Constellation Copper Reports Second Quarter 2007 Financial Results



    TSX: CCU

    DENVER, CO, Aug. 9 /CNW Telbec/ - Constellation Copper Corporation
("Constellation" or the "Company") (TSX: CCU) is pleased to announce its
financial results for the quarter ended June 30, 2007. All dollar amounts are
in US dollars unless otherwise stated.

    
    Highlights
    ----------

    - Positive quarterly cash flows from operations achieved for the first
      time
    - Primary acid supply contract renegotiated for cost savings of
      approximately $1.5 million during second quarter of 2007
    - Lisbon Valley mine second quarter 2007 production of 5,859,000 pounds
      of copper cathode at a cash cost of $1.78 per pound, excluding
      royalties and taxes of $0.05 per pound
    - Copper sales during the second quarter of 2007 were 5,919,000 pounds at
      an average price of $3.43 per pound
    - Focus for the remainder of 2007 will be on increasing contained pounds
      of copper loaded on the leach pad and implementing production
      enhancements
    - Drilling program continues at the San Javier property in Sonora,
      Mexico; in April 2007, the Company announced an initial mineral
      resource for the deposit
    - Engineering and evaluation activities continue at Terrazas property in
      Chihuahua, Mexico. Company is actively pursuing additional zinc
      resources for proposed agitation leach process and considering various
      financing alternatives, including partnering

    Positive operating cash flows
    -----------------------------

    The Company achieved positive cash flows from operating activities for the
first time in the quarter ending June 30, 2007, although the Lisbon Valley
mine is currently operating below expectations. Copper production was
5,859,000 pounds for the second quarter of 2007, compared to a previous
forecast of 6,400,000 pounds. The primary reason for the lower copper
production was unscheduled maintenance on the agglomerator, which mixes
crushed ore with sulfuric acid before the ore is loaded onto the leach pad.
The agglomerator was out of service for 8 days in May 2007, for an overhaul
and various operating improvements during the maintenance outage. Even with
the unexpected downtime, estimated contained copper pounds loaded on the leach
pad increased to 10,007,000 in the second quarter of 2007 from
8,171,000 pounds in the first quarter of 2007, a 22% increase related
primarily to higher grade of ore being mined and crushed. A new monthly record
of 4.2 million contained pounds of copper loaded on the leach pad was achieved
in June 2007. The agglomerator was also out of service for 6 days in July
2007, and the Company is currently evaluating the purchase of a second
agglomerator, among other operating enhancements, to increase the reliability
of the crushing, conveying and stacking systems.

    Operating enhancements
    ----------------------

    Operating enhancements currently underway include supplementing the ore
being placed on the leach pad by trucking primary crushed ore (minus six-inch
size) directly to a separate area of the leach pad. Through June 30, 2007, all
ore had been processed through the secondary crushing system and agglomerator
before being loaded on the leach pad. In July 2007, the Company leased three
100-ton capacity haul trucks and a dozer for a period of six months to haul
supplemental predominately oxide ore from the primary crusher to the leach
pad. Currently, with the single pass leaching, there is only enough pumping
capacity available to irrigate about half of the ore stacked on the leach pad,
so the Company is constructing an Intermediate Leach Solution (ILS) pond and
distribution system to double the amount of ore under leach. The ILS system
will increase the grade of the pregnant leach solution (PLS) by re-circulating
("stacking") the low grade solution through previously leached areas of the
leach pad before it is circulated through the new ore and is processed through
the SX/EW plant.
    The Company completed a process plant conversion to a parallel flow
configuration during March 2007, which resulted in the planned 16% increase in
PLS flow to 5,000 gallons per minute from the original design of 4,300 gallons
per minute.
    The Company renegotiated its primary sulfuric acid supply contract,
effective April 1, 2007, to change to a long term, fixed price contract from a
price indexed to the price of copper. The new contract resulted in a reduction
of acid cost during the second quarter of 2007 of approximately $1.5 million
from the cost that would have been incurred under the previous pricing
arrangement, a savings of approximately $0.25 per pound of copper produced.
    Copper sales were 5,919,000 pounds at an average realized copper price of
$3.43 per pound during the second quarter of 2007. The average copper price
realized increased from $2.70 per pound during the first quarter of 2007.

