Anaconda Mining sells 4,605 ounces and generates $2.6M of EBITDA at the Point Rousse Project for Q2 fiscal 2016

TORONTO, Jan. 8, 2016 /CNW/ - Anaconda Mining Inc. ("Anaconda" or the "Company") – (TSX: ANX) is pleased to report its financial and operating results for the three and six months ended November 30, 2015. All amounts are expressed in Canadian Dollars unless otherwise noted. During the second quarter of fiscal 2016, the Company sold 4,605 ounces of gold resulting in $6,798,075 in revenue at an average sales price of $1,476 per ounce (USD$1,118). Cash cost per ounce sold at the Point Rousse Project for the three months ended November 30, 2015 was $913 (USD$691). Earnings before interest, taxes, depreciation and amortization and other non-cash expenses ("EBITDA") at the project level were $2,594,851. Net income for the three months ended November 30, 2015 was $766,040. As at November 30, 2015, the Company had cash and cash equivalents of $972,479 and net working capital of $2,473,693.

President and CEO, Dustin Angelo, stated, "Anaconda had an exceptional second quarter, both operationally and financially, buoyed by a quarterly sales volume record of 4,605 ounces. The continued improvement of the Pine Cove mill has given us the ability to increase our throughput significantly compared to last year. The mining staff has done an excellent job at efficiently mucking and optimizing grade to supply the mill at the higher tonnage levels. The resulting upturn in our gold sales volume has helped us drive our cash cost per ounce sold below $1,000 per ounce for the quarter and year to date. Moving into the second half of the year, we are looking to gain further efficiencies through completing our mill automation project and making further upgrades to equipment in the mill."

Highlights for the three months ended November 30, 2015 

• As at November 30, 2015, the Company had cash and cash equivalents of $972,479 and net working capital of $2,473,693.
• For the three months ended November 30, 2015, the Company sold 4,605 ounces of gold, a quarterly sales volume record, and generated $6,798,075 in revenue at an average sales price of $1,476 per ounce.
• For the six months ended November 30, 2015, the Company sold 8,561 ounces of gold and generated $12,583,876 in revenue at an average sales price of $1,470 per ounce.
• Cash cost per ounce sold at the Pine Cove Project for the three and six months ended November 30, 2015 was $913 and $996 per ounce respectively.
• All-in sustaining cash cost per ounce sold ("AISC") (see Reconciliation of Non-GAAP Financial Measures), including corporate administration, capital expenditures and exploration costs for the three and six months ended November 30, 2015 was $1,364 and $1,424 per ounce respectively.
• The mill processed 1,181 tonnes of ore per operating day for the three months ended November 30, 2015.
• The overall recovery in the mill for the three and six months ended November 30, 2015 was 87%.
• At the Pine Cove Project, EBITDA (see Reconciliation of Non-GAAP Financial Measures) for the three and six months ended November 30, 2015 was $2,594,851 and $4,057,279 respectively.
• On a consolidated basis, EBITDA for the three and six months ended November 30, 2015 was $2,032,078 and $2,972,055, respectively.
• Net income for the three and six months ended November 30, 2015 was $766,040 and $581,121 respectively.
• Purchase of property, mill and equipment for the six months ended November 30, 2015 was $1,804,419. Key items included mill automation and equipment upgrades of $590,000, tailing expansion costs of $346,000, polishing pond construction of $221,000, construction of ore shed enclosure of $203,000 and development costs of $380,000.
• Production stripping assets for the six months ended November 30, 2015 include additions of $414,397 and amortization of $37,258.
• Approximately $814,000 was spent at the Point Rousse Project on exploration for the six months ended November 30, 2015. The Company's exploration initiatives included publishing a 43-101 Technical Report outlining mineral resources at the Stog'er Tight and Pine Cove deposits, a trenching program adjacent to the Stog'er Tight deposit to expose near surface mineralization, geological mapping and trenching program at the Argyle zone and drilling at the Pine Cove Pond area adjacent to the Pine Cove pit.
• On December 18, 2015, the Company entered into an agreement (the "Agreement") with Auramet International LLC ("Auramet") through which Auramet has paid USD$500,000 (USD$980 per ounce) (the "Prepayment Amount"), less fees, to Anaconda in exchange for 510 ounces of gold.

