A Northair Group Company
SUITE 860 - 625 HOWE STREET ? VANCOUVER, BC ? V6C 2T6 CANADA ? TEL: (604) 687-7545 FAX: (604) 689-5041
PRESS RELEASE
FOR IMMEDIATE RELEASE
May 30, 2008 #08-21
Sherwood Copper Reports Strong Results from Operations in First Quarter 2008
10.95 million lbs of Payable Copper Production at a Cash Cost of $1.19* per lb
$16.9* million in Mine Operating Cash Flow
(All amounts in C$ unless otherwise stated)
VANCOUVER, BRITISH COLUMBIA - Sherwood Copper Corporation (SWC: TSX-V) today announced its results for the first three months of 2008 including results of operations at its high grade Minto copper-gold mine located in the Yukon. Sherwood generated cash flow from mining operations* of $16.9 million based on sales of 7.1 million pounds of copper, 3,950 ounces of gold and 25,016 ounces of silver. This material was mostly produced in the fourth quarter of 2007 but sold in 2008 and, in accordance with Sherwood?s revenue recognition policies, recorded in the first quarter of 2008.
First quarter 2008 production totalled 10.95 million pounds of payable copper at an estimated cash cost of $1.19* per pound of payable copper, a period during which Sherwood completed commissioning the Phase 2 mill expansion increasing mill throughput from 1,563 tonnes per day to 2,400 tonnes per day by mid-March. Since then, production has been sustained at levels equal to or higher than design capacity of 2,400 tonnes per day for the process plant. Revenue and expenses for first quarter production will be recognized when this material is sold.
?Production at our high grade Minto copper-gold mine ramped up to and often exceeded design capacity by the end of the first quarter of 2008,? said Stephen Quin, President & CEO. ?Even though we were commissioning the Phase 2 mill expansion to 2,400 tonnes per day during the quarter, we still reported very respectable cash costs* of $1.19 per pound on 10.95 million payable pounds of copper produced. Cash flow from mining operations* of $16.9 million was also strong. Going forward, we expect to benefit from sustained throughput at or above design levels and, as a result, unit costs should fall below the levels reported for the first quarter. Later in the year, we will also benefit from connecting to lower cost grid power as the transmission line is completed from the Minto mine to the Yukon electrical grid.?
During the first quarter, Sherwood continued its project optimization process, developing a rescheduled open pit mine plan that should result in increased production in 2009 versus what was previously forecast as a result of bringing some of 2010?s forecast production forward. Production forecasts for 2008 of approximately 55 million pounds of payable copper and 24,000 oz of payable gold remain unchanged. ?The rescheduled open pit should result in more copper production sooner, which should increase value to all of our stakeholders,? said Mr. Quin.
*These are non-GAAP performance measures and readers should refer to notes on non-GAAP performance measures on page 12 of the Company?s management discussion and analysis for the three month period ended March 31, 2008 as filed on Sedar for further details.
Highlights of First Quarter 2008
During the first three months, even though this was a period of commissioning and ramp up to Phase 2 mill capacity, Sherwood marked a number of notable achievements, including the following:
v Produced 11.32 million pounds of contained and 10.95 million pounds of payable copper at an estimated cash cost* of $1.19 per pound of payable copper, including by-product credits, treatment charges and selling costs. Going forward, unit costs should trend down as a result of increased production and mill throughput, and conversion to grid electrical power before the end of 2008.
v Mined 321,431 dmt of ore from the main Minto pit, processing 153,368 dmt and stockpiling the balance for future processing.
v Completed commissioning of Phase 2 mill expansion to 2,400 dmt per day, achieving design performance in the latter part of March and a one day throughput record of more than 2,500 dmt/day in that period.
v Shipped 9,158 dmt of concentrate from the Port of Skagway in early March 2008, the majority of which was produced in 2007.
v Held 10,197 dmt of copper concentrate grading 38.4% copper in inventory at March 31 2008, 9,849 dmt of which was shipped in early April. Revenue and costs related to this shipment will be recognized in the second quarter of 2008.
