Rusoro Mining Ltd. ("Rusoro" or the "Company") (TSX VENTURE: RML)
is pleased to report its financial results for the quarter ended
September 30, 2008 ("Q3"). The Company's Q3 consolidated financial
statements and management's discussion and analysis (MD&A) for
the three and nine months periods ended September 30, 2008 have
been filed on SEDAR (www.sedar.com).
All amounts set out in this news release and in the Company's
financial statements and MD&A are unaudited and in United
States dollars, unless otherwise stated.
Q3 2008 Highlights
- Commercial gold production officially commenced during Q3 at
the Company's newly acquired Isidora gold mine, situated in Bolivar
State, Venezuela. From start-up, the Company achieved a total of
4,722 ounces of gold production in September at a cash cost per
ounce of $247. Management is encouraged by this lower than expected
initial cash cost estimate from its first gold production at the
mine and believes this low cost trend can be maintained for the
near to medium term, with production levels expected to be ramped
up considerably from the levels achieved in September. The
financial results from Isidora production could not be consolidated
in Rusoro's Q3 financial statements, given that the agreements
officially finalizing the acquisition will not be concluded until
December 2008.
- Production from Choco 10 mine continued, with 22,082 ounces of
gold produced from the mine during Q3 at an average cash cost per
ounce of $713. The Q3 was impacted by lower than forecasted
production in August caused by a delay in import deliveries of key
consumables and equipment at the mine. The Q3 financial statements
also continued to be impacted by Venezuelan in-country financial
volatility. The outlook for improvements in in-country financial
volatility impacting mine costs is, in Rusoro management's view,
improving steadily.
- On July 4, 2008 the Company entered into an agreement with the
Venezuelan Ministry of Mines and Basic Industries ("MIBAM") to
establish a joint venture (the "Mixed Enterprise") to carry on with
gold exploration, development and mining of the Hecla-Venezuela
assets. The Mixed Enterprise will be owned 50% by the Company and
50% by Empresa Basica Minera Nacional ("EMN"), a company owned by
MIBAM. The Mixed Enterprise is expected to be created within 6
months of the date of the agreement with MIBAM. None of the
Company's existing assets, such as the Choco 10 mine, are to be
contributed to the Mixed Enterprise.
- On July 8th, 2008, Rusoro reported news of high grade
intercepts of gold from its Yuruan property, grading up to 39.1 g/t
over 5.7 meters (see July 8th news release).
- On July 8, 2008, the Company closed the acquisition of 100% of
the outstanding shares of El Callao Gold Mining Ltd. and
Drake-Bering Holdings B.V. including their wholly-owned
subsidiaries Minera Hecla Venezolana, C.A. ("Minera Hecla") and El
Callao Gold Mining Company de Venezuela, SCS ("El Callao Gold
Mining") (the "Hecla-Venezuela Acquisition").
- On September 5, 2008, the Company announced that it had
formally completed agreements with MIBAM to custom mill ore from
various CVG Minerven, C.A. ("CVG Minerven") operations in
Venezuela.
Results of Operations and Financial Position:
During the three months ended September 30, 2008, the Company
sold 21,755 ounces of gold for a total amount of revenue of
$14,716,982. Net loss for the three months ended September 30, 2008
was $12,490,285, which includes non-cash expenses such as
amortization of $7,562,389, stock based compensation of $1,699,049,
an impairment adjustment of $1,911,444 to write down gold
inventories to net realizable value and accretion of long-term debt
of $1,199,801. Also includes non-cash gains such as unrealized
foreign exchange gain of $5,604,031 and future income tax recovery
of $5,449,517.
Net cash generated in operating activities during the three
months period ended September 30, 2008 was $3,065,567, cash used in
financing activities was $1,379,957 and cash used in investing
activities amounted $43,441,454. As at September 30, 2008 the
Company had a cash position of $19,968,965 to be used to fund
on-going production expansion initiatives.
Commentary and Outlook:
Choco 10
The Choco 10 mine produced 22,082 ounces of gold during the Q3
at an average cash cost per ounce of $713. The quarter was impacted
by lower than forecasted production in September caused by a delay
in import deliveries of key consumables and equipment to the mine.
