Quadra Mining Ltd.
TSX : QUA

Quadra Mining Ltd.

November 09, 2005 09:00 ET

Quadra Reports Financial Results for the Third Quarter of 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 9, 2005) - (All monetary amounts are in thousands of US$ unless otherwise stated)

Quadra Mining Ltd. (TSX:QUA) ("The Company") announces its financial results for the three months ended September 30, 2005. The complete financial statements are available together with the Management Discussion and Analysis at www.quadramining.com and at www.sedar.com.

Net losses for the three months ended September 30, 2005 were $10,890 or US$0.40 per share. During the quarter operational improvements at the Robinson Mine and high quality ore feed resulted in the highest copper and gold production year to date. While revenues generated from sales during the quarter were strong, earnings were offset by the settlement of forward hedge contracts and two one time events; the termination fee paid to the mining contractor and the write down of the Magistral Project.

SUMMARY OF FINANCIAL RESULTS FOR THE THIRD QUARTER

- Net Revenue of $63,432 generated by the sale of 64,208 dry metric tons of copper concentrate was offset by settlement of forward hedge contracts of $10,708 in the quarter.

- Net Revenue of $162,964 generated by the sale of 182,620 dry metric tonnes of copper concentrate was offset by settlement of forward hedge contracts of $10,850 in the first nine months of 2005.

- Operating margin at the Mine for the three months ended September 30, 2005 was $0.27/share and $1.10/share for the first nine months of 2005.

- Cash and working capital were $9,413 and $7,059 respectively, as of September 30, 2005.

- The Company expensed $4,436 to the mining contractor to assume owner mining activities.

- The Company withdrew from the Magistral Project and wrote off $6,042.

- Cash cost of production was $1.19 per copper pound produced in the quarter and an average $1.22 per pound produced for the nine months ended September 30, 2005.

SUMMARY OF OPERATIONAL HIGHLIGHTS FOR THE THIRD QUARTER

- The Mine produced 36.5 million pounds of copper and 24,666 ounces of gold in the quarter ended September 30, 2005. The copper head grade was 0.60% while the gold grade was 0.39 g/tonne and the concentrate grade averaged 26.5% copper.

- Concentrate inventory at September 30, 2005 was 18,391 tonnes.

- The average daily mill throughput rate was 37,674 tonnes and the plant operating time was 95%.

- The copper feed grade increased to 0.60% versus 0.50% and 0.51% in the previous two quarters.

- Copper recoveries for the three month period ending September 30, 2005 averaged 79.5% while gold recoveries were 57.3%.

- Unit mining costs were US$1.34 per tonne mined, which included under-accruals from previous quarters and abnormally high maintenance costs. Actual mining costs year to date are US$1.09 per tonne mined. Milling costs were US$3.27 per tonne milled while unit general and administrative costs were US$0.76 per tonne milled.

- The month of September was the highest production month ever with the Mine producing 13.9 million pounds of copper and 9,910 ounces of gold. An average of 39,967 tonnes per day was processed through the mill and 248,233 tonnes per day were mined from the pit.

OVERALL PERFORMANCE

Financial Results:

Net revenues from concentrate sales were $63,432 in the third quarter of 2005. Net loss for the three months ended September 30, 2005 was $10,890, equal to US$0.40 per share as compared to a net loss of $1,754 or US$0.06 per share in the third quarter of the previous year. Cash flow from operating activities was $3,095, equal to US$0.11 per share compared to a loss of $959 or US$0.04 per share in the third quarter last year. Cash flow from operating activities was $16,273, equal to $0.60 per share for the nine months ended September, 2005. The Company's revenue during the quarter was generated primarily from the sale of 64,208 dry tonnes of copper concentrate. Payable copper and gold were 35.9 million pounds and 19,276 ounces respectively. There were no sales of copper concentrate in the third quarter of 2004. After taking into account the realized copper forward sales, adjusted net revenues during the quarter were $52,724 from a realized average copper price of US$1.43 per pound of copper sold compared to the LME average price of US$1.70 per pound. Cash operating expenditures comprised of cost of sales and royalties during the period were $45,581 and other cash costs comprised of general and administrative, realized loss on derivatives and net interest expense were $12,160. Non-cash expenditures of $7,841 primarily related to amortization, depletion and depreciation charges, accretion of the asset retirement obligation, the cost of stock-based compensation employee options and the unrealized loss on derivatives. During the third quarter ended September 30, 2005, the Company expensed a one time transfer fee of $4,436 payable to WGI.

