Nord Resources Reports Second-Quarter 2009 Results



    
    -   Production of copper increasing since reaching commercial production
        of new ore in April 2009
    -   Sold 2,070,034 pounds of copper in 2009 second quarter, up 147% from
        first quarter 2009
    -   Modifications to production process led to improvement in production
        rate in July 2009
    -   Increasing production and strengthening price of copper improving
        cash flow
    -   Company continues to explore alternatives regarding a possible
        financing for working capital
    

    TUCSON, AZ, Aug. 14 /CNW/ - Nord Resources Corporation (TSX: NRD/OTC:
NRDS), which is ramping up copper mining and processing operations at Johnson
Camp Mine in Arizona, today announced its financial results for the quarter
ended June 30, 2009. The condensed consolidated unaudited financial statements
were prepared in accordance with U.S. generally accepted accounting principles
and all currency amounts are in U.S. dollars.
    "On April 1, the company successfully completed the testing and
development phase of reactivating the Johnson Camp Mine and entered into the
commercial production from the mining of new ore," said John Perry, President
and Chief Executive Officer. "This is a critical milestone in the reactivation
of the mine."
    The company shipped 2,070,034 pounds of copper in the 2009 second
quarter, a 147 percent increase from the 836,781 pounds in the 2009 first
quarter when the company was still producing copper largely from the residual
leaching of the ore previously placed on the mine's pads. The pounds shipped
in the first quarter included 280,728 pounds produced during the development
and testing phase of the ramp up.
    "While we are rapidly ramping up our mining of new ore and production of
copper, as discussed in our progress report news releases of June 22, 2009 and
August 6, 2009, we are still operating below our target annualized rate of 25
million pounds of copper production. We encountered some relatively short-term
operating issues that are generally not unusual in a ramp up of a new
operation. The recent modifications to our crushing and conveyor circuit have
improved our operating performance and in July we were able to significantly
increase the stacking rate of ore on the leach pads. With the increased
stacking, we realized improved feed grade to the SX plant, resulting in a
steady increase in our production during July and into August. We are
continuing to make modifications as needed to reach and sustain our target
production rate later this year," said Randy Davenport, Vice-President and
Chief Operating Officer.
    The company expects to realize increased operating cash flow as a result
of improvements in the copper production rate and the strengthening in the
price of copper. Nevertheless, the company believes it requires additional
financing for working capital purposes. Accordingly, the company is continuing
to explore alternatives regarding a possible financing.
    Reaching the milestone of achieving commercial production affects Nord
Resources' financial reporting for the 2009 second quarter and going forward.
The expenses of mining new ore are now being expensed as incurred and the
capitalized mine development costs associated with the production of copper
from the mining of new ore are being amortized over the life of the mine.
Prior to reaching commercial production, the company capitalized $1,841,080
($1,631,317 in the first quarter of 2009) in mine development costs. Due to
the fact that the company operated at less than targeted capacity during the
ramp up in the second quarter of 2009, operating expenses of $3,000,839
resulting from under utilization of the mining operation have been expensed to
cost of goods sold during the quarter.

