TORONTO, Oct. 17, 2011 /CNW/ - Cline Mining Corporation ("Cline Mining" or the "Company") (TSX:CMK) today announced its results for the three and nine months ended August 31, 2011 ("third quarter 2011" and "nine-month period 2011" respectively).
Third Quarter Results
Financial
The loss for third quarter 2011 of $992,755 (
.00 per share) compares with a loss of $7,530,237 (
.07 per share) for the third quarter 2010. Cash used in operating activities of $691,667 for the third quarter 2011 compares with $478,868 for the third quarter 2010.
The loss for nine-month period 2011 of $9,167,166 (
.05 per share) compares with a loss of $10,101,808 (
.09 per share) for the nine-month period 2010. Cash used in operating activities of $2,603,616 for the nine-month period 2011 compares with $2,130,207 for the nine-month period 2010.
Mineral properties and deferred development expenditures (including expenditures written off) for the nine-month period 2011 of $76,422,959 brings the total for capitalized mineral property and development costs to $143,871,549 at August 31, 2011. The expenditures were substantially all incurred at New Elk mine.
As at August 31, 2011 the Company had cash of $57,353,320, total assets of $208,433,672 and shareholders equity of $202,547,383, compared with $43,758,330, $67,448,590 and $116,731,279 respectively as at November 30, 2010.
Cash and Liquidity
As at August 31, 2011 the Company had cash and cash equivalents of $57,353,320 compared with $43,758,330 at November 30, 2010. The increase in cash is associated with $81,284,042 in net proceeds from the issuance of shares related to the short form prospectus offering of 31,372,000 common shares at a price of $2.75 per common share for aggregate gross proceeds of $86,273,000 (which included the exercise of the over-allotment option by the underwriters in full), offset by planned operational and capital expenditures at the New Elk mine.
As mentioned above, capitalized mineral property and deferred costs increased in aggregate by $76,422,959 during the nine-month period 2011. To minimize liquidity risk, the Company prepares budgets for both its exploration activities and its overhead expenditures and closely monitors its liquidity position. The Company's working capital position at August 31, 2011 of $52.7 million compares with $40.0 million at November 30, 2010.
In addition to the cash on hand at August 31, 2011 of $57,353,320 the Company has subsequently raised additional funds of $40 million though the sale to Xstrata of its Lossan property and has also secured a US$50 million stand-by debt facility, further extending the financial stability and strength of the Company. Please refer the Company's MD&A for the third quarter for further discussion regarding the debt facility.
Over the full year 2011, the Company anticipates spending approximately $84.0 million in new capital costs, approximately $39.0 million in operating costs and approximately $13.7 million in transportation and loading costs (to the seaborne market and assuming 200,000 tons of coal shipped) at its New Elk coal mine. Up to August 31, 2011 and as discussed the Company has spent approximately $76.4 million, leaving approximately $46.6 million in capital and operating costs remaining to be spent by the end of December 2011. In addition to substantial cash reserves, the Company anticipates producing 200,000 tons by the end of December 2011, the sale of which will also offset the capital and operating costs of the New Elk coal mine.
New Elk Production and Development
Production of metallurgical steel-making coal slated for world markets is anticipated to ramp up to a production run-rate of 3.0 million tons annually during the first quarter of 2012, as described and detailed in the 2011 Technical Report. Total production for 2012 is anticipated to be 2.75 million tons.
Total raw coal production in the mine start-up phase is 74,140 tons to August 31, 2011, which is fed into the New Elk coal wash plant to produce saleable metallurgical coal. Plant feed to August 31, 2011 is 43,439 tons. Plant coal produced to specification up to August 31, 2011 is 10,259 tons. Substantial tonnage of coal has been used as bedding coal at the New Elk mine-site and the Trinidad train load-out site and for trial runs and calibration of the New Elk preparation plant.
As a result of the ventilation changeover from auxiliary ventilation to full ventilation on August 24, 2011, the number of continuous miners allowed to operate simultaneously in the Allen Mine has been increased from one continuous miner to three. Presently, two continuous miners are operating in Allen Mine underground in Apache Seam and one continuous miner is deployed in slope development into the Blue Seam.
Currently, 6 continuous miners are on site at the New Elk mine and will increase to 8 continuous miners by the end of December 2011, with the remaining 2 continuous miners to be deployed during the first quarter of 2012, for a total of 10 continuous miners, arranged in 5 super-sections. As discussed, these 10 continuous miners will enable the New Elk coal mine to achieve a production run-rate of 3.0 million tons annually (300,000 tons per continuous miner), currently anticipated to be reached by the second quarter of 2012.
The production of saleable metallurgical coal is presently expected to reach 200,000 tons by year-end 2011. Coal production guidance from time to time is always subject to unforeseen start-up and other unexpected delays.
Coal prices and trends
The international coking coal market continues to soften. The benchmark price for prime Australian exports of coking coal into the seaborne trade for the 2011 fourth quarter has been reported to be $285 MT; this is down from the previous quarter price of $315 MT. The Company expects that its New Elk metallurgical coal will be marketed at a discount to the benchmark, adjusted for quality. The international coal year for annually negotiated prices commences on April 1 and negotiations between the buyers and sellers generally begin in the November/December period. There has been very little spot business conducted in the North American coking coal market, but major steel companies are in the market for 2012 tonnage. It is generally believed that there will be some softening of prices compared with 2011.
About Cline: Cline has significant metallurgical coal property interests in North America with NI 43-101 compliant independent Technical Reports. Cline Mining Corporation is a mine development company focused on the exploration and development of metallurgical steel making coals in Canada and the U.S., iron ore in Madagascar and the Cline Lake Gold Mine Property in northern Ontario, Canada.
CLINE MINING CORPORATION
Ken Bates, President and Chief Executive Officer
Forward-Looking Information
This press release contains forward-looking statements (including "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995) relating to, among other things, the operations of the Company, the environment in which it operates, the timing and amount of capital expenditures, the results of exploration and mine development, the availability of funding to the Company, the timing of geological reports and the Company's future financial and operating performance. Generally, 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". Such statements are based on assumptions, estimates, forecasts and projections made in light of the trends, conditions and expected developments that are considered to be relevant and reasonable in the circumstances at the date that such statements are made. Forward-looking statements are not guarantees of future performance and such information is inherently subject to known and unknown risks, uncertainties and other factors that are difficult to predict and may be beyond the control of the Company. A number of factors and assumptions may cause actual results, level of activity, performance or outcomes of the Company to be materially different from those expressed or implied by such forward-looking statements including, without limitation, the future price of relevant precious metals, the estimation of mineral reserves and resources, capital, operating and exploration expenditures, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters, risks set forth in other public filings of the Company/risks set forth in the Company's final prospectus under the headings "Risk Factors" and "Forward-Looking Statements"/risks set forth in the annual information form under the heading "Risk Factors". Consequently, undue reliance should not be placed on such forward-looking statements. In addition, all forward-looking statements in this press release are given as of the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, save and except as may be required by applicable securities laws.
Head office: Brookfield Place, 181 Bay Street, 3rd Floor, Clarkson Gordon Heritage Building, Toronto, ON, M5J 2T3
For further information:
Ken Bates, President and CEO
Ernest Cleave, Vice-President and CFO
Office: (416) 504-7600
Email: info@clinemining.com
Website: www.clinemining.com