Minefinders Announces Third Quarter 2010 Results and Updates 2010 Production Guidance
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/08/10 -- (All figures are in United States dollars unless otherwise stated).
Minefinders Corporation Ltd. (TSX: MFL)(NYSE Amex: MFN) today reported its financial and operating results for the quarter ended September 30, 2010. The Company also updated its production guidance for 2010.
Q3 2010 summary results include:
-- Third quarter revenue of $13.6 million.
-- Income from operations of $0.6 million.
-- Net loss of $4.8 million or $0.07 per share.
-- Cash flow from operations before changes in non-cash working capital of
$1.4 million.
-- Proceeds of $13.6 million from the sale 8,070 ounces of gold and 202,800
ounces of silver at an operating cash cost of $743 per gold equivalent
ounce sold.
-- Production of 7,447 ounces of gold and 184,887 ounces of silver.
Financial and Operating Results
Remediation work on the tear in the phase 1 leach pad liner significantly impaired gold and silver production during the third quarter. Remediation work to repair the liner continues to advance but until completed, leaching on the phase 1 pad is on hold. With the continued cessation of leaching on the phase 1 leach pad, lower than planned metal production is also expected in the fourth quarter and is now estimated to be between 11,000 and 12,000 ounces of gold and 500,000 and 600,000 ounces of silver. Total production for fiscal 2010 is now estimated at between 51,000 and 52,000 ounces of gold and 1.2 million and 1.3 million ounces of silver.
These lower production levels are expected to be temporary as stacking to the recently constructed phase 2 leach pad is at planned rates and, to accelerate metal recovery, non-leached crushed material from the phase 1 pad is being moved to the phase 2 leach pad. Optimization efforts undertaken during the year have begun to reflect positively in the grades. Material stacked during the third quarter averaged grades of 0.52 grams per tonne ('gpt') gold and 52.99 gpt silver. This is the third straight quarter of increasing ore grades and the highest grade material stacked during a quarter since operations commenced at Dolores. Grades have continued to increase subsequent to quarter end with stacked grades in October averaging 0.61 gpt gold and 62.1 gpt silver.
The phase 2 leach pad provides capacity for over three years of planned production. As the volume and duration of ore stacked on the phase 2 leach pad increases, production of gold and silver will increase. Accordingly, fiscal 2011 gold and silver production is not expected to be significantly affected by the remediation work on the phase 1 leach pad.
A comparison of the third quarter and nine-month period of 2010 to 2009 is as follows:
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Three months ended Nine months ended
September 30, September 30,
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2010 2009 2010 2009(1)
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Ore crushed and stacked
(tonnes) 1,127,834 1,278,791 4,133,489 3,925,303
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Gold grade per tonne stacked
(gpt) 0.52 0.67 0.44 0.74
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Silver grade per tonne
stacked (gpt) 52.99 18.07 35.39 21.93
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Strip Ratio 2.13 3.70 2.32 2.91
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Gold production (oz) 7,447 18,799 40,008 56,304
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Silver production (oz) 184,887 318,878 707,120 1,021,253
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Gold volume sold (oz) 8,070 19,305 41,827 54,726
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Silver volume sold (oz) 202,800 349,248 729,597 992,161
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Gold equivalent volume sold
(oz) (3) 11,170 24,689 53,076 69,545
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Sales proceeds (millions) $ 13.6 $ 24.1 $ 61.6 $ 66.2
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Income (loss) from
operations (millions) $ 0.6 $ 1.4 $ 7.0 ($0.6)
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Net loss (millions) $ 4.8 $ 0.7 $ 6.0 $ 8.6
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Net loss per share $ 0.07 $ 0.01 $ 0.09 $ 0.15
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Cash flow provided by (used
in) operating activities
(2) (millions) $ 1.4 $ 3.8 $ 14.3 $ 5.3
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Cash operating cost per gold
equivalent ounce sold (3) $ 743 $ 587 $ 633 $ 535
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Total cash cost per gold
equivalent ounce sold (3) $ 779 $ 616 $ 669 $ 558
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(1) Reflects pre-commercial production from January 1, 2009 to April 30,
2009.
(2) Cash flow provided by (used in) operating activities is before changes
in non-cash working capital and is a non-GAAP measure further discussed
below.
(3) Gold equivalent ounces sold includes gold ounces sold and silver ounces
sold converted to a gold equivalent based on the ratio of actual
realized gold price to actual realized silver price. Gold equivalent
ounces sold in the third quarter and nine-month period of 2010 were
estimated using a 65 to 1 silver to gold ratio and a 64 to 1 silver to
gold ratio, respectively (2009 - 65 to 1 ratio and 67 to 1 ratio,
respectively).
Working Capital and Liquidity
At September 30, 2010 the Company had $7.9 million in cash and cash equivalents and net working capital of $45.8 million. Early in November the Company received formal credit approval from the Bank of Nova Scotia for a three-year renewal of the Company's existing $50 million revolving credit facility. The renewal is expected to close in mid-November.
