In September 2006, the Company signed an agreement to acquire the 56.7% controlling interest in Agua de la Falda S.A. (“ADLF”) that includes the Jeronimo Deposit from the Corporacion Nacional del Cobre de Chile (“Codelco”) for $20 million.

ADLF’s properties, located 50 kilometers southeast of El Salvador in the Third Region of Northern Chile, encompass over 240 km² and include the El Hueso, Coya and Agua de la Falda mines that produced over 660,000 gold ounces for Homestake Mining Company between 1988 and 2002. The Jeronimo Deposit is the downdip extension of the Agua de la Falda deposit and is estimated to contain up to 16.6 million tonnes of potential ore at a gold grade of 5.2 grams per tonne for a contained resource of at least 2.8 million ounces of gold. The ore deposit is largely unoxidized and will require further metallurgical testing to determine the proper processing techniques to liberate the gold in a production environment. There is an existing scoping study on the property and as part of the agreement; Yamana is required to prepare the feasibility study of the Jeronimo Deposit.