Constellation Copper reports delayed third quarter 2007 financial results



    DENVER, CO, Jan. 11 /CNW Telbec/ - Constellation Copper Corporation
("Constellation" or the "Company") (TSX: CCU) announced today its financial
results for the quarter ended September 30, 2007. The Company's management had
previously determined it was impractical to meet the original filing
requirements and provide meaningful unaudited financial statements until a
management evaluation was completed. All dollar amounts are in US dollars
unless otherwise stated.

    
    Recent developments
    -------------------

    - A comprehensive management evaluation of Lisbon Valley completed in
      late November 2007 resulted in the conversion to a "leach only"
      operation and planned cessation of normal mining operations at the end
      of January 2008. In connection with the decision and due to a variety
      of operating factors, the Company recorded an asset impairment of
      $92.9 million.
    - The Company is amending its commodity swap arrangements to defer
      $5.1 million of settlement payments and also to close-out approximately
      7.5 million pounds of copper forward sales at a fixed price of
      $3.08 per pound.
    - In November 2007, the Company revised its copper offtake agreement to
      simplify pricing and reduce uncertainty of volatile copper markets.
    - Lisbon Valley production in the third quarter of 2007 was
      4,433,000 pounds of copper cathode at a cash cost of $1.77 per pound,
      excluding royalties and taxes of $0.04 per pound.
    - Copper sales during the third quarter of 2007 were 4,693,000 pounds at
      an average price of $3.42 per pound.
    - Copper production at Lisbon Valley was 4,090,000 pounds for the fourth
      quarter of 2007 and 19,773,000 pounds for the full year of 2007.
    - A preliminary economic assessment ("PEA") for the San Javier property
      in Sonora, Mexico was completed in December 2007, indicating the
      project is both technically and economically feasible.
    - Limited engineering and evaluation activities continued at the Terrazas
      property in Chihuahua, Mexico.

    Going concern and liquidity
    ---------------------------

    Since achieving commercial production on November 1, 2006, the Company has
a history of operating losses and negative cash flows due to insufficient
copper production at Lisbon Valley. Recovery of copper from the heap leach
process has been significantly slower than anticipated in the original
feasibility studies and cash flow assumptions, resulting in continued
requirements to fund increases to in-process inventories. Since inception, the
Lisbon Valley mine has experienced operating difficulties and high maintenance
costs primarily relating to its crushing and material handling systems.
Extended periods of cold weather and greater than normal precipitation also
have resulted in delays and inefficiencies.
    In addition to funding working capital, the Company is required to settle
forward sales contracts each month at copper prices that are currently
significantly lower than the market price of copper. The forward sales
contracts, which continue through December 2008, were put in place primarily
as a requirement of the Lisbon Valley project financing. In connection with a
proposed amendment to the Company's commodity transaction agreement with
Investec Bank (UK) Limited ("Investec"), the Company deferred $5,100,000 of
forward settlements until no later than December 31, 2008. The Company is
required to pay monthly interest on the amount deferred at an annual rate of
LIBOR plus 4%. The Company is also required to make interest payments of
approximately Cdn.$1.9 million semi-annually in March and September on its
outstanding Cdn.$69.0 million 5.5% senior convertible debentures.
    In late November 2007, as a result of a comprehensive management
evaluation of Lisbon Valley operations, the Company announced its decision to
cease mining and crushing activities and convert the Lisbon Valley mine to a
leach only operation in early 2008. The evaluation included analyses of
various mining plans, waste stripping requirements, contract mining
arrangements, available mining equipment, projected copper prices and
extensive operating cost and cash flow projections. In connection with the
evaluation and conversion to a leach only operation, the Company recorded an
asset impairment of $92,918,000.
    The remaining Lisbon Valley asset carrying values will be reviewed in
subsequent periods and adjusted if it becomes determinable that additional
amounts may not be recoverable. Circumstances that could lead to additional
impairments include, but are not limited to, lower than expected copper
production, lower copper prices, higher than expected operating costs, and an
inability to renegotiate material contracts to terms more favorable to the
Company. Future adjustments could be material.
    At September 30, 2007, the Company had approximately $10,871,000 of cash.
The cash balance has been reduced further to approximately $3,200,000 at
December 31, 2007 and in order to provide liquidity, the Company is actively
pursuing various near term financing alternatives, including bank financing,
equity investment, mergers, and sale of certain assets or sale of the entire
company. There is significant doubt about the Company's ability to continue as
a going concern.

