Ashton Mining of Canada Inc.

Ashton Mining of Canada Inc.

August 15, 2005 17:00 ET

Ashton Announces Second Quarter Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 15, 2005) - Robert T. Boyd, President and CEO of Ashton Mining of Canada Inc. (TSX:ACA) ("Ashton" or the "Corporation"), is pleased to announce that during the second quarter, Ashton successfully concluded the most aggressive bulk sampling program in the Corporation's history. The favourable diamond results from the 664 tonnes of material collected during this 18-month program confirm that the Foxtrot property in north-central Quebec is one of the most promising exploration-stage diamond projects in Canada.

Since the initial Renard discoveries four years ago, the Quebec project has progressed to the definition of an aggregate drill-estimated tonnage for five of the six bodies in the Renard Core Area that currently stands at 22.4 million tonnes. Diamond results from the large samples collected from these bodies suggest the presence of several million carats of diamonds in the ground. Moreover, significant potential exists to discover further tonnage within the Renard cluster.

In April, a modeled value of US$88 per carat was determined for diamonds from four of the six bodies within the Core Area. This estimate exceeds the world average rough diamond price. Ashton is very encouraged by the recovery of seven diamonds larger than two carats from the Renard bodies and by a 5.66 carat diamond recovered from the Lynx South area this year. Photographs of some of the larger diamonds are available on Ashton's website at

During the remainder of 2005, potential mining scenarios will be reviewed to determine the next steps to advance the Quebec project. These steps could include the collection of a larger bulk sample in 2006 to further refine the current estimate of the value of the Renard diamonds by recovering a parcel that contains a greater number of large stones.

During the summer field season, mini-bulk samples are being collected from Renard 4, 7 and 8 and Renard 2, 7, 8, 9 and 10 are being drilled to determine the presence of additional tonnage. This work is nearing completion, and the diamond results and updated tonnage estimates are expected to be announced before the end of the third quarter. The collection of a 30 tonne mini-bulk sample of in-situ kimberlitic material from the Lynx dyke system is also planned this summer. The encouraging characteristics of this system include its 3.7 kilometre strike length and the recovery of several large diamonds from kimberlitic boulders discovered along this feature. Further evaluation of the Lynx dyke system could potentially confirm significant additional tonnage with high average diamond content located in close proximity to the Renard cluster. Beyond the Renard cluster and the Lynx dyke system, at least seven unexplained indicator mineral anomalies on the Foxtrot property will be investigated during the summer field season.

Four new areas of kimberlitic boulders have been discovered this summer between the Renard cluster and the Lynx dyke system. Caustic dissolution analysis of 100 kg of boulder material has confirmed the sample to be highly diamondiferous. The exploration drilling program that will commence in late August is intended to locate the bedrock source of these boulders.

To complement the advanced exploration initiatives in Quebec, Ashton is conducting earlier-stage exploration and drilling programs in other areas of Canada. Three large and promising targets will be drilled this summer on the Buffalo Hills property in north-central Alberta. In addition, the diamond-bearing Stellaria kimberlite on the Kikerk Lake property in Nunavut will be the subject of further drilling to determine the potential size of this body. Ashton is also conducting regional sampling programs in under-explored areas of Canada to identify new diamond districts.

The information set out below is provided pursuant to national Instrument 54-102. Unless otherwise indicated, this information reflects the Corporation's results and activities to July 29, 2005.


The loss for the three and six month periods ended June 30, 2005 amounted to $2.6 million (2004 - $1.5 million) or $0.03 per share (2004 - $0.02) and $2.1 million (2004 - $2.0 million) or $0.03 per share (2004 - $0.03) respectively.

Excluding exploration costs written off to operations, corporate costs for the second quarter of 2005 decreased by 26 percent compared to the second quarter of 2004. During that period, Ashton incurred additional costs related to the search for a new director and participation at an international mining conference.

Deferred exploration costs attributable to projects and properties that are abandoned or no longer deemed to be significant with respect to their mineral potential are also written off when that determination is made. The process of identifying projects and properties whose exploration costs should no longer be deferred to future periods is the subject of critical judgment and estimates by management. This process is carried out on a current basis. Management assesses the mineral potential of a project or property in light of recent and historical exploration results. In the absence of encouraging results or in cases where the Corporation does not plan to continue the evaluation of a kimberlite or a property in the foreseeable future, the related deferred exploration costs are written off. During the second quarter of 2005, Ashton wrote off approximately $2.0 million of costs relating to historic exploration drilling programs in Quebec that did not result in the discovery of kimberlites that warrant further evaluation.

Investment income is affected by the amount of funds under management during a given period and the prevailing interest rates. The Corporation's cash resources during the second quarter of 2005 were less than those held during the corresponding period in 2004. As a result, investment income was marginally lower.

The table on the next page summarizes the Corporation's net income or loss, its net income or loss per share and its administrative expenses (excluding exploration costs written off to operations) for the eight most recent quarters. Quarterly results for 2003 and 2004 have been restated to reflect the recognition of the fair value of options granted in 2003 and 2004 over their vesting period, as more fully discussed in the Corporation's 2004 Management Discussion and Analysis dated February 28, 2005.

