Anvil Mining Reports Second Quarter 2011 Results - Construction of the Kinsevere Stage II SX-EW Plant Now Complete TSX, ASX: AVM Common shares outstanding 157.9 million All amounts are expressed in US dollars, unless otherwise stated. MONTREAL, Aug. 12, 2011 /CNW Telbec/ - Anvil Mining Limited (TSX, ASX: AVM), ("Anvil" or the "Company"), today announced construction of the Kinsevere Stage II Solvent Extraction Electrowinning ("SX-EW") plant is essentially complete, with commissioning and ramp-up progressing in accordance with the Company's expectations. For the June quarter, start-up production of copper cathode totalled 3,376 tonnes. The revenue and costs related to the production of cathode during the testing and commissioning phase were capitalized against the construction costs of the SX-EW plant in accordance with accounting standards. The Company anticipates that commercial production will be declared in the third quarter of 2011, at which time revenue, costs and depreciation of the Stage II SX-EW plant will be recognized in the income statement. Importantly, provisional copper cathode assays received during the testing and commissioning phase, from a third party independent laboratory, confirm that the majority of cathode produced during the quarter conforms to LME Grade A chemical specifications. Group copper production for the June quarter amounted to 5,999 tonnes, comprised of 2,623 tonnes of copper in concentrate and 3,376 tonnes of copper cathode. For the six months ended June 30, 2011, Group copper production totalled 9,315 tonnes, comprised of 5,939 tonnes of copper in concentrate and 3,376 tonnes of copper cathode. The Kinsevere Stage I Heavy Media Separation ("HMS") plant operated until June 24, 2011, at which time it was placed on care and maintenance, allowing resources to focus on the commissioning and ramp-up of the SX-EW plant. The Company generated revenues of $10.4 million from the sale of copper in concentrates and incurred an operating loss of $1.9 million for the June quarter due to lower volume and continued high mining costs in relation to the cutback program in the central pit at Kinsevere in order to prepare for Stage II processing and to provide waste material for the raising of the embankments at the Stage II tailings storage facility. The Company's net loss after tax for the June quarter was $0.8 million, equivalent to loss per share of $0.01 (basic). The Company's consolidated financial statements for the three and six months ended June 30, 2011 and 2010 restated comparatives have been prepared in accordance with IFRS. Key operating highlights for the second quarter -- Net sales of copper in concentrate of $10.4 million compared to $14.5 million for the second quarter of 2010. -- Production of 2,623 tonnes of copper in concentrate, compared to 4,412 tonnes in the second quarter of 2010. -- Operating loss of $1.9 million, compared to $2.5 million for the second quarter of 2010. -- Net loss from continuing operations of $0.8 million (-$0.01 per share), compared to net profit of $15.1 million ($0.10 per share) for the second quarter of 2010. -- Average realized copper price of $4.09 per pound, compared to $2.95 per pound for the second quarter of 2010. -- Production of 3,376 tonnes of copper cathode. -- Copper cathode sales of 2,975 tonnes for revenue of $26.8 million. -- Commencement of drilling program at the Kinsevere sulphide deposit. Darryll Castle, President and CEO of Anvil, commented, "The construction of the Kinsevere Stage II 60,000 tonnes per year SX-EW plant is essentially complete. Our focus remains firmly on the commissioning and ramp-up of the Kinsevere Stage II SX-EW plant, which continues to progress well, with 2,023 and 3,173 tonnes of copper cathode for the months of June and July respectively, the majority of which has been independently assayed as LME Grade A quality. Given the current rate of progress with ramp-up and commissioning, it is anticipated that the 5,000 tonnes per month design capacity will be achieved during the fourth quarter of 2011. With the performance of the Stage II SX-EW plant, along with the commencement of sulphide drilling at Kinsevere and the regional exploration effort, the Company is well placed for organic growth." Strategic Review Process Anvil has been informed by its largest shareholder, Trafigura Beheer B.V., that it considers its 39% ownership interest (fully diluted) in Anvil to be non-core and is considering alternatives to maximize the value thereof. In light of Trafigura's decision, the Board of Directors of Anvil has formed a Special Committee to review alternatives in order to maximize value for all shareholders. BMO Capital Markets has been retained by the Company to assist in this regard. Kinsevere Stage II Commissioning and Ramp-up Testing and commissioning of