Aurcana Corporation
TSX VENTURE : AUN

Aurcana Corporation

November 26, 2007 09:15 ET

Aurcana Reports First Ever Sales and Gross Profit

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 26, 2007) - Aurcana Corporation ("Aurcana" or the "Company") (TSX VENTURE:AUN) is pleased to report its financial results for the three and nine month periods ended September 30, 2007. The summary of the selected financial information should be read in conjunction with the unaudited financial statements for the nine months ended September 30, 2007 and the related management's discussion and analysis dated November 22, 2007 together referred to as the "Financial Statements", which have been filed on www.sedar.com and the Company's website www.aurcana.com. All figures are in Canadian dollars unless otherwise noted.

Highlights of the 3rd Quarter September 30, 2007 results are:

- 74,000 tonnes of ore processed

- 3,800 tonnes of concentrate sold

- Revenues of $3,936,000

- Operating cash flow of $754,142 and gross operating profit was $1,194,320

- C$14.8 million in cash held on deposit with major bank (no exposure to Asset Backed Commercial Paper) working capital of C$14.3 million

- Working capital of C$14.3 million

Overall Performance:

La Negra

During the third quarter the operation performed as expected. Efforts during the first six months of 2007 were concentrated on ensuring the mill was reconditioned to obtain a capacity of 1,000 tonnes per day, an increase of 25% of the previous operating capacity and this capacity was achieved in the third quarter.

Morale at the mine continues to be high and recent monthly production levels at the mine are on target with expectations of an average of 1,000 tonnes per day and monthly sales on target with expectations for a restarted mine. It is expected that with the recent acquisition of new underground equipment the mine will sustain production to meet mill throughput.

The Company also recently commenced a 15,000 metre underground diamond drill exploration program to define additional resources.

Rosario

On February 22, 2007, the Company received Exchange approval to enter into an Option Agreement to acquire, through its subsidiary, Aurcana de Mexico, an 100% interest in a silver-zinc-lead-gold Property, Rosario (Rosario) located in Sinaloa State, Mexico for US$3,000,000.

Following its technical and legal review of the Rosario Property, the Company on August 7, 2007 exercised the Option to Purchase and executed a Sale and Purchase Agreement to acquire a 100% undivided interest in Rosario, under the following terms:

February 22, 2007 US$250,000 upon signing the option agreement (paid)

August 7, 2007 US$250,000 upon signing the purchase agreement (paid)

February 7, 2008 US$1,250,000

February 7, 2009 US$1,250,000

Development at the Rosario site has been proceeding well and the Company expects to begin production from the mine before the end of fiscal 2008. To assist in meeting its goal of production start up in the last quarter of 2008, Aurcana has acquired a critical piece of mill equipment. Currently, lead times in the mining industry for both mill equipment and mining equipment are becoming increasingly longer but Aurcana has been successful in securing a SAG ("Semi-Autogenous Grinding") mill that will be instrumental in the refurbishment of the Rosario mill and ensure that timelines are maintained. The SAG mill is capable of processing up to 1200 tonnes per day.

Results of Operations:

Production

Production, at La Negra, for the three and nine months ended September 30, 2007 was 74,000 metric tonnes of ore producing 3,800 tonnes of concentrate (2006 - Nil). The target production levels are 1,000 tonnes of ore production per day on a 75 day quarter for a total expected production of 75,000 metric tonnes.

Sales

The mine generated its first sales of $4,951,000 during the three months ended September 30, 2007 of which the Company's 80% share was $3,936,000 (2006 - Nil).

Operating Margin

The Company's gross margin for the three months ended September 30, 2007 was $1,194,000 or 30% (2006 - Nil), and reflects the efforts the Company has made to bring production to market quickly. The cost of sales for the three months ended September 30, 2007, were $2,742,000. Lower cost of sales in the future, are expected. Operating costs during this period marked the Company's first commercial production which the Company expects to be lower in the following subsequent quarters. Recent equipment acquisitions, along with scheduled maintenance and final refurbishments of existing facilities continue to result in improved efficiency.

Income

Net loss for the three months ended September 30, 2007 of $144,000 ($0.00 per share basic and diluted) compares with a loss of $1,482,000 ($0.01 per share basic and diluted) for the same period in 2006.

Net loss for the nine months ended September 30, 2007 of $3,374,000 ($0.04 per share basic and diluted) compares with a loss of $1,692,000 ($0.03 per share basic and diluted) from the same period in 2006.

Cash Flows

Cash flow from operating activities (before changes in non-cash working capital) for the three months ended September 30, 2007 was $754,000 compared to the cash flow of $181,000 for the same period in 2006.

