International Minerals Reports Strong Pallancata Mine Production Results for the Quarter Ended September 30, 2010
Announces Closing of Private Placement Financing with Hochschild
Mining
International Minerals Corporation (TSX and SIX: 'IMZ?) (TSX: IMZ) (SWX:
IMZ) reports that the Pallancata silver mine in Peru produced 2.51
million ounces (1.0 million silver ounces attributable to IMZ) in the
third calendar quarter of 2010 ('Calendar Q3?) at direct site costs of
$2.53 per ounce ('/oz?) of silver, net of gold by-product credit. IMZ′s
total cash costs were $5.77/oz silver, net of gold credit.
IMZ is also is pleased to report that on November 4, 2010, the
previously-announced (see news release dated October 12, 2010)
non-brokered private placement financing with Hochschild Mining plc
('Hochschild?) was completed for proceeds to IMZ of $20.0 million
(approximately CDN$20.2 million).
All dollar amounts are reported in U.S. Dollars.
Pallancata Mine
The Pallancata Mine is jointly owned by IMZ (40% interest) and
Hochschild Mining plc ('Hochschild?, 60% interest and operatorship).
Cash Flow and Capital Expenditure
IMZ′s share of cash dividends paid out by the Pallancata operating
company from free cash flow from the Pallancata Mine so far in calendar
year 2010 is $16 million, with additional dividends expected to be
received prior to year end.
IMZ′s 40% share of the total projected capital expenditures in calendar
year 2010 of approximately $46 million (primarily for additional mine
development/infrastructure and construction of new tailings, waste rock
and paste backfill facilities) will be fully-funded by operational cash
flow.
IMZ estimates calendar year 2010 production for Pallancata (on a 100%
project basis) of approximately 10.0 million ounces of silver and 33,000
ounces of gold.
IMZ uses an equity accounting basis to record its 40% interest in the
Pallancata Mine.
Production
Table 1 below shows that Pallancata′s Calendar Q3 silver production (on
a 100% project basis) compared to Calendar Q2 is stable at approximately
2.5 million ounces. Gold production was 11% lower for Calendar Q3 at
8,265 ounces compared to 9.319 ounces Calendar Q2, due to a slightly
lower gold grade and recoveries in the current quarter.
For Calendar Q3, direct site costs at Pallancata were $2.53/oz of
silver, after gold credit. IMZ′s total cash costs (including the
management fee to Hochschild), the government royalty and
commercialization costs for the sale of concentrate) were $5.77/oz of
silver, after gold by-product credit. These costs are higher by 5%
compared to Calendar Q2, due primarily to lower gold production than
realized during Calendar Q2.
Direct and total cash costs for the full calendar year 2010 are
estimated by IMZ to be approximately $2.75/oz silver and $5.75/oz silver
respectively, both after gold by-product credit.
Table 1: Pallancata Mine Production Highlights
(100% Basis; in U.S. Dollars)
| On 100% Basis | Calendar | Calendar | Calendar | Nine | ||||
Ore mined (tonnes) | 286,358 | 262,347 | 249,094 | 786,672 | ||||
Ore processed (tonnes) | 273,239 | 269,311 | 269,128 | 790,582 | ||||
Average head grade silver1 (g/t) | 337 | 341 | 335 | 339 | ||||
Average head grade gold1 (g/t) | 1.32 | 1.39 | 1.5 | 1.37 | ||||
Concentrate produced (tonnes) | 2,360 | 2,558 | 2,160 | 7,257 | ||||
Silver grade in concentrate (kg/t) | 33.1 | 30.8 | 36.1 | 31.6 | ||||
Gold grade in concentrate (kg/t) | 0.11 | 0.11 | 0.14 | 0.11 | ||||
Silver produced2 (oz) | 2,511,189 | 2,528,006 | 2,507,220 | 7,372,758 | ||||
Gold produced2 (oz) | 8,265 | 9,319 | 9,621 | 25,804 | ||||
Silver sold (payable oz) | 2,406,904 | 2,671,909 | 2,351,235 | 7,211,509 | ||||
Gold sold (payable oz) | 7,673 | 9,980 | 8,780 | 24,616 | ||||
IMZ Direct Site Costs per oz silver (after gold by-product credit)3 ($/oz) | $ 2.53 | $ 2.40 | $ 2.72 | $ 2.66 | ||||
IMZ Total Cash Costs per oz silver (after gold by-product credit)4 ($/oz) | $ 5.77 | $ 5.47 | $ 5.30 | $ 5.69 | ||||
Table 2: Pallancata Mine Production Highlights
(IMZ 40% Share)
| IMZ's 40% Share | Calendar | Calendar | Calendar | Nine | ||||
Silver produced2 (oz) | 1,004,476 | 1,011,202 | 1,002,900 | 2,949,103 | ||||
Gold produced2 (oz) | 3,306 | 3,728 | 3,848 | 10,322 | ||||
