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Re: News Releases - Wednesday, March 13, 2013
Pacific Rim Mining Announces Fiscal 2013 Third Quarter Results
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PMU News Release #13-01
TSX: PMU
OTCQX: PFRMF
March 13, 2013
Pacific Rim Mining Announces Fiscal 2013 Third Quarter Results
Pacific Rim Mining Corp. ("Pacific Rim" or "the Company") reports its
financial and operating results for the three months ended January 31,
2013. Details of the Company's financial results are provided in its
interim consolidated financial statements and Management's Discussion
and Analysis ("MD&A") that will be publicly filed and made available to
shareholders shortly. Shareholders are strongly encouraged to review
these documents. All monetary amounts are expressed in United States
("US") dollars unless otherwise stated.
Nature of Operations
Pacific Rim is mineral exploration company focused on high grade,
environmentally clean gold deposits in the Americas and committed to
excellence in environmental stewardship and social responsibility.
Pacific Rim's primary asset is the advanced-stage, vein-hosted El
Dorado gold deposit in El Salvador, where the Company also owns several
grassroots gold projects. The Company additionally holds a joint
venture option on the Hog Ranch epithermal gold project in Nevada and
is continuously evaluating additional exploration opportunities
elsewhere in the Americas.
All references to "Pacific Rim" or "the Company" encompass the Canadian
corporation, Pacific Rim Mining Corp, its U.S. subsidiaries (Pac Rim
Cayman LLC ("PacRim"), Pacific Rim Exploration Inc., and Dayton Mining
(U.S.) Inc.), and Salvadoran subsidiaries (Pacific Rim El Salvador,
S.A. de C.V. ("PRES") and Dorado Exploraciones, S.A. de C.V. ("DOREX"),
inclusive.
The Company's business activity is primarily focused on resolving the
El Dorado project permitting impasse, including legal recourse. In
addition, the Company continues to seek new exploration opportunities
that fit its areas of focus and expertise.The El Dorado project is the
subject of an arbitration claim (the "Arbitration") (more thoroughly
described in the Company's Q3 2013 MD&A and Fiscal 2012 MD&A) being
heard at the International Center for the Settlement of Investment
Disputes ("ICSID") at the World Bank. During Q1 2013 the Arbitration
was given permission by ICSID to proceed, under the Investment Law of
El Salvador, to its final phase wherein the merits of the claim will
finally be addressed at ICSID headquarters in Washington, DC.
Notwithstanding the ongoing legal action, the Company continues to seek
a negotiated resolution to the El Dorado permitting impasse and to
resuming its advancement of the El Dorado project. The Company holds an
option to earn a 65% interest in the Hog Ranch gold property in Nevada.
The Company selected targets for, and recently received a permit to
conduct, a Phase 1 drill program on the Hog Ranch property.
Pacific Rim's shares trade under the symbol PMU on the Toronto Stock
Exchange ("TSX") and on the OTCQX market in the US under the symbol
PFRMF.
Results of Operations
For the three month period ended January 31, 2013, Pacific Rim recorded
a net loss of $(0.9) million ($(0.00) per share), compared to net loss
of $(0.9) million ($0.01 per share) for the same period a year earlier.
The loss recorded for Q3 2013 is primarily a result of operating
losses of $(1.0) million, offset by a $0.1 million gain on derivative
liability (unrealized income related to changes in the fair value of
common stock warrants issued by the Company during private placement
financings). This compares virtually identically to the results of
operations for Q3 2012, when the Company recorded an operation loss of
$(1.0) million and a gain on derivative liability of $0.1 million.
For the nine months ended January 31, 2013, Pacific Rim recorded a loss
of $(2.8) million or $(0.01) per share, compared to a loss of $(1.5)
million or $(0.01) per share, for the nine months ended January 31,
2012. This $1.3 million increase in net loss period over period is
primarily attributable to a $1.3 million difference in unrealized gain
on derivative liability ($1.5 million for the first nine months of
fiscal 2012 compared to $0.2 million for the same period of the current
fiscal year).