Technical studies on Magistral were completed during the quarter ended September 30, 2005. On October 26, 2005 the Company made a decision to withdraw from the Investment and Operating Agreement with Inca Pacific Resources Inc because the project did not have a sufficient probability of meeting Quadra's investment criteria. As a result, the investment and costs incurred on the Magistral Project capitalized as mineral properties in the amount of $6,042 have been written off and charged to income as of September 30, 2005. In addition, the investment in Inca Pacific has been written down to fair market value of $542 as of September 30, 2005. The total investment loss in the Magistral Project amounted to $6,098.

During the third quarter ending September 30, 2005, the realized loss on copper forward sales contracts charged against revenues was $10,708. As at September 30, 2005, concentrate shipments that have future price settlement dates have an associated open hedge position of 13,690 tonnes of copper metal and 50,000 ounces of gold at an average price of US$1.39 per pound and US$411 per ounce respectively. This resulted in an unrealized loss before tax of $4,527 during the third quarter of September 30, 2005.

The following table summarizes the earnings per share breakdown for the three quarters of 2005 and the nine months ended September 30, 2005:



-------------------------------------------------
Q1 2005 Q2 2005 Q3 2005 YTD 2005
-------------------------------------------------
Financial Financial Financial Financial C1
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Operating margin after
hedge losses 0.32 0.51 0.27 1.10 1.10
-------------------------------------------------
Cash expenses
(G&A, Interests &
royalties) (0.05) (0.05) (0.06) (0.16) (0.16)
-------------------------------------------------
Ordinary income 0.27 0.46 0.21 0.94 0.94
-------------------------------------------------
Contract termination fee - - (0.16) (0.16) (0.16)
-------------------------------------------------
Total cash profit 0.27 0.46 0.05 0.78 0.78
-------------------------------------------------
Non-cash items (0.13) (0.35) (0.23) (0.71) (0.71)
-------------------------------------------------
Magistral property
write down - - (0.22) (0.22) (0.22)
-------------------------------------------------
Earnings (loss) for
the period 0.14 0.11 (0.40) (0.15) (0.15)
-------------------------------------------------


OVERALL PERFORMANCE

Operational Results - Robinson Mine

The improved performance at the Mine is a direct result of several optimization initiatives being realized.

The mining of waste from the pit wall ("the de-weighting program") initiated in the second quarter was substantially completed. A system has been put in place to continuously monitor the pit walls. A secondary fleet of smaller mining equipment was used for the de-weighting project, allowing the main operational fleet to focus on production activities. Availabilities on all of the major pit equipment improved during the quarter and a record production of 295,000 tonnes in one day was achieved.

During the third quarter, higher head grade and less oxidized material resulted in the highest copper recovery and pounds produced year to date. Gold recovery was about 10% higher than projected as a result of the performance of the gravity concentrators and subsequently production estimates increased from 66,000 ounces to 75,000 ounces of gold for the year. Mill maintenance has improved to the point that during the quarter the mill experienced minimal unscheduled downtime.

Quadra continues to put increased emphasis on reducing operating costs. The Company has assumed all direct mining operation responsibilities at the Robinson Mine. This change is expected to provide enhanced cost control and efficiencies going forward in 2006 and beyond. As a subsequent event to the quarter, the orderly transfer of equipment, personnel, duties and responsibilities is now complete with approximately 95% of the former contractor workforce that was offered full time employment agreeing to join the Robinson Nevada Mining Company.

Construction of the $7,750 molybdenum recovery circuit at the Mine continued during the quarter and is on schedule to be completed by the end of this year.

