share of Yamana, and one-half of a warrant to pur- chase more common shares.A full warrant entitles Royal Gold to purchase another common share of Yamana.The exercise price of the warrants was orig- inally Cdn $0.50 per share, but was re-priced to Cdn $0.30.The Units expire February 2003. Royal Gold also purchased an additional 2 million shares and 2 million warrants for US$250,000, in early 2001. These warrants have an exercise price of US$0.15 and expire in February 2004. Royal Gold now holds about 10% of the issued and outstanding shares  of Yamana. Royal Gold holds a 2% net smelter returns  royalty on all mineral production from all the devel- opment and exploration properties of Yamana Resources Inc. (TSE:YRI) encompassing about 365,000 acres (148,000 hectares), in Santa Cruz Province, southern Argentina.Yamana’s properties include the high-grade silver property known as  the Martha mine at the Bacon prospect, and the high-grade gold property known as Coyote at the Martinetas prospect.Yamana thinks this large land package hosts excellent potential for the discovery of substantial gold-silver deposits, with continued exploration. At the Bacon prospect,Yamana succeeded in putting the Martha mine into production during this fiscal year.The property features high grade, direct shipping ore (“DSO”).The high grade ore is mined and shipped directly to a smelter, without further mine site processing. Development of the mine, pri- marily including decline construction, commenced  in October 2000.Yamana has advised Royal Gold that through July 2001, eleven shipments of DSO, or 2,935 tons (2,663 tonnes) of material containing approximately 1.5 million ounces of equivalent silver, have been shipped from the Martha mine to the smelter in Quebec, Canada. Royal Gold has received royalty payment for all of these eleven shipments. Production from this initial Phase I operation, which Yamana projects to produce about 2.9 million ounces of equivalent silver, is expected to continue into early 2002. Royal Gold also acquired, through a private placement in February 2000, three million Units of the equity securities of Yamana Resources Inc. for Cdn $1.8 million. Each Unit consists of one common Royal Gold holds a 5% net smelter returns roy- alty on a portion of the Mule Canyon property, operated by Newmont Gold Company. Approximately 24,000 ounces of gold is expected to be produced from the portion of the Mule Canyon deposit that is subject to this royalty interest, pending a production commitment by Newmont. 8  MULE CANYON  LANDER COUNTY, NEVADA YAMANA RESOURCES, SANTA CRUZ PROVINCE, ARGENTINA PORTAL OF THE MARTHA MINE DECLINE.