Third Quarter Interim Highlights for the Three and
Nine Month Periods Ending September 30, 2007
REDCORP VENTURES LTD. (RDV-TSX) is pleased to report third quarter interim operational and financial
highlights for Redcorp and its wholly-owned consolidated subsidiaries,
Redfern Resources Ltd. and Redcorp Empreendimentos Mineiros Unipessoal
Lda. Readers are advised that due to the summary nature of this
release, the highlights should be read in conjunction with our third
quarter interim report that is being concurrently filed on www.sedar.com.
Summary of Operational and Financial Highlights The following table shows selected consolidated financial
information for the comparative three and nine month interim periods ended
September 30, 2007 and 2006.
($000's, unless otherwise stated)
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2007-Q3
|
2006-Q3
|
2007-Nine
|
2006-Nine
|
Revenue
|
|
|
|
|
Oil and gas revenue, interest and other income
|
1,535
|
67
|
1,757
|
163
|
Expenses
|
|
|
|
|
Exploration expenses
|
1,398
|
3,928
|
5,594
|
6,203
|
General and administrative
|
966
|
263
|
2,100
|
856
|
Interest and financing charges
|
4,735
|
-
|
4,735
|
-
|
Stock compensation expense
|
315
|
231
|
520
|
279
|
Impairment charge on investments (1)
|
6,400
|
-
|
6,400
|
-
|
Net loss, being comprehensive loss
|
(12,437)
|
(4,467)
|
(18,044)
|
(7,509)
|
Basic and diluted loss per share [$/share]
|
(0.03)
|
(0.05)
|
(0.09)
|
(0.09)
|
Capital expenditures (2)
|
15,452
|
34
|
19,149
|
94
|
Total assets
|
254,037
|
16,813
|
254,037
|
16,813
|
Total liabilities
|
127,789
|
5,198
|
127,789
|
5,198
|
Working capital
|
196,263
|
5,842
|
196,263
|
5,842
|
Shareholders' equity
|
126,248
|
11,615
|
126,248
|
11,615
|
(1) See
Investments in ABCP below for further explanation.
(2) Includes expenditures in Property, Plant and
Equipment, and Oil and Gas Interests.
The following items summarize the key operational
and financial highlights of the interim period:
Closing of $252 Million Debt and Equity
Offering On July 10, 2007 we closed a
short-form prospectus offering for total gross cash proceeds of
approximately $252.0 million - 56.3% of which was debt-based and 43.7%
equity-based. The debt component involved the issuance of
141,975 series D units and the equity component involved the
issuance of 220,022,650 series E units. Each D unit was comprised
of a senior secured redeemable $1,000 principal amount D note and 320 of
our common shares. The D notes bear interest at a rate of 13% per
annum, payable semi-annually in arrears, and will mature on July 11,
2012. The D notes are direct secured obligations of ours, ranking
senior to all existing and future indebtedness. Each E unit, priced at $0.50, was comprised of one common share
and one-half of one common share purchase warrant. Each whole common
share purchase warrant is exercisable for the purchase of one common share
at a price of $0.65 until July 10, 2009, subject to our right to
accelerate the expiry date of the warrants after July 10, 2008 if the
volume weighted average price of the common shares on the TSX is greater
than $1.50 for 20 consecutive trading days. Pursuant to the terms of the D notes, an amount equal to the first
four interest payments payable by us to the note holders has been deposited
in a trust-governed escrow account. The proceeds of the prospectus offering are to be used for
development and construction through to production of a new mine at the
Tulsequah Chief deposit in northwest B.C. and for general corporate
purposes. The new mine, which is owned 100% by Redfern, is projected
to produce zinc, copper and lead concentrates with significant gold and
silver by-products. Pre-start-up capital investment was estimated in
the 2007 Feasibility Study by Wardrop Engineering Inc. at $201.5 million,
including a $21.4 million contingency.
Capital Expenditures During 2007-Q3, we incurred or accrued capital expenditures relating
to the development of the Tulsequah Chief mine, which contributed 98% of
the increase in our property, plant and equipment, and oil and gas
interests that aggregated $15.5 million.
Big Bull Exploration Update During 2007-Q3, we announced that exploration drilling in the Big Bull area cut three
zones of significant mineralization in drill hole BB07076. The first zone, from
244.00 to 245.12
meters, cut 4.49 gpt gold, 259.57 gpt silver, 3.86%
lead and 22.46% zinc over an estimated true width of 1.1 meters. From
255.00 to 257.81
meters the hole cut 1.69 gpt gold, 120.14 gpt
silver, 1.91% lead and 4.75% zinc over an estimated true width of 2.2 meters and the
final intercept cut from 284.85 to 290.57 meters,
returned 1.89 gpt gold, 110.41 gpt silver, 2.43% lead and 9.29% zinc over
an estimated true width of 5.6 meters. The stratigraphic
position of this mineralization suggests that it is part of the main Big
Bull trend.
