Anaconda Mining Inc.
TSX : ANX

Anaconda Mining Inc.

April 12, 2013 07:00 ET

Anaconda Mining Generates $856,762, or $0.005 Per Share, in Net Income for FY Q3 2013

TORONTO, ONTARIO--(Marketwired - April 12, 2013) - Anaconda Mining Inc. ("Anaconda" or the "Company") - (TSX:ANX) is pleased to report its financial and operating results from the fiscal 2013 third quarter ended February 28, 2013. The Company generated net income for the three and nine months ended February 28, 2013 of $856,762 and $2,495,642 or $0.005 and $0.014 per basic and fully diluted share, respectively. Earnings before interest, taxes, depreciation, amortization and non-cash share-based compensation ("EBITDA") was $1,516,463 and $4,773,120 for the three and nine months ended February 28, 2013, respectively.

During the third quarter, the Company sold 3,101 ounces of gold and generated $5,137,269 in revenue at an average gold sales price of $1,657 per ounce. Cash cost per ounce sold for the third quarter on a consolidated basis and at Pine Cove were $1,174 per ounce and $971 per ounce, respectively. Corporate costs include additional accounting and administrative accruals of $43 per ounce which were captured in the third quarter, but related to the first nine months of the fiscal year. For the first nine months of fiscal 2013, the Company sold 10,512 ounces of gold and generated $17,393,131 in revenue at an average gold sales price of $1,655 per ounce. Cash cost per ounce sold for the first nine months of the fiscal year on a consolidated basis and at Pine Cove were $1,202 per ounce and $1,048 per ounce, respectively.

Anaconda President and CEO, Dustin Angelo, stated, "The third quarter net income was over $700,000 more than the second quarter. We had a challenging quarter in terms of weather conditions and some mechanical breakdowns. However, we were able to control costs better, particularly on the mining side, and sell nearly the same amount of ounces as Q2, which resulted in more profit. We've made some important improvements with our crusher that have already enabled the mill to perform more consistently. In addition, we've been employing larger capacity trucks since the beginning of January. Consequently, we'd expect our unit costs to be lower in the second half of fiscal 2013 versus the first half. We've already seen that Corporate and Pine Cove Q3 cash costs per ounce were both better than the first half of the fiscal year by $40 and $110, respectively. The Company also continued to advance its organic growth story around Pine Cove with positive drill results from our winter drill program and encouraging assay results from the bulk sample at the Romeo and Juliet prospect."

All amounts are in Canadian dollars unless stated otherwise. The financial results and Management's Discussion and Analysis of these results may be found on Anaconda's website (www.anacondamining.com) and on its SEDAR profile (www.sedar.com).

Highlights for the three and nine months ended February 28, 2013:

BALANCE SHEET:

  • As at February 28, 2013, the Company had cash and cash equivalents of $196,775 and a net working capital deficit of $1,311,412. The Company had $359,665 in outstanding accounts receivable related to gold sales, which were collected just after quarter end. The working capital deficit is primarily due to the loans and debentures being current.
  • During the nine months ended February 28, 2013, the Company made principal payments of $2,317,002 and reduced its overall principal amount of debt to $2,000,062. Of the total principal paid, $2,048,000 went against its Series I, Series II and the Thorsen loans on a pro-rata basis.

OPERATING PERFORMANCE:

  • For the three and nine months ended February 28, 2013, the Company sold 3,101 and 10,512 ounces of gold and generated $5,137,269 and $17,393,131 in revenue at an average sales price of $1,657 and $1,655 per ounce, respectively.
  • Cash operating cost per ounce sold at the Pine Cove Project for the three and nine months ended February 28, 2013 was $971 and $1,048 per ounce, respectively.
  • At the Pine Cove project, EBITDA for the three and nine months ended February 28, 2013 was $2,124,854 and $6,372,182, respectively.
  • On a consolidated basis, EBITDA for the three and nine months ended February 28, 2013 was $1,516,463 and $4,773,120.
  • Net income for the three and nine months ended February 28, 2013 was $856,762 and $2,495,642 or $0.005 and $0.014 per share basic, respectively.
  • Purchase of property, mill and equipment for the nine months ended February 28, 2013 was $1,190,133.
  • Approximately $656,000 was spent at the Pine Cove project on exploration for the nine months ended February 28, 2013.

