Acadian Mining Q3 results show significant improvement over Q2 - Production outlook for Q4 is positive
Mon Nov 3, 1:06 PM
ca.news.finance.yahoo.com
Trading Symbol: ADA:TSX; C2Z-Frankfurt
Shares Outstanding: 153,357,907
HALIFAX, Nov. 3 /CNW/ - Acadian Mining Corporation (TSX: ADA.TO) ("Acadian" or the "Company") announced its third quarter financial results for the nine months ended September 30, 2008 and information on its Scotia Mine operations, highlights of which are presented in Tables 1 and 2 below. Complete financial statements and management's discussion and analysis of results are available on the regulatory filing site www.sedar.com and the Company's website www.acadianmining.com and should be read in conjunction with this news release.
The Company recorded a profit from operations of $22,279 and a consolidated loss of $158,729 on revenues of $8,697,156 from zinc and lead concentrate sales for the quarter. The consolidated loss reflects the recognition of the Company's 29.18% interest in the loss of $189,874 reported for the quarter by affiliate Royal Roads Corp. Although Q3 results are a dramatic improvement over Q2, performance was negatively impacted by decreasing prices for zinc and lead. A sales revenue protection program initiated early Q3 forestalled negative pricing adjustments which significantly impacted results in the previous quarter. This program is continuing in Q4.
Combined zinc and lead sales of 14,034,896 pounds represents a 51.9% increase in sales in Q3 versus Q2, and reflects significant overall improvements in operations in both the open pit and the mill.
Cash cost per pound of payable metal (zinc and lead) sold for the period was $0.51, a decrease of $0.27 or 34.6% from the previous quarter. Revenue realized per pound of metal (zinc and lead) sold for the period was $0.62, an increase of $0.22 or 55.0% from the previous quarter.
Table 1 - Financial Highlights - Quarter ended September 30, 2008 vs.
Q1 & Q2-2008
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Q3-2008 Q2-2008 Q1-2008
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$ $ $
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Revenue 8,697,156 3,688,127 9,832,088
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Operating income (loss) 22,279 (5,658,985) 950,997
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Net income (loss) (158,729) (5,762,413) 912,173
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Income (loss) per share (0.001) (0.04) 0.01
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Cash and equivalents 469,958 137,683 1,285,667
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Working capital (1,828,502) (3,826,266) 5,483,883
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Total assets 66,372,976 61,977,699 64,223,241
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Table 2 - Operational Highlights - Quarter ended September 30, 2008 vs.
Q2 & Q3-2008
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Production Q3 - 2008 Q2 - 2008 Q1 - 2008
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Ore milled Tonnes 181,229 189,200 173,433
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Head grade - zinc Percent 3.10 2.13 1.99
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Head grade - lead Percent 1.07 1.03 1.09
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Recovery - zinc Percent 80.90 82.65 75.21
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Recovery - lead Percent 79.98 86.04 87.42
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Zinc concentrate Tonnes dry 7,821 5,592 4,253
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Zinc concentrate Grade % 56.80 56.80 54.64
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Zinc metal Tonnes 4,442 3,176 2,324
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Zinc metal Pounds 9,793,495 7,002,374 5,123,862
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Lead concentrate Tonnes dry 2,070 2,248 2,116
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Lead concentrate Grade % 71.70 70.74 70.15
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Lead metal Tonnes 1,484 1,590 1,484
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Lead metal Pounds 3,272,067 3,505,832 3,505,832
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Metals Sold - Summary
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Zinc Tonnes 4,484 2,686 2,568
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Zinc Pounds 9,882,560 5,921,156 5,661,589
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Lead Tonnes 1,884 1,584 1,895
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Lead Pounds 4,152,336 3,316,783 4,178,026
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Zinc & lead Total pounds 14,034,896 9,237,939 9,839,615
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Cost of production
sold $7,147,572 $7,189,056 $7,124,843
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Cost of production
sold Per lb. Zn & Pb $0.51 $0.78 $0.72
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Cost of production
sold Per tonne milled $39.44 $37.98 $35.06
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Revenue realized Per lb. Zn & Pb $0.62 $0.40 $1.00
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Revenue realized Per tonne milled $47.99 $19.49 $56.69
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The 181,229 tonnes of ore processed during the quarter was 102% of plan. The ore grades for the period of 3.10% zinc and 1.07% lead were 97% and 82% of plan respectively. Zinc concentrate production for the quarter was 106% of plan with concentrate grades at 98% of plan and recovery at 96% of plan. Lead concentrate production was 67% of plan with concentrate grades at 100% of plan and recovery at 89% of plan. Zinc and lead recoveries in the mill were 81% and 80% respectively, a slight decrease over Q2 recoveries and is attributable to decreased performance of the flotation circuit during the hot summer months.