v Generated cash flow from mining operations* of $16.9 million and income from mining operations of $13.0 million on the sale of 7.1 million lbs of copper, 3,950 ounces of gold and 25,016 ounces of silver, most of which was produced in 2007.
v Generated adjusted net earnings* of $3.7 million, before the following non-cash items: unrealized loss on mark-to-market of forward metal sales ($70.4 million), financing fees ($1.5 million), stock based compensation expense ($0.7 million) and future income tax recovery ($2.8 million). Before these adjustments, Sherwood reported a net loss of $66.1 million.
v Appointed Kevin Weston as Chief Operating Officer and Randall Thompson as General Manager of the Minto Mine.
v Acquired 93% ownership in Western Keltic Mines, owner of the high grade Kutcho copper project in BC and commenced a reassessment of the development approach to the Kutcho project.
v Entered into a memorandum of understanding with Firestone Ventures Inc. for the creation of an exploration company, Northern Tiger, to own and explore certain mineral interests in the Yukon currently controlled by Firestone and by Sherwood, in proximity to, but separate from, the Minto mine property.
*These are non-GAAP performance measures and readers should refer to notes on non-GAAP performance measures on page 12 of the Company?s management discussion and analysis for the three month period ended March 31, 2008 as filed on Sedar for further details.
Highlights Subsequent to March 31
Subsequent to March 31, Sherwood notes the following significant events:
v Operations personnel continued to push mill performance and optimize day-to-day activities, achieving single day throughput records of 3,363 and 3,386 dmt per day (141% of design capacity). Overall production averaged at design capacity in April and May to date, aside from five operating days when the mill was shut down for scheduled maintenance, including replacement of liners and grates in the SAG mill. As noted above, Sherwood aims to operate the mill at above design capacity for the remainder of the year in order to achieve its production objectives for 2008.
v Reported copper-gold discoveries in previously untested areas as part of a 20,000m $4.4 million exploration program underway at the Minto Mine which is focused on better defining and expanding known mineralized areas, as well as evaluating new targets.
v Commenced a major drill program at the Kutcho copper project with the objective of better defining the higher grade near surface mineralization and providing samples for metallurgical testing.
v On May 21, Western Keltic shareholders voted in favour of completing an amalgamation with a wholly owned subsidiary of Sherwood Copper, which amalgamation was effective May 27, 2008. 99.9% of all votes cast at the meeting were in favour of the amalgamation.
Financial Results
Sherwood reported a net loss of $66.1 million in the quarter ended March 31, 2008, primarily as a result of non-cash unrealized losses on forward metal sales of $70.4 million, as compared with a net loss of $1.6 million for the period ended March 31, 2007. The non-cash unrealized losses on forward metal sales of $70.4 million were attributable to a notable increase in the future prices of copper on March 31, 2008 versus future prices at the beginning of the period.
In the first three months of 2008, Sherwood recorded net revenue of $28.6 million on the sale of 9,158 dmt of copper concentrate, most of which was produced in the fourth quarter of 2007. Cash operating costs of $11.8 million and non-cash operating costs of $3.8 million resulted in income from mining operations of $13.0 million.
Sherwood?s net income or loss may vary significantly from quarter to quarter based on revenue recognition timing. In addition, the mark-to-market of forward metal sales, expenses for stock based compensation and foreign exchange adjustments, all of which are non-cash adjustments, can swing significantly from period to period and therefore affect reported net income without any impact on cash or the financial strength of the Company.
Additional details on the financial results for first quarter 2008 are available in the Company?s unaudited consolidated interim financial statements and management discussion and analysis for the three month period ended March 31, 2008 filed on SEDAR at www.sedar.com, while additional information on production results is set out in the Company?s news release dated April 17, 2008.
Prior to October 1, 2007, the Company capitalized or classified as inventory all revenue and costs related to the Minto Project as commercial production had not yet been achieved.
