TORONTO, Jan. 16, 2012 /CNW/ - Anaconda Mining Inc. ("Anaconda" or the "Company") - (TSX: ANX) is pleased to report its results for the three and six months ended November 30, 2011. The Pine Cove mine continues to demonstrate operational progress despite limited production time during the second quarter as a result of scheduled capital improvements and other interruptions. During the second quarter, Pine Cove sold 2,166 ounces of gold and generated earnings before interest, taxes, depreciation, amortization and non-cash share-based compensation ("EBITDA") of approximately $1.2 million.
On a consolidated basis, the Company generated a net loss for the second quarter ended November 30, 2011 of approximately $790,000 (or $0.004 per basic and fully diluted share). The primary catalyst for the loss was a foreign exchange loss related to an inter-company loan as explained in further detail in the Financial Overview section. EBITDA (exclusive of FX losses) was approximately $573,000 for the second quarter ended November 30, 2011. The EBITDA figure includes one-time transaction costs for the sale of the Chilean iron ore assets of $178,677. Adjusted for the one-time transaction costs, EBITDA would have been over $750,000 for the second quarter.
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 www.sedar.com).
Anaconda President and CEO, Dustin Angelo, stated, "The second quarter produced very positive results despite limited production time. As expected, we are beginning to see the benefits of the mill modifications made in September and October as well as other operational adjustments made during the period and after the quarter end. Gold production has steadily increased back to pre-modification levels with December having sales of over 1,000 ounces. Winter is always challenging and we have experienced occasional interruptions in throughput production in January; however, we will continue to implement operating procedures to mitigate downtime. The sale of our Chilean iron ore assets has accelerated the Company's ability to clean up its balance sheet. Just after the quarter ended, the Company repaid in full the Series III debentures as well as approximately $1.1 million in aged payables. Between the sale proceeds and operating cash flow, there has been great progress in reducing outstanding payables balances, which is expected to be reflected in the third quarter financial statements."
- Precious metals sales for the second quarter ended November 30, 2011 were $3.8 million and costs of goods sold were approximately $2.4 million for a gross margin of nearly $1.4 million (37% of revenue).
- Precious metals sales for the six months ended November 30, 2011 were $8.3 million and costs of goods sold were approximately $5.2 million for a gross margin of nearly $2.1 million (37% of revenue).
- Administrative expenses for the three and six month period ended November 30, 2011 were $1.1 million and $2.4 million respectively. Non-cash charges of depletion, depreciation and share-based compensation totaled $437,751 and $1.1 million for the three and six months ended November 30, 2011, respectively.
- Foreign exchange loss for the six months ended November 30, 2011 was $597,463 and was mainly the result of marking-to-market the inter-company loan payable of the Company's Chilean subsidiary Inversiones La Veta Limitada ("La Veta") to the Company's Canadian subsidiary, Colorado Minerals Inc. The Chilean peso strengthened approximately 5.5% against the Canadian dollar during the period, leaving the loan receivable from La Veta valued at approximately $475,000 less than at the end of last fiscal year ended May 31, 2011.
- As at November 30, 2011, Anaconda had cash and cash equivalents of $727,367, of which $673,148 was restricted for letters-of-credit guarantees regarding asset retirement obligations of the Company regarding its Pine Cove site development plan.
- As at November 30, 2011, Anaconda had a working capital deficiency of approximately $5.3 million. Anaconda utilized the proceeds from its precious metals sales together with funds from the completed private placement during the first quarter to fund its working capital and capital expenditure requirements.
- Capital expenditures, primarily for mill equipment and tailings dam construction, totaled $496,198 and $1,313,947 for the three and six months ended November 30, 2011, respectively.
- Approximately $107,000 and $194,000 was spent at Pine Cove on exploration at the down dip extension for the three and six months ended November 30, 2011, respectively.
Pine Cove gold mine, Baie Verte, Newfoundland:
The Pine Cove mill operated for 65 days out of 91 during the second quarter primarily due to the scheduled shut down for the modifications that began in late September. Despite the downtime, Pine Cove sold 2,166 ounces of gold, generating approximately $3.8 million in revenue and approximately $1.2 million in EBITDA at an average gold sales price of $1,751 per ounce and total cash costs (before exploration expenses) of $1,147 per ounce.
Total cash costs on a per ounce basis exceeded the first quarter by $135 per ounce primarily due to the fixed cost structure of the milling operations and the time needed to build up circuit inventory to pre-modification levels. Furthermore, the final week's worth of production in November was not sold until the first week of December.
