URSA Major Minerals Incorporated
TSX : UMJ

URSA Major Minerals Incorporated

April 25, 2011 18:05 ET

URSA Major Minerals Reports Operational Profit of $2.4 million at Shakespeare Mine, Sudbury, Ontario for the Year Ended January 31, 2011

TORONTO, ONTARIO--(Marketwire - April 25, 2011) -

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URSA Major Minerals Incorporated ("URSA Major" or the "Company") (TSX:UMJ) announces its financial and operating results for the year ended January 31, 2011. The Company is pleased to announce that the Shakespeare Nickel-Copper Mine achieved an operational profit on mining activities of $2,388,738, in the first year of commercial production.

Financial and Operating Highlights for the Year

  • For the year ended January 31, 2011, the Company recorded gross revenue of $14,866,306 on the sale of metals from the Shakespeare Mine, located 70 km west of Sudbury, Ontario. This revenue reflects three quarters of commercial production. Prior to May 27, 2010, the mine was in the pre- production mining stage.
  • The Company reported an operating profit on mining activities of $2,388,738, net income of $667,998, and comprehensive income of $700,498, for the year ended January 31, 2011.
  • The quarter ended January 31, 2011, was the third quarter of commercial production at the Shakespeare Nickel Mine. During the quarter, the Company recorded gross revenue of $5,991,995, from the sale of metals, and net income of $455,764.
  • During the nine months of production ending January 31, 2011, the Company delivered a total of 166,913 tonnes of ore to the Strathcona Mill at a grade of 0.357% nickel, 0.407% copper, 0.025% cobalt, 0.373 g/t platinum, 0.409 g/t palladium, 0.207 g/t gold and 2.328 g/t silver.
  • For the quarter ended January 31, 2011, the Company delivered 63,864 tonnes of ore to the Strathcona mill at a grade of 0.338% nickel, 0.400% copper, 0.027% cobalt, 0.365 g/t platinum, 0.391 g/t palladium, 0.191 g/t gold and 2.269 g/t silver.
  • In November 2010, the Company completed 2,582 meters of exploration drilling at the Nickel Offsets Property and announced an intersection of 2.89 meters of nickel-rich massive sulphides grading 2.90% nickel, 0.97% copper, 0.16% cobalt, 0.94 g/t platinum, 1.28 g/t palladium, and 0.11 g/t gold. This hole intersected an additional 2.0 meters of precious metal mineralization grading 3.04 g/t platinum, 2.00 g/t palladium, 0.82 g/t gold, with 0.07% nickel and 0.37% copper in disseminated sulphides in the footwall of the nickel-rich massive sulphide. This exploration has defined additional drilling targets on the property.
  • In November 2010, the Company completed an airborne magnetic and time domain electromagnetic survey of the Disraeli Lake areas north of Thunder Bay, Ontario.
  • In December 2010, the Company resumed drilling at the Shakespeare East Deposit, with the objective of increasing resources of the Shakespeare deposit. The drill holes will test for nickel- copper-platinum group metals mineralization up to 400 metres east of, and down-plunge from, the previous sulphide mineralized drill intersections reported in 2008.
  • In February 2010 and April 2010, the Company closed a non-brokered private placement financing for $1,219,640, to fund the restart of operations at the Shakespeare Mine and to fund exploration. In January 2011, URSA Major closed a brokered private placement financing for $2,471,820, to finance an accelerated exploration program and for working capital purposes.
  • In February 2010, the Company arranged a US$2.5 million credit facility with Auramet Trading, LLC to finance the Company's metal inventory and receivables associated with ore produced from the Shakespeare Mine. The credit facility is secured by in-process metal and receivables and also provides for hedging of base metal prices between ore milling and final metals out-turn.
  • For the year ended January 31, 2011, the Company achieved a strengthened balance sheet with current assets of $5,001,774, and current liabilities of $2,186,720.
  • During the year, the Company appointed Jean-Pierre Colin to the board of directors, Eric Loch was appointed as Vice President Mine Operations and Projects, Vic Hugo, CMA, as Financial Controller and Interim CFO, Douglas Bache was engaged as Executive Advisor-Corporate Development and Alison Tullis appointed as Investor Relations Manager.

The quarterly financial statements and related Management Discussion and Analysis will be filed on SEDAR (www.sedar.com). Additionally, these documents are available on URSA Major's website at www.ursamajorminerals.com . All amounts are in Canadian dollars unless otherwise indicated.

Richard Sutcliffe, URSA Major's CEO commented, "We are extremely pleased to report a profitable year of operations at the Shakespeare Mine, a significantly strengthened balance sheet, and an expanded exploration program. Our objective is to build URSA Major through a combination of successful exploration, expanding production, and project acquisition."

