Acadian Mining reports Q-2 loss from operations - Production outlook for Q-3 is positive



    Trading Symbol: ADA:TSX; C2Z-Frankfurt
    Shares Outstanding: 142,357,907

    HALIFAX, Aug. 14 /CNW/ - Acadian Mining Corporation (TSX: ADA) ("Acadian"
or the "Company") announced its second quarter financial results for the three
months ended June 30, 2008 and information on its Scotia Mine operations,
highlights of which are presented in Tables 1 & 2 below. Complete financial
statements and management's discussion and analysis of results are available
on the regulatory filing site www.sedar.com and the Company's website
www.acadianmining.com and should be read in conjunction with this news
release.
    The Company recorded a loss of $5,762,413 on revenues of $3,688,127 from
zinc and lead concentrate sales for the quarter. The loss for the quarter
reflects the impact of certain events in the pit operations and negative
pricing adjustments on concentrate sales settlement dates. The pit operations
are now running smoothly and the Company is initiating a revenue protection
program to curtail future negative pricing adjustments.

    
    Table 1 - Financial Highlights

    -------------------------------------------------------------------------
                                                      Quarter ended June 30
    -------------------------------------------------------------------------

                                                          2008          2007
    -------------------------------------------------------------------------
                                                             $             $
    -------------------------------------------------------------------------
    Revenue                                          3,688,127           nil
    -------------------------------------------------------------------------
    Operating income (loss)                         (5,658,985)     (867,370)
    -------------------------------------------------------------------------
    Net income (loss)                               (5,762,413)      600,061
    -------------------------------------------------------------------------
    Income (loss) per share                              (0.04)         0.01
    -------------------------------------------------------------------------
                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    Cash and equivalents                               137,683     3,022,687
    -------------------------------------------------------------------------
    Working capital                                 (3,826,266)    6,920,319
    -------------------------------------------------------------------------
    Total assets                                    61,977,699    63,043,437
    -------------------------------------------------------------------------

    The events in the pit operations which negatively impacted results in this
quarter stemmed directly from the previously reported (May 16, 2008) flooding
of the polishing pond in the first quarter. The flooding was due to extreme
run off caused by unusually heavy rainfalls coupled with snow melt, and
necessitated shutting down the pit pumps. While corrective measures were
implemented at the polishing pond to avoid future problems of this nature, the
475 bench in the central section of the pit, which is developed in reserve
grade ore, was lost due to water submersion subsequent to shutting down the
pit pumps. During the period to late April when the 475 bench ore was not
available, the plant processed material from low grade, higher level pit
benches and stock piles.
    In mid-May it was apparent that the small foot print of the central
section of the pit would not be capable of providing the flexibility needed to
take advantage of the increased mill capacity at 2,500 tpd and further
incremental throughput planned for late Q3-08.
    In order to address this issue, a decision was made to bring the north
section of the pit down to the 475 level as quickly as possible to
significantly expand the footprint of the pit in reserve grade ore. To achieve
this objective necessitated mining materials in excess of plan comprising
865,000 tonnes of waste material and low grade ore typical of higher bench
levels in the back reef portion of the deposit. This resulted in extending the
period of low grade mill feed to 10 June, 2008. Mill head grades in July and
August have improved to 3.17% zinc and 1.48% lead and 3.66% zinc and
1.01% lead respectively, and are expected to remain at mine grade, being a
combined zinc and lead grade of approximately 4.68% through Q-3 and Q-4.
    Ore Reserve block model data was reconciled with the blast hole drill data
on the 505 m level bench, and indicated a positive variance for both tonnes
and grade. This is a positive development which provides management with
confidence in the block model grade of benches scheduled to be mined for the
remainder of 2008 and beyond.
    A further significant improvement in the pit operations was also
undertaken in Q-2. This entailed the drilling of six, 18-inch wells
immediately peripheral to the planned pit perimeter to depths below the final
planned pit depth. Pumping from these wells has greatly improved pit
operations and productivity which previously was impacted by time lost through
moving submersible pit pumps prior to, and following blasting.
    The negative impact to financial results from pricing differentials
between those at shipping dates and settlement dates was significant. Prices
for both zinc and lead declined during Q-2 which resulted in a negative
adjustment of the final prices for concentrates shipped in Q-1. During the
quarter the Company requested hedging proposals from several groups and is
considering various revenue protection programs.
    To date, a portion of the Q-2 lead production has been sold forward, with
the settlement date of the contract, coinciding with the date of the
settlement by the concentrate buyer. At the time of this news release, no zinc
production has as yet been sold forward.
    Cash cost per pound of payable metal (zinc and lead) sold for the period
was $0.78, which exceeded the cost for the first quarter operating period by
$0.06. The increased cost of production reflects the above described
production issues experienced in Q-2. Cash cost per pound of payable metal
(zinc and lead) for Q-3 is forecast to decrease to approximately $0.55.
    Operational highlights for the quarter are presented in Table 2 below.

