LionOre Mining International Ltd.
TSX : LIM
ASX : LIM
LSE : LOR
BOTSWANA : LIONORE

LionOre Mining International Ltd.

November 07, 2006 17:00 ET

LionOre Reports Third Quarter 2006 Results Record Earnings of $148.1 Million or $0.68 Per Share

TORONTO, ONTARIO--(CCNMatthews - Nov. 7, 2006) - LionOre Mining International Ltd. ("LionOre") (TSX:LIM)(ASX:LIM)(LSE:LOR)(BSE:LIONORE) today reported its third quarter 2006 financial and operational results. All amounts are in U.S. dollars unless otherwise noted.

Quarterly Highlights

- Group production (100% basis) of 7,812 tonnes of payable nickel at a cash cost of $3.79/lb(Q3 2005: 7,872 tonnes of payable nickel at a cash cost of $3.01/lb)

- Net mineral sales of $276.7 million (Q3 2005: $88.9 million)

- Net earnings of $148.1 million or $0.68 per share (Q3 2005: $7.9 million or $0.04 per share), includes $25.0 million or $0.11 per share recorded as income for the net proceeds of a break fee resulting from the termination of the proposed acquisition of the Nikkelverk Refinery

- Operating earnings of $170.2 million (Q3 2005: $12.0 million)

- Operating cash flow, before changes in non-cash working capital items, of $211.4 million (Q3 2005: $11.7 million)

- Cash and cash equivalents of $280.4 million

- Nickel production for the Company was in line with forecast, as follows:



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Q3 2006 Year to Date Q3 2005
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Production Tonnes Cost Tonnes Cost Tonnes Cost
Payable Payable Payable
Ni Ni Ni
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Operation 100%(1) Attrib. $/lb 100%(1) Attrib. $/lb 100%(1) Attrib. $/lb
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Lake
Johnston 2,262 2,262 3.79 6,384 6,384 3.64 3,091 3,091 2.58
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Black
Swan 1,214 971 9.16 4,378 3,502 6.61 1,845 1,476 4.36
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Tati 3,543 3,012 2.87 8,767 7,452 3.34 2,302 1,957 2.99
---------------------------------------------------------------------------
Nkomati 660 660 (1.11) 1,890 1,890 (0.24) 634 634 1.22
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Waterloo 133 133 n/a 133 133 n/a - - -
---------------------------------------------------------------------------
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Total 7,812 7,038 3.79 21,552 19,361 3.78 7,872 7,158 3.01
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1 100% of production except for the Nkomati mine which is shown at 50%
(LionOre's share of the Nkomati mine).


Commenting on the results, Colin Steyn, President and CEO of LionOre, said, "I am pleased to announce that LionOre has achieved a record profit for the second consecutive quarter, earning $148.1 million or $0.68 per share. LionOre's earnings have been bolstered by the high nickel price and achieving group production targets.

This quarter has been an extended exercise of plant commissioning throughout the group, followed by ramp-up in production. Notwithstanding, we have had strong production performances from Tati, Nkomati and Waterloo. Waterloo has been the star of the quarter, contributing early production from the development activity, which has progressed well ahead of schedule. Lake Johnston and Black Swan are completing their plant commissioning and this should impact positively on production in the fourth quarter. On-mine costs have come under strict management focus and are beginning to show improvement; however, the high nickel price has adversely affected the cost of marketing and refining charges leading to higher overall cash costs. This is particularly the case at Black Swan.

The Tati Activox® Projects have started with the commencement of earthworks and the appointment of well respected EPCM contractors, Hatch Africa for the Activox® Refinery and Dowding Reynard & Associates (DRA) for the DMS Plant.

The outlook for the final quarter of the year is positive, with nickel prices forecast to remain strong due to high demand, particularly from the stainless steel sector. The Group's production is on track to meet the 2006 annual target of 34,100 tonnes of payable nickel, whilst costs remain the key focus for management at all locations."

Quarterly Overview

Corporate

- Appointment of Peter Breese as Chief Operating Officer of LionOre Mining International Ltd. and Bryan Hyde as Chairman of LionOre Australia

Africa

LionOre Africa had a strong quarter, characterized by lower cash costs and achievement of production targets. At Tati Nickel in particular, the benefits of stabilizing grade control, Project 5 Million and the Dense Media Separation (DMS) Phase 1 Plant were clearly demonstrated by the positive increase in production and the commensurate reduction in cash costs.

- Tati Nickel production up by 23% to 3,543 tonnes of payable nickel at a cash cost of $2.87/lb, a corresponding 23% decrease on the previous quarter (Q3 2005: 2,302 tonnes, $2.99/lb)

- Commissioning of the $4.7 million DMS Phase 1 Plant at Tati

- Tati Activox® Project

-- Appointment of Hatch Africa as EPCM contractors for the Activox® Refinery and DRA for the DMS Phase 2 Plant

-- Financing negotiations at an advanced stage, with the appointment of a lead arranger anticipated in the fourth quarter

-- Earthworks have started

- Selkirk pre-feasibility study underway and due for completion during first quarter of 2007

- Nkomati cash cost of negative $1.11/lb of nickel due to significant by-product credits

Australia

Performance from LionOre Australia was primarily impacted by the change in mining mix at the Lake Johnston and Black Swan operations, the final construction phase of their plant upgrades and the high cost of marketing and refining, particularly at Black Swan.

The plant upgrades are now being commissioned, which will increase production due to higher throughput.

- Lake Johnston continued the transition from the high-grade Emily Ann mine to the disseminated Maggie Hays deposit

- Maggie Hays Upgrade commissioning and ramp-up during fourth quarter

- Record amounts of ore were mined at Black Swan from the open pit as ore stockpiles were built up in advance of the commissioning of the upgraded plant

- Black Swan Disseminated 2 project in the process of commissioning and ramp-up

- Waterloo produced 133 tonnes of payable nickel during the quarter

- Drilling programme to start at Amorac and Waterloo in early 2007

- 38,304 ounces of gold produced at a cash cost of $395 per ounce (Q3 2005: 31,869 ounces at a cash cost $359 per ounce) at Thunderbox gold mine

LionOre's Consolidated Interim Financial Statements and Management's Discussion and Analysis for the quarter can be found at www.lionore.com.

Forward-Looking Statements

Certain statements contained herein are forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant uncertainties and contingencies. Many known and unknown factors could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements. Such factors include, but are not limited to: exploration, development and operating risks, uninsurable risks, ore reserve and resource estimates, additional funding requirements, dependence on smelting facilities, foreign countries and regulatory requirements, and environmental regulation and liability. For further information concerning certain such factors, see the Company's most recent annual information form filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com. The Company disclaims any intent or obligation to update any forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, not to put undue reliance on such statements.

Teleconference and Webcast Details:

LionOre will host a teleconference / webcast on Wednesday November 7, 2006 at 9:00 am 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 617-801-6888 or 1-888-286-8010, passcode: 69973738.

Contact Information

  • LionOre Mining
    UK / Europe
    Colin Steyn
    President & CEO
    +44 (0)20 7590 8888
    or
    LionOre Mining
    Africa
    Peter Breese
    Chief Operating Officer
    +27 (0)11 463 4223
    or
    LionOre Mining
    Canada
    Ted Mayers
    Chief Financial Officer
    (416) 777-1670
    or
    LionOre Australia
    Bryan Hyde
    Chairman
    +61 (0)8 9426 0100
    Website: www.lionore.com