    Exploration and development
    ---------------------------

    During the quarter ended June 30, 2007, the Company continued drilling and
related activities, including the start of column testing at the San Javier
project in Sonora, Mexico. A technical report announcing the initial mineral
resource at San Javier was filed in April 2007. A preliminary economic
assessment is scheduled to be completed in the fourth quarter of 2007.
    During the second quarter of 2007, the Company continued engineering and
estimating capital requirements and operating costs for an agitation leach
processing alternative at the Terrazas property in Chihuahua, Mexico. The
Company is currently evaluating additional sources of zinc oxide materials for
processing at the Terrazas site. The Company continues to consider partnering
opportunities for the Terrazas project and other financing alternatives.

    Results of Operations
    ---------------------

    The Company had a net loss of $8,078,000 ($0.05 per share) for the second
quarter of 2007, compared to a net loss of $33,278,000 ($0.21 per share) for
the second quarter of 2006.
    Revenues during the second quarter of 2007 were $20,301,000 from the sale
of 5,919,000 pounds of cathode copper at an average price of $3.43 per pound.
Costs of sales, excluding depreciation and amortization costs, were
$10,879,000. Non-cash costs of $2,123,000 are combined with non-operating
depreciation and amortization of $20,000 and reported separately on the
consolidated statement of operations. Depreciation and amortization in the
second quarter of 2006 was $18,000, all relating to corporate activities. All
mine operating expenditures, net of revenues, in the second quarter of 2006
were capitalized.
    The net loss for the second quarter of 2007 included a realized loss of
$5,870,000 and an unrealized loss of $3,135,000 on derivative instruments.
Also during the second quarter of 2007, the Company had interest expense of
$1,592,000, and a foreign exchange loss of $3,385,000. Interest expense was
capitalized prior to achieving commercial production. The foreign exchange
loss relates primarily to the strengthening of the Canadian dollar to the US
dollar for the outstanding Cdn.$69.0 million convertible debentures due
March 31, 2012, and related accrued interest. The Company had realized and
unrealized losses on derivative instruments of $4,398,000 and $26,673,000
respectively, and a foreign exchange gain of $60,000 in the second quarter of
2006.
    General and administrative expenses were $1,131,000 for the quarter ended
June 30, 2007, compared to $861,000 in the quarter ended June 30, 2006. The
increase relates primarily to severance benefits for the former CEO, who left
the Company near the end of June 2007. Stock based compensation expense was
$360,000, net of $50,000 capitalized, and $834,000, with no amounts
capitalized, for the quarters ended June 30, 2007 and 2006, respectively. The
higher stock based compensation expense in the second quarter of 2006 relates
primarily to the granting of options during June 2006.
    During the second quarter of 2007, the Company expensed $155,000 for
exploration activities on properties on which mineral resources had not yet
been identified, compared to exploration expense of $736,000 in the second
quarter of 2006. In accordance with its accounting policies, the Company began
capitalizing costs on the San Javier project in January 2007. In prior
periods, costs related to San Javier were expensed. Interest income was
$271,000 in the second quarter of 2007 compared to $182,000 in the second
quarter of 2006, reflecting higher cash balances including remaining proceeds
of the convertible debentures issued in March 2007.