    Lisbon Valley
    -------------

    The Lisbon Valley mine has continued to operate below expectations. Copper
production was 4,433,000 pounds for the third quarter of 2007, compared to a
projection of approximately 4,800,000 pounds. A significant portion of the
production shortfall during the 2007 third quarter related to 2.5 days of
unscheduled downtime of the solvent extraction electrowinning ("SX-EW") plant
as a result of problems with the electrical control and other mechanical
systems. This is the first time the SX-EW plant has been out of service for an
extended period since commissioning in early 2006. In addition to the process
plant downtime, the agglomerator, which mixes crushed ore with sulfuric acid
before the ore is loaded onto the leach pad, was out of service for six days
in July 2007 for unscheduled maintenance.
    During the quarter ended September 30, 2007, the Company loaded 18,859,000
contained pounds of copper on the leach pad, including 7,378,000 contained
pounds in primary crushed ore (minus six-inch size) loaded directly to a
separate area of the leach pad. Through June 30, 2007, all ore had been
processed through the secondary crushing system and agglomerator before being
stacked on the leach pad. In July 2007, the Company leased three 100-ton
capacity haul trucks and a dozer for a period of six months to haul
supplemental ore from the primary crusher to the leach pad. Initially, the
truck hauled ore was expected to be predominantly oxide ore. To date, the
truck hauled ore has consisted of mostly slower leaching sulfide ore. The
results from leaching the primary crushed ore have not been significantly
different from stacked ore.
    At September 30, 2007, there was only enough pumping capacity at Lisbon
Valley to irrigate about half of the ore stacked on the leach pad. In June
2007, the Company began constructing an Intermediate Leach Solution (ILS) pond
and distribution system to double the amount of ore under leach. The ILS
system was completed in mid-November 2007, as scheduled. The ILS system is
expected to increase the grade of the pregnant leach solution (PLS) by
re-circulating ("stacking") the low grade solution through previously leached
areas of the leach pad before it is processed through the SX-EW plant. The
full benefit from the ILS system is not expected to be realized until the
second quarter of 2008.
    Copper sales were 4,693,000 pounds at an average realized copper price of
$3.42 per pound during the third quarter of 2007. The copper price realized
during the first and second quarter of 2007 was $2.70 and $3.43 per pound,
respectively. Realized copper prices do not include forward sales or put
option contract activities.
    During October 2007, the Company suspended exploration drilling activities
at Lisbon Valley to conserve cash.
    In late November 2007, the Company decided to suspend mining and crushing
activities and convert the Lisbon Valley mine to a leach only operation. The
Company's evaluation included various long-term mining plans given the
existing waste to ore stripping ratio requirements and instability in the
Centennial open pit wall at Lisbon Valley. The Company also evaluated the cost
and benefits of contract mining arrangements and the availability and cost of
obtaining additional mining equipment. The evaluation of other operating costs
included recent increases to sulfuric acid prices, availability and costs of
additions to the work force in a very tight local labor market and continual
problems experienced since inception with the mine's material handling
systems. In addition, the Company evaluated the results of recent production
enhancements, long-term copper price projections and its existing forward
sales positions.
    The Company expects normal mining operations to continue until the end of
January 2008. In connection with the decision to convert to leach only and in
compliance with federal requirements, the Company notified approximately
100 employees, including the entire mining and crushing departments, that
their positions would be eliminated at or soon after the end of January 2008.
    As a result of continued production difficulties and the resultant
conversion to leach only, the Company assessed the estimated recoverability of
the Lisbon Valley assets and recorded an asset impairment charge of
$92,918,000 at September 30, 2007.
    Leaching of ore on the leach pad is expected to continue as long as it
remains economic, depending on recovery rates, market copper prices and
operating costs, including the successful re-negotiation of the terms of
certain material contracts. At present, leaching is expected to continue until
June 2010.

