
enhanced as a result of recent improvements to the processing plant, the economic potential of the stockpile material has improved, and as
such, the existing stockpile and planned increases are expected to improve the development studies being reviewed at Chapada, specifically
be considered for the plant expansion.

The following table presents other expenditure results in 2018 and expectations for 2019:

(In millions of US Dollars, unless otherwise noted)

Total DDA (ii)
Total general and administrative expenses ("G&A")

Cash based G&A
Stock-based G&A

2018 Actual (i)
412.0 $
83.4 $
77.8 $
5.6 $

$
$
$
$

2019 Guidance

475.0
87.0
75.0
12.0

(i)

Excluding any attribution from Yamana’s interest in Leagold Mining Corporation and Gualcamayo (sold during the year).

Yamana Annual
Report 2018

(ii)

The Company expects higher DDA in 2019 compared to 2018 mainly due to a full year of production at Cerro Moro and the draw down and unrefined inventory of gold and
silver carried over from 2018, mostly from Cerro Moro. Cerro Moro DDA reflects both the costs of construction as well as the historical acquisition costs.

Guidance Assumptions

Key assumptions, in relation to the above guidance, are presented in the table below.

GEO Ratio
Gold
Silver
Copper
C$/US$
BRL/US$
CLP/US$
ARS/US$

$
$
$
$

2018
Actual (i)
79.6
1,264 $
15.87 $
2.99 $
1.30 $
3.65
641.00
28.09

2019 Guidance
Assumptions
82.5
1,275
15.50
2.75
1.31
3.60
680.00
37.00

(i)

2018 metal prices and exchange rates shown in the table above are the average realized metal prices and exchange rates for the year ended December 31, 2018.
Excludes Yamana’s interest in Leagold Mining Corporation and Gualcamayo (sold during the year).

REVIEW OF FINANCIAL RESULTS

IMPAIRMENT AND REVERSAL OF IMPAIRMENT

In the fourth quarter of 2018, in accordance with policy, operating mine sites were reviewed for indicators of impairment or reversal and the
Company performed the annual goodwill impairment test. The Company observed an increase in the recoverable amount of our Jacobina
mine in Brazil that resulted in a reversal of the impairment loss recorded in 2014, totalling $150.0 million. This reversal was offset by an
impairment at Minera Florida of $151.0 million and a $45.0 million impairment of goodwill recorded on the acquisition of the Canadian Malartic
mine. No indicators of impairment or reversal were identified for the other operating mine sites.

Under IFRS, an impairment loss is recognized when the carrying value of an asset (or cash-generating unit ("CGU")) is above the recoverable
amount, being the higher of ‘fair value less costs of disposal’ or its ‘value in use’. When the inverse is true, a reversal of impairment is
recognized. Based on the continuous application of this current fair value principle and updating of discounted cash flow models for changes
in macro-economic and mine specific operational assumptions and triggers, it is more likely that under IFRS compared to other accounting
standards, an asset will be impaired or have an impairment reversal occur earlier and/or more frequently.

Yamana Annual
Report 2018

Jacobina

The Company recorded an impairment of its Jacobina mine in 2014. The impairment was the result of the average processing rate
declining to below 4,000 tonnes per day with life of mine plans contemplating a processing rate at less than 60% of capacity.
Additionally, the mine experienced dilution controls issues resulting in lower than expected grades and higher costs leading to an
impairment charge. Following several years of remediation plans, the Company considered the following factors to be an indicator
of reversal of the previous impairment charge:

• A significant increase in mineral reserves and mineral resources for 2018, which both extended the life of the mine and

improved the life of mine models.

• A second consecutive year of meaningful improvements, leading to a record production closer to long-term goal of 150,000

ounces per year.

• A reduction in costs to expected levels benefiting from the higher production and continuous cost reduction initiatives.
• Milling rates in excess of 95% of plant capacity reaching a sustainable level, following plant optimization initiatives including
the commissioning of the advanced control system in the third quarter, which enhanced plant stability. A modest investment
in 2019 is expected to increase processing capacity further.

• During the year, the Company developed underground areas and surface stockpiling, and achieved the goals of one month

ahead of ready-to-blast tonnage and additional five months of ready to drill ore.

The Company concluded that the recoverable amount for the Jacobina Cash Generating Unit ("CGU"), representing the CGU’s
FVLCD, exceeded the carrying amount. This resulted in a reversal of the impairment charge recorded in 2014, which was limited to
the carrying amount of the Jacobina CGU that would have been determined had no impairment charge been recognized in prior
years, net of depletion, depreciation and amortization charges.

Minera Florida

During 2018, the Minera Florida mine experienced lower production at higher than expected unit costs. Similar to the approach taken
at El Peñón and Jacobina in the past, the focus of the updated life of mine plan at Minera Florida is to right size the operation at a
sustainable production level. The focus is to maximize operating margins and to advance mine development and mineral reserve
delineation to deliver mine flexibility and scope for future potential production increases, driven by either throughput or grade.

In consideration of the above, at Minera Florida, a non-cash accounting impairment of $151.0 million was recognized, which resulted
from:

•

•
•

decreased life of mine profitability from an updated life of mine plan, developed in the fourth quarter of 2018 as part of the
Company’s annual process,
the impact of the plan on the value of exploration potential and land interest, and
the anticipated disposal of certain exploration land holdings of the Minera Florida CGU not contiguous to the area of the
mine.

Studies considering the decommissioning of the PTR plant will be evaluated during 2019 and several retrofits completed on the main
processing plant to be able to process approximately 900,000 tonnes per year or approximately 9% higher than current levels.

For 2019, mining activity has transitioned to the higher-grade zones of Pataguas and PVS, which will enable a higher production level
compared to 2018 and at an anticipated lower cost structure. A lower exploration budget and reduced drilling activity is planned while
the optimization progresses. Drilling at Los Patos zone in 2018 returned impressive assay results extending the zone, which will be
followed up further in 2019. In addition, Don Leopoldo was tested at depth, with results confirming mineralization is open at depth.
In general, the Company has applied more restrictive controls around the mineral resource modelling potential and continues to
perform additional work to have a better understanding of ore shoots.

Yamana Annual
Report 2018

The optimization of operations also prompted the review of a detailed plan for future exploration during the fourth quarter, both from
a budget and a strategic perspective. As the land holdings of the Minera Florida CGU are significant in size and breadth,
rationalization of the portfolio presented the opportunity to save on the ongoing maintenance and licensing costs that are currently
incurred. The value attributable to the land arose from a purchase price allocation associated with its acquisition.

Canadian Malartic

On June 16, 2014, the Company acquired a 50% interest in the Canadian Malartic mine. Goodwill of $427.6 million was recognized.
As a result of the deferred income tax liability recognized in purchase accounting, an additional "gross up" of the fair value of the
acquired assets is required, which resulted in the recognition of goodwill. Goodwill is not amortized and may be impaired in
future periods, pending the identification of additional mineral reserves and mineral resources. As goodwill is tested annually for
impairment and not amortized, unless the mine as a CGU can continuously replenish mineral reserves and mineral resources, it may
result in the gradual impairment of goodwill. As at December 31, 2018, the FVLCD of Canadian Malartic exceeded the mine's book
value. However, the sum of the carrying value of the Canadian Malartic CGU and goodwill from its acquisition was deemed to be in
excess of the FVLCD of the Canadian Malartic CGU by $45.0 million, due to the 2018 mineral depletion. The impairment represents
approximately 10% of the total goodwill balance.

For the year ended December 31, 2018, the Company recorded net impairment losses of $302.0 million (2017: $356.5 million) including the
above and the impairments previously recognized during the year with respect to sales transactions.

FINANCIAL RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2018

Net loss

• Net loss attributable to Yamana Gold Inc. equity holders, for the three months ended December 31, 2018 was $61.4 million or $0.06
per share basic and diluted, compared to a net loss of $188.6 million or $0.20 per share for the three months ended December 31,
2017. Significant events having an accounting or cash flow impact during the fourth quarter that are not reflective of ongoing
operations include (Refer to Section 3: Review of Financial Results of this MD&A for additional details):
◦ An impairment reversal in respect of Jacobina following the significant increase in mineral reserves and mineral resources, which

extends the life of the mine, and other operational improvements, as described above.

◦ The reversal was offset by non-cash accounting impairments in respect of Minera Florida and in respect of goodwill on acquisition

of Canadian Malartic.

◦ A higher income tax expense of $33.3 million due to a non-recurring tax payment made in the quarter.
◦ Approximately $6.4 million in export taxes that were recently enacted by the Argentine Executive Branch. In December, there
was a favourable judgment on proceedings challenging the constitutionality of the export tax in respect of the amounts paid prior
to December 3, 2018. The Company had paid $3.5 million in export taxes incurred prior to December 3, 2018.

◦ A $43.2 million non-cash unrealized foreign exchange gain, recorded in income taxes, resulting from the US dollar weakening

during the quarter against local currencies.

Yamana Annual
Report 2018

• Certain non-cash and other items that may not be reflective of current and ongoing operations were $87.6 million or $0.09 per share.
The Company refers to the following items, which may be used to adjust or reconcile input models in consensus estimates, the most
notable of which, being the aforementioned net impairment as discussed in Section 1: Highlights and Relevant Updates of this MD&A:

(In millions of US Dollars; unless otherwise noted)

Non-cash unrealized foreign exchange losses (gains)
Share-based payments/mark-to-market of deferred share units
Mark-to-market (gains) losses on derivative contracts (ii)
Net mark-to-market losses (gains) on investments and other assets
Revision in estimates and liabilities including contingencies
Gain on sale of subsidiaries
Impairment (reversal) of mining and non-operational mineral properties, and properties held for sale
Impairment of goodwill
Reorganization costs
Other provisions, write-downs and adjustments (i)
Non-cash tax on unrealized foreign exchange losses
Income tax effect of adjustments and other one-time tax adjustments (iii)

Total adjustments - increase to earnings attributable to Yamana Gold Inc. equity holders
Total adjustments - increase to earnings per share attributable to Yamana Gold Inc. equity holders

$
$

For the three months ended December 31,

2018

3.2 $
(0.5)
(2.6)
0.9
0.3
(2.7)
(13.0)
45.0
2.2
16.4
(43.2)
81.6
87.6 $
0.09 $

2017
(restated)
(1.2)
3.7
12.8
(0.5)
1.9
—
356.4
—
1.2
(0.5)
11.6
(141.3)

244.1
0.26

(i)
(ii)

The balance includes, among other things, the reversal of certain provisions such as tax credits and legal contingencies.
On January 1, 2018, the Company adopted IFRS 9 Financial Instruments. Under the transitional provisions of IFRS 9, the Company has restated the comparative period for
certain hedging requirements. Specifically, under IFRS 9, changes in time value on the Company's zero cost collars, which were taken to profit or loss under IAS 39:
Financial Instruments: Recognition and Measurement, are now recognized in OCI as a cost of hedging rather than in profit or loss. Accordingly, the results of the comparative
period have been adjusted to remove time value movements from profit or loss, and the comparative adjustments above have been adjusted accordingly.

(iii) Other one-time tax adjustments includes $50.1 million in deferred tax recognized as a result of foreign exchange in the period.

Revenue

• Revenue for the three months ended December 31, 2018 was $483.4 million, compared to $478.8 million in the same period in 2017;
as 5% lower realized gold prices were partly offset by higher silver and copper sales. Revenue was also impacted by lower
consolidated gold quantities sold, as there were attributable ounces from Brio Gold in 2017. At Cerro Moro, elevated silver grades
above plan led to capacity constraints at the mine furnace, resulting in an increase in gold and silver precipitate. This impacted sales
volumes. Precipitate inventory levels are expected to be drawn down to normalized levels the first half of 2019.

For the three months ended December 31,

2018

Gold (i)
Silver
Copper (i)

Revenue

Quantity

sold

Revenue per
ounce/pound

Revenue
(In millions of
US Dollars)

284,420 oz
3,065,102 oz
35,509,168

$
$
lbs $

1,223 $
14.59
2.56

347.9 $
44.7
90.8

483.4 $

2017

Revenue
(In millions of
US Dollars)
382.6
17.8
78.4

478.8

Yamana Annual
Report 2018

For the three months ended December 31,

Gold (i)

Silver
Silver subject to metal sales agreement (ii)

Copper (i)
Copper subject to metal sales agreements (ii)

Gross revenue
(Deduct) add:
- Treatment and refining charges of gold and copper concentrate
- Sales taxes (iii)
- Metal price, MTM, and derivative settlement adjustments
- Other adjustments

Revenue (iii)(iv)

Quantity
sold

284,420 oz

3,009,473 oz
55,629 oz

3,065,102 oz

$
$

22,701,830
12,807,338

lbs $
lbs $

35,509,168

lbs

2018

Average
realized price

1,226 $

14.54
17.26
14.59
2.79
3.08
2.90
$

Revenue
(In millions of
US Dollars)

348.7 $

2017

Revenue
(In millions of
US Dollars)
387.8

43.7
1.0

63.4
39.4

16.9
0.9

95.4
4.8

496.2 $

505.8

(10.0)
—
(2.8)
—

483.4 $

(10.9)
(5.5)
(10.7)
0.1

478.8

(i)
(ii)
(iii)
(iv)

Includes payable gold and copper contained in concentrate.
Balances represent the metals sold under the metal sales agreements and the advanced copper sales program.
Beginning on January 1, 2018, the Company is presenting revenue gross of certain sales taxes.
As discussed in Note 5: Recent Accounting Pronouncements to the Company's Consolidated Financial Statements, the Company adopted IFRS 15 Revenue from Contracts
with Customers on January 1, 2018. Under IFRS 15, the Company is required to account for the financing component on its streaming arrangements, under which, revenue
is increased by an imputed interest amount, with a corresponding increase to finance expense each period. The amount of this adjustment in the three months ended
December 31, 2018 was $4.2 million. In accordance with the transition provisions of IFRS 15, revenue in the comparative period has not been restated.

Cost of Sales

Lower unit costs of production more than offset higher production volumes during the three months ended December 31, 2018.
•
• Cost of sales excluding DDA for the three months ended December 31, 2018 was $266.2 million, in line with $264.7 million for the
same period in 2017. The cost associated with higher silver and copper sales were offset by the depreciation of local currencies
against the US Dollar.
Total DDA expense for the three months ended December 31, 2018 was $130.9 million, comparable to the $100.9 million for the
same period in 2017. DDA expense is higher mainly due to the higher production on the completion of ramp up at Cerro Moro,
partially offset by no DDA from Brio Gold or Gualcamayo.

•

Expenses and Other Income

• General and administrative expenses were $21.0 million for the three months ended December 31, 2018, 38% lower compared to

$34.0 million for the same period in 2017.

• Exploration and evaluation expenses were $3.6 million for the three months ended December 31, 2018, compared to $7.0 million for

the same period in 2017, in line with lower planned greenfield exploration during the period.

• Share of earnings of associate totalled $4.5 million for the three months ended December 31, 2018, representing the equity pick up

•

from the Company's interest in Leagold, which was acquired in May 2018.
The Company recorded other expenses of $11.0 million for the three months ended December 31, 2018, compared to other expenses
of $16.4 million for the same period in 2017.
Finance costs were $32.0 million for the three months ended December 31, 2018, compared to $28.7 million for the same period in
2017, primarily attributable to the non-cash interest expense of $3.6 million related to the financing component of deferred revenue
contracts recorded in the current period. Interest expense on outstanding debt remained reasonably consistent with the prior period.

Yamana Annual
Report 2018

• Other income was $0.2 million in the three months ended December 31, 2018 compared to other costs of $7.4 million in the
comparative period. This account is comprised primarily of unrealized gains and losses on derivatives and foreign exchange and,
given the nature of these accounts, is expected to fluctuate from year to year.

Income Tax Expense (Recovery)

•

The Company recorded an income tax expense of $52.9 million for the three months ended December 31, 2018 (2017: income tax
recovery of $138.5 million). The income tax provision reflects a current income tax expense of $51.6 million and a deferred income
tax expense of $1.3 million. The current quarter includes an income tax expense of $33.3 million incurred and payable at the end of
the year, following an administrative interpretation of relevant tax legislation and approach by Brazilian tax authorities under that tax
legislation in December. The expense was unexpected, not consistent with the Company's interpretations of the tax legislation and
inconsistent with past practice. The Company has made the payment so as to avoid penalties and interest but in respect of which,
the Company is pursuing its legal recourse and remedies. The prior year income tax recovery includes deferred income tax liability
reversals of $83.0 million in Argentina related to the non-cash impairment loss recognized on the re-measurement of Gualcamayo in
association with its reclassification as a disposal group held for sale, and the impact of a tax rate change in the fourth quarter of
$216.8 million.

FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2018

Net Loss

• Net loss attributable to Yamana Gold Inc. equity holders, for the year ended December 31, 2018 was $284.6 million or $0.30 per
share basic and diluted, compared to a net loss of $188.5 million or $0.20 per share for the year ended December 31, 2017. The net
loss resulted mainly from non-cash accounting impairments previously discussed.

• Certain non-cash and other items that may not be reflective of current and ongoing operations were $396.5 million or $0.42 per share.

The Company refers to the following items, which may be used to adjust or reconcile input models in consensus estimates:

(In millions of US Dollars; unless otherwise noted)

Non-cash unrealized foreign exchange losses
Share-based payments/mark-to-market of deferred share units
Mark-to-market (gains) losses on derivative contracts (ii)
Net mark-to-market loss on investments
Revision in estimates and liabilities including contingencies
Gain on sale of subsidiaries
Impairment (reversal) of mining and non-operational mineral properties, and properties held for sale
Impairment of goodwill
Financing costs paid on early note redemption
Reorganization costs
Other provisions, write-downs and adjustments (i)
Non-cash tax on unrealized foreign exchange losses (gains)
Income tax effect of adjustments and other one-time tax adjustments

Total adjustments - increase to earnings attributable to Yamana Gold Inc. equity holders
Total adjustments - increase to earnings per share attributable to Yamana Gold Inc. equity holders

$
$

For the year ended December 31,

2018

9.5 $
5.3
(9.4)
9.8
12.9
(73.7)
250.0
45.0
14.7
10.1
34.9
151.9
(64.4)
396.5 $
0.42 $

2017

15.0
12.8
9.3
2.5
(26.6)
—
356.5
—
—
4.8
18.5
9.9
(143.4)

259.3
0.27

(i)

(ii)

The balance includes, among other things, the reversal of certain provisions such as tax credits and legal contingencies.

On January 1, 2018, the Company adopted IFRS 9 Financial Instruments. Under the transitional provisions of IFRS 9, the Company has restated the comparative period for
certain hedging requirements. Specifically, under IFRS 9, changes in time value on the Company's zero cost collars, which were taken to profit or loss under IAS 39:
Financial Instruments: Recognition and Measurement, are now recognized in OCI as a cost of hedging rather than in profit or loss. Accordingly, the results of the comparative
period have been adjusted to remove time value movements from profit or loss, and the comparative adjustments above have been adjusted accordingly.

Yamana Annual
Report 2018

Revenue

• Revenue for the year ended December 31, 2018 was $1,798.5 million, compared to $1,803.8 million for the year ended December
31, 2017. Lower revenue resulted from lower consolidated gold quantities sold, as there were more attributable ounces from Brio
Gold and Gualcamayo in 2017. This was partly offset by an additional 3.5 million pounds of copper sold at 8% higher average realized
copper prices and revenue from Cerro Moro. As aforementioned, the inventory build-up at Cerro Moro also affected revenue for the
year.

For the years ended December 31,

Gold (i)
Silver
Copper (i)

Revenue

For the years ended December 31,

Gold (i)

Silver
Silver subject to metal sales agreement (ii)

Copper (i)
Copper subject to metal sales agreements (ii)

Gross revenue
(Deduct) add:
- Treatment and refining charges of gold and copper concentrate
- Sales taxes (iii)
- Metal price, MTM, and derivative settlement adjustments
- Other adjustments

Revenue (iii)(iv)

2018

Quantity

sold

Revenue per
ounce/pound

Revenue
(In millions of
US Dollars)

1,075,214 oz
7,000,887 oz

$
$
lbs $

123,555,941

1,263 $
15.37
2.70

1,357.5 $
107.6
333.4

1,798.5 $

Quantity
sold

1,075,214 oz

6,759,000 oz
241,887 oz

7,000,887 oz

$
$

91,182,021
32,373,920

lbs $
lbs $

123,555,941

lbs

2018

Average
realized price

1,267 $

15.29
17.69
15.37
2.99
2.99
2.99
$

Revenue
(In millions of
US Dollars)

1,362.8 $

103.3
4.3

272.9
96.9

2017
Revenue
(In millions of
US Dollars)
1,433.9
86.1
283.8

1,803.8

2017

Revenue
(In millions of
US Dollars)
1,450.1

83.0
3.2

317.0
16.9

1,840.2 $

1,870.2

(34.6)
—
(6.8)
(0.2)

(38.2)
(18.6)
(10.1)
0.5

1,798.5 $

1,803.8

(i)
(ii)
(iii)
(iv)

Includes payable copper and gold contained in concentrate.
Balances represent the metals sold under the metal sales agreements and the advanced copper sales program.
Beginning on January 1, 2018, the Company is presenting revenue gross of certain sales taxes.
As discussed in Note 5: Recent Accounting Pronouncements to the Company's Consolidated Financial Statements, the Company adopted IFRS 15 Revenue from Contracts
with Customers on January 1, 2018. Under IFRS 15, the Company is required to account for the financing component on its streaming arrangements, under which, revenue
is increased by an imputed interest amount, with a corresponding increase to finance expense each period. The amount of this adjustment in the year ended December 31,
2018 was $13.8 million. In accordance with the transition provisions of IFRS 15, revenue in the comparative period has not been restated.

Cost of Sales

• Cost of sales excluding DDA for the year ended December 31, 2018 was $1,010.0 million, compared to $1,042.4 million for the year
ended December 31, 2017. Cost of sales excluding DDA for the year was lower than in 2017, on lower sale quantities and lower unit
costs of production from several ongoing operational efficiencies. In addition, costs were lower due to the exclusion of Brio Gold cost
of sales from late May, 2018, partially offset by the addition of Cerro Moro cost of sales starting the third quarter of 2018.
Total DDA expense for the year ended December 31, 2018 was $438.3 million, compared to $426.8 million for the year ended
December 31, 2017. DDA expense is higher mainly due to the higher production on the completion of ramp up at Cerro Moro, partially
offset by the DDA that ceased to be recorded following the classification of Brio Gold and Gualcamayo as held for sale.

•

Yamana Annual
Report 2018

Expenses and Other Income

• General and administrative expenses were $91.8 million for the year ended December 31, 2018, compared to $113.6 million for the
year ended December 31, 2017. General and administrative expenses are 19% lower than the comparative year. General and
administrative expenses were $83.4 million excluding Brio Gold and Gualcamayo and below guidance of $94.0 million for the year.
• Exploration and evaluation expenses were $13.0 million for the year ended December 31, 2018, compared to $21.2 million for the

year ended December 31, 2017, in line with lower planned greenfield exploration.

• Share of earnings of associate totalled $5.5 million for the year ended December 31, 2018, representing the equity pick up from the

•

Company's interest in Leagold.
The Company recorded other operating income of $9.3 million for the year ended December 31, 2018, compared to other expenses
of $23.6 million for the year ended December 31, 2017. The change is primarily due to the gains on sale of certain Canadian
exploration properties, the Brio Gold transaction and Gualcamayo recorded in the current year, partly offset by increases in provisions.
Refer to Note 6: Divestitures to the Company's Consolidated Financial Statements for further discussion on the sale transactions.
Finance costs were $137.4 million for the year ended December 31, 2018, compared to $110.8 million for the year ended December
31, 2017. The increase in finance costs is attributable to the impact of the one-time financing cost of $14.7 million on the early debt
redemption that occurred in the first quarter and the non-cash interest expense of $16.0 million related to the financing component of
deferred revenue contracts recorded in the current year. Interest expense on outstanding debt remained reasonably consistent with
the prior year.

• Other costs generated a gain of $2.5 million in the current year compared to costs of $20.9 million in the prior year. Other costs is
comprised primarily of unrealized gains and losses on derivatives and foreign exchange and, given the nature of these accounts, is
expected to fluctuate from year to year.

Income Tax Expense

•

The Company recorded an income tax expense of $121.0 million for the year ended December 31, 2018 (2017: $113.9 million income
tax recovery). The income tax provision reflects a current income tax expense of $138.8 million and a deferred income tax recovery
of $17.8 million, compared to a current income tax expense of $239.2 million and a deferred income tax recovery of $353.1 million
for the year ended December 31, 2017.
The effective tax rate is subject to a number of factors including the source of income between different countries, different tax rates
in the various jurisdictions, the non-recognition of tax assets, foreign currency exchange movements, mining taxes, changes in tax
laws and the impact of specific transactions and assessments. The consolidated effective tax rate was negative 68.4% on the loss
before tax for the year ended December 31, 2018, compared to an effective tax rate of 36.5% for the same period in the prior year.
The following items have the most significant impact on the difference between the Company's Canadian statutory tax rate of 26.5%
and our effective rate for the year ended December 31, 2018 and 2017:
◦

Income tax accounts are required to be re-measured at each balance sheet date for changes in the foreign exchange rate.
Within a number of our foreign subsidiaries, the tax basis of non-monetary assets is converted from local currency to US Dollars
at the period end spot rate for the purpose of calculating deferred taxes. For the year ended December 31, 2018 and 2017 an
expense of $151.9 million and $9.9 million, respectively, was recorded on currency fluctuations previously described.

◦ Within a number of the Company's foreign subsidiaries, taxable or deductible foreign exchange gains or losses arise as a result
of US Dollar transactions translation into local currency, whereas foreign currency exchange gains or losses that arise as local
transaction are translated to US Dollars are not taxable or deductible. For the year ended December 31, 2018, a deductible local
foreign exchange loss of $119.7 million was recognized, compared to deductible local foreign exchange loss of $9.2 million
recognized in the comparative period.

◦ An income tax expense of $33.3 million incurred at the end of the year, as previously described. This is compared to an expense

of $149.9 million relating to the settlement of tax disputes in Brazil in the comparative period.

•

The deferred tax liabilities relating to the operating mines will reverse in the future, as the assets are depreciated or depleted. The
capitalized exploration expenditures on non-producing mineral properties will not reverse until the property becomes a mine subject

Yamana Annual
Report 2018

to depletion, is written off or sold. The deferred income taxes would only be paid on a direct disposition of the asset that may never
occur.
The Company operates in the following tax jurisdictions: Brazil, where the statutory tax rate is 34%; Argentina, where the statutory
tax rate is 30% in 2018, decreasing to 25% in 2020; Chile, where the statutory tax rate is 27%; and Canada, where the federal
statutory tax rate is 15% with varying provincial tax rates. The Company does not anticipate the statutory tax rates to change in the
foreseeable future; hence, there should be no impact on the calculation of the current or deferred tax expense in the period.
The largest components of the deferred tax liabilities relate to:

•

(In millions of US Dollars)

Canadian Malartic
Jacobina
Chapada
El Peñón
Agua Rica
Exploration potential / other

$
$
$
$
$
$

2018
314.0 $
168.7 $
68.0 $
46.1 $
266.6 $
245.9 $

2017

333.9
102.2
62.0
56.5
266.5
296.7

• See Note 13: Income Taxes to the Company's Consolidated Financial Statements for an explanation of the foreign exchange charged
to the income tax expense. Readers are also encouraged to read and consider the tax related risk factors and uncertainties in the
Company’s Annual Information Form.

QUARTERLY FINANCIAL SUMMARY

For the three months ended

(In millions of US Dollars, unless otherwise noted)

Financial results
Revenue (i)
Attributable to Yamana equity holders:
Net (loss) earnings (ii)
Per share - basic and diluted

Dec. 31 Sep. 30,
2018

2018

Jun. 30 Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2017

2017

2018

2017

$
$

483.4 $ 424.7 $ 435.7 $ 454.7 $ 478.8 $ 493.4 $ 428.1 $ 403.5

(61.4)$
(0.06)$

(81.3) $
(0.09) $

18.0 $ (160.1) $
(0.17) $
0.02 $

(194.4) $
(0.20) $

45.7 $
0.05 $

(39.9) $
(0.04) $

—
—

(i)

(ii)

On January 1, 2018, the Company adopted IFRS 15 Revenue from Contracts with Customers. In accordance with the transition requirements in IFRS 15, prior period numbers
are not restated. The impact to the Company's revenue of applying IFRS 15 in the three months ended December 31, 2018, September 30, 2018, June 30, 2018 and March
31, 2018 was an increase of $4.2 million, $4.1 million, $2.5 million and $3.0 million, respectively.
On January 1, 2018, the Company adopted IFRS 9 Financial Instruments. In accordance with the transition requirements in IFRS 9, the Company has restated the 2017
comparative periods for certain hedging requirements. Specifically, under IFRS 9, changes in time value on the Company's zero cost collars, which were taken to profit or
loss under IAS 39: Financial Instruments: Recognition and Measurement, are now recognized in OCI as a cost of hedging rather than in profit or loss. Accordingly, the 2017
comparative periods have been restated for this change.

Yamana Annual
Report 2018

OPERATING SEGMENTS PERFORMANCE

YAMANA MINES

CHAPADA, BRAZIL

Chapada is an open pit gold-copper mine, located northwest of Brasília in Goías state, Brazil.

Operating and Financial Information

2018

2017

2018

2017

For the three months ended December 31,

For the years ended December 31,

Operating (iv)
Ore mined (tonnes)
Waste mined (tonnes)
Ore processed (tonnes)
Gold

Production (ounces) (iii)
Sales (ounces) (iii)
Feed grade (g/t)
Concentrate grade (g/t)
Recovery rate (%)
Total cost of sales per ounce sold (ii)
Co-product cash costs per ounce produced (i)
All-in sustaining co-product costs per ounce produced (i)
DDA per ounce sold

Copper

Production (millions of pounds)
Sales (millions of pounds)
Feed grade (%)
Concentrate grade (%)
Recovery rate (%)
Total cost of sales per pound sold (ii)
Co-product cash costs per pound produced (i)
All-in sustaining co-product costs per pound produced (i)
DDA per pound sold

Concentrate

Production (tonnes)
Sales (tonnes)
Treatment and refining charges (millions of $)
Metal price adjustments related to concentrate revenue
(millions of $)

Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA

Gross margin excluding DDA
DDA

Mine operating earnings
Capital expenditures

Sustaining and other
Expansionary
Exploration

10,025,022
8,350,604
6,064,827

9,320,161
7,306,962
6,080,611

33,787,816
31,305,991
22,929,227

34,163,445
32,832,383
23,000,557

40,841
35,607
0.31
17.21
67.1
410 $
294 $
349 $
69 $

39.0
35.5
0.34
23.98
86.3
1.86 $
1.50 $
1.73 $
0.28 $

73,830
70,008

(10.0)$

(2.8)$

140.0 $
(75.0)

65.0 $
(12.3)

52.7 $

9.4 $
2.4 $
1.3 $

36,578
36,789
0.30
17.21
61.8
326 $
291 $
327 $
62 $

34.7
33.2
0.31
23.79
83.5
1.67 $
1.51 $
1.67 $
0.28 $

66,104
64,873

(10.9) $

(10.7) $

122.0 $
(55.9)

66.1 $
(11.6)

54.5 $

5.6 $
3.4 $
1.6 $

121,003
116,743
0.26
15.48
63.3
418 $
334 $
399 $
75 $

129.2
123.6
0.31
24.10
82.4
1.78 $
1.51 $
1.76 $
0.28 $

243,129
242,496

(34.6) $

(6.8) $

475.4 $
(225.6)

249.8 $
(43.6)

206.2 $

35.2 $
4.1 $
4.8 $

119,852
117,305
0.28
15.40
57.0
384
334
385
64

127.3
120.1
0.31
23.85
79.8
1.73
1.54
1.74
0.25

242,126
242,536

(38.2 )

(10.1 )

425.4
(215.3)

210.1
(38.1)

172.0

27.9
13.4
5.4

$
$
$
$

$
$
$

(i)

(ii)
(iii) Contained in concentrate/Payable contained in concentrate.

Yamana Annual
Report 2018

(iv)

Beginning January 1, 2018, silver production and related KPIs for Chapada no longer meet the minimum significance threshold in accordance with the Company's policy.

Chapada annual gold production exceeded expectations in 2018. Underpinned by an 11% increase in gold recovery rate, production was higher
compared to 2017 at below guidance costs.

Gold and copper production in the fourth quarter in 2018 also exceeded expectations, driven mainly by higher grades and recoveries as an
increased proportion of higher grade fresh ore from Corpo Sul was processed, compared to the previous quarter and the comparative quarter
of 2017. The higher production level also improved revenues and mine operating earnings, partly offset by lower gold prices during the quarter.

Planned higher mine development and scheduled maintenance contributed to the increase in sustaining costs for gold and copper. This was
partly offset by higher metal production, cost control initiatives implemented and the depreciation of the Brazilian Real against the US Dollar.

Copper grades are expected to remain constant through the guidance period while mill feed grades for gold will decline. This is consistent with
mine sequencing as reflected in previously published technical reports. Chapada is mostly a copper mine with significant gold contribution
and, as such, gold grades will vary as the mine is sequenced while copper grades will remain more consistent. For 2019, mill feed grades are
expected to average 0.21 g/t gold and 0.28% copper and, as is customary for Chapada, production will be weighted to the back half of the year.
The Company has various development, optimization and expansion opportunities under review at Chapada that are not included in the 2019
expansionary capital expenditures. The plan for 2019 does, however, consider the continuation of Phase 1, which targets plant optimization for
further copper and gold recovery increases in the range of 2 percent for all ore types. Approximately, $9 million of Phase 1 expansionary capital
is earmarked for 2019. Results from the ongoing feasibility study for Chapada Phases 2 and 3 are expected in mid 2019 (Refer to Section 5:
Construction, Development and Exploration of this MD&A for additional details).

Gold and copper mineral reserves increased by 6% and 7%, respectively, over prior year, representing a significant overall improvement over
depletion in 2018. Approximately 7,377 metres of drilling were completed at Chapada in the fourth quarter of 2018, in line with plan. The
exploration plan focused on expanding the mineral envelopes at the Suruca hanging wall and footwall, Baru NE and Corpo Sul. At Suruca,
drilling continues to expand the strike of both the footwall and hanging wall mineralization. At Baru NE, fourth quarter drilling focused on
expanding the strike length of the shallow body copper-gold rich mineralization identified in the third quarter. The mineral system remains open
to the northeast and will be followed up on in 2019.

Yamana Annual
Report 2018

EL PEÑÓN, CHILE

El Peñón is a high grade gold-silver underground mine located approximately 160 kilometres southeast of Antofagasta in northern Chile.

Operating and Financial Information

2018

2017

2018

2017

For the three months ended December 31,

For the years ended December 31,

Operating
Ore mined (tonnes)
Ore processed (tonnes)
Gold

Production (ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Total cost of sales per ounce sold
Co-product cash costs per ounce produced (i)
All-in sustaining co-product costs per ounce produced (i)
DDA per ounce sold

Silver

Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA

Gross margin excluding DDA
DDA

Mine operating earnings (loss)
Capital expenditures

Sustaining and other
Expansionary
Exploration

270,191
310,808

280,007
255,727

975,379
1,103,835

1,018,007
1,041,200

37,956
37,864
4.04
93.8
1,270 $
769 $
917 $
501 $

1,186,789
1,145,821
142
84.2
16.07 $
9.48 $
11.31 $
6.27 $

63.0 $
(40.4)

22.6 $
(26.2)

(3.6)$

7.4 $
1 $
4.7 $

39,401
34,955
5.11
94.3
1,069 $
707 $
864 $
354 $

1,052,423
909,205
152
85.4
14.58 $
9.19 $
11.23 $
4.84 $

60.3 $
(33.9)

26.4 $
(16.8)

9.6 $

8.1 $
— $
2.3 $

151,893
151,921
4.53
94.1
1,316 $
833 $
995 $
462 $

3,903,961
3,878,748
131
83.6
16.48 $
10.43 $
12.46 $
5.83 $

253.6 $
(171.0)

82.6 $
(92.9)

(10.3) $

31.8 $
1.1 $
17.9 $

160,509
159,149
5.05
95.1
1,089
751
928
325

4,282,339
4,264,501
148
86.4
14.57
10.30
12.77
4.34

274.0
(165.2)

108.8
(70.2)

38.6

38.5
—
17.8

$
$
$
$

$
$
$

(i)

A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A.

Gold production at El Peñón exceeded guidance in 2018. Gold costs on co-product bases were impacted by the lower silver production and
sales that had the effect of proportionally allocating more costs to gold.

Gold and silver production were 6% and 33% higher than the third quarter of 2018, respectively, mainly from higher processing rates. Gold and
silver production for the fourth quarter, in comparison to the same period in 2017, were impacted by processing from the lower grade stockpile
with a relatively higher proportion of silver than gold. Per unit costs for gold and silver during the quarter were favourably improved from the
higher production and the quarterly depreciation of the Chilean Peso relative to the US Dollar, compared to the previous quarter in 2018.

Gold-equivalent production in 2019 is forecast to be in line with production guidance for 2018, with cash costs and AISC expected to be lower
to those reported in 2018. Underground mine development activities in the first half of 2019 are expected to increase access to higher gold
and silver grades in the second half of 2019, which will afford the operation greater flexibility, including for blending activities. Approximately

Yamana Annual
Report 2018

56% of the gold and 62% of the silver are expected to be produced in the second half of 2019 with cost metrics commensurately lower in the
second half of 2019.

With the total infill drilling in 2018, mineral reserves increased by 5% for gold and 6% for silver, increasing over depletion in 2018. Approximately
26,293 metres of drilling was completed at El Peñón in the fourth quarter of 2018, in line with plan. Exploration work focused primarily on
converting inferred mineral resources to measured and indicated mineral resources at Sistema Dorada, Martillo Centro Sur, Aleste SS, Nueva
Providencia, Esmeralda and Laguna, and drilling 17 different areas within the mine area to identify new inferred mineral resources. Aleste SS,
Laguna and Sistema Dorada had the highest conversion and were the main focus in the fourth quarter, returning significant new mineral
resources. The targets for expanding inferred mineral resources were largely known veins tested to depth and along strike; however several
new areas of mineralization were also identified. Follow up in 2019 will test these targets to determine their potential to add inferred mineral
resources.

Yamana Annual
Report 2018

CANADIAN MALARTIC (50% interest), CANADA

Canadian Malartic is an open pit gold mine, located in the Abitibi region of Quebec, Canada.

Operating and Financial Information
Operating
Ore mined (tonnes)
Waste mined (tonnes)
Ore processed (tonnes)
Gold

Production (ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Total cost of sales per ounce sold
Co-product cash costs per ounce produced (i)(ii)
All-in sustaining co-product costs per ounce produced (i)
DDA per ounce sold

Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA

Gross margin excluding DDA
DDA
Impairment of goodwill

Mine operating (loss) earnings
Capital expenditures

Sustaining and other
Expansionary
Exploration

For the three months ended December 31,

For the years ended December 31,

2018

2017

2018

2017

3,467,366
3,619,041
2,541,967

2,997,727
5,066,884
2,614,712

13,645,600
14,306,186
10,241,870

11,771,047
21,075,681
10,178,803

84,732
89,626
1.18
87.9
975 $
569 $
720 $
388 $

110.2 $
(52.5)

57.7 $
(34.7)
(45.0)

(22.0) $

11.4 $
8.9 $
0.4 $

80,743
88,812
1.09
87.8
995 $
628 $
835 $
364 $

115.4 $
(56.0)

59.4 $
(32.4)
—

27.0 $

15.6 $
20.2 $
2.6 $

348,600
349,923
1.20
88.3
967 $
563 $
711 $
394 $

447.6 $
(200.4)
247.2 $
(137.8)
(45.0)
64.4 $

46.4 $
31.4 $
4.0 $

316,731
315,517
1.09
88.6
1,000
576
742
410

403.1
(186.0)

217.1
(129.4)

—

87.7

48.2
31.0
10.2

$
$
$
$

$
$
$

(i)

(ii)

Canadian Malartic delivered record annual production and exceeded guidance in 2018 at 10% higher production and costs lower than expected
and lower than those observed in 2017.

