Redcorp Ventures Ltd.

Redcorp Ventures Ltd.

August 12, 2008 09:01 ET

Redcorp Ventures Ltd.: Financial and Operating Highlights for the Second Quarter Ended June 30, 2008

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 12, 2008) - Redcorp Ventures Ltd. (TSX:RDV) and its wholly-owned consolidated subsidiaries Redfern Resources Ltd. and Redcorp Empreendimentos Mineiros Unipessoal Lda. (collectively, "Redcorp") will, on or before August 14, 2008, file on and mail to shareholders its interim report for the three and six month periods ending June 30, 2008. In this release, we provide a comparative summary of the quarter's operational and financial highlights. Readers are advised that due to the summary nature of this release, the highlights should be read in conjunction with our interim MD&A and unaudited consolidated financial statements contained in our 2nd Quarter 2008 report, once available.

Summary of Operational and Financial Highlights

The following table shows selected comparative consolidated financial information for the three and six month periods ended June 30, 2008 and 2007.

2008-Q2 2007-Q2 2008-Half 2007-Half
($000's, unless otherwise stated)
Oil and gas revenue, interest and
other income 743 146 1,778 222
Exploration expenses 506 2,260 1,204 4,196
General and administrative 1,234 664 2,259 1,128
Interest and financing charges 2,438 3 6,013 4
Stock-based compensation expense 65 92 196 205
Foreign exchange (gain) loss 40 6 (379) 3
Net loss, being comprehensive loss (3,733) (3,026) (7,894) (5,607)
Basic and diluted loss per share
($/share) (0.01) (0.02) (0.02) (0.05)
Capital expenditures (1) 28,224 3,660 54,318 3,697
Total assets 232,654 19,378 232,654 19,378
Total liabilities 133,476 6,603 133,476 6,603
Working capital 45,478 3,391 45,478 3,391
Shareholders' equity 99,178 12,775 99,178 12,775
(1) Includes expenditures in property, plant and equipment, and oil and gas

The following items summarize the key operational and financial highlights of the quarter:

- We signed a letter agreement with HSBC Bank Canada ("HSBC") wherein HSBC is offering to provide a demand non-revolving bridge loan in the maximum principal amount of $64.0 million in exchange for a first-priority security interest in our asset backed commercial paper ("ABCP") investments. Completion of the transaction will require approval of our noteholders;

- We announced the execution of a letter of intent with Gold Wheaton Corp. ("Gold Wheaton") to effect a sale to Gold Wheaton of 100% of the gold produced by the Tulsequah Chief Mine in exchange for a staged US$90 million upfront payment plus an ongoing US$400 per ounce payment to us, subject to adjustment. Completion of the transaction will require approval of our noteholders;

- We incurred capital expenditures of $28.2 million, virtually all of which was related to the development of the Tulsequah Chief Mine; and

- We appointed new officers, Neil Jones and Marilyn Wong, as Vice President, Human Resources and Corporate Secretary, respectively. Mr. Jones has over 28 years experience in the areas of recruitment, training, employee relations and human resource management. Ms. Wong has extensive experience relating to private and public company management including compliance and continuous disclosure.

A key challenge during the quarter was:

- We announced a 47.4% increase to our capital expenditures budget relating to the construction of our Tulsequah Chief Mine. Following a rigorous process, the revised budget was determined to be $297.1 million, net $34.6 million in capital leasing and $16.9 million in contingency.

As a result of the updated construction budget, management and its financial advisors also undertook to update the economic forecast for the Tulsequah Project as at July 15, 2008, including the increased capital costs and the effects of the Gold Wheaton gold sale. Other factors utilized in the forecast includes: Exchange rates of US$1.00 equals Cdn$1.00 for 2009; Cdn$1.05 for 2010; Cdn$1.10 thereafter; and consensus metal prices in the following table that management considered more timely than those used in the Feasibility Study.

