Anaconda Mining generates $5.8 million in net income for FY Q3 2012 from record sales volume and EBITDA at Pine Cove and sale of its Chilean iron ore assets
TORONTO, April 16, 2012 /CNW/ - Anaconda Mining Inc. ('Anaconda' or the 'Company') -
is pleased to report its results for the three and nine months ended February 29, 2012. The Company generated net income for the three months ended February 29, 2012 of $5,789,191 (or $0.03 per fully diluted share) and for the nine months ended February 29, 2012 of $4,187,458 (or $0.02 per fully diluted share).Anaconda's third quarter performance was buoyed by record sales volume at the Pine Cove project. During the period, the Company sold 3,277 ounces of gold at Pine Cove and generated $5,558,524 in revenue and $2,636,396 in earnings before interest, taxes, depreciation, amortization and non-cash share-based compensation ('EBITDA'). The average gold sales price was $1,696 per ounce and cash cost per ounce sold at Pine Cove was $892 for the third quarter.
With the initial proceeds from the sale of its Chilean iron ore assets on December 7, 2011 and operating cash flow, the Company paid off the Series III debentures totaling approximately $711,000 (including accrued interest), reduced aged payables significantly and, subsequent to quarter-end, made a payment of approximately $500,000 on the Thorsen loan, Series I and Series II debentures (the 'Loans'). Anaconda expects to make another payment on the outstanding Loans by the end of April and reach its target of cutting interest bearing debt by nearly 50% by May 31, 2012.
Anaconda President and CEO, Dustin Angelo, stated, 'The performance at Pine Cove is really starting to pick up as demonstrated by the record third quarter results. The Pine Cove team has done an exceptional job in continuing to optimize the operation, which has generated the necessary cash flow to enable the Company to make progress on various initiatives like de-levering the balance sheet, exploration, property expansion and further operational improvements.'
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).
Highlights for the three and nine months ended February 29, 2012:
CHILE:
-- On December 7, 2011, Anaconda's wholly owned subsidiary,
Inversiones La Veta SpA ('La Veta'), sold its shares
representing a 50% ownership stake in Minera Hierro San Gabriel
S.A. ('MHSG') and a 20% ownership stake in Inversiones Hierro
Antofagasta S.A. ('IHA') to Hierro Tal Tal S.A. ('Tal Tal'), a
private Chilean company, 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'). Anaconda, via La
Veta, received US$2 million at closing and will receive another
US$2 million on or before May 31, 2012. The remaining payments
are contingent upon Tal Tal meeting certain production and
sales milestones.
BALANCE SHEET IMPROVEMENT:
-- As at February 29, 2012, the Company had cash and cash
equivalents of $1,187,024 and a net working capital surplus of
$1,108,134.
-- In December 2011, the Company repaid the full principal amount
plus accrued interest of approximately $711,000 to the holders
of the Series III debentures.
-- As at February 29, 2012, the Company had $3,297,424 in
trade/other payables and amounts due to shareholders, a
reduction of $2,450,133 since May 31, 2011.
-- Subsequent to the end of the third quarter of fiscal 2012, on
March 28, 2012, the Company paid a total of $500,360 against
its Series I, Series II and the Thorsen loan on a pro-rata
basis.
OPERATING PERFORMANCE:
-- For the three months ended February 29, 2012, the Company sold
3,277 ounces of gold and generated $5,558,524 in revenue at an
average sales price of $1,696 per ounce. For the nine months
ended February 29, 2012, Anaconda sold 8,301 ounces of gold and
generated $13,870,022 in revenue at an average sales price of
$1,671 per ounce.
-- At the Pine Cove project, EBITDA for the three months ended
February 29, 2012 was $2,636,396 and $5,479,971 for the nine
months ended February 29, 2012.
-- Cash operating cost per ounce sold at the Pine Cove project for
the three and nine months ended February 29, 2012 was $892 per
ounce and $1,011 per ounce, respectively.
-- On a consolidated basis, EBITDA for the three months ended
February 29, 2012 was $2,229,593 and $3,938,686 for the nine
months ended February 29, 2012.
-- Net income for the three months ended February 29, 2012 was
$5,789,191 or $0.03 per share and $4,187,458 or $0.02 per share
for the nine months ended February 29, 2012.
-- Purchase of property, mill and equipment for the three and nine
months ended February 29, 2012 was $2,234 and $1,098,552,
respectively.
