Malaga Inc.
TSX : MLG

Malaga Inc.

June 17, 2011 07:30 ET

Malaga Generates a Net Income of $0.8 Million and an EBITDA of $1.3 Million in Q1 2011

MONTREAL, QUEBEC--(Marketwire - June 17, 2011) - Malaga Inc. ("MLG") (TSX:MLG) is pleased to report that it has filed its unaudited financial statements for the quarter ended March 31, 2011. The management discussion and analysis and unaudited financial statements can be found on the Company's website (www.malaga.ca) and on SEDAR (www.sedar.com). All amounts are in US dollars unless otherwise indicated.

On January 1, 2011, International Financial Reporting Standards ("IFRS") became Canadian GAAP for publicly-accountable enterprises. MLG's interim and annual financial statements are therefore prepared in accordance with IFRS as of January 1, 2011, and comparable figures for 2010 have been restated accordingly. MLG has also therefore adopted the US dollar as its functional and reporting currency.

Malaga generated net income of $0.8 million ($0.00 per share) in the first quarter of 2011, a $1.8 million increase from the loss of $1.0 million ($0.01 per share) reported in the same quarter of 2010. This improved performance resulted from the combined effect of a low production cost of $129 per MTU and a $159 increase in the average selling price per metric ton unit (MTU).

Operating income was $0.9 million in Q1-2011, a $1.5 million improvement over the $0.6 million loss in the same quarter of 2010. Operating activities generated cash flow of $1.4 million before changes in working capital items, compared to $0.5 million in Q1-2010.

Sales increased to $5.3 million, up 46% from $3.6 million in the first quarter of 2010. Sales of tungsten concentrate totalled 18,090 MTU. The Company's selling price for tungsten is based on the price of APT (ammonium paratungstate); in the first quarter, the APT price averaged $360 compared to $201 in the first quarter of 2010.

Q1 Key financial data:

Three-month period ended March 31
20112010
(in $'000)
Sales5, 2573, 594
Cost of sales3, 5343, 432
Amortization and depletion714786
Income from mining activities1, 722162
General and administrative expenses868794
Net earnings (loss)813(973)
EBITDA1, 31433
Earnings (loss) per share (basic and diluted)$0.00($0.00)
Cash cost of production per MTU$129$136
Cash flow from operating activities before changes in non-cash working capital items1, 353455
Acquisition of property, plant and equipment1, 451359
Additions to deferred development costs172171
Sales in MTU (Metric Tonne Unit)18, 09018, 108
Production was as follows :Three-month period ended March 31
20112010
Tonnes mined31, 38828, 190
Yield (%)56%62%
Production (MTU)17, 49317, 611

"With cash assets of $1.6 million and working capital of $1.7 million, Malaga has succeeded in consolidating its financial position" said Joey Trombino, Vice President and Chief Financial Officer. "The price of APT on the world market has increased five times since the end of March 2011, and now stands at $460. Tungsten customers absorb these price hikes because the use of the metal in some applications is increasing and it cannot be easily replaced. Furthermore, we are pleased that we were able to keep our production costs low and thus benefit from the increase in the price of APT." added Pierre Monet, President of Malaga. "Malaga is now on course to generate net income in 2011. The drilling program that began in the second quarter will continue throughout the year to increase our reserves and resources in a context of higher global tungsten demand."

Accidents at the Pasto Bueno mine results in two fatalities

The Company is sad to report that there has been two accidents at the Pasto Bueno mine during Q2 2011 resulting in the death of two workers employed by two of Malaga's subcontractors. Official investigations by the Peruvian authorities have been completed to determine the circumstances that led to the accidents. The investigations concluded that in both cases they were accidents and that no fault was attributed to the Company. Six safety and worker training recommendations were made and Malaga will implement these recommendations to ensure that we continue to maintain the highest safety standards. Malaga has a special health and safety unit that oversees and ensures that Malaga complies with all the mandatory mining safety rules and regulations. This unit is composed of 5 health and safety officers under the supervision of a professional health and safety superintendent.

ABOUT MALAGA INC.

Malaga Inc. owns and operates a mine in Peru and is one of the few publicly-traded producers of tungsten outside of China. Malaga is a low cost producer due to its gravimetric ore concentration process and the availability of hydroelectric power at its Pasto Bueno property in Peru. Malaga produces 15% of the tungsten outside of China. The Company plans to increase production and explore the property to develop its reserves and resources.

FORWARD‐LOOKING STATEMENTS

Certain statements in the foregoing may constitute forward‐looking statements which involve known and unknown risks, uncertainties and other factors that may cause Malaga's actual results, performance or achievements or industry results to be materially different from any future result, performance or achievement expressed or implied by such forward‐looking statements. The information provided reflects management's current expectations regarding future events and performance as of the date of this news release.

Contact Information

  • Jean Martineau
    Chairman of the Board and Chief Executive Officer
    Malaga Inc.
    514 288-3224

    Pierre Monet
    President
    Malaga Inc.
    514 288-3224

    Nicole Blanchard
    Corporate Strategy and Investor Relations
    Sun International Communications
    450 973-6600