Patricia Mining Corp.

Patricia Mining Corp.

November 30, 2007 10:09 ET

Patricia Mining Corp. Reports Results for the 3rd Quarter of 2007, Island Gold Mine Expected to Produce Positive Cash Flow in 4th Quarter

TORONTO, ONTARIO--(Marketwire - Nov. 30, 2007) -


Patricia Mining Corp. ("Patricia") (TSX VENTURE:PAT) has released financial and operational results for its third quarter which ended Sept. 30, 2007. Financial results are based on Canadian GAAP (generally accepted accounting principles).

The Company's main asset is a 45% interest in the Island Gold Mine located approximately 50 km northeast of Wawa, Ontario. The 650 tonne-per-day carbon-in-pulp mill was successfully restarted in September 2006 and the first gold was poured in November 2006.

3rd Quarter Highlights and Milestones:

- Commercial production at the Island Gold Mine was declared as of October 1, 2007. In the third quarter of 2007, a total of 7,202 ounces of gold were sold at an average price of US$643 per ounce for total proceeds of $5,093,711 from the Mine.

- In the fourth quarter, the Island Gold Mine plan calls for the development and drilling of five stopes, in addition to the initial two stopes that produced ore in the third quarter.

- The mill throughput is expected to be increased in the first quarter of 2008 towards a targeted capacity of approximately 675 tonnes per day at a 95% gold recovery rate. Production of over 32,000 ounces is forecast for 2007 and is expected to increase to over 54,000 ounces in 2008.

"With the Island Gold Mine now in commercial production and the majority of ore coming from long hole stopes, we have seen an encouraging improvement in ore grade" stated Chris Chadder, Patricia's CEO, "After a long development phase, we expect that the Mine will now start to produce positive cash flow."

Summary of Operations

The Company accounts for the Island Gold Project as a Variable Interest Entity (VIE) with Richmont Mines Inc. ("Richmont Mines") being the primary beneficiary. Accordingly, the Company's interest in the Project is accounted for using the equity method. Summarized operational information for the joint venture is as follows:

Three Months ended Nine Months ended
September September September September
30, 2007 30, 2006 30, 2007 30, 2006

Tonnes processed from
development activities 44,968 - 124,152 -
Ounces sold 7,202 - 23,031 -
Recovered Grade (g/t) 4.98 - 5.77 -

Investment in exploration
and development ($)
Capitalized exploration
and development costs 6,186,445 6,024,547 18,536,459 15,742,312
Gold sales from
development activities (5,093,711) - (16,774,926) -
Property 152,367 501,695 534,725 1,055,997
Mill - 729,845 132,375 983,220
Mining Properties - 60,608 - 60,608
1,245,101 7,316,695 2,428,633 17,842,137

Exploration expenses ($) 38,811 61,477 265,964 177,164

Development metres 989 778 3,335 2,518

Exploration Drilling (metres)
Underground 3,087 9,199 10,079 20,956
Surface - 3,898 - 10,602

- 7,202 ounces of gold were produced and sold at an average price of US$643 by the joint venture participants during the quarter. The proceeds for these sales totalling $5,093,711 were deducted from the development costs. For the nine months ended 23,031 ounces of gold were sold at an average price of US$662 for proceeds of $16,774,926.

- 44,968 tonnes of mineralized material were processed at the Island Gold mill during the quarter. For the nine months ended 124,152 tonnes were processed.

- During the quarter 3,087 metres of underground diamond drilling was completed in zones that have demonstrated strong potential to confirm the mineralization model and increase mineral resources. For the nine months ended September 30, 2007, 10,079 metres of underground diamond drilling was completed.

- Underground development of 989 metres was completed during the quarter for a total of 3,335 meters for the first nine months of the year.

As of May 2007, the Island Gold Mine Proven and Probable Reserves have been assessed at 1,013,854 tonnes of ore at an average diluted grade of 8.55 grams per tonne, for a total of 278,711 ounces of gold at the project, representing more than four years production. In addition to the reserves, a total of 454,705 tonnes at an average grade of 10.26 g/t or 149,972 ounces of gold, were categorized as Measured and Indicated Resources, while Inferred Resources were evaluated at 610,728 tonnes at a grade of 9.96 g/t, or 195,549 ounces of gold. The results of the reserve calculation were completed by the independent firm Genivar and a technical report prepared according to the requirements of Regulation 43-101 was filed on SEDAR on May 25, 2007. Reserve tonnage has been reduced by mining since the release of the Reserve report.