all modules is progressing in line with expectations and the Company anticipates that this will be completed in the third quarter of 2011, at which time it is expected that commercial production be declared and formal taking over of the Stage II SX-EW plant take place. With construction essentially complete, the Company remains firmly focused on the ramp-up of the plant to design capacity, which is expected during the fourth quarter of 2011. Consistency of supply of power from the grid will continue to be addressed both internally and with Société Nationale d'Electricité, the state owned electricity provider. As at July 31, 2011, $178 million of the $200 million budget for completion of construction had been spent, $123 million of which relates to the Engineering, Procurement and Construction (Lump Sum Turn Key) Contract (the "EPC Contract") with Ausenco Limited, $55 million to Owner's Costs, with a further $8 million committed for a total spent and committed amount of $186 million of the remaining $200 million required to complete the project. The Company continues to investigate an expansion of the capacity of the Stage II SX-EW Plant, which to date has involved review of various technical options. The Board has given management the approval to proceed with the ordering of long lead-time items.The long lead-time items will serve an additional purpose of debottlenecking the existing facility and allow it to exceed current design parameters. The complete June quarter 2011 unaudited financial statements together with the related Management's Discussion and Analysis (MD&A) are available on Anvil's website at www.anvilmining.com under the heading "Financial Reports" within the Investor Relations section. Kinsevere SX-EW Cathode Production For the three months ended June 30, 2011, the Company produced 3,376 tonnes of cathode, 2,975 tonnes of which were sold, for revenue of $26.8 million. Kinsevere SX-EW operations Three Months Ended June 30, 2011 Cathode revenue $'000 26,788 Cathode allocated costs $'000 9,085 Net Cathode contribution allocated to $'000 17,703 capital Cathode produced Tonnes 3,376 Cathode grade % Cu 99.99 Cathode copper sold Tonnes 2,975 Liquidity As at July 31, 2011, Anvil had approximately $25.2 million in cash, all of which is held on deposit with international banks, and restricted cash of $7.3 million, the majority of which relates to cash collateral in connection with security in place under the Engineering, Procurement and Construction (Lump Sum Turn Key) Contract for the development of Kinsevere Stage II. In addition to its cash, as at July 31, 2011, $43 million of the $100 million Project Loan Facility (the "Loan Facility") provided by Trafigura, the proceeds of which are being used exclusively to meet costs associated with the completion of construction of Kinsevere Stage II, remains undrawn. The Company does not expect to make any further drawdown under the Loan Facility. Appointment of Senior Executives During the June quarter, the Company made two executive appointments to newly created positions, each of which further strengthened the management team and the Company's capacity to deliver its operational and growth objectives. Mr. Greg Morris was appointed to the position of Chief Operating Officer and Mr. Neil Caldwell was appointed to the position of Vice President Development and Sustainability. Both Mr. Morris and Mr. Caldwell are based in Johannesburg and report directly to the President and Chief Executive Officer. A summary of their respective experience is available on the Company's website (www.anvilmining.com) under the Corporate/Management section. The appointment of Mr. Morris and Mr. Caldwell follows the appointment of Mr. Darryll Castle to the position of President and CEO, effective May 1, 2011. Second Quarter 2011 Results Conference Call and Webcast A conference call will be held at 8:30 a.m. (Toronto time) on Friday August 12, 2011 coinciding with 8:30 p.m. (AWST - Australia, Perth time) on the same day to discuss the Company's second quarter 2011 results. The details to access the conference call and the live audio webcast are as follows: Conference call: (Please call approximately five minutes prior to the scheduled start of the call). -- Toll-free within North America: 1-888-231-8191 -- For local and overseas calling: 1-647-427-7450 Live audio webcast of the conference call (listen mode only): -- CNW Group website at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3608660 (English) http://www.cnw.ca/fr/webcast/viewEvent.cgi?eventID=3608660 (French) Replay Information (available for a period of 7 days): The conference call will be recorded and a playback of the call will be available after the event by dialling: Toll Free: 1-855-859-2056 Local: 416-849-0833, 514-807-9274, 613-667-0035, 403-451-9481, 778-371-8506 