Yamana increasing quarterly dividend by 10 per cent to 5.5 cents per share

Yamana Gold Inc. said Wednesday it will increase its quarterly dividend by 10 per cent as the mid-tier gold producer reported lower profits after investment writedowns.

The Toronto-based gold miner (TSX:YRI) said it will pay a quarterly dividend of 5.5 cents per share in April, up from five cents paid in January and 4.5 cents in October.

And chief executive Peter Marrone said the company is eyeing future dividend increases as Yamana looks to bring two new mines into production this year and cash flow grows.

Yamana plans to complete two mines in Brazil, C1 Santa Luz and Ernesto/Pau-a-Pique, before the end of year.

"As we come closer to seeing when they will start operations, we'll further evaluate what we do with our dividend," Marrone said.

"We're nicely advanced on both of those ... with about 10 months to go in the year. So I'm becoming increasingly confident that these will follow a similar path to Mercedes."

Yamana started commercial production at its Mercedes gold mine in Mexico late last year, ahead of its plan for early this year.

The new payment rate will come to total annual payment of 22 cents per share. Based on the gold miner's share price Wednesday it will have a yield of just under 1.3 per cent.

The increase came as Yamana reported a quarterly profit of $89.6 million, or 12 cents a share, for the fourth quarter ended Dec. 31.

That was down 27 per cent from earnings of $125.6 million, or 23 cents per share, a year earlier.

The latest quarterly results included a one-time $81-million after-tax unrealized non-cash charge on investments in the quarter.

Yamana reported adjusted earnings $184 million, or 25 cents per share, in the fourth quarter of 2011, compared with $171 million, or 23 cents per share, a year earlier.

Revenue totalled $568.8 million, up from $535.1 million in the last three months of 2010.

During the quarter, Yamana produced 231,670 ounces of gold, down from 243,407 ounces a year ago. Silver production totalled 2.3 million ounces, down from 2.4 million.

The average realized gold price amounted to $1,670 per ounce, up from $1,374, while the average realized silver price was $31.29 per ounce, up from $28.20.

For the full year, Yamana reported a profit of $548.3 million, or 74 cents per share, on $2.17 billion in revenue. That compared with a profit of $466.5 million, or 63 cents per share, on $1.69 billion in revenue for 2010.

Yamana also reported Wednesday it has increased its proven and probable mineral reserves by 11 per cent to 18.6 million gold-equivalent ounces.

Gold reserves increased 10 per cent to 17 million ounces, while total silver reserves increased 28 per cent to 82.9 million ounces.

Yamana has mines and projects in Brazil, Argentina, Chile, Mexico and Colombia.

Shares in the company were up 23 cents at $17.36 on the Toronto Stock Exchange.