Alhambra Resources Ltd. (TSX
VENTURE:ALH)(PINKSHEETS:AHBRF)(FRANKFURT:A4Y) ("Alhambra" or the
"Corporation") announces its financial and operating results for
the quarter ended September 30, 2012. All amounts related to the
financial results are expressed in thousands of United States
dollars unless otherwise indicated.
HIGHLIGHTS FOR THE QUARTER:
-- Received approval from the Kazakhstan Ministry of Industry and New
Technology ("MINT") to proceed at the Corporation's discretion with the
issue of new shares
-- Executed a non-binding term sheet to complete a financing
-- Suspended mining operations in the quarter; no fresh ore was stacked on
the heaps
-- Gold sales were realized from the drawdown of recoverable gold inventory
from work in progress ("WIP")
-- Revenue from gold sales amounted to $2.4 million based on the sale of
1,452 ounces ("ozs")
-- The estimated recoverable gold in WIP as of September 30, 2012 was
38,619 ozs
-- Cash operating costs were $751 per oz of gold sold
-- Kazakhstan mining operations recorded net income of $0.1 million
($0.00/share)
-- The Corporation recorded a net loss of $0.4 million ($0.01/share)
-- A reverse circulation ("RC") exploration drilling program was completed
at Shirotnaia and a RC drilling program was initiated at Zhusaly
-- Exploration expenditures were $0.4 million
-- Announced board of director changes
FINANCIAL HIGHLIGHTS
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(in US$000 except per Three Months ended Nine Months ended
share amounts) September 30 September 30
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2012 2011 2012 2011
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Revenue from gold
sales $ 2,447 $ 7,012 $ 8,080 $ 12,555
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Net income (loss) (365) 2,550 (1,637) (1,201)
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Per share (basic and
diluted) (0.01) 0.02 (0.02) (0.01)
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Weighted average
shares outstanding
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Basic 104,132,059 104,132,059 104,132,059 104,094,115
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Diluted 104,132,059 106,079,287 104,132,059 104,094,115
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Shares outstanding at
end of period 104,132,059 104,132,059 104,132,059 104,132,059
----------------------------------------------------------------------------
For the third quarter of 2012, the Corporation recognized $2.4
million in revenue from the sale of 1,452 ozs of gold at an average
price of $1,686/oz. This compares to $7.0 million in revenue from
the sale of 3,858 ozs of gold at an average price of $1,817/oz
during the third quarter of 2011.
Kazakhstan mining operations recorded net income of $0.1 million
for the third quarter of 2012. This compares to net income of $3.5
million for the third quarter of 2011. The Corporation recorded a
net loss of $0.4 million ($0.01 per basic and diluted share) for
the third quarter of 2012. This compares to net income of $2.6
million ($0.02 per basic and diluted share) for the third quarter
of 2011.
OPERATING HIGHLIGHTS
During the third quarter of 2012, no fresh ore was stacked on
its heap leach pads (2011 - 257,003 tonnes ("t")) nor was any waste
mined during the same period (2011 - 279,846 t). Gold sales were
realized from the drawdown of recoverable gold inventory from WIP.
As of September 30, 2012, the estimated recoverable gold classified
as WIP was 38,619 ozs.
During the nine months ended September 30, 2012, the Corporation
mined a total of 403,952 t of waste and stacked 136,220 t of ore at
an average gold grade of 0.57 grams/t ("g/t"). This compares to
1,178,980 t of waste mined and 570,068 t of ore stacked at an
average gold grade of 0.85 g/t during the nine months ended
September 30, 2011. The reduction in tonnes mined for the nine
months ended September 30, 2012 as compared to the comparable
period in 2011 is a result of issues with the mining contractor.
Earlier in 2012 the mining contractor had mechanical issues with
its equipment which impacted their ability to mine ore. In
addition, because of the Corporation's constrained financial
resources, both the mining contractor and the Corporation agreed at
the end of the second quarter of 2012 to suspend mining operations
in order to conserve cash during this period of financial hardship.
As previously announced, the Corporation has executed a non-binding
term sheet to complete a financing and is currently completing the
due diligence process related to that financing. Should this
financing be successfully concluded, a portion of the use of the
proceeds will go towards resuming the mining of ore.
