All amounts are in Canadian dollars, unless otherwise stated.
TORONTO, May 31 /CNW/ - Medoro Resources Ltd. (TSX-V: MRS) announced today unaudited consolidated financial results for the three months ended March 31, 2010 ("Q1 2010"). For Q1 2010, Medoro reported a net loss of $2.1 million or $0.01 per share compared to a net loss of $0.6 million or $0.01 per share in Q1 2009. The increase in net loss of $1.5 million was primarily a result of increases in operating costs of $2.1 million and foreign exchange losses of $0.2 million, partially offset by a gross profit of $0.8 million and other income of $0.1 million from the operating Mineros Nacionales mine at Marmato.
As at March 31, 2010, the Company had $30 million net working capital, including cash and short-term investments of $41.1 million and no debt. Mineros Nacionales S.A., which was acquired on February 15, 2010, owns the Zona Baja license at the Marmato Project and operates the Mineros Nacionales underground gold mine. During the period from the date of the acquisition to the end of Q1 2010, Mineros Nacionales produced 3,442 ounces of gold and 5,383 ounces of silver, and sold 2,698 ounces of gold and 4,188 ounces of silver at weighted average prices of approximately US$1,091 per ounce and US$ 16.14 per ounce, respectively. The weighted average cash cost(1) per ounce of gold produced was approximately US$ 875, net of silver by-product credits. The Company had no revenues in Q1 2009.
During Q1 2010, the Company completed two acquisitions: Colombia Gold plc on February 8, 2010, and Mineros Nacionales S.A. on February 15, 2010. These two acquisitions, together with the acquisition of Colombia Goldfields Ltd. in Q4 2009, completed the Company's strategy of consolidating the Marmato gold prospect in the Marmato gold district. The Marmato Project is one gold deposit comprised of the three contiguous license areas of Zona Alta, Zona Baja and Echandia, which were owned by Colombia Goldfields Ltd., Mineros Nacionales S.A. and Colombia Gold plc, respectively, in the Department of Caldas, Colombia.
During Q1 2010, Medoro also entered into an asset purchase agreement to acquire all of the assets of Frontino Gold Mines Ltd. for a total cash purchase price of COP380,000 million (approximately US$200 million). As part of this agreement, the Company paid a deposit of COP15,000 million, which is being held in escrow until closing, which is scheduled to be four months from March 31, 2010, the date of the agreement, subject to any agreed changes. Up to fifteen days after the end of the first two months from the date of the agreement, Medoro has the right, subject to certain terms and conditions, to terminate the agreement and have the entire deposit, plus accrued interest, refunded. Medoro has agreed to form a joint venture with a separate company, whereby Medoro and the joint venture company will each own 50% of the Frontino assets and Medoro will be the operator. Each partner will be responsible for 50% of the deposit, due diligence costs, net acquisition price, related costs and all new capital required.
Frontino has been in production for 155 years, during which time it has produced over 4.5 million ounces of gold from underground mining. There are three existing underground mines at Frontino: El Silencio, Providencia and Sandra K. In 2009, Frontino produced approximately 55,000 ounces of gold with an average grade of 10.4 g/t Au, with approximately 90% of this production coming from the Providencia mine (based on information received from Frontino).
(1) Non-GAAP Measures
This press release refers to cash cost per ounce of gold produced because certain investors may use this information to assess the Company's performance and also determine the Company's ability to generate cash flow for investing activities. This measurement captures all of the important components of the Company's production costs. In addition, management utilizes this metric as an important management tool to monitor cost performance of the Company's operations. This measurement has no standardized meaning under Canadian generally accepted accounting principles ("Canadian GAAP") and is therefore unlikely to be comparable to similar measures presented by other companies. This measurement is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP.
About Medoro Resources Ltd.
Medoro Resources Ltd. is a gold exploration, development and mining company with a primary emphasis on Colombia. The Company operates the producing Mineros Nacionales gold mine located in Zona Baja at Marmato in the Department of Caldas and is conducting an exploration and infill drilling program at its Marmato Project at Marmato to upgrade and expand its gold resources there.
On March 31, 2010, Medoro signed an asset purchase agreement to acquire all the assets of Frontino Gold Mines Limited. This acquisition is scheduled to close by July 31, 2010, subject to certain conditions including legal and technical due diligence and requisite regulatory approvals (see the Company's press release dated March 31, 2010).
Medoro also holds a 100% interest in the Lo Increible 4A and 4B concessions in Venezuela where it is continuing its efforts to obtain an exploitation permit to allow development of these gold properties when circumstances in Venezuela allow. Medoro owns interests in gold exploration properties in Mali in respect of which it is seeking possible joint venture partners to further explore these properties.
Additional information on Medoro Resources Ltd. can be found on the Company's website at www.medororesources.com and by reviewing the Company's profile on SEDAR at www.sedar.com.
This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of Medoro and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "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. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Medoro to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and Medoro disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. 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, the reader is cautioned not to place undue reliance on forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE MEDORO RESOURCES LIMITED
For further information: For further information: John Hick, President & CEO, (416) 603-4653, Linda Dorrington, Director, Investor Relations, (416) 603-4653