Alexis Minerals Reports Third Quarter Results
TORONTO, ONTARIO -- (Marketwire) -- 11/15/10 -- ALEXIS MINERALS CORPORATION (TSX: AMC)(OTCQX: AXSMF) ('Alexis' or the 'Company') has reported its third quarter 2010 Financial Statements and Management's Discussion and Analysis for the three month period ended September 30, 2010. Progress at the Snow Lake mine has been encouraging with the recent completion of the Snow Lake Feasibility Study. The study projects 80,000 ounces of annual gold production over a five year operating period. The study includes a revised estimate of Mineral Resources which have increased significantly during the year. Total resources in all categories have passed the million ounce mark. Proven and Probable gold reserves within Resources and supporting the production estimates now total an estimated 451,900 ounces gold (see news release, November 3, 2010, for details regarding the mineral reserve estimates). Our prime issue during recent months has been inconsistent gold grades being mined at our Lac Herbin gold mine. Operating costs are being closely monitored, and as the third quarter progressed certain expenses were reduced or eliminated to preserve cash. We are diligently and continuously assessing all factors to improve the grades and performance at Lac Herbin. 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).
Q3- 2010 Summary:
During the three months ended September 30, 2010 the following occurred at Alexis Minerals:
-- Total revenue of $7.74 million was generated, 17.9% higher than in Q3-
2009; 14.7% less than Q2-2010. The latter was due to fewer ounces of
gold mined, milled and recovered during Q3-2010.
-- The Company sold 6,498 ounces of gold at an average realized price of
$1,250/oz (USD $1,208/oz.), compared to 6,575 ounces sold during Q3-2009
at an average realized price of $1,048/oz (USD $940/oz).
-- Lac Herbin Mine, in Val-d'Or, Quebec, the Company's initial gold
operation, mined 4,677 oz. of gold, a 47% reduction compared to 6,874
ounces mined in Q2-2010. The grades realized continued to be lower than
expected. Management continues to work to better predict the nature of
the gold grades. More drilling and in depth review of the geology has
led to a better understanding of the nature of the deposit.
-- Our wholly-owned Aurbel Gold Mill, performed at a more consistent level
during this quarter with an average recovery rate of 91.6%, improved
from 87.2% in Q2-2010. The Aurbel Mill was refurbished earlier this year
with the rationale that Alexis would achieve an estimated 10% reduction
in annual operating costs for the Lac Herbin gold mine.
-- Cash cost of sales per ounce (see non-GAAP measures) of the Lac Herbin
gold sold was at $1,283/oz Au for the third quarter. The deposit has
continued to pose challenges, at the current stage of development, in
producing sufficiently high grade ore (see further comments below). As
an immediate action, various costs and mining development efforts were
reduced in an effort to offset the lower revenue. Alexis is very focused
on reducing unit cost.
-- Compared to Q2-2010, cash flow was negatively impacted by the reduction
of accumulated accounts payable, significantly depleting working
capital.
-- Exploration and delineation drilling totaling 7,714 metres occurred
primarily at Snow Lake and Lac Herbin. Year to date drilling totals
55,544 metres.
-- Exploration drilling continued in the Deep West target area, near the
past producing Louvicourt mine. Drilling approximately 600 metres above
the deep Massive Sulphide discovery intersected broad alteration and
stringer sulphide zones. Recognized regional folding in association with
geological trends should allow Alexis to align drilling to ultimately
locate and test a large seismic-reflection geophysical anomaly in this
general area.
-- The Company raised $14.375 million through a public offering at a price
of $0.15 per share. A portion of the net proceeds were devoted to
reinforcing working capital and general corporate purposes. The Snow
Lake Feasibility Study has been completed and key capital programs are
being prepared to support the next phase of the Company's strategic plan
focused on the Snow Lake Gold Mine in Manitoba.
-- Subsequent to the end of the quarter, Alexis announced that a Letter of
Engagement had been signed with Legend Securities, a New York based
broker-dealer, in order to advance a facility of up to $60 Million in
support of future Capital Cost and Working Capital requirements
anticipated in the development of the Snow Lake Mine, Manitoba.
-- Subsequent to the end of the third quarter the Feasibility Study for the
Snow Lake mine was completed. Results propose the project to be
economic, with the projected annual production of approximately 80,000
oz. of gold for at least five years, and a pre-tax Net Present Value of
approximately $100.8 million. The Feasibility Study included an estimate
of proven and probable reserves of 3,477,000 tonnes at 4.04 g/t totaling
451,900 oz. of gold (see news release, November 3, 2010).
The acquisition of Garson Gold has allowed Alexis to more than double its estimated gold resources. The recently completed Feasibility Study for Snow Lake added newly estimated Proven and Probable Reserves of 451,900 ounces of gold and estimated the potential for 80,000 ounces of gold production annually for at least five years at an estimated total cash cost of $640 per oz gold.
Our first gold mine, Lac Herbin, has continued to produce gold since late 2008; however there have been challenges in recent months with lower than expected gold grades being mined. Accordingly, the 2010 outlook for gold production from Lac Herbin is revised to be 24,000 ounces of gold as it is expected the shortage of ounces during the first three quarters cannot be recouped. New development that started in Q2-2010 resulted in lower grades of gold and it was expected that additional definition drilling into Q3- 2010 would identify areas of higher grade ore to mine. Where development has been undertaken in Q3, the narrow vein structure of the deposit has continued to deliver less than the target grade of gold. Therefore development was reduced to minimize the impact of the resultant lower than expected revenue stream. The net effect has been an increase in the cash cost (see non-GAAP measures) of sales to $1,283/oz Au.