    Exploration and development projects
    ------------------------------------

    During the quarter ended September 30, 2007, the Company continued
drilling and related activities at the San Javier project in Sonora, Mexico.
In-fill drilling of the Cerro Verde deposit of the project was partially
completed prior to the suspension of drilling activities in October 2007 to
conserve cash. Boundary definition drilling was completed at Cerro Verde
earlier in 2007. Results from column tests started during the second quarter
of 2007 to examine the leaching characteristics of different ore types and
crush sizes have been encouraging, and indicate rapid leaching and low acid
consumption of the bulk samples.
    A PEA was completed in December 2007, as scheduled. The PEA indicates the
project is both technically and economically feasible and recommends
advancement to the next stage of evaluation. The San Javier project is
currently envisioned as an open pit, heap leach mine with a conventional SX-EW
processing facility with a nominal processing rate of 30,000 tonnes of ore per
day and average annual production of 49.3 million pounds of copper over the
first five years at an average operating cost of $1.14 per pound. The initial
capital cost is estimated to be $238.9 million, including all mining equipment
and a $39.2 million contingency.
    During the third quarter of 2007, the Company performed limited
engineering and cost studies for an agitation leach processing alternative at
the Terrazas property in Chihuahua, Mexico. The Company is evaluating
additional sources of zinc oxide materials for processing at the site and
continues to consider partnering opportunities for the Terrazas project, as
well as other financing alternatives.

    Results of operations
    ---------------------

    The Company had a net loss of $97,955,000 ($0.55 per share) for the third
quarter of 2007, compared to a net loss of $10,126,000 ($0.06 per share) for
the third quarter of 2006. The net loss in the third quarter of 2007 included
an asset impairment of $92,918,000, related to continued production problems
and the conversion to a leach only operation at Lisbon Valley.
    Revenues during the third quarter of 2007 were $16,071,000 from the sale
of 4,693,000 pounds of cathode copper at an average price of $3.42 per pound.
Costs of sales, excluding depreciation and amortization costs, were
$8,553,000, or $1.82 per pound of copper sold. Non-cash costs of $1,841,000,
$0.39 per pound sold, are combined with non-operating depreciation and
amortization of $16,000 and reported separately on the consolidated statement
of operations. Depreciation and amortization in the third quarter of 2006 was
$21,000, all relating to corporate activities. All mine operating
expenditures, net of revenues, in the third quarter of 2006 were capitalized.
    The net loss for the third quarter of 2007 included a realized loss of
$6,459,000 on derivative instruments, including $5,725,000 on settlement of
forward sales contracts, $549,000 on expiry of put options and $185,000 final
settlement for deliveries of cathode copper under the terms of the Company's
offtake agreement. In accordance with the newly adopted CICA's financial
instrument accounting guidelines, the customer's option to price their
purchases during the month subsequent to delivery creates an embedded
derivative instrument in instances where that pricing option is selected. The
customer selected the subsequent month pricing option for the second, third
and fourth quarters of 2007. In November 2007, in an effort to reduce the
uncertainty of copper markets, the Company agreed to revise the terms of its
offtake agreement to temporarily suspend the customer's option to final copper
pricing in the month after shipment. All remaining shipments in 2007 were
billed and settled at the COMEX price in effect on the day following the
shipping date.
    The Company had an unrealized gain of $1,412,000 on derivative instruments
during the third quarter of 2007, including $100,000 related to forward
contracts, $549,000 related to put options and $763,000 related to customer
pricing options. Also during the third quarter of 2007, the Company had
interest expense of $1,573,000, including accretion and a foreign exchange
loss of $3,106,000. Interest expense was capitalized prior to achieving
commercial production. The foreign exchange loss relates primarily to the
strengthening of the Canadian dollar to the US dollar for the outstanding
Cdn.$69.0 million convertible debentures and related accrued interest. The
Company had realized and unrealized losses on derivative instruments of
$6,282,000 and $1,832,000, respectively, and a foreign exchange loss of
$37,000 in the third quarter of 2006. Subsequent to September 30, 2007, the
Company amended its commodity swap arrangement to fix the price on
approximately 50% of its outstanding forward sales contracts.
    General and administrative expenses were $832,000 for the quarter ended
September 30, 2007, compared to $682,000 in the quarter ended September 30,
2006. Stock based compensation expense was $228,000, net of $28,000
capitalized, and $469,000, net of $58,000 capitalized, for the quarters ended
September 30, 2007 and 2006, respectively. Stock based compensation expense is
recorded as options vest. The higher stock based compensation expense in the
third quarter of 2006 relates primarily to the vesting schedule of 4,015,000
options granted during June 2006.
    During the third quarter of 2007, the Company expensed $326,000 for
exploration activities on properties on which mineral resources had not yet
been identified, compared to exploration expense of $880,000 in the third
quarter of 2006. In accordance with its accounting policies, the Company began
capitalizing costs on the San Javier project in January 2007. In prior
periods, costs related to San Javier were expensed. Interest income was
$236,000 in the third quarter of 2007 compared to $77,000 in the third quarter
of 2006, reflecting higher cash balances including remaining proceeds of the
convertible debentures issued in March 2007.

