VANCOUVER, BRITISH COLUMBIA — (MARKET WIRE) —
The Company is pleased to announce that its Board of Directors has approved the construction of a mill, expected to have a minimum capacity of 6,500 tonnes per day, and the development of an underground resource at its
Third quarter 2011 highlights
— Gold production of 16,279 ounces. — Silver production of 692,121 ounces. — Revenue of
$53.8 million. — Sale of 32,222 gold-equivalent ounces. — Operating cash cost of $506per gold equivalent ounce sold. — Income from operations of $29.0 million. — Positive cash flow from operations before changes in non-cash working capital of $28.7 millionor $0.35per share. — Adjusted net income of $13.2 millionor $0.16per share and a net loss of $1.3 million, or $0.02per share. — Reported additional high-grade gold and silver intercepts at the La Virginia Project. — Filed an independently prepared National Instrument 43-101 compliant technical report on the updated 2010 reserves and resources for the Dolores mine (previously reported by news release on May 4, 2011) on SEDAR and EDGAR.
Financial and Operating Results
Adjusted net income for the quarter ended
Gold and, more significantly, silver production increased in the third quarter and nine-month period of 2011 as compared to the third quarter and nine-month period of 2010 primarily due to higher average gold and silver grades stacked to the leach pad in immediately preceding quarters. Metal grades stacked in 2011 are consistent with plan and have generally increased from the prior year primarily due to sequencing in the open pit and mining practice improvements designed to decrease dilution.
For the current quarter, gold and silver production was lower than planned due to a reduction in cyanide concentration going onto the leach pad and timing of placing ore under irrigation. The reduction in cyanide concentration was a result of the Company’s primary supplier of cyanide declaring force majeure at the end of
In addition, the west side of the phase 2 leach pad suffered a crushed collection pipe that prevented collection of solution in one of two collection pipes. In order to maintain the bulk of production while accessing the affected area for remediation, the east side of the pad was prepared for stacking. While no metal was lost as a result of this event, metal production was delayed during the changeover while new patios were prepared for irrigation. This work is now complete and the area under irrigation has been expanded. In addition, repair of the crushed collection pipe is substantially complete.
The Company expects production to improve in the fourth quarter and shipped over 7,900 ounces of gold and over 274,000 ounces of silver in October.
The third quarter and nine-month period of 2011 compare to 2010 as follows:
————————————————————————– Three months ended Nine months ended September 30 September 30 ————————————————————————– 2011 2010 2011 2010 ————————————————————————– Ore crushed and stacked (tonnes) 1,495,873 1,127,834 4,571,516 4,133,489 ————————————————————————– Strip Ratio 2.13 2.13 1.97 2.32 ————————————————————————– Average gold grade per tonne stacked (gpt) 0.53 0.52 0.52 0.44 ————————————————————————– Average silver grade per tonne stacked (gpt) 42.77 52.99 44.95 35.39 ————————————————————————– Gold production (oz) 16,279 7,447 53,662 40,008 ————————————————————————– Silver production (oz) 692,121 184,887 2,653,620 707,120 ————————————————————————– Sales proceeds (millions) $53.8 $13.6 $179.2 $61.6 ————————————————————————– Gold equivalent volume sold (oz) (1) 32,222 11,170 118,498 53,076 ————————————————————————– Cash operating cost per gold equivalent ounce sold (1) $506 $743 $477 $633 ————————————————————————– Total cash cost per gold equivalent ounce sold (1) $549 $779 $515 $669 ————————————————————————– Gold volume sold (oz) 15,945 8,070 53,708 41,827 ————————————————————————– Average realized gold price (per oz) $1,668 $1,214 $1,517 $1,157 ————————————————————————– Silver volume sold (oz) 693,532 202,800 2,665,024 729,597 ————————————————————————– Average realized silver price (per oz) $39.22 $18.74 $36.66 $18.09 ————————————————————————– (1) Gold equivalent ounces sold includes gold ounces sold and silver ounces sold converted to a gold equivalent based on the ratio of actual realized gold price to actual realized silver price. Gold-equivalent ounces sold in the third quarter and nine-month period of 2011 were estimated using a 43 to one silver to gold ratio and a 41 to one silver to gold ratio, respectively (2010 – 65 to one ratio and 64 to one ratio, respectively).
The complete unaudited condensed consolidated interim financial statements and accompanying Management’s Discussion and Analysis are available at www.sedar.com or on the Company’s website at www.minefinders.com.
The Company’s Board of Directors recently approved the addition of a mill to complement the existing heap leach operation at Dolores. During the third quarter tender documents were issued to certain independent mine engineering firms for the preparation of detailed engineering design. The Company is in the process of reviewing bids and the chosen engineering firm is expected to begin detailed engineering work in the fourth quarter of 2011 and construction in the first quarter of 2012, subject to the receipt of permitting. Concurrently, the Company is accelerating the development of an underground exploration program below the existing open pit at Dolores. This work will include engineering, procurement of underground equipment and upon receipt of final permits, construction of an underground portal and decline.
Remediation work on the phase 1 leach pad is progressing and to date has included excavation of approximately 2.2 million tonnes to fully expose the affected area. Recent assessment of the excavated area on the phase 1 leach pad shows more damage to the liner than anticipated and indicates the liner may be impaired upslope from the excavated area. Accordingly, the Company is assessing various options to fully remediate the liner. The remaining low grade material on the phase 1 leach pad consists of approximately 8.3 million tonnes containing an estimated 3,800 recoverable gold ounces and 575,000 recoverable silver ounces. This material will be reserved for future processing, the manner of which will be determined based on the resolution of a remediation plan for the phase 1 pad.
During the third quarter the Company received the most significant permits required from the relevant Mexican authorities for the Board to approve, and for management to begin to initiate, the construction of a mine at
Initial site access and infrastructure as well as adequate water supplies needed to operate the mine are currently being established. The recruitment of senior personnel necessary to construct and operate
The project has an initial mine life of approximately six years with current proven and probable mineral reserves of 316,000 ounces of gold and 4.5 million ounces of silver.
Exploration drilling at La Virginia is progressing and results continue to be encouraging. Two core rigs are currently dedicated to the project and the Company plans to add a third core rig before the end of the year. Drilling will continue to follow up on encouraging intercepts located in the three main zones and will also be extended to cover an area to the south of the existing zones.
Investor Conference Call
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