Higher fourth quarter production and revenue, compared to the same period in 2017, was mainly due to higher grades in line with the mining
sequence. Costs during the quarter were lower than the comparative quarter of 2017 and lower or in-line with the previous quarter of 2018,
benefiting from higher production.

Production and costs were better than expectations at Canadian Malartic in 2018 and should continue in 2019. Production in 2019 is forecast
to be 330,000 ounces, in line with plan, with production costs similar to those reported in 2018. The Extension Project is continuing according
to plan with contributions from Barnat expected to begin in late 2019 with more meaningful contributions in 2020 and 2021. On a 50% basis,
expansionary capex is expected to be $37 million in 2019, of which $34 million is earmarked for the Extension Project. Work continues to focus
on the highway 117 road deviation, pit preparation and tailings expansion.

Discussions with four First Nations groups concerning a potential memorandum of understanding continue. As with other community relations
efforts at Canadian Malartic, the Company is working collaboratively with stakeholders to establish cooperative relationships that support the
long-term potential of the mine.

Yamana Annual
Report 2018

Gold mineral reserves reflect depletion associated with 2018 production. The Company continues to see encouraging drill results at the East
Malartic and Odyssey projects with drilling ongoing to extend and upgrade the mineral resources in these zones. Exploration programs are
ongoing to evaluate zones along the Canadian Malartic trend, including the Odyssey, East Malartic, Midway and East Amphi zones. These
opportunities have the potential to provide new sources of ore for the Canadian Malartic mill.

Yamana Annual
Report 2018

JACOBINA, BRAZIL

Jacobina is a complex of underground gold mines located in Bahia state, Brazil.

Operating and Financial Information
Operating
Ore mined (tonnes)
Ore processed (tonnes)
Gold

Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA

Gross margin excluding DDA
DDA
Impairment reversal

Mine operating earnings
Capital expenditures

Sustaining and other
Expansionary
Exploration

For the three months ended December 31,

For the years ended December 31,

2018

2017

2018

2017

505,329
517,953

531,034
509,672

2,093,413
2,035,214

2,007,572
1,978,409

37,071
34,934
2.31
96.2
1,132 $
677 $
826 $
451 $

44.9 $
(25.8)

19.1 $
(15.7)
150.0

153.4 $

5.1 $
9.4 $
1.7 $

34,566
33,695
2.09
97.2
1,027 $
703 $
906 $
257 $

43.0 $
(25.9)

17.1 $
(8.7)
—

8.4 $

7.0 $
5.7 $
1.8 $

144,695
141,780
2.30
96.3
967 $
649 $
802 $
292 $

179.4 $
(95.7)
83.7 $
(41.4)
150.0
192.3 $

21.0 $
20.6 $
5.9 $

135,806
135,620
2.20
96.3
1,057
701
867
330

170.8
(98.6)

72.2
(44.8)
—

27.4

21.7
17.6
5.8

$
$
$
$

$
$
$

(i)

A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A.

Jacobina delivered record annual production and exceeded guidance in 2018. Production was 7% higher than guidance with cost metrics
approximately 11% lower and also lower compared to 2017.

Jacobina exceeded production expectations in the fourth quarter of 2018 at 7% higher production, compared to the same quarter in 2017.
Higher grades from Canavieiras Central, Canavieiras Sul and João Belo contributed to the higher production and operating earnings.

Costs benefited from the higher production and the depreciation of the local currency, which contributed to higher mine operating earnings. In
addition, costs continue to benefit from the ongoing optimization initiatives, the most recent of which was the advanced control system to
enhance plant stability. The Company continues to pursue opportunities to increase productivity and reduce costs through improvements
relating to mining, plant processing, maintenance and supply chain. A modest investment in 2019 is expected to increase processing capacity
further.

The forecast for 2019 is similar to that of 2018 in terms of production and costs while including an additional $8 million of expansionary capex
with this attributable to the internalization of development activities. Looking ahead to 2019, with significant underground development work
complete and a surface stockpile of approximately 100,000 tonnes grading 2.0 g/t the mine continues to be well positioned to deliver on its
production and cost targets.

Yamana Annual
Report 2018

Jacobina replaced production depletion in 2018 and increased gold mineral reserves by 11%, significantly higher than 2017. Importantly, gold
grades in the mineral reserve and mineral resource have trended higher, which was a strategic objective of the 2018 drill program.
Approximately 10,630 meters of drilling were completed at Jacobina in the fourth quarter, in line with plan. The focus was primarily infill drilling
at João Belo, Canavieiras Sul and Morro de Vento, as well as an expansion of known reefs at Canavieiras Sul and Canavieiras Central. At
Canavieiras Sul and Joao Belo, drilling continues to intersect higher than mineral reserve grade mineralization through infill drilling. At
Canavieiras Central, drilling testing the down dip extensions returned positive results for Maneira, LVLPC, MU and LU reefs. With these
impressive results, Jacobina succeeded at adding over 800,000 inferred mineral resources. At Canavieiras Sul, the exploratory drill holes were
designed to test the previously discovered higher-grade zones along the southeast direction, and drilling will continue to test the extent of this
zone in 2019.

As previously noted, following the significant increase in mineral reserves and mineral resources, which extends the life of the mine, and other
operational improvements in 2018, the impairment taken in 2014 was reversed in 2018.

Yamana Annual
Report 2018

CERRO MORO, ARGENTINA

Cerro Moro is the Company’s newest high-grade underground and open pit gold-silver mine, located in the province of Santa Cruz, Argentina.

Operating and Financial Information

2018

2017

2018

2017

For the three months ended December 31,

For the years ended December 31,

Operating
Ore mined (tonnes)
Waste mined (tonnes)
Ore processed (tonnes)
Gold

Production (pre-commercial ounces)
Production (commercial ounces)
Production (total ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Total cost of sales per ounce sold
Co-product cash costs per ounce produced (i)
All-in sustaining co-product costs per ounce produced (i)
DDA per ounce sold

Silver

Production (pre-commercial ounces)
Production (commercial ounces)
Production (total ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Total cost of sales per silver ounce sold
Co-product cash costs per silver ounce produced (i)
All-in sustaining co-product costs per silver ounce produced (i)
DDA per ounce sold

Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA

Gross margin excluding DDA
DDA

Mine operating earnings
Capital expenditures

Sustaining and other
Expansionary
Exploration

83,313
2,261,670
85,673

—
45,066
45,066
40,016
17.09
94.2
1,072 $
471 $
611 $
471 $

—
2,077,906
2,077,906
1,903,652
811
91.4
13.03 $
5.78 $
7.52 $
5.62 $

80.6 $
(41.8)

38.8 $
(29.5)

9.3 $

9.4 $
2.7 $
3.0 $

$
$
$
$

$
$
$

—
—
—

—
—
—
—
—
—
— $
— $
— $
— $

— $
—

— $

— $
48.3 $
2.2 $

210,644
6,416,534
199,602

8,625
84,168
92,793
68,669
15.85
93.1
1,074 $
479 $
600 $
458 $

333,878
3,785,207
4,119,085
2,920,252
725
89.4
14.22 $
5.98 $
7.49 $
6.05 $

126.8 $
(66.1)
60.7 $
(49.1)
11.6 $

15.0 $
61.3 $
11.3 $

—
—
—

—
—
—
—
—
—
—
—
—
—

—
—

—

—
172.0
7.7

(i)

A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A.

Cerro Moro completed its successful ramp up at costs below guidance, while exceeding 2018 production guidance as throughput and grades
increased according to plan. Underground production activity met expectations along with mineral extraction rates and dilution control. Ground
stability allowed for larger stopes than originally planned.

Production during the quarter exceeded expectations with a gold feed grade of 17.09 g/t and silver feed grade of 811 g/t being significantly
higher than budget. Production exceeded sales by approximately 15,000 ounces of gold and 814,000 ounces of silver, which remained in
inventory as at December 31, 2018. Elevated silver grades above plan led to capacity constraints at the mine furnace, resulting in an increase

Yamana Annual
Report 2018

in gold and silver precipitate. Precipitate inventory levels are expected to be drawn down to normalized levels the first half of 2019. An
additional furnace is expected to be installed by mid 2019 and with the sequencing modifications, inventory is expected to normalize at
approximately 25% of current levels. At the average prices observed in the fourth quarter, this inventory normalization would add in excess of
$25 million to revenue.

Costs during the period benefited from the higher production and the depreciation of the local currency, partly offset by inflation.

Gold-equivalent production for 2019 is expected to be in line with plan and prior guidance. The operation will focus on optimizing the
underground mining design and processing practices, building on the successes delivered in 2018, the first six months of commercial
production. For 2019, the inclusion of the export tax and historical Bocamina tax add approximately $130 per GEO and $40 per GEO,
respectively, to the previously guided costs. The export tax will incrementally affect cash flows and is enacted through 2020. Operational
optimization initiatives continue and are expected to offset costs in 2019. Cerro Moro DDA reflects both the costs of construction as well as the
historical acquisition costs. DDA per unit at Cerro Moro is also expected to decrease to lower levels as the exploration program advances.

Gold mineral reserves increases were offset by depletion associated with 2018 production at Cerro Moro. In terms of exploration drilling,
approximately 9,543 metres were completed at Cerro Moro during the fourth quarter, in line with plan. Drilling in the core mine returned
mineralized intercepts at Michelle, Milagros and Tres Lomas. Regional exploration south of the mine area intercepted a wide zone of
mineralization at Naty. These zones are expected to undergo further drilling in 2019. Important to note is that the current mineral resources do
not consider drilling results for the last four months of the year, which are in the process of being analyzed. The 2019 budget has been
increased by 33% over 2018. Funds are expected to be used for an aggressive drill program designed to test major structures with potential to
host a significant new mineralized zone, while continuing to generate new targets through multi-disciplinary fieldwork.

Yamana Annual
Report 2018

MINERA FLORIDA, CHILE

Minera Florida is an underground gold mine located south of Santiago in central Chile.

Operating and Financial Information (iii)

2018

2017

2018

2017

For the three months ended December 31,

For the years ended December 31,

Operating (ii)
Ore mined (tonnes)
Ore processed (tonnes)
Gold

Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA

Gross margin excluding DDA
DDA
Impairment

Mine operating (loss) earnings
Capital expenditures

Sustaining and other
Expansionary
Exploration

211,030
211,452

220,168
228,850

792,706
824,669

801,250
1,033,295

24,526
23,882
3.95
90.9
1,164 $
743 $
931 $
433 $

29.3 $
(17.5)

11.8 $
(10.3)
(151.0)

(149.5)$

4.4 $
10.5 $
3.9 $

23,540
23,503
3.49
89.9
1,198 $
765 $
1,011 $
412 $

31.2 $
(19.0)

12.2 $
(9.9)
—

2.3 $

5.4 $
3.0 $
3.3 $

$
$
$
$

$
$
$

81,635
81,449
3.42
90.5
1,398 $
916 $
1,099 $
481 $

102.6 $
(74.7)
27.9 $
(39.2)
(151.0)

(162.3)$

14.5 $
32.2 $
14.0 $

90,366
90,876
3.05
88.6
1,248
812
1,090
422

123.1
(79.5)

43.6
(40.5)
—

3.1

24.6
17.8
10.2

(i)

(ii)
(iii)

A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this
MD&A.
DDA per ounce is higher as DDA was allocated over a smaller number of ounces compared to the same period in 2017.
Beginning January 1, 2018, silver production and related KPIs for Minera Florida no longer meet the minimum significance threshold in accordance with the Company's
policy.

In line with plan and guidance, production at Minera Florida increased from the previous quarter mainly from the contribution of the higher-
grade zones of Pataguas and PVS. Fourth quarter production was higher than the same quarter in 2017, resulting from higher grade and
recovery partly offset by lower throughput. With the completion of raise boring activity in the new Aguas Fria concession, which hosts PVS and
Pataguas zones, development rates continue to trend higher. As such, looking ahead to 2019, higher mining rates are expected in these zones
with overall production expected to improve modestly, as lower production from the historic mining concession provides a partial offset.

All per unit cost metrics improved significantly from the previous quarter in 2018, benefiting from higher production. Several cost containment
initiatives planned for 2019 are expected to continue to lower costs overall.

During 2018, the Minera Florida mine experienced lower production at higher-than-expected unit costs. Similar to the approach taken at El
Peñón and Jacobina in the past, the focus of the updated life of mine plan at Minera Florida is to right size the operation at a sustainable
production level. The focus is to maximize operating margins and to advance mine development and mineral reserve delineation to deliver
mine flexibility and scope for future potential production increases, driven by either throughput or grade.

In consideration of the above, at Minera Florida, a non-cash accounting impairment of $151.0 million ($109.1 million after tax) was recognized.
Refer to Section 3: Review of Financial Results of this MD&A for additional details.

Yamana Annual
Report 2018

For 2018, total gold mineral reserves reflect depletion associated with 2018 production and an updated block model. Approximately 12,955
meters of drilling were completed at Minera Florida in the fourth quarter, in line with plan. The focus of drilling was to convert inferred mineral
resources to measured and indicated mineral resources at PVS, Fantasma and Satelite Fantasma in addition to testing mineral zones for
inferred mineral resource expansion at Los Patos and Don Leopoldo. Drilling at Los Patos returned impressive assays extending the zone,
which will be followed up further in 2019. In addition, Don Leopoldo was tested at depth, with results confirming mineralization is open at depth.
The 2019 budget has declined to $5 million from $14 million and expected to focus on infill drilling to extend mineral reserves. Prior year
programs have generative new exploration potential, which is being reviewed in the context of the mine plan updates and optimization efforts.
A return to higher exploration spending rates is expected in 2020.

Yamana Annual
Report 2018

CONSTRUCTION, DEVELOPMENT AND EXPLORATION

CONSTRUCTION AND DEVELOPMENT

The following highlights key updates during the fourth quarter of 2018, in respect to certain of the Company's development projects.

CHAPADA, BRAZIL

The Company continues to advance its exploration program with the objective of identifying higher-grade copper and gold opportunities that
are near to the Chapada mine, completing infill drilling of the Sucupira and Baru deposits, which would lead to a pit expansion, and advancing
district scale targets. Mineralization has been identified along a 15-kilometre trend with numerous prospective areas under consideration for
further drilling. Infill drilling in the Baru area is expected to reduce stripping ratios for the Sucupira deposit and drilling on oxide mineralization,
such as Hidrotermalito, brings to bear the potential for heap leaching opportunities that could complement the Suruca Oxides Project.
Notwithstanding the focus on the exploration potential to discover higher-grade copper and gold areas, the Company has also advanced other
projects that are expected to further enhance returns from the Chapada mine.

To this end, the Company has completed studies and evaluations on several of the development opportunities at Chapada and has embarked
on a feasibility-level review of a three-phase plan at Chapada. These opportunities range in scope from plant optimization initiatives to enhance
copper and gold recoveries, to plant expansions to bring forward cash flows, and pit wall pushbacks to expose higher-grade zones. The study
and evaluations include third party design and engineering, estimates of capital expenses, and production and operating cost forecasts.

Given the nature of the opportunities, the projects can be considered on their own or as part of a phased development plan. This flexibility in
approach allows the Company to balance the maximization of value at Chapada, with the allocation of capital across the broader Company
portfolio.

The Phase 1- Plant Optimization Work with expected recovery improvements in the range of 2% for both metals has been approved. Associated
capital expenditures estimated to be approximately $9 million. The Company is continuing to prioritize engineering for long lead-time equipment
for Phase 1 and during the fourth quarter, the flotation circuit expansion continued as planned with the installation of six new DFR flotation cells.
Commissioning is scheduled for mid-2019.

Engineering is being advanced for Phases 2 and 3, an expansion of the Chapada mill, and pushback of the Chapada pit wall to expose higher
grade Sucupira ores, respectively. While review of these projects are progressing through the evaluation process, the Company does not
anticipate the allocation of significant expansionary capital for these projects before 2021.

Based on the work completed to date, the Company estimates the phased plan will provide the foundation to sustain annual production in the
range of 100,000 to 110,000 ounces of gold (not including contributions to gold production from identified higher-grade areas of Suruca, which
is a gold-only ore body) and 150 to 160 million pounds of copper until at least 2034. This represents an opportunity to deliver significant cash
flow increases and cash flow returns on invested capital and an increase to the production outlook, as recently disclosed in the Chapada NI
43-101 Technical Report dated March 21, 2018. Further project details are expected to be available in mid-2019 with the completion of the
Feasibility Study. A development decision for Phase 2 is expected to follow in 2020.

Yamana Annual
Report 2018

Suruca - Gold-Only Oxide and Sulphide Development Opportunity

Concurrent with the multi-phase plan for Chapada, development of the gold-only Suruca oxides deposit continues to be evaluated as a
standalone heap leach operation, for which a feasibility study level update has been completed. Furthermore, the Suruca Sulphides project
has been updated in the 2018 exploration results for these orebodies, resulting in an increase of gold mineral resources. The integrated scenario
for Suruca orebodies includes processing of the oxides through a heap leach and processing of the gold-only sulphides through a carbon-in-
leach ("CIL") plant located at Chapada. Alternatives to process the sulphide portion of Suruca earlier in the life of mine are currently being
contemplated, including an exploration program designed to test further extensions of the sulphide mineralization and metallurgical test work.
The Company expects to continue this development program through 2019 in order to build on the results from the 2017 and 2018 programs,
which resulted in extensions of the oxide and sulphide deposits

CANADIAN MALARTIC (50% interest), CANADA

The Canadian Malartic Extension Project is continuing according to plan with contributions from Barnat expected to begin in 2019 with more
meaningful contributions in 2020. On a 50% basis, expansionary capex is expected to be $37 million, of which $34 million is earmarked for
the extension project in 2019. Work continued to focus on the highway 117 road deviation, pit preparation and tailings expansion.

OTHER OPTIMIZATION AND MONETIZATION INITIATIVES

A number of project evaluations are underway with a goal of surfacing value from non-strategic or non-producing assets including Agua Rica,
Suyai and Don Sixto, all of which have well-defined delineated mineral reserves and/or mineral resources. Notable progress relating to some
of these initiatives include, but are not limited to the following:

AGUA RICA, ARGENTINA

The Company continues to advance its alternatives for the development of the Agua Rica project. These alternatives include technical work
and analysis for project development options for Agua Rica, as well as the review and consideration of various strategic alternatives, all in an
effort to advance the project and surface value. Considerable effort has been undertaken to advance two development scenarios, one a large-
scale open pit integrated operation and the other an initially smaller scale but scalable standalone operation. The large-scale open pit scenario
contemplates the integration with the neighboring Alumbrera mine in which the Company holds a 12.5% interest and for which it expects to
complete an updated pre-feasibility study during the first half of 2019.

SUYAI, ARGENTINA

The Company previously completed a scoping study that evaluated two options for ore processing, both of which provide favourable project
economics. The first considered the construction of CIL processing facility for the on-site production of gold and silver in the form of doré. The
second considered the construction of a processing facility for on-site production of gold and silver contained in a high-grade concentrate,
which would be shipped abroad for subsequent precious metal recovery. Both approaches considered an identical underground configuration
with average annual production expected to be in excess of 200,000 ounces of gold and 300,000 ounces of silver. The Company believes both
scenarios address past concerns regarding open pit mining and the development scenario that includes production of an on-site concentrate
addresses many of the past concerns regarding the use of cyanide, and would potentially meet provincial regulations currently in place in
Chubut. The Company will work with local stakeholders to obtain and sustain its social license should the project progress to a more advanced
stage.

The Company continues to pursue development plans and other strategic alternative for the project. Given the extensive amount of work
performed to date the existing scoping study could rapidly progress to a feasibility study, allowing for the project to be developed in a short time
frame. The Suyai project is one of the highest gold grade development-ready projects in the Americas. While a financial adviser has not been
retained at this time, the Company is evaluating its strategic alternatives in addition to development of the project.

Yamana Annual
Report 2018

MONUMENT BAY, CANADA

The Monument Bay deposits are hosted in the Stull Lake Greenstone Belt comprised by three volcanic assemblages, ranging in age from 2.85
to 2.71 Ga. Gold and tungsten mineralization occurs along the steeply north dipping Twin Lakes Shear Zone and the AZ Sheer Zone.

In 2018, approximately 16,270 metres of drilling were completed on the Monument Bay project. The focus was testing targets near the Twin
Lakes deposit and testing regional targets. In addition, during the period, a new geological interpretation of the deposit was formed and is
expected to form the basis for an updated block model and mineral resource estimate. Groundwork is continuing and generating prospects for
follow up testing in 2019.

On September 13, 2018, the Company signed an Exploration Agreement with Red Sucker Lake First Nations in relation to the Monument Bay
exploration site in Northern Manitoba. This is an important step allowing the Company to solidify a strategic collaboration with this community,
as it continues to advance the project.

OTHER

The Company continues to pursue development and strategic initiatives for the 56.7% held Agua De La Falda joint venture with Codelco,
located in northern Chile. The historical Jeronimo Feasibility Study focused on maximizing production from the sulfide deposits. The Company
completed the study of a low capital start-up project based on the remaining oxide inventory with positive results, and is evaluating exploration
plans on the highly prospective claims surrounding the mine. Agua De La Falda has installed processing capacity and infrastructure.

EXPLORATION

Exploration on the most prospective properties is a key to unlocking and creating value for shareholders. The 2018 exploration program
focused on finding higher quality ounces, improving mine grade, infill drilling to replace production by upgrading existing mineral resources,
and exploring the Yamana property portfolio for new exploration targets. For exploration updates relating to operating mines during the year,
refer to Section 4: Operating Segments Performance of this MD&A. The following is a summary of the exploration and evaluation expenditures
for the current and comparative periods:

(In millions of US Dollars)

Exploration and evaluation capitalized (i)
Exploration and evaluation expensed (ii)

Total exploration and evaluation expenditures

For the three months ended December 31,

For the years ended December 31,

2018

18.5 $
3.6

22.1 $

2017

17.9 $
7.0

24.9 $

2018
75.4 $
13.0
88.4 $

2017

82.5
21.2

103.7

(i)

(ii)

Capitalized exploration and evaluation costs are reflected in property, plant and equipment in the Consolidated Balance Sheets as additions to exploration and evaluation
assets.
Expensed exploration and evaluation costs are reported in the Consolidated Statements of Operations for the respective period or year.

MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES

Mineral reserves and mineral resources are determined in accordance with National Instrument 43-101- Standards of Disclosure for Mineral
Projects, issued by the Canadian Securities Administrators ("NI 43-101"). This National Instrument lays out the standards of disclosure for
mineral projects including rules relating to the determination of mineral reserves and mineral resources. This includes a requirement that a
“qualified person” (as defined under the NI 43-101) supervises the preparation of the mineral reserves and mineral resources reports. The
Company's mineral reserve and mineral resource reports are reviewed by Sébastien Bernier (Senior Director, Geology and Mineral Resources),
who is an employee of Yamana Gold Inc. and a "Qualified Person" as defined by Canadian Securities Administrators' NI 43-101.

Yamana Annual
Report 2018

Assumptions for metal prices used in the estimates of mineral reserves and mineral resources for the Company's operating mines and
development projects are below. For details, refer to the mineral reserve and mineral resource tables contained in the Company's 2018 annual
report.

Gold (per ounce)

Silver (per ounce)

Copper (per pound)

(i)

Except for Jacobina ($1,500 per ounce) and Canadian Malartic ($1,200 per ounce).

Mineral
reserves

Mineral resources
(i)
1,600

1,250 $
18.00 $
3.00 $

24.00

4.00

The Company's mineral reserves and mineral resources as at December 31, 2018 are summarized in the following tables. Complete
information relating to mineral reserves and mineral resources indicating a complete listing of metal-price assumptions, tonnage, grade and
recoveries is contained in a complete mineral resource and mineral reserve table accompanying the 2018 annual report available on the
Company's website, www.yamana.com.

Yamana Annual
Report 2018

* Sold during the year ended December 31, 2018.

Yamana Annual
Report 2018

Mineral Reserves & Mineral Resources
Estimates (i)

Proven & probable mineral reserves

Chapada
El Peñón
Canadian Malartic (50%)
Jacobina
Cerro Moro
Minera Florida
Jeronimo (57%)

Total proven & probable mineral reserves
Measured & indicated mineral resources
Chapada
El Peñón
Canadian Malartic (50%)
Jacobina
Cerro Moro
Minera Florida
Jeronimo (57%)
La Pepa
Suyai
Monument Bay

Total measured & indicated mineral resources
Inferred mineral resources
Chapada
El Peñón
Canadian Malartic (50%)
Jacobina
Cerro Moro
Minera Florida
Jeronimo (57%)
La Pepa
Lavra Velha
Arco Sul
Suyai
Monument Bay

Total inferred mineral resources

Contained Gold

(in 000's ounces)

Contained Silver

(in 000's ounces)

Contained Copper

(in million pounds)

2018

4,546
800
2,780
2,099
675
404
1,082

2017

4,287
764
3,189
1,892
715
492
1,082

12,386

12,421

3,330
396
869
3,232
208
817
139
2,760
2,286
1,787

2,804
318
653
3,258
238
832
139
2,760
2,286
1,787

15,824

15,075

616
933
2,319
1,008
211
1,038
161
620
543
646
274
1,781

10,150

609
960
2,306
115
279
1,231
161
620
543
646
274
1,781

9,525

2018

—
24,893
—
—
37,959
2,976
—

65,828

—
12,904
—
—
15,704
5,186
—
—
3,523
—

37,317

—
32,570
—
—
14,139
6,093
—
—
—
—
575
—

53,377

2017
—
23,578
—
—
40,723
3,553
—
67,854

—
9,962
—
—
20,313
4,916
—
—
3,523
—
38,714

—
33,506
—
—
14,415
6,661
—
—
—
—
575
—
55,157

2018

3,707
—
—
—
—
—
—

3,707

2,025
—
—
—
—
—
—
—
—
—

2,025

781
—
—
—
—
—
—
—
—
—
—
—

781

2017

3,471
—
—
—
—
—
—

3,471

1,313
—
—
—
—
—
—
—
—
—

1,313

252
—
—
—
—
—
—
—
—
—
—
—

252

(i)

Table excludes assets sold in 2018, Agua Rica and the Company's interest in Alumbrera and Leagold.

Further information by mine is detailed below.

Chapada, Brazil

As the result of the continued definition and expansion of the Sucupira mineral reserve, immediately adjacent to the main Chapada pit, gold
and copper mineral reserves increased by 6% and 7%, respectively, over prior year, representing a significant overall improvement over
depletion in 2018. Gold measured and indicated mineral resources increased by 19%, while copper increased by 54% compared to the prior
year, following the drilling for extensions of the mineral envelopes at Corpo Sul under the Bois River and Santa Cruz mineral resources, in
addition to Sucupira and Baru. Gold inferred mineral resources are unchanged from 2017, while copper increased significantly.

Yamana Annual
Report 2018

El Peñón, Chile

El Peñón's mineral reserves increased by 5% for gold and 6% for silver, increasing over depletion in 2018. Gold measured and indicated
mineral resources increased by 25%, while silver increased by 30% compared to the prior year continuing from numerous secondary vein
structures in the east mine area. Lower gold and silver inferred mineral resources reflect conversion to indicated mineral resources.

Canadian Malartic including Odyssey, Canada (50%)

Gold mineral reserves reflect depletion associated with 2018 production at Canadian Malartic. Separately, much of the mineral resource
accretion in 2018 is associated with the East Malartic underground. Additional drilling also at East Malartic and Odyssey contributed to the
33% increase in gold measured and indicated mineral resources and the 1% increase in gold inferred mineral resources.

Jacobina, Brazil

Jacobina increased gold mineral reserves by 11% over and above 2018 production depletion. Measured and indicated mineral resources are
in line with 2017 and reflect the conversion to mineral reserves. Inferred mineral resources increased by significantly by over 800,000 ounces
of gold, despite increasing the cut-off grade from 0.5 g/t to 1.0 g/t. The exploration program at Jacobina also achieved the main goal for the
year, which was to identify and define high-grade mineralization close to current infrastructure. Several zones were defined, including down
dip of João Belo, Morro do Vento South and the northern portion, Serra do Corrego and Canavieiras Sul. In 2019, the exploratory drilling will
continue focusing the extension these high-grade zones, including south extension of João Belo. The definition drilling program will continue
in 2019, to increase confidence in reef geometry and fault locations for sectors planned to be mined within the next three years.

Minera Florida, Chile

At Minera Florida, the change in mineral reserves reflect mine depletion. An updated geological model and more conservative design
parameters with higher cut-off grades especially around the historic mining areas, resulted in an overall decrease of mineral reserves, albeit
with a resulting improved quality. These design parameters also impacted gold measured and indicated mineral resources and inferred mineral
resources. Now that the mine has entered the new PVS and Pataguas zones, both of which are the main target of 2019 exploration drilling,
the Company expects to deliver on the 2019 guidance.

Cerro Moro, Argentina

At Cerro Moro, increases in gold and silver mineral reserves partially offset depletion associated with 2018 production. The main increases
came from the discovery of new high grade, near surface vein Veronica and the extensions of Nini. Also drilling in the core mine area returned
mineralized intercepts at Michelle, Milagros and Tres Lomas which will be followed-up upon in 2019. Updated economical parameters with
higher cut-off grades for both mineral reserves and mineral resources had the impact of reducing tonnage, but increasing the overall grade.
Due to the previous focus of the site on project development, start-up and ramp-up of operations, long-term exploration effort began in 2018
and as result the current mineral resources do not consider drilling results for the last four months of the year. These results are in the process
of being analyzed and are expected to provide good quality targets for 2019. This ultimately resulted in 13% lower gold for remaining measured
and indicated mineral resources and 24% lower inferred mineral resources. Regional exploration south of the mine area intercepted a wide
zone of mineralization at Naty. These zones are expected to undergo further drilling in 2019, as part of the increased exploration budget
allocation to the mine.

Yamana Annual
Report 2018

FINANCIAL CONDITION AND LIQUIDITY

BALANCE SHEET REVIEW

As at,
(In millions of US Dollars)

Cash and cash equivalents
Current assets (including cash and cash equivalents)
Non-current assets

Total assets
Current liabilities (excluding current portion of debt)
Non-current liabilities (excluding long-term debt)
Debt (current and long-term)

Total liabilities
Equity attributable to Yamana Gold Inc. equity holders
Non-controlling interests

Total equity

Working capital (i)
Net debt (ii)

December 31,
2018
98.5 $
429.2
7,583.7
8,012.9 $
494.5
1,735.7
1,758.7
3,988.9 $
3,989.3
34.7
4,024.0 $

(67.2)$
1,660.2 $

$
$

December 31,
2017
148.9
839.4
7,923.9

8,763.3
670.7
1,787.6
1,857.7

4,316.0
4,313.4
133.9

4,447.3

58.7
1,708.8

(i) Working capital is defined as the excess of current assets over current liabilities, which includes the current portion of long-term debt and assets and, at December 31, 2017,

(ii)

assets and liabilities held for sale.
A cautionary note regarding non-GAAP financial measures and their respective reconciliations, as well as additional subtotals in financial statements is included in Section
11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this MD&A.

Total assets were $8.0 billion as at December 31, 2018, 9% lower than as at December 31, 2017, primarily attributable to assets sold during
the period. This decrease was partly offset by amounts capitalized in the period, including those related to the completion of the Cerro Moro
mine in Argentina; and the associate interest in Leagold Mining Corporation as part of the Brio Gold transaction. The Company’s asset base is
primarily comprised of non-current assets such as property, plant and equipment and goodwill, reflecting the capital-intensive nature of the
mining business and previous growth through acquisitions. Other significant assets include inventories, indirect taxes recoverable (consisting
of value added taxes in the jurisdictions in which the Company operates), advances and deposits, and cash and cash equivalents.

Total liabilities as at December 31, 2018 were $4.0 billion, lower by 8% from December 31, 2017, primarily attributable to lower debt resulting
from the repayment of several series of the Company's Senior Notes during the year, and lower trade payables following the completion of
Cerro Moro and due to the impact of the depreciation of local currencies on foreign currency-denominated liabilities.

Cash and cash equivalents were $98.5 million as at December 31, 2018, compared to $148.9 million as at December 31, 2017. Working capital
was negative $67.2 million as at December 31, 2018, compared to $58.7 million as at December 31, 2017. Working capital includes the current
portion of long-term debt and assets and liabilities of disposal groups held for sale. Accordingly, current assets and current liabilities at
December 31, 2017 included all assets and liabilities of Gualcamayo and the Canadian Exploration Properties, as these disposal groups were
classified as held for sale at December 31, 2017. Additionally, working capital is being impacted by the current portion of deferred metal sales
agreements; however, this effect will decline in future reporting periods with remaining copper deliveries scheduled in March 2019 and June
2019.

Yamana Annual
Report 2018

Net change in working capital movement was a cash outflow of $162.1 million for the year ended December 31, 2018. Working capital was
impacted predominantly by Cerro Moro due to the aforementioned inventory buildup (refer to Section 4: Operating Segments Performance of
this MD&A), temporary indirect tax credit build-up associated with the commencement of operations, which is expected to be recoverable
starting in 2019 and trade payables returning to normal levels following the completion of construction. The remainder of the movement in
working capital is associated with:

• Approximately $8.6 million of unsold inventory as the Company awaits resolution on its bailment claim following the Chapter 11

bankruptcy of Republic Metals Corporation;

• General inventory increases at Chapada and Canadian Malartic; and
Timing of regular trade payments for the Company's operating mines.
•

The Company also has invested $192.0 million in stockpile inventory classified as other non-current assets as it is not expected to be processed
within one year. The funds invested currently do not generate cash flow, but are readily available for processing, and the sale of which, will
generate cash flow.

Total debt was $1.8 billion as at December 31, 2018, compared to $1.9 billion as at December 31, 2017. Net debt as at December 31, 2018
was $1.66 billion or 3% lower, compared to $1.71 billion as at December 31, 2017. Following the early redemption of the 2019 notes and the
2018 maturities, the Company’s next scheduled maturity fixed maturity debt of $84.1 million is March 2020. Based on its current credit rating,
the Company expects that it can refinance the existing long-term debt in similar or more favourable terms to support the execution of the
Company's business strategy.

LIQUIDITY

Planned growth, development activities, expenditures, negative working capital and commitments are expected to be sufficiently funded by
recent and potential monetization and financing transactions, future operating cash flows and available credit facilities.

As at December 31, 2018, the financial resources available to the Company in meeting its financial obligations include $705.0 million from its
revolving credit facility. The Company will, from time to time, repay balances outstanding on its revolving credit with operating cash flow and
cash flow from other sources. Additionally, the Company intends to renew the credit facility either before or upon maturity in June 2023.

For the year ended December 31, 2018, cash flows from operating activities were $404.2 million net of the impact of the $99.5 million deferred
revenue recognized in respect of metal sales agreements, some of which had cash payments received in previous periods. Cash flows from
operating activities are expected to remain positive and increase in the short-term mainly from the completion of the advanced copper sales
agreement, lower capital investments on the completion of Cerro Moro, the sale of inventory build-up and a full year of operations also at Cerro
Moro. The Company expects its cash flows from operations will increase organically, subject to prevailing metal prices, in 2019. Refer to Section
8: Economic Trends, Business Risks and Uncertainties of this MD&A for a detailed discussion of market price risk.

The Company’s near-term financial obligations include repayment obligations within one year of long-term debt of $1.9 million, construction
and service contract commitments of $179.6 million, and sustaining capital expenditures of approximately $182.0 million for 2019. The
Company budgets for expansionary and exploration capital expenditures, however, are discretionary in nature, allowing management a
reasonable degree of flexibility in managing its financial resources. Further information with regards to sustaining capital expenditures can be
found in the Section 1: Highlights and Relevant Updates of this MD&A and commitments by year can be found below.

Yamana Annual
Report 2018

The Company's continuous commitment to balance sheet and cost improvements will further strengthen its financial position, and is highlighted
by the following initiatives completed or expected in the near-term:

•

The sale of Gualcamayo, achieving various corporate objectives, provides both immediate and periodic future payments. Future
payments from currently identified opportunities, new discoveries, mine life extensions, and higher metal prices, are expected to
provide upside in value in relation to its current carrying value.
The extension of the revolving credit facility from September 2021 to June 2023 was completed in June 2018 at terms substantially
similar to existing terms.
The completion of the previously announced sale of its 50% indirect interest in certain jointly owned exploration properties of the
Canadian Malartic Corporation for cash proceeds of $162.5 million;
The early redemption of $181.5 million of the 6.97% senior notes due December 2019, which extended the tenor of the Company's
fixed term profile at lower average interest rates and improved financial flexibility.
The receipt of $125.0 million from the copper advanced sales program in exchange for approximately 40.3 million pounds of copper
to be delivered in the second half of 2018 and first half of 2019.

• Although the Brio transaction did not bring immediate cash, the combined entity created an impressive mid-tier gold producer with
assets in two excellent jurisdictions, a strong production platform, built-in potential for growth and a proven management team well
positioned to deliver future value increases. This investment provides the Company with a significant monetization potential.

Additionally, through the completion of the Cerro Moro mine resulting in lower capital expenditures and expected step-change in cash flow in
2019, the Company is well positioned to drive a reduction in net debt and manage its debt repayments.

SOURCES AND USES OF CASH

The following table summarizes cash inflows and outflows for the following periods:

For the three months ended December 31,

For the years ended December 31,

(In millions of US Dollars)

Cash flows from operating activities
Cash flows from operating activities before net change in working
capital (i)
Cash flows used in investing activities
Cash flows (used in) from financing activities

$
$

2018

114.7 $

115.8 $

(91.4)$
(49.3)$

2017

158.5 $

122.3 $

(196.9) $
68.3 $

2018
404.2 $

566.3

(329.6)$
(134.3)$

2017

484.0

498.0

(644.2)
217.9

(i) A cautionary note regarding non-GAAP financial measures is included in Section 11: Non-GAAP Financial Measures and Additional Subtotals in Financial Statements of this

MD&A.

Operating Activities

Cash flows from operating activities for the year ended December 31, 2018 were $404.2 million, compared to $484.0 million for the year ended
December 31, 2017. Cash flows from operating activities before net change in working capital for the year ended December 31, 2018 were
$566.3 million, compared to $498.0 million for the year ended December 31, 2017. Cash flows from operating activities were lower mainly due
to higher tax payments including incremental payments to Brazilian tax authorities of $101.3 million and the aforementioned net change in
working capital of $162.1 million.

Cash flows from operating activities for the three months ended December 31, 2018 were $114.7 million, compared to $158.5 million for the
same period ended December 31, 2017. Cash flows from operating activities before net change in working capital for the three months ended
December 31, 2018 were $115.8 million, compared to $122.3 million for the three months ended December 31, 2017 mainly due to higher tax
payments including incremental payments to Brazilian tax authorities discussed above.

Yamana Annual
Report 2018

Investing Activities

Cash flows used in investing activities were $329.6 million for the year ended December 31, 2018, compared to $644.2 million for the year
ended December 31, 2017. The net cash outflows resulted from the cash capital expenditures mainly arising from the completion of Cerro
Moro in the second quarter of 2018 and the continued development of Canadian Malartic; and the build-up of ore stockpiles not scheduled for
processing within the next twelve months. Also included in investing activities in 2018 was a $189.9 million net cash inflow from the sale of
subsidiaries and other assets.

Cash flows used in investing activities were $91.4 million for the three months ended December 31, 2018, compared to $196.9 million for the
same period ended December 31, 2017. The decrease is mainly due to lower capital expenditures given the completion of Cerro Moro during
the year.

Financing Activities

Cash flows used in financing activities were $134.3 million for the year ended December 31, 2018, compared to inflows of $217.9 million for
the year ended December 31, 2017. Cash flows from financing activities represent the net impact of drawdowns and repayments on the
revolving facility, repayment of certain tranches of the Company's senior notes, and the payment of interest on term debt. Cash flows used in
financing activities also reflect the lower interest and other finance expenses paid during the year compared to the year ended December 31,
2017.