Operations overview

During the three months ended November 30, 2015, the gold sales volume of 4,605 ounces represented a 34% increase over the same period in fiscal 2015, due to increased mill throughput, grade and recovery. Ore tonnes processed increased from 85,515 ore tonnes to 95,629, a 12% increase compared to the three months ended November 30, 2014. Grade for the three months ended November 30, 2015 was 1.66 g/t, a 4% increase from the same period in fiscal 2015. Recovery also increased from 85% to 87% period over period. Average sales price for the three months ended November 30, 2015 was $1,476 per ounce compared to $1,398 per ounce the same period in fiscal 2015. As a result of the higher sales volume, gross revenue for the three months ended November 30, 2015 of $6,798,075 was higher period over period by $1,999,896 or 42%.

The following table summarizes the key operating metrics for the three and six months ended November 30, 2015 and 2014:

MILLING OPERATIONS
The Pine Cove mill operated for 81 days during the second quarter of fiscal 2016 at an availability rate of 88% (which included an eight-day mill shutdown for scheduled annual maintenance). For the three months ended November 30, 2015, the mill processed 95,629 dry tonnes of ore at an average head grade of 1.66 grams per tonne. Overall mill recovery was 87%, compared to 85% in the second quarter of fiscal 2015. The mill's run rate for the quarter was 1,181 tonnes per operating day versus 1,056 in the same period in the previous fiscal year, a 12% increase.

During the second quarter of fiscal 2016, the mill had its annual scheduled shutdown for an eight-day maintenance program. During the shutdown, the primary ball mill was relined, repairs were completed on the ball mill electric motor, new feed boxes were installed and several components were installed for the mill automation project. The repairs to the ball mill motor enabled it to start up with a higher ball charge, which helped improve throughput in November to a new monthly high of 1,212 tonnes per operating day.

MINING OPERATIONS
The mine operated for 64 days in the second quarter of fiscal 2016 producing 105,947 tonnes of ore and 529,718 tonnes of waste. Mining production increased 19% in the second quarter of fiscal 2016 compared to the second quarter of fiscal 2015 to accommodate the increased levels of throughput at the Pine Cove mill.

EXPLORATION
The Company is pursuing a strategy to leverage the existing infrastructure at the Point Rousse Project by exploring and developing its mineral licenses and mining leases in search of two general mineralization styles: Pine Cove-like, quartz-carbonate-pyrite hosted (2+ g/t) mineralization (baseload production sources) and higher grade (5+ g/t) quartz vein ± carbonate ± pyrite mineralization. The Company is working on expanding the current Pine Cove pit resource and bringing the Stog'er Tight deposit into production to extend the life of the Point Rousse Project beyond its current three plus years. Anaconda is also exploring and delineating potentially higher-grade deposits such as Romeo & Juliet to blend with relatively lower grade Pine Cove and Stog'er Tight ore. With the high grade "layer" and a marginal increase to throughput, the Company expects to increase annual production to approximately 30,000 ounces. The Company envisions creating an operating complex on the Ming's Bight Peninsula with multiple pits and trucking the ore back to the Pine Cove mill.

Consistent with this strategy, in the quarter ended November 30, 2015, the Company has made the following advances in exploration:

• Published a 43-101 Technical Report outlining mineral resources at the Stog'er Tight and Pine Cove deposits;
• Conducted a trenching program adjacent to the Stog'er Tight deposit to expose near surface mineralization;
• Conducted a geological mapping and trenching program at the Argyle zone;
• Conducted drilling at the Pine Cove Pond area adjacent to the Pine Cove pit.

