Anvil Mining Reports Second Quarter 2009 Results



    
    TSX, ASX: AVM
    Common shares outstanding 101.9 million
    All amounts are expressed in US dollars, unless otherwise stated.
    

    MONTREAL, Aug. 13 /CNW Telbec/ - Anvil Mining Limited (TSX, ASX: AVM),
("Anvil" or the "Company"), today announced a net loss for the second quarter
ended June 30, 2009, of $11.3 million (-$0.13 per share), compared to net
income of $8.5 million ($0.12 per share) for the second quarter of 2008. Net
sales for the second quarter of 2009 totalled $7.7 million, compared to $59.8
million for the corresponding quarter in 2008. Negative cash flows from
operating activities, before working capital movements, of $6.4 million
(-$0.07 per share), compared to a positive cash flow of $24.6 million ($0.35
per share) in the second quarter of 2008. At June 30, 2009, the Company had a
cash balance of $48.7 million, available for sale investments of $12.6
million, trade receivables of $5.4 million and almost no debt. Copper
production for the second quarter of 2009 totalled 5,372 tonnes.
    The Company's 2009 second quarter results were negatively affected by a
number of factors including: significantly lower production and sales
resulting mainly from the cessation of mining and processing operations at the
Dikulushi and Mutoshi mines, lower realized copper prices and one-off charges
of $6.1 million.
    Bill Turner, President and CEO of Anvil, commented, "While the strategy
put in place during the fourth quarter of 2008 and implementation of a range
of further initiatives have involved significant one-off impacts on the
Company's financial performance, we believe that the Company is now better
positioned to move forward. The Kinsevere HMS plant which recommenced
operations in late March 2009 is on target to produce 8,900 tonnes of copper
through to the third quarter of 2009."
    Mr. Turner further commented, "We are especially pleased to have reached
agreement with Trafigura for a combined debt and equity financing arrangement
for an aggregate amount of $200 million that represents a fully financed
solution for the development of Kinsevere Stage II. With approximately 50% of
the Stage II capital cost already incurred, this financing package will enable
us to commence commissioning of Kinsevere Stage II in late 2010 and achieve
commercial production in 2011. Annual production is expected to be 60,000
tonnes of Grade A copper cathode at an estimated "C1"(1) cash cost of $0.89
per pound of copper. We believe that Trafigura, an internationally renowned,
independent commodities trading company, represents an excellent long-term
partner for Anvil and we look forward to working with them to successfully
complete Kinsevere Stage II and further develop the Company's interests in the
DRC."
    The complete second quarter 2009 unaudited financial statements together
with the related Management's Discussion and Analysis (MD&A) are available on
Anvil's website at www.anvilmining.com under the heading "Financial Reports"
within the Investor Relations section.
    
    ------------------------------------------
    (1) The C1 Cash cost is the mine gate cash cost that includes export
        duties and transportation and marketing charges but does not include
        royalties.
    

    Cash and Liquidity

    As at August 12, 2009, Anvil had approximately $40.0 million in cash,
$10.5 million in available-for-sale investments and $5.2 million of
receivables, the majority of which it expects to realize during the third
quarter of 2009. During the next 12 months the Company's commitments include
$12.2 million for Pas de Porte (entry premium) payments due to La Générale des
Carrières et des Mines ("Gécamines") with respect to the Kinsevere and Mutoshi
amended agreements and $19.5 million that relates to the Kinsevere Stage II
development. In July 2009, the Company paid to Gécamines the first tranche of
the Pas de Porte of $10 million for Kinsevere, less an amount of $2.2 million
due to Anvil by Gécamines with respect to past purchases of copper
concentrates by Gécamines.

    Kinsevere HMS Production

    The Kinsevere HMS plant was restarted on March 27, 2009, with feed to the
plant sourced from the Run of Mine ("ROM") stockpile and at June 30 has
produced 21,655 tonnes of concentrate, grading 25.7% for 5,571 tonnes of
copper. The HMS plant is expected to produce approximately 8,900 tonnes of
copper contained in concentrates through to the end of the third quarter of
2009, at an operating cash cost at the mine gate of less than $0.50/lb Cu
(inclusive of sunk costs). Table 1 below sets out the details of the
performance of the HMS plant for the second quarter and year to date.
    In order to extend the operation of the HMS plant beyond the end of the
third quarter 2009, during August, the Company plans to resume mining in the
Stage I Central (Tshifufia) Pit where ore faces and broken stocks with an
inventory of approximately 825,000 tonnes with a grade in excess of 5.0%
copper are available.