The decrease in revenue for the nine months ended September 30,
2012 over the comparable nine month period in 2011 was a result of
a 37% decrease in sales volume which was offset partially by a 2%
increase in the average price of gold. The majority of the decrease
in sales volume occurred in the first and third quarters of 2012 as
a result of the Corporation not mining any fresh ore to stack on
the heaps due to the contractor equipment issues and the
Corporation's current financial constraints described above.
Revenues from gold sales were also negatively impacted by a 7%
decline in the average price of gold in the third quarter of 2012
as compared to the third quarter of 2011.
OPERATING EXPENSES
Operating expenses consist of all costs associated with the
production of gold, (including direct costs incurred in the mining,
leaching and resin stripping processes ("Process Operating Costs"),
Mineral Extraction Tax ("MET")), transportation and refining of the
cathodic sediment. All process operating costs are charged to WIP
and are expensed on the basis of the quantity of gold sold as a
percentage of total recoverable gold mined.
Operating costs for the three months ended September 30, 2012
totaled $1.2 million or $831/oz of gold sold as compared to $3.2
million or $819/oz of gold sold for the same period in 2011.
Included in this amount is $0.1 million or $80/oz (three months
ended September 30, 2011 - $0.4 million or $107/oz) related to the
amortization of the bump-up to fair value from the estimated cost
of WIP. Cash operating costs for the third quarter were therefore
$751/oz (compared to $712/oz for the third quarter of 2011). This
was $48/oz higher than the $703/oz incurred during the second
quarter of 2012.
Operating costs for the nine months ended September 30, 2012
totaled $4.1 million or $840/oz of gold sold as compared to $6.5
million or $853/oz of gold sold for the same period in 2011.
Included in this amount for the nine months ended September 30,
2012 is $0.4 million or $74/oz (nine months ended September 30,
2011 - $0.9 million or $120/oz of gold sold) related to the
amortization of the bump-up to fair value from the estimated cost
of WIP. Cash operating costs for the nine months ended September
30, 2012 were therefore $766/oz as compared to $733/oz for the nine
months ended September 30, 2011.
CAPITAL EXPLORATION PROGRAMS
Nine months ended September 30, 2012
During the three months ended September 30, 2012 the Corporation
recorded capital expenditures of $0.4 million which relates to the
Corporation's 2012 exploration program which is detailed below.
During the three months ended September 30, 2012, Alhambra
completed a reverse circulation ("RC") drilling program at
Shirotnaia, one of its advanced exploration projects, and initiated
a RC drilling program and completed a soil sampling program at
Zhusaly, one of its early stage exploration projects.
Since the beginning of 2012, two batches of core drill samples
(totaling 5,146 samples) from Shirotnaia and Zhanatobe have been
sent to the Kyrgyzstan Stewart Group laboratory for assaying.
As of the end of the third quarter of 2012, there were 1,987
Shirotnaia assay results pending (1,978 core and 7 QA/QC core
re-sampling) from the Stewart Kyrgyzstan laboratory.
In addition, as of the end of the third quarter of 2012, 3,942
samples were being prepared for export as follows:
-- Shirotnaia - 2,525 (RC samples),
-- Vasilkovskoe East - 844 (soil samples),
-- Zhusaly - 573 (soil samples).
Shirotnaia
During the third quarter of 2012, 1,596 assay results for eight
of 18 core holes (3,691 metres ("m")) completed in the first half
of 2012 were received. The assays were being interpreted. All drill
holes encountered intervals of strong chlorite sericite alteration
and sulphide mineralization as well as intervals of
carbonate-quartz veins and veinlets.
Late in the third quarter of 2012, a RC drilling program which
was initiated earlier in the quarter, was completed. The objective
of this drilling program was to check for possible extensions of
gold mineralization to the north where it is marked on the surface
by anomalous soil and trench samples taken earlier. This area has
significant potential according to the recently prepared structural
model. A total of 26 (2,434 m) RC holes were completed and 2,525
samples were taken which have been prepared for export.
