Arehada Mining Limited announces second quarter 2007 results

    TORONTO, Aug. 14 /CNW/ - Arehada Mining Limited (TSX: AHD) (the
"Company") announced today announced financial results and operational
highlights for the second quarter and six months ending June 30, 2007. During
this period, the Company completed the start up of its flagship Arehada
zinc/lead/silver mine.
    Total revenue for the second quarter was $4,989,547 from the mining of
118,445 tonnes of ore resulting in earnings after tax of $421,448 or $0.003
per share.
    Total revenue for the first six months was $9,618,000 from the mining of
223,000 tonnes of ore resulting in earnings after tax of $2,803,600 or $0.017
per share including a non-cash charge of $1,471,900 for stock based
compensation in the second quarter. Excluding those charges, the earnings
would have been $4,275,500 or $0.026 per share.
    Cash flow for the six month period was $4,853,890 or $0.03 per share.
    In the first half of 2007, Arehada conducted mining operations at
approximately 1,500 tonnes per day and operated 149 days during the period
which is in line with expectations for the period based on a projected 300 day
per annum operation.
    Head grades of approximately 1.0% zinc and 0.9% lead resulted in an
average combined recovery rate of 81%. Silver head grades of 29 grammes per
tonne met a 84% recovery factor into the lead concentrate.
    These grades are substantially below the overall head grades for the
resource cited in the RPA technical report completed in but partially reflect
the mining of above normal amounts of waste rock and lower grade material
customary at the commencement of mining operations.
    Operating costs have increased to US$15.92 per tonne largely reflecting
an anticipated increase in labour rates. It is expected that these costs will
level out during the second half of 2007 as mining operations progress.
    Nevertheless, overall we do not feel these results are satisfactory and
changes to senior management in mine operations have already been implemented
in the second quarter in order to address these shortcomings.
    The Company is beginning to see a significant improvement in grades early
in the third quarter and expects production to rise slightly above the
projected rate of 450,000 tonnes per annum.

    Resource Upgrade

    For the past 15 months, subsequent to receipt of a 43-101 compliant
report, the Company has been conducting an extensive development drilling
programme utilizing six drills to outline further mineral resources. We are
engaging an independent engineering firm to update our 43-101 report by the
end of 2007.
    The mineral resources are being developed to support an expansion of
Arehada's underground mining capacity to 3,000 tonnes per with a concurrent
doubling of capacity of milling capacity.
    The Company is financing this development drilling from internal cash
flow and can fund a gradual expansion of its underground capacity in the same
    As previously reported, construction of the first phase of our 50,000
tonnes per annum plant to produce zinc oxide and sulphuric acid from
concentrate has now been completed. Arehada expects it to be fully operational
by the end of 2007 at which time this plant, which is the only one in the
region, will process ore from our Arehada mine and other zinc mines in the
    To date, $17 million has been used in building the first phase and this
has been funded through a five year term loan from a major Chinese bank.
Management is looking to accelerate the plant start up process, which would
require approximately $6 million to purchase sufficient initial feedstock, by
raising capital through a private placement of equity.

    About Arehada Mining

    Arehada Mining Limited is engaged in the exploration, development,
extraction and production of zinc, lead and silver in Dongwuzhumuqinqi,
located in Inner Mongolia, China. Arehada produces zinc and lead concentrates,
which are then sold to smelters in China.
    Arehada is currently constructing its own zinc plant with a designed
processing capacity of 100,000 tonnes per annum. The recently completed first
phase, with a rated capacity of 50,000 tonnes per annum, will produce zinc
oxide and sulphuric acid.

    Forward Looking Statements
    The above contains forward looking statements that are subject to a
number of known and unknown risks, uncertainties and other factors that may
cause actual results to differ materially from those anticipated in our
forward looking statements. Factors that could cause such differences include:
changes in world commodity markets, equity markets, costs and supply of
materials relevant to the mining industry, extent of resources actually
contained in mineral deposits, actual recoveries achieved in processing ore,
technological change, change to regulations affecting the mining industry,
risks associated with mining operation in China, environmental and safety
regulations risks, and risk associated with failure to obtain required
regulatory or third party consent. Forward-looking statements in this release
include statements regarding future programs, review completion dates and
opportunities. Although we believe the expectations reflected in our forward
looking statements are reasonable, results may vary, and we cannot guarantee
future results, levels of activity, performance or achievements.

For further information:

For further information: Christopher Harrop, Chairman, Arehada Mining
Limited, Tel.: (416) 362-5466, Email:; Martti Kangas,
Investor Relations, The Equicom Group, Tel: (416) 815-0700 x 243, Email:

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890