Yamana Extends Offer for Meridian Gold and Increases Cash Consideration to C$4.00 Per Share

Market Wire, August, 2007

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

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

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

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

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

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

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

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

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

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

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

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

Conference Call

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