Cash flows used in financing activities were $49.3 million for the three months ended December 31, 2018, compared to inflows of $68.3 million
for the same period ended December 31, 2017. Cash flows from financing activities in both periods represent the net impact of drawdowns
and repayments on the revolving facility and the payment of interest on term debt.

CAPITAL RESOURCES

The capital of the Company consists of items included in shareholders’ equity, and debt obligations net of cash and cash equivalents as follows:

As at
(In millions of US Dollars)

Shareholders’ equity
Debt

Less: Cash and cash equivalents

December 31,
2018
4,024.0 $
1,758.7
5,782.7
(98.5)
5,684.2 $

December 31,
2017
4,447.3

1,857.7

6,305.0
(148.9)

6,156.1

In order to maintain or adjust its capital structure, the Company may, upon approval from its Board of Directors, issue shares, pay dividends,
or undertake other activities as deemed appropriate under the specific circumstances.

Yamana Annual
Report 2018

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following
table summarizes the remaining contractual maturities of the Company’s financial liabilities, and operating and capital commitments at
December 31, 2018, shown on an undiscounted basis:

(In millions of US Dollars)

Debt
Repayment of principal
Interest
Mine operating/construction and service contracts and other
Operating leases
Decommissioning, restoration and similar liabilities

Within
1 year

Years
2 and 3

Years
4 and 5

After
5 years

1.9 $
82.0
179.6
2.2
9.5

275.2 $

84.1 $
157.5
132.3
4.3
27.1

405.3 $

748.9 $
127.8
2.5
4.5
21.5
905.2 $

935.6 $
69.9
—
3.9
514.4

1,523.8 $

Total

1,770.5
437.2
314.4
14.9
572.5

3,109.5

(i)

Additionally, as at December 31, 2018, the Company had outstanding letters of credit totalling $57.4 million (C$78.3 million) representing guarantees for reclamation
obligations and road construction relating to the Company’s share of mining interest in Canadian Malartic, and $13.6 million representing guarantees for reclamation
obligations relating to the Company's US properties.

OUTSTANDING SHARE DATA

The Company is authorized to issue an unlimited number of common shares at no par value and a maximum of eight million first preference
shares. There are no first preference shares issued or outstanding. The table below summarizes the Company's common shares and securities
convertible into common shares as at the following dates:

As at (thousands)

Common shares issued and outstanding
Share options outstanding
Restricted share units

February 8,
2019
949,732
1,698
1,923

December 31,
2018
949,342
1,772
2,284

ECONOMIC TRENDS, BUSINESS RISKS AND UNCERTAINTIES

Exploration, development and mining of precious metals involve numerous risks as a result of the inherent nature of the business, global
economic trends and the influences of local social, political, environmental and economic conditions in the various geographical areas of
operation. As such, the Company is subject to several financial and operational risks that could have a significant impact on its profitability,
financial instruments and levels of operating cash flows.

Below is a summary of the principal financial risks and related uncertainties facing the Company. Readers are also encouraged to read and
consider the risk factors more particularly described in the latest available Company’s Annual Information Form. Such risk factors could
materially affect the future operating results of the Company and could cause actual events to differ materially from those described in forward-
looking statements relating to the Company.

Yamana Annual
Report 2018

METAL PRICE RISK

The Company's profitability and long-term viability depend, in large part, upon the market price of metals that may be produced from the
Company's properties, primarily gold, copper and silver. Market price fluctuations of these commodities could adversely affect profitability of
operations and lead to impairments of mineral properties. Metal prices fluctuate widely and are affected by numerous factors beyond the
Company's control including but not limited to supply and demand, consumption patterns, macroeconomic factors (interest, exchange and
inflation), banking and political conditions, and mining specific factors.

Gold Price Two-Year Trend (LBMA p.m. price: USD per ounce of gold)

Copper Price Two-Year Trend (LME Cash: USD per pound of copper)

Gold Price - Market Update

For the year ended December 31, 2018, spot gold prices averaged $1,268 per ounce, representing an increase of 1% to $1,259 per ounce in
2017. Prices ranged between $1,178 and $1,355 per ounce and ended the year at $1,279 per ounce.

For the quarter ended December 31, 2018, spot gold prices averaged $1,226 per ounce, representing a decrease of 4%, compared to $1,277
per ounce in the fourth quarter of 2017. Prices ranged between $1,186 and $1,279 per ounce during the fourth quarter of 2018.

Gold prices moved higher in the fourth quarter as US equities and Treasury yields declined, and late cycle fears developed. The US Federal
Reserve (“US Fed”) increased the US Fed Funds rate by 0.25% in December, as expected, but lowered its forecast to two hikes in 2019, from
three. Other central banks have also begun to tighten monetary policy and while higher interest rates may weigh on gold, the prospect of other
central banks increasing rates should temper US Dollar strength.

The amount of global debt added over the past several years is significant and the prospect of rising global interest rates may pose refinancing
challenges, which may prove to be supportive for gold. Most governments continue to run fiscal deficits during this period of global economic
expansion, which may ultimately leave them with limited flexibility when an economic contraction occurs. This should be a longer-term source
of support for gold price. In the short-term, gold prices are likely be driven by the changing sentiment as to the monetary policy path of the US
Fed and US Treasury yields, developments on global trade and equity market performance.

Copper Price - Market Update

For the year ended December 31, 2018, spot copper prices averaged $2.96 per pound, representing an increase of 5.8% compared to $2.80
per pound in 2017. Prices ranged between $2.61 and $3.33 per pound and ended the year at $2.70 per pound.

For the quarter ended December 31, 2018, spot copper prices averaged $2.80 per pound, representing a decrease of 9%, compared to $3.09
per pound in the fourth quarter of 2017. Prices ranged between $2.69 and $2.87 per pound in the fourth quarter of 2018.

Yamana Annual
Report 2018

Copper prices moved lower in the fourth quarter, as trade fears between the US and China continued. In the short term, copper will continue
to be impacted by global growth expectations. Over the medium to longer-term, copper prices should be supported by positive fundamentals,
as the market moves towards a deficit with supply growth slowing as fewer new mines are expected to begin operations.

The Company currently uses forward and option contracts to economically hedge against the risk of declining copper prices for a portion of its
forecast copper concentrate sales. As at December 31, 2018, the Company had 25.7 million pounds of copper forward contracts in place to
May 2019 at an average sales price of $2.79 per pound. In addition, as part of the copper advanced sales program for which $125.0 million
was received in January 2018, the Company has effectively hedged approximately 16.3 million pounds of copper at $3.26 per pound, to be
delivered in the first half of 2019. This production represents approximately 28% of planned production over this period. In the fourth quarter of
2018, 10.7 million pounds of copper were delivered under this program at $3.26 per pound.

CURRENCY RISK

The Company’s sales are predominantly denominated in US Dollars. The Company is primarily exposed to currency fluctuations relative to the
US Dollar as a portion of the Company’s operating costs and capital expenditures are denominated in foreign currencies; predominately the
Brazilian Real, the Argentine Peso, the Chilean Peso, and the Canadian Dollar. Monetary assets denominated in foreign currencies are also
exposed to foreign currency fluctuations. These potential currency fluctuations could have a significant impact on production costs and affect
the Company’s earnings and financial condition. To limit the variability in the Company’s expected operating expenses denominated in foreign
currencies, the Company restarted its hedging program in May 2016, entering into forward contracts and zero-cost collar option contracts.

US Dollar - Market Update

The following summarizes the movement in key currencies vis-à-vis the US Dollar (source: Bloomberg):

The Canadian Dollar, Argentine Peso and the Chilean Peso all weakened against the US Dollar during the three months ended December 31,
2018, while the Brazilian Real strengthened compared to the previous quarter in 2018. Relative to the same quarter of 2018, all currencies
below weakened against the US Dollar. The US Fed increased the Fed Funds rate by 0.25% in December and lowered their expectations for
rate hikes in 2019.

Yamana Annual
Report 2018

For the three months ended December 31,

For the years ended December 31,

As at December 31,

Average Exchange Rate

Period-end Exchange Rate

2018
1.3216
3.8112
37.1153
680.55

2017

1.2709
3.2504
17.5464
633.42

% (i)

2018

4.0% 1.2961
17.3% 3.655
111.5% 30.7165
7.4% 654.63

2017

1.2981
3.1917
16.5607
649.01

% (i)

-0.2%
14.5%
85.5%
0.9%

2018
1.3637
3.8745
37.6679
693.60

2017

1.2571
3.3085
18.6232
615.44

% (i)

8.5%
17.1%
102.3%
12.7%

USD-CAD
USD-BRL
USD-ARG
USD-CLP

(i)

Positive variance represents the US Dollar increase in value relative to the foreign currency.

As at December 31, 2018, the Company had zero-cost collar contracts, which allow the Company to participate in exchange rate movements
between two strikes, as follows:

Brazilian Real to USD
January 2019 to June 2019
January 2019 to December 2019
July 2019 to December 2019

(i)
(ii)

R$ = Brazilian Reais.
Evenly split by month.

Average call price (i) Average put strike price (i)

Total (ii)

R$ 3.15
R$ 3.75
R$ 3.75

R$ 3.47
R$ 4.74
R$ 4.87

R$ 180 million
R$ 348 million
R$ 135 million

On February 5 and 7, 2019, the Company entered into forward contracts totalling CLP 56.76 billion (CLP = Chilean Pesos; approximately
USD$86.8 million) evenly split by month from February 2019 to December 2019 at a weighted average Chilean Peso to US Dollar forward rate
of CLP 652.42 per US Dollar. These forward contracts are expected to cover approximately 50% of the Chilean Peso denominated forecasted
operating costs from February 2019 to December 2019.

OTHER FINANCIAL STATEMENT RISKS

Credit and Counterparty Risk

Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial instrument. The Company is exposed
to various counterparty risks including, but not limited to: (i) financial institutions that hold the Company’s cash and short-term investments; (ii)
companies that have payables to the Company, including concentrate and bullion customers; (iii) providers of its risk management services
(including hedging arrangements); (iv) shipping service providers that move the Company’s material; (v) the Company’s insurance providers;
(vi) refineries contracted that hold and process the Company's precious metals; and (vii) the Company’s lenders. The Company seeks to limit
counterparty risk by entering into business arrangements with high credit-quality counterparties, limiting the amount of exposure to each
counterparty and monitoring the financial condition of counterparties. In addition, credit risk is further mitigated in specific cases by maintaining
the ability to novate contracts from lower quality credit counterparties to those with higher credit ratings. For cash and cash equivalents, and
trade and other receivables, credit risk is represented by the carrying amount on the consolidated balance sheets.

Yamana Annual
Report 2018

Liquidity and Interest Rate Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by
delivering cash or another financial asset. Under the terms of the Company's trading agreements, counterparties cannot require the Company
to immediately settle outstanding derivatives except upon the occurrence of customary events of default. The Company mitigates liquidity risk
through the implementation of its Capital Management Policy by managing its capital expenditures, forecast and operational cash flows, and
by maintaining adequate lines of credit. The Company manages its capital structure and adjusts it in light of general economic conditions, the
risk characteristics of the underlying assets and the Company’s working capital requirements. In order to maintain or adjust its capital structure,
the Company, upon approval from its Board of Directors, may issue shares, pay dividends, or undertake other activities as deemed appropriate
under the specific circumstances. As part the capital allocation strategy, the Company examines opportunities to divest assets that do not meet
the Company’s investment criteria. The Company is exposed to interest rate risk on its variable rate debt and may enter into interest rate swap
agreements to hedge this risk.

CONTINGENCIES

Litigation and Claims

The Company is currently subject to litigation proceedings as disclosed in Note 35: Contingencies to the Company's Consolidated Financial
Statements, and may be involved in disputes with other parties in the future that may result in litigation. If the Company is unable to resolve
these disputes favorably, it may have a material adverse impact on the Company's financial condition, cash flow and results of operations.

10.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Basis of Preparation

The Company's Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards as issued by
the International Accounting Standards Board ("IFRS"). The significant accounting policies applied and recent accounting pronouncements
are described in Note 3: Significant Accounting Policies and Note 5: Recent Accounting Pronouncements, respectively, to the Company's
Consolidated Financial Statements for the year ended December 31, 2018.

In preparing the Consolidated Financial Statements in accordance with IFRS, management is required to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses. Critical accounting estimates represent estimates that are
uncertain and for which changes in those estimates could materially impact the Company's Consolidated Financial Statements. Actual future
outcomes may differ from present estimates. Management reviews its estimates and assumptions on an ongoing basis using the most current
information available.

The critical judgements and key sources of estimation uncertainties in the application of accounting policies during the year ended
December 31, 2018 are disclosed in Note 4: Critical Judgements and Estimation Uncertainties to the Company's Consolidated Financial
Statements for the year ended December 31, 2018.

Yamana Annual
Report 2018

11.

NON-GAAP FINANCIAL MEASURES AND ADDITIONAL SUBTOTALS IN FINANCIAL STATEMENTS

The Company has included certain non-GAAP financial measures to supplement its Consolidated Financial Statements, which are presented in
accordance with IFRS, including the following:

The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved
ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed
under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide
additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with
IFRS. Management's determination of the components of non-GAAP and additional measures are evaluated on a periodic basis influenced by
new items and transactions, a review of investor uses and new regulations as applicable. Any changes to the measures are duly noted and
retrospectively applied as applicable.

CASH COSTS AND ALL-IN SUSTAINING COSTS

The Company discloses “cash costs” because it understands that certain investors use this information to determine the Company’s ability to
generate earnings and cash flows for use in investing and other activities. The Company believes that conventional measures of performance
prepared in accordance with IFRS do not fully illustrate the ability of its operating mines to generate cash flows. The measures, as determined
under IFRS, are not necessarily indicative of operating profit or cash flows from operating activities. Cash costs figures are calculated in
accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and
included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard remains the generally accepted
standard of reporting cash costs of production in North America. Adoption of the standard is voluntary and the cost measures presented herein
may not be comparable to other similarly titled measures of other companies.

The measure of cash costs, along with revenue from sales, is considered to be a key indicator of a company’s ability to generate operating
earnings and cash flows from its mining operations. This data is furnished to provide additional information and is a non-GAAP financial measure.
The terms co-product and by-product cash costs per ounce of gold or silver produced, co-product cash costs per pound of copper produced, co-
product and by-product AISC per ounce of gold or silver produced and co-product AISC per pound of copper produced do not have any
standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies.
Non-GAAP financial measures should not be considered in isolation as a substitute for measures of performance prepared in accordance with
IFRS and is not necessarily indicative of operating costs, operating profit or cash flows presented under IFRS.

Yamana Annual
Report 2018

By-Product and Co-Product Cash Costs

Cash costs include mine site operating costs such as mining, processing, administration, production taxes and royalties which are not based on
sales or taxable income calculations, but are exclusive of amortization, reclamation, capital, development and exploration costs. The Company
believes that such measure provides useful information about the Company’s underlying cash costs of operations. Cash costs are computed
on a weighted average basis, net of by-product sales and on a co-product basis as follows:

• Cash costs of gold and silver on a by-product basis - shown on a per ounce basis. The attributable cost for each metal is calculated
net of by-products by applying copper and zinc net revenues, which are incidental to the production of precious metals, as a credit to
gold and silver ounces produced, thereby allowing the Company’s management and stakeholders to assess net costs of precious
metal production. These costs are then divided by gold and silver ounces produced.

• Cash costs of gold and silver on a co-product basis - shown on a per ounce basis. Costs directly attributed to gold and silver will
be allocated to each metal. Costs not directly attributed to each metal will be allocated based on the relative value of revenues, which
will be determined annually. The attributable cost for each metal will then be divided by the production of each metal in calculating
cash costs per ounce on a co-product basis for the period.

• Cash costs of copper on a co-product basis - shown on a per pound basis. Costs attributable to copper production are divided by

commercial copper pounds produced.

By-Product and Co-Product AISC

All-in sustaining costs per ounce of gold and silver produced seeks to represent total sustaining expenditures of producing gold and silver ounces
from current operations, based on co-product costs or by-product costs, including cost components of mine sustaining capital expenditures,
corporate general and administrative expense excluding stock-based compensation, and exploration and evaluation expense. All-in sustaining
costs do not include capital expenditures attributable to projects or mine expansions, exploration and evaluation costs attributable to growth
projects, income tax payments, financing costs and dividend payments. Consequently, this measure is not representative of all of the Company's
cash expenditures. In addition, the calculation of all-in sustaining costs does not include depletion, depreciation and amortization expense as it
does not reflect the impact of expenditures incurred in prior periods.

All-in sustaining co-product costs reflect allocations of the aforementioned cost components on the basis that is consistent with the nature of
each of the cost component to the gold, silver or copper production activities. Similarly, all-in sustaining by-product costs reflect allocations of
the aforementioned cost components on the basis that is consistent with the nature of each of the cost component to the gold and silver
production activities but net of by-product revenue credits from sales of copper and zinc.

The following tables provide a reconciliation of total cost of sales of gold, silver and copper sold (cost of sales excluding depletion, depreciation
and amortization, plus depletion, depreciation and amortization) per the Consolidated Financial Statements to co-product cash costs of gold
produced, co-product cash costs of silver produced, co-product cash costs of copper produced, co-product AISC of gold produced, co-product
AISC of silver produced, co-product AISC of copper produced, by-product cash costs of gold produced, by-product cash costs of silver produced,
by-product AISC of gold produced and by-product AISC of silver produced. The tables also present total cost of sales on a per ounce or pound
sold, co-product and by-product cash costs and AISC on a per ounce or pound produced basis, as deemed appropriate.

Total cost of sales in the following reconciliations to co-product and by-product cash costs and co-product and by-product AISC agree to the
Consolidated Financial Statement of operations. All production costs are classified in inventory together with treatment and refining charges,
commercial costs, overseas freight and other selling costs. The amount of inventories recognized as cost of sales for the reporting period
corresponds to the units of products sold during that period.

Beginning January 1, 2018, silver production and related KPIs for Chapada and Minera Florida no longer meet the minimum significance
threshold in accordance with the Company's policy.

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Yamana Annual
Report 2018

RECONCILIATON OF 2018 ACTUALS - CASH COSTS AND AISC PER GEO SOLD

As described in Section 2: Core Business, Strategy and Outlook of this MD&A, beginning January 1, 2019, the Company has adopted the
updated version of the Guidance Note on All-in Sustaining Costs. The following tables reconcile 2018 actuals to the revised methodology:

(USD/GEO ounce sold, unless otherwise noted)

Chapada

Canadian
Malartic

El Peñón

Cerro Moro

Jacobina

Cash Costs (co-product, current methodology,
per ounce)
Production vs. sales
Inventory movement and adjustments

Commercial costs

Sales tax

Others

Subtotal

Cash Costs (co-product, revised methodology) $

334 $

563 $

833 $

12
4

—

54 $

388 $

6
1

—

10 $

573 $

2
14

—

18 $

851 $

479
9
75
—
66
—
150 $
629 $

649 $

5
1

—

26 $

675 $

(USD/GEO ounce sold, unless otherwise noted)

Chapada

Canadian
Malartic

El Peñón

Cerro Moro

Jacobina

Minera
Florida

916

(4)
5

—

917

Minera
Florida

All-in Sustaining Costs (co-product, current
methodology, per ounce produced)
Production vs. sales
Inventory movement and adjustments
Commercial costs
Sales tax
G&A stock based comp
Exploration CAPEX
Community social programs
Closure related expenses
Closure depletion
Others

Subtotal
All-in Sustaining (co-product, revised
methodology)

NET DEBT

399 $

711 $

995 $

15
3
23
15
—
8
1
8
1
—

6
1
—
—
—
12
—
—
—
2

2
13
1
—
—
89
—
6
9
2

74 $

473 $

21 $

732 $

122 $

1,117 $

600
38
75
—
66
—
61
7
1
—
—
248 $

848

802 $

1,099

9
1
1
19
—
41
—
13
5
—

89 $

891 $

(4)
4
—
—
—
172
7
21
28
—

228

1,327

The Company uses the financial measure "Net Debt", which is a non-GAAP financial measure, to supplement information in its Consolidated
Financial Statements. The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and
certain investors and analysts use this information to evaluate the Company’s performance. The non-GAAP financial measure of net debt does
not have any standardized meaning prescribed under IFRS, and therefore it may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.

Net Debt is calculated as the sum of the current and non-current portions of long-term debt net of the cash and cash equivalent balance as at
the balance sheet date. A reconciliation of Net Debt is provided below:

Yamana Annual
Report 2018

As at,
(In millions of US Dollars)
Debt
Non-current portion
Current portion

Total debt
Less: Cash and cash equivalents

Net Debt

NET FREE CASH FLOW

December 31,
2018

December 31,
2017

1,756.8 $
1.9
1,758.7 $
98.5
1,660.2 $

1,747.7
110.0

1,857.7
148.9

1,708.8

The Company uses the financial measure "Net Free Cash Flow", which is a non-GAAP financial measure, to supplement information in its
Consolidated Financial Statements. Net Free Cash Flow does not have any standardized meaning prescribed under IFRS, and therefore it may
not be comparable to similar measures employed by other companies. The Company believes that in addition to conventional measures
prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s
performance with respect to its operating cash flow capacity to meet non-discretionary outflows of cash. The presentation of Net Free Cash
Flow is not meant to be a substitute for the cash flow information presented in accordance with IFRS, but rather should be evaluated in
conjunction with such IFRS measures. Net Free Cash Flow is calculated as cash flows from operating activities of continuing operations
adjusted for advance payments received pursuant to metal purchase agreements, non-discretionary expenditures from sustaining capital
expenditures and interest and financing expenses paid related to the current period. A reconciliation of Net Free Cash Flow is included in
Section 1: Highlights and Relevant Updates of this MD&A.

AVERAGE REALIZED METAL PRICES

The Company uses the financial measures "average realized gold price", "average realized silver price" and "average realized copper price",
which are non-GAAP financial measures, to supplement in its Consolidated Financial Statements. Average realized price does not have any
standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies.
The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and
analysts use this information to evaluate the Company’s performance vis-à-vis average market prices of metals for the period. The presentation
of average realized metal prices is not meant to be a substitute for the revenue information presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measure.

Yamana Annual
Report 2018

Average realized metal price represents the sale price of the underlying metal before deducting sales taxes, treatment and refining charges,
and other quotational and pricing adjustments. Average realized prices are calculated as the revenue related to each of the metals sold, i.e.
gold, silver and copper, divided by the quantity of the respective units of metals sold, i.e. gold ounce, silver ounce and copper pound.
Reconciliations of average realized metal prices to revenue are provided below:

For the three months ended December 31,

2018

(In millions of US Dollars; unless otherwise noted)

Total

Gold

Silver

Copper

Revenue
Treatment and refining charges of concentrate
Sales taxes
Metal price adjustments related to concentrate revenue
Other adjustments

Gross revenue

483.4 $
10.1
—
2.8
(0.1)

496.2 $

347.9 $
1.5
—
(0.6)
(0.1)

44.7 $
—
—

—

90.8 $
8.6
—
3.4
—

348.7 $

44.7 $

102.8 $

Total
478.8 $
10.9
5.5
10.7
(0.1)
505.8 $

2017

Gold
382.6 $
1.7
3.3
0.1
0.1
387.8 $

Silver

Copper

17.8 $
—
—
—
—

78.4
9.2
2.2
10.6
(0.2)

17.8 $

100.2

Commercial gold/silver ounces, million pounds of
copper sold
Revenue per gold/silver ounce, pound of copper sold
Average realized price per gold/silver ounce, pound
of copper sold

284,420 3,065,102

1,223 $

14.59 $

35.5

2.56

1,226 $

14.59 $

2.90

301,513

1,081,731

1,269 $

16.46 $

33.2

2.36

1,286

16.49 $

3.02

For the year ended December 31,

2018

2017

(In millions of US Dollars; unless otherwise noted)

Total

Gold

Silver

Revenue
Treatment and refining charges of concentrate
Sales taxes
Metal price adjustments related to concentrate revenue
Other adjustments

1,798.5 $
34.6
—
6.8
0.3

1,357.5 $
4.9
—
0.1
0.3

107.6 $
—
—
—
—

Gross revenue

1,840.2 $

1,362.8 $

107.6 $

Copper

Gold

Total
333.4 $ 1,803.8 $ 1,433.9 $
38.2
5.6
29.7
18.6
11.5
—
10.1
6.6
(0.8)
(0.5)
—
(0.1)
369.7 $ 1,870.2 $ 1,450.1 $

Silver

Copper

86.1 $
0.2
—
—
(0.1)

283.8
32.4
7.1
10.9
(0.3)

86.2 $

333.9

Commercial gold/silver ounces, million pounds of
copper sold
Revenue per gold/silver ounce, pound of copper
sold
Average realized price per gold/silver ounce, pound
of copper sold

1,075,214 7,000,887

123.6

1,147,204

5,125,689

120.1

1,263 $

15.37 $

2.70

1,267 $

15.37 $

2.99

1,250

16.80 $

2.36

1,264

16.83 $

2.78

ADDITIONAL LINE ITEMS OR SUBTOTALS IN FINANCIAL STATEMENTS

The Company uses the following additional line items and subtotals in the Consolidated Financial Statements as contemplated in IAS 1:
Presentation of Financial Statements:
• Gross margin excluding depletion, depreciation and amortization — represents the amount of revenue in excess of cost of sales
excluding depletion, depreciation and amortization. This additional measure represents the cash contribution from the sales of metals
before all other operating expenses and DDA, in the reporting period.

• Mine operating earnings — represents the amount of revenue in excess of cost of sales excluding depletion, depreciation and

amortization and depletion, depreciation and amortization.

• Operating earnings — represents the amount of earnings before net finance income/expense and income tax recovery/expense. This
measure represents the amount of financial contribution, net of all expenses directly attributable to mining operations and overheads.
Finance income, finance expense and foreign exchange gains/losses are not classified as expenses directly attributable to mining
operations.

• Cash flows from operating activities before income taxes paid and net change in working capital — excludes the payments made
during the period related to income taxes and tax related payments and the movement from period-to-period in working capital items
including trade and other receivables, other assets, inventories, trade and other payables. Working capital and income taxes can be

Yamana Annual
Report 2018

volatile due to numerous factors, such as the timing of payment and receipt. As the Company uses the indirect method prescribed by
IFRS in preparing its statement of cash flows, this additional measure represents the cash flows generated by the mining business to
complement the GAAP measure of cash flows from operating activities, which is adjusted for income taxes paid and tax related payments
and the working capital change during the reporting period.

• Cash flows from operating activities before net change in working capital — excludes the movement from period-to-period in working
capital items including trade and other receivables, other assets, inventories, trade and other payables. Working capital can be volatile
due to numerous factors, such as the timing of payment and receipt. As the Company uses the indirect method prescribed by IFRS in
preparing its statement of cash flows, this additional measure represents the cash flows generated by the mining business to complement
the GAAP measure of cash flows from operating activities, which is adjusted for the working capital change during the reporting period.
• Cash flows from operating activities before net change in working capital, normalized due to copper advanced sales program -
excludes the impact due to the copper advanced sales program payments and deliveries that results in timing differences between the
cash payment and delivery.

The Company’s management believes that their presentation provides useful information to investors because gross margin excluding
depletion, depreciation and amortization excludes the non-cash operating cost item (i.e. depreciation, depletion and amortization), cash flows
from operating activities before net change in working capital excludes the movement in working capital items, mine operating earnings excludes
expenses not directly associated with commercial production and operating earnings excludes finance and tax related expenses and
income/recoveries. These, in management’s view, provide useful information of the Company’s cash flows from operating activities and are
considered to be meaningful in evaluating the Company’s past financial performance or the future prospects.

12.

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to
senior management, including the Company’s President and Chief Executive Officer and Senior Vice President, Finance and Chief Financial
Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure. The Company’s system of disclosure controls
and procedures includes, but is not limited to, our Timely Disclosure and Confidentiality Policy, our Code of Conduct, our Insider Trading Policy,
our Corporate Controls Policy, the effective functioning of our Audit Committee and procedures in place to systematically identify matters
warranting consideration of disclosure by the Audit Committee.

As at the end of the period covered by this Management’s Discussion and Analysis, management of the Company, with the participation of the
President and Chief Executive Officer and the Senior Vice President, Finance and Chief Financial Officer, evaluated the effectiveness of the
Company’s disclosure controls and procedures as required by applicable rules of the Canadian Securities Administrators (or Canadian
securities regulatory authorities) and the U.S. Securities and Exchange Commission (or the SEC). The evaluation included documentation
review, inquiries and other procedures considered by management to be appropriate in the circumstances. Based on that evaluation, the
President and Chief Executive Officer and the Senior Vice President, Finance and Chief Financial Officer have concluded that, as of the end of
the period covered by this Management’s Discussion and Analysis, the disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Securities Exchange Act of 1934) were effective to provide reasonable assurance that information required to be disclosed in the Company’s
annual filings and interim filings and other reports filed or submitted under applicable securities laws, is recorded, processed, summarized and
reported within time periods specified by those laws and that material information is accumulated and communicated to management of the
Company, including the President and Chief Executive Officer and the Senior Vice President, Finance and Chief Financial Officer, as appropriate
to allow timely decisions regarding required disclosure.

Yamana Annual
Report 2018

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining effective "internal control over financial reporting" as such term is
defined in the rules of the Canadian Securities Administrators and the SEC. The Company’s internal control over financial reporting is designed
to provide reasonable assurance regarding the reliability of the Company’s financial reporting for external purposes in accordance with
IFRS. The Company’s internal control over financial reporting includes:

• Maintaining records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets of the

Company;

• Providing reasonable assurance that transactions are recorded as necessary for preparation of our Consolidated Financial

Statements in accordance with generally accepted accounting principles;

• Providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and the

directors of the Company; and

• Providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect

on the Company’s Consolidated Financial Statements would be prevented or detected on a timely basis.

The Company’s internal control over financial reporting may not prevent or detect all misstatements because of inherent limitations. Additionally,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to changes in
conditions or deterioration in the degree of compliance with the Company’s policies and procedures.

Management assessed the effectiveness of the Company's internal control over financial reporting, as defined in Rules 13a - 15(f) and 15d -
15(f) of the Securities Exchange Act of 1934, based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission as of December 31, 2018. This evaluation included review of the
documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion
on this evaluation. Based on this evaluation, management has concluded that the Company's internal control over financial reporting was
effective as of December 31, 2018.

The Company's independent registered public accounting firm, Deloitte LLP, has audited the Consolidated Financial Statements included in
the annual report and has issued an attestation report dated February 14, 2019 on the Company's internal control over financial reporting based
on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.

CHANGES IN INTERNAL CONTROLS

During the period ended December 31, 2018, there has been no change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Yamana Annual
Report 2018

LIMITATIONS OF CONTROLS AND PROCEDURES

The Company’s management, including the President and Chief Executive Officer and the Senior Vice President, Finance and Chief Financial
Officer, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any systems of controls
also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control
system, misstatements due to error or fraud may occur and not be detected.

This report provides a discussion and analysis of the financial condition and results of operations (“Management’s Discussion and
Analysis”) to enable a reader to assess material changes in financial condition between December 31, 2018 and December 31, 2017
and results of operations for the periods ended December 31, 2018 and December 31, 2017.

This Management’s Discussion and Analysis has been prepared as of February 14, 2019. The consolidated financial statements
prepared in accordance with IFRS as issued by the IASB follow this Management’s Discussion and Analysis. This Management’s
Discussion and Analysis is intended to supplement and complement the annual audited consolidated financial statements and notes
thereto as at and for the year ended December 31, 2018 (collectively the “Financial Statements”). You are encouraged to review the
Financial Statements in conjunction with your review of this Management’s Discussion and Analysis. This Management’s Discussion
and Analysis should be read in conjunction with both the Financial Statements and the most recent Annual Information Form for the
year ended December 31, 2017 on file with the Securities Commissions of all of the provinces in Canada and which are included in
the 2017 Annual Report on Form 40-F filed with the United States Securities and Exchange Commission. Certain notes to the
Financial Statements are specifically referred to in this Management’s Discussion and Analysis. All Dollar amounts in the
Management’s Discussion and Analysis are in US Dollars, unless otherwise specified.

Yamana Annual
Report 2018

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Management’s Discussion and Analysis contains or incorporates by reference “forward-looking statements” and “forward-looking
information” under applicable Canadian securities legislation within the meaning of the United States Private Securities Litigation Reform Act
of 1995. Forward-looking information includes, but is not limited to information with respect to the Company’s strategy, plans or future financial
or operating performance, the outcome of the legal matters involving the damages assessments and any related enforcement proceedings.
Forward-looking statements are characterized by words such as “plan", “expect”, “budget”, “target”, “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, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently
subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially
from those projected in the forward-looking statements. These factors include the Company’s expectations in connection with the production
and exploration, development and expansion plans at the Company's projects discussed herein being met, the impact of proposed optimizations
at the Company's projects, changes in national and local government legislation, taxation, controls or regulations and/or change in the
administration of laws, policies and practices, and the impact of general business and economic conditions, global liquidity and credit availability
on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices (such as gold,
copper, silver and zinc), currency exchange rates (such as the Brazilian Real, the Chilean Peso and the Argentine Peso versus the US Dollar),
the impact of inflation, possible variations in ore grade or recovery rates, changes in the Company’s hedging program, changes in accounting
policies, changes in mineral resources and mineral reserves, risks related to asset disposition, risks related to metal purchase agreements,
risks related to acquisitions, changes in project parameters as plans continue to be refined, changes in project development, construction,
production and commissioning time frames, unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other
consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as
anticipated, unexpected changes in mine life, final pricing for concentrate sales, unanticipated results of future studies, seasonality and
unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, permitting timelines,
government regulation and the risk of government expropriation or nationalization of mining operations, risks related to relying on local advisors
and consultants in foreign jurisdictions, environmental risks, unanticipated reclamation expenses, risks relating to joint venture operations, title
disputes or claims, limitations on insurance coverage, timing and possible outcome of pending and outstanding litigation and labour disputes,
risks related to enforcing legal rights in foreign jurisdictions, the Company's expectations in connection with the satisfaction of all closing
conditions of the aforementioned sale transaction, the completion of the aforementioned sale transaction, the expected use of proceeds
discussed herein and delivering value creation over the long term, as well as those risk factors discussed or referred to herein and in the
Company's Annual Information Form filed with the securities regulatory authorities in all provinces of Canada and available at www.sedar.com,
and the Company’s Annual Report on Form 40-F filed with the United States Securities and Exchange Commission. Although the Company
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 Company undertakes no obligation to update forward-looking statements if circumstances or management’s
estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance
on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in
understanding the Company’s expected financial and operational performance and results as at and for the periods ended on the dates
presented in the Company’s plans and objectives and may not be appropriate for other purposes.

CAUTIONARY STATEMENT REGARDING MINERAL RESERVES AND MINERAL RESOURCES

Scientific and technical information contained in this Management’s Discussion and Analysis has been reviewed and approved by Sébastien
Bernier (Senior Director, Geology and Mineral Resources). Sébastien Bernier is an employee of Yamana Gold Inc. and a "Qualified Person"
as defined by Canadian Securities Administrators' National Instrument 43-101 - Standards of Disclosure for Mineral Projects.

Yamana Annual
Report 2018

Readers should refer to the Annual Information Form of the Company for the year ended December 31, 2017 and other continuous disclosure
documents filed by the Company since January 1, 2018 available at www.sedar.com, for further information on mineral reserves and mineral
resources, which is subject to the qualifications and notes set forth therein.

CAUTIONARY STATEMENT TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERAL
RESOURCES

This Management’s Discussion and Analysis has been prepared in accordance with the requirements of the securities laws in effect in Canada,
which differ in certain material respects from the disclosure requirements of United States securities laws contained in Industry Guide 7. The
terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with
Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining,
Metallurgy and Petroleum (the “CIM”) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council,
as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the Securities and Exchange
Commission (the “Commission”) contained in Industry Guide 7. Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is
required to report mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow analysis to designate
mineral reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined
in and required to be disclosed by NI 43-101. However, these terms are not defined terms under Industry Guide 7. Investors are cautioned
not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. “Inferred mineral
resources” have a great amount of uncertainty as to their existence, and great uncertainty 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 pre-feasibility studies, except in rare cases. Investors are cautioned not to
assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a
mineral resource is permitted disclosure under Canadian regulations. In contrast, issuers reporting pursuant to Industry Guide 7 report
mineralization that does not constitute “mineral reserves” by Commission standards as in place tonnage and grade without reference to unit
measures.

Accordingly, information contained in this Management’s Discussion and Analysis may not be comparable to similar information made public
by U.S. companies reporting pursuant to Industry Guide 7.

*************

TABLE OF CONTENTS

Management's Responsibility for Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Loss
Consolidated Statements of Cash Flows
Consolidated Balance Sheets
Consolidated Statements of Changes in Equity

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:

Note 1:
Note 2:
Note 3:
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
Note 9:
Note 10:
Note 11:
Note 12:
Note 13:
Note 14:
Note 15:
Note 16:
Note 17:
Note 18:
Note 19:
Note 20:
Note 21:
Note 22:
Note 23:
Note 24:
Note 25:
Note 26:
Note 27:
Note 28:
Note 29:
Note 30:
Note 31:
Note 32:
Note 33:
Note 34:
Note 35:
Note 36:
Note 37:
Note 38:

Description of Business and Nature of Operations
Basis of Preparation and Presentation
Significant Accounting Policies
Critical Judgements and Estimation Uncertainties
Recent Accounting Pronouncements
Divestitures
Revenue
Cost of Sales Excluding Depletion, Depreciation and Amortization
Employee Compensation and Benefits Expenses
Other Expenses
Finance Costs
Impairment and Reversal of Impairment
Income Taxes
Loss Per Share
Supplementary Cash Flow Information
Financial Instruments
Financial Risk Management
Inventories
Other Financial Assets
Other Assets
Property, Plant and Equipment
Goodwill and Other Intangible Assets
Investment in Associate
Trade and Other Payables
Other Financial Liabilities
Other Provisions and Liabilities
Long-Term Debt and Credit Facilities
Decommissioning, Restoration and Similar Liabilities
Share Capital
Share-Based Payments
Non-Controlling Interests
Capital Management
Operating Segments
Operating Leases
Contingencies
Related Party Transactions
Subsequent Events
Guarantor Subsidiaries Annual Financial Statements

Yamana Annual
Report 2018

Page
96
97
99
100
101
102
103

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159
160
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163
164
164
165

Yamana Annual
Report 2018

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of Yamana Gold Inc. and subsidiaries ("Yamana Gold Inc." or the "Company") and all the
information in this annual report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared by management on a going concern basis in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). When alternative accounting methods exist,
management has chosen those it deems most appropriate in the circumstances. Financial statements are not exact since they include certain
amounts based on estimates and judgements. Management has determined such amounts on a reasonable basis in order to ensure that the
financial statements are presented fairly, in all material respects. Management has prepared the financial information presented elsewhere in
the annual report and has ensured that it is consistent with that in the consolidated financial statements.

Yamana Gold Inc. maintains systems of internal accounting and administrative controls in order to provide, on a reasonable basis, assurance
that the financial information is relevant, reliable and accurate and that the Company's assets are appropriately accounted for and adequately
safeguarded. The Company's internal control over financial reporting as of December 31, 2018, is based on the criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible
for reviewing and approving the financial statements. The Board carries out this responsibility principally through its Audit Committee
("Committee").

The Audit Committee is appointed by the Board, and all of its members are independent directors. The Committee meets at least four times a
year with management, as well as the external auditors, to discuss internal controls over the financial reporting process, auditing matters and
financial reporting issues, to satisfy itself that each party is properly discharging its responsibilities, and to review the quarterly and the annual
reports, the consolidated financial statements and the external auditors' reports. The Committee reports its findings to the Board for
consideration when approving the consolidated financial statements for issuance to the shareholders. The Committee also considers, for
review by the Board and approval by the shareholders, the engagement or reappointment of the external auditors. The consolidated financial
statements have been audited by Deloitte LLP, Chartered Professional Accountants, Licensed Public Accountants, in accordance with the
standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders. Deloitte LLP has full and free
access to the Audit Committee.

