| | Wed May 12, 2010
Farallon Announces First Quarter Financial and Operating Results
|
| | $6.2 Million Net Earnings
25m lb of Zinc Produced at a Total Cash Cost1 of $0.38/lb payable zinc
May 12, 2010, Vancouver, BC - Farallon Mining Ltd. ("Farallon" or the "Company") (TSX:FAN) announces its financial and operating results for the three months ended March 31, 2010. Currency amounts are stated in United States Dollars, unless otherwise noted.
The Company's G-9 mine produced a record 25.0 million pounds of zinc and 2.1 million pounds of copper in concentrates at a total cash cost1 of $0.38/lb of payable zinc. Farallon reported net earnings of $6.2 million and the Company generated $6.0 million in cash from operations before changes in non-cash working capital.
"The G-9 mine has increased production every quarter since production began in the first quarter of 2009" said President and CEO Dick Whittington. "Quarterly production has steadily increased from 1,180 tpd to 1,650 tpd, a 40% increase over the last 15 months. With improvements in throughput to over 1,900 tonnes per day in March and April and metallurgical improvements being made, the G-9 mine is now providing steady cash flow and a base from which we can deliver on our objective of becoming a mid-tier, multi-mine company."
Highlights for the three months ended March 31, 2010 ("Q1") compared to the three months ended December 31, 2009 ("Q4") are as follows:
Financial
- Operating earnings of $9.1 million and net earnings of $6.2 million, up from operating earnings of $3.9 million and net earnings of nil in Q4.
- Cash flow from operations before changes in non-cash working capital of $6.0 million, up from $2.2 million in Q4.
- Gross revenues of $37.6 million, up from $32.3 million in Q4.
- Non-GAAP Adjusted EBITDA1 of $9.0 million, up from $4.5 million in Q4.
- Total cash cost per payable pound of zinc1 of $0.38/lb (including $0.31/lb for the month of March 2010), down from $0.44/lb in Q4.
- Working capital of $18.2 million at March 31, 2010, up from $14.9 million at Dec 31, 2009.
Operations
- Processed 152,178 tonnes of ore (average throughput 1,691 tonnes per day - "tpd") grading 9.1% zinc, 1.1% copper, 174 g/t silver and 2.5 g/t gold. Increased throughput rates for the month of March 2010, processing 59,715 tonnes of ore for an average rate of 1,926 tpd or 128% of design.
- Produced 23,365 tonnes of zinc concentrate and 6,952 tonnes of copper concentrate, containing an estimated 25.0 million pounds of zinc, 2.1 million pounds of copper, 420,911 ounces of silver and 4,322 ounces of gold from the G-9 mine.
- Sold approximately 22,420 tonnes of zinc concentrate grading 48% zinc and 9,480 tonnes of copper concentrate grading 14% copper. Payable metals contained in concentrate were 20.0 million pounds of zinc, 2.7 million pounds of copper, 336,000 ounces of silver and 4,106 ounces of gold. Realized metal prices on sales of $0.99/lb zinc and $3.23/lb copper.
- Given the success of increasing mill throughput to over 1,900 tpd in March and April, the Company is revising the scope of the Mill Expansion project to determine the maximum throughput that can be obtained within the approved capital budget of $5.3 million. However, the Company continued with procurement of additional regrind and flotation equipment for the Mill Expansion Project. The project was originally designed to increase mill capacity from 1,500 tpd to 2,000 tpd by July 2010.
Exploration
- Continued exploration drilling at Campo Morado with two surface drills and one underground drill operational as part of a $5.4 million program for 2010.
- Updated the G-9 mineral resource estimate as at December 31, 2009 which includes 3.0 million tonnes of Measured and Indicated Resources at 9.4% zinc and 1.3% copper as well as 0.9 million tonnes of Inferred Resources at 9.2% zinc and 1.1% copper (at a 3.0% zinc cut-off)2.
- Upgraded a portion of the mineral resources as at December 31, 2009 to mineral reserves, including 2.0 million tonnes of Proven and Probable Reserves at 10.0% zinc and 1.34% copper2.
