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Re: 2007 News Releases - Tuesday, September 11, 2007
Pacific Rim Announces Fiscal 2008 First Quarter Results
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News Release #07-08
Pacific Rim Mining Corp. ("Pacific Rim" or "the Company") is pleased to
announce its financial results for the three months ended July 31, 2007
representing the Company's first quarter of fiscal 2008 ("Q1 2008").
Complete financial statements will be included in the Company's First
Quarterly Report to be mailed to shareholders shortly. All monetary
amounts are expressed in United States ("US") dollars unless otherwise
stated.
Overview
Pacific Rim is a growth-oriented, revenue-generating, environmentally
and socially responsible gold exploration company with operations in
North America and exploration assets in Central and South America. The
Company is expanding and developing its advanced-stage, high grade El
Dorado gold project in El Salvador and is actively exploring a pipeline
of grassroots gold projects. Pacific Rim's goal is to become a low
cost, intermediate level gold producer. The Company's shares trade
under the symbol PMU on both the Toronto Stock Exchange ("TSX") and the
American Stock Exchange ("AMEX").
Financial Highlights (all amounts in thousands of US dollars, except
per share amounts)
Financial Highlights
(all amounts in thousands of US dollars, except per share amounts)
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Q1 2008 Q1 2007
(three months (three months
ended July 31, ended July 31,
2007) 2006)
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Revenue $ 1,339 $ 1,610
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Operating Costs $ 139 $ 966
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Exploration expenditures $ 2,346 $ 2,185
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Net income (loss) for the period $ (1,459) $ (2,046)
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Per share (basic and diluted) $ (0.01) $ (0.02)
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Cash Flow (used) for operating
activities $ (3,003) $ (2,498)
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Net increase (decrease) in cash and
cash equivalents $ (1,624) $ (849)
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Common shares outstanding (average) 109,781,960 105,962,064
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Fully diluted shares (average) 113,783,228 111,924,564
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July 31, 2007 April 30, 2007
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Cash and cash equivalents $ 872 $ 2,496
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Total assets $ 19,551 $ 21,494
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Total liabilities $ 4,199 $ 4,857
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Working Capital $ 7,006 $ 9,297
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2008 First Quarter Developments
Exploration
Pacific Rim's primary on-going exploration project is the
advanced-stage El Dorado gold project in El Salvador. During Q1 2008,
the Company's exploration efforts focused on continuing to drill
delineate the Balsamo gold zone on the El Dorado project in preparation
for an updated resource estimate for the project.
Drilling at the Balsamo deposit during Q1 2008 focused on defining its
upper limits and stepping out from the high grade area. The Balsamo
deposit is deeper than the nearby Minita and South Minita deposits and
remains open at depth. It is hosted by a north-south structure that
will require additional broad step out drilling in both strike
directions to close off the known mineralization as well as to search
for additional high grade zones. The Balsamo structure can be projected
over a distance of several kilometers, the majority of which has never
been drill tested.
During the course of its Balsamo deposit drilling, the Company has
identified another new gold-bearing vein parallel to and 200 meters
east of the Balsamo structure. The Cerro Alto vein has been
intersected in a number of Balsamo-focused drill holes and locally
contains attractive grades. Deeper drilling is required to determine
the full extent of the gold mineralization in the Cerro Alto vein.
The Company has scheduled its resource consultants to perform an
updated resource estimate for the El Dorado project, including the
Balsamo deposit, this fall, provided drilling on the Balsamo and Cerro
Alto veins is completed as expected.
Pacific Rim's exploration activities elsewhere in El Salvador during Q1
2008 included ongoing surface mapping, sampling and target generation
programs at the Zamora-Cerro Colorado project, and regional
reconnaissance elsewhere in El Salvador as part of its project
generation efforts. Exploration work at the Santa Rita project
remained temporarily suspended during Q1 2008.