or 902-455-3955. Conference ID/Password number: 85078769 followed by the pound (#) key. Anvil Mining Limited is a copper producer whose shares are traded on the Toronto Stock Exchange (as Common Shares) and the Australian Securities Exchange (as CDIs) under the symbol AVM. Caution Regarding Forward Looking Statements: This news release contains "forward-looking statements" and "forward-looking information", based on assumptions and judgments of management regarding future events and results. Such "forward-looking statements" and "forward-looking information which may include, but is not limited to commissioning and ramp-up of the Kinsevere Stage II SX-EW plant, operation of the Kinsevere Stage II SX-EW plant, the financing of the development of Kinsevere, the Group's plans for expansions of the Kinsevere copper mine and exploration activities and the review of strategic alternatives. Many of these assumptions are based on factors and events that are not within the control of Anvil and there is no assurance they will prove to be correct. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "is expecting", "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. The purpose of forward-looking information is to provide the reader with information about management's expectations and plans for 2011. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anvil and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, the actual market price of copper, changes in project parameters as plans continue to be evaluated, and the possibility of cost overruns, as well as those factors disclosed in the Company's filed documents. There can be no assurance that the Stage II expansion of the Kinsevere copper mine will be completed as planned, within expected time limits and budgets or that, when completed, the expanded Kinsevere Stage II copper project will operate as anticipated. There can be no assurance that the review will result in any specific transaction and no firm timetable has been set for the completion of this process. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information. Appendix Key Financial and Production Data (unaudited) 3 Months Ended 6 Months Ended June 30 June 30 2011 2010 2011 2010 FINANCIAL PERFORMANCE Copper concentrate sales: ($ millions) 10.4 14.5 28.0 30.0 Operating income / (loss): ($ millions) (1.9) 2.5 4.6 7.2 Net profit / (loss): ($ millions) (0.8) 15.1 36.7 15.1 PRODUCTION STATISTICS Consolidated Group Copper produced in concentrates (tonnes) 2.623 4,412 5,939 8,505 Kinsevere mine (HMS) Ore processed (tonnes) 51,772 72,716 133,613 134,207 Copper grade (% Cu) 5.6 7.3 5.3 7.9 Copper recovery - HMS (% Cu) 78.2 72.1 73.9 70.5 Concentrate grade - HMS and spirals (% 23.4 24.0 24.7 24.5 Cu) Copper produced in concentrate - HMS and 2,623 4,412 5,939 8,505 Spiral (tonnes) Copper sold (tonnes) 2,149 4,872 5,331 9,296 Operating cash costs ( $/tonne 924 292 824 305 concentrate) Kinsevere mine (SX-EW) Ore processed (tonnes) 146,790 - 146,790 - Feed grade (% Cu) 3.4 - 3.4 - Cathode produced (tonnes) 3,376 - 3,376 - Cathode Grade (% Cu) 99.99 - 99.99 - Cathode sold (tonnes) 2,975 - 2,975 - Consolidated Balance Sheets (unaudited) (Expressed in thousands of United States dollars) June 30 Dec 31 2011 2010 (restated) ASSETS Current assets Cash and cash equivalents 28,428 56,415 Restricted cash 6,808 7,314 Trade and other receivables 27,947 12,988 Inventories 27,460 14,060 Other financial assets 75 182 Current assets classified as held for sale - 1,204 90,718 92,163 Non-current assets Restricted cash 513 513 Trade and other receivables 14,311 14,253 Other financial assets 25,752 - Investment in associate - 11,927 Inventories 14,250 13,109 Exploration and evaluation expenditure 60,722 60,657 Property, plant and equipment 516,763 488,703 632,311 589,162 Total assets 723,029 681,325 LIABILITIES Current liabilities Trade and other payables 25,243 29,508 Financial liabilities 18,641 38,669 Borrowings 13,060 4,649 Current income taxes 62 21 Provisions 2,680 2,634 59,686 75,481 Non-current liabilities Borrowings 38,978 31,829 Provisions 21,417 20,991 Deferred tax liabilities 499 10,766 60,894 63,586 Total liabilities 120,580 139,067 Net assets 602,449 542,258 June 30 December 31 2011 2010 (restated) Shareholders' equity Share capital 519,465 480,787 Share based payment reserve 10,382 9,413 Retained earnings 92,894 54,944 Other reserves (16,134) - Capital and reserves attributable to owners of 606,607 545,144 Anvil Mining Limited Non-controlling interests (4,158) (2,886) Total equity 602,449 542,258 Consolidated Statements of Income and Comprehensive Income (unaudited) (Expressed in thousands of United States dollars except per share amounts) 3 Months Ended 6 Months Ended June 30 June 30 2011 2010 2011 2010 (restated) (restated) Continuing operations Revenue