    Cash Flows
    ----------

    The Company's cash balance at June 30, 2007 was $25,832,000 compared to
$5,726,000 at December 31, 2006. The higher cash balance is due primarily to
proceeds from the issuance of convertible debentures net of a repayment of the
Lisbon Valley project financing in March 2007.
    Cash provided from operating activities was $717,000 for the quarter ended
June 30, 2007, compared with cash used in operating activities of $10,581,000
for the second quarter of 2006. This is the first quarter the Company
generated positive cash flow from operations, as a result of higher production
volumes, lower operating costs and an increase in copper prices. The
renegotiated sulfuric acid contract was effective April 1, 2007. Cash used in
building inventories during the second quarter of 2007 was $2,015,000 compared
to $6,987,000 during the second quarter of 2006.
    The Company continues to be unable to benefit in full from high copper
prices as a result of the forward sales contracts entered into as a
requirement of the Lisbon Valley project financing. Approximately
1.3 million pounds of copper each month through December 2008 are subject to
forward sales contracts. The Company settles the forward sales in cash each
month for the difference between the contract price and the monthly average
London Metals Exchange (LME) copper price. The settlements of forward sales
contracts required by the Lisbon Valley project financing commenced in
April 2006. During the second quarter of 2007, the Company's forward sales
settlements required total cash payments of $5,223,000.
    The average LME price of copper has increased dramatically from $2.57 per
pound in January and February 2007 to $3.62 per pound during July 2007. As a
result of the increase in copper prices, the cost to close out the outstanding
forward sales contracts in advance of the original contract maturity dates,
has also risen significantly. The remaining outstanding forward sales
contracts may be closed out in advance of scheduled monthly maturities
depending on market conditions.
    Cash used in investing activities was $3,023,000 in the second quarter of
2007 compared to $661,000 during the quarter ended June 30, 2006. Expenditures
in the quarters ended June 30, 2007 and 2006 on mineral properties were
$2,481,000 and $1,508,000, respectively. Expenditures on property, plant and
equipment were $515,000 in the quarter ended June 30, 2007. In the quarter
ended June 30, 2006, $1,306,000 of cash was generated as a result of netting
pre-commercial revenues against mine development expenditures.
    During the second quarter of 2007, the Company received $79,000 in
connection with a grant from the U.S. Trade and Development Agency ("TDA").
The grant, totaling funding of $421,000 through June 30, 2007, is required to
be repaid under certain conditions. In the quarter ended June 30, 2006, cash
from financing activities included $8,187,000 of proceeds from the exercise of
options and warrants and $97,000 from the TDA grant.

    Outlook
    -------

    The Company has undertaken several operating enhancements during 2007 in
an effort to increase the amount of ore loaded on the leach pads and increase
the quantity of leach solution for irrigating a larger proportion of the leach
pad. Trucking primary crushed ore directly to the leach pad began in late July
2007, with leaching of the trucked ore expected to begin early in the fourth
quarter of 2007. The ILS system is expected to be operational in November 2007
and stacking the PLS grade will begin immediately upon completion. The full
effect of the ILS system will be seen once the planned flow rate is achieved
in mid-spring of 2008. The addition of more ore to the pad and more leaching
solution is expected to offset the slower recovery of copper that was
previously disclosed. Improvements in PLS grades being processed through the
SX/EW plant and the resulting higher copper production are expected to begin
in the fourth quarter of 2007.
    Attached to this press release are the Company's unaudited interim
consolidated financial statements for the quarter ended June 30, 2007. For a
more complete discussion, please refer to the Company's second quarter 2007
report and the Company's audited financial statements and MD&A for the year
ended December 31, 2006 on the SEDAR website at www.sedar.com.
    As previously announced, the Company will host a conference call on
Thursday, August 9, 2007 at 11:00 AM (EDT), to discuss 2007 second quarter
results. To participate in the conference call, please dial (416) 644-3430
(Toronto and surrounding area), (514) 807-8791 (Montreal and surrounding area,
or Toll free 1-800-814-4853. To ensure your participation, please call
approximately five minutes prior to the scheduled start of the call.

