Dr. Richard Sutcliffe reports
URSA MAJOR MINERALS REPORTS OPERATIONAL PROFIT OF $2.4 MILLION AT SHAKESPEARE MINE, SUDBURY, ONTARIO FOR THE YEAR ENDED JANUARY 31, 2011
Ursa Major Minerals Inc. has released its financial and operating results for the year ended Jan. 31, 2011. The company is pleased to announce that the Shakespeare nickel-copper mine achieved an operational profit on mining activities of $2,388,738, in the first year of commercial production.
Financial and operating highlights for the year
For the year ended Jan. 31, 2011, the company recorded gross revenue of $14,866,306 on the sale of metals from the Shakespeare mine, located 70 kilometres west of Sudbury, Ont. This revenue reflects three quarters of commercial production. Prior to May 27, 2010, the mine was in the preproduction mining stage.
The company reported an operating profit on mining activities of $2,388,738, net income of $667,998 and comprehensive income of $700,498 for the year ended Jan. 31, 2011.
The quarter ended Jan. 31, 2011, was the third quarter of commercial production at the Shakespeare nickel mine. During the quarter, the company recorded gross revenue of $5,991,995, from the sale of metals, and net income of $455,764.
During the nine months of production ending Jan. 31, 2011, the company delivered a total of 166,913 tonnes of ore to the Strathcona mill at a grade of 0.357 per cent nickel, 0.407 per cent copper, 0.025 per cent cobalt, 0.373 gram per tonne platinum, 0.409 g/t palladium, 0.207 g/t gold and 2.328 g/t silver.
For the quarter ended Jan. 31, 2011, the company delivered 63,864 tonnes of ore to the Strathcona mill at a grade of 0.338 per cent nickel, 0.400 per cent copper, 0.027 per cent cobalt, 0.365 g/t platinum, 0.391 g/t palladium, 0.191 g/t gold and 2.269 g/t silver.
In November, 2010, the company completed 2,582 metres of exploration drilling at the Nickel Offsets property and announced an intersection of 2.89 metres of nickel-rich massive sulphides grading 2.90 per cent nickel, 0.97 per cent copper, 0.16 per cent cobalt, 0.94 g/t platinum, 1.28 g/t palladium, and 0.11 g/t gold. This hole intersected an additional 2.0 metres of precious metal mineralization grading 3.04 g/t platinum, 2.00 g/t palladium, 0.82 g/t gold, with 0.07 per cent nickel and 0.37 per cent copper in disseminated sulphides in the footwall of the nickel-rich massive sulphide. This exploration has defined additional drilling targets on the property.
In November, 2010, the company completed an airborne magnetic and time domain electromagnetic survey of the Disraeli Lake areas north of Thunder Bay, Ont.
In December, 2010, the company resumed drilling at the Shakespeare East deposit, with the objective of increasing resources of the Shakespeare deposit. The drill holes will test for nickel-copper-platinum group metals mineralization up to 400 metres east of, and down plunge from, the previous sulphide mineralized drill intersections reported in 2008.
In February, 2010, and April, 2010, the company closed a non-brokered private placement financing for $1,219,640, to finance the restart of operations at the Shakespeare mine and to finance exploration. In January, 2011, Ursa Major closed a brokered private placement financing for $2,471,820, to finance an accelerated exploration program and for working capital purposes.
In February, 2010, the company arranged a $2.5-million (U.S.) credit facility with Auramet Trading, LLC to finance the company's metal inventory and receivables associated with ore produced from the Shakespeare mine. The credit facility is secured by in-process metal and receivables, and also provides for hedging of base metal prices between ore milling and final metals out-turn.
For the year ended Jan. 31, 2011, the company achieved a strengthened balance sheet with current assets of $5,001,774 and current liabilities of $2,186,720.
During the year, the company appointed Jean-Pierre Colin to the board of directors, Eric Loch was appointed as vice-president mine operations and projects, Vic Hugo, CMA, as financial controller and interim chief financial officer, Douglas Bache was engaged as executive adviser corporate development, and Alison Tullis appointed as investor relations manager.
The quarterly financial statements and related management discussion and analysis will be filed on SEDAR. Additionally, these documents are available on Ursa Major's website. All amounts are in Canadian dollars unless otherwise indicated.
Dr. Richard Sutcliffe, Ursa Major's chief executive officer, commented: "We are extremely pleased to report a profitable year of operations at the Shakespeare mine, a significantly strengthened balance sheet and an expanded exploration program. Our objective is to build Ursa Major through a combination of successful exploration, expanding production and project acquisition."
