(All figures are in United States dollars unless otherwise stated)
Minefinders Corporation Ltd. (TSX: MFL)(NYSE Amex: MFN) today
announced its financial and operating results for the fourth
quarter and year ended December 31, 2010. The Company also provided
production guidance for the coming year and stated its development
plans for 2011.
Fourth quarter 2010 financial and operating highlights:
-- Gold production of 16,102 ounces.
-- Silver production of 511,544 ounces.
-- Revenue of $31.3 million.
-- Net income of $12.1 million or $0.18 per share.
-- Positive cash flow from operations before changes in non-cash working
capital of $16.9 million.
-- Sale of 22,690 gold-equivalent ounces.
-- Operating cash cost of $472 per gold equivalent ounce sold.
Full year 2010 financial and operating highlights:
-- Revenue of $92.9 million.
-- Net income of $6.1 million or $0.09 per share.
-- Positive cash flow from operations before changes in non-cash working
capital of $31.2 million.
-- Sale of 75,767 gold-equivalent ounces.
-- Operating cash cost of $585 per gold-equivalent ounce sold.
-- Reported high-grade gold and silver intercepts encountered during
drilling at the Dolores Mine South Extension target.
-- Reported the discovery of a new zone of mineralization at the Dolores
Mine North Dome target.
-- Reported the discovery of a gold and silver system at the Company's La
Virginia Project.
-- Reported results of an independently prepared pre-feasibility study
assessing the construction of a mine at the Company's La Bolsa Project.
-- Reported results of an independently prepared draft pre-feasibility
study assessing the addition of a mill at the Company's Dolores Mine.
Commenting on the annual results, Mark Bailey, President and
CEO, stated, "2010 proved to be a challenging year for our
operations. Our ability to achieve production targets at our
Dolores Mine was hampered due to the tear in our phase 1 leach pad
liner. However, following the successful commissioning of our phase
2 leach pad in September, we saw significant improvement in
production during the fourth quarter."
"In other areas, our exploration and development initiatives at
Dolores, La Bolsa and La Virginia yielded encouraging results. We
will continue to focus on expansion and infill drilling at Dolores
and La Virginia as well as commence exploration drilling at our
other properties in Northern Sonora with the intention of drilling
at least 50,000 metres in 2011."
Full Year and Fourth Quarter 2010 Financial and Operating
Results
At the end of 2010 Minefinders reported improved financial
results for the fourth quarter and full year which were primarily
driven by higher gold and silver prices, higher average silver
grades stacked, increasing crusher throughput and increasing gold
grades stacked during the latter part of 2010.
Revenue in the fourth quarter of 2010 was $31.3 million compared
to revenue of $27.8 million in the fourth quarter of 2009. For the
full year, revenue increased from $75.2 million in 2009 to $92.9
million with the Company's first full year of commercial production
at Dolores.
Earnings from operations increased to $14.2 million in the
fourth quarter of 2010 as compared to $5.7 million in the fourth
quarter of 2009. Net income was $12.1 million, or $0.18 per share,
in the fourth quarter of 2010 compared with $4.3 million, or $0.07
per share, in the fourth quarter of 2009. Earnings from operations
for 2010 increased to $21.2 million from $5.0 million in 2009. Net
income for the full year 2010 also improved to $6.1 million or
$0.09 per share compared to a net loss of $4.3 million or $0.07 per
share in 2009 with 2010 being the first full year in which the
Company reported positive net income.
Cash operating cost per gold equivalent ounce sold was $472 in
the fourth quarter of 2010 compared with $593 for the fourth
quarter of 2009. For the full year 2010, the cash operating cost
per gold equivalent ounce sold was $585 compared with $550 for
2009.
