Second Quarter Financial and Operating Results Filed Today
VANCOUVER, Aug. 12 /CNW/ - Dick Whittington, President and CEO of
Farallon Mining Ltd. ("Farallon" or the "Company") (TSX:FAN) is pleased to
announce the financial and operating results for the Company for the three
months ending June 30, 2009. Currency is United States dollars unless
otherwise indicated. This news release should be read in conjunction with the
Company's financial statements and MD&A, which are available on SEDAR.
Farallon will hold a conference call tomorrow, Thursday August 13th, at 8:00
am Pacific time (11:00 am Eastern) to discuss these results. Call-in details
are provided at the end of this release.
The Company generated cash flow from mining operations(1) of $5.7 million
with an operating profit of $1.4 million. Production included zinc contained
in zinc concentrates of 21.3 million pounds, copper in copper concentrate of
1.7 million pounds and additional by-product lead, silver and gold. The total
cash cost(1) including transportation and treatment and refining charges but
net of by-product credits was $0.39/lb of payable zinc.
President and CEO Dick Whittington said "The G-9 mine's first quarter of
commercial production shows that the operation is capable of producing high
quality zinc concentrates at low cash cost. Further improvements in
metallurgical recovery and mill throughput are anticipated during the second
half of 2009, targeted to increase production to 120 million pounds of zinc
annually with cash costs in the lowest quartile of zinc producers. Now that
the balance sheet has been restructured and the mine is generating operating
profits, Farallon is well positioned to establish a solid operational base
from which to grow, through further exploration at Campo Morado and accretive
transactions. Our goal is to become a multi-mine, mid-tier, mining company".
Financial and operational highlights for the three months ended June 30,
2009 are as follows:
- Generated cash flow from mining operations(1) of $5.7 million in its
first quarter of commercial production at the G-9 mine.
- Operating profit of $1.4 million.
- Increased working capital to $13.7 million at June 30, 2009 from a
deficit of $17.8 million at March 31, 2009.
- Generated revenues of $20.1 million, up from $6.7 million last
- Produced at a cash cost per pound of payable zinc(1) of US$0.39/lb.
- Produced 18,567 tonnes of zinc concentrate, 5,603 tonnes of copper
concentrate and 1,280 tonnes of lead concentrate containing an
estimated 21.3 million pounds of zinc, 1.7 million pounds of copper,
0.6 million pounds of lead, 284,350 ounces of silver and 4,400 ounces
of gold from the G-9 mine.
- Declared commercial production effective April 1, 2009 and processed
114,600 tonnes of ore grading of 11.0% zinc, 1.3% copper, 1.2% lead,
165 g/t silver and 2.3 g/t gold. Mined 134,970 tonnes of ore
averaging 10.9% Zn, 1.4% Cu and 1.2% Pb, 168 g/t Ag and 2.3 g/t Au.
- Sold approximately 25,750 dry metric tonnes of zinc concentrate
averaging 52% zinc and 3,862 dry metric tonnes of copper concentrate
averaging 17.4% copper.
- Secured a $30 million, four-year term loan facility with Credit
Suisse. A portion of the loan was used to repay promissory notes due
in September 2009 at significantly reducing borrowing costs.
- Appointed Kevin Weston as Chief Operating Officer, adding significant
operating experience to the senior management team.
(1) See "Non-GAAP Financial Measures" in June 30, 2009 MD&A for more
The Company recorded cash flow from mining operations(1) of $5.7 million
from $20.1 million in revenues from the sale of zinc, copper and lead
concentrates. A net loss of $8.0 million was reported which includes
non-realized foreign exchange losses.
During the period, the Company substantially strengthened its balance
sheet, increasing working capital on June 30, 2009 to $13.7 million from a
deficit of $17.8 million on March 31, 2009. Cash on-hand at June 30 was $13.2
G-9 Mine Operations
The mine continued to mine material from the high-grade Southeast zone as
well as material from the North zone and West Extension. Further development
activity continued in the Southeast zone, opening up enough mining faces to
deliver design production of 1,500 tonnes per day to the milling operations.
In June 2009, over 45,000 tonnes of ore was mined. Development is expected to
be complete by the end of the third quarter, opening up access to all mining
areas in the Southeast zone.
During the period, the milling operations achieved the design throughput
capacity of 1,500 tonnes per day for extended periods of time; however, mill
availability was lower than design leading to production rates averaging 1,260
tonnes per day, up from 1,180 tonnes per day in the first quarter of 2009. As
maintenance programs continue to mature, sustained production at design rates
are expected. Trucking of concentrates to the port of Manzanillo continued,
with all concentrates sold under contract to Trafigura, Free On Board ("FOB")
at the port site.