    Financial Highlights

    Net sales from the sale of 2,070,034 pounds of copper cathode in the 2009
second quarter were $5,179,552 including $919,323 from the settlement of
copper hedging derivatives. In the 2008 second quarter, Nord recorded net
sales of $3,115,392 from the sale of 836,198 pounds of copper cathode.
    In the first half of 2009, the company's net sales were $6,596,971
(including $1,492,289 from the settlement of copper hedges) from the sale of
2,626,087 pounds of copper cathode. Additionally, revenues earned from the
sale of 280,728 pounds of copper cathode produced prior to the commencement of
commercial production in the amount of $742,237 were credited to development
costs. The company recorded net sales of $4,655,546 from the sale of 1,258,103
pounds of copper from February 1, 2008, when it began production from the
leaching of the old ore on its pads, through June 30, 2008. Revenues earned
from the sale of 58,723 pounds of copper in the amount of $209,907 were
credited to mine development costs during the period ended June 30, 2008.
    Gross margins declined for the second quarter and first six months of
2009 from the 2008 levels, primarily as the result of lower copper prices in
the 2009 periods. The decline was partially offset by increased production
volume from the sale of copper produced from newly mined ore and lower unit
costs as compared with the prior-year periods when all sales were based on
copper obtained from the residual leaching operations. The gross margins in
2009 (excluding depreciation, depletion, and amortization) were $379,331 and
$871,668 (including approximately $3,000,000 in ramp up expenses during each
time period) in the second-quarter and six-month periods, respectively. In the
comparative 2008 periods, the gross margins were $1,083,878 and $1,654,261,
respectively.
    Costs applicable to sales represents the expenses incurred in mining and
processing ore into salable copper cathodes. For the 2009 second quarter, the
company's costs applicable to sales were $4,800,221 (including approximately
$3,000,000 in ramp up expenses), compared with $2,031,514 for the 2008 period.
    For the first six months of 2009, the costs applicable to sales amounted
to $5,725,303 (including $3,000,839 in ramp up expenses). Operating costs
incurred in the development and testing phase of the ramp up in the amount of
$1,651,317 (net of pre-commercial revenue of $742,347) were capitalized. In
the 2008 period, the company's costs applicable to sales were $3,001,285 from
the commencement of commercial production from residual leaching on February
1, 2008. Operating costs incurred from December 1, 2007 through January 31,
2008 in the amount of $572,118 (net of pre-commercial revenue of $209,207)
were capitalized.
    General and administrative expenses decreased to $664,560 for the 2009
second quarter, compared with $799,290 for the 2008 period. This decrease was
primarily due to a decrease in employee compensation offset in part by an
increase of $110,209 in professional fees. For the 2009 six-month period,
general and administrative expenses decreased to $1,447,932, compared with
$2,032,545 for the first six months of 2008. This decrease was primarily due
to decreases in employee compensation and professional fees.
    Depreciation, depletion, and amortization expenses increased $317,267 in
the 2009 second quarter from $94,009 a year earlier and were $501,676 for the
first half of 2009, compared with $147,865 in the 2008 period. The increases
were primarily due to the transferring of costs associated with the
reactivation of the Johnson Camp mine from construction in progress to
property and equipment and the commencement of depreciation effective January
1, 2009.
    Interest expense is primarily attributable to interest accrued on the
Nedbank credit facility since achievement of commercial production in April
2009. Interest incurred prior to April 2009 in the amount of $1,838,022 has
been capitalized and included in the principal balance of the facility.
Interest expense increased to $641,976 for the 2009 second quarter from
$196,992 in the 2008 period. For the first six months of 2009, interest
expenses amounted to $777,399, up from $271,578 in the 2008 six-month period.
Interest accrued in the facility in the future will be expensed as incurred.
    Miscellaneous income was $94,182 in the 2009 second quarter, compared
with $115,929 in the 2008 period. The decrease was due primarily to the
reclassification of income earn from the sale of decorative rock and
aggregated from other income to cost of goods sold offset in part by the
reclassification copper price protection contracts valued at $111,998 to
miscellaneous income.
    For the first six months of 2009, miscellaneous income increased to
$1,360,477 from $232,696 in the first half of 2008. The increase was due
primarily to the reclassification as trading securities of copper price
protection contracts representing approximately 740 metric tons of copper
which were originally designated as cash flow hedges. The value of these
contracts in the amount of $1,373,237 has been reclassified from accumulated
other comprehensive income to miscellaneous income.
    The net loss for the 2009 second quarter was $1,150,186 (a loss of $0.02
per diluted share), compared with net income of $109,516 ($0.00 per diluted
share) for the 2008 period. The net loss for the first six months of 2009 was
$494,862 (a loss of $0.01 per diluted share), compared with a net loss of
$565,031 (a loss of $0.01 per diluted share) for the first half of 2008.

