(All amounts in C$ unless otherwise stated)
Sherwood Copper Corporation (TSX VENTURE: SWC)(TSX VENTURE:
SWC.DB) today announced its results for the three and nine months
ended September 30, 2008 including results of operations at its
high grade Minto copper-gold mine located in the Yukon.
Sherwood generated $55.1 million of net revenue and $29.9
million of cash flow from mining operations(x) during the three
months ended September 30, 2008 (the "Current Quarter") and $116.1
million of net revenue and $68.3 million of cash flow from mining
operations(x) for the nine months ended September 30, 2008 (the
"Current Period"), as detailed below. During the Current Quarter,
Sherwood reported net income of $85.4 million (including $78.2
million in positive adjustments to unrealized forward sales) and an
adjusted net income(x) of $12.1 million (excluding adjustments to
unrealized forward sales and other non-cash adjustments). With the
continued dramatic decline in metal prices subsequent to September
30, as at the date of the Company's Q3 2008 MD&A, the
mark-to-market of Sherwood's copper hedge position was an estimated
unrealized derivative instruments asset of approximately $71.2
million positive, for a net positive change of $128.8 million over
that on September 30, 2008. Copper prices declined from US$3.98 to
US$1.57 per pound between June 30 and the date of this press
release, a fall of over 60%, a fall somewhat mitigated by the fall
in the Canadian dollar over the same time period.
"The results for the third quarter of 2008 reflects a transition
period for the high grade Minto Mine as mill feed came from lower
grade stockpiles with lower recoveries while mining operations
focused on accessing the highest grade part of the Minto deposit,
which will provide the mill feed for the rest of 2008 and all of
2009, and implementing the Phase III mill expansion to 3,200tpd,"
said Stephen Quin, President & CEO of Sherwood Copper.
"Excellent progress towards these objectives was achieved
subsequent to the quarter end, with high grade ore (greater than 3%
copper) starting to be fed into the mill in mid-October and, since
the end of the first week of November, mill throughput has been
averaging approximately 3,000 tpd (and individual days exceeding
3,400tpd), feed grade 3.7% copper as the ramp up continues and
recoveries 95%. The latter part of 2008 and all of 2009 should
benefit from these efforts, with high grade mill feed and higher
mill throughput planned for the entire period which, combined with
Sherwood's significant copper hedge book, puts the Minto Mine in an
excellent position to prosper in the current world financial
situation."
Copper production during Current Quarter was lower than during
the prior two quarters, at 7.3 million pounds of payable copper,
and costs higher at total cash costs(x) of US$2.10 per pound
produced, as mining operations focused on waste stripping in order
to access high grade ore in Q4 2008. As a result, ore processed
came from relatively lower grade stockpiles which had lower than
average recoveries. Year-to-date production for 2008 totals 32.0
million pounds of payable copper at total cash costs(x) of US$1.37
per pound, with Q4 expected to be a very strong production quarter
due to higher grades and increased throughput, with costs per pound
falling significantly as a result of the resulting higher copper
production, reduced stripping, recently completed connection to
grid electrical power and falling input costs, such as fuel.
Highlights for the three months ended September 30, 2008
- Recorded a net income of $85.4 million and an adjusted net
income(x) of $12.1 million.
- Generated cash flow from mining operations(x) of $29.9 million
and income from mining operations(x) of $20.4 million.
- Sold 19,683 dry metric tonnes (dmt) of concentrate with an
estimated net revenue value of $2,798 per dmt at September 30,
2008.
- Produced 8,708 dmt of copper concentrate containing 7.3
million pounds of payable copper at an estimated total cash cost(x)
of US$2.10 per pound of payable copper as a result of lower
production and recoveries during the period.
- Processed 223,245 dmt of 1.78% copper at an average cash
cost(x) of $74 per tonne. This lower grade ore came from ore stock
pile as mining activity concentrated on continued stripping of the
high grade Phase 2 higher area with the removal of 2.7 million dmt
of waste. This stripping entered ore in September and allowed
141,455 dmt of ore to be mined at the end of the period.
- Held 4,421 dmt of concentrate in inventory at September 30,
2008 with a carrying value of $2,619 per dmt(x) comprised of $1,845
per dmt cash costs and $774 per dmt non-cash cost.
- Received approval to increase mill throughput to 3,200 tonnes
per day under the Company's Quartz Mining License, an increase of
28% over the previously approved 2,500 tonnes per day.
- Completed a National Instrument 43-101 compliant Technical
Report for the Minto Mine that details two significant
developments:
-- Rescheduling of the open pit where higher grade copper
production has been brought forward from 2010 to 2009.
