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| | Wed Jul 30, 2008
ROCA Reports Third Quarter Results
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| | Vancouver, British Columbia: Roca Mines Inc. (ROK: TSX-V) ("Roca" or "the Company") has released its financial results for the third quarter of 2008, including production and sales from the MAX Molybdenum mine located in British Columbia, Canada. All dollar amounts are stated in Canadian dollars unless otherwise indicated.
Overview and highlights:
- Revenues of $6.3 million since declaring commercial production as of April 12, 2008;
- The average price for molybdenum sales in the quarter was US$32.82 per pound;
- The Company reported its first operating profit of $1.5 million or 2 cents per share;
- The Company reported cash flows from operations of $2.2 million or 3 cents per share;
- Molybdenum production during the quarter was 345,571 pounds compared with 261,462 pounds for the three months ended Feb 29, 2008; and,
- Molybdenum cash costs for the quarter were approximately $7.75 per pound of molybdenum.
MAX Molybdenum Mine - Production Results and Concentrate Sales
During the quarter, the Company produced and sold 345,571 pounds of molybdenum contained in concentrates. The value of the molybdenum in concentrates sold equaled $11.3 million based on an average molybdenum price received of US$32.82 per pound. Revenues of $6.3 million for the quarter resulted from sales which occurred after the commencement of commercial production on April 12, 2008. Concentrate inventory at May 31, 2008, was 24,729 pounds of molybdenum contained. The Company sells its concentrates to a UK-based buyer with sales revenues based on prevailing molybdenum oxide prices.
The table below is a summary of the operating statistics for the three months ended May 31, 2008:
MAX Molybdenum Mine Q3 - 2008
Month MAR-08 APR-08 MAY-08
Molybdenum Produced (lbs) (1) 69,825 125,243 150,502
Average Head Grade (% Mo) 0.333 0.712 0.732
Molybdenum Recovery (%) 89.9 93.8 94.3
Mill Availability (%) 79 74 82
Average Daily Throughput (tpd) 348 300 335
Notes: (1) molybdenum in concentrate
Third Quarter 2008 Summary
The Company announced on April 12, 2008 that it had achieved commercial production at its MAX Molybdenum Mine located in British Columbia, Canada. The MAX Mine was constructed over an 18-month fast-tracked timeframe, with a capital cost for the Phase I mine of approximately C$50 million. The mine became British Columbia's first new metal mine in a decade and the newest primary molybdenum mine in Canada.
Production during the Phase I commissioning process was facilitated utilizing stockpiled development material to run mill tests and optimize circuits. During the quarter, Phase II development of a second access adit, engineering for a third ball mill and other expansion activities were carried out. Also during the quarter, the delivery and processing of ore directly from mine stopes to the mill commenced. After review of operations it is clear that the number of tonnes mined was greater than planned and resulting head grades from those stopes was lower than anticipated due to mine dilution. Mine dilution occurs as a result of mixing higher grade material with lower grade rock and can occur for a number of reasons. Lack of previous exposure in the high-grade zone and inexperience with geological controls on mineralization in general are believed to have caused the lower overall head grades to the mill.
Opportunities to run continuous milling operations were also hampered due to availability and unscheduled maintenance of on-site generator sets. These primary power sources impacted production capacity and the number of pounds of concentrate produced for the quarter.
At various times and for sustained periods, the mine and mill have operated well and achieved their targeted production rates. Grade control and power generation issues at the site, which have recently been resolved, have had a prolonged impact and effect into the months of June and July 2008. The resulting down time, reduced production capacity and lesser grades than planned, occurring in each month of the quarter have caused targeted production rates to be missed.
Since the end of the third quarter grade control has improved with the implementation of a grade control program. The redesign of longhole blasting in stopes and overall improvements in stope layout and procedures makes the mining operation much less susceptible to mine dilution. However, some of these improvements were not realized until after the reporting period and their beneficial effects may not be delivered until August 2008.
Mine/Mill Expansion
During the quarter, the Company completed development of the #2 Adit with work now underway to establish an upgraded ventilation system for the Phase II mine.
The Company is currently completing the foundations on a mill base for a third ball mill acquired in 2007. The installation of this mill will allow for greater production flexibility and will provide for a nominal capacity of 1,000 tonnes per day. The new equipment is to be commissioned by the fall of 2008. A concentrate drying system has also been installed to control moisture content in the molybdenite concentrates to levels consistent with the minimum specification for the product.
Subsequent events
Production
In early July 2008 both the mine and the mill were operating at target production rates for a prolonged period demonstrating capacity and grade as planned. Later in July however, activities occurring in the mine prevented attaining the planned production rate of 500 tpd. As a result of that, head grades to the mill were also lower than expected because of blending dilution that was taking place at the mill. Blending was being carried out with lower grade material such that milling operations could proceed at mill capacity. The underground activities included excess freshet drainage into the adits causing sediment control challenges in mine water effluent and overall mine ventilation challenges. Both of these are currently being remedied and significant improvement is anticipated in early August 2008. Recorded head grades in June and July 2008 are therefore unrelated to actual stope grades during certain periods in those months. Production of molybdenum in June and July 2008 was 112,555 pounds and 126,326 pounds respectively.
Exploration
Final results from the Company's 2007 underground drilling program at MAX were received and confirmed additional molybdenite mineralization is present at depth and that a previously undiscovered feeder zone may be present.
The Company also completed initial drill programs on separate molybdenum and tungsten targets located on the MAX property. The Ridge Tungsten Zone appears to have significant potential for a large-scale tungsten resource and planning is underway to expand on this work.
The Company is also conducting prospecting, mapping and ground geophysical programs at its Foremore Project in northwestern British Columbia. Foremore has several copper, lead, zinc, gold and silver targets, and has been the focus of much past work by the Company. A diamond drilling program is planned for the project in August 2008.
Financial results
The information in this news release and the selected financial information should be read in conjunction with the interim consolidated financial statements, and management discussion and analysis, for the three and nine month periods ended May 31, 2008, which will be available at ROCA's website at www.rocamines.com.
Consolidated Statements of Operations
Three months ended May 31, 2008
Total Revenues $6,275,767
Total (cost) of sales ($4,389,104)
Operating Profit $1,886,663
General and Administrative and other expenses $270,971
Other items (loss) ($98,846)
Earnings for Period $1,516,846
Earnings per share -- Basic and Diluted $0.02
ROCA MINES INC.
"Scott Broughton"
Scott E. Broughton, P.Eng. -- President & CEO
For further information contact:
Doug Fosbrooke
Investor Relations
Tel: 604-684-2900
Fax: 604-684-2902
Email: [email protected]
Web: www.rocamines.com
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. |
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