    
                 Table 1. Performance of Kinsevere HMS Plant
    -------------------------------------------------------------------------
                                                          Second        Year
                                                         Quarter     to date
                                                           ended          at
                                                         June 30,   June  30,
                                                            2009        2009
    -------------------------------------------------------------------------
    Ore mined (tonnes)
    -------------------------------------------------------------------------
    Ore processed(1)                                      83,084      85,780
    -------------------------------------------------------------------------
    HMS feed grade (%Cu)                                     7.9         8.0
    -------------------------------------------------------------------------
    Contained copper (tonnes)                              6,566       6,837
    -------------------------------------------------------------------------
    HMS copper recovery (%)                                 70.9        70.9
    -------------------------------------------------------------------------
    Copper produced in concentrate (tonnes)                5,372       5,571
    -------------------------------------------------------------------------
    Copper sold(2) (tonnes)                                3,060       4,121
    -------------------------------------------------------------------------
    Operating cash cost (ex mine-gate)
    $/tonne of concentrate                                   484         734
    -------------------------------------------------------------------------
    1. Ore processed relates to ore processed through the HMS plant.
    2. At July 31, 2009, the Company held a stockpile of 5,295 tonnes of
       copper contained in concentrate.
    

    Kinsevere Stage II

    On August 10, 2009 the Company announced that it had reached agreement
with Trafigura Beheer B.V. ("Trafigura") for a combined debt and equity
financing arrangement for an aggregate amount of $200 million that represents
a fully financed solution for the development of Kinsevere Stage II. Under the
terms of the equity financing, Trafigura will subscribe for Anvil equity units
by way of private placement, which will result in proceeds to Anvil of $100
million. Each Anvil equity unit will be issued at a price of C$2.20 and
consist of one common share of Anvil and 0.232 of one common share purchase
warrant. The equity financing will be undertaken in two tranches, the first of
which will bring Trafigura's aggregate equity interest in Anvil to 19.9% and
the second of which, will increase Trafigura's shareholding to approximately
36% of the issued and outstanding common shares of Anvil, with an opportunity
to increase its shareholding to approximately 39% on a fully-diluted basis
should it exercise the common share purchase warrants.
    Trafigura will also make available to the Company a loan facility with a
total commitment of $100 million. The term of the loan facility is five years
from the first drawdown and all amounts outstanding under the loan facility
will bear interest at a rate per annum equal to LIBOR plus 4%, plus the cost
of political risk insurance.
    The second tranche of the equity financing, the debt finance and the
additional agreements described below are subject to normal regulatory
approvals and shareholder approval.
    In addition to the agreements reached in connection with the equity and
debt financing, the Company has reached agreement with Trafigura on the
principal terms of an offtake agreement, a technical services agreement and an
ancillary rights agreement.
    In July 2009, the Company re-engaged with Ausenco Limited ("Ausenco"),
signing a contract for recommencement of work on engineering and design work
relating mainly to electrical, piping and instrumentation, which was
approximately 80% complete at the time the project was placed on hold in
November 2008. The Company is also working to put in place a Lump Sum Turnkey
contract for completion of the construction and fabrication works, the
awarding of which is conditional upon receiving the normal regulatory
approvals and shareholder approval of the funding package with Trafigura.
    As at August 12, 2009 approximately $199 million ($179.5 million spent,
$19.5 million committed) of the budgeted cost of $394 million had been
invested. The increase in capital cost is a result of several factors
including: redundancy payments to Kinsevere Stage II personnel; payment of
demobilisation costs to contractors; charges associated with the cancellation
of the engineering and design works; penalties in connection with the
cancellation and suspension of orders; provision for reestablishment of
contracts and remobilisation and some escalation primarily due to the contract
being a LSTK contract rather than an engineering, procurement and construction
management contract.

    Conclusion of DRC Government Review of Anvil's Mining Agreements

    During July 2009 the Company finalised an amendment agreement with
Gécamines and the Government of the Democratic Republic of Congo ("DRC") on
the revised terms of its Mutoshi Joint Venture ("JV") Agreement. As a result,
the Company's interest in the Mutoshi JV has reduced from 80% to 70% and an
additional Pas de Porte payment of $14.4 million is payable to Gécamines in
two tranches; $7.2 million is to be paid within 6 months of the amended
agreement and the balance ($7.2 million) within 18 months. The finalisation of
the Mutoshi JV negotiations, together with the amendment agreement reached on
the Company's Kinsevere Lease Agreement and the Dikulushi Mining Convention,
brings to an end the DRC Government's review of the Company's mining
agreements.

