AUR RESOURCES INC.
TSX : AUR

AUR RESOURCES INC.

August 03, 2005 17:00 ET

Aur Resources Inc. Reports Net Earnings of $36.5 Million and Cash Flow From Operating Activities of $52.3 Million in the Second Quarter of 2005

TORONTO, ONTARIO--(CCNMatthews - Aug. 3, 2005) - Aur Resources Inc. (TSX:AUR)

(All dollar amounts are expressed in United States currency)

Second Quarter Highlights June 30, 2005

- Net earnings were $36.5 million or $0.38 (CDN$0.47) per share in the second quarter of 2005.

- Cash flow from operating activities was $52.3 million equal to $0.55 (CDN $0.68) per share in the second quarter of 2005.

- Cash and working capital increased to $276.9 million and $287.5 million, respectively, as at June 30, 2005.

- Aur's cash per share increased to CDN$3.57 as at June 30, 2005.

- Aur's share of copper production from the Louvicourt, Andacollo and Quebrada Blanca Mines was 61.1 million pounds in the second quarter of 2005.

- Aur realized $1.64 per pound of copper sold in the second quarter of 2005.

- Aur declared its regular dividend of CDN$0.05 per share payable on July 1, 2005 to shareholders of record on June 1, 2005.

Financial Highlights

Operating revenues were $109.6 million in the second quarter of 2005, compared to $70.0 million for the same period in 2004. Net earnings were $36.5 million, equal to $0.38 per share for the quarter, a 128% increase over net earnings of $16.0 million or $0.17 per share for the same quarter last year. Cash flow from operating activities was $52.3 million, equal to $0.55 (CDN$0.69) per share, compared to $34.1 million or $0.36 per share in the second quarter of 2004. Aur's consolidated cash position at June 30, 2005 increased by $48.3 million to $276.9 million from March 31, 2005, and working capital increased by $30.4 million to $287.5 million. Aur's consolidated cash exceeded its $125 million senior note debt by $151.9 million at June 30, 2005.

Operating revenues for the six month period ended June 30, 2005 were $206.1 million, approximately 30% higher than the $158.9 million in 2004. Net earnings were $69.7 million, equal to $0.73 (CDN$0.91) per share for the period, compared to $42.7 million or $0.45 per share, in 2004. Cash flow from operating activities was $96.1 million, equal to $1.01 (CDN$1.25) per share for the six months ended June 30, 2005, compared to $74.7 million or $0.79 per share in 2004. Aur's consolidated cash position at June 30, 2005 was $276.9 million, an increase of 34%, or $70.3 million, from December 31, 2004. Working capital at June 30, 2005 was $287.5 million, an increase of $65.9 million in 2005.

Aur's realized copper price, including cathode sales premiums, averaged $1.64 per pound and $1.63 per pound of copper sold in the second quarter and year to date, respectively, compared to the LME average price for the quarter of $1.54 per pound and $1.51 per pound for the year to date.

The following table presents a summary of, and changes between, Aur's Consolidated Statements of Operations for the periods ended June 30, 2005 and 2004.



Three months ended Six months ended
June 30 ($000's) June 30 ($000's)
-------------------------- -------------------------
2005 2004 Change 2005 2004 Change
-------------------------- -------------------------
Mining revenues 109,636 70,031 39,605 206,149 158,857 47,292
Mining expenses (45,381) (31,642)(13,739) (83,355) (68,556)(14,799)
Depreciation &
amortization (8,223) (9,252) 1,029 (16,674) (19,215) 2,541
Mine closure &
site restoration (715) (599) (116) (1,501) (1,057) (444)
Non-controlling
interests (5,668) (3,301) (2,367) (11,332) (8,234) (3,098)
-------------------------- -------------------------
Operating
earnings 49,649 25,237 24,412 93,287 61,795 31,492
Business
development (1,369) (1,230) (139) (2,641) (2,263) (378)
Administration (1,620) (1,632) 12 (3,783) (3,229) (554)
Interest on
long-term debt (2,109) (2,109) - (4,218) (4,218) -
Stock-based
compensation (287) (97) (190) (864) (187) (677)
Taxes (8,628) (4,288) (4,340) (15,960) (9,649) (6,311)
Other 850 153 697 3,925 419 3,506
-------------------------- -------------------------
Net earnings 36,486 16,034 20,452 69,746 42,668 27,078
-------------------------- -------------------------
-------------------------- -------------------------
Basic earnings
per share 0.38 0.17 0.21 0.73 0.45 0.28
-------------------------- -------------------------
-------------------------- -------------------------


Metal Production and Sales

Aur's share of metal production from the Louvicourt, Andacollo and Quebrada Blanca Mines in the second quarter of 2005 was 61.1 million pounds of copper, 4.2 million pounds of zinc, 75,000 ounces of silver and 2,100 ounces of gold, compared to 55.4 million pounds of copper, 4.2 million pounds of zinc, 55,000 ounces of silver and 1,900 ounces of gold in the second quarter of 2004. Aur's share of copper production was 2.7 million pounds higher than budgeted in the second quarter of 2005 due to significantly higher mill throughput at the Louvicourt Mine and higher mine production at higher grade at the Andacollo Mine. Aur's share of copper production was 5.7 million pounds higher than the second quarter of 2004 due to higher ore tonnage mined at a higher grade at all three mines.

Mining revenues were $109.6 million in the second quarter of 2005, a $39.6 million increase over the same period in 2004, primarily due to a $0.37 per pound higher realized copper price and higher copper sales at each of the mines. Copper sales were 11.5 million pounds higher in the second quarter of 2005 compared to the second quarter of 2004.

Minesite cash operating costs were $45.4 million in the second quarter of 2005, compared to $31.6 million in 2004. Aur's cash operating cost per pound of copper sold was $0.65 for the quarter, $0.10 per pound higher than in the second quarter of 2004. The higher unit operating costs resulted primarily from increased energy, acid, foreign exchange, labour and transportation costs.

Aur's share of metal production from the Louvicourt, Andacollo and Quebrada Blanca Mines in the six months ended June 30, 2005 was 121.8 million pounds of copper, 8.0 million pounds of zinc, 127,000 ounces of silver and 4,200 ounces of gold, compared to 118.0 million pounds of copper, 6.5 million pounds of zinc, 99,000 ounces of silver and 3,500 ounces of gold in 2004. Copper production to June 30, 2005 was 3.8 million pounds higher than in 2004 due to the factors noted above.

Mining revenues were $206.1 million for the year to date, an increase of 30% over the $158.9 million for the same period in 2004. Mining revenues were $47.3 million higher than in 2004 primarily due to a $0.31 per pound higher realized copper price and $2.5 million of additional by-product credits. Higher copper sales, due to higher production, resulted in $7.2 million more revenue, while the higher copper price generated $37.6 million more revenue in 2005, compared to 2004.

Minesite cash operating costs were $83.3 million to June 30, 2005, compared to $68.6 million in 2004. Aur's cash operating cost per pound of copper sold was $0.62 for the year to date, compared to $0.54 in 2004. The 5.4 million more pounds of copper sold to June 30, 2005 compared to the first half of 2004 resulted in $3.2 million of higher mining expenses while the higher operating costs per pound of copper sold resulted from $11.6 million of additional mining expenses.

The following tables present the calculation of cash operating costs per pound of copper sold, net of by-product credits, for the three months and six months ended June 30, 2005 and 2004. Aur, and the mining industry in general, utilize unit cost information to better understand costs and reporting period fluctuations. There are no industry standardized measures used in calculating unit cash costs and this data is intended only to provide information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP.



Three months ended Three months ended
June 30, 2005 June 30, 2004
------------------- -------------------
$000's $/lb. $000's $/lb.
Mining expenses 45,381 0.71 31,641 0.60
By-products credits included
in mining revenues
Zinc (2,434) (0.04) (1,872) (0.04)
Silver (546) (0.01) (316) (0.01)
Gold (896) (0.01) (721) (0.01)
------------------- -------------------
Net cash operating costs 41,505 0.65 28,732 0.54
------------------- -------------------
------------------- -------------------
Copper sold (000's lbs.) 64,343 52,841
---------- ----------
---------- ----------



Six months ended Six months ended
June 30, 2005 June 30, 2004
------------------- -------------------
$000's $/lb. $000's $/lb.
Mining expenses 83,355 0.68 68,556 0.59
By-products credits included
in mining revenues
Zinc (4,928) (0.04) (3,070) (0.03)
Silver (896) (0.01) (619) (0.00)
Gold (1,780) (0.01) (1,374) (0.01)
------------------- -------------------
Net cash operating costs 75,751 0.62 63,493 0.55
------------------- -------------------
------------------- -------------------
Copper sold (000's lbs.) 121,731 116,300
---------- ----------
---------- ----------


The following table presents a summary of, and changes between, mine operating earnings(1) for the periods ended June 30, 2005 and 2004.



