MONTREAL, QUEBEC--(Marketwire - May 26, 2011) - MDN Inc. ("MDN") (News - Market indicators) is pleased to release its unaudited financial statements for the quarter ended March 31, 2011. The management discussion and analysis and the unaudited financial statements can be found on the Corporation's website (www.mdn-mines.com) and on SEDAR (www.sedar.com).
Effective January 1, 2011, International Financial Reporting Standards (IFRS) are replacing Canadian GAAP for publicly accountable enterprises. As a result, MDN Inc. will report under IFRS for interim and annual periods beginning January 1, 2011, with comparative information for 2010 restated under IFRS.
The Tulawaka mine in Tanzania produced 19,606 ounces of gold in the first quarter of 2011, up 34% from 14,588 ounces in the first quarter of 2010. The higher production was achieved through investments made in 2010 to improve the overall efficiency of the underground mine operation.
For the first quarter of 2011, the Tulawaka mine generated total revenues of US $25.6 million. Cash costs per ounce were higher in the first quarter of 2011 than in the same period of 2010 (US $738/ounce compared to US $558/ounce at March 31, 2010). The Tulawaka mine continues to generate operating income, yielding a total of $3.7 million in the first quarter of 2011.
In 2010, the two partners in the Tulawaka mine agreed to conduct extensive exploration to extend the mine life, thus reducing the cash available for distribution. Consequently, MDN did not recognize any royalty revenues from the mine in its first quarter 2011 financial results.
| MDN INC. |
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| SUMMARY OF OPERATING RESULTS |
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| For the three months ended March 31 |
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2011 |
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2010 |
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| Revenues |
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$ |
46 |
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$ |
33 |
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| Administrative expenses |
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$ |
807 |
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1,477 |
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| Net income (loss) attributable to the shareholders of the Corporation |
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$ |
(890 |
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(1,433 |
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| Basic and fully diluted net income (loss) per share |
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$ |
(0.006 |
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(0.014 |
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| Weighted average number of shares outstanding (in thousands) |
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98,444 |
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95,376 |
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Underground exploration was ongoing throughout the first quarter, with the goal of adding to the mineral resource below the 8th level (200 to 300 metres below surface).
At March 31, 2011, the Corporation's cash position, consisting of cash, investments and term deposits, stood at $8.3 million, down from $10.7 million as at December 31, 2010, primarily due to investments in exploration in Tanzania and development at the Crevier project during the period.
Exploration in Tanzania
Drilling began in 2011 despite some delays at the main exploration project, Ikungu, arising from logistical issues on the contractor's side. Two objectives were nevertheless achieved during and just subsequent to the quarter.
First, the mineralized structure was intercepted on Section 970E, with an intersection of 2.87 g/t Au over 2 m confirming the presence of the mineralized structure to the west. The holes to the west were drilled to test a gold soil anomaly 400 m from Hole IKBH-42 (2.15 g/t Au over 6.2 m and 1.54 g/t Au over 21.45 m), drilled on the mineralized structure. The results for IKBH-48 and IKBH-42 proved that this structure extends 1 km west from the last hole, IKD-33 (2.66 g/t Au over 5.36 m), thus increasing the potential for additional tonnage.
On May 17, 2011, MDN also reported positive assay results for Hole IKBH-71 (13.43 g/t Au over 2.00 m and 1.83 g/t Au over 5.00 m), confirming the existence of the Ikungu mineralized zone to the southeast. The Ikungu structure has now been traced over a distance of more than 4 km and remains the focus of interest for future exploration programs, with the goal of outlining an initial gold resource in the area.
Crevier Project Development
The Crevier project feasibility study was ongoing throughout the first quarter. On site, field work for geotechnical characterization and the environmental base line study was completed, and the team responsible for preparing the environmental study are now putting together the final report. The geotechnical data is used in the design of the main installations needed for site operation.
In terms of pit-related work, the mine plan and in-pit mineral resource are now at the optimization stage.
The main activity for the quarter was related to the preparation and execution of a 215-tonne pilot plant trial on ore from the Crevier deposit. The pilot trial had three main objectives: to demonstrate the effectiveness of the process in a continuous processing context, to develop the engineering design criteria to be used in mill design and to produce a sufficient quantity of concentrate for ongoing metallurgical characterization work. The results of this study will be released in the coming weeks, once they have been compiled and analyzed.
An update of the market study by Roskill Consulting Group Ltd. required by MDN has confirmed that tantalum prices have risen considerably. In fact, the preliminary economic assessment (PEA) in January 2010 used a price of $150/kg for tantalum, while it is now $275/kg. The niobium oxide price ($50/kg) remains substantially the same as the price used in the 2010 PEA.
The Crevier project was recently in the spotlight when it was included in the Quebec government's Plan Nord. The plan is designed to stimulate mineral resource and infrastructure development in the Far North, among other things, and as such could be of benefit to the Crevier project. Discussions are underway for possible support under the Plan Nord for construction of the power line required for project development.
An agreement was signed with Price Waterhouse Corporate Finance (PwCCF) in the past few weeks for technical support for the Crevier project development strategy. The purpose of the agreement is to identify a strategic partner to promote and accelerate project development.
The samples were analysed by fire assay at the SGS Laboratory of Mwanza, Tanzania, which is certified according to international standards. A stringent assay quality verification program implemented by MDN included 10% control samples. The technical and scientific information contained in this press release has been reviewed by Marc Boisvert, engineering geologist and Vice President, Exploration, who acts as a qualified person in accordance with National Instrument 43-101.
About MDN
MDN Inc. (News - Market indicators) is a mining exploration and development company with sufficient financial resources to develop its projects in Quebec and Tanzania. The Corporation is also active in the search for new business opportunities that can increase shareholder value. In addition to its 30% participating interest in the Tulawaka gold mine, MDN is the operator and owner of a majority interest in mineral licenses totalling 757 km2 in the vicinity of the Tulawaka mine. MDN also owns a 72.5% interest in Crevier Minerals Inc. which owns an NI 43-101 niobium-tantalum resource in the Lac-Saint-Jean area of Quebec. MDN has an option to increase its equity participation in Crevier Minerals Inc. to a maximum of 87.5%. Additional information is available on MDN's website at www.mdn-mines.com.
The Tulawaka project is a contractual joint venture between MDN (30% interest) and Pangea Goldfields Inc. (70% interest), an indirect, wholly-owned subsidiary of African Barrick Gold plc, the project operator and owner through its subsidiary Pangea Minerals Ltd. Disclosure on the Tulawaka gold mine is based on information provided by the operator.
Forward-Looking Statements
Other than statements of historical fact, all statements in this release that address events or developments that the Company expects to occur are forward-looking statements. Although the Company believes that the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results may differ materially from those in the forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements are discussed in greater detail in the Company's most recent Annual Information Form filed on SEDAR, which also provides additional general assumptions in connection with these statements. Investors and others who base themselves on the Company's forward-looking statements should carefully consider the factors mentioned in the Annual Information Form as well as the uncertainties they represent and the risk they entail. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct, and as such, the forward-looking statements in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.