-- Approximately $9,560 and $214,000 was spent at the Pine Cove
project on exploration for the three and nine months ended
February 29, 2012, respectively.
MANAGERIAL CHANGES:
-- On January 26, 2012, Anaconda announced the appointment of J.
Errol Farr, CMA, as Chief Financial Officer of the Company.
-- On February 10, 2012, the Company announced certain changes to
its board of directors that included the appointments of
Michael Byron and Maruf Raza, and the resignations of John
McBride, David Wiley, Thomas Pladsen and Glenn Kosick.
OPERATIONAL OVERVIEW
Pine Cove project, Baie Verte, Newfoundland:
Overview:
During the third quarter ended February 29, 2012, the Pine Cove project generated a record level of gold sales volume of 3,277 ounces, representing a 51% increase over the second quarter ended November 30, 2011 and a 15% increase over the first quarter ended August 31, 2011. The improvement in overall gold output compared to previous quarters is due to greater consistency in achieving key operating parameters. In the third quarter, grade, throughput and recovery were at or near their highest levels for fiscal 2012. The following table summarizes the results for the key operating parameters by quarter for fiscal 2012.
_________________________________________________________________
| | Q1 '12| Q2 '12|Q3 '12|Total/Avg.|
|_______________________|___________|___________|______|__________|
|OPERATING STATISTICS: | | | | |
|_______________________|___________|___________|______|__________|
|Dry tonnes processed | 79,935| 55,369|72,500| 207,804|
|_______________________|___________|___________|______|__________|
|Grade (grams per tonne)| 1.51| 2.04| 2.01| 1.83|
|_______________________|___________|___________|______|__________|
|Overall mill recovery | 76%| 78%| 81%| 78%|
|_______________________|___________|___________|______|__________|
| | | | | |
|_______________________|___________|___________|______|__________|
|Gold sales volume (troy| 2,858| 2,166| 3,277| 8,301|
|oz.) | | | | |
|_______________________|___________|___________|______|__________|
Mill operations:
The Pine Cove mill operated for 79.5 days during the third quarter. Mill availability was normal for the first two months of the quarter and then crusher maintenance and a heavy snowfall caused significant downtime in February. The mill processed 72,500 dry tonnes of ore (912 tonnes per operating day) at an average head grade of 2.01 grams per tonne, which was nearly the same as the previous quarter and in line with life of mine expectations. Overall mill recovery averaged 81% for the quarter and reached a high of 83% in February. The following table summarizes the key operating statistics by month for the third quarter ended February 29, 2012:
_____________________________________________________________________
| | Dec '11| Jan '12| Feb '12| Total/Avg.|
|_______________________|___________|_________|_________|_____________|
|OPERATING STATISTICS: | | | | |
|_______________________|___________|_________|_________|_____________|
|Calendar days | 31| 31| 29| 91|
|_______________________|___________|_________|_________|_____________|
|Operating days | 29| 29| 21.5| 79.5|
|_______________________|___________|_________|_________|_____________|
|Availability | 93%| 93%| 74%| 87%|
|_______________________|___________|_________|_________|_____________|
|Dry tonnes processed | 26,901| 24,228| 21,371| 72,500|
|_______________________|___________|_________|_________|_____________|
|Tonnes per 24-hour day | 928| 835| 994| 912|
|_______________________|___________|_________|_________|_____________|
|Grade (grams per tonne)| 1.94| 1.75| 2.34| 2.01|
|_______________________|___________|_________|_________|_____________|
|Overall mill recovery | 78%| 82%| 83%| 81%|
|_______________________|___________|_________|_________|_____________|
| | | | | |
|_______________________|___________|_________|_________|_____________|
|Gold sales volume (troy| 1,028| 997| 1,252| 3,277|
|oz.) | | | | |
|_______________________|___________|_________|_________|_____________|
In December, overall mill recovery was below the targeted level of 80% primarily because of lower than expected leach recovery. The leach circuit feed size distribution was too coarse due to changes made to improve throughput at the grinding circuit and insufficient size reduction through the regrind ball mill, causing leach recovery to be below expectations. Additional media was added to the regrind mill and a more precise control strategy was implemented late in the month to control grind size. In addition, the use of copper sulphate to aid the performance of the filtration circuit contributed towards mill optimization, allowing a finer grind product (p80 - 30 microns) in the leach circuit.