Silver sold (oz) | 962,800 | 1,068,800 | 940,400 | 2,884,604 | ||||
Gold sold (oz) | 3,068 | 3,992 | 3,512 | 9,846 | ||||
Notes to Tables 1 and 2:
1. | Head grades for silver and gold are based on the overall metallurgical balance for the process plant. | |||
2. | Difference between 'produced? metal ounces and 'sold? metal ounces is a combination of the smelter metal payability factors and in-process concentrate. | |||
3. | Direct Site Costs per ounce silver and Total Cash Costs per ounce silver reflect a 'mined ore inventory adjustment?. IMZ believes that this calculation more accurately matches costs with ounces of production. (Also see notes 4 and 5 below.) | |||
4. | Direct Site Costs per ounce silver comprise direct mining, mined ore inventory adjustment, toll processing and mine general and administrative costs (net of gold by-product credit). | |||
5. | Total Cash Costs, using the Gold Institute′s definition, comprise: mine operating costs, mined ore inventory adjustment, toll processing costs, mine general and administrative costs, Hochschild′s management fee, concentrate transportation and smelting costs, local and provincial taxes (other than federal income tax) and the Peruvian government royalty (net of by-product gold credit). |
The technical information reported in this news release was reviewed by
IMZ′s Qualified Person, VP Corporate Development Nick Appleyard.
Private Placement Financing
On November 4, 2010, IMZ completed the previously-announced $20.0
million non-brokered private placement with Hochschild. The equity
placement forms part of a Framework Agreement (the 'Agreement?) signed
by IMZ and Hochschild (see IMZ news release dated October 12, 2010) to
fast-track development, permitting and commencement of production at the
IMZ/Hochschild jointly-owned Inmaculada property in southeastern Peru,
located 25km south of the Pallancata Mine.
A total of 3,655,746 common shares of IMZ were issued to Hochschild at a
price of CDN$5.525 per share. The share price was based on the
volume-weighted average trading price of IMZ shares on the Toronto Stock
Exchange over the 10 trading day period preceding the date of signing of
the Agreement on October 12, 2010. There were no commissions paid with
respect to the private placement.
Proceeds from the financing will be used principally by IMZ for general
working capital purposes.
Hochschild Mining plc does not accept any responsibility for the
adequacy or inadequacy of the disclosure made in this news release and
any such responsibility is hereby disclaimed in all respects.
Cautionary Statement:
The Gold Institute calculation of Direct Site Costs and Total Cash
Costs are non-Canadian GAAP financial measures, which IMZ management
believes are useful in measuring operational performance, and also any
forward-oriented financial information provided may not be appropriate
in relation to Canadian GAAP reporting, which should be referred to in
the Company′s financial reporting. Some of the statements contained in
this release are 'forward-looking statements? within the meaning of
Canadian securities law requirements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that
may cause our actual results, performance or achievements to differ
materially from the anticipated results, performance or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements in this release include statements regarding estimates of
production, total cash costs, mine life, resources, cash flow, capital
costs and dividends. Factors that could cause actual results to differ
materially from anticipated results include risks and uncertainties such
as: risks in attaining ramped-up production and processing rates, risks
of cost escalation, risks of estimating mineral resources and reserves,
variances between mineral reserves and actual mineral production and
other risks and uncertainties detailed in the Company′s Annual
Information Form for the year ended June 30, 2010, which is available at www.sedar.com
under the Company′s name. The Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
International Minerals Corporation
In
North America:
Paul Durham, 1-203-940 2538
Vice
President Corporate Relations
or
In
Europe:
Oliver Holzer, +41 (0) 44 854 11 39
Marketing
Consultant
IR@intlminerals.com
http://www.intlminerals.com