Key mine consumables, especially those related to ore milling, need
to be imported into Venezuela and cleared through customs. Given
the recent tightening of measures on import and exchange controls,
this process temporarily impeded the arrival of these key
consumables, leading to sporadic mill shut-downs and reductions in
mill availabilities throughout September and into early October.
The Company is pleased to report that the mine has finally received
these key consumables and that the mill availability levels have
reestablished themselves.
The Q3 financials also continued to be impacted by Venezuelan
in-country financial volatility. The outlook for improvements in
in-country financial volatility impacting mine costs is, in Rusoro
management's view, improving steadily and it is expected to have a
positive effect on future cash-flows from the mine.
During Q3, 7 new Terex TR100 trucks were commissioned in
addition to 2 new Komatsu excavators, 3 new Komatsu front end
loaders and 1 new grader.
The Company has recently negotiated a new contract with its
primary ore and waste haulage contractor, Ramel, with new pricing
terms put into effect in September. These new pricing terms,
calculated on a "Bench-Cubic Meter" basis, are better suited to the
style of mining that is being conducted at Choco 10 mine and should
result in a measurable cost savings in the near future for the
Company. Improvements have already been noted in this arrangement,
most notably with truck and shovel fleet availabilities trending
above 80% (historically, less than 50% availability).
With most major equipment and haulage fleet issues resolved,
in-country financial volatility narrowing and minor enhancements
made to the ore handling and milling process, the Company expects
measurable improvements to its gold production and cost profile in
the very near term from Choco 10 mine.
Isidora
The transition of the Isidora Mine (formerly owned by Hecla) to
Rusoro's management and operational control occurred in mid-July of
this year, following months of negotiations with its former owners
and the underlying concession holders, CVG Minerven. As part of the
transition, site crews and managers worked quickly in July and
August to re-establish the mine into working order, given that it
had been under care and maintenance for many months prior to its
acquisition.
Ore from Isidora, averaging in excess of 30 g/t is being mined
at an average rate of 500 to 800 tonnes per day. Once hauled from
underground, the ore is stockpiled on surface, sampled, and then
trucked a short distance to Rusoro's near-by Choco 10 gold
processing plant. Currently, the Choco 10 plant has a production
capacity of over 8000 tonnes per day, and thus can accommodate the
milling of Isidora ore with ease. In our first full month of
operation, the mine produced 4,722 ounces at an estimated cash cost
of $247. Gold recoveries from the processing of Isidora ore at the
Choco 10 plant have been averaging 90% during the first month of
production.
Management is encouraged by this lower than expected initial
cash cost estimate from its first month of gold production at the
Isidora mine and believes that this low cost trend can be
maintained for the near to long term. Gold production levels are
being ramped up considerably up from the levels achieved in
September, with a steady-state production level of 6000 to 7000
ounces per month established as a target.
Corporate Commentary
In light of the down-turn in the financial markets and related
budgetary constraints, the Company has initiated a number of
measures to cut operating costs, expenses and overheads where
applicable. As a starting measure, senior executive fees,
in-country senior management fees and board fees have been reduced,
in some cases by up to 50%. Employee rationalization and expatriate
work-force reduction initiatives have also commenced at all
operating and administrative sites. Active exploration, including
drilling activities, has also been drastically reduced.
ON BEHALF OF THE BOARD
George Salamis, President
Forward-looking statements: This document contains statements
about expected or anticipated future events and financial results
that are forward-looking in nature and as a result, are subject to
certain risks and uncertainties, such as general economic, market
and business conditions, the regulatory process and actions,
technical issues, new legislation, competitive and general economic
factors and conditions, the uncertainties resulting from potential
delays or changes in plans, the occurrence of unexpected events,
and the Company's capability to execute and implement its future
plans. Actual results may differ materially from those projected by
management. For such statements, we claim the safe harbour for
forward-looking statements within the meaning of the Private
Securities Legislation Reform Act of 1995.
The TSX Venture Exchange has not reviewed and does not take
responsibility for the adequacy or accuracy of this release.
Contacts: Rusoro Mining Ltd. George Salamis President (604)
632-4044 or Toll Free: 1-800-668-0091 (604) 632-4045 (FAX) Email:
info@rusoro.com Website: www.rusoro.com
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