Ashton Mining of Canada Inc.
TSX : ACA

Ashton Mining of Canada Inc.

November 14, 2005 17:00 ET

Ashton Announces Third Quarter Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 14, 2005) - Robert T. Boyd, President and CEO of Ashton Mining of Canada Inc. ("Ashton" or "the Corporation") (TSX:ACA), is pleased to report that the Foxtrot property in north-central Quebec continued to generate encouraging results during the third quarter.

On the strength of these results, Ashton announced on November 8 that the Corporation and its joint venture partner, SOQUEM INC., intend to recover a parcel of diamonds of at least 5,000 carats from a bulk sample to be collected from Renard 2, 3, 4 and 9. A combination of trenching, reverse circulation drilling and underground mining methods will be used for the bulk sampling program. The material will be processed through a dense media separation ("DMS") plant that will be installed at the project site as soon as possible. The collection of the bulk sample is the next critical step to advance the project because the valuation of a 5000-plus carat parcel is necessary in order to complete a preliminary feasibility study of the project.

As announced on November 8, Renard 2, 3, 4 and 9 could potentially contain 18.6 to 22.0 million carats of diamonds within 23.2 to 27.5 million tonnes of kimberlitic material. These estimates are based on the drilling data generated to date and the diamond content of the samples analyzed from the four bodies. These estimates are conceptual in nature and do not constitute a mineral resource as defined by National Instrument 43-101. In its November 8 news release, the Corporation has provided a complete description of the assumptions and limitations of the data from which these estimates have been derived.

A complete description of the Corporation's activities during the third quarter is set out below. The information is provided pursuant to National Instrument 54-102 and, unless otherwise indicated, reflects the Corporation's results and activities to November 2, 2005.

RESULTS OF OPERATIONS

The loss for the three and nine month periods ended September 30, 2005 amounted to $3.5 million (2004 -$2.8 million) or $0.05 per share (2004 - $0.04) and $5.6 million (2004 - $4.6 million) or $0.07 per share (2004 - $0.07) respectively.

Excluding exploration costs written off to operations, corporate costs for the third quarter of 2005 were lower compared to the third quarter of 2004. Higher costs in 2004 were mainly due to two visits to the Quebec field operations by analysts, media and Quebec government representatives. 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 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 conducted 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 third quarter of 2005, Ashton wrote off approximately $3.1 million (2004 - $2.3 million) of deferred exploration costs. The majority of these costs relate to historic exploration drilling programs 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 third quarter of 2005 were less than those held during the corresponding period in 2004. This was offset by the effect of marginally higher interest rates resulting in comparable investment income between the two periods.

The table below 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 (the "Annual MD&A").



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Amounts per Calendar Quarter
2003 2004
Fourth First Second Third Fourth
-------------------------------- ----------------------------------
Net income (loss)(i) $(2,335) $ (543) $(1,515) $(2,785) $(2,707)
Net income (loss)
per share (0.04) (0.01) (0.02) (0.04) (0.04)
Administrative
expenses(i) 786 579 641 562 784
-------------------------------- ----------------------------------


--------------------------------------------------------------------
Amounts per Calendar Quarter
2005
First Second Third
--------------------------------------------------------------------
Net income (loss)(i) $ 500 $(2,620) $(3,489)
Net income (loss) per share 0.01 (0.03) (0.05)
Administrative expenses(i) 652 555 483
--------------------------------------------------------------------
(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 due principally to 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. Higher costs in the first quarter of 2005 reflected higher salaries, the recognition of the benefit of stock options granted in the period and investor relation activities that included attendance at various mining conferences.