    This press release contains certain forward-looking statements. In certain
cases, forward-looking statements can be identified by the use of words such
as "plans", "expects" or "does not anticipate", or "believes", or variations
of such words and phrases or statements 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 the Company to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others, risks related
to changes in commodity and power prices, changes in interest and currency
exchange rates, inaccurate geological and metallurgical assumptions (including
with respect to the size, grade and recoverability of mineral reserves and
resources), unanticipated operational difficulties (including failure of
plant, equipment or processes to operate in accordance with specifications,
cost escalation, unavailability of materials and equipment, delays in the
receipt of government approvals, industrial disturbances or other job action,
and unanticipated events related to health, safety and environmental matters),
political risk, social unrest, and changes in general economic conditions or
conditions in the financial markets. Although the Company has attempted to
identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking statements, there
may be other factors that cause actions, events or results to differ from
those anticipated, estimated or intended. 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, readers should not place undue reliance on
forward-looking statements.


    CONSTELLATION COPPER CORPORATION
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)     (in thousands of U.S. Dollars)
    ----------------------------------------------
                                                                As at
                                                   --------------------------
                                                         June 30,   December
                                                            2007    31, 2006

    Assets

    Current assets
    Cash and cash equivalents                             25,832       5,726
    Other current assets                                   1,605       1,487
    Inventories                                           36,332      31,150
                                                   --------------------------
                                                          63,769      38,363

    Property, plant and equipment                         82,634      84,357
    Mineral properties                                    16,312      12,121
    Deferred charges and other assets                      4,555       7,068
    Restricted cash                                        2,348       2,479
                                                   --------------------------
                                                         169,618     144,388
                                                   --------------------------
                                                   --------------------------

    Liabilities

    Current liabilities
    Accounts payable and accrued liabilities             9,524         7,977
    Derivative instruments                              20,814        13,928
    Current portion of long-term debt                        -         8,587
                                                   --------------------------
                                                        30,338        30,492

    Asset retirement obligations                         2,841         2,314
    Long-term debt                                      46,795        20,598
    Other long-term liabilities                         10,028        12,882
                                                   --------------------------
                                                        90,002        66,286
                                                   --------------------------

    Shareholders' Equity

    Capital stock                                      150,537       150,211
    Convertible debentures                              14,796             -
    Stock options                                        3,475         2,666
    Warrants                                               297             -
    Deficit                                            (89,647)      (74,775)
    Accumulated other comprehensive income                 158             -
                                                   --------------------------
                                                        79,616        78,102
                                                   --------------------------
                                                       169,618       144,388
                                                   --------------------------
                                                   --------------------------


    CONSTELLATION COPPER CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
    (Unaudited)
    (in thousands of U.S. Dollars, except for share and per share amounts)
    ----------------------------------------------------------------------

                                   Three Months Ended       Six Months Ended
                                         June 30                 June 30
                                    2007        2006        2007        2006

    Revenues                      20,301           -      36,143           -
                                ---------------------------------------------

    Costs and Expenses
      Cost of sales               10,879           -      22,350           -
      General and administrative   1,131         861       1,927       1,558
      Stock-based compensation       360         834         746         969
      Depreciation and
       amortization                2,143          18       4,249          33
      Exploration                    155         736         262         943
                                ---------------------------------------------
                                  14,668       2,449      29,534       3,503
                                ---------------------------------------------

    Other (Income) Expense
      Interest income               (271)       (182)       (380)       (270)
      Interest expense             1,592           -       2,470           -
      Foreign exchange loss (gain) 3,385         (60)      4,049           8
      Gain on sale of assets           -           -        (585)       (696)
      Write-off of financing costs     -           -       2,605           -
      Realized loss on derivative
       instruments                 5,870       4,398      10,210       4,448
      Unrealized loss on
       derivative instruments      3,135      26,673       3,112      39,329
                                ---------------------------------------------
                                  13,711      30,829      21,481      42,819
                                ---------------------------------------------

    Loss and comprehensive loss
     for the period                8,078      33,278      14,872      46,322

    Deficit - Beginning of
     period                       81,569      38,241      74,775      25,197
                                ---------------------------------------------

    Deficit - End of period       89,647      71,519      89,647      71,519
                                ---------------------------------------------
                                ---------------------------------------------

