MONTREAL, QUEBEC--(Marketwire - March 31, 2011) - Malaga Inc. (News - Market indicators) ("MLG") is pleased to report that it has filed its audited financial statements for the year ended December 31, 2010. The management discussion and analysis and audited financial statements can be found on the Company's website (www.malaga.ca) and on SEDAR (www.sedar.com). Amounts are in Canadian dollars unless otherwise indicated.
Sales for the year totalled $14.8 million ($11.1 million in 2009), an increase of 33% due to the sale of copper by-product in the amount of $2.0 million, a 14% increase in production output and a 26% appreciation in the APT (ammonium paratungstate) price, the reference price for Malaga's tungsten concentrate sales. A lower cash cost of sales per MTU ($129 vs $146) also contributed to the increase in the income from mining activities for 2010 which achieved a record level of $1.2 million compared to a $2.5 million loss in 2009.
"We are very pleased with our 2010 results. The record production level, significantly higher APT price and $17/MTU reduction in our cash costs all contributed to our $1.1 million in income from mining activities. In light of Malaga's plans to increase tungsten production in 2011 and the steady rise in the APT market price, which is currently close to US $400, we are forecasting an excellent year in 2011, and profitability as of the first quarter," said Jean Martineau, Malaga's Chairman of the Board and Chief Executive Officer.
The following table provides a summary of Malaga's record financial performance in 2010 in comparison with 2009:
| |
2010 |
|
2009 |
|
|
| Tungsten production (in MTU) |
70,407 |
|
62,054 |
|
+13% |
| Sales ($ millions) |
14.8 |
|
11.1 |
|
+33% |
| Cash cost of sales ($ per MTU) |
129 |
|
146 |
|
-13% |
| Income from mining activities ($ millions) |
1.1 |
|
(2.5 |
) |
n/a |
| Net loss ($ millions) |
(0.9 |
) |
(7.6 |
) |
n/a |
| Cash flow ($ millions) |
1.2 |
|
(1.2 |
) |
n/a |
| Average APT reference price (per MTU)* |
US $240 |
|
US $190 |
|
+26% |
| * |
The APT reference price reached a new record of close to US $400 as at March 29, 2011. |
2011 Outlook
Malaga has an installed plant capacity of 500 tpd at the plant but the mine is unable to supply the plant with ore at that rate. The Company has introduced a capital expenditure program to increase mine production capacity as rapidly as possible to reach 600 tpd by the end of the 2011. This increase would not require significant capital expenditure at the plant.
Malaga is planning to invest $3 to $4 million for exploration and development at the Pasto Bueno property in 2011. This investment should lead to an increase in reserves and resources to support the increase plant production capacity and demonstrate the potential of the property. The mantos will be the main focus of the 2011 exploration program, which should be announced sometime in the second quarter.
Tungsten Supply and Demand
Current market conditions have demand for tungsten growing with no new significant production capacity increases outside of China envisioned before at least 2014. The APT price has risen 115% since the beginning of 2010, from US $185 in 2010 to nearly US $400 today. The Company believes that market prices will remain strong because market demand currently exceeds production capacity. Demand is also growing as there is presently no replacement product for tungsten in the market. Finally, tungsten is one of 14 critical raw materials for the European Union, according to a European Commission report published in June 2010, which reinforces the notion of a strategic metal and the supply risk.
2011 Objectives
Malaga's main objectives for 2011 are to:
- Accelerate mine development to support the increase plant production capacity
- Increase mineral reserves and resources
- Increase plant production capacity to 600 tpd by the end of 2011 and production output to 80,000 MTU in 2011
- Generate net income
- Decrease cash cost of sales per MTU by more than 10% to from US $127 to US $115
Meeting of Shareholders
The annual general meeting of Malaga Inc. will be held at 10 a.m. on June 16, 2011, in Montreal, at 1 Place Ville Marie, 38th Floor.
ABOUT MALAGA INC.
Malaga Inc. owns and operates a mine in Peru and is one of the few producers of tungsten outside of China. Malaga is a low cost producer due to the availability of hydroelectric power at its Pasto Bueno property in Peru, which has a current production capacity of 500 tpd. Future plans are to increase production and explore the property to increase reserves and resources.
FORWARD‐LOOKING 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 result, performance or achievement 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.
