IMZ Reports Strong Pallancata Mine Operating Results. Additional US$6.0 million Cash Dividend Received
Scottsdale, Arizona, August 11, 2010 � International Minerals Corporation (TSX and SIX: �IMZ�) reports that the Pallancata silver mine in Peru increased silver production by approximately 34% in the calendar second quarter of 2010 (�Q2 2010�) to 2.53 million ounces (1.0 million silver ounces attributable to IMZ) compared to the second quarter of 2009.
The Pallancata Mine is jointly owned by IMZ (40% interest) and Hochschild Mining plc (�Hochschild�, 60% interest and operatorship). All dollar numbers are in US Dollars.
Highlights for Q2 2010 at the Pallancata Mine include:
Stephen Kay, President and CEO of IMZ, stated, �The Pallancata Mine continues to perform extremely well both at the production level and on an operating cost basis. IMZ has received record cash dividends from its 40% ownership in the mine of $16 million so far in calendar year 2010, compared to $7.6 million for the entire 2009 calendar year, which is a tremendous achievement.�
Cash Flow
Using a silver price of $16 per ounce, IMZ�s share of cash dividends to be paid out from the free cash flow from operations at Pallancata for calendar year 2010 is expected to total approximately $22 million (including the $16 million received to date), based on the current IMZ production estimate of approximately 10.0 million ounces of silver and 33,000 ounces of gold for calendar year 2010 (on a 100% basis) and projected operating costs.
IMZ�s 40% share ($18.4 million) of the projected capital expenditures in calendar year 2010 of approximately $46 million (primarily for additional mine development/infrastructure and construction of new tailings, waste rock and paste backfill facilities) is expected to be fully-funded by operational cash flow. The $22 million of estimated cash dividends to be paid this year to IMZ is net of these capital expenditure requirements.
IMZ uses an equity accounting basis to record its 40% interest in the Pallancata Mine.
Production
Table 1 below (Click here to view pdf) shows that Pallancata�s Q2 2010 silver production compared to Q1 2010 increased by 8% from 2.33 million ounces to approximately 2.53 million ounces.
For Q2 2010, direct site costs were $2.40 per ounce of silver and total cash costs were $5.47 per ounce of silver, both after gold by-product credit. These costs are lower by 22% and 6% respectively compared to Q1 2010, due primarily to higher silver and gold production (and a higher gold price) realized during Q2 2010.
Table 1: Pallancata Mine Production Highlights (100% Basis; in US Dollars)
|
On 100% Basis |
Calendar
Q2 Ended 6/30/10 |
Calendar Q1 Ended 3/31/10 |
IMZ Fiscal Year 2010 Ended 6/30/10 |
Calendar
Q2 Ended 6/30/09 |
|
Ore mined (tonnes) |
262,347 |
237,967 |
1,024,921 |
208,426 |
|
Ore processed (tonnes) |
269,311 |
248,032 |
1,064,024 |
220,288 |
|
Average head grade silver1 (g/t) |
341 |
339 |
342 |
307 |
|
Average head grade gold1 (g/t) |
1.39 |
1.39 |
1.44 |
1.37 |
|
Concentrate produced (tonnes) |
2,558 |
2,339 |
9,578 |
1,781 |
|
Silver grade in concentrate (kg/t) |
30.8 |
31.0 |
32.9 |
32.9 |
|
Gold grade in concentrate (kg/t) |
0.11 |
0.11 |
0.12 |
0.13 |
|
Silver produced2 (oz) |
2,528,000 |
2,333,600 |
10,100,100 |
1,882,600 |
|
Gold produced2 (oz) |
9,320 |
8,219 |
37,405 |
7,169 |
|
Silver sold (payable oz) |
2,671,909 |
2,133,416 |
9,761,989 |
2,053,750 |
|
Gold sold (payable oz) |
9,980 |
6,966 |
35,283 |
7,360 |
|
IMZ Direct Site Costs per oz silver (after gold by-product credit)3 ($/oz) |
$ 2.40 |
$ 3.09 |
$ 2.48 |
$ 3.73 |
|
IMZ Total Cash Costs per oz silver (after gold by-product credit)4 ($/oz) |
$ 5.47 |
$ 5.83 |
$ 5.32 |
$ 6.20 |
Table 2: Pallancata Mine Production Highlights (IMZ 40% Share)
|
IMZ's 40% Share |
Calendar
Q2 Ended 6/30/10 |
Calendar Q1 Ended 3/31/10 |
IMZ Fiscal
Year 2010
Ended
6/30/10 |
Calendar
Q2 Ended 6/30/09 |
|
Silver produced2 (oz) |
1,011,200 |
933,400 |
4,040,000 |
753,000 |
|
Gold produced2 (oz) |
3,728 |
3,288 |
14,962 |
2,868 |
|
Silver sold (oz) |
1,068,764 |
853,366 |
3,904,796 |
821,500 |
|
Gold sold (oz) |
3,992 |
2,786 |
14,113 |
2,944 |
Notes to Tables 1 and 2:
1. Head grades for silver and gold are based on the overall metallurgical balance for the process plant.
2. Difference between �produced� metal ounces and �sold� metal ounces is a combination of the smelter metal payability factors and in-process concentrate. Silver production figures are rounded to hundreds of ounces.
3. Direct Site Costs per ounce silver and Total Cash Costs per ounce silver reflect a �mined ore inventory adjustment�. IMZ believes that this calculation more accurately matches costs with ounces of production. (Also see notes 4 and 5 below.)
4. Direct Site Costs per ounce silver comprise direct mining, mined ore inventory adjustment, toll processing and mine general and administrative costs (net of gold by-product credit).
5. Total Cash Costs, using the Gold Institute�s definition, comprise: mine operating costs, mined ore inventory adjustment, toll processing costs, mine general and administrative costs, Hochschild�s management fee, concentrate transportation and smelting costs, local and provincial taxes (other than federal income tax) and the Peruvian government royalty.
The technical information reported in this news release was reviewed by IMZ�s Qualified Person, VP of Corporate Development, Nick Appleyard.
Hochschild Mining plc does not accept any responsibility for the adequacy or inadequacy of the disclosure made in this news release and any such responsibility is hereby disclaimed in all respects.
For additional information, contact:
In North America:
Paul Durham, Vice President Corporate Relations
Tel: 1 (203) 883-8359
In Europe:
Oliver Holzer, Marketing Consultant
+41 (0) 44 854 11 39
Or email the Company at:
IR@intlminerals.com
Internet Site: http://www.intlminerals.com
Cautionary Statement:
The Gold Institute calculation of Direct Site Costs and Total Cash Costs are non-Canadian GAAP financial measures, which IMZ management believes are useful in measuring operational performance, and also any forward-oriented financial information provided may not be appropriate in relation to Canadian GAAP reporting, which should be referred to in the Company�s financial reporting. Some of the statements contained in this release are �forward-looking statements� within the meaning of Canadian securities law requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this release include statements regarding estimates of production, total cash costs, mine life, resources, cash flow, capital costs and dividends. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks in attaining ramped-up production and processing rates, risks of cost escalation, risks of estimating mineral resources and reserves, variances between mineral reserves and actual mineral production and other risks and uncertainties detailed in the Company�s Renewal Annual Information Form for the year ended June 30, 2009, which is available at www.sedar.com under the Company�s name. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. |