For the nine months ended September 30, 2007, the Company generated a positive cash flow from operations (before changes in non-cash working capital) of $390,000 compared to negative cash flow of $143,000 for the same period in 2006.

The most notable changes for the three months ended September 30, 2007 were a $1,008,000 increase in trade accounts receivable, a $1,537,000 increase in other accounts receivable, a $296,000 increase in inventory, and a $1,550,000 increase in accounts payable providing a net cash inflow of $1,213,000 from changes in non-cash working capital items.

For the nine-month period, the Company completed a $21,000,000 financing and received, net of expensed, $20,020,000 from the issuance of shares, and repaid $1,130,000 of long-term debt.

After taking into account $4,503,000 incurred on mineral property development and capital asset purchases of $785,000, there was a net increase in cash balances of $14,820,000 for the nine months ended September 30, 2007.

At September 30, 2007, cash balances totalled $14,820,000.

Liquidity

The working capital position of the Company is positive. Current assets exceed current liabilities by $14,264,000 compared to a working capital deficiency of $922,000 at December 31, 2006. While management expects positive cash flow from the La Negra operation there will still be considerable outflows in the near term as the Rosario project is developed.

Corporate Highlights:

1. Aurcana has a strong balance sheet, growing revenues from the La Negra Mine and projected revenue starting Quarter 4, 2008 from its second project Rosario;

2. The Company has a diversified asset base and will be producing five different metals from La Negra and Rosario;

3. Aurcana has significant exploration potential at both of La Negra and Rosario;

4. Aurcana has shown it ability to implement and follow through with its plan to become a significant base - precious metal producer;

5. The Company has a network of contacts that can lead to the acquisition of additional projects that are in production or at advanced development or exploration stages all within its corporate mandate.

With a strong balance sheet, 1,000 tonnes per day production established at La Negra, Rosario slated to add additional production of 800 tonnes per day by the end 2008, a very positive outlook for the price of commodities, along with the continued expansion of Aurcana's shareholder base, a very bright, exciting and rewarding future await Aurcana and its shareholders.

Ken Booth, President, stated: "The future for La Negra is very promising as we continue to improve on all aspects of the operating. The ongoing exploration program will provide us with the capacity to potentially expand the mill to 2,000 tonnes per day, and provide further efficiencies."

Aurcana is a Canadian junior mining company listed on the TSX Venture Exchange, symbol: AUN. The Company remains focused on the acquisition, development and operation of silver, zinc and copper mines with good infrastructure and ore reserves/resources that require minimal capital and time to re-start.

ON BEHALF OF THE BOARD OF DIRECTORS OF AURCANA CORPORATION

Ken Booth, President

Caution Regarding Forward-Looking Statements - This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include unsuccessful exploration results, changes in metal prices, changes in the availability of funding for mineral exploration and development, unanticipated changes in key management personnel and general economic conditions. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. Ron Nichols, P.Eng. a Director and Vice President of Exploration for Aurcana, and a Qualified Person as defined by National Instrument 43-101, supervised the preparation of the technical information in this release.

The Company does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf.



AURCANA CORPORATION
Interim Consolidated Balance Sheets
(Unaudited - Prepared by Management)

30 September 31 December
ASSETS 2007 2006
--------------------------------------------------------------------------
Current
Cash $ 14,820,238 $ 2,011,458
Accounts receivable - trade 1,008,226 -
- other 1,545,550 8,350
Prepaid expenses and advances 120,405 199,829
Inventory 295,915 -
-----------------------------
17,790,334 2,219,637
Property, Plant and Equipment 3,223,937 2,638,469
Mineral Properties 11,966,936 8,163,982
-----------------------------
$ 32,981,207 $ 13,022,088
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES
--------------------------------------------------------------------------
Current
Accounts payable $ 1,652,515 $ 108,025
Current portion of notes payable 356,191 334,031
Acquisition liability - 1,166,400
Loan payable 795,840 934,865
Due to Reyna Mining & Engineering
S.A. de C.V. 721,230 598,502
-----------------------------
3,525,776 3,141,823

Due to Reyna Mining & Engineering
S.A. de C.V. - 844,698
Notes Payable 470,748 761,431
-----------------------------
470,748 4,747,952

SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------
Capital Stock 45,840,283 24,205,811
Obligation to Issue Shares 200,000 400,000
Contributed Surplus 4,205,724 1,555,853
Deficit (21,261,323) (17,887,528)
-----------------------------
28,984,682 8,274,136

$ 32,981,207 $ 13,022,088
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Commitments

Approved on behalf of the Board:

"Ken Booth"
--------------------, Director
Ken Booth

"Brian Flower"
--------------------, Director
Brian Flower


AURCANA CORPORATION
Interim Consolidated Statements of Operations and Deficit
(Unaudited - Prepared by Management)

Three Months Ended Nine Months Ended
30 September 30 September 30 September 30 September
2007 2006 2007 2006
--------------------------------------------------------------------------
Sales $ 3,936,456 $ - $ 3,936,456 $ -
Cost of Sales 2,742,136 - 2,742,136 -
----------------------------------------------------------

Gross Margin 1,194,320 - 1,194,320
----------------------------------------------------------
Administrative
Expense 543,449 93,948 859,921 327,247
Amortization 198,594 24,263 199,942 24,354
Depletion of
mineral
properties 699,970 - 699,970 -
Foreign
Exchange
Loss (Gain) 49,350 (139,884) 102,208 (63,197)
Interest and
Financing (284,218) (1,508) (411,493) (12,916)
Investor
Relations 86,023 5,455 150,686 5,455
Listing and
Filing Fees 7,290 4,588 36,271 15,169
Professional
Fees 38,284 - 66,989 14,299
Stock-Based
Compensation - 1,367,348 2,863,621 1,367,348
----------------------------------------------------------

1,338,742 1,354,210 4,568,115 1,677,759
----------------------------------------------------------

(Loss) Before
the Under-Noted (144,422) (1,354,210) (3,373,795) (1,677,759)
Other Income - 143,961 - 143,961
Write Off Mineral
Property Costs - - - (157,759)
----------------------------------------------------------

Net (Loss) for
the Period (144,422) (1,210,249) (3,373,795) (1,691,557)

Deficit,
beginning of
period (21,116,901) (16,121,971) (17,887,528) (15,640,663)
----------------------------------------------------------

Deficit, End of
Period $ (21,261,323) $ (17,332,220) $ (21,261,323) $ (17,332,220)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

(Loss) Per
Share $ (0.00) $ (0.01) $ (0.04) $ (0.03)
Weighted average
number of shares
Basic and
Diluted 90,368,933 68,456,171 82,783,514 51,010,650
--------------------------------------------------------------------------
--------------------------------------------------------------------------


AURCANA CORPORATION
Interim Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)

Cash Resources Three Months Ended Nine Months Ended
Provided by 30 September 30 September 30 September 30 September
(Used In) 2007 2006 2007 2006
--------------------------------------------------------------------------

Operating
Activities
(Loss) for
the period $ (144,422) $ (1,210,249) $ (3,373,795) $ (1,691,557)
Items not
involving cash
Amortization 198,594 24,263 199,942 24,354
Depletion of
mineral
property 699,970 - 699,970 -
Stock-based
compensation - 1,367,348 2,863,621 1,367,348
Write-off of
mineral
properties - - - 157,759
----------------------------------------------------------
754,142 181,362 389,738 (142,096)
Net change in
non-cash working
capital (129,12) 1,176,535 1,213,465 1,003,905
----------------------------------------------------------

625,030 1,357,897 (823,727) 861,809
----------------------------------------------------------
Investing
Activities
Purchase of
plant and
equipment (330,771) (2,672,309) (785,410) (2,862,521)
Expenditures
on mineral
properties (1,495,895) (120,805) (4,502,924) (2,867,543)
----------------------------------------------------------

(1,826,666) (2,793,114) (5,288,334) (5,730,064)
----------------------------------------------------------

Financing
Activities
Due to Reyna
Mining (73,246) - (721,970) -
Long-term debt (67,186) - (268,523) -
Share capital
issued for cash - 639,284 20,050,359 8,026,646
Loan Payable (310,096) - (139,025) -
----------------------------------------------------------

(450,528) 639,284 18,920,841 8,026,646
----------------------------------------------------------

Net Increase
(Decrease)
in Cash (1,652,164) (795,933) 12,808,780 3,158,391
Cash position -
beginning of
period 16,472,402 3,990,984 2,011,458 36,660
----------------------------------------------------------
Cash position -
End of Period $ 14,820,238 $ 3,195,051 $ 14,820,238 $ 3,195,051
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Supplemental
Cash Flow
Information
Issue of shares
for mineral
properties $ 1,370,221 $ - $ 1,370,221 $ 200,000


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this Release.

Contact Information

  • Aurcana Corporation
    Ken Booth
    President
    (604) 331-9333 or 1-866-532-9333
    or
    Aurcana Corporation
    Jack Barnes
    Investor Relations
    (604) 331-9333 or 1-866-532-9333
    Website: www.aurcana.com