Uzboy
Alhambra's independent consultants (Micromine and ACA Howe
International) continued to work on updating the Uzboy National
Instrument ("NI") 43-101 resource estimate and Preliminary Economic
Assessment. Upon completion of these studies, the Corporation will
press release the study results.
Zhusaly
In the third quarter of 2012, soil sampling on the Zhusaly early
stage project, which commenced in the second quarter, was
completed. 573 soil samples were taken along 15 lines. They have
been dried, screened and prepared for export.
A planned seven hole (1,050 m) RC drilling program was initiated
at Zhusaly prior to the end of the third quarter. The purpose of
this drill program is to check the soil anomaly established in
2011. Two NW orientated RC lines are planned. The proposed drill
lines will be 250 m apart with the planned distance between holes
being 150 m along the SW line (scissor holes) and 75 m along the NE
line (fence holes).
Zhanatobe
The assay results from the Zhanatobe diamond drilling program
were received late in the quarter and were being interpreted. The
drilling program included nine holes totaling 1,449 m. The assay
results will be released once interpreted.
Capital Expenditure Activity Subsequent to September 30,
2012
Shirotnaia
Assay results for eight of 18 diamond drill holes completed were
interpreted and released. They were very encouraging. Diamond
drilling intersected higher-grade gold mineralization (+1.0 grams
per tonne gold ("g/t Au")) over core intervals ranging from 6.4 m
to 135.6 m (down-hole). These higher-grade intervals define a core
gold mineralization zone interpreted to be at least 1,200 m long
enveloped by an aureole of lower grade (less than 1.0 g/t) gold
mineralization with dimensions of 1,800 m by 750 m which remains
open in three directions and at depth. These assay results included
one of the best drill holes to date on the project which entered
strong mineralization from surface and returned an interval of
135.6 m averaging 1.12 g/t Au. Seven of the holes returned
intercepts with gold grades greater than 1.0 g/t Au and in four of
the holes these grade intervals have core lengths greater than 6.0
m. Thirty eight mineralized intervals (of variable widths) with
gold grades of greater than 0.2 g/t Au were intersected in the
eight holes assayed. The best mineralization intersected included:
1.12 g/t Au over 135.6 m, 1.47 g/t Au over 27.4 m, 1.73 g/t over
17.5 m and 1.56 g/t Au over 18.2 m.
OUTLOOK
Currently, Alhambra's focus is on financing. With the receipt of
MINT's approval on September 11, 2012 of the Corporation's
application requesting the pre-approval of possible future equity
financings, one of the hurdles related to financing has been
overcome. Alhambra previously announced that it had negotiated and
executed a non-binding financing term sheet complying with the
financing terms approved by MINT. The due diligence is progressing
toward the completion of the financing which, if and when
completed, will allow the Corporation to proceed with its objective
to accelerate exploration and development activities in
Kazakhstan.
Alhambra's exploration focus will continue to be its advanced
exploration targets (including Uzboy, Shirotnaia and Dombraly) as
well as the seven other early stage projects. Production
development will focus on advancing Uzboy through Pre-Feasibility
and Feasibility Studies and to assess the other advanced targets
for production potential and follow-up as appropriate with
Pre-Feasibility assessments.
BOARD OF DIRECTOR CHANGES
During the third quarter of 2012, two Alhambra directors Mr.
Mike Hriskevich and Mr. Mr. Clarence K. Wagenaar, retired.
Appointed as their replacements were Mr. John I. Huhs and Mr. Robin
M. Merrifield.
Mr. John I. Huhs, fluent in Russian, is a lawyer and graduated
with honours from both the Stanford Graduate School of Business and
Stanford Law School. He is a retired Senior Partner and Special
Counsel of Dewey & LeBoeuf, and chaired the Firm's
International Practice for almost two decades and founded the
Firm's practice in the former Soviet Union, including the Moscow
and Almaty (Kazakhstan) offices. Mr. Huhs has over 40 years of
experience in energy, mining, aerospace, hi-tech (including
intellectual property) and manufacturing. He has focused on
negotiations, concluding and implementing hundreds of international
mergers and acquisitions, production sharing agreements, joint
operating agreements, financings, joint ventures and other complex
transactions worldwide. He lived in the Republic of China from 1954
to 1957.
