VANCOUVER, Aug. 12 /PRNewswire-FirstCall/ -- Dick Whittington, President and CEO of Farallon Mining Ltd. ("Farallon" or the "Company") (TSX:FAN) is pleased to announce the financial and operating results for the Company for the three months ending June 30, 2009. Currency is United States dollars unless otherwise indicated. This news release should be read in conjunction with the Company's financial statements and MD A, which are available on SEDAR. Farallon will hold a conference call tomorrow, Thursday August 13th, at 8:00 am Pacific time (11:00 am Eastern) to discuss these results. Call-in details are provided at the end of this release.
The Company generated cash flow from mining operations(1) of $5.7 million with an operating profit of $1.4 million. Production included zinc contained in zinc concentrates of 21.3 million pounds, copper in copper concentrate of 1.7 million pounds and additional by-product lead, silver and gold. The total cash cost(1) including transportation and treatment and refining charges but net of by-product credits was $0.39/lb of payable zinc.
President and CEO Dick Whittington said "The G-9 mine's first quarter of commercial production shows that the operation is capable of producing high quality zinc concentrates at low cash cost. Further improvements in metallurgical recovery and mill throughput are anticipated during the second half of 2009, targeted to increase production to 120 million pounds of zinc annually with cash costs in the lowest quartile of zinc producers. Now that the balance sheet has been restructured and the mine is generating operating profits, Farallon is well positioned to establish a solid operational base from which to grow, through further exploration at Campo Morado and accretive transactions. Our goal is to become a multi-mine, mid-tier, mining company".
Financial and operational highlights for the three months ended June 30, 2009 are as follows:
- Generated cash flow from mining operations(1) of $5.7 million in its first quarter of commercial production at the G-9 mine. - Operating profit of $1.4 million. - Increased working capital to $13.7 million at June 30, 2009 from a deficit of $17.8 million at March 31, 2009. - Generated revenues of $20.1 million, up from $6.7 million last quarter. - Produced at a cash cost per pound of payable zinc(1) of US$0.39/lb. - Produced 18,567 tonnes of zinc concentrate, 5,603 tonnes of copper concentrate and 1,280 tonnes of lead concentrate containing an estimated 21.3 million pounds of zinc, 1.7 million pounds of copper, 0.6 million pounds of lead, 284,350 ounces of silver and 4,400 ounces of gold from the G-9 mine. - Declared commercial production effective April 1, 2009 and processed 114,600 tonnes of ore grading of 11.0% zinc, 1.3% copper, 1.2% lead, 165 g/t silver and 2.3 g/t gold. Mined 134,970 tonnes of ore averaging 10.9% Zn, 1.4% Cu and 1.2% Pb, 168 g/t Ag and 2.3 g/t Au. - Sold approximately 25,750 dry metric tonnes of zinc concentrate averaging 52% zinc and 3,862 dry metric tonnes of copper concentrate averaging 17.4% copper. - Secured a $30 million, four-year term loan facility with Credit Suisse. A portion of the loan was used to repay promissory notes due in September 2009 at significantly reducing borrowing costs. - Appointed Kevin Weston as Chief Operating Officer, adding significant operating experience to the senior management team. (1) See "Non-GAAP Financial Measures" in June 30, 2009 MD&A for more information. Financial Results -----------------
The Company recorded cash flow from mining operations(1) of $5.7 million from $20.1 million in revenues from the sale of zinc, copper and lead concentrates. A net loss of $8.0 million was reported which includes non-realized foreign exchange losses.
During the period, the Company substantially strengthened its balance sheet, increasing working capital on June 30, 2009 to $13.7 million from a deficit of $17.8 million on March 31, 2009. Cash on-hand at June 30 was $13.2 million.
G-9 Mine Operations -------------------
The mine continued to mine material from the high-grade Southeast zone as well as material from the North zone and West Extension. Further development activity continued in the Southeast zone, opening up enough mining faces to deliver design production of 1,500 tonnes per day to the milling operations. In June 2009, over 45,000 tonnes of ore was mined. Development is expected to be complete by the end of the third quarter, opening up access to all mining areas in the Southeast zone.
During the period, the milling operations achieved the design throughput capacity of 1,500 tonnes per day for extended periods of time; however, mill availability was lower than design leading to production rates averaging 1,260 tonnes per day, up from 1,180 tonnes per day in the first quarter of 2009. As maintenance programs continue to mature, sustained production at design rates are expected. Trucking of concentrates to the port of Manzanillo continued, with all concentrates sold under contract to Trafigura, Free On Board ("FOB") at the port site.