Recoveries of zinc and copper were below expectations at 77% and 55%,
respectively. A metallurgical optimization program is underway with the goal
of achieving recoveries of 85% zinc and 70% copper. Recoveries of silver and
gold were above expectations at 47% and 52%, respectively.
Key operating and sales metrics are shown in the table below.
Q2 2009 Q1 2009 YTD 2009
Production (contained in concentrate)
Zinc (000's Pounds) 21,319 16,895 38,214
Copper (000's pounds) 1,740 1,180 2,920
Lead (000's pounds) 588 328 916
Silver (ounces) 284,352 229,539 513,891
Gold (ounces) 4,443 3,309 7,752
Ore Mined (tonnes) 134,970 115,978 250,948
Ore Processed (tonnes) 114,644 106,265 220,909
tonnes per day 1,260 1,180 1,220
Zinc grade (%) 11.0 9.2 10.1
Copper grade (%) 1.3 1.1 1.2
Lead grade (%) 1.2 0.9 1.0
Silver grade (%) 165 170 167
Gold grade (%) 2.3 1.7 2.0
Recovery Q2 2009 Q1 2009 YTD 2009
Zinc (%) 77 79 78
Copper (%) 55 45 50
Lead (%) 20 16 18
Silver (%) 47 40 44
Gold (%) 52 43 48
Zinc (DMT) 18,567 14,829 33,396
Zinc (%) 52.1 51.7 51.9
Silver (g/t) 206 252 226
Gold (g/t) 2.0 2.4 2.2
Copper (DMT) 5,603 3,015 8,618
Copper (%) 14.1 17.8 15.4
Silver (g/t) 572 694 615
Gold (g/t) 8.7 10.4 9.3
Lead (DMT) 1,280 650 1,930
Lead (%) 20.9 22.9 21.6
Silver (g/t) 1540 2005 1697
Gold (g/t) 41.4 56.5 46.5
Site Costs (US$/t milled) $76.28 $70.64 $73.55
Total Cash Costs (US$/payable pound zinc) $ 0.39 $ 0.44 $ 0.41
(2) These are provisional assays, subject to finalization.
DMT means Dry Metric Tonnes
The conference call can be accessed by telephone at the following numbers
(416) 644-3422 or the toll-free number (800) 590-1817. A live webcast will
also be available at www.farallonmining.com. The replay of the conference call
will be on the website after the call is completed.
Farallon's G-9 zinc, copper, silver, gold and lead mine at the Campo
Morado Property in Mexico reached commercial production in April 2009. The
Company is targeting to produce at an annualized production rate of 120
million pounds of zinc and 15 million pounds of copper per year.
ON BEHALF OF THE BOARD OF DIRECTORS
J.R.H. (Dick) Whittington
President & CEO
No regulatory authority has approved or disapproved the information
contained in this news release
Forward Looking Information
This release includes certain statements that may be deemed
"forward-looking statements." All statements in this release, other than
statements of historical facts, that address future production, reserve or
resource potential, continuity of mineralization, exploration drilling,
operational activities, production rates, costs to completion and events or
developments that the Company expects are forward-looking statements. Although
the Company believes that the expectations expressed in such forward looking
statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results or developments may differ
materially from those in the forward looking statements and may require
achievement of a number of operational, technical, economic, financial and
legal objectives. The likelihood of continued future mining at Campo Morado is
subject to a large number of risks, including obtaining lower than expected
grades and quantities of mineralization and resources, lower than expected
mill recovery rates and mining rates, changes in and the effect of government
policies with respect to mineral exploration and exploitation, the possibility
of local disputes including blockades of the company's property, the
possibility of adverse developments in the financial markets generally,
fluctuations in the prices of zinc, gold, silver, copper and lead, obtaining
additional mining and construction permits, preparation of all necessary
engineering for ongoing underground and processing facilities as well as
receipt of additional financing to fund mine construction, development and
operation, if needed. Such funding may not be available to the Company on
acceptable terms or on any terms at all. There is no known ore at Campo Morado
and there is no assurance that the mineralization at Campo Morado will ever be
classified as ore. For more information on the Company and the risk factors
inherent in its business, investors should review the Company's Annual
Information Form at www.sedar.com.
For further information:
For further information: on Farallon Mining Ltd., please visit the
Company's website at www.farallonmining.com or contact Neil MacRae, Investor
Relations Manager, at (604) 638-2160 or within North America at