Yamana Gold : Second Quarter 2022 Report

Q2

Second Quarter Report 2022

CONTENTS

		Page
1:	Highlights and Relevant Updates	1
2: Core Business, Strategy and Outlook	13
3:	Review of Financial Results	17
4: Operating Segments Performance	21
5:	Construction, Development and Other Initiatives	30
6: Exploration	41
7:	Financial Condition and Liquidity	47
8: Economic Trends, Business Risks and Uncertainties	50
9:	Contingencies	53
10: Critical Accounting Policies and Estimates	53
11:	Non-GAAP Financial Performance Measures	54
12: Disclosure Controls and Procedures	61

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") condensed consolidated interim financial statements for the three and six months ended June 30, 2022, and the most recently issued annual Consolidated Financial Statements for the year ended December 31, 2021 ("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 performance 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 performance measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar non-GAAP financial performance 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 performance measures included in this MD&A include:

• Cash costs per gold equivalent ounce ("GEO") sold;
  • All-in sustaining costs ("AISC") per GEO sold;
  • Net free cash flow;
  • Free cash flow before dividends and debt repayment; and
• Average realized price per ounce of gold/silver sold

Reconciliations and descriptions associated with the above non-GAAP financial performance measures can be found in Section

1. Non-GAAPFinancial Performance Measures in this MD&A. In addition, each non-GAAP financial performance measure in this MD&A has been annotated with a reference to endnote (1).

Cautionary statements regarding forward-looking information and mineral reserves and mineral resources can be found in Section

1. Disclosure Controls and Procedures in this MD&A. Endnotes can be found on the final page of this MD&A.

1. HIGHLIGHTS AND RELEVANT UPDATES

For the three months ended June 30, 2022 unless otherwise noted

Operational, Earnings and Cash Flow Highlights:

• Gold production of 232,542 ounces exceeded plan and the prior year comparative quarter, following standout performances from Malartic with 87,186 ounces, Jacobina with 49,662 ounces, El Peñón with 46,627 ounces and Cerro Moro with 30,929 ounces.

• Silver production of 2,356,853 ounces was in line with plan, following an exceptional performance from Cerro Moro. Quarterly silver production also well exceeded the prior year comparative quarter.
• Strong GEO(2) production from Yamana mines(4) of 260,960 GEO(2) was in line with plan, despite the gold to silver ratio being near an all-time high and significantly above that anticipated in the plan and guidance. Quarterly GEO(2) production also exceeded the prior year comparative quarter production of 241,341 GEO(2), on the back of strong gold production. Cerro Moro in particular exceeded the prior year comparative quarter GEO production by 105%.
• Year to date operating results comfortably position the Company to achieve both its annual production and cost guidance. The strong year to date gold equivalent production has exceeded budget despite the gold to silver ratio.

• Quarterly total cost of sales, cash costs(1) and AISC(1) on a per GEO(2) basis of $1,168, $734, and $1,084 respectively, were in line with plan and substantially unchanged versus the prior year comparative quarter. Productivity gains along with stable and, in some cases, better than expected costs, offset inflationary impacts on certain consumables, notably diesel. By the end of the quarter, the cost of several commodity-based consumables appeared to have peaked with

1

prices meaningfully below recent levels. Strong cash flows, free cash flows and increasing cash balances in the following quarters will support the modest planned increases to capital spending.

• Cash flows from operating activities for the three months ended June 30, 2022 were $187.8 million an increase of 22.3% compared to $153.5 million in the prior year comparative quarter. Net free cash flow(1) for the three months ended June 30, 2022 was $136.6 million, an increase of 41.7% compared to $96.3 million in the prior year comparative quarter.
• As at June 30, 2022, the Company had cash and cash equivalents of $545.1 million, including $213.8 million available for utilization by the MARA Project. Further, the Company has available credit of $750.0 million from its undrawn revolving credit facility. Net free cash flow(1) is expected to steadily increase quarter-over-quarter, with the strongest free cash flow generation expected in the second half of the year, and, in particular, during the fourth quarter. The Company expects cash balances to increase steadily throughout the year with the strongest contribution in the latter half of the year, also aided by the fact that higher income tax installments have been paid, as customary, in the first half of the year.
• Net earnings(3) for the three months ended June 30, 2022 were $72.1 million or $0.07 per share basic and diluted, compared to a net loss(3) of $43.9 million or $0.05 per share basic and diluted for the three months ended June 30, 2021. Adjusting items of $13.7 million(3), that management believes may not be reflective of current and ongoing operations, and which may be used to adjust or reconcile input models in consensus estimates, decreased net earnings(3) for the current period. For a complete list of adjustments attributable to Yamana Gold Inc. equity holders, refer to the Financial highlights section below.

Value Creation and Upside Optionality Underpinning Core Portfolio of Generational Assets

