Yamana Gold Inc., the owner of the Chapada mine in Brazil, gained the most in more than a month after fourth-quarter profit topped analysts’ expectations.

Yamana (YRI/TSX) rose $1.07, or 10%, to $11.28 a share at 3:50 p.m. in Toronto Stock Exchange trading. A close at that price would be the biggest gain since Jan. 23. The stock has climbed 19% this year.

Chief executive Peter Marrone plans to more than double gold output by 2012 to exploit higher prices, which had their eighth straight annual gain last year. Toronto-based Yamana, like rivals Agnico-Eagle Mines Ltd. and Goldcorp Inc., is reaping the benefit of lower operating costs after declines in the price of fuel, equipment and steel.

Yamana has “exceptional growth, a better than average cost structure and a strong balance sheet,” Ron Coll, a mining analyst at Jennings Capital Inc., said Thursday in a note to clients. He recommends buying the shares and says they may rise to $12 within 12 months.

Yamana’s profit before some one-time items was 5 cents a share, according to research notes from Jennings and Salman Partners Inc. That tops the 4-cent average estimate of 18 analysts surveyed by Bloomberg.

Net income surged to US$179.4 million, or 25 cents a share, from US$47.1 million, or 8 cents, a year earlier, the company said. Sales slid 48% to US$114.1 million after the company accounted for a US$74.1-million pricing adjustment for copper sold in the previous quarter.

“We began to experience declining costs during the fourth quarter, confirming the expected downward trend and further increasing our margin to the gold price,” Mr. Marrone said Wednesday in a statement.

Mr. Marrone, who agreed to buy Meridian Gold Inc. and Northern Orion Resources Inc. in 2007, shunned acquisitions last year to develop Yamana’s own mines. Now, he may acquire smaller rivals to help boost gold output to 2.2 million ounces by 2012 and curb reliance on copper production after a rout in base-metal prices.

Profit was boosted by US$128-million in foreign-exchange gains and a US$56-million gain on hedge contracts for its copper output, Mr. Marrone said Thursday in a telephone interview from Toronto. Those helped offset the loss from adjustments made to copper concentrate sold, he said.

The company has fixed the price of 50 million pounds of copper to be sold this year at about US$3 a pound and 26.5 million pounds at US$1.54, he said.

Gold prices, which touched a record US$1,033.90 on March 17, averaged US$796.85 in the fourth quarter, 0.5% higher than a year earlier. Copper averaged US$1.77 a pound during the period, compared with about US$3.28 a year earlier.

Gold-equivalent production, which includes other metals, rose 11% to 254,774 ounces, the company said. The cost to produce an ounce of gold was US$383, Yamana said.

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