Minefinders Reports Third
Quarter 2011 Financial and Operating Results and Announces Approvals for
Expansion Plans
Minefinders Corporation Ltd.
("Minefinders" or the "Company") (TSX: MFL)(NYSE Amex: MFN)
is today reporting its financial and operating results for the quarter and
nine-months ended September 30, 2011 and confirming its
production guidance for 2011.
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 Dolores Mine.
Approval has also been given for the construction of a mine at the Company's La
Bolsa project.
Mark Bailey,
President and Chief Executive Officer, commented, "With over 53,600 ounces
of gold and over 2.65 million ounces of silver produced and sold for the
nine-month period of 2011, we continue to be on track to meet our guidance for
2011. We are cash flow positive and with over $228.0 million in
cash reserves, we are well positioned to unlock the potential of our existing
assets and steadily increase gold and silver production."
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 $506 per 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 million or $0.35 per share.
-- Adjusted net income of $13.2 million or $0.16 per share and a net loss
of $1.3 million, or $0.02 per 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
At September 30, 2011
the Company had $228.6 million in cash, cash equivalents and
short-term investments, an increase from $166.9 million at December
31, 2010. Net working capital at September 30, 2011 was $236.2
million, an increase from $167.4 million at December
31, 2010. The primary reason for the increase in working capital during
the nine-month period was cash flow from operations of $92.6 million
and $12.0 million from the exercise of share options and
warrants, partially offset by capital expenditures and repayment of the $17.0
million balance outstanding on our $50.0 million
revolving credit facility. The entire facility is available as at September
30, 2011.
Adjusted net income for the
quarter ended September 30, 2011 was $13.2 million
or $0.16 per share and for the nine-month period was $58.8
million, or $0.73 per share. The Company uses adjusted
net income as a supplemental financial measure in its evaluation of income
during a period. The Company believes that adjusting for items including
changes in the fair value of derivative liabilities and other unusual or
non-recurring items assists in making assessments of net income for the period.
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 June
2011 and cyanide concentrations to the pad were being reduced. Supplies
have now returned to normal levels as has the concentration level of cyanide
being applied to the leach pad and the levels of gold and silver in solution.
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. Minefinders
maintains its production guidance for 2011 of 65,000 to 70,000 ounces of gold
and 3.3 million to 3..5 million ounces of silver at a cash operating cost
between $450 and $500 per gold equivalent ounce sold assuming a
48 to one silver to gold ratio.
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).
As of January 1, 2011,
the Company's financial results are prepared in accordance with International
Financial Reporting Standards ("IFRS").. As a result, accounting
policies, presentation, financial statement captions and terminology used in
this news release, the third quarter financial statements and Management's
Discussion and Analysis differ from that used in financial reporting in
previous years. Further details on the transition to IFRS are included in the
Changes in Accounting Policies section beginning on page 19 of Management's
Discussion and Analysis and in note 15 of the third quarter financial
statements.
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.
Outlook
Dolores Mine
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.
La Bolsa Project
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 La
Bolsa. The construction decision is based on the previously reported
positive pre-feasibility study results as well as detailed engineering which
was substantially completed in the third quarter by an independent engineering
contractor retained by the Company.
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 La
Bolsa has also commenced.
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.
La Virginia Project
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
An investor conference call
will be held on Tuesday, November 8, 2011 at 8 a.m.
Pacific Time (11 a.m. Eastern Time) to discuss the
results. Participants may join the call by dialing 1-877-240-9772 toll-free or
1-416-340-9432 for calls outside Canada
and the U.S. Simultaneously, an audio webcast of the conference call will be
available on the home page of the Company's website, www.minefinders.com.
An audio replay will be
available until November 15, 2011 by calling 1-800-408-3053
toll-free or 1-905-694-9451 for calls outside Canada
and the U..S. and entering pass code 7573714.
About Minefinders
Minefinders is a precious metals mining
and exploration company and operates the Dolores gold and silver mine in Mexico.
For more information, please visit our website at www.minefinders.com.
Supplementary Financial
Measures
The Company uses both IFRS
and certain non-IFRS measures to assess performance. This news release includes
non-IFRS supplementary financial measures of "operating cash cost per
ounce", "total cash cost per ounce", "operating cash flow
before changes in working capital" and "adjusted net income".
These supplementary financial measures are intended to provide additional
information and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. For a reconciliation
of these supplementary performance measures to IFRS refer to the Supplementary
Financial Measures section in the third quarter Management's Discussion and
Analysis beginning on page 23.
Forward Looking Statements
This release contains
certain "forward-looking statements" and "forward-looking
information" as defined under applicable Canadian and U.S. securities
laws. Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may", "will",
"expect", "intend", "estimate",
"anticipate", "believe", "continue" or similar
terminology. Forward-looking statements are based on forecasts of future
results, estimates of amounts not yet determinable and assumptions that, while
believed by management to be reasonable, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. Certain of
the statements made herein by Minefinders
are forward-looking and subject to important risk factors and uncertainties,
both known and unknown, many of which are beyond the Company's ability to
control or predict. Known and unknown factors could cause actual results to
differ materially from those projected in the forward-looking statements. Those
factors are described or referred to under the heading "Risk Factors"
in Minefinders' Annual
Information Form for the year ended December 31, 2010 and under
the heading "Risks and Uncertainties" in Minefinders'
Management's Discussion and Analysis for the quarter ended September 30,
2011, both of which are incorporated by reference herein and are
available on SEDAR at www.sedar.com. Although the Company has attempted to
identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking statements, there
may be other factors that cause actions, events or results not to be as
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements. Minefinders
does not undertake to update any forward looking statements that are
incorporated by reference, except in accordance with applicable securities
laws.
Contacts:
Minefinders Corporation Ltd.
Jonathan Hackshaw
Director of Corporate Communications
Toll Free: (866) 687-6263
Minefinders Corporation Ltd.
Mike Wills
Investors Relations Representative
Toll Free: (866) 687-6263
www.minefinders.com
Source: Minefinders
Corporation Ltd.