Sherwood Copper Corporation
TSX VENTURE : SWC
TSX VENTURE : SWC.DB

Sherwood Copper Corporation

April 30, 2008 07:00 ET

Sherwood Copper Reports Year End Results for 2007

A Year Marked by the Successful Transformation of Sherwood to a Producing Mining Company

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 30, 2008) - Sherwood Copper Corporation (TSX VENTURE:SWC)(TSX VENTURE:SWC.DB) today announced its year-end financial results for 2007. During the year, Sherwood Copper completed its transition from a developer to a producer, with the completion of the Phase 1 construction of its Minto copper-gold mine in the Yukon in May, the commencement of commercial production on October 1 and substantial completion of the Phase 2 mill expansion by year-end. As a result of the Company's accounting policies, all production prior to the commencement of commercial production was capitalized while virtually all production in the fourth quarter, except for 339 dry metric tonnes of concentrate, was not shipped and hence the majority of revenues and related production costs have been deferred into the first quarter of 2008.

"Sherwood and its high grade Minto copper-gold mine passed a series of major milestones in 2007," said Stephen Quin, President & CEO. "Most importantly, construction of the Minto Mine was completed ahead of schedule and on budget, commercial production was achieved and the Phase 2 mill expansion constructed several months early. In parallel with these production milestones, exploration success was converted into a pre-feasibility that supported increased reserves, production and enhanced project economics," he added. "These notable achievements are a credit to the management and staff at Sherwood and the Minto Mine, and the numerous contractors and consultants involved in all stages of the project."

Highlights of 2007

During the year, Sherwood marked a number of notable events and milestones, including the following:

- Completed Phase 1 construction of the Minto Mine ahead of schedule and within 2% of budget;

- Produced first copper concentrates on May 31, with 9.66 million pounds of copper in concentrates produced by year-end;

- Declared commercial production as of October 1, 2007;

- Mined and stockpiled 500,000 tonnes more ore than processed to bring higher grades forward - this material will be processed in future periods;

- Shipped first concentrates (5,938 dry metric tonnes) from the port of Skagway on October 25, 2007;

- Substantial completion of Phase 2 mill expansion to 2,400 tpd by year-end 2007 with commissioning of Phase 2 to full capacity in Q1/2008;

- Reported a 60% increase in project resources following the incorporation of the Area 2 deposit discovered and defined in 2006;

- Completed pre-feasibility study for a 45% Phase 3 increase in mill throughput to 3,500 tpd with added reserves, production and mine life following incorporation of the Area 2 discovery into reserves;

- Completed a 101-hole exploration program, resulting in the discovery of significant new copper-gold mineralization at the Area 118, Ridgetop, Copper Keel, Airstrip and Gap prospects;

- Entered into a long term agreement for the provision of grid power to the Minto Mine, which should provide significant cost reductions in operating costs by the end of 2008;

- Entered into a long-term agreement for the refurbishment and use of the Skagway Ore Terminal for transhipment of Minto concentrates to overseas smelters;

- Made an offer to acquire all of the shares of Western Keltic Mines, owner of the Kutcho copper project, significantly increasing Sherwood's copper resources and providing the potential for a second mining operation through the re-scoping of the Kutcho project;

- Completed a $43.6 million convertible debenture financing, which allowed the acceleration of the completion of the Phase 2 mill expansion by more than six months.

Results of Operations

The Company completed the construction of its Minto mine in the second quarter of 2007 and reached commercial production on October 1, 2007. 12,630 dry metric tonnes of copper concentrate (9,660,656 pounds of contained copper) were produced in 2007, of which 5,938 dry metric tonnes were shipped from the Port of Skagway in October 2007. Since 5,599 dry metric tonnes of this shipment were produced prior to achieving commercial production, the net revenue realized on this tonnage was credited against capitalized pre-production costs. The balance of the shipment, 339 dry metric tonnes, was recorded as revenue during the fourth quarter. The remaining 6,692 dry metric tonnes of concentrate produced in 2007 were held in inventory as at December 31, 2007.

Due to the location of the Minto mine, truck transport of concentrates from the mine site to port is not available for two, eight to ten week periods, beginning in October and in April of each year, since access across the Yukon River in not available due to freeze up and break up. The concentrate produced during these periods is stored at the mine site; total concentrate accumulated at the mine site could reach 15,000 to 20,000 wet metric tonnes. Once access is available, concentrate at the mine is trucked to the Skagway Ore Terminal where it is stored until loaded onto a ship; total concentrate stored at the port could reach 10,000 to 13,000 wet metric tonnes. Since Sherwood's revenue recognition policy requires that title and risk passes to the customer and that the settlement price be reasonably determinable in accordance with the Company's off take agreement, the recognition of revenue in Sherwood's financial statements may vary significantly from quarter to quarter, depending on the timing of moving concentrates from the mine site to the Port of Skagway and then on to ocean vessels.