The following table summarizes the Mine performance for the three quarters of 2005 and nine months ended September 30, 2005:



-----------------------------------------------------------------------
Three months Three months Three months Nine months
ended ended ended ended
September 30, June 30, March 31, September 30,
2005 2005 2005 2005
-----------------------------------------------------------------------
Ore + Waste mined
(Tonnes 000's)(i) 19,229 17,740 16,017 52,986
-----------------------------------------------------------------------
Ore milled
(Tonnes 000's) 3,466 3,570 3,296 10,332
-----------------------------------------------------------------------
Stripping ratio 4.3 4.2 2.7 3.7
-----------------------------------------------------------------------
Copper grade (%) 0.60 0.50 0.51 0.54
-----------------------------------------------------------------------
Gold grade (g/t) 0.39 0.33 0.32 0.34
-----------------------------------------------------------------------
Concentrate grade
(% Cu) 26.5 25.2 25.4 25.8
-----------------------------------------------------------------------
Copper recovery 79.5% 76.4% 74.2% 77.1%
-----------------------------------------------------------------------
Gold recovery 57.3% 51.3% 41.5% 50.8%
-----------------------------------------------------------------------
Copper production
(Million lbs) 36.5 30.5 27.6 94.6
-----------------------------------------------------------------------
Gold production (ozs) 24,666 19,932 14,081 58,679
-----------------------------------------------------------------------
Cash cost per
pound produced(i) US$1.19/lb US$1.25/lb US$1.23/lb US$1.22/lb
-----------------------------------------------------------------------
Copper sales
(Million lbs) 35.9 35.6 32.8 104.3
-----------------------------------------------------------------------
(i) Cash cost per pound produced includes all onsite operating costs,
concentrate transportation, smelting and refining costs less by-
product revenue received divided by the pounds of copper produced.
The cost of waste tonnage over the pit strip ratio is capitalized
and not shown in the cash cost per pound. Under Canadian Generally
Accepted Accounting Principles, unit cash cost of production is not
defined.


Sierra Gorda:

Quadra spent approximately $1,421 on the Sierra Gorda Project during the third quarter, the major activity being the completion of the drilling program begun in the second quarter. During the quarter, 8,278 meters in 38 reverse circulation drill holes was completed for a total of 15,712 meters in 74 holes for the 2005 program. The focus of the drill program was to define additional copper oxide resources primarily outside the currently defined resource area. Results provided the basis for another round of exploratory RC drilling in early 2006.

Magistral

Quadra expended $657 on the Magistral Project in Peru during the third quarter 2005 on a work program representing the first phase in the preparation of a pre-feasibility study. All diamond drilling results were integrated into the geological model and provided the basis for a revised mineral resource estimate. Other studies included acid base accounting test work, environmental studies, community relations and the development of infrastructure strategies. Results of this work were in hand by October 26th, 2005, the date by which time Quadra was required to notify Ancash Cobre of its intention whether or not to continue with the project. As of September 30, 2005, Quadra had written off the costs and investment associated with the project in the amount of $6,098.

Quadra management will hold a conference call to discuss the Company's financial results and performance for the third quarter ending September 30, 2005 at 8.00am PST/11.00am EST on Wednesday, November 9th, 2005. Management will also provide an update on recent business activities.

The North American toll free number for this conference call is 1-877-888-3490. To access the simultaneous webcast, visit Quadra's website at www.quadramining.com or www.vcall.com. The playback version of the call will be archived and available for replay through Wednesday, November 16th, 2005 at 1-888-509-0082.

About Quadra Mining Ltd. (TSX:QUA)

Quadra is a British Columbia corporation based in Vancouver and is a mining company whose principal asset is the Robinson Mine in Nevada. The Company has a goal of becoming a mid-tier base metals development and operating company with interests in a number of advanced exploration, development and producing properties.

This Press Release contains "forward-looking statements" that were based on Quadra's expectations, estimates and projections as of the dates as of which those statements were made. These forward-looking statements include, among other things, statements with respect to Quadra's business strategy, plans, outlook, long-term growth in cash flow, earnings per share and shareholder value, projections, targets and expectations as to reserves, resources, results of exploration (including targets) and related expenses, property acquisitions, mine development, mine operations, mine production costs, drilling activity, sampling and other data, future recovery levels, future production levels, capital costs, costs savings, cash and total costs of production of copper, gold and other minerals, expenditures for environmental matters and technology, projected life of our mines, reclamation and other post closure obligations and estimated future expenditures for those matters, completion dates for the various development stages of mines, future copper, gold and other mineral prices (including the long-term estimated prices used in calculating Quadra's mineral reserves), the percentage of production derived from mechanized mining, currency exchange rates, debt reductions, and the percentage of anticipated production covered by forward sale and other option contracts or agreements. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "outlook", "anticipate", "project", "target", "believe", "estimate", "expect", "intend", "should" and similar expressions. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause Quadra's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, including but not limited to:

- Uncertainties related to the accuracy of our reserve and resource estimates and our estimates of future production and future cash and total costs of production and the geotechnical or hydrogeological nature of ore deposits and diminishing quantities or grades of reserves.

- Uncertainties related to expected production rates, timing of production and the cash and total costs of production and milling.

- Uncertainties relating to copper, gold, molybdenum and other mineral prices, which are beyond the Company's control.

- Operating and technical difficulties in connection with mining development activities.

- Uncertainties with respect to the quantity or quality of molybdenum that may be produced at the Robinson Mine. Based on the assays produced to date, the historical drill database and the life o mine plan, the Company has prepared an internal estimate of future molybdenum production. However, these limited results from this past production are not necessarily determinative of future production and Quadra cannot be certain of the quantity or quality of molybdenum it will produce at the Robinson Mine, or that any molybdenum recovered in the future will be of the same grade as that previously recovered or as determined by small scale laboratory testwork.

- Uncertainties and costs related to Quadra's exploration and development activities, such as those associated with determining whether copper, gold, molybdenum or other mineral reserves exist on a property.

- Uncertainties related to feasibility studies and other studies that provide estimates of expected or anticipated costs, expenditures and economic returns from a mining project.

- Uncertainties related to the ability to obtain and retain necessary licenses, permits, electricity, surface rights and title for development projects and project delays due to third party opposition.

- Uncertainties related to the future development or implementation of new technologies, research and development and, in each case, related initiatives and the effect of those on our operating performance.

- Uncertainties related to judicial or regulatory proceedings.

- Changes in, and the effects of, the laws, regulations and government policies affecting our mining operations, particularly laws, regulations and policies relating to:

- mine expansions, environmental protection and associated compliance costs arising from exploration, mine development, mine operations, reclamation and mine closures;

- expected effective future tax rates in jurisdictions in which our operations are located;

- the protection of the health and safety of mine workers; and

- mineral rights ownership in countries where our mineral deposits are located.

- Changes in general economic conditions, the financial markets and in the demand and market price for copper, gold and other minerals and commodities, such as diesel fuel, petroleum, steel, concrete, electricity and other forms of energy, mining equipment, operating supplies, and fluctuations in exchange rates, particularly with respect to the value of the U.S. dollar and Canadian dollar, concentrate and transportation charges.

- The effects of forward selling instruments to protect against fluctuations in copper, gold, molybdenum and other metal prices and exchange rate movements and the risks of counterparty defaults, and mark to market risk.

- Unusual or unexpected formations, seismic activity, cave-ins, flooding, pressures, pit wall failures and other similar incidents (and the risk of inadequate insurance or inability to obtain insurance to cover these risks).

- Changes in accounting policies and methods we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates.

- Environmental issues and liabilities associated with mining including processing and stock piling ore.

- Geopolitical uncertainty and political and economic instability in countries which we operate.

- Labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate mines, or extreme weather conditions, environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt the production of minerals in our mines.

- Quadra's reliance on a single producing property.

- Uncertainties relating to acquisitions, including the uncertainty as to whether the Company will complete the proposed acquisition of the Carlota Project and if it does complete such acquisition, whether the Carlota Project can ever be brought into production.

A discussion of these and other factors that may affect Quadra's actual results, performance, achievements or financial position is contained in the filings by Quadra with the Canadian provincial securities regulatory authorities, including Quadra's Annual Information Form. This list is not exhaustive of the factors that may affect our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking statements. Quadra disclaims any intent or obligations to update or revise publicly any forward-looking statements whether as a result of new information, future events or results or otherwise.


Contact Information

  • Quadra Mining Ltd.
    Sophie Taylor
    Manager, Investor Relations
    (604) 689-8550 (local 110)
    www.quadramining.com