Alexis Resolves Challenges; Reports Second Quarter Results
TORONTO, ONTARIO -- (Marketwire) -- 08/16/10 -- ALEXIS MINERALS CORPORATION (TSX: AMC)(OTCQX: AXSMF) ('Alexis' or the 'Company')' has reported its second quarter 2010 Financial Statements and Management's Discussion and Analysis for the three month period ended June 30, 2010. The Company achieved significant increases over its first quarter 2010 results, with revenue being 67.5% higher, and a record amount of gold milled, representing a 65.5% increase from the first quarter. Alexis achieved one of its priorities by starting regular processing of ore from its newly re-opened Aurbel gold mill, as a strategic step to reduce milling costs. Year to date gold production totals 15,264 ounces. Some operational challenges that started in the first quarter negatively impacted cost per ounce into the second quarter, yet these were effectively addressed during the second quarter. The Company expects the completion of a feasibility study on its Snow Lake mine in September and anticipates it will increase gold reserves at Snow Lake, providing Alexis with the potential to increase gold production towards the targeted 150,000 oz. annualized production rate by the end of 2011. The quarterly result documents can be reviewed in full on SEDAR (www.sedar.com) or on the Company's website at www.alexisminerals.com.
(Note: All figures are reported in Canadian dollars, unless otherwise noted).
Q2- 2010 Summary:
During the three months ended June 30, 2010 the following occurred at Alexis Minerals:
-- Total revenue of $8.88 million was generated, 67.5% higher than in Q1-
2010 and the Company's second highest quarterly total.
-- The Company sold 7,865 ounces of gold, 65.5% higher than Q1-2010, at an
average realized price of $1,185/oz (USD $1,168/oz.), compared to 6,375
ounces at an average realized price of $1,075/oz (USD $935/oz) during
Q2-2009.
-- Milled a quarterly record 9,094 ounces of gold, slightly higher than
target as stockpiled ore from Q1-2010 was milled.
-- Lac Herbin Mine, in Val-d'Or, Quebec, the Company's initial gold
operation, mined 6,874 oz. of gold, compared to 6,528 in Q1-2010. This
was less than planned as the grades achieved were lower than expected
due to lower gold content than estimated in newly developed stoping
areas.
-- Our wholly-owned Aurbel Gold Mill started milling the Lac Herbin ore
during the quarter. Using our own mill is expected to reduce annual
operating costs at Lac Herbin by an estimated 10%. Initial delays and
inconsistent recoveries at the mill forced the company to mill lower
grade stockpiles and redirect higher grade ore back to the custom
milling facility used throughout 2009. This resulted in increased, above
plan milling costs for the second quarter. Through concerted improvement
efforts the milling of Lac Herbin ore was returned to the Aurbel Mill by
the end of the second quarter. It is now operating at a rate of up to
800 tonnes per day and with recovery rates over 92%, close to the target
of 94%.
-- The Company completed its bulk sample and feasibility program at the Lac
Pelletier gold project. The results confirm that the Lac Pelletier gold
project and offers longer term potential through exploration. The
Company believes the bulk sampling program has confirmed the deposit
grade, while mine development and diamond drilling has proven ore
continuity. A completed feasibility study concludes that potential
annual production of an estimated 33,500 ounces of gold is possible over
a 14-month period (news release, June 28, 2010). Results from the
program suggest several areas in the immediate mine area offer very good
potential for new discovery and resource growth.
-- Cash cost of $1,104 per ounce (see non-GAAP measures) of the Lac Herbin
gold sold was higher than the Life of Mine plan of $567 per ounce. New,
unexpected issues arose in Q2-2010 which resulted in above budget costs
in the quarter, as described below. Management still expects cash costs
to align with the Life of Mine costs for the gold sold during the second
half of the year, with positive results through the improvement
initiatives currently in progress.
-- Extensive exploration and delineation drilling occurred during Q2
totaling 15,857 metres, resulting in the year to date total of 47,830
metres.
-- At Snow Lake two new high-grade gold zones were discovered. The new
zones contain mineralization that is similar in character to that of the
Main Mine and the No.3 Zone; however it is of significantly higher
grade, including 63.59 g.Au/t over 1.92 metres in the footwall and
Hangingwall of these zones.
Overall, for the second quarter, the expected tonnage was mined and milled but at a lower than expected grade and recovery through the Aurbel Mill. The resulting total cash cost and net profit for Q2 was a direct result of three inter-related factors:
a) Lower than expected gold grades: A lower than expected grade of gold was
extracted at Lac Herbin because of extensive dilution from ground
failures in two areas that were already in the mining sequence. Extra
development, added to better control the stability of the stopes and
reduce dilution to planned levels, delayed production from the higher
grade areas. This new development began in Q2 and is expected to be
completed in Q3 when resulting higher grades are expected to be mined.
As well, new areas of mining where additional definition drilling was
required and completed in Q2, were entering their production cycle late
in Q2 with mining now advancing through the areas.
b) Milling recovery rates were lower than expected: The Aurbel Mill was re-
started with the intent of reducing milling costs for 2010 and beyond.
The initial tuning process resulted in inconsistent recovery rates for
longer than expected. The throughput in the mill was lowered, and taken
from low grade stockpiles, to gain control on mill recoveries resulting
in higher costs of milling in the second quarter. The mill was unable to
catch up on the stockpiled ore during the second quarter and more
expensive custom milling campaign was added to the quarter.
c) Higher mining expenses were incurred, compared to Q1-2010 and Q2-2009,
due to the above situations. Through the second quarter, corrective
steps to address each issue were implemented. The additional development
required to decrease the vertical spacing of sub-levels in stopes is
nearly complete, the mill is now operating as designed and the grades in
the new mining areas are more predictable with the additional completed
definition drilling. While the impact has been negative for Q2, the
Company believes Q3 is beginning to turn around, with the last quarter
of 2010 expected to be on plan regarding gold production and cost per
ounce.