Financial Results

Sherwood reported a net loss of $44.7 million in the year ended December 31, 2007 compared with a net loss of $21.5 million for the period ended December 31, 2006, primarily as a result of unrealized losses on forward metal sales ($40.8 million) and non-cash cost stock-based compensation ($4.9 million). Prior to October 1, 2007, the Company capitalized or classified as inventory all revenue and costs related to the Minto Project as commercial production had not yet been achieved.

In 2007, Sherwood recorded net revenue of $0.7 million on the sale of 339 dry metric tonnes of copper concentrate in the fourth quarter. Operating costs of $2.9 million were recorded against the net revenue which included a write down of $1.9 million to adjust the 6,692 dry metric tonnes of concentrate inventory held at the end of the period to net realizable value based on December 31, 2007 metal prices. With a first quarter 2008 ship date for this inventory, all revenues and costs associated with this inventory will be realized in the first quarter of 2008. Sherwood expects to realize a significant increase in value for the 6,692 dry metric tonnes of concentrate due to increased metal prices since year-end.

Sherwood's net income or loss may vary significantly for quarter to quarter based on revenue recognition timing, adjustments in inventory values, the mark-to-market of forward metal sales, expenses for stock based compensation and foreign exchange adjustments, all of which are non-cash adjustments that can swing significantly from period to period without any impact on cash or the financial strength of the company. This variability is illustrated by the results for the fourth quarter of 2007, where Sherwood reported net income of $15.0 million compared to a net loss of $20.3 million in the four months ended December 31, 2006 as a result of $20.2 million of unrealized gains on derivative instruments in 2007 compared with an unrealized loss of $18.4 million on derivative instruments in 2006.

Additional details of the financial results for 2007 are available in the financial statements and management discussion and analysis filed on SEDAR at www.sedar.com, while additional information on production results set out in the Company's news release dated April 17, 2008.

Concentrate Shipments

In early March 2008, Sherwood loaded approximately 9,158 dry metric tonnes of concentrate grading approximately 36% copper on the vessel MV Beluga Enterprise (including the 6,692 dry metric tonnes held in inventory at December 31, 2007) and, in early April, an additional 9,849 dry metric tonnes of concentrate grading approximately 39% copper on the vessel MV Sanko Eternal for sale to Japanese smelters. Of these quantities delivered, approximately 79% will be delivered into Sherwood's copper forward sales contracts, while the balance has been or will be sold at spot between the loading date and final settlement date. In addition, these concentrates contain significant gold and silver credits. Forward sales account for approximately 50% of 2008 forecast production providing Sherwood with significant exposure to current high spot prices for copper, gold and silver in 2008.

2008 Outlook

Given that the mill has demonstrated capacity in excess of design, for the balance of 2008 Sherwood aims to average mill throughput in excess of 2,400 tonnes per day in order to achieve its production forecast of approximately 55 million pounds of payable copper and 24,000 oz of payable gold in 2008. This forecast was made without assuming any benefits from on-going optimizations, such as rescheduling the pit sequencing in order to bring production forward, coarsening the grind and implementing the Phase 3 mill expansion, details of which were outlined in the February 25, 2008 announcement.

About Sherwood Copper

Sherwood Copper's current focus is profitable production of base and precious metals from high grade, open pit mines in Canada. Sherwood's first operating mine, the high grade Minto copper-gold mine in Yukon, Canada, was built on budget and ahead of schedule. The Minto Mine is one of the highest-grade open pit copper-gold mines in the world, and is forecast to be a low cost producer. Aggressive exploration on the Minto property has yielded significant success, providing Sherwood the opportunity to 'grow from within' by expanding the resource and reserve base, potentially leading to further production increases. To further accelerate its production growth, Sherwood intends to pursue merger & acquisition opportunities that fit its business model and, in March 2008, Sherwood acquired more than 93% ownership in Western Keltic Mines, owner of the high-grade Kutcho copper-zinc-gold-silver deposit in northwestern British Columbia. Sherwood aims to repeat its successful development of the Minto Mine at the Kutcho project.

Quality Assurance

The technical information in this news release has been prepared in accordance with Canadian regulatory requirements set out in National Instrument 43-101 and reviewed by Stephen P. Quin, P. Geo., President & CEO for Sherwood Copper Corporation. The operational information relating to the Minto Mine in this release have been carried out under the supervision of Randall Thompson, General Manager of the Minto Mine, and Kevin Weston, P.Eng., Chief Operating Officer for Sherwood Copper.

Additional Information

Additional information on Sherwood and its Minto Project can be obtained on Sherwood's website at http://www.sherwoodcopper.com.

On behalf of the board of directors

SHERWOOD COPPER CORPORATION

Stephen P. Quin, President & CEO

This document may contain "forward-looking statements" within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date of this document and the Company does not intend, and does not assume any obligation, to update these forward-looking statements.

Forward-looking statements relate to future events or future performance and reflect management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

Accordingly, readers should not place undue reliance on forward-looking statements.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Sherwood Copper Corporation - Investor Contact
    Stephen P. Quin
    (604) 687-7545
    or
    Sherwood Copper Corporation - Investor Contact
    Brad Kopp
    (604) 687-7545
    (604) 689-5041 (FAX)
    Website: www.sherwoodcopper.com