Malaga Announces Its Q2 Results
Published : August 15, 2012

Net income of $0.2M and cash flow from operating activities of $1.8M

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Keywords :   China | Copper | Diamond | Gold | Lead | Market | Peru | Recovery | Tungsten |

MONTREAL, QUEBEC--(Marketwire - Aug. 15, 2012) - Malaga Inc. ("MLG") (News - Market indicators)(OTCQX:MLGAF) reports its financial results today for the second quarter ended June 30, 2012. The management discussion and analysis and unaudited interim financial statements can be found on the Company's website ( and on SEDAR ( All amounts are in US dollars unless otherwise indicated.

Second Quarter and First Six-Month Highlights

  • Net income of $0.2M for Q2-2012, and $0.3M for the six-month period ended June 30, 2012;
  • Cash flow from operating activities of $1.8M for Q2-2012 and $2.8M for the six-month period;
  • EBITDA of $0.8M for Q2-2012 and $1.4M for the six-month period;
  • Total sales for the quarter of $5.0M and $8.6M for the six-month period;
  • Copper by-product sales for the quarter of $0.6M and $0.7M for the six-month period;
  • Advances on sales of $1.4M to fund the construction of a pilot plant to recover tailings and other programs to increase output;
  • Completion of the first phase of the exploration campaign.

Financial Results

For the second quarter of 2012, Malaga generated an adjusted net income of $0.2M compared to $0.5M in Q2-2011. The decrease is mainly the result of a 13% decrease in sales volume of tungsten (13,600 MTU in Q2-2012 compared to 15,607 in Q2-2011), an 11% decrease in the selling price and a $14 increase in cash cost production per MTU ($203 compared to $189) which results from lower head grade of mineral extracted (0.57% compared to 0.64% in Q2-2011). The rate of production remained constant in Q2 averaging above 350 tpd.

Copper sales were very low in Q1 due to the transportation problems caused by the unusually strong rainfall. In Q2, the Company has been able to recover some of the Q1 loss and the by-product sales amounted to $0.6M, substantially greater than in Q1-2012. The Company will continue to sell the copper by-product for the remainder of the year.

For the second half of the year, Malaga will continue with its development program at the mine, with the construction of a new incline ramp in order to access new ore zones in Huayllapon with higher grades. In addition, the Company has commenced the construction of a pilot plant to recover tungsten in the current tailings pond, which is expected to be completed midway through Q4-2012. Long lead time equipment (pump and screens) have been ordered with estimated delivery by the end of Q3, the detailed engineering and construction plans will be completed during Q3 and the site preparation for the pilot plant has commenced and is ongoing. Assuming a 50% recovery rate, Malaga would produce 31,500 MTU over the next few years from the current tailings pond. With production levels expected to increase in the second half of the year compared to the first, Malaga estimates that the cash cost of production will decrease.

The APT price forecast from Roskill Information Services "Tungsten: Market Outlook to 2016, 10th edition 2011", are between $350/MTU and $440/MTU through 2016 and take into account growing demand and anticipated new sources of supply coming into the market. The current European APT price is between $390/MTU and $415/MTU. The Company believes long-term market fundamentals remain robust with limited availability of tungsten in the market and strong demand for tungsten concentrate.

Continued development at the mine

Malaga continues to accelerate underground development at the Pasto Bueno mine in order to replenish the mined reserves and define new reserves and resources. On a year-to-date basis, 2,136 meters of underground development advances and 678 meters of underground Diamond drilling were completed.

Exploration Campaign

The Company completed its initial exploration campaign on the southern part of the property, the area of the mantos. Results from 14 of 17 drill holes in the mantos show the presence of tungsten ore from traces up to 4.04% W03. This mineralized zone is very different from the northern part of the Pasto Bueno property where Malaga is currently extracting and milling tungsten as the mantos are wider and contains scheelite (CaW04) which supports the potential presence of a skarn at depth, which will need to be proven out with further drilling. Drilling also indicated the presence of gold, copper and other metals in that part of the property.


Hidropesac, owned 49% by Malaga, expects to complete the archaeological and environmental studies during Q3-2012. Then, it will apply for a permanent concession and after approval and commercial agreements and financing secured, construction would commence with the objective to start in early 2013.

Key Financial Data:

  For the three-month periods ended June 30,   For the six-month periods ended June 30,
(in $'000) 2012 2011   2012 2011
Sales 4,958 5,329   8,565 10,586
Cost of sales (including depreciation and depletion) 3,559 3,192   6,058 6,726
Depreciation and depletion 534 560   1,001 1,275
Income from mining activities 1,399 2,138   2,507 3,860
General and administrative expenses 997 1,276   1,844 2,145
Net income 150 1,629   281 2,443
Adjusted net income 148 506   263 1,275
EBITDA 806 1,569   1,377 2,839
Earnings per share basic and diluted $0.00 $0.01   $0.00 $0.01
Cash cost of production per MTU $203 $189   $200 $155
Production in MTU 12,613 13,073   24,556 30,566


Malaga Inc. owns the Pasto Bueno mine in Peru and is one of a few publicly-traded producers of tungsten outside of China. Malaga is a low cost producer due to its gravimetric ore concentration process and the availability of hydroelectric power generated on its property. The Company plans to increase production and continue to explore the property to develop its reserves and resources.