Outlook

To January 31, 2012, the end of the Company's next fiscal year, URSA Major anticipates the production and delivery of approximately 199,000 tonnes of ore grading 0.373% nickel, 0.419% copper, 0.027% cobalt, 0.397 g/t platinum, 0.420 g/t palladium, 0.252 g/t gold (plus silver equivalent); from the Shakespeare Mine. Revenues from metal sales for the fiscal year ended January 31, 2012, are forecast to be CDN$18.2 million and were calculated using an exchange rate at par and metal prices quoted in US dollars as follows; nickel $11.00/lb, copper $4.00/lb, cobalt $17.00/lb, platinum $1,700/oz, palladium $700/oz and gold $1,350/oz. Metal prices are management's estimate of average metal prices for the fiscal year and are based on analyst consensus forecasts for the same period. The processing rates for milling, treatment and refining charges were established under contract with Xstrata Nickel in December 2006.

Total contained nickel and copper in ore are expected to be 1.6 million pounds and 1.8 million pounds, respectively, in fiscal 2012. Contained metals are subject to mill and smelter recoveries. Total production cost for fiscal 2012 is forecast to be CDN$43.65 per tonne of ore. Fiscal 2012 total production costs are forecast to increase over the previous fiscal year as a result of higher fuel costs and an increase in waste rock removal. After taking into account the cost of drilling and blasting, mucking and crushing, and haulage to the mill, net revenue for fiscal 2012 is forecasted at CDN$12.23 per tonne of ore. Gross operating margin for fiscal 2012 is forecast at $2.4 million.

Trucking operations were temporarily suspended on March 15, 2011, due to the spring season half-load trucking restriction. This restriction is an annual event and is taken into consideration in the annual operating plan for the Shakespeare Mine. Trucking resumes when the spring load restriction is removed by the Municipality of Sudbury, which typically occurs in late May. As a consequence of the half load trucking restriction, the Company's revenue is reduced in the first half of the fiscal year.

The Company's revenues are derived from base and precious metals and the Company receives prices for the metals that are determined by global market conditions. The Company anticipates that demand for base and precious metals will likely remain robust for the first half of 2011. Nickel in particular is a very volatile in price and to reduce revenue risks associated with nickel price volatility, the Company has a facility with Auramet Trading to hedge the price of base metals between the time of ore delivery and final metals out-turn.

The Company's custom milling agreement with Xstrata Nickel expires on December 31, 2011, and the Company is currently in discussions to extend this agreement.

In 2010, the Company began using a portion of its cash flow from mining operations to fund part of its exploration program. The Company intends to continue this strategy in 2011. In January 2011, the Company completed a private placement financing of which part of the proceeds are being used to accelerate and expand the drilling campaign. In addition, and in accordance with the Company's strategic plan, management is evaluating further opportunities for base metal property acquisition, particularly for copper, nickel and PGM-rich deposits.

URSA Major has initiated a 7,000 metre drilling program at the Shakespeare East Deposit consisting of both infill and step out drilling (see press release dated February 10, 2011). The intent is to update the resource estimate beneath the Shakespeare East Deposit, and to assess the economics of underground mining operations, with the Company's own mill onsite. P&E Mining Consultants Inc. has been engaged to produce a technical report on the updated resource estimate and economic analysis. The work program will take approximately four months to complete.

The Company is encouraged by results from the 2010 program at the Nickel Offsets option and anticipates that it will continue to drill targets on this property in the first half of 2011. The results of 2010 drilling and the geophysical surveys are being compiled into a 3-dimensional model to generate targets for the next round of drilling. The Company plans to complete a five hole, 2,500 meter program with further bore-hole EM surveys at Nickel Offsets over the next six months.

URSA Major has also recently completed two drill holes to test magnetic and time domain electromagnetic anomalies defined by the airborne survey of the Disraeli lake area, north of Thunder Bay, Ontario that was completed in 2010 and is awaiting assays. The Company anticipates conducting further geological mapping and prospecting on this property in 2011. This property is interpreted to be a similar geological environment to Magma Metals' property that contains the Current Lake platinum group metal discovery.

The Company has completed a full positive feasibility study at Shakespeare that evaluated an open pit mine and 4,500 tpd on site concentrator. The execution of this project remains a baseline strategy for the Company and it continues to be evaluated at the management and board levels. URSA Major has retained Raymond James Ltd. ("Raymond James") as its strategic advisor. Raymond James will assist the Company in evaluating strategic merger and acquisition opportunities. In connection with the Company's plan to expand the Shakespeare Mine and construct an on-site concentrator, Raymond James will assist with evaluating development options and financing alternatives.

About URSA Major Minerals - URSA Major is a Canadian mining company with two nickel sulphide projects containing significant NI43-101 compliant nickel and copper reserves and resources. The Company is focused on demonstrating profitable operations at the Shakespeare Mine and growing its nickel, copper and platinum group metal (PGM) deposits through exploration and development, primarily in Ontario, Canada.

Some statements contained in this release are forward-looking and, therefore, involve uncertainties or risks that could cause actual results to differ materially. Such forward-looking statements include comments regarding mining and milling operations, mineral resource statements and exploration program performance. Factors that could cause actual results to differ materially include metal price volatility, economic and political events affecting metal supply and demand, fluctuations in mineralization grade, geological, technical, mining or processing problems, exploration programs and future results of exploration programs, future profitability and production.

This release was prepared by management of the Company who takes full responsibility for its contents. The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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