    Basic and diluted loss per
     share                         (0.05)      (0.21)      (0.08)      (0.30)
                                ---------------------------------------------
                                ---------------------------------------------

    Weighted average number of
     shares (000's)              178,850     161,598     178,780     154,985
                                ---------------------------------------------
                                ---------------------------------------------


    CONSTELLATION COPPER CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOW
    (Unaudited) (in thousands of U.S. Dollars)
    -------------------------------------------

                                   Three Months Ended       Six Months Ended
                                         June 30                 June 30
                                    2007        2006        2007        2006

    Cash flows from (used in)
     operating activities
      Loss for the period         (8,078)    (33,278)    (14,872)    (46,322)

      Items not affecting cash:
        Depreciation and
         amortization              2,143          18       4,249          33
        Stock-based compensation     360         834         746         969
        Unrealized foreign
         exchange loss             3,745           -       4,494           -
        Write-off of financing
         costs                         -           -       2,834           -
        Accretion                    748           -         773           -
        Realized loss on
         derivative instruments      474         194         884         244
        Unrealized loss on
         derivative instruments    3,135      26,673       3,112      39,329
        Gain on sale of assets         -           -        (585)       (696)

      Change in non-cash working
       capital items:
        Inventories               (2,015)     (6,987)     (3,641)    (10,585)
        Other current assets         589         112          40          68
        Accounts payable and
         accrued liabilities        (384)      1,853      (1,069)      3,534
                                ---------------------------------------------
                                     717     (10,581)     (3,035)    (13,426)
                                ---------------------------------------------

    Cash flows from (used in)
     investing activities
      Expenditures on mineral
       properties                 (2,481)     (1,508)     (3,692)     (2,626)
      Expenditures on property,
       plant and equipment          (515)      1,306      (1,939)    (11,316)
      Decrease in restricted cash,
       net of interest earned        (27)        (21)        131         (42)
      Proceeds from sale of
       assets                          -           -       1,640         696
      Deferred charges and other
       assets                          -        (438)       (518)       (531)
                                ---------------------------------------------
                                  (3,023)       (661)     (4,378)    (13,819)
                                ---------------------------------------------

    Cash flows from (used in)
     financing activities
      Proceeds from issuance
       of debt                         -           -      60,470      10,000
      Repayments of debt               -           -     (30,685)          -
      Proceeds from exercise of
       options and warrants            -       8,187         257      27,582
      Financing costs                  -           -      (2,602)       (234)
      Proceeds from TDA grant         79          97          79         220
                                ---------------------------------------------
                                      79       8,284      27,519      37,568
                                ---------------------------------------------

    Increase (decrease) in cash
     and cash equivalents         (2,227)     (2,958)     20,106      10,323

    Cash and cash equivalents -
     Beginning of period          28,059      20,082       5,726       6,801
                                ---------------------------------------------

    Cash and cash equivalents -
     End of period                25,832      17,124      25,832      17,124
                                ---------------------------------------------
                                ---------------------------------------------

    Non-cash investing and
     financing activities
    In accounts payable at
     period end:
      Expenditures on mineral
       properties                    841         110         841         110
      Expenditures on property,
       plant and equipment         2,178         521       2,178         521
    Settled by issuance of
     shares                           28       5,000          28      10,728
                                ---------------------------------------------
                                ---------------------------------------------
    
    %SEDAR: 00002465E




For further information:

For further information: Constellation Copper Corporation: John A.
Labate, Chief Financial Officer; Michelle Hebert, Manager, Corporate Affairs,
(720) 228-0055, Toll Free: 1-877-370-5400, Fax: (303) 863-1736,
info@constellationcopper.com, www.constellationcopper.com; Renmark Financial
Communications Inc.: Neil Murray-Lyon, nmurraylyon@renmarkfinancial.com;
Barbara Komorowski, bkomorowski@renmarkfinancial.com; Media: Vanessa Napoli,
vnapoli@renmarkfinancial.com, (514) 939-3989, (514) 939-3717,
www.renmarkfinancial.com

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