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Breakwater reports first quarter 2002 production and operating cost results and exploration update
08:30 EDT Wednesday, April 24, 2002
TORONTO, April 24 /CNW/ - (BWR - TSE) Breakwater Resources Ltd. is pleased to announce its production and operating results for the first quarter ended March 31, 2002 as well as an exploration update.
Production
The Company produced a total of 133 million pounds of zinc contained in concentrate during the first quarter of 2002 compared with 116 million pounds during the same period in 2001. This is an increase of 15% and places the Company slightly ahead of management's objective to produce 483 million pounds of zinc for the full year. The increased production resulted from the near record performance of the Nanisivik mine and the increased output from the Bouchard-Hebert, El Mochito and El Toqui mines.
Operating Costs
Total cash costs decreased by 16% to U.S.$0.31 per pound of payable zinc for the first quarter of 2002 from U.S.$0.37 in the same period in 2001. Total cash costs are calculated on a per pound of payable zinc basis and include all cash costs incurred and expensed at the minesite, plus treatment charges, shipping and marketing costs, net of by-product credits.
The reduction in total cash costs, quarter over quarter, was due, in part, to improved smelter treatment charges and shipping rates and, in part, to lower minesite operating costs resulting from increased productivity and higher zinc and silver head grades. As well, improved metallurgical results at the Bougrine, El Mochito and El Toqui mines contributed to increased zinc production and lower total cash costs by way of increased recoveries and concentrate grades.
The following table details the consolidated operating statistics as well as consolidated operating costs and total cash costs.
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First Quarter
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2002 2001
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Ore Milled (tonnes) 820,890 823,618
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Zinc (%) 8.1 7.2
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Concentrate Production
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Zinc (tonnes) 111,929 98,580
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Copper (tonnes) 9,218 10,813
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Lead (tonnes) 5,390 4,870
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Gold (tonnes) 1,181 942
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Metal in Concentrates
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Zinc (tonnes) 60,470 52,647
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Copper (tonnes) 1,391 1,793
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Lead (tonnes) 3,690 3,194
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Silver (ounces) 937,545 745,335
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Gold (ounces) 7,474 12,431
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Minesite Operating Costs
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Per tonne milled (U.S.$) $26.61 $27.29
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Total Cash Costs
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Per lb. payable zinc (U.S.$) $0.31 $0.37
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Operations
Bouchard-Hebert Mine
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At the Bouchard-Hebert mine, the total cash cost was U.S.$0.26 per pound of payable zinc the same as the first quarter of 2001. The zinc head grade was up slightly in 2002, while the precious metals and copper head grades were modestly lower compared with 2001. Mill throughput increased 6% in the first quarter of 2002 and, combined with operating cost reductions resulted in the cost per tonne milled being reduced by 7% in 2002.
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First Quarter
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2002 2001
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Ore Milled (tonnes) 267,434 251,419
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Zinc (%) 5.2 4.9
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Copper (%) 0.6 0.9
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Silver (g/t) 47 52
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Gold (g/t) 1.6 1.9
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Concentrate Production
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Zinc (tonnes) 22,069 19,728
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Recovery (%) 86.6 87.5
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Grade (%) 54.4 54.3
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Copper (tonnes) 9,218 10,813
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Recovery (%) 82.6 84.1
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Grade (%) 15.1 16.6
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Metal in Concentrates
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Zinc (tonnes) 12,011 10,715
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Copper (tonnes) 1,391 1,793
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Silver (ounces) 152,136 164,952
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Gold (ounces) 6,187 8,999
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Minesite Operating Costs
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Per tonne milled (Cdn.$) $32.35 $34.90
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Total Cash Costs
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Per lb. payable zinc (U.S.$) $0.26 $0.26
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Since acquiring Bouchard-Hebert, management has focused on improving the operating performance of the mine and conducting exploration in the immediate vicinity of the mine in search of new reserves and resources.
Surface drill hole 01-BW-129, initiated in late November, 2001 and completed during the first quarter of 2002, was drilled to test a strong conductive Pulse-Em anomaly. The anomaly was projected to be located approximately 850 metres below surface and 500 metres northwest of the Bouchard-Hebert mine shaft. The hole intersected the targeted stratigraphic plane at approximately 150 metres lower than projected. This stratigraphic and mineralized plane is believed to correspond to a leaner and narrower portion of a wider massive sulfide horizon that could lie along strike above the trace of this hole.
Further diamond drilling work and (3D) in-hole Pulse-EM surveying are planned for the second quarter to test this anomaly.