-- Increased the mineral the resource estimates for the Minto
Mine by approximately 50%, as announced in June 2008.
- Continued to receive significant positive results from the
Minto and Kutcho 2008 drill programs.
- Entered into a Letter Agreement with Capstone Mining Corp. to
combine, by way of a plan of arrangement to create a well-funded,
low-cost, growth-oriented, copper company copper with two producing
mines in mining friendly jurisdictions in North America. Sherwood
shareholders voted in favour of the combination on November 14,
2008.
Highlights Subsequent to September 30, 2008
- Entered into a letter of intent November 7, 2008 with
Silverstone Resources Corp. ("Silverstone") and completed the
transaction on November 21, 2008 whereby Silverstone will purchase
all of the payable gold and silver from the Minto Mine over the
life of the mine for an up-front payment of US$37.5 million, plus a
further payments of the lesser of (a) US$300 per ounce of gold and
US$3.90 per ounce of silver. The Company will use the upfront
payment to strengthen its balance sheet.
- Shipped 7,865 dmt of concentrate from the Port of Skagway on
November 6, 2008. This will be the last shipment until the first
quarter of 2009 due to the Yukon River freeze-up.
- Made trial connection to the Yukon Energy Corporation grid
power on November 15, 2008 for one day and reconnected on November
19, 2008, with full, uninterruptible power expected by the end of
November 2008 thereby significantly reducing the electrical power
costs to the Minto Mine.
Financial and Production Results
The Company recorded net income of $85.4 million and $19.0
million in the three months (the "Current Quarter") and nine months
(the "Current Period") ended September 30, 2008 respectively.
Net revenue of $55.1 million on the sale of 19,683 dmt ($2,798
per dmt) of copper concentrate in the Current Quarter generated
cash flow from mining operations(x) of $29.9 million and income
from mining operations of $20.4 million. Net revenue of $116.1
million on the sale of 38,690 dmt ($3,000 per dmt) in the Current
Period generated $68.3 million of cash flow from mining
operations(x) and $50.8 million of income from mining operations.
Concentrate sales are summarized in the table below.
--------------------------------------------------------------------------
Concentrate Payable Payable Payable
- tonnes Copper Gold Silver
Sales sold (lbs) (oz) (oz)
--------------------------------------------------------------------------
Q1-2008 9,158 7,087,088 3,950 25,016
Q2-2008 9,849 7,933,592 4,087 37,304
Q3-2008 19,683 16,989,990 10,108 71,768
--------------------------------------------------------------------------
2008 to date 38,690 32,003,964 19,908 134,476
--------------------------------------------------------------------------
A total of 8,708 dmt of copper concentrate were produced in the
Current Quarter for a total of 36,416 tonnes produced during the
Current Period. There was no production in the comparable periods
as the Company only achieved commercial production on October 1,
2007. In the Current Quarter, 19,683 dmt were shipped bringing the
total for the Current Period to 38,690 dmt. At the end of the
Current Period 4,421 dmt of copper concentrate with an average
attributable cost of $2,619 per dmt (cash $1,845 and non-cash $774)
were held in inventory.
Production costs (cash and non-cash) per dmt of copper
concentrate increased during the Current Quarter to $2,654 in the
Current Period compared with $1,333 and $1,373 in the second and
first quarters of 2008 respectively as copper concentrate
productions level decreased with the lower feed grade of 1.78%
compared with 3.25% and 3.46% in the second and first quarters and
lower recoveries. Costs per tonne processed were comparable with
prior quarters. Mill feed in the Current Quarter was primarily from
lower grade ore stockpile material while the mine concentrated on
stripping the Phase III area of the main pit to release higher
grade ore for processing in the fourth quarter of 2008 and all of
2009. This lower grade material also had lower recoveries. With
access to significantly higher grade ore in the fourth quarter of
2008 and into 2009, a return to high recoveries and lower cost grid
electrical power, unit production costs are expected to fall going
forward.