    Cash flows
    ----------

    The Company's cash balance at September 30, 2007 was $10,871,000 compared
to $5,726,000 at December 31, 2006. The higher cash balance in 2007 was due
primarily to proceeds from the issuance of convertible debentures in March
2007, net of repayment of the Lisbon Valley project financing, funding working
capital, settling forward contracts as they become due and additions to
mineral properties and property, plant and equipment.
    Cash used in operating activities was $8,027,000 during the third quarter
of 2007, compared to $17,738,000 for the third quarter of 2006. Cash used to
build inventories during the third quarter of 2007 was $7,037,000 compared to
$11,451,000 during the third quarter of 2006.
    The Company continues to be unable to benefit in full from current high
copper prices as a result of the forward sales contracts entered into
primarily as a requirement of the Lisbon Valley project financing.
Approximately 1.2 million pounds of copper each month through December 2008
are subject to forward sales contracts. The Company settles the forward sales
in cash each month for the difference between the contract price and the
monthly average London Metals Exchange (LME) copper price. The settlements of
forward sales contracts required by the Lisbon Valley project financing
commenced in April 2006. During the third quarter of 2007, the Company's
forward sales settlements required total cash payments of $5,725,000.
    The average LME price of copper increased dramatically from a low of $2.57
per pound during the first quarter of 2007 to a high of $3.62 per pound during
the third quarter of 2007. As a result of the increase in copper prices, the
cost to close out the outstanding forward sales contracts in advance of the
original contract maturity dates, has also risen significantly.
    Cash used in investing activities was $7,453,000 in the third quarter of
2007 compared to $1,547,000 during the quarter ended September 30, 2006.
Expenditures in the quarters ended September 30, 2007 and 2006 on mineral
properties were $2,062,000 and $1,600,000, respectively. Effective January 1,
2007, the Company began capitalizing expenditures relating to the San Javier
property. In the quarter ended September 30, 2007, expenditures on property,
plant and equipment were $4,229,000, related primarily to the leach pad
expansion and ILS system. In the quarter ended September 30, 2006, $432,000 of
cash was generated as a result of netting pre-commercial revenues against mine
development expenditures. In the quarter ended September 30, 2007 the Company
increased restricted cash by $1,168,000, including interest earned, compared
to an increase of $22,000 in the third quarter of 2006. The increase in
restricted cash in the third quarter of 2007 consisted of payments and
interest related to the Company's reclamation bonds.
    During the third quarter of 2007, the Company received $519,000 in
connection with the exercise of options compared to $19,306,000 received in
the third quarter of 2006 from the exercise of options and warrants.