Three months ended Six months ended
June 30 ($000's) June 30 ($000's)
-------------------------- -------------------------
2005 2004 Change 2005 2004 Change
-------------------------- -------------------------
Louvicourt 6,646 3,550 3,096 13,292 10,249 3,043
Andacollo 12,371 6,892 5,479 24,870 18,340 6,530
Quebrada Blanca 45,238 27,948 17,290 84,632 61,713 22,919
-------------------------- -------------------------
64,255 38,390 25,865 122,794 90,302 32,492
-------------------------- -------------------------
-------------------------- -------------------------


(1) Mine operating earnings equals mining operating revenues less mining operating expenses.

Cash flow from mine operating activities was $55.2 million in the second quarter of 2005 and $108.4 million for the year to date, compared to $37.0 million and $84.3 million, respectively, for the same periods last year.

Louvicourt Mine

The Louvicourt Mine operating performance was exceptional in the first half of 2005. After almost 11 years of production, the last 3,000 tonnes of ore was processed through the mill on July 12, 2005 and the Louvicourt Mine ceased operation. Production was 51,633 tonnes of ore in July and decommissioning and reclamation work is now in progress. Working capital at June 30, 2005 was $10,465, the majority of which is expected to be realized during the remainder of 2005.

The Louvicourt Mine produced 20.1 million pounds of copper and 14.0 million pounds of zinc from 386,401 tonnes of ore milled during the second quarter of 2005, compared to 14.9 million pounds of copper and 13.9 million pounds of zinc from 297,645 tonnes of ore milled in 2004. Copper production was 3.2 million pounds higher and zinc production was 1.4 million pounds higher than in the first quarter of 2005 due to higher copper grades and better zinc recoveries. Copper and zinc production were 6.4 million pounds and 3.6 million pounds higher, respectively than budgeted in the second quarter due principally to 41% higher mill throughput.

Aur's share of Louvicourt's revenues was $13.6 million in the second quarter of 2005, compared to $7.7 million in 2004. The higher revenue was principally due to higher metal prices and higher copper production and sales. Cash operating costs of $0.51 per pound of copper sold for the quarter, net of by-product credits, were $0.04 per pound higher than budgeted and $0.23 per pound higher than in the corresponding period in 2004 due to the negative impact of a strong Canadian dollar versus the United States dollar, higher copper sales and higher smelting and refining costs in the second quarter which included a $1.1 million adjustment for the first quarter of 2005 resulting from the finalization in the second quarter of the terms for 2005. Aur's cash flow from Louvicourt's operating activities was $4.4 million in the second quarter of 2005, compared to $4.2 million in 2004. There were no expenditures on property, plant and equipment in the second quarter of this year or last year.

Louvicourt produced 36.9 million pounds of copper and 26.7 million pounds of zinc from 768,854 tonnes of ore milled during the six months ended June 30, 2005, compared to 37.4 million pounds of copper and 21.5 million pounds of zinc from 602,819 tonnes of ore milled during the first half of 2004. Mill throughput was 225,854 tonnes higher than budgeted and copper and zinc production were 7.8 million pounds and 7.2 million pounds, respectively, higher than budget for the year to date.

Aur's share of Louvicourt's revenues was $25.5 million for the year to date, compared to $20.0 million for the same period in 2004. The higher revenue was principally due to higher metal prices, and higher zinc sales. Cash operating costs of $0.40 per pound of copper sold, net of by-product credits, were $0.02 per pound lower than in 2004 due to higher by-product credits offset by somewhat higher operating costs. Aur's 30% of the cash flow from operating activities was $9.6 million in the first six months of 2005, compared to $6.9 million in 2004.

Andacollo Mine

The Andacollo Mine produced 12.3 million pounds of LME registered Grade A cathode copper during the second quarter of 2005, 0.6 million pounds less than in the first quarter of 2005 and 2.1 million more than the second quarter of 2004. Production was 1.0 million pounds higher than budgeted. A total of 4.6 million tonnes of rock, of which 1.1 million tonnes was ore, was mined at a strip ratio of 3.3:1. A total of 3.3 million tonnes of rock, of which 0.8 million tonnes was ore, was mined at a strip ratio of 3.4:1 in the fourth quarter of 2004.

Andacollo's revenues of $20.1 million, generated from the sale of 12.2 million pounds of copper in the second quarter of 2005, were $8.4 million higher than the revenues of $11.7 million in the second quarter of 2004 as a result of higher copper prices and sales. Revenues were $6.0 million higher than budget as a result of higher copper prices and 0.9 million more pounds of copper sold. Cash operating costs were $1.2 million higher than budget at $7.7 million and were $3.0 million higher than for the same period in 2004 principally due to the higher tonnage mined, and higher energy and labour costs and the negative impact of a strong Chilean peso versus the United States dollar. The cash operating costs in the second quarter of 2005 were $0.63 per pound of copper sold, $0.05 per pound higher than budgeted and $0.12 per pound higher than in 2004. Cash flow from operating activities was $13.5 million in the second quarter of 2005, compared to $5.9 million in 2004. Expenditures on property, plant and equipment were $0.8 million in the second quarter compared to $0.6 million in 2004.

Andacollo produced 25.2 million pounds of LME registered Grade A cathode copper during the six months ended June 30, 2005, 2.6 million pounds more than budgeted and 2.3 million pounds more than in 2004. A total of 9.4 million tonnes of rock, of which 2.1 million tonnes was ore, was mined at a strip ratio of 3.4:1. A total of 7.6 million tonnes of rock, of which 1.7 million tonnes was ore, was mined at a strip ratio of 3.4:1 in 2004.

Andacollo's revenues of $40.9 million, generated from the sale of 25.0 million pounds of copper in the first half of 2005, were $11.5 million higher than the revenues of $29.4 million in 2004 and $12.4 million higher than budgeted, primarily as a result of higher copper prices and copper sales. Cash operating costs were $16.0 million, $2.2 million higher than budgeted, as a result of more pounds of copper sold and higher energy and labour costs. Cash operating costs were $4.9 million more than in the first six months of 2004. The cash operating costs for the year to date were $0.64 per pound of copper sold, $0.03 per pound higher than budget, and $0.14 per pound higher than in 2004. The higher costs were for the reasons mentioned above. Cash flow from operating activities was $25.8 million in the year to date, compared to $16.4 million in 2004. Expenditures on property, plant and equipment were $1.1 million for the year to date, compared to $1.9 million in 2004.

The evaluation of establishing a dump leach facility at Andacollo to process lower grade copper ore and thereby extend the heap leach mining into 2010 is expected to be completed in the third quarter of 2005 and the bankable feasibility study for the large hypogene copper deposit, expected to be completed by March 2006, is also in progress.

The Andacollo Mine is now expected to produce 50 million pounds of copper at a cash operating cost of $0.64 per pound of copper sold in 2005. At an average copper price of $1.50 per pound in the second half of 2005, operating cash flow is forecast at approximately $50 million.

Quebrada Blanca Mine

The Quebrada Blanca Mine produced 42.8 million pounds of LME registered Grade A cathode copper in the second quarter of 2005, essentially as budgeted, compared to 42.7 million pounds in the first quarter of 2005 and 40.7 million pounds in the second quarter of 2004. A total of 9.4 million tonnes of rock, of which 1.9 million tonnes was heap leach ore and 3.8 million tonnes was dump leach ore, was mined at a strip ratio of 0.7:1 in the second quarter of 2005, compared to 8.6 million tonnes of rock, of which 1.7 million tonnes was heap leach ore and 1.4 million tonnes was dump leach ore, and a strip ratio of 1.8:1 for the second quarter 2004.

