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Aurcana Reports Record Results for Q2, 2012


August 20, 2012

Aurcana Corporation ("Aurcana" or the "Company") (TSXV: AUN, OTCQX: AUNFF) today is pleased to report its unaudited financial results for the second quarter ending June 30, 2012. The summary of the selected financial information should be read in conjunction with the unaudited financial statements and the related management's discussion and analysis dated August 17, 2012 together referred to as the "Financial Statements", which have been filed on SEDAR (www.sedar.com) and the Company's website (http://www.aurcana.com). All figures are in US dollars unless otherwise noted.

The Q2 2012 Earnings Conference Call has been scheduled at 2:00 pm Eastern Time (11:00am Pacific) on Monday, August 20, 2012. See bottom of press release for details. "We are very pleased to report to investors record results for the second quarter of 2012 The results achieved this quarter highlight the success of the Company in building La Negra into a profitable producing mine. They are a clear testament that Aurcana is well on its way to becoming a mid-tier silver producer and the progress to date has been outstanding. The commissioning and testing of the mine at Shafter is making continuous progress." said Lenic Rodriguez, Aurcana's President & CEO

The significant operating highlights for Q2, 2012 related to the Company's ongoing mining operations at La Negra were:



  • 7% increase in net revenues to $13.3 million compared to $12.4 million for the second quarter of 2011.
  • 4% increase in earnings from mining operations to $5.5 million compared to $5.3 million for the second quarter of 2011.
  • 50% increase in net income to $3.4 million for the first six months of 2012 compared to $2.3 million for the first six months of 2011.
  • 106% increase in operating cash flow before movements in working capital items, to $4.7 million compared to $2.3 million for the second quarter of 2011.
  • 18% increase in milled tonnes processed for a total of 307,161 during the six months ended June 30, 2012 (2011: 260,931); of which 15% (45,588 tonnes) were mined from NI 43-101 Measured and Indicated resources and 85% (261,573 tonnes) were mined from new discoveries.
  • 23% increase in silver ounces sold for the second quarter of 2012 to 323,307 (373,037 ounces produced) from 263,357 silver ounces in 2011.
  • Metal prices were a significant factor in revenues of the Company. Due to a general economic slowdown, average silver prices in the second quarter of 2012 were $28.51 compared to $36.86 per ounce in the second quarter of 2011.
  • 52% increase in silver equivalent ounces produced to 690,162 in the second quarter of 2012 (2011: 455, 516).

Earnings

The Company had earnings from La Negra mining operations of $5.5 million for the quarter ended June 30, 2012 (2011: $5.3 million); income before taxes of $2.0 million (2011: $1.7 million); a net income of $1.4 million (2011: $1.6 million). For the six months ended June 30, 2012 the Company had earnings from mining operations to $11.0 million (2011: $10.7 million); income before taxes to $4.6 million (2011: $3.3); a net income of $3.4 million (2011: $2.3 million).
The increase in earnings from La Negra mining operations was mainly related to increased volumes sold and the increase in the higher grades of the metals in the concentrates produced by the Company, in spite of lower metals prices.

Revenue

During the year ended June 30, 2012, the Company generated revenues from La Negra mining operation for the sale of 2,425 tonnes of copper concentrate (2011: 1,832 tonnes); 4,244 tonnes of zinc concentrate (2011: 2,667 tonnes); 945 tonnes of Lead Concentrate (2011: 846) and 323,307 ounces of silver (2011: 263,357 ounces) for total net revenues of $13.7 million (2011: $12.4 million).

The average price for sales of copper, silver, zinc and lead during the second quarter were Cu $3.52 (2011: $4.14) per pound; Ag $28.51 (2011: $36.86) per ounce; Zn $0.86 (2011: $1.02) per pound and Pb $0.89 (2011: $1.16) per pound.

La Negra Mine Production Highlights


  • 32% increase in tonnes of ore processed during the second quarter of 2012 to 176,591 (2011: 133,700).
  • 45% increase in silver ounces produced during the second quarter of 2012 to 373,037 (2012: 257,508).
  • 44% increase in copper, zinc and lead concentrate produced during the second quarter of 2012 to 7,751 tonnes (2011: 5,391 tonnes).
  • Achieved 26% decrease in production costs per silver equivalent to $8.43 (2011: $11.47).
  • La Negra's production increase was supported by a continuous in-house diamond drilling program.

Mining operations and exploration drilling at La Negra continue to delineate additional mineralized zones, either between or as extensions of existing ore zones. These results have the potential to add to the mine life of La Negra. Drill crews have completed 5,968 metres of diamond drilling during the six months ended June 30, 2012.

La Negra mine completed its second consecutive mill expansion from a capacity of 1,500 tonnes per day (tpd) to 2,500 tpd on time and on budget in April, 2012. The planned milling rate is 2,000 tpd and La Negra continuously exceeded the planned rate in Q2, 2012, with a goal to grow up to 2,500tpd. 

