Aurcana Corporation ("Aurcana" or the "Company") is pleased to report its financial results for the period ended June 30, 2008. The summary of the selected financial information should be read in conjunction with the unaudited financial statements for the three and six months ended June 30, 2008 and the related management's discussion and analysis dated August 28, 2008 together referred to as the "Financial Statements", which have been filed on Sedar (www.sedar.com) and the Company's website (www.aurcana.com). All figures are in Canadian dollars unless otherwise noted.
For the second quarter ended June 30, 2008, Aurcana posted sales of $3.2 million and a net loss before non-cash items of $162,100 and a net loss after non-cash items of $962,245. Net profit for the six months ended 30 June 2008 was $190,775 before non-cash items and the net loss was $1.4 million after non-cash items on sales of $6.5 million. For the three month period, the Company applied $3,087,227 toward the purchase of new equipment and expenditures on mineral properties. At the end of the second quarter the Company had cash and cash equivalents of $4.3 million.
LA NEGRA MINE
During the first six months of 2008 the La Negra mine continued to achieve its budgeted daily throughput of 1,000 tonnes per day of ore processed and generated positive operating cashflow. During the three months ended June 30, 2008 the La Negra mine produced operating cash flow of $750,402 and for the six months ended June 30, 2008 the operating cash flow was $2.6 million.
|La Negra Mine (100%)*||3 months ended June 30, 2008||6 months ended June 30, 2008|
|Tonnes of ore Processed||73,768||145,642|
|Tonnes of Zinc concentrate sold||532||1,212|
|Pounds of Zinc||493,178||847,955|
|Tonnes of Copper-Silver concentrate sold||2,352||4,810|
|Pounds of Copper||956,765||1,714,247|
|Ounces of Silver||106,778||192,670|
|Revenues (US $)||$3,635,199||$7,825,644|
|Operating Cash Cost per tonne (US $)||$43.45||$40.10|
|Operating Cash Flow||$750,402||$2,569,235|
*Aurcana owns 80% of La Negra
Operating cash costs in the first six months were $40.10 per tonne of ore processed versus a budget of 35.00 per tonne. The revenues and cash flow, due mainly to mining lower grades, have fallen short of expectations set before the mine commenced commercial production. The main challenge is to maintain budgeted head grades. The lower grades resulted from higher than anticipated dilution due to erratic ore contacts, particularly in the mantos. Limited equipment availability due to delays in delivery reduced flexibility in mining.
These issues are being addressed by increasing channel sampling equipment to improve sample accuracy and quality of samples, implementing geological controls and mining procedures designed to minimize dilution and emphasize grade not tonnes. Also the arrival of additional new equipment and a stock of spare parts will improve equipment availability.
The Company is confident that these measures will improve the mill head grades over the third and fourth quarters and continuing into 2009. The Company has also initiated plans to increase the mill throughput to 1,300 tonnes per day in the first quarter of 2009 and to 1,500 tonnes per day by mid 2009. The Company has most of the necessary mill equipment to undertake this expansion.
During the first six months of 2008, N.I. 43-101 reports were completed on two of the 23 known deposits. The Alacran chimney deposit NI 43-101 compliant reserve calculation doubled the historical reserve figure. The Alacran chimney is interpreted to continue to depth as a well mineralized breccia deposit.
The Monica ore body is a manto structure which dips moderately to the northwest. The NI 43-101 compliant deposit resource was calculated over only a 200 metre vertical distance down to the 2055 level which resulted in an eleven-fold increase in tonnage compared to the historical resource figure. Further work has confirmed the structure continues down to and below the 2000 foot level where evidence of higher copper grades is starting to emerge.
Significant exploration potential exists around and below all of the 23 known deposits. A 15,000 metre underground diamond drill program to continue to test for new zones and to delineate and expand known reserves and resources is ongoing. The results to date have been very encouraging with length weighted average intervals of 8.58 metres of 207 g/t silver, 2.75% zinc, 1.75% copper, 0.71% lead and 11.8 metres of 162 g/t silver, 2.57% zinc, 1.28% copper, 0.43% lead. These exploration results continue to impress and are significantly higher that the average historical resource grades at La Negra.
Subsequent to the end of the second quarter a silver stream agreement with Silver Wheaton Corp. for 50% of the life-of-mine silver production at La Negra resulted in a $25 million cash payment being made to Aurcana. Additionally $3.90 for each ounce of silver will be paid to Aurcana at time of delivery. Based on current metal prices silver represents approximately 31% of the total contained metal value in reserves and resources at La Negra.
SHAFTER SILVER MINE
Aurcana acquired 100% of the Shafter silver mine from Silver Standard Resources Inc. in July 2008. Shafter is located in Presidio County, southwest Texas and is fully accessible via paved highway from El Paso, Texas. Silver was mined in the region from 1883 until 1942, when the mine was closed by the War Act. Production during that period was 2.3 million tons of ore containing 35 million ounces of silver at an average grade of 15.24 ounces per ton
The 100% owned mine is planned for production start up at 3.2 million ounces per year in the form of silver dore. Based on a four ounce per ton cutoff, the mine contains a silver resource of 24,600,000 ounces in the measured and indicated categories and 22,800,000 ounces in the inferred category based on a 43-101 compliant report filed in June 2008. A timely start up is anticipated as significant infrastructure is already in place, including a major power line and paved highway crossing the property, an electrical sub-station and components on site for a 2000 ton per day mill, a 1,050 foot shaft serviced by a 80 ton per hour hoist and 5,100 feet of completed underground development.
Aurcana is moving quickly to complete engineering studies and to obtain all necessary permits to begin operations at Shafter.
Aurcana's leading development project is now the Shafter Silver mine and the Company will commit its resources and proven construction and operating team to its advancement. As such, Rosario, will have an exploration focus and will be held for future development.
About Aurcana Corporation:
Aurcana Corporation's strategy is "Growth through Acquisition".
The Shafter silver mine represented the third acquisition in two years.
The 100% owned Shafter silver mine in Presidio County, Texas, is planned to produce at 3.2 million ounces silver annually. The 80% owned La Negra silver-lead-zinc-copper mine in Queretaro State, Mexico, operates at 1,000 tonnes per day. The 100% owned Rosario exploration project, located in the Sierra Madre precious metals belt, Sinaloa State, Mexico, is being held for future development.
The reader should be cautioned the Company has not completed feasibility studies confirming the projected production capacity for La Negra, Shafter or Rosario and there is no certainty the Company's plans will be economically viable.
ON BEHALF OF THE BOARD OF DIRECTORS OF
"Ken Booth", President
For further information, please visit the website at www.aurcana.com.
Ken Booth, President or
Jack Barnes, Investor Relations
Phone: (604) 331-9333
Toll Free: (866) 532-9333
Fax: (604) 633-9179
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.
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