Investments in ABCP On July 12 and 13, 2007, we invested a portion of our uncommitted
funds for approximately 30 days in highly-liquid, third-party sponsored
ABCP. On August 13 and 14, 2007, short-term investments, that one
month earlier we had made upon the recommendation of our corporate bank,
HSBC Bank Canada, had matured and not been repaid, leaving an outstanding
balance owed to us of $91.4 million, including interest to their maturity
only. During the month of August, the Canadian
third-party ABCP market experienced liquidity problems. As a result, in
some cases, certain Canadian ABCP programs were unable to raise funds from
new issuances and therefore were not able to refund the paper as it
matured. At this time, the ABCP market is currently the subject of an
agreement signed August 16, 2007 among a number of affected parties. This
agreement, referred to as the "Montreal Proposal", contemplates
some form of a restructuring of ABCP with the expressed intention of
re-introducing the investments in a different form and also creating a
market for them to be traded. While we are not a signatory to the
Montreal Proposal, we are directly and through counsel monitoring the
activities of a committee formed to implement the restructuring. As at
September 30, 2007, we included ABCP under investments on our balance sheet
at a value of $84.7 million which, due to our intention to liquidate these
investments within one year, have been reported as current assets. These
investments have been classified as Held-for-Trading upon their initial
recognition and accordingly are carried at an estimated fair value. Given
that these investments are classified as Held-for-Trading, we are required
by Canadian GAAP to fair value them as at September 30, 2007. Further,
market uncertainty around ABCP prompted a necessity under GAAP to evaluate
our ABCP for any impairment. As a result, we have recognized during
2007-Q3 an impairment of $6.4 million. As there was no market data
available, management estimated the fair value by discounting the expected
future cash flows according to the probability of recoverability of
principal, without factoring in interest. It is reasonably possible
that the actual timing and amounts ultimately recovered may differ
materially from this estimate. At the time of their
initial purchase, our Series A investments were rated "R1-High"
by the Dominion Bond Rating Service (DBRS), such rating being the highest
credit rating possible for this type of investment. As at the date of
this MD&A, they are rated as "R1-High, Under Review with
Developing Implications". Management will
continue to seek all avenues to recover the full value of the original
investments and related interest. We are encouraged by the successful
restructuring progress made to date by the Montreal Committee and with its
positive predictions of arriving at other restructuring proposals by the
recently-extended December 14, 2007 deadline.
Board of Director Changes During 2007-Q3 Mr. Peter Dey joined our Board of Directors during the quarter. Mr.
Dey is Chairman of Paradigm Capital Inc. and Addax Petroleum Corporation,
Director of Goldcorp Inc., Director of Sun Times Media Group Inc., and is
an experienced financial and legal advisor. Mr. Dey served previously as
Chairman of the Ontario Securities Commission, Morgan Stanley Canada and
was a senior partner of Osler, Hoskin & Harcourt. In 1994 Mr. Dey
was Chairman of the Toronto Stock Exchange Committee on Corporate
Governance. Messrs. Jonathan Rubenstein and Abraham Aronowicz
elected to resign from the Board after many years of much-appreciated
service.
Update on Exploration Activities at Lagoa
Salgada in Portugal We received from
Wardrop Engineering Inc. an NI 43-101 resource estimate on the Lagoa
Salgada deposit. The estimate incorporated data from ten surface
holes and includes data collected by previous operators on the project and
new holes from our 2006-2007 drill program. This latter program included a
total of 5,197
meters of drilling in 11 holes. The estimate
resulted in an inferred resource of 2,017,000 tonnes, grading 1.29 gpt
gold, 85.35 gpt silver, 4.83% lead, 0.35% copper and 5.13% zinc. The
program was successful in two key areas: the extension of the Lagoa Salgada
mineralizing system; and the discovery of a potential new lens of
massive-sulphide mineralization, located 12 km from the Lagoa
Salgada deposit at a target called Rio Moinhos. Under our exploration contract with the Portuguese Government, we
have applied for and received a one‑year extension of the Lagoa
Salgada Concession. Under the terms of the concession, the area has been
reduced by 50% and now totals approximately 207 square
kilometers. All key areas within the property have been
retained. Follow-up drilling is planned early in 2008. In November of
this year a further area reduction is contemplated as part of the renewal
of the concession for another one-year term.