EXPLORATION:

  • During the third quarter, the Company's exploration initiatives focused on drilling the down-dip and western extensions of the pit, and assaying the bulk sample from the Romeo and Juliet prospect.

OPERATIONAL OVERVIEW

Pine Cove project, Baie Verte, Newfoundland:

Milling operations

The Pine Cove mill operated for 77 days during the Period. Mill availability was 85% for the quarter. The mill processed 63,822 dry tonnes of ore (830 tonnes per operating day) at an average head grade of 2.17 grams per tonne ("g/t"), higher than the 1.83 g/t projected for the quarter. Overall mill recovery averaged 83% for the quarter, which was on budget.

Significant snowfall followed by extended periods of rain and freezing rain contributed to some mechanical failures and lower availability of the crushing plant. In addition, there were two weather related power outages/incidents during the quarter causing site shutdowns. Mill throughput, consequently, was affected. Subsequent mechanical improvements together with an extension in the crushing schedule have alleviated availability issues going into the final quarter of fiscal 2013. These improvements have allowed the site to achieve crushing capacity in excess of the mill capacity. Consequently, the site has now been able to maintain consistent feed to the ball mill and several days of crushed ore for unscheduled mechanical downtime. The following table summarizes the key mill operating statistics for the three and nine months ended February 28, 2013.

OPERATING STATISTICS: Three months
ended
February 28
2013
Nine months
ended
February 28
2013
Calendar days 90 273
Operating days 77 237
Availability 85 % 85 %
Dry tonnes processed 63,822 202,979
Tonnes per 24-hour period (throughput) 830 857
Grade (g/t) 2.17 1.91
Overall mill recovery 83 % 83 %
Gold sales volume (troy oz.) 3,101 10,512

Mining operations

Mining activities operated for a total of 52 days during the Period and excavated a total of 421,694 tonnes of ore and waste. Ore production totaled approximately 86,000 tonnes which was over budget by 30%, while waste was approximately 336,000 tonnes for a strip ratio of 3.9 : 1.

For the nine months ended February 28, 2013, the Company budgeted a strip ratio of approximately 5.7 : 1 while the actual strip ratio was slightly higher at 5.73 : 1. Excluding the Pasture Pond project (removal of 270,000 tonnes of overburden), the actual strip ratio in the pit was approximately 4.6 : 1 in comparison to the budget for the year of 4.5 : 1.

The following table summarizes the mining production for the three and nine months ended February 28, 2013:

OPERATING STATISTICS:
Three months
ended
February 28
2013
Nine months
ended
February 28
2013
Operating days 52 182
Ore production (tonnes) 86,025 235,356
Waste production (tonnes) 335,669 1,347,546
Total production (tonnes) 421,694 1,582,902
Waste to ore ratio (strip ratio) 3.90 5.73

Exploration update:

During the third quarter, the Company focused its exploration efforts on the area around the Pine Cove pit and the Romeo and Juliet bulk sample, as described below.

  1. Pine Cove Down-Dip and Western Extension Exploration: Historic drilling immediately north of the Pine Cove deposit indicated potential for additional gold mineralization down-dip of the Pine Cove deposit. In 2011 and 2012, drilling was completed approximately 100 meters north of the mine. Drill hole PC-11-181 intersected 2.50 grams per tonne gold over 40.8 meters and PC-12-189 intersected 32 meters grading 0.848 grams per tonne. In this quarter the Company completed a ten-hole, 1919-meter program successfully exploring the area immediately west and down-dip of the Pine Cove deposit.

