Alexis Minerals Corporation
TSX : AMC
OTCQX : AXSMF

Alexis Minerals Corporation

November 15, 2010 23:55 ET

Alexis Minerals Reports Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 15, 2010) - ALEXIS MINERALS CORPORATION (TSX:AMC)(OTCQX:AXSMF) ("Alexis" or the "Company") has reported its third quarter 2010 Financial Statements and Management's Discussion and Analysis for the three month period ended September 30, 2010. Progress at the Snow Lake mine has been encouraging with the recent completion of the Snow Lake Feasibility Study. The study projects 80,000 ounces of annual gold production over a five year operating period. The study includes a revised estimate of Mineral Resources which have increased significantly during the year. Total resources in all categories have passed the million ounce mark. Proven and Probable gold reserves within Resources and supporting the production estimates now total an estimated 451,900 ounces gold (see news release, November 3, 2010, for details regarding the mineral reserve estimates). Our prime issue during recent months has been inconsistent gold grades being mined at our Lac Herbin gold mine. Operating costs are being closely monitored, and as the third quarter progressed certain expenses were reduced or eliminated to preserve cash. We are diligently and continuously assessing all factors to improve the grades and performance at Lac Herbin. The quarterly result documents can be reviewed in full on SEDAR (www.sedar.com) or on the Company's website at www.alexisminerals.com.

(Note: All figures are reported in Canadian dollars, unless otherwise noted).

Q3- 2010 Summary:

During the three months ended September 30, 2010 the following occurred at Alexis Minerals:

  • Total revenue of $7.74 million was generated, 17.9% higher than in Q3-2009; 14.7% less than Q2-2010. The latter was due to fewer ounces of gold mined, milled and recovered during Q3-2010.

  • The Company sold 6,498 ounces of gold at an average realized price of $1,250/oz (USD $1,208/oz.), compared to 6,575 ounces sold during Q3-2009 at an average realized price of $1,048/oz (USD $940/oz).

  • Lac Herbin Mine, in Val-d'Or, Quebec, the Company's initial gold operation, mined 4,677 oz. of gold, a 47% reduction compared to 6,874 ounces mined in Q2-2010. The grades realized continued to be lower than expected. Management continues to work to better predict the nature of the gold grades. More drilling and in depth review of the geology has led to a better understanding of the nature of the deposit.

  • Our wholly-owned Aurbel Gold Mill, performed at a more consistent level during this quarter with an average recovery rate of 91.6%, improved from 87.2% in Q2-2010. The Aurbel Mill was refurbished earlier this year with the rationale that Alexis would achieve an estimated 10% reduction in annual operating costs for the Lac Herbin gold mine.

  • Cash cost of sales per ounce (see non-GAAP measures) of the Lac Herbin gold sold was at $1,283/oz Au for the third quarter. The deposit has continued to pose challenges, at the current stage of development, in producing sufficiently high grade ore (see further comments below). As an immediate action, various costs and mining development efforts were reduced in an effort to offset the lower revenue. Alexis is very focused on reducing unit cost.
  • Compared to Q2-2010, cash flow was negatively impacted by the reduction of accumulated accounts payable, significantly depleting working capital.

  • Exploration and delineation drilling totaling 7,714 metres occurred primarily at Snow Lake and Lac Herbin. Year to date drilling totals 55,544 metres.

  • Exploration drilling continued in the Deep West target area, near the past producing Louvicourt mine. Drilling approximately 600 metres above the deep Massive Sulphide discovery intersected broad alteration and stringer sulphide zones. Recognized regional folding in association with geological trends should allow Alexis to align drilling to ultimately locate and test a large seismic-reflection geophysical anomaly in this general area.

  • The Company raised $14.375 million through a public offering at a price of $0.15 per share. A portion of the net proceeds were devoted to reinforcing working capital and general corporate purposes. The Snow Lake Feasibility Study has been completed and key capital programs are being prepared to support the next phase of the Company's strategic plan focused on the Snow Lake Gold Mine in Manitoba.

  • Subsequent to the end of the quarter, Alexis announced that a Letter of Engagement had been signed with Legend Securities, a New York based broker-dealer, in order to advance a facility of up to $60 Million in support of future Capital Cost and Working Capital requirements anticipated in the development of the Snow Lake Mine, Manitoba.

