|Tue Dec 2, 2008|
Aurcana Corporation Reports Third Quarter Results
|Aurcana Corporation ("Aurcana" or the "Company") is pleased to report its financial results for the period ended September 30, 2008. The summary of the selected financial information should be read in conjunction with the unaudited financial statements for the three and nine months ended September 30, 2008 and the related management's discussion and analysis dated November 27, 2008 together referred to as the "Financial Statements", which have been filed on Sedar (www.sedar.com) and the Company's website (www.aurcana.com). All figures are in Canadian dollars unless otherwise noted.|
During the quarter ended September 30, 2008, the Company realized total revenues of $3.8 million from the sale of 463 tonnes of payable copper, 363 tonnes of payable zinc and 124,572 ounces of silver. The average price for sales of copper, zinc and silver during the period were Cu - $3.24, Ag - $14.38 and Zn - $0.82. An adjustment to the Company's second quarter June 30, 2008 revenue of $438,087 was made during the third quarter September 30, 2008 as a result of lower metal prices. Falling metal prices in the quarter, compared to earlier in the year and 2007, and the timing of the finalization of previous sales, where the concentrate buyer can choose the final metal prices over a four months, resulted in sales adjustments year to date totaling a deduction from sales of $542,313.
For the three months ended September 30, 2007 being the first quarter of production, revenues were $3.9 million from the sale of 392 tonnes of payable copper (463 tonnes in Q3/08), 143 tonnes of payable zinc (363 tonnes in Q3/08) and 96,065 ounces silver (124,572 ounces in Q3/08). Average prices for sales of copper, zinc and silver during the three month period ended September 30, 2007 were Cu - $3.40 ($3.24 in Q3/08), Ag - $18.53 ($14.38 in Q3/08) and Zn - $1.49 ($0.82 in Q3/08).
For the quarter ended September 30, 2008 the Company reported a net loss of $3,745,498 or $0.04 loss per share and an operating loss of $166,367 compared to net loss of $144,422 or $0.00 per share and an operating profit of $1,194,320 for the three months ended September 30, 2007. The operating loss combined with a one time corporate finance fee and foreign exchange losses of $932,313 contributed to the net loss. For the nine months ended September 30, 2008 the Company recorded a net loss of $5,146,160 or $0.05 loss per share and operating income of $1,318,405 compared to a net loss of $3,373,795 or $0.04 loss per share and an operating income of $1,194,320 for the nine months ended September 30, 2007.
At the end of the third quarter September 30, 2008 the Company had cash and cash equivalents of $2.9 million.
LA NEGRA MINE
For the first nine months of 2008 the La Negra mine continued to achieve its budgeted daily throughput of 1,000 tonnes per day of ore processed and generated positive operating cashflow before adjustments related to finalization of previous concentrate sales which were impacted by falling metal prices. During the three months ended September 30, 2008 the La Negra mine produced operating cash flow of US$458,080 and for the nine months ended September 30, 2008 the operating cash flow was US$2.69 million. Negatively impacting the operating cashflow at the mine were labour, power and maintenance costs, with hourly workers and staff being 22% higher than in the same period in 2007. The Company and management at the mine are addressing the number of workers and the maintenance costs and are implementing plans to achieve savings.
N.I. 43-101 reports were completed on two of the 23 known deposits. The Alacran chimney deposit NI 43-101 compliant reserve calculation doubled the historical reserve figure. The Ala¬cran chimney is interpreted to continue to depth as a well mineralized breccia deposit. The Monica ore body is a manto structure which dips moderately to the northwest. The NI 43-101 compliant deposit resource was calculated over only a 200 metre vertical distance down to the 2,055 level which resulted in an eleven-fold increase in tonnage compared to the his¬torical resource figure. Further work has confirmed the struc¬ture continues down to and below the 2,000 foot level where evidence of higher copper grades is starting to emerge.
During the 2008 third quarter a silver stream agree¬ment with Silver Wheaton Corp. for 50% of the life-of-mine silver production at La Negra resulted in a $25 million cash payment being made to Aurcana. Additionally $3.90 for each ounce of silver will be paid to Aurcana by Silver Wheaton at time of delivery.