    Outlook
    -------

    As a result of the Company's decision in November 2007 to convert to a
leach only configuration, all mining and crushing activities at Lisbon Valley
are expected to cease in late January 2008. The continuation of leach only
operations at Lisbon Valley is dependent on several factors, including
sustaining production of cathode copper, reductions in operating costs,
continued high copper prices and successful renegotiation of several material
contracts. If cash flows from leach only operations are lower than
anticipated, the Company could experience additional liquidity problems,
including an inability to fund obligations as they become due and requirements
to pay vendors for goods and services in advance of delivery.
    The Company is currently estimating copper production of 35 million pounds
for the period January 2008 through June 2010. Copper production is a function
of PLS flow rates, PLS grades and processing extraction efficiency. Although
the PLS flow rates and extraction efficiency are somewhat predictable, it is
extremely difficult to forecast PLS grades due to the uncertainty of leach
time. The completion of the ILS system at Lisbon Valley in November 2007 is
expected to increase PLS grades as a portion of the leaching solution is
re-circulated back over previously leached sections of the pad before it is
processed through the SX-EW facility. The full effect of the ILS system on
production is expected when the planned maximum flow rate is achieved in the
second quarter of 2008 and when warmer weather is expected.
    The Company is in the process of amending its commodity swap arrangement.
Under the terms of the proposed amendment, the Company deferred, until no
later than December 2008, approximately $5,084,000 of forward sales
settlements originally due in the fourth quarter of 2007 and January 2008. The
deferred amounts are subject to interest at LIBOR, plus 4%, payable monthly.
The Company also agreed to settle the copper price on approximately 50 percent
of its remaining forward sales contracts at $3.08 per pound, and fix the
related loss at $8,947,000. The remaining 7.5 million pounds of forward sales
contracts, at an average contract price of $1.86 per pound, will be settled at
prevailing LME average monthly copper prices.
    In November 2007, in an effort to reduce the uncertainty of copper
markets, the Company agreed to revise the terms of its offtake agreement to
temporarily suspend the customer's option to final copper pricing in the month
after shipment. For shipments during the fourth quarter of 2007, the customer
had previously selected the option to adjust provisional pricing to a final
price determined anytime during the month subsequent to the month shipped. All
November shipments on or before November 27, 2007, were final settled at the
November 27, 2007 COMEX copper price. All remaining shipments in 2007 were
billed and settled at the COMEX price in effect on the day following the
shipping date.
    Attached to this press release are the Company's unaudited consolidated
financial statements for the quarter ended September 30, 2007. For a more
complete discussion, please refer to the Company's third quarter 2007 report
and the Company's audited financial statements and MD&A for the year ended
December 31, 2006 on the SEDAR website at www.sedar.com.

    As previously announced, the Company will host a conference call on
Monday, January 14, 2008 at 11:00 AM (EST), to discuss 2007 third quarter
results. To participate in the conference call, please dial (416) 644-3414
(Toronto and surrounding area), or toll free 1-800-732-6179. To ensure your
participation, please call approximately five minutes prior to the scheduled
start of the call.

    This press release contains certain forward-looking statements. In certain
cases, forward-looking statements can be identified by the use of words such
as "plans", "expects" or "does not anticipate", or "believes", or variations
of such words and phrases or statements that certain actions, events or
results "may", "could", "would", "might" or "will" "be taken", "occur" or "be
achieved". Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, risks related
to changes in commodity and power prices, changes in interest and currency
exchange rates, inaccurate geological and metallurgical assumptions (including
with respect to the size, grade and recoverability of mineral reserves and
resources), unanticipated operational difficulties (including failure of
plant, equipment or processes to operate in accordance with specifications,
cost escalation, unavailability of materials and equipment, delays in the
receipt of government approvals, industrial disturbances or other job action,
and unanticipated events related to health, safety and environmental matters),
political risk, social unrest, and changes in general economic conditions or
conditions in the financial markets. Although the Company has attempted to
identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking statements, there
may be other factors that cause actions, events or results to differ from
those anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements.