Quebrada Blanca's revenues, generated from the sale of 46.1 million pounds of copper, were $76.0 million in the second quarter of 2005, compared to $50.6 million generated from the sale of 39.1 million pounds of copper in 2004. The $25.4 million increase in revenues was due to a $0.35 per pound higher realized copper price and higher sales volumes. Cash operating costs of $30.7 million were $8.0 million higher than in the same period in 2004. Cash operating costs were $0.67 per pound of copper sold, $0.07 per pound higher than budgeted and $0.09 per pound higher than in the second quarter of 2004 as a result of higher energy, acid, labour and transportation costs and the negative impact of the strong Chilean peso versus the United States dollar. Cash flow from operating activities was $37.3 million in the second quarter of 2005 compared to $26.9 million in 2004. Expenditures on property, plant and equipment were $0.2 million in the second quarter, compared to $0.6 million in 2004.

Quebrada Blanca produced 85.5 million pounds of LME registered Grade A copper in the six months ended June 30, 2005, 2.8 million pounds less than budgeted, compared to 83.9 million pounds produced in 2004. A total of 18.5 million tonnes of rock, of which 3.7 million tonnes was heap leach ore and 6.3 million tonnes was dump leach ore, was mined at a strip ratio of 0.8:1 to June 30, 2005. A total of 16.6 million tonnes of rock, of which 3.4 million tonnes was heap leach ore and 3.0 million tonnes was dump leach ore, was mined at a strip ratio of 1.6:1 in 2004.

Quebrada Blanca's revenues, generated from the sale of 85.6 million pounds of copper, were $139.8 million in the six months ended June 30, 2005, compared to $109.4 million generated from the sale of 83.0 million pounds of copper in 2004. The $30.4 million increase is due to higher realized copper prices and higher sales volumes. Operating revenues were $29.3 million higher than budget. Cash operating costs were $4.2 million higher than budgeted at $55.2 million, and $7.5 million higher than in 2004. Cash operating costs were $0.64 per pound of copper sold in the first six months of 2005, $0.06 per pound higher than last year. The higher costs were for the reasons mentioned above. Cash flow from operating activities in the first half of 2005 was $72.9 million, compared to $61.0 million in 2004. Expenditures on property, plant and equipment were $0.3 million compared to $0.7 million in 2004.

The Quebrada Blanca Mine is expected to produce 176 million pounds of copper at a cash operating cost of $0.64 per pound of copper sold in 2005. At an average copper price of $1.50 per pound in the second half of the year, operating cash flow is expected to be approximately $158 million.

Development Projects

Duck Pond - Newfoundland

Development of the Duck Pond copper-zinc deposit for production beginning in the fourth quarter of 2006 was active in the second quarter. Expenditures of $2.7 million were incurred as detailed engineering, site clearing and power line construction progressed. The portal and over 100 metres of ramp was completed and equipment procurement advanced as scheduled. The second half of 2005 will be highly active as mill construction, ramp development and related minesite infrastructure are fully activated. Expenditures for the full year are budgeted to be CDN$51.7 million with the balance of the CDN$92 million capital investment to be incurred in 2006.

Other Financial Information

Business Development

Aur's exploration and acquisition programs were active in the second quarter of 2005. Exploration targets on three copper projects in Chile were refined and drilling is expected to be carried out in the second half of this year. At the La Verde copper discovery in Mexico, exploration was disrupted by local residents and resulted in the suspension of the drilling program. Progress toward a resolution of this situation has been made and drilling resumed in late July. Results of this phase of the drilling program are expected to be reported in early October.

Aur's acquisition program in Eastern Europe, CIS countries and Africa was initiated in the second quarter of 2005. Mr. Nigel Walls, a mining engineer with over 22 years of experience in these jurisdictions, will assume responsibility for this program beginning in September from Aur's new office in London, England.

Administration

Administration expenses were as budgeted at $1.6 million and $3.8 million in the second quarter and in the year to date, respectively, compared to $1.6 million and $3.2 million, respectively, in 2004. These expenses are expected to be $6.6 million for the year.

Depreciation and amortization

Depreciation and amortization expenses were $8.2 million and $16.7 million in the second quarter and in the year to date, respectively, compared to $9.3 million and $19.2 million, respectively, in 2004. These expenses are expected to be $33 million for the year.

Mine closure and site restoration

Non-cash mine closure and site-restoration expenses were $0.7 million and $1.5 million in the second quarter and in the year to date, respectively, compared to $0.6 million and $1.1 million, respectively, in 2004. These expenses are expected to be $2.6 million for the year, of which $0.8 million will be cash expenditures at the Louvicourt Mine which closed on July 12, 2005.

Interest on long-term debt

Interest expense on Aur's $125 million senior notes debt was as budgeted at $2.1 million and $4.2 million in the second quarter and in the year to date, respectively, in both 2005 and 2004, and will be $8.4 million for the year.

Stock-based compensation

Stock-based compensation expense was $0.3 million and $0.9 million in the second quarter and in the year to date, respectively, compared to $0.1 million and $0.2 million, respectively, in 2004. Based upon options granted during the period January 1, 2003 to June 30, 2005, stock-based compensation expense for the year will total $1.6 million in 2005 for the options granted during the period January 1, 2003 to June 30, 2005.

Other expenses (revenues)

Other expenses (revenues) were a net revenue of $0.9 million and 3.9 million in the second quarter and in the year to date, respectively, compared to $0.2 million and $0.4 million, respectively, in 2004. Net revenues in the second quarter were primarily due to interest income of $2.1 million, a gain on the sale of marketable securities of $0.7 million, partially offset by a $1.0 million copper price participation amount expected to be payable to ENAMI by Quebrada Blanca, and interest and financing costs of $0.7 million. For the year to date, net revenues consisted primarily of interest income of $3.6 million and a gain on the sale of marketable securities of $1.8 million. Other expenses (revenues) are forecast to be a net revenue of $5.5 million for the year, primarily due to interest income earned on Aur's substantial cash balances, offset by an expected copper price participation expense, payable to ENAMI, of $2.0 million.

Provision for income and resource taxes

Provision for taxes was $8.6 million in the second quarter and $16.0 million for the year to date, respectively, compared to $4.2 million and $9.6 million, respectively, in 2004. Year to date cash taxes totalled $12.5 million, of which $10.8 million related to Quebrada Blanca and $1.7 million related to Quebec mining duties on Aur's share of Louvicourt's income, while non-cash future taxes totalled $2.5 million. Cash taxes totalled $6.1 million in the first half of 2004. The higher tax expense in 2005 is a result of higher earnings. At an LME average copper price of $1.50 per pound for the balance of 2005, the provision for taxes is expected to be $25.0 million for cash taxes and $4.0 million for future taxes in 2005.

Non-controlling interests

Non-controlling interests expense, related to the non-controlling interests of Aur's partners in the Andacollo and Quebrada Blanca Mines, was $5.7 million and $11.3 million in the second quarter and in the year to date, respectively, compared to $3.3 million and $8.2 million, respectively, in 2004. Cash payments to non-controlling interests totalled $3.6 million for the year to date, compared to $8.0 million for the same period in 2004.

The debt obligations of both Andacollo and Quebrada Blanca were fully repaid in the second quarter of 2005 following which Aur no longer had preferential rights with respect to cash flow from these mines, its entitlement thereafter being the right to receive 76.5% and 63% of Quebrada Blanca's and Andacollo's future cash distributions, respectively. As at June 30, 2005, the entitlement of the non-controlling interests to cash distributions was $14.1 million.

Working capital

Working capital increased $30.4 million during the second quarter to $287.5 million at June 30, 2005, primarily due to increased cash balances resulting from operating activities.

Property, plant and equipment

Investments in property, plant and equipment totalled $15.6 million in the first half of 2005, compared to $3.1 million in 2004. These investments included a $10.0 million accrual for the expected copper price participation amount payable to Teck Cominco in January 2006 for 2005, relating to the 2000 purchase of Quebrada Blanca, $4.2 million invested at Duck Pond, $1.1 million invested at Andacollo and $0.3 million invested at Quebrada Blanca. Aur anticipates that, in addition to the $10 million accrued copper price participation, expenditures on property, plant and equipment in 2005 will be $38.3 million at Duck Pond, $2.2 million at Quebrada Blanca and $5.8 million at Andacollo.

