Malaga Inc.
TSX : MLG

Malaga Inc.

November 15, 2010 06:30 ET

Malaga Generates a Postive Income From Mining Activities for a Third Consecutive Quarter

MONTREAL, QUEBEC--(Marketwire - Nov. 15, 2010) - Malaga Inc. ("MLG") (TSX:MLG) is pleased to report that it has filed its unaudited financial statements for the quarter ended September 30, 2010. The unaudited financial statements and management discussion and analysis can be found on the Company's website (www.malaga.ca) and on SEDAR (www.sedar.com).

Malaga generated $0.2 million in income from mining activities in the third quarter of 2010, $1.0 million better than the $0.8 million loss reported for the same quarter in 2009. The increase was mainly due to 20% sales volume growth and a $12 reduction in the cash cost of sales per Metric Tonne Unit ("MTU") compared to Q3-2009.

MLG also generated $0.7 million in EBITDA(1) (Earnings Before Interest Taxes Depreciation and Amortization) in the third quarter of 2010 compared to a negative EBITDA of $0.8 million in the same quarter of 2009. The Company's operating activities generated $0.7 million in cash flow, whereas in Q3-2009, $0.6 million had been used.

Sales totalled $4.0 million ($2.8 million in Q3-2009). MLG sold more than 18,000 MTUs for a third consecutive quarter (18,619 vs 15,529 in the same quarter of 2009). This was due to an increase in production capacity to 392 tonnes per day ("tpd"). Production capacity currently stands at 500 tpd following the installation of the new magnets.

The selling price for the Company's tungsten is based on the market price for APT (ammonium paratungstate). During the quarter, the average reference selling price for APT rose to US $240 compared to US $180 in Q3-2009. The APT price has increased 24 times since the beginning of the year, and is currently at US $280.

The cash cost of sales for the quarter was $136 per MTU compared to $148 in Q3-2009. This cost should decline further in the coming quarter due to the addition of the new magnets and the resulting improvement in production capacity.

Malaga reduced its net loss to $0.6 million, down $1.4 million from Q3-2009. The per share loss was $0.00 ($0.01 in 2009).

(1) EBITDA is a non-GAAP measure. See the non-GAAP reconciliation in Malaga's MDA

"We are pleased to note that our results are continuing to improve. Malaga has generated positive cash flow from operations before working capital for the year to date, and reduced its cash cost per MTU by $11 relative to the nine-month period ended September 2009. In combination with the new APT market price, this will enable us to generate more funds for investment in exploration. We have also requested the repayment of the $2.6 million promissory note receivable from Dynacor Gold Mines Inc., and expect to receive these funds by mid-December," said Pierre Monet, Malaga's Vice President and Chief Financial Officer.

"Thanks to the delivery and installation of the final parts for the high-performance magnets, the processing capacity of the plant is now up to 500 tpd. We also started a new drilling program during the quarter and, given the expected production increase, may be in a position to step up the pace in the coming months," added Jean Martineau, President and Chief Executive Officer of Malaga.

Financial Highlights
 
(in $'000) Three-month periods ended September 30,   Nine-month periods ended September 30,  
  2010   2009   2010   2009  
Sales   3,975     2,780     11,324     8,708  
                         
Cost of sales (excluding amortization and depletion)   2,773     2,534     7,935     6,878  
Amortization and depletion   964     993     2,908     3,018  
Income (loss) from mining activities   235     (768 )   465     (1,248 )
General and administrative expenses   696     666     2,040     2,083  
Net Loss   (620 )   (1,977 )   (2,712 )   (3,859 )
EBITDA(1)   677     (772 )   1,267     (313 )
                         
Loss per share, basic and diluted $ (0.00 ) $ (0.01 ) $ (0.02 ) $ (0.03 )
Cash cost of sales per MTU $ 136   $ 148   $ 129   $ 140  
                         
Cash flow before changes in non-cash working capital items   254     (1,401 )   802     (1,109 )
Acquisitions of property, plant and equipment   1,140     1,277     2,340     1,984  
Additions to deferred development and exploration costs   381     470     710     1,938  
 
(1) EBITDA is a non-GAAP measure. See the non-GAAP reconciliation in Malaga's MDA
 
Metal Sales and Production
 
  Three-month periods Nine-month periods
  ended September 30, ended September 30,
     
     
  2010   2009   2010   2009
Sales (in MTU) 18,619   15,529   55,528   46,466
Production:              
Tonnes extracted 34,281   24,111   93,793   66,831
Yield (%) 0.55   0.71   0.59   0.71
Production Output (MTU) 18,724   17,177   55,656   47,713
               
    Three-month periods ended September 30,   Nine-month periods ended September 30,
         
In $CA per MTU   2010   2009   2010   2009
  Average cash cost of sales   136   148   129   140
  Write-down of inventory to net realizable value   -   15   2   8
  Amortization and depletion   52   64   52   65
  Total cost   188   227   183   213

ABOUT MALAGA

Malaga Inc. owns and operates a mine in Peru and is one of the few companies outside of China that produces tungsten. Malaga is a low cost producer due to the availability of hydroelectric power at its Pasto Bueno property in Peru and has a current production capacity of 500 tpd. Future plans are to increase production and thoroughly explore the property to increase reserves and resources. 

FORWARD-LOOKING INFORMATION

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

Contact Information

  • Malaga Inc.
    Jean Martineau
    President & CEO
    514-288-3224
    or
    Sun International Communications
    Nicole Blanchard
    Corporate Strategy and Investor Relations
    450-973-6600