Tulsequah Project Design Changes Approval
Received On October 3, 2007, we
received approval from the British Columbia Environmental Assessment Office
for design and infrastructure changes to our original mine plan which will
allow for increased operational efficiencies and ultimately higher
profitability. We also received approval for the extension to our original
Project Approval Certificate which allows for the design, construction,
operation and ultimate dismantlement of the Tulsequah Project. Under the
terms of the amendment, the Province of British Columbia has granted an
extension to December 12, 2012, during which time we must substantially
start the Project. We have one final environmental assessment application
in progress to approve the use of air cushion barges for year-round access
to the site in place of the 162 kilometer access road. This amendment
is in the public comment period and we anticipate that the formal process
will conclude in January 2008. Mining exploration,
mining and processing activities involve a high degree of risk. There
are several risk factors that may cause actual results to differ materially
from the forward-looking information included in this news release, or
which otherwise affect our business. Such other factors are discussed
in detail in our Annual Information Form for the year ended December 31,
2006 and in each subsequent MD&A filed by us on www.sedar.com. Redcorp Ventures Ltd. is a Vancouver-based mineral
exploration and development company with active projects in British
Columbia and Portugal. Further information on Redcorp and the
Tulsequah Project can be obtained on the Company's website at www.redcorp-ventures.com and at Redfern's website at www.redfern.bc.ca or by calling toll-free to Troy Winsor, Manager of Investor
Relations, at 1-888-225-9662.
ON BEHALF OF THE BOARD OF DIRECTORS OF REDCORP
VENTURES LTD.
Terence Chandler
President and CEO
Certain of the statements made and information
contained herein is "forward- looking information" within the
meaning of the Securities Act
(Ontario) and the Securities Act
(Alberta.) Forward-looking information includes disclosure regarding
possible or anticipated events, conditions or results of operations that is
based on assumptions about future economic conditions and courses of action
and includes future oriented financial information with respect to
prospective results of operations or financial position that is presented
either as a forecast or a projection. Forward looking information is
often, but not always, identified by the use of words such as
"seek", "anticipate", "believe",
"plan", "estimate", "expect" and
"intend"; statements that an event or result is "due"
on or "may", "will", "should",
"could", or might" occur or be achieved; and, other similar
expressions. More specifically, forward looking information contained
herein includes, without limitation, statements concerning our plans at our
Tulsequah Project (inclusive of the Big Bull Project), the net present
value of the Tulsequah Project, the timing and amount of estimated future
production and mine life, expected future prices of gold, silver, copper,
lead and zinc, mineral reserve and mineral resource estimates, estimated
capital and operating costs of the project, estimated capital pay-back
period, estimated asset retirement obligations, timing of development and
permitting time lines; all of which involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements, or industry results, to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking information. Forward-looking
information contained herein is based on material factors and assumptions
and is subject to a variety of risks and uncertainties which could cause
actual events or results to differ materially from a conclusion, forecast
or projection in the forward-looking information. These include,
without limitation, material factors and assumptions relating to, and risks
and uncertainties associated with, the availability of financing for
activities when required and on acceptable terms, the accuracy of the
interpretation of drill results and the estimation of mineral resources and
reserves, the geology, grade and continuity of mineral deposits, the
consistency of future exploration, development or mining results with our
expectations, metal price fluctuations, the achievement and maintenance of
planned production rates, the accuracy of component costs of capital and
operating cost estimates, current and future environmental and regulatory
requirements, favourable governmental relations, the availability of
permits and the timeliness of the permitting process, the availability of
shipping services, the ultimate recovery amount, if any, of our investment
in third-party asset-backed commercial paper (ABCP) that is currently
undergoing liquidity restructuring by the Committee representing the
Montreal Accord, the availability of specialized vehicles and similar
equipment, costs of remediation and mitigation, maintenance of title to our
mineral properties, industrial accidents, equipment breakdowns,
contractor's costs, remote site transportation costs, materials costs for
remediation, labour disputes, the potential for delays in exploration or
development activities, timely completion of future NI 43-101 compliant
reports, timely completion of future feasibility studies, the inherent
uncertainty of production and cost estimates and the potential for
unexpected costs and expenses, commodity price fluctuations, currency
fluctuations, continuing global demand for base metals, expectations and
beliefs of management and other risks and uncertainties, including those
described under Risk Factors Relating to Our Business in our Annual
Information Form, filed on SEDAR on April 2, 2007, and in each subsequent
Management's Discussion and Analysis. Although we have 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. Should
one or more of these risks and uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from any
conclusions, forecasts or projections described in the forward-looking
information. Accordingly, readers are advised not to place undue reliance
on forward-looking information. Except as required under applicable
securities legislation, we undertake no obligation to publicly update or
revise forward-looking information, whether as a result of new information,
future events or otherwise.
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