Constellation Copper Reports Second Quarter 2008 Financial Results

Denver, Colorado, August 13, 2008 � Constellation Copper Corporation (�Constellation� or the �Company�) (TSX: CCU) announced its financial results for the quarter ended June 30, 2008.  All dollar amounts are in US dollars unless otherwise stated.

Recent developments

• Lisbon Valley mine second quarter 2008 production was 3,832,000 pounds of copper cathode. 
• Copper sales during the second quarter of 2008 were 3,715,000 pounds at an average price per pound of $3.77, before the impact of derivative instruments put in place primarily as a requirement of the Lisbon Valley project financing.  During the second quarter of 2008, the realized loss on derivative instruments was $5.5 million or $1.47 per pound of copper sold.  
• In February 2008, the Company finalized an amendment to its commodity swap arrangement, deferring approximately $5.1 million of realized losses on settlement of forward sale contracts.  In addition, the Company has only paid a portion of the losses settled in the first six months of 2008 that were not deferred. 
• The Company did not pay $1,861,000 of interest on its convertible debentures when it was due on March 31, 2008.  Following a prescribed cure period ended April 30, 2008; the non-payment of interest was considered an event of default requiring the Company to accrete the debentures up to their full face value, which is payable on demand and classified as a current liability. At June 30, 2008, the outstanding principal and accrued interest on the convertible debentures is $68,310,000 and $2,820,000, respectively.  
• The Company is currently soliciting proposals for various forms of outside financing for the San Javier and Terrazas development properties, including sources of funding the $3.0 million Terrazas mineral rights payment due in October 2008.  If the Company is unsuccessful in obtaining financing for the payment, the Company may lose its rights and the $12.3 million carrying value of Terrazas may be impaired.
• In July 2008, the Company received notification of pending negotiations between a common shareholder and holders of more than two-thirds of the Company�s convertible debentures regarding a proposed restructuring of the Company.  The restructuring contemplates a share placement of $10 million and exchange of convertible debentures and related accrued interest at less than the current carrying values.  The restructuring would be subject to, among other things, approval by the board of directors and shareholders of the Company, all necessary regulatory approvals and satisfactory due diligence. 
• In July 2008, the Company was notified by the Toronto Stock Exchange (�TSX�) that the TSX had further extended their review of the common shares of the Company with respect to meeting the continued listing requirements until September 1, 2008.  

Going concern and liquidity

There is significant doubt about the Company�s ability to continue as a going concern.

At June 30, 2008, the Company had $1,457,000 of cash.  The Company continues to pursue various near term financing alternatives, including bank financing, equity investment, mergers, and sale of certain assets or sale of the entire company.  In addition to not paying interest on its convertible debentures and only paying a portion of forward sales settlements, the Company has been unable to pay many of its vendor obligations when they were originally due, which may eventually result in vendors requiring payment before delivery of goods and services necessary to continue operations.  The Company, however, has made substantial progress in reducing its vendor payables.

The Company may consider filing for legal protection from its creditors in both Canada and the United States if cash liquidity problems can not be resolved. 

Lisbon Valley

The Company ceased mining and crushing activities at Lisbon Valley at the end of January 2008.  In early July 2008 the Company completed the acid cure of the ore placed on the leach pad before mining activities were concluded.  All ore on the pads is currently under leach.   As a result of lower than expected temperatures at Lisbon Valley during the first six months of 2008, the temperature of leach solutions did not reach 60 degrees until late June 2008.  Typically, the bacterium that enhances the leaching characteristics of sulfide ore becomes active when the temperature of the leach solution exceeds 60 degrees.  Copper production in the second quarter of 2008 was 3,832,000 pounds compared to 3,353,000 pounds in the first quarter of 2008.

Exploration and development projects

During the quarter ended June 30, 2008, the Company continued evaluation of financing alternatives for the San Javier project in Sonora, Mexico and the Terrazas project in Chihuahua, Mexico.  The Company is currently soliciting joint venture and purchase proposals. 

The Company is also evaluating other zinc resources that would be amenable to agitation leaching to enhance the economics of the Terrazas project.

The Company�s exploration and development properties are subject to periodic payments to maintain property positions.  If the Company is unable to obtain sources for funding required payments, the carrying value of mineral properties, totaling $17.2 million at June 30, 2008, may be impaired.