  • Subsequent to the end of the third quarter the Feasibility Study for the Snow Lake mine was completed. Results propose the project to be economic, with the projected annual production of approximately 80,000 oz. of gold for at least five years, and a pre-tax Net Present Value of approximately $100.8 million. The Feasibility Study included an estimate of proven and probable reserves of 3,477,000 tonnes at 4.04 g/t totaling 451,900 oz. of gold (see news release, November 3, 2010).

The acquisition of Garson Gold has allowed Alexis to more than double its estimated gold resources. The recently completed Feasibility Study for Snow Lake added newly estimated Proven and Probable Reserves of 451,900 ounces of gold and estimated the potential for 80,000 ounces of gold production annually for at least five years at an estimated total cash cost of $640 per oz gold.

Our first gold mine, Lac Herbin, has continued to produce gold since late 2008; however there have been challenges in recent months with lower than expected gold grades being mined. Accordingly, the 2010 outlook for gold production from Lac Herbin is revised to be 24,000 ounces of gold as it is expected the shortage of ounces during the first three quarters cannot be recouped. New development that started in Q2-2010 resulted in lower grades of gold and it was expected that additional definition drilling into Q3- 2010 would identify areas of higher grade ore to mine. Where development has been undertaken in Q3, the narrow vein structure of the deposit has continued to deliver less than the target grade of gold. Therefore development was reduced to minimize the impact of the resultant lower than expected revenue stream. The net effect has been an increase in the cash cost (see non-GAAP measures) of sales to $1,283/oz Au.

A bulk sample program at our second gold project at Lac Pelletier was completed earlier in the year. A production commitment notice was issued to Thundermin Resources Ltd. with the Company thereby exercising its option to acquire the property. The Company is in discussion with Thundermin regarding the transfer of full title and ownership of the property to the Company.

The recovery rate from our wholly owned Aurbel Gold mill has been relatively consistent at an average of 91.6%, compared to the target recovery rate of 94%.

Management remains encouraged as exploration continues with many prospective targets. Our drilling program in Snow Lake has discovered significant gold mineralization in a potential, on-strike extension to the Snow Lake Mine. This may represent the discovery of a major new ore zone and characterizes the potential remaining on the property and in proximity to our Snow Lake Gold Mill, currently the only gold mill in the region. As well, two new high-grade gold zones were discovered containing mineralization that is similar in character to that of the Main and the No.3 Zones yet is of significantly higher grade.

Our expectations are high for further significant discovery from focused exploration through 2010 in the immediate vicinity of the Aurbel Gold Mill. Exploration and compilation in this area is already providing indications of untested extensions to the Herbin Mine to the north and northwest, of new zones between the Ferderber and Herbin mines and at greater depth potential at the Herbin and Dumont mines.

Alexis continued with the planned 2010 exploration campaign for over 80,000 metres of drilling, devoting approximately $6 million to the Snow Lake Mine property and $4 million to the Abitibi Mining Camp. This has been funded through the flow through financings completed in 2009.

Alexis Minerals Corporation Three months ended   Three months ended   Nine months ended   Nine months ended  
  30-Sep-10   30-Sep-09   30-Sep-10   30-Sep-09  
   
Tonnes of ore mined   26,050     46,319     106,724     122,915  
Grade per tonne mined   5.58     5.29     5.27     6.08  
Total gold ounces mined   4,677     7,883     18,080     24,038  
Tonnes of ore milled   36,517     12,347     128,106     111,832  
Grade per tonne milled   5.51     5.95     5.28     6.08  
Total gold ounces milled   6,472     2,363     21,736     21,871  
Average recovery rate   91.6 %   96.1 %   90.1 %   97.5 %
Gold ounces recovered   5,925     2,270     19,593     21,314  
Gold ounces sold   6,498     6,575     19,114     19,325  
Average realized gold price (per oz CAD) $ 1,250   $ 1,048   $ 1,192   $ 1,083  
Revenue from mining operations (net of Royalties and refining charges CAD 000's) $ 7,742   $ 6,564   $ 21,874   $ 19,920  
Mine operating expenses (excludes depletion and amortization - CAD 000's) $ 8,340   $ 6,212   $ 21,898   $ 15,157  
Amortization and depletion (CAD 000's) $ 2,384   $ 1,303   $ 6,071   $ 4,393  
Gross profit/(loss) (CAD 000's)   ($2,983 )   ($951 )   ($6,095 ) $ 370  
Net earnings (loss) (CAD 000's)   ($3,012 )   ($1,715 )   ($3,991 )   ($2,210 )
Basic and diluted earnings (loss) per share (CAD)   ($0.01 )   ($0.01 )   ($0.02 )   ($0.02 )
Cash flow from operating activities (CAD 000's)   ($6,847 )   ($299 ) $ 3,215   $ 4,136  
*Cost of sales per ounces sold (CAD) $ 1,283   $ 945   $ 1,146   $ 784  
   