    Liquidity

    The slower than forecasted ramping up of production negatively impacted
the company's cash flow in the short term. The company expects cash flow to
improve as a result of the recent improvement in the copper production rate
and the strengthening copper prices. However, the company expects that it will
require approximately $5,000,000 in additional funds during the third quarter
of 2009 to be used for working capital, including further modifications to
increase its production of copper, and for general corporate purposes.
    Cash reserves as of June 30, 2009 were $441,257, excluding $686,476 in
restricted cash being held in conjunction with two letters of credit. Working
capital decreased by $7,157,492 in the first six months of 2009. The company
had a working capital deficiency of $10,007,152 at the end of the 2009 second
quarter, including $7,156,806 in the current portion of long-term debt and
accrued interest and a net current asset of $754,105 in derivative contracts.
    Cash flows used in operating activities during the first six months of
2009 and 2008 were ($609,796) and ($461,612), respectively. The company
generated $871,668 (including $3,000,089 in ramp up expenses) and $1,654,261
in gross margin excluding depreciation, depletion and amortization during the
six months ended June 30, 2009 and 2008, respectively.
    Cash flows used in investing activities during the 2009 six-month period
were ($8,287,615), which primarily reflects capital expenditures of $9,083,522
related to the reactivation of the Johnson Camp Mine during this time period,
$1,651,317 in mine development costs, $913,562 in proceeds from the sale of
ineffective copper hedges, and the reclassification of $1,533,662 from
restricted cash and marketable securities to cash and cash equivalents. Cash
flows used in investing activities during the first six months of 2008 was
($9,753,828), which primarily reflects capital expenditures of $9,181,063
related to the reactivation of the mine during this time period, and $572,765
in pre-commercial production costs incurred prior to the commencement of
commercial production from leaching operations that began in February 2008.
    Cash flow from financing activities for the first six months of 2009
amounted to $4,873,423, compared with $7,392,362 for the same period in 2008.
On March 31, 2009, the company sold to IRC Nevada Inc. a 2.5 percent net
smelter royalty on the mineral production sold from the existing mineral
rights at Johnson Camp. Net proceeds from the sale were $4,950,000 and are
being used for working capital during the ramp-up of our mining operations.
    As of June 30, 2009, the estimated amount of copper production hedged by
the company was approximately 53 percent at a price of $2.41 per pound of the
total estimated copper production for the six months ending December 31, 2009,
and 32 percent at $2.20 per pound and 21 percent at $2.00 per pound for the
years ending December 31, 2010 and 2011, respectively.

    About Nord Resources

    Nord Resources Corporation is a copper mining company whose primary asset
is the Johnson Camp Mine, located approximately 65 miles east of Tucson,
Arizona. Nord commenced the development and testing phase of mining new ore on
February 1, 2009 and commercial production began April 1, 2009. Previously,
since February 1, 2008, the company was commercially producing copper from
residual leaching of the existing ore heaps. The company expects to reach full
copper production at a rate of approximately 25 million pounds per annum by
the end of 2009. For further information, please visit the company's website
at www.nordresources.com.

    Forward-Looking Statements

    This news release includes certain statements that may be deemed
"forward-looking". All statements in this release, other than those of
historical facts, may be considered forward-looking statements, including
those concerning Nord's expectations regarding copper production targets at
the Johnson Camp Mine (including its expectation that it will reach full
copper production at a rate of approximately 25 million pounds per annum by
the end of 2009), and statements concerning the potential of the Johnson Camp
Mine.
    Factors that could cause actual results to differ materially from those
in forward-looking statements include, but are not limited to, the market
prices of copper and sulfuric acid, general economic, market, and business
conditions, ability to reach full production rates, statements or information
with respect to known or unknown risks, uncertainties, and other factors that
may cause the actual results, performance or achievements of the company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements or information. Investors are cautioned that any such statements
are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements. In addition, Nord's business and operations are subject to the
risks set forth in Nord's most recent Form 10-K, Form 10-Q, and other SEC
filings which are available through EDGAR at www.sec.gov, and in Nord's
prospectus and other filings with the British Columbia and Ontario Securities
Commissions, which are available through SEDAR at www.sedar.com. Nord assumes
no obligation to update the forward-looking statements except as may be
required by law.

