Dacha Strategic Metals Inc.

Dacha Strategic Metals Inc.

September 14, 2011 07:30 ET

Dacha Reports Net Income of US$0.79 Per Share and Financial Results for the First Quarter Ending June 30, 2011

TORONTO, ONTARIO--(Marketwire - Sept. 14, 2011) - Dacha Strategic Metals Inc. ("Dacha" or the "Company") (TSX VENTURE:DSM)(OTCQX:DCHAF) is pleased to announce that it has released its interim financial results for the three months ended June 30, 2011. For more information please see the Company's interim financial statements and Management's Discussion and Analysis ("MD&A") which are filed under the Company's profile on SEDAR at www.sedar.com.

Dacha reported net earnings of US$57.8 million or US$0.79 per share for the three months ended June 30, 2011 from total revenue of US$60.3 million (US$61.6 million from gain on its metal investments offset by US$1.4 million loss on security investments). For the three months ending June 30, 2010, Dacha reported net income of US$0.2 million or US$0.00 per share from total revenue of US$1.4 million (US$1.7 million from gain on its metal investments offset by US$0.5 million loss on security investments).

The June 30, 2011 financial statements mark the Company's first quarter reporting under International Financial Reporting Standards ("IFRS"). Along with the transition to IFRS, the Company has changed its functional and reporting currency to the US dollar.

As of June 30, 2011, the Company's metals inventory, with a cost basis of US$20.5 million, had an estimated market value of US$102.7 million. During the three months ended June 30, 2011, Dacha purchased US$3.1 million of metals and disposed of US$3.8 million of metals for realized profit of approximately US$3.0 million.

Outlook on Rare Earth Pricing

Dacha has noted a significant upward trend in heavy rare earth prices since its March 31 year end as a result of fundamental changes to the mining and refining in the domestic Chinese rare earth market, which has affected prices both domestically and internationally. In the last 60 days, pricing has declined slightly in both markets, which the Company believes is primarily the result of speculators, who may have obtained material outside of authorized production channels, moving material out of inventory. Mining and refining of heavy rare earths in southern China, the major source of all heavy rare earths globally, has undergone a substantial restructuring in 2011. Production quotas for the mining and refining of rare earths are also being enforced for the first time. China Minmetals announcement in early August of the voluntary shutdown of its South China separation facilities seems to have gone largely unnoticed by the investing public but has a significant impact of the availability of material for the balance of this year. Although the capital market does not appear to have reacted to recent announcements in early August as to the voluntary shutdown of certain South China separation facilities, this change appears to have a significant impact on the availability of material from China for the balance of the year.

With production quotas being enforced for the mining and refining of rare earths and the substantial reduction in production capacity, Dacha expects that the rare earth oxide market this fall will experience a significant shortfall in available material which could cause a rebound in rare earths prices, particularly for heavy rare earth oxides, which will have an effect on the value of the metals held in our inventory.

Normal Course Issuer Bid

During the three months ended June 30, 2011, Dacha commenced a Normal Course Issuer Bid ("NCIB") that will terminate on June 3, 2012. During the quarter, the Company purchased and cancelled 175,000 common shares at an average cost of CAD$0.79. Subsequent to June 30, 2011, an additional 1,950,000 common shares have been purchased for cancellation at an average cost of CAD$1.08. Dacha expects to continue to purchase shares over the remainder of the fiscal year, depending on market conditions and other investment opportunities that may be available.

About Dacha

Dacha Strategic Metals Inc is an investment company focused on the acquisition, storage and trading of strategic metals with a primary focus on Rare Earth Elements. Dacha is in the unique position of holding a commercial stockpile of Physical Rare Earth Elements. Its shares are listed on the TSX Venture Exchange under the symbol "DSM" and on the OTCQX exchange under the symbol "DCHAF".

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the Company's ability to trade in rare earth elements, the realization value of Dacha's physical inventory portfolio, the investment strategy of the Company, trends in the supply and price of rare earth elements and general investment and market trends. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Dacha to be materially different from those expressed or implied by such forward-looking information. Although management of Dacha has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Dacha does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

The market value of the Company's physical inventory is estimated using price quotes published by two of the largest independent news sources for the metals industry, namely, Asian Metal (www.asianmetal.com) and Metal-Pages (www.metal-pages.com). In cases where these websites do not provide a price quote on the type or quality of metal held in the Company's physical inventory, the Company relies on a price quote provided by independent third-party industry participants.


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