LionOre Mining International Ltd.

LionOre Mining International Ltd.

March 15, 2005 17:39 ET

LionOre Mining Reports Fourth Quarter Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: LIONORE MINING INTERNATIONAL LTD.

TSX, ASX. SYMBOL: LIM
LSE SYMBOL: LOR

MARCH 15, 2005 - 17:39 ET

LionOre Mining Reports Fourth Quarter Results

TORONTO, ONTARIO--(CCNMatthews - March 15, 2005) - LionOre Mining
International Ltd. ("LionOre"), (TSX:LIM)(ASX:LIM)(LSE:LOR), an
international nickel and gold producer, today reported its fourth
quarter and full year financial and operational results. All amounts are
in U.S. dollars unless otherwise noted.

4th Quarter Highlights

- Net mineral sales increased to $111.0 million (2003: $108.8 million)

- Net earnings were $24.0 million or $0.12 per share (2003: $29.5
million or $0.16 per share)

- Net earnings include a foreign exchange loss of $8.0 million or 3
cents per share after tax (2003 - $3.6 million, 1 cent per share)

- Operating earnings were $38.1 million (2003: $51.0 million)

- Cash flow from operations was $53.9 million (2003: $17.2 million)

- Successful acquisition of MPI Mines Ltd (MPI) for a total
consideration of $226.3 million

- Attributable nickel production for the quarter was 3,753 tonnes at a
cash cost of $2.94 (2003: 4,743 tonnes at $2.55)

Full Year Highlights

- Net mineral sales were $338.2 million, (2003: $247.8 million)

- Net earnings were $78.2 million or $0.40 per share (2003: $57.4
million, or $0.34 per share)

- Cash flow from operations was $161.7 million (2003: $70.2 million)

- Attributable nickel production for the year was 17,435 tonnes, a 3%
increase over 2003 production of 16,928 tonnes

- The average cash cost of nickel production was $2.59 (2003: $2.31)

- MPI and Nkomati transactions to increase attributable short term
nickel production by approximately 60% and attributable nickel resources
by over 200% to 1.8 million tonnes

Commenting on the results, Colin Steyn, President and CEO of LionOre,
said "I am pleased to report a 36% increase in net profit for the year
to $78.2 million on increased net mineral sales of 36% to $338.2
million. Cash flow from operations at $161.7 million was up 130%
year-over-year. Increased production combined with strong commodity
prices have delivered superior results, despite some cost increases due
to the impact of unusually high rainfall at Tati, higher diesel prices,
strong producer currencies and price participation.

Looking forward, LionOre has an exciting year ahead in 2005. Organic
growth at our operations and the addition of the MPI assets, as well as
a 50% interest in the Nkomati nickel mine will produce immediate
earnings growth in the short term and a platform for solid growth in the
long term."

Teleconference and Webcast Details:

LionOre will host a teleconference and webcast on Wednesday March 16th,
2005, at 9:00am EST. The webcast can be accessed at www.lionore.com and
will be archived on the site for 90 days.

The replay will be available for 2 weeks at +1 800 408 3053 or 416 695
5800, pass code 3145794#.

Corporate Highlights

MPI Transaction

The successful takeover bid for MPI Mines Ltd (MPI) closed on December
22, 2004. LionOre received acceptances amounting to 94.8% of MPI's
outstanding shares and moved to compulsorily acquire the remaining
shares, a process completed on February 7, 2005. Cash compensation paid
amounted to A$129.5 million, with 94.8% of the total cash being paid on
January 7, 2005 and the remaining 5.2% paid on February 7, 2005.

To satisfy the share compensation component, LionOre issued 20.6 million
new common shares on January 7, 2005 and 1.1 million new common shares
on February 7, 2005. MPI is now a 100%-owned subsidiary of LionOre.
MPI's nickel assets, which include the Black Swan nickel operations and
the Honeymoon Well nickel sulphide deposit, are held in MPI's 80%-owned
subsidiary, MPI Nickel, with US-based OM Group owning the remaining 20%.

The Honeymoon Well deposit contains an Indicated Resource of 131,500,000
tonnes at 0.8% nickel for approximately 1 million tonnes of contained
nickel.

Nkomati Transaction

On February 2, 2005, LionOre announced the acquisition of a 50% share in
the Nkomati nickel mine in South Africa from African Rainbow Minerals
(ARM). Consideration of $28.5 million will be paid on the close of the
transaction, with a further $20.0 million to be paid if LionOre and ARM
agree to proceed with the expansion project at the significantly larger,
lower grade disseminated ore body. The effective date of this
transaction is January 1, 2005.