Recoveries of zinc and copper were below expectations at 77% and 55%, respectively. A metallurgical optimization program is underway with the goal of achieving recoveries of 85% zinc and 70% copper. Recoveries of silver and gold were above expectations at 47% and 52%, respectively.
Key operating and sales metrics are shown in the table below. Q2 2009 Q1 2009 YTD 2009 ------------------------------------------------------------------------- Production (contained in concentrate) Zinc (000's Pounds) 21,319 16,895 38,214 Copper (000's pounds) 1,740 1,180 2,920 Lead (000's pounds) 588 328 916 Silver (ounces) 284,352 229,539 513,891 Gold (ounces) 4,443 3,309 7,752 Ore Mined (tonnes) 134,970 115,978 250,948 Ore Processed (tonnes) 114,644 106,265 220,909 tonnes per day 1,260 1,180 1,220 Zinc grade (%) 11.0 9.2 10.1 Copper grade (%) 1.3 1.1 1.2 Lead grade (%) 1.2 0.9 1.0 Silver grade (%) 165 170 167 Gold grade (%) 2.3 1.7 2.0 Recovery Q2 2009 Q1 2009 YTD 2009 ------------------------------------------------------------------------- Zinc (%) 77 79 78 Copper (%) 55 45 50 Lead (%) 20 16 18 Silver (%) 47 40 44 Gold (%) 52 43 48 Concentrate Zinc (DMT) 18,567 14,829 33,396 Zinc (%) 52.1 51.7 51.9 Silver (g/t) 206 252 226 Gold (g/t) 2.0 2.4 2.2 Copper (DMT) 5,603 3,015 8,618 Copper (%) 14.1 17.8 15.4 Silver (g/t) 572 694 615 Gold (g/t) 8.7 10.4 9.3 Lead (DMT) 1,280 650 1,930 Lead (%) 20.9 22.9 21.6 Silver (g/t) 1540 2005 1697 Gold (g/t) 41.4 56.5 46.5 Site Costs (US$/t milled) $76.28 $70.64 $73.55 Total Cash Costs (US$/payable pound zinc) $ 0.39 $ 0.44 $ 0.41 (2) These are provisional assays, subject to finalization. DMT means Dry Metric Tonnes
The conference call can be accessed by telephone at the following numbers (416) 644-3422 or the toll-free number (800) 590-1817. A live webcast will also be available at http://www.farallonmining.com/. The replay of the conference call will be on the website after the call is completed.
Farallon's G-9 zinc, copper, silver, gold and lead mine at the Campo Morado Property in Mexico reached commercial production in April 2009. The Company is targeting to produce at an annualized production rate of 120 million pounds of zinc and 15 million pounds of copper per year.
ON BEHALF OF THE BOARD OF DIRECTORS J.R.H. (Dick) Whittington President & CEO No regulatory authority has approved or disapproved the information contained in this news release Forward Looking Information
This release includes certain statements that may be deemed "forward-looking statements." All statements in this release, other than statements of historical facts, that address future production, reserve or resource potential, continuity of mineralization, exploration drilling, operational activities, production rates, costs to completion and events or developments that the Company expects are forward-looking statements. Although the Company believes that the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward looking statements and may require achievement of a number of operational, technical, economic, financial and legal objectives. The likelihood of continued future mining at Campo Morado is subject to a large number of risks, including obtaining lower than expected grades and quantities of mineralization and resources, lower than expected mill recovery rates and mining rates, changes in and the effect of government policies with respect to mineral exploration and exploitation, the possibility of local disputes including blockades of the company's property, the possibility of adverse developments in the financial markets generally, fluctuations in the prices of zinc, gold, silver, copper and lead, obtaining additional mining and construction permits, preparation of all necessary engineering for ongoing underground and processing facilities as well as receipt of additional financing to fund mine construction, development and operation, if needed. Such funding may not be available to the Company on acceptable terms or on any terms at all. There is no known ore at Campo Morado and there is no assurance that the mineralization at Campo Morado will ever be classified as ore. For more information on the Company and the risk factors inherent in its business, investors should review the Company's Annual Information Form at http://www.sedar.com/.
Farallon Mining Ltd.
CONTACT: on Farallon Mining Ltd., please visit the Company's website at
http://www.farallonmining.com/ or contact Neil MacRae, Investor Relations Manager, at
(604) 638-2160 or within North America at 1-800-667-2114
