Maudore Announces Third Quarter 2013 Results

MONTREAL, Dec. 2, 2013 /CNW Telbec/ - Maudore Minerals Ltd. (TSXV: MAO) (US OTC: MAOMF) (Frankfurt Exchange: M6L) announces the financial results for the third quarter ended September 30, 2013.

Highlights for Q3-13

• Production of 5,215 ounces of gold of which 5,065 were sold in Q3-13 generating $7M of revenues that are capitalized against the development cost of Vezza;
• Initiation of exploration and development drilling underground at Sleeping Giant on the new ore zones and extensions to the historical high grade zones;
• Suspension of the Vezza project's development on July 16^th, 2013 and subsequent mine out of the currently developed ore zones by the end of September;
• August re-start of underground mining at the Sleeping Giant mine in remnant mining areas;
• Completion of a custom milling agreement with Abcourt Mines Inc ("Abcourt") in September;
• Initial treatment of the Abcourt Mines production beginning in October;
• Negotiation and closing of Standstill Agreements for both Aurbec and Maudore and acceptance of a Consensual Restructuring Financing Proposal
• Filing of the ancillary Rights Offering preliminary short form prospectus in November;
• Initial tabulation of the aero mag survey for the overall property holdings.

Vezza Project

During Q3-13, 40,361 tonnes of ore were extracted at the Vezza Project and trucked to the Sleeping Giant Mill, producing 5,215 ounces of gold. Since the Vezza Project was in development, revenues from the gold sales were used to offset capital development costs.

In mid-April, initial steps were taken to reduce the development cost at the Vezza Project in advance of declining gold prices. This involved a first round of contractor layoffs associated with the long term development plan. While partially effective, cost reductions from this action were not sufficient to meet the further decline in the gold price. This was followed by a second round of reductions on July 16, 2013, when the Corporation announced it was suspending all development at the Vezza Project and will only mine its developed mineralized inventory. The Corporation will now focus on targeting higher grade gold opportunities at its Sleeping Giant property. The Corporation finished mining at the Vezza Project on September 22^nd with the final Vezza material being completed on October 2^nd. During this time, a small workforce was deployed from Vezza to the Sleeping Giant mine to prepare the underground workings for exploration drilling and remnant mining. Currently the Vezza project is on care and maintenance and the lower section of the mine up to the 300 meter level is being allowed to flood. Because of the slow inflow of water it is anticipated that this will take between 8 to 10 months to fill up to the 300 level at which time the 300 meter level pumping station will be reactivated to keep the water level static until such time in the future the metal price would justify re-activation of this mine.

The direct cost profile for Aurbec during this time clearly shows the improvements achieved and the relatively short time to accomplish these reductions. See statistics table below for details.

Assets are tested for impairment when events or changes in circumstance indicate that the carrying amount may not be recoverable. As at June 30, 2013, the Corporation determined that suspending development at the Vezza Project triggered an impairment testing. The Corporation used a cash-flow approach to estimate the fair value less cost to sell on the Vezza Project and a $9,604,403 non-cash impairment charge was recognized during Q3-13 year to date.

Sleeping Giant Mine

Remnant mining at Sleeping Giant mine commenced on August 13^th with one mining crew. Approximately 979 tonnes were initially mined from the first remnant stopes at an average grade of 6.64 gpt. As Vezza was shut down, more crews moved providing production from three remnant stopes going into Q4. While the initial stoping results delivered expected results, management still anticipates variable conditions in general from the remnant areas due to their uncertain continuity. However, these areas provide the benefit of deploying experienced mining crews to interim production efforts while the extensions to historic high grade areas and the new zones continue to prove viable through the infill development drilling.

In parallel to the restart of Remnant mining at Sleeping Giant, underground diamond drilling on the growth targets of the extensions to the historical high grade zones plus the infill drilling on the new zones at depth began on August 13th. The first drill was mobilized to the 975 level to test the new zone potential of 785N and #16 zone between the 975 and the 915 meter levels. The second drill arrived on August 26^th and began testing the extensions to the #30, #20 and #8 zones from the 725 meter level in the "shaft shadow" area to the west of the historical mining. The initial results of these programs were encouraging and validated earlier assumptions regarding the potential of these areas. On October 24^th the Corporation issued a Press Release that documented the first results from this drilling campaign.