A comparison of the fourth quarter and full year for 2010 and
2009 is as follows:
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Three months ended Year ended
December 31, December 31,
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2010 2009 2010 2009(1)
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Ore crushed and stacked
(tonnes) 1,420,804 1,620,289 5,554,293 5,545,592
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Gold grade per tonne stacked
(grams per tonne ("gpt")) 0.60 0.61 0.48 0.70
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Silver grade per tonne
stacked (gpt) 56.96 18.00 40.91 20.58
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Strip ratio (waste to ore) 1.48 2.37 2.10 2.79
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Gold production (ounces
("oz")) 16,102 20,960 56,110 77,264
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Silver production (oz) 511,544 296,992 1,218,664 1,318,245
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Gold volume sold (oz) 14,150 20,400 55,977 75,126
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Silver volume sold 423,950 293,560 1,153,547 1,285,721
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Gold equivalent volume sold
(oz)(3) 22,690 25,131 75,767 94,676
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Sales proceeds (millions) $ 31.3 $ 27.8 $ 92.9 $ 94.0
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Income (loss) from
operations (millions) $ 14.2 $ 5.7 $ 21.2 $ 4.9
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Net Income (loss) $ 12.1 $ 4.3 $ 6.1 $ (4.3)
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Net Income (loss) per share $ 0.18 $ 0.07 $ 0.09 $ (0.07)
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Cash flow provided by (used
in) operating activities(2)
(millions) $ 16.9 $ 8.5 $ 31.2 $ 14.4
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Operating cost per gold
equivalent ounce sold(2) $ 472 $ 593 $ 585 $ 550
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Total cash cost per gold
equivalent ounce sold(2) $ 511 $ 625 $ 620 $ 576
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Average realized gold price
(per oz) $ 1,375 $ 1,108 $ 1,212 $ 993
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Average realized silver
price (per oz) $ 27.72 $ 17.71 $ 21.63 $ 15.09
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(1) Reflects pre-commercial production from January 1, 2009 to April 30,
2009.
(2) Cash flow provided by (used in) operating activities is before changes
in non-cash working capital and is a non-GAAP measure further discussed
below.
(3) Gold equivalent ounces sold includes gold ounces sold and silver ounces
sold converted to a gold equivalent based on the ratio of actual
realized gold price to actual realized silver price.
Working Capital and Liquidity
At December 31, 2010, the Company had $166.9 million in cash,
cash equivalents and short-term investments, up from $30.4 million
as at December 31, 2009, and working capital of $167.4 million, up
from $53.0 million as at December 31, 2009. The primary reason for
the increase in working capital was the net cash proceeds of $141.4
million received from the equity financing in December partially
offset by the reclassification of $47.4 million ($52.1 million face
value) of convertible notes due December 15, 2011, to current
liabilities.
In November 2010, the Company completed the exchange of an
aggregate of $32.9 million of the principal due under the $85
million face value 2011 convertible senior notes for consideration
of $36.2 million of new 4.50% convertible senior notes,
significantly reducing current debt.
In December 2010, the Company renewed its $50 million revolving
credit facility with Scotia Capital, a subsidiary of the Bank of
Nova Scotia ("BNS"). The renewal was structured as an amendment to
the existing credit agreement with BNS and extends the term of the
revolving credit facility an additional three years to December,
2013. At December 31, 2010, $17.0 million was outstanding on the
credit facility and at February 24, 2011, $2.0 million was
outstanding.
2011 Production Guidance:
-- Production and sale of approximately 65,000 to 70,000 ounces of gold.
-- Production and sale of approximately 3.3 million to 3.5 million ounces
of silver.
-- Estimated cash operating costs of between $450 and $500 per gold-
equivalent ounce assuming 48 to one silver to gold ratio, a decline from
costs of $585 in 2010. Operating cash cost per ounce is determined on a
sales basis and excludes royalties.
Production guidance for 2011 assumes all production will be
sourced from the phase 2 leach pad. While gold production is
expected to remain relatively constant through the year, silver
production is expected to trend up quarter to quarter through 2011
due to increasing volume and duration of ore under leach. The
production forecast assumes a 1.31 operating strip ratio and
stacking 5.9 million ore tonnes during the year, primarily mined
from phase 2 and phase 3 of the open pit. An additional 2.4 million
lower grade ore tonnes will be stockpiled for future processing.
Gold and silver grades of ore tonnes stacked to the leach pad are
expected to average 0.51 grams per tonne and 46.57 grams per tonne,
respectively. All production from the Dolores Mine is unhedged.
Remediation work on the phase 1 leach pad continues and is on
track to be completed late in 2011 as previously reported. As of
December 31, 2010, there are approximately 16,500 ounces of
recoverable gold and 1.75 million ounces of recoverable silver
remaining on the phase 1 leach pad and available for recovery on
resumption of leaching. Excavation and repair of the phase 1 leach
pad liner is estimated to cost approximately $3.5 million.
2011 Capital and Development Budget
The sustaining capital budget for the Dolores Mine is $12.3
million and includes $4.7 million to complete the construction of
the reservoir dam, $1.6 million in plant modifications, $4.2
million in infrastructure and other operating equipment and $1.8
million in drilling equipment.