    CONSTELLATION COPPER CORPORATION
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)     (in thousands of U.S. Dollars)
    ----------------------------------------------

                                                             As at
                                                  ---------------------------
                                                  September 30,  December 31,
                                                          2007          2006
    Assets

    Current assets
    Cash and cash equivalents                           10,871         5,726
    Other current assets                                 1,913         1,487
    Inventories                                         37,376        31,150
                                                  ---------------------------
                                                        50,160        38,363

    Property, plant and equipment                        3,917        84,357
    Mineral properties                                  15,086        12,121
    Deferred charges and other assets                        -         7,068
    Restricted cash                                      3,516         2,479
                                                  ---------------------------
                                                        72,679       144,388
                                                  ---------------------------
                                                  ---------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities             5,809         7,977
    Derivative instruments                              23,606        13,928
    Current portion of long-term debt                        -         8,587
                                                  ---------------------------
                                                        29,415        30,492

    Asset retirement obligations                         3,145         2,314
    Long-term debt                                      50,705        20,598
    Other long-term liabilities                          7,136        12,882
                                                  ---------------------------
                                                        90,401        66,286
                                                  ---------------------------

    Shareholders' Deficit

    Capital stock                                      151,130       150,211
    Convertible debentures                              14,796             -
    Stock options                                        3,657         2,666
    Warrants                                               297             -
    Deficit                                           (187,602)      (74,775)
    Accumulated other comprehensive income                   -             -
                                                  ---------------------------
                                                       (17,722)       78,102
                                                  ---------------------------

                                                        72,679       144,388
                                                  ---------------------------
                                                  ---------------------------



    CONSTELLATION COPPER CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
    (Unaudited)
    (in thousands of  U.S. Dollars, except for share and per share amounts)
    -----------------------------------------------------------------------

                                      Three Months Ended   Nine Months Ended
                                          September 30        September 30

                                          2007      2006      2007      2006

    Revenues                            16,071         -    52,214         -
                                      ---------------------------------------

      Costs and Expenses
      Cost of sales                      8,553         -    30,903         -
      General and administrative           832       682     2,759     2,240
      Stock-based compensation             228       469       974     1,438
      Depreciation and amortization      1,857        21     6,106        54
      Exploration                          326       880       588     1,823
                                      ---------------------------------------
                                        11,796     2,052    41,330     5,555
                                      ---------------------------------------

    Other (Income) Expense
      Interest income                     (236)      (77)     (616)     (347)
      Interest expense                   1,573         -     4,043         -
      Foreign exchange loss              3,106        37     7,155        45
      Gain on sale of  assets             (178)        -      (763)     (696)
      Write-off of financing costs           -         -     2,605         -
      Realized loss on derivative
       instruments                       6,459     6,282    16,669    10,730
      Unrealized (gain) loss on
       derivative instruments           (1,412)    1,832     1,700    41,161
      Asset impairment                  92,918         -    92,918         -
                                      ---------------------------------------
                                       102,230     8,074   123,711    50,893
                                      ---------------------------------------

    Loss for the period                 97,955    10,126   112,827    56,448
    Other comprehensive loss
     for the period                        158         -       158         -
                                      ---------------------------------------
    Comprehensive loss for
     the period                         98,113    10,126   112,985    56,448
                                      ---------------------------------------
                                      ---------------------------------------


    Loss for the period                 97,955    10,126   112,827    56,448
    Deficit - Beginning of period       89,647    71,519    74,775    25,197
                                      ---------------------------------------
    Deficit - End of period            187,602    81,645   187,602    81,645
                                      ---------------------------------------
                                      ---------------------------------------

    Basic and diluted loss per share      0.55      0.06      0.63      0.35
                                      ---------------------------------------
                                      ---------------------------------------

