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Aurcana Corporation Reports Positive Second Quarter Results


September 2, 2009

Aurcana Corporation ("Aurcana" or the "Company") is pleased to report its financial results for the period ended June 30, 2009. 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, 2009 and the related management's discussion and analysis dated August 28, 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 second quarter ended June 30, 2009, Aurcana posted consolidated net sales of $4.0 million, a loss from operations including corporate expenses of $0.6 million, and an overall profit of $2.8 million after the effects of a foreign exchange gain of $2.5 million and a gain on debt settlement of $1.0 million. On a year to date basis, consolidated net sales were $7.4 million with a loss from operations of $1.1 million and overall earnings of $1.96 million after the gains noted above. At the end of the second quarter the Company had cash and cash equivalents of $1.0 million.

LA NEGRA MINE

During the quarter, the Company took steps to stabilize and advance the operations of the La Negra mine. With the expiry of the previous operator's contract, the Company took operational control of the mine and commenced the process of expanding the mine to 1,300 tons per day with an eventual goal of 1,500 tons per day of production.

In spite of an extended down period in May, as new equipment was being installed to facilitate the expansion, the results from the La Negra mine for the period were positive. Contributing factors were rising metal concentrate prices, revised contract settlement terms with our concentrate buyer which eliminated some of the pricing risks which plagued the Company last year, and the first tentative results of management's efforts to contain costs and commence direct operational control of the mine: 

 

La Negra Mine (100%)

3 months ended 
June 30, 2009

6 months ended 
June 30, 2009

 

 

 

Tonnes of ore Processed

79,110

148,476

 

 

 

Tonnes of payable Zinc metal sold

403

734

          Pounds of Zinc

888,454

1,618,176

 

 

 

Tonnes of payable Copper metal sold

313

745

          Pounds of Copper

690,040

1,642,427

 

 

 

Ounces of payable Silver sold

200,825

391,472

 

 

 

Revenues

$3,796,296

$6,977,791

Gross Margin

$759,830

$1,487,706

Net Income

$119,982

$331,498



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, having diluted its joint venture partner subsequent to the quarter end from 20% to 8%. 

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.

ROSARIO

During the 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. At quarter end final documentation and the finalization of due diligence were still in progress.

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 produce at 3.5 million ounces silver per year. The 92% owned La Negra silver-lead-zinc-copper mine in Queretaro State, Mexico, is operating at 1,000 tonnes per day. 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 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.

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, Manager Investor 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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