International Minerals Reports Strong Pallancata Mine Operating Results;Initial US$1.2 million Cash Dividend Received
Mon. August 24, 2009; Posted: 12:20 AM
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SCOTTSDALE, Ariz., Aug 24, 2009 (BUSINESS WIRE) -- IMZLF | Quote | Chart | News | PowerRating -- International Minerals Corporation (TSX: IMZ)(SIX: IMZ | Quote | Chart | News | PowerRating) reports that the Pallancata silver-gold mine in southern Peru more than doubled silver production in the calendar second quarter ("Q2 2009") to 1.9 million ounces (753,200 silver ounces attributable to IMZ | Quote | Chart | News | PowerRating) compared to the second quarter of 2008.
The Pallancata Mine is jointly owned by IMZ (40% interest) and Hochschild Mining plc ("Hochschild", 60% interest and operatorship). All dollar numbers are in U.S. Dollars.
Highlights for Q2 2009 at the Pallancata Mine include:
-- Silver production increased from first calendar quarter 2009 ("Q1 2009") by 45% to approximately 1.9 million ounces;
-- Record quarterly production of 753,200 silver ounces attributable to IMZ;
-- IMZ's total cash costs per ounce of silver (net of gold credit) lowered by 6% to $6.20 from Q1 2009;
-- Payment of an initial cash dividend of approximately $3.1 million (of which IMZ received approximately $1.2 million for its 40% interest);
Steve Kay, President and CEO of IMZ, said, "Pallancata continues to show strong numbers, both at the production level and on a revenue/cost basis. Receiving a first-time cash dividend of approximately $1.2 million achieves another significant milestone for IMZ at Pallancata and we are confident that it is the first of many to come in the future."
Cash Flow
Using $12 per ounce silver, IMZ's share of cash flow from operations at Pallancata for calendar year 2009 is expected to be between $14 million and $15 million, based on the current IMZ production estimate of approximately 7.0 million ounces of silver and 25,000 ounces of gold for calendar year 2009 (on a 100% basis) and costs, but before capital expenditure requirements (see below). IMZ estimates that each additional one dollar increase in the silver price would add approximately $3 million to IMZ's share of cash flow from operations.
IMZ's 40% share of the projected capital expenditures in calendar year 2009 of approximately $32 million, (primarily for mine expansion from 2,000 tonnes per day ("tpd") to 3,000 tpd in calendar 2009) is expected to be fully funded by the operational cash flow discussed above.
IMZ uses an equity accounting basis to record its interest in the Pallancata Mine.
Production
Table 1 below shows that Pallancata's Q2 2009 production compared to Q1 2009 increased by 45% to approximately 1.9 million ounces (100% basis) due to the ramp-up in mining operations during 2009.
Recently, the Pallancata Mine achieved the targeted 50% increase in production to 3,000 tpd. Since the closing of the Hochschild wholly-owned Selene Mine in Q2 2009, Pallancata ore now accounts for 100% of the 3,000 tpd design capacity throughput at the Selene processing plant, where the Pallancata ore is toll processed to produce a precious metal float concentrate.
For Q2 2009, direct site costs were $3.73 per ounce of silver and total cash costs were $6.20 per ounce of silver, both after gold by-product credit. These costs are lower by 10% and 6% respectively compared to Q1 2009, due primarily to the higher average grade of silver and higher gold price during Q2 2009.
Table 1: Pallancata Mine Production Highlights (100% Basis; in U.S. Dollars)
On 100% project basis Calendar Calendar Fiscal Year Calendar
Q2 Ended Q1 Ended 2009 Q2 Ended
06/30/09 03/31/09 Ended 6/30/08
6/30/09
Ore mined (tonnes) 208,426 171,413 743,437 88,033
Ore processed (tonnes) 220,288 155,552 709,555 83,517
Average head grade silver (g/t) 306 297 301 339
Average head grade gold (g/t) 1.4 1.3 1.4 1.7
Concentrate produced (tonnes) 1,781 1,223 5,881 847
Silver grade in concentrate (kg/t) 32.9 33.1 32.0 30.5
Gold grade in concentrate (kg/t) 0.13 0.13 0.12 0.12
Silver produced(2) (oz) 1,883,000 1,299,000 6,040,000 829,000
Gold produced(2) (oz) 7,170 4,939 23,114 3,230
Silver sold (payable oz) 2,054,000 1,137,000 5,856,000 796,000
Gold sold (payble oz) 7,360 4,080 21,680 3,130
IMZ Direct Site Costs per oz silver (after $ 3.73 $ 4.16 $ 3.98 $ 3.08
gold
by-product credit)(1,3) ($/oz)
IMZ Total Cash Costs per oz silver (after $ 6.20 $ 6.62 $ 6.42 $ 5.72
gold
by-product credit)(1,4) ($/oz)
Table 2: Pallancata Mine Production Highlights (IMZ 40% Share)
IMZ's 40% Share Calendar Calendar Fiscal Year Calendar
Q2 Ended Q1 Ended 2009 Q2 Ended
06/30/09 03/31/09 6/30/08
Silver produced(2) (oz) 753,200 519,600 2,416,000 331,600
Gold produced(2) (oz) 2,868 1,976 9,246 1,340
Silver sold (oz) 821,600 454,800 2,342,400 329,600
Gold sold (oz) 2,944 1,632 8,672 1,208
Notes to Tables 1 and 2:
1. Head grades for silver and gold are based on the overall metallurgical balance for the process plant.
2. Difference between "produced" metal ounces and "sold" metal ounces is a combination of the smelter metal payability factors and in-process concentrate. Quarterly silver production is shown rounded to hundreds of ounces.
3. Direct Site Costs per ounce silver and Total Cash Costs per ounce silver reflect a "mined ore inventory adjustment". IMZ believes that this calculation more accurately matches costs with ounces of production. (Also see notes 4 and 5 below.)
4. Direct Site Costs per ounce silver comprise direct mining, mined ore inventory adjustment, toll processing and mine general and administrative costs (net of gold by-product credit).
5. Total Cash Costs, using the Gold Institute's definition, comprise: mine operating costs, mined ore inventory adjustment, toll processing costs, mine general and administrative costs, Hochschild's management fee, concentrate transportation and smelting costs, local and provincial taxes (other than federal income tax) and the Peruvian government royalty.
The technical information reported in this news release was reviewed by IMZ's Qualified Person, Technical Manager Nick Appleyard.
Hochschild Mining plc does not accept any responsibility for the adequacy or inadequacy of the disclosure made in this news release and any such responsibility is hereby disclaimed in all respects.
Cautionary Statement:
The Gold Institute calculation of Direct Site Costs and Total Cash Costs are non-Canadian GAAP financial measures, which IMZ management believes are useful in measuring operational performance, and also any forward-oriented financial information provided may not be appropriate in relation to Canadian GAAP reporting. Please refer to the Company's financial statements and notes. Some of the statements contained in this release are "forward-looking statements" within the meaning of Canadian securities law requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this release include statements regarding estimates of production, total cash costs, mine life, resources, cash flow, capital costs and dividends. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks in attaining ramped-up production and processing rates, risks of cost escalation, risks of estimating mineral resources and reserves, variances between mineral reserves and actual mineral production and other risks and uncertainties detailed in the Company's Renewal Annual Information Form for the year ended June 30, 2008, which is available at www.sedar.com under the Company's name. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE: International Minerals Corporation
International Minerals Corporation
Wendy Yang, 303-357-4863
intlminerals.com |