Certain statements in the foregoing may constitute forward‐looking statements which involve known and unknown risks, uncertainties and other factors that may cause Malaga's actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. The information provided reflects management's current expectations regarding future events and performance as of the date of this news release.

Pierre Monet
President & CEO
Malaga Inc.
514 288-3224
Nicole Blanchard
Corporate Strategy and Investor Relations
Sun International Communications
450 973-6600
Data and Statistics for these countries : China | Peru | All
Gold and Silver Prices for these countries : China | Peru | All

Malaga Inc.

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Malaga is a gold and tungsten producing company based in Canada.

Malaga holds various exploration projects in Peru.

Its main asset in production is PASTO BUENO in Peru.

Malaga is listed in Canada and in United States of America. Its market capitalisation is CA$ 918 375 as of today (US$ 881 456, € 674 490).

Its stock quote reached its highest recent level on June 20, 2008 at CA$ 0.49, and its lowest recent point on July 15, 2013 at CA$ 0.01.

Malaga has 183 675 000 shares outstanding.

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Annual reports of Malaga Inc.
2007 Annual Report
Nominations of Malaga Inc.
12/2/2011Announces Appointment of Pierre Monet as President and Chief...
6/23/2011Appoints Three New Board Members
7/8/2008appoints Paul Cregheur to the Board of Directors
6/26/2008appoints three new Directors
12/20/2007Appoints a new board member
Financials of Malaga Inc.
4/3/2013Publishes Year-End Results
8/22/2008Q2 2008 financial results and outlook for 2008
4/14/2008Reports its year end financial results for 2007
11/15/2007reports net earnings in its third quarter 2007
8/16/2007Reports $6,749,432 revenue from the sale of gold and tungste...
5/23/2007reports sales of $2.3 million of tungsten concentrate for th...
4/13/2007files its audited consolidated financial statements and anno...
Project news of Malaga Inc.
5/31/2011(Pasto Bueno)Announces a $1.5 Million Diamond Drilling Campaign in the Co...
4/24/2008(Pasto Bueno) Pasto Bueno: Commissioning of the first phase of the Pasto ...
3/3/2008(Pasto Bueno)discovers new tungsten mineralized vein structures at Pasto ...
11/13/2007(Pasto Bueno) Pasto Bueno: Drilling Reveals New Tungsten Mineralized Zone...
5/15/2007(Pasto Bueno)commercial production begins at the Pasto Bueno mine
Corporate news of Malaga Inc.
6/6/2013Files a Notice of Intention to Make a Proposal Under the Ban...
5/21/2013Publishes Q1 Results
4/9/2013Sells Its Hydro Electric Power Plant
11/9/2012Update on Mining Operations
11/9/2012Update on Mining Operations
10/22/2012(Pasto Bueno)Pasto Bueno Process Plant in Care and Maintenance
10/22/2012(Pasto Bueno)Pasto Bueno Process Plant in Care and Maintenance
8/15/2012Announces Its Q2 Results
5/9/2012Maintains Profitability and Generates Cashflow From Operatin...
4/17/2012to Recover Additional Tungsten From Its Tailings Pond
3/28/2012Improves Profitability and Generates a Net Income of $5.6M a...
2/27/2012(Pasto Bueno)Increases Its Resources by More Than 140% and Its Reserves b...
2/16/2012to Build New Hydroelectric Plant in Peru
1/9/2012(Pasto Bueno)Announces Appointment of Fernando Pajuelo Rincon as General ...
10/4/2011Joins OTCQX-"MLGAF"
8/15/2011Reports Financial Results for Second Quarter 2011: Generates...
6/17/2011Generates a Net Income of $0.8 Million and an EBITDA of $1.3...
5/20/2011Says it is Not Aware of Any Undisclosed Development That Wou...
4/11/2011Reports Record Sales of US $4.5 Million in the First Quarter...
3/31/2011Reports Income of $1.1 Million From Mining Activities
10/30/2007 Announces the Final Distribution Ratio of Dynacor Gold Mine...
9/26/2007senior management changes within the company
7/17/2007Change of corporate name and trading symbol (previously Dyna...
4/17/2007has 100% ownership of its Acari property in Peru
3/21/2007signs an engagement letter of up to CA$5 million with D&D Se...
2/20/2007To Spin Off Gold Assets To Shareholders
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