    Table 2 - Operational Highlights - Quarter ended June 30, 2008

    -------------------------------------------------------------------------
    Production                                         Q2 - 2008   Q1 - 2008
    ----------
    -------------------------------------------------------------------------
    Ore milled                     Tonnes                189,200     173,433
    -------------------------------------------------------------------------
    Head grade - zinc              Percent                  2.13        1.99
    -------------------------------------------------------------------------
    Head grade - lead              Percent                  1.03        1.09
    -------------------------------------------------------------------------
    Recovery - zinc                Percent                 82.65       75.21
    -------------------------------------------------------------------------
    Recovery - lead                Percent                 86.04       87.42
    -------------------------------------------------------------------------
    Zinc concentrate               Tonnes dry              5,592       4,253
    -------------------------------------------------------------------------
    Zinc concentrate               Grade %                 56.80       54.64
    -------------------------------------------------------------------------
    Zinc metal                     Tonnes                  3,176       2,324
    -------------------------------------------------------------------------
    Zinc metal                     Pounds              7,002,374   5,123,862
    -------------------------------------------------------------------------
    Lead concentrate               Tonnes dry              2,248       2,116
    -------------------------------------------------------------------------
    Lead concentrate               Grade %                 70.74       70.15
    -------------------------------------------------------------------------
    Lead metal                     Tonnes                  1,590       1,484
    -------------------------------------------------------------------------
    Lead metal                     Pounds              3,505,832   3,505,832
    -------------------------------------------------------------------------

    Metals Sold - Cost of Production
    --------------------------------
    -------------------------------------------------------------------------
    Zinc                           Tonnes                  2,686       2,568
    -------------------------------------------------------------------------
    Zinc                           Pounds              5,921,156   5,661,589
    -------------------------------------------------------------------------
    Lead                           Tonnes                  1,584       1,895
    -------------------------------------------------------------------------
    Lead                           Pounds              3,316,783   4,178,026
    -------------------------------------------------------------------------
    Zinc & lead                    Total pounds        9,237,939   9,839,615
    -------------------------------------------------------------------------
    Cost of production sold                           $7,189,056  $7,124,843
    -------------------------------------------------------------------------
    Cost of production sold        Per pound Zn & Pb       $0.78       $0.72
    -------------------------------------------------------------------------
    Cost of production sold        Per tonne milled       $37.98      $35.06
    -------------------------------------------------------------------------
    

    The Company's second quarter zinc and lead production was 74% and 77%,
respectively, of target, which was due to not having full access to mine
benches at and below the 475 m level during the quarter for reasons as
described above. This restricted access to reserve grade ore below the
475 m level resulted in lower head grades to the mill. The average zinc head
grade for the period was 2.13%, which was 75% of plan for the period and the
average lead head grade was 1.03% which was 79% of plan. Zinc and lead
recoveries in the mill were 82.65% and 86.04% respectively, which was 101% and
96% of plan. Further improvements in recoveries are anticipated in Q3. Mill
throughput for the quarter averaged 2,300 tpd at 90% mill availability.
Planned improvement to the crushing circuit in Q3 is expected to increase
throughput to 2,600-2,700 tpd.
    The company is implementing a cost reduction program at Scotia Mine
designed to ensure that every effort is being made to stay globally
competitive in a challenging and uncertain metal price environment.
    Despite reduced levels of production in the first half of 2008, the
Company is confident that with the planned increased mill throughput couple
with current head grades, the targeted production of 30,000 tonnes of zinc
concentrate and 12,000 tonnes of lead concentrate remains achievable in 2008.
The projected production is approximately 33.5 million pounds of payable zinc
and 17.7 million pounds of payable lead.

