Sirocco Mining Inc.
TSX VENTURE : SIM

Sirocco Mining Inc.

April 03, 2012 08:30 ET

Sirocco Releases 2011 Financials

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 3, 2012) - Sirocco Mining Inc. (TSX VENTURE:SIM) ("Sirocco" or "the Company") is pleased to report financial and operating results for the year ended December 31, 2011. The 2011 consolidated financial statements together with Management's Discussion and Analysis will be available on the Company's web site (www.siroccomining.com) and on SEDAR (www.sedar.com).

2011 was a year of change for the Company, culminating in the appointment of a new Management Team on October 24, 2011. The new team includes the entire senior management team of Red Back Mining Inc. Since the management change, a number of significant events have occurred:

  • At Aguas Blancas, major alterations have been made to the crushing and screening sections of the agitated leach plant ("ALP"). These have resulted in a successful commissioning of the ALP in the first quarter of 2012.
  • A private placement equity financing resulting in the issuance of 50 million subscription receipts at an issue price of $1.20 for gross proceeds of $60 million was closed on December 20, 2011. The proceeds were released from escrow to the Company and common shares issued on January 23, 2012.
  • The Company changed its name to "Sirocco Mining Inc." on January 24, 2012.
  • Concurrent with the appointment of the Management Team, the Company completed the acquisition of Sirocco Gold Inc., a private company formally controlled by the Management Team, with early-stage exploration projects in Africa.
  • A detailed review of the carrying value of the Company's assets was undertaken in connection with the preparation of the annual financial statements.

Financial Results

The tables below summarize key financial and operating results of the Company for the last quarter and the year.

Three Months Ended
December 31,
2011
Three Months Ended
December 31,
2010
Year Ended
December 31,
2011
Year Ended
December 31,
2010
Tonnes Mined (000's t) 1,311 1,033 4,488 3,804
Iodine Grade (ppm) 586 570 581 623
Iodine Produced (t) 277 345 1,122 1,256
Iodine Sold (t) 260 325 1,134 1,244

Iodine production for 2011 included a minimal amount of production from the ALP. The majority of forecast production growth in 2012 will come from the recently commissioned ALP. It is expected that heap leach production will remain at similar levels to 2011.

Increased iodine prices during the year contributed to 33% higher revenues in 2011. Iodine prices averaged $40 per kilogram in 2011 compared to $27 in 2010. Higher revenues were partially offset by increased production costs as the Company experienced higher power, personnel and camp costs in the year.

Iodine prices are expected to remain robust for 2012 and the Company will continue to focus on unit cost reduction.

A number of material non-recurring charges were recorded in Q4 2011 as a result of an operational and financial review undertaken by the Management Team and the accounting treatment of the acquisition of Sirocco Gold Inc. These are detailed in Management's Discussion and Analysis and summarized below:

  • Stock-based compensation of $18.2 million recognized as a result of the appointment of the Management Team;
  • Capital asset write-off of $6.5 million relating to obsolete portions of the ALP, following a review of the ALP in the last quarter of the year; and
  • Commissioning costs of $1.0 million for the transition from contractor to owner-mining.
Year ended
December 31,
2011
Year ended
December 31,
2010
Year ended
December 31,
2009
Statement of Operations Data (000's)
Total Revenue $ 45,076 $ 33,989 $ 29,426
Net Income (loss) $ (24,312) $ (2,380) $ 2,867
Data per Common Share
Basic Income (Loss) per share $ (0.15) $ (0.01) $ 0.02
Diluted Income (Loss) per share $ (0.15) $ (0.01) $ 0.02
Balance Sheet Data (000's)
Total Assets $ 127,689 $ 112,246 $ 136,561
Long Term Liabilities $ 10,861 $ 5,048 $ 11,601
* The comparative numbers for the year ended December 31, 2009 have been presented under Canadian Generally Accepted Accounting Principles before implementation of IFRS

A conference call to discuss the financial and operating results will be held at 8am PST on Tuesday April 3, 2012. Participants should dial in on 1 888 340 9642 or 416 340 8527 and follow the prompts. A replay of the call will be available until midnight on April 17, 2012 by dialing 905 694 9451 or 1 800 408 3053, passcode 3210496.

Strong Financial Position

The Company stands at 31 December 2011 with a strong balance sheet that includes $22.2 million in cash. The net proceeds of the $60 million private placement financing were received by the Company on January 23, 2012 further increasing the cash and working capital position of Sirocco.

Outlook for 2012

At Aguas Blancas, we continue to optimise the mine operations with the objective of maximising production from available water sources. Through a combination of heap leaching and the ALP processing, production is expected to increase to between 1,350 and 1,450 tonnes of iodine, a projected 25% increase from 2011, at a cash operating cost of $30 - $35 per kilogram.

Following the appointment of the Management Team, the ALP was taken off line to carry out alterations to the crushing and screening sections of the plant. These alterations have increased the plant availability to near 90%, at 50% throughput. Phase II of the ALP modifications will focus on expanding the screen area and increasing residence time. These modifications are scheduled to be completed in early Q1 2013.

As part of an exploration budget of $750,000, the Company is targeting the conversion of inferred resources at Aguas Blancas to the measured and indicated categories.

Exploration is ongoing at the Company's projects in Mauritania and Cote D'Ivoire. Total exploration on these projects is expected to be in the $5.0 million range.

Corporately, M&A opportunities in both Africa and South America continue to be evaluated and assessed.

About the Company

Sirocco Mining Inc. is a Canadian company which produces iodine from its Aguas Blancas mine in northern Chile. In addition, the Company has exploration interests in Brazil and West Africa and is actively assessing other opportunities in the resource sector.

Cautionary Statements

This news release contains forward-looking statements concerning the Company's plans for its business and properties. These forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to political risks involving the Company's exploration and development of its properties, the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, the inability or failure to obtain adequate financing on a timely basis and other risks and uncertainties, including those described in the Company's periodic filings with the British Columbia Securities 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, except as required by law, and disclaims any legal liability to the contrary.

On behalf of the Board,

Lukas Lundin, Chairman

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

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