--------------------------------------------------------------------------
Cost per Cost per Total
Dry metric tonne, tonne, cost per
Copper Concentrate tonne cash(x) non-cash(x) tonne(x)
--------------------------------------------------------------------------
Opening inventory 6,692 $1,775 $427 $2,202
--------------------------------------------------------------------------
Produced - First Quarter 2008 12,662 $ 985 $388 $1,373
--------------------------------------------------------------------------
Sold - First Quarter 2008 (9,158) $1,288 $413 $1,701
--------------------------------------------------------------------------
Inventory March 31, 2008 10,196 $1,288 $413 $1,701
--------------------------------------------------------------------------
Produced - Second Quarter 2008 15,049 $ 930 $403 $1,333
--------------------------------------------------------------------------
Sold - Second Quarter 2008 (9,849) $1,075 $407 $1,482
--------------------------------------------------------------------------
Inventory - June 30, 2008 15,396 $1,075 $407 $1,482
--------------------------------------------------------------------------
Produced - Third Quarter 2008 8,708 $1,887 $768 $2,654
--------------------------------------------------------------------------
Sold - Third Quarter 2008 (19,683) $1,262 $484 $1,746
--------------------------------------------------------------------------
Inventory - September 30, 2008 4,421 $1,845 $774 $2,619
--------------------------------------------------------------------------
The difference in the metal produced and the metal sold is due
to timing differences between when the material is produced at the
mine and when a sale can be recognized under Sherwood's revenue
recognition policy. Under that policy, in order for a sale to be
recognized, the metals have to be sold. Metals produced but not
sold are carried as inventory at the cost of production. This
timing difference is also affected by the availability of road
transport from the mine to the Port of Skagway due to the freeze up
and breakup of the Yukon River in fall and spring of each year.
Current Quarter
The Company reported net income of $85.4 million in the Current
Quarter compared with a net loss of $36.9 million for the three
months ended September 30, 2007 (the "Comparative Quarter"). The
main reasons for this improvement was the generation of income from
mining operations of $18.6 million and the recording of $78.2
million in a unrealized gain on derivative instruments compared to
a loss from mining operations of $1.5 million and a loss of $38.1
million on derivative instruments in the Comparative Quarter; the
quarters are not readily comparable from a mining operation
perspective as the Company was in the development stage in the
Comparative Quarter.
Current Period
The Company reported a net income of $19.0 million in the
Current Period compared with a net loss of $59.7 million for the
nine months ended September 30, 2007 (the "Comparative Period").
The main reasons for this improvement were income from mining
operations of $45.8 million and an unrealized gain on derivative
instruments of $1.7 million in the Current Period compared with a
loss of $5.2 million from mining operations as the Company was
still in the developments stage and an unrealized loss on
derivative instruments of $61.0 million due to higher metal prices
in the Current Period.
Sherwood's net income or loss may vary significantly from
quarter to quarter based on revenue recognition timing. In
addition, the mark-to-market of forward metal sales, expenses for
stock based compensation and foreign exchange adjustments, all of
which are non-cash adjustments, can swing significantly from period
to period and therefore affect reported net income without any
impact on cash or the financial strength of the Company.
Additional details on the financial and production results are
available in the Company's unaudited consolidated interim financial
statements and management discussion and analysis for the three and
nine month periods ended September 30, 2008 filed on SEDAR at
www.sedar.com.
Key operating statistics for the Minto Mine in the first, second
and third quarters and year to date for 2008 are presented
below:
--------------------------------------------------------------------------
Q1 2008(3) Q2 2008(3) Q3 2008 YTD 2008(5)
--------------------------------------------------------------------------
Production
(contained in concentrates)
--------------------------------------------------------------------------
- Copper (000's lbs) 10,832,251 13,765,721 7,563,877 32,161,849
--------------------------------------------------------------------------
- Gold (oz)(1) 7,085 8,255 6,767 22,107
--------------------------------------------------------------------------
- Silver (oz) 59,375 72,511 37,327 169,213
--------------------------------------------------------------------------
Mining
--------------------------------------------------------------------------
- Waste (tonnes) 1,372,953 3,301,619 2,676,589 7,351,156
--------------------------------------------------------------------------
- Ore (tonnes) 321,431 - 141,455 462,885
--------------------------------------------------------------------------
- Total material mined (tonnes) 1,694,384 3,301,619 2,818,044 7,814,041
--------------------------------------------------------------------------
- Copper grade (%) 3.57 N/A 1.48 2.91
--------------------------------------------------------------------------
- Gold grade (g/t)(1) 1.46 N/A 0.63 1.00
--------------------------------------------------------------------------
- Silver grade (g/t) 14.6 N/A 4.8 11.5
--------------------------------------------------------------------------
Milling
--------------------------------------------------------------------------
- Tonnes processed 152,368 206,263 223,245 581,876
--------------------------------------------------------------------------
- Tonnes processed per day 1,674 2,267 2,427 2,124
--------------------------------------------------------------------------
