Rusoro Mining Limited
TSX VENTURE : RML

Rusoro Mining Limited

April 18, 2011 08:01 ET

Rusoro Mining Reports Its 2010 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 18, 2011) - Rusoro Mining Ltd. ("Rusoro" or the "Company") (TSX VENTURE:RML) is pleased to report its financial results for the year ended December 31, 2010. The Company's audited consolidated financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2010 have been filed on SEDAR (www.sedar.com).

All amounts set out in the Company's consolidated financial statements are audited and in United States dollars ("USD"), unless otherwise stated.

The following is a synopsis of the year ended December 31, 2010 and related information. For detailed information regarding Rusoro's 2010 year-end, please refer to the audited consolidated financial statements and related MD&A which have been filed on SEDAR at www.sedar.com and can be found on the Company's website at www.rusoro.com.

The Company's highlights for 2010 were:

  • Average realized gold price per ounce sold of $965 (2009: $696) and cash cost per ounce sold of $739 (2009: $338). The higher average realized gold price is a result of a higher international spot price per ounce of gold during 2010. The higher cash cost per ounce sold is mainly due to the increase in labour costs resulting from the Venezuelan inflation rate, lower ore grade, and the change in the rate used to translate transactions and balances to US Dollars (see "Consolidated Results of Operations" section of the MD&A).
  • Gold production of 101,183 ounces of finished gold (doré form) (2010 guidance: 110,000 ounces) (2009: 150,460 ounces) and gold sold of 148,928 ounces (2009: 104,036 ounces).
  • Completion of a pre-feasibility study and National Instrument 43-101 ("NI 43-101") technical report on the San Rafael El Placer ("SREP") project, including completion of a mine plan for the existing indicated resources resulting in a probable reserve of 1,157,000 tonnes grading 10.1 g/t gold (375,700 ounces). The results were reported in a news release dated May 11, 2010; the news release, technical report and pre-feasibility study titled, Bried, B., M. Cullen, G. Hawthorn, and S. Januszewski, 2010; Preliminary Feasibility Study NI43-101 Technical Report on the San Rafael and El Placer Deposits, State of Bolivar, Venezuela. By Whillans Mines Studies Ltd. Report for Rusoro Mining Ltd. May 7, 2010, are available on www.sedar.com.
  • Repayment of $30 million principal of the convertible loan and refinancing of the remaining $30 million principal portion until June 2011.
  • In July 2010 an updated resource estimate ("the Updated Estimate") prepared by Micon International Limited was released for the Choco Mine resulting in a 78% increase in measured and indicated resources to 8.3 million ounces of gold (139.9 million tonnes grading 1.85 g/t) with an additional 2.8 million ounces of gold inferred (59.2 million tonnes grading 1.48 g/t). The results were reported in a news release dated July 6, 2010 and the technical information on the Updated Estimate is detailed in a NI 43-101 compliant technical report titled "Technical Report on the Mineral Resources of the Choco 10 Deposits, Bolivar State, Venezuela" dated August 18, 2010, both of which are available on www.sedar.com.
  • Central Bank of Venezuela ("CBV") Resolution No. 10-07-01 and an updated Exchange Agreement No. 12 became effective August 12, 2010. The resolution increases the portion of the Company's gold production that can be exported and the updated exchange agreement provides greater flexibility to the Company's use of proceeds from exports. Further details on this resolution and the updated exchange agreement are provided in the "Venezuelan Currency Exchange and Gold Sales" section of this MD&A.
  • The Ministry of the People's Power for the Environment ("MinAmb") issued the authorization to affect natural resources for the Company's Increible 6 gold project. The granting of the permit was the final step in the permitting process toward the commencement of mining activities at Increible 6, which is located 6km from the Company's mill at the Choco Mine ("the Choco Mine Mill").
  • During the three months ended December 31, 2010 ("Q4 2010") the Company exported 4,924 ounces of finished gold at the international spot price per ounce, less associated costs and commissions.

The Company's highlights subsequent to 2010 were:

  • During the three months ended March 31, 2011 (Q1 2011), the Company exported 11,817 ounces of finished gold at the international spot price per ounce, less associated costs and commissions.