2005 Forecast

Aur has used an average copper price of $1.50 per pound in developing this 2005 outlook.

In 2005, Aur expects its share of the 266 million pounds of copper production from the Louvicourt, Andacollo and Quebrada Blanca Mines to total approximately 238 million pounds together with by-product zinc, silver and gold. Cash operating costs per pound of copper sold, net of by-product credits, are forecast to average $0.63 per pound in 2005 subject to fluctuations from quarter to quarter.

Revenue is forecast to be approximately $389 million, including by-product credits. Mine operating costs are expected to be $157 million. Operating profit, after business development, administration and senior notes interest costs, is expected to be approximately $207 million. Net earnings, after other expenses including depreciation and amortization, non-cash mine closure expenses, income tax provision and non-controlling interests totalling $94 million, are forecast at approximately $113 million, equal to $1.19 or CDN$1.49 per share.

Cash flow from operating activities is forecast to be approximately $209 million. Cash expenditures associated with financing activities are expected to total $16 million and are comprised of $11 million for dividends, $4 million for capital leases and $4 million to non-controlling interests, offset by proceeds of $3 million, primarily from common share issuances. Cash expenditures on investing activities are expected to total $53 million in 2005, comprised of $38 million at Duck Pond, $8 million at the mines and $10 million to Teck Cominco for the 2004 copper price participation offset by $3.0 million of other proceeds on sale of marketable securities and disposal of property, plant and equipment. Aur's consolidated cash balance at December 31, 2005 is forecast to be $347 million, of which Aur's entitlement is $302 million.

Aur's sensitivity to copper price is such that a $0.10 per pound increase or decrease in the price of copper from $1.50 per pound for the remainder of the year would change, in the second half of 2005, revenues by approximately $11 million, net earnings by $8 million and cash flow from operating activities by $10 million.

This news release contains forward-looking statements that are based on current expectations and which involve risks and uncertainties, including those referred to in Aur's 2004 Annual Report and/or in Aur's Annual Information Form dated March 31, 2005 and filed with Canadian securities regulatory authorities, that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in the forward-looking statements. Such forward-looking statements include statements regarding financial results and expectations for 2005 and include among other things, statements regarding targets, estimates and/or assumptions in respect of copper production and/or copper prices, cash operating costs, expenditures on property, plant and equipment, increases and decreases in production, reserves and/or resources and anticipated grades and recovery rates and are or may be based on assumptions and/or estimates related to future economic, market and other conditions. Factors that could cause actual results, developments or events to differ materially from those anticipated include, among others, the factors described or referred to elsewhere herein and/or in the AIF and include unanticipated and/or unusual events. Many of such factors are beyond Aur's ability to control or predict. Actual results may differ materially from those anticipated. Readers are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. Aur disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise.

Additional information, including the quarterly and annual Consolidated Financial Statements, AIF, Management Information Circular and other disclosure documents, may also be examined and/or obtained through the Internet by accessing Aur's website at www.aurresources.com or by accessing the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com.

Aur's second quarter analyst conference call will be held at 9:00 a.m., ET, on Thursday, August 4, 2005. This listen-only webcast can be accessed by going directly to CCN Matthews web site at www.ccnmatthews.com or by going to the home page of Aur's web site.



PRODUCTION STATISTICS
Three months ended June 30

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2005 Louvicourt Andacollo Quebrada Blanca Total
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Ore (tonnes) 386,401 1,016,456 1,875,392 n/a

Grade
Copper (%) 2.45 0.86 1.30 n/a
Soluble copper (%) n/a 0.75 1.13 n/a
Zinc (%) 1.79 - - n/a
Gold (oz/t) 0.03 - - n/a
Silver (oz/t) 1.04 - - n/a

Copper (pounds)
Produced 6,022,000 12,317,000 42,777,000 61,116,000
Sold 6,022,000 12,181,000 46,141,000 64,344,000
Less:
non-controlling
interests - (3,654,300) (4,614,100)(8,268,400)
---------- ----------- ----------- -----------
Net to Aur 6,022,000 8,526,700 41,526,900 56,075,600
Inventory - 750,000 2,392,000 3,142,000

Other metals
produced and sold
Zinc (pounds) 4,214,000 - - 4,214,000
Gold (ounces) 2,100 - - 2,100
Silver (ounces) 75,000 - - 75,000

Cost per pound
of copper sold 0.51 0.63 0.67 0.65
---------------------------------------------------------------------
2004 Louvicourt Andacollo Quebrada Blanca Total
---------------------------------------------------------------------
Ore (tonnes) 297,645 702,734 1,674,121 n/a

Grade
Copper (%) 2.38 0.69 1.21 n/a
Soluble copper (%) n/a 0.59 1.06 n/a
Zinc (%) 2.44 - - n/a
Gold (oz/t) 0.03 - - n/a
Silver (oz/t) 1.08 - - n/a

Copper (pounds)
Produced 4,481,000 10,197,000 40,728,000 55,406,000
Sold 4,481,000 9,281,000 39,079,000 52,841,000
Less:
non-controlling
interests - (2,785,000) (3,907,000)(6,692,000)
---------- ----------- ----------- -----------
Net to Aur 4,481,000 6,496,000 35,172,000 46,149,000
Inventory - 1,493,000 3,706,000 5,199,000

Other metals
produced and sold
Zinc (pounds) 4,184,000 - - 4,184,000
Gold (ounces) 1,900 - - 1,900
Silver (ounces) 55,000 - - 55,000

Cost per pound
of copper sold $0.28 $0.51 $0.58 $0.54
---------------------------------------------------------------------

Notes: 1. Tonnes of ore milled at Louvicourt and stacked at Andacollo
and Quebrada Blanca and all metal production figures are
shown on a 100% basis with the exception of metal
production figures for Louvicourt, which represents Aur's
30% joint venture interest. Net copper to Aur represents
Aur's 30%, 70% and 90% beneficial interests in Louvicourt,
Andacollo and Quebrada Blanca, respectively. At Quebrada
Blanca, the ore is material stacked in the period and
excludes 3,751,322 tonnes (2004-1,412,112 tonnes) of dump
leach ore.

2. Cash operating cost per pound of copper sold includes
smelting, refining, transportation and marketing costs,
settlement adjustments, provisional pricing, and is net of
by-product credits where applicable.



PRODUCTION STATISTICS
Six months ended June 30

---------------------------------------------------------------------
2005 Louvicourt Andacollo Quebrada Blanca Total
---------------------------------------------------------------------
Ore (tonnes) 768,854 2,083,463 3,667,709 n/a

Grade
Copper (%) 2.28 0.83 1.31 n/a
Soluble copper (%) n/a 0.71 1.16 n/a
Zinc (%) 1.78 - - n/a
Gold (oz/t) 0.03 - - n/a
Silver (oz/t) 0.92 - - n/a

Copper (pounds)
Produced 11,082,000 25,229,000 85,455,000 121,766,000
Sold 11,082,000 25,035,000 85,615,000 121,732,000
Less:
non-controlling
interests - (7,510,500) (8,561,500)(16,072,000)
---------- ----------- ----------- -----------
Net to Aur 11,082,000 17,524,500 77,053,500 105,660,000
Inventory - 750,000 2,392,000 3,142,000

Other metals
produced and sold
Zinc (pounds) 8,017,000 - - 8,017,000
Gold (ounces) 4,200 - - 4,200
Silver (ounces) 127,000 - - 127,000

Cost per pound
of copper sold 0.40 0.64 0.64 0.62
---------------------------------------------------------------------
2004 Louvicourt Andacollo Quebrada Blanca Total
---------------------------------------------------------------------
Ore (tonnes) 602,819 1,697,193 3,420,007 n/a

Grade
Copper (%) 2.92 0.78 1.24 n/a
Soluble copper (%) n/a 0.68 1.08 n/a
Zinc (%) 1.91 - - n/a
Gold (oz/t) 0.03 - - n/a
Silver (oz/t) 0.89 - - n/a

Copper (pounds)
Produced 11,229,000 22,907,000 83,855,000 117,991,000
Sold 11,229,000 22,116,000 82,955,000 116,300,000
Less:
non-controlling
interests - (6,635,000) (8,295,000)(14,930,000)
---------- ----------- ----------- -----------
Net to Aur 11,229,000 15,481,000 74,660,000 101,370,000
Inventory - 1,493,000 3,706,000 5,199,000

Other metals
produced and sold
Zinc (pounds) 6,454,000 - - 6,454,000
Gold (ounces) 3,500 - - 3,500
Silver (ounces) 99,000 - - 99,000

Cost per pound
of copper sold $0.42 $0.50 $0.58 $0.55
---------------------------------------------------------------------

Notes: 1. Tonnes of ore milled at Louvicourt and stacked at Andacollo
and Quebrada Blanca and all metal production figures are
shown on a 100% basis with the exception of metal
production figures for Louvicourt, which represents Aur's
30% joint venture interest. Net copper to Aur represents
Aur's 30%, 70% and 90% beneficial interests in Louvicourt,
Andacollo and Quebrada Blanca, respectively. At Quebrada
Blanca, the ore is material stacked in the period and
excludes 6,345,374 tonnes (2004-3,017,239 tonnes) of dump
leach ore.