Amounts per Calendar Quarter
2003 2004 2005
Third Fourth First Second Third Fourth First Second
---------------------- ------------------------------ -------------
(i) $(969)$(2,335) $(543)$(1,515) $(2,785)$(2,707) $500 $(2,620)
share (0.02) (0.04) (0.01) (0.02) (0.04) (0.04) 0.01 (0.03)
(i) 384 786 579 641 562 784 652 555
---------------------- ------------------------------ -------------
(i) Amounts expressed in thousands of dollars

Except for a future tax recovery of $1.1 million in the first quarter of 2005 that resulted in the recognition of net income for that period, variations in the quarterly loss and the corresponding loss per share are principally the result of the write-off of exploration costs.

Quarterly administrative expenses have not varied significantly over time except for variations attributable to stock-based remuneration resulting from the granting of stock options. These grants were made primarily in the fourth quarter of 2003 and 2004. In the second and third quarters of 2004, the Corporation also incurred higher than usual investor relations and consulting costs. These expenses resulted from visits to field operations by analysts, media and government representatives, and fees paid in relation to the recruitment of candidates for managerial and director positions.

Exploration Activities

Including the contribution of the Corporation's joint venture partners, gross exploration costs in the second quarter of 2005 were $2.0 million (2004 - $2.2 million) of which more than 69 percent was expended in Quebec. These expenditures relate primarily to drilling and laboratory activities. Ashton's share of these expenditures for the quarter was only $682,000 (2004 - $1.2 million) because the Corporation received a Quebec government tax credit of $1.2 million (2004 - $591,000) relating to 2004 Quebec exploration costs. In the first half of 2005, Ashton's total net exploration expenditures amounted to $3.9 million (2004 - $4.7 million).

The table below provides a summary of exploration costs on a project-by-project basis for each of the eight most recent quarters.

Amounts in Thousands of Dollars per Calendar Quarter
2003 2004 2005
Third Fourth First Second Third Fourth First Second
--------------------- ------------------------------- --------------
Quebec $ 1,548 $ 650 $ 3,190 $ 489 $ 3,089 $ 1,684 $ 2,483 $ 162

Alberta 201 257 117 48 143 119 218 77

ories 992 211 90 642 947 240 443 409

Others 70 23 49 32 45 33 59 34
--------------------- ------------------------------- --------------

Ashton explores in remote areas of Canada. At this stage of the Corporation's initiatives, prevailing weather and ground conditions strongly influence the timing of activities in the field. As a result, the Corporation incurs higher exploration costs during periods of the year when field operations are at their peak, generally during the winter and summer months. Field exploration programs are often suspended for short periods in late spring and fall.

Brooke Clements, Professional Geologist and Ashton's Vice President Exploration, is a Qualified Person under National Instrument 43-101 and is responsible for the design and conduct of the Corporation's exploration programs, and for the verification and quality assurance of analytical results.


Winter field activities on the Quebec project were completed in second quarter. Processing of 6.18 tonnes of kimberlitic material collected from Renard 9 in 2005 returned 6.24 carats of diamonds, including a 3.58 carat colourless crystal, for a diamond content of 101 carats per hundred tonnes. Second quarter activities also included the valuation of 459 carats of diamonds from Renard 2, 3, 4 and 65, four of the six kimberlitic bodies situated in the Core Area of the Renard cluster on the Foxtrot property. On April 26, Ashton reported a modeled value of US $88 per carat for the Renard diamonds.

The extent of second quarter activities was similar to the same period in 2004. However, as noted above, 2005 exploration costs were offset by a provincial government refund of $1.2 million compared to a refund of $591,000 during the corresponding period in 2004.


Very limited expenditures were incurred in Alberta during the second quarter of both 2005 and 2004. The work conducted in 2005 included the planning of a summer drilling program scheduled to commence in late August.

Nunavut and Northwest Territories

Second quarter expenditures in 2005 were lower compared to the corresponding period in 2004 because Ashton did not conduct airborne and ground geophysical surveys in Nunavut and the Northwest Territories.

During the second quarter of 2005, activities on this project focused on the laboratory analysis of indicator mineral samples collected from the Nunavut properties in 2004. In addition, caustic dissolution of drill core from Ric-97, a kimberlite discovered earlier in the year, confirmed that this body is only weakly diamondiferous and, therefore, unlikely to be the subject to further evaluation.

Ashton will complete a summer program of indicator mineral sampling, prospecting and target drilling before the end of August.


Cash on hand at June 30, 2005 was approximately $12.7 million (December 31, 2004 - $16.7 million) and working capital was $12.5 million (December 31, 2004 - $16.8 million).


No significant capital expenditures were incurred during the second quarter of 2005. Similarly, limited capital expenditures were incurred during the corresponding period in 2004.


The exercise of stock options resulted in the issuance of 224,875 common shares during the second quarter.

Contact Information

  • Ashton Mining of Canada Inc.
    Alessandro Bitelli
    Vice-President, Finance
    (604) 983-7750
    Ashton Mining of Canada Inc.
    Mike Westerlund
    Manager, Investor Relations
    (604) 983-7750