VANCOUVER, May 9 /PRNewswire-FirstCall/ -- Peak Gold Ltd. (PIK:TSX-V) ("Peak Gold") today announced its 2008 first quarter operating and financial results and provided operational guidance for the year.
Q1 Financial and Operating Highlights ------------------------------------- - Net Earnings were $9.8 million after charges of $2.6 million in stock based compensation - Gold production of 43,300 ounces - Gold sales of 51,700 ounces - Cash cost was $427 per ounce (net of by-product sales)(1) - Consolidated operating cash flows of $18.4 million - Ordering of long lead items for the washing circuit at Amapari commenced - On March 31, 2008 Peak Gold announced a proposed business combination with New Gold Inc. and Metallica Resources Inc. The combined company, to be called New Gold Inc, will own three operating gold mines in Australia, Brazil and Mexico, development projects in Canada and Chile and will have a combined market capitalization of approximately $1.6 billion. Operational Review ------------------
Total gold production for the first quarter 2008 was 43,300 ounces at a cash cost of $427 per ounce net of by-product credit. Copper production for the quarter was 2.2 million pounds. Production and cash cost by mine is included in the table below.
2008 First Quarter ---------------------------------------------------- Production oz Cash Cost $/oz ---------------------------------------------------- Peak Mines 25,099 281 Amapari 18,201 650 ---------------------------------------------------- Total 43,300 427
The first quarter production at Amapari was lower than anticipated primarily due to lower tonnes placed on the leach pads. Ore deliveries were reduced by the lower equipment availability which was due to unplanned maintenance requirements on key processing and mining equipment. Additional site resources have been acquired and improved practices have been implemented to address these issues. As expected, the high clay content of the Amapari ores continued to cause low gold recovery. Procurement has commenced for the long lead items required for the installation of a washing circuit that would improve recovery and facilitate higher throughput.
Peak Mines gold production was lower than the corresponding quarter of last year but in line with expectation. With mining progressing through higher grade copper zones; copper production somewhat off-set the planned, temporarily lower than historic gold grades.
Unit cash costs at both operations were adversely affected by lower gold production, stronger Brazilian and Australian currencies against the U.S. dollar and higher consumable costs, particularly for cyanide and carbon.
Financial Highlights --------------------
Cash flow from operations was $18.4 million with a higher gold price off-setting lower production.
Net earnings for the first quarter of 2008 were $9.8 million, which includes $2.6 million related to stock-based compensation.
Cash and cash equivalents totaled $197.6 million at the end of the quarter.
2008 Operating Outlook ----------------------
Including results of the first quarter, continuing appreciation of the Brazilian Real and Australian Dollar and continued pressures on the cost of supplies and services; gold production and cost forecast for 2008 have been revised downward and are included in the table below. The 2008 copper production forecast at Peak Mines is 9 to 11 million pounds.
2008 Forecast ---------------------------------------------------- Production oz Cash Cost $/oz ---------------------------------------------------- Peak Mines 95,000 - 105,000 310 - 330 Amapari 95,000 - 105,000 570 - 590 ---------------------------------------------------- Total 190,000 - 210,000 440 - 460
"The Company faced operational challenges during the quarter, particularly at Amapari which are being addressed", said Robert Gallagher, President and Chief Executive Officer. "Assessment of the operational capabilities at Amapari has been completed and changes are being implemented on both a short and long term basis. Significant progress was made during the quarter to finalize studies towards a decision on installation of a wash plant at Amapari with the objective of significantly increasing metal production and lowering the cash cost of that operation."
Per the March 31, 2008 announcement, Peak Gold has progressed towards the closing of the business combination between Metallica Resources, Peak Gold and New Gold to create the new intermediate gold mining company with a combined market capitalization of approximately $1.6 billion.
"We look forward to closing the transaction and are excited about the opportunities this transaction presents to our collective shareholders and see it as a step towards building a superior intermediate gold mining company," said Robert Gallagher, President and Chief Executive Officer.
The Unaudited Interim Financial Statements and Management Discussion and Analysis will be filed on SEDAR at http://www.sedar.com/ before market opens on Friday, May 16, 2008.
Peak Gold will host a conference call at 10:00a.m. Pacific Time to discuss these results. You may join the call by dialing toll free 1-866-340-2217 or 1-416-340-2217 for calls from outside Canada and the U.S. You can listen to a recorded playback of the call after the event until June 16, 2008 by dialing 1-800-408-3053 or 1-416-695-5800 for calls outside Canada and the U.S. Passcode: 3259711, followed by the number sign.
Peak Gold is a new intermediate gold producer with a strong foundation for growth. To learn more about us, please visit our website at http://www.peakgold.com/.
(1) Peak Gold has included a non-GAAP performance measure, total cash costs per gold ounce, throughout this news release. Peak Gold reports total cash costs on a sales basis. In the gold mining industry, this is a common performance measure but does not have any standardized meaning, and is a non-GAAP measure. Peak Gold follows the recommendations of the Gold Institute standard. Peak Gold believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate Peak Gold's performance and ability to generate cash flow. Accordingly, it is 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 TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This News Release contains "forward looking information", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian Securities legislation which may include, but is not limited to, statements with respect to the future price of gold and copper, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. Generally, these forward looking statements can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts" ,"intends" ," anticipates", or "does not anticipate", or "believes", or variations (including negative variations) of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" or "will be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Peak Gold to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions; risks related to international operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold and copper; possible variations in ore reserves, grade or recovery rates; failure of plant; equipment or processes to operate as anticipated; accidents; labor disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in Peak Gold's Annual Information Form dated December 18, 2007 and revised on February 25, 2008, available at http://www.sedar.com/. Although Peak Gold has attempted to identify important factors that would cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated, or intended. There can be no assurance that such 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 that are incorporated by reference herein, except in accordance with applicable securities laws.
CONTACT: Melanie Hennessey, Vice President, Investor Relations, Peak Gold Ltd., 3110-666 Burrard Street, Vancouver, British Columbia, V6C 2X8, Telephone: (604) 696-4100, Fax: (604) 696-4110, e-mail:
