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Re: News Release - Wednesday, December 24, 2008
ROCA Reports Annual Results
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Vancouver, British Columbia: Roca Mines Inc. (ROK: TSX-V) ("Roca" or
"the Company") has released its financial results for the annual period
ended August 31, 2008, including production and sales from the MAX
molybdenum mine located in British Columbia, Canada. All dollar
amounts are stated in Canadian dollars unless otherwise indicated.
Overview and highlights:
- Revenues of $18.8 million since reaching commercial production as of
April 12, 2008;
- The Company reported a net loss of $2.5 million or 3 cents per share;
- The Company reported cash flows from operations of $7.8 million or 10
cents per share;
- Molybdenum production during the year was 1,027,907 pounds (including
pre-commercial production).
- Phase II progress at MAX including the 1,400 meter #2 adit,
installation of a third primary ball mill, and significant
underground ventilation upgrades are complete or nearing completion.
- Exploration results from
Diamond drill programs conducted below the
MAX molybdenum deposit confirm resource expansion potential and have
extended high grade zones within the known resource.
- Metal prices declined sharply post year-end and the Company has taken
action to minimize costs at the MAX mine and throughout the
organization.
MAX Molybdenum Mine - Production Results and Concentrate Sales
The Company announced that it had achieved its commercial production
targets on April 12, 2008 at its MAX molybdenum mine located in British
Columbia, Canada. The mine became British Columbia's first new metal
mine in a decade and the newest primary molybdenum mine in Canada.
Production during the Phase I commissioning prior to April 12, 2008 was
facilitated utilizing stockpiled development material to run mill tests
and optimize circuits, in addition to variably graded ore from stope
development. As a result, head grades and concentrate production during
this period were generally lower than current levels. After April 12,
2008 delivery and processing of ore directly from mine stopes to the
mill commenced. Head grades from the initial stopes were lower than
anticipated due to mine dilution. Mine dilution occurs as a result of
diluting higher grade material with lower grade rock and can occur for
a number of reasons. Lack of previous exposure in the high-grade zone
and inexperience with geological controls on mineralization in general
are believed to have caused the lower overall head grades to the mill.
Opportunities to run continuous milling operations were also hampered
due to availability and unscheduled maintenance requirements of on-site
generator sets. These primary power sources impacted production
capacity and therefore concentrate produced during the year.
During the pre-production period, the Company produced approximately
412,000 lbs of molybdenum contained in concentrates processing a blend
of ore grade material and variably mineralized development and waste
rock. Pre-commercial concentrate proceeds of approximately $10.1
million were used for mill completion costs and underground
development. For accounting purposes, these pre-commercial revenues
are recorded as an offset to mine development costs. Revenues of $18.8
million for the year ended August 31, 2008 result from sales that
occurred after the commencement of commercial production on April 12,
2008. Concentrate inventory at August 31, 2008 was 11,394 lbs of
molybdenum contained.
The table below is a summary of the operating statistics from
commercial production start to August 31, 2008:
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MAX Mine
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APR
13-30 MAY JUN JUL AUG
'08 '08 '08 '08 '08
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Molybdenum Produced 77,056 150,502 112,255 138,125 137,330
(lbs)(1)
Average Head Grade 0.755 0.732 0.473 0.584 0.757
(% Mo)
Molybdenum Recovery 93.8 94.3 94.1 93.6 94.1
(%)
Mill Availability 82 82 81 94 100
(%)
Average Daily
Throughput (tpd) 280 335 399 388 292
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Note 1 - molybdenum (Mo) in concentrate
Cash costs of production during the fourth quarter were significantly
higher than in the third quarter ended May 31, 2008 largely because of
lower average grades received at the mill during June and July. Cash
costs averaged approximately Cdn$13 per lb of molybdenum during the
post commercial production period from April 13, 2008 through August
31, 2008. Management believes that its grade control programs and
underground infrastructure improvements will dramatically reduce the
average production costs going forward into 2009. Post year-end 2008,
in September through November, molybdenum in concentrate production
averaged 226,566 lbs per month which will lead directly to lower
average cash costs/lb due to economies of scale.
On December 4, 2008, a rockfall occurred underground at the mine which
has impacted the availability of production ore. The rockfall was
localized to the stope development area of the 875 m level. No workers
were present on the level at the time and no one was harmed. The
rockfall poses no threat to other working areas of the mine, but does
impact the immediate production schedule. A maintenance break
originally scheduled between December 12 and December 29, 2008, will
now be extended until January 19, 2009.
MAX Mine/Mill Expansion
Initial production at MAX is focusing on the "HG" Zone, including an
estimated 280,000 tonnes of ("measured + indicated") ore grading 1.95%
MoS2. Expansion of the mine and mill is being guided by prevailing
molybdenum prices and an assessment of ongoing operating costs
throughout 2009.
During the year ended August 31, 2008, the Company completed
significant development work on the #2 Adit and subsequent to year-end,
completed the installation of an upgraded ventilation system including
bulkheads and underground fans. The Company has also completed the
foundations on a mill base for a third ball mill acquired in 2007. The
installation of this mill will allow for greater production flexibility
and will provide for a nominal capacity of more than 1,000 tonnes per
day.
The Company plans to seek graduated permitting to increase the
production of the mine over time including the Phase II mine. Under
current requirements, a permit to operate at the as-built capacity will
be required in late 2009. The application for this increase in
production rate will be submitted after environmental and water quality
data is collected and compiled. The information will demonstrate that
the mine is working well within its compliance requirements and with
minimal impact to the environment.
As a result of recent global economic uncertainty and declining
commodity prices, management of the Company has undertaken several
initiatives to cut costs at the MAX molybdenum mine while continuing to
operate under its Phase I mine plan. Grade control through detailed
geological mapping and modifications to material handling will
contribute to lower cash costs going forward. Phase II expansion plans,
including completing capital spending for that expansion, are being
minimized.
MAX Molybdenum Exploration
The Company has previously reported the results from underground and
surface
Diamond drill programs focused on the exploration for new
molybdenite mineralization both at depth below the known MAX resource
and in areas previously unexplored areas within the MAX property
boundary.
The Company's underground exploration drilling has thus far intersected
strong hydrothermal alteration, indications of several intrusive
phases, and significant multiple episodes of mineralization below the
MAX deposit. Detailed petrographic studies by previous workers also
concluded that there are at least four intrusive pulses, and a highly
repetitive mineralizing event at MAX. The size of the inferred system
is also significant. It is estimated that a pluton at depth could have
a diameter of roughly 1,000 m, based on the width of the contact
metamorphic aureole on surface, whereas the intrusion at the centre of
the deposit is roughly 200 m in diameter. This suggests that the known
deposit may have other zones and/or other deposits that are not yet
discovered. Additional exploration drilling will be collared from new
locations within the mine workings in the future.
The North molybdenum biogeochemical anomaly has a surface footprint of
150 metres (m) X 350 m and is centered approximately 200 m north of
Adit #2. Two initial holes intersected a wide zone (over 100 m) of
intense silicification, hornfelsing, locally strong quartz veining and
pervasive sericite alteration with trace molybdenite throughout.
Further
Diamond drilling is planned from the Adit #2 area to test for a
separate molybdenum deposit on the east side of the Z Fault, or a
faulted extension of the MAX deposit itself.
While economically significant molybdenum values were not intersected
the geologic and near-surface expression of this new zone is
reminiscent of the MAX resource itself where the extent of a relatively
minor molybdenite mineralized zone on surface lies atop a large-scale
mineralized deposit currently being mined.
MAX Tungsten Exploration
The Company's initial drill program tested the size and potential of
the Ridge and Upper Ridge tungsten zones located approximately 1.2
kilometres southwest of the MAX mine portal area. Surface
Diamond-drilling conducted on the southern portion of the Ridge
Tungsten Zone intersected significant intervals and grades of tungsten
mineralization. Combined with past work, the recent results suggest
great potential for a new tungsten resource to be defined at MAX based
on the exceptional continuity observed. The mineralization was
intersected above and in close proximity to the producing MAX Mine. At
their lowest point, the tungsten intervals are located approximately
650 metres (m) above the Main Haulage Adit 960 level of the MAX Mine.
Existing infrastructure at the MAX Mine is well suited to the potential
development of a tungsten resource.
Foremore VMS-Gold Project
The Company holds a 100% interest in the Foremore VMS-Gold project
situated in the "Golden Triangle" one of the most active mining and
exploration areas in north-western British Columbia. The property
comprises 65 contiguous mineral claims totaling 23,609 hectares in the
Liard Mining Division. Significant operations in the area include
Barrick Gold's legendary Eskay Creek Mine, Cominco's historic Snip Mine
and NovaGold and Teck Cominco's Galore Creek Project. Foremore has
been the focus of the Company's exploration efforts dating back to the
summer of 2002 and was the focus of exploration by Cominco Limited
between 1989 and 1996.
While relatively inactive at Foremore during the two prior fiscal
years, the Company has recently completed an extensive program at
Foremore including gridding in four areas totaling 78.0 line km. A
total of 52.6 line km of Induced Polarization (IP) surveys and 57.7
line km of Total Field Ground Magnetometer surveys were completed. In
addition, 3,299.4 m of core drilling was completed in 13 holes from
which 890 samples were submitted for analytical work. During the
course of geological mapping a total of 301 rock and 197 soil samples
were submitted for chemical analysis. One of the primary objectives of
the 2008 work program was to explore for a potential bedrock source for
the sulphide-rich boulders and blocks of the South Boulder Field (SBF).
The drilling program was significantly smaller in scope than that
originally planned, due to a shortage of drill equipment and to the
short season remaining once the drill arrived on the property.
Consequently there remain a number of excellent untested drill targets
on the property, including the Ryder NW, Westmore, H.Valley/SBF, SG VMS
Horizon, Antler and Zig Zag Areas.
In the Antler area the Company completed 20.6 line km of grid (17
lines). The grid was mapped, a Ground Magnetometer survey and 3.0 km of
Induced Polarization completed. Exploration targeted a north trending,
locally pyrite-rich felsic intrusion 2.5 km long and 200 m thick where
historical rock sampling by the Company yielded extremely anomalous
arsenic values. No drilling was completed in the Antler Area during
2008. Massive sulphide boulders have been discovered in adjacent Rumble
Cr, as well as west of the Antler Grid.
In the SBF/Hanging Valley area 43.2 line km of grid (29 lines) were
completed. The grid was mapped, Ground Magnetometer surveys and 35.7
km of Induced Polarization were completed. Exploration targeted an
area where historical soil sampling by the Company defined a
multi-element soil anomaly, a potential source of, and proximal to the
South Boulder Field, comprised of more than 900 polymetallic massive
sulphide boulders. Five drill holes, totaling 822.5 m, tested several
high chargeability anomalies but intersected mainly pyrite. A number of
intermediate anomalies remain to be tested and these may be indicative
of less conductive sphalerite/galena mineralization. Further work is
planned.
In the Westmore area 8.5 line km of grid (13 lines) were completed.
The grid was mapped and 8.3 km of Induced Polarization completed.
Exploration in this area targeted the prospective, altered rhyolite
unit host to the Ryder VMS mineralization located some 3 km to the
northeast. Two drill holes, totaling 396.0 m, tested a high
chargeability anomaly associated with the altered rhyolite but failed
to intersect significant base or precious metal values.
Subsequent geophysical interpretations suggest that the drill holes may
have been collared updip from the anomaly & further work is planned
here. In addition, a total of 21 samples were taken on one contoured
soil line to follow up on several historical soil samples which yielded
high Au values. The line was about 600 m long and sample stations
varied between 25 and 50 m apart. Only one sample yielded an anomalous
value of 216.6 ppb Au.
In the Ryder/BRT area 5.7 line km of grid (5 lines) and 5.6 km of
Induced Polarization were completed. Exploration in this area targeted
the prospective, altered rhyolite unit host to the Ryder and BRT VMS
mineralization. Six drill holes, totaling 2,081.9 m, tested several
chargeability anomalies associated with the altered rhyolite. Four of
these drill holes intersected VMS mineralization for which selected
intercepts are tabulated below:
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From To Width Cu Pb Zn
Hole ID Area (m) (m) (m) % % %
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FM08-43 Ryder 229.82 234.00 4.18 0.036 0.039 0.797
240.65 242.15 1.50 0.091 0.190 2.47
FM08-46 BRT 128.05 130.10 2.05 0.006 0.013 0.04
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FM08-53 Ryder 30.00 43.50 13.50 0.346 0.021 0.305
Including 41.90 42.50 0.60 1.497 0.104 3.660
FM08-54 Ryder 24.00 27.00 3.00 0.131 0.117 0.575
42.43 43.35 0.92 0.045 0.011 0.404
48.73 51.00 2.27 0.180 0.038 0.509
55.50 64.50 9.00 0.214 0.030 0.428
Including 60.88 62.37 1.49 0.923 0.120 1.100
73.50 81.00 7.50 0.380 0.053 0.600
Including 75.00 77.30 2.30 0.954 0.093 1.420
89.20 99.15 9.95 0.163 0.059 0.328
106.50 108.00 1.50 0.092 0.021 0.235
115.50 124.50 9.00 0.088 0.023 0.184
154.50 177.00 22.50 0.132 0.009 0.198
Including 159.00 160.80 1.80 0.194 0.010 1.270
181.50 202.50 21.00 0.066 0.038 0.440
Including 186.00 187.50 1.50 0.034 0.070 1.200
212.15 217.50 5.35 0.152 0.026 0.107
223.50 228.00 4.50 0.065 0.025 0.160
237.00 243.00 6.00 0.128 0.009 0.094
249.00 252.00 3.00 0.073 0.016 0.176
259.50 265.50 6.00 0.166 0.016 0.451
24.00 265.50 241.50 0.076 0.017 0.170
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Ag Au
Hole ID Area (g/t) (g/t)
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FM08-43 Ryder 1.6 less than 0.1
6.1 less than 0.1
FM08-46 BRT 9.7 0.34
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FM08-53 Ryder 13.0 0.5
Including 195.2 1.1
FM08-54 Ryder 3.4 less than 0.1
4.6 0.3
3.0 less than 0.1
6.3 0.1
Including 22.2 0.6
6.1 0.1
Including 13.7 0.2
4.5 less than 0.1
5.8 0.1
2.2 less than 0.1
2.9 less than 0.1
Including 3.8 less than 0.1
3.1 less than 0.1
Including 3.9 less than 0.1
3.3 less than 0.1
3.0 less than 0.1
3.4 less than 0.1
1.6 less than 0.1
2.3 less than 0.1
2.3 less than 0.1
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The last hole, FM08-54, intersected a thick (>250m) altered, dominantly
felsic sequence, highly anomalous in base & precious metals, indicating
that the VMS mineralizing system remains open to the northwest.
Drilling was curtailed due to the onset of winter conditions, and
additional work is planned to test the extension of the Ryder in this
direction. Additional Chargeability anomalies remain to be tested.
In addition, three contoured soil lines (197 samples) were completed In
the Ryder area along the northwest facing mountain slope where the
prospective rhyolite stratigraphy is covered with overburden and
vegetation. The 2008 soil sampling survey defined a multi-element
anomaly overlying altered rhyolite associated with the Ryder
mineralized system. The anomaly is elongate towards the NNE, up to 500
m long and 200 m wide and defined by elevated concentrations of Zn, Cu,
Pb, As, Au, and Ag. This anomaly remains to be tested by drilling.
Expenditures on the Foremore Project during the fiscal year ended
August 31, 2008 were $1,374,824 and at August 31, 2008 totaled
$5,548,509 including $452,113 in acquisition, staking costs and advance
royalties.
SeaGold Property
The Company holds a 50% interest in the SeaGold Project, comprising 8
claim blocks of 4,000 hectares, centered on a number of gold and copper
occurrences approximately 35 km north of Barrick Gold's Eskay Creek
gold/silver mine in British Columbia. The balance of the property
interest is now held by Romios Gold Resources Inc., which serves as the
operator of a 50:50 joint venture on the SeaGold project. Results are
pending from this fieldwork.
Lardeau Properties
A 2006 exploration program by the Company reviewed potential targets
within a 100 km radius of the MAX Molybdenum Mine. This work resulted
in the optioning of a 100% interest in four projects in the historic
Lardeau Mining Camp covering an area of approximately 5,600 hectares.
The Company has recently conducted exploratory prospecting and limited
Diamond drill programs on these four properties.
In 2007, the Company acquired by staking a 100% interest in the Butters
Peak Molybdenum Property, located approximately 25 km northeast of the
MAX Mine. Covering approximately 1,650 hectares, the property was
originally discovered by tracing highly anomalous regional silt
geochemical results to molybdenite float. The Company conducted limited
prospecting and reconnaissance on the property in 2008.
In light of current economic conditions, management considers it
unlikely that it will continue exploration on these early-stage
prospects in order to focus on its more advanced mining and exploration
projects in 2009. Therefore the Company has taken an impairment charge
of the total $1,244,873 in expenditures incurred on these projects
through August 31, 2008
Share Capital
In May of 2008, the Company received approval to repurchase up to a
maximum of 4,078,500 outstanding common shares in the Company through
the facilities of the TSX Venture Exchange (the "Exchange") until June
1, 2009. Pursuant to the policies of the Exchange, the Company is
permitted to repurchase through open market purchases, up to 2 per cent
of its outstanding common shares in any given 30-day period. The
Company did not repurchase any shares during the year ended August 31,
2008. Subsequent to August 31, 2008 the Company purchased through the
facilities of the TSX Venture Exchange, and subsequently cancelled a
total of 1,460,700 common shares under its normal course issuer bid.
Also subsequent to August 31, 2008 a total of 8,354,978 warrants and
121,000 options expired unexercised and 246,000 options were exercised
for proceeds of $49,200. The Company had 80,755,628 common shares
outstanding, 90,172,378 on a full-diluted basis as at the date of this
report.
Outlook
As a result of recent global economic uncertainty and rapidly declining
commodity prices, management has decisively cut costs at the MAX
Molybdenum mine while continuing to operate under its Phase I mine
plan. Phase II expansion plans, including completion capital spending
for that expansion, are being minimized. Similarly, exploration work
at the Company's projects, including the MAX property, will be limited
to definition drilling where required. Management will continue to
operate the mine while it generates positive cash flow, recognizing
that the MAX Molybdenum Mine was originally designed to operate at
historic prices. Significant gains have also been realized from the
recent Canada-USA exchange rate and fuel cost reductions.
It remains management's belief that molybdenum prices should remain
significantly greater than historic values for the foreseeable future
due to i) production problems globally, ii) the reduction of by-product
production related to copper mines and iii) the inability of new mines
to achieve financing. In real terms, recent events have seriously
eroded the global supply of molybdenum and management believes that a
realization of supply and demand fundamentals in the medium-term will
result in positive changes to pricing. It is therefore Management's
goal to remain in operation and preserve the value of the resource and
the opportunity to produce molybdenite concentrate in a rapidly
appreciating environment.
In the interim, production at the MAX Molybdenum Mine will be limited
to current target levels in an effort to preserve the molybdenum
resource, and the mine will be readied, with minimal additional cost,
for a rapid response to periods when greater margins on sales can be
realized. Few other producers will have similar ability to ramp-up
production.
Management has observed that experience with the geological controls on
mineralization, its grade control program, and underground
infrastructure improvements have dramatically reduced the average
production costs and anticipate lower cash costs going forward.
Financial Results
The information in this news release and the selected financial
information should be read in conjunction with the audited consolidated
financial statements, and management discussion and analysis, for the
year ended August 31, 2008, which will be available at Roca's website
at www.rocamines.com.
For the year ended August 31, 2008, the Company reported a loss of
$2,493,151 and an accumulated deficit of $4,909,947 at that date.
Total assets were $60,462,014 and cash and cash equivalents were
$2,497,077 at August 31, 2008. While the Company had cash flow from
operations of $7,795,318 for the year ended August 31, 2008, a recent
decline in the price for molybdenite concentrates has significantly
reduced cash operating margins. The ability of the Company to continue
as a going concern is dependent upon its ability to reduce costs and
improve operating margins or to continue to raise adequate financing.
Management has implemented a series of cost cutting measures and
contingency plans for future financing should economic conditions
deteriorate. There is no assurance that these initiatives will be
successful in the future.
Summary Consolidated Statements of Operations and Loss
Summary Consolidated Statements of Operations and Loss
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Year ended
August 31, 2008
Cdn$
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Total Revenues 18,785,083
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Cost of sales (7,872,063)
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Depletion, amortization, accretion (12,472,155)
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Mining Loss (1,559,135)
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G&A, Stock-based comp., write-offs (3,800,186)
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Loss from Operations (5,359,321)
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Other income (expenses) 74,161
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Income and mining tax provision (recovery) (2,792,009)
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Net Loss for the Year (2,493,151)
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Loss per Share - Basic and Diluted (0.03)
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Scott E. Broughton, P.Eng, is the qualified person responsible for the
preparation of this news release under National Instrument 43-101.
ROCA MINES INC.
"Scott Broughton"
Scott E. Broughton, P.Eng. - President & CEO
For further information contact:
Investor Relations
Tel: 604-684-2900
Fax: 604-684-2902
Email: info@rocamines.com
Web: www.rocamines.com
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
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Copyright (c) 2008 ROCA MINES INC. (ROK) All rights reserved. For
more information visit our website at http://www.rocamines.com/ or send
mailto:info@rocamines.com
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