    Cancellation of Q2 Conference Call and Webcast

    Please note that the second quarter 2009 conference call, previously
scheduled to take place at 8:30 a.m. (Canada, Toronto time) today, Thursday
August 13, 2009, has been cancelled due to the recent update provided at the
conference call held on Monday August 10, 2009 on the agreement reached with
Trafigura regarding a $200 million funding package; the status of Kinsevere
Stage II and the Company's cash position.

    Anvil Mining Limited is a copper producer whose shares are listed for
trading on the Toronto Stock Exchange (as common shares) and the Australian
Securities Exchange (as CDIs) under the symbol AVM.

    Caution Regarding Forward Looking Statements: This news release contains
"forward-looking statements" and "forward-looking information", based on
assumptions and judgements of management regarding future events and results.
Such "forward-looking statements" and "forward-looking information which may
include, but is not limited to the operation of the Kinsevere HMS plant, the
liquidation of the Company's available-for-sale investments and the Company's
plans for expansions of the Kinsevere copper mine. Often, but not always,
forward-looking information can be identified by the use of words such as
"plans", "expects", "is expected", "is expecting", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "believes", or
variations (including negative variations) of such words and phrases, or state
that certain actions, events or results "may", "could", "would", "might", or
"will" be taken, occur or be achieved. The purpose of forward-looking
information is to provide the reader with information about management's
expectations and plans for 2009. Readers are cautioned that forward-looking
information involves known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of Anvil
and/or its subsidiaries to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
information. Such factors include, among others, the actual market prices of
the available-for-sale investments, the actual market price of copper, changes
in project parameters as plans continue to be evaluated, and the possibility
of cost overruns, as well as those factors disclosed in the Company's filed
documents. There can be no assurance that the Stage II expansion of the
Kinsevere copper mine will proceed as planned or that the transactions
proposed with Trafigura will be successfully completed within expected time
limits and budgets or that, when completed, the expanded production facility
will operate as anticipated.

    

                                   Appendix
                Key Financial and Production Data (unaudited)

    -------------------------------------------------------------------------
                                       3 months ended        6 months ended
                                           June 30               June 30
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revenues: ($ millions)(1)           7.7       59.8        9.4      135.1
    -------------------------------------------------------------------------
    Operating (loss) / profit :
     ($ millions)                      (7.7)      16.0      (22.1)      49.7
    -------------------------------------------------------------------------
    Provision for impairment:
     ($ millions)                      (0.2)         -       (3.9)         -
    Exploration expenditure
     written off ($ millions)          (3.2)         -       (3.2)         -
    -------------------------------------------------------------------------
    Net (loss)/ Income:
     ($ millions)                     (11.3)       8.5      (30.2)      30.0
    -------------------------------------------------------------------------

    PRODUCTION STATISTICS:

    Consolidated Group
    Copper produced in
     concentrates (tonnes)            5,372     10,521      5,571     22,548
    Silver produced in
     concentrates (ounces)                -    248,816          -    731,472

    Per Mine
    Kinsevere mine
    Ore mined (tonnes)                    -    578,350          -  1,520,731
    Ore processed (tonnes)(2)        83,084     94,403     85,780    186,394
    Copper grade (% Cu)                 7.9       10.0        8.0        9.6
    Contained copper in ore
     (tonnes)                         6,566      9,424      6,837     17,823
    Recovery Cu (%)                    70.9       68.3       70.9       63.3
    Copper produced in
     concentrates (tonnes)            5,372      6,433      5,571     11,288
    Copper produced in blister
     (tonnes)                             -          -        461          -
    -------------------------------------------------------------------------
    Costs of production ($)

