Aurcana Provides Corporate Update
October 12, 2007
Aurcana Corporation ("Aurcana" or the "Company") is pleased to provide an update on its projects and plans. 2007 has been a very successful transition year for Aurcana. It is a year that saw La Negra achieve full production of 1,000 tonnes per day coupled with very encouraging phase 1 drill results from mine site exploration and the addition of the 100% owned Rosario project which is slated to commence production at 800 tonnes per day in the fourth quarter of 2008. Aurcana will finish the year with established cash flow, a strong balance sheet, exploration upside and projected increased future revenues.
With the acquisition of the La Negra Mine in May 2006, Aurcana vaulted into the world of producing resource companies. In less than one year, specifically April 2007, the Company was pleased to announce that mill refurbishment, expansion and preliminary testing had been completed and production commenced at its 80% owned La Negra silver-copper-zinc-lead mine in Queretaro State, Mexico. The refurbishing and upgrades were completed on time and production of 1,000 tonnes per day commenced in June 2007.
At La Negra there is complete infrastructure in place and the mine has been fully developed on five main levels. The mine is fully accessible via adits and ramps and the adjacent plant consists of three stages of crushing, an 8' x 10' ball mill and conventional floatation to produce zinc, copper and lead concentrates. The previous operator left the mine with approximately two years of development which allowed Aurcana to restart production in less than one year. Once the initial start up phase was completed, La Negra has produced continuously at the planned rate. Throughput in the third quarter ended September 30, 2007 for the mill was 73,000 tonnes of ore and concentrate produced in the third quarter was 3,205 tonnes. Total site operating costs during the third quarter were on target and the Company continues to introduce efficiencies into the operation.
The mine already has the capacity to double production to 2,000 tonnes of ore per day. Likewise the installed crushing capacity can easily keep up to the 2,000 tonnes per day of mine output. Only the backend of the mill will need to be expanded to accept and handle additional capacity. Based on successful exploration and a potential increase in reserves an expansion will likely be financed by internal cash flow from operations. If the mill expansion is financed from cash flow it is estimated that payback would occur in approximately 6 months based on the following assumptions. The cost of increasing capacity at La Negra has been estimated at $1 million per 100 tonnes. To double production to 2,000 tonnes per day from 1,000 would cost about $10 million and using a forecasted annual cash flow of $20 million, at 1,000 tonnes per day, would result in an approximate six month payback. The reader should be cautioned the Company has not completed a feasibility study confirming the projected production capacity and there is no certainty the Company's plans will be economically viable.
Wardrop Engineering Inc. is conducting an independent audit of historical reserves on the Alacran zone at La Negra as part of the Company's commitment to establish 43-101 compliant reserves and resources. Once the Alacran audit is complete, (expected by early November), Aurcana will continue the audit on the other zones at La Negra.
EXPLORATION AT LA NEGRA
There are 23 ore bodies with eight of the ore bodies containing 84% of the historical reserves. All of the ore bodies are easily accessed by over 50 km of historical underground development. Significant exploration potential exists around and below the known ore bodies. An aggressive and ongoing exploration program is being planned to expand and delineate the known historical reserves and to test for new zones based on previously defined geophysical targets and historic drill intersections. The Company's decision to employ all resources to fast track production at La Negra is producing great benefits as cash flow will support a renewed focus on a long-term exploration program. The objective of the program is to outline sufficient additional resources in order to expand the size of the existing mill.
In August 2007 Aurcana announced the acquisition of 100% of a second mine, the silver-zinc-lead-gold Rosario Property located in southeastern Sinaloa State, Mexico for US$3 million payable over 24 months. The historical data shows production at Rosario achieved a rate of 600 tonnes per day. However, plans for the Rosario mill refurbishing calls for an increase in production to 800 tonnes per day - a 33% increase over the historic mine production. The addition of the 800 tonnes per day from the Rosario Mine, expected in the fourth quarter of 2008, will double Aurcana's daily ore production. The reader should be cautioned the Company has not completed a feasibility study confirming the projected production capacity and there is no certainty the Company's plans will be economically viable.
The Rosario Property consists of 18 concessions totaling approximately 8,515 hectares and is located about 94 kilometers southeast of Mazatlan and is accessed by an all weather road. There are two main areas on the Rosario Property - San Juan and La Cruz. The San Juan area has historically reported reserves of 256,756 tonnes grading 329.3 g/t silver, 3.73% zinc, 1.69% lead and 0.19 g/t gold. An underground ramp has been driven into the San Juan Zone and has tested the zone over a vertical distance of 40 metres, with the zone still open to depth and along strike. The La Cruz area has historically reported reserves of 638,756 tonnes grading 136 g/t silver, 3.21 % zinc, 2.23% lead, 1.05 g/t gold. The reader should be cautioned the historic reserves do not conform to National Instrument 43-101 requirements for reporting purposes; as such the Company is not treating these historic estimates as current reserves or resources. These estimates should not be relied upon until they have been verified by further due diligence and by the Company's "Qualified Person".
EXPLORATION AT ROSARIO
Work is already underway at the La Cruz zone to provide access for an initial 3,000 meter underground diamond drill program to expand the known historical reserves. Surface work is also verifying and defining new surface targets that will be prioritized for detailed follow-up.
The successful track record of the management of Aurcana has confirmed management's ongoing ability to identify, negotiate, finance and acquire high quality projects for the Company. Aurcana continues to pursue other high quality, producing or near producing projects. With the completion of any or all of these advanced stage projects, Aurcana could see present and proposed production increase significantly.
1. Aurcana has a strong balance sheet, revenues from its first mine and pending revenue from its second mine.
2. The Company has a diversified asset base and will be producing five different metals from two different projects
3. Aurcana has substantial exploration potential at both of its mine sites.
4. The Company has a network of contacts that can lead to the acquisition of additional projects that are in production or at advanced development or exploration stages.
5. Aurcana has shown that it is able to implement and follow through with its plan to become a significant base -- precious metal producer.
With a strong balance sheet, 1,000 tonnes per day production established at La Negra, Rosario slated to add additional production of 800 tonnes per day by the end 2008, a very positive outlook for the price of commodities, along with the continued expansion of Aurcana's shareholder base, a very bright, exciting and rewarding future await Aurcana and its shareholders
Ron Nichols, P.Eng. a Director and Vice President of Exploration for Aurcana, and a Qualified Person as defined by National Instrument 43-101, supervised the preparation of the technical information in this release.
Aurcana is a Canadian junior mining company listed on the TSX Venture Exchange, symbol: AUN. The Company remains focused on the acquisition, development and operation of silver, zinc and copper mines with good infrastructure and ore reserves/resources that require minimal capital and time to re-start.
ON BEHALF OF THE BOARD OF DIRECTORS OF
"Ken Booth", President
For further information, please contact:
Ken Booth, President or
Jack Barnes, Investor Relations
Phone: (604) 331-9333
Web site: www.aurcana.com
Caution Regarding Forward-Looking Statements -- This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include unsuccessful exploration results, changes in metal prices, changes in the availability of funding for mineral exploration and development, unanticipated changes in key management personnel and general economic conditions. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. The Company does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this Release.