    Weighted average number of
     shares (000's)                    179,096   171,734   178,886   160,630
                                      ---------------------------------------
                                      ---------------------------------------



    CONSTELLATION COPPER CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOW
    (Unaudited)     (in thousands of  U.S. Dollars)
    -----------------------------------------------

                                      Three Months Ended   Nine Months Ended
                                          September 30        September 30

                                          2007      2006      2007      2006

    Cash flows from (used in)
     operating activities
      Loss for the period              (97,955)  (10,126) (112,827)  (56,448)

      Items not affecting cash:
        Depreciation and amortization    1,857        21     6,106        54
        Stock-based compensation           228       469       974     1,438
        Unrealized foreign exchange
         loss                            3,229         -     7,723         -
        Write-off of financing costs         -         -     2,834         -
        Accretion                          666         -     1,439         -
        Realized loss on derivative
         instruments                       549       322     1,433       566
        Unrealized (gain) loss on
         derivative instruments         (1,412)    1,832     1,700    41,161
        Gain on sale of assets            (178)        -      (763)     (696)
        Asset impairment                92,918         -    92,918         -

      Change in non-cash working
       capital items:
        Inventories                     (7,037)  (11,451)  (10,678)  (22,036)
        Other current assets               254      (522)      294      (454)
        Accounts payable and accrued
         liabilities                    (1,146)    1,717    (2,215)    5,251
                                      ---------------------------------------
                                        (8,027)  (17,738)  (11,062)  (31,164)
                                      ---------------------------------------

    Cash flows from (used in)
     investing activities
      Expenditures on mineral
        properties                      (2,062)   (1,600)   (5,754)   (4,226)
      Expenditures on property,
        plant and equipment, net        (4,229)      432    (6,168)  (10,884)
      Increase in restricted cash,
       net of interest earned           (1,168)      (22)   (1,037)      (64)
      Proceeds from sale of assets         178         -     1,818       696
      Deferred charges and other
       assets                             (172)     (357)     (690)     (888)
                                      ---------------------------------------
                                        (7,453)   (1,547)  (11,831)  (15,366)
                                      ---------------------------------------

    Cash flows from (used in)
     financing activities
      Proceeds from issuance of debt         -         -    60,470    10,000
      Repayments of debt                     -         -   (30,685)        -
      Proceeds from exercise of
       options and warrants                519    19,306       776    46,888
      Financing costs                        -       (33)   (2,602)     (267)
      Proceeds from TDA grant                -         -        79       220
                                      ---------------------------------------
                                           519    19,273    28,038    56,841
                                      ---------------------------------------

    Increase (decrease) in cash and
     cash equivalents                  (14,961)      (12)    5,145    10,311

    Cash and cash equivalents -
     Beginning of period                25,832    17,124     5,726     6,801
                                      ---------------------------------------
    Cash and cash equivalents -
     End of period                      10,871    17,112    10,871    17,112
                                      ---------------------------------------
                                      ---------------------------------------

    Non-cash investing and financing
     activities
    In accounts payable at period end:
          Expenditures on mineral
           properties                      424       431       424       431
          Expenditures on property,
           plant and equipment             116        53       116        53
    Cash interest paid                   2,071     1,009     3,284     2,095
    Settled by issuance of shares            -         -        28    10,728
                                      ---------------------------------------
                                      ---------------------------------------
    
    %SEDAR: 00002465E




For further information:

For further information: Constellation Copper Corporation: Patrick
James, Chief Executive Officer; Michelle Hebert, Manager, Corporate Affairs,
(720) 228-0055; 1-877-370-5400, Fax: (303) 863-1736,
info@constellationcopper.com, www.constellationcopper.com; Renmark Financial
Communications Inc.: Neil Murray-Lyon, nmurraylyon@renmarkfinancial.com;
Barbara Komorowski, bkomorowski@renmarkfinancial.com, (514) 939-3989, Fax:
(514) 939-3717, www.renmarkfinancial.com

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Constellation Copper Corporation

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