VANCOUVER, BRITISH COLUMBIA (TSX VENTURE: SWC.DB) today
announced its results for the first three months of 2008 including
results of operations at its high grade Minto copper-gold mine
located in the Yukon. Sherwood generated cash flow from mining
operations(i) of $16.9 million based on sales of 7.1 million pounds
of copper, 3,950 ounces of gold and 25,016 ounces of silver. This
material was mostly produced in the fourth quarter of 2007 but sold
in 2008 and, in accordance with Sherwood's revenue recognition
policies, recorded in the first quarter of 2008.
First quarter 2008 production totalled 10.95 million pounds of
payable copper at an estimated cash cost of $1.19(i) per pound of
payable copper, a period during which Sherwood completed
commissioning the Phase 2 mill expansion increasing mill throughput
from 1,563 tonnes per day to 2,400 tonnes per day by mid-March.
Since then, production has been sustained at levels equal to or
higher than design capacity of 2,400 tonnes per day for the process
plant. Revenue and expenses for first quarter production will be
recognized when this material is sold.
"Production at our high grade Minto copper-gold mine ramped up
to and often exceeded design capacity by the end of the first
quarter of 2008," said Stephen Quin, President & CEO. "Even
though we were commissioning the Phase 2 mill expansion to 2,400
tonnes per day during the quarter, we still reported very
respectable cash costs(i) of $1.19 per pound on 10.95 million
payable pounds of copper produced. Cash flow from mining
operations(i) of $16.9 million was also strong. Going forward, we
expect to benefit from sustained throughput at or above design
levels and, as a result, unit costs should fall below the levels
reported for the first quarter. Later in the year, we will also
benefit from connecting to lower cost grid power as the
transmission line is completed from the Minto mine to the Yukon
electrical grid."
During the first quarter, Sherwood continued its project
optimization process, developing a rescheduled open pit mine plan
that should result in increased production in 2009 versus what was
previously forecast as a result of bringing some of 2010's forecast
production forward. Production forecasts for 2008 of approximately
55 million pounds of payable copper and 24,000 oz of payable gold
remain unchanged. "The rescheduled open pit should result in more
copper production sooner, which should increase value to all of our
stakeholders," said Mr. Quin.
Highlights of First Quarter 2008
During the first three months, even though this was a period of
commissioning and ramp up to Phase 2 mill capacity, Sherwood marked
a number of notable achievements, including the following:
- Produced 11.32 million pounds of contained and 10.95 million
pounds of payable copper at an estimated cash cost(i) of $1.19 per
pound of payable copper, including by-product credits, treatment
charges and selling costs. Going forward, unit costs should trend
down as a result of increased production and mill throughput, and
conversion to grid electrical power before the end of 2008.
- Mined 321,431 dmt of ore from the main Minto pit, processing
153,368 dmt and stockpiling the balance for future processing.
- Completed commissioning of Phase 2 mill expansion to 2,400 dmt
per day, achieving design performance in the latter part of March
and a one day throughput record of more than 2,500 dmt/day in that
period.
- Shipped 9,158 dmt of concentrate from the Port of Skagway in
early March 2008, the majority of which was produced in 2007.
- Held 10,197 dmt of copper concentrate grading 38.4% copper in
inventory at March 31 2008, 9,849 dmt of which was shipped in early
April. Revenue and costs related to this shipment will be
recognized in the second quarter of 2008.
- Generated cash flow from mining operations(i) of $16.9 million
and income from mining operations of $13.0 million on the sale of
7.1 million lbs of copper, 3,950 ounces of gold and 25,016 ounces
of silver, most of which was produced in 2007.
- Generated adjusted net earnings(i) of $3.7 million, before the
following non-cash items: unrealized loss on mark-to-market of
forward metal sales ($70.4 million), financing fees ($1.5 million),
stock based compensation expense ($0.7 million) and future income
tax recovery ($2.8 million). Before these adjustments, Sherwood
reported a net loss of $66.1 million.
- Appointed Kevin Weston as Chief Operating Officer and Randall
Thompson as General Manager of the Minto Mine.
- Acquired 93% ownership in Western Keltic Mines, owner of the
high grade Kutcho copper project in BC and commenced a reassessment
of the development approach to the Kutcho project.