2. Cash operating cost per pound of copper sold includes
smelting, refining, transportation and marketing costs,
settlement adjustments, provisional pricing, and is net
of by-product credits where applicable.



AUR RESOURCES INC.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS

June 30, 2005
(Expressed in thousands of United States dollars)

These interim financial statements have not been audited or reviewed
by the Corporation's external auditors.



Consolidated Statements of Operations
(in thousands of United States Three months Six months
dollars except earnings per share) ended June 30 ended June 30
--------------------------------
(Unaudited) 2005 2004 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $

Mining revenues 109,636 70,031 206,149 158,857
---------------------------------------------------------------------

Expenses
Mining 45,381 31,641 83,355 68,555
Business development 1,369 1,230 2,641 2,263
Administration 1,620 1,633 3,783 3,230
Depreciation and amortization 8,223 9,252 16,674 19,215
Mine closure and site restoration 715 599 1,501 1,057
Interest on long-term debt 2,109 2,109 4,218 4,218
Stock-based compensation 287 97 864 187
Other expenses (revenues) (note 7) (850) (153) (3,925) (419)
---------------------------------------------------------------------
58,854 46,408 109,111 98,306
---------------------------------------------------------------------
Earnings before taxes and
non-controlling interests 50,782 23,623 97,038 60,551
Income and resource taxes (8,628) (4,288) (15,960) (9,649)
---------------------------------------------------------------------
Earnings before non-controlling
interests 42,154 19,335 81,078 50,902
Non-controlling interests (5,668) (3,301) (11,332) (8,234)
---------------------------------------------------------------------
Net earnings for the period 36,486 16,034 69,746 42,668
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic and diluted earnings per
share (note 6(b)) 0.38 0.17 0.73 0.45
---------------------------------------------------------------------
---------------------------------------------------------------------


Consolidated Statements of Retained Earnings
(in thousands of United States dollars)
(Unaudited) Three months Six months
ended June 30 ended June 30
--------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
Retained earnings - beginning of
period 161,906 66,301 128,646 39,667
Net earnings for the period 36,486 16,034 69,746 42,668
Dividends on common shares (3,817) - (3,817) -
---------------------------------------------------------------------
Retained earnings - end of period 194,575 82,335 194,575 82,335
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.



Consolidated Segmented Information on Operations for the three months
ended June 30
(in thousands of United States dollars)
(Unaudited)

2005 Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Mining
revenues 13,557 20,093 75,986 - 109,636
---------------------------------------------------------------------

Expenses
Mining 6,911 7,722 30,748 - 45,381
Business
development - - - 1,369 1,369
Administration - - - 1,620 1,620
Depreciation
and amortization 178 2,104 5,977 (36) 8,223
Mine closure and
site restoration 110 93 512 - 715
Interest on
long-term debt - - - 2,109 2,109
Stock-based
compensation - - - 287 287
Other expenses
(revenues) (182) 474 888 (2,030) (850)
---------------------------------------------------------------------
7,017 10,393 38,125 3,319 58,854
---------------------------------------------------------------------
Earnings (loss)
before taxes 6,540 9,700 37,861 (3,319) 50,782
Income and
resource taxes (2,519) (1,210) (6,650) 1,751 (8,628)
---------------------------------------------------------------------
Earnings (loss)
before
non-controlling
interests 4,021 8,490 31,211 (1,568) 42,154
Non-controlling
interests - (2,547) (3,121) - (5,668)
---------------------------------------------------------------------
Net earnings
(loss) 4,021 5,943 28,090 (1,568) 36,486
---------------------------------------------------------------------
---------------------------------------------------------------------


2004 Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Mining
revenues 7,730 11,654 50,647 - 70,031
---------------------------------------------------------------------

Expenses
Mining 4,180 4,762 22,699 - 31,641
Business
development - - - 1,230 1,230
Administration - - - 1,633 1,633
Depreciation
and amortization 582 1,874 6,176 620 9,252
Mine closure and
site restoration 36 53 510 - 599
Interest on
long-term debt - - - 2,109 2,109
Stock-based
compensation - - - 97 97
Other expenses
(revenues) (65) (137) (132) 181 (153)
---------------------------------------------------------------------
4,733 6,552 29,253 5,870 46,408
---------------------------------------------------------------------
Earnings (loss)
before taxes 2,997 5,102 21,394 (5,870) 23,623
Income and
resource taxes (1,742) - (3,687) 1,141 (4,288)
---------------------------------------------------------------------
Earnings (loss)
before
non-controlling
interests 1,255 5,102 17,707 (4,729) 19,335
Non-controlling
interests - (1,530) (1,771) - (3,301)
---------------------------------------------------------------------
Net earnings
(loss) 1,255 3,572 15,936 (4,729) 16,034
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.



Consolidated Segmented Information on Operations for the six months
ended June 30
(in thousands of United States dollars)
(Unaudited)

2005 Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Mining
revenues 25,456 40,887 139,806 - 206,149
---------------------------------------------------------------------

Expenses
Mining 12,164 16,017 55,174 - 83,355
Business
development - - - 2,641 2,641
Administration - - - 3,783 3,783
Depreciation
and amortization 766 4,546 11,289 73 16,674
Mine closure and
site restoration 248 251 1,002 - 1,501
Interest on
long-term debt - - - 4,218 4,218
Stock-based
compensation - - - 864 864
Other expenses
(revenues) (177) 348 427 (4,523) (3,925)
---------------------------------------------------------------------
13,001 21,162 67,892 7,056 109,111
---------------------------------------------------------------------
Earnings (loss)
before taxes 12,455 19,725 71,914 (7,056) 97,038
Income and
resource taxes (5,010) (1,740) (12,555) 3,345 (15,960)
---------------------------------------------------------------------
Earnings (loss)
before
non-controlling
interests 7,445 17,985 59,359 (3,711) 81,078
Non-controlling
interests - (5,396) (5,936) - (11,332)
---------------------------------------------------------------------
Net earnings
(loss) 7,445 12,589 53,423 (3,711) 69,746
---------------------------------------------------------------------
---------------------------------------------------------------------


2004 Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Mining
revenues 20,017 29,433 109,407 - 158,857
---------------------------------------------------------------------

Expenses
Mining 9,768 11,093 47,694 - 68,555
Business
development - - - 2,263 2,263
Administration - - - 3,230 3,230
Depreciation
and amortization 1,178 4,139 12,658 1,240 19,215
Mine closure and
site restoration 80 170 807 - 1,057
Interest on
long-term debt - - - 4,218 4,218
Stock-based
compensation - - - 187 187
Other expenses
(revenues) (65) (50) (236) (68) (419)
---------------------------------------------------------------------
10,961 15,352 60,923 11,070 98,306
---------------------------------------------------------------------
Earnings (loss)
before taxes 9,056 14,081 48,484 (11,070) 60,551
Income and
resource taxes (3,901) - (8,387) 2,639 (9,649)
---------------------------------------------------------------------
Earnings (loss)
before
non-controlling
interests 5,155 14,081 40,097 (8,431) 50,902
Non-controlling
interests - (4,224) (4,010) - (8,234)
---------------------------------------------------------------------
Net earnings
(loss) 5,155 9,857 36,087 (8,431) 42,668
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.