Nanisivik Mine
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The Nanisivik mine produced 55% more contained zinc in the first quarter of 2002 than in the same period in 2001 as a result of a significant increase in the zinc grade of the mill feed. During the first quarter of 2002, the mill head grade averaged 10.6% zinc while for the same period in 2001, the mill head grade averaged 6.3% zinc. The substantial increase in the zinc mill head grade results from a combination of mining higher grade pillars and operating the Dense Media Separation ("DMS") plant. The DMS plant, commissioned in the third quarter of 2001, allows for the separation of gangue (waste) material from the ore bearing sulphides prior to the ore being sent to the mill. The process takes advantage of the variance in the specific gravity of the two materials. During the quarter, the plant rejected approximately 27% of the mine feed and increased the overall feed grade to the mill by 20% (1.7% in zinc).
The increase in output of zinc concentrate has resulted in a sharp decline in the total cash cost. The total cash costs were U.S.$0.34 per pound of payable zinc for the first quarter of 2002 compared with U.S.$0.45 in the same period in 2001.
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First Quarter
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2002 2001
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Ore Milled (tonnes) 182,468 199,613
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Zinc (%) 10.6 6.3
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Silver (g/t) 45 28
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Concentrate Production
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Zinc (tonnes) 33,415 21,015
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Recovery (%) 97.0 96.4
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Grade (%) 56.2 57.2
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Metal in Concentrate
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Zinc (tonnes) 18,769 12,126
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Silver (ounces) 211,619 129,426
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Minesite Operating Costs
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Per tonne milled (Cdn.$) $51.02 $45.82
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Total Cash Costs
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Per lb. payable zinc (U.S.$) $0.34 $0.45
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During 2001, as a result of the falling zinc price, a new mine plan was developed to optimize mine performance. The new plan called for the operation to be closed on or about September 2002 and this target date remains unchanged.
Bougrine Mine
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At the Bougrine mine the minesite operating cost per tonne of ore milled was up 6% in the first quarter of 2002 compared with the same period in 2001. The increased cost per tonne was due to an increase in the cost of materials and supplies. A slightly higher mill throughput in the first quarter of 2002, the weakening Tunisian dinar against the U.S. dollar and improved metallurgical performance resulted in the total cash cost per pound of payable zinc remaining the same between the first quarter of 2001 and 2002 despite the per tonne cost increase.
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First Quarter
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2002 2001
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Ore Milled (tonnes) 107,896 105,536
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Zinc (%) 10.3 13.0
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Lead (%) 1.7 2.2
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Concentrate Production
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Zinc (tonnes) 16,514 20,964
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Recovery (%) 81.5 81.7
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Grade (%) 54.9 53.4
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Lead (tonnes) 2,181 2,707
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Recovery (%) 80.0 76.6
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Grade (%) 67.4 66.0
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Metal in Concentrates
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Zinc (tonnes) 9,062 11,184
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Lead (tonnes) 1,470 1,786
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Minesite Operating Costs
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Per tonne milled (U.S.$) $28.28 $26.65
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Total Cash Costs
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Per lb. payable zinc (U.S.$) $0.32 $0.32
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In an ongoing effort to increase the mineral reserves and resources and the operating life of the mine, the Company has been engaged in discussions with the Tunisian authorities on utilizing reserves currently being mined by a government enterprise. As well, the Company has entered into discussions with a Canadian exploration company holding lands in the area of Bougrine, with the express purpose of putting together a joint exploration program in Tunisia and more specifically in the immediate vicinity of the Bougrine mine.
El Mochito Mine
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At the El Mochito mine, production of contained zinc increased by 11% in the first quarter of 2002 over the same period in 2001 and total cash costs fell by 30%.
Initiatives undertaken during 2001 resulted in total cash costs decreasing to U.S.$0.30 per pound of payable zinc during the first quarter of 2002 compared with U.S.$0.43 for the same period in 2001. The reduction in cost is attributable to lower treatment charges, improvements in grade control and improved productivity. In addition, recent metallurgical improvements have resulted in record levels in zinc concentrate grade and metal recovery.
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First Quarter
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2002 2001
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Ore Milled (tonnes) 159,494 161,146
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Zinc (%) 8.0 7.3
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Lead (%) 1.7 1.2
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Silver (g/t) 108 80
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Concentrate Production
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Zinc (tonnes) 22,755 20,822
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Recovery (%) 93.2 91.6
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Grade (%) 52.3 51.5
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Lead (tonnes) 3,209 2,163
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Recovery (%) 82.8 76.1
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Grade (%) 69.2 65.1
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Metal in Concentrates
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Zinc (tonnes) 11,908 10,722
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Lead (tonnes) 2,220 1,408
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Silver (ounces) 495,574 363,046
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Minesite Operating Costs
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Per tonne milled (U.S.$) $30.06 $31.99
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Total Cash Costs
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Per lb. payable zinc (U.S.$) $0.30 $0.43
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During the first quarter of 2002, underground exploration diamond drilling from the 2450 level of the El Mochito mine continued to increase the manto resources to the northeast along the Salva Vida-Nacional trend, which remains open on strike. Also drilling continued from the 2100 level to improve the Company's understanding of the deep Santo Nino orebody.
