Nov 16 2010
Farallon Mining Ltd. (TSX:FAN) announces its financial and operating results for the three months ended September 30, 2010.
Currency amounts are stated in United States Dollars, unless otherwise noted.
The Company's G-9 mine produced 18.9 million pounds of zinc and 2.0 million pounds of copper in concentrates at a total cash cost of $0.35/lb of payable zinc, generating operating earnings of $5.1 million and $1.6 million in cash from operations before changes in non-cash working capital.
A summary of the results for the three months ended September 30, 2010 ("Q3") compared to the three months ended June 30, 2010 ("Q2") are as follows:
Financial
- Operating earnings of $5.1 million and net income of $1.0 million, down from operating earnings of $11.3 million and net income of $2 million in Q2 as a result of a planned slow down of ore production to 1,500 tpd from 1,815 tpd in Q2.
- Cash flow from operations before changes in non-cash working capital of $1.6 million, down from $6.6 million in Q2.
- Gross revenues of $28.5 million, down from $39.1 million in Q2.
- Non-GAAP Adjusted EBITDA of $4.5 million, down from $11.4 million in Q2.
- Working capital of $21.8 million at September 30, 2010, down from $24.4 million at June 30, 2010.
Operations
- Mined 139,447 tonnes of ore (average 1,516 tpd), in line with a previously stated target of 1,500 tpd.
- Processed 132,529 tonnes of ore (average throughput 1,441 tonnes per day "tpd) grading 7.8% zinc, 0.94% copper, 118 g/t silver and 1.6 g/t gold.
- Produced 17,985 tonnes of zinc concentrate and 6,783 tonnes of copper concentrate, containing an estimated 18.9 million pounds of zinc, 2.0 million pounds of copper, 311,638 ounces of silver and 2,926 ounces of gold from the G-9 mine.
- Recovered 83% zinc, 74% copper, 62% silver and 43% gold from ore into zinc and copper concentrates.
- Sold approximately 20,489 tonnes of zinc concentrate grading 47% zinc and 6,604 tonnes of copper concentrate grading 13% copper. Payable metals contained in concentrate were 17.6 million pounds of zinc, 1.7 million pounds of copper, 254,008 ounces of silver and 2,284 ounces of gold.
Metal Prices
- Realized sales prices for zinc and copper were of $0.96/lb and $3.52/lb, respectively, up from Q2 realized prices of $0.89/lb zinc and $3.11/lb copper.
Management Changes
The Company announced the departure of Mr. Kerry Barker as the General Manager of G-9, and has appointed the G9 Administration Manager, Oscar Zelaya, as interim General Manger.
Exploration
The Company issued an update on exploration activities in a separate news release dated October 20, 2010.
Subsequent Event
On November 15, 2010 the Company announced that it has entered into a Support Agreement with Nyrstar NV ("Nyrstar") pursuant to which Nyrstar has agreed to make an all-cash offer to acquire all of the issued and outstanding shares of the Company by way of a friendly take-over bid at a price of CAD$0.80 per common share (the "Offer"), valuing the Company at approximately CAD$405 million on a fully diluted basis.
The Nyrstar Offer represents a premium of 23% to the Company's closing price on the Toronto Stock Exchange (the "TSX") on November 12, 2010 and a premium of 32% to the Company's volume weighted average price on the TSX for the 20 trading days prior to the announcement of the Offer.
The Company's Board of Directors has unanimously recommended that shareholders tender their shares in favour of the Offer.