Results of Operations
The consolidated net loss for Q1 2008 was $(1.5) million or $(0.01) per
share compared to a net loss of $(2.0) million or $(0.02) per share in
Q1 2007. The $0.5 million improvement in net loss period over period
is primarily a result of an increase in mine operating income ($1.1
million for Q1 2008 compared to $0.6 million for Q1 2007) and foreign
exchange gain ($0.3 million for Q1 2008 compared to a foreign exchange
loss of $(0.2) million for Q1 2007).
Revenue
Revenue, consisting entirely of the sale of gold from the
Denton-Rawhide mine, was $1.3 million in Q1 2008, compared to $1.6
million in Q1 2007. While gold production increased during Q1 2008
(3,042 ounces) compared to the same period a year earlier (2,977
ounces), the amount of gold sold during the current period was 1,500
ounces, compared to 2,500 ounces of gold sold during Q1 2007. The
decrease in gold sales (and related increase in bullion inventory on
the Company's balance sheet; $0.8 million at the end of Q1 2007 and
$0.8 million at the end of fiscal 2007 compared to $1.9 million at the
end of Q1 2008) was offset in part by improvements in the realized gold
price ($679 per ounce for Q1 2008 compared to $644 per ounce for Q1
2007). As a result, revenue for the first quarter of fiscal 2008 was
$0.3 million lower than the same period of fiscal 2007.
Mine operating expenses were $0.2 million in Q1 2008 compared to $1.0
million in the same period a year earlier, reflecting a $0.8 million
reduction in mine operating costs. The lower operating costs booked
for Q1 2008 compared to Q1 2007 reflects the increase in bullion
inventory on hand ($1.9 million at July 31, 2007 compared to $0.8
million at April 30, 2007) and resulting decreased sales revenues
during the period (see above). Depreciation, depletion and
amortization costs at Denton-Rawhide reflected little change quarter
over quarter ($0.1 million during Q1 2008 and a negligible amount
during Q1 2007) because the cost of the mine's property, plant and
equipment has been almost completely amortized as the mine nears the
end of its projected life.
Decreased mine operating expenses and marginally lower revenues for the
current quarter compared to the same period a year earlier led to a
$0.5 million improvement in mine operating income, from $0.6 million in
Q1 2007 to $1.1 million in Q1 2008.
Expenses
Net non-operating expenses decreased marginally during Q1 2008 to $2.6
million from $2.7 million during Q1 2007. The minor increase in
non-operating expenses is attributable to a $0.2 million increase in
direct general and administrative costs ($0.6 million during Q1 2008
compared to $0.4 million during Q1 2007). Direct exploration expenses
were essentially unchanged ($2.3 million during Q1 2008 compared to
$2.2 during Q1 2007). The small increases in exploration and general
and administrative expenses quarter over quarter were offset by a $0.3
million unrealized foreign exchange gain during Q1 2008 (compared to an
unrealized foreign exchange loss of $(0.2) million for the same period
a year earlier) reflecting the impact of the US-Canadian dollar
exchange rate on the Company's Canadian dollar-denominated investments
on hand period over period.
Summary
The net effect of the $0.5 million increase in mine operating income
and $0.1 million decrease in non-operating expenses is a $0.5 million
decrease in loss for the period from $(2.0) million or $(0.02) per
share during Q1 2007 to $(1.5) million or $(0.01) per share during Q1
2008.
Liquidity and Capital Resources
Cash
During Q1 2008 Pacific Rim's cash and cash equivalents decreased by
$1.6 million, from $2.5 million at April 30, 2007 to $0.9 million at
July 31, 2007. At July 31, 2007, temporary investments and bullion were
$5.6 million and $1.9 million respectively, compared to $7.9 million
and $0.8 million respectively at April 30, 2007. The total of cash and
cash equivalents, temporary investments and bullion (which in the
Company's opinion are collectively equivalent to cash, being
immediately available to cover short-term cash requirements) was $8.3
million at July 31, 2007 compared to $11.2 million at April 30, 2007, a
decrease of $2.9 million.
The Company's temporary investments consist of bankers acceptances
guaranteed by large North American banking institutions, are callable
on demand and pay interest for the period of the investment. The
Company has no exposure to asset backed commercial paper.
