Arehada Mining Limited

Arehada Mining Limited

May 15, 2008 11:03 ET

Arehada Mining Reports First Quarter Results

TORONTO, ONTARIO--(Marketwire - May 15, 2008) - Arehada Mining Limited (TSX:AHD) today announced financial results and operational highlights for the 3 months ended March 31, 2008.

Revenue for the quarter was $5,259,000 from the mining of 101,845 tonnes of ore compared to $4,611,000 from 105,000 tonnes in the same quarter last year. Earnings after tax of $1,959,000 or $0.011 per share in Q1 2008 compares to $2,356,000 or $0.015 per share for the same quarter in 2007 when there were fewer shares outstanding (172,073,557 vs. 155,153,197).

Cash flow for the three month period was $2,402,000 or $0.014 per share versus $2,563,000 or $0.017 for the same period in 2007.

During the quarter, Arehada conducted mining operations at a rate of approximately 1,434 tonnes per day and operated 71 days during the period which compares favourably to the average rate of 1,340 tonnes per day during the 2007 fiscal year. Operating days are in line with expectations but the daily mining rate was below our forecast 1,500 tonnes per day.

Head grades of approximately 1.27% zinc and 1.31% lead resulted in an average combined recovery rate of 87%. Silver head grades of 58 grammes per tonne met a 79% recovery factor from the lead concentrate. These grades are significantly improved over the average grades for 2007 and we are confident they will continue on this trend during the balance of 2008.

Operating costs decreased slightly to US$18.08 per tonne however remain in line with the RPA Report forecast of $18.65 per tonne. It is expected that these costs will level out from here as the mining operations progress.

Subsequent to receipt of our 43-101 report we have conducted an extensive development drilling programme utilizing six drills to outline further mineral resources and are expecting to update our 43-101 report by the end of the second quarter.

The mineral resources are being developed with a view to support a gradual expansion of our underground mining capacity to 3,000 tonnes per day with a concurrent doubling of capacity of our milling capacity. Arehada funded this development drilling from internal cash flow and will fund a gradual expansion of our underground capacity in the same manner.

As previously reported, construction of the first phase of our 50,000 tonnes per annum plant to produce zinc oxide and sulphuric acid from concentrate has now been completed. We had expected this to be operational by the end of 2007 but have endured innumerable delays in receiving bank funding for working capital due to the tightening credit situation in China. We remain cautiously optimistic that we will be able to commence operations in the near future.

Finally, with respect to the related party loan receivable, we have increased the collateral to secure these loans and are actively working with the principals to find a way to substantially, if not totally, reduce the amounts owing prior to year end.

About Arehada Mining

Arehada Mining Limited is engaged in the exploration, development, extraction and production of zinc, lead and silver in Dongwuzhumuqinqi, located in Inner Mongolia, China. Arehada produces zinc and lead concentrates, which are then sold to smelters in China.

Arehada has constructed a zinc plant with a designed processing capacity of 50,000 tonnes per annum and startup is scheduled for the second quarter of 2008 contingent on receiving working capital funding from a local bank.

Forward Looking Statements

The above contains forward looking statements that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in our forward looking statements. Factors that could cause such differences include: changes in world commodity markets, equity markets, costs and supply of materials relevant to the mining industry, extent of resources actually contained in mineral deposits, actual recoveries achieved in processing ore, technological change, change to regulations affecting the mining industry, risks associated with mining operation in China, environmental and safety regulations risks, and risk associated with failure to obtain required regulatory or third party consent. Forward-looking statements in this release include statements regarding future programs, review completion dates and opportunities. Although we believe the expectations reflected in our forward looking statements are reasonable, results may vary, and we cannot guarantee future results, levels of activity, performance or achievements.

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