Sirocco Reports Results for Q3 2012
VANCOUVER, BRITISH COLUMBIA, Nov 09, 2012 (Menafn - MARKETWIRE via COMTEX) --Sirocco Mining Inc. ("Sirocco" or "the Company") ispleased to report financial and operating results for the quarterended September 30, 2012. The consolidated financial statementstogether with Management's Discussion and Analysis will be availableon the Company's web site (www.siroccomining.com) and on SEDAR(www.sedar.com).
In Q3 2012, the Company continued to improve its performance over2011 with strong production along with solid financial results.
Highlights of the quarter include:
--Iodine production of 259 tonnes (year-to-date:941 tonnes)
--Average realized iodine prices of 63 per kilogram (year-to-date:62)
--Gross profit of 4.3 million (year-to-date:20.2 million)
--Cash flow from operations of 1.9 million (year-to-date:15.7 million)
--Bank debt reduction of 2.6 million (year-to-date:8.3 million)
Positive pre-feasibility studies for the production of nitrates andsulphates were received near the end of the third quarter. Thesestudies have indicated the potential to produce up to 90,000 tonnesper annum of sodium nitrate from the existing water supply andcurrent brine concentrations at an estimated production cost of 175tonne and an estimated capital cost of 80 million. Operating marginsare robust at current Chilean export sale prices of approximately600 per tonne of NaNO3. The Board has approved the decision to moveto a full feasibility study for the construction of a sodium nitrateprocessing facility. This study is anticipated to commence before theend of 2012.
The studies also support the potential of producing sodium sulphateat Aguas Blancas. Testwork and processing analysis is continuing,with various production and marketing scenarios being evaluated.
Commenting on the studies, Rick Clark, CEO, stated: "We are veryencouraged by the results of the pre-feasibility studies. The AguasBlancas deposit contains many marketable salts and we believe thatthere is great potential to develop the mine into a substantialmulti-product industrial minerals operation. Sodium nitrate will bethe next business at Aguas Blancas, with full feasibility underway.Ultimately, we see Sirocco as a significant cash flow producingCompany which will deliver substantial returns to shareholders."
In support of the various development opportunities at Aguas Blancas,a preliminary economic assessment for the installation of a sea waterpipeline is underway and is scheduled to be completed by the end of2012.
Financial Results
The tables below summarize key financial and operating results of theCompany for the Quarter.
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Three MonthsThree Months
Ended SeptemberEnded September
30, 201230, 2011
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Tonnes Mined (000t)1,1951,008
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Iodine Grade (ppm)552574
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Iodine Produced (t)259191
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Iodine Sold (t)238194
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Cash operating costs per kg (note 1)3843
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Sales Revenue ('000)14,9618,591
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Gross Profit ('000)4,347(676)
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Net Income/(loss) ('000)(244)(809)
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Comprehensive Income/(loss) ('000)2,237(1,985)
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Diluted Income/(loss) per share ()0.00(0.00)
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Total Assets ('000)189,832124,061
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Net Assets ('000)162,75187,749
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Note 1: Cash operating costs per kg is calculated by dividing cost ofsales, adjusted for related depreciation and stock-basedcompensation, by quantities of iodine sold in the period.
Iodine production in Q3 2012 continues to reflect ongoing operatingimprovements. Aguas Blancas produced 36% more Iodine in Q3 2012 ascompared to Q3 2011.
After three quarters of testwork and operations, the crushing andscreening circuit at the agitated leach plant ("ALP") has proved tobe impractical due to the highly variable proportion of volcanics inthe feed which reduce throughput and cause significant wear in theleach tanks. During the third quarter this issue resulted in fourweeks of downtime in the ALP. As a result, the Company has revisedthe forecast level of production for 2012 to a range of 1,200 to1,250 tonnes of iodine, a reduction of approximately 12% fromprevious forecast levels of between 1,350 and 1,450 tonnes.
The solution to the volcanics issue will be the installation of agrinding mill which will produce a clean pebble reject and grind thevolcanic chips to minimize wear issues. Testwork is being completedto determine the optimum sizing of the new mill. The Board ofDirectors has approved the purchase of the mill and operation isslated for 2014. With this new mill and installation of an associatedthickener, leach throughput of 400 tonnes per hour is targeted,increasing production rates to over 2,000 tonnes of iodine per annum.The total capital cost is estimated to be approximately 15 million.
The Company has also initiated temporary measures to maximizeproduction for 2013. The mined product will now be screened at sourceusing mobile screening plants. The screened fines will be trucked tothe ALP, slurried and processed in the leach section of the ALP. Thescreened coarse product will be trucked to the Heap Leach pads. Thesemeasures are expected to increase Iodine production rates at AguasBlancas to approximately 1,600 tonnes iodine per annum in 2013.
The small third quarter loss is mainly attributable to the deferralof two late-September iodine shipments until the fourth quarter inaccordance with the Company's revenue recognition policy. Theassociated net revenue for these shipments will be recognized in Q42012. Additional items affecting the net result included increasedexploration costs at Aguas Blancas (1.2 million) as the Companycontinues its program of converting inferred resources to indicatedresources, and unrealized CDN-USD foreign exchange losses (0.7million) on US denominated short-term investments held by Sirocco.
Iodine prices realized for the quarter were 63 per kilogram and areexpected to remain robust for 2012.
Sirocco stands at 30 September 2012 with a strong balance sheet thatincludes 72.8 million in cash and working capital of 89.2 million.
Commenting on the results of the third quarter, Rick Clark, CEO,said: "The Aguas Blancas mine continues to perform at highly improvedlevels compared to past years. Our operating team is now implementingmineral processing changes identified to increase iodine productionfor 2013. At the same time we are completing final engineeringtowards the ordering of a mill to further maximise production in2014. Coupled with the strong financial position of the Company andexpansion plans to develop other salt products, we are excited aboutthe future potential of Aguas Blancas."
Exploration at Aguas Blancas is ongoing to convert inferred resourcesto the indicated category.
A conference call to discuss the financial and operating results willbe held at 8am PST on Friday November 9, 2012. Participants shoulddial in on 1 877 974 0446 or 416 644 3417 and follow the prompts. Areplay of the call will be available until midnight on November 16,2012 by dialing 416 640 1917 or 1 877 289 8525, passcode 4570054#.
About the Company
Sirocco Mining Inc. is a Canadian company which produces iodine fromits Aguas Blancas mine in northern Chile. In addition, the Companyhas exploration interests in Brazil and West Africa and is activelyassessing other opportunities in the resource sector.
Cautionary Statements
This news release contains forward-looking statements concerning theCompany's plans for its business and properties,. Theseforward-looking statements are subject to a variety of risks anduncertainties which could cause actual events or results to differmaterially from those reflected in the forward-looking statements,including, without limitation, risks and uncertainties relating topolitical risks involving the Company's exploration and developmentof its properties, the inherent uncertainty of cost estimates and thepotential for unexpected costs and expenses, commodity pricefluctuations, the inability or failure to obtain adequate financingon a timely basis and other risks and uncertainties, including thosedescribed in the Company's periodic filings with the British ColumbiaSecurities Commission. Such information contained herein representsmanagement's best judgment as of the date hereof based on informationcurrently available. The Company does not intend to update thisinformation, except as required by law, and disclaims any legalliability to the contrary.
On behalf of the Board,
Rick Clark, CEO
Contacts:
Sirocco Mining Inc.
Simon Jackson
President
(604) 689-7842
(604) 689-4250 (FAX)
www.siroccomining.com
SOURCE: Sirocco Mining Inc.
http://www.siroccomining.com
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