TORONTO, Aug. 31, 2017 /CNW/ - Cerro Grande Mining Corporation
(the "Company" or "CEG") (CSE:CEG) reported its unaudited results for its third fiscal quarter ended June
30, 2017 compared to the same quarter in 2016 and results for the nine months fiscal period ended June 30, 2017 compared to the same nine months period in 2016. These financial statements and MD&A have
been filed on SEDAR and the Company refers the reader to those materials for additional information.
As previously reported, the company's only significant subsidiary Companía Minera Pimentón (Pimentón), filed for
voluntary bankruptcy on May 31, 2017. The Court approved this bankruptcy filing and named a
Liquidator on July 18, 2017.
These consolidated financial statements do not include Pimentón's assets and liabilities, which have been eliminated and show
a gain on bankruptcy of $4,727. The Consolidated Statement of Income includes 7 months of
operations of Pimenton before the voluntary bankruptcy filing.
In accordance with Chilean law, the court appointed bankruptcy Liquidator has taken possession of Pimentón and all of its
assets and liabilities. He is also responsible for all ongoing costs of Pimentón until the sale or liquidation of Pimentón.
Any profits obtained or losses incurred, by the Liquidator in the bankruptcy process have no impact on the Company since all
financial assets and obligations transfer to the Liquidator.
The Company's other projects, which are in various stages of exploration and development in Chile include Companía Minera Tordillo, Companía Minera Bandurrias, Companía
Minera Catedral, Companía Minera Cal Norte, and Companía Minera Til
Til are not affected by the bankruptcy of Companía Minera Pimentón.
Revenues totalled US $572,000 for the Company's third fiscal quarter ended June 30, 2017 which includes gold sales of US $487,000 (345 ozs of gold) and
copper and silver sales of US $85,000 compared to revenues for the same quarter in 2016 of US
$1,472,000 which includes gold sales of US $1,300,000 (1,028 ozs of
gold) and copper and silver sales of US $172,000.
Revenues totalled US $3,236,000 for the Company's nine months fiscal period ended June 30, 2017 which included gold sales of US $2,626,000 (2,175 ozs of gold) and
copper and silver sales of US $614,000 compared to revenues for the same nine month period in 2016
of US $5,825,000 which includes gold sales of US $5,074,000 (4,435
ozs of gold) and copper and silver sales of US $751,000.
Net income before income taxes for the third fiscal quarter ended June 30, 2017 was US
$250,000 compared to a loss of US $1,629,000 in the comparable period
a year ago and for the nine month period ended June 30, 2016.
At June 30, 2017 the Company had a negative working capital position of US $3,094,000 compared to negative working capital of US $10,252,000 at September 30, 2016.
SUMMARY FINANCIAL RESULTS
The table below sets out the consolidated income (loss) for the three and nine month period ended June
30, 2017 and 2016.
|
Three months ended
|
|
Nine months ended
|
|
Jun 30,
|
Jun 30,
|
|
Jun 30,
|
Jun 30,
|
|
2017
|
2016
|
|
2017
|
2016
|
Revenue
|
$
|
$
|
|
$
|
$
|
Sales
|
572
|
1,472
|
|
3,236
|
5,825
|
|
572
|
1,472
|
|
3,236
|
5,825
|
Expenses
|
|
|
|
|
|
Operating costs
|
1,578
|
2,611
|
|
6,527
|
8,157
|
Reclamation and remediation
|
2
|
5
|
|
16
|
16
|
General, sales and administrative
|
353
|
508
|
|
953
|
1,698
|
Foreign exchange
|
25
|
36
|
|
(96)
|
15
|
Interest
|
35
|
52
|
|
215
|
172
|
Other (income) and expenses (net)
|
(80)
|
(111)
|
|
23
|
(253)
|
Exploration costs
|
75
|
-
|
|
75
|
-
|
|
1,988
|
3,101
|
|
7,713
|
9,805
|
|
|
|
|
|
|
Loss before income taxes and other item
|
(1,416)
|
(1,629)
|
|
(4,477)
|
(3,980)
|
Income Tax
|
-
|
-
|
|
-
|
-
|
Other - Gain on bankruptcy
|
4,727
|
-
|
|
4,727
|
-
|
|
|
|
|
|
|
Net Income (loss) and net comprehensive income (loss) for the
period
|
3,311
|
(1,629)
|
|
250
|
(3,980)
|
|
|
|
|
|
|
Basic and diluted income (loss) per share
|
0.01
|
(0.01)
|
|
0.00
|
(0.01)
|
1)
|
Consolidated statements for the three month period ended June 30,
2017 and 2016:
|
|
|
|
|
a)
|
Revenue for the three month period ended June 30, 2017, decreased over the
same period in 2016 due to a decrease in gold ounces sold and no production during the month of May. The mine was put
into voluntary bankruptcy on May 31, 2017. Sales decreased to 415 ounces compared to 1,027 ounces in the three month
period ended June 30, 2016.
|
|
|
|
|
b)
|
Operating expenses for the three months ended June 30, 2017 were $1,578
compared to $2,611 for the same period in 2016.
|
|
|
|
|
c)
|
General sales and administrative costs for the three months ended June 30,
2017 were $353 compared to $508 for the same period in 2016.
