ANACONDA MINING CONTINUES IMPROVEMENT IN FISCAL SECOND QUARTER ENDED NOVEMBER 30, 2010

TORONTO, Jan. 13 /CNW/ - Anaconda Mining Inc. ("Anaconda") - (TSX: ANX); is pleased to report its results for the three and six months ended November 30, 2010. All amounts are in Canadian dollars unless stated otherwise. The financial results and Management's Discussion and Analysis of these results may be found on Anaconda's website (www.anacondamining.com) and on its SEDAR profile href="http://www.sedar.com/">(www.sedar.com).

FISCAL SECOND QUARTER HIGHLIGHTS

Pine Cove gold mine, Baie Verte, Newfoundland:

  • During the second quarter ended November 30, 2010, Anaconda produced approximately
    980 ounces of gold versus 380 ounces during the first fiscal quarter, an increase of
    approximately 600 ounces or 157%.
  • Consistent recoveries in the processing circuit remained constrained by a combination of
    operator inexperience with the higher tonnage operation and mill down-time associated with
    the replacement of the primary ball mill starter.
  • Changes implemented during the second fiscal quarter allowed for greater operational efficiency at the mill resulting in higher gold production over the first fiscal quarter.
  • Ongoing optimization efforts of the mill processing circuit resulted in steady improvements in gold recoveries as notably approximately 59%, or 566 ounces, of the 978 ounces produced in the second quarter came during November, driving down unit operating costs, including site level general and administrative expenses, to $1,091 per ounce for the month.

Iron-ore assets, Chañaral, Chile:

  • On November 30, 2010, the Company announced a strategic plan to realize the value contained within its portfolio of Chilean iron-ore assets together with its joint venture partner, Inversiones SBX Limitada ("SBX").
  • Anaconda and SBX agreed in principle to roll their respective Chilean iron ore assets held in Minera Hierro San Gabriel and Inversiones Hierro Antofagasta into a single dedicated company, creating a large, stand-alone, world-class Chilean iron-ore company, separate and apart from Anaconda's gold-producing assets.
FINANCIAL OVERVIEW
  • Precious metals sales for the second quarter were $1.1 million, and $1.6 million for the six-month period ended November 30, 2010.
  • These were offset by $1.7 million ($2.7 million for the 6-month period) for costs of goods sold.
  • Administrative expenses were $1.5 million for the quarter and $3.5 million over the 6 months.
  • The Company realized losses on the sale of investments during the second quarter of $1.5 million and the loss on the sale of 50% of the Anaconda's interest in its San Gabriel project (including the loss of future VAT credits) increased by $41,000 over the second quarter to bring the 6-month loss to a total of $2.0 million.
  • Consolidated net loss for the three and six months ended November 30, 2010 was approximately $4.2 million ($0.04 per basic and fully diluted share) and $8.5 million ($0.08 per basic and fully-diluted share), respectively.
  • As at November 30, 2010, Anaconda had cash and cash equivalents of $1,013,000, of which $836,000 was restricted for letters-of-credit guarantees with a Canadian financial institution and amounts held in a debt-reduction escrow account to be utilized for debt service and/or principal repayments to Anaconda's Series I debenture holders.
  • As at November 30, 2010, Anaconda had a working capital deficiency of approximately $4.9 million. Anaconda utilized the proceeds from its precious metals sales over the first six months together with funds drawn under new loans and debenture issues to fund operations and to discharge some of its current operating obligations as well as providing funding for its capital requirements.
  • The Company has also worked closely with its vendors to arrange payment plans for past due payables. Many vendors have been highly receptive to working with the Company to stage payments in a manner that mirrors the timing of expected revenue, as the Pine Cove project increases its gold output.
  • The Company has undertaken to complete a rights offering, as discussed in the press release dated December 23, 2010. Use of proceeds from the rights offering will be used to repay aged payables and fund other working capital requirements.

Anaconda President and CEO, Dustin Angelo, stated, "We continue to see encouraging results out of the Pine Cove mill as evidenced by the production in November, but we still have to make improvements in the circuit, particularly related to leaching and filtration, to optimize our recovery. We are pleased with the developments in Chile and look forward to creating a sizable, stand-alone iron ore company."

ABOUT ANACONDA

Anaconda is a Toronto, Canada-based mining company focused on advancing its principal assets, the Pine Cove Gold Mine in Canada and its portfolio of Chilean iron ore assets. Anaconda has reached full Commercial Production at Pine Cove and continues to work towards optimizing the operation. Anaconda is also evaluating strategies to 'unlock' value attributable to its Chilean iron portfolio for the benefit of its shareholders.

FORWARD LOOKING STATEMENTS

Certain statements contained herein constitute "forward-looking statements". These forward- looking statements are based on current expectations. The nature, timing and extent of mining and processing of Pine Cove ore under the Crew Gold toll processing arrangement may materially change from current intentions for a number of reasons. Additionally, forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "plans," "may," "estimates," "expects," "indicates," "targeting," "potential" and similar expressions. These forward-looking statements, including statements regarding Anaconda's beliefs in the potential mineralization, are based on current expectations and entail various risks and uncertainties. Actual results may materially differ from expectations as more information regarding the property is gathered or if known and unknown risks or uncertainties affect Anaconda's business, or if Anaconda's estimates or assumptions prove inaccurate. Anaconda assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.

SOURCE Anaconda Mining Inc.

For further information:

Anaconda Mining Inc.
Dustin Angelo
President and CEO
(647)260-1248
Email:
dangelo@anacondamining.com


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