VANCOUVER, BRITISH COLUMBIA (TSX VENTURE: SWC.DB) today
announced its year-end financial results for 2007. During the year,
Sherwood Copper completed its transition from a developer to a
producer, with the completion of the Phase 1 construction of its
Minto copper-gold mine in the Yukon in May, the commencement of
commercial production on October 1 and substantial completion of
the Phase 2 mill expansion by year-end. As a result of the
Company's accounting policies, all production prior to the
commencement of commercial production was capitalized while
virtually all production in the fourth quarter, except for 339 dry
metric tonnes of concentrate, was not shipped and hence the
majority of revenues and related production costs have been
deferred into the first quarter of 2008.
"Sherwood and its high grade Minto copper-gold mine passed a
series of major milestones in 2007," said Stephen Quin, President
& CEO. "Most importantly, construction of the Minto Mine was
completed ahead of schedule and on budget, commercial production
was achieved and the Phase 2 mill expansion constructed several
months early. In parallel with these production milestones,
exploration success was converted into a pre-feasibility that
supported increased reserves, production and enhanced project
economics," he added. "These notable achievements are a credit to
the management and staff at Sherwood and the Minto Mine, and the
numerous contractors and consultants involved in all stages of the
project."
Highlights of 2007
During the year, Sherwood marked a number of notable events and
milestones, including the following:
- Completed Phase 1 construction of the Minto Mine ahead of
schedule and within 2% of budget;
- Produced first copper concentrates on May 31, with 9.66
million pounds of copper in concentrates produced by year-end;
- Declared commercial production as of October 1, 2007;
- Mined and stockpiled 500,000 tonnes more ore than processed to
bring higher grades forward - this material will be processed in
future periods;
- Shipped first concentrates (5,938 dry metric tonnes) from the
port of Skagway on October 25, 2007;
- Substantial completion of Phase 2 mill expansion to 2,400 tpd
by year-end 2007 with commissioning of Phase 2 to full capacity in
Q1/2008;
- Reported a 60% increase in project resources following the
incorporation of the Area 2 deposit discovered and defined in
2006;
- Completed pre-feasibility study for a 45% Phase 3 increase in
mill throughput to 3,500 tpd with added reserves, production and
mine life following incorporation of the Area 2 discovery into
reserves;
- Completed a 101-hole exploration program, resulting in the
discovery of significant new copper-gold mineralization at the Area
118, Ridgetop, Copper Keel, Airstrip and Gap prospects;
- Entered into a long term agreement for the provision of grid
power to the Minto Mine, which should provide significant cost
reductions in operating costs by the end of 2008;
- Entered into a long-term agreement for the refurbishment and
use of the Skagway Ore Terminal for transhipment of Minto
concentrates to overseas smelters;
- Made an offer to acquire all of the shares of Western Keltic
Mines, owner of the Kutcho copper project, significantly increasing
Sherwood's copper resources and providing the potential for a
second mining operation through the re-scoping of the Kutcho
project;
- Completed a $43.6 million convertible debenture financing,
which allowed the acceleration of the completion of the Phase 2
mill expansion by more than six months.
Results of Operations
The Company completed the construction of its Minto mine in the
second quarter of 2007 and reached commercial production on October
1, 2007. 12,630 dry metric tonnes of copper concentrate (9,660,656
pounds of contained copper) were produced in 2007, of which 5,938
dry metric tonnes were shipped from the Port of Skagway in October
2007. Since 5,599 dry metric tonnes of this shipment were produced
prior to achieving commercial production, the net revenue realized
on this tonnage was credited against capitalized pre-production
costs. The balance of the shipment, 339 dry metric tonnes, was
recorded as revenue during the fourth quarter. The remaining 6,692
dry metric tonnes of concentrate produced in 2007 were held in
inventory as at December 31, 2007.
Due to the location of the Minto mine, truck transport of
concentrates from the mine site to port is not available for two,
eight to ten week periods, beginning in October and in April of
each year, since access across the Yukon River in not available due
to freeze up and break up. The concentrate produced during these
periods is stored at the mine site; total concentrate accumulated
at the mine site could reach 15,000 to 20,000 wet metric tonnes.
Once access is available, concentrate at the mine is trucked to the
Skagway Ore Terminal where it is stored until loaded onto a ship;
total concentrate stored at the port could reach 10,000 to 13,000
wet metric tonnes. Since Sherwood's revenue recognition policy
requires that title and risk passes to the customer and that the
settlement price be reasonably determinable in accordance with the
Company's off take agreement, the recognition of revenue in
Sherwood's financial statements may vary significantly from quarter
to quarter, depending on the timing of moving concentrates from the
mine site to the Port of Skagway and then on to ocean vessels.
Financial Results
Sherwood reported a net loss of $44.7 million in the year ended
December 31, 2007 compared with a net loss of $21.5 million for the
period ended December 31, 2006, primarily as a result of unrealized
losses on forward metal sales ($40.8 million) and non-cash cost
stock-based compensation ($4.9 million). Prior to October 1, 2007,
the Company capitalized or classified as inventory all revenue and
costs related to the Minto Project as commercial production had not
yet been achieved.
In 2007, Sherwood recorded net revenue of $0.7 million on the
sale of 339 dry metric tonnes of copper concentrate in the fourth
quarter. Operating costs of $2.9 million were recorded against the
net revenue which included a write down of $1.9 million to adjust
the 6,692 dry metric tonnes of concentrate inventory held at the
end of the period to net realizable value based on December 31,
2007 metal prices. With a first quarter 2008 ship date for this
inventory, all revenues and costs associated with this inventory
will be realized in the first quarter of 2008. Sherwood expects to
realize a significant increase in value for the 6,692 dry metric
tonnes of concentrate due to increased metal prices since
year-end.
