Aurcana Corporation ("Aurcana" or the "Company") is pleased to report its financial results for the three and nine month periods ended September 30, 2007. The summary of the selected financial information should be read in conjunction with the unaudited financial statements for the nine months ended September 30, 2007 and the related management's discussion and analysis dated November 22, 2007 together referred to as the "Financial Statements", which have been filed on www.sedar.com and the Company's website www.aurcana.com. All figures are in Canadian dollars unless otherwise noted.
Highlights of the 3rd Quarter September 30, 2007 results are:
During the third quarter the operation performed as expected. Efforts during the first six months of 2007 were concentrated on ensuring the mill was reconditioned to obtain a capacity of 1,000 tonnes per day, an increase of 25% of the previous operating capacity and this capacity was achieved in the third quarter.
Morale at the mine continues to be high and recent monthly production levels at the mine are on target with expectations of an average of 1,000 tonnes per day and monthly sales on target with expectations for a restarted mine. It is expected that with the recent acquisition of new underground equipment the mine will sustain production to meet mill throughput.
The Company also recently commenced a 15,000 metre underground diamond drill exploration program to define additional resources.
On February 22, 2007, the Company received Exchange approval to enter into an Option Agreement to acquire, through its subsidiary, Aurcana de Mexico, an 100% interest in a silver-zinc-lead-gold Property, Rosario (Rosario) located in Sinaloa State, Mexico for US$3,000,000.
Following its technical and legal review of the Rosario Property, the Company on August 7, 2007 exercised the Option to Purchase and executed a Sale and Purchase Agreement to acquire a 100% undivided interest in Rosario, under the following terms:
February 22, 2007 US$250,000 upon signing the option agreement (paid)
August 7, 2007 US$250,000 upon signing the purchase agreement (paid)
February 7, 2008 US$1,250,000
February 7, 2009 US$1,250,000
Development at the Rosario site has been proceeding well and the Company expects to begin production from the mine before the end of fiscal 2008. To assist in meeting its goal of production start up in the last quarter of 2008, Aurcana has acquired a critical piece of mill equipment. Currently, lead times in the mining industry for both mill equipment and mining equipment are becoming increasingly longer but Aurcana has been successful in securing a SAG ("Semi-Autogenous Grinding") mill that will be instrumental in the refurbishment of the Rosario mill and ensure that timelines are maintained. The SAG mill is capable of processing up to 1200 tonnes per day.
Results of Operations:
Production, at La Negra, for the three and nine months ended September 30, 2007 was 74,000 metric tonnes of ore producing 3,800 tonnes of concentrate (2006 -- Nil). The target production levels are 1,000 tonnes of ore production per day on a 75 day quarter for a total expected production of 75,000 metric tonnes.
The mine generated its first sales of $4,951,000 during the three months ended September 30, 2007 of which the Company's 80% share was $3,936,000 (2006 -- Nil).
The Company's gross margin for the three months ended September 30, 2007 was $1,194,000 or 30% (2006 -- Nil), and reflects the efforts the Company has made to bring production to market quickly. The cost of sales for the three months ended September 30, 2007, were $2,742,000. Lower cost of sales in the future, are expected. Operating costs during this period marked the Company's first commercial production which the Company expects to be lower in the following subsequent quarters. Recent equipment acquisitions, along with scheduled maintenance and final refurbishments of existing facilities continue to result in improved efficiency.
Net loss for the three months ended September 30, 2007 of $144,000 ($0.00 per share basic and diluted) compares with a loss of $1,482,000 ($0.01 per share basic and diluted) for the same period in 2006.
Net loss for the nine months ended September 30, 2007 of $3,374,000 ($0.04 per share basic and diluted) compares with a loss of $1,692,000 ($0.03 per share basic and diluted) from the same period in 2006.
Cash flow from operating activities (before changes in non-cash working capital) for the three months ended September 30, 2007 was $754,000 compared to the cash flow of $181,000 for the same period in 2006.
For the nine months ended September 30, 2007, the Company generated a positive cash flow from operations (before changes in non-cash working capital) of $390,000 compared to negative cash flow of $143,000 for the same period in 2006.
The most notable changes for the three months ended September 30, 2007 were a $1,008,000 increase in trade accounts receivable, a $1,537,000 increase in other accounts receivable, a $296,000 increase in inventory, and a $1,550,000 increase in accounts payable providing a net cash inflow of $1,213,000 from changes in non-cash working capital items.
For the nine-month period, the Company completed a $21,000,000 financing and received, net of expensed, $20,020,000 from the issuance of shares, and repaid $1,130,000 of long-term debt.
After taking into account $4,503,000 incurred on mineral property development and capital asset purchases of $785,000, there was a net increase in cash balances of $14,820,000 for the nine months ended September 30, 2007.
At September 30, 2007, cash balances totalled $14,820,000.
The working capital position of the Company is positive. Current assets exceed current liabilities by $14,264,000 compared to a working capital deficiency of $922,000 at December 31, 2006. While management expects positive cash flow from the La Negra operation there will still be considerable outflows in the near term as the Rosario project is developed.
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.
Ken Booth, President, stated: "The future for La Negra is very promising as we continue to improve on all aspects of the operating. The ongoing exploration program will provide us with the capacity to potentially expand the mill to 2,000 tonnes per day, and provide further efficiencies.
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. 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.
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.