Expenses
Exploration expenses were $0.4 million during Q3 2013 compared to $0.6
million during Q3 2012 reflecting a slowdown in activity during the
current quarter. Expenses related to the ICSID Arbitration were $0.3
million during Q3 2013 compared to $0.1 million during the same period
a year earlier reflecting increased activity in preparation for the
final phase of the case, which commenced during Q2 2013. Other
expenses were largely unchanged quarter over quarter. As a result,
operating loss for both Q3 2013 and Q3 2012 was $(1.0) million.
As described above, the Company recorded an unrealized gain on
derivative liability of $0.1 million during both Q3 2013 and Q3 2012.
Unusual Items
There were no unusual items in Q3 2013.
Summary
Slightly lower exploration costs during Q3 2013 compared to Q3 2012
were offset by slightly higher Arbitration costs, which resulted in an
operating loss of $(1.0) million for the third quarter of both fiscal
2013 and 2012. This loss was negligibly decreased by an unrealized gain
on derivative liability of $0.1 million during both Q3 2013 and Q3
2012, which resulted in a net loss and comprehensive loss of $(0.9)
million for each of Q3 2013 and Q3 2012.
Liquidity and Capital Resources
Cash
The Company's cash and cash equivalents at January 31, 2013 stood at
$1.6 million, which is$0.8 million higher than the April 30, 2012
balance of $0.8 million. Short-term investments also increased, from
$0.5 million at April 30, 2012 to $1.2 million at January 31, 2013. As
a result of these increases in cash and cash equivalents and short-term
investments, current assets increased by $1.5 million during the first
nine months of fiscal 2013, from $1.4 million at April 30, 2012 to $2.9
million at January 31, 2013. This increase reflects increases in cash
and cash equivalents from the proceeds of a private placement financing
undertaken during Q2 2013 and redemptions from short term investments,
offset by expenditures of cash on the purchase of new short term
investments and on exploration and project generation expenses, general
and administrative costs associated with maintaining a public company,
and expenditures related to the Arbitration action.
The Company's financial statements have been prepared on the basis that
the Company will continue as a going concern, which assumes that the
Company will be able to meet its commitments, continue operations,
realize its assets and discharge its liabilities in the normal course
of business for the foreseeable future. There are events and conditions
that cast substantial doubt on the validity of that assumption. The
Company will require additional financing in the future in order to
conduct substantial exploration programs and meet property commitments,
for administrative purposes and potentially for legal expenses related
to the Arbitration. The costs for the Arbitration are substantial and
are anticipated to increase as the case proceeds to through the final,
merits-based phase. While the Company has entered into a service and
fee agreement with its Arbitration legal counsel that provides legal
fee cost certainty, and, as a result of its recent private placement
financing, has the funds in place to pay the legal costs related to the
final phase of the Arbitration, additional Arbitration-related costs
including but not limited to costs related to expert witness testimony,
that fall outside of the service and fee agreement, will be incurred,
and along with ongoing general and administrative and regulatory
expenses, will likely necessitate additional financing in the future.
Factors that could affect the availability of financing include
fluctuations in the Company's share price, the state of international
debt and equity markets, investor perceptions and expectations, global
financial and metals markets, progress on any of the Company's
exploration properties, and developments, if any, on the El Dorado
project permitting application. The Company believes it will be able
to obtain the necessary financing to meet its requirements on an
ongoing basis; however, there can be no assurance that the necessary
financing will be obtained, and such financing, if available, may be
dilutive to the Company's shares and shareholders. As it has in the
past, the Company plans to obtain additional financing through, but not
limited to, the issuance of additional equity. Readers are referred to
Section 13 -- Risks and Uncertainties in the Q3 2013 MD&A and Section
14.1 -- Financing Risks in the Company's fiscal 2012 MD&A.
[The foregoing two paragraphs contain forward-looking statements
regarding the requirement for financing and the use of funds that may
be raised. See Forward-Looking Information.]
Working Capital
At January 31, 2013, the value of the Company's current assets was $2.9
million, compared to $1.4 million at April 30, 2012, an increase of
$1.5 million. This increase is primarily the result of an increase in
cash related to the Company's October 2012 private placement financing,
offset by expenditures of cash on exploration, general and
administrative responsibilities and the Arbitration action as outlined
in Section 5 above. Resource property balances at January 31, 2013
were negligibly higher than the April 30, 2012 balance ($5.51 million
and $5.49 million respectively).