Mr. Merrifield, a chartered accountant, has over 30 years of
experience in the international mining industry of South Africa,
North America and in a number of Central Asian countries including
Kazakhstan, Kyrgyzstan, Armenia, Georgia and Tajikistan. Mr.
Merrifield has gained his experience both in the corporate offices
and on operating sites of a number of major international mining
companies focused mainly on the uranium, gold and copper/nickel
businesses. Mr. Merrifield is a Director of a number of junior
exploration mining companies. He currently continues to assist
Uranium One Inc. in regard to their Kazakhstan operations as a
senior staff consultant. He previously served as its CFO for four
years. Prior to this position Mr. Merrifield was an international
consultant focused on financial and general management and was the
Vice President, Finance of the Kumtor Gold Company located in
Bishkek, Kyrgyzstan from 1997 to 2001.
GOVERNMENT OF KAZAKHSTAN PRE-EMPTIVE RIGHT
The Subsoil and Subsoil Use Act (the "Act") in Kazakhstan grants
the Government of Kazakhstan the first right of refusal to purchase
any direct or indirect interest in any subsoil license or legal
entity holding that license or the legal entity controlling the
holder of the subsoil use license at market prices should the
license or shares or instruments convertible or giving rights to
shares (joint, the "Subsoil Use Assets") come up for sale. As a
result, before a company can accept an offer to sell its Subsoil
Use Assets, it must first get approval from relevant Kazakhstan
authority (MINT). The Act extends this obligation to require a
company whose main business is connected with subsoil use in
Kazakhstan to get approval should it desire to issue any common
shares or issue any derivative instruments that are convertible
into common shares. On April 21, 2011, the Corporation completed
and filed an application with MINT to have pre-approved, any shares
that may be issued upon conversion of outstanding warrants and
options as well as requested that MINT pre-approve a private
placement that the Corporation would contemplate doing in the near
future to finance its exploration and development activities. This
application was amended on August 16 and October 25, 2011 which
included responses to certain questions received from MINT. On
September 11, 2012 the Corporation received MINT's approval. This
approval is effective for six months. Under Kazakhstan legislation
the Corporation can apply to have the effective date extended a
further six months.
Alhambra's original application included a floor price for the
issuance of common shares of $0.60 per share. Unfortunately, during
the time period that MINT was considering the Corporation's
application, the trading price of Alhambra's common share dropped
below that floor. The Corporation has applied to MINT to have that
floor price reduced. The Corporation is waiting for MINT's response
on this request. While the Corporation is currently negotiating a
potential financing that's in compliance with the terms approved by
MINT, this price reduction should provide additional financing
opportunities.
UNAUDITED FINANCIAL STATEMENTS AND MANAGEMENT DISCUSSION AND
ANALYSIS ("MD&A")
The Corporation's third quarter 2012 financial statements and
MD&A are available on the Corporation's website, can be
obtained on application from the Corporation and are available
under the Corporation's profile on SEDAR at www.sedar.com.
ABOUT ALHAMBRA
Alhambra is a Canadian based international exploration and gold
production corporation with NI 43-101 gold resources as per ACA
Howe International UK and Micromine Consulting Services UK as noted
below:
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Measured (M) Indicated (I)
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Project Grade Grade
--------------------------------------------------------------------------
Tonnes (g/t) Ounces Tonnes (g/t) Ounces
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Uzboy (1) 14,317,200 1.52 700,000 7,009,500 1.22 275,500
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Dombraly (2) - - 559,000 1.22 22,000
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Shirotnaia (3) - - 2,900,000 0.76 71,000
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TOTAL 14,317,200 1.52 700,000 10,468,500 1.09 368,500
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M + I Inferred
----------------------------------------------------------------------------
Project Grade Grade
----------------------------------------------------------------------------
Tonnes (g/t) Ounces Tonnes (g/t) Ounces
----------------------------------------------------------------------------
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Uzboy (1) 21,326,700 1.42 975,500 11,258,200 1.17 421,700
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Dombraly (2) 559,000 1.22 22,000 9,317,000 1.01 301,000
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Shirotnaia (3) 2,900,000 0.76 71,000 34,577,000 0.58 645,000
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TOTAL 24,785,700 1.34 1,068,500 55,152,200 0.77 1,367,700
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(1) Effective as of Dec 31/07 as per ACA Howe per news release dated Apr
8/08 at a 0.40 g/t cut-off.