- Entered into a memorandum of understanding with Firestone
Ventures Inc. for the creation of an exploration company, Northern
Tiger, to own and explore certain mineral interests in the Yukon
currently controlled by Firestone and by Sherwood, in proximity to,
but separate from, the Minto mine property.
Highlights Subsequent to March 31
Subsequent to March 31, Sherwood notes the following significant
events:
- Operations personnel continued to push mill performance and
optimize day-to-day activities, achieving single day throughput
records of 3,363 and 3,386 dmt per day (141% of design capacity).
Overall production averaged at design capacity in April and May to
date, aside from five operating days when the mill was shut down
for scheduled maintenance, including replacement of liners and
grates in the SAG mill. As noted above, Sherwood aims to operate
the mill at above design capacity for the remainder of the year in
order to achieve its production objectives for 2008.
- Reported copper-gold discoveries in previously untested areas
as part of a 20,000m $4.4 million exploration program underway at
the Minto Mine which is focused on better defining and expanding
known mineralized areas, as well as evaluating new targets.
- Commenced a major drill program at the Kutcho copper project
with the objective of better defining the higher grade near surface
mineralization and providing samples for metallurgical testing.
- On May 21, Western Keltic shareholders voted in favour of
completing an amalgamation with a wholly owned subsidiary of
Sherwood Copper, which amalgamation was effective May 27, 2008.
99.9% of all votes cast at the meeting were in favour of the
amalgamation.
Financial Results
Sherwood reported a net loss of $66.1 million in the quarter
ended March 31, 2008, primarily as a result of non-cash unrealized
losses on forward metal sales of $70.4 million, as compared with a
net loss of $1.6 million for the period ended March 31, 2007. The
non-cash unrealized losses on forward metal sales of $70.4 million
were attributable to a notable increase in the future prices of
copper on March 31, 2008 versus future prices at the beginning of
the period.
In the first three months of 2008, Sherwood recorded net revenue
of $28.6 million on the sale of 9,158 dmt of copper concentrate,
most of which was produced in the fourth quarter of 2007. Cash
operating costs of $11.8 million and non-cash operating costs of
$3.8 million resulted in income from mining operations of $13.0
million.
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 results for first quarter
2008 are available in the Company's unaudited consolidated interim
financial statements and management discussion and analysis for the
three month period ended March 31, 2008 filed on SEDAR at
www.sedar.com, while additional information on production results
is set out in the Company's news release dated April 17, 2008.
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.
Concentrate Shipments
10,196 dmt of copper concentrate were held in inventory at March
31, 2008, of which 9,849 dmt grading approximately 39% copper were
shipped in early April of 2008 and will be recognised as revenue in
the second quarter of 2008. Sherwood expects to settle 2,668 tonnes
of forward copper sales in June 2008, matching these sales to the
final price settlement of the March 2008 concentrate shipment,
which totalled 9,158 dmt of concentrate. These forward copper sales
have an average strike price of $6,385 per tonne of copper. 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.
Updated Outlook
Given that the mill has demonstrated capacity significantly 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.
As part of its optimization plan, Sherwood has rescheduled mine
production from the main pit at Minto in order to accelerate the
mining of high grade ore currently scheduled for production in
2010. This rescheduling involves developing the pit northward from
the current pit walls, as opposed to the prior plan of developing
the southern portion of the pit first. This rescheduled mine plan
will expose the largest amount of high grade copper-gold ore
(greater than 4% copper and 2g/t gold) in the main Minto pit 12-18
months earlier than previously planned, resulting in increased
copper production in 2009 while reducing the forecast production
for 2010 below that set out in the February 17, 2008 press release.
Given current very high copper and gold prices, this change in pit
scheduling should result in several million pounds of copper
production being brought forward from 2010 into 2009, without
reducing Sherwood's forecast production of approximately 55 million
pounds of copper in 2008. Additional details will be provided in
respect of the rescheduled production outlook for 2009 and 2010 in
the near future.
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 expects to lever off its successful development of the
Minto Mine and rapidly advance the Kutcho project to a production
decision.
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 has 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.
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.
(i)These are non-GAAP performance measures and readers should
refer to notes on non-GAAP performance measures on page 12 of the
Company's management discussion and analysis for the three month
period ended March 31, 2008 as filed on Sedar for further
details.
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 Brad Kopp
Investor Contact (604) 687-7545 (604) 689-5041 (FAX) Website:
www.sherwoodcopper.com
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