    Operating cash costs per
     tonne of concentrate
     (ex mine gate) $/t                 484        278        734        321
    -------------------------------------------------------------------------
    Dikulushi mine
    Ore mined (tonnes)                    -     33,159          -     63,470
    Ore processed (tonnes)(3)             -    110,990          -    210,523
    Feed grade (% Cu)                     -        3.1          -        4.2
    Contained Copper in Ore
     (tonnes)                             -      3,399          -      8,903
    Recovery Cu (%)                       -       76.7          -       84.2
    Copper produced in
     concentrates (tonnes)                -      2,607          -      7,491
    Silver produced in
     concentrates (ounces)                -    248,816          -    731,472
    Operating cash cost (ex mine
     gate) (after silver credits)
     ($/lb)                               -       0.73          -       0.39
    -------------------------------------------------------------------------
    Total cash costs from
     operations ($/lb)                    -       1.24          -       0.89
    -------------------------------------------------------------------------

    Mutoshi mine
    Ore mined (tonnes)                    -    200,035          -    287,991
    Ore processed (tonnes)(4)             -    130,693          -    237,427
    Copper grade (% Cu)                   -        3.7          -        4.0
    Contained copper in ore
     (tonnes)                             -      4,872          -      9,545
    Recovery Cu (%)                       -       30.4          -       39.5
    Copper produced in
     concentrates (tonnes)                -      1,481          -      3,768
    -------------------------------------------------------------------------
    Costs of production: ($)
    Operating cash costs per
     tonne of concentrate
     (ex mine gate)                       -      1,164          -        871
    -------------------------------------------------------------------------
    1. Includes provisional and final pricing adjustments and treatment and
       refining charges.
    2. Kinsevere commenced production in June 2007 as an HMS processing
       operation.
    3. Ore processed at Dikulushi relates to ore processed through the ball
       mill and flotation plant.
    4. Ore processed at Mutoshi and Kinsevere relates to ore processed
       through the HMS plants.


                   Consolidated Balance Sheets (unaudited)
              (Expressed in thousands of United States dollars)

                                                         June 30 December 31
                                                            2009        2008
                                                               $           $
    ASSETS
    Current assets
    Cash and cash equivalents                             48,677      45,033
    Restricted cash                                          964         871
    Accounts receivable                                    9,478      24,243
    Inventories                                           23,964      31,064
    Available-for-sale investments                        12,635      24,032
    Prepaid expenses and deposits                         33,142      51,258
                                                        ---------------------
                                                         128,860     176,501
    Equity accounted investment                                -       1,320
    Long-term inventory                                   10,651      10,651
    Long-term receivable                                  13,411      12,464
    Exploration and acquisition expenditure               49,790      51,352
    Property, plant and equipment                        320,120     280,334
                                                        ---------------------
                                                         522,832     532,622
                                                        ---------------------
                                                        ---------------------
    LIABILITIES
    Current liabilities
    Accounts payable and accrued liabilities              29,059      34,731
    Income taxes payable                                     414         463
    Other liabilities                                      1,759       2,460
    Current portion of long-term debt                        535         362
                                                        ---------------------
                                                          31,767      38,016
    Future income tax liability                           19,167      24,431
    Long-term debt                                           195         321
    Asset retirement obligations                          13,410      12,980
                                                        ---------------------
                                                          64,539      75,748
    Non-controlling interest                               1,118       1,909
                                                        ---------------------
                                                          65,657      77,657
                                                        ---------------------
    Shareholders' equity
    Equity accounts                                      412,444     383,419
    Retained earnings                                     40,805      70,987
    Accumulated other comprehensive income                 3,926         559
                                                        ---------------------
    Total shareholders' equity                           457,175     454,965
                                                        ---------------------
                                                         522,832     532,622
                                                        ---------------------
                                                        ---------------------


         Consolidated Statements of Income and Comprehensive Income
                                 (unaudited)
               (Expressed in thousands of United States dollars
                          except per share amounts)

                                       3 months ended        6 months ended
                                           June 30               June 30
                                       2009       2008       2009       2008
                                          $          $          $          $

    Sales                             7,738     59,789      9,384    135,056
    Operating expenses              (11,371)   (27,928)   (23,823)   (61,986)
    Amortization                     (4,032)   (15,897)    (7,697)   (23,390)
                                   ------------------------------------------
                                     (7,665)    15,964    (22,136)    49,680
                                   ------------------------------------------

    Other income                        125      2,428        446      5,247
    Share of loss in associates           -          -          -       (336)

