The Robins manager revealed that he has had initial discussions with the former Forest Green man but is preparing to lose Mohamed after two seasons and 18 goals.
"I said I would be making an offer to Mo, but I didn't know where I was money-wise and we were very honest with each other," Yates told the Gloucester Citizen.
"He genuinely said he has loved it here and that he has enjoyed working with everyone, myself and Neil (Howarth) included, but at this moment in time he doesn't see his future at this club.
"It's great that he was open and honest. He's been great for me for two seasons and I just respect his honesty, because he's had offers from one or two League One clubs and lots of clubs in our league - at least he had the guts to tell me to my face and we shook hands.
"That said, he'll still be getting a call from me offering him something because I think he's worth that, but as things stand I don't think he'll be here next season."
Yates said he would strongly recommend the club offer goalkeeper Scott Brown an extension to his current deal, which has another year left to run.
The Robins supporters' and players' player of the year started all 54 games during his ninth season with the club and will be due a testimonial next summer.
"I think he deserves it and I have spoken to him about it to see if he would be interested," Yates said.
"He's the best in League Two in my opinion and he wasn't banging my door down for a new contract, but I think he should be sorted out. Why not get your better players tied down for longer?"
- Sports & Recreation