Timmins Gold Corp Reports Q3 Operating and Financial Results San Francisco Mine Generates US$16 Million in Net Profits Before Taxes
Timmins Gold Corp. is pleased to report to shareholders on its operating and financial results for the three and nine month periods ending December 31, 2010. All currency in this report is in Canadian dollars unless otherwise indicated.
The major highlights for the three months ended December 31, 2010, which was only the third quarter of commercial operations at the San Francisco Mine, include the following:
Third Quarter Highlights
– Gold sales for this fiscal quarter were 20,030 ounces representing an increase in gold sales of 28 % over the prior quarter; – Positive Income from Operations of US$16.0 million or US$0.12 per share for the three months ended December 31, 2010, as compared to US$5.43 million or US$0.04 per share for the previous quarter(1); – Operating costs at the mine in terms of costs per ounce sold for the three months ended December 31, 2010 were US$439 ($445) compared to US$515 ($534) for the previous quarter(1); – Net income after tax for the quarter ended December 31, 2010 was $7.5 million or $0.06 per share ($0.05 on a diluted basis) compared to $0.9 million or $0.01 per share (on a basis and diluted basis) for the previous quarter(1); – Tonnes of ore placed on the leach pads for the three months ended December 31, 2010 totaled 1,208,678 at an average grade of 0.939 grams per tonne, an increase of 10.8 % and 14.9 %, respectively over the prior quarter. On average 402,893 tonnes of ore per month were placed on the heap leach pads (13,430 tonnes per day). In total 36,477 ounces of gold were placed on the leach pads or 27.3 % more ounces than were placed on the leach pads in the previous quarter; – Total direct mine operating cost per tonne of ore placed on the leach pads were $12.64 per tonne for the quarter ended December 31, 2010 versus $11.36 per tonne during the previous quarter(1), an increase of 11.3 %. The increase in cost per tonne was due primarily to an increase in the strip ratio coupled with a revision in the mining contract escalating formula as well as an important increase in the cost of
diesel fuel.
Bruce Bragagnolo, CEO of the Company, in commenting on the results for the Company’s third ever quarter of operations at the San Francisco Mine said “The Mine’s performance during the three months ended December 31, 2010 continues to be on schedule. The achievement of quarterly gold sales of 20,030 ounces at an operating cost of US$439 per ounce speaks volumes for the hard work of the production team at the mine. We achieved or surpassed all our production targets and saw continuing increases in all operating metrics, including mine production, ore deposited on leach pads, gold recovery and gold and silver sales. We are also very pleased with the exploration efforts in the vicinity of the San Francisco Mine which resulted in a 28% increase in the measured and indicated resources at the San Francisco mine.”
“We are restating our second quarter financial statements to correct an adjustment to the amortization of our strip ratio over the life of the mine. The net result of the restatement is a reduction in cash costs to US$515 per ounce for the second quarter ended September 30, 2010(1).”
CONSOLIDATED RESULTS
For the three months ended December 31, 2010, Timmins reported a net income after tax of $7,537,351 or $0.06 per share ($0.05 on a diluted basis) on revenue of $28.0 million. This compared to a net loss of $1,793,238 million or $(0.02) per share (basic and diluted) during the three months ended December 31, 2009, a period during which commercial operations at the San Francisco Mine had not yet commenced. The financial performance of the Company benefitted from continued strong gold prices and a successful and increasing operating performance at the San Francisco Mine. During the third quarter ended December 31, 2010, cost of sales was $8.9 million. General and administration costs were $687,589 in the third quarter of 2010 compared to $1,489,043 during the third quarter of 2009. Depreciation and amortization charges in this quarter were $2,117,888 compared to $16,321 in the comparable quarter last year. Other expenses during this quarter consisted primarily of the interest expense, mostly attributable to interest on the gold loan, of $4,341,617 and foreign exchange gains, net of interest income, of $774,085.
As a result of the foregoing factors, net income before taxes was $12,246,629 for the third quarter of 2010 compared to a loss of $1,793,238 for the third quarter of 2009. For the three months ended December 31, 2010, net income, after taxes, was $7,537,351 or $0.06 per share ($0.05 on a diluted basis) compared to a net loss of $1,793,238 or $(0.02) per share (basic and diluted) for the three month period ended December 31, 2009.
For the nine month period ended December 31, 2010, the company reported net income before taxes of $16,542,350 or $0.13 per share ($0.11 on a diluted basis), compared to a loss of $3,159,567 or $(0.03) per share (basic and diluted) for the nine month period ended December 31, 2009. For the same nine month period, net income, after taxes, was $7,623,020 or $0.06 per share ($0.05 on a diluted basis) on sales of $62.6 million. This compares to a loss of $3,159,567 for the comparable nine month period of the previous year with, proceeds from the sale of gold and silver were applied as a reduction to the construction and commissioning costs of the Mine.
The remaining third party long-term debt obligation of the Company is the gold loan which was used to complete the commissioning of the mine. During the quarter an additional three scheduled monthly repayments were made which totaled to the cash equivalent value of 5,001 ounces of gold with a gross value of US $6.95 million. As of the date of this press release, the Company has already made six out of twelve payments on the gold loan totaling US $13.43 million in payments. Six more monthly payments are due with the last one scheduled for August of 2011. At the end of the quarter the Company had $4.6 million cash on hand compared to cash on hand of $2.7 million on March 31, 2010.
THE SAN FRANCISCO MINE
The table below illustrates certain key operating statistics for the San Francisco Mine for the three quarters ended December 31, 2010. There were no comparable statistics to report for the three months ended December 31, 2009.
The Company has achieved the following significant improvements in its operating performance:
– In November a 28% increase in the measured and indicated mineral resources was announced based solely on the first phase of the calendar year 2010 drill program;
– Significant improvements to grade control in the pit were implemented;
– The mining contractor brought two additional drills, one additional shovel and five more trucks onto the property to expand production;
– Operations are seeing continued improvements in tonnes mined per day and ore placed on leach pads per day, increasing from 9,948 tonnes processed per day during the April to June quarter to 11,856 tonnes processed per day during the July to September quarter to 13,430 tonnes per day in this quarter, an increase of 35% in productivity since beginning of commercial production.