As overall mill recovery improved in January (82%) and February (83%), total dry tonnes processed in those months declined. The two leading factors were weather and crusher related maintenance issues. Inclement weather slowed crushing activities and periodically froze stockpiles while scheduled crusher maintenance was performed along with unscheduled outages to replace key parts. The maintenance team has since built an inventory of critical crusher spare parts to limit future downtime. Despite the weather and crusher maintenance challenges, mill throughput per 24-hour operating day operated efficiently at 919 tonnes with February being nearly 1,000 tonnes of throughput per 24-hour operating day.
Mining Operations:
During the third quarter ended February 29, 2012, contract mining activities operated for a total of 58 days with one crew and excavated a total of 303,945 tonnes of ore and waste. Ore production totaled over 82,000 tonnes while waste was approximately 221,000 tonnes. In addition to ore and waste mucking, mining activities included tailings dam/decant enhancement, ramp construction/realignment and pit dewatering. The average feed grade through the mill for the quarter was approximately 2.0 g/t. The following table summarizes the mining production for the third quarter ended February 29, 2012:
____________________________________________________________
| |Dec '11|Jan '12|Feb '12|Total/Avg.|
|_________________________|_______|_______|_______|__________|
|OPERATING STATISTICS: | | | | |
|_________________________|_______|_______|_______|__________|
|Calendar days | 31| 31| 29| 91|
|_________________________|_______|_______|_______|__________|
|Operating days | 17| 21| 20| 58|
|_________________________|_______|_______|_______|__________|
| | | | | |
|_________________________|_______|_______|_______|__________|
|Ore production (tonnes) | 45,985| 7,627| 29,106| 82,718|
|_________________________|_______|_______|_______|__________|
|Waste production (tonnes)| 68,052| 73,558| 79,618| 221,228|
|_________________________|_______|_______|_______|__________|
|Total production (tonnes)|114,037| 81,185|108,723| 303,945|
|_________________________|_______|_______|_______|__________|
|Waste: Ore ratio | 1.48| 9.64| 2.74| 2.67|
|_________________________|_______|_______|_______|__________|
| | | | | |
|_________________________|_______|_______|_______|__________|
|Grade (grams per tonne) | 1.94| 1.75| 2.34| 2.01|
|_________________________|_______|_______|_______|__________|
For the month of December, a low strip ratio resulted due to the abundance of broken ore in the pit and the need to expose solid pit faces for future planned drilling and blasting. In addition, mining activities were curbed during the Christmas holidays so mucking was performed in a lower strip ratio area to build inventory for the mill, which operated without any holiday downtime. During January, the strip ratio rose to nearly 10:1 as waste rock was used for widening the main ramp into the pit and for continued enhancement of the tailings dam. A low strip ratio was intentionally targeted for the month of February to make up for the minimal ore mucked in January.
During the third quarter ended February 29, 2012, the tailings dam enhancement program continued, using waste material excavated from normal course mining activities. By the end of the quarter, dam elevation was at 95 meters on the northeast section and at 93 meters on the southwest section. Once the decant structure is complete, focus will shift to completing the southwest portion and begin preparation for till and liner application. Ultimate elevation is targeted to be 98 meters.
Exploration update:
During the month of February, Anaconda received a report from its geophysical contractor outlining the results of an IP survey that targeted an area with known mineralization just north of the current operation. The IP survey identified an anomaly located to the northwest of the existing pit. Using this survey and past drill results as a guideline, a small drill program of up to four holes was scheduled to begin in late March.
CHILEAN IRON ORE ASSETS
On December 7, 2011, the Company announced that, pursuant to an agreement dated that day, it had closed the sale of its Chilean iron-ore exploration assets to Tal Tal, a private Chilean company for up to US$11 million in cash payments, a gross sales royalty and a 1.25% carried interest in 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, the Company is to receive another cash payment of US$2 million on May 31, 2012.
The Company recorded a gain on sale of the Chilean iron ore assets of $4,187,772, which includes the US$2 million received on closing, the US$2 million due by May 31, 2012 and the right off of the remaining assets and liabilities related to Chile at closing.
ABOUT ANACONDA
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.
Anaconda Mining Inc.
CONTACT: Anaconda Mining Inc.
Dustin Angelo
President and CEO
(647) 260-1248
Email: dangelo@anacondamining.com
Company website: www.anacondamining.com