As at
------------------------------
Consolidated Balance Sheets June 30 December 31
(in thousands of United States dollars) 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
(Unaudited)
$ $
Assets

Current
Cash 276,854 206,520
Receivables 18,304 14,242
Inventories and prepaid expenses
(note 2) 56,076 52,750
---------------------------------------------------------------------
351,234 273,512
Property, plant and equipment 272,308 273,887
Future income and resource taxes 3,766 5,506
Long-term copper inventory and
other (note 3) 21,312 21,748
---------------------------------------------------------------------
648,620 574,653
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities 29,287 28,290
Dividends payable 3,884 7,849
Copper price participations (note 4) 10,988 10,000
Current portion of non-controlling
interests 14,136 -
Current portion of obligation under
capital leases 3,436 3,847
Current portion of mine closure and
site restoration 2,013 1,946
---------------------------------------------------------------------
63,744 51,932
---------------------------------------------------------------------

Senior notes (note 5) 125,000 125,000

Obligation under capital leases 7,365 8,952

Obligation on properties purchased 227 227

Future income and resource taxes 21,182 19,396

Mine closure and site restoration 23,385 23,025

Non-controlling interests 28,818 35,258
---------------------------------------------------------------------
205,977 211,858
---------------------------------------------------------------------
269,721 263,790
---------------------------------------------------------------------
Contingency (note 10)

Shareholders' equity
Share capital (note 6) 179,962 178,269
Contributed surplus - stock-based
compensation 1,571 707
Cumulative translation adjustment 2,791 3,241
Retained earnings 194,575 128,646
---------------------------------------------------------------------
378,899 310,863
---------------------------------------------------------------------
648,620 574,653
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.



Consolidated Segmented Balance Sheet Information as at
(in thousands of United States dollars)

June 30, 2005
(Unaudited) Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Assets
Current
Cash 1,004 12,920 70,155 192,775 276,854
Receivables 12,520 1,543 3,785 456 18,304
Inventories
and prepaid
expenses 131 10,388 45,119 438 56,076
---------------------------------------------------------------------
13,655 24,851 119,059 193,669 351,234
Property, plant
and equipment 540 29,809 229,379 12,580 272,308
Future income and
resource taxes - 379 - 3,387 3,766
Long-term copper
inventory and
other - - 20,116 1,196 21,312
---------------------------------------------------------------------
14,195 55,039 368,554 210,832 648,620
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities
Current
Accounts payable
and accrued
liabilities 1,177 2,981 21,403 3,726 29,287
Dividends
payable - - - 3,884 3,884
Copper price
participations - - 988 10,000 10,988
Current portion
of non-controlling
interests - - 14,136 - 14,136
Current portion
of obligation
under capital
leases - 187 3,249 - 3,436
Current portion
of mine closure
and site
restoration 2,013 - - - 2,013
---------------------------------------------------------------------
3,190 3,168 39,776 17,610 63,744
Senior notes - - - 125,000 125,000
Obligation under
capital leases - - 7,365 - 7,365
Obligation on
properties
purchased - - - 227 227
Future income and
resource taxes - - 21,182 - 21,182
Mine closure and
site restoration 1,102 4,514 17,066 703 23,385
Non-controlling
interests - 15,587 13,231 - 28,818
---------------------------------------------------------------------
4,292 23,269 98,620 143,540 269,721
---------------------------------------------------------------------
---------------------------------------------------------------------


December
31, 2004 Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Assets
Current
Cash 461 981 10,988 194,090 206,520
Receivables 10,804 1,116 1,837 485 14,242
Inventories
and prepaid
expenses 401 11,716 40,411 222 52,750
---------------------------------------------------------------------
11,666 13,813 53,236 194,797 273,512
Property, plant
and equipment 1,427 33,433 230,607 8,420 273,887
Future income and
resource taxes - 2,119 - 3,387 5,506
Long-term copper
inventory and
other - - 20,426 1,322 21,748
---------------------------------------------------------------------
13,093 49,365 304,269 207,926 574,653
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities
Current
Accounts payable
and accrued
liabilities 1,629 2,567 16,264 7,830 28,290
Dividends
payable - - - 7,849 7,849
Copper price
participation - - - 10,000 10,000
Current portion
of obligation
under capital
leases - 368 3,479 - 3,847
Current portion
of mine closure
and site
restoration 1,946 - - - 1,946
---------------------------------------------------------------------
3,575 2,935 19,743 25,679 51,932
Senior notes - - - 125,000 125,000
Obligation under
capital leases - - 8,952 - 8,952
Obligation on
properties
purchased - - - 227 227
Future income and
resource taxes - - 19,396 - 19,396
Mine closure and
site restoration 1,141 4,424 16,743 717 23,025
Non-controlling
interests - 13,827 21,431 - 35,258
---------------------------------------------------------------------
4,716 21,186 86,265 151,623 263,790
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.



Consolidated Statements of Cash Flow Three months Six months
(in thousands of United States ended June 30 ended June 30
dollars --------------------------------
(Unaudited) 2005 2004 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $

Operating activities
Net earnings for the period 36,486 16,034 69,746 42,668
Non-cash items -
Depreciation and amortization 8,223 9,252 16,674 19,215
Future income and resource taxes 1,730 3,676 3,525 8,365
Mine closure and site restoration 553 599 1,339 1,057
(Gain) on sale of marketable
securities (669) - (1,804) -
(Gain) loss on disposal of
property, plant and equipment (129) 13 (145) (19)
Interest on obligation on property
purchased 9 187 18 374
Stock-based compensation 287 97 864 187
Copper price participation 988 - 988 -
Non-controlling interests 5,668 3,301 11,332 8,234
---------------------------------------------------------------------
53,146 33,159 102,537 80,081
Net change in non-cash working
capital items (note 8) (807) 971 (6,391) (5,414)
---------------------------------------------------------------------
52,339 34,130 96,146 74,667
---------------------------------------------------------------------

Financing activities
Dividends on common shares - - (7,956) -
Repayments of capital leases (989) (1,889) (1,976) (2,754)
Payments of non-controlling
interests (350) (5,263) (3,589) (8,017)
Common shares issued 203 263 1,693 823
Foreign exchange and other (380) (280) (755) (783)
---------------------------------------------------------------------
(1,516) (7,169) (12,583)(10,731)
---------------------------------------------------------------------

Investing activities
Payment of copper price
participation - - (10,000) -
Property, plant and equipment (1,096) (1,301) (1,448) (2,640)
Mineral property development (2,681) (165) (4,158) (420)
Principal payment on property
purchased - (2,250) - (2,250)
Proceeds on sale of marketable
securities 1,078 - 2,213 -
Proceeds on disposal of property,
plant and equipment 146 (9) 164 62
---------------------------------------------------------------------
(2,553) (3,725) (13,229) (5,248)
---------------------------------------------------------------------

Increase in cash for the period 48,270 23,236 70,334 58,688

Cash - beginning of period 228,584 110,765 206,520 75,313
---------------------------------------------------------------------

Cash - end of period 276,854 134,001 276,854 134,001
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.



