Minefinders Corporation Ltd.

Minefinders Corporation Ltd.

November 16, 2005 09:00 ET

Minefinders Reports on Operations and Financial Results for the Third Quarter 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 16, 2005) - Minefinders Corporation Ltd. (the "Company") (TSX:MFL)(AMEX:MFN) is pleased to report on the status of its operations and present its unaudited, interim financial results for the nine month period ended September 30, 2005.

All dollar amounts in this news release are stated in US currency unless otherwise noted.

Summary of Activities

Dolores Mine Development

Since receiving a positive bankable feasibility study for its 100% owned Dolores gold and silver deposit in Chihuahua, Mexico, the Company has focused on optimizing the 18,000 tonnes/day mine plan proposed by Kappes, Cassiday & Associates, while moving ahead with financing and mine construction (see the Company's news releases dated June 28, 2005, August 3, 2005, September 7, 2005 and September 27, 2005; all news releases are available at www.sedar.com or at www.minefinders.com). During the third quarter the Company:

1. completed a comprehensive data room and completed initial technical reviews and coordinated on-site field reviews with representatives from several international banking syndicates, culminating in three term sheets for project financings of up to $100 million;

2. completed and filed an Environmental Impact Study (Manifestacion de Impacto Ambiental or MIA);

3. completed and filed an Environmental Risk Assessment Study;

4. completed an application for a Change of Land Use Permit, which the Company expects to file this week;

5. completed and filed an application for an Explosives Permit;

6. entered into a contract for and initiated the expansion of access roads to the primary mine road to accommodate mine construction and operations traffic;

7. initiated 14 columns of representative ore types for additional leach test work to evaluate the potential for enhanced recoveries of gold and silver dependent on final crush size;

8. initiated detail engineering drawings for mine development, infrastructure and components, with a target date for completion during the first quarter of 2006;

9. engaged an experienced mine construction manager (Brent McFarlane) to head the Company's mine development activities as Country Manager; and

10. engaged a civil engineer to oversee road improvement works and infrastructural planning for the Dolores community.

Project Financing

The Company has been in discussions with several major international banking syndicates regarding Dolores project financing. Following an initial review by the syndicates' technical teams of technical studies and other information concerning the project, including a visit to the proposed Dolores operations site, the Company has received term sheets from three separate syndicates proposing to act as lead agent for financings ranging from $85 million to $100 million, to raise money for the development of the Dolores mine. These proposals are subject to customary conditions, including the performance of a more detailed review of the project. The Board of Directors is currently weighing all of the proposals, and expects to make a further announcement in the near future.

Project Activities

The Environmental Impact Study - Manifestacion de Impacto Ambiental ("MIA") has been completed and filed with the requisite Environmental Risk Assessment Study. Applications for Change of Land Use and Explosives Permits have also been, or are in the process of being, submitted. Permits have already been received for the new road construction and improvements and waterwell testing. Detailed engineering quotes have been obtained and accepted for the crushing plant and associated conveyor and stacking systems, for the heap-leach pad and pond facilities, and for the Merril-Crowe and Smelting facilities. The Company expects to finalize all contracts for detail engineering work in the next several weeks. The Company also continues to build its senior construction management team in anticipation of a construction decision by the Board of Directors in the first quarter of 2006.

At Dolores, infrastructure and preparatory activities continue in anticipation of successful financing of the project. The exploration and condemnation drilling program continues to test additional targets on the 27,000 hectare Dolores property. A new drill contract has been let with one core drill rig already on the property, and a second expected in the next week, to begin a program to further test the underground and peripheral mineralization and complete condemnation drilling. Recently completed condemnation drilling encountered mineralization at surface in the leach pad area that averaged 0.94 grams per tonne ("g/t") gold over 15 meters and 0.7 g/t gold over 30 meters down hole depth in an area 400 meters by 100 meters. In addition, several holes completed at the end of the last stepout drill program encountered unexpected widths of mineralization south of the present open pit mine area that could be incorporated into the pit with additional mine planning.

The current Dolores mine plan proposes an open pit mine at a production level of 18,000 tonnes/day with a life of mine strip ratio of 3.7:1, three-stage crushing and conventional heap leach and Merrill-Crowe recovery. Current capital costs are set at $126 million with an estimated mine life of eleven and a half years. As is customary at this stage in a project, the Company continues to evaluate other options to maximize the total economic potential of the Dolores project, and work continues on the optimizing studies, including evaluation of enhanced gold and silver recoveries; an independent review of mine equipment requirements, utilization and staffing; and possible reductions in initial capital costs through contract mining, equipment leasing, and purchase of suitable used equipment.

Data obtained from recent drilling is expected to result in an upgrading of significant resources previously reported in the "inferred" category to the "measured" and "indicated" categories and, potentially, to future reserves.