Shafter Silver Mine Updates

  • Commissioning and testing of the processing plant continues at the Shafter Silver Mine in Texas. As a result of the testing to date, two key areas have been identified for improvement; further mine development and the processing plant mill dewatering. In addition, during this testing phase we are continuing to upgrade and train the mining personnel at Shafter.
  • The underground production will be supplemented by a test open pit until the fourth quarter of 2012 as further development is required in order to sustain 1,500 tons per day. Further development of the underground mine is currently under review.
  • During the second quarter of 2012, the deferred stripping of a small test open pit was started. The mineralized rock is expected to be processed starting in late August 2012.
  • Resulting from the commissioning test in Q2 2012, the dewatering process of the processing plant is currently being re-configured. The processing plant continues testing to reach 1,500 tons per day as anticipated, and will be ready in the fourth quarter of 2012.

Summary

During Q2 2012 Aurcana completed the expansion of the La Negra mill capacity to 2,500 tpd. Production increases continued at La Negra and revenues increased even with the significant drop in metal prices. The Company continued to adjust its cost structure, both on the operational and administrative side. At Shafter the processing plant was commissioned in Q2, 2012 and testing continues with expectation of commercial production in the 4th quarter of 2012. Full capacity of 2,500 tpd will be achieved during 2013 at Shafter. Aurcana is prepared for significant increases in production and further growth in 2012 and beyond.

To read complete Financial Statement click on this link: http://www.aurcana.com/i/pdf/2012Q2FS.pdf?v=0.066

To read complete MD&A click on this link: http://www.aurcana.com/i/pdf/2012Q2MDA.pdf?v=0.066

Aurcana Corporation is scheduling a conference call to discuss the audited second quarter 2012 results at 1100 PST on Monday, August 20th, 2012.

Conference Call Details:

Date: Monday, August 20th, 2012 

Time: 2:00 PM EDT (11:00 AM Pacific)

Attendee Access Information:

1-800-319-4610 Canada and USA Toll-free

604-638-5340 Vancouver

1-604-638-5340 Outside of Canada & USA

A replay of the conference call will be available immediately following the conference by dialing 1-800-319-6413 in Canada & USA (Toll-free) or 1-604-638-9010 outside of Canada and USA. The required pass code is 2729 followed by the # sign. Please dial-in to the meeting at least 5 minutes prior to the start time using one of the attendee phone numbers.

Corporate
The Company's shares are now also traded in the United States on OTCQX under the symbol "AUNFF". Investors can find current financial disclosure and Real-Time Level 2 quotes for the Company on www.otcqx.com andwww.otcmarkets.com.

About Aurcana Corporation:
The Shafter Silver Mine is scheduled to produce 3.8 million ounces of silver in the first full 12 months of operation. It has an NI 43-101 Measured and Indicated Resource of 24.6 million ounces of silver and an Inferred Resource of 22.8 million ounces of silver using a 4.0 ounce per ton cut off. The 99.9% owned La Negra silver-lead-zinc-copper mine produced over 1.1 million ounces of silver equivalent in the first six months of 2012. 

The scientific and technical information contained in this news release regarding the Shafter Silver Mine has been reviewed by Ken Collison, P.Eng. Director of the Company, and a Qualified Person ("QP") and scientific and technical information contained in this news release regarding the La Negra Mine has been reviewed by Baltazar Solano, P.Eng. and a QP). as defined by National Instrument 43-101 (Standards of Disclosure for Mineral Project)

ON BEHALF OF THE BOARD OF DIRECTORS OF
AURCANA CORPORATION

"Lenic Rodriguez", President & CEO
For further information, visit the website at www.aurcana.com or contact:

Aurcana Corporation 
Phone: (604) 331-9333 
Toll Free: (866) 532-9333
Fax: (604) 633-9179 
Gary Lindsey, Corporate Relations
Phone: (720)-273-6224
Email: gary@strata-star.com

NR-12-12

This news release contains certain forward-looking statements, including statements regarding forecast silver production, silver grades, recoveries, potential mineralization, exploration result, future plans and objectives of the Company and the business and anticipated financial performance of the Company. These statements are forward-looking statements that involve various risks and uncertainties. These forward-looking statements include, but are not limited to, statements with respect to mining and processing of mined ore, achieving projected recovery rates, anticipated production rates and mine life, operating efficiencies, costs and expenditures, changes in mineral resources and conversion of mineral resources to proven and probable reserves, and other information that is based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management.

Exploration results that include geophysics, sampling and drill results on wide spacings may not be indicative of the occurrence of a mineral deposit. Such results do not provide assurance that further work will establish sufficient grade, continuity, metallurgical characteristics and economic potential to be classified as a category of mineral resource. A mineral resource which is classified as "inferred" or indicated" has a great amount of uncertainty as to its existence and economic and legal feasibility. It cannot be assumed that any or part of an "indicated mineral resource" or "inferred mineral resource" will ever be upgraded to a higher category of resource. Investors are cautioned not to assume that all or any part of mineral deposits in these categories will ever be converted into proven and probable reserves.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or does not expect", "is expected", anticipates" or "does not anticipate" "plans", "estimates" or "intends" or stating that certain actions, events or results " may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to materially differ from those reflected in the forward-looking statements. 

Actual results may differ materially from results contemplated by the forward-looking statements. Important factors that could differ materially from the Company's expectations include, among others ,risks related to international operations, unsuccessful exploration results, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as 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. Accordingly, readers should not place undue reliance on forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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