SHAFTER SILVER MINE
On July 17, 2008, Aurcana closed the acquisition of a 100% interest in the Shafter silver mine ("Shafter") located in southwest Texas from Silver Standard Resources Inc. ("Silver Standard"). Aurcana paid Silver Standard US $23 million in cash; issued 15 million Aurcana common shares and a $10 million convertible debenture paying a 3% coupon. The debenture has a three year term and is convertible into 6.62 million Aurcana common shares at $1.51 per share.
In July, Tetra Tech completed an independent NI 43-101 Report using an economic cut off of four ounces per tonne.
Silver was mined in the Shafter region from 1883 until 1942, when the mine was closed, not from lack of ore, but by the War Act. Historically reported total production during that period was 35 million ounces of silver from 2.3 million tonnes of ore, at an average grade of 15.24 ounces per tonne.
A timely start up is anticipated as significant infrastructure is already in place, including a major power line and paved highway crossing the property, an electrical sub-station and components on site for a 2,000 tonne per day mill, a 1,050 foot shaft serviced by a 80 tonne per hour hoist and 5,100 feet of completed underground development
Recently the Company appointed a project manager for Shafter and work is underway on a scoping study which is expected to be completed in January 2009. The results of the scoping study and tradeoffs will be used to guide a prefeasibility study which the Company expects to be finished in June 2009. The pre-feasibility study will select the mining method that will be used to optimize production capacity and maximize the project's economic return. The study will investigate the use of a decline to access the deposit, and mechanized room and pillar extraction. The decline will facilitate the efficient movement of supplies and large equipment for production and will allow the existing shaft to be dedicated to hoisting ore for the nearby mill. Initial calculations indicate that daily production could be sustained at a rate of up to 1,500 tonnes per day. The decline also potentially allows for early production and cash flow, as it will initially target resource blocks in the upper levels of the mine which are located above the water table.
During the quarter ended September 30, 2008 the Company completed 3,817 metres of diamond drilling at Rosario. The drill program commenced on April 1st, with the objective to confirm the extent of mineralization associated with the San Francisco and Yecora vein systems with surface diamond drill holes which occur adjacent to the high grade San Juan vein. The program consisted of drilling holes from 2 drill stations on the San Francisco vein and holes on the Yecora vein and 1 hole at San Juan. In addition 8 holes were drilled at the Plomosas mine, 4 from surface and 4 from underground. Assay results are pending from the drill program and are anticipated by mid December 2008. A summary report on all activities completed at Rosario will be available by early 2009. As the Company turns its focus on to its Shafter Project in Texas, and its La Negra mining operation, management has put its Rosario project on care and maintenance. A small workforce will be kept at Rosario to provide security and to maintain the camp. Aurcana has been approached by several parties regarding a transaction for the Rosario project and as proposals are received they will be reviewed to maximize the value of Rosario in the current market.
ABOUT AURCANA CORPORATION
Aurcana Corporation's strategy is "Growth through Acquisition".
The Shafter silver mine represented the third acquisition in two years.
The 100% owned Shafter silver mine in Presidio County, Texas, is planned to start up at 3.2 million ounces silver annually. The 80% owned La Negra silver-lead-zinc-copper mine in Queretaro State, Mexico, operates at 1,000 tonnes per day. The 100% owned Rosario lead-zinc-silver exploration project, located in the Sierra Madre precious metals belt, Sinaloa State, Mexico, is being held for future development.
The reader should be cautioned the Company has not completed feasibility studies confirming the projected production capacity for La Negra or Shafter and there is no certainty the Company's plans will be economically viable.
ON BEHALF OF THE BOARD OF DIRECTORS OF
"Ken Booth", President
For further information, please visit the website at www.aurcana.com.
Ken Booth, President or
Jack Barnes, Investor Relations
Phone: (604) 331-9333
Toll Free: 1 (866) 532-9333
Fax: (604) 633-9179
Caution Regarding Forward-Looking Statements -- This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include unsuccessful exploration results, changes in metal prices, changes in the availability of funding for mineral exploration and development, unanticipated changes in key management personnel and general economic conditions. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. The Company does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this Release
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