Consolidated Segmented Information on Cash Flow for the three months
ended June 30
(in thousands of United States dollars)
(Unaudited)

2005 Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Operating
activities
Net earnings
(loss) 4,021 5,943 28,090 (1,568) 36,486
Non-cash
items 1,697 5,954 11,119 (2,110) 16,660
---------------------------------------------------------------------
5,718 11,897 39,209 (3,678) 53,146
Net change
in non-cash
working
capital
items (1,275) 1,625 (1,946) 789 (807)
---------------------------------------------------------------------
4,443 13,522 37,263 (2,889) 52,339
---------------------------------------------------------------------
Financing
activities
Repayments of
capital leases - (180) (809) - (989)
Payments of
non-controlling
interests - (350) - - (350)
Common shares
issued - - - 203 203
Foreign exchange
and other (53) 30 (123) (234) (380)
---------------------------------------------------------------------
(53) (500) (932) (31) (1,516)
---------------------------------------------------------------------
Investing
activities
Property, plant
and equipment - (771) (230) (95) (1,096)
Mineral property
development - - - (2,681) (2,681)
Other 145 - - 1,079 1,224
---------------------------------------------------------------------
145 (771) (230) (1,697) (2,553)
---------------------------------------------------------------------
Intersegment
distributions
to corporate (3,636) (1,539) (11,261) 16,436 -
---------------------------------------------------------------------
Increase in
cash for the
period 899 10,712 24,840 11,819 48,270
Cash - beginning
of period 105 2,208 45,315 180,956 228,584
---------------------------------------------------------------------
Cash - end of
period 1,004 12,920 70,155 192,775 276,854
---------------------------------------------------------------------
---------------------------------------------------------------------


2004 Louvicourt Andacollo Quebrada Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Operating
activities
Net earnings
(loss) 1,255 3,572 15,936 (4,729) 16,034
Non-cash
items 1,780 3,450 12,162 (267) 17,125
---------------------------------------------------------------------
3,035 7,022 28,098 (4,996) 33,159
Net change in
non-cash
working
capital items 1,135 (1,147) (1,177) 2,160 971
---------------------------------------------------------------------
4,170 5,875 26,921 (2,836) 34,130
---------------------------------------------------------------------
Financing
activities
Repayments of
capital leases - (1,276) (613) - (1,889)
Payments of
non-controlling
interests - (1,236) (4,027) - (5,263)
Common shares
issued - - - 263 263
Foreign exchange
and other 28 64 343 (715) (280)
---------------------------------------------------------------------
28 (2,448) (4,297) (452) (7,169)
---------------------------------------------------------------------
Investing activities
Property, plant
and equipment - (623) (635) (43) (1,301)
Mineral property
development - - - (165) (165)
Principal payment
of property
purchased - - - (2,250) (2,250)
Proceeds on
disposal of
property, plant
and equipment 14 - (30) 7 (9)
---------------------------------------------------------------------
14 (623) (665) (2,451) (3,725)
---------------------------------------------------------------------
Intersegment
distributions
to corporate (4,552) (3,067) (55,032) 62,651 -
---------------------------------------------------------------------
Increase
(decrease) in
cash for the
period (340) (263) (33,073) 56,912 23,236
Cash - beginning
of period 626 1,893 43,198 65,048 110,765
---------------------------------------------------------------------
Cash - end of
period 286 1,630 10,125 121,960 134,001
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.



Consolidated Segmented Information on Cash Flow for the six months
ended June 30
(in thousands of United States dollars)
(Unaudited)

2005 Quebrada
Louvicourt Andacollo Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Operating activities
Net earnings (loss) 7,445 12,589 53,423 (3,711) 69,746
Non-cash items 4,072 11,932 21,002 (4,215) 32,791
---------------------------------------------------------------------
11,517 24,521 74,425 (7,926) 102,537
Net change in non-cash
working capital items (1,899) 1,316 (1,517) (4,291) (6,391)
---------------------------------------------------------------------
9,618 25,837 72,908 (12,217) 96,146
---------------------------------------------------------------------
Financing activities
Dividends on common
shares - - - (7,956) (7,956)
Repayments of capital
leases - (180) (1,796) - (1,976)
Payments of non-
controlling interests - (3,589) - - (3,589)
Common shares issued - - - 1,693 1,693
Foreign exchange and
other (31) (86) (342) (296) (755)
---------------------------------------------------------------------
(31) (3,855) (2,138) (6,559) (12,583)
---------------------------------------------------------------------
Investing activities
Payment of copper
price participation - - - (10,000) (10,000)
Property, plant and
equipment - (1,063) (277) (108) (1,448)
Mineral property
development - - - (4,158) (4,158)
Other 163 - - 2,214 2,377
---------------------------------------------------------------------
163 (1,063) (277) (12,052) (13,229)
---------------------------------------------------------------------
Intersegment
distributions to
corporate (9,207) (8,980) (11,326) 29,513 -
---------------------------------------------------------------------
Increase (decrease)
in cash for the period 543 11,939 59,167 (1,315) 70,334
Cash - beginning of
period 461 981 10,988 194,090 206,520
---------------------------------------------------------------------
Cash - end of period 1,004 12,920 70,155 192,775 276,854
---------------------------------------------------------------------
---------------------------------------------------------------------

Quebrada
2004 Louvicourt Andacollo Blanca Corporate Total
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $

Operating activities
Net earnings (loss) 5,155 9,857 36,087 (8,431) 42,668
Non-cash items 3,943 8,526 25,838 (894) 37,413
---------------------------------------------------------------------
9,098 18,383 61,925 (9,325) 80,081
Net change in non-cash
working capital items (2,208) (1,998) (948) (260) (5,414)
---------------------------------------------------------------------
6,890 16,385 60,977 (9,585) 74,667
---------------------------------------------------------------------
Financing activities
Repayments of capital
leases - (1,276) (1,478) - (2,754)
Payments of non-
controlling interests - (3,786) (4,231) - (8,017)
Common shares issued - - - 823 823
Foreign exchange and other - - - (783) (783)
---------------------------------------------------------------------
- (5,062) (5,709) 40 (10,731)
---------------------------------------------------------------------
Investing activities
Property, plant and
equipment - (1,928) (662) (50) (2,640)
Mineral property
development - - - (420) (420)
Principal payment on
property purchased - - - (2,250) (2,250)
Proceeds on disposal of
property, plant and
equipment 15 - 40 7 62
---------------------------------------------------------------------
15 (1,928) (622) (2,713) (5,248)
---------------------------------------------------------------------
Intersegment
distributions to
corporate (6,922) (8,970) (55,449) 71,341 -
---------------------------------------------------------------------
Increase (decrease)
in cash for the period (17) 425 (803) 59,083 58,688
Cash - beginning of
period 303 1,205 10,928 62,877 75,313
---------------------------------------------------------------------
Cash - end of period 286 1,630 10,125 121,960 134,001
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying notes to interim consolidated financial statements.


AUR RESOURCES INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and six month periods ended June 30, 2005 and 2004
(in thousands of United States dollars except where otherwise noted)
(Unaudited)


1. Accounting policies

The interim unaudited consolidated financial statements of Aur Resources Inc. ("Aur") have been prepared in accordance with accounting principles generally accepted in Canada using the same accounting policies as those disclosed in note 1 to Aur's audited consolidated financial statements for the year ended December 31, 2004. These interim unaudited consolidated financial statements should be read in conjunction with Aur's audited annual consolidated financial statements included in Aur's Annual Report for the year 2004.



2. Inventories and prepaid expenses

June 30 December 31
2005 2004
------- -----------
$ $
Cathode copper 2,256 2,183
In-process inventories 41,188 38,375
Mine supplies 11,234 10,488
Prepaid expenses 1,398 1,704
------- -----------
56,076 52,750
------- -----------
------- -----------


The amount of depreciation and amortization capitalized to cathode copper and in-process inventories at June 30, 2005 and December 31, 2004 was $6,491 and $6,587, respectively. The depreciation and amortization in the carrying value of cathode copper and in-process inventories will be charged to the depreciation and amortization expense category of the statement of operations.



3. Long-term copper inventory and other

June 30 December 31
2005 2004
------- -----------
$ $
Long-term in-process copper inventory 18,747 18,747
Deferred financing cost 1,196 1,322
Other 1,369 1,679
------- -----------
21,312 21,748
------- -----------
------- -----------


4. Copper price participations

Teck Cominco Limited ("Teck Cominco") is entitled to a payment of up to $10,000 per year (or after 2006 or the repayment of the senior notes, $2,500 quarterly) to a maximum of $40,000, should average yearly (or after 2006 or the repayment of the senior notes, quarterly) copper prices equal or exceed $1.22 per pound at December 31, 2004, adjusted for United States inflation until December 31, 2012. Included in current liabilities at December 31, 2004 was $10,000 pertaining to this commitment as the actual average copper price per pound for 2004 of $1.30 exceeded the inflation adjusted copper price. The $10,000 was paid on January 7, 2005. Based upon the actual average copper price for the six months ended June 30, 2005 and the period end forward copper price for the balance of the year, the average copper price for 2005 is calculated to exceed the inflation adjusted copper price for 2005. Accordingly, an additional $10,000 liability to Teck Cominco has been accrued at June 30, 2005 with a corresponding increase in property, plant and equipment assets at Quebrada Blanca.