A pre-stripping program at Dolores, estimated to cost $20.9
million, will be conducted through the year and involves removing
approximately 16.3 million tonnes of non-mineralized overburden
from phases 3, 5 and 6 of the open-pit. The program is designed to
expand ore sources and to obtain and accelerate access to higher
grade ore zones in these areas, benefiting production in future
years. The stripping program will be conducted using a combination
of internal and contracted resources.
The $3.5 million Dolores development budget primarily includes
development drilling to expand reserves and resources and is
currently focused on infill drilling, pit expansion to the south
and underground resource definition. The Company plans to drill
20,000 metres at Dolores in 2011. In addition, $2.3 million has
been budgeted to continue to advance the La Bolsa property to
construction and includes permitting, securing water rights,
infrastructure development and drilling activities.
The Company is continuing to assess the addition of a milling
operation at the Dolores Mine and the development of the
underground resource at Dolores. The Company expects to report
further on these activities from time to time during the year. In
2011, the Company will also be assessing the viability of
processing low grade ore through a dump leach operation.
Finally, the Company plans to complete an update of the Dolores
Mine reserve and resource estimate currently in process by the end
of the first quarter and will announce these results when
completed.
Exploration 2011
The Company plans to drill over 30,000 metres in 2011 at its La
Virginia property and at its other properties in Northern Sonora,
Mexico. Exploration activities on the La Virginia property will
focus on delineating a resource and attempting to expand
mineralization at depth. Drilling is also planned the Company's
Planchas de Plata property to advance development of a resource.
Initial grass roots exploration is also planned at other properties
such as Tepehuaje, Babicanora, Las Cruces and El Capulin. The
exploration expense for 2011 is expected to total $5.9 million.
The complete 2010 Consolidated Financial Statements and
accompanying Management's Discussion and Analysis are available at
www.sedar.com or on the Company's website at
www.minefinders.com.
Conference Call
The Company has scheduled an investor conference call on Friday,
February 25, 2011 at 8 a.m. Pacific Time (11 a.m. Eastern Time) to
discuss its financial and operating results for the year ended
December 31, 2010. Participants may join the call by dialing
toll-free 1-877-240-9772 or 1-416-340-8527 for calls outside Canada
and the U.S. Simultaneously, an audio webcast of the conference
call will also be available on the home page of the Company's
website, www.minefinders.com.
An audio replay will be available until March 4, 2011 by calling
toll-free 1-800-408-3053 or 1-416-695-5800 for calls outside Canada
and the U.S and entering pass code 6506584.
About Minefinders
Minefinders is a precious metals mining and exploration company
and operates the multi-million ounce Dolores gold and silver mine
in Mexico. For more information, please visit our website at
www.minefinders.com.
Non-GAAP Measures
This release includes non-GAAP performance measures of "total
cash cost per ounce" and "operating cash cost per ounce". Operating
and total cash cost per ounce have been determined by the Company
on a sales basis. Operating and total cash cost per ounce are
measures typically reported by mining companies but are non-GAAP
measures without standardized meaning. The Company follows the Gold
Institute standard in determining operating and total cash cost per
ounce. This information is intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
GAAP.
Forward Looking Statements
This release contains certain "forward-looking statements" and
"forward-looking information" as defined under applicable Canadian
and U.S. securities laws. Forward-looking statements generally can
be identified by the use of forward-looking terminology such as
"may", "will", "expect", "intend", "estimate", "anticipate",
"believe", "continue" or similar terminology. Forward-looking
statements are based on forecasts of future results, estimates of
amounts not yet determinable and assumptions that, while believed
by management to be reasonable, are inherently subject to
significant business, economic and competitive uncertainties and
contingencies. Certain of the statements made herein by Minefinders
are forward-looking and subject to important risk factors and
uncertainties, both known and unknown, many of which are beyond the
Company's ability to control or predict. Known and unknown factors
could cause actual results to differ materially from those
projected in the forward-looking statements. Those factors are
described or referred to under the heading "Risk Factors" in
Minefinders' Annual Information Form for the year ended December
31, 2010 and under the heading "Risks and Uncertainties" in
Minefinders' Management's Discussion and Analysis for the year
ended December 31, 2010, both of which are incorporated by
reference herein and are available on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements. Minefinders does not undertake to update any forward
looking statements that are incorporated by reference, except in
accordance with applicable securities laws.
Contacts: Minefinders Corporation Ltd. Jonathan Hackshaw
Director of Corporate Communications Toll Free: (866) 687-6263
Minefinders Corporation Ltd. Mike Wills Investors Relations
Representative Toll Free: (866) 687-6263 www.minefinders.com
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