During Q1 2008 the Company received cash flow from the following
sources: $2.8 million from the redemption of temporary investments;
and, $0.1 million in interest income. Outlays of cash during Q1 2008
included: $2.9 million on direct exploration expenditures; $0.6 million
on direct general and administrative expenses; and, $1.0 million on the
purchase of property, plant and equipment, including the purchase of
surface rights required for the proposed mine infrastructure site at
the El Dorado project. The net of these cash inflows and outlays was a
decrease in cash and cash equivalents during Q1 2008 of $1.6 million.
Working Capital
At July 31, 2007 the book value of Pacific Rim's current assets stood
at $8.9 million compared to $11.8 million at April 30, 2007. The
decrease in current assets is primarily a result of decreases in cash
and cash equivalents (from $2.5 million at April 30, 2007 to $0.9
million at July 31, 2007) and temporary investments (from $7.9 million
at April 30, 2007 to $5.6 million at July 31, 2007), offset in part by
increases in bullion inventory ($0.8 million at April 30, 2007 compared
to $1.9 million at July 31, 2007). The Company's total assets at July
31, 2007 were $19.6 million compared to $21.5 million at April 30,
2007, with property, plant and equipment increasing by $0.9 million
(from $6.3 million at April 30, 2007 to $7.2 million at July 31, 2007),
and closure fund balances essentially unchanged.
At July 31, 2007, Pacific Rim had current liabilities of $1.9 million,
a $0.6 million decrease from the April 30, 2007 amount of $2.5 million.
The Company has no debt.
The $2.9 million decrease in current assets combined with the $0.6
million reduction in current liabilities, resulted in a $2.3 million
reduction in working capital from $9.3 million at April 30, 2007 to
$7.0 million at July 31, 2007.
The Company's exploration plans for the remainder of the current fiscal
year are:
- to complete drilling of the Balsamo deposit and utilize the data
generated to calculate an updated resource estimate for the El Dorado
project
- to complete work on the El Dorado project feasibility study,
incorporating the updated resource estimate, which will consider an
expanded operation with greater annual throughput than that envisioned
in the January 2005 pre-feasibility study. The El Dorado feasibility
study commenced in late fiscal 2006 and was originally expected to be
completed during fiscal 2007 before being temporarily halted in March
2007 order to include the important Balsamo deposit discovery
- to continue exploration drilling within the El Dorado project and
test high priority gold targets discovered in the southern part of the
El Dorado district
- to resume exploration work, including a Phase 1 drill program, at
the Santa Rita project
- to generate drill targets on the Company's grassroots projects, and
identify additional project acquisition opportunities
The Company anticipates that its fiscal 2008 exploration plans as
outlined above will cost approximately $8.0 million, though a majority
of this anticipated spending is discretionary and can be adjusted
according to short-term cash flow predictions. In order to complete
this program as planned the Company may require additional financing
during fiscal 2008, or alternatively may be required to reduce its
exploration expenditures. Pacific Rim forecasts production levels,
revenue and cash flow from the Denton-Rawhide gold mine roughly 6
months in advance due to the variability in recoveries that are
inherent in a residual heap leach operation, and the volatility in gold
price. Denton-Rawhide is expected to continue to contribute funds in
fiscal 2008 that will be used for exploration or general and
administrative expenses. In addition, the Company expects to receive a
$1.4 million payment related to the sale of the Andacollo mine (see
Section 2) during its second quarter of fiscal 2008. Furthermore, the
Company anticipates cash flow from tipping fees related to the sale of
the Denton-Rawhide open pits (see Section 3), if as and when the
Denton-Rawhide Property Purchase and Sale Agreement closes as expected
during the Company's second quarter of fiscal 2008. Additional
financing will be required if the Company is able to commence
development activities (construction of an access / haulage ramp) at El
Dorado during the coming fiscal year.
Production
Pacific Rim is 49% owner of the Denton-Rawhide gold mine, located near
Fallon, Nevada. Kennecott Minerals Company, a subsidiary of Rio Tinto
Plc, is 51% owner and operator of the mine. Denton-Rawhide is a
residual heap leach operation that ceased active mining in October
2002. Crushing and stacking of a low-grade ore stockpile continued
until May 2003 at which time the operation commenced the residual leach
and reclamation phase.