A bulk sample program at our second gold project at Lac Pelletier was completed earlier in the year. A production commitment notice was issued to Thundermin Resources Ltd. with the Company thereby exercising its option to acquire the property. The Company is in discussion with Thundermin regarding the transfer of full title and ownership of the property to the Company.
The recovery rate from our wholly owned Aurbel Gold mill has been relatively consistent at an average of 91.6%, compared to the target recovery rate of 94%.
Management remains encouraged as exploration continues with many prospective targets. Our drilling program in Snow Lake has discovered significant gold mineralization in a potential, on-strike extension to the Snow Lake Mine. This may represent the discovery of a major new ore zone and characterizes the potential remaining on the property and in proximity to our Snow Lake Gold Mill, currently the only gold mill in the region. As well, two new high-grade gold zones were discovered containing mineralization that is similar in character to that of the Main and the No.3 Zones yet is of significantly higher grade.
Our expectations are high for further significant discovery from focused exploration through 2010 in the immediate vicinity of the Aurbel Gold Mill. Exploration and compilation in this area is already providing indications of untested extensions to the Herbin Mine to the north and northwest, of new zones between the Ferderber and Herbin mines and at greater depth potential at the Herbin and Dumont mines.
Alexis continued with the planned 2010 exploration campaign for over 80,000 metres of drilling, devoting approximately $6 million to the Snow Lake Mine property and $4 million to the Abitibi Mining Camp. This has been funded through the flow through financings completed in 2009.
Alexis Minerals Three months Three months Nine months Nine months
Corporation ended ended ended ended
30-Sep-10 30-Sep-09 30-Sep-10 30-Sep-09
Tonnes of ore mined 26,050 46,319 106,724 122,915
Grade per tonne mined 5.58 5.29 5.27 6.08
Total gold ounces
mined 4,677 7,883 18,080 24,038
Tonnes of ore milled 36,517 12,347 128,106 111,832
Grade per tonne
milled 5.51 5.95 5.28 6.08
Total gold ounces
milled 6,472 2,363 21,736 21,871
Average recovery rate 91.6% 96.1% 90.1% 97.5%
Gold ounces recovered 5,925 2,270 19,593 21,314
Gold ounces sold 6,498 6,575 19,114 19,325
Average realized gold
price (per oz CAD) $ 1,250 $ 1,048 $ 1,192 $ 1,083
Revenue from mining
operations (net of
Royalties and
refining charges CAD
000's) $ 7,742 $ 6,564 $ 21,874 $ 19,920
Mine operating
expenses (excludes
depletion and
amortization - CAD
000's) $ 8,340 $ 6,212 $ 21,898 $ 15,157
Amortization and
depletion (CAD
000's) $ 2,384 $ 1,303 $ 6,071 $ 4,393
Gross profit/(loss)
(CAD 000's) ($2,983) ($951) ($6,095) $ 370
Net earnings (loss)
(CAD 000's) ($3,012) ($1,715) ($3,991) ($2,210)
Basic and diluted
earnings (loss) per
share (CAD) ($0.01) ($0.01) ($0.02) ($0.02)
Cash flow from
operating activities
(CAD 000's) ($6,847) ($299) $ 3,215 $ 4,136
(i)Cost of sales per
ounces sold (CAD) $ 1,283 $ 945 $ 1,146 $ 784
(i)see Non GAAP Measures and comments under 'Executive Summary - Third
Quarter' section, regarding Cost of Sales at Lac Herbin
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 and nine months ended September 30, 2010 and 2009, and a reconciliation of working capital to the financial statements for the nine months ended September 30, 2010 and the twelve months ended December 31, 2009.
Working Capital
----------------------------------------------------------------------------
(CAD 000's)
Current assets: September 30, 2010 December 31, 2009
------------------------------------
Cash and cash equivalents $ 2,369 $ 6,106
Amounts receivable 481 2,083
Tax credits receivable 8,398 7,465
Inventory 2,109 6,168
Prepaid expenses 521 273
Investments 590 122
----------------------------------------------------------------------------
14,468 22,217
Current liabilities
Accounts payable and accrued
liabilities $ 7,527 $ 13,687
Current portion of capital lease
obligations 188 412
Current portion of long-term debt 68 99
Liability component of convertible
debenture - 6,143
----------------------------------------------------------------------------
7,783 20,341
Working capital/(deficit) (current
assets less current liabilities) $ 6,685 $ 1,876
Cash Cost per Ounce
Q3-2010 Q3-2009 2010 2009
----------------------------------------------------
Revenue
From commercial
production ounces (CAD
000's) $ 7,742 $ 6,564 $ 21,874 $ 19,920
Ounces sold 6,498 6,575 19,114 19,325
Mine operating expenses
(CAD 000's) $ 8,340 $ 6,212 $ 21,898 $ 15,157
Cash cost per ounce sold
(CAD) (mining operating
expenses divided by
ounces sold) $ 1,283 $ 945 $ 1,146 $ 784
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 has the option to earn its 100% interest by bringing into production the Lac Pelletier gold property in Rouyn-Noranda, both in Quebec. Alexis also owns the Snow Lake Mine in Manitoba. 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