    Provision for impairment of
     assets                            (258)         -     (4,935)         -
    Exploration expenditure
     written off                     (3,224)         -     (3,224)         -
    General, administrative and
     marketing                       (3,208)    (7,021)    (5,842)   (12,413)
    Foreign exchange gains              905        334      1,545        382
    Stock based compensation            254       (433)    (1,106)    (1,000)
    Interest and financing fees        (280)       748       (518)      (857)
                                   ------------------------------------------
    (Loss) / earnings before
     income tax and
     non-controlling interest       (13,351)    12,020    (35,770)    40,703

    Income tax recovery /
     (expense)                        1,692     (3,712)     5,234     (9,309)
    Non-controlling interest
     share of loss / (gain)             310        208        354     (1,439)
                                   ------------------------------------------
    Net (loss) / income             (11,349)     8,516    (30,182)    29,955

    Other comprehensive income,
     net of  taxes
    Net unrealized gain on
     available-for-sale
     investments                      3,367        200      3,367        342
                                   ------------------------------------------
    Total comprehensive (loss) /
     income                          (7,982)     8,716    (26,815)    30,297
                                   ------------------------------------------
                                   ------------------------------------------

    Basic (loss) / earnings
     per share ($)                    (0.13)      0.12      (0.37)      0.42
    Diluted (loss) / earnings
     per share ($)                    (0.13)      0.12      (0.37)      0.42



               Consolidated Statement of Cash Flows (unaudited)
              (Expressed in thousands of United States dollars)

                                       3 months ended        6 months ended
                                           June 30               June 30
                                       2009       2008       2009       2008
                                          $          $          $          $

    Cash flows from operating
     activities
    Net (loss) / earnings for
     the period                     (11,349)     8,516    (30,182)    29,955
    Items not affecting cash
      Amortization                    4,032     15,897      7,697     23,390
      (Gain) on derivative
       instruments                        -       (960)         -          -
      Share of loss in associates         -          -          -        336
      (Gain) / Loss on sale of
       assets                            52        (31)        42        257
      Exploration expenditure
       written off                    3,224          -      3,224          -
      Provision for impairment
       of assets                        258          -      4,935          -
      Accretion expense                 215          -        430          -
      Non-controlling interest
       share of (loss) / income        (310)      (208)      (354)     1,439
      Unrealized foreign exchange
       losses                          (552)       467         59        550
      Future tax                     (1,719)       530     (5,265)     3,063
      Stock based compensation         (254)       433      1,106      1,000
    Changes in non-cash working
     capital                          1,025     (7,008)    11,806    (23,362)
                                   ------------------------------------------
                                     (5,378)    17,636     (6,502)    36,628
                                   ------------------------------------------
    Cash flows from investing
     activities
    Payments for property, plant
     and equipment                   (9,649)   (55,956)   (27,297)   (95,198)
    Proceeds from sale of assets        342         61        352        240
    Payments for exploration and
     evaluation expenditure             (42)   (10,592)    (1,108)   (15,359)
    Proceeds of principal
     repayments from investments     11,060      6,057     11,528      7,305
                                   ------------------------------------------
                                      1,711    (60,430)   (16,525)  (103,012)
                                   ------------------------------------------
    Cash flows from financing
     activities
    Proceeds from issue of shares
     (net of issue expenses)         27,199        302     27,199        518
    Proceeds from borrowings
     (net of fees incurred)               -          -          -        800
    Repayment of borrowings               -        (38)         -        (38)
    Movement in restricted cash         (79)    (1,291)       (93)    (1,193)
    Disbursements on behalf of
     Dikulushi Trusts                  (434)    (2,304)      (437)    (3,099)
                                   ------------------------------------------
                                     26,686     (3,331)    26,669     (3,012)
                                   ------------------------------------------
    Net increase / (decrease) in
     cash and cash equivalents       23,019    (46,125)     3,642    (69,396)
    Cash and cash equivalents at
     beginning of the period         25,617    192,498     45,033    215,754
    Effects of exchange rate
     changes on cash held in
     foreign currencies                  41       (187)         2       (172)
                                   ------------------------------------------
    Cash and cash equivalents at
     end of the period               48,677    146,186     48,677    146,186
                                   ------------------------------------------

    

    %SEDAR: 00020549E




For further information:

For further information: Craig Munro, Senior Vice President Corporate &
CFO, Tel: +61 (8) 9481 4700, craigm@anvilmining.com (Perth); Robert La
Vallière, Vice President Corporate Affairs, Tel: (Office) (514) 448-6664,
(Cell) (514) 944-9036, robertl@anvilmining.com (Montreal); Website:
www.anvilmining.com

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