At January 31, 2013 the Company had current liabilities of $1.6
million, unchanged from the April 30, 2012 balance of $1.6 million. Of
the accounts payable and accrued liability balances, $1.2 million at
January 31, 2013 (compared to $1.4 million at April 30, 2012) is due to
one vendor associated with the Arbitration action.
As a result of the increase in current assets, the Company's working
capital increased by $1.6 million between April 30, 2012 ((0.2)
million) and January 31, 2013 ($1.4 million).
Financial Condition
The Company does not intend to resume significant exploration programs
in El Salvador until such time as the El Dorado environmental permit
and exploitation concession are received. The Company cannot judge if
or when the required permits will be received and is not currently
planning any exploration programs for its El Dorado, Santa Rita and
Zamora-Cerro Colorado properties for the immediate future beyond what
is necessary to keep all of its exploration licences in good standing.
Should the required permits be granted, the Company will evaluate its
options for resuming full scale exploration work designed to advance
its El Salvador projects.
During Q1 2013 the Company applied for and was granted a drill permit
to conduct a 10-15-hole (approximately 12,000 meter) drill program at
the Hog Ranch property, which permit allows for expanding the drill
program to 31 holes and is valid for two years from the date of grant.
The Hog Ranch drill program is subject to future financing (favourable
conditions for which are unlikely to occur until such time as the El
Dorado permit has been received) and sourcing of drill contractors, and
consequently is not likely to commence during fiscal 2013 as previously
anticipated. Acquisition of the Remance project is in doubt and
therefore, no exploration plans for Remance are being contemplated at
this time. However, if a final acquisition agreement on Remance is
signed, as per the terms of the Remance LOI the Company will be
responsible for undertaking a $1 million exploration program in the
first year of the option period. The Company intends to continue its
project generation initiatives with the aim of evaluating and possibly
acquiring new exploration properties of merit that fit its exploration
focus.
The Company anticipates that the Hog Ranch drill program and associated
exploration will cost approximately $1.5 million, with a further $1
million required in the event the Remance property is acquired. Minimal
expenditures are anticipated for generative exploration work. The
Company will require additional financing in order to carry out the
planned Hog Ranch drill program, as well as any other future
exploration work of a substantive nature.
[The foregoing two paragraphs contain forward-looking statements
regarding the scope and anticipated costs of exploration and generative
work programs management intends to undertake during fiscal 2013. See
Forward-Looking Information.]
As a result of recently adopted measures aimed at reducing staffing
expenses, the Company's general and administrative costs are expected
to decrease marginally during the remainder of fiscal 2013 and remain
stable into the foreseeable future. Expenditures related to the
Arbitration claim are expected to be substantial as the case proceeds
through the final phase. At January 31, 2013, the Company had
accumulated a liability of approximately $1.2 million related to the
Arbitration. Additional working capital (likely through equity
financing) will be required to fund ongoing general and administrative
costs. Though the Company has signed a service and fee agreement with
its Arbitration legal counsel (as described in Section 2.1.4 of the Q3
2013 MD&A and elsewhere) that will preclude legal fee cost overruns,
ancillary Arbitration-related expenses such as expert witnesses, court
costs, etc. are less certain and may be substantial.
[The foregoing paragraph contains forward-looking statements regarding
anticipated general and administrative expenses for fiscal 2013, and
the requirement for additional financing to fund legal costs and future
general working capital expenses. See Forward-Looking Information.]
The business of mining and exploration involves a high degree of risk
and there can be no assurance that any of the Company's current
exploration projects will result in profitable mining operations. The
Company has no source of revenue, and will require additional cash in
the future to fund exploration and administrative expenses. As at
January 31, 2013, the Company has working capital of $1.4 million, has
incurred losses since inception and has an accumulated deficit of $92.6
million. The Company's ability to continue operations and exploration
activities as a going concern is dependent upon its ability to obtain
future financing. The Company will need to raise additional funds to
support exploration and administration expenses and may require
additional funds to support expenses related to the Arbitration action
that fall outside of its legal services agreement. While the Company
has been successful in obtaining financing in the past, there is no
assurance that sufficient funds will be available to the Company, or be
available on favourable terms in the future. Factors that could affect
the availability of financing include fluctuations in the Company's
share price, the state of international debt and equity markets,
investor perceptions and expectations, global financial and metals
markets, progress on any of the Company's exploration properties, and
developments, if any, on the El Dorado project permitting application.