“Daniel Racine”

“Jason LeBlanc”

President and
Chief Executive Officer

February 14, 2019

Senior Vice President, Finance and
Chief Financial Officer

Yamana Annual
Report 2018

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Yamana Gold Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Yamana Gold Inc. and subsidiaries (the "Company") as of December 31,
2018 and 2017, the related consolidated statements of operations, comprehensive loss, cash flows and changes in equity, for each of the two
years in the period ended December 31, 2018, and the related notes (collectively referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its
financial performance and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 14,
2019, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.

"Deloitte LLP"

Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada

February 14, 2019

We have served as the Company's auditor since 1995.

Yamana Annual
Report 2018

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Yamana Gold Inc.

Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Yamana Gold Inc. and subsidiaries (the “Company”) as of December 31, 2018,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated financial statements as of and for the year ended December 31, 2018 of the Company and our report dated February 14, 2019,
expressed an unqualified opinion on those financial statements.

Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a
public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.

"Deloitte LLP"

Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada

February 14, 2019

YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,

(In millions of US Dollars except for shares and per share amounts)

Revenue (Note 7)
Cost of sales excluding depletion, depreciation and amortization (Note 8)

Gross margin excluding depletion, depreciation and amortization
Depletion, depreciation and amortization
Impairment of mining properties and goodwill, net (Note 12)

Mine operating earnings

Expenses
General and administrative
Exploration and evaluation
Share of earnings of associate (Note 23)
Other operating income (expenses), net (Note 10(a))
Impairment of non-operating mining properties (Note 12)

Operating loss
Finance costs (Note 11)
Other income (costs), net (Note 10(b))

Loss before taxes
Current income tax expense (Note 13)
Deferred income tax recovery (Note 13)

Income tax (expense) recovery
Net loss

Attributable to:

Yamana Gold Inc. equity holders
Non-controlling interests

Net loss

Loss per share attributable to Yamana Gold Inc. equity holders (Note 14)

Basic and diluted

Weighted average number of shares outstanding (in thousands) (Note 14)

Basic and diluted

Yamana Annual
Report 2018

$
$

2018
1,798.5 $
(1,010.0)

788.5 $
(438.3)
(149.0)
201.2 $

(91.8)
(13.0)
5.5
9.3
(153.0)

(41.8)$
(137.4)
2.5
(176.7)$
(138.8)
17.8
(121.0)$
(297.7)$

(284.6)$
(13.1)

(297.7)$

2017
(Restated) (i)
1,803.8
(1,042.4)

761.4
(426.8)
(256.9)

77.7

(113.6)
(21.2)
—
(23.6)
(99.6)

(180.3)
(110.8)
(20.9)

(312.0)
(239.2)
353.1

113.9
(198.1)

(188.5)
(9.6)

(198.1)

(0.30)$

(0.20)

949,030

948,187

(i)

The accompanying notes are an integral part of the Consolidated Financial Statements.

100

Yamana Annual
Report 2018

YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31,

(In millions of US Dollars)

Net loss

Other comprehensive (loss) income, net of taxes
Items that may be reclassified subsequently to net earnings (loss):
Available-for-sale financial assets
- Reclassification adjustments related to available-for-sale financial assets
Cash-flow hedges
- Effective portion of changes in fair value of cash flow hedges
- Reclassification of losses (gains) recorded in earnings
- Tax Impact on fair value of hedging instruments
- Time value of options contracts excluded from hedge relationship

Items that will not be reclassified to net earnings (loss):
Changes in the fair value of equity investments at FVOCI
Re-measurement of employee benefit plan

Total other comprehensive (loss) income
Total comprehensive loss

Attributable to :

Yamana Gold Inc. equity holders
Non-controlling interests

Total comprehensive loss

2018

(297.7)$

2017
(Restated) (i)
(198.1)

—

(15.9)
3.4
(1.4)
5.4
(8.5)$

(1.0)
(1.0)

(10.5)$
(308.2)$

(294.4)$
(13.8)

(308.2)$

4.5

5.9
(0.3)
1.3
(6.0)

5.4

—
1.3

6.7
(191.4)

(182.8)
(8.6)

(191.4)

$
$

(i)

The accompanying notes are an integral part of the Consolidated Financial Statements.

YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,

(In millions of US Dollars)

Operating activities
Loss before taxes
Adjustments to reconcile loss before taxes to net operating cash flows:

Depletion, depreciation and amortization
Share-based payments (Note 30)
Other (income) costs, net (Note 10(b))
Finance costs (Note 11)
Mark-to-market on financial assets and metal concentrates
Share of earnings of associate (Note 23)
Impairment of mineral properties, net (Note 12)
Amortization of deferred revenue on metal purchase agreements (Note 26)
Gain on asset disposals
Other non-cash expenses (recoveries) (Note 15(d))
Advanced payments received on metal purchase agreements
Decommissioning, restoration and similar liabilities paid (Note 28)
Other payments
Cash flows from operating activities before income taxes paid and net change in working capital
Income taxes paid
Payments made to Brazilian tax authorities (Note 13(e))
Cash flows from operating activities before net change in working capital
Net change in working capital (Note 15(b))
Cash flows from operating activities
Investing activities
Acquisition of property, plant and equipment
Net proceeds on disposal of subsidiaries and other assets
Acquisition of investments and other assets
Cash used in other investing activities
Cash flows used in investing activities
Financing activities
Dividends paid (Note 29(b))
Interest and other finance expenses paid
Financing costs paid on early note redemption (Note 11)
Proceeds from Brio Gold Inc. private placement and rights offering
Repayment of term loan and notes payable (Note 27)
Proceeds from term loan and notes payable (Note 27)
Proceeds from other financing activities
Cash flows (used in) from financing activities
Effect of foreign exchange of non-US Dollar denominated cash and cash equivalents
(Decrease) Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents classified as held for sale, beginning of year
Cash and cash equivalents, end of year
Cash and cash equivalents reclassified as held for sale
Cash and cash equivalents, excluding amount classified as held for sale, end of year

Yamana Annual
Report 2018

101

2018

2017
(Restated) (i)

(176.7) $

(312.0)

438.3
5.3
(2.5)
137.4
17.6
(5.5)
302.0
(99.5)
(74.2)
50.4
127.8
(5.3)
(6.7)
708.4
(40.8)
(101.3)
566.3 $
(162.1)
404.2 $

(446.9) $
189.9
(5.2)
(67.4)
(329.6) $

(19.0) $
(80.1)
(14.7)
—
(486.5)
460.0
6.0
(134.3) $
3.0
(56.7) $
148.9 $
6.3 $
98.5 $
— $
98.5 $

426.8
12.6
20.9
110.8

(1.5)
—
356.5

(8.6)
—
(7.8)
6.6
(4.6)
(6.0)

593.7
(19.0)
(76.7)
498.0
(14.0)
484.0

(607.5)
17.5
—
(54.2)
(644.2)

(18.9)
(103.8)

—
71.5
(460.9)
730.0
—
217.9
0.1
57.8
97.4
—
155.2
(6.3)
148.9

$
$
$
$
$
$

(i)

Supplementary cash flow information (Note 15).

The accompanying notes are an integral part of the Consolidated Financial Statements.

102

Yamana Annual
Report 2018

YAMANA GOLD INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,

(In millions of US Dollars)

Assets
Current assets:

Cash and cash equivalents (Note 15(c))

Trade and other receivables

Inventories (Note 18)

Other financial assets (Note 19)

Other assets (Note 20)

Assets held for sale (Note 6)

Non-current assets:

Property, plant and equipment (Note 21)

Goodwill and other intangible assets (Note 22)

Investment in associate (Note 23)

Deferred tax assets (Note 13(b))

Other financial assets (Note 19)

Other assets (Note 20)

Total assets

Liabilities

Current liabilities:

Trade and other payables (Note 24)

Income taxes payable

Other financial liabilities (Note 25)

Other provisions and liabilities (Note 26)

Liabilities relating to assets held for sale (Note 6)

Non-current liabilities:

Long-term debt (Note 27)

Decommissioning, restoration and similar liabilities (Note 28)

Deferred tax liabilities (Note 13(b))

Other financial liabilities (Note 25)

Other provisions and liabilities (Note 26)

Total liabilities

Equity

Share capital (Note 29)

Issued and outstanding 949,341,830 common shares (December 31, 2017 - 948,524,667 common shares)

Contributed surplus

Accumulated other comprehensive (loss) income

Deficit

Attributable to Yamana Gold Inc. equity holders
Non-controlling interests (Note 31)

Total equity

Total liabilities and equity

2018

2017
(Restated) (i)

98.5 $
24.3
181.0
7.4
118.0
—
429.2 $

6,696.4
399.8
146.0
88.5
18.9
234.1
8,012.9 $

294.8 $
32.5
62.3
106.8
—
496.4 $

1,756.8
241.2
1,129.3
76.0
289.2
3,988.9 $

7,636.4 $
20.4
(16.9)

(3,650.6)
3,989.3 $
34.7
4,024.0 $
8,012.9 $

148.9

38.6

163.5

13.2

119.4

355.8

839.4

7,153.2

449.5

—

97.8

26.1

197.3

8,763.3

345.4

91.8

203.1

56.7

83.7

780.7

1,747.7

258.2

1,147.1

85.7

296.6

4,316.0

7,633.7

18.0

2.2

(3,340.5)

4,313.4
133.9

4,447.3

8,763.3

(i)

Commitments and contingencies (Notes 21, 34 and 35).
The accompanying notes are an integral part of the Consolidated Financial Statements

Approved by the Board

“Peter Marrone”
PETER MARRONE
Director

“Richard Graff”
RICHARD GRAFF
Director

YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31,

(In millions of US Dollars)

Share
capital

Contributed
surplus (i)

Accumulated
other
comprehensive
(loss) income (i)

Balance as at January 1, 2017 as
previously reported
Adjustment from adoption of IFRS 9 (Note 5) $

Restated balance as at January 1, 2017

7,630.5

$
— $
7,630.5 $

Total comprehensive loss

Net loss

Other comprehensive income, net of
income tax

Transactions with owners

Offering of purchase rights of Brio Gold

Issued on vesting of restricted share units
(Note 29(a))
Vesting restricted share units

Restricted share units cancellation

Dividend reinvestment plan (Note 29(a))

Dividends (Note 29(b))

Restated balance as at December 31, 2017 $

Adjustments on initial application of:

IFRS 15 (Note 5)

IFRS 9 (Note 5)

Adjusted balance at January 1, 2018

Total comprehensive loss

Net loss

Other comprehensive loss, net of income
tax

Transactions with owners

Disposal of Brio Gold (Note 6)

Disposal of part interest in subsidiary
(Note 31)
Issued on vesting of restricted share units
(Note 29(a))
Vesting restricted share units

Dividend reinvestment plan (Note 29(a))

Dividends (Note 29(b))

Balance as at December 31, 2018

—

—
— $

—

2.9
—
—
0.3
—
7,633.7 $

—
—
7,633.7

— $

—
—

—

2.3
—
0.4
—
7,636.4 $

Yamana Annual
Report 2018

103

Attributable
to Yamana
equity holders

Non-
controlling
interests

4,512.2

$
— $
4,512.2 $

67.8 $

— $

67.8 $

Deficit

(3,130.3)$

(2.3 ) $

(3,132.6)$

Total
equity

4,580.0

—

4,580.0

(188.5 )

(188.5)

(9.6)

(198.1 )

17.8 $

— $

17.8 $

—

(5.8)$

2.3 $

(3.5)$

—

5.7

— $

5.7 $

(188.5 ) $

(182.8) $

—

5.7

—

(2.9)

3.1

—

— $

(19.4 ) $

18.0 $

2.2 $

(3,340.5)$

—

(8.8)

(6.6)

(16.4 )

8.8

(3,348.1 )

—

—
3.1
—
0.3
(19.4)
4,313.4 $

(16.4)
—
4,297.0

1.0

(8.6) $

6.7

(191.4 )

70.9

—

7.0

(3.2)

—

70.9

—

10.1

(3.2)

0.3

(19.4)

133.9 $

4,447.3

—

(16.4)

—

133.9

4,430.9

— $

(284.6 ) $

(284.6)$

(13.1) $

(297.7)

(9.8) $

(9.8)

— $

(9.8)$

(284.6 )

(294.4)

(0.7) $

(13.8)

(10.5)

(308.2 )

—

(19.2 )

—

—
4.7
0.4
(19.2)
3,989.3 $

(101.7)

16.0

—

0.3

—

16.0

—

5.0

0.4

(19.2)

34.7 $

4,024.0

—

18.0

— $

—

(2.3)

4.7

—

(i)

In the current year the Company is presenting 'Contributed Surplus' and 'Accumulated Other Comprehensive (loss) income' as separate components of equity on the face
of the Consolidated Statement of Changes in Equity. In the prior year these items were included in 'Reserves', with further detail provided in the accompanying notes to the
Consolidated Financial Statements. This change has also resulted in a consequential change to the equity section of the Consolidated Balance Sheets.

The accompanying notes are an integral part of the Consolidated Financial Statements.

20.4 $

(16.9)$

(3,650.6)$

104

Yamana Annual
Report 2018

YAMANA GOLD INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2018 and December 31, 2017
(Tabular amounts in millions of US Dollars, unless otherwise noted)

DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

Yamana Gold Inc. (the “Company” or “Yamana”) is a Canadian-based gold, silver and copper producer with a significant portfolio comprised of
operating mines, development stage projects, and exploration and mineral properties throughout the Americas, mainly in Canada, Brazil, Chile
and Argentina. Yamana plans to continue to build on this base through expansion and optimization initiatives at existing operating mines,
development of new mines, the advancement of its exploration properties and, at times, by targeting other consolidation opportunities with a
primary focus in the Americas.

The address of the Company’s registered office is 200 Bay Street, Suite 2200 Royal Bank Plaza, North Tower, Toronto, Ontario, M5J 2J3,
Canada. The Company is listed on the Toronto Stock Exchange (Symbol: YRI) and The New York Stock Exchange (Symbol: AUY).

These consolidated financial statements are comprised of the Company, its subsidiaries, and its 50% interest in the Canadian Malartic mine,
which is accounted for as a joint operation ("Consolidated Financial Statements").

On May 24, 2018, the Company completed the disposal of its 53.6% controlling interest in Brio Gold Inc. ("Brio Gold") to Leagold Mining
Corporation ("Leagold"). Pursuant to the terms of the sale, the Company received 20.5% of Leagold's issued and outstanding shares, which is
accounted for as an investment in associate using the equity method. Refer to Note 6: Divestitures.

On June 26, 2018, the Company announced that the Cerro Moro mine in Argentina had achieved commercial production.

On October 25, 2018, the Company entered into a definitive purchase agreement to sell its 100% interest in the Gualcamayo mine in Argentina
to Mineros S.A. ("Mineros"). Separately, the Company has agreed to grant Mineros an option to acquire up to a 51% interest in the La Pepa
project, located in Chile, over an earn-in period of four years (subject to extension for certain unexpected contingencies) and then the remaining
49% interest pursuant to a call option. The sale of the Gualcamayo mine was completed on December 14, 2018. Refer to Note 6: Divestitures.

BASIS OF PREPARATION AND PRESENTATION

These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards as issued by
the International Accounting Standards Board (“IFRS”), effective as of December 31, 2018.

The Consolidated Financial Statements have been prepared on a going concern basis using historical cost except for those assets and liabilities
that are measured at revalued amounts or fair values at the end of each reporting period as explained in Note 3: Significant Accounting Policies.
Additionally, these Consolidated Financial Statements have been prepared using the accrual basis of accounting, except for cash flow
information.

The functional and presentation currencies of the Company and all its subsidiaries is the United States Dollar ("US Dollar"), and all values
herein are rounded to the nearest million except where otherwise indicated.

The Consolidated Financial Statements were authorized for issuance by the Board of Directors of the Company on February 14, 2019.

Yamana Annual
Report 2018

105

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used in the preparation of these Consolidated Financial Statements are as follows:

(a)

Basis of Consolidation

These Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the
Company. Control exists when the Company has power over an investee, when the Company is exposed, or has rights, to variable returns
from the investee and when the Company has the ability to affect those returns through its power over the investee. Subsidiaries are included
in the consolidated financial statements from the date control is obtained until the date control ceases. Where the Company’s interest in a
subsidiary is less than 100%, the Company recognizes non-controlling interests. All intercompany balances, transactions, income, expenses,
profits and losses, including unrealized gains and losses have been eliminated on consolidation.

The principal subsidiaries of the Company as at December 31, 2018 and 2017 were as follows:

Legal Entity

Mineração Maracá Industria e Comércio S.A.
Minera Meridian Ltda.
Canadian Malartic Corporation - a joint operation (Note 3(b))
Jacobina Mineração e Comércio Ltda.
Estelar Resources Ltd.
Minera Florida Ltda.
Minas Argentinas S.A. (Note 6)

*Refer to discussion at Note 31: Non-controlling interests.

Mine

Chapada
El Peñón
Canadian Malartic
Jacobina
Cerro Moro
Minera Florida
Gualcamayo

Country of
incorporation
Brazil
Chile
Canada
Brazil
Argentina
Chile
Argentina

Interest

2018

100%
100%
50%
100%
100%*
100%
—%

2017

100%
100%
50%
100%
100%
100%
100%

The Consolidated Financial Statements also include Yamana Gold Ontario in Canada; the Company’s 56.7% interest in Agua De La Falda S.A.
("ADLF"), which holds the Jeronimo project in Chile; the Company's 100% interest in Minera Agua Rica Sucursal, which holds the Agua Rica
project in Argentina; the Company's 53.6% interest in Brio Gold (up to May 24, 2018 (see Note 6: Divestitures)); and the Company's 20.5%
interest in Leagold, which is accounted for using the equity method (see (b) below).

(b)

Investment in Associate

An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control over those decisions. The Company is presumed to have significant
influence if it holds, directly or indirectly, 20% or more of the voting power of the investee, unless it can be clearly demonstrated that the
Company does not have significant influence. The Company concluded that it has significant influence over its investment in Leagold through
the level of ownership of voting rights and representation on Leagold's board of directors.

The Company accounts for its investments in associates using the equity method. Under the equity method, the Company’s investment in an
associate is initially recognized at cost and subsequently increased or decreased to recognize the Company's share of net earnings or losses
of the associate, after any adjustments necessary to give effect to uniform accounting policies, any other movement in the associate's reserves,
and for impairment losses after the initial recognition date. The total carrying amount of the Company's investments in associates also include
any long-term debt interests which, in substance, form part of the Company's net investment. The Company’s share of an associate's losses
that are in excess of its investment are recognized only to the extent that the Company has incurred legal or constructive obligations or made
payments on behalf of the associate. The Company's share of earnings or losses of associates are recognized in net earnings during the
period. Dividends and repayment of capital received from an associate are accounted for as a reduction in the carrying amount of the Company’s
investment. Unrealized gains and losses between the Company and its associates are recognized only to the extent of unrelated investors’

106

Yamana Annual
Report 2018

interests in the associates. Intercompany balances and interest expense and income arising on loans and borrowings between the Company
and its associates are not eliminated.

At the end of each reporting period, the Company assesses whether there is any objective evidence that an investment in an associate is
impaired. Objective evidence includes observable data indicating there is a measurable decrease in the estimated future cash flows of the
investee’s operations. When there is objective evidence that an investment is impaired, the carrying amount of such investment is compared
to its recoverable amount, being the higher of its fair value less costs of disposal ("FVLCD") and value-in-use ("VIU"). If the recoverable amount
of an investment is less than its carrying amount, the carrying amount is reduced to its recoverable amount and an impairment loss, being the
excess of carrying amount over the recoverable amount, is recognized in the period in which the relevant circumstances are identified. When
an impairment loss reverses in a subsequent period, the carrying amount of the investment is increased to the revised estimate of recoverable
amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had an
impairment loss not been previously recognized. A reversal of an impairment loss is recognized in net earnings/loss in the period in which the
reversal occurs.

A joint arrangement is defined as an arrangement in which two or more parties have joint control. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties
sharing the control. A joint operation is a joint arrangement whereby the parties have joint control of the arrangement and have rights to the
assets and obligations for the liabilities relating to the arrangement. The Company's 50% interest in each of Canadian Malartic Corporation and
Canadian Malartic GP, the general partnership that holds the Canadian Malartic mine located in Quebec (collectively "Canadian Malartic"), has
been accounted for as a joint operation. The Company recognizes its direct right to the assets, liabilities, revenues and expenses of the joint
operation and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the
Consolidated Financial Statements under the appropriate headings.

(d) Non-controlling interests

Non-controlling interests in the Company's less than wholly-owned subsidiaries are classified as a separate component of equity. The Company
recognizes non-controlling interests in an acquired entity, that are present ownership interests and entitle their holders to a proportionate share
of the entity’s net assets in the event of liquidation, either at the non-controlling interest’s proportionate share of the acquiree’s identifiable net
assets or at fair value. This decision is made on an acquisition-by-acquisition basis.

Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-
controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this
results in the non-controlling interests having a deficit balance. Changes in the Company’s ownership interest in a subsidiary that do not result
in a loss of control are accounted for as equity transactions.

Yamana Annual
Report 2018

107

(e) Foreign Currency Translation

The functional and presentation currency of the Company and each of its subsidiaries, associate and joint operation is the US Dollar. In
preparing the financial statements of the individual companies, transactions in currencies other than the Company’s functional currency ("foreign
currencies") are recognized at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-
monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Income statement items denominated
in foreign currencies are translated at the average exchange rates prevailing during the year, with the exception of depletion, depreciation and
amortization which is translated at historical exchange rates. Foreign exchange gains and losses are included in net earnings (loss). Foreign
exchange gains and losses related to income taxes, if any, are reported within the income tax expense line in the Company's consolidated
statement of operations.

(f) Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is
measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Company, liabilities
incurred by the Company to the former owners of the acquiree and the equity interest issued by the Company in exchange for control of the
acquiree. Acquisition-related costs are recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition date.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree,
and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree

and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as
a bargain purchase gain.

When the consideration transferred by the Company in a business combination includes contingent consideration arrangement, the contingent
consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination.
Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with
corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained
during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the
acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments
depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent
reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at
subsequent reporting dates with changes in fair value recognized in earnings.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the
measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

108

Yamana Annual
Report 2018

(g) Goodwill

Goodwill is initially recognized and measured as set out above.

Goodwill is not amortized but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each
of the Company’s cash-generating units ("CGUs") expected to benefit from the synergies of the combination. CGUs to which goodwill has been
allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable
amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
An impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a CGU, the attributable amount of goodwill
is included in the determination of the profit or loss on disposal.

(h)

Impairment and Reversal of Impairment of Non-Current Assets

At each reporting date, the Company reviews the carrying amounts of its mining properties and plant and equipment at the CGU level to
determine whether there is any indication that these assets may be impaired. If any such indication exists, the recoverable amount of the
relevant CGU is estimated in order to determine the extent of the impairment loss (if any). A CGU is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Company's CGUs are
its significant mine sites and significant development projects. In certain circumstances, where the recoverable amount of an individual asset
can be determined, impairment is performed at the individual asset level.

The recoverable amount of a mine site is the greater of its fair value less costs of disposal ("FVLCD") and value in use ("VIU"). In the absence
of market related comparative information, FVLCD is estimated as the discounted future after-tax cash flows expected to be derived from a
mine site, less an amount for costs to sell estimated based on similar past transactions. When discounting estimated future after-tax cash flows,
the Company uses its after-tax weighted average cost of capital. Estimated cash flows are based on expected future production, metal selling
prices, operating costs and capital expenditures. If the recoverable amount of a mine site is estimated to be less than its carrying amount, the
carrying amount is reduced to its recoverable amount. The carrying amount of each mine site includes the carrying amounts of mining
properties, plant and equipment, goodwill (if applicable) and related deferred income tax balances, net of the mine site decommissioning and
restoration provision. In addition, the carrying amounts of the Company’s corporate assets are allocated to the relevant mine sites for impairment
purposes. Impairment losses are recognized in the statement of operations in the period in which they are incurred. The allocation of an
impairment loss, if any, for a particular mine site to its mining properties and plant and equipment is based on the relative carrying amounts of
those assets at the date of impairment.

At each reporting date an assessment is made to determine whether there is an indication that previously recognized impairment losses may
no longer exist or may have decreased. A previously recognized impairment loss is reversed only if there has been a change in the assumptions
used to determine the CGU’s recoverable amount since the last impairment loss was recognized. This reversal is recognized in the consolidated
statements of operations and is limited to the carrying value that would have been determined, net of any depreciation, depletion and
amortization where applicable, had no impairment charge been recognized in prior years. When an impairment reversal is undertaken, the
recoverable amount is assessed by reference to the higher of VIU and FVLCD.

Yamana Annual
Report 2018

109

(i) Assets and Liabilities Held for Sale and Discontinued Operations

Non-current assets and disposal groups are classified as held for sale if their carrying value will be recovered principally through a sale
transaction rather than through continuing use. The criteria for held for sale classification is regarded as met only when the sale is highly
probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be
committed to the plan to sell the asset or disposal group and the sale expected to be completed within one year from the date of the
classification.

Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs
to sell ("FVLCS"). If the FVLCS is lower than the carrying amount, an impairment loss is recognized in the consolidated statement of operations.
Costs to sell are the incremental costs directly attributable to the disposal of an asset or disposal group, excluding finance costs and income
tax expense. Non-current assets are not depreciated or amortized once classified as held for sale. Assets and liabilities classified as held for
sale are presented separately as current items in the Company's consolidated balance sheet.

A disposal group qualifies as a discontinued operation if it is a component of the Company that either has been disposed of, or is classified as
held for sale, and: (i) represents a separate major line of business or geographical area of operations; (ii) is part of a single coordinated plan to
dispose of a separate major line of business or geographical area of operations; or (iii) is a subsidiary acquired exclusively with a view to resale.
A component of the Company comprises an operation and cash flows that can be clearly distinguished, operationally and for financial reporting
purposes, from the rest of the Company.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax
from discontinued operations in the consolidated statement of operations.

(j) Revenue Recognition

On January 1, 2018, the Company adopted IFRS 15 Revenue from Contracts with Customers ("IFRS 15"). The Company adopted IFRS 15
using the modified retrospective approach applied to those contracts that were not completed as of January 1, 2018. The cumulative effect of
initially applying IFRS 15 has been recognized as an adjustment to the opening deficit at January 1, 2018. Revenue for the year ended
December 31, 2018 is accounted for in accordance with the requirements of IFRS 15, while revenue for the year ended December 31, 2017,
which was accounted for under the IFRS standards effective to December 31, 2017, has not been restated. The accounting policy below reflects
the Company's accounting policy under IFRS 15; however, the only difference in the preparation of the 2017 numbers was that there was no
interest recognized on the streaming arrangements.

The impact to the Company's Consolidated Financial Statements of adopting IFRS 15 is discussed in Note 5: Recent Accounting
Pronouncements.

Gold and Silver
The Company sells gold and silver in bullion and doré form to customers, which are all major financial institutions.

Revenue is recognized when control of the gold or silver has transferred to the customer. For bullion sales, this is typically at the point in time
when the bullion has been pledged to the customer in writing, which is often at the time it is credited to the metal account of the customer. For
doré sales, this is typically at the point in time when the customer has received all required confirmations from the Company, which is at the
time the doré is shipped from the mine. Following gold or silver being pledged to a customer or the shipment of doré, the customer has the
ability to direct the use of, and obtain substantially all of the remaining benefits from, the metal.

110

Yamana Annual
Report 2018

Revenue is measured at the transaction price agreed under the contract and excludes any amounts collected on behalf of third parties. Payment
of the transaction price is due immediately when the metal is transferred to the customer. A receivable is recognized when the metal is
transferred to the customer, as this is the point in time that the consideration is unconditional because only the passage of time is required
before the payment is due.

Metal Concentrate
The Company sells concentrate from its Chapada mine in Brazil. The concentrate is sold to independent smelting companies for extraction of
the metal contents, which are predominantly copper, with small quantities of gold and silver.

Revenue from concentrate sales is recognized when control of the concentrate has transferred to the customer, which is typically upon loading
of the concentrate onto the shipping vessel for shipment to the customer. At this point in time, the customer has the significant risks and
rewards of ownership of the concentrate, and is committed to accept and pay for the concentrate. Although legal title does not pass until receipt
of the first provisional payment, the fact that under the contract the customer has the right to process the concentrate as soon as it is received,
indicates that the customer has obtained control of the concentrate prior to the transfer of title - i.e. the customer has the ability to direct the
use of, and obtain substantially all of the remaining benefits from, the concentrate.

Concentrate sales include provisional pricing features whereby the price is provisional at the time of sale, with the final sales price based on
the market price at a future specified date and the final physical attributes (i.e. quantity of contained metals) of the concentrate determined after
further processing and assessment. The price adjustments associated with changes in market price and the physical attributes of the
concentrate give rise to variability in the consideration the Company will receive from the customer. The variability associated with the change
in market prices is accounted for separately as a derivative.

At the point in time that control of the concentrate transfers to the customer, the Company recognizes revenue and a receivable (the latter,
because the Company has determined it has an unconditional right to the consideration). Revenue is measured at the amount the Company
expects to be entitled to - being the estimate of the price expected to be received upon final invoice (at the end of the quotational period) using
the most recently determined estimate of metal quantity and the estimated forward price. The receivable is measured at fair value through
profit or loss, and is marked to market through earnings each period prior to final settlement. The period between provisional and final invoicing
is typically 3 to 4 months. The Company presents changes in the fair value of the receivable arising from provisionally priced contracts in the
revenue line in the consolidated statement of operations.

Streaming Arrangements and Advanced Metal Sales
From time to time, the Company enters into arrangements with customers pursuant to which, the Company receives consideration in advance
of the delivery of metals.

Under advanced metal sales, the Company receives advanced consideration against the delivery of a fixed quantity of a specified metal over
a specified period.

The Company has entered into the following advanced metal sales agreements:

• On January 10, 2018, the Company entered into an advanced metal sales agreement pursuant to which, the Company received
advanced consideration of $125.0 million in exchange for approximately 40.3 million pounds of copper to be delivered in the second
half of 2018 and the first half of 2019.

Under streaming arrangements, the Company receives advanced consideration against the delivery of a portion of future metal production
referenced to the mine(s) of the Company specified in the contract. In addition to the advanced consideration, the Company may also receive
a cash payment as metals are delivered to the customer.

Yamana Annual
Report 2018

111

The Company has entered into the following streaming arrangements:

• On October 27, 2015 the Company entered into three metal purchase agreements with Sandstorm Gold Ltd ("Sandstorm") pursuant
to which, the Company received advanced consideration of $170.4 million against future deliveries of silver production related to
Cerro Moro, Minera Florida and Chapada, copper production related to Chapada, and gold production related to Agua Rica. In
addition to the advanced consideration, the Company receives cash payments equal to 30% of market price at the date of delivery.
• On March 31, 2016, the Company entered into a copper purchase agreement with Altius Minerals Corporation ("Altius"), pursuant to
which, the Company received advanced consideration of $61.1 million against future deliveries of copper related to the Company's
Chapada mine in Brazil. In addition to the advanced consideration, the Company receives cash payments equal to 30% of the market
price at the date of delivery.

The Company recognizes the advanced consideration as deferred revenue and recognizes the amounts in revenue as it satisfies its
performance obligations to deliver metal to the customer over the life of the contract. In contracts for the delivery of gold or silver bullion, this
is typically at the point in time when the metal is credited to the metal account of the customer. For copper sales, this is at the point in time
when the copper, in the form of copper warrants, is delivered to the customer. Following the crediting of gold or silver to a customer’s metal
account or the delivery of copper warrants, the customer has legal title to, physical possession of, and the risks and rewards of ownership of
the metal, and therefore, the ability to direct the use of, and obtain substantially all of the remaining benefits from, the metal.

The Company determines the amortization of deferred revenue to the consolidated statement of operations on a per unit basis. In advanced
metal sales arrangements, this is over the fixed number of ounces specified in the contract. In streaming arrangements, the estimated total
quantity of metal expected to be delivered to the customer over the term of the contract is used. Subsequent changes to expected deliveries
result in an adjustment to revenue in the year of change to retroactively adjust for the new number of ounces or pounds expected to be delivered
under the contract.

Where consideration is received in advance of the Company’s performance of its obligation, there is an inherent financing component in the
transaction. When the period between receipt of consideration and revenue recognition is greater than one year, the Company determines
whether the financing component is significant to the contract.

Where a contract is determined to have a significant financing component, the transaction price is adjusted to reflect the financing. The discount
rate used in adjusting the promised amount of consideration is the rate that would be reflected in a separate financing transaction between the
Company and the customer at contract inception. This rate is not subsequently adjusted for any other changes over the contract term.

The accretion of the interest expense is recognized in the finance expense line in the consolidated statement of operations, unless capitalized
to assets under construction in accordance with the Company’s policy on capitalized borrowing costs.

The Company estimates the current portion of deferred revenue based on quantities anticipated to be delivered over the next twelve months.

Other Income
Other income arising from the use by others of the Company's assets yielding interest, royalties and dividends are recognized when it is
probable that the economic benefits associated with the transaction will flow to the Company and the amount of the income can be measured
reliably, on the following bases:

Interest is recognized using the effective interest method.

•
• Royalties are recognized on an accrual basis in accordance with the substance of the agreement.
• Dividends are recognized when the shareholder's right to receive payment is established.

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(k) Financial Instruments

On January 1, 2018, the Company adopted IFRS 9 Financial Instruments ("IFRS 9"). Changes in accounting policies resulting from the adoption
of IFRS 9 have been applied retrospectively, except as described below.

•

The Company has taken an exemption not to restate comparative information for prior periods with respect to classification and
measurement (including impairment) requirements. Therefore, comparative periods have been restated only for retrospective
application of the cost of hedging approach for the time value of option contracts. Differences in the carrying amounts of financial
assets and financial liabilities resulting from the adoption of IFRS 9 are recognized in retained earnings (deficit) and reserves as at
January 1, 2018. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9 but rather
those of IAS 39 Financial Instruments: Recognition and Measurement.

The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial
application.
◦
◦

The determination of the business model within which a financial asset is held.
The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at
FVTPL.
The designation of certain investments in equity instruments not held for trading as at FVOCI.

◦

• Changes to hedge accounting policies have been applied prospectively except for the cost of hedging approach for the time value
component of options, which has been applied retrospectively to hedging relationships that existed on or were designated after
January 1, 2017.

• All hedging relationships designated under IAS 39 at December 31, 2017 met the criteria for hedge accounting under IFRS 9 at

January 1, 2018 and are therefore regarded as continuing hedging relationships.

a. Classification and Measurement of Financial Assets and Financial Liabilities

Financial Assets - Policy applicable from January 1, 2018
On initial recognition, a financial asset is classified as measured at: amortized cost, FVOCI, or FVTPL. The classification of financial assets is
generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives
embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead, the hybrid financial
instrument as a whole is assessed for classification.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

•
•

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

•

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets;
and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in
the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

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All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all
derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch
that would otherwise arise.

A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is
initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition.

The following accounting policies apply to the subsequent measurement of financial assets:

Financial assets at amortized cost

Financial assets at FVTPL

Equity investments at FVOCI

Debt investments at FVOCI

These assets are subsequently measured at amortized cost using the effective interest method. The
amortized cost is reduced by impairment losses (see b) below). Interest income, foreign exchange
gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition
is recognized in profit or loss.

These assets are subsequently measured at fair value. Net gains and losses, including any interest
or dividend income, are recognized in profit or loss. Refer to c) below for derivatives designated as
hedging instruments.
These assets are subsequently measured at fair value. Dividends are recognized as income in profit
or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other
net gains and losses are recognized in OCI and are never reclassified to profit or loss.

These assets are subsequently measured at fair value. Interest income calculated using the effective
interest method, foreign exchange gains and losses and impairment are recognized in profit or loss.
Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated
in OCI are reclassified to profit or loss.

Financial Assets - Policy applicable before January 1, 2018
The Company classified its financial assets into one of the following categories:

Loans and receivables;

•
• Held to maturity;
• Available for sale; and
• At FVTPL, and within this category as held for trading; derivative hedging instruments; or designated as at FVTPL

The following accounting policies applied to the subsequent measurement of financial assets:

Financial assets at FVTPL

Held-to-maturity financial assets
Loans and receivables

Available-for-sale financial assets

Measured at fair value and changes therein, including any interest or dividend income, were
recognized in profit or loss. Refer to c) below for derivatives designated as hedging instruments.
Measured at amortized cost using the effective interest method.
Measured at amortized cost using the effective interest method.
Measured at fair value and changes therein, other than impairment losses, interest income and
foreign currency differences on debt instruments, were recognized in OCI and accumulated in the
fair value reserve. When these assets were derecognized, the gain or loss accumulated in equity
was reclassified to profit or loss.

Financial Liabilities - Policy applicable before and from January 1, 2018
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-
for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at
amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss.
Any gain or loss on derecognition is also recognized in profit or loss. See (c) below for financial liabilities designated as hedging instruments.

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Impairment

Non-derivative financial assets

Policy applicable from January 1, 2018
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting
date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit
risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the credit risk on the financial asset has
not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to
twelve month expected credit losses. Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the
financial asset is no longer credit-impaired and the improvement can be related objectively to an event occurring after the impairment was
recognized (such as an improvement in the counterparty's credit rating).

For trade receivables that are classified as financial assets at amortized cost, the Company applies the simplified approach permitted by IFRS
9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

Policy applicable before January 1, 2018
Financial assets not classified as at FVTPL were assessed at each reporting date to determine whether there was objective evidence of
impairment. For an investment in an equity instrument, objective evidence of impairment included a significant or prolonged decline in its value
below its cost.

c. Derivative Instruments and Hedge Accounting

Policy applicable from January 1, 2018
The Company uses derivative financial instruments to hedge its exposure to exchange rate fluctuations on foreign currency operating expenses
and capital expenditures.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives
and strategies for undertaking hedge transactions. This process includes linking all derivative hedging instruments to forecasted transactions.
Hedge effectiveness is assessed based on the degree to which the cash flows from the derivative contracts are expected to offset the cash
flows of the underlying transaction being hedged.

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in fair value is recognized in other
comprehensive income, net of tax. For hedged items other than the purchase of non-financial assets, the amounts accumulated in other
comprehensive income are reclassified to the consolidated statements of operations when the underlying hedged transaction, identified at
contract inception, affects profit or loss. When hedging a forecasted transaction that results in the recognition of a non-financial asset or a non-
financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial
carrying amount of the asset or liability.

Any ineffective portion of a hedge relationship is recognized immediately in the consolidated statements of operations. The Company has
elected to exclude the time value component of options and the forward element of forward contracts from the hedging relationships, with
changes in these amounts recorded in other comprehensive income and treated as a cost of hedging. For hedged items other than the purchase
of non-financial assets, the cost of hedging amounts is reclassified to the consolidated statements of operations when the underlying hedged
transaction affects profit or loss. When hedging a forecasted transaction that results in the recognition of a non-financial asset, the cost of
hedging is added to the carrying amount of the non-financial asset.

When derivative contracts designated as cash flow hedges are terminated, expired, sold or no longer qualify for hedge accounting, hedge
accounting is discontinued prospectively. Any amounts recorded in other comprehensive income up until the time the contracts do not qualify
for hedge accounting remain in other comprehensive income. Amounts recognized in other comprehensive income are recognized in the

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consolidated statements of operations in the period in which the underlying hedged transaction is completed. Gains or losses arising
subsequent to the derivative contracts not qualifying for hedge accounting are recognized in the period incurred in the consolidated statements
of operations.

If the forecasted transaction is no longer expected to occur, then the amounts accumulated in other comprehensive income are reclassified to
the consolidated statement of operations immediately.

