| August 13, 2008 |
| Central Sun Reports Second Quarter 2008 Financial Results |
TORONTO, ONTARIO--(Marketwire - Aug. 13, 2008) - Central Sun Mining Inc. ("Central Sun" or the "Company") (TSX:CSM)(TSX:CSM.WT)(AMEX:SMC) reports its financial results for the six months ended June 30, 2008 (currency figures in U.S. dollars). The consolidated financial statements along with management's discussion and analysis are available for viewing on the Central Sun website at www.centralsun.ca. The documents have been filed with SEDAR (www.sedar.com) and should be available on SEDAR no later than 24 hours from dissemination of this release.
Note: A conference call for analysts and investors is scheduled for Thursday, August 14, 2008 at 11:00 a.m. Eastern (Toronto time).
The following are highlights of financial results for the second quarter 2008 (Q2 2008) compared to results for the second quarter 2007 (Q2 2007). The operating results for Q2 2008 reflect only the Limon Mine compared to the two operating mines in Q2 of 2007. All expenditures incurred prior to April 30, 2008 on the Orosi Mill Project development costs have been charged to income as these were prior to the receipt of a positive feasibility study.
- The Q2 2008 results reflect operations from only the Limon Mine whereas in Q2 2007 results of operations included the Company's Bellavista and Limon mines. This had the following impact:
-- Revenue decreased 48% to $7.4 million in Q2 2008 compared to revenue of $14.3 million in Q2 2007
-- Gold sales decreased 61% to 8,351 ounces in Q2 2008 compared to 21,490 ounces in Q2 2007
-- Gold production decreased 54% to 9,302 ounces in Q2 2008 compared to 20,340 ounces in Q2 2007
-- Income from mining operations decreased 4% to $1,434,000 in Q2 2008 compared to $1,491,000 in Q2 2007
-- Cash operating costs per ounce of gold sold increased to $595 per ounce in Q2 2008 compared to $451 per ounce in Q2 2007
- Loss in Q2 2008 was $5.9 million, or $0.10 loss per share compared to a $3.3 million profit, or $0.09 profit per share in Q2 2007. The Q2 2008 loss includes a $2.6 million expense item for the Orosi Mill Project, expenses incurred to April 30, 2008, prior to receipt of a positive feasibility study
- Cash used in operations totalled $6.8 million in Q2 2008 compared to $1.5 million used in Q2 2007
The following are highlights of financial results for the six months ended June 30 (Q2 2008 YTD) compared to results for the six months ended June 30 2007 (Q2 2007 YTD). The operating results for Q2 2008 YTD reflect only the Limon Mine compared to three operating mines in Q1 of 2007 and two operating mines in Q2 2007. All expenditures, other than the cost of physical assets, incurred prior to April 30, 2008 on the Orosi Mill Project have been charged to income as these were prior to the receipt of a positive feasibility study.
- The Q2 2008 YTD results reflect operations from only the Limon Mine whereas in Q2 2007 YTD results of operations included the Company's Bellavista, Orosi and Limon mines in Q1 2007 and the Bellavista and Limon mines in Q2 of 2007. This had the following impact:
-- Revenue decreased 43% to $19.7 million in Q2 2008 YTD compared to revenue of $34.6 million in Q2 2007 YTD
-- Gold sales decreased 58% to 21,875 ounces in Q2 2008 YTD compared to 52,624 ounces in Q2 2007 YTD
-- Gold production decreased 63% to 19,146 ounces in Q2 2008 YTD compared to 52,141 ounces in Q2 2007 YTD
-- Income from mining operations increased 150% to $5.5 million in Q2 2008 YTD compared to $2.2 million in Q2 2007 YTD
-- Cash operating costs per ounce of gold sold increased to $538 per ounce in Q2 2008 YTD compared to $463 per ounce in Q2 2007 YTD
- Loss in Q2 2008 YTD was $10.95 million, or $0.18 loss per share compared to a $2.1 million profit, or $0.06 profit per share in Q2 2007 YTD
- Cash used in operations totalled $10.1 million in Q2 2008 YTD compared to $3.9 million generated in Q2 2007 YTD
- Cash on hand totalled $3.5 million as at June 30, 2008 compared to $16.8 million as at December 31, 2007
- Orosi Mill Project is on target for Q1 2009 completion. A total of $20,002,000 has been spent on the project to June 30, 2008 of which $10,470,000 has been capitalized and $9,532,000 has been expensed since the project start in Q1 of 2007.
In June of 2008 the company secured a temporary bridge loan facility of $8,000,000. The facility was drawn down in two equal tranches of $4,000,000 in July and August of 2008 and matures 120 days after draw-down. The Company is currently working on securing a permanent term loan or other financing on the project which will be required to complete the Orosi Mill Project.
