Malaga Maintains Profitability and Generates Cashflow From Operating Activities of $1.1M in Q1 2012
Published : May 09, 2012
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Keywords :   Canada | China | Copper | Euro | Market | Peru | Recovery | Tungsten |

MONTREAL, QUEBEC--(Marketwire - May 9, 2012) - Malaga Inc. ("MLG")(News - Market indicators)(OTCQX:MLGAF) is pleased to report its financial results today for the first quarter ended March 31, 2012. The management discussion and analysis and unaudited financial statements can be found on the Company's website (www.malaga.ca) and on SEDAR (www.sedar.com). All amounts are in US dollars unless otherwise indicated.

First Quarter Highlights

  • Net income of $0.1M compared to $0.8M in Q1 2011;
  • Cash flow from operating activities of $1.1M compared to $0.7M in Q1 2011;
  • EBITDA of $0.6M compared to $1.3M in Q1 2011;
  • Sales of $3.6M compared to $5.2M in Q1 2011;
  • A 19% increase in the average APT average reference selling price, from $360 in Q1 2011 to $430 in Q1 2012;
  • Advance on sales of $0.8M was repaid.

"The commencement of the underground drilling campaign, acceleration of the development program, particularly in the Huayllapon sector, and the addition of a new contractor on site should help to increase tungsten production for the remainder of the year", said Pierre Monet, President and CEO of Malaga.

Financial Results

For the first quarter of 2012, Malaga generated a net income of $0.1M compared to $0.8M in Q1 2011. The decrease is mainly the result of a decrease in tungsten sales as well as copper sales, which were partially offset by a 19% increase in the APT selling price during the first quarter of 2012 compared with Q1 2011. This was a result of the rainy season which was particularly strong during the first quarter of 2012, with heavy rainfall causing the erosion of certain roads and overpasses, making transportation difficult. The rate of production has since improved to 350 tpd during April compared with a rate of 308 tpd during Q1-2012. 

Sales amounted to $3.6M for the first quarter compared with $5.3M in Q1 2011. This includes $0.1M from copper sales compared to $0.6M in Q1 2011. This shortfall of by-product sales will be recovered in Q2 and Q3 2012.

Sales of tungsten in MTU amounted to 10,331 in the first quarter of 2012 compared to 18,090 in the first quarter of 2011 because of lower production (11,943 MTU compared to 17,493 MTU in Q1 2011) due to lower tonnes extracted (26,182 tonnes compared to 31,388 in Q1 2011) and a lower head grade of 0.62% compared to 0.75% in Q1 2011.

During Q1 2012, cash cost of production was $197 per MTU, up from $129 per MTU for the same period a year ago, mainly due to the decrease in production. With production levels expected to return to 350 tpd during Q2 2012, Malaga expects to lower cash costs during the second quarter. This still remains a competitive advantage for the Company.

According to the Metal Bulletin European quotations for APT, tungsten prices should continue to remain strong despite the decrease in the APT reference price in late April. As well, the Chinese APT selling price is currently ranging from $385 to $405. 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 extensive underground development at its Pasto Bueno mine in order to replace the mined reserves and define new reserves and resources. During the first quarter of 2012, 1,136 meters of underground development work was completed. While current production is extracted from five veins, there are more than 79 veins on the property, excluding the southern part of the property that is under exploration. The Company has also applied for a medium-producer permit which allows for production of 500 tpd up to a maximum of 750 tpd.

Exploration Campaign

The Company initiated an exploration campaign in 2011 on the southern part of the property, the area of the mantos, which will be completed in Q2 2012, with all results published during Q2. The Company will then determine the scope of the next exploration campaign.

Key Financial Data:

  For the three-month periods ended March 31,
(in $M) 2012 2011
Sales 3.6 5.3
Cost of sales (including depreciation and depletion) 2.4 3.5
Depreciation and depletion 0.5 0.7
Income from mining activities 0.3 0.9
General and administrative expenses 0.8 0.9
Net income 0.1 0.8
EBITDA 0.6 1.3
     
Earnings per share (basic and fully diluted) $0.00 $0.00
Cash cost of production per MTU 197 129
Production in MTU 11,943 17,493

LIQUIDITY

Following the end of the quarter, on April 17 2012, Malaga obtained a financing from its customer to undertake the construction of a pilot plant to validate the proof-of-concept studies for recovering and reprocessing tungsten from its existing tailings pond. Construction will begin during the second quarter with first delivery expected during the third quarter 2012. The Company's NI 43-101 report indicated that the tailings pond contains 450,000 tonnes @ 0.14% WO3 of inferred resources. Assuming a 50% recovery rate, Malaga would produce an additional 31,500 MTU over the next few years from the current tailings pond, which is the equivalent value of $9.0M in revenues at current market prices ($370 per MTU at May 8, 2012).

In addition to the tailings pond pilot plant funding, a new advance on sales in the amount of $0.8M was secured from its current customer to increase tungsten output. The Company also obtained an unsecured guarantee from Export and Development Canada that will be used to set-up a stand-by letter of credit facility in Peru for $0.8M.

On May 7, 2012, 36.4M warrants having a $0.25 strike price and that were issued in May 2010, went unexercised. The remaining 875,000 warrants are still outstanding and will expire at the end of Q2-2012.

ANNUAL GENERAL MEETING

The annual general meeting will be held on June 6, 2012 at 10am at 1 Place Ville-Marie, 40th floor.

The Company will be presenting at the Euro-Pacific Conference in New York on May 31, 2012 and is available to meet investors.

ABOUT MALAGA INC.

Malaga Inc. owns the Pasto Bueno mine in Peru and is one of the 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. Malaga's production capacity represents about 10% of the tungsten available for sale outside of China. The Company plans to increase production and continue to explore the property to develop its reserves and resources.

FORWARDLOOKING STATEMENTS

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
or
Nicole Blanchard
Corporate Strategy and Investor Relations
Sun International Communications
450 973-6600
Data and Statistics for these countries : Canada | China | Peru | All
Gold and Silver Prices for these countries : Canada | China | Peru | All

Malaga Inc.

PRODUCER
CODE : MLG.TO
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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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