Policy applicable before January 1, 2018
The policy applied in the comparative information presented for 2017 is similar to that applied for 2018.

(l) Share-Based Payments

The Company accounts for all share-based payments, including share options, restricted share units, deferred share units and performance
share units, to employees and non-employees using the fair value based method of accounting and recognizes compensation expense over
the vesting period. For the deferred share units, the fair value method requires that a mark-to-market adjustment be recorded at the end of
each reporting period with the recovery or expense for the period recorded in other operating expenses. The Company's share option plan
includes a share appreciation feature. If and when the share options are ultimately exercised, the applicable amount in the equity reserve is
transferred to share capital.

Equity instruments, including share-based payments, issued by subsidiaries that are not owned by the parent are non-controlling interests
regardless of whether they are vested and of the exercise price (refer to Note 31: Non-Controlling Interests for additional details).

(m) Income Taxes

Income tax expense or recovery comprises of current and deferred tax. Income tax expense or recovery is recognized in the Consolidated
Statements of Operations except to the extent it relates to items recognized directly in equity or in OCI, in which case the related taxes are
recognized in equity or OCI.

Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, which may differ from earnings reported
in the Consolidated Statements of Operations due to items of income or expenses that are not currently taxable or deductible for tax purposes,
using tax rates substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred income tax is recognized based on the balance sheet method in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the
following temporary differences:

• Goodwill or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting

•

nor taxable profit or loss, and
Investments in subsidiaries and jointly controlled entities to the extent they can be controlled and that it is probable that they will not reverse
in the foreseeable future.

Deferred income tax is recognized on the movement in foreign exchange rates on non-monetary assets denominated in foreign currencies.
Foreign exchange gains or losses relating to deferred income taxes are included in the deferred income tax expense in the Consolidated
Statements of Operations.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable

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right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or
on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized
simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that
future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(n)

Inventories

Inventories consisting of product inventories, work-in-process (metal-in-circuit, gold-in-process, heap leach ore) and ore stockpiles are
measured at the lower of the cost of production and net realizable value. Net realizable value is calculated as the difference between estimated
costs to complete production into a saleable form and the prevailing prices at end of the period.

Work-in-process represents inventories that are currently in the process of being converted to a saleable product. The cost of production
includes an appropriate proportion of depreciation, depletion and amortization and overhead. The assumptions used in the valuation of work-
in-process inventories include estimates of metal contained and recoverable in the ore stacked on leach pads, the amount of metal stacked in
the mill circuits that is expected to be recovered from the leach pads, the amount of gold in these mill circuits and an assumption of the precious
metal price expected to be realized when the precious metal is recovered. If the cost of inventories is not recoverable due to decline in selling
prices or the costs of completion or the estimated costs to be incurred to make the sale have increased, the Company would be required to
write-down the recorded value of its work-in-process inventories to net realizable value. Adjustments related to write-down of inventory are
included in cost of sales.

Ore in stockpiles is comprised of ore extracted from the mine and available for further processing. Costs are added to ore in stockpiles at the
current mining cost per tonne and removed at the accumulated average cost per tonne. Costs are added to ore on the heap leach pads based
on current mining costs and removed from the heap leach pad as ounces are recovered in process at the plant based on the average cost per
recoverable ounce on the heap leach pad. Although the quantities of recoverable gold placed on the heap leach pads are reconciled by
comparing the grades of ore placed on the heap leach pads to the quantities of gold actually recovered, the nature of the leaching process
inherently limits the ability to precisely monitor inventory levels. As such, engineering estimates are refined based on actual results over time.
Variances between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to
net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from each heap leach pad will not be known until
the leaching process is concluded. Ore in stockpiles not expected to be processed in the next twelve months is classified as long-term.

Inventories of materials and supplies expected to be used in production are valued at the lower of cost and net realizable value. When the
circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase
in net realizable value because of changed economic circumstances, the amount of write-down is reversed up to the original write-down amount.
Write-downs of inventory and reversals of write-downs are reported as a component of current period costs.

(o) Property, Plant and Equipment

Land, Building, Plant and Equipment

Land, building, plant and equipment are recorded at cost, less accumulated depreciation and accumulated impairment losses. The cost is
comprised of the asset's purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management and the estimated decommissioning and restoration costs associated with the
asset.

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The depreciable amount of building, plant and equipment is amortized on a straight-line basis to the residual value of the asset over the lesser
of mine life or estimated useful life of the asset. Each part of an item of building, plant and equipment with a cost that is significant in relation to
the total cost of the item is depreciated separately if its useful life differs. Useful lives of building, plant and equipment items range from two to
thirty years, but do not exceed the related estimated mine life based on proven and probable mineral reserves and the portion of mineral
resources that management expects to become mineral reserves in the future and be economically extracted.

Building

Machinery and equipment

Vehicles

Furniture and office equipment

Computer equipment and software

Land

Depreciation Method

Straight Line

Not depreciated

Useful Life

4 to 30 years

2 to 7 years

3 to 5 years

2 to 10 years

3 to 5 years

N/A

The Company reviews the useful life, depreciation method, residual value and carrying value of its building, plant and equipment at least
annually. Where the carrying value is estimated to exceed the estimated recoverable amount, which is the higher of the asset's fair value less
costs of disposal or value in use, a provision for impairment is measured and recorded.

Expenditures that extend the useful lives of existing facilities or equipment are capitalized and depreciated over the remaining useful lives of
the assets or useful life of the component (e.g. major overhaul) of an asset. Repairs and maintenance expenditures are expensed as incurred.

ii.

Exploration, Evaluation Assets and Depletable Producing Properties

The Company's tangible exploration and evaluation assets are comprised of mineral resources and exploration potential. The value associated
with mineral resources and exploration potential is the value beyond proven and probable mineral reserves.

Exploration and evaluation assets acquired as part of an asset acquisition or a business combination are recorded as tangible exploration and
evaluation assets and are capitalized at cost, which represents the fair value of the assets at the time of acquisition determined by estimating
the fair value of the property's mineral reserves, mineral resources and exploration potential at such time.

The value of such assets when acquired is primarily a function of the nature and amount of mineralized materials contained in such properties.
Exploration and evaluation stage mineral interests represent interests in properties that potentially contain mineralized material consisting of
measured, indicated and inferred mineral resources; other mine exploration potential such as inferred mineral resources not immediately
adjacent to existing mineral reserves but located around and near mine or project areas; other mine-related exploration potential that is not part
of measured, indicated and inferred mineral resources; and any acquired right to explore and develop a potential mineral deposit.

Expenditures incurred before the Company has obtained legal rights to explore a specific area of interest are expensed. Costs incurred for
general exploration that are either not-project-specific or do not result in the acquisition of mineral properties are considered greenfield
expenditures and charged to expense. Brownfield expenditures, which typically occur in areas surrounding known deposits and/or re-exploring
older mines using new technologies to determine if greater mineral reserves and mineral resources exist, are capitalized. Brownfield activities
are focused on the discovery of mineral reserves and mineral resources close to existing operations, including around mine or near-mine,
mineral reserve and mineral resource extension and infill drilling.

Exploration expenditures include the costs incurred in either the initial exploration for mineral deposits with economic potential or in the process
of obtaining more information about existing mineral deposits.

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Evaluation expenditures include the costs incurred to establish the technical feasibility and commercial viability of developing mineral deposits
identified through exploration activities or by acquisition. Evaluation expenditures include the cost of:

• Acquiring the rights to explore;
• Establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that

is classified as either a mineral resource or a proven and probable mineral reserve;
• Determining the optimal methods of extraction and metallurgical and treatment processes;
• Studies related to surveying, transportation and infrastructure requirements;
• Permitting activities; and
• Economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, pre-

feasibility and final feasibility studies.

The values assigned to the tangible exploration and evaluation assets are carried at acquired costs until such time as the technical feasibility
and commercial viability of extracting mineral resource from the assets is demonstrated, which occurs when the activities are designated as a
development project and advancement of the project is considered economically feasible. At that time, the property and the related costs are
reclassified as part of the development costs of a producing property not yet subject to depletion, and remain capitalized. Assessment for
impairment is conducted before reclassification.

Depletion or depreciation of those capitalized exploration and evaluation costs and development costs commences upon completion of
commissioning of the associated project or component. Depletion of mining properties and amortization of preproduction and development
costs are calculated and recorded on a unit-of-production basis over the estimate of recoverable ounces. The depletable costs for the reporting
period are the total depletable costs related to the ore body or component of the ore body in production multiplied by the number of ounces
produced in the reporting period divided by the estimated recoverable ounces. The estimated recoverable ounces include proven and probable
mineral reserves of the mine and the portion of mineral resources expected to be classified as mineral reserves and economically
extracted (which may include mineral resources in each of the measured, indicated and/or inferred mineral resources categories). The
percentage of measured, indicated and/or inferred mineral resources, if any, included in the estimated recoverable ounces of a mining property
and depleted using the unit-of-production method is determined on a mine-by-mine basis using the current life of mine plan for each mine.
Management assesses the estimated recoverable ounces used in the calculation of depletion at least annually, or whenever facts and
circumstances warrant that an assessment should be made. Changes to estimates of recoverable ounces and depletable costs including
changes resulting from revisions to the Company's mine plans and changes in metal price forecasts can result in a change in future depletion
rates.

The Company assesses and tests its exploration and evaluation assets and mining properties for impairment, and subsequent reversal of
impairment, at least annually or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable
or that an impairment may be reversed. Costs related to areas of interest abandoned are written off when the decision of abandonment is
made. Refer to (h) Impairment and Reversal of Impairment of Non-Current Assets for details of the policy. An impairment assessment of the
exploration and evaluation assets is conducted before the reclassification or transfer of exploration and evaluation assets to depletable
producing properties.

iii. Stripping Costs

In open pit mining operations, it is necessary to remove overburden and other waste materials in order to access ore from which minerals can
be extracted economically. The process of mining overburden and waste materials is referred to as stripping.

Stripping costs incurred in order to provide initial access to the ore body (referred to as pre-production stripping) are capitalized as open pit
mine development costs.

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During the production phase of a mine, stripping is generally considered to create two distinct benefits: (i) the production of inventory and
(ii) improved access to ore that is expected to be mined in the future. Where the benefits are realized in the form of inventory produced in the
period, the stripping costs are accounted for as part of the cost of producing those inventories. Where the benefits are realized in the form of
improved access to ore to be mined in the future, the costs are recognized as a non-current asset, referred to as a “stripping activity asset,” if
the following criteria are met: (a) future economic benefits (that is, improved access to the ore body for future extraction) are probable; (b) the
component of the ore body for which access will be improved can be accurately identified; and (c) the costs associated with the improved
access can be reliably measured. If any of these criteria are not met, the production stripping costs are charged to profit or loss as operating
costs as they are incurred.

The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that
improves access to the identified component of ore, plus an allocation of directly attributable overhead costs. If incidental operations occur at
the same time as the production stripping activity, but are not necessary for the production stripping activity to continue as planned, these costs
are not included in the cost of the stripping activity asset. If the costs of the inventory produced and the stripping activity asset are not separately
identifiable, a production measure is used to allocate the production stripping costs between the inventory produced and the stripping activity
asset. This production measure is calculated for the identified component of the ore body, which is based on the specific development phases
determined when designing the development plan for the pit. This measure is then used as a benchmark to identify the extent to which the
stripping activities have created a future benefit. The Company uses the expected volume of waste extracted for a volume of ore production
compared with the actual volume extracted for such volume of ore production to calculate each component. The stripping activity asset is then
accounted for as an addition to, or an enhancement of, the applicable mine asset, and is presented as part of “Mining properties” in the
Company’s Consolidated Balance Sheets.

iv. Assets Under Construction

Assets under construction are capitalized as 'Construction in Progress' until the asset is capable of operating at levels intended by management.
Costs incurred prior to this point, including depreciation of related plant and equipment, are capitalized and proceeds from sales during this
period are offset against costs capitalized. Borrowing costs, including interest, associated with projects that are actively being prepared for
production are capitalized to Construction in Progress. These costs are elements of the historical cost of acquiring an asset when a period of
time is required to bring it to the condition and location necessary for its intended use. The borrowing costs eligible for capitalization are
determined by applying a capitalization rate, which is the weighted average of the borrowing costs applicable to the borrowings of the Company
that are outstanding during the period, to the expenditures on the asset. Capitalized interest costs are amortized on the same basis as the
related qualifying asset.

(p) Decommissioning, Restoration and Similar Liabilities and Other Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where the effect of the time value of
money is material, provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the liability that have not been reflected in the estimate of the
expenditure. The unwinding of the discount is recognized as a finance expense.

Decommissioning, restoration and similar liabilities are a type of provision associated with the retirement of a long-lived asset that the Company
has acquired, constructed, developed and/or used in operations. Reclamation obligations on the Company's mineral properties are recorded
as decommissioning, restoration and similar liabilities. These include the dismantling and demolition of infrastructure and the removal of residual
materials and remediation of disturbed areas. These estimated obligations are provided for in the accounting period when the related
disturbance occurs, whether during the mine development or production phases at the present value of estimated future costs to settle the
obligations, or when a constructive obligation arises. The costs are estimated based on the Company’s mine closure plan. The cost estimates
are updated annually during the life of the operation to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives
of operations, or changes in legal or regulatory requirements), and are subject to review at regular intervals.

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Decommissioning, restoration and similar liabilities are initially recorded with a corresponding increase to the carrying amounts of property,
plant and equipment, with any subsequent changes to the liability accounted for as changes in the carrying amounts of the related property,
plant and equipment. The capitalized costs are amortized over the life of the mine on a unit-of-production basis.

(q)

Intangible Assets

Intangible assets acquired by way of an asset acquisition or business combination are recognized if the asset is separable or arises from
contractual or legal rights and the fair value can be measured reliably on initial recognition. Intangible assets must be identifiable, controlled by
the Company and with future economic benefits expected to flow from the assets. Intangible assets that are acquired by the Company and
have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite
useful lives are amortized on a straight-line basis over the lesser of mine life or estimated useful life of the intangible asset. The Company
reviews the useful life, amortization method and carrying value on a regular basis.

CRITICAL JUDGEMENTS AND ESTIMATION UNCERTAINTIES

The preparation of the Company’s consolidated financial statements in accordance with IFRS requires management to make judgements,
estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and the accompanying disclosures.
These assumptions, judgements and estimates are based on management’s best knowledge of the relevant facts and circumstances, having
regard to previous experience, but actual results may differ materially from the amounts included in the consolidated financial statements.
Management reviews its estimates and underlying assumptions on an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects
both current and future periods.

The most significant judgements and key sources of estimation uncertainty that management believes could have a significant risk of resulting
in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:

Mineral Reserve and Mineral Resource Estimates

Key Sources of Estimation Uncertainty

The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101 Standards of Disclosure
for Mineral Projects, issued by the Canadian Securities Administrators. This National Instrument lays out the standards of disclosure for mineral
projects including rules relating to the determination of mineral reserves and mineral resources. There are numerous uncertainties inherent in
estimating mineral reserves and mineral resources, including many factors beyond the Company's control. Such estimation is a subjective
process, and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of
the assumptions made and judgements used in engineering and geological interpretation. Short-term operating factors relating to the mineral
reserves, such as the need for orderly development of the ore bodies or the processing of new or different ore grades, may cause the mining
operation to be unprofitable in any particular accounting period. Lower market prices, increased production costs, reduced recovery rates and
other factors may result in a revision of its mineral reserve estimates from time to time or may render the Company’s mineral reserves
uneconomic to exploit, which may materially and adversely affect the results of operations or financial condition. Mineral reserve data are not
indicative of future results of operations. Evaluation of mineral resources is conducted from time to time and mineral resources may change
depending on further geological interpretation, drilling results and metal prices. The Company regularly evaluates its mineral resources and it
often determines the merits of increasing the reliability of its overall mineral resources.

Differences between management's assumptions, and actual events including economic assumptions such as metal prices and market
conditions, could have a material effect in the future on the Company's financial position and results of operations.

Estimates of the quantities of proven and probable mineral reserves and mineral resources form the basis for the Company’s LOM ("LOM")
plans, which are used for a number of important business and accounting purposes, including: determination of the useful life of property, plant

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and equipment and measurement of the depreciation expense, capitalization and amortization of stripping costs, exploration and evaluation of
mineral resources and determination of technical feasibility and commercial viability, and forecasting the timing of the payments related to the
environmental rehabilitation provision. In addition, the underlying LOM plans are used in the impairment tests for goodwill and non-current
assets.

Estimated Recoverable Ounces

Key Sources of Estimation Uncertainty

The carrying amounts of the Company’s mining properties are depleted based on recoverable ounces contained in proven and probable mineral
reserves plus a portion of mineral resources. The Company includes a portion of mineral resources where it is considered probable that those
mineral resources will be economically extracted. Changes to estimates of recoverable ounces and depletable costs including changes
resulting from revisions to the Company’s mine plans and changes in metal price forecasts can result in a change to future depletion rates.

Economic Recoverability and Probability of Future Economic Benefits of Exploration, Evaluation and Development Costs

Critical Judgements in Applying Accounting Policies

Management has determined that exploration and evaluation costs incurred during the year and costs associated with projects under
construction have future economic benefits and are economically recoverable. In making this judgement, management has assessed various
sources of information including but not limited to the geologic and metallurgic information, history of conversion of mineral deposits to proven
and probable mineral reserves, scoping and feasibility studies, proximity of operating facilities, operating management expertise, existing
permits and life of mine plans.

Impairment of Mineral Properties and Goodwill

Critical Judgements in Applying Accounting Policies

When assessing whether any indications of impairment exist for mineral properties and goodwill, consideration is given to both external and
internal sources of information. Information the Company considers includes changes in the market, economic and legal environment in which
the Company operates that are not within its control and affect the recoverable amount of mineral properties and goodwill. Internal sources of
information include the manner in which property and plant and equipment are being used or are expected to be used and indicators of the
economic performance of the assets, historical exploration and operating results. Management identified indicators of impairment at Minera
Florida, and indicators that a previously recognized impairment at Jacobina may no longer exist as of December 31, 2018. No impairment or
impairment reversal indicators were identified as of December 31, 2017, except for the decision to sell Gualcamayo. Refer to Note 12:
Impairment and Reversal of Impairment.

Key Sources of Estimation Uncertainty

In determining the recoverable amounts of the Company’s mining interests and goodwill, management makes estimates of the discounted
future after-tax cash flows expected to be derived from the Company’s mining properties, costs to sell the mining properties and the appropriate
discount rate. The projected cash flows are significantly affected by changes in assumptions related to metal selling prices, changes in the
amount of recoverable reserves, resources, and exploration potential, production cost estimates, future capital expenditures, discount rates
and exchange rates. Significant changes in metal price forecasts, estimated future costs of production, capital expenditures, the amount of
recoverable reserves, resources, and exploration potential, and/or the impact of changes in current economic conditions may result in a write-
down or reversal of impairment of the carrying amounts of the Company’s mining interests and/or goodwill.

During the year ended December 31, 2018, the Company recognized a net impairment loss of $302.0 million (2017: $356.5 million) in respect
of the carrying amounts of certain mineral properties and goodwill. Refer Note 12: Impairment and Reversal of Impairment.

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Deferral of Stripping Costs

Key Sources of Estimation Uncertainty

In determining whether stripping costs incurred during the production phase of a mining property relate to mineral reserves and mineral
resources that will be mined in a future period and therefore should be capitalized, the Company determines whether it is probable that future
economic benefits associated with the stripping activity over the life of the mineral property will flow to the Company. Changes in estimated
strip ratios can result in a change to the future capitalization of stripping costs incurred. At December 31, 2018, the carrying amount of stripping
costs capitalized and included in mining properties was $257.5 million (December 31, 2017: $355.6 million).

Decommissioning, Restoration and Similar Liabilities

Key Sources of Estimation Uncertainty

Given the nature of its operations, the Company incurs obligations to close, restore and rehabilitate its sites. Closure and rehabilitation activities
are governed by a combination of legislative requirements and Company policies. The Company’s provision for decommissioning, restoration
and similar liabilities represents management’s best estimate of the present value of the future cash outflows required to settle the liabilities,
which reflects estimates of future costs, inflation, movements in foreign exchange rates and assumptions of risks associated with the future
cash outflows, and the applicable risk-free interest rates for discounting the future cash outflows. Changes in the above factors can result in a
change to the provision recognized by the Company. The actual future expenditures may differ from the amounts currently provided if the
estimates made are significantly different than actual results or if there are significant changes in environmental and/or regulatory requirements
in the future.

Revenue Recognition: Application of Variable Consideration Constraint (applied from January 1, 2018)

Key Sources of Estimation Uncertainty

The Company determines the amortization of deferred revenue to the consolidated statement of operations on a per unit basis using the
expected quantity of metal (ounces for gold and silver and pounds for copper) that will be delivered over the term of the contract, which is based
on geological reports and the Company’s LOM plan at contract inception. As subsequent changes to the expected quantity of metal to be
delivered triggers a retrospective adjustment to revenue, management is required to estimate the ounces or pounds to be included in the
denominator that will be sufficient such that subsequent changes are not expected to result in a significant revenue reversal. Accordingly,
management includes reserves and portion of resources, which management is reasonably confident are transferable to reserves, in the
calculation. With this approach, the Company considers that it is highly probable that changes in subsequent reserve and resource estimates
will not result in a significant revenue reversal of previously recognized revenue.

Deferred Revenue

Critical Judgements in Applying Accounting Policies

Significant judgements are required in determining the appropriate accounting treatment for metal transactions entered into by the Company.
With respect to the streaming arrangements the Company has entered into with Sandstorm and Altius, management has determined that based
on the agreements, Sandstorm and Altius assume significant business risk and rewards associated with the timing and amount of metals being
delivered. As such, the deposits received from Sandstorm and Altius have been recorded as deferred revenue in the consolidated balance
sheet. Additionally, the Company has determined that the transaction is not a financial liability as; based on the specific rights and obligations
set out in the agreements, under no circumstances will the delivery obligations be satisfied with cash. Refer to Note 26: Other Provisions and
Liabilities.

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Joint arrangements

Critical Judgements in Applying Accounting Policies

Judgement is required to determine when the Company has joint control of a contractual arrangement, which requires a continuous assessment
of the relevant activities and when the decisions in relation to those activities require unanimous consent. Judgement is also required to classify
a joint arrangement as either a joint operation or a joint venture when the arrangement has been structured through a separate vehicle.
Classifying the arrangement requires the Company to assess its rights and obligations arising from the arrangement. Specifically, the Company
considers the legal form of the separate vehicle, the terms of the contractual arrangement and other relevant facts and circumstances. This
assessment often requires significant judgement, and a different conclusion on joint control, or whether the arrangement is a joint operation or
a joint venture, may have a material impact on the accounting treatment.

Management evaluated its joint arrangement with Agnico Eagle Mines Limited, whereby both parties acquired 50.0% of the shares of Osisko
(now Canadian Malartic) in accordance with the requirements in IFRS 11 Joint Arrangements. The Company concluded that the arrangement
qualified as a joint operation upon consideration of the following significant factors: (i) The requirement that the joint operators purchase all
output from the investee and investee restrictions on selling the output to any third party; (ii) The parties to the arrangement are substantially
the only source of cash flow contributing to the continuity of the arrangement; and (iii) If the selling price drops below cost, the joint operators
are required to cover any obligations Canadian Malartic cannot satisfy.

Determination of Assets Held for Sale and Discontinued Operations

Critical Judgements in Applying Accounting Policies

Judgement is required in determining whether an asset or disposal group should be classified as held for sale. An asset or disposal group
should be classified as held for sale when it is available for immediate sale in its present condition and its sale is highly probable. Conditions
that support a highly probable sale include the following: an appropriate level of management is committed to a plan to sell the asset or disposal
group, an active program to locate a buyer and complete the plan has been initiated, the asset or disposal group has been actively marketed
for sale at a price that is reasonable in relation to its current fair value, and the sale of the asset or disposal group is expected to qualify for
recognition as a completed sale within one year from the date of classification as held for sale.

At December 31, 2017, the Company concluded that the assets and liabilities of Gualcamayo and related Argentinian exploration properties
("Gualcamayo"), and certain exploration properties in Northern Ontario (the “Canadian Exploration Properties”) met the criteria for classification
as held for sale. Accordingly, the assets and liabilities of each property, were presented separately in the Company's consolidated balance
sheet under current assets and current liabilities, respectively at December 31, 2017. The sale of both properties was completed in 2018.

Management also applies judgement to determine whether a component of the Company that either has been disposed of, or is classified as
held for sale, meets the criteria of a discontinued operation. The key area that involves management judgement in this determination is whether
the component represents a separate major line of business or geographical area of operation. This determination applied to Gualcamayo in
2017, as it was a component of the Company. Given that the Company would continue to operate in Argentina after the disposal of Gualcamayo
and following the analysis of quantitative factors, the Company concluded that Gualcamayo was not a separate major line of business or
geographical area of operation, thus it was not considered to be a discontinued operation.

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Income Taxes

Critical Judgements in Applying Accounting Policies

Interest and penalties related to income taxes: The determination of whether interest and penalties relating to income taxes are classified
with income taxes and accounted for under IAS 12 Income Taxes or classified and accounted for under IAS 37 Provisions, Contingent Liabilities
and Contingent Assets requires management to make certain judgements as to the substance of the amounts incurred. If an amount was based
on taxable profit and therefore meets the definition of an income tax, it should be classified with income taxes or if it was based on another
measure, such as compensation for the time value of money, it should be classified outside of income taxes. Based on an assessment of the
specific facts and circumstances in which interest and penalties relating to the Company’s Brazilian tax liabilities were incurred, management
determined that such interest and penalties are within the scope of IAS 12 because they are in substance, part of a larger tax assessment
rather than resulting from delayed payment. The amounts are therefore, included in the tax expense line item in the Company’s consolidated
statement of operations. For the year ended December 31, 2018, such interest and penalties included in tax expense were $35.8 million (2017:
$62.6 million). Refer to Note 13: Income Taxes for further discussion on the Brazilian tax matters.

Key Sources of Estimation Uncertainty

Income taxes and recoverability of deferred tax assets: In assessing the probability of realizing income tax assets recognized, management
makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing
temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its
assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable
income are based on forecasted cash flows from operating activities and the application of existing tax laws in each jurisdiction. The Company
considers relevant tax planning opportunities that are within the Company's control, are feasible, and within management's ability to implement.
Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in
light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is
reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future
changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses
unrecognized income tax assets at each reporting period.

Contingencies

Key Sources of Estimation Uncertainty

Due to the size, nature and complexity of the Company’s operations, various legal and tax matters are outstanding from time to time. In the
event that the Company’s estimates of the future resolution of these matters changes, the effects of the changes will be recognized in the
Consolidated Financial Statements. Refer to Note 35: Contingencies for further discussion on contingencies.

Inventory Valuation

Key Sources of Estimation Uncertainty

The measurement of inventory including the determination of its net realizable value, especially as it relates to ore in stockpiles, involves the
use of estimates. Estimation is required in determining the tonnage, recoverable gold and copper contained therein, and in determining the
remaining costs of completion to bring inventory into its saleable form. Changes in these estimates can result in a change in mine operating
costs of future periods and carrying amounts of inventories

Further, in determining the net realizable value of ore in stockpiles, the Company estimates future metal selling prices, production forecasts,
realized grades and recoveries, timing of processing, and future costs to convert the inventories into saleable form. Reductions in metal price
forecasts, increases in estimated future costs to convert, reductions in the amount of recoverable ounces, and a delay in timing of processing
can result in a write down of the carrying amounts of the Company’s work-in-process and ore in stockpiles inventory. During the year ended
December 31, 2018, the Company recorded a write down of $13.8 million, as a result of the carrying amount of certain inventory exceeding net
realizable value (2017: $11.2 million). Refer to Note 18: Inventories.

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125

Commencement of Commercial Production

Critical Judgements in Applying Accounting Policies

Prior to a mine being capable of operating at levels intended by management, costs incurred are capitalized as part of the costs of the related
mining properties and proceeds from mineral sales are offset against costs capitalized. Recognition of revenue and the depletion of capitalized
costs for mining properties begins when the mine is capable of operating at levels intended by management. Management considers several
factors in determining when a mining property is capable of operating at levels intended by management. Amongst other quantitative and
qualitative factors, throughput, mill grades and recoveries were assessed over a reasonable period to make this determination. A factor of 70%
of planned output and/or design capacity measures was utilized in determining the appropriate timing. The Company determined that the Cerro
Moro mine in Argentina was capable of operating at levels intended by management effective June 26, 2018.

RECENT ACCOUNTING PRONOUNCEMENTS

(a)

Application of New and Amended Standards and Interpretations

The Company has adopted the following new IFRSs and Interpretations that had an impact on these Consolidated Financial Statements:

IFRS 15 Revenue from Contracts with Customers ("IFRS 15")

On January 1, 2018, the Company adopted IFRS 15. IFRS 15 is based on the principle that revenue is recognized when control of a good or
service is transferred to a customer. The Company adopted IFRS 15 using the modified retrospective approach applied to those contracts that
were not completed as of January 1, 2018. The cumulative effect of initially applying IFRS 15 has been recognized as an adjustment to the
opening deficit at January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under IFRS 15, while prior
period amounts have not been restated and continue to be reported under the accounting standards in effect for those periods.

The adoption of IFRS 15 did not have a significant impact on the Company's Consolidated Financial Statements, with the exception of
adjustments to the metal streaming arrangements as discussed below, and the addition of new disclosures, which are included in Note 7:
Revenue.

Under IFRS 15, where consideration is received in advance of the Company's performance of its obligation, there is an inherent financing
component in the transaction. When the period between receipt of consideration and revenue recognition is greater than one year, the Company
is required to determine whether the financing component is significant to the contract. The Company performed this assessment for its metal
streaming arrangements with Sandstorm and Altius that existed at the date of initial application of IFRS 15, and determined that the financing
component was significant to each of these arrangements.

Accordingly, in accounting for each of the arrangements under IFRS 15, the transaction price is increased by an imputed interest amount and
a corresponding amount of interest expense recognized in each period. The Company recorded a net increase of $16.4 million to the opening
deficit balance as of January 1, 2018 due to the cumulative impact of adopting IFRS 15, as a result of adjustments to the deferred revenue
balances associated with the Company's metal streaming arrangements. The adjustments resulted from a change in draw down rates resulting
from the adjustment to the transaction price to reflect the financing component.

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The impact of adoption of IFRS 15 on the Company’s consolidated statement of operations for the year ended December 31, 2018 and
consolidated balance sheet as at December 31, 2018 was as follows:

Consolidated Statement of Operations (extract)

For the year ended December 31, 2018

Revenue

Gross margin excluding depletion, depreciation and amortization
Mine operating earnings

Finance costs

Net loss

Consolidated Balance Sheet (extract)

As at December 31, 2018

Liabilities
Current liabilities:
Other provisions and liabilities

Non-current liabilities:
Other provisions and liabilities

Total liabilities

Equity
Deficit

Total equity
Total liabilities and equity

As reported

1,798.5 $

788.5 $
201.2 $

Balances without
adoption of IFRS 15
1,784.7 $
774.7 $
187.4 $

(137.4)

(121.4)

(297.7)$

(295.5)$

Effect of change

13.8

13.8
13.8

(16.0 )

(2.2)

As reported

Balances without
adoption of IFRS 15

Effect of change

106.8 $

104.5 $

289.2 $

3,988.9 $

(3,650.6) $

4,024.0 $
8,012.9 $

272.8 $
4.0 $

(3,632.0) $
4,042.6 $
8,012.8 $

2.3

16.4

18.7

(18.6)

(18.6)
0.1

$
$

The above changes are attributable to accounting for the financing component in the Company's streaming arrangements, as discussed above,
and the financing component on the advanced copper purchase agreement entered into in January 2018. Refer to Note 26: Other Provisions
and Liabilities.

IFRS 9 Financial Instruments ("IFRS 9")

On January 1, 2018, the Company adopted IFRS 9 (2014). IFRS 9 addresses the classification, measurement and derecognition of financial
assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. In accordance with
the transitional provisions in IFRS 9, comparative figures have not been restated with the exception of certain aspects of hedge accounting.

The following summarizes the significant changes in IFRS 9 compared to IAS 39 Financial Instruments: Recognition and Measurement
("IAS 39"):

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127

a. Classification and Measurement of Financial Assets

IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other
comprehensive income (“FVOCI”) and fair value through profit or loss (“FVTPL”). The classification of financial assets under IFRS 9 is generally
based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Management reviewed and
assessed the Company’s existing financial assets as at January 1, 2018 based on the facts and circumstances that existed at that date and
concluded that the initial application of IFRS 9 has had the following impact on the Company’s financial assets as regards their classification
and measurement:

•
•

•

Financial assets measured at FVTPL under IAS 39 continue to be measured as such under IFRS 9;
Financial assets classified as Loans and Receivables under IAS 39 that were measured at amortized cost continue to be measured
at amortized cost under IFRS 9;
Investments in equity securities that were classified as available-for-sale under IAS 39 have been classified at FVOCI, pursuant to
the irrevocable election available in IFRS 9. Under IFRS 9, all realized and unrealized gains and losses are recognized permanently
in OCI with no reclassification to profit or loss. Accordingly, impairment losses of $8.8 million on equity securities that the Company
continued to own at January 1, 2018 that were previously recognized in profit or loss were reclassified from opening deficit to the fair
value through OCI reserve on January 1, 2018.

Impairment of Financial Assets

IFRS 9 introduced a single expected credit loss impairment model, which is based on changes in credit quality since initial recognition. The
adoption of the expected credit loss impairment model did not have a significant impact on the carrying amounts of the Company's financial
assets on the transition date given the Company transacts exclusively with large international financial institutions and other organizations with
strong credit ratings and the negligible historical level of customer default.

c. Hedge Accounting

IFRS 9 changes the requirements for hedge effectiveness and consequently for the application of hedge accounting. The IAS 39 effectiveness
test is replaced with a requirement for an economic relationship between the hedged item and hedging instrument, and for the ‘hedged ratio’
to be the same as that used by the entity for risk management purposes. Certain restrictions that prevented some hedging strategies and
hedging instruments from qualifying for hedge accounting were removed under IFRS 9. Generally, the mechanics of hedge accounting remain
unchanged.

All of the Company’s existing hedging relationships that qualified for hedge accounting under IAS 39 were assessed upon adoption of IFRS 9
and these have continued to qualify for hedge accounting under IFRS 9. The Company also reassessed economic hedges that did not qualify
for hedge accounting under IAS 39. IFRS 9 has enabled the Company to apply hedge accounting to copper derivative contracts, thus reducing
the volatility of reported net income. These positions previously did not qualify for hedge accounting as component hedging was not permitted
under IAS 39.

The Company enters into zero cost collars, which consist of a combination of purchased and written (sold) options to reduce the impact of the
variability of the US Dollar amount of foreign currency denominated operating expenditures caused by changes in currency exchange rates.
Under IAS 39, the Company separated the intrinsic value and time value of these contracts, designating only the change in intrinsic value as
the hedging instrument. As a result, any variability in the intrinsic value was taken to OCI and any variability in the time value was taken to profit
or loss. Under IFRS 9, the Company will continue to separate the intrinsic value and time value of these contracts, designating only the change

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in intrinsic value as the hedging instrument as allowed under the exception provided in IFRS 9. However, under IFRS 9, changes in time value
are recognized in OCI as a cost of hedging rather than in profit or loss, resulting in a reduction in profit or loss volatility. Retrospective application
of the cost of hedging approach resulted in a $6.0 million decrease to the unrealized loss on derivatives, included in Other Income (Costs), net
in the Consolidated Statement of Operations, and a $6.0 million loss being recognized in OCI in the Consolidated Statement of Comprehensive
Loss for the year ended December 31, 2017.

Refer to Note 3: Significant Accounting Policies for a description of the new accounting policies applied by the Company as a result of adoption
of these new IFRS standards.

ii. Adoption of Other Narrow Scope Amendments to IFRSs and IFRS Interpretations

The Company also adopted other amendments to IFRSs, as well as the Interpretation IFRIC 22 Foreign Currency Transactions and Advance
Consideration, which were effective for accounting periods beginning on or after January 1, 2018. The impact of adoption was not significant
to the Company's Consolidated Financial Statements.

(b) New and Revised IFRSs not yet Effective

Certain pronouncements have been issued by the IASB that are mandatory for accounting periods after December 31, 2018. Pronouncements
that are not applicable to the Company have been excluded from this note.

IFRS 16 Leases ("IFRS 16")

In January 2016, the IASB issued IFRS 16, which supersedes IAS 17 Leases (and related interpretations). IFRS 16 introduces a comprehensive
model for the identification of lease arrangements and accounting treatments. IFRS 16 distinguishes leases and service contracts on the basis
of whether an identified asset is controlled by a customer. Distinctions of operating leases (off balance sheet) and finance leases (on balance
sheet) are removed for lessee accounting, and are replaced by a model where a right-of-use asset and a corresponding liability are required to
be recognized for all leases, with limited exceptions for short-term leases and leases of low value assets.

The Company is close to finalizing its implementation project. It is expected that the Company will record a material balance of lease assets
and associated lease liabilities on the consolidated balance sheet at January 1, 2019. In addition to the recognition of additional assets and
liabilities on the consolidated balance sheet, it is expected that the adoption of IFRS 16 will result in a decrease in lease expense and a
corresponding increase in both depreciation expense and finance charges representing the unwind of the discount on the lease liability. The
Company also expects cash flows from operating activities to increase under IFRS 16 as lease payments for substantially all leases will be
recorded as financing outflows in the consolidated statement of cash flows as opposed to operating cash flows.

IFRS 16 is effective for the Company from January 1, 2019. The Company will adopt IFRS 16 using the modified retrospective approach, with
the cumulative impact of applying IFRS 16 recognized at January 1, 2019. The Company does not intend to bring short-term leases (contracts
of 12 months or fewer to run as at January 1, 2019, including reasonably certain options to extend) or low value leases on balance sheet. Costs
for these items will continue to be expensed directly to the Consolidated Statement of Operations.

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DIVESTITURES

(a) Gualcamayo and Related Argentinian Exploration Properties

As part of ongoing strategic and technical reviews of its asset portfolio, in December 2017 the Company committed to a formal plan to dispose
of the Gualcamayo mine and related exploration properties in Argentina (“Gualcamayo”) and initiated an active program to sell Gualcamayo.
As the sale was considered highly probable at December 31, 2017, the assets and liabilities of Gualcamayo were classified as assets and
liabilities (a disposal group) held for sale and presented separately under current assets and current liabilities, respectively. Immediately prior
to the classification to assets and liabilities held for sale, the carrying amount of Gualcamayo was re-measured to its recoverable amount, being
its FVLCD, the estimate of which, was supported by various sources including a formal bid received by the Company, external valuation reports
and comparable trading company multiples. As a result, the Company recorded an impairment loss of $356.5 million in relation to Gualcamayo
for the year ended December 31, 2017.

On October 25, 2018, the Company entered into a definitive purchase agreement to sell its 100% interest in Gualcamayo to Mineros S.A.
("Mineros") for consideration comprising: (i) $30.0 million in cash, payable at closing; (ii) An additional $30.0 million in cash upon declaration of
commercial production of the Deep Carbonates project, which is an undeveloped mineral resource below the existing oxide gold mineralization
at Gualcamayo; (iii) A 2% net smelter return royalty (“NSR”) at Gualcamayo on metal produced after the initial 396,000 ounces, capped at $50.0
million (excluding products produced from the Deep Carbonates Project); and (iv) A 1.5% uncapped NSR on products produced from the Deep
Carbonates project.

Separately, the Company also agreed to grant Mineros an option to acquire up to a 51% interest in the La Pepa project, located in Chile, over
an earn-in period of four years (subject to extension for certain unexpected contingencies) and then the remaining 49% interest pursuant to a
call option.

As the estimated consideration was lower than the carrying value of Gualcamayo, the Company recorded an impairment loss of $75.0 million
in the period ended September 30, 2018.