- Copper grade (%) 3.46 3.25 1.78 2.74
--------------------------------------------------------------------------
- Gold grade (g/t)(2) 1.79 1.56 1.18 1.53
--------------------------------------------------------------------------
- Silver grade (g/t) 13.9 12.7 6.6 10.7
--------------------------------------------------------------------------
Recoveries
--------------------------------------------------------------------------
- Copper (%) 93.2 93.2 86.4 91.5
--------------------------------------------------------------------------
- Gold (%)(1) 80.8 79.8 79.9 79.9
--------------------------------------------------------------------------
- Silver (%) 87.2 86.1 78.8 84.7
--------------------------------------------------------------------------
Concentrate
--------------------------------------------------------------------------
- Dry tonnes produced 12,662 15,046 8,708 36,416
--------------------------------------------------------------------------
- Copper grade (%) 38.8 41.5 39.4 40.1
--------------------------------------------------------------------------
- Gold grade (g/t)(1) 17.4 17.0 15.1 16.9
--------------------------------------------------------------------------
- Silver grade (g/t) 146 149 134 144
--------------------------------------------------------------------------
Unit Operating Costs(6)
--------------------------------------------------------------------------
Cash cost per tonne milled (C$) $86 $68 $74 $75
--------------------------------------------------------------------------
Cash cost/payable pound of Cu (US$)
--------------------------------------------------------------------------
- Operating costs $1.24 $1.04 $2.14 $1.37
--------------------------------------------------------------------------
- By-product credits ($0.55) ($0.53) ($0.43)(4) ($0.52)
--------------------------------------------------------------------------
- Treatment, refining, freight,
port, insurance $0.43 $0.37 $0.39 $0.40
--------------------------------------------------------------------------
Total cash cost/payable pound
of Cu (US$) $1.12 $0.95 $2.10 $1.25
--------------------------------------------------------------------------
(1) Gold is not assayed on site, resulting in a significant lag in
receiving this data.
(2) Gold grades for ore mined are estimated from the reserve block model,
whereas copper and silver grades are based on blast hole assays.
(3) Q1 & Q2/08 numbers have been adjusted based on concentrate settlement
information.
(4) Q3/08 by-product credits for gold and silver are based on estimates
and will be adjusted after final settlement.
(5) YTD totals may not match the totals from individual quarters due to
rounding and post-quarter adjustments.
(6) This is a non-GAAP performance measure; please see Non-GAAP
Performance Measures of this MD&A adjustments.
(x) These are non-GAAP performance measures and readers should
refer to notes on non-GAAP performance measures on page 17 of the
Company's management discussion and analysis for the three and six
month periods ended June 30, 2008 as filed on Sedar for further
details.
Concentrate Shipments
19,683 dmt of copper concentrate were shipped in the Current
Quarter. The Company received provisional payments for these
concentrates based on the copper price at time of shipment. The
final price is based on the average copper price in the months
October and November of 2008. Due to the substantial reduction in
the copper price over the past few months the Company will have to
repay an estimated US$22.5 million of these provisional payments
($US6.0 million has been repaid to date). The Company brought
forward copper hedge positions to cover approximately 100% of these
metal sales to mitigate the reduced final settlement pricing by
US$13.2 million.
Production Outlook
As a result of delays in accessing the high grade ore following
the previously reported flood event during the Current Quarter,
processing of the high grade ore was delayed into Q4-2008. This
delay, resulting in an extended period of processing lower grade
material with lower recoveries, combined with a somewhat slower the
planned ramp up to Phase III production levels, is expected to
result in a reduction in 2008 copper production below that
previously forecast. However, since the high grade ore has now been
accessed and mill throughput is climbing towards Phase 3 capacity,
any deferred very high grade production will be processed in early
2009.
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 activities carried out at the Minto Mine have been
carried out under the supervision of Randall Thompson, General
Manager of the Minto Mine, and Kevin Weston, Chief Operating
Officer for Sherwood Copper, who have reviewed and approved the
information contained herein. The exploration activities at the
Minto Mine and Kutcho Project have been carried out under the
supervision of Brad Mercer P. Geo., Sherwood's VP Exploration.
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
mineral resources, conversion of inferred mineral resources to the
measured and indicated categories, the realization of mineral
reserve estimates in mining, 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 metals; future currency exchange rates; conversion of mineral
resources to higher confidence levels or to mineral reserves;
possible variations in mineral reserves, grade or recovery rates;
accidents, labour disputes and other risks of the mining industry;
changes in the legal or regulatory regime affecting the Company's
operations; 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, including those for the Current
Period, 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 Stephen P. Quin Investor
Contact (604) 687-7545 Sherwood Copper Corporation Chris Curran
Investor Contact (604) 687-7545 (604) 689-5041 (FAX) Website:
www.sherwoodcopper.com
Sherwood Copper Com Npv (TSXV:SWC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sherwood Copper Com Npv (TSXV:SWC)
Historical Stock Chart
From Jul 2023 to Jul 2024