    
                  NORD RE

SOURCES CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 30, 2009 AND DECEMBER 31, 2008 June 30, December 31, 2009 2008 ------------- ------------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 441,257 $ 4,465,245 Accounts receivable 447,855 320,493 Inventories 4,442,244 221,271 Current portion of derivative contracts 1,079,164 9,604,405 Prepaid expenses and other 60,401 360,901 ------------- ------------- Total Current Assets 6,470,921 14,972,315 ------------- ------------- Property and Equipment, at cost: Property and equipment 46,535,860 4,657,929 Less accumulated depreciation and amortization (2,428,781) (1,614,405) ------------- ------------- 44,107,079 3,043,524 Construction in progress - 36,944,454 ------------- ------------- Net Property and Equipment 44,107,079 39,987,978 ------------- ------------- Other Assets: Restricted cash and marketable securities 686,476 2,220,138 Derivative contracts, less current portion - 9,549,697 Debt issuance costs, net of accumulated amortization 938,634 877,249 ------------- ------------- Total Other Assets 1,625,110 12,647,084 ------------- ------------- Total Assets $ 52,203,110 $ 67,607,377 ------------- ------------- ------------- ------------- June 30, December 31, 2009 2008 ------------- ------------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities: Accounts payable $ 7,619,662 $ 9,694,716 Accrued expenses 1,034,874 887,438 Current portion of deferred revenue 325,864 - Current maturities of long term debt 7,156,806 6,932,109 Current maturities of derivative contracts 325,059 299,717 Current maturities of capital lease obligation 15,808 7,995 ------------- ------------- Total Current Liabilities 16,478,073 17,821,975 ------------- ------------- Long Term Liabilities: Derivative contracts, less current maturities 623,048 137,367 Long term debt, less current maturities 19,681,216 19,063,298 Capital lease obligation, less current maturities 35,254 45,015 Deferred revenue, less current portion 4,596,852 - Accrued reclamation costs 148,241 144,256 Other 37,726 47,103 ------------- ------------- Total Long Term Liabilities 25,122,337 19,437,039 ------------- ------------- Total Liabilities 41,600,410 37,259,014 ------------- ------------- Commitments and contingencies Stockholders' Equity: Common stock: $.01 par value, 200,000,000 shares authorized, 69,642,589 and 69,493,635 shares issued and outstanding as of June 30, 2009 and December 31, 2008, respectively 696,426 694,936 Additional paid-in-capital 110,292,925 109,940,000 Accumulated deficit (100,508,078) (100,013,216) Accumulated other comprehensive income 121,427 19,726,643 ------------- ------------- Total Stockholders' Equity 10,602,700 30,348,363 ------------- ------------- Total Liabilities and Stockholders' Equity $ 52,203,110 $ 67,607,377 ------------- ------------- ------------- ------------- NORD RE

SOURCES CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Unaudited) 2009 2008 ------------- ------------- Net sales $ 6,596,971 $ 4,655,546 Costs applicable to sales (exclusive of depreciation, depletion and amortization shown separately below) 5,725,303 3,001,285 General and administrative expenses (includes stock based compensation of $248,115 and $365,555, respectively) 1,447,932 2,032,545 Depreciation, depletion and amortization 501,676 147,865 ------------- ------------- Loss from operations (1,077,940) (526,149) ------------- ------------- Other income (expense): Interest expense (777,399) (271,578) Miscellaneous income (expense) 1,360,477 232,696 ------------- ------------- Total other income (expense) 583,078 (38,882) ------------- ------------- Loss before income taxes (494,862) (565,031) Provision for income taxes - - ------------- ------------- Net loss $ (494,862) $ (565,031) ------------- ------------- ------------- ------------- Net loss per basic and diluted share of common stock: Weighted average number of basic and diluted common shares outstanding 69,859,195 66,871,932 Basic and diluted loss per share of common stock $ (0.01) $ (0.01) NORD RE

SOURCES CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2009 AND 2008 (Unaudited) 2009 2008 ------------- ------------- Net sales $ 5,179,552 $ 3,115,392 Costs applicable to sales (exclusive of depreciation, depletion and amortization shown separately below) 4,800,221 2,031,514 General and administrative expenses (includes stock based compensation of $62,592 and $154,733, respectively) 664,560 799,290 Depreciation, depletion and amortization 317,267 94,009 ------------- ------------- Income (loss) from operations (602,496) 190,579 ------------- ------------- Other income (expense): Interest expense (641,976) (196,992) Miscellaneous income (expense) 94,286 115,929 ------------- ------------- Total other income (expense) (547,690) (81,063) ------------- ------------- Income (loss) before income taxes (1,150,186) 109,516 Provision for income taxes - - ------------- ------------- Net income (loss) $ (1,150,186) $ 109,516 ------------- ------------- ------------- ------------- Net income (loss) per basic and diluted share of common stock: Weighted average number of basic common shares outstanding 69,944,154 67,081,882 Basic earnings (loss) per share of common stock $ (0.02) $ 0.00 Weighted average number of diluted common shares outstanding 69,944,154 69,985,450 Diluted earnings (loss) per share of common stock $ (0.02) $ 0.00

For further information:

For further information: John Perry, President and Chief Executive
Officer, Nord Resources Corporation, (520) 292-0266, www.nordresources.com;
Investor and Media Relations: Richard Wertheim, Wertheim + Company Inc., (416)
594-1600 or (416) 518-8479 (cell), Or by email at wertheim@wertheim.ca

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Nord Resources Corporation

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