|
|
|
2)
|
Consolidated statements for the nine month period ended June 30, 2017 and
2016:
|
|
|
|
|
a)
|
Revenue for the nine month period ended June 30, 2017 decreased over the
same period in 2016 due to a decrease in gold ounces sold and no production during the month of May. The mine was put
into voluntary bankruptcy on May 31, 2017. Sales decreased to 1,857 ounces compared to 4,433 ounces in the same period
ended June 30, 2016.
|
|
|
|
|
b)
|
Operating expenses for the nine months ended June 30, 2017 were $6,527
compared to $8,157 for the same period in 2016 due to close down and voluntary bankruptcy of the Pimentón
mine.
|
|
|
|
|
c)
|
General sales and administrative costs for the nine months ended June 30,
2017 were $953 compared to $1,698 for the same period in 2016.
|
|
|
3)
|
Consolidated Cash flow for the nine month period ended June 30,
2017:
|
|
|
|
Cash generated by the Pimentón Mine decreased due to operational problems,
a drop in the price and grade of gold added to the fact that there was no production during the month of May and the mine
was put into bankruptcy on May 31, 2017. The operational problems relate to delays in reaching known and expected ore
shoots below the existing levels.
|
|
|
4)
|
Consolidated Statement of Financial Position as at June 30,
2017:
|
|
|
|
As at June 30, 2017 the Company had a negative working capital of $3,094
(2016–negative $7,746).
|
Operational Highlights – Pre Bankruptcy
- Gold produced by the Pimentón Mine for the nine month period ended June 30, 2017 was 1,857 oz
compared to 4,246 oz produced in the same period ended June 30, 2016.
- Pimentón's cash costs for the nine months ended June 30, 2017 was $3,620 per ounce of gold produced net of by-product credits, compared to $1,158
per oz in the same period for 2016.
- Pimentón's production costs, which include depreciation and amortization, for the nine months ended June 30, 2017 was $2,070 per ounce of gold produced net of by-product credit,
compared to $1,555 per oz in the same period for 2016.
- The average gold recovery for the nine month period ended June 30, 2017 was 91.00% compared
to 92.90% in the same period ended June 30, 2016.
Financial Highlights
- Loss before income taxes and other item for the nine month period ended June 30, 2017 was
$4,477 compared to a loss of $3,980 in the same period in
2017.
- Average price per ounce of gold for the nine month period ended June 30, 2017 was
$1,184 (2016 - $1,145). Average price per ounce during the three
months ended June 30, 2017 was $1,239 (2016 - $1,209)
- Profit after income taxes and other item for the nine month period ended June 30, 2017 was
$250 compared to a loss of $3,980 in the same period in 2016. This
was due to the net effect of eliminating Pimentón's assets and liabilities at May 30, 2017.
- Basic loss per share for the nine month period ended June 30, 2017 was a 0.00 cents per share (2016 – loss of 0.01).
- At June 30 2017, the Company had cash and cash equivalents of $28 compared to $37 at June 30, 2016.
- Cash flow from operations for the nine month period ended June 30, 2017 was negative
$1,456 (2016 – negative $1,541).
Other Highlights
- Due to a snow storm at the beginning of May 2017, during which approximately 2 meters of snow
accumulated at the mine site, production was interrupted and the mine was evacuated. Shortly afterward, Pimentón filed for
voluntary bankruptcy effective May 31, 2017.
- Tordillo exploration and the Catedral/Rino and Cal Norte limestone deposits are not reflected in the Company's market
capitalization. The Company will continue its effort to enhance the underlying values of its assets.
- On December 7, 2016 the Company agreed in principle to extinguish certain outstanding
indebtedness owed to David Thomson and Mario Hernandez (the
"Related Parties"), both officers and directors of the Company by issuing convertible debentures. The Debt Settlement was
completed in order to immediately improve the financial position of the Company given the serious financial difficulties it is
currently facing. Pursuant to the Debt Settlement, the Company extinguished outstanding indebtedness in the aggregate amount of
US$ 2,771,237 owed to the Related Parties, such indebtedness being made up of net smelter
royalty, management fees, cash advances and interest thereon made to the Company by the Related Parties. The interest rate on
these Debentures is 8% to be paid semi-annually. In June 2017 these convertible debentures were
converted into common shares.
Following the conversion of the Convertible Debentures, the Company has 339,390,784 shares outstanding (368,626,851 shares on
a fully-diluted basis).
Following the conversion David Thomson holds 139,670,195 common shares of the Company,
representing approximately 44.15% of the outstanding shares (approximately 39.33% on a fully-diluted basis).
Following the conversion Mario Hernandez holds 132,384,709 common shares of the Company,
representing approximately 39.01% of the outstanding shares (approximately 39.18% on a fully-diluted basis).
On a fully diluted basis, Mr. Thomson and Mr. Hernandez hold an aggregate of 289,400,018 common shares of the
Company, representing approximately 78.51% of the shares of the Company.
Cerro Grande Mining Corporation is a minerals exploration and development company with properties and activities currently
focused in Chile.
Cautionary Statement on Forward-looking Information:
This news release contains "forward-looking information", which may include, but is not limited to, statements with respect
to the future financial or operating performance of CEG. Often, but not always, forward-looking statements can be identified by
the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain
actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements
of CEG to be materially different from any future results, performance or achievements expressed or implied by the
forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release based on
current expectations and beliefs and CEG disclaims, other than as required by law, any obligation to update any forward-looking
statements whether as a result of new information, results, future events, circumstances, or if management's estimates or
opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is
cautioned not to place undue reliance on forward-looking statements.
SOURCE Cerro Grande Mining Corporation
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