Final Results -5-
March 25 2009 - 3:01AM
UK Regulatory
infrastructure as ore from the operation is transported 22 kilometres to the
plant at Selene for processing. Selene's plant was expanded in 2008 from 2,000
to 3,000 tpd to accommodate the anticipated growth in production at Pallancata.
Pallancata recorded strong production results in its first full year of
operation, with silver and gold production increasing 495% and 486% year on
year to 4,188 koz and 16.16 koz respectively.
In 2008 the silver/gold concentrate from Pallancata was sold to Teck Cominco.
Exploration
+-----------------------------+------------------+------------------+----------+
| Stated on an attributable | As at | As at | % change |
| basis | 31 December | 31 December 2007 | |
| | 2008* | | |
+-----------------------------+------------------+------------------+----------+
| Resources | 3.32 mt @ 411 | 3.22 mt @ 397 | |
| | g/t Ag & 1.68 | g/t Ag & 1.42 | |
| | g/t Au | g/t Au | |
+-----------------------------+------------------+------------------+----------+
| Resource (moz Ag eq) | 54.6 | 49.9 | 9% |
+-----------------------------+------------------+------------------+----------+
| Reserves | 2.58 mt @ 366 | 2.13 mt @ 289 | |
| | g/t Ag & 1.51 | g/t Ag & 1.24 | |
| | g/t Au | g/t Au | |
+-----------------------------+------------------+------------------+----------+
| Reserve (moz Ag eq) | 37.8 | 24.9 | 52% |
+-----------------------------+------------------+------------------+----------+
*2008 reserve and resource figures are not comparable to 2007 due to the
increase in cut-off grades
Underground workings at the Pallancata Central, Ramal Central, Cimoide 1, María
and Sofía veins resulted in a major conversion of resources into reserves of
3,080,459 metric tonnes at 1.3 g/t Au and 396 g/t Ag (47.5 million ounces of
silver equivalent).
In addition, we drilled 5,332 metres in 67 drill holes at the Pallancata-Oeste,
Pallancata-Central veins and associated secondary structures, developing an
inferred resource of 699,102 metric tonnes at 1.4 g/t Au and 368 g/t Ag (10.1
million ounces of silver equivalent).
The 2009 exploration program will focus on 15,220 metres of drilling at the
Virgen del Carmen, San Javier and Mariana that have high grade silver potential.
Argentina
San José
Production and sales
+-----------------------------------+--------------------+--------------------+--------------------+
| | Year ended 31 | Year ended 31 | % change |
| | December 2008 | December 2007 | |
+-----------------------------------+--------------------+--------------------+--------------------+
| Ore production (tonnes) | 295,963 | 92,974 | 218% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Average head grade silver (g/t) | 559.11 | 538.38 | 4% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Average head grade gold (g/t) | 6.69 | 7.08 | (6%) |
+-----------------------------------+--------------------+--------------------+--------------------+
| Silver produced (koz) | 4,381 | 958 | 357% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Gold produced (koz) | 54.26 | 14.96 | 263% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Silver sold (koz) | 4,588 | 92 | 4,887% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Gold sold (koz) | 57.70 | 1.49 | 3,772% |
+-----------------------------------+--------------------+--------------------+--------------------+
San José, the Group's operation in Argentina, commenced production in the second
quarter of 2007. San José is a venture with Minera Andes in which we control 51%
and act as the mine operator. We remain very positive about the potential at San
José, reflected by the plant expansion undertaken in 2008 which doubled capacity
from 750 to 1,500 tonnes per day.
Inventories were higher than expected in the fourth quarter primarily due to a
temporary furnace malfunction which has now been resolved. In addition, sales
were impacted by the early closure of a customer's refinery for the Christmas
holiday period.
After the year end, we made an offer to acquire Minera Andes or its stake in the
San José project, in order to ensure that the project would be fully financed.
Although our offer was not accepted, Minera Andes was able to meet its
obligations at San José by other means.
In 2008, we sold the doré produced at San José to Argor Heraeus S.A., a licensed
trader, smelter and assayer based in Switzerland. The concentrate produced at
the operation was sold to Norddeutsche Affinerie AG.
Exploration
+----------------------------+------------------+------------------+-------------+
| Stated on an attributable | As at | As at | % change |
| basis | 31 December | 31 December 2007 | |
| | 2008* | | |
+----------------------------+------------------+------------------+-------------+
| Resources | 1.68 mt @ 467 | 1.59 mt @ 473 | |
| | g/t Ag & 7.30 | g/t Ag & 7.09 | |
| | g/t Au | g/t Au | |
+----------------------------+------------------+------------------+-------------+
| Resource (moz Ag eq) | 49.0 | 45.9 | 7% |
+----------------------------+------------------+------------------+-------------+
| Reserves | 0.83 mt @ 522 | 1.37 mt @ 403 | |
| | g/t Ag & 7.90 | g/t Ag & 6.01 | |
| | g/t Au | g/t Au | |
+----------------------------+------------------+------------------+-------------+
| Reserve (moz Ag eq) | 26.7 | 33.7 | (21%) |
+----------------------------+------------------+------------------+-------------+
*2008 reserve and resource figures are not comparable to 2007 due to the
increase in cut-off grades and methodology
In 2008 we drilled 14,453 metres in 60 drill holes along the Odin, Ayellen and
Ramal Frea veins. Another 4,24 metres in 20 holes were drilled at extensions of
the Huevos Verdes, Frea and Kospi veins increasing the mineralization potential
of these structures.
Mexico
Moris
Production and sales
+-----------------------------------+--------------------+--------------------+--------------------+
| | Year ended 31 | Year ended 31 | % change |
| | December 2008 | December 2007 | |
+-----------------------------------+--------------------+--------------------+--------------------+
| Ore production (tonnes) | 876,148 | 338,304 | 159% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Average head grade silver (g/t) | 5.71 | 4.69 | 22% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Average head grade gold (g/t) | 1.57 | 1.65 | (5%) |
+-----------------------------------+--------------------+--------------------+--------------------+
| Silver produced (koz) | 65.07 | 12.63 | 415% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Gold produced (koz) | 26.85 | 5.58 | 381% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Silver sold (koz) | 68.27 | 6.44 | 960% |
+-----------------------------------+--------------------+--------------------+--------------------+
| Gold sold (koz) | 28.01 | 3.26 | 759% |
+-----------------------------------+--------------------+--------------------+--------------------+
Moris, which commenced production in August 2007, is a venture with EXMIN in
which we control 70% and act as the mine operator. Moris is the Group's only
open pit mine but provided a key stepping stone into Mexico, which is of key
strategic importance to the Group.
Production at the operation more than doubled to 876 thousand tonnes in 2008.
Gold recoveries at Moris are expected to increase in 2009 as a result of a more
stable plant process. In 2008, we sold all of the gold/silver doré produced at
Moris to Johnson Matthey.
Exploration
+----------------------------+------------------+------------------+-------------+
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