    Management Opinion
    ------------------

    Will Felderhof, President & CEO stated: "Obviously we are disappointed
with the 2nd quarter performance. However, with the major improvements in pit
operations, increased mill throughput to 2,500 tpd and ore grades at mine
plan, we are expecting the second half of 2008 to exceed our original
production targets for this period."

    About the Company
    -----------------

    Acadian is a Halifax, Nova Scotia, Canada based mining company which
operates a zinc-lead mine (Scotia Mine) at Gays River, Nova Scotia and is
exploring and developing gold, zinc-lead, and barite properties in Atlantic
Canada. The Scotia Mine operates as an open pit mine and is expected to
produce 30,000 tonnes of high grade zinc concentrate and 12,000 tonnes of high
grade lead concentrate in 2008. See Acadian's News Release No. 16-06 dated
July 17, 2006 for further details.
    The Company is also focused on developing five advanced gold properties.
All five of the properties, Beaver Dam, Tangier, Forest Hill, Goldenville and
Fifteen Mile Stream host gold resources described in technical reports
prepared in compliance with National Instrument 43-101 which are available on
www.sedar.com. Beaver Dam and Fifteen Mile Stream, located only 18 kilometres
apart, are targets for potential bulk tonnage - open deposits.
    The Company is bringing a new approach to the development of Nova Scotia
gold deposits by pursuing a multiple mine, central processing, managing and
servicing strategy.
    The Company holds a 29.1% equity interest in Royal Roads Corp. ("Royal
Roads"). Royal Roads is a Halifax, Nova Scotia, Canada based mineral
exploration and development company listed for trade on the TSX-Venture
Exchange under the trading symbol RRO, and on the Frankfurt Exchange under the
symbol RR91. The Company has two key assets, the Daniels Pond base metal
deposit and the former Buchans Mine, both 100% owned. The Company holds
additional exploration properties in Newfoundland, several of which are joint
ventured with third parties.
    The 100% owned Daniels Pond deposit is located in the 16,075 hectare
Tulks North mineral property strategically located in the centre of the
world-class Buchans base metal region in central Newfoundland, Canada. The
100% owned Buchans Mine property controls the past producing Buchans Mine, and
essentially all of the key mineral claims covering the Buchans Formation of
rocks which was host to the Lucky Strike base metal-silver deposit mined
previously by Asarco. The Lucky strike deposit was one of Canada's richest
base metal deposits.

    Forward Looking Statement
    -------------------------

    Certain information regarding the Company contained herein may constitute
forward-looking statements within the meaning of applicable securities laws.
Forward-looking statements may include estimates, plans, expectations,
opinions, forecasts, projections, guidance or other statements that are not
statements of fact. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. The Company
cautions that actual performance will be affected by a number of factors, many
of which are beyond the Company's control, and that future events and results
may vary substantially from what the Company currently foresees.
    Discussion of the various factors that may affect future results is
contained in the Company's 2006 Annual Report which is available at
www.sedar.com. The Company's forward-looking statements are expressly
qualified in their entirety by this cautionary statement.

    Other
    -----

    For additional information on the Company's properties and activities,
please visit our web site at www.acadianmining.com. If you wish to be added to
the Company's e-mail or fax distribution list for future news releases and
updates, please contact Acadian at phone: 902 444-7779, fax: 902 444-3296,
email: mail@acadianmining.com.

    No regulatory authority has approved or disapproved the contents of this
    release.




For further information:

For further information: G. William Felderhof, President & CEO; Terry F.
Coughlan, Vice President; (902) 444-7779, Toll Free: (877) 444-7774,
mail@acadianmining.com

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Acadian Mining Corporation

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