Yamana Gold Increases Cash Consideration; Reduces Minimum Tender Condition; and Extends Offer for Meridian Gold

Market Wire, September, 2007

YAMANA GOLD INC. (TSX: YRI)(NYSE: AUY)(LSE: YAU) today announced that it has reduced the minimum tender condition relating to the offer to acquire all of the outstanding common shares of Meridian Gold Inc. to 50.1 percent and extended the offer deadline to 8:00 pm (Toronto time) on October 2, 2007. Previously, the offer was contingent on 66 2/3 percent of the common shares on a fully diluted basis being deposited to the offer by 8:00 pm (Toronto time) on September 24, 2007.

Yamana has also increased the cash component of the offer by C$2.50 per share to a total of C$6.50 per share, which represents an approximate 63 percent increase in the cash portion of the consideration. The share component of the offer is unchanged. Meridian Gold shareholders will now be entitled to receive 2.235 Yamana common shares plus C$6.50 in cash for each Meridian common share tendered and taken up by Yamana. The cash portion of the consideration will be funded from currently available debt facilities.

Based on the closing prices of Yamana shares and Meridian shares 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 36 percent. The premium is approximately 37 percent based on the then 20-day average closing prices of each company's shares on the Toronto Stock Exchange. Based on Yamana's closing price at the time of the original proposal, the cash component now accounts for about 18.3 percent of the offer.

In arriving at the decision to increase the cash component of its offer, Yamana's management and Board of Directors considered, among other things, current market conditions, operational upside at Meridian's assets, the advice of its financial advisors and updated fairness opinions from Genuity Capital Markets and Canaccord Capital Corporation indicating that the revised terms of the offer are fair, from a financial point of view, to Yamana.

"Where we see the most upside with Meridian's assets is in the expansion of El Penon, the maturing of Mercedes as a development project and the ultimate permitting and development of Esquel," said Antenor Silva, Yamana's president and chief operating officer. "We believe that the expansion at El Penon can be successfully completed with the goal of expediting the increase in production from current levels. Although this will take time and effort, we have undertaken a similar expansion at one of our underground mines. At Mercedes, we expect to ultimately be able to develop a mine consistent in size and scope with Yamana's C1 Santa Luz project in Brazil. Based on our experience and track record in Argentina, we are confident that we have an excellent opportunity to develop Esquel and, in time, realize the value of the high grade gold deposit which presently has limited value."

"Based on our assumptions and the value we see in Meridian's assets, we are offering a full and fair premium to Meridian shareholders," commented Peter Marrone, Yamana's chairman and chief executive officer. "We urge any Meridian shareholders who have not yet tendered their shares to do so today. We also encourage support from Meridian as we believe this combination results in a compelling company offering significant value for all shareholders. We have evaluated all of the sources of additional value including what has been offered publicly by Meridian in recent announcements. Our revised offer follows discussions with our shareholders and Meridian shareholders and we believe the offer addresses the issues raised by Meridian. As we have said from the beginning, the transaction creates a substantive company that is greater than the sum of its parts."

WHY THE NEW YAMANA IS A SUPERIOR INVESTMENT

1. Superior Return on Investment

- Both Yamana and Yamana after this transaction is completed offer significantly higher earnings on a per dollar invested basis

2. Best Exposure to Cash Flow

- Yamana offers amongst the highest level of cash flow in its peer group on a per dollar invested basis and New Yamana offers significantly more exposure to gold prices

- Yamana's share price has correlated more favorably to the price of gold

3. Enhanced Operational Depth and Track Record

- Yamana built two significant mines last year alone: the Sao Francisco gold mine and the Chapada gold-copper mine (one of the three largest metal mines in Brazil)

- Yamana has a track record of meeting long-term production targets

4. Superior Growth Profile - Production, Earnings and Cash Flow

- New Yamana's growth is primarily fueled by Yamana's existing development project pipeline

- Yamana's growth is driven 100 percent by gold

5. Superior Risk-Reward Proposition

- There is a significant benefit to combining an established producer with lesser growth with a current producer showing substantial growth

- The New Yamana includes seven producing mines and a substantial gold-only development pipeline

- Yamana's project pipeline is backed by independent technical information and an experienced in-house development team