Pacific Rim's share of production from the Denton-Rawhide operation
during the first quarter of fiscal 2008 was 3,042 ounces of gold and
26,634 ounces of silver at a total cash production cost of $246 per
ounce of gold produced (net of silver credits). During the first
quarter of fiscal 2007 Pacific Rim's share of production was 2,977
ounces of gold and 26,905 ounces of silver at a total cash production
cost of $216 per ounce of gold produced (net of silver credits).
Production costs per ounce of gold increased quarter over quarter as
the per-ounce costs associated with residual leaching as the
Denton-Rawhide operation nears the end of its mine life increase. Q1
2008 unit production costs include a credit for silver sales where no
corresponding credit was realized in Q1 2007.
Gold production from Denton-Rawhide during the first quarter of fiscal
2008 was approximately 2% higher than in the same period of fiscal
2007; a reversal of the predominant trend toward declining production
at Denton-Rawhide typical of the natural slowdown in recovery that
occurs in the residual leach phase of a heap leach operation. The
improvement in gold production at Denton-Rawhide during Q1 2008
compared to Q1 2007 is a result of on-going production optimization
efforts by the mine operators to maximize the recovery of gold from the
heap leach pile. While these efforts have and may continue to result
in short term improvements in production, recoveries are expected to
continue to decline overall as the residual leaching process continues.
For the purposes of internal budgeting, the Company's projections for
Denton-Rawhide production look forward no more than six months at a
time.
Outlook
Pacific Rim's available funds include current cash and cash equivalent
balances plus short term liquid investments, an anticipated $1.4
million payment due in September 2007 related to the sale of the
Andacollo mine, and projected cash flow from gold production at the
Denton-Rawhide mine, which is expected to continue through fiscal 2008
and beyond, albeit with decreasing production rates and cash flows as
the operation progresses through the residual leaching phase.
A substantial portion of these funds will be spent on the El Dorado
gold project in El Salvador during the remainder of fiscal 2008. The
Company expects to complete its ongoing Balsamo deposit drill program
in its second quarter of fiscal 2008, and calculate an updated resource
estimate for the El Dorado project by the end of December 2007.
Subsequent to the completion of the updated resource estimate, the El
Dorado feasibility study will resume (having been temporarily postponed
during fiscal 2007 in order to gather the data necessary to include the
Balsamo deposit in the mine plan), with an anticipated completion
before the end of fiscal 2008. The El Dorado feasibility study will
consider the economic impact of including the South Minita and Balsamo
deposits in the El Dorado mine plan (as envisioned in the January 2005
prefeasibility study) and the possibility of expanding the annual
throughput of the proposed operation. In addition the Company intends
to continue exploration drilling within the El Dorado project,
concentrating on testing the high priority gold targets it has defined
in the southern part of the El Dorado district and will continue its
social and environmental initiatives. Funds currently available in
cash and cash equivalents and temporary investments, plus anticipated
cash flow from gold production at the Denton-Rawhide mine and payments
related to the sale of the Andacollo mine are marginally sufficient to
conduct the Company's planned fiscal 2008 exploration programs but are
not sufficient to conduct development activities at El Dorado.
The Company awaits receipt of an exploitation concession for the
central El Dorado project area, which application is currently in
process. The Company intends to commence development activities
(construction of an access / haulage ramp) on the El Dorado property
once it is able to evaluate the detailed economics outlined in the full
feasibility study expected to be completed by the end of fiscal 2008,
and will further depend on obtaining the required mining and
environmental permits and sufficient financing to proceed.
Outside of the El Dorado project, during the remainder of fiscal 2008
the Company intends to spend a portion of its available funds on a
Phase 1 drill program at the Santa Rita gold project in El Salvador and
to conduct early stage exploration initiatives in the lead up to
exploration drilling at its other grassroots projects in El Salvador
and Chile.