By the end of Q3-13, 3,269 meters out of a 20,000 meter initial drill campaign had been drilled from these 2 locations. On October 23^rd a third drill was mobilized to complete stope definition drilling on the 725 #30 zone target in preparation for the first stoping activity in the area of the #30 vein extension. As at November 20^th, 2013, a total of 8,012 meters of drilling have been completed by all three drills.

The results included in the October 24, 2013 press release verify the existence of the high grade extensions to the historic producers as well as the continuity and grade of the newer zones at depth. Work continues to improve the understanding of these structures with the goal of adding to the updated resource and reserve base reported in the recently released 43-101 updated mineral resources published on October 29^th.

While this underground drilling continues, the Corporation has re-started mining operations on the existing remnant stoping areas reflected in the updated 43-101 technical report on the resources. These remnant stopes targeted for the initial re-start of operations are very site specific with a higher level of confidence. However, mining has resumed without the benefit of a full economic evaluation.   The resource areas targeted for remnant mining were calculated using the polygon method on inclined longitudinal sections, which has been used in the past to yield reliable results. Capping varied from 60-250 g/t Au depending on the vein; grades, tonnage and historic costs derived from previous mining were integrated, and minimum mining width 1.6m applied to stopes with dip greater than 50° and minimum mining width 1.8m applied to stopes with dip less than 50°. Nominal dilution of 15% was applied, and mining recovery varied from 75-100%.

Structural 3D re-evaluation of the geology continues on the multiple high-grade opportunities within the existing mine environment. As the new resources become confirmed, the mining crews currently mining in the remnant areas will be transitioned over to these new stoping blocks being defined.

Sleeping Giant Mill

The mill has a capacity of approximately 900 tonnes per day ("tpd") depending on the grind size required to optimize gold recoveries. The mill was currently processing between 500-700 tpd due to increased grinding requirements for the Vezza ore with +/- 91% gold recovery. Milling operations were five days per week, exclusively treating underground muck from the Vezza gold project.  As at the end of September, Vezza mill production ceased and processing began on the mineralized material from Abcourt's Elder mine for the month of October. In November, the mill processed the first material from the re-start of the Sleeping Giant mine during the first week of the month and has now switched back over to the second tranche of Abcourt production. The plan will be to batch the ores separately with a focus on toll milling until such time that new Sleeping Giant ore production from the new zones and extensions to the historic high grade areas ramps up to full capacity.

Milling agreement with Abcourt

On August 15, 2013, Aurbec signed a milling agreement with Abcourt Mines Inc. to treat mine production from their Elder Mine at the Sleeping Giant Mill. The agreement is in effect for six months and may be extended if both parties agree. Aurbec received the necessary environment permits and authorizations to store and process the Elder mineralized material at Sleeping Giant in late September. Ore shipments from Abcourt's Elder mine began immediately upon receipt of these permits with processing of the initial tranche in the month of October.

Statistics

The initial Sleeping Giant production has been held in inventory at the end of Q3-13 and will be processed in Q4-13. At that time Sleeping Giant production will be reported.

The Sleeping Giant mill processed Abcourt's Elder mine production from October 2^nd through the end of the month. The terms of the contract are confidential and therefore operating statistics will be available through Abcourt's normal disclosures.

Financial results

The Corporation reported a loss of $1,552,120 for Q3-13 versus a loss of $658,924 for Q3-12.

Since the Vezza Project was still in the development phase and had not commenced commercial production, the revenues from the sales of any finished products produced by the project have been deducted, net of the cost of inventories, from the related development cost capitalized in the statement of financial position. The Sleeping Giant mine generated revenues of $296,132 from the sale of the gold extracted following the treatment of the carbon done once in a while by the Corporation. The $149,731 loss from mining operations represents residual costs relating to the Sleeping Giant mine to restart the underground mining in the remnant mining areas as well as costs associated with the treatment of carbon.

On September 30, 2013, the working capital of the Corporation was at $6,435,339 ($1,157,087 as of December 31, 2012).  As at September 30, 2013, cash and cash equivalents includes $3,306,151 that, as per the Credit Facility agreement must be segregated in a separate account and requires the lender's authorization prior to releasing funds including for interest payments.