*see Non GAAP Measures and comments under "Executive Summary – Third Quarter" section, regarding Cost of Sales at Lac Herbin

Non GAAP Measures

The Company has included certain Non-GAAP performance measures, namely cash costs per gold ounce sold and working capital, throughout this document. In the gold mining industry, these are common non- GAAP performance measures but do not have any standardized meaning. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, we and certain investors use this information to evaluate the Company's performance and ability to generate cash, profits and meet financial commitments. These Non GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The following tables provide a reconciliation of cash costs per gold ounce sold for the three and nine months ended September 30, 2010 and 2009, and a reconciliation of working capital to the financial statements for the nine months ended September 30, 2010 and the twelve months ended December 31, 2009.

Working Capital

(CAD 000's)    
Current assets: September 30, 2010 December 31, 2009
  Cash and cash equivalents $ 2,369 $ 6,106
  Amounts receivable   481   2,083
  Tax credits receivable   8,398   7,465
  Inventory   2,109   6,168
  Prepaid expenses   521   273
  Investments   590   122
    14,468   22,217
Current liabilities        
  Accounts payable and accrued liabilities $ 7,527 $ 13,687
  Current portion of capital lease obligations   188   412
  Current portion of long-term debt   68   99
  Liability component of convertible debenture   -   6,143
    7,783   20,341
 
  Working capital/(deficit) (current assets less current liabilities) $ 6,685 $ 1,876
 
Cash Cost per Ounce        
 
  Q3-2010 Q3-2009 2010 2009
 
Revenue        
From commercial production ounces (CAD 000's) $ 7,742 $ 6,564 $ 21,874 $ 19,920
Ounces sold   6,498   6,575   19,114   19,325
Mine operating expenses (CAD 000's) $ 8,340 $ 6,212 $ 21,898 $ 15,157
Cash cost per ounce sold (CAD) (mining operating expenses divided by ounces sold) $ 1,283 $ 945 $ 1,146 $ 784

Quality Control

The technical and scientific content of this press release has been reviewed by Keith Boyle, P.Eng., Chief Operating Officer, Alexis Minerals and Qualified Person as defined under NI 43-101 guidelines.

About Alexis Minerals

Alexis Minerals Corporation is a Canadian mining company listed on the Toronto Stock Exchange (symbol "AMC") and trades in the United States on the Over the Counter QX International platform (OTCQX:AXSMF). The Company owns one producing gold mine in Val-d'Or, and has the option to earn its 100% interest by bringing into production the Lac Pelletier gold property in Rouyn-Noranda, both in Quebec. Alexis also owns the Snow Lake Mine in Manitoba. Alexis is targeting mid-tier gold production levels in 2011-2012. Alexis undertakes exploration in the mineral rich Val-d'Or (100% ownership of 212 sq. km.) and Rouyn-Noranda Mining Camps (50% ownership of 785 sq.km and in joint venture with Xstrata Copper) as well as in the Snow Lake Mining Camp (100% ownership of 50 sq. km). For more information about Alexis Minerals visit www.alexisminerals.com.

Forward looking information

This document may contain or refer to forward looking information within the meaning of applicable securities laws, based on current expectations, including, but not limited to, mineralization projections, future exploration priorities, estimates and costs, projected capital and operating expenditures, future exploration plans and techniques, estimates regarding the timing and costs of exploration, mineral prices, and future mining plans. Forward looking statements are subject to significant risks and uncertainties, including those risks identified in the annual information form of the Company, which is available under the profile of the Company on SEDAR, and other factors that could cause actual results to differ materially from expected results. Estimates and assumptions underlying the mineralization projections are based upon extensive technical and scientific analysis conducted by the management of the Company, the results from drill programs and other exploration, the analysis of external consultants and information obtained by the Company from third parties. Readers should not place undue reliance on forward-looking information. Forward looking information is provided as of the date hereof and we assume no responsibility to update or revise them to reflect new events or circumstances.

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