Minefinders Corporation Ltd.
TSX : MFL
AMEX : MFN

Minefinders Corporation Ltd.

August 18, 2005 09:00 ET

Minefinders Reports on Operations for the Second Quarter 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 18, 2005) - Minefinders Corporation Ltd. (the "Company") (TSX:MFL)(AMEX:MFN) has released its unaudited, interim financial results for the three and six month periods ended June 30, 2005.

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

Summary of Activities

Dolores

In June 2005, the Company received a positive bankable feasibility study of its 100% owned Dolores gold and silver deposit in Chihuahua, Mexico. A concurrent initial optimization study, designed to evaluate alternatives to the base case bankable feasibility study, produced significant improvements and is the basis for further ongoing optimization work. The two studies, and explanatory news releases dated June 28 and August 3, 2005, were filed on the Canadian SEDAR site and are available at www.sedar.com.

The initial, optimized study recommends a production rate of 18,000 tonnes per day in a conventional open pit heap-leach operation with direct capital costs of $97.6 million and indirect capital costs of $33.5 million and a mine life of twelve years. The study estimates production of 72.5 million tonnes of proven and probable ore and 1.44 million ounces of gold and 52.7 million ounces of silver recovered, at a total production cost of $220 per gold equivalent ounce (or $115 per ounce of gold net of silver credits, using $400 gold and $6 silver). The study estimates an internal rate of return for the life of mine of 20.3%, and an undiscounted net present value of $253.6 million.

The Company is now well advanced in the modification of the design of the Dolores project so as to maximize its economic potential. Ongoing optimization studies include the evaluation of enhanced gold and silver recoveries and an independent review of mine equipment requirements, utilization and staffing. Reductions in initial capital costs are expected through contract mining, equipment leasing, and/or the purchase of suitable used equipment.

Separately, data obtained from recent drilling at Dolores are expected to result in a significant increase in the size of the mineable resource used in the feasibility studies, through the up-grading of resources from the "inferred" category to the "measured and indicated" category.

The Company is required to note that its financial resources, although significant, are not sufficient to allow it to proceed to full construction of a mine at its Dolores property without additional funding. The total amount of such funding will not be known until current optimization studies are complete. Although the Company reasonably expects to secure the required debt and equity funding, there is no assurance that it will be able to do so.

Northern Sonora

Exploration programs at the Company's Riel Viejo and Planchas de Plata silver prospects were started in the first quarter of 2005 and continued into the second. Work was suspended temporarily because of severe heat and a shortage of water for drilling, but has now recommenced. At Planchas de Plata, drill testing was directed at confirming existing data from previous mining. Significant silver mineralization was encountered, and additional work is planned. At Real Viejo, a program of reverse circulation drilling has begun, and results will be reported when available.

Nevada

Drilling was conducted on the Dottie and Clear properties in Nevada during the second quarter. After review, results were determined to be insufficient to justify further exploration and the properties will be surrendered.

Financial Highlights

During the quarter ended June 30, 2005, the Company recorded a net loss from operations of $1.992 million ($0.05 per share), which includes a one-time charge of $1.664 million on the write-off of exploration costs on its Nevada properties. This loss compares with $1.741 million ($0.05 per share) during the same period in 2004. For the six months to June 30, 2005, the net loss was $2.486 million ($0.07 per share), compared with $1.983 million ($0.05 per share) in 2004.

It should be noted that losses in 2004 included a charge for stock option compensation of $1.318 million in the second quarter that has no equivalent in 2005, as no stock options were granted, or vested, in the six-month period ended June 30, 2005.

The Company continues to maintain high levels of cash and working capital. At June 30, 2005, the Company had working capital of $35.67 million, compared with $41.76 million at December 31, 2004.

The Company's cash balances are held primarily in Canadian dollars. During the first six months of 2005, the US dollar value of those balances decreased because of the strengthening of the US dollar against the Canadian dollar - from US $ 0.8319 per Canadian dollar at December 31, 2004 to US$ 0.8161 at June 30, 2005. The resultant decrease in the cash equivalents was a translation loss of $ 0.833 million in the six months to June 30, 2005 (2004 - $1.28 million loss). The largest components of the net decrease in cash and cash equivalents during the six month period ended June 30, 2005 are this currency translation loss and the Company's cash expenditures on mineral properties, exploration and equipment of $4.646 million.

This summary of financial highlights should be read in conjunction with the Company's unaudited, interim consolidated financial statements for the three and six months ended June 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.

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, the timing of the further exploration and development of the Company's mineral projects, the potential for improvement in the economics of the Dolores project, and the Company's ability to secure future funding 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)
    www.minefinders.com