National Instrument 43-101 Disclosure
Mr. William Gehlen, Vice President Exploration, supervises Pacific
Rim's exploration work on the El Dorado project. Mr. Gehlen is a
Certified Professional Geologist with the AIPG (No. 10626), an employee
of Pacific Rim and a Qualified Person as defined in NI 43-101.
Mr. David Ernst, Chief Geologist, supervises Pacific Rim's project
generation initiatives. Mr. Ernst is geologist licensed by the State
of Washington, an employee of Pacific Rim Mining Corp. and a Qualified
Person as defined in National Instrument 43-101.
Pacific Rim's sampling procedures follow the Exploration Best Practices
Guidelines outlined by the Mining Standards Task Force and adopted by
The Toronto Stock Exchange. Samples are assayed using fire assay with a
gravimetric finish on a 30-gram split. Quality control measures,
including check- and sample standard-assaying, are being implemented.
Samples are assayed by Inspectorate America Corporation in Reno, Nevada
USA, an ISO 9002 certified laboratory, independent of Pacific Rim
Mining Corp.
The June 2006 El Dorado resource estimate was prepared by Mr. Steven
Ristorcelli, P.Geo., of Mine Development Associates, Reno, Nevada. Mr.
Ristorcelli is an independent Qualified Person as defined in NI 43-101.
The resource estimate conforms to current CIM Standards on Mineral
Resources and Reserves. A technical report in support of the updated
El Dorado resource estimate presented above was filed with SEDAR in
July 2006. The report was co-authored by Mr. Steven Ristorcelli,
P.Geo., and Mr. Peter Ronning, P.Eng., each of whom are independent
Qualified Persons as defined in NI 43-101.
The January 2005 El Dorado pre-feasibility study is supported by a
technical report prepared for Pacific Rim Mining Corp. by SRK
Consulting (US) Inc. of Denver Colorado, entitled "Pre-Feasibility
Study, El Dorado Project, El Salvador", dated January 21, 2005 and
publicly available on SEDAR (www.sedar.com). The primary author of the
report is Mr. William F. Tanaka, a Qualified Person independent of
Pacific Rim, as defined in NI 43-101. Mr. Tanaka is a member of the
SME and the mAUSIMM.
The terms "measured resource", "indicated resource" and "inferred
resource" used in this document are Canadian mining terms as defined in
NI 43-101 and CIM Standards on Mineral Resources and Mineral Reserves.
Mineral resources that are not mineral reserves have not been
demonstrated to be economically and legally extractable. Mineral
resource estimates do not account for mineability, selectivity, mining
loss and dilution. It should not be assumed that all or any part of a
resource will ever be converted to a reserve. These mineral resource
estimates include inferred mineral resources that are normally
considered too speculative geologically to have economic considerations
applied to them that would enable them to be categorized as mineral
reserves. There is also no certainty that these inferred resources
will be converted to measured and indicated resource categories through
further drilling, or into mineral reserves once economic considerations
are applied.
The term "bankable" in reference to a feasibility study is defined as a
comprehensive analysis of a project's economics and is used by the
banking industry for financing purposes.
On behalf of the board of directors,
"Thomas C. Shrake"
Thomas C. Shrake
President and CEO
The TSX and The AMEX have neither reviewed nor accept responsibility
for the adequacy or accuracy of this release.
Forward-Looking Statements
This discussion contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934 concerning the
Company's plans for its properties, operations and other matters.