- Initiated an engineering study on the treatment of El Largo, Naranjo and El Ray deposits. The study is investigating the mining and processing of 4.9 million tonnes of Indicated Mineral Resources at 6.4% zinc, 2.1 g/t gold and 165 g/t silver (at a 5% zinc cut-off grade) with the existing mining equipment and processing facilities2.
- As part of its preliminary assessment of the potential for high grade gold zones being present below the main zinc orebodies, the Company announced on April 21, 2010 the discovery of three distinct high-grade gold zones outside the current mineral resources (at a 5% zinc cut-off grade) at the G-9 mine. These zones contain estimated Inferred Mineral Resources of 225,038 tonnes grading 8.6 g/t gold and 407 g/t silver (at a 5 g/t gold cut-off grade)3.
Dick Whittington said "The exploration program at Campo Morado is continuing on three fronts. First, the Company has two surface drills exploring north of the Abajo zone, targeting new lenses on the Abajo horizon. Second, we continue to utilize underground drilling to delineate new high-grade zinc resources in and around the existing G-9 mining operations. Third, the program to evaluate and expand upon the newly announced gold zones is advancing."
This new release should be read in conjunction with the Company's financial statements and MD&A which are available on SEDAR and the Company's website. Farallon will hold a conference call tomorrow, Thursday May 13, 2010, at 8:00 am Pacific time (11:00 am Eastern) to discuss these results. The call can be accessed at (647) 427-7450 or toll-free at (888) 231-8191. A live webcast will also be available at www.farallonmining.com.
Farallon operates the G-9 zinc mine on its Campo Morado Property in Guerrero State, Mexico. G-9 is a 1,500 tonnes per day, underground, zinc mine with important by-product credits of copper, gold and silver. The Company is targeting to produce at an annualized production rate of 120 million pounds of zinc and 15 million pounds of copper per year.
For further details on Farallon, please visit the Company's website at www.farallonmining.com or contact Neil MacRae, Investor Relations Manager, at (604) 638-2160 or within North America at 1-877-688-2050.
ON BEHALF OF THE BOARD OF DIRECTORS
J.R.H. (Dick) Whittington, President & CEO
Notes:
(1) Total Cash Costs and Adjusted EBITDA are Non-GAAP Financial Measures. Please read page 11 of the Company's MD&A for further information.
(2) Further information on these mineral resource and reserve estimates is included in the Company's March 29, 2010 news release. The Mineral Reserves are stated at a 3% zinc grade cut-off for the Abajo, West Extension and South East zones and a 5% zinc grade cut-off for the North zone.
(3) Further information on the mineral resources in the gold zones is included in the Company's April 21, 2010 news release.
No regulatory authority has approved or disapproved the information contained in this news release
Forward Looking Information
This news release includes certain statements that may be deemed "forward-looking statements." All statements in this release, other than statements of historical facts, that address future production, reserve or resource potential, continuity of mineralization, exploration drilling, operational activities, production rates, costs to completion and events or developments that the Company expects, or is targeting, are forward-looking statements. Although the Company believes that the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward looking statements and may require achievement of a number of operational, technical, economic, financial and legal objectives. The likelihood of continued future mining at Campo Morado is subject to a large number of risks, including obtaining lower than expected grades and quantities of mineralization and resources, lower than expected mill recovery rates and mining rates, changes in and the effect of government policies with respect to mineral exploration and exploitation, the possibility of local disputes including blockades of the company's property, the possibility of adverse developments in the financial markets generally, fluctuations in the prices of zinc, gold, silver, copper and lead, obtaining additional mining and construction permits, preparation of all necessary engineering for ongoing underground and processing facilities as well as receipt of additional financing to fund mine construction, development and operation, if needed. Such funding may not be available to the Company on acceptable terms or on any terms at all. For more information on the Company and the risk factors inherent in its business, investors should review the Company's Annual Information Form at www.sedar.com.
Information Concerning Estimates of Measured, Indicated and Inferred Resources
This news release uses the terms "measured resources", "indicated resources" and "inferred resources". Farallon advises investors that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. |
| |
| | You can view the Next News Releases item: Wed May 12, 2010, Farallon Director is Recognized by the Canadian Institute of Mining, Metallurgy and Petroleum
You can view the Previous News Releases item: Thu May 6, 2010, Farallon Confirms Annual Meeting Matters
|
|
| |