Consolidated Statements of Operations (Unaudited)
(US Dollars and shares in thousands, except per share amounts)
Three months ended Six months ended
June 30 June 30
Note 2008 2007 2008 2007
Sales $ 7,382 $ 14,313 $ 19,692 $ 34,610
-------- -------- --------- --------
Cost of sales 4,972 9,700 11,758 24,339
Royalties and
production taxes 461 629 1,163 1,485
Depreciation and
depletion 367 2,426 964 6,406
Accretion expense 11 148 67 298 133
-------- -------- --------- --------
5,948 12,822 14,183 32,363
-------- -------- --------- --------
Income from mining
operations before
the under noted items 1,434 1,491 5,509 2,247
-------- -------- --------- --------
Expenses and other
income
General and
administrative 1,515 1,308 2,811 2,579
Orosi Mine - Mill
Project 2,573 141 6,789 241
Care and maintenance 1,118 765 2,332 765
Stock based compensation 15 1,079 297 2,211 663
Exploration 1,332 536 2,393 953
Other income 3 (250) (6,777) (72) (7,030)
-------- -------- --------- --------
7,367 (3,730) 16,464 (1,829)
-------- -------- --------- --------
(Loss) income from
continuing operations,
before taxes (5,933) 5,221 (10,955) 4,076
Income tax expense - (1,865) - (1,865)
-------- -------- --------- --------
(Loss) income from
continuing operations,
after taxes (5,933) 3,356 (10,955) 2,211
Loss from discontinued
operations, net of
taxes 10 - (96) - (124)
-------- -------- --------- --------
Net (Loss) income for
the period $ (5,933) $ 3,260 $ (10,955) $ 2,087
-------- -------- --------- --------
-------- -------- --------- --------
Loss per share from
continuing operations
- basic and diluted $ (0.10) $ 0.10 $ (0.18) $ 0.06
Loss per share from
discontinued operations,
net of tax - basic
and diluted - (0.00) - (0.00)
-------- -------- --------- --------
(Loss) income per share
- basic and diluted $ (0.10) $ 0.09 $ (0.18) $ 0.06
-------- -------- --------- --------
-------- -------- --------- --------
Weighted average
number of shares
outstanding 59,399 34,467 59,368 34,432
Limon Mine
Gold sold in the first six months of the year totalled 21,875 ounces which is 2,404 ounces ahead of the 19,471 ounces sold in the first six months of 2007. Gold sold in the second quarter 2008 was 8,351 ounces compared to 10,958 in the second quarter of 2007 a reduction of 2,607 ounces. The gold sales in the second quarter of 2008 were negatively impacted by approximately 21 lost production days due to work stoppages, hurricane Alma and national power grid outages resulting from the storm. The Company believes it will make up this lost production during the rest of 2008 and achieve its 2008 sales and production targets of 45,000 ounces from the Limon Mine.
"Central Sun has continued to make steady progress on many fronts. The Orosi Mill Project feasibility was completed showing positive economics. The construction of the Orosi Mill and facilities has continued on a fast track and remains on schedule for the Orosi Mine to be back in production by the end of the first quarter of 2009. Our Limon Mine while making excellent progress in many areas particularly by increasing the recoveries in the milling process to 86% recoveries from the historical 82% was negatively impacted by labour difficulties and hurricane Alma" said Peter Tagliamonte, President and CEO. "We are also very encouraged by the results we have been getting from the exploration at both the Limon Mine and the Orosi Mine and the identification of significant geophysical anomalies that we have started to test with a Diamond drill campaign".
Conference call
Central Sun has scheduled a conference call for analysts and investors on Thursday, August 14, 2008 at 11:00 a.m. (Eastern) to discuss its second quarter 2008 results and provide an update on its exploration and operations activities.
Messrs. Peter Tagliamonte, President and Chief Executive Officer; Bill Pearson, Executive Vice President, Exploration; Graham Speirs, Chief Operating Officer and Denis Arsenault, Chief Financial Officer will be available to answer questions during the call.
To participate in the conference call, please dial 416-695-9753 or 1-888-818-4097 about five minutes prior to the start of the call.
A live audio webcast of the conference call will be available at www.centralsun.ca.
An archived recording of the call will be available at 416-695-5800 or 1-800-408-3053 (Passcode 3268759#) until August 21, 2008 11:59 p.m. An archived recording of the webcast will also be available on the Company's website.
About Central Sun Mining Inc.
The Company is a growing gold producer with mining and exploration activities focused in Nicaragua. The Company operates the Limon Mine in Nicaragua and is converting the Orosi Mine in Nicaragua to conventional milling to increase the annual gold output. It also holds an option to acquire a 100% interest in the Mestiza gold property which is located 70 kilometres east of the Limon Mine. The Company is focused on efficient and productive mining practices to establish high quality and cost effective operations. Central Sun Mining is committed to growth by optimizing current operations, expanding mineral reserves and resources at existing mines, exploring its extensive land holdings and seeking strategic mergers or acquisitions in the Americas.
Cautionary Note Regarding Forward-Looking Statements: This press release contains "forward-looking statements", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the completion of the Company's new strategic plan, the future financial or operating performance of the Company, its subsidiaries and its projects, the future price of gold, estimated recoveries under the milling plan, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital for the mill project, operating and exploration expenditures, costs and timing of the development of new deposits, outcome, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; actual results of reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold; possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, insurrection or war; delays in obtaining governmental approvals or required financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "General Development of the Business - Risks of the Business" in the Company's annual information form for the year ended December 31, 2007 on file with the securities regulatory authorities in Canada and the Company's Form 40-F on file with the Securities and Exchange Commission in Washington, D.C. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such 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. The Company does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities law.
Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources
The information presented uses the terms "measured", "indicated" and "inferred" mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. | |