(2) Effective as of Nov 27/11 as per ACA Howe per news release dated Feb
7/12 using natural cut-off grades of 0.13 g/t, 0.1 g/t and 0.2 g/t for
the low grade stockpile, pit infill and in-situ mineralized zones
respectively.
(3) Effective as of Jan 9/12 as per ACA Howe per news release dated Feb
28/12 using cut-off grades of 0.1 g/t for oxide gold mineralization and
0.2 g/t for transitional and primary gold mineralization respectively.
Alhambra holds exploration and exploitation rights to a 2.4
million acre (9,800 km2), 100% owned license called the Uzboy
Project, located in the Northern Kazakhstan Metallogenic Province
which hosts numerous world-class gold deposits. Over 100 mineral
targets, including three advanced exploration areas, are contained
within the Uzboy Project.
Alhambra common shares trade in Canada on The TSX Venture
Exchange under the symbol ALH, in the United States on the
Over-The-Counter Pink Sheets Market under the symbol AHBRF and in
Germany on the Frankfurt Open Market under the symbol A4Y. The
Corporation's website can be accessed at
www.alhambraresources.com.
Elmer B. Stewart, MSc. P. Geol., a technical consultant, is the
Corporation's nominated Qualified Person. Mr. Stewart has reviewed
the technical information contained in this news release.
Forward-Looking Statements
Certain statements contained in this news release constitute
"forward-looking statements" as such term is used in applicable
Canadian and US securities laws. These statements relate to
analyses and other information that are based on forecasts of
future results, estimates of amounts not yet determinable and
assumptions of management. In particular, completing a financing,
availability of capital to fund drilling programs, initiating the
Uzboy pre-feasibility and feasibility studies, and other factors
and events described in this news release should be viewed as
forward-looking statements to the extent that they involve
estimates thereof. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions or future events or
performance (often, but not always, using words or phrases such as
"expects" or "does not expect", "is expected", "anticipates" or
"does not anticipate", "plans, "estimates" or "intends", or stating
that certain actions, events or results "may", "could", "would",
"might" or "will" be taken, occur or be achieved) are not
statements of historical fact and should be viewed as
"forward-looking statements". Such forward looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Corporation to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such risks and other factors include,
among others, completing a financing, availability of capital to
fund drilling programs, initiating the Uzboy pre-feasibility and
feasibility studies; political, social and other risks inherent in
carrying on business in a foreign jurisdiction and such other
business risks as discussed herein and other publicly filed
disclosure documents. Although the Corporation has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove
to be accurate as actual results and future events could vary or
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements contained in this news release.
Forward looking statements are made based on management's
beliefs, estimates and opinions on the date the statements are made
and the Corporation undertakes no obligation to update
forward-looking statements and if these beliefs, estimates and
opinions or other circumstances should change, except as required
by applicable law.
This news release contains forward-looking statements based on
assumptions, uncertainties and management's best estimates of
future events. When used herein, words such as "intended" and
similar expressions are intended to identify forward-looking
statements. Forward-looking statements are based on assumptions by
and information available to the Corporation. Investors are
cautioned that such forward-looking statements involve risks and
uncertainties. Actual results may differ materially from those
currently anticipated. The forward-looking statements contained
herein are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange Inc. nor its Regulation
Services Provider (as that term is defined in the Policies of the
TSX Venture Exchange Inc.) accepts responsibility for the adequacy
or accuracy of this release.
Contacts: Alhambra Resources Ltd. Ihor P. Wasylkiw VP &
Chief Information Officer +1 (403) 508-4953 Alhambra Resources Ltd.
Donald D. McKechnie VP Finance & Chief Financial Officer +1
(403) 228-2855 www.alhambraresources.com
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