• The Company's exploration success and track record of mineral reserve replacement and mineral resource growth supports a clear pathway toward realizing significant and progressive production increases and increased cash flow generation. The board-approved program labeled the YAMANA 1.5 Plan supports the measured and prudent growth of approximately 50% to 1.5 million GEO(2) within the ten-year outlook horizon, with upside optionality from longer-term development projects which potentially extend the production platform beyond that timeframe and above that production level.
• The YAMANA 1.5 Plan is underpinned by multiple low-risk,low-capital projects that have the ability to be mixed and matched, and adhere to the Company's balanced approach to capital allocation, which is expected to generate significant and growing cash balances during the guidance period, positioning projects to be funded from that free cash flow generation. The multiple projects further benefit from being largely brownfield in nature, allowing for added flexibility with regards to sequencing and timing of such projects in response to prevailing market conditions, enabling each component to provide incremental growth and free cash flow generation on the path to achieving the growth plan. Such flexibility allows the Company to re-arrange, adjust or defer the projects at its discretion while still having the confidence in achieving the overall plan.
• The Company's near-term guided growth to 1.06 million GEO(2) is supported by the recently completed Phase 2 expansion at Jacobina and first production from the Odyssey Project in early 2023. Thereafter, to achieve the YAMANA 1.5 Plan, the Company's advanced, low-capital projects, which can be pursued and re-sequenced to add GEO(2) in a responsible and self-funded manner, include:
• • The construction of Wasamac, for which the recently completed strategic life-of-mine plan shows a faster production ramp-up to 200,000 ounces in 2027 and up to 250,000 ounces in 2028,
  • The Phase 3 Plant expansion at Jacobina with expected incremental production of 40,000 ounces of gold,
  • The Cerro Moro plant expansion with expected incremental production of 50,000 to 60,000 ounces of GEO(2) ,
  • The Minera Florida expansion with expected incremental production of 35,000 ounces of gold,
  • The Phase 4 Plant expansion at Jacobina with expected incremental production of 75,000 to 125,000 ounces of gold,
  • The Lavra Velha heap leach project with expected incremental production of 60,000 to 70,000 ounces of gold.

For further details on the above projects, please refer the Strategic Developments, Construction Developments and Advanced Stage Projects section below, Section 5: Construction, Development and Other Initiatives and Section 6: Exploration.

2

• The Odyssey Project at Canadian Malartic represents one important step towards realizing the YAMANA 1.5 Plan as it will establish a large sustainable gold production platform of 500,000 - 600,000 ounces (100% basis) with a strategic mine life into the 2040's. As of December 31, 2021, the Odyssey mineral resource holds 2.35 million ounces of gold in 25.2 million tonnes at a grade of 2.9 grams per tonne of indicated mineral resources and 13.15 million ounces of gold in 173.7 million tonnes at a grade of 2.4 grams per tonne of inferred mineral resources of which 7.3 million ounces, approximately 47% of the total mineral resource, is included in the technical study mine plan.
• • The construction decision made by the Canadian Malartic Partnership ("the Partnership") in the first quarter of 2021, prior to the declaration of mineral reserves, was made on the basis of 0.8 million ounces of Indicated Mineral Resources (100% basis), 13.5 million ounces of Inferred Mineral Resources (100% basis), an aggressive infill program to convert a significant component of inferred mineral resources to indicated mineral resources that will provide the basis for updated technical studies in 2023 which will allow the definition of mineral reserves for the Odyssey underground project over the next few years and starting at the end of 2022, and the very strong continuity and homogeneous nature of the East Gouldie deposit with favourable geometry and good rock quality similar to the open pit operation. Further, the proposed operations at the Odyssey Project were based on the results of an internal technical study conducted by the Partnership. The study presented a brownfields project with the utilization of the existing processing plant and infrastructure, as well as a clear path towards receiving a Certificate of Authorization for the underground project. Based on these strong attributes of the project, the Partnership determined that there was an opportunity to create significant value and extend the mine life of the asset making the decision to advance the project starting the underground development including the construction of the shaft, with limited to no risk in making such decision.
  • The size and continuity of the East Gouldie mineralized zone is highlighted by the rapid resource growth. The new zone was discovered in the fourth quarter of 2018 and the decision to start the shaft development was made in the first quarter of 2021. By the end of 2021 that decision was validated by further infill drilling, when 1.5 million ounces (11.9 million tonnes grading 3.88 g/t gold) had been converted to indicated mineral resources and an additional 1.2 million ounces (10.7 million tonnes at 3.4 g/t gold) had been added to new inferred mineral resources, largely within the 2020 East Gouldie resource envelope. The predictive exploration model consistently shows mineralization where the model expects it, and the Company has tested the reliability of that predictability. Infill drilling in 2022 continues to confirm the remarkable continuity of grade and width in the East Gouldie mineralized zone, and continues to improve the ore body, with indicated resource drilling meeting or exceeding the grade and width of the reported inferred resource. Twelve surface diamond drill rigs are active on East Gouldie, as well as four underground drill rigs on Odyssey South.
  • Drilling results are already in hand to support the conversion of a significant portion of inferred mineral resources declared in 2021 to indicated mineral resources by the end of 2022. These new indicated resources will, as aforementioned, provide the basis for updated technical studies in 2023 that will allow the definition of mineral reserves for the Odyssey underground project over the next few years, starting at the end of 2022.
  • Initial expansionary capital spend through to the end of 2022 is expected at less than $150 million (50% basis), with over half of that spend supporting ramp access and development of the Odyssey ore body. As underground development has now entered areas with established ore, once the plant feed commences in the first quarter of 2023, immediate return on capital spend is achieved and, as previously disclosed and discussed below, gold ounces produced will subsidize the further and more significant initial expansionary capital spend.
  • The initial expansionary capital of $1.14 billion (100% basis) through 2028 does not include any offsetting gross margin from this pre-commercial production due to amendments to the relevant accounting standard*, which represents a practical consequence of IFRS application, however cash outlays are expected to be partially offset by 932,000 ounces (100% basis) of production during the construction period. Assuming a gold price of $1,550 per ounce, more than half of this initial expansionary capital spend would be effectively offset and subsidized from such gross margin, such that the remaining net initial expansionary capital requirements from 2022 to 2028 is approximately $170 million on a 50% basis. For further details on the Odyssey project, please refer to the

3