Sinchao Metals Corp.
TSX VENTURE : SMZ

Sinchao Metals Corp.

August 27, 2010 17:16 ET

Sinchao Reports 2010 Q1 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 27, 2010) - Sinchao Metals Corp. ('Sinchao' or the 'Company') (TSX VENTURE:SMZ) reports that for the first quarter ended June 30, 2010, it incurred a loss of $209,804 or $0.00 per share compared to a profit of $202,756 or $0.00 for the same period in 2009. The profit in 2009 was attributable to a foreign exchange gain of $349,941.

Overview

Sinchao Metals Corp. ("Sinchao", or the "Company") was incorporated on March 15, 2006 under the Business Corporations Act of Alberta. Through its 100% owned subsidiary, Corporacion Minera Sinchao S.A.C. ("Minera Sinchao"), the Company's principal business is the exploration of mineral properties located in Peru. This South American nation has a long tradition of mining and infrastructure to support the mining industry.

Sinchao is a Canadian-based exploration and development company. The Company is a subsidiary of Andean American Mining Corp., ("Andean") which owns approximately 60.17% of the outstanding shares.

The Company is exploring its Sinchao property, of which most is owned 100% by the Company, and the proposed drill program, subject to financing, is seeking to define the size of the potential bulk tonnage, open pittable mineralization of the Breccia and Skarn zones.

Operational

Only 15% of the geological targets on the Sinchao Property have been drill tested. An additional drill program of approximately 5,000m has been recommended in order to test the extensions of the Breccia Zone to the northwest and the Skarn Zone to the southeast. An additional 15,000 metres of drilling, contingent on the results of this drilling, has also been budgeted. The objectives of the planned drilling will be to increase the inferred resource and collect representative samples for metallurgical studies. Strategic partners may be involved. No drilling took place during the three months ended June 30, 2010.

Reinterpretation of the geology has identified potential additional mineralization at the Hydrothermal Breccia and Skarn Zones and extensions to the Epithermal Zone. These zones have the geological potential to host additional resources ranging from 400 million to 1600 million tonnes, with estimated grades of 0.3% to 0.6% copper and 0.3 to 0.5 g/t gold. This is exclusive of the recently identified porphyry – style mineralization, which has not yet been evaluated.

A NI 43-101 compliant resource estimate of inferred resources was completed October 30, 2008.

Inferred Resource estimates by cut-off:

Cut-Off Tonnes Copper Gold Silver
Cu % Au g/t Millions % g/t g/t
           
0.13 0.07 416 0.36 0.33 9.2
0.23 0.15 376 0.38 0.36 9.9
0.27 0.24 237 0.47 0.49 12.1
0.39 0.35 155 0.58 0.62 14.2
0.44 0.44 113 0.65 0.72 15.6
0.43 0.55 82 0.74 0.82 17.0
0.48 0.64 64 0.85 0.90 110.3

Examples of Contained Metals:

Tonnes Copper lbs Gold ozs Silver ozs Eq. Lbs Copper
237 2.45 3.73 92 4.04
Million Billion Million Million Billion grading 0.77% Copper Eq*
         
416 3.3 4.4 123 5.71
Million Billion Million Million Billion grading 0.62% Copper Eq*

*based on US$1.50/lb copper, US$600/oz gold and US$8/oz silver.

Notes:
1. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by the inability to obtain required environmental and other regulatory approval, environmental or operating permits. The estimate may also be materially affected by global economic conditions such as the price of gold and silver, the price of oil and other commodities utilized in the production of gold and silver. Unknown geologic or hydrologic conditions or other unknown factors may materially affect the resource estimates.
2. Metallurgical recoveries and net smelter returns have not yet been determined. There has been no metallurgical work done at the Sinchao Property to date.
3. Victor Jaramillo, P. Geo., of Discover Geological Consultants Inc. is an Independent Qualified Person as defined by National Instrument 43-101 and is responsible for the resource estimates

Results of Operations

Three months ended June 30 2010 2009
(Loss)/profit before income tax ($209,804) $202,756
Loss per share 0.00 0.00
Total assets 31,558,969 31,343,921
Working capital deficit 1,080,145 584,271
Mineral properties 31,355,370 30,856,167
Share Capital:    
Outstanding 75,977,800 70,103,514
Warrants - 8,750,000
Options 2,955,000 2,195,000

Cash Flow and Liquidity

At June 30, 2010 the Company had a working capital deficit of $1,080,145, compared to $584,271 at June 30, 2009. Sinchao's net cash used for the three months ended June 30, 2010 was $978,863 ($800,000 to repay Andean) and ($300) for the same period in 2009.

During the three months ended June 30, 2010, the Company issued no common shares.

The information above should be reviewed in conjunction with the Company's unaudited consolidated financial statements, management discussion and analysis, for the year three months ended June 30, 2010 that will be available shortly on www.sedar.com. For further information call (604) 681-6186 or toll free: 1-888-356-4784 or visit our website at www.smzmetals.com. The technical disclosure in this news release has been reviewed by Andrew Gourlay, P.Geol., Geological Consultant and a Qualified Person as defined by National Instrument 43-101.

Certain of the information contained in this news release constitutes 'forward-looking statements' within the meaning of securities laws. Such forward-looking statements, including but not limited to those with respect to the prices of metals and minerals, purchase payments, royalty payments, estimated future production and estimated costs of future production involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any forecast results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual prices of metals and minerals, the actual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the documents of the Company filed from time to time with the British Columbia Securities Commission.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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