The mill processed over 55,000 dry tonnes of ore at an average head grade of 2.04 grams per tonne. The head grade for the second quarter was approximately 0.50 grams per tonne greater than the first quarter (1.51 grams per tonne). Overall mill recovery averaged slightly below the target level of 80% during the second quarter, although it did peak at 81% in October. Mill optimization efforts continued with the incorporation of copper sulphate to aid the performance of the filtration circuit, thus allowing for a finer grind product (p80 - 30 microns) in the leach circuit. The finer grind is expected to improve leach recovery. The following table summarizes the key operating statistics by month for the second quarter of fiscal 2012 ended November 30, 2011.
|Sep '11||Oct '11||Nov '11||Total/Avg|
|Dry tonnes processed||19,941||10,502||24,926||55,369|
|Tonnes per 24-hour day||886||750||875||837|
|Grade (grams per tonne)||2.12||2.06||1.95||2.04|
|Overall mill recovery||78%||81%||75%||78%|
|Gold sales volume (troy oz.)||1,065||493||608||2,166|
During the second quarter ended November 30, 2011, contract mining activities operated for a total of 53 days primarily because of the scheduled downtime related to the mill modifications and the winter storm that knocked out power for approximately four days at the end of October. As a result of the reduced mining activity, blasting was also limited with none performed in October. The average feed grade through the mill for the reporting period was slightly above 2.0 grams per tonne ("g/t") at 2.04 g/t and marks one of the most consistent periods of ore grade since restarting the operation in the summer of 2010.
The following table summarizes the mining production for the second quarter ended November 30, 2011.
|Sep '11||Oct '11||Nov '11||Total/Avg|
|Ore production (tonnes)||32,460||9,310||4,506||46,276|
|Waste production (tonnes)||110,377||31,516||36,378||178,271|
|Total production (tonnes)||142,837||40,826||40,884||224,547|
|Waste : Ore ratio||3.4||3.4||8.1||3.9|
|Grade (grams per tonne)||2.12||2.06||1.95||2.04|
The Company completed its Stage II Tailings Impoundment Area (TIA) during the second quarter. The latest dam construction will accommodate approximately 1,000,000 tonnes of processed waste rock. The rock placement for the final phase of the TIA will also use waste rock from the pit, but will be done during normal course activities over the next several months.
The Company has scheduled a geophysical contractor on site early in the third quarter of fiscal 2012 to follow up on the exploration results from the drill program performed in June 2011. A significant interval, grading 2.5 g/t over 40.8 meters was intersected in diamond drilling down-dip of the current deposit. A detail structure investigation performed during the second quarter suggested the intersection is likely a gold hosted zone within a hinge fold similar to other zones within the mining area. The planned geophysics is anticipated to be an effective tool to indentify further extensions of this zone in other areas of the property lease. Pending favorable results over known mineralization, the survey will likely be extended over the entire land package. Any anomalies identified will be further tested by diamond drilling.
CHILEAN IRON ORE ASSETS
On December 7, 2011, subsequent to quarter end, the Company announced that, pursuant to an agreement dated that day, it had closed the sale of its Chilean iron-ore exploration assets to a private Chilean company, Hierro Tal Tal S.A. ("Tal Tal"), for up to US$11 million in cash payments, a gross sales royalty and a 1.25% carried interest in Compania Portuaria Tal Tal S.A. ("CPTT"). With the cash proceeds received at closing of US$2 million, Anaconda paid the full principal amount plus accrued interest of approximately $711,000 to the holders of the Series III Debentures. The remaining cash was used for working capital purposes to repay approximately $1.1 million in aged payables. Pursuant to the share purchase agreement ("SPA"), the Company is to receive another cash payment of US$2 million on May 31, 2012.
Headquartered in Toronto, Canada, Anaconda is a growth oriented, gold mining and exploration company with a producing operation located on the Baie Verte Peninsula in Newfoundland, Canada called Pine Cove mine.
FORWARD LOOKING STATEMENTS
This document contains or refers to forward-looking information. Such forward-looking information includes, among other things, statements regarding targets, estimates and/or assumptions in respect of future production, mine development costs, unit costs, capital costs, timing of commencement of operations and future economic, market and other conditions, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to: the final approval of the private placement by the Toronto Stock Exchange; the grade and recovery of ore which is mined varying from estimates; capital and operating costs varying significantly from estimates; inflation; changes in exchange rates; fluctuations in commodity prices; delays in the development of the any project caused by unavailability of equipment, labour or supplies, climatic conditions or otherwise; termination or revision of any debt financing; failure to raise additional funds required to finance the completion of a project; and other factors. 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. Forward-looking statements are subject to significant risks and uncertainties and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no responsibility to update them or revise them to reflect new events or circumstances, except as required by law.
For further information:
Company website: www.anacondamining.com