These statements relate to analyses and other information that are
based on forecasts of future results, estimates of amounts not yet
determinable and assumptions of management. Statements concerning
reserves and mineral resource estimates may also be deemed to
constitute forward-looking statements to the extent that they involve
estimates of the mineralization that will be encountered if the
property is developed, and in the case of mineral reserves, such
statements reflect the conclusion based on certain assumptions that the
mineral deposit can be economically exploited. Any statements that
express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or
future events or performance (often, but not always, using words or
phrases such as "expects" or "does not expect", "is expected",
"anticipates" or "does not anticipate", "plans", "estimates" or
"intends", or stating that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved) are
not statements of historical fact and may be "forward-looking
statements." Forward-looking statements are subject to a variety of
risks and uncertainties, which could cause actual events or results to
differ from those reflected in the forward-looking statements,
including, without limitation:
- risks related to gold price and other commodity price fluctuations;
- risks and uncertainties relating to the interpretation of drill
results, the geology, grade and continuity of mineral deposits;
- risks related to the inherent uncertainty of production and cost
estimates and the potential for unexpected costs and expenses;
- results of initial feasibility, prefeasibility and feasibility
studies, and the possibility that future exploration, development or
mining results will not be consistent with the Company's expectations;
- mining and development risks, including risks related to accidents,
equipment breakdowns, labour disputes or other unanticipated
difficulties with or interruptions in production;
- the potential for delays in exploration or development activities or
the completion of feasibility studies;
- the uncertainty of profitability based upon the Company's history of
losses;
- risks related to failure to obtain adequate financing on a timely
basis and on acceptable terms;
- risks related to environmental regulation and liability;
- risks related to hedging activities;
- political and regulatory risks associated with mining and
exploration; and
- other risks and uncertainties related to the Company's prospects,
properties and business strategy.
Should one or more of these risks and uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described in forward-looking statements. Forward
looking statements are made based on management's beliefs, estimates
and opinions on the date the statements are made and the Company
undertakes no obligation to update forward-looking statements if these
beliefs, estimates and opinions or other circumstances should change.
Investors should review the Company's disclosure of Risks and
Uncertainties in its Annual and Quarterly reports as filed on SEDAR in
Canada and EDGAR in the U.S., and are cautioned against attributing
undue certainty to forward-looking statements.
Cautionary Note to U.S. Investors Concerning Estimates of Resources and
Reserves
We advise U.S. Investors that while the terms "mineral resource",
"measured mineral resource", "indicated mineral resource" and "inferred
mineral resource" are recognized and required to be reported by
Canadian regulations, the U.S. Securities and Exchange Commission does
not recognize them. As such, information contained in this document
concerning descriptions of mineralization and resources under Canadian
standards may not be comparable to similar information made public by
U.S. companies subject to the reporting and disclosure requirements of
the U.S. Securities and Exchange Commission. "Inferred mineral
resources" have a great amount of uncertainty as to their existence and
a great uncertainty as to their economic and legal feasibility. It
cannot be assumed that all or any part of a "mineral resource" will
ever be upgraded to a higher category. U.S. investors are cautioned
not to assume that any part or all of an "inferred mineral resource"
exists, or is economically or legally mineable. U.S. investors are
also cautioned not to assume that any part or all of the mineral
deposits in the "measured mineral resource" or "indicated mineral
resource" categories will ever be converted into reserves.
"Mineral reserves" are calculated in accordance with NI 43-101 as
required by Canadian securities regulatory authorities. For United
States reporting purposes, SEC Industry Guide 7 (as interpreted by the
staff of the U.S. Securities and Exchange Commission) applies different
standards for the disclosure of reserves. U.S. investors are cautioned
that the reserves presented above, while in compliance with Canadian
standards and regulations, do not meet the following requirements of
reserve disclosure under U.S. Securities and Exchange Commission
guidelines: the Minita reserves are based on a pre-feasibility level
study (as allowed under Canadian regulations) rather than a "final" or
"bankable" level feasibility study as required by the U.S. Securities
and Exchange Commission; and, the Minita reserves are calculated using
gold and silver prices of $350 and $5.00, respectively (the industry
standard current at the time of the Minita reserve calculation), rather
than the historic three year average prices required by the U.S.
Securities and Exchange Commission (which as at January 21, 2005, the
date of the Minita reserve calculation, would have been a $360.94 gold
price and $5.38 silver price).
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Copyright (c) 2007 PACIFIC RIM MINING CORP. (PMU) All rights reserved.
For more information visit our website at
http://www.pacrim-mining.com/ or send mailto:info@pacrim-mining.com
Message sent on Tue Sep 11, 2007 at 10:59:36 AM Pacific Time
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