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Aurcana Corporation Reports Positive Third Quarter Results


December 1, 2009

Aurcana Corporation ("Aurcana" or the "Company") is pleased to report its financial results for the period ended September 30, 2009. The summary of the selected financial information should be read in conjunction with the unaudited financial statements for the three and nine months ended June 30, 2009 and the related management's discussion and analysis dated November 27, 2009 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 third quarter ended September 30, 2009, Aurcana commenced reporting 100% of the results of operations at the La Negra mine, less an 8% non-controlling interest. This is a direct result of the dilution of the former joint venture partner at the beginning of the quarter, and the assumption of direct operational control of the mine by the Company. 

The Company posted consolidated net sales of $5.2 million, a profit from operations including corporate expenses of $0.4 million, and an overall profit of $2.3 million after the effects of a foreign exchange gain of $1.9 million. On a year to date basis, consolidated net sales were $12.6 million with a loss from operations of $0.7 million and overall earnings of $4.3 million after gains on foreign exchange and debt settlement. At the end of the third quarter the Company had cash and cash equivalents of $1.3 million.

LA NEGRA MINE

During the quarter, the Company continued to advance the operations of the La Negra mine, including the process of expanding the mill and flotation plant to a rate of 1,500 tons per day of production. A decision to initiate production from the Maravillas zone was also made. The zone will be mined by a Contractor, who is on site, preparing to commence work. 

In spite of an extended 14 day down period in September, to repair the main ball mill motor, the results from the La Negra mine for the period were positive. Contributing factors were rising metal concentrate prices, positive foreign exchange rates, and management's continued efforts to contain costs: 

 

La Negra Mine (100%)

3 months ended 
September 30, 2009

9 months ended 
September 30, 
2009

 

 

 

Tonnes of ore Processed

72,716

221,182

 

 

 

Tonnes of payable Zinc metal sold

358

1,092

          Pounds of Zinc

789,247

2,407,423

 

 

 

Tonnes of payable Copper metal sold

323

1,068

          Pounds of Copper

712,086

2,354,513

 

 

 

Ounces of payable Silver sold

162,356

553,828

 

 

 

Revenues

$5,228,565

$12,647,262

Earnings from Mining Operations

$1,433,685

$1,513,498

Income from Operations

$466,232

$(728,465)

Net Income

$2,388,932

$4,346,646



The consolidated financial statements of the Company as of June 30, 2009 include only 80% of La Negra's results. Aurcana currently owns 92% of the La Negra mine, and commencing with this quarter reports 100% of the results of operations, less an 8% non-controlling interest. 

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. 

On June 29, the Company announced the results of the pre-feasibility study. The highlights of the report were:

  • Payback of under 2 years based on a silver price of $13.55 per ounce;
  • An internal rate of return ("IRR") of 25% pre tax;
  • A pre tax net present value ("NPV") of $23 million at a 5% discount rate;
  • An initial estimated capital expenditure of under $40 million;
  • Silver production of 3.75 million ounces in year one and 4 million ounces in year two; and
  • An average total cost of $7.50 per ounce of silver produced in the first two years.

Mr. Sandy McVey P.Eng., M.Sc., PMP. has been appointed project manager for Shafter and is commencing with the detailed engineering on the project. Mr McVey is also coordinating all of the permitting necessary for the mine start up. Mr. McVey has over 30 years experience working on mining operations and capital construction projects in North America, Africa and Europe, and has held positions of plant superintendent and mine manager for underground operations. 

ROSARIO

During the second quarter, the Company announced entering into an agreement to sell the Rosario property for $250,000, one million shares of Silvermex Resources, and the assumption of all future property payments. Additional consideration $2.5 million and 1 million shares is to be paid in installments upon production or within 24 months. Subsequent to the third quarter end, the Company announced the completion of documentation. The sale of Rosario completed on November 30, 2009.

About Aurcana Corporation:
The Shafter silver mine, with a NI 43-101 measured and indicated resource of 24.6 million ounces of silver and an inferred resource of 22.8 million ounces of silver using a 4.0 ounce per ton cut off, is scheduled to start up production at 3.9 million ounces silver per year. The 92% owned La Negra silver-lead-zinc-copper mine in Queretaro State, Mexico, is working towards expanding operations to 1500 tonnes per day by spring of 2010. The reader should be cautioned the Company has not completed a feasibility study confirming the projected production capacity for La Negra and there is no certainty the Company's plans will be economically viable. Ron Nichols, P.Eng. a Director and Senior Vice President for Aurcana, and a Qualified Person as defined by National Instrument 43-101, supervised the preparation of the technical information in this release.

ON BEHALF OF THE BOARD OF DIRECTORS OF
AURCANA CORPORATION
"Lenic Rodriguez", President 

For further information, visit the website at www.aurcana.com or contact:
Jack Barnes, Corporate Relations
Aurcana Corporation
Phone: (604) 331-9333
Toll Free: (866) 532-9333
Fax: (604) 633-9179
Email: jbarnes@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.

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