Andean American Mining Reports 2010 Audited Financial Results
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 07/29/10 -- Andean American Mining Corp. ('Andean' or the 'Company') (TSX VENTURE: AAG)(FRANKFURT: AQN) reports that for the year ended March 31, 2010, it incurred a loss of $691,552 or $0.01 per share compared to a loss of $5,738,809 or $0.07 for the same period in 2009.
Overview
Andean American Mining Corp.'s main focus is on the Invicta Project held through its 100% owned Peruvian subsidiary Invicta Mining Corp. SAC. The Company maintains an ownership interest in various other mineral properties in Peru, including the Sinchao properties through its 60.17% ownership of Sinchao Metals Corp. ('Sinchao'), the Mamara properties and those properties adjacent to the Santa Rosa mine which was previously operated by Andean. During the year the Company sold its 100% interest in its subsidiary El Misti Peru. El Misti Peru was in the process of shutting the Santa Rosa Mine down due to its inability to generate fresh mineral resources that are economically viable. The Company is now focused on the exploration and development of the Invicta and Sinchao properties.
Company Highlights
On August 7, 2009 the Company announced that it had entered into a financial advisory agreement with WestLB AG ('WestLB') for the Invicta Mining Project ('Invicta') and on February 10, 2010 engaged Barclays Bank PLC ('Barclays') and WestLB to act as exclusive arrangers of an up to US $68 million Senior Secured Project Finance Facility to support the construction and development of the Invicta Mining Project.
Trafigura Beheer B.V. ('Trafigura') has also agreed to provide $15 million in subordinated loans to the Invicta Project in the form of a cost overrun and start-up facility. In addition should the banks delay for three months in financing the Invicta project then Trafigura has the right to finance the Invicta Project on commercial terms and acquire up to an additional 16% of the shares of Andean American at the prevailing market prices.
On March 30, 2010, the Company announced an agreement with Trafigura, whereby Trafigura agreed to make an equity investment in the Company in the amount of $3 million and has long term off-take agreements for the sale of the Invicta Project's copper, lead and zinc concentrates. The off-take agreements will provide the Company with predictability in cash flow and assist in obtaining financing.
The Company increased its share in Sinchao Metals Corp. ('Sinchao'), a company listed on the TSX Venture Exchange trading under the symbol SMZ from 58.48% to 60.17%.
During June and July 2010, the Company strengthened its management team by recruiting David Rae as President, Bruce Ramsden as VP Finance and Chief Financial Officer and Mark Zabel, VP Corporate Development.
Company's Future
In order to meet the Bank's requirements, the Company is in the process of completing a Feasibility Study on the Invicta gold-copper mining project, located in the Huaura Province in Peru. On completion of the study, the Company will secure funding of up to US $68 million in a Senior Secured Project Finance Facility to support the construction and development of the Invicta Mining Project as mentioned above.
Exploration and Development Review
The Company filed the initial Invicta Project Feasibility Study on SEDAR in July, 2009, following an audit by the Lokhorst Group. The study involved an extensive analysis of all the aspects of the Invicta project and resulted in a financially robust model with strong cash flow generation at conservative metals prices. A Feasibility Study with updated metallurgical results audited by the Lokhorst Group and Deepak Malhotra, PhD., MS in Metallurgical Engineering and PhD. in Mineral Economics, of Resource Development Inc. was filed on SEDAR in July, 2010. Metallurgical and financial highlights include:
Financial Analysis Highlights:
-- Average Annual Production of 97,931 Oz Gold and Average Annual Gold
Equivalent Production of 160,857 Oz(1)
-- LOM Cash Cost Per Oz Gold1
-- On a co-product basis: $451.38 US;
-- On a gold-equivalent basis: $274.80 US;
-- On a by-product basis ($126.91) US
-- 5 Year AVG Annual Free Cash Flow of $65,273,398 US(2)
-- Net Present Value using an 8% discount rate of $265,057,808(2) US
-- Capital Expenditures of $68M including: $49M project costs, $9M in
refundable IGV taxes and $7M in contingency funds and a $3M start up
facility;
-- Mine life based on Probable Reserves of 7.9M tonnes from the Measured
and indicated resources grading 2.14 g/t Au, 18.76 g/t Ag, 0.52% Cu,
0.38% Pb and 0.30% Zn. Not included were Inferred resources of 14.2M
tonnes grading 0.67 g/t Au, 11.2 g/t Ag, 0.36% Cu, 0.24% Pb and 0.15% Zn
or a high grade zone currently being sampled and drilled for NI 43-101
compliance;
-- A drill program will be a part of the ongoing development during the
construction period;
-- Operating costs of $28.31 US/tonne;
-- Updated resource estimate and improved metallurgical process;
-- Production rates of 3,000 tpd in year one, 4,000 tpd in year 2 and 5,000
tpd in years 3, 4 and 5.