The sale of the Gualcamayo mine was completed on December 14, 2018. Upon disposal of Gualcamayo on December 14, 2018, the Company
recognized a $2.6 million gain, as calculated below.

Gualcamayo was presented in the "Other Mines" reportable operating segment.

(b) Brio Gold

On May 24, 2018, the Company completed the sale of its 53.6% controlling interest in Brio Gold to Leagold Mining Corporation ("Leagold") and
received total consideration of $147.6 million. The consideration was comprised of $140.5 million of Leagold common shares ("Leagold
Shares"), representing approximately 20.5% of Leagold's issued and outstanding common shares at the closing date and $7.1 million of Leagold
share purchase warrants, which entitle the Company to purchase one Leagold Share at a price of C$3.70 for a period of two years from May
24, 2018. The Leagold Shares were measured based on the 3-day volume weighted average trading price of Leagold Shares on the Toronto
Stock Exchange ("TSX") as at May 23, 2018, and must be held for a minimum period of 12 months, subject to certain exceptions. The Leagold
share purchase warrants were valued using the Black-Scholes option-pricing model.

During the first quarter of 2018, the Company concluded that the assets and liabilities of Brio Gold met the criteria for classification as a disposal
group held for sale, and accordingly, the assets and liabilities of Brio Gold were presented separately in the Company's condensed consolidated
interim balance sheet as at March 31, 2018 as current assets and current liabilities, respectively. The Company recorded an impairment loss
upon initial classification as held for sale, and a further impairment loss at March 31, 2018 to write the carrying amount of the disposal group
down to its fair value less costs to sell ("FVLCS") for a combined impairment write down of $181.0 million ($175.0 million net of tax) in the three

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months ended March 31, 2018. The FVLCS was estimated based on the consideration expected to be received in the sale transaction using
the Leagold share price per the TSX on the dates of the respective write downs, a level 1 input per the fair value hierarchy.

Upon disposal of Brio Gold on May 24, 2018, the Company recognized a $32.0 million gain, as calculated below.

Brio Gold was presented in the "Other Mines" reportable operating segment.

On March 29, 2018, the Company completed the sale of certain jointly owned exploration properties of the Canadian Malartic Corporation
(“CMC”) including the Kirkland Lake and Hammond Reef properties (the “Canadian Exploration Properties”) to Agnico Eagle Mines Limited
(“Agnico”) for total cash consideration of $162.5 million. The Transaction was structured as a sale of assets by CMC (in which the Company
holds a 50% indirect interest) pursuant to which Agnico acquired all of the Company's indirect 50% interest in the Canadian exploration assets
of CMC.

At December 31, 2017, the sale was considered highly probable and accordingly, the assets and liabilities of the Canadian Exploration
Properties were classified as assets and liabilities held for sale and presented separately under current assets and current liabilities,
respectively. No impairment loss was recognized on reclassification to held for sale, as the FVLCD was higher than the carrying amount of the
assets based on the sale price in the agreement. Upon sale, the Company recognized a gain of $39.0 million, which is included in other
operating income (expenses), net in the consolidated statement of operations for the year ended December 31, 2018.

The Canadian Exploration Properties were presented in the Canadian Malartic reportable operating segment.

The gains on disposal of Gualcamayo and Brio Gold were calculated as below:

Total consideration including working capital adjustments (net of transaction costs)
Net assets sold and derecognized:
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Property, plant and equipment (i)
Deferred tax assets
Goodwill and intangibles
Trade and other payables
Income taxes payable
Other financial liabilities
Other provisions and liabilities
Long-term debt
Decommissioning, restoration and similar liabilities

Net assets
Other comprehensive Income
Non-controlling interests (i)

Net assets attributable to Yamana
Gain on disposal (Note 10)

Brio Gold
146.1 $

5.4 $
1.4
42.0
1.5
16.1
337.7
5.3
—
(54.1)
(3.3)
(19.4)
(14.5)
(73.0)
(34.2)
210.9 $
4.9
(101.7)
114.1 $
32.0 $

$
$

Gualcamayo

82.5

1.5
7.5
60.8
0.8
11.8
67.9
—
1.4
(31.1)
—
(1.3)
(9.7)
—
(29.7)

79.9
—
—

79.9
2.6

(i)

Balances have been reclassified during the period, reflecting an adjustment to balances previously reported in the Company's quarterly financial statements in 2018.

Yamana Annual
Report 2018

131

The gains on disposal are included in other operating income (expenses), net in the consolidated statement of operations for the year ended
December 31, 2018.

REVENUE

The Company has recognized the following amounts relating to revenue in the consolidated statements of operations:

For the years ended December 31,

Revenue from contracts with customers (a)
Revenue from other sources
Provisional pricing adjustments on concentrate sales

(a) Disaggregation of Revenue from Contracts with Customers

2018
1,805.3 $

(6.8)
1,798.5 $

2017

1,813.9

(10.1 )

1,803.8

The following table disaggregates revenue from contracts with customers by metal and source mine.

The table also includes a reconciliation of the disaggregated revenue from contracts with customers with disaggregated revenue reported in
Note 33: Operating Segments.

For the year ended December 31, 2018

Gold
Silver
Copper

Total revenue from contracts with
customers
Provisional pricing adjustments
Total revenue

Chapada
142.1 $
—
340.1

482.2

(6.8)
475.4 $

El Peñón

Canadian
Malartic

Jacobina

192.6 $
61.0
—

253.6 $

—
253.6 $

444.0 $
3.6
—

447.6 $

—
447.6 $

179.4 $
—
—

179.4 $

—
179.4 $

Minera
Florida Cerro Moro
83.8 $
43.0
—

102.6 $
—
—

Other
mines
213.1 $
—
—

Total

1,357.6
107.6
340.1

102.6 $

—
102.6 $

126.8
—
126.8 $

213.1 $

1,805.3

—
213.1 $

(6.8)
1,798.5

For the year ended December 31, 2017

Chapada

El Peñón

Canadian
Malartic

Jacobina

Minera
Florida Cerro Moro Other mines

Gold
Silver
Copper

Total revenue from contracts with
customers
Provisional pricing adjustments
Total revenue

138.7 $
2.1
294.7

201.3 $
72.7
—

399.9 $
3.2
—

170.8 $
—
—

115.0 $
8.1
—

435.5

274.0 $

403.1 $

170.8 $

123.1 $

(10.1)
425.4 $

—
274.0 $

—
403.1 $

—
170.8 $

—
123.1 $

— $
—
—

—
—
— $

Total

1,433.1
86.1
294.7

407.4 $
—
—

407.4 $

1,813.9

—
407.4 $

(10.1 )

1,803.8

(b) Transaction Price Allocated to the Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes
deferred revenue amounts relating to the Company's streaming arrangements and advanced metal sales agreement that will be invoiced and
recognized as revenue in future periods. The Company applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose
information about remaining performance obligations that have original expected durations of one year or less.

At December 31, 2018 the aggregate amount of the revenue allocated to unsatisfied performance obligations was $280.6 million.

The Company expects to recognize approximately $68.5 million of this revenue over the next 12 months and the remainder (all relating to the
streaming arrangements) over periods of 11 to 33 years.

132

Yamana Annual
Report 2018

COST OF SALES EXCLUDING DEPLETION, DEPRECIATION AND AMORTIZATION

For the years ended December 31,

Contractors and services
Employee compensation and benefits expenses (Note 9)
Repairs and maintenance
Power
Materials and supplies
Change in inventories, impact of foreign currency, royalties, sales taxes and other

Cost of sales excluding depletion, depreciation and amortization

EMPLOYEE COMPENSATION AND BENEFITS EXPENSES

For the years ended December 31,

Wages and salaries
Social security, pension and government-mandated programs (i)
Other benefits (ii)

Total employee compensation and benefits expenses
Less: expensed within general and administrative or exploration and evaluation expenses
Less: capitalized to property, plant and equipment

Employee compensation and benefit expenses included in cost of sales (Note 8)

2018
316.0 $
229.5
136.6
62.4
286.8
(21.5)
1,010.0 $

2018
214.2 $
96.7
15.4
326.3 $
(68.8)
(28.1)
229.5 $

2017

307.7
264.0
138.6
66.6
293.0
(27.5)

1,042.4

2017
242.5
101.9
18.9

363.4
(79.5)
(19.9)

264.0

(i)

(ii)

Included in this item are defined contribution pension plans for all full-time qualifying employees of the Company. Contributions by the Company are based on a contribution
percentage using the annual salary as the base and are made on a quarterly basis or as otherwise determined by the Company. The assets of the plans are held separately
from those of the Company and are managed by independent plan administrators. The total expense recognized in the consolidated statement of operations of $3.7 million
(2017: $6.3 million) represents contributions payable to these plans by the Company at rates specified in the rules of the plans. As at December 31, 2018, contributions of
$7.9 million due in respect of the 2018 reporting period (2017: $9.1 million) had not been paid over to the plans but were paid subsequent to the end of the year.
Included in Other benefits are share-based payment transactions as discussed in Note 30: Share-Based Payments.

10.

OTHER EXPENSES

(a) OTHER OPERATING (INCOME) EXPENSES, NET

For the years ended December 31,

Change in provisions (i)

Write-down of other assets

Gain on sale of subsidiaries (Note 6)

Business transaction costs

Gain on sale of other assets

Mark-to-market gain on deferred share compensation

Net mark-to-market loss on investments

Reorganization costs

Other expenses (ii)

Other operating (income) expenses, net

2018
12.9 $
25.6
(73.7)
7.2
(3.6)
—
9.8
10.1
2.3

(9.3)$

2017

(26.6)

13.4

—

2.9

(5.2)

(1.7)

2.5

4.8

33.5

23.6

(i)
(ii)

Amount represents the recording (reversal) of certain existing provisions based on management's best estimate of the likely outcome.
In 2017, other expenses included $9.4 million related to standby costs incurred during El Peñón's suspension of operations associated with the collective bargaining
negotiation, and $5.1 million due to business interruption costs at MRDM.

(b) OTHER (INCOME) COSTS, NET

For the years ended December 31,

Finance income
Unrealized (gain) loss on derivatives

Net foreign exchange loss

Other (income) costs, net

Yamana Annual
Report 2018

133

2018

(2.6)$
(9.4)
9.5

(2.5)$

2017
(Restated) (i)

(3.4)
9.3

15.0

20.9

(i)

11.

FINANCE COSTS

For the years ended December 31,

Unwinding of discounts on provisions
Interest expense on long-term debt
Financing costs paid on early note redemption
Amortization of deferred financing, bank, financing fees and other (i)

Finance costs

2018
16.7 $
75.6
14.7
30.4

137.4 $

2017 (ii)
20.4
72.7
—
17.7

110.8

(i)

(ii)

Included in other finance costs for the year ended December 31, 2018 is $16.0 million of non-cash interest expense related to the financing component of deferred revenue
contracts. Refer to Note 5: Recent Accounting Pronouncements.
In the current year the Company has reclassified certain items that were previously included in Finance Costs to Other Costs. Comparative numbers have been updated to
reflect the change in presentation in the current year.

12.

IMPAIRMENT AND REVERSAL OF IMPAIRMENT

Summary of impairments (reversals)

For the year ended December 31, 2018, the Company recorded net impairment losses of $302.0 million (2017: $356.5 million), as summarized
in the following table:

2018

Non-
operating
mining

properties Goodwill (i)

78.0 $
75.0
—
—
—

153.0 $

— $
—
—
—
45.0

45.0 $

Operating
mining
properties

103.0 $
—
(150.0)
151.0
—

104.0 $

Operating
mining
properties

— $

256.9
—
—
—
256.9 $

Total

181.0
75.0
(150.0)
151.0
45.0

302.0

2017

Non-
operating
mining
properties

— $

99.6
—
—
—

99.6 $

Total

—
356.5
—
—
—

356.5

Brio Gold
Gualcamayo
Jacobina
Minera Florida
Canadian Malartic

Net impairment loss

(i)

The goodwill impairment pertains to Canadian Malartic and is included in the impairment of operating mines line in the consolidated statement of operations.

134

Yamana Annual
Report 2018

2018 Indicators of Impairment (Impairment Reversal)

In the fourth quarter of 2018, the Company reviewed its operating mine sites for indicators of impairment or impairment reversal and performed
the annual goodwill impairment test. The Company observed an increase in the fair value less costs of disposal ("FVLCD") of the Jacobina
mine in Brazil that resulted in a reversal of the impairment loss recorded in 2014, totalling $150.0 million. This reversal was offset by an
impairment at Minera Florida of $151.0 million and a $45.0 million impairment of goodwill recorded on the acquisition of the Canadian Malartic
mine. No indicators of impairment or impairment reversal were identified for the other operating mine sites.

Jacobina

The Company recorded an impairment of its Jacobina mine in 2014. The impairment was the result of the average processing rate declining
to below 4,000 tonnes per day with life of mine plans contemplating a processing rate at less than 60% of capacity. Additionally, the mine
experienced dilution controls issues resulting in lower than expected grades and higher costs leading to an impairment charge. Following
several years of remediation plans, the Company considered the following factors to be an indicator of reversal of the previous impairment
charge:

• A significant increase in mineral reserves and mineral resources for 2018, which both extended the life of the mine and improved the

life of mine models.

• A second consecutive year of meaningful improvements, leading to a record production closer to long-term goal of 150,000 ounces

per year.

• A reduction in costs to expected levels benefiting from the higher production and continuous cost reduction initiatives.
• Milling rates in excess of 95% of plant capacity reaching a sustainable level, following plant optimization initiatives including the
commissioning of the advanced control system in the third quarter, which enhanced plant stability. A modest investment in 2019 is
expected to increase processing capacity further.

• During the year, the Company developed underground areas and surface stockpiling, and achieved the goals of one month ahead of

ready-to-blast tonnage and additional five months of ready to drill ore.

As a result, an assessment was performed for the Company's Jacobina CGU, and it was determined that the recoverable amount, representing
the CGU’s FVLCD, exceeded the carrying amount. This resulted in a reversal of the impairment charge recorded in 2014, which was limited to
the carrying amount of the Jacobina CGU that would have been determined had no impairment charge been recognized in prior years, net of
depletion, depreciation and amortization charges.

Minera Florida

During 2018, the Minera Florida mine experienced lower production at higher than expected unit costs. As part of the Company’s annual
process, in the fourth quarter of 2018 an updated life of mine (“LOM”) plan was developed, the focus of which, was to right-size the operation
at a sustainable production level (similar to the approach taken at El Peñón and Jacobina in the past). The focus of the new life of mine plan is
to maximize operating margins and to advance mine development and mineral reserve delineation to deliver mine flexibility and scope for future
potential production increases, driven by either throughput or grade.

The Company considered the decreased mine profitability resulting from the updated LOM plan and the impact of the LOM plan on the value
of exploration potential and land interest; along with the anticipated disposal of certain exploration land holdings of the Minera Florida CGU not
contiguous to the area of the mine, to be indicators of impairment.

As a result, an assessment was performed for the Company’s Minera Florida CGU, and it was determined that the carrying amount of the CGU
exceeded its recoverable amount, representing the CGU’s FVLCD. This resulted in a non-cash accounting impairment of $151.0 million being
recognized in the consolidated statement of operations.

Yamana Annual
Report 2018

135

The optimization of operations also prompted the review of a detailed plan for future exploration during the fourth quarter, both from a budget
and a strategic perspective. As the land holdings of the Minera Florida CGU are significant in size and breadth, rationalization of the portfolio
presented the opportunity to save on the ongoing maintenance and licensing costs that are currently incurred. The value attributable to the land
arose from a purchase price allocation associated with its acquisition.

Canadian Malartic

On June 16, 2014, the Company acquired a 50% interest in the Canadian Malartic mine. Goodwill of $427.6 million was recognized. As a result
of the deferred income tax liability recognized in purchase accounting, an additional "gross up" of the fair value of the acquired assets is
required, which resulted in the recognition of goodwill. Goodwill is not amortized and may be impaired in future periods, pending
the identification of additional mineral reserves and mineral resources. As goodwill is tested annually for impairment and not amortized, unless
the mine as a CGU can continuously replenish mineral reserves and mineral resources, it may result in the gradual impairment of goodwill. As
at December 31, 2018, the FVLCD of Canadian Malartic exceeded the mine's book value. However, the sum of the carrying value of the
Canadian Malartic CGU and goodwill from its acquisition was deemed to be in excess of the FVLCD of the Canadian Malartic CGU by $45.0
million, due to the 2018 mineral depletion. The impairment represents approximately 10% of the total goodwill balance.

Other 2018 Impairments

Gualcamayo

The fair value of the consideration receivable in the transaction with Mineros (refer to Note 6: Divestitures), which was in line with more recent
market valuations for comparable assets in Argentina, and reflective of the commodity price environment; was approximately $85.0 million.
Accordingly, the Company recorded an impairment loss of $75.0 million in the period ended September 30, 2018 to write the carrying amount
of the disposal group down to its FVLCS. The Company recognized a gain of $2.6 million upon closing of the sale on December 14, 2018. The
gain resulted from movements in Gualcamayo's balance sheet, including taxes, prior to disposal.

Brio Gold

During the first quarter of 2018, the assets and liabilities of Brio Gold were classified as assets and liabilities (a disposal group) held for sale
(See Note 6: Divestitures). The Company recorded an impairment loss upon initial classification of Brio Gold as held for sale, and a further
impairment loss at March 31, 2018 to write the carrying amount of the disposal group down to its FVLCS for a combined impairment write down
of $181.0 million ($175.0 million net of tax) in the three months ended March 31, 2018. The FVLCS was estimated based on the consideration
expected to be received in the sale transaction using the Leagold share price per the TSX on the dates of the respective write downs, a level
1 input per the fair value hierarchy.

2017 Indicators of Impairment

Gualcamayo

In the fourth quarter of 2017, the assets and liabilities of the Company's Gualcamayo mine were classified as assets and liabilities (a disposal
group) held for sale (see Note 6: Divestitures). Immediately prior to the classification to assets and liabilities held for sale, the carrying amount
of Gualcamayo was re-measured to its recoverable amount, being its FVLCD, the estimate of which, was supported by various sources including
a formal bid received by the Company, external valuation reports and comparable trading company multiples. As a result, the Company recorded
an impairment loss of $356.5 million in relation to Gualcamayo for the year ended December 31, 2017.

The Company continues to consider, on a regular basis, whether other indicators exist that suggest that the carrying values of its assets are
impaired for accounting purposes. While the market capitalization relative to the carrying value of the Company’s assets is reviewed on a
regular basis, it is not considered as the sole indicator of impairment. Given recent strategic developments the Company has achieved, and

136

Yamana Annual
Report 2018

the volatility of the market reflecting the current economic sentiment, using the current share price as a sole determinant of fair value is not
reasonable; however, the Company monitors the magnitude of the gap between the Company market capitalization and the asset carrying
values. Although the Company's market capitalization as at December 31, 2018 was below the carrying value of the net assets, based on the
impairment assessments, the Company has determined that only the impairments recognized in the year ended December 31, 2018 are
required. The Company believes that its share price does not impact the Company’s ability to generate cash flows from its assets which support
the net book values on a discounted cash flow basis.

Impairment Testing: Key Assumptions

The determination of FVLCD, with level 3 input of the fair value hierarchy, includes the following key applicable assumptions:

• Production volumes: In calculating the FVLCD, the production volumes incorporated into the cash flow models based on detailed life-
of-mine plans and take into account development plans for the mines agreed by management as part of the long-term planning
process. Production volumes are dependent on a number of variables, such as: the recoverable quantities; the production profile; the
cost of the development of the infrastructure necessary to extract the reserves; the production costs; the contractual duration of
mining rights; and the selling price of the commodities extracted. As each producing mine has specific reserve characteristics and
economic circumstances, the cash flows of the mines are computed using appropriate individual economic models and key
assumptions established by management. The production profiles used were consistent with the reserves and resource volumes
approved as part of the Company’s process for the estimation of proved and probable reserves, resource estimates and in certain
circumstances, include expansion projects. These are then assessed to ensure they are consistent with what a market participant
would estimate.

• Commodity prices: Forecast commodity prices are based on management’s estimates and are derived from forward price curves and
long-term views of global supply and demand, building on past experience of the industry and consistent with external sources.
Estimated long-term gold, silver and copper prices of $1,300 per ounce (2017: $1,300 per ounce), $19.00 per ounce (2017: $19.05
per ounce) and $3.00 per pound (2017: $3.00 per pound) respectively, have been used to estimate future revenues.

• Discount rates: In calculating the FVLCD, a real post-tax discount rate of 4.50% (2017: 4.50%) based on the Company's weighted
average cost of capital (“WACC”). The WACC used in the models is in real terms, consistent with the other assumptions in the
models.

• Exchange rates: Foreign exchange rates are estimated with reference to external market forecasts and based on observable market
data including spot and forward values. In the current year, there was a depreciation in the long-term rates of the local currencies in
which the Company operates.

Sensitivity Analysis

The Company has performed a sensitivity analysis to identify the impact of changes in long-term metal prices and operating costs which are
key assumptions that impact the impairment calculations. The Company assumed a 1% change in the metal price assumptions and a 1%
change in exchange rate inputs while holding all other assumptions constant. Based on the results of the impairment testing performed, the
CGU’s sensitivity to changes in these key assumptions appear below. Generally there is a direct correlation between metal prices and industry
cost levels as a significant decline in metal prices will often be mitigated by a corresponding decline in industry operating input cost levels. The
Company believes that adverse changes in metal price assumptions would impact certain other inputs in the life of mine plans which may offset,
to a certain extent, the impact of these adverse exchange rate and metal price changes.

Jacobina
Minera Florida
Canadian Malartic

Yamana Annual
Report 2018

137

Change in recoverable value
from a 1% change in metal
prices

Change in recoverable value
from a 1% change in
exchange rates

$
$
$

25.5 $
15.3 $
40.8 $

13.6
10.2
23.9

The model used to determine impairment is based on management's best assumptions using material and practicable data which may generate
results that are not necessarily indicative of future performance. In addition, in deriving this analysis, the Company has made assumptions
based on the structure and relationships of variables as at the balance sheet date which may differ due to fluctuations throughout future years
with all other variables assumed to remain constant. Actual changes in one variable may contribute to changes in another variable, which may
amplify or offset the individual effect of each assumption.

Although these estimates are based on management's best knowledge of the amounts, events or actions, the actual results may differ from
these estimates.

13.

INCOME TAXES

(a)

Income Tax Expense (Recovery)

For the years ended December 31,

Current tax expense (recovery)
Current tax expense in respect of the current year
Adjustment for prior periods
Impact of foreign exchange
Interest and penalties

Deferred tax (recovery) expense
Deferred tax recovery recognized in the current year
Adjustment for prior periods
Impact of foreign exchange

Total income tax expense (recovery)

2018

97.5 $
35.0
3.8
2.5
138.8 $

(158.4)$
(7.5)
148.1
(17.8)$
121.0 $

2017

86.2
156.4

(3.9)
0.5

239.2

(361.3)
(5.5)
13.7

(353.1)
(113.9)

$
$

138

Yamana Annual
Report 2018

The following table reconciles income taxes calculated at statutory rates with the income tax expense in the Consolidated Statements of
Operations:

For the years ended December 31,

Loss before income taxes
Canadian statutory tax rate (%)
Expected income tax recovery
Impact of higher foreign tax rates (ii)
Impact of change in enacted tax rates (iii), (iv)
Permanent differences
Unused tax losses and tax offsets not recognized in deferred tax assets
Tax effects of translation in foreign operations
True-up of tax provisions in respect of prior years and effects of Brazilian Tax Matters (Note 13(e))
Withholding taxes
Unrealized foreign exchange
Mining taxes on profit
Planned distribution of foreign earnings of the company
Other

Income tax expense (recovery)
Income tax expense (recovery) is represented by:
Current income tax expense
Deferred income tax recovery

Net income tax expense (recovery)

2018

(176.7) $
26.5%
(46.8)
20.0
(5.0)
38.8
26.4
(119.7)
27.5
8.7
151.9
14.3
0.9
4.0
121.0 $

138.8 $
(17.8)
121.0 $

2017
(Restated) (i)

(312.0)

26.5%
(82.7)
(31.7)
(216.8)
(20.7)
53.0
(9.2)
150.7
10.8
9.9
14.5
9.9
(1.6)

(113.9)

239.2
(353.1)

(113.9)

(i)

(ii)
(iii)

The Company has initially applied IFRS 9 at January 1, 2018. Under the transition method chosen, comparative information has been restated for certain hedging
requirements. Refer to Note 5: Recent Accounting Pronouncements.
The Company operates in multiple foreign tax jurisdictions that have tax rates that differ from the Canadian statutory rate.
In November 2016, the Quebec government enacted changes to the income tax rate as proposed in the 2016 provincial budget. Beginning in 2017, the provincial rate has
been decreasing by 0.1% per year, and over 4 years will decrease from 11.9% to 11.5% in 2020.

(iv) On December 29, 2017 the Argentinian government enacted tax reform legislation, which reduces the corporate rate from 35% to 30% in 2018 with a further reduction to

25% starting in 2020.

(b) Deferred Income Taxes

The following is the analysis of the deferred income tax assets (liabilities) presented in the Consolidated Balance Sheets:

As at December 31,

The net deferred income tax assets (liabilities) are classified as follows:
Deferred income tax assets
Deferred income tax liabilities

2018

2017

88.5 $

(1,129.3)

(1,040.8)$

For the year ended December 31, 2018

Opening balance

Recognized in
profit or loss

Recognized in
OCI

Divestitures

Deductible temporary differences
Amounts related to tax losses
Financing costs
Decommissioning, restoration and similar liabilities
Derivative liability
Property, plant and equipment
Other

Net deferred income tax liabilities

24.7 $
133.7
2.6
15.8
(1.4)
(1,226.0)
1.3

(1,049.3)$

(1.4)$
(26.8)
84.8
(0.6)
(6.6)
(30.9)
(0.6)

17.8 $

— $
—
—
—
—
—
—
— $

(7.0)$
(1.8)

(4.2)
7.1
(3.4)
(0.1)

(9.3)$

97.8
(1,147.1)

(1,049.3)

Closing
balance

16.3
105.1
87.4
11.0
(0.9)
(1,260.3)
0.6

(1,040.8)

For the year ended December 31, 2017

Opening balance

Recognized in
profit or loss

Recognized in
OCI

Discontinued
operations

Deductible temporary differences
Amounts related to tax losses
Financing costs
Decommissioning, restoration and similar liabilities
Derivative liability
Property, plant and equipment
Unrealized foreign exchange losses
Available-for-sale securities
Other

Net deferred income tax liabilities

67.3 $
76.7
23.8
16.0
—
(1,578.0)
(4.6)
—
4.1

(1,394.7) $

(42.6) $
66.0
(21.2)
(0.2)
(2.8)

352.0
4.6
0.1
(2.8)

353.1 $

— $
—
—
—
1.4
—
—
(0.1)
—
1.3 $

Yamana Annual
Report 2018

139

Closing
balance
24.7
133.7
2.6
15.8
(1.4)
(1,226.0)

—
—
1.3

— $

(9.0)
—
—
—
—
—
—
—

(9.0) $

(1,049.3)

A deferred income tax asset in the amount of $82.0 million has been recorded in Canada and $4.1 million in Argentina (2017: $82.1 million in
Canada and $7.4 million in Brazil). The deferred income tax asset consists mainly of unused tax losses and deductible temporary differences
which arose primarily from financing costs and general and administrative expenses. Projections of taxable profits from various sources were
used to support the recognition of a portion of the losses. The future projected income could be affected by metal prices and quantities of
proven and probable reserves. If these factors or other circumstances change, we would reassess our ability to record the deferred income tax
asset relating to the unused tax losses.

Deferred tax assets have not been recognized in respect of the following items:

As at December 31,

Deductible temporary differences (no expiry)
Tax losses

Loss carry forwards at December 31, 2018 will expire as follows:

2018
63.1 $
342.8
405.9 $

2017

59.0
391.4

450.4

2019
2020
2021
2022
2023
2024 and onwards
Unlimited

Canada

— $
—
—
—
—
401.9
1,120.9

1,522.8 $

U.S.

9.8 $
5.6
16.8
19.3
34.8
144.9
3.3

234.5 $

Brazil

Chile

Argentina

Other

— $
—
—
—
—
—
302.0

302.0 $

— $
—
—
—
—
—
129.4

129.4 $

— $
—
—
—
—
—
—
— $

0.1 $
0.1
—
—
—
5.7
—

5.9 $

Total

9.9
5.7
16.8
19.3
34.8
552.5
1,555.6

2,194.6

140

Yamana Annual
Report 2018

(d) Unrecognized Taxable Temporary Differences Associated with Investments and Interests in Subsidiaries

As at December 31, 2018, an aggregate temporary difference of $2.8 billion (2017: $3.0 billion) related to investments in subsidiaries was not
recognized because the Company controls the reversal of the liability and it is expected that it will not reverse in the foreseeable future.

(e) Brazilian Tax Matters

An income tax expense of $33.3 million incurred and payable at the end of the year, following an administrative interpretation of relevant tax
legislation and approach by Brazilian tax authorities under that tax legislation in December. The expense was unexpected, not consistent with
the Company's interpretations of the tax legislation and inconsistent with past practice. The Company has made the payment so as to avoid
penalties and interest but in respect of which, the Company is pursuing its legal recourse and remedies.

In the third quarter of 2017, the Company elected to participate in a program to settle all significant outstanding income tax assessments in
Brazil and all income tax assessments relating to the Company’s Chapada mine.

The Company paid $76.7 million in the year ended December 31, 2017 and a lump sum of $68.0 million in the first quarter of 2018. The income
tax expense associated with the tax matters has been recorded in the Consolidated Statement of Operations for the year ended December 31,
2017, and is the most significant component of the $150.7 million true-up of tax provisions in respect of prior years in the rate reconciliation.

14.

LOSS PER SHARE

Loss per share for the years ended December 31, 2018 and 2017 was calculated based on the following:

Attributable to Yamana Gold Inc. equity holders
Net loss

2018

2017
(Restated) (i)

(284.6)$

(188.5)

(i)

Earnings (loss) per share is based on the weighted average number of common shares of the Company outstanding during the period. The
diluted earnings (loss) per share reflects the potential dilution of common share equivalents, such as outstanding share options, in the weighted
average number of common shares outstanding during the period, if dilutive.

The weighted average number of shares used in the calculation of loss per share for the years ended December 31 were based on the following:

Weighted average number of common shares (in thousands) - basic
Weighted average number of dilutive share options (i)
Weighted average number of dilutive Restricted Share Units (i)

Weighted average number of common shares (in thousands) - diluted (i)

2018
949,030
—
—
949,030

2017

948,187
—
—

948,187

(i)

Effect of dilutive securities - the potential shares attributable to 954 share options (2017: 954 share options) and 1,356,779 restricted share units (2017: 636,774 restricted
share units) were anti-dilutive for the years ended December 31, 2018 and December 31, 2017, respectively.

15.

SUPPLEMENTARY CASH FLOW INFORMATION

(a) Non-Cash Investing and Financing Transactions

For the years ended December 31,

Interest capitalized to assets under construction (Note 21)
Issue of common shares on vesting of restricted share units (Note 29(a))

(b) Net Change in Working Capital

For the years ended December 31,

Net (increase) decrease in:
Trade and other receivables
Inventories
Other assets
Net increase (decrease) in:
Trade and other payables
Other liabilities
Movement in above related to foreign exchange

Net change in working capital (i)

(i)

Change in working capital is net of items related to Property, Plant and Equipment.

As at December 31,

Cash at bank
Bank short-term deposits

Total cash and cash equivalents (i)

Yamana Annual
Report 2018

141

$
$

2018

8.3 $
2.3 $

2018

1.7 $

(67.0)
(28.0)

(39.9)
(2.3)
(26.6)

(162.1)$

2018
96.3 $
2.2
98.5 $

2017

11.3
2.9

2017

(0.2)
(17.8)
(35.1)

16.6
13.8
8.7

(14.0)

2017

146.7
2.2

148.9

(i)

Cash and cash equivalents consist of cash on hand, cash on deposit with banks, bank term deposits and highly liquid short-term investments with terms of less than 90
days from the date of acquisition.

(d) Other Non-Cash Expenses (Recoveries)

For the years ended December 31,

Write off of assets
Revaluation of employees' pension plan
Provision on indirect taxes
Legal expenses (recoveries)
Other expenses

Total non-cash expenses (recoveries)

(e) Changes in Liabilities Arising from Financing Activities

Changes from financing cash flows

Debt

Accrued interest (i)

Balance at
January 1, 2018

Debt issued

Debt
repayments

1,857.7 $
0.6
1,858.3 $

460.0 $
—
460.0 $

(486.5) $

—

(486.5)$

Interest paid Interest expense

— $

(80.1)

(80.1) $

— $

75.6

75.6 $

2018
10.7 $
14.3
5.7
8.8
10.9
50.4 $

2017

16.4
3.9
(10.8)
(33.0)
15.7

(7.8)

Other changes

Capitalized
interest

— $
8.3
8.3 $

Balance at
December 31,
2018

1,758.7

0.6

1,759.3

Other

(72.5 ) $

(3.8)

(76.3)$

142

Yamana Annual
Report 2018

Changes from financing cash flows

Balance at
January 1, 2017

Debt issued

Debt
repayments

Interest paid Interest expense

Other changes

Capitalized
interest

Debt

Accrued interest (i)

1,592.4 $
0.8
1,593.2 $

730.0 $
—
730.0 $

(460.9 ) $

—

(460.9)$

— $

(103.8)

(103.8) $

— $

72.7

72.7 $

— $

11.3
11.3 $

Balance at
December 31,
2017

1,857.7

0.6

1,858.3

Other

(3.8) $

19.6

15.8 $

(i)

Included in Trade and other payables.

16.

FINANCIAL INSTRUMENTS

(a) Financial Assets and Financial Liabilities by Categories

As at December 31, 2018

Financial assets
Cash and cash equivalents
Trade and other receivables
Receivables from provisional copper sales
Investments in equity securities (i)
Warrants
Derivative assets - Hedging instruments
Derivative assets - Non-hedge
Other financial assets

Total financial assets

Financial liabilities
Total debt
Trade and other payables
Derivative liabilities - Hedging instruments
Derivative liabilities - Non-hedge
Other financial liabilities

Total financial liabilities

Financial
assets at
amortized cost

— $

10.3
—
—
—
—
—
13.1

23.4 $

— $
—
—
—
—

— $

FVOCI - equity
instruments

Mandatorily at
FVTPL - others

FV - Hedging
Instruments

Other financial
liabilities at
amortized cost

— $
—
—
9.1
—
—
—
—

9.1 $

— $
—
—
—
—

— $

98.5 $
—
14.0
—
0.5
—
2.0
—

115.0 $

— $
—
—
0.6
—

0.6 $

— $
—
—
—
—
1.6
—
—
1.6 $

— $
—
5.9
—
—
5.9 $

— $
—
—
—
—
—
—
—

— $

1,758.7 $
294.8
—
—
129.9

2,183.4 $

Total

98.5
10.3
14.0
9.1
0.5
1.6
2.0
13.1

149.1

1,758.7
294.8
5.9
0.6
129.9

2,189.9

(i)

Investments in publicly quoted equity securities that are neither subsidiaries nor associates are categorized as FVOCI pursuant to the irrevocable election available in
IFRS 9 for these instruments. The Company’s portfolio of equity securities is primarily focused on the mining sector. These are strategic investments and the Company
considers this classification to be more relevant.

Yamana Annual
Report 2018

143

Loans and
receivables

Available-for-
sale

Fair value
through
profit or loss

Derivative
instruments in
designated
hedge
accounting
relationships

Other financial
liabilities at
amortized cost

— $
8.1
—
—
—
—
—
22.8

30.9 $

— $
—
—
—
—

— $

— $
—
—
4.6
—
—
—
—

4.6 $

— $
—
—
—
—

— $

148.9 $
—
30.5
—
2.6
—
2.5
—

184.5 $

— $
—
—
8.5
—

8.5 $

— $
—
—
—
—
6.8
—
—
6.8 $

— $
—
5.7
—
—
5.7 $

— $
—
—
—
—
—
—
—

— $

1,857.7 $
345.4
—
—
164.6

2,367.7 $

Total

148.9
8.1
30.5
4.6
2.6
6.8
2.5
22.8

226.8

1,857.7
345.4
5.7
8.5
164.6

2,381.9

As at December 31, 2017

Financial assets
Cash and cash equivalents
Trade and other receivables
Receivables from provisional copper sales
Investments in equity securities
Warrants
Derivative assets - Hedging instruments
Derivative assets - Non-hedge
Other financial assets

Total financial assets

Financial liabilities
Total debt
Trade and other payables
Derivative liabilities - Hedging instruments
Derivative liabilities - Non-hedge
Other financial liabilities

Total financial liabilities

(b) Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. In assessing the fair value of a particular contract, the market participant would consider the credit risk
of the counterparty to the contract. Consequently, when it is appropriate to do so, the Company adjusts its valuation models to incorporate a
measure of credit risk.

Fair Value Measurements of Financial Assets and Financial Liabilities Measured at Fair Value

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments that are measured
at fair value:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the

measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or

indirectly.

Level 3: Unobservable inputs for the asset or liability.

144

Yamana Annual
Report 2018

The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized on the
Consolidated Balance Sheets at fair value on a recurring basis were categorized as follows:

Assets
Cash and cash equivalents
Receivables from provisional copper sales
Investments in equity securities
Warrants
Derivative related assets

Liabilities
Derivative related liabilities

December 31, 2018

December 31, 2017

Level 1
input

Level 2
input

Aggregate
fair value

Level 1
input

Level 2
input

Aggregate
fair value

98.5 $
—
9.1
—
—

— $

14.0
—
0.5
3.6

98.5 $
14.0
9.1
0.5
3.6

107.6 $

18.1 $

125.7 $

— $

6.5 $

148.9 $
—
4.6
—
—
153.5 $

— $
— $

— $

30.5
—
2.6
9.3

42.4 $

14.2 $

148.9
30.5
4.6
2.6
9.3

195.9

14.2

At December 31, 2018, there were no financial assets and liabilities measured and recognized at fair value on a non-recurring basis.

There were no transfers between Level 1 and Level 2 during the year ended December 31, 2018. At December 31, 2018, there were no
financial assets or liabilities measured and recognized on the Consolidated Balance Sheets at fair value that would be categorized as Level 3
in the fair value hierarchy.

ii) Valuation Methodologies Used in the Measurement of Fair Value for Level 2 Financial Assets and Financial Liabilities

Receivables from Provisional Copper Sales
The Company's copper concentrate sales are subject to provisional pricing with the final selling price adjusted at the end of the quotational
period. At the end of each reporting period, the Company's accounts receivable relating to these contracts are marked-to-market based
on quoted forward prices for which an active commodity market exists.

Warrants
The fair value of warrants is calculated using the Black-Scholes option pricing model, which uses a combination of quoted prices and
market-derived inputs, including volatility estimates.

Derivative Related Assets and Liabilities
The fair value of derivative instruments is determined using either present value techniques or option pricing models that utilize a variety
of inputs that are a combination of quoted prices and market-corroborated inputs. The Company continues to monitor the potential impact
of the recent instability of the financial markets, and will adjust its derivative contracts for credit risk based upon the credit default swap
spread for each of the counterparties as warranted.

iii) Carrying Value Versus Fair Value

Set out below is a comparison by class of the carrying amounts and fair value of the Company's financial instruments, other than those whose
carrying amounts are a reasonable approximation of fair value:

Debt
Senior notes

Financial instrument
classification

Carrying amount

Fair value (i)

Carrying amount

Fair value (i)

December 31, 2018

December 31, 2017

Amortized cost

1,465.3 $

1,455.0 $

1,754.8 $

1,751.5

Yamana Annual
Report 2018

145

(i)

The Company's senior notes are accounted for at amortized cost, using the effective interest method. The fair value required to be disclosed is determined by discounting
the future cash flows by a discount factor based on an interest rate of 5%, which reflects the Company's own credit risk.

