Hillsborough Resources Limited

Hillsborough Resources Limited

May 14, 2008 17:27 ET

Hillsborough Resources Issues Financial Results For First Quarter of Fiscal 2008

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2008) - Hillsborough Resources Limited (TSX:HLB) advises that it has now issued its financial results for the three months ended March 31, 2008.

Hillsborough incurred a loss from continuing operations before taxes of $1,425,106 during the first quarter of 2008, compared to earnings from continuing operations before taxes in the first quarter of 2007 of $94,402. Included in the 2008 loss is a $1,047,663 provision for Hillsborough's share of losses for the quarter of Peace River Coal Limited Partnership ("Peace River Coal"), compared to a provision for Hillsborough's share of losses for the first quarter of 2007 of $178,000. Excluding the effect of this provision, Hillsborough's loss from operations before taxes for the first quarter of 2008 was $377,443, compared to earnings of $272,402 for the first quarter of 2007, with the primary reason for the decline from 2007 being the increased costs per tonne of clean coal produced at the Quinsam mine.

Various factors contributed to the increased costs per tonne which include higher prices for steel, fuel and labour, training a young labour force and major mechanical and other problems experienced in the wash plant. In addition, contractual commitments to domestic customers limit the Corporation from taking advantage of the unprecedented increase in sales prices in the international market.

Contribution from sales in the first quarter of 2008 fell to ($166,411) on coal revenues of $4,572,074, or (3.6%), compared to $1,249,961 on coal revenues of $8,946,706, or 14.0%, in the first quarter of 2007. Adversely affecting the production cost of coal sold during the first quarter of 2008 was the effect of the coal quality and mining conditions in a section of the mine due to higher than normal sulphur contents and mud parting. Resolving the issues resulted in increased man hours and slowed production while increasing rejected coal. The mine plan has been re-developed to include a section which is expected to yield better clean coal production. The increased production costs also resulted from the expansion of the workforce at the mine including training and integration of the new employees.

Hillsborough's net loss for the quarter, after recovery of taxes, was $1,632,084 ($0.03 per share) compared to a net loss of $190,476 ($nil per share) in the first quarter of 2007.

At the Quinsam mine, demand for coal from the domestic market remained strong through the quarter; the revenues for the quarter totaled $4,572,074 or $51.99 per tonne, compared to $53.03 per tonne in the first quarter of 2007 and $52.41 for full year 2007. Production costs at Quinsam are currently holding steady, production of clean coal is increasing and average revenues per tonne are increasing as well. A follow-up drill program was initiated on the Quinsam North property, located immediately north of and adjacent to the Corporation's existing Quinsam mine. Part of the purpose of the program is to begin preparation of a mine development plan for the area.

At the Wapiti thermal coal property in northeast BC, a National Instrument 43-101 compliant technical report was completed and filed in February 2007 providing an updated resource estimate of 80.1 million tonnes measured and indicated plus a further 35.2 million tonnes inferred. The large resource tonnage offers the opportunity for mine development based on the export market as well as the regional industrial markets both in British Columbia and Alberta, and the Corporation is continuing in active discussions with a major Asian utility company to consider the possibility of their participation in the mine's development.

In January 2008, Peace River Coal commenced commercial operations at the Trend mine and made good progress on increasing productivity, especially in the wash plant, where new circuits have added capacity and improved recovery percentages. An automatic loader was commissioned at Peace River Coal's rail load out near Tumbler Ridge, and a second train set leased to improve rolling stock availability. Decisions were made to start replacing some of the contractor's equipment at the mine-site with owner-operated units, and the first of these is now on site. During the quarter, $9.12 million was contributed by the Corporation to Peace River Coal in respect of cash calls made on it to cover both operating costs as well as certain capital expenditures. As a result, the Corporation's 14.1% interest has remained intact.

About the Corporation

Hillsborough Resources Limited is a coal mining company that operates the Quinsam underground thermal coal mine near Campbell River, British Columbia, serving the local and west-coast U.S. cement industry and is increasing export sales. The Company is a limited partner in the Peace River Coal Limited Partnership, which has substantial metallurgical coal properties both in production and under development near Tumbler Ridge, British Columbia. In addition, the Company is developing the proposed Wapiti thermal coal mine in the same region. Hillsborough also holds the Bingay Creek metallurgical coal property located in the Elk Valley region of southeast British Columbia.

This release may contain forward-looking statements regarding the Corporation's business or financial condition. All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Corporation expects are forward-looking statements. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Actual results could differ materially from those described in this news release as a result of factors including but not limited to the following: adverse exploration or development results; adverse due diligence findings; re-assessments of corporate or development objectives and requirements; additional technical developments and considerations; unexpected increases in the costs of producing coal, changes in international coal or transportation markets, a rapid change in the value of the Canadian dollar particularly with respect to the US dollar, a fundamental slow down in the North American, Asian or worldwide economies; and other factors. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.

Contact Information

  • Hillsborough Resources Limited
    David Slater
    President & C.E.O.
    (604) 684-9288
    Hillsborough Resources Limited
    Ian Kirk
    C.A., C.F.O.
    (604) 684-9288
    (604) 684-3178 (FAX)
    Website: www.hillsboroughresources.com