VANCOUVER, Dec. 21 /CNW/ - Roca Mines Inc. (TSX-V: ROK) ("Roca" or "the Company") has released its financial results for the annual period ended August 31, 2010, including production and sales from the MAX molybdenum mine located in British Columbia, Canada. All dollar amounts are stated in Canadian dollars unless otherwise indicated.
Overview and highlights:
- MAX Molybdenum mine awarded British Columbia's 2009 Mining and Sustainability Award in April of 2010;
- Government approval of Phase II MAX mine expansion plan to operate at 1,000tpd;
- Revenues of $17.6 million for September 1, 2009 to August 31, 2010;
- Cash costs of $11.99 per lb (US$11.47) during the year ended August 31, 2010;
- Average molybdenum recoveries of over 95%; and
- Molybdenum in concentrate production of 1,381,631 lbs for the year ended August 31, 2010.
MAX Molybdenum Mine - Production Results and Concentrate Sales
Revenues of $17.6 million for the year ended August 31, 2010 result from shipments during fiscal 2010 and reflect final and/or estimated final pricing at August 31, 2010. The Company sells its concentrates to a UK-based buyer with sales revenues based on average prevailing molybdenum oxide prices subsequent to delivery.
The table below is a summary of the average operating statistics by quarter for the fiscal year ended August 31, 2010:
|MAX Mine Statistics||Fiscal Year Ended August 31, 2010|
|Molybdenum Produced (lbs) 1||362,633||305,485||369,026||344,487|
|Average Head Grade (% Mo)||0.41||0.35||0.40||0.37|
|Molybdenum Recovery (%)||96||95||96||96|
|Mill Availability (%)||96||99||99||98|
|Average Daily Throughput (tpd)||460||454||493||470|
|Notes: (1) molybdenum contained in concentrate|
Molybdenum production during the year ended August 31, 2010 was significantly less than targeted, totalling 1,381,631 lbs of contained molybdenum (2009 - 2,374,355 lbs Mo). This resulted in higher cash costs of production at Cdn$11.99 (US$11.47) per lb of molybdenum sold, versus Cdn$7.29 (US$6.65) for the year ended August 31, 2009. Molybdenum production was lower in fiscal 2010 as a result of various dilutive events.
In October 2009, the mine experienced dilution due to a failure caused by the intersection of previously unknown structures in the stope, impacting production well into January 2010. The mine continues to focus on its sampling methods, grade and dilution control to deliver the best possible head grades. Management believes that its experience within the main zone and planning for other zones will deliver more robust operating performance in the future.
In August and September of 2010, the mine and mill were shut down for nine days as a result of an underground stope wall sloughing event between the 830 and 805 metre levels. An independent review was completed and highlighted that there were no issues with respect to re-entering the mine and that the event was contained entirely to the inactive, non-man-entry stope. Milling operations resumed on September 4, 2010. However on September 21, 2010, the Company announced that production had been suspended due to a collapse of the 830-850mL sill pillar.
A revised mine plan has now been prepared and reflects the desire to effectively isolate all future production from the stoping areas that have recently caused various production delays.
The information in this news release and the selected financial information should be read in conjunction with the audited consolidated financial statements, and management discussion and analysis, for the year ended August 31, 2010, which will be available at Roca's website at www.rocamines.com.
During the three months ended August 31, 2010, the Company recorded revenues of $4,239,642 and a loss of $12,354,804 compared to $8,797,479 in revenues and net income of $3,065,117 in the fourth quarter of the prior fiscal year. In light of continuing operational difficulties at the MAX Molybdenum mine, the value of certain future income tax assets was considered not to be recoverable. Therefore, the Company wrote-off a total of $11,584,037 in future income tax assets during the quarter ended August 31, 2010. Cash flows from operations totalled $375,764 during the fourth quarter ended August 31, 2010 versus cash flow from operations of $2,309,416 during the fourth quarter ended August 31, 2009 reflecting much higher head grades and molybdenum concentrate volumes produced in the prior year.
During the year ended August 31, 2010, the Company recorded production revenues of $17,649,841 and a net loss of $14,239,676 compared to revenues of $25,959,489 and a net loss of $18,448,087 for fiscal 2009. In the current year, the most significant charge is a write-off of $11,584,037 (2009 - Nil) in future income tax assets. The most significant charges in the prior year were depletion, amortization and accretion costs of $36,765,811 which totalled only $1,651,096 in the current year. Until June 1, 2009 the Company was depleting capital start-up costs of approximately $55 million over the Phase I mine plan. As of June 1, 2009, upon a decision to advance the Company's Phase II mine plan, all capital costs for development and equipment available for use are now being amortized over the estimated Phase II mine life on a unit of production basis.
Cash flows from operations of $2,661,724 (2009 - $8,672,503) and proceeds from financing activities of $535,493 (2009 - $1,052,471) were invested in exploration, mine development and underground maintenance and repairs. General and administrative expenses have decreased by approximately 9% over 2009, reflecting the Company's cost-cutting initiatives while the MAX Molybdenum mine's performance suffered from various dilutive events in 2010.
Summary Consolidated Statements of Operations and Loss
| Year ended
August 31, 2010
| Year ended
August 31, 2009
|Cost of sales||(16,489,167)||(17,348,348)|
|Depletion, amortization, accretion||(1,651,096)||(36,765,811)|
|G&A, Stock-based comp., write-offs||(2,280,131)||(1,858,680)|
|Loss from Operations||(2,770,553)||(30,013,350)|
|Foreign Exchange gains (losses) and other||(75,943)||706,986|
|Income and mining tax recovery provision||(11,393,180)||10,858,277|
|Net Loss for the Year||(14,239,676)||(18,448,087)|
|Loss per Share - Basic and Diluted||(0.15)||(0.21)|
It remains management's belief that molybdenum prices should remain significantly greater than historic values for the foreseeable future due to i) production problems globally, ii) the reduction of by-product production related to copper mines and iii) the inability of new mines to achieve financing. In real terms, recent global events have seriously eroded the supply of molybdenum and management believes that a realization of supply and demand fundamentals in the medium-term will result in positive changes to pricing. It is therefore management's goal to re-start production at the MAX Molybdenum mine and to accelerate to 1000 tpd to reduce unit costs and to preserve the opportunity to produce concentrates in an appreciating price environment.
Exploration work at the Company's various projects has been limited recently to preserve limited cash resources and expenditures towards mine expansion and operating efficiencies continue to be management's top priority.
ROCA MINES INC.
David J. Skerlec - Chief Financial Officer
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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