Rusoro Mining loses $36.8-million (U.S.) in Q2Rusoro Mining loses $36.8-million (U.S.) in Q2
2008-08-28 20:32 ET - News Release
Mr. George Salamis reports
RUSORO MINING REPORTS Q2 2008 FINANCIAL RESULTS
Rusoro Mining Ltd. has released its financial results for the quarterended June 30, 2008. The company's second quarter consolidatedfinancial statements and management's discussion and analysis for thethree- and six-month periods ended June 30, 2008, have been filed onSEDAR.
All amounts set out in the company's financial statements andMD&A are unaudited and in U.S. dollars, unless otherwise stated.
Second quarter 2008 highlights:
- On June 10, 2008, the company closed an $80-million syndicate financing led by Peter Hambro Mining PLC. The proceeds were raised for asset acquisitions and for corporate development projects.
- On July 8, 2008, the company closed the acquisition of 100 per cent of the outstanding shares of El Callao Gold Mining Ltd. and Drake-Bering Holdings B.V. (the Hecla-Venezuela acquisition) in consideration of $20-million paid in cash and $5-million paid by the issuance of 4,273,504 common shares of the company. The main assets being acquired with the Hecla-Venezuela acquisition are the block B -- Isidora mining leases and the La Camorra mill facility in Bolivar state, Venezuela (the Hecla-Venezuela assets).
- On July 4, 2008, the company entered into an agreement with the Venezuelan Ministry of Mines and Basic Industries (MIBAM) to establish a mixed enterprise to carry on with gold exploration, development and mining of the Hecla-Venezuela assets. The mixed enterprise will be owned 50 per cent by the company and 50 per cent by Empresa Minera Nacional (EMN), a company owned by MIBAM. The mixed enterprise is expected to be created within six months of the date of the agreement with MIBAM. None of the company's existing assets, such as the Choco 10 mine, are to be contributed to the mixed enterprise.
- During the second quarter of 2008, all Venezuelan operations, development and exploration projects were hit by higher-than-expected costs due to the depreciation of the U.S.-dollar-to-Venezuela-bolivar exchange rate from 4.98 during the first quarter of 2008 to 3.51 bolivars per $1 (U.S.) during the second quarter of 2008. Steps are under way to mitigate this situation by changing the nature and currency of some of the major mining, development and exploration contracts.
- Some mine fleet equipment ordered in the fourth quarter of 2007 started to arrive on site at Choco 10 mine toward the latter part of the second quarter of 2008, and is being readied for trials and production. Although the company has suffered delays in the importation of key equipment into Venezuela, it is expected that most of the ordered equipment will arrive in the next several weeks.
- The Choco 10 mill performed beyond expectations with another record performance of a monthly average of 209,414 tonnes treated in the second quarter 2008.
- During the second quarter of 2008, the company awarded the mandate to complete scoping and feasibility studies for the Choco 10 mine to Micon International Ltd.
- Significant gold exploration discoveries were made at the Valle Hondo, Increible 14 and Yuruan projects during the second quarter of 2008.
Results of operations and financial position
During the three months ended June 30, 2008, the company sold 36,343ounces of gold for a total amount of revenue of $23.2-million. Net lossfor the three months ended June 30, 2008, was $36.8-million, whichincludes non-cash expenses such as amortization of $10.8-million,stock-based compensation of $18.4-million and an impairment adjustmentof $1.6-million to write down gold inventories to net realizable value.
Net cash used in operating activities during the three-monthperiod ended June 30, 2008, was $6.8-million, cash generated infinancing activities was $76.4-million and cash used in investingactivities amounted $18.7-million. As at June 30, 2008, the company hada cash position of $62.5-million to be used to finalize the financingof the Hecla-Venezuela acquisition and for corporate developmentprojects.
We seek Safe Harbor.