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Three Six
months months
Alexis Minerals Corporation ended ended
30-Jun-10 30-Jun-10
Tonnes of ore mined 41,624 80,674
Grade per tonne mined 5.14 5.17
Total gold ounces mined 6,874 13,402
Tonnes of ore milled 55,790 91,589
Grade per tonne milled 5.07 5.18
Total gold ounces milled 9,094 15,264
Average recovery rate 87.2% 89.5%
Gold ounces recovered 7,932 13,668
Gold ounces sold 7,865 12,615
Average realized gold price (per oz CAD) $1,185 $1,169
Revenue from mining operations (net of Royalties
and refining charges CAD 000's) $8,881 $14,133
Mine operating expenses (excludes depletion and
amortization - CAD 000's) $8,680 $13,558
Amortization and depletion (CAD 000's) $2,481 $3,687
Gross profit/(loss) (CAD 000's) ($2,279) ($3,112)
Net earnings (loss) (CAD 000's) $646 ($979)
Basic and diluted earnings (loss) per share (CAD) $0.00 ($0.00)
Cash flow from operating activates (CAD 000's) $8,795 $10,062
Cost of sales per ounces sold (CAD) (i) $1,104 (i) $1,075
(i)see Non GAAP Measures and comments under 'Q2-2010
Summary' section above, regarding Cost of Sales
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Non GAAP Measures
The Company has included certain Non-GAAP performance measures, namely cash costs per gold ounce sold and working capital, throughout this document. In the gold mining industry, these are common non- GAAP performance measures but do not have any standardized meaning. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, we and certain investors use this information to evaluate the Company's performance and ability to generate cash, profits and meet financial commitments. These Non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following tables provide a reconciliation of cash costs per gold ounce sold for the three months ended June 30, 2010 and 2009, and a reconciliation of working capital to the financial statements for the three months ended June 30, 2010 and the twelve months ended December 31, 2009.
Working Capital
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(CAD 000's) June 30, December 31,
Current assets: 2010 2009
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Cash and cash equivalents $ 1,255 $ 6,106
Amounts receivable 685 2,083
Tax credits receivable 8,163 7,465
Inventory 4,849 6,168
Prepaid expenses 482 273
Investments 429 122
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15,863 22,217
Current liabilities
Accounts payable and accrued liabilities $20,098 $13,687
Current portion of capital lease
obligations 271 412
Current portion of long-term debt 66 99
Liability component of convertible
debenture 2,141 6,143
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22,576 20,341
Working capital (deficit)
(current assets less current liabilities) ($ 6,713) $ 1,876
Cash Cost per Ounce
Q2-2010 Q2-2009 2010 2009
---------- ------- ------- -------
Revenue
From commercial production ounces
(CAD 000's) $8,881 $6,536 $14,133 $13,356
Ounces sold 7,865 6,375 12,615 12,750
Mine operating expenses (CAD 000's) $8,680 $3,813 $13,558 $ 8,121
Cash cost per ounce sold (CAD)
(mining operating expenses divided
by ounces sold) $1,104 $ 598 $ 1,075 $ 637
Quality Control
The technical and scientific content of this press release has been reviewed by Keith Boyle, P.Eng., Chief Operating Officer, Alexis Minerals and Qualified Person as defined under NI 43-101 guidelines.
About Alexis Minerals
Alexis Minerals Corporation is a Canadian mining company listed on the Toronto Stock Exchange (symbol 'AMC') and trades in the United States on the Over the Counter QX International platform (OTCQX: AXSMF). The Company owns one producing gold mine in Val-d'Or and the right to earn a 100% interest in the Lac Pelletier gold property in Rouyn-Noranda, both in Quebec. Alexis also owns the Snow Lake Mine in Manitoba. With these assets Alexis has the potential to develop gold production forwards. Alexis is targeting mid-tier gold production levels in 2011-2012. Alexis undertakes exploration in the mineral rich Val-d'Or (100% ownership of 212 sq. km.) and Rouyn-Noranda Mining Camps (50% ownership of 785 sq.km and in joint venture with Xstrata Copper) as well as in the Snow Lake Mining Camp (100% ownership of 50 sq. km). For more information about Alexis Minerals visit www.alexisminerals.com.
Forward looking information
This document may contain or refer to forward looking information within the meaning of applicable securities laws, based on current expectations, including, but not limited to, mineralization projections, future exploration priorities, estimates and costs, projected capital and operating expenditures, future exploration plans and techniques, estimates regarding the timing and costs of exploration, mineral prices, and future mining plans. Forward looking statements are subject to significant risks and uncertainties, including those risks identified in the annual information form of the Company, which is available under the profile of the Company on SEDAR, and other factors that could cause actual results to differ materially from expected results. Estimates and assumptions underlying the mineralization projections are based upon extensive technical and scientific analysis conducted by the management of the Company, the results from drill programs and other exploration, the analysis of external consultants and information obtained by the Company from third parties. Readers should not place undue reliance on forward-looking information. Forward looking information is provided as of the date hereof and we assume no responsibility to update or revise them to reflect new events or circumstances.
Contacts:
Alexis Minerals Corporation
David Rigg
President and CEO
(416) 861-5889
(416) 861-8165 (FAX)
info@alexisminerals.com
Alexis Minerals Corporation
Bruce Barch
VP Investor & Corporate Affairs
(416) 861-5905 or Toll Free: 877-717-3027
bruce.barch@alexisminerals.ca
Alexis Minerals Corporation
Louis Baribeau
Relationniste
(514) 667-2304
lb@decorporateconsultants.ca
www.alexisminerals.com