ENAMI is also entitled to receive, under the by-laws of Compania Quebrada Blanca S.A., a per pound price participation in copper sales from the Quebrada Blanca Mine equal to 10% of the amount by which the average realized sales price per pound of copper sold by the Mine in any calendar year exceeds a specified inflation adjusted indexed price for such year. Based upon the average realized copper price for the six months ended June 30, 2005 and the period end forward LME copper price plus premiums for the balance of the year, the average realized sales price is expected to exceed the inflation adjusted copper price for the year. Accordingly, a $1.0 million liability to ENAMI has been accrued at June 30, 2005, representing 50% of the 2005 obligation earned to date, with a corresponding increase in the line item entitled "Other expenses (revenues)" on the Consolidated Statements of Operations.

5. Senior notes

On March 10, 2003, Aur issued US$125,000 of senior unsecured notes (the "Notes") to a number of U.S. insurance companies. The Notes bear interest at 6.75% per annum, require semi-annual interest payments and are repayable at any time in whole or in part, subject to certain specified prepayment premiums based on prevailing interest rates at the time of prepayment.



6. Share capital, earnings per share and stock-based compensation

(a) Issued and outstanding

2005 2004
--------------- ---------------
Shares Amount Shares Amount
------ -------- ------ --------
#000's $ #000's $
Common shares
Balance - beginning of period 94,401 178,269 94,108 177,160
Share purchase options exercised 850 1,693 147 823
------ -------- ------ --------
Balance - end of period 95,251 179,962 94,255 177,983
------ -------- ------ --------
------ -------- ------ --------

(b) Earnings per common share

Three months Six months
ended June 30 ended June 30
------------- -------------
2005 2004 2005 2004
----- ------- ------ ------
$ $ $ $

(i) Basic

Numerator
Net earnings available to shareholders 36,486 16,034 69,746 42,668
----- ------- ------ ------
Denominator (# 000's)
Weighted average number of shares 95,035 94,104 95,035 94,104
----- ------- ------ ------
Basic earnings per share 0.38 0.17 0.73 0.45
----- ------- ------ ------
----- ------- ------ ------


Three months Six months
ended June 30 ended June 30
------------- -------------
2005 2004 2005 2004
------ ------ ------ ------
$ $ $ $
(ii) Diluted
Numerator
Income available to shareholders 36,486 16,034 69,746 42,668
------ ------ ------ ------
Denominator (# 000's)
Weighted average number of shares 95,035 94,104 95,035 94,104
Potential issuance of shares from
purchase options 717 1,196 717 1,196
Potential incremental issuance from
stock-based compensation 368 71 368 71
------ ------ ------ ------
96,120 95,371 96,120 95,371
------ ------ ------ ------
Diluted earnings per share 0.38 0.17 0.73 0.45
------ ------ ------ ------
------ ------ ------ ------


(c) Stock-based compensation plans

At June 30, 2005, Aur had one stock-based compensation plan, a common share purchase option plan (the "Plan"), which is described below. Effective January 1, 2003, Aur adopted the recommendations of the CICA with respect to stock-based compensation and commenced to expense stock options granted since January 1, 2003 using the fair value method.

The Plan is for directors, officers and senior management personnel of Aur. Options under the Plan are typically granted in such numbers as reflect the level of responsibility of the particular optionee and his or her contribution to the business and activities of Aur. Options granted under the Plan typically have a five year term and are typically made cumulatively exercisable by the holders thereof as to a proportionate part of the aggregate number of shares subject to the option over a specified term. Except in specified circumstances, options are not assignable and terminate upon the optionee ceasing to be employed by or associated with Aur. The terms of the Plan further provide that the price at which shares may be issued under the Plan cannot be less than the market price of the shares when the relevant options are granted.

Aur's common shares are listed on the Toronto Stock Exchange and trade in Canadian dollars ("CDN"). The following table summarizes information regarding Aur's outstanding and exercisable common share purchase options as at June 30, 2005:



Outstanding Exercisable
---------------------------------------------- ----------------------
Weighted Weighted
Range of Weighted average average
exercise average exercise exercise
prices months price price
per share Shares remaining per share Shares per share
------------ -------------------------------- ------- ---------
CDN$ # 000's # CDN$ # 000's CDN$

1.96 to 2.55 280 7 2.09 275 2.08
3.30 to 3.91 704 31 3.58 511 3.62
4.10 to 5.90 431 40 5.34 238 5.04
6.11 to 7.06 1,586 54 6.50 557 6.47
------- -------
3,001 1,581
------- -------
------- -------


The number of stock options outstanding at June 30, 2005 represents 3.2% of Aur's issued and outstanding common shares.

The following table summarizes information regarding Aur's common share purchase options as at and for the periods ended June 30, 2005:



Three months ended Six months ended
------------------ ------------------
Weighted Weighted
average average
exercise exercise
price price
Shares per share Shares per share
-------- --------- -------- ---------
# 000's CDN$ # 000's CDN$

Balance - beginning of period 2,866 5.05 2,465 3.55
Granted 210 7.01 1,385 6.52
Exercised (75) 3.36 (849) 2.45
-------- --------
Balance - end of period 3,001 3,001
-------- --------
-------- --------


For purposes of stock-based compensation, the fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants as follows: dividend yield of 1.6% (2004 - 0%), expected volatility of 42% (2004 - 44%), risk-free interest rate of 3.4% (2004 - 2.6%) and expected life of 24 months (2004 - 36 months).



7. Other expenses (revenues)


Three months Six months
ended June 30 ended June 30
-------------- ---------------
2005 2004 2005 2004
-------- ----- ------- -------
$ $ $ $
Interest on obligation under
capital leases 138 163 285 390
Interest and other income (2,080) (494) (3,556) (1,124)
Interest and financing costs 520 272 533 459
Copper price participation 988 - 988 -
Foreign exchange 283 (337) (430) (509)
(Gain) on sale of marketable securities (669) - (1,804) -
(Gain) loss on disposal of property,
plant and equipment (129) 13 (145) (19)
Miscellaneous 99 230 204 384
-------- ----- ------- -------
(850) (153) (3,925) (419)
-------- ----- ------- -------
-------- ----- ------- -------

8. Supplementary cash flow information

Three months Six months
ended June 30 ended June 30
-------------- ---------------
2005 2004 2005 2004
------ ------- ------- -------
$ $ $ $
Net change in non-cash working
capital:
Receivables (1,263) 1,553 (4,062) (1,913)
Inventories and prepaid expenses (956) (3,329) (3,326) (1,533)
Accounts payable and accrued
liabilities 1,412 2,747 997 (1,968)
------ ------- ------- -------
(807) 971 (6,391) (5,414)
------ ------- ------- -------
------ ------- ------- -------
Other information:
Interest paid - - 4,219 4,219
Income, resource and capital
taxes paid 6,908 1,698 11,125 1,918


9. Fair value of financial instruments

The carrying amount of cash, accounts receivable and current liabilities approximate their fair value due to the short term maturities of these instruments.

10. Contingency

In 2003, the Chilean Internal Revenue Service (the "IRS") issued to CMQB a notice of reassessment in respect of the deduction of certain components of guarantee fee payments claimed as expenses by CMQB totalling $3,805, thereby reducing by $3,805 of tax loss carryforwards that would otherwise be available to CMQB and reassessing CMQB for withholding taxes of $2,480, including interest and penalties, relating to the payment of the guarantee fees to Aur in 2003. It is the opinion of management and CMQB's legal counsel that CMQB's income tax filings with respect to the guarantee fees are correct and that the payment of the guarantee fees does not attract withholding taxes. Should CMQB ultimately be unsuccessful in overturning the reassessment, Aur would record a pre-tax charge to earnings equal to its proportionate share of CMQB's expense of $2,480, including interest and penalties. At this time, the outcome of the resolution of this reassessment cannot be determined and, accordingly, the loss, if any, has not been recorded in the consolidated financial statements.

Contact Information

  • Aur Resources Inc.
    Dr. James W. Gill
    Chief Executive Officer
    (416) 362-2614
    or
    Aur Resources Inc.
    Mr. John Knowles
    Executive Vice-President, Finance
    and Chief Financial Officer
    (416) 362-2614
    or visit our web site at www.aurresources.com