Going concern assumption

The condensed consolidated interim financial statements have been prepared on the basis of the going concern assumption, meaning the Corporation will be able to realize its assets and discharge its liabilities in the normal course of operations.

The Corporation has not yet determined whether all of its mineral properties contain mineral deposits that are economically recoverable. The only property currently in active development was the Vezza deposit where the Corporation had yet to generate any income or cash flows and for which the Corporation announced on July 16, 2013 that it was suspending its development. Additionally, the re-evaluation of the Sleeping Giant mine has identified significant high grade mineralized targets previously untested. Work has recently been initiated to physically evaluate its economic viability going forward.

During the period from October 2012 to present, the market price of gold has been volatile and dropping steadily. This trend in gold prices created a strain on the Corporation's cash resources and caused the Corporation to experience difficulties in dealing with its creditors. As a result, on August 15, 2013, Entrepreneur minier Promec Inc. ("Promec") registered a notice of legal hypothec against the Corporation's Vezza project and Sleeping Giant property (the "Promec Hypothec").  Promec later filed a petition in bankruptcy against the Corporation's wholly-owned subsidiary Aurbec Mines Inc. on August 23, 2013. While vigorously working to have the petition in bankruptcy dismissed, the Corporation initiated the negotiation of a consensual restructuring with its senior lender, Cyrus Capital Partners, in its capacity as a manager to FBC Holdings S.à r.l., its four major unsecured creditors and other stakeholders with a view to implementing its ongoing business plan consisting of the recommencement of mining operations at its Sleeping Giant property. As at November 27, 2013 the Corporation reports that upon an application by Promec, the Quebec Superior Court has dismissed the bankruptcy petition that Promec had previously filed against Aurbec, and has discharged the hypothec previously registered in favour of Promec against Aurbec's Vezza and Sleeping Giant properties.

Pursuant to an agreement that was reached last month for the consensual restructuring of Aurbec's trade payables, an arrangement has been made that is acceptable to the Corporation's senior secured lender to grant a first ranking security to Promec and to one other creditor over the Vezza property only in order to secure the repayment of all indebtedness owing to them should Aurbec fail to delivery on the current plan to see all creditors repaid in full.

The Corporation's ability to continue as a going concern is dependent upon its ability to raise additional financing, to generate cash flow from operations, ongoing support from major creditors and continuing support of its senior lenders.  It is uncertain whether the Corporation will be able to achieve these objectives, and accordingly there is reason for doubt regarding the Corporation's ability to continue as a going concern. Even though the Corporation is confident, there is no assurance that it will manage to meet those conditions in the future.

About Maudore Minerals Ltd.

Maudore is a Quebec-based junior gold company in production, with mining and milling operations as well as more than 22 exploration projects. Five of these projects are at an advanced stage of development with reported current and historical resources and mining. Currently, gold production is ramping up at the Sleeping Giant mine. The Company's projects span some 120 km, east-west, of the underexplored Northern Volcanic Zone of the Abitibi Greenstone Belt and cover a total area of 1,570 km² with the Sleeping Giant Processing Facility within trucking distance of key development projects.

Cautionary Statement Regarding Forward-Looking Statements

This release and other documents filed by the Company contain forward-looking statements. All statements that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "intend", "anticipate", "believe", "expect", "estimate", "plan" and similar expressions are generally intended to identify forward-looking statements. These forward-looking statements include, without limitation, performance and achievements of the Company, business and financing plans, business trends and future operating revenues. These statements are inherently uncertain and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, financial related risks, unstable gold and metal prices, operational risks including those related to title, significant uncertainty related to inferred mineral resources, operational hazards, unexpected geological situations, unfavourable mining conditions, changing regulations and governmental policies, failure to obtain required permits and approvals from government authorities, failure to obtain any required approvals of the TSXV or from shareholders, failure to obtain any required financing, failure to complete any of the transactions described herein, increased competition from other companies many of which have greater financial resources, dependence on key personnel and environmental risks and the other risks described in the Company's continuous disclosure documents.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Maudore Minerals Ltd.