Vaaldiam Mining Inc.

Vaaldiam Mining Inc.

March 28, 2011 07:30 ET

Vaaldiam Reports 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - March 28, 2011) - Vaaldiam Mining Inc. ('Vaaldiam' or the 'Company') (TSX:VAA) reports that, for the year ended December 31, 2010, it has recorded a net loss of $8,102,000 or $0.12 per share compared to a net loss of $35,369,000 or $0.74 per share in 2009.

Vaaldiam ended the year with a strong cash position of $8.3 million and working capital of $7.6 million. Vaaldiam also holds 10.6 million shares in Flemish Gold Corp. ('Flemish'), which is focused on gold exploration in sub-Saharan Africa, marketable securities valued presently at approximately $2.3 million and royalties on two major exploration and development projects.

Company Highlights

Braúna Bulk Sampling

A National Instrument 43-101 ("NI 43-101") report, completed at the end of December 2010, provided estimates of Indicated Resources at Braúna 3 to a depth of approximately 40 metres of 0.63 million tonnes at a grade of 24.58 carats per hundred tonnes ("cpht") in the south lobe and 0.67 million tonnes at a grade of 4.72 cpht in the north lobe of the kimberlite. Inferred Resources to a depth of approximately 200 metres are estimated to contain 3.75 million tonnes at a grade of 24.58 cpht in the south lobe and 1.04 million tonnes at a grade of 4.72 cpht in the north lobe. The diamonds from the north and south lobes were valued at US$98 per carat ("ct") and US$339 per ct, respectively, using the average estimated sales price of two independent diamond valuations. A Preliminary Economic Assessment was commissioned at the end of December 2010 and the results are expected to be completed by April 30, 2011.

On March 4, 2011, Vaaldiam entered into an arrangement with the joint venture partners of the Braúna project to restructure the existing arrangement and to increase the ownership interest of the Company in the Braúna project from 20% to 51% by paying a transaction consideration of US$6.5 million to the existing partners and financing the project development cost to production. Vaaldiam is the operator for the project and will advance the project by additional exploration work in 2011, with a full feasibility study expected to follow.

Duas Barras Mine

Pre-production at the Duas Barras mine commenced in the third quarter of 2010, focusing on pre-stripping and plant commissioning. During 2010, 56,179 bank cubic metres ("bcm") of new gravel was mined and blended with 38,243 bcm of stockpiled gravel for a total run-of-mill feed of 78,475 bcm of gravel and a gravel stockpile as at December 31, 2010 of 15,947 bcm. A total of 8,804 carats ("cts") of diamonds were recovered during 2010 at an average grade of 0.11 cts per bcm (8,161 cts in the 4th quarter at an average grade of 0.15 cts per bcm) versus an average resource grade of 0.16 cts per bcm. In addition, 4,696 g or 150 troy ounces of gold were produced during 2010, at an average grade of 0.05 g per bcm versus an average resource grade of 0.18 g per bcm. With the higher than expected level of stripping and operating costs, and the lower than expected grades of diamond and gold experienced in the pre-production period, the Company reviewed the Duas Barras project for impairment and recorded a $4.7 million impairment loss at December 31, 2010. Management continues to monitor Duas Barras closely and will consider and evaluate any necessary action required to improve the diamond and gold grades.

Other transactions

On July 30, 2010, the Company closed the sale to Base Resources Limited (ASX:BSE) ("BRL", previously Base Iron Limited) whereby BRL would acquire the Kwale Mineral Sands Project ('Kwale'), all the intellectual property associated with Vaaldiam's mineral sands projects in Africa and an option to acquire 100% of Tiomin Kenya Limited ('TKL') for US$3 million in cash on closing and a cash royalty of 1.5% of all product revenue from Kwale.

In the first quarter of 2010, Vaaldiam sold its 49% contributing equity interest in the Pukaqaqa copper-gold project in Peru to Compañía Minera Milpo S.A.A. ("Milpo") for US$7 million in cash. Vaaldiam will also receive US$4 million if the project begins commercial production, a second payment of US$4 million one year later and a variable Net Smelter Return royalty ("NSR"). The NSR is 1% on all mineral production if the quarterly LME copper price averages US$3/lb or less and 2% above US$3/lb.

Vaaldiam continues to pursue its strategy of using cash flow from disposing of non-core assets to sustain itself and to advance its high-potential hard rock diamond and gold properties in Brazil. It is well-positioned to exploit the strengthening market for rough diamonds.

Selected Financial Information
(Expressed in thousands of Canadian dollars, except share capital amounts):
  December 31, 2010 December 31, 2009
Net loss for the year 8,102 35,369
Loss per share 0.12 0.74
Total assets 25,452 22,719
Working capital 7,619 17,736
Mineral properties 4,691 -
Share Capital:    
  Common shares (000s) 71,627 48,226
  Warrants (000s) 6,094 10,329
  Options (000s) 4,807 4,245

Cash Flow and Liquidity

As at December 31, 2010, Vaaldiam had working capital of $7.6 million, compared with $17.7 million at December 31, 2009. For the year ended December 31, 2010, Vaaldiam generated cash of $7.1 million, which included proceeds of $7.3 million from the sale of the Company's interest in Pukaqaqa project in Peru, proceeds of $3.1 million on the sale of the Kwale project and proceeds of $10.0 million on the maturity of a short-term investment. This was offset by cash used in operating activities of $9.6 million, plant and equipment additions of $0.7 million, deferred pre-production costs of $1.4 million and $0.7 million for the acquisition of Vaaldiam Resources Ltd.

The information above should be reviewed in conjunction with the Company's consolidated financial statements and management discussion and analysis for the year ended December 31, 2010 that will be available shortly on and

Certain of the information contained in this news release constitutes 'forward-looking statements' within the meaning of securities laws. Such forward-looking statements, including but not limited to those with respect to the prices of metals and minerals, purchase payments, royalty payments, estimated future production and estimated costs of future production involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any forecast results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual prices of metals and minerals, the actual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the documents of the Company filed from time to time with the Ontario Securities Commission.

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