Sherwood's net income or loss may vary significantly for quarter
to quarter based on revenue recognition timing, adjustments in
inventory values, the mark-to-market of forward metal sales,
expenses for stock based compensation and foreign exchange
adjustments, all of which are non-cash adjustments that can swing
significantly from period to period without any impact on cash or
the financial strength of the company. This variability is
illustrated by the results for the fourth quarter of 2007, where
Sherwood reported net income of $15.0 million compared to a net
loss of $20.3 million in the four months ended December 31, 2006 as
a result of $20.2 million of unrealized gains on derivative
instruments in 2007 compared with an unrealized loss of $18.4
million on derivative instruments in 2006.
Additional details of the financial results for 2007 are
available in the financial statements and management discussion and
analysis filed on SEDAR at www.sedar.com, while additional
information on production results set out in the Company's news
release dated April 17, 2008.
Concentrate Shipments
In early March 2008, Sherwood loaded approximately 9,158 dry
metric tonnes of concentrate grading approximately 36% copper on
the vessel MV Beluga Enterprise (including the 6,692 dry metric
tonnes held in inventory at December 31, 2007) and, in early April,
an additional 9,849 dry metric tonnes of concentrate grading
approximately 39% copper on the vessel MV Sanko Eternal for sale to
Japanese smelters. Of these quantities delivered, approximately 79%
will be delivered into Sherwood's copper forward sales contracts,
while the balance has been or will be sold at spot between the
loading date and final settlement date. In addition, these
concentrates contain significant gold and silver credits. Forward
sales account for approximately 50% of 2008 forecast production
providing Sherwood with significant exposure to current high spot
prices for copper, gold and silver in 2008.
2008 Outlook
Given that the mill has demonstrated capacity in excess of
design, for the balance of 2008 Sherwood aims to average mill
throughput in excess of 2,400 tonnes per day in order to achieve
its production forecast of approximately 55 million pounds of
payable copper and 24,000 oz of payable gold in 2008. This forecast
was made without assuming any benefits from on-going optimizations,
such as rescheduling the pit sequencing in order to bring
production forward, coarsening the grind and implementing the Phase
3 mill expansion, details of which were outlined in the February
25, 2008 announcement.
About Sherwood Copper
Sherwood Copper's current focus is profitable production of base
and precious metals from high grade, open pit mines in Canada.
Sherwood's first operating mine, the high grade Minto copper-gold
mine in Yukon, Canada, was built on budget and ahead of schedule.
The Minto Mine is one of the highest-grade open pit copper-gold
mines in the world, and is forecast to be a low cost producer.
Aggressive exploration on the Minto property has yielded
significant success, providing Sherwood the opportunity to 'grow
from within' by expanding the resource and reserve base,
potentially leading to further production increases. To further
accelerate its production growth, Sherwood intends to pursue merger
& acquisition opportunities that fit its business model and, in
March 2008, Sherwood acquired more than 93% ownership in Western
Keltic Mines, owner of the high-grade Kutcho
copper-zinc-gold-silver deposit in northwestern British Columbia.
Sherwood aims to repeat its successful development of the Minto
Mine at the Kutcho project.
Quality Assurance
The technical information in this news release has been prepared
in accordance with Canadian regulatory requirements set out in
National Instrument 43-101 and reviewed by Stephen P. Quin, P.
Geo., President & CEO for Sherwood Copper Corporation. The
operational information relating to the Minto Mine in this release
have been carried out under the supervision of Randall Thompson,
General Manager of the Minto Mine, and Kevin Weston, P.Eng., Chief
Operating Officer for Sherwood Copper.
Additional Information
Additional information on Sherwood and its Minto Project can be
obtained on Sherwood's website at
http://www.sherwoodcopper.com.
On behalf of the board of directors
SHERWOOD COPPER CORPORATION
Stephen P. Quin, President & CEO
This document may contain "forward-looking statements" within
the meaning of Canadian securities legislation and the United
States Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date of this document
and the Company does not intend, and does not assume any
obligation, to update these forward-looking statements.
Forward-looking statements relate to future events or future
performance and reflect management's expectations or beliefs
regarding future events and include, but are not limited to,
statements with respect to the estimation of mineral reserves and
resources, the realization of mineral reserve estimates, the timing
and amount of estimated future production, costs of production,
capital expenditures, success of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims
and limitations on insurance coverage. In certain cases,
forward-looking statements can be identified by the use of words
such as "plans", "expects" or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved" or the negative of these
terms or comparable terminology. By their very nature
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, among others, risks related to actual results of
current exploration activities; changes in project parameters as
plans continue to be refined; future prices of resources; possible
variations in ore reserves, grade or recovery rates; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; as well as those factors
detailed from time to time in the Company's interim and annual
financial statements and management's discussion and analysis of
those statements, all of which are filed and available for review
on SEDAR at www.sedar.com. Although the Company has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such
statements.
Accordingly, readers should not place undue reliance on
forward-looking statements.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this press
release.
Contacts: Sherwood Copper Corporation - Investor Contact Stephen
P. Quin (604) 687-7545 Sherwood Copper Corporation - Investor
Contact Brad Kopp (604) 687-7545 (604) 689-5041 (FAX) Website:
www.sherwoodcopper.com
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