The Company's financial resources are not sufficient to allow it to proceed to full construction of a mine at its Dolores property. The total amount required to be raised will not be known until the optimization studies are completed. There is no assurance that equity and financial markets will be able to provide the financing that will be required.

Northern Sonora

Exploration programs continued in the third quarter to expand on previous mineralization encountered on the Planchas de Plata silver prospect. Significant silver mineralization, including intercepts of up to 22 ounces per tonne ("opt") over 24 feet was encountered (see the Company's news release dated October 12, 2005) and additional work is planned.

At the Company's Real Viejo project, a follow-up program of three to five core holes is planned to further define the silver resource discovered in 2004 (see the Company's news releases dated June 9, 2004 and February 28, 2005). Three to five additional drill holes are also planned to follow-up on gold intercepts previously encountered on the El Malacate gold prospect. It is anticipated that drilling on both prospects will be complete just prior to or following year end 2005.

Financial Highlights

The Company recorded a net loss for the quarter ended September 30, 2005 of $1.416 million ($0.04 per share) compared with $0.42 million ($0.01 per share) in 2004. For the nine month period ended September 30, 2005, the net loss was $3.902 million ($0.11 per share) compared with $2.403 million ($0.07 per share) in 2004. The losses for the quarter and nine-month period ended September 30, 2005 include a charge for stock option compensation of $0.659 million in the third quarter. In 2004, a stock option compensation expense of $1.318 million was recorded in the second quarter. The loss for the year to date in 2005 ($3.902 million) includes a substantial charge for exploration costs written off of $2.095 million (2004-$0.286 million). Information on losses before these two categories of highly variable expenditures are taken into consideration is given in "Summary by Quarter" on page 4 of the Company's Management's Discussion and Analysis for the period.

Without including the non-cash charges for amortization and stock compensation, administrative costs for the quarter amounted to $0.495 million (2004-$0.374 million) and for the nine month period amounted to $1.641 million (2004-$1.478 million). The increase over 2004 is 32% for the quarter and 11% for the year to date, and is attributable mainly to the three areas of cost: accounting and auditing, legal, and office services. Accounting and auditing expense continues to rise as the Company prepares for compliance with the Sarbanes-Oxley Act relating to internal controls and financial disclosure controls. Legal expense has increased with increased regulatory requirements and initial financing activities, and office services and expenses are increasing as the Company increases the pace of its "pre-construction" activities. Although the Board of Directors has not made a formal decision to proceed to financing and construction, expenditures are expected to increase substantially as new staff are hired and preparations for mine construction and operation are made.

Financial Position and Liquidity

As at September 30, 2005, the Company had working capital of $35.15 million, compared with $41.76 million at December 31, 2004. The most significant component of the change in working capital in the nine month period was the decrease in cash and cash equivalents by $6.90 million over the December 31, 2004 balance. The Company's cash and cash equivalents were held primarily in Canadian dollars until September 23, 2005, when approximately CDN$21 million was exchanged for US dollars at an exchange rate almost the same as the rate at September 30, 2005. In addition, the US dollar value of the remaining Canadian dollars increased because of the weakening of the US dollar against the Canadian dollar, from US$0.8319 per Canadian dollar at December 31, 2004, to US$ 0.8601 per Canadian dollar at September 30, 2005. The resultant increase in the cash equivalents was a gain of $1.843 million in the quarter and a net gain for the year to date of $1.013 million. This gain, less the cash expenditures on mineral properties, exploration and equipment of $6.595 million, and the cash loss for the nine-month period of $1.140 million, are the significant components of the net decrease in cash and cash equivalents during the nine month period of $6.903 million.

Additional Information

This summary of financial highlights should be read in conjunction with the Company's unaudited interim consolidated financial statements for the nine month period ended September 30, 2005 and the Management Discussion and Analysis for the same period. Both of these documents are available at www.sedar.com, or from the Company.

Mark Bailey MSc., P.Geo. is the "qualified person" with overall responsibility for the Dolores project and is responsible for the contents of this news release. Technical reports summarizing the Dolores feasibility and initial optimization studies are available for inspection online at www.sedar.com.


Mark H. Bailey, President and Chief Executive Officer

Safe Harbor Statement under the United States Private Securities Litigation Act of 1995: Statements in this release that are forward-looking, including statements relating to the size, and growth in size, of the Company's mineral resources and the timing of the further exploration and development of the Company's mineral projects, are subject to various risks and uncertainties concerning the specific factors identified above and in the company's periodic filings with the Ontario Securities Commission and the U. S. Securities Exchange Commission. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not intend to update this information and disclaims any legal liability to the contrary.

Contact Information

  • Minefinders Corporation Ltd.
    Mark H. Bailey
    President and Chief Executive Officer
    1 (866) 687-6263
    (604) 687-6267 (FAX)