Management assessed that the fair values of trade and other receivables, trade and other payables, and other financial assets and liabilities
approximate their carrying amounts, largely due to the short-term maturities of these instruments. Derivative assets and liabilities are already
carried at fair value.

c) Derivative Instruments ("Derivatives")

Summary of Derivatives at December 31, 2018

Average call
strike price
(per USD)

Average put
strike price
(per USD)

Notional Amount

Cash flow

Remaining term

hedge Non-hedge

Fair value
(USD)

Currency contracts
Brazilian real option contracts ($R millions) (i)
Brazilian real option contracts ($R millions) (i)
Brazilian real option contracts ($R millions) (i)

R$3.15
R$3.75
R$3.75

R$3.47
R$4.74
R$4.87

January - June 2019
January - December 2019
July - December 2019

180.0 $
348.0
135.0

— $
—
—

(5.9)
1.1
0.5

Commodity contracts
Copper forward contracts (millions of pounds) (ii)

Average sales price (USD)
$2.79

January - May 2019

—

25.7

2.0

Other

Per share value (CAD)

DSU contracts (millions of DSUs) (ii)

$3.5002

January 2019 -
March 2020

—

3.0

(0.6)

(i)

(ii)

The Company has designated zero cost collar option contracts as cash flow hedges for its highly probable forecasted Brazilian Real expenditure requirements. The Company
has elected to only designate the change in the intrinsic value of options in the hedging relationships. The change in fair value of the time value component of options is
recorded in OCI as a cost of hedging. These cash flow hedges are expected to cover approximately 63% of the Brazilian Real denominated forecasted operating costs from
January 2019 to December 2019.

The Company currently uses forward contracts to economically hedge against the risk of declining copper prices for a portion of its forecast copper concentrate sales. As at
December 31, 2018, the Company had 25.7 million pounds of copper forward contracts in place to May 2019 at an average sales price of $2.79 per pound. In addition, as
part of the copper advanced sales program for which $125.0 million was received in January 2018, the Company has effectively hedged approximately 16.3 million pounds
of copper at $3.26 per pound, to be delivered in the first half of 2019 (refer Note 26: Other Provisions and Liabilities). This production represents approximately 28% of
planned production over this period.

(iii) During the first quarter of 2017, the Company entered into a derivative contract to mitigate the volatility of its share price on DSU compensation, effectively locking in the

exposure of the Company for three million DSUs (approximately 80% of outstanding DSUs) at a value of C$3.5002 per share.

Fair values of Derivatives

At as December 31,

Derivatives designated as hedging instruments
Currency contracts

Total derivatives designated as hedging instruments
Derivatives not designated as hedging instruments
Commodity contracts
DSU contracts

Total derivatives not designated as hedges
Total derivative instruments (Note 19 and Note 25)

Asset derivatives

Liability derivatives

2018

2017

2018

2017

$
$

1.6 $

2.0
—

2.0 $
3.6 $

6.8 $
6.8 $

1.5
1.0
2.5 $
9.3 $

5.9 $

—
0.6

0.6 $
6.5 $

5.7

8.5
—

8.5
14.2

146

Yamana Annual
Report 2018

Cash Flow Hedge Gains (Losses) in Accumulated Other Comprehensive Income (“AOCI”)

Gain (loss) recognized in cash flow
hedge reserve

Gain (loss) reclassified or adjusted
from cash flow hedge reserve

2018

2017

2018

2017

For the year ended December 31,
Exchange rate risk
Brazilian real option contracts

Time value of option contracts excluded from hedge relationship

Gains (Losses) on Non-hedge Derivatives

(15.9)

(15.9)$
5.4

(10.5)$

5.9

5.9 $
(6.0)

(0.1) $

The net gain (loss) on derivatives not designated as hedging instruments was comprised of the following:

For the years ended December 31,

Realized gains (losses)
Commodity contracts

Unrealized gains (losses)
Foreign currency contracts
Commodity contracts
DSU contracts

3.4
3.4 $
—
3.4 $

2018

6.7
6.7 $

(0.5)$
9.8
(1.6)
7.7 $

(0.3)

(0.3)
—

(0.3)

2017

(27.4 )

(27.4)

—
(9.4 )
1.0

(8.4)

17.

FINANCIAL RISK MANAGEMENT

i) Market Risk

Market risk is the risk that changes in market factors, such as foreign exchange, commodity prices or interest rates will affect the value of the
Company's financial instruments. Market risks are managed by either accepting the risk or mitigating it through the use of derivatives and other
economic hedges.

i. Currency Risk

Details of outstanding derivative instruments can be found in Note 16: Financial Instruments section (c).

Yamana Annual
Report 2018

147

The following table outlines the Company's exposure to currency risk and the pre-tax effects on profit or loss and equity at the end of the
reporting period of a 10% change in the foreign currency for the foreign currency denominated monetary items. The sensitivity analysis includes
cash and cash equivalents and trade payables. The number below indicates an increase or decrease in profit or equity where the US dollar
strengthens or weakens by 10% against the relevant foreign currency.

(On 10% change in US Dollars exchange rate)

Brazilian Real
Argentine Peso
Canadian Dollar
Chilean Peso

Effect on net earnings
before tax
2018

$
$
$
$

5.0 $
1.9 $
2.9 $
5.6 $

Effect on other comprehensive
income, before tax

2018

2017

1.2 $
— $
— $
— $

0.5
—
—
—

2017
4.0 $
1.0 $
8.1 $
4.4 $

The sensitivity analysis included in the tables above should be used with caution as the results are theoretical, based on management's best
assumptions using material and practicable data which may generate results that are not necessarily indicative of future performance. In
addition, in deriving this analysis, the Company has made assumptions based on the structure and relationships of variables as at the balance
sheet date which may differ due to fluctuations throughout the year with all other variables assumed to remain constant. Actual changes in one
variable may contribute to changes in another variable, which may amplify or offset the effect on earnings.

ii. Commodity Price Risk

During the third quarter of 2017, the Company entered into a portfolio of zero cost collar contracts for copper with a number of counterparties.
The arrangement was comprised of written call and purchased put options with identical characteristics and a range of strike prices that expired
over a six month period from January to June 2018. Total notional quantities included under this arrangement amounted to approximately 45
million pounds of copper (approximately 7.5 million pounds per month). The weighted average strike prices of the options were $2.85 per pound
and $3.33 per pound for the put and call options, respectively, comprising the boundaries of the collar.

During the third quarter of 2017, the Company also entered into a portfolio of zero cost collar contracts for gold with a number of counterparties.
The arrangement was comprised of written call and purchased put options with identical characteristics and a range of strike prices that expired
over a six month period from October 2017 to March 2018. Total notional quantities included under this arrangement amounted to 284,200
ounces of gold. The weighted average strike prices of the options were $1,300 per ounce and $1,414 per ounce for the put and call options,
respectively, comprising the boundaries of the collar.

As at December 31, 2018 the Company had $14.0 million (December 31, 2017: $30.5 million) in receivables relating to provisionally priced
concentrate sales. For the year ended December 31, 2018, the Company had unrecognized losses of $1.2 million (2017: $4.0 million gain) on
receivables relating to provisionally priced concentrate sales.

As at December 31, 2018, the Company has outstanding contracts whereby 25.7 million pounds of copper were purchased at a price of $2.79
per pound. The Company periodically uses forward contracts to economically hedge against the risk of declining copper prices for a portion of
its forecast copper concentrate sales.

148

Yamana Annual
Report 2018

The Company's balance sheet exposure to commodity prices is limited to the trade receivables associated with provisional pricing of metal
concentrate sales, particularly copper, and the copper forward contracts. A 10% change in the average metal prices at the balance sheet date
with all other variables constant would result in the following impact to the Company's before tax earnings:

(10% change in price)

Gold in concentrate
Copper in concentrate
Silver in concentrate

Effects on net earnings, before tax

$
$
$

2018

0.8 $
4.8 $
— $

2017

2.0
5.0
—

The change in the average commodity prices will not have an impact on Other Comprehensive Income.

iii.

Interest Rate Risk

As at December 31, 2018, the majority of the Company’s long-term debt was at fixed rates. The Company is exposed to interest rate risk on its
variable rate debt and may enter into interest rate swap agreements to hedge this risk. The Company did not have any interest rate swaps as
at December 31, 2018.

ii) Credit Risk

Cash and cash equivalents are deposited with highly rated corporations and the credit risk associated with these deposits is low. The Company
sells its products to large international financial institutions and other organizations with high credit ratings. Historical levels of receivable
defaults and overdue balances over normal credit terms are both negligible, thus the credit risk associated with trade receivables is also
considered to be negligible. For derivatives, the Company assumes no credit risk when the fair value of the instruments is negative. When the
fair value of the instruments is positive, this is a reasonable measure of credit risk. The Company does not have any assets pledged as
collateral.

The Company's maximum credit exposure to credit risk is as follows:

As at December 31, 2018

Cash and cash equivalents
Trade and other receivables
Derivative related assets (Note 19)
Other current and non-current financial assets

2018
98.5 $
24.3
3.6
13.1
139.5 $

2017
148.9

38.6

9.3
22.8

219.6

Yamana Annual
Report 2018

149

iii) Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by
delivering cash or another financial asset. Under the terms of the Company's trading agreements, counterparties cannot require the Company
to immediately settle outstanding derivatives except upon the occurrence of customary events of default. The Company mitigates liquidity risk
through the implementation of its Capital Management Policy by managing its capital expenditures, forecast and operational cash flows, and
by maintaining adequate lines of credit. The Company manages its capital structure and adjusts it in light of general economic conditions, the
risk characteristics of the underlying assets and the Company’s working capital requirements. In order to maintain or adjust its capital structure,
the Company, upon approval from its Board of Directors, may issue shares, pay dividends, or undertake other activities as deemed appropriate
under the specific circumstances. As part the capital allocation strategy, the Company examines opportunities to divest assets that do not meet
the Company’s investment criteria. In addition, the Company addresses the capital management process as described in Note 32: Capital
Management. Contractual maturities relating to long-term debt and operating leases are included in Note 27: Long-Term Debt and Credit
Facilities and Note 34: Operating Leases, respectively.

As at December 31,

2018

2017

Within 1
year

2 - 3
years

4 - 5
years

Over 5
years

Total

Accounts payable and accrued liabilities
Debt repayments
Interest payments on debt
Decommissioning, restoration and similar liabilities (i)

294.8 $
1.9
82.0
9.5

84.1
157.5
27.1

— $

294.8 $

748.9
127.8
21.5
898.2 $

935.7
69.9
514.4
1,520.0 $

1,770.5
437.2
572.5

345.4
1,872.0
484.6
575.2

388.2 $

268.7 $

3,075.0 $ 3,277.2

(i)

Undiscounted inflated amount of future decommissioning, restoration and similar expenditures expected to take place between 2019 and 2119. Certain obligations related
to post closure monitoring and maintenance at the Company's Chilean mines are expected to continue in perpetuity.

18.

INVENTORIES

As at December 31,

Product inventories
Work in process
Ore stockpiles
Materials and supplies

Less: non-current ore stockpiles included in other non-current assets (Note 20)

2018
55.8 $
12.6
209.0
95.6
373.0 $
(192.0)
181.0 $

2017

35.6
14.1
126.6
93.7

270.0
(106.5)

163.5

For the year ended December 31, 2018, a total charge of $13.8 million was recorded to adjust inventory to net realizable value (2017: $11.2
million), which is included in cost of sales excluding depletion, depreciation and amortization.

150

Yamana Annual
Report 2018

19.

OTHER FINANCIAL ASSETS

As at December 31,

Derivative assets (Note 16)
Royalty and other receivables
Investments in financial securities (i)
Other

Current
Non-current

$
$

2018

3.6 $
12.9
9.6
0.2
26.3 $
7.4 $
18.9
26.3 $

2017

9.3
21.0
7.2
1.8

39.3
13.2
26.1

39.3

(i)

Investments in financial securities include equity securities and warrants with a cost of $25.3 million (December 31, 2017: $16.4 million) and a fair value of $9.6 million
(December 31, 2017: $7.2 million).

20.

OTHER ASSETS

As at December 31,

Non-current portion of ore stockpiles (Note 18) (i)
Income tax recoverable and installments
Tax credits recoverable (ii)
Advances and deposits
Other long-term advances

Current
Non-current

$
$

2018
192.0 $
9.3
95.2
42.9
12.7
352.1 $
118.0 $
234.1
352.1 $

2017

106.5
23.1
118.8
53.1
15.2

316.7
119.4
197.3

316.7

(i)

(ii)

Non-current ore stockpiles represent material not scheduled for processing within the next twelve months at the Company's Chapada, Jacobina and Canadian Malartic
mines. Comparatives, which were previously included in Property, Plant and Equipment, have been reclassified to reflect the change in presentation adopted in the current
period. At January 1, 2017, the non-current ore stockpile balance was $28.3 million.
Tax credits recoverable consist of sales taxes which are recoverable either in the form of a refund from the respective jurisdictions in which the Company operates or against
other taxes payable and value-added tax.

Yamana Annual
Report 2018

151

Total (i)

13,437.1
415.5

102.1

(1,491.3)

21.

PROPERTY, PLANT AND EQUIPMENT

Mining properties

Depletable (ii)

Non-
depletable

Land,
building,
plant &
equipment

Construction
in progress
(iii)

Exploration &
evaluation

Cost
At January 1, 2018
Additions (iii)
Reclassifications, transfers and other non cash
movements (iv)
Gross cost reclassified as held for sale and disposals

At December 31, 2018
Accumulated depletion, depreciation and
amortization ("DDA") and impairment
At January 1, 2018
DDA
Impairment and impairment reversal (v)
Gross accumulated DDA and impairment eliminated
on reclassification as held for sale and disposals
At December 31, 2018
Carrying amount, December 31, 2018

5,527.0
148.0

313.0

(608.2)

1,708.6
130.4

(221.3)

(204.2)

2,490.4
64.0

310.4

(682.1)

5,379.8 $

1,413.5 $

2,182.7 $

(3,270.9)
(285.8)
99.0

188.4

(786.4)
—
—

469.9

(1,398.5)
(157.3)
(26.2)

302.8

$
$

(3,269.3)$
2,110.5 $

(316.5)$
1,097.0 $

(1,279.2)$
903.5 $

261.6
58.6

(320.2)

—
— $

—
—
—

—

— $
— $

3,449.5
14.5

20.2

3.2

3,487.4 $

12,463.4

(828.1)
—
(73.8)

—

(901.9)$
2,585.5 $

(6,283.9)
(443.1)
(1.0)

961.1

(5,766.9)
6,696.4

Mining properties

Depletable (ii)

Non-
depletable

Land,
building,
plant &
equipment

Construction
in progress
(iii)

Exploration &
evaluation

Total (i)

Cost
At January 1, 2017
Additions (iii)
Reclassification, transfers and other non-cash
movements (iv)
Gross cost reclassified as held for sale and disposals

At December 31, 2017
Accumulated depletion, depreciation and
amortization ("DDA") and impairment
At January 1, 2017
DDA
Impairment (v)
Gross accumulated DDA and impairment eliminated
on reclassification as held for sale and disposals
At December 31, 2017
Carrying amount, December 31, 2017

$
$

5,860.4 $
231.9

1,708.9 $
62.7

2,745.2 $
94.1

89.6 $
172.0

4,155.3 $
46.8

14,559.4
607.5

146.9

226.3

(29.2)

—

(291.7)

52.3

(712.2)

(289.3)

(319.7)

5,527.0 $

1,708.6 $

2,490.4 $

—
261.6 $

(460.9)

(1,782.1)

3,449.5 $

13,437.1

(3,569.4) $
(224.9)
(129.7)

(1,032.7) $

—
(7.5)

(1,370.7 ) $
(212.4)
(80.4)

653.1

253.8

265.0

(3,270.9) $
2,256.1 $

(786.4) $
922.2 $

(1,398.5 ) $
1,091.9 $

— $
—
—
—

— $
261.6 $

(1,048.5) $

—

(138.9)

359.3

(828.1) $
2,621.4 $

(7,021.3 )
(437.3)
(356.5)

1,531.2

(6,283.9 )
7,153.2

152

Yamana Annual
Report 2018

(i)

(ii)

In the current year, the Company has enhanced its disclosures to separately identify exploration and evaluation assets and provide further clarity on the movements during
the years presented. Comparative balances reflect the change in presentation adopted in the current year.

At December 31, 2018, the carrying amount of capitalized production phase stripping costs totalled $257.5 million (December 31, 2017: $355.6 million). The following table
reconciles the movements in the balance in the respective years:

Balance, beginning of year
Additions
Amortization
Reclassified as held for sale (Note 6)

Balance, end of year

2018
355.6 $
41.0
(32.6)
(106.5)
257.5 $

2017

285.3
135.2
(18.2)
(46.7)

355.6

(iii) During the year, the Company recognized capitalized interest of $8.3 million (2017: $11.3 million) related to qualifying capital expenditures at Cerro Moro and had a weighted

average borrowing rate of 4.59% and 4.69% during the years ended December 31, 2018 and 2017, respectively.

(iv) Reclassifications, transfers and other non-cash movements includes non-cash additions to PPE and changes in decommissioning, restoration and similar liabilities as noted

in Note 28: Decommissioning, Restoration, and Similar Liabilities.

(v) During the year, the Company recognized an impairment charge totalling $151.0 million related to Minera Florida and an impairment reversal of $150.0 million related to

Jacobina (2017: impairment of $356.5 million related to Gualcamayo). Refer to Note 12: Impairment and Reversal of Impairment for additional details.

(vi)

In addition to entering into various operational commitments in the normal course of business, the Company had commitments of approximately $17.4 million at December
31, 2018 for construction activities at its sites and projects.

22.

GOODWILL AND OTHER INTANGIBLE ASSETS

Cost
At January 1, 2018 and December 31, 2018
Accumulated amortization and impairment
At January 1, 2018
Amortization
Impairment (Note 12)

At December 31, 2018
Net book value at December 31, 2018

Cost
At January 1, 2017
Reclassified as held for sale

At December 31, 2017
Accumulated amortization and impairment
At January 1, 2017
Amortization

At December 31, 2017
Net book value at December 31, 2017

Goodwill (i)

Other intangible
assets (ii)

403.7

—
—
(45.0)

(45.0)
358.7

77.6

(31.8)
(4.7)
—
(36.5)
41.1

Goodwill (i)

Other intangible
assets (ii)

427.7
(24.0)

403.7

—
—

—
403.7

79.0
(1.4)
77.6

(25.7)
(6.1)

(31.8)
45.8

Total

481.3

(31.8)
(4.7)
(45.0)

(81.5)
399.8

Total

506.7
(25.4)

481.3

(25.7)
(6.1)

(31.8)
449.5

(i)

Goodwill represents the excess of the purchase cost over the fair value of net assets acquired on a business acquisition. On June 16, 2014, the Company acquired a 50%
interest in Canadian Malartic. Goodwill of $427.7 million was recognized on the excess of the purchase consideration over the fair value of the assets and liabilities acquired.
On December 21, 2017, the Company announced that it had entered into an agreement to sell certain jointly owned exploration properties of the Canadian Malartic

Yamana Annual
Report 2018

153

Corporation. At December 31, 2017, the sale was considered highly probable and the exploration properties' assets were reclassified to assets held for sale, including $24.0
million of goodwill allocated to the exploration properties. The sale was completed in March 2018. Refer Note 6: Divestitures.
Other intangible assets primarily comprise capitalized system development costs.

(ii)

23.

INVESTMENT IN ASSOCIATE

Details of the Company's investment in associate are as follows:

Name of Associate

Principal
activity
Leagold Mining Corporation (i) Gold mining

Measurement
method
Equity method

Country of
incorporation
Canada

Principal place
of business
Brazil, Mexico

% ownership
interest

Quoted fair
value (i)

20.5%$

73.7 $

Carrying
amount
146.0

(i) On May 24, 2018, the Company completed the disposal of its 53.6% controlling interest in Brio Gold to Leagold. Pursuant to the terms of the sale, the Company received
20.5% of Leagold's issued and outstanding shares. Refer to Note 6: Divestitures. Earnings of Leagold have been included in the earnings of the Company since acquisition.
(ii) The fair value of the Company's interest in Leagold, which is listed on the TSX, was based on the quoted market price at December 31, 2018, which is a Level 1 input in

terms of IFRS 13.

As at December 31, 2018

For the purposes of applying the equity method of accounting, the consolidated financial statements of Leagold as at September 30, 2018 have
been used and appropriate adjustments have been made for the effects of significant transactions between that date and December 31, 2018.

The following table summarizes the change in the carrying amount of the Company's investment in associate:

Balance as at January 1, 2018
Acquisition of interest in Leagold (Note 6)
Company's share of net earnings of Leagold

Balance as at December 31, 2018

2018

—
140.5
5.5

146.0

Summarized financial information in respect of the Company’s associate is set out below. The summarized financial information below
represents amounts in the associate's consolidated financial statements prepared in accordance with IFRS, adjusted for fair value adjustments
at acquisition and differences in accounting policies.

Summarized Consolidated Balance Sheet Information

As at December 31,

Current assets
Non-current assets

Total assets
Current liabilities
Non-current liabilities

Total liabilities
Net assets
Company's share of net assets
Goodwill
Carrying Amount

Summarized Consolidated Statement of Operations Information

For the period from May 24 to December 31,

Revenue
Net earnings

Company's share of net earnings

$
$

2018

190.0
852.2

1,042.1
142.4
317.1

459.5
582.7
119.5
26.5
146.0

2018

279.0
26.8

5.5

154

Yamana Annual
Report 2018

24.

TRADE AND OTHER PAYABLES

As at December 31,

Trade payables
Other payables (i)

(i)

Other payables include dividends, salaries, bonuses, pension, and interest payable, among other accruals.

25.

OTHER FINANCIAL LIABILITIES

As at December 31,

Royalty payable (i)
Payable related to purchase of mineral interests (ii)
Severance accrual
Deferred share units/performance share units liability (Note 30)
Accounts receivable financing credit (iii)
Current portion of long-term debt (Note 27)
Derivative liabilities (Note 16)
Other

Current
Non-current

$
$

2018
221.3 $
73.5
294.8 $

2018
16.8 $
—
33.9
18.6
40.6
1.9
6.5
20.0
138.3 $
62.3 $
76.0
138.3 $

2017

256.4
89.0

345.4

2017

18.1
10.8
32.0
21.0
54.1
110.0
14.2
28.6

288.8
203.1
85.7

288.8

(i)

(ii)
(iii)

Included in Royalty payable is an agreement with Miramar Mining Corporation (“Miramar” acquired by Newmont Mining Corporation) for a Proceeds Interest of C$15.4
million. The agreement entitles Miramar to receive payment of this interest over time calculated as the economic equivalent of a 2.5% net smelter return royalty on all
production from the Company’s mining properties held at the time of Northern Orion entering into the agreement, or 50% of the net proceeds of disposition of any interest in
the Agua Rica property until the Proceeds Interest of C$15.4 million is paid. Since inception, partial payments of $6.0 million and appreciation of the US Dollar have resulted
in the liability being measured at $5.0 million as at December 31, 2018. Also included in Royalty payable is $10.5 million of amounts payable by Canadian Malartic.
Payable related to purchase of the remaining interests in Agua Fria, which was completed in 2018.
Accounts receivable financing credit is payable within 30 days from the proceeds on concentrate sales.

26.

OTHER PROVISIONS AND LIABILITIES

As at December 31,

Other taxes payable
Provision for repatriation taxes payable (i)
Provision for taxes
Deferred revenue on metal agreements - Altius (ii)
Deferred revenue on metal agreements - Sandstorm (iii)
Deferred revenue on advanced metal sales - other (iv)
Other provisions and liabilities (v)

Current
Non-current

$
$

2018
17.4 $
23.8
21.9
58.5
169.8
52.3
52.2
396.0 $
106.8 $
289.2
396.0 $

2017

15.8
22.9
25.6
57.5
158.5
—
73.0

353.3
56.7
296.6

353.3

(i)

The Company is subject to additional taxes in Chile on the repatriation of profits to its foreign shareholders. Total taxes in the amount of $23.8 million (December 31, 2017:
$22.9 million) have been accrued on the assumption that the profits will be repatriated.

(ii)

On March 31, 2016, the Company entered into a copper purchase agreement with Altius, pursuant to which, the Company received advanced consideration of $61.1 million
against future deliveries of copper produced by the Company's Chapada mine in Brazil. The advanced consideration is accounted for as deferred revenue, with revenue
recognized when copper is delivered to Altius.

Yamana Annual
Report 2018

155

The following table summarizes the changes in deferred revenue:

Balance as at December 31, 2017

Adjustment on initial adoption of IFRS 15 (Note 5)

Adjusted balance at January 1, 2018

Recognition of revenue during the year net of interest accretion

Current portion

Non-current portion

Balance as at December 31, 2018

2018
57.5

3.4

60.9

(2.4)

58.5

2.1

56.4

58.5

(iii) On October 27, 2015 the Company entered into three metal purchase agreements with Sandstorm pursuant to which, the Company received advanced consideration of
$170.4 million against future deliveries of silver production from Cerro Moro, Minera Florida and Chapada, copper production from Chapada, and gold production from Agua
Rica. The advanced consideration is accounted for as deferred revenue, with revenue recognized when the respective metals are delivered to Sandstorm.

The following table summarizes the changes in deferred revenue:

Balance as at December 31, 2017

Adjustment on initial adoption of IFRS 15 (Note 5)

Adjusted balance at January 1, 2018

Recognition of revenue during the year net of interest accretion

Current portion

Non-current portion

Balance as at December 31, 2018

2018
158.5

13.0

171.5

(1.7)

169.8

14.0

155.8

169.8

(iv) On January 10, 2018, the Company entered into an advanced metal sales agreement pursuant to which, the Company received advanced consideration of $125.0 million
in exchange for approximately 40.3 million pounds of copper to be delivered in the second half of 2018 and the first half of 2019. The advanced consideration is accounted
for as deferred revenue, with revenue recognized as copper is delivered to the counterparty. As the Company received consideration more than a year in advance of
completion of delivery, the Company has accounted for the financing component in the transaction. Accordingly, in the year to December 31, 2018, the Company recognized
interest expense of $5.3 million, with a corresponding increase to the deferred revenue balance. During the year ended, the Company completed deliveries of copper under
the arrangement and recognized revenue of $78.0 million.

(v)

Other provisions and liabilities include provisions relating to the short term portion of decommissioning, restoration and similar liabilities, silicosis and other. Decrease during
the year reflects, settlements, change in provisions and the depreciation of local currencies.

156

Yamana Annual
Report 2018

27.

LONG-TERM DEBT AND CREDIT FACILITIES

As at December 31,

Senior Notes
$300 million notes issued December 2017
4.625% 10-year notes due December 2027
$500 million notes issued June 2014
4.95% 10-year notes due July 2024
$300 million notes issued June 2013
Series A - 3.64% 5-year notes due June 2018 ($35 million)
Series B - 4.78% 10-year notes due June 2023 ($265 million)
$500 million notes issued March 2012
Series A - 3.89% 6-year notes due March 2018 ($75 million)
Series B - 4.36% 8-year notes due March 2020 ($85 million)
Series C - 4.76% 10-year notes due March 2022 ($200 million)
Series D - 4.91% 12-year notes due March 2024 ($140 million)
$270 million notes issued December 2009
Series C - 6.97% 10-year notes due December 2019 ($181.5 million)

Revolving Credit Facilities
$1.0 billion credit facility (a)
$75.0 million credit facility (b)

Debt from 50% interest in Canadian Malartic

Total debt (i)
Less: current portion of long-term debt (Note 25)
Long-term debt

2018

2017

296.8

496.8

—
260.4

—
84.0
192.1
135.2

—
1,465.3

291.5
—

1.9
1,758.7
(1.9)
1,756.8

297.5

496.2

34.9
260.2

73.6
83.9
192.0
135.1

181.4
1,754.8

27.0
72.6

3.3
1,857.7
(110.0)
1,747.7

(i)

Balances are net of transaction costs of $11.8 million, net of amortization (December 31, 2017: $14.3 million).

Senior Notes

The Company's senior notes are unsecured and interest is payable semi-annually. Each series of senior notes is redeemable, in whole or in
part, at the Company's option, at any time prior to maturity, subject to make-whole provisions. The senior notes are accreted to the face value
over their respective terms.

On January 29, 2018, the Company redeemed $181.5 million of 6.97% senior notes due December 2019 at a make-whole price of 108.12.

Revolving Credit Facilities

(a) In June 2018, the Company extended the term of its $1.0 billion revolving credit facility from September 2021 to June 2023, under existing
terms and conditions. The revolving credit facility is unsecured and has an interest rate on drawn amounts of LIBOR plus an interest margin of
between 1.20% and 2.25% depending on the Company's credit rating, and a commitment fee of between 0.24% and 0.45% depending on the
Company's credit rating. During the year the Company drew $460.0 million and repaid $195.0 million on the revolving credit facility.

(b) The $75.0 million revolving facility was entered into by Brio Gold. The Company's interest in Brio Gold was disposed of on May 24, 2018.
Refer to Note 6: Divestitures.

The senior notes and revolving credit facility are subject to various financial and general covenants. The principal covenants are tangible net
worth of at least $2.3 billion; maximum net total debt (debt less cash) to tangible net worth of 0.75; and leverage ratio (net total debt/EBITDA)
to be less than or equal to 3.5:1. The Company was in compliance with all covenants as at December 31, 2018.

Yamana Annual
Report 2018

157

Scheduled Debt Repayments

Senior notes
$1.0 billion credit facility
Debt from 50% interest in Canadian Malartic

2019

2020

2021

2022

— $
—
1.9

1.9 $

84.1 $
—
—

84.1 $

— $
—
—

— $

192.7 $
—
—

192.7 $

2023
261.2 $
295.0
—
556.2 $

2024 and
thereafter

935.6 $
— $
— $

Total

1,473.6
295.0
1.9

935.6 $

1,770.5

28.

DECOMMISSIONING, RESTORATION AND SIMILAR LIABILITIES

The Company incurs decommissioning, restoration and similar liabilities relating to its operating, inactive and closed mines and development
projects. Significant decommissioning and restoration activities include land rehabilitation, demolition of buildings and mine facilities, ongoing
care and maintenance and monitoring.

The Company estimates future decommissioning and restoration costs based on the level of current mining activity and estimates of costs
required to fulfill the Company’s future obligations. Changes in decommissioning and restoration provision estimates during the period reflect
changes in cash flow estimates as well as assumptions including discount and inflation rates.

At December 31, 2018, the present value of decommissioning and restoration liabilities relating to the Company's mining properties was
estimated at $250.3 million (December 31, 2017: $274.3 million) using discount rates specific to the liabilities ranging between 2.14% and
11.41% (December 31, 2017: 1.99% and 16.63%). The undiscounted value of these liabilities was $365.1 million (December 31, 2017: $413.4
million).

The following table reconciles the beginning and ending carrying amounts of the Company's decommissioning and restoration liabilities. The
majority of the expenditures are expected to take place between 2019 and 2119. Certain obligations related to post closure monitoring and
maintenance at the Company's Chilean mines are expected to continue in perpetuity

Balance, beginning of year
Accretion expense included in finance costs
Revisions in estimates and obligations
Expenditures during the current year
Foreign exchange impact
Reclassified to liabilities relating to assets held for sale

Balance, end of year
Current (i)
Non-current

$
$

2018
274.3 $
14.9
31.2
(5.3)
(30.6)
(34.2)
250.3 $
9.1 $

241.2
250.3 $

2017

235.6
26.7
47.6
(4.6)
(3.9)
(27.1)

274.3
16.1
258.2

274.3

(i)

The current portion of decommissioning, restoration and similar liabilities is included in the current portion of Note 26: Other Provisions and Liabilities.

Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated decommissioning, restoration and similar
obligations. As at December 31, 2018, the Company had outstanding letters of credit in the amount of $57.4 million (C$78.3 million) (December
31, 2017: $18.7 million (C$25.1 million)) representing guarantees for reclamation obligations and road construction relating to the Company's
share of mining interest in Canadian Malartic, and $13.6 million representing guarantees for reclamation obligations relating to the Company's
US properties. These letters of credit are automatically extended for one year periods from their expiration dates.

158

Yamana Annual
Report 2018

29.

SHARE CAPITAL

(a) Common Shares Issued and Outstanding

The Company is authorized to issue an unlimited number of common shares at no par value and a maximum of eight million first preference
shares. There were no first preference shares issued or outstanding as at December 31, 2018 (2017: nil).

For the years ended December 31,

2018

2017

Issued and outstanding - 949,341,830 common shares
(December 31, 2017 - 948,524,667 common shares):

Balance, beginning of year
Issued on vesting of restricted share units
Dividend reinvestment plan (i)

Balance, end of year

Number of
common shares

(In thousands)

948,525 $
687
130

949,342 $

Amount
(In millions)
7,633.7
2.3
0.4
7,636.4

Number of
common shares

(In thousands)

947,798 $
591
136

948,525 $

Amount
(In millions)

7,630.5
2.9
0.3

7,633.7

(i)

The Company has a dividend reinvestment plan to provide holders of common shares a simple and convenient method to purchase additional common shares by electing
to automatically reinvest all or any portion of cash dividends paid on common shares held by the plan participant without paying any brokerage commissions, administrative
costs or other service charges. As at December 31, 2018, a total of 11,825,042 shares have subscribed to the plan.

(b) Dividends Paid and Declared

For the years ended December 31,

Dividends paid
Dividends declared in respect of the year
Dividend paid (per share)
Dividend declared in respect of the year (per share)

30.

SHARE-BASED PAYMENTS

$
$
$
$

2018
19.0 $
19.2 $
0.02 $
0.02 $

2017

18.9
19.4
0.02
0.02

The total expense relating to share-based payments includes accrued compensation expense related to plans granted in the current period,
plans granted in the prior period and adjustments to compensation associated with mark-to-market adjustments on cash-settled plans, as
follows:

For the years ended December 31,

Accrued expense on equity-settled compensation plans
Accrued expense on cash-settled compensation plans

Total expense for instruments granted
Compensation expense for Brio Gold
Mark-to-market change on cash-settled plans

Total expense recognized as compensation expense

As at December 31,

Total carrying amount of liabilities for cash-settled arrangements (Note 25)

2018

4.9 $
0.9
5.8 $
0.3
(0.8)
5.3 $

2018
18.6 $

2017

3.3
4.4

7.7
7.0
(2.1)

12.6

2017
21.0

The following table summarizes the equity instruments outstanding related to share-based payments.

As at December 31, (In thousands)

Share options outstanding (i), (ii), (iii)
Restricted share units ("RSU") (iv)
Deferred share units ("DSU") (v)
Performance share units ("PSU") (vi)

Yamana Annual
Report 2018

159

2018
1,772
2,284
4,802
2,457

2017

1,831
1,474
4,288
2,521

(i)
(ii)

The aggregate maximum number of common shares that may be reserved for issuance under the Company's Share Incentive Plan is 24.9 million (2017: 24.9 million).
Share options outstanding at December 31, 2018 had a weighted average exercise price of C$7.80 (December 31, 2017: C$7.75). As at December 31, 2018,1,772,365
share options with a weighted average exercise price of C$7.80 were exercisable (December 31, 2017: 1,662,521 share options with a weighted exercise price of C$8.00).

(iii) During the year ended December 31, 2018, no share options were granted, and 58,851 share options expired.
(iv) During the year ended December 31, 2018, the Company granted 1,676,232 RSUs with a weighted average grant date fair value of C$4.14 per RSU; a total of 687,472
RSUs vested and the Company credited $2.3 million (2017: $2.9 million) to share capital in respect of RSUs that vested during the period. There were a total of 178,931
RSUs cancelled during the year ended December 31, 2018.
During the year ended December 31, 2018, the Company granted 513,713 DSUs and recorded an expense of C$1.9 million. During the first quarter of 2017, the Company
entered into a derivative contract to mitigate the volatility of share price on DSU compensation, effectively locking in the exposure of the Company for 3 million DSUs
(approximately 80% of outstanding DSUs) at a value of C$3.5002 per share. For the year ended December 31, 2018, the Company recorded a mark-to-market gain on
DSUs of $2.4 million and a mark-to-market loss on the DSU hedge of $1.6 million.

(v)

(vi) During the year ended December 31, 2018, 1,210,742 PSU units were granted. This PSU plan has an expiry date on December 31, 2020 and had a fair value of C$2.53

per unit at December 31, 2018. There were payouts of 1,296,342 PSU units during the year ended December 31, 2018.

31.

NON-CONTROLLING INTERESTS

As at December 31,

Agua De La Falda S.A. (i)
Brio Gold Inc. (ii)
Estelar Resources Ltd (iii)

2018
18.7 $
—
16.0
34.7 $

2017

18.7
115.2
—

133.9

(i)

(ii)

The Company holds a 56.7% interest in the Agua De La Falda ("ADLF") project along with Corporación Nacional del Cobre de Chile ("Codelco"). The ADLF project is an
exploration project that includes the Jeronimo Deposit and is located in northern Chile.
The Company held approximately 53.6% of the issued and outstanding shares of Brio Gold as at December 31, 2017. On May 24, 2018, the Company completed the sale
of its 53.6% controlling interest in Brio Gold to Leagold and deconsolidated the subsidiary. Refer to Note 6: Divestitures.

(iii) During the second quarter of 2018, the Company entered into an arrangement with Fomento Minero de Santa Cruz S.E. ("FOMICRUZ") pursuant to which, FOMICRUZ is
entitled to certain subordinated shares in the legal entity that directly owns Cerro Moro, Estelar Resources Ltd. These subordinated shares entitle FOMICRUZ to a 5%
interest in future dividends after the Company's investment in Cerro Moro, which includes construction and development along with acquisition costs, has been recovered
in full. As part of the arrangement and as further consideration to the Company, the right to use the land related to the Bahía Laura properties, a significant land package to
the west and south west of Cerro Moro, was obtained at an approximate value of $16.0 million.

32.

CAPITAL MANAGEMENT

The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic
acquisitions, to ensure the externally imposed capital requirements relating to its long-term debt are being met, and to provide returns to its
shareholders. The Company defines capital that it manages as net worth, which is comprised of total shareholders’ equity and debt obligations
(net of cash and cash equivalents). Refer to Note 29: Share Capital and Note 27: Long-term Debt and Credit Facilities, respectively, for a
quantitative summary of these items.

The Company manages its capital structure and makes adjustments to it in light of general economic conditions, the risk characteristics of the
underlying assets and the Company’s working capital requirements. In order to maintain or adjust its capital structure, the Company, upon
approval from its Board of Directors, may issue shares, pay dividends, or undertake other activities as deemed appropriate under the specific
circumstances. The Board of Directors reviews and approves any material transactions out of the ordinary course of business, including

160

Yamana Annual
Report 2018

proposals on acquisitions or other major investments or divestitures, as well as capital and operating budgets. The Company has not made
any changes to its policies and processes for managing capital during the year.

33.

OPERATING SEGMENTS

The Company bases its operating segments on the way information is reported and used by the Company's chief operating decision maker
("CODM"), being the Company's Senior Executive Group. The results of operating segments are reviewed by the CODM in order to make
decisions about resources to be allocated to the segments and to assess their performance.

The Company considers each of its individual operating mine sites as reportable segments for financial reporting purposes. In addition to
these reportable segments, the Company aggregates and discloses the financial results of other operating segments with similar economic
characteristics as reviewed by the CODM, including exploration properties and corporate entities, under "Corporate and Other".

The following changes have been made to the Company's reportable segments since December 31, 2017:

•

The Company's Cerro Moro mine, which was included in "Corporate and Other" at December 31, 2017, is now a separate reportable
segment. On June 26, 2018, the Company announced that the Cerro Moro mine had achieved commercial production, and the
assets associated with Cerro Moro now comprise 13% of the Company's total assets.
The CODM reviews the results of operating mines that the Company does not intend to manage in the long-term and for which a
disposal plan has been initiated, as one operating segment. Accordingly, Gualcamayo and Brio Gold, which were separate reportable
operating segments at December 31, 2017 were grouped into one reportable operating segment, "Other Mines" from January 1,
2018. The Company's interests in Brio Gold and Gualcamayo were disposed of on May 24, 2018 and December 14, 2018,
respectively. Refer to Note 6: Divestitures.