Results of operations

The Company had net income of $1,457,000 ($0.01 per share) for the second quarter of 2008, compared to a net loss of $8,078,000 ($0.05 per share) for the second quarter of 2007.  

Revenues during the second quarter of 2008 were $14,019,000 from the sale of 3,715,000 pounds of cathode copper at an average price of $3.77 per pound.   Revenues during the second quarter of 2007 were $20,301,000 from the sale of 5,919,000 pounds of copper at an average price of $3.43 per pound.   Quarterly revenues exclude a realized loss on derivative instruments of $5,461,000 or $1.47 per pound sold in 2008 and $5,870,000 or $0.99 per pound sold in 2007.

Costs of sales, excluding depreciation and amortization costs, were $9,091,000, or $2.45 per pound of copper sold in the second quarter of 2008.  As a result of the asset impairments in 2007, a majority of non-cash costs were written-off and the entire $9,000 of depreciation and amortization in the second quarter of 2008 relates to non-operating equipment.  In the second quarter of 2007, costs of sales, excluding depreciation and amortization, were $10,879,000, or $1.84 per pound of copper sold.  Non-cash costs of $2,123,000, or $0.36 per pound, were combined with $20,000 of non-operating depreciation and amortization.

General and administrative expenses were $1,112,000 for the quarter ended June 30, 2008, compared to $1,131,000 in the quarter ended June 30, 2007.  Stock based compensation expense was $108,000, net of $13,000 capitalized, and $360,000, net of $50,000 capitalized, for the quarters ended June 30, 2008 and 2007, respectively.  Stock based compensation is recognized over the vesting period of the options. 

During the second quarter of 2008, the Company expensed $40,000 for activities related to properties on which mineral resources had not yet been identified compared to exploration expense of $155,000 in the second quarter of 2007. Exploration activities have been curtailed to conserve cash and are generally limited to expenditures required to maintain the Company�s ownership positions in its existing properties.

Interest and other income was $180,000 in the second quarter of 2008 compared to $271,000 in the second quarter of 2007.   Interest and other income in the second quarter of 2008 include a total of approximately $152,000 from the sale of exploration data and scrap copper.  In addition, cash balances were significantly higher during the second quarter of 2007. 

In the second quarter of 2008, the Company had interest expense of $1,152,000 compared to $1,592,000 in the second quarter of 2007.  The decrease relates primarily to not having any accretion on the Company�s convertible debentures and lower cash balances and interest rates in the second quarter of 2008, partially offset by additional interest on deferred forward sales settlements.  The convertible debentures were accreted to their face value at March 31, 2008, as noted above.

In the second quarter of 2008, the Company recorded a loss of $809,000 on foreign exchange compared to a loss of $3,385,000 in the second quarter of 2007.  The foreign exchange loss in each quarter relates primarily to the effect of the strengthening of the Canadian dollar relative to the US dollar on the convertible debentures.  

In addition to realized losses in the second quarter of 2008 and 2007 of $5,461,000 and $5,870,000, respectively, the Company had an unrealized gain on derivative instruments of $5,059,000 in the second quarter of 2008 compared to an unrealized loss of $3,135,000 in the second quarter of 2007.  Unrealized gains and losses on derivative instruments includes the effect of any change in copper prices for outstanding forward sales in addition to reversing  previously recorded gains or losses when the contracts are settled.

Cash flows

Cash used in operating activities was $1,534,000 for the quarter ended June 30, 2008, compared with cash provided of $717,000 for the second quarter of 2007.  The increase in cash used in operating activities in the second quarter of 2008 relates primarily to the timing of paying off forward sales settlements, past due vendors and insurance invoices. 

The $1,316,000 realized loss on settlement of the January 2008 forward sale contracts was deferred by the lender in connection with an amendment of the commodity swap arrangement.  In addition, at June 30, 2008, the Company has only paid $7,800,000 toward realized losses of $8,584,000 during 2008 that were not deferred.  During the second quarter of 2008, the Company�s cash payments of forward sales settlements were $6,000,000, compared to $5,396,000 in the second quarter of 2007.   

In the second quarter of 2008, working capital of $1,629,000 was provided compared to funding of $1,810,000 of working capital in the second quarter of 2007.  As a result of the cessation of mining and crushing activities in January 2008, the Company has completed stacking ore on the leach pad and began drawing down ore-in-process inventories.  Inventory provided $3,568,000 of working capital in the second quarter of 2008 compared to use of $2,015,000 during the second quarter of 2007, when ore-in-process inventory was being built. 