The Nkomati orebody contains an Indicated Resource of 139,000,000 tonnes
at 0.49% nickel for approximately 700,000 tonnes of contained nickel.

These two transactions will increase LionOre's near term nickel
production by approximately 60% and nickel resources by 200%, from
555,000 tonnes to 1.7 million tonnes of contained nickel.

Activox®

Following the success of the demonstration phase of the Activox®
Hydrometallurgical Plant at Tati Nickel in Botswana, local management
has decided to maintain the plant at a full operational level throughout
2005. During the trial phase, the plant achieved nickel extractions of
up to 98% against a target of 96%, while copper extractions were
considerably above target, achieving up to 90%. The quality of nickel
and copper cathode consistently graded above 99.9% and 99.99%
respectively. The 2005 campaign (Phase 1), will focus on stable
continuous operating conditions, fine-tuning the metallurgical
performance, testing materials of construction and ongoing training of
personnel.

Financial Review

- Working capital was $154.8 million at December 31, 2004, (2003: $67.0
million).

- Subsequent to year end, the cash portion of the cost of the MPI
acquisition in the amount of $101.1 million was paid to MPI shareholders
and financed by a short-term loan facility with a major Australian bank.

Operational Review

Tati Nickel (85%-owned) Botswana

- Production levels in the fourth quarter were adversely affected by
abnormally heavy rainfall over a 36-hour period at the beginning of
December. As a consequence, the higher grade base of the Phoenix pit
could not be mined, resulting in lower than planned production and
higher cash costs

- 4th quarter sales of payable nickel were 3,899 tonnes (Q4 2003: 3,360
tonnes), this included all concentrates remaining from the build-up
during the BCL shutdown, leaving no finished concentrates on-hand at
year end. The scheduled BCL shutdown also adversely effected Tati's
efficiencies and costs during 2004.

- 4th quarter production of 2,332 tonnes of payable nickel at a cash
cost of $2.93 per pound (2003: 3,370 tonnes at a cash cost of $2.52 per
pound) reflected the above factors.

- Annual production was 11,446 tonnes (2003: 11,509 tonnes) of payable
nickel at a cash cost of $2.60 per pound (2003: $2.37 per pound).

Lake Johnston (100%-owned), Australia

- 4th quarter production was 1,771 tonnes of payable nickel at a cash
cost of $2.95 per pound (2003: 1,878 tonnes at a cash cost of $2.60 per
pound).

- Annual production was 7,706 tonnes (2003: 7,145 tonnes) of payable
nickel at a cash cost of $2.58 per pound (2003: $2.23 per pound).

- Sales of payable nickel during the fourth quarter were 2,060 tonnes
(2003: 3,796 tonnes). In the previous year, fourth quarter sales
included concentrate produced, but not sold in the third quarter, due to
the Inco strike.

- Plant upgrade at Emily Ann to 500,000tpa was completed in December
with the installation of a second ball mill.

Thunderbox (100%-owned), Australia

- 4th quarter gold production was 42,636 ounces at a cash cost of $301
per ounce (2003: 39,498, $213 per ounce). Costs were pushed higher by
the increase in commodities costs, specifically diesel fuel, and the
strong Australian dollar.

- Construction of a gas pipeline to site and the subsequent conversion
of the power station from diesel to duel fuel will result in a reduction
in energy costs from the second quarter 2005.

- Annual gold production was 156,916 ounces at a cash cost of $265 per
ounce (2003: 212,459 ounces at a cash cost of $138 per ounce). LionOre's
share of production was 60% prior to October 30, 2003, when Dalrymple
was acquired, increasing LionOre's ownership to 100%.

- The initial stage of an oxygen injection process was commissioned in
December resulting in increased plant recovery.

Exploration - Botswana

Exploration activities in the fourth quarter concentrated on drill data
compilation and resource estimation work for the drilling completed
during the year to the south of the pit. The preparation of an updated
drill-hole database was completed in the first half of the quarter, and
subsequently submitted to the resource consultants for joint estimation
work with Tati Nickel's geologists. LionOre expects the results of this
work to be published in the 2004 Annual Report.

A further campaign of diamond drilling to evaluate the potential
continuity of vein-hosted economic mineralization at depth, below the
vertical limits of the current open pit, commenced early in the fourth
quarter. This evaluation is being carried out at a drill support spacing
that will provide resource category information for mine life planning
scenarios.

Exploration will resume at Selkirk mine with a view to securing
additional nickel units.

Exploration - Australia

A decision to develop the Waterloo deposit as an exploration decline,
that will also yield production tonnage, will be taken shortly.