Consensus Metal Prices for Updated Economic Forecast - As at July 15, 2008
(For Copper, Lead and Zinc - US$/Pound; For Silver and Gold - US$/Ounce)
2009 2010 2011 2012 2013 2014 2015 2016 2017
Copper 3.59 3.41 3.26 3.11 2.98 1.75 1.74 1.74 1.74
Zinc 0.86 0.88 0.88 0.88 0.78 0.77 0.77 0.77 0.77
Lead 0.80 0.70 0.64 0.59 0.59 0.46 0.46 0.46 0.46
Silver 18.61 19.13 19.83 20.29 20.29 12.20 12.20 12.00 12.00
Gold 875 863 760 725 700 650 650 650 650

After applying all of the above inputs and the ongoing gold price of US$400 per ounce to be paid to us pursuant to the gold sale, the Tulsequah Chief Mine is estimated to generate internal rates of return of 33.2% pre-tax and 30.4% after-tax. Correspondingly, the unlevered net present values for the project based on an 8% discount rate, are estimated at Cdn$201.9 million pre-tax and Cdn$163.1 million after-tax.

Total revenues are estimated at Cdn$1.39 billion before smelting and refining, 35.9% from zinc and 27.7% copper. On an after treatment, refining and freight basis, revenues are estimated to be Cdn$1.12 billion, 29.4% zinc-based and 27.4% copper. Of the remaining revenue, approximately half is gold-sourced, with the remainder being nearly all silver with limited lead.

We believe there is considerable potential to improve the economics of the project by expansion of existing resources through additional exploration of the 14,360 hectares encompassing both the Tulsequah and Big Bull properties which will be facilitated by mine development and improved infrastructure.

2008-Q2 vs 2007-Q2

Oil and gas revenue - net of royalties, and interest and other income

In aggregate, we had an increase between comparative quarters of $0.6 million, to $0.7 million. This was due primarily to increased interest income generated from the significantly higher level of cash raised in mid-2007.

Exploration expenses

Exploration expenses decreased in 2008-Q2 by $1.8 million or 78%, to $0.5 million. The main reason for this decrease was due to costs incurred during 2007-Q2 on our 8,000 meter drilling program at Big Bull. Comparatively, our exploration costs in 2008-Q2 related to a planned 4,000 meter, six-hole exploration program that commenced in 2008-Q1 at Lagoa Salgada in Portugal.

General and administrative expenses ("G&A")

During 2008-Q2, our G&A increased over 2007-Q2 by $0.6 million or 86%, to $1.2 million. Over half of this increase was due to legal costs incurred on a variety of corporate issues: the asset backed commercial paper matter; annual general meeting costs; construction contracts; and other general corporate matters. The majority of the remainder was due to an increase in employee and board compensation costs due to new staffing requirements.

Stock-based compensation expense

During 2008-Q2, our stock-based compensation expense remained at relatively the same level as in 2007-Q2.

Investment in ABCP

On March 17, 2008, conduits that initially issued Canadian non-bank asset backed commercial paper ("ABCP") filed for creditor protection under the Companies' Creditors Arrangement Act of Canada in the Ontario Superior Court of Justice, followed immediately by a proposed restructuring plan. The filing asked the Court to call a meeting of ABCP noteholders to vote on the restructuring plan involving 20 trusts affecting $32 billion in notes, including those trusts in which we hold notes.

Our fair value methodology continues to support the estimated value of $68.3 million recorded under long-term investments as at March 31, 2008, and December 31, 2007, for our ABCP. Management and its advisors, Desjardins Securities/Bodiam Inc., will continue to assess alternatives and recourses to recover maximum value from the $91.4 million to maturity that we invested in ABCP. We did not hold ABCP in 2007-Q2.

2008-Half vs 2007-Half

Oil and gas revenue - net of royalties, and interest and other income

Amounts reported increased by an aggregate of approximately $1.6 million or 700% to $1.8 million. The explanation for this increase is the same as above in the quarter-to-quarter comparative.

Exploration expenses

Costs decreased by $3.0 million or 71% to $1.2 million between periods. In 2008-Half we incurred costs on a 4,000 meter drilling program at Lagoa Salgada compared to a drilling program during 2007-Half involving 32,451 meters in the Tulsequah and Big Bull areas.

General and administrative expenses ("G&A")

Total G&A increased by $1.1 million or 100% to $2.3 million. In addition to the increased legal costs in the quarter discussed above, higher costs were incurred for investor and community relations, audit, and general office costs. All these increases were anticipated due to accelerated field activities and growth in related administration.