Forecast
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Further improvement in production is expected in Q4 and is expected to mitigate to a degree, the lower metal prices already being experienced. Production for Q4 is planned at 206,000 tonnes milled at a feed grade of 3.62% zinc and 1.14% lead and is expected to realize 16.9 million pounds payable metal (12.5 million pounds zinc and 4.4 million pounds lead) in concentrates. Payable metals to the mine are reduced by transportation costs, smelter charges and government royalties.
Based on the above forecast, 2008 production is expected to be 750,000 tonnes milled at a grade of 2.75% zinc and 1.08% lead, equating to approximately 32.0 million pounds of payable zinc and 14.7 million pounds of payable lead in concentrates. Total 2008 concentrate production is expected to be on target for zinc at 30,000 tonnes and to be 17% below target for lead at 10,000 tonnes versus plan of 12,000 tonnes.
Concentrate production for October, 2008 is at 103% of plan and mill head grades average for the month are at 3.93% zinc and 1.07% lead. Mill recoveries have improved significantly over Q3 with the zinc recovery at 89.3% at a 57% zinc concentrate grade and the lead recovery at 89.5% at a 70% lead concentrate grade.
A cost reduction program continues at Scotia Mine with the objective of protecting the operating margin from further erosion in the event of further decreases in metal prices. Personnel reduction was unfortunately required to facilitate achieving the necessary production cost targets, and as a result staff has been reduced by 27. Total mine staff now number 108. Other significant production cost savings are expected when a new electrical substation is commissioned in early November, replacing a diesel powered genset powering the pit pumps, and a new crushing unit is acquired and commissioned. The acquisition of the new crusher which would replace a rental unit is subject to obtaining funding of approximately $1.2 million. The rental unit has been instrumental in increasing throughput from 2,000 to 2,400-2,500 tpd, and the new unit is expected to increase throughput further to 2,700 tpd.
The recent drop in the world price for oil is favourably impacting mining and trucking costs, and in addition, ocean freight rates have also declined. The reduction in these cost centres, as well as those under Acadian's control, should enable the Company to improve its operating margin provided there are no further steep declines in metal prices.
Management's Opinion
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Will Felderhof, President and CEO stated, "We are very pleased with the huge improvement in performance in Q3, however, we recognize that in these very challenging times with very low metal prices forcing mines worldwide to curtail production or close down, it is crucial that Acadian continue its efforts to ratchet down production costs. We believe metal prices are in an oversold situation and that as normal market fundamentals once again prevail, prices will rise quickly. As the global economy stabilizes and with a focus on cost control, Acadian should be in a position to sell into this rising market when it occurs."
Forward Looking Statement
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Certain information regarding the Company contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Company's control, and that future events and results may vary substantially from what the Company currently foresees. Discussion of the various factors that may affect future results is contained in the Company's 2007 Annual Report which is available at www.sedar.com. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
Other
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For additional information on the Company's properties and activities, please visit our web site at www.acadianmining.com.
No regulatory authority has approved or disapproved the contents of this
release.
Contacts
G. William Felderhof
President & CEO
Terry F. Coughlan
Vice President
(902) 444-7779
Toll Free: (877) 444-7774
mail@acadianmining.com |