During the course of Anaconda's exploration and development efforts, three primary gold trends have been identified within the Point Rousse Project area, with a cumulative prospective strike length of approximately 20 kilometres. The Company's recent exploration work, combined with historical results, has brought more clarity, understanding and confidence to the Company's geological interpretations and models. The Company believes it has the potential to discover and develop multiple deposits on the Ming's Bight Peninsula. As a result, Anaconda believes that the Point Rousse Project area could double production and continue for 10 years or more. Exploration and development efforts during the past year has focused entirely on implementing this strategy by focusing on extending the baseload production centered on Pine Cove and Stog'er Tight, as well as evaluating a potential high-grade gold source at Romeo & Juliet and advancing grass roots projects at Goldenville and Argyle.

Below is a brief overview of the gold trends on the Ming's Bight Peninsula and Anaconda's exploration efforts within them with specific reference to the Pine Cove and Stog'er Tight deposits and recent exploration work on these deposits.

The Scrape Trend
The Scrape Trend consists of a belt of highly prospective rocks approximately 7 kilometres long and approximately 1 to 2 kilometres wide. It begins southwest of the Pine Cove mine site and continues eastward to the community of Ming's Bight. The Scrape Trend includes the Pine Cove and Stog'er Tight deposits as well as the Romeo & Juliet, Anaroc and Animal Pond prospects and a new discovery referred to as the Argyle zone.  These gold occurrences align with a fault delineated by a topographic lineament coincident with a broad. The Scrape Trend hosts both baseload and high-grade styles of mineralization.

The Stog'er Tight and Pine Cove Resource Calculation
On October 22, 2015, the Company announced the results of a 43-101 compliant mineral resource estimate at the Stog'er Tight and Pine Cove deposits. These resource calculations represent an important step in the Company's strategy to extend the life of the Point Rousse Project. With these new resource calculations, the Company is beginning to build a portfolio of ounces and demonstrate the potential of the Point Rousse Project.

The following tables summarize the Mineral Resources and reserves estimate for the Point Rousse Project:

¹ – Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability 
² – The Pine Cove Resource statement includes the Pine Cove Reserves

The Stog'er Tight deposit trends east-southeasterly, is exposed over approximately 300 metres of strike.  Mineralized lenses vary from a few, to greater than 10 metres in thickness and to a depth of, approximately, 100 metres.  The deposit is characterized by intense carbonate, albite, pyrite alteration of gabbroic rocks with gold closely associated with pyrite as at the Pine Cove deposit.

The Pine Cove deposit generally trends easterly and consists of a series of stacked mineralized zones across 350 metres that vary in strike length from 25 to 250 metres. Mineralization extends down dip for approximately 800 metres, though approximately 300 metres of the dip extent has been excluded from the current resource estimate since it is not currently feasible for open-pit mining because of its depth (between 175 and 300 metres from surface). The deposit is characterized by carbonate, quartz, pyrite, albite alteration with gold occurring with pyrite. The deposit has been continually mined since 2009 with a current production rate of approximately 15,000 ounces per year.

The Stog'er Tight Trenching Program
On December 17, 2015, the Company announced the results of its fall exploration program on the Stog'er Tight deposit. The program was focused on continuing to expand mineral resources along strike and adjacent to the Stog'er Tight deposit.  The program included the excavation of 6 trenches and the collection of 219 one-metre channel samples in the East, West and Gabbro zones following up on historical mapping and trenching that indicated the presence of mineralization.

The primary goal of the program was to test the hypothesis that the East and West zones are continuous with the Stog'er Tight deposit at surface and that the East Gabbro zone is a separate zone of mineralization. The deposit has a known, near-surface strike length of approximately 300 metres. The results of the trenching and channel sampling program indicate that the East zone mineralization is contiguous with the Stog'er Tight deposit over a distance of 100 metres. The West zone was confirmed to contain mineralization over a strike length of at least 80 metres, but appears to be offset by approximately 25-40 metres along a fault south of the main trend of the deposit. Consequently, the strike length of mineralization exposed at surface at Stog'er Tight, including the deposit and the East and offset West zones, is now approximately 480 metres. Trenches across the East Gabbro zone intersected alteration, but did not produce appreciable gold grades. The table below summarizes the composited grades associated with the trenching and channel sampling program.