Comparatives have been restated to reflect the change in presentation adopted in the current period.

(a)

Information about Assets and Liabilities

Total assets at December 31, 2018

Total liabilities at December 31, 2018

Capital expenditures for the year ended
December 31, 2018

Total assets at December 31, 2017

Total liabilities at December 31, 2017

Capital expenditures for the year ended
December 31, 2017

Chapada
819.6 $
263.9 $

El Peñón

Canadian
Malartic

Jacobina

646.3 $

158.9 $

1,686.8 $

436.3 $

951.7 $

232.0 $

Minera
Florida Cerro Moro
1,033.6 $
89.1 $

305.7 $

92.0 $

Other Mines
(i)
— $
— $

Corporate
and other
(ii)

2,569.2 $

2,716.7 $

Total

8,012.9

3,988.9

44.1

50.8 $

81.8 $

47.5 $

60.7 $

87.6

44.2

30.2 $

446.9

Chapada

El Peñón

Canadian
Malartic

Jacobina

Minera
Florida Cerro Moro

798.2 $
318.0 $

707.2 $

1,869.6 $

179.1 $

436.4 $

783.3 $

162.0 $

330.0 $

103.0 $

Other Mines
(i)
811.3 $
203.5 $

897.6 $
75.5 $

Corporate
and other
(ii)

Total

2,566.1 $

8,763.3

2,838.5 $

4,316.0

46.7

56.3 $

89.4 $

45.1 $

52.6 $

179.7

107.8

29.9 $

607.5

(i)
(ii)

Other mines included Brio Gold and Gualcamayo, both of which were disposed of during 2018. Refer to Note 6: Divestitures.
"Corporate and other" includes Agua Rica ($1.1 billion) (2017: $1.1 billion), advanced stage development projects, exploration properties, corporate entities and the
Company's investment in associate.

Yamana Annual
Report 2018

161

(b)

Information about Profit or Loss

For the year ended December 31, 2018

Revenue (ii)

Cost of sales excluding
depletion, depreciation and amortization

Gross margin excluding depletion,
depreciation and amortization

Depletion, depreciation and amortization

(Impairment) reversal of impairment of
mining properties and goodwill

Segment income (loss)

Chapada
475.4 $

El Peñón

Canadian
Malartic

Jacobina

253.6 $

447.6 $

179.4 $

Minera
Florida Cerro Moro
126.8 $

102.6 $

Other
mines
213.1 $

Corporate
and other

Total

— $

1,798.5

(225.6)

(171.0)

(200.4)

(95.7)

(74.7)

(66.1)

(176.5)

—

(1,010.0)

249.8

(43.6)

—
206.2 $

82.6 $

247.2 $

(92.9)

(137.8)

83.7 $

(41.4)

27.9 $

(39.2)

—

(45.0)

150.0

(151.0)

(10.3)$

64.4 $

192.3 $

(162.3)$

60.7

(49.1)

—
11.6 $

36.6

(26.3)

— $

(8.0)

(103.0)

—

(92.7)$

(8.0)$

Other expenses (i)

Loss before taxes $

Income tax expense

Net loss $

788.5

(438.3)

(149.0)

201.2

(377.9)

(176.7)

(121.0)

(297.7)

For the year ended December 31, 2017
(restated) (iii)

Chapada

El Peñón

Canadian
Malartic

Jacobina

Minera
Florida Cerro Moro

Revenue (ii)

425.4 $

274.0 $

403.1 $

170.8 $

123.1 $

— $

Other
mines
407.4 $

Corporate
and other

Total

— $

1,803.8

Cost of sales excluding
depletion, depreciation and amortization

Gross margin excluding depletion,
depreciation and amortization

Depletion, depreciation and amortization

Impairment of mining properties

Segment income/(loss)

(215.3 )

(165.2)

(186.0)

(98.6)

(79.5)

—

(297.8)

— $

(1,042.4)

210.1

(38.1 )
—
172.0 $

108.8 $

217.1 $

72.2 $

43.6 $

(70.2)

(129.4)

(44.8)

(40.5)

—

38.6 $

87.7 $

27.4 $

3.1 $

—
—
—
— $

109.6

— $

761.4

(96.2 )

(256.9 )

(7.6)

—

(426.8)

(256.9)

(243.5) $

(7.6) $

77.7

Other expenses (i)

(389.7)

Loss before taxes $

(312.0)

Income tax recovery

113.9

Net loss $

(198.1)

(i)

(ii)

(iii)

Other expenses are comprised of general and administrative expense of $91.8 million (2017: $113.6 million), exploration and evaluation expense of $13.0 million (2017:
$21.2 million), share of earnings of associate of $5.5 million (2017: nil), finance costs of $137.4 million (2017: $110.8 million), other operating income of $9.3 million (2017:
other operating expenses of $23.6 million), other income of $2.5 million (2017: other costs of $20.9 million), and expenses related to impairment of non-operating mining
properties of $153.0 million (2017: $99.6 million).
Intersegment sales are eliminated in the above information reported to the Company’s CODM. For the year ended December 31, 2018, intersegment purchases included
$1,704.7 million of gold, silver and copper purchased by the Company’s corporate office from the Company’s producing mines (2017: $1,585 million) and revenue related
to the sale of these metals to third parties was $1,704.7 million (2017: $1,585 million).
The Company has initially applied IFRS 9 at January 1, 2018. Under the transition method chosen, comparative information has been restated for certain hedging
requirements. Refer to Note 5: Recent Accounting Pronouncements for further discussion.

(c)

Information about Geographical Areas

Revenue is attributed to regions based on the source location of the product sold.

For the years ended December 31,

Canada
Chile
Brazil
Argentina

Total revenue

2018
447.5 $
356.2
748.7
246.1
1,798.5 $

2017

403.1
397.1
815.0
188.6

1,803.8

162

Yamana Annual
Report 2018

Non-current assets for this purpose exclude deferred tax assets.

As at December 31,

Canada
Chile
Brazil
Argentina
United States

Total non-current assets

(d)

Information about Major Customers

2018
2,092.1 $
1,348.4
1,704.6
2,314.9
32.6
7,492.6 $

2017

1,962.4
1,541.4
2,024.8
2,260.1
37.4

7,826.1

The Company sells its gold, silver and copper through the corporate office to major metal exchange markets or directly to major Canadian
financial institutions and to smelters. Given the nature of the Company's products, there are always willing market participants ready to
purchase the Company's products at the prevailing market prices.

The following table presents sales to individual customers that exceeded 10% of annual metal sales for the following periods:

For the years ended December 31,

Customer (i)
1
2
3
4
5

Total sales to customers exceeding 10% of annual metal sales
Percentage of total metal sales

2018

2017

360.4 $
343.9
270.5
229.6
182.3
1,386.7 $
77.1%

384.5
267.1
—
262.7
229.9
1,144.2

63.4%

(i)

A balance is only included for a customer in each year where total sales to that customer exceeded 10% of annual metal sales in the period.

34.

OPERATING LEASES

The Company leases office premises under non-cancellable operating leases. The total of future minimum lease payments under non-
cancellable operating leases are as follows:

As at December 31,

Within 1 year
Between 1 and 5 years
After 5 years

2018

2.2 $
8.7
3.9
14.8 $

2017

2.5
9.9
7.1

19.5

The total operating lease payments that were expensed during the year amounted to $2.3 million (2017: $4.0 million).

Yamana Annual
Report 2018

163

35.

CONTINGENCIES

Due to the size, complexity and nature of the Company’s operations, various legal and tax matters arise in the ordinary course of business.
The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. Certain conditions may
exist as of the date the consolidated financial statements are issued that may result in a loss to the Company, but which will be resolved only
when one or more future events occur or fail to occur. The impact of any resulting loss from such matters affecting these Consolidated Financial
Statements of the Company may be material.

Canadian Malartic

On August 2, 2016, Canadian Malartic General Partnership (“CMGP”), a general partnership jointly owned by the Company and Agnico Eagle
Mines Limited (the "Partnership"), was served with a class action lawsuit with respect to allegations involving the Canadian Malartic mine. The
complaint is in respect of "neighbourhood annoyances" arising from dust, noise, vibrations and blasts at the mine. The plaintiffs are seeking
damages in an unspecified amount as well as punitive damages in the amount of $20.0 million. The class action was certified in May 2017. In
November 2017, a declaratory judgment was issued allowing the Partnership to settle individually with class members for 2017 under its Good
Neighbor Guide (the “Guide”). In September 2018, the Superior Court introduced an annual revision of the ending date of the class action
period and a mechanism for the partial exclusion of class members, allowing the residents to individually settle for a specific period (usually a
calendar year) and to opt-out from the class action for such specific period. Both of these judgments were confirmed by the Court of Appeal
and the class members will thus continue to have the option to benefit from the Guide. In January 2018, a judgment was rendered in favor of
the Partnership, resulting in the removal from the class action of the pre-transaction period, spanning from August 2013 to June 16, 2014,
during which the Canadian Malartic mine was not operated by the Partnership. The plaintiff did not seek leave to appeal this decision and will
rather add new allegations in an attempt to recapture the pre-transaction period. The Company and the Partnership will take all necessary
steps to defend themselves from this lawsuit.

On August 15, 2016, the Partnership received notice of an application for injunction relating to the Canadian Malartic mine, which had been
filed under the Environment Quality Act (Quebec). A hearing related to an interlocutory injunction was completed on March 17, 2017 and a
decision of the Superior Court of Quebec dismissed the injunction. An application for permanent injunction is currently pending. The Company
and the Partnership have reviewed the injunction request, consider the request without merit and will take all reasonable steps to defend against
this injunction. These measures include a motion for the dismissal of the application for injunction, which has been filed and will be heard at a
date to be determined. While at this time the potential impacts of the injunction cannot be definitively determined, the Company expects that if
the injunction were to be granted, there would be a negative impact on the operations of the Canadian Malartic mine, which could include a
reduction in production.

On June 1, 2017, the Partnership was served with an application for judicial review to obtain the annulment of a governmental decree. The
Partnership is an impleaded party in the proceedings. The applicant seeks to obtain the annulment of a decree authorizing the expansion of
the Canadian Malartic mine. The Company and the Partnership have reviewed the application for judicial review, consider the application
without merit and will take all reasonable steps to defend against this application. The hearing on the merits began on October 1, 2018, but no
judgment has been rendered so far. While the Company believes it is highly unlikely that the annulment will be granted, the Company expects
that if the annulment were to be granted, there would be a negative impact on the operations of the Canadian Malartic mine, which could include
a reduction in anticipated future production.

164

Yamana Annual
Report 2018

36.

RELATED PARTY TRANSACTIONS

(a) Related Parties and Transactions

The Company’s related parties include its subsidiaries, associate, a joint venture in which the Company is a joint operator, and key management
personnel. During its normal course of operation, the Company enters into transactions with its related parties for goods and services.
Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and
are not disclosed in this note. There were no other related party transactions for the years ended December 31, 2018 and 2017.

(b) Compensation of Key Management Personnel

Key management personnel compensation comprises:

For the years ended December 31,

Short-term employee benefits (i)
Post-employment benefits
Termination benefits
Share-based payments (ii)

$
$
$
$

2018
14.9 $
1.9 $
3.7 $
4.7 $
25.2 $

2017

20.6
3.4
—
14.1

38.1

(i)
(ii)

Short-term employee benefits include salaries, bonuses payable within 12 months of the balance sheet date and other annual employee benefits.
Relates to share option, RSU, DSU and PSU grants. Balances exclude the periodic fair value adjustment on the DSUs.

Given the classification of the Company's interest in Brio Gold as a disposal group held for sale during the first quarter of 2018, the Company
re-examined the classification of key management personnel for 2018 and determined that the roles which have the authority and responsibility
for planning, directing and controlling the activities of the Company are the Board of Directors and members of the Company's Senior Executive
Group, comprising the Chief Executive Officer and the Company's senior vice presidents. The Company determined that, effective January 1,
2018 Brio Gold executives and officers and other management personnel outside of the Senior Executive Group are not key management
personnel. Had key management personnel been determined on the same basis in 2017, short-term employee benefits, post-employment
benefits and share-based payment compensation would have been $15.3 million, $1.9 million, and $6.1 million, respectively, for total
compensation of $23.3 million.

37.

SUBSEQUENT EVENTS

These forward contracts are expected to cover approximately 50% of the Chilean Peso denominated forecasted operating costs from February
2019 to December 2019.

Yamana Annual
Report 2018

165

38.

GUARANTOR SUBSIDIARIES ANNUAL FINANCIAL STATEMENTS

The obligations of the Company under the senior debt notes and revolver facility are guaranteed by the following 100% owned subsidiaries of
the Company (the ‘‘guarantor subsidiaries’’): Mineração Maracá Industria e Comércio S.A., Jacobina Mineração e Comércio Ltda., Minera
Meridian Limitada, Minera Florida Limitada, and Yamana Malartic Canada Inc. All guarantees by the guarantor subsidiaries are joint and
several, and full and unconditional, subject to certain customary release provisions contained in the indenture (as supplemented) governing
the senior debt notes. Based on the domestic regulations of jurisdictions of the subsidiaries, collection of funds in the form of dividend or loan
payments would be subject to customary repatriation restrictions.

The following tables outline separate condensed financial information related to the issuer, and the guarantor and non-guarantor subsidiaries
and as set out in the Consolidated Balance Sheets as at December 31, 2018 and December 31, 2017 and the Consolidated Statements of
Operations, Consolidated Statements of Comprehensive Loss and Consolidated Statements of Cash Flows for the years ended December 31,
2018 and December 31, 2017. For the purposes of this information, the financial information of the Company and the guarantor subsidiaries
reflect investments in subsidiary companies on an equity accounting basis and are in compliance with Rule 3-10 of Regulation S-X. As provided
for under Rule 3-10 of Regulation S-X the Company’s basis is “pushed down” to the applicable subsidiary columns.

166

Yamana Annual
Report 2018

CONDENSED CONSOLIDATED BALANCE SHEETS

As at December 31, 2018

Assets
Current assets:
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Assets held for sale
Intercompany receivables

Non-current assets:
Property, plant and equipment
Goodwill and other intangible assets
Investment in associate
Deferred tax assets
Other financial assets
Other assets
Intercompany receivables

Total assets
Liabilities
Current liabilities:
Trade and other payables
Income taxes payable
Other financial liabilities
Other provisions and liabilities
Liabilities relating to assets held for sale
Intercompany payables

Non-current liabilities:
Long-term debt
Decommissioning, restoration and
similar liabilities
Deferred tax liabilities
Other financial liabilities
Other provisions and liabilities
Intercompany payables

Total liabilities
Equity
Equity attributable to Yamana Gold Inc.
equity holders
Non-controlling interests

Total equity
Total liabilities and equity

Yamana Gold Inc.
(parent)

Guarantor
subsidiaries

Non-guarantors

Eliminations and
reclassifications

Consolidated

$
$

67.6 $
14.6
6.6
3.6
2.4
—
—

94.8 $

73.7
31.6
4,824.0
72.6
9.9
—
1,069.9

14.2 $
4.1
86.7
—
43.5
—
101.8

250.3 $

2,555.1
4.0
494.1
9.4
1.9
137.5
1,193.2

16.7 $
5.6
87.7
3.8
72.1
—
180.2

366.1 $

4,067.6
364.2
—
6.5
7.1
96.6
—

— $
—
—
—
—
—
(282.0)

(282.0)$

—
—
(5,172.1)
—
—
—
(2,263.1)

6,176.5 $

4,645.5 $

4,908.1 $

(7,717.2)$

61.1 $
—
5.9
59.6
—
282.0

408.6 $

1,756.8

—

2.3
19.5
—
—

145.9 $
25.3
42.8
15.5
—
—

229.5 $

—

144.3

325.8
32.3
60.2
1,731.2

87.8 $
7.2
13.6
31.7
—
—

140.3 $

—

96.9

801.2
24.2
229.0
531.9

— $
—
—
—
—
(282.0)

(282.0)$

—

—
—
—
—
(2,263.1)

2,187.2 $

2,523.3 $

1,823.5 $

(2,545.1)$

3,989.3 $

2,122.2 $

3,049.9 $

—

3,989.3 $
6,176.5 $

—

2,122.2 $
4,645.5 $

34.7

3,084.6 $
4,908.1 $

(5,172.1) $

—
(5,172.1)$
(7,717.2)$

98.5
24.3
181.0
7.4
118.0
—
—

429.2

6,696.4
399.8
146.0
88.5
18.9
234.1
—

8,012.9

294.8
32.5
62.3
106.8
—
—

496.4

1,756.8

241.2

1,129.3
76.0
289.2
—

3,988.9

3,989.3

34.7

4,024.0
8,012.9

Yamana Annual
Report 2018

167

Yamana Gold Inc.
(parent)

Guarantor
subsidiaries

Non-guarantors

Eliminations and
reclassifications

Consolidated

98.2 $
24.4
11.8
2.6
3.1
—
—

16.8 $
10.5
77.7
—
67.2
—
91.9

140.1 $

264.1 $

24.4
34.8
4,558.3
73.0
17.3
—
1,486.1

2,575.4
5.4
539.1
14.7
3.5
105.5
1,277.6

33.9 $
3.7
74.0
10.6
49.1
355.8
53.2

580.3 $

4,553.4
409.3
—
10.1
5.3
91.8
—

— $
—
—
—
—
—
(145.1)

(145.1)$

—
—
(5,097.4)
—
—
—
(2,763.7)

$
$

6,334.0 $

4,785.3 $

5,650.2 $

(8,006.2)$

53.4 $
—
121.4
1.0
—
145.1

320.9 $

1,673.2

—

5.5
21.0
—
—

148.7 $
87.1
54.5
9.3
—
—

299.6 $

—

143.6

307.2
29.4
69.5
1,742.9

143.3 $
4.7
27.2
46.4
83.7
—

305.3 $

74.5

114.6

834.4
35.3
227.1
1,020.8

— $
—
—
—
—
(145.1)

(145.1)$

—

—
—
—
—
(2,763.7)

2,020.6 $

2,592.2 $

2,612.0 $

(2,908.8)$

4,313.4 $

2,193.1 $

3,019.5 $

—

4,313.4 $
6,334.0 $

—

2,193.1 $
4,785.3 $

18.7

3,038.2 $
5,650.2 $

(5,212.6) $
115.2
(5,097.4)$
(8,006.2)$

148.9
38.6
163.5
13.2
119.4
355.8
—

839.4

7,153.2
449.5
—
97.8
26.1
197.3
—

8,763.3

345.4
91.8
203.1
56.7
83.7
—

780.7

1,747.7

258.2

1,147.1
85.7
296.6
—

4,316.0

4,313.4

133.9

4,447.3
8,763.3

As at December 31, 2017(i)

Assets
Current assets:
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other assets
Assets held for sale
Intercompany receivables

Non-current assets:
Property, plant and equipment
Goodwill and other intangible assets
Investment in associate
Deferred tax assets
Other financial assets
Other assets
Intercompany receivables

Non-current liabilities:
Long-term debt
Decommissioning, restoration
and similar liabilities
Deferred tax liabilities
Other financial liabilities
Other provisions and liabilities
Intercompany payables

Total liabilities
Equity
Equity attributable to Yamana Gold Inc.
equity holders
Non-controlling interests

Total equity
Total liabilities and equity

(i)

Comparatives in respect of certain balances have been reclassified to conform to the change in presentation adopted in the current period, including the removal of certain
assets as guarantors following their respective sales. Additionally, certain balances previously included as Guarantors Subsidiaries have been recast as they relate to
Canadian Malartic General Partnership, a Non-Guarantor.

168

Yamana Annual
Report 2018

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended December 31, 2018

Revenue
Cost of sales excluding depletion,
depreciation and amortization

Yamana Gold Inc.
(parent)
1,654.0 $

Guarantor
subsidiaries

Non-guarantors

Eliminations and
reclassifications

Consolidated

1,382.8 $

803.5 $

(2,041.8) $

1,798.5

(1,631.2)

(970.2)

(466.3)

2,057.7

(1,010.0)

Gross margin excluding depletion,
depreciation and amortization
Depletion, depreciation and amortization

Impairment of mining properties
and goodwill, net

Mine operating earnings/(loss)

Expenses (i)

General and administrative

Exploration and evaluation

Share of earnings of associate

Other operating income (expenses), net

Impairment of non-operating mining properties

Operating earnings (loss)
Finance costs

Other income (costs), net

(Loss)/income before taxes
Current income tax expense

Deferred income tax recovery

Income tax (expense) recovery

Net loss

Attributable to:

Yamana Gold Inc. equity holders

Non-controlling interests

Net loss

Total other comprehensive income

Total comprehensive loss

22.8 $

(7.8)

—

15.0

(50.4)

(0.9)

(293.8)

19.2

—

(310.9)
(109.0)

126.6

(293.3)
(6.8)

2.4

(4.4)

(297.7)$

(297.7)

—

(297.7)

(10.5)$

(308.2)$

412.6 $

(216.8)

(1.0)

194.8

(19.6)

(5.3)

(45.0)

(31.1)

—

93.8
(286.5)

130.8

(61.9)
(89.5)

(24.7)

(114.2)

(176.1)$

(176.1)

—

(176.1)

— $

(176.1)$

337.2 $

(213.7)

(148.0)

(24.5)

(21.8)

(6.8)

(0.5)

21.2

(153.0)

(185.4)
(222.4)

225.6

(182.2)
(42.5)

40.1

(2.4)

(184.6)$

(171.5)

(13.1)

(184.6)

(0.7)$

(185.3)$

15.9
—

—
15.9

—
—
344.8
—
—
360.7
480.5
(480.5)
360.7
—
—
—
360.7 $

360.7
—
360.7

0.7 $
361.4 $

788.5

(438.3)

(149.0)

201.2

(91.8)

(13.0)

5.5

9.3

(153.0)

(41.8)
(137.4)

2.5

(176.7)
(138.8)

17.8

(121.0)

(297.7)

(284.6)

(13.1)

(297.7)

(10.5)

(308.2)

(i)

Balances are net of intercompany movements in the respective classifications which are eliminated on consolidation.

Yamana Annual
Report 2018

169

For the year ended December 31, 2017 (ii)

Revenue
Cost of sales excluding depletion,
depreciation and amortization

Gross margin excluding depletion,
depreciation and amortization
Depletion, depreciation and amortization

Impairment of mining properties and
goodwill, net

Mine operating earnings/(loss)

Expenses (i)

General and administrative

Exploration and evaluation

Share of earnings of associate

Other operating income (expenses), net

Impairment of non-operating mining properties

Operating earnings (loss)
Finance costs

Other income (costs), net

(Loss)/income before taxes
Current income tax expense

Deferred income tax recovery

Income tax (expense) recovery

Net loss

Attributable to:

Yamana Gold Inc. equity holders

Non-controlling interests

Net loss

Total other comprehensive income

Total comprehensive loss

Yamana Gold Inc.
(parent)

Guarantor
subsidiaries

Non-guarantors

Eliminations and
reclassifications

Consolidated

1,555.6 $

1,367.3 $

816.3 $

(1,935.4) $

1,803.8

(1,536.5)

(932.3)

(502.8)

1,929.2

(1,042.4)

19.1 $

(6.5)

—

12.6

(50.9)

(0.9)

(176.6)

(4.3)

—

(220.1)
(115.6)

108.3

(227.4)
(3.9)

33.2

29.3

435.0 $

(193.2)

—

241.8

(5.7)

(9.8)

(2.8)

(19.0)

—

204.5
(128.1)

77.3

153.7
(189.0)

(18.5)

(207.5)

313.5 $

(227.1)

(256.9)

(170.5)

(57.0)

(10.5)

—

(0.3)

(99.6)

(337.9)
(210.7)

129.8

(418.8)
(46.3)

338.4

292.1

(198.1)$

(53.8)$

(126.7)$

(198.1)

—

(198.1)

6.7 $

(191.4)$

(53.8)

—

(53.8)

— $

(53.8)$

(117.1)

(9.6)

(126.7)

1.0 $

(125.7)$

(6.2)$
—

—

(6.2)

—
—
179.4
—
—
173.2
343.6
(336.3)
180.5
—
—
—
180.5 $

180.5
—
180.5

(1.0)$
179.5 $

761.4

(426.8)

(256.9)

77.7

(113.6)

(21.2)

—

(23.6)

(99.6)

(180.3)
(110.8)

(20.9)

(312.0)
(239.2)

353.1

113.9

(198.1)

(188.5)

(9.6)

(198.1)

6.7

(191.4)

(i)

(ii)

Balances are net of intercompany movements in the respective classifications which are eliminated on consolidation.

Comparatives in respect of certain balances have been reclassified to conform to the change in presentation adopted in the current period, including the removal of certain
assets as guarantors following their respective sales. Additionally, certain revenues and expenses previously included as Guarantors Subsidiaries have been recast as they
relate to Canadian Malartic General Partnership, a Non-Guarantor. This had no impact to net earnings (loss).

170

Yamana Annual
Report 2018

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the year ended December 31, 2018

Operating activities
Loss before taxes

Adjustments to reconcile earnings before taxes to
net operating cash flows:

Depletion, depreciation and amortization

Share-based payments

Other (income) costs, net

Finance costs

Mark-to-market on financial assets and
metal concentrates
Share of earnings of associate

Impairment of mineral properties, net

Amortization of deferred revenue on metal
purchase agreements
Gain on asset disposals

Other non-cash (recoveries)/expenses

Advanced payments received on metal
purchase agreements
Decommissioning, restoration and similar
liabilities paid
Other payments

Cash flows from operating activities before
income taxes paid and net change in
working capital
Income taxes paid

Payments made to Brazilian tax authorities

Cash flows from operating activities before
net change in working capital
Net change in working capital

Intercompany movement in operations

Cash flows from operating activities

Investing activities
Acquisition of property, plant and equipment

Net proceeds on disposal of subsidiaries and
other assets
Acquisition of investments and other assets

Cash used in other investing activities

Cash flows used in investing activities

Financing activities
Dividends paid

Interest and other finance expenses paid

Financing costs paid on early note redemption

Proceeds from Brio Gold Inc. private placement
and rights offering
Repayment of term loan and notes payable

Proceeds from term loan and notes payable

Proceeds from other financing activities

Proceeds (repayments) of intercompany
financing activities

Yamana Gold Inc.
(parent)

Guarantor
subsidiaries

Non-guarantors

Eliminations and
reclassifications

Consolidated

(293.3) $

(62.0) $

(182.0) $

360.6 $

(176.7)

7.8

4.7

(126.6)

109.0

17.6

293.8

—

(72.7)

(39.1)

2.5

127.8

—

31.5 $

(0.1)

—

31.4 $

(26.6)

118.2

123.0 $

216.8

—

(130.8)

286.5

—

45.0

1.0

—

37.8

—

(2.8)

—

391.5 $

(13.4)

(101.3)

276.8 $

(46.4)

(9.4)

221.0 $

213.7

0.6

(225.6)

222.4

—

0.5

301.0

(26.8)

(35.1)

10.1

—

(2.5)

(6.7)

269.6 $

(27.3)

—

242.3 $

(89.1)

(108.8)

44.4 $

(14.4) $

(203.1) $

(229.4) $

4.3

(3.9)

—

(14.0)$

(19.0) $

(80.1)

(14.7)

—

(486.5)

460.0

6.0

(5.6)

—

(37.0)

(240.1)$

185.6

(1.3)

(30.4)

(75.5)$

— $

—

15.2

—

6.2

—
—
480.5
(480.5)

—

(344.8)
—

—
—
—

—

—
—

15.8
—
—

15.8
—
—
15.8 $

— $

—
—
—
— $

— $
—
—

—
—
—
—

(15.8)

438.3

5.3

(2.5)

137.4

17.6

(5.5)

302.0

(99.5)

(74.2)

50.4

127.8

(5.3)

(6.7)

708.4

(40.8)

(101.3)

566.3

(162.1)

—

404.2

(446.9)

189.9

(5.2)

(67.4)

(329.6)

(19.0)

(80.1)

(14.7)

—

(486.5)

460.0

6.0

—

Cash flows (used in) from financing activities $

(139.9)$

Effect of foreign exchange on non-US Dollar
denominated cash and cash equivalents
(Decrease) Increase in cash and
cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, classified as held for
sale, beginning of year

Cash and cash equivalents, end of year
Cash and cash equivalents reclassified as
held for sale

Cash and cash equivalents, excluding
amounts classified as held for sale,
end of year

0.3

(30.6) $

98.2 $

— $

67.6 $

— $

15.2 $

1.3

(2.6) $

16.8 $

— $

14.2 $

— $

6.2 $

1.4

(23.5) $

33.9 $

6.3 $

16.7 $

— $

67.6 $

14.2 $

16.7 $

Yamana Annual
Report 2018

171

(15.8)$

(134.3)

—

—
$
— $

—

3.0

(56.7)

148.9

6.3

98.5

—

98.5

172

Yamana Annual
Report 2018

For the year ended December 31, 2017 (i)

Operating activities
Loss before taxes

Adjustments to reconcile earnings before taxes
to net operating cash flows:

Depletion, depreciation and amortization

Share-based payments

Other (income) costs, net

Finance costs

Mark-to-market on financial assets and
metal concentrates
Share of earnings of associate

Impairment of mineral properties, net

Amortization of deferred revenue on metal
purchase agreements
Gain on asset disposals

Other non-cash expenses (recoveries)

Advanced payments received on
metal purchase agreements
Decommissioning, restoration and similar
liabilities paid
Other payments

Cash flows from operating activities before
income taxes paid and net change in working
capital
Income taxes paid

Payments made to Brazilian tax authorities

Cash flows from operating activities before
net change in working capital
Net change in working capital

Intercompany movement in operations

Cash flows from operating activities

Investing activities
Acquisition of property, plant and equipment

Net proceeds on disposal of subsidiaries and
other assets
Acquisition of investments and other assets

Cash used in other investing activities

Cash flows used in investing activities

Financing activities
Dividends paid

Interest and other finance expenses paid

Financing costs paid on early note redemption

Proceeds from Brio Gold Inc. private placement
and rights offering
Repayment of term loan and notes payable

Proceeds from term loan and notes payable

Proceeds from other financing activities

Proceeds (repayments) of intercompany
financing activities

Cash flows (used in) from financing activities $

Effect of foreign exchange on non-US Dollar
denominated cash and cash equivalents

Yamana Gold Inc.
(parent)

Guarantor
subsidiaries

Non-guarantors

Eliminations and
reclassifications

Consolidated

(227.3) $

153.7 $

(418.9) $

180.5 $

(312.0)

6.5

7.2

(108.3)

115.6

(1.5)

176.6

—

6.6

—

(24.6)$

—

(24.6)$

7.6

(51.8)

(68.8)$

193.2

—

(77.3)

128.1

—

2.8

—

16.6

—

(3.7)

—

413.4 $

(3.0)

(76.7)

333.7 $

(47.7)

(15.3)

270.7 $

227.1

5.4

(129.8)

210.7

—

356.5

(8.6)

—

(24.4)

—

(0.9)

(6.0)

211.1 $

(16.0)

—

195.1 $

(2.4)

67.1

259.8 $

(2.4) $

(206.6) $

(398.5) $

17.5

—

15.1 $

(18.9) $

(103.8)

—

71.5

(460.9)

655.0

—

(26.2)

116.7 $

0.1

—

(54.2)

(260.8)$

—

(398.5)$

— $

—

(4.9)

(4.9)$

(6.6)

—

75.0

—

53.4

128.4 $

6.6

—
—
336.3
(343.6)

—

(179.4)
—

—
—
—

—

—
—

(6.2)$
—
—

(6.2)$
28.5
—
22.3 $

— $

—
—
—
— $

— $
—
—

—
—
—
—

(22.3)

(22.3)$

—

426.8

12.6

20.9

110.8

(1.5)

—

356.5

(8.6)

—

(7.8)

6.6

(4.6)

(6.0)

593.7

(19.0)

(76.7)

498.0

(14.0)

—

484.0

(607.5)

17.5

—

(54.2)

(644.2)

(18.9)

(103.8)

—

71.5

(460.9)

730.0

—

217.9

0.1

Yamana Annual
Report 2018

173

(Decrease) Increase in cash and
cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, classified as held for
sale, beginning of year

Cash and cash equivalents, end of year
Cash and cash equivalents reclassified as
held for sale

Cash and cash equivalents, excluding
amounts classified as held for sale,
end of year

63.1 $

35.1 $

— $

98.2 $

— $

(1.6) $

18.4 $

— $

16.8 $

— $

(3.7) $

43.9 $

— $

40.2 $

(6.3) $

—
$
— $

—

57.8

97.4

—

155.2

(6.3)

98.2 $

16.8 $

33.9 $

—

148.9

(i)

Comparatives in respect of certain balances have been reclassified to conform to the change in presentation adopted in the current period, including the removal of certain
assets as guarantors following their respective sales. Additionally, certain cash flow activities previously included as Guarantors Subsidiaries have been recast as they
relate to Canadian Malartic General Partnership, a Non-Guarantor.

*************

174

Yamana Annual
Report 2018

Corporate Governance & Committees of the Board

Corporate Governance

Committees of the Board

Yamana and the board recognize the importance of corporate
governance to the effective management of the Company and to
the protection of its employees and shareholders. The Company’s
approach to significant issues of corporate governance is designed
with a view to ensuring that Yamana’s business and affairs are
effectively managed so as to enhance shareholder value.

The Company’s corporate governance practices have been
designed to be in compliance with applicable Canadian and
United States legal requirements and best practices. The
Company continues to monitor developments in Canada and the
United States, with a view to keeping its governance policies and
practices current.

Although, as a regulatory matter, the majority of the corporate
governance listing standards of the New York Stock Exchange
are not applicable to the Company, Yamana has corporate
governance practices that comply with such standards.

The board has the following four standing committees:

Audit Committee

The Audit Committee provides assistance to the board in
fulfilling its financial reporting and control responsibilities to the
shareholders of the Company and the investment community.
The external auditors of the Company report directly to the
Audit Committee.

Compensation Committee

The Compensation Committee, which is composed entirely
of independent directors, among other things may determine
appropriate compensation for the Company’s directors and
senior officers. The process by which appropriate compensation
is determined is through periodic and annual reports from
the Compensation Committee on the Company’s overall
compensation and benefits philosophies.

Code of Conduct

The board has adopted a Code of Conduct (the “Code”) for
its directors, officers, employees and any third party acting on
our behalf or representing Yamana such as contractors, agents
and consultants. The board encourages and promotes an overall
culture of ethical business conduct by promoting compliance
with applicable laws, rules and regulations in all jurisdictions in
which the Company conducts business; providing guidance to
directors, officers, employees and third parties to help them
recognize and deal with ethical issues; promoting a culture of
open communication, honesty and accountability; and ensuring
awareness of disciplinary action for violations of ethical business
conduct.

Yamana has established a toll-free compliance call line and
website to allow for anonymous reporting of any suspected Code
violations, including concerns regarding accounting, internal
controls over financial reporting or other auditing matters.

Corporate Governance and Nominating Committee

This committee is responsible for conducting an annual review of
the board’s relationship with management to ensure the board is
able to, and in fact does, function independently of management;
develops and recommends to the board for approval a long-term
plan for board composition that takes into consideration the
independence of directors, competencies and skills of the board as
a whole; reviews retirement dates and the appropriate size of the
board with a view to facilitating effective decision making and the
strategic direction of the Company; and develops and implements
a process to handle any director nominees who are recommended
by security holders.

Sustainability Committee

The board also has a Sustainability Committee to assist in
oversight of sustainability, environmental, health and safety
matters, including monitoring the implementation and
management of the Company’s policies, procedures and practices
relating to sustainability, environmental, health and safety matters.

To view Yamana’s board and committee charters, code of conduct,
corporate governance practices as well as how they compare to
the NYSE standards, please visit www.yamana.com/Governance.
More information can also be found in Yamana’s Management
Information Circular.

Yamana Annual
Report 2018

175

Corporate Information

Board of Directors

Senior Management

Peter Marrone
Executive Chairman

Daniel Racine
President and Chief Executive Officer

Jason LeBlanc
Senior Vice President,
Finance and Chief Financial Officer

Yohann Bouchard
Senior Vice President, Operations

Richard Campbell
Senior Vice President,
Human Resources

Gerardo Fernandez
Senior Vice President,
Corporate Development

Ross Gallinger
Senior Vice President,
Health, Safety and Sustainable
Development

Henry Marsden
Senior Vice President, Exploration

Steve Parsons
Senior Vice President,
Investor Relations and
Corporate Communications

Sofia Tsakos
Senior Vice President,
General Counsel and
Corporate Secretary

John Begeman(1)(4)
Company Director

Christiane Bergevin(3)(4)
Company Director

Andrea Bertone(1)
Company Director

Alex Davidson(2)(4)
Company Director

Robert Gallagher(3)(4)
Company Director

Richard Graff(1)
Lead Director

Kimberly Keating(2)
Company Director

Nigel Lees(2)
Company Director

Peter Marrone*
Executive Chairman

Jane Sadowsky(1)(3)
Company Director

Dino Titaro(2)(3)(4)
Company Director

* Non-independent Board Member

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

(3) Member of the Corporate Governance and

Nominating Committee

(4) Member of the Sustainability Committee

176

Yamana Annual
Report 2018

Shareholder Information

Share Listings

Toronto Stock Exchange: YRI
New York Stock Exchange: AUY

Capitalization (as at December 31, 2018)

Common Shares (basic): 949.3 million
Restricted Share Units: 2.0 million
Options: 1.8 million
Common Shares (fully diluted): 953.4 million

2018 Common Share Trading Information

Ticker

YRI-T
AUY

Closing price

C$3.21
US$2.36

High

C$4.69
US$3.80

Low

C$2.66
US$2.00

Average
Daily Volume

4,719,660
12,075,218

Stock Exchange

TSX
NYSE

Dividends

Yamana currently pays a quarterly dividend of US $0.005 per share

2018 Dividend Schedule

Anticipated 2019 Dividend Schedule

Record Date

March 29, 2018
June 29, 2018
September 28, 2018
December 28, 2018

Payment Date

April 13, 2018
July 13, 2018
October 12, 2018
January 11, 2019

Record Date

March 29, 2019
June 28, 2019
September 30, 2019
December 31, 2019

Payment Date

April 12, 2019
July 12, 2019
October 15, 2019
January 14, 2020

Electronic Delivery of Shareholder Documents

If you would like to receive your shareholder and financial
documents electronically, please enroll in Yamana’s electronic
delivery program through AST Trust Company (Canada) at
https://ca.astfinancial.com/edelivery

Auditors

Deloitte LLP

Legal Counsel

Transfer Agent

For information regarding shareholdings, dividends, certificates,
change of address, electronic delivery, or exchange of share
certificates due to an acquisition please contact:

AST Trust Company (Canada)
P.O. Box 700
Station B
Montreal, QC
H3B 3K3
1-800-387-0825 (toll free in North America)
416-682-3860 (outside North America)
Email: inquiries@astfinancial.com
www.astfinancial.com/ca-en

Investor Contact

For additional financial information, industry developments,
latest news and corporate updates:

Phone: 416-815-0220
Email: investor@yamana.com
Website: www.yamana.com

Cassels, Brock & Blackwell LLP
Paul, Weiss, Rifkind, Wharton & Garrison LLP

Executive Office

200 Bay Street
Royal Bank Plaza, North Tower
Suite 2200
Toronto, Ontario
M5J 2J3
Phone: 416-815-0220
Fax: 416-815-0021

Annual General Meeting

Thursday, May 2, 2019
11:00 a.m. Eastern DST

Design Exchange
234 Bay Street
Toronto Dominion Centre
Toronto, Ontario, Canada

Design: Ove Brand | Design

Typesetting & Pre-Press Production: Mary Acsai

Printing: Merrill Corporation Canada

Portrait Photography: Zanetti Photography

Illustration: Eunice Joaquin

Printed in Canada