Final Results -4-
March 25 2009 - 3:01AM
UK Regulatory
| | g/t Ag & 5.89 | g/t Ag & 5.89 | |
| | g/t Au | g/t Au | |
+----------------------------+------------------+------------------+-------------+
| Resource (moz Ag eq) | 17.5 | 16.8 | 4% |
+----------------------------+------------------+------------------+-------------+
| Reserves | 0.65 mt @ 120 | 0.84 mt @ 183 | |
| | g/t Ag & 4.86 | g/t Ag & 5.94 | |
| | g/t Au | g/t Au | |
+----------------------------+------------------+------------------+-------------+
| Reserve (moz Ag eq) | 8.6 | 14.6 | (41%) |
+----------------------------+------------------+------------------+-------------+
*2008 reserve and resource figures are not comparable to 2007 due to the
increase in cut-off grades
During 2008 we drilled 5,690 metres and developed 1,062 metres of underground
workings that resulted in 178,954 metric tonnes with 5.1 g/t Au and 96 g/t Ag
(2.3 million ounces of silver equivalent). We are continuing to replace the ore
in splays and tensional structures in the Victoria vein system.
We tested a new geological model with 19 drill holes (6,226 metres) exploring
the Apolo, Maria, Teresa and Tania vein targets, sub-parallel to the major
success at the main Victoria system. In 2009, our exploration efforts will focus
on developing resources and reserves at the Isabel, Tania and Maruja veins,
located north of Victoria.
Selene
Production and sales
+--------------------------+---------------+---------------+---------------+
| | Year ended 31 | Year ended 31 | % change |
| | December 2008 | December 2007 | |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 269,150 | 413,622 | (35%) |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 209.52 | 295.79 | (29%) |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 1.21 | 2.01 | (40%) |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Concentrate produced | 3,201 | 4,010 | (20%) |
| (tonnes) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver grade in | 15.04 | 26.83 | (44%) |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Gold grade in | 0.08 | 0.17 | (53%) |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 1,579 | 3,414 | (54%) |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 8.50 | 21.62 | (61%) |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 1,929 | 3,644 | (47%) |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 9.93 | 22.03 | (55%) |
+--------------------------+---------------+---------------+---------------+
As anticipated and previously disclosed, the average reserve grade at Selene is
declining due to the ageing and geological nature of the deposit. As a
consequence, gold and silver production decreased 61% and 54% respectively.
Selene produced an average of 22,000 tonnes of ore per month in 2008; however,
this number is expected to decrease to approximately 15,000 tonnes per month in
2009. Although Selene has 1.2 million tonnes of total resources, a high level of
capital expenditure would be required to extract these ounces. As announced in
our Q408 Production Report in January 2009, the Company's focus for 2009 is to
deliver profitable production and we will therefore reduce production, close, or
put into care and maintenance any mines that are considered uneconomic. As a
consequence, Selene is under consideration for closure. Selene's plant, which
was upgraded during the year, will continue to process ore from Pallancata. The
2009 production target of 28 million silver equivalent ounces only forecasts
Selene's production through to June with a significant decline in tonnage over
this 6 month period.
In 2008, more than 60% of Selene's production was converted into doré at the
Ares plant and sold to Johnson Matthey. The remaining concentrate was sold on a
spot basis primarily to Teck Cominco, Norddeutsche Affinerie AG and in blends
with Arcata to Cormin.
Exploration
+----------------------------+------------------+------------------+-------------+
| Stated on an attributable | As at | As at | % change |
| basis | 31 December | 31 December 2007 | |
| | 2008* | | |
+----------------------------+------------------+------------------+-------------+
| Resources | 1.20 mt @ 248 | 1.79 mt @ 241 | |
| | g/t Ag & 1.35 | g/t Ag & 1.34 | |
| | g/t Au | g/t Au | |
+----------------------------+------------------+------------------+-------------+
| Resource (moz Ag eq) | 12.7 | 18.5 | (31%) |
+----------------------------+------------------+------------------+-------------+
| Reserves | 0.13 mt @ 268 | 0.81 mt @ 269 | |
| | g/t Ag & 2.00 | g/t Ag & 1.68 | |
| | g/t Au | g/t Au | |
+----------------------------+------------------+------------------+-------------+
| Reserve (moz Ag eq) | 1.6 | 9.6 | (83%) |
+----------------------------+------------------+------------------+-------------+
*2008 reserve and resource figures are not comparable to 2007 due to the
increase in cut-off grades
During 2008, we executed 11,335 metres of diamond drilling at the Martha-Eva,
Tumiri, Timida, Explorador and Pucanta veins. We achieved a minor development of
resources, converting 290,716 metric tonnes at 1.5 g/t Au and 189 g/t Ag (2.6
million ounces silver equivalent) into reserves. However, grades are lower than
those historically found at Selene due to the ageing nature of the mine. As the
exploration results have deteriorated over time, in 2009 we will focus on
compiling all geological information and re-interpreting the data to define
possible new drill targets.
Pallancata
Production and sales
+--------------------------+---------------+---------------+---------------+
| | Year ended 31 | Year ended 31 | % change |
| | December 2008 | December 2007 | |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 468,125 | 78,335 | 498% |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 312.18 | 310.02 | 1% |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 1.49 | 1.49 | 0% |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Concentrate produced | 4,265 | 638 | 568% |
| (tonnes) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver grade in | 30.54 | 34.28 | (11%) |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Gold grade in | 0.12 | 0.13 | (8%) |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 4,188 | 704 | 495% |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 16.16 | 2.76 | 486% |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 3,852 | 550 | 600% |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 14.81 | 2.03 | 630% |
+--------------------------+---------------+---------------+---------------+
Pallancata, which commenced production in the third quarter of 2007, is a
venture with International Minerals Corporation ("IMC") in which we control 60%
and act as the mine operator. Pallancata exemplifies our cluster consolidation
strategy. Its close proximity to Selene enables us to leverage existing
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