Cash provided by investing activities was $225,000 in the second quarter of 2008 compared to cash used of $3,023,000 during the quarter ended June 30, 2007.  Expenditures in the quarter ended June 30, 2008 on mineral properties was $295,000, compared to a total of $2,996,000 spent on mineral properties and plant, property and equipment in the second quarter of 2007.  The increase in restricted cash was $40,000 and $27,000 in the second quarter of 2008 and 2007, respectively.  Also during the second quarter of 2008, the Company received $560,000 from the sale of excess inventory and equipment.

There were no cash flows from financing activities in the quarter ended June 30, 2008, compared to proceeds of $79,000 from a TDA grant in the quarter ended June 30, 2007. 

Outlook

Copper production at Lisbon Valley increased marginally in the second quarter compared to the first quarter of 2008, as a result of increased PLS flow rates related primarily to warmer weather in the second quarter.  Future copper production will continue as long as it remains economic, depending on leach recovery rates, copper prices and operating costs.

Copper prices increased significantly during the second quarter of 2008, to an average price per pound of $3.83 in the second quarter of 2008 from a price of $3.52 in the first quarter of 2008.  The copper price was $3.40 per pound on August 8, 2008.  There is no assurance that copper prices will remain at these levels.

At June 30, 2008, the Company has forward sales contracts for 7.9 million pounds of copper maturing over the remainder of 2008, at a contract price of $1.85 per pound.  Approximately 3.9 million pounds of the forward sales will be settled at a previously agre ed price of $3.08 per pound and the remaining 4.0 million pounds will be settled at the monthly average London Metals Exchange (�LME�) copper price.

In July 2008, the Company received notification of pending negotiations between a common shareholder and holders of more than two-thirds of the Company�s convertible debentures regarding a proposed restructuring of the Company.  The restructuring contemplates a share placement of $10 million and exchange of convertible debentures and related accrued interest at less than the current carrying values.  The restructuring would be subject to, among other things, approval by the board of directors and shareholders of the Company, all necessary regulatory approvals and satisfactory due diligence.

Subsequent Event

On May 2, 2008 the Toronto Stock Exchange ("TSX") reported that it was reviewing the common shares of the  Company with respect to their meeting the TSX's continued listing requirements and that the Company had been granted 30 days in which to demonstrate compliance with these requirements, pursuant to the Remedial Review Process. The TSX has advised the Company that the reason for this review is that it believes the financial condition and operating results of the Company do not meet the continued listing requirements under sections 709 and 710(a)(i) of the TSX Company Manual and the price of the Company's securities have been reduced so as not to warrant continued listing pursuant to section 711 of the TSX Company Manual. 

The TSX has granted a series of extensions and in July 2008, the Company was notified the TSX had further extended their review of the common shares of the Company with respect to meeting the continued listing requirements until September 1, 2008. 

Attached to this press release are the Company�s unaudited consolidated financial statements for the quarter ended June 30, 2008.  For a more complete discussion, please refer to the Company�s second quarter 2008 report and the Company�s audited financial statements and MD&A for the year ended December 31, 2007 on the SEDAR website at www.sedar.com.  (CLICK HERE TO VIEW FINANCIAL STATEMENTS)

For further information please contact:

Constellation Copper Corporation 
Patrick James, Chief Executive Officer
Michelle Hebert, Manager, Corporate Affairs
Tel: (720) 228-0055
Toll Free: 1-877-370-5400
Fax: (303) 863-1736
info@constellationcopper.com
www.constellationcopper.com

Renmark Financial Communications Inc.
Neil Murray-Lyon : nmurraylyon@renmarkfinancial.com
Barbara Komorowski : bkomorowski@renmarkfinancial.com
Tel.: (514) 939-3989 
Fax: (514) 939-3717
www.renmarkfinancial.com 

This press release contains certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will be taken", "occur" or "be achieved".   Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.  Such factors include, among others, risks related to changes in commodity and power prices, changes in interest and currency exchange rates, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications, cost escalation, unavailability of materials and equipment, delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), political risk, social unrest, and changes in general economic conditions or conditions in the financial markets.  Although the Company has attempted to i dentify 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 to differ from those anticipated, estimated or intended.  There can be no assurance that forward-looking 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.