Additional financing will require, but may not be limited to, the
issuance of additional equity. Readers are encouraged to thoroughly
review the Risks and Uncertainties outlined in Section 13 of the Q3
2013 MD&A and more thoroughly described in Section 14 of the Company's
Fiscal 2012 MD&A.
Outlook
Exploration
During the first half of fiscal 2013, the Company applied for and was
granted a drill permit to conduct a 10-15 hole (approximately 12,000
meter) Phase 1 drill program at Hog Ranch, which permit allows for
expansion of the drill program to 31 holes and is valid for two years
from the date of grant. The Company has selected and prioritized drill
targets for Hog Ranch but has elected to forestall commencement of this
Phase 1 drill program until such time as it can minimize the dilution
on the cost of capital necessary to undertake the program (conditions
for which are not likely to occur until such time as the El Dorado
permit is granted). In addition to being subject to financing,
commencement of this drill program is dependent on sourcing of drill
contractors at a competitive rate. As such, the Hog Ranch drill program
is not likely to occur during fiscal 2013 as was previously
anticipated.
The Company's acquisition of the Remance property is on hold and highly
uncertain at this time, pending the vendor's legal appeal of the
Government of Panama's recent decision to deny extension of the Remance
concession term. While the Company is keeping the Remance LOI in effect
during Minera Clifton's appeal, it does not intend to sign a final
agreement to acquire the Remance project unless the term of the
concession is extended.
The Company will continue to curtail its exploration programs and
expenditures in El Salvador until such time as PRES receives the El
Dorado environmental permit and exploitation concession. The Company
remains hopeful that it will either receive the El Dorado permit and
mining concession or that it will be appropriately compensated. The
Company will continue to seek opportunities for dialogue with the GOES
aimed at resolving its permitting issues in El Salvador including
receipt of the environmental and mining permits for the El Dorado
project as well as re-establishing the exploration licence for Santa
Rita.
The Company continues to evaluate new project opportunities in North
and Central America.
The planned Phase 1 Hog Ranch drill program described above and in
Section 2.2 is expected to cost approximately $1.5 million. However,
commencement of this drill program is dependent on securing adequate
future financing, and procurement of drill contractors and as such, its
timing is currently uncertain. If the Remance project is acquired, the
Company will require financing to undertake an exploration program, as
per the terms of its Remance letter of intent that is anticipated to
cost approximately $1.0 million. Additional exploration work required
to keep all of its El Salvador projects in good standing, and
exploration expenses related to the Company's generative programs, will
continue through the remainder of fiscal 2013 and for the foreseeable
future.
[The foregoing paragraph contains forward-looking statements regarding
the Company's exploration plans and anticipated costs during fiscal
2013 and beyond, its efforts to settle the El Dorado permit impasse,
and its requirements for additional funding. See Forward-Looking
Information.]
General and Administrative and Legal
As a result of recently adopted measures aimed at reducing its staffing
costs, the Company's general and administrative costs are expected to
be marginally reduced during the remainder of fiscal 2013 following
which they will stabilize. Additional working capital (likely through
equity financing) will be required in the future to fund ongoing
general and administrative costs. Expenditures related to the
Arbitration claim are expected to be substantial as the case proceeds
through the final phase. Though the Company has signed a service and
fee agreement with its Arbitration legal counsel (as described in
Section 2.1.4 of the Q3 2013 MD&A and elsewhere) that will preclude
legal fee cost overruns, ancillary Arbitration-related expenses such as
expert witnesses, court costs, etc. are less certain and may be
substantial.
The Company will continue to seek opportunities for dialogue with the
GOES aimed at resolving the El Dorado permitting situation. The Company
and its subsidiaries have a well-documented history of supporting local
inhabitants and building relationships with all stakeholders. This is
a key component of the Company's approach to exploration and
development, and will continue in all jurisdictions in which it and its
subsidiaries operate.
Unless these diplomatic efforts are successful, the Arbitration action
is expected to proceed during the remainder of fiscal 2013 and beyond.