    Highlights:

    Western Extension Area

    • Hole PC-13-196 intersected 11.4 meters of 2.19 grams per tonne ("g/t") gold from a depth of 26.6 meters;
    • Additional mineralization in hole PC-13-196 was intersected at 63.9 meters and again at 96.0 meters;
    • PC-13-196 and PC-13-201 encountered new mineralization adjacent to the ultimate open pit boundary; and
    • 1,000-metre follow-up drill program is scheduled for the end of March to expand this new zone and assess potential for open pit extension and mining cost reductions.

    Down-dip Extension Area

    • Hole PC-13-195 intersected 12.06 metres of 3.32 g/t gold from a depth of 168.66 meters;
    • Hole PC-13-199 intersected 3.06 meters of 7.69 g/t gold from a depth of 147.2 meters:
    • Four, widely spaced drill holes all intersected mineralization up dip from PC-11-181, which assayed 2.50 g/t gold over a core length of 40.8 meters (Anaconda Press Release, July 27, 2011); and
    • The drilling continues to demonstrate the potential continuity of mineralization within the down-dip zone.

  2. Romeo and Juliet Bulk Sample: The Romeo and Juliet prospect is a gold-bearing quartz vein system located 1.5 kilometers northwest of the Pine Cove mine. In the late fall of 2012 Anaconda extracted a 1,000-tonne bulk sample from the Juliet zone and stockpiled the broken quartz vein material at the Pine Cove mine where it was crushed. Five representative samples of crushed quartz, averaging 12.6 kg, were taken from the bulk sample and processed at Accurassay Laboratories in Thunder Bay by cyanide extraction (bottle roll testing). The weighted average assay of the five samples is 5.71 g/t gold and is representative of the gold grade within the near surface portion of the Juliet zone where the bulk sample was extracted. Table 1 contains the head grade assay results for the five samples. (For more information, see press release dated April 4, 2013)

Table 1. Gold head grade assay results from Anaconda's Romeo and Juliet bulk sample.

Sample Mass
(grams)
Grade
(g/t gold)
68956 11,842 6.32
68957 12,774 5.14
68958 12,299 5.15
68959 13,061 4.91
68960 13,018 7.05

Romeo and Juliet Project Plan

The Company is now planning metallurgical testing and pilot milling of the Romeo and Juliet material. Ideally, the quartz vein hosted mineralization would supplement the current sulfide hosted mineralization to maximize the current circuit configuration of the mill. Simultaneously, the Company plans to prepare a preliminary resource estimate, which will require additional infill drilling. Pending a favorable resource estimate, Anaconda is considering an underground exploration program, to better define grades and geometry.

The information in this MD&A has been reviewed and approved by David Evans, P. Geo., with Silvertip Exploration Consultants Inc., a "Qualified Person" under National Instrument 43-101.

ABOUT ANACONDA

Headquartered in Toronto, Canada, Anaconda is a growth-oriented, gold mining and exploration company with a producing asset located on the Baie Verte Peninsula in Newfoundland, Canada called the Pine Cove mine.

FORWARD-LOOKING STATEMENTS

This document contains or refers to forward-looking information. Such forward-looking information includes, among other things, statements regarding targets, estimates and/or assumptions in respect of future production, mine development costs, unit costs, capital costs, timing of commencement of operations and future economic, market and other conditions, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to: the final approval of the private placement by the Toronto Stock Exchange; the grade and recovery of ore which is mined varying from estimates; capital and operating costs varying significantly from estimates; inflation; changes in exchange rates; fluctuations in commodity prices; delays in the development of the any project caused by unavailability of equipment, labour or supplies, climatic conditions or otherwise; termination or revision of any debt financing; failure to raise additional funds required to finance the completion of a project; and other factors. Additionally, forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "plans", "may", "estimates", "expects", "indicates", "targeting", "potential" and similar expressions. These forward-looking statements, including statements regarding Anaconda's beliefs in the potential mineralization, are based on current expectations and entail various risks and uncertainties. Forward-looking statements are subject to significant risks and uncertainties and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no responsibility to update them or revise them to reflect new events or circumstances, except as required by law.

Company website: www.anacondamining.com.

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