Exploration Activities

Including the contribution of the Corporation's joint venture partners, gross exploration costs in the third quarter of 2005 were $5.8 million (2004 - $7.2 million) of which more than 74 percent was expended in Quebec. These expenditures relate primarily to drilling, indicator mineral sampling and laboratory activities. Bulk sampling activities on the Quebec project are the most significant contributing factor for the higher level of expenditures in the third quarter of 2004 compared to the same period in 2005. Ashton's share of expenditures for the quarter was $3.6 million (2004 - $4.0 million). In the first nine months of 2005, Ashton's total net exploration expenditures amounted to $7.5 million (2004 - $8.7 million).

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



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Amounts in Thousands of Dollars per Calendar Quarter
2003 2004 2005
Fourth First Second Third Fourth First Second Third
-------------------- --------------------------- --------------------
Quebec $ 650 $3,190 $ 489 $3,089 $1,684 $2,483 $ 162 $2,277
Alberta 257 117 48 143 119 218 77 421
Nunavut and
Northwest
Territories 211 90 642 947 240 443 409 836
Others 23 49 32 45 33 59 34 66
-------------------- --------------------------- --------------------


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.

Quebec

Exploration costs in the third quarter were lower compared to the same period in 2004 because work programs in 2004 included a bulk sampling program. In the third quarter of 2005, activities focused on the Foxtrot property and included:

- indicator mineral sampling, ground geophysics and prospecting. This work led to the discovery of the Hibou dyke near the interpreted source area of kimberlitic boulders located between the Renard cluster and the diamondiferous Lynx dyke system. Caustic dissolution of a small amount of material from these boulders provided very encouraging initial diamond results;

- target drilling which resulted in the discovery of Hibou and three other kimberlitic dykes;

- the collection by trenching of approximately 30 and 10 tonnes respectively from the Lynx and Hibou dykes;

- drilling of Renard 2, 8 and 9. As a result of this work, subsequent to September 30, Ashton reported that the estimated total drill-indicated tonnage of Renard 2, 3, 4 and 9, whose samples to date have returned the highest diamond contents, now combine for an estimated drill-indicated tonnage of 17.5 million tonnes;

- the stripping of an outcrop on the northern zone of Renard 4. To date, 9.16 tonnes of surface material from this zone have returned a diamond content of 173 carats per hundred tonnes. Further work is required to better define the limits of this zone and its diamond content;

- further drilling of Renard 10. As a result of this work, Renard 10 is now interpreted to be a zone of multiple dyke intersections with a minimum strike length of 350 metres and a maximum dyke thickness of 20 metres; and

- the collection and laboratory analysis of mini-bulk samples from Renard 7 and 8. This material returned low diamond contents, suggesting that these two bodies have limited economic potential.

Alberta

Third quarter expenditures in Alberta were greater than in 2004 largely because Ashton is funding approximately 90 percent of the 2005 project costs compared to 50 percent in 2004. Activities in the third quarter of 2005 focused on target drilling, which did not result in the discovery of kimberlites.

Nunavut and Northwest Territories

The level of third quarter expenditures in 2005 was comparable to the corresponding period in 2004. However, activities focused on indicator mineral sampling and drilling rather than indicator mineral sampling and geophysics in 2004. Drilling was conducted on the Kikerk Lake property in Nunavut. This work established that the Stellaria kimberlite, originally discovered in 2002, is a linear dyke-like feature of insufficient size to justify further evaluation.

FINANCIAL CONDITIONS AND LIQUIDITY

Cash on hand at September 30, 2005 was approximately $9.8 million (December 31, 2004 - $16.7 million) and working capital was $8.8 million (December 31, 2004 - $16.8 million).

The Annual MD&A accurately describes the current financial commitments of the Corporation.

CAPITAL RESOURCES

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

SHARE CAPITAL

The exercise of stock options resulted in the issuance of 163,250 common shares during the third quarter.


Contact Information

  • Ashton Mining of Canada Inc.
    Robert T. Boyd
    President and CEO
    (604) 983-7750
    or
    Ashton Mining of Canada Inc.
    Mike Westerlund
    Manager, Investor Relations
    (604) 983-7750
    contact@ashton.ca
    www.ashton.ca