Stock-based compensation expense

During 2008-Half, stock-based compensation remained at relatively the same level as in 2007-Half.

Mining exploration, mining and processing activities involve a high degree of risk. There are several risk factors that may cause actual results to differ materially from the forward-looking information included in this news release, or which otherwise affect our business. Such other factors are discussed in detail in our Interim Report for the quarter ended June 30, 2008, and our Annual Information Form and MD&A for the year ended December 31, 2007 as filed by us on

Redcorp Ventures Ltd. is a Vancouver-based mineral exploration and development company with active projects in British Columbia and Portugal. Further information on Redcorp and the Tulsequah Project can be obtained on our website at and at Redfern's website at or by calling toll-free to Troy Winsor, Manager of Investor Relations or Salina Landstad, Manager of Public Relations, at the contact numbers listed below.


Terence Chandler, President and CEO

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of the Securities Act (Ontario) and the Securities Act (Alberta.) Forward-looking information includes disclosure regarding possible or anticipated events, conditions or results of operations that is based on assumptions about future economic conditions and courses of action and includes future oriented financial information with respect to prospective results of operations or financial position that is presented either as a forecast or a projection. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect" and "intend"; statements that an event or result is "due" on or "may", "will", "should", "could", or "might" occur or be achieved; and, other similar expressions.

More specifically, forward-looking information contained herein includes, without limitation, statements concerning our plans at our Tulsequah Project (inclusive of the Big Bull Project), the net present value of the Tulsequah Project, the timing and amount of estimated future production and mine life, expected future prices of gold, silver, copper, lead and zinc, mineral reserve and mineral resource estimates, estimated capital and operating costs of the project, estimated capital pay-back period, estimated asset retirement obligations, timing of development and permitting time lines; all of which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information.

Forward-looking information contained herein is based on material factors and assumptions and is subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from a conclusion, forecast or projection in the forward-looking information. These include, without limitation, material factors and assumptions relating to, and risks and uncertainties associated with, the availability of financing for activities when required and on acceptable terms, the accuracy of the interpretation of drill results and the estimation of mineral resources and reserves, the geology, grade and continuity of mineral deposits, the consistency of future exploration, development or mining results with our expectations, metal price fluctuations, the achievement and maintenance of planned production rates, the accuracy of component costs of capital and operating cost estimates, current and future environmental and regulatory requirements, favourable governmental relations, the availability of permits and the timeliness of the permitting process, the availability of shipping services, the ultimate recovery amount, if any, of our investment in third-party asset backed commercial paper ("ABCP") that has since August 2007 been the subject of a liquidity restructuring plan proposed by the Pan Canadian Committee representing the Montreal Accord and sanctioned on June 5, 2008 by the Ontario Superior Court of Justice pursuant to section 6 of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended, the risk that the Noteholders may not approve the necessary amendments to the Note Indenture required pursuant to the HSBC credit facility secured by ABCP and the Gold Wheaton gold sale agreement, the availability of specialized vehicles and similar equipment, costs of remediation and mitigation, maintenance of title to our mineral properties, industrial accidents, equipment breakdowns, contractor's costs, remote site transportation costs, materials costs for remediation, labour disputes, the potential for delays in exploration or development activities, timely completion of future NI 43-101 compliant reports, timely completion of future feasibility studies, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, currency fluctuations, continuing global demand for base metals, expectations and beliefs of management and other risks and uncertainties, including those described under Risk Factors Relating to Our Business in our Annual Information Form, filed on SEDAR on March 31, 2008, and in each subsequent Management's Discussion and Analysis.
Although we have 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. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from any conclusions, forecasts or projections described in the forward-looking information. Accordingly, readers are advised not to place undue reliance on forward-looking information. Except as required under applicable securities legislation, we undertake no obligation to publicly update or revise forward-looking information, whether as a result of new information, future events or otherwise.

News Release 08-14

Contact Information

  • Redcorp Ventures Ltd.
    Troy Winsor
    Manager, Investor Relations
    (604) 466-8934 or 1-888-225-9662
    Redcorp Ventures Ltd.
    Salina Landstad
    Manager, Public Relations & Corporate Communications
    (604) 639-0135 or 1-888-669-4775 ext. 103