In late October Minefinders completed the purchase and cancellation of an aggregate $32.9 million of the principal due under its 4.50% Convertible Senior Notes due December 15, 2011 ('2011 Notes'). In consideration for the purchased notes, Minefinders has issued new 4.50% Convertible Senior Notes due December 15, 2015, in the aggregate principal amount of $36.2 million. After giving effect to the note purchase, $52.1 million of the original $85.0 million principal amount of the 2011 Notes remain outstanding.
The net proceeds from the production and sale of gold and silver, working capital on hand and funds available through its revolving credit facility will allow the Company to fund its current and projected cash requirements.
The complete unaudited interim consolidated financial statements for the three and nine months ended September 30, 2010 and 2009 and accompanying Management's Discussion and Analysis are available at www.sedar.com or on the Company's website at www.minefinders.com.
Q3 Exploration and Development Highlights
At Dolores, the Company continued with its exploration program to examine upside potential outside of the current open-pit and during the third quarter reported high-grade gold and silver intercepts at the Dolores Mine South Extension target and the discovery of a new zone of mineralization at the Dolores Mine North Dome target. The Company's grass roots exploration program at its La Virginia project also resulted in the discovery of a new gold and silver system and drilling at the property is continuing.
In July, the results of a pre-feasibility study for the La Bolsa property were reported and the Company is assessing a number of options to realize value from this project.
Board of Directors: Retirement of Director and Appointment of Successor
The Company announces the retirement of Anthonie (Tony) Luteijn from the Board of Directors. Mr. Luteijn joined the Minefinders Board in 2004 after a distinguished career in the mining business. His career as a mining engineer covers a 50-year period and includes senior management positions with Placer Dome Inc. and executive positions with Sutton Resources Ltd. and Canico Resource Corp. The Company appreciates the significant contribution and counsel furnished by Tony and wishes him well in retirement.
The Board of Directors has appointed W. Robert Gilroy to fill the vacancy caused by Mr. Luteijn's retirement. Mr. Gilroy has more than 40 years experience in many areas of the mining industry in Canada and internationally. He has participated in the development and operation of mines in climates ranging from high Arctic to mountainous tropical. Following retirement from a full-time career in 2008, Bob continued to act as a consultant to the mining industry. We welcome Bob Gilroy to the Board of Directors and look forward to his advice and participation in the growth of the Company.
Conference Call
An investor conference call will be held on Tuesday, November 9, 2010 at 1p.m. Pacific Time (4 p.m. Eastern Time) to discuss the results. Participants may join the call by calling toll-free 1-866-226-1793 or 1-416-340-2219 for calls outside Canada and the U.S. A live audio webcast of the conference call will also be available on the home page of the Company's website, www.minefinders.com. An audio replay will be available until August 12, 2010 by calling toll-free 1-800-408-3053 in Canada and the U.S. or 1-416-695-5800 for calls outside Canada and the U.S. Please enter the pass code 3544508.
About Minefinders
Minefinders is a precious metals mining and exploration company and operates the multi-million ounce Dolores gold and silver mine in Mexico. For more information, please visit our website at www.minefinders.com.
Non-GAAP Measures
The Company uses both GAAP and certain non-GAAP measures to assess performance. This news release includes non-GAAP performance measures of 'operating cash cost per ounce', 'total cash cost per ounce', and 'operating cash flow before changes in working capital'. These non-GAAP financial 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.
Operating and total cash cost per ounce have been determined by the Company on a sales basis. Operating and total cash cost per ounce is a measure typically reported by mining companies but is a non-GAAP measure without standardized meaning. The Company follows the Gold Institute standard in determining operating and total cash cost per ounce. The Company uses operating cash flow before changes in working capital as a supplemental financial measure in its evaluation of liquidity. The Company believes that adjusting for the changes in non-cash working capital items due to timing issues assists in making liquidity assessments.
Forward Looking Statements
This release contains certain 'forward-looking statements' and 'forward-looking information' as defined under applicable Canadian and U.S. securities laws. Forward-looking statements generally can be identified by the use of forward-looking terminology such as 'may', 'will', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'continue' or similar terminology. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that, while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Certain of the statements made herein by Minefinders are forward-looking and subject to important risk factors and uncertainties, both known and unknown, many of which are beyond the Company's ability to control or predict. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Those factors are described or referred to under the heading 'Risk Factors' in Minefinders' Annual Information Form for the year ended December 31, 2009 and under the heading 'Risks and Uncertainties' in Minefinders' Management's Discussion and Analysis for the quarter ended September 30, 2010, both of which are incorporated by reference herein and are available on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Minefinders does not undertake to update any forward looking statements that are incorporated by reference, except in accordance with applicable securities laws.
Contacts:
Minefinders Corporation Ltd.
Jonathan Hackshaw
Director of Corporate Communications
Toll Free: (866) 687-6263
Minefinders Corporation Ltd.
Mike Wills
Investors Relations Representative
Toll Free: (866) 687-6263
www.minefinders.com