LionOre entered into an agreement to earn 60% of the nickel rights in a
700 square kilometer tenement package held by Jackson Gold and Placer
Dome in the Kalgoorlie and Kanowna district. This area covers highly
prospective ground along strike from LionOre's recently acquired Black
Swan nickel operations, which has not previously been effectively
explored for nickel owing to its long term ownership by gold companies.

ABOUT LIONORE:

LionOre is an international nickel and gold producer with a strong
record of growth through an integrated program of acquisitions,
exploration success, and operational efficiency. LionOre owns the
Activox® process, a proprietary technology for processing metal
concentrates. The Company's major mining assets are located in Botswana
and in Western Australia.

LionOre trades on The Toronto Stock Exchange and the Australian Stock
Exchange under the symbol "LIM" and on the London Stock Exchange under
the symbol "LOR".



LIONORE MINING INTERNATIONAL LTD.
Consolidated Balance Sheets
As at December 31, 2004 and 2003
(Unaudited) (US$ 000s)
--------------------------------------------------------------------
--------------------------------------------------------------------

2004 2003
-------- --------
ASSETS

CURRENT
Cash and cash equivalents $ 254,989 $ 35,256
Marketable securites 5,305 -
Accounts receivable 78,470 96,476
Inventories 29,429 11,596
Other 1,520 895
--------------------------------------------------------------------
369,713 144,223
Restricted cash 7,500 9,907
Property, plant and equipment 413,004 299,641
Mineral exploration and development properties 456,493 163,951
Other long-term investments and other assets 26,772 6,507
--------------------------------------------------------------------
$ 1,273,482 $ 624,229
--------------------------------------------------------------------
--------------------------------------------------------------------

LIABILITIES

CURRENT
Accounts payable and accrued liabilities $ 88,971 $ 37,841
Short-term financing - 3,950
Amount due on acquisition of MPI Mines Ltd 101,072 -
Current portion of long-term debt 24,837 35,428
--------------------------------------------------------------------
214,880 77,219
Long-term debt 138,475 41,537
Asset retirement obligations 34,442 10,265
Other 16,742 7,748
Future income tax liabilities 205,960 77,441
Non-controlling interest 38,464 15,166
--------------------------------------------------------------------
648,963 229,376
--------------------------------------------------------------------

SHAREHOLDERS' EQUITY

Share capital 357,359 355,020
Shares to be issued on acquisition of MPI
Mines Ltd 105,556 -
Equity component of convertible notes 24,780 -
Stock options 2,469 1,010
Share purchase warrants - 764
Retained earnings (deficit) 51,450 (26,750)
Cumulative translation adjustment 82,905 64,809
--------------------------------------------------------------------
624,519 394,853
--------------------------------------------------------------------
$ 1,273,482 $ 624,229
--------------------------------------------------------------------
--------------------------------------------------------------------



LIONORE MINING INTERNATIONAL LTD.
Consolidated Interim Statements of Earnings and Retained
Earnings (Deficit)
(Unaudited) (US$ 000s, except per share amounts)
---------------------------------------------------------------------
---------------------------------------------------------------------
For the three For the twelve
months ended months ended
December 31 December 31
--------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------

REVENUES
Gross mineral
sales $ 129,924 $ 127,302 $ 399,497 $ 292,818
Third party
treatment and
refining costs (18,879) (18,478) (61,288) (45,001)
---------------------------------------------------------------------
Net mineral sales 111,045 108,824 338,209 247,817
Contract revenues 1,814 24 4,347 106
---------------------------------------------------------------------
112,859 108,848 342,556 247,923
---------------------------------------------------------------------
EXPENSES
Operating costs 49,554 39,357 142,715 100,401
Depreciation and
amortization 18,754 14,971 56,485 37,127
General and
administrative 3,036 3,603 10,309 9,140
Stock-based
compensation 402 246 1,489 786
Contract and other
expenses 3,030 (285) 5,074 77
---------------------------------------------------------------------
74,776 57,892 216,072 147,531
---------------------------------------------------------------------

OPERATING EARNINGS 38,083 50,956 126,484 100,392

Foreign exchange loss (8,047) (3,555) (8,076) (7,468)
Gain on sale of
marketable securities - - - 2,936
Interest expense (2,942) (1,554) (8,333) (7,724)
Interest and
investment income 5,241 687 7,205 1,540
Other income - - 1,933 -
---------------------------------------------------------------------
NET EARNINGS BEFORE
TAXATION AND
NON-CONTROLLING
INTEREST 32,335 46,534 119,213 89,676
Current income tax
expense (9,710) - (29,944) -
Future income tax
recovery (expense) 4,143 (14,338) (119) (26,812)
---------------------------------------------------------------------
NET EARNINGS BEFORE
NON-CONTROLLING
INTEREST 26,768 32,196 89,150 62,864
Non-controlling
interest (2,773) (2,660) (10,950) (5,438)
---------------------------------------------------------------------
NET EARNINGS 23,995 29,536 78,200 57,426
RETAINED EARNINGS
(DEFICIT), BEGINNING
OF PERIOD 27,455 (56,286) (26,750) (84,176)
---------------------------------------------------------------------
RETAINED EARNINGS
(DEFICIT), END OF
PERIOD $ 51,450 $(26,750) $ 51,450 $(26,750)
---------------------------------------------------------------------