Results of Operations

The Island Gold Joint Venture was formed in November 2005 and, as such, is responsible for all costs related to the Island Gold Project. There were limited exploration and development expenditures incurred directly by Patricia at the Island Gold property for the quarter ended September 30, 2007. In total the Company invested $236,650 net of gold sales for the quarter and a total of $1,049,580 net of gold sales for the nine months ended September 30, 2007 to continue the development work at the Island Gold site.

The Company reported no revenues for the quarter ended September 30, 2007. For the quarter ended September 30, 2007, the Company had a loss before taxes of $138,591 as compared to a loss of $161,969 for the same period in the prior year.

Under the provisions of the Island Gold Project Operating and Joint Venture Agreement, the Company has entered into a loan agreement with Richmont Mines. The Company has a loan facility of up to $4,500,000 for the purposes of financing the Company's proportionate share of development expenditures relating to the Island Gold Project. As at December 31, 2006 $4,500,000 of the facility had been drawn down to fund project expenditures. The loan bears interest at prime plus 3% and is secured by the Company's interest in the Island Gold Project. Repayment is required in 36 equal monthly instalments commencing April 1, 2007. As at September 30, 2007 the loan balance was $3,750,000. The loan can be repaid at any time without penalty. In the event of default, the Company's participating interest in the Island Gold Joint Venture could be reduced by 1% for each $166,666 owing. Management believes that sufficient cash flow from the Company's interest in the Island Gold Project will be achieved to service this debt obligation.

In 2006, the Company also completed a $2,000,000 non brokered private placement debenture which resulted in gross proceeds of $1,960,000 to the Company. The debenture bears interest at 7% and was due on July 1, 2007. Additional details of this financing are contained in Note 6 to the unaudited financial statements of the Company for the six months ended September 30, 2007. This debenture was not repaid on July 1, 2007 and is in default. The debenture is due and payable on demand. Interest on the debenture after default is 14% per annum.

Subsequent to the quarter end, the holder of the $2,000,000 debenture which came due on July 1, 2007 has agreed to convert the debenture into 3,846,154 units. In lieu of interest, an additional 536,250 units will be issued. Each unit will be priced at $0.52 and is comprised of one common share and one half of a share purchase warrant. Each whole share purchase warrant entitles the holder to acquire one common share at an exercise price of $0.75. The warrants will expire one year after the date of closing. The conversion of the debenture is subject to regulatory approval.

In the second quarter, the Company completed a $1,000,000 non-brokered private placement debenture financing with a private individual. The debenture was issued at 97.5% of face value which delivered $975,000 to the Company. The debenture yields 9% and is due on June 1, 2008. The holder of the debenture received 500,000 common share purchase warrants exercisable at $0.85 on or before July 1, 2008. In the event of default, the debenture is due and payable on demand and interest on the debenture after default is 14% per annum.

National Instrument 43-101 - The reserve and resource calculation for the Island Gold property as of May 15, 2007 was performed by GENIVAR for Richmont Mines Inc. as operator of the project. Mr. Michel Garon, Eng., of GENIVAR, is the qualified person under the terms of NI43-101.

This release was prepared by management of the Company who takes full responsibility for its contents.

Some statements contained in this release are forward-looking and, therefore, involve uncertainties or risks that could cause actual results to differ materially. Such forward-looking statements include comments regarding mining and milling operations, mineral resource statements and exploration program performance. Factors that could cause actual results to differ materially include metal price volatility, economic and political events affecting metal supply and demand, fluctuations in mineralization grade, geological, technical, mining or processing problems, exploration programs and future results of exploration programs at the Island Gold Project, future profitability and production.

The securities referred to herein have not been registered under the US Securities Act of 1933 and may not be offered or sold in the United States or to a US person absent registration or an applicable exemption from registration.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Patricia Mining Corp.
    Christopher R Chadder C.A.
    President & CEO
    (416) 214-4900
    Patricia Mining Corp.
    Richard H. Sutcliffe, Ph.D, P. Geo.
    (416) 214-4900
    (416) 864-0620 (FAX)
    Patricia Mining Corp.
    Mr. Gus Garisto
    Investor Relations
    (416) 805-3106