-- The Company intends to forward sale base metal production in order to
fully gear the Invicta project towards upside movements in the price of
gold and silver, while at the same time ensuring cash flow on an
operating basis to protect the project loan repayment schedule.
Notes:
1. The following price deck was used: Gold $900/oz, Silver $12.50/oz,
Copper $2.50/lb, Lead $0.70/lb, Zinc $0.75/lb.
2. The following price deck was used: Gold $1,100/oz, Silver $12.50/oz,
Copper $2.50/lb, Lead $0.70/lb, Zinc $0.75/lb.
Results of Operations
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Twelve months ended March 31 2010 2009
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Sales of metals $255,669 $2,940,479
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Loss before income tax $691,552 $5,738,809
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Loss per share $0.01 $0.07
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Total assets $49,604,359 $43,909,675
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Working capital deficit $2,598,914 $5,870,106
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Mineral properties $44,562,692 $41,714,764
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Share Capital:
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Outstanding 94,570,693(1) 78,196,721
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Warrants 7,711,645(2) 14,089,178
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Options 7,093,500(3) 4,608,000
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1. During July 2010, 6,923,682 common shares were issued by way of a
private placement at $0.50 per common share.
2. Subsequent to year end 2,272,727 warrants expired.
3. Subsequent to year end 1,850,000 stock options were issued to directors,
officers and consultants of the Company.
Cash Flow and Liquidity
At March 31, 2010 the Company had a working capital deficit of $2,598,914, compared to $5,870,106 at March 31, 2009. Andean's net cash (used)/increased for the year ended March 31, 2010 was $3,100,301 and ($5,852,788) for the same period in 2009.
During the year ended March 31, 2010, the Company issued 13,606,836 common shares for cash proceeds of $4,986,201. Finder's fees of $139,096 were paid.
The information above should be reviewed in conjunction with the Company's audited consolidated financial statements, management discussion and analysis, for the year ended March 31, 2010 that will be available shortly on www.sedar.com. For further information call (604) 681-6186 or toll free: 1-888-356-4784 or visit our website at www.andeanamerican.com.
Guy Lokhorst, P. Eng., of The Lokhorst Group, is an Independent Qualified Person and is responsible for the review of the mining methodology, including the life of mine and probable reserves, for the Feasibility Study. Deepak Malhotra, PhD., MS in Metallurgical Engineering and PhD. in Mineral Economics, Independent Qualified Person as defined by NI 43-101, of Resource Development Inc., reviewed the metallurgy for the Invicta project and developed the finalized process flow diagram for the Feasibility Study of July, 2010. Victor Jaramillo, P. Geo., of Discover Geological Consultants Inc. is an Independent Qualified Person as defined by NI 43-101 and is responsible for the resource estimates. The technical disclosure in this news release has been reviewed by Leslie F. Tarnai, P. Eng., General Manager of Engineering for Invicta Mining Corp. and a Qualified Person as defined by National Instrument 43-101.
In addition, the Company wishes to announce the closing of a non-brokered private placement of 6,923,682 million shares at a price of C$0.50 per share. The shares are subject to a mandatory four-month hold period, expiring November, 2010. The shares were placed with institutional investors in the U.S., Canada and London, England. Trafigura Beheer B.V. has subscribed for their pro rata share of the private placement in accordance with their participation rights (see news release of March 30, 2010). Proceeds from the financing will be used for advancement of the Invicta Project and general working capital. Finder's fees of $10,500 were paid in connection with this financing.
Certain of the information contained in this news release constitutes 'forward-looking statements' within the meaning of securities laws. Such forward-looking statements, including but not limited to those with respect to the prices of metals and minerals, purchase payments, royalty payments, estimated future production and estimated costs of future production involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any forecast results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual prices of metals and minerals, the actual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the documents of the Company filed from time to time with the British Columbia Securities Commission.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Andean American Mining Corp.
Bruce Ramsden
Vice President, Finance and CFO
416-368-9500
bramsden@andeanamerican.com
www.andeanamerican.com