The Company and its legal counsel are currently preparing for the final
phase of the ICSID Arbitration case. PacRim's Memorial (initial written
testimony in which the details of its case our presented) is now in
preparation and will be submitted to the Tribunal in late March 2013.
This submission will be followed by a written response from the GOES
and oral testimony by both parties before the Tribunal. Based on these
submissions and testimonies, the Tribunal will determine whether El
Salvador has breached Salvadoran and international law by refusing to
issue the necessary mining licenses for the El Dorado Mine. They will
also determine El Salvador's monetary liability for breaching the
investment protections owed to a foreign investor as per in its own
laws. The final phase of the Arbitration case is expected to continue
through calendar 2013 and potentially beyond.
[The foregoing paragraph contains forward-looking statements regarding
anticipated general and administrative and legal expenses during fiscal
2013; anticipated schedule of events through the final phase of the
Arbitration; and management's expectations regarding expected
Arbitration costs and its ability to manage these expenses. See
Forward-Looking Information.]
Key Issues
Important corporate and technical issues facing the Company in the
coming fiscal months (and beyond) include: developments related to the
Arbitration action; ongoing efforts to reach a resolution to the El
Dorado permitting impasse with the GOES; the Company's ability to
secure adequate future financing for ongoing Arbitration-related costs,
general working capital purposes, and exploration expenses including
the planned Hog Ranch drill program and maintenance of the El Salvador
and Nevada properties; the execution and outcome of the Company's Phase
1 drill program at the Hog Ranch property; developments related to the
potential signing of a formal option agreement to acquire the Remance
project and the subsequent undertaking of an exploration and drilling
program at Remance if, as, and when it is formally acquired; and, the
continued search for additional exploration project opportunities.
Readers are strongly encouraged to review the information provided in
Section 13 -- Risks and Uncertainties of the Q3 2013 MD&A and more
thoroughly detailed in Section 14 of the Company's fiscal 2012 MD&A.
[The foregoing paragraph contains forward-looking statements regarding
management's assessment of the key issues facing the Company during
fiscal 2013 and the requirement for additional financing. See
Forward-Looking Information.]
On behalf of the board of directors,
"Thomas C. Shrake"
Thomas C. Shrake
President and CEO
To contact the Company about this news release call 604-689-1976.
Forward-Looking Information
The information contained herein contains "forward-looking statements"
within the meaning of Section 21E of the United States Securities
Exchange Act of 1934 (as amended) and applicable Canadian securities
legislation. Forward-looking statements relate to analyses and other
information that are based on forecasts of future results, estimates of
amounts not yet determinable and assumptions of management. Any
statements that express predictions, expectations, beliefs, plans,
projections, objectives, assumptions or future events or performance
are not statements of historical fact and may be "forward-looking
statements." Statements concerning reserves and mineral resource
estimates may also be deemed to constitute forward-looking statements
to the extent that they involve estimates of the mineralization that
will be encountered if the property is developed, and in the case of
mineral reserves, such statements reflect the conclusion based on
certain assumptions that the mineral deposit can be economically
exploited.
This report contains forward-looking statements regarding:
.. the Company's future financing requirements and the use of funds that
may be raised. These assumptions are based on management's estimate of
working capital requirements and past expenditures. There are no
guarantees that future financing will be available to the Company under
acceptable terms and conditions. Readers are cautioned that without
additional financing the Company's ongoing exploration plans may not be
carried out as anticipated and its ability to continue its business may
be at risk.
.. the Company's assessment of expected legal costs associated with the
Arbitration and its ability to meet these costs based on current cash
and cash equivalent balances, as well as management's assessment that
unanticipated Arbitration costs may arise for which additional
financing may be required. The Company's expectation that it can meet
the expected legal expenses during the final phase of the Arbitration
is based on its understanding of costs laid out in the service and fee
agreement with its legal counsel as well as its understanding of
potential additional costs. Arbitration-related costs not covered by
the service and fee agreement will be incurred, and other unanticipated
costs related to the Arbitration may cause these assumptions to change,
either or both of which may necessitate the Company to secure
additional financing in order to complete the Arbitration. There can
be no guarantee that additional financing will be available to the
Company under acceptable terms and conditions.