Concentrate Shipments
10,196 dmt of copper concentrate were held in inventory at March 31, 2008, of which 9,849 dmt grading approximately 39% copper were shipped in early April of 2008 and will be recognised as revenue in the second quarter of 2008. Sherwood expects to settle 2,668 tonnes of forward copper sales in June 2008, matching these sales to the final price settlement of the March 2008 concentrate shipment, which totalled 9,158 dmt of concentrate. These forward copper sales have an average strike price of $6,385 per tonne of copper. In addition, these concentrates contain significant gold and silver credits. Forward sales account for approximately 50% of 2008 forecast production providing Sherwood with significant exposure to current high spot prices for copper, gold and silver in 2008.
Updated Outlook
Given that the mill has demonstrated capacity significantly in excess of design, for the balance of 2008 Sherwood aims to average mill throughput in excess of 2,400 tonnes per day in order to achieve its production forecast of approximately 55 million pounds of payable copper and 24,000 oz of payable gold in 2008.
As part of its optimization plan, Sherwood has rescheduled mine production from the main pit at Minto in order to accelerate the mining of high grade ore currently scheduled for production in 2010. This rescheduling involves developing the pit northward from the current pit walls, as opposed to the prior plan of developing the southern portion of the pit first. This rescheduled mine plan will expose the largest amount of high grade copper-gold ore (greater than 4% copper and 2g/t gold) in the main Minto pit 12-18 months earlier than previously planned, resulting in increased copper production in 2009 while reducing the forecast production for 2010 below that set out in the February 17, 2008 press release. Given current very high copper and gold prices, this change in pit scheduling should result in several million pounds of copper production being brought forward from 2010 into 2009, without reducing Sherwood?s forecast production of approximately 55 million pounds of copper in 2008. Additional details will be provided in respect of the rescheduled production outlook for 2009 and 2010 in the near future.
About Sherwood Copper
Sherwood Copper?s current focus is profitable production of base and precious metals from high grade, open pit mines in Canada. Sherwood?s first operating mine, the high grade Minto copper-gold mine in Yukon, Canada, was built on budget and ahead of schedule. The Minto Mine is one of the highest-grade open pit copper-gold mines in the world, and is forecast to be a low cost producer. Aggressive exploration on the Minto property has yielded significant success, providing Sherwood the opportunity to ?grow from within? by expanding the resource and reserve base, potentially leading to further production increases. To further accelerate its production growth, Sherwood intends to pursue merger & acquisition opportunities that fit its business model and, in March 2008, Sherwood acquired more than 93% ownership in Western Keltic Mines, owner of the high-grade Kutcho copper-zinc-gold-silver deposit in northwestern British Columbia. Sherwood expects to lever off its successful development of the Minto Mine and rapidly advance the Kutcho project to a production decision.
Quality Assurance
The technical information in this news release has been prepared in accordance with Canadian regulatory requirements set out in National Instrument 43-101 and reviewed by Stephen P. Quin, P. Geo., President & CEO for Sherwood Copper Corporation. The operational activities carried out at the Minto Mine has been carried out under the supervision of Randall Thompson, General Manager of the Minto Mine, and Kevin Weston, Chief Operating Officer for Sherwood Copper, who have reviewed and approved the information contained herein.
Additional Information
Additional information on Sherwood and its Minto Project can be obtained on Sherwood?s website at http://www.sherwoodcopper.com.
On behalf of the board of directors
SHERWOOD COPPER CORPORATION
?Stephen P. Quin?
Stephen P. Quin
President & CEO
Investor Contacts:
Stephen P. Quin 604.687-7545 or Brad Kopp 604-687-7545
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this press release.
This document may contain "forward-looking statements" within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date of this document and the Company does not intend, and does not assume any obligation, to update these forward-looking statements.
Forward-looking statements relate to future events or future performance and reflect management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to 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 expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words 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 statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature 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 actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although the Company has 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, 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.