from sale of goods 10,402 14,529 27,966 30,015 Cost of goods sold (12,311) (11,994) (23,363) (22,825) Gross (loss) / profit (1,909) 2,535 4,603 7,190 Other income 93 3,920 30,694 4,952 Gain / (loss) on derivative 193 (757) (107) (409) instruments Exploration costs (65) - (65) - General, administrative and (6,195) (4,234) (10,331) (8,109) marketing costs Share of (loss)/gain in - (226) 1,116 (226) associate Fair value gain on warrants 1,240 9,912 793 4,198 carried at fair value through profit and loss Other expenses (1,011) (540) (1,100) (495) (Loss) / profit before finance (7,654) 10,610 25,603 7,101 items and tax Finance income 34 577 1,358 992 Finance costs (209) (501) (477) (1,015) Finance items - net (175) 76 881 (23) (Loss)/ profit before tax (7,829) 10,686 26,484 7,078 Income tax benefit 6,997 4,410 10,194 8,005 (Loss) / profit for the period (832) 15,096 36,678 15,083 from continuing operations Discontinued operation Profit from discontinued - 5,582 - 5,448 operation (Loss) / profit for the period (832) 20,678 36,678 20,531 Other comprehensive income / (loss) Changes in fair value of (16,134) (233) (16,134) (284) available-for-sale investments Total comprehensive (loss) / (16,966) 20,445 20,544 20,247 income for the period (Loss) / profit attributable to: Owners of Anvil Mining Limited (67) 21,826 37,950 22,269 Non-controlling interests (765) (1,198) (1,272) (1,738) (832) 20,678 36,678 20,531 Total comprehensive (loss) / income attributable to: Owners of Anvil Mining Limited (16,201) 21,643 21,816 21,985 Non-controlling interests (765) (1,198) (1,272) (1,738) (16,966) 20,445 20,544 20,247 Profit / (loss) per share from continuing operations: Basic profit / (loss) per share (0.01) 0.10 0.23 0.10 ($) Diluted profit / (loss) per (0.01) 0.10 0.23 0.10 share ($) Consolidated Statement of Cash Flows (unaudited) (Expressed in thousands of United States dollars) 3 Months Ended June 30 6 Months Ended June 30 2011 2010 2011 2010 Cash flows from operating activities (Loss)/profit for the (832) 15,096 36,678 15,083 period from continuing operations Adjustments for: Depreciation and 4,154 4,245 7,717 9,064 amortization Share of loss/(gain) of - 226 (1,116) 226 associate Loss / (gain) on (193) 757 107 409 derivative instruments Provision for - (3,904) - (4,809) impairment of asset Gain on sale of asset (126) - (1,764) - Non cash finance cost 209 519 418 999 Gain on discontinuation - - (28,842) - of equity accounting Provision for bad or - 450 - 450 doubtful debts Net exchange (1,072) 123 (703) (218) differences Fair value gain on (1,240) (9,912) (793) (4,198) warrants Deferred tax (6,997) (4,410) (10,194) (8,005) Share based payment 367 114 335 382 expense (5,730) 3,304 1,843 9,383 Changes in non-cash (20,222) 3,580 (36,689) (1,398) working capital (25,952) 6,884 (34,846) 7,985 Cash flows used in investing activities Payments for property, (8,093) (23,490) (27,672) (57,021) plant and equipment Payments for exploration (65) (5) (65) (227) expenditure Payments as security - (6,460) - (6,460) deposit Proceeds from repayments - 112 - 112 from investment (8,158) (29,843) (27,737) (63,596) Cash flows (used in) / provided by financing activities Proceeds from issue of 1,964 42 20,078 (229) shares (net of issue expenses) Payment of loan - (255) (795) (531) origination costs Movement in restricted 514 127 505 44 cash Payment of borrowings (50) (71) (101) (140) Receipts from borrowings - - 15,000 - Shares purchased - ESSIP - (1,238) - (1,238) 2,428 (1,395) 34,687 (2,094) Cash flows from discontinued operations Cash flows used in operating activities - 513 - - Cash flows from financing - (30) - - Net decrease in cash and cash equivalents from discontinued operations - 483 - - Net increase / (decrease) in cash and cash equivalents (31,682) (23,871) (27,896) (57,705) Cash and cash equivalents 60,176 87,440 56,415 121,234 at beginning of the period Effects of exchange rate (66) (109) (91) (69) changes on cash held in foreign currencies Cash and cash equivalents at end of the period for continuing operations 28,428 63,460 28,428 63,460 Cash and cash equivalents 28,428 63,460 28,428 63,460 at end of the period Philippe Monier Robert La Vallière Vice President Corporate & CFO Vice President Corporate Affairs Tel: +61 (8) 9481 4700 Tel: (Office) +1 (514) 448 6664, (Cell) +1 (514) 944 9036 Email: firstname.lastname@example.org Email: email@example.com (Perth) (Montréal) Website:www.anvilmining.com To view this news release in HTML formatting, please use the following URL: http://www.cnw.ca/en/releases/archive/August2011/12/c3419.html CO: ANVIL MINING LIMITED ST: Quebec NI: MNG PCS ERN FIN -0- Aug/12/2011 09:50 GMT
Anvil Mining Reports Second Quarter 2011 Results - Construction of the Kinsevere Stage II SX-EW Plant Now Complete
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