Polar Star Mining Corp (C-PSR) - News Release
Polar Star cuts expenses, raises production targets
2012-11-14 12:11 ET - News Release
Shares issued 166,001,002
PSR Close 2012-11-12 C$ 0.18
Mr. Colin Bird reports
POLAR STAR CORPORATE AND STRATEGIC UPDATE
Polar Star Mining Corp. has released a management update following the company's recent fundraising, and organizational and management changes.
Highlights
- Successful closing of a recent $6.5-million fundraising demonstrates strong investor support for the new executive and non-executive team;
- New non-executive chairman, chief executive officer and non-executive director appointed to the board as part of this fundraising and restructuring;
- Significant reduction and rationalization of corporate expenses already achieved with additional potential savings targeted in the near term;
- Chepica mine successfully increasing production and revenue. Revised Chepica mine design and production plans have been put in place intended to sustain higher production;
- Key items of capital equipment identified and being ordered to help achieve revised production targets at Chepica;
- New imminent Chepica exploration drilling program;
- Review of all current joint venture agreements and 100-per-cent-owned licences in order to minimize holding costs;
- New highly prospective copper exploration target identified north of the Melisa target at the Montezuma property.
Chepica mine
In October, 2012, the Chepica mine achieved its highest monthly revenue during Polar Star ownership. Production increases are expected to continue as the development program produces more faces for exploitation. The result of more faces will be more flexibility providing the opportunity to blend and balance input grade to the plant.
The company intends to purchase a single boom drill rig and an additional scoop tram to meet the new production and development objectives. Similarly, the company is placing orders for electrical transformers and an additional ball mill to meet the increased processing capability.
A surface diamond drill program will commence imminently with the initial objective of defining the next two years production. The program will test the vein structures currently being mined and will also test other veins in the region for mining suitability. Veins closer to the processing plants will have evaluation priority, and other veins within the general concession area will be explored in the midterm.
Chepica has recently demonstrated improving production and revenues.
Montezuma
A continuing review of the Montezuma exploration concessions in the major copper-producing area near the town of Calama has confirmed a number of areas to be highly prospective and worthy of additional exploration. Recent prospecting work has identified an area in North Melisa where there appears to be wide veins over a considerable strike area. This is evidenced by small workings scattered along a distinct trend line. The veins are numerous and parallel. The company intends to carry out trenching in the area with a view to assessing the mineralization between the significant veins.
South Melisa has several defined stockwork systems, which are also populated with abundant previous small mine workings. As such, South Melisa also represents a short-term exploration target for the company, and future exploration work there will test for the possibility of a concealed porphyry below the stockwork.
The central area of Montezuma, the Patricia target, also shows good indication for the possible discovery of a new porphyry system, and information provided by the company's previous drilling campaign will provide a basis for drill hole positioning in future programs. At the moment however this area is being subordinated to the work plan at Melisa.
The Karina target to the south shows good overall potential, and detailed mapping and sampling will take place in order to decide its priority and ranking in any future drilling program.
BHP Billiton joint venture agreement
Polar Star continues to liaise with BHP Billiton in relation to their joint venture agreement over 172,800 hectares of exploration land currently held by Polar Star. As previously reported, BHP Billiton has until July 13, 2013, to decide which of the five blocks currently under option it wishes to select for further investigation.
Other exploration areas
Other exploration areas in the Polar Star portfolio are being evaluated for prospectivity and potential contribution to the group. The board is considering all options to generate value for its shareholders, and these will include further joint venture agreements, direct exploration or possibly a spinoff of non-core assets into a new dedicated copper-gold exploration vehicle. The board remains open-minded and looks forward to announcing the results of this internal review to shareholders in due course.
Corporate
The company is pleased to announce that it has now successfully concluded its recently announced $6.5-million equity fundraising. It was pleasing to see that most of the existing institutional shareholders participated in this offering and that a significant new institutional shareholder, Praetorian Resources Limited, also joined the share register.
The company is in the process of implementing a significant cost-cutting program at both the Toronto head office and the Chilean regional office level, and this rationalization will continue as the reorganized board develops and executes upon the revised strategy for the group. To illustrate this, the revised aggregate cash remuneration for the company's five-person board has fallen to approximately $100,000 per annum, and a number of other non-core company contracts and payments have either been cancelled or not renewed.
As already mentioned, as part of this equity offering there was a major overhaul of senior management. The company is delighted to have been able to attract Kaare Foy to act as chairman and Colin Bird to act as chief executive officer. Mr. Foy was one of the founders of Great Panther Silver Ltd., which subsequently listed on both the Toronto Stock Exchange and the NYSE Amex, and attained a market capitalization of over $600-million (U.S.). Mr. Bird has founded and floated several public companies in the resource sector, and served on resource company boards in the United Kingdom, Canada and South Africa. In the exploration arena he founded, financed and was chairman of Kiwara PLC, an AIM-listed company, which discovered, and sold to First Quantum Minerals for $270-million, a large open-pit copper project in Zambia.
The new management team is determined to continue to take a strong stance toward cost reductions to ensure every company dollar is directed toward maximum shareholder return through the development of the company's existing asset base. Remuneration is now significantly geared toward performance with cash payments reduced to a minimum.
We seek Safe Harbor.