Basic earnings per
share $ 0.12 $ 0.16 $ 0.40 $ 0.34
Diluted earnings per
share $ 0.12 $ 0.16 $ 0.40 $ 0.33

Weighted average
number of common
shares
outstanding 195,113,600 182,613,901 194,636,453 170,932,636
----------------------------------------------------------------------

Diluted weighted
average number of
common shares
outstanding 196,722,489 185,442,149 196,472,080 173,695,025
----------------------------------------------------------------------



LIONORE MINING INTERNATIONAL LTD.
Consolidated Interim Statements of Cash Flows
(Unaudited) (US$ 000s)
---------------------------------------------------------------------
---------------------------------------------------------------------
For the three months For the twelve months
ended December 31 ended December 31
----------------------------------------------
2004 2003 2004 2003
----------------------------------------------

CASH FLOWS FROM
OPERATING ACTIVITIES
Net earnings $ 23,995 $ 29,536 $ 78,200 $ 57,426
Items not involving
cash:
Depreciation and
amortization 18,754 14,971 56,485 37,127
Future income tax
expense (4,143) 14,338 119 26,812
Gain on marketable
securities - - - (2,936)
Non-controlling
interest 2,773 2,660 10,950 5,438
Stock-based
compensation 402 246 1,489 786
Unrealized (gain) loss
on foreign exchange 3,007 (614) 5,042 (1,413)
Write off of
exploration and
development
properties 813 - 868 412
Other (2,832) (4,220) (799) (6,061)
Changes in non-cash
working capital 11,106 (39,707) 9,303 (47,343)
---------------------------------------------------------------------
53,875 17,210 161,657 70,248
---------------------------------------------------------------------

CASH FLOWS FROM
INVESTING ACTIVITIES
Cash acquired
from MPI 36,993 - 36,993 -
Payment for buyout
of MPI options (6,739) - (6,739) -
Cash acquired
from Dalrymple - 4,168 - 4,168
Development of mineral
properties (1,094) (2,593) (8,688) (10,917)
Exploration (1,127) (2,352) (11,138) (6,921)
Investment in
property, plant
and equipment (12,260) (9,041) (51,723) (19,717)
(Payments for)
proceeds from
investments (5,304) (2,619) (7,459) 1,727
Other (987) 415 (394) 760
---------------------------------------------------------------------
9,482 (12,022) (49,148) (30,900)
---------------------------------------------------------------------

CASH FLOWS FROM
FINANCING ACTIVITES
Proceeds from the
issue of share
capital - 514 1,545 16,682
Gross proceeds of
borrowings - 5,748 144,000 7,000
Financing costs - - (4,827) -
Repayment of
borrowings (9,702) (19,732) (41,952) (52,888)
Other 792 (2,768) (58) (2,842)
---------------------------------------------------------------------
(8,910) (16,238) 98,708 (32,048)
---------------------------------------------------------------------
Effect of exchange
rates on cash and
cash equivalents 10,027 2,886 8,516 6,118
---------------------------------------------------------------------
INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 64,474 (8,164) 219,733 13,418
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD 190,515 43,420 35,256 21,838
---------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS, END
OF PERIOD $ 254,989 $ 35,256 $254,989 $ 35,256
---------------------------------------------------------------------
---------------------------------------------------------------------

Supplemental cash flow
information:

Cash payments of
interest $ 4,227 $ 2,616 $ 7,575 $ 7,449
---------------------------------------------------------------------
Cash payments of
income taxes $ 2,220 $ 1,423 $ 22,436 $ 1,423
---------------------------------------------------------------------



-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    LionOre Mining International Ltd.
    Canada: Mr. Ted Mayers
    Chief Financial Officer
    +1 (416) 777-1670 (Toronto)
    or
    LionOre Australia
    Australia: Mr. Mark Ashley
    Managing Director
    +61 8 9481 5656 (Perth)
    or
    LionOre Mining International Ltd.
    UK: Mr. Colin Steyn
    President & CEO
    +44 20 7590 8888 (London)
    info@lionore.com
    www.lionore.com