The recognition of significant near-surface mineralization immediately along strike from the Stog'er Tight deposit is a positive sign that near-term growth of mineral resources is possible. The results of this program enable the Company to develop a focused diamond drill program targeting near-surface mineralization with the goal of expanding the mineral resource at Stog'er Tight.

The Argyle Zone Trenching Program
On January 8, 2015, the Company announced the discovery of the Argyle zone through a trenching program.  The new discovery is located approximately 5 kilometres from the Pine Cove mill and consists of two areas of mineralization located approximately 200 metres apart. On November 16, 2015, the Company announced a geological mapping and trenching program to better understand the geological controls and surface distribution of mineralization. The mapping indicated that the Argyle zone is associated with a style of alteration very similar to the Stog'er Tight deposit – specifically the albitization and carbonatization of gabbroic rocks. Four trenches were designed to expose the potential along strike continuation of the two zones of mineralization.

Drilling at the Pine Cove Deposit
On November 16, 2015 the Company announced it initiated a targeted exploration program consisting of 1,000 metres of diamond drilling adjacent to the Pine Cove deposit focused on the southern margins of the mine in an area known as Pine Cove Pond. The goal of the drill program was to expand near-surface mineral resources at the Pine Cove mine adjacent to the current ultimate pit design. Geological and geophysical data indicate that the Pine Cove Pond area may contain the easterly and westerly continuation of the southern portion of the Pine Cove deposit.

The Goldenville Trend
The Goldenville Trend is an 8-kilometre long trend of highly prospective rocks centered on an iron stone unit referred to as the Goldenville Horizon. The Company believes the trend to be highly prospective because the trend is thought to contain ironstone hosted gold deposits including the Corkscrew deposit recently optioned from Seaside Realty (see press release of August 4, 2015).  Mineralization within the Goldenville Trend is a well-established geological model and the region is known to host these deposits. The Goldenville Trend has numerous gold prospects including four small, historical, hand-dug shafts, which were developed to mine visible gold. Anaconda is exploring the Goldenville Trend for high-grade deposits on the order of approximately 250,000 ounces of gold at 5 g/t or more (based on similar deposits and historical production within the region). If the Company is successful, it will have a longstanding high-grade feed source for the Pine Cove mill to layer on top of the baseload production from other sources like Pine Cove or Stog'er Tight.

No exploration field work was conducted during the three months ended November 30, 2015. 

The Deer Cove Trend
The Deer Cove Trend is located in the northern part of the Ming's Bight Peninsula and consists of a belt of prospective rocks approximately 3.5 kilometres in strike length. It is associated with the Deer Cove thrust fault and includes the Deer Cove deposit as well as various other showings and prospects.

Historical drill results suggested that the Deer Cove deposit could be a source of high-grade feed for the Pine Cove mill. Past development work includes a drill program on the Deer Cove deposit in 2014 to better outline the distribution of high-grade gold within the vein and to test the vein down-dip. The program consisted of 2,090 metres of diamond drilling in 20 holes (see press release dated February 27, 2015).  The results indicate that the deposit does continue at depth but that the high-grade portion of the deposit was not present to the depths tested.

No exploration field work was conducted during the three months ended November 30, 2015. The Company plans to update the deposit model with the most recent drill results and assess the deposits ability to be developed and included within the mine plan as a source of high-grade ore.

Completed and anticipated fiscal 2016 exploration work
Anaconda continues to pursue its strategy of leveraging the existing infrastructure at the Point Rousse Project by exploring and developing its mineral licenses and mining leases in search of the two general mineralization styles. The Company is attempting to demonstrate a minimum of 10 years of baseload production as well as develop a high-grade deposit to layer with the baseload to ultimately expand production to 30,000 ounces per year. Work in fiscal 2016 continues to focus on the Pine Cove and Stog'er Tight deposits with ancilliary work on other projects such as Romeo and Juliet and the Argyle zone.

The goal at the Pine Cove deposit is to outline at least three more years of production by focusing on the Northwestern Extension and Pine Cove Pond areas. In fiscal 2016, the Company has conducted drilling programs within the Northwestern Extension and, more recently, the Pine Cove Pond areas. Following the evaluation of the Pine Cove Pond drilling and deposit modelling, the Company will evaluate the potential to bring mineralization within these areas into the mine plan and if further work is required to expand or better define these areas of mineralization. 