Results for 2010

  • Effective May 17, 2010, the Venezuelan government enacted a law that effectively closed the swap market which eliminated the implicit exchange rate previously used to translate transactions and balances. As a result of this change, translation of transactions and balances into US Dollars are done using the official rate of BsF 4.30/$1.00 which significantly increased the US Dollar revenues, costs, expenses, and balance sheet amounts ("the Change in Translation Rate") (see "Venezuela Currency Exchange and Gold Sales" section in the MD&A).
  • Revenue increased to $143.7 million (148,928 ounces sold) in 2010 from $72.4 million (104,036 ounces sold) in 2009 due to having sold more gold in 2010 compared to 2009, the increase in the average international spot price of gold to $1,225 during 2010 from $972 during 2009, and due to the Change in Translation Rate. Ounces sold increased as the Company sold a substantial portion of its 2009 finished gold production in 2010.
  • During 2010 the Company recorded a net loss of $86.8 million compared to a net loss of $15.3 million during 2009, which increased significantly as a result of an unrealized foreign exchange loss originated by the Change in Translation Rate.
  • Mining operating expenses and mining amortization increased to $111.5 million and $21.4 million respectively in 2010 from $39.4 million and $10.2 million in 2009. This cost increase is primarily due to having sold more gold in 2010 compared to 2009 and the Change in Translation Rate. Operational factors impacting the amount of tonnes mined and processed and grade as discussed below in the Choco Mine and Isidora Mine results also negatively impacted production costs in 2010.
  • General and administrative expenses remained consistent at $9.2 million in 2010 compared to $9.4 million in 2009.
  • Stock-based compensation decreased to $1.4 million in 2010 from $6.8 million in 2009 due to the issuance and vesting of stock-options with significantly lower values than those issued in 2009.
  • Interest on the Company's convertible loan decreased to $8.0 million in 2010 from $13.0 million in 2009 due to the partial retirement of the convertible loan.
  • Foreign exchange loss was $100.8 million in 2010 compared to a foreign exchange gain of $1.1 million in 2009, due significantly to the effect of the Change in Translation Rate on the Company's future income tax liability and the resulting unrealized foreign exchange loss.
  • Income tax recovery increased to $22.9 million in 2010 from $1.0 million in 2009 due to declining results at the Choco Mine and the Isidora Mine and due to the Change in Translation Rate.

Operating Performance

The following table summarizes summarizes key operating statistics for 100% of the Choco Mine and 50% of the Isidora Mine:

12 Months Ended December 31,
2010
12 Months Ended December 31,
2009
ChocoIsidoraTotalChocoIsidoraTotal
Ore tonnes mined ('000 t)1,790271,8172,374312,405
Ore tonnes milled ('000 t)1,833251,8582,056352,091
Average grade (g/t)1.6216.711.821.9724.632.35
Average recovery rate (%)929092909090
Gold produced (ounces)90,08711,096101,183125,71424,746150,460
Gold sold (ounces)130,89018,038148,92885,05718,979104,036
Total mining operating expenses $(000)92,27719,238111,51528,24611,14439,390
asset retirement obligations accretion $(000)(540)(266)(806)(314)(266)(580)
impairment of inventories $(000)-(605)(605)---
fair value differential of inventory acquired $(000) (1)----(3,603)(3,603)
Total cash costs $(000)(2)91,73718,367110,10427,9327,27535,207
Total cash costs per ounce sold $(3)7011,018739328383338
Average spot gold price per ounce $n/an/a1,225n/an/a972
Average realized gold price per ounce sold $9491,081965698683696

The following notes are applicable to the above tables:

  1. In calculating cash costs per ounce sold for 2009 the Company has excluded the difference between the book value and fair value of inventory acquired at the date of acquisition of the 50% interest in the Isidora Mine.
  2. Total cash costs used in the calculation of cash costs per ounce is calculated as mining operating expenses from the consolidated statement of operations excluding accretion expense related to the asset retirement obligations and expense of the fair value differential between the book value and fair value of inventory acquired at the date of acquisition of the 50% interest in the Isidora Mine.
  3. Cash costs per ounce sold is a non-GAAP measure. Total cash costs per ounce sold as shown above is calculated by dividing the total cash costs by the gold ounces sold during the period. Cash costs per ounce sold includes all expenditures related to the mine such as mining, processing, administration, royalties and production taxes but excludes reclamation, capital and exploration expenditures, impairments of inventories, and the fair value differential between the book value and fair value of inventory acquired at the date of acquisition of the 50% interest in the Isidora Mine.

Outlook

During 2011, the Company expects to produce 120,000 ounces of gold from the Choco Mine and its 50% interest in the Isidora Mine. Total cash costs per ounce sold for 2011 are expected to be $830 per ounce as discussed in the Outlook section of the MD&A. Cash costs per ounce sold for 2011 are expected to decrease from 2010 due to factors described in the Outlook section of the MD&A.

Qualified person

Mr. Gregory Smith, P.Geo., the Vice-President of Exploration of the Company, is a "qualified Person" as defined in NI 43-101, and is responsible for the accuracy of the scientific and technical information contained within this news release.

Cautionary non-GAAP measures

Total cash costs per ounce sold is a non-GAAP measure. The Company believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use the cash costs per ounce data to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP as it does not have any standardized meaning prescribed by GAAP. Data used in the calculation of total cash costs per ounce may not conform to other similarly titled measures provided by other precious metals companies.

ON BEHALF OF THE BOARD

Andre Agapov, President & CEO

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company's capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."

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