Comprehensive UpdatePress Release Source: Desert Sun Mining Corp.
Desert Sun Announces Results For The Thirteen Months Ended September 30, 2004
Friday November 12, 12:00 pm ET
TORONTO--(BUSINESS WIRE)--Nov. 12, 2004--DESERT SUN MINING CORP. (TSX:DSM - News; AMEX:DEZ - News) continues its steady advance towards production in early 2005, when it expects to be producing at a steady state rate of 103,000 ounces per annum by the end of the second calendar quarter. Desert Sun has changed its financial year-end from August 31 to December 31, with a transition year of 16-months ending December 31, 2004 and a fourth interim period covering the three and thirteen months ending September 30, 2004.
The dewatering of the Jacobina Mine, removal of the previous track haulage system and slashing of the main haulage drifts to accommodate the large mechanized equipment have been completed, and underground services are being installed. Ramp development has commenced and is ahead of schedule. The Company has ordered mobile equipment from Atlas Copco, who is providing financing over a period of 24-months. Atlas Copco is establishing a parts warehouse at the Jacobina Mine and has entered into a Full Service Agreement with the Company. To ensure that Desert Sun meets its production timetable, bridge units have arrived on site and are operating well. The Jacobina Mine offices, mechanical shop and staff facilities have been completed and tailings lines are being installed to the tailings dam area. Construction of the foundations for the four new leach tanks and the crusher has started and the installation of power and instrumentation is expected to be substantially completed by the end of November. A "Commissioning Team" has been established to ensure that mill commissioning proceeds smoothly.
In July 2004 the Company received the final operating and environmental permits required to re-start mining operations at the Jacobina Mine. In addition to the License of Operation for the mine, Desert Sun has been issued licenses for water usage and water discharge, permits for the purchase and use of cyanide in the metallurgical process and permits for buying and use of explosives in the mining operations. On September 17, 2004 a symbolic "Jacobina Mine Opening" took place that was attended by The Governor of Bahia, The Mayor of Jacobina, The Canadian Ambassador for Brazil and the Ministry of Mines Brasil.
Recognizing the enormous potential of the Bahia Gold Belt, Desert Sun is conducting a significant exploration program in 2004, focused on exploring several new targets identified in the 2003 drill program, most notably Morro do Vento, Canavieiras Mine, Morro do Vento Extension and the northern "blue sky" areas. Drilling at Morro do Vento continues to confirm the potential to outline a large mineral resource amenable to low cost bulk mining techniques. The target Intermediate reef package at Morro do Vento is consistently about 60 to 70 metres wide and extends along the full two kilometres strike length. Morro do Vento is located about 1.5 kilometres from the 4,200 tonnes per day processing plant that is currently being refurbished by Desert Sun in preparation for production. The first stage of metallurgical tests to be carried out by SGS Lakefield Research on samples from diamond drill holes at Morro do Vento, to determine recoveries using conventional milling, reported that the overall gold extraction for the Master composite was 96.4% with a range of 95.7% to 97.0%. At the Canavieiras Mine, located three kilometres north of the processing plant, the mineralized horizons are located within a fault-bounded block that is approximately 1.2 kilometres long and 400 metres wide. The mine was last worked in 1998, and past production totaled 458,247 tonnes at a grade of 8.65 g Au/t. In addition, the Company is conducting a major exploration program along the Bahia Gold Belt, which has outlined four major target areas for more detailed follow up. Desert Sun is carrying out an initial 2,000 metre drilling program to test targets identified from soil geochemical sampling by Desert Sun and a recently completed induced polarization geophysical survey by Fugro-LASAGeomag. Desert Sun's wholly owned Bahia Gold Belt property now totals 131,539 hectares, which includes 5,996 hectares in the mining lease, 97,476 hectares of granted exploration concessions and 28,067 of filed applications for exploration concessions.
In the three months ended September 30, 2004, Desert Sun invested $8.1 million in the acquisition, exploration and development of the Jacobina Mine, compared with $4.7 million in the three months ended June 30, 2004, $1.8 million in the four months ended March 31, 2004 and $6 million in the three months ended November 30, 2003. Expenditure in the first quarter included $5 million to acquire the remaining 49% interest in the Jacobina property from Valencia Ventures Inc. The purchase price of $5 million was satisfied through a cash payment of $2 million and the issuance of 1,851,852 common shares at a price of $1.62 per share.
As at September 30, 2004 Desert Sun had cash and equivalents totaling $15.8 million and no debt. On a consolidated basis, the Company recorded a net loss from operations of $1,351,000 in the three months ended September 30, 2004, or 2 cent per share, compared with a net loss in the third, second and first quarters of $543,000, $5,116,000 and $835,000 respectively. Included in the loss from operations is a non-cash compensation expense of $784,000 (third quarter: $105,000, second quarter: $4,478,000, first quarter: $nil), attributable to options issued to directors, officers, employees and consultants and which vested during the particular period, as valued in terms of the Black-Scholes option pricing model. The net loss from operations in the three months, excluding this expense was $567,000, comprising general and administration expenses of $647,000 and interest received on cash invested of $80,000.
About Desert Sun Mining Corp
Desert Sun owns the Jacobina Mine in Bahia State, Brazil and the associated large Bahia Gold Belt, which stretches for over 155 km along strike. The mine produced almost 700,000 ounces of gold from 1983 until 1998, when it was put on standby due to low metal prices. Total measured and indicated mineral resources reported under National Instrument 43-101 and reviewed and confirmed by Micon International are 14,802,000 tonnes at 2.86 g Au/t containing 1,362,300 ounces of gold. Inferred mineral resources total 29,487,000 tonnes at 2.62 g Au/t containing 2,479,500 ounces of gold. These resources are on less than 10% of the property. DSM commissioned a feasibility study through SNC Lavalin which in September 2003 confirmed the economics of reactivating the Jacobina Mine at a gold price of US$350 per ounce and outlined proven and probable reserves of 10,746,000 tonnes grading 2.20 g Au/t containing 758,600 ounces of gold. Based on this feasibility study, DSM has begun reactivation of the mine and expects to be in production by the second quarter of 2005, producing 75,000 ounces in 2005 and reaching steady state of approximately 103,000 ounces per annum thereafter, at an average cash cost of approximately US$190 per ounce.
Under SEC Guide 7 standards, as reported in the Company's 20-F filing, proven and probable reserves are as stated in the paragraph above. In addition, mineralized material in the former Canavieiras mine totals 659,000 tonnes grading 5.88 g Au/t. The reserves have been estimated using a gold price of US$300/ounce, a 3:1 $US:$R exchange rate, a cutoff grade of 1.3 g Au/t , dilution of 15% at grade estimated from diamond drilling information and including an allowance for mining recovery including pillars.
Statements in this release that are not historical facts are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned that any such statements are not guarantees of future performance and that actual developments or results may vary materially from those in these "forward-looking statements".
Desert Sun Mining is a Canadian gold exploration and development company listed on the Toronto Stock Exchange under the symbol "DSM" and on the American Stock Exchange under the symbol "DEZ". (www.desertsunmining.com).
Desert Sun Mining Corp. (TSX:DSM - News; AMEX:DEZ - News)
Contact:
Desert Sun Mining Corp.
John Carlesso
Vice President, Corporate Development
416-861-5881
1-866-477-0077
www.desertsunmining.com