The goal at the Stog'er Tight deposit is to outline and begin development of at least five years of production.  Consistent with this goal, the Company conducted a stripping and channel sampling program to expose and characterize the deposit and the associated geology. This was followed up with a small drill program to test the extents of mineralization adjacent to the deposit. Plans were also developed to conduct metallurgical test work and to take a bulk sample for processing at the Pine Cove mill. Following a resource calculation the Company began work to expand on that resource by testing the limits of surface exposures of mineralization along strike from the deposit and also within adjacent areas. Based on the success of the most recent trenching, the Company is planning a drill program to test the down dip extents of mineralization exposed at surface, outside of the current resource.

The Company plans to further evaluate the resource potential at the Romeo & Juliet prospect and the Argyle zone. At the Romeo and Juliet prospect, the Company has the goal of demonstrating the potential to host five years of production as a high-grade (5+ g/t) source of gold that can be processed with the baseload production.   At Romeo & Juliet, an in-house resource calculation and review of historical ground induced polarization data is planned to determine and develop drill targets with the goal of growing potential resources. Planned work on the Argyle zone includes the evaluation of recent trenching and channel sample data. If warranted, plans will be developed to further test the Argyle zone.

The information contained within the exploration section above has been reviewed and approved by Paul McNeill, P. Geo., VP Exploration with Anaconda Mining Inc., a "Qualified Person", under National Instrument 43-101 Standard for Disclosure for Mineral Projects.

SUBSEQUENT EVENT
On December 18, 2015, the Company entered into an Agreement with Auramet through which Auramet has paid the Prepayment Amount, less fees, to Anaconda in exchange for 510 ounces of gold. Anaconda will deliver these ounces to Auramet in 10 deliveries of 51 ounces per month from January to October 2016. The Prepayment Amount was priced based on a spot price on December 18, 2015 of USD$1,067 per ounce. Anaconda also agrees to sell 100% of its production to Auramet for a minimum of one year from the last contractual delivery date (October 2016). In addition, Auramet has the option ("Call Options") to purchase 1,800 ounces at a strike price of USD$1,250 only on the applicable expiration date of December 30, 2016.

Reconciliation of Non-GAAP Financial Measures

The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.

Adjusted net earnings measures the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company's underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, impairment charges, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results.

The following table provides a reconciliation of adjusted net earnings for the three and six months ended November 30, 2015 and 2014:

Cash cost per ounce sold is cost of sales before depreciation divided by gold ounces sold. All-in sustaining cash cost per ounce sold is cash cost, corporate administration, purchase of property, mill and equipment and purchase of exploration and evaluation assets divided by gold ounces sold.

The following table provides a reconciliation of cash cost per ounce sold and all-in sustaining cash cost per ounce sold for the three and six months ended November 30, 2015 and 2014:

EBITDA is earnings before finance expense, foreign exchange loss (gain), unrealized gain on forward sales contract derivative, share-based compensation, income tax recovery and depreciation and depletion.

Point Rousse Project EBITDA is EBITDA before corporate administration, other revenues and expenses and write down of Chilean assets.

The following table provides a reconciliation of EBITDA for the three and six months ended November 30, 2015 and 2014:

ABOUT ANACONDA
Headquartered in Toronto, Canada, Anaconda is a growth oriented, gold mining and exploration company with a producing project, called the Point Rousse Project, and approximately 6,300 hectares of exploration property on the Ming's Bight Peninsula located in the Baie Verte Mining District in Newfoundland, Canada. Since 2012, Anaconda has increased its property control by almost ten-fold. It is currently exploring three primary, prospective gold trends, which have approximately 20 kilometres of cumulative strike length and include four deposits and numerous prospects and showings, all within 8 kilometres of the Pine Cove mill. The Company's plan is to discover and develop more resources within the project area and double annual production from its current rate of approximately 15,000 ounces to 30,000 ounces.

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.

SOURCE Anaconda Mining Inc.