Late in the first quarter, underground diamond drilling from the 1850 level, in a previously unexplored area of the mine approximately 300 metres northwest of the Nacional orebody, intercepted 7.6 metres of chimney-style mineralization grading 361 g/t silver, 9.6% lead and 8.7% zinc. The significance of this intercept is that it may be indicative of an entirely new mineralized zone.
A surface diamond drilling program was initiated at El Mochito during the quarter to test an unexplored area believed to be associated with an extension of the Salvador orebody. The Salvador orebody was a producer of high-grade silver ores during the 1950's.
El Toqui Mine
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At the El Toqui mine, production of contained zinc increased by 10% in the first quarter of 2002 over the same period in 2001 while total cash costs decreased by 13%. Total cash costs were U.S.$0.32 per pound of payable zinc during the first quarter of 2002 compared with U.S.$0.37 for the same period in 2001. The reduction in total cash costs was a result of lower smelter treatment charges and improved productivity. In addition, recent metallurgical improvements have produced record zinc recoveries and concentrate grades which have also positively impacted the bottom line.
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First Quarter
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2002 2001
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Ore Milled (tonnes) 103,598 105,904
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Zinc (%) 9.1 8.4
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Gold (g/t) 0.8 1.9
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Concentrate Production
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Zinc (tonnes) 17,176 16,051
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Recovery (%) 92.0 89.1
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Grade (%) 50.8 49.2
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Gold (tonnes) 1,181 942
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Recovery (%) 48.2 53.0
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Grade (g/t) 33.9 113.3
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Metal in Concentrates
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Zinc (tonnes) 8,720 7,900
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Gold (ounces) 1,287 3,432
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Silver (ounces) 78,216 87,911
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Minesite Operating Costs
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Per tonne milled (U.S.$) $26.33 $26.21
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Total Cash Costs
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Per lb. payable zinc (U.S.$) $0.32 $0.37
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During the quarter, work continued on finalizing an expansion plan for both the mine and mill and on exploration. The exploration work for the quarter focussed on a compilation of all of the geological information amassed in the El Toqui District to date. As a result of a detailed review by an independent qualified person, a new geological model has been developed for the Toqui District, which model holds significant promise. The new geological model indicates that further work is required for confirmation and Breakwater intends to pursue this work during the next two quarters.
Langlois Mine
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The Langlois mine remained on care and maintenance during the period awaiting the return of better zinc prices.
Caribou Mine
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The Caribou mine remained on care and maintenance during the quarter.
Summary
Production in the first quarter from Breakwater's five operating mines is ahead of the 2002 yearly target of 483 million pounds of zinc. Total cash costs were U.S.$0.31 per pound of payable zinc during the first three months of 2002 compared with the Company's forecasted annual total cash costs of U.S.$0.35 as published in the Company's annual report.
Breakwater's financial results are largely dependent on the price of zinc. For the first quarter of 2002 realized prices averaged U.S.$0.37 per pound of zinc (U.S.$813 per tonne) which was better than the U.S.$0.35 per pound (U.S.$780 per tonne) that the Company had forecast for the period. The sensitivity to earnings and cash flow to changes in the zinc price on an annualized basis is $5.4 million per U.S.$0.01 per pound based on forecasted production. In addition, smelter treatment charges were approximately U.S.$12 below the company's forecast for the year and the shipping rates were lower than forecast. Based on production estimates for 2002 a U.S.$10/tonne change in the treatment charge impacts the earnings and cash flow by $6.128 million. It is expected that the financial results for the Company will be released after the market's close on Thursday, May 2, 2002.
This news release contains forward-looking statements. When used in this
news release the words "anticipate", "believe", "intend", "estimate",
"plans", "projects", "expect", "will", "budget", "could", "may", and
similar expressions are intended to identify forward-looking statements.
To the extent that this news release contains forward-looking statements
regarding operating results or business prospects please be advised that
the actual operating results and business performance of the Company may
differ materially from that anticipated, projected or estimated in such
forward-looking statements.
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For further information: Colin K. Benner, President and Chief Executive Officer, (416) 363-4798 Ext. 264; Rene R. Galipeau, Executive Vice President and Chief Financial Officer, (416) 363-4798 Ext. 260
© 2002 Canada Newswire Ltd. |