.. the scope of exploration and generative work programs management
plans to undertake during fiscal 2013 and in the foreseeable future.
These expectations are based on various assumptions including but not
limited to: the Company's ability to secure financing, procure
contractors and obtain permits necessary to commence the proposed Hog
Ranch drill program; the Company and/or its subsidiary's signing of a
Formal Agreement to acquire the Remance project; the Company and/or its
subsidiaries' continued title and access to the El Dorado, Santa Rita
and Zamora-Cerro Colorado properties; the availability and
accessibility of projects the Company may be interested in acquiring;
the availability of sufficient working capital and access to financing;
the ability to procure adequate experienced staff; the availability of
contractors; and other risks and uncertainties. Should any of these
assumptions prove incorrect or requirements not be met, the Company's
project generation and exploration for fiscal 2013 and beyond may not
occur as planned.
.. the Company's intent to forego significant exploration work at the El
Salvador projects until certain permits are granted, the implication
being that if and when these permits are granted increased investments
in exploration will be made in El Salvador. Readers are cautioned that
this statement conveys management's intent but that resumption of a
large-scale exploration program at the El Salvador projects is
dependent on not only the PRES's receipt of the El Dorado permit but
also the availability of adequate financing, the ability to procure
adequate experienced staff, the availability of contractors, and other
risks and uncertainties. Should any of these assumptions prove
incorrect or requirements not be met, the Company's project generation
and exploration plans for the remainder of fiscal 2012 may not occur as
planned.
.. the Company's exploration plans and anticipated costs for fiscal 2013
and beyond . The anticipated exploration expenditures reflect
estimations made by management based on current levels of expenditure
and anticipated work programs as described previously. Should
unexpected costs arise, exploration expenditures may differ from those
currently anticipated.
.. anticipated general and administrative, and legal expenses and the
possible requirement for additional financing to fund general working
capital expenses and potential, unanticipated legal costs. These
statements are based on management's assumption the Arbitration action
will continue through fiscal 2013 and the expected costs of pursuing
this action, plus the Company's anticipated burn rate for general and
administrative costs. Should PRES receive the El Dorado permits at any
time, the necessity to continue the CAFTA action may be averted and the
anticipated impact on general and administrative costs may not
materialize.
Forward-looking statements are subject to a variety of risks and
uncertainties, which could cause actual events or results to differ
from those reflected in the forward-looking statements, including the
risks and uncertainties outlined above and other risks and
uncertainties related to the Company's prospects, properties and
business detailed in its fiscal 2012 MD&A, in the Company's Annual
Information Form for the year ended April 30, 2012 and in the Company's
most recent Annual Report on Form 20F filed with the US Securities and
Exchange Commission. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in
forward-looking statements. Investors are cautioned against
attributing undue certainty to 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 laws.
National Instrument 43-101 Disclosure
Mr. William Gehlen, Vice President Exploration, supervises Pacific
Rim's exploration work on the El Dorado project. Mr. Gehlen is a
Certified Professional Geologist with the AIPG (No. 10626), an employee
of the Company and a Qualified Person as defined in NI 43-101.
Mr. David Ernst, Chief Geologist, supervises the Company's project
generation initiatives and conducted due diligence geological
investigations and confirmatory sampling at the Remance Project . Mr.
Ernst is geologist licensed by the State of Washington, an employee of
Pacific Rim and a Qualified Person as defined in NI 43-101.
Pacific Rim's sampling procedures follow the Exploration Best Practices
Guidelines outlined by the Mining Standards Task Force and adopted by
The Toronto Stock Exchange. Samples are assayed using fire assay with a
gravimetric finish on a 30-gram split. Quality control measures,
including check- and sample standard-assaying, are being implemented.
Samples are assayed by Inspectorate America Corporation in Reno, Nevada
USA, an ISO 9002 certified laboratory, independent of Pacific Rim
Mining Corp.
The TSX has neither reviewed nor accept responsibility for the ad
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Copyright (c) 2013 PACIFIC RIM MINING CORP. (PMU) All rights reserved.
For more information visit our website at
http://www.pacrim-mining.com/ or send mailto:general@pacrim-mining.com
Message sent on Wed Mar 13, 2013 at 2:21:57 PM Pacific Time
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