Outlook
To Jan. 31, 2012, the end of the company's next fiscal year, Ursa Major anticipates the production and delivery of approximately 199,000 tonnes of ore grading 0.373 per cent nickel, 0.419 per cent copper, 0.027 per cent cobalt, 0.397 g/t platinum, 0.420 g/t palladium, 0.252 g/t gold (plus silver equivalent) from the Shakespeare mine. Revenues from metal sales for the fiscal year ended Jan. 31, 2012, are forecast to be $18.2-million and were calculated using an exchange rate at par and metal prices quoted in U.S. dollars as follows: nickel $11.00 per pound, copper $4.00 per pound, cobalt $17.00 per pound, platinum $1,700 per ounce, palladium $700 per ounce and gold $1,350 per ounce. Metal prices are management's estimate of average metal prices for the fiscal year and are based on analyst consensus forecasts for the same period. The processing rates for milling, treatment and refining charges were established under contract with Xstrata Nickel in December, 2006.
Total contained nickel and copper in ore are expected to be 1.6 million pounds and 1.8 million pounds, respectively, in fiscal 2012. Contained metals are subject to mill and smelter recoveries. Total production cost for fiscal 2012 is forecast to be $43.65 per tonne of ore. Fiscal 2012 total production costs are forecast to increase over the previous fiscal year as a result of higher fuel costs and an increase in waste rock removal. After taking into account the cost of drilling and blasting, mucking and crushing, and haulage to the mill, net revenue for fiscal 2012 is forecasted at $12.23 per tonne of ore. Gross operating margin for fiscal 2012 is forecast at $2.4-million.
Trucking operations were temporarily suspended on March 15, 2011, due to the spring season half-load trucking restriction. This restriction is an annual event and is taken into consideration in the annual operating plan for the Shakespeare mine. Trucking resumes when the spring load restriction is removed by the Municipality of Sudbury, which typically occurs in late May. As a consequence of the half-load trucking restriction, the company's revenue is reduced in the first half of the fiscal year.
The company's revenues are derived from base and precious metals, and the company receives prices for the metals that are determined by global market conditions. The company anticipates that demand for base and precious metals will likely remain robust for the first half of 2011. Nickel in particular is very volatile in price and to reduce revenue risks associated with nickel price volatility, the company has a facility with Auramet Trading to hedge the price of base metals between the time of ore delivery and final metals out-turn.
The company's custom milling agreement with Xstrata Nickel expires on Dec. 31, 2011, and the company is currently in discussions to extend this agreement.
In 2010, the company began using a portion of its cash flow from mining operations to finance part of its exploration program. The company intends to continue this strategy in 2011. In January, 2011, the company completed a private placement financing of which part of the proceeds are being used to accelerate and expand the drilling campaign. In addition, and in accordance with the company's strategic plan, management is evaluating further opportunities for base metal property acquisition, particularly for copper, nickel and PGM-rich (platinum group metals-rich) deposits.
Ursa Major has initiated a 7,000-metre drilling program at the Shakespeare East deposit consisting of both infill and step-out drilling (see news in Stockwatch Feb. 10, 2011). The intent is to update the resource estimate beneath the Shakespeare East deposit, and to assess the economics of underground mining operations, with the company's own mill on site. P&E Mining Consultants Inc. has been engaged to produce a technical report on the updated resource estimate and economic analysis. The work program will take approximately four months to complete.
The company is encouraged by results from the 2010 program at the Nickel Offsets option and anticipates that it will continue to drill targets on this property in the first half of 2011. The results of 2010 drilling and the geophysical surveys are being compiled into a three-dimensional model to generate targets for the next round of drilling. The company plans to complete a five-hole, 2,500-metre program with further borehole EM surveys at Nickel Offsets over the next six months.
Ursa Major has also recently completed two drill holes to test magnetic and time domain electromagnetic anomalies defined by the airborne survey of the Disraeli Lake area, north of Thunder Bay, Ont., that was completed in 2010 and is awaiting assays. The company anticipates conducting further geological mapping and prospecting on this property in 2011. This property is interpreted to be a similar geological environment to Magma Metals' property that contains the Current Lake platinum group metal discovery.
The company has completed a full positive feasibility study at Shakespeare that evaluated an open pit mine and 4,500-tonne-per-day on-site concentrator. The execution of this project remains a baseline strategy for the company and it continues to be evaluated at the management and board levels. Ursa Major has retained Raymond James Ltd. as its strategic adviser. Raymond James will assist the company in evaluating strategic merger and acquisition opportunities. In connection with the company's plan to expand the Shakespeare mine and construct an on-site concentrator, Raymond James will assist with evaluating development options and financing alternatives.