Registered Office: Santiago Office:
ROYAL BANK PLAZA AVDA. SANTA MARIA 2224
SOUTH TOWER PROVIDENCIA, SANTIAGO,
200 BAY STREET, SUITE 3800 CHILE
TORONTO, ONTARIO M5J 2Z4 Telephone: 56-2-2569 6224
CANADA
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Toronto Office: For further information, contact:
1 KING STREET, OF. 4009 Stephen W. Houghton, CEO
TORONTO, ONTARIO M5H 1A1 David R. S. Thomson, EVP
CANADA E-Mail: ceg@cegmining.com
Telephone: 56-2-2569 6200
Website: www.cegmining.com
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TORONTO, Jan. 31, 2017 /PRNewswire/ - Cerro Grande Mining Corporation (the "Company" or "CEG") (CSE:CEG) (OTCQB:CEGMF) announced today its audited Consolidated Financial Statements and Management Discussion and Analysis for its fourth quarter and year ended September 30, 2016 with the comparatives for the same periods in 2015 have been filed on SEDAR. The Company refers the reader to those materials for additional information.
SUMMARY FINANCIAL RESULTS
The table below sets out the consolidated loss for fourth quarter and year ended September 30, 2016 and 2015.
Three months ended Twelve months ended
September 30, September 30,
2016 2015 2016 2015
Revenue $ $ $ $
Sales 62 2,016 5,887 8,995
--- ----- ----- -----
62 2,016 5,887 8,995
Expenses
Operating costs 2,459 2,397 10,616 12,088
Reclamation and remediation 5 - 21 27
General, sales and administrative 173 922 1,871 2,765
Foreign exchange 49 (71) 64 (154)
Share-based compensation 87 - 87 -
Interest 39 88 211 283
Other (income) and expenses (net) 206 455 (47) (43)
Impairment charges - 6,737 - 6,737
Exploration costs - 19 - 21
--- --- --- ---
3,018 10,547 12,823 21,724
Loss and comprehensive loss before income taxes (2,956) (8,531) (6,936) (12,729)
Income tax (expense)/recovery - (176) - (176)
Deferred income tax - - - -
--- --- --- ---
Loss and comprehensive loss for the period (2,956) (8,706) (6,936) (12,905)
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Basic and diluted loss per share (0.01) (0.05) (0.03) (0.08)
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Weighted average number of shares outstanding 256,687,061 170,743,264 256,687,061 170,743,264
1. Consolidated statements of loss and other comprehensive loss for the
three month periods ended September 30, 2016 and 2015:
a. Revenue for the three month period ended September 30, 2016 was $62
due to the shut-down of the Plant and Mine during the quarter
compared to $ 2,016 in the three month period ended September 30,
2015.
b. Operating expenses for the three months ended September 30, 2016 were
$2,459 compared to $2,397 for the same period in 2015.
c. General sales and administrative costs for the three months ended
September 30, 2016 were $173 compared to $922 for the same period in
2015.
2. Consolidated statements for the year ended September 30, 2016 and 2015:
a. Sales revenue for the year ended September 30, 2016 decreased over
the same period in 2015 due to gold sales of 4,256 oz compared to
6,633 oz in the year ended September 30, 2015. This, in combination
with a drop in the gold price and the grade for the year ended
September 30, 2015 coupled with having to shut down the plant during
the months of June 2016 to September 2016, have led to lower results
for the year.
b. Operating expenses for the year ended September 30, 2016 were $10,616
compared to $12,088 for the same period in 2015. The decrease of
$1,472 consists mainly of a reduction in labour costs and lower fuel,
maintenance and other production costs as a result of the mine
closure during the last quarter.
c. General and administrative costs for the year ended September 30,
2016 were $1,871 compared to $2,765 for the same period in 2015,
mainly due to reduction in labour costs.
3. Consolidated Cash flow for the year ended September 30, 2016:Cash
generated by the Pimenton Mine decreased due to operational problems and
the drop in the price and grade of gold. The operational problems related
to delays in reaching known and expected ore shoots below the existing
levels. In addition, as mentioned previously, the Mine was closed down
for a four month period starting in June 2016.
4. Consolidated Statement of Financial Position as at September 30, 2016:As
at September 30, 2016 the Company had a negative working capital of
$10,252 (2015-negative $8,200).
OVERVIEW
The Company is an exploration, development and mining corporation focused in Chile. The Company's primary asset is an operating gold and copper mine in Chile (the "Pimenton Mine"). The Pimenton mine is a narrow high-grade gold and copper mine located in the high mountain range of Chile and encompasses 3,121 hectares (7,708 acres).
The Company's other major projects are a porphyry copper deposit (the "Pimenton Porphyry") and other projects in various stages of exploration and development in Chile which include "Tordillo", and two limestone deposits "Catedral" and "Cal Norte".
HIGHLIGHTS
Operational Highlights
-- Gold produced by the Pimenton Mine for the year ended September 30, 2016
was 4,256 oz compared to 6,633 oz produced in the prior year.
-- The average gold recovery for the year ended September 30, 2016 was
91.75% compared to 92.54% in the prior year.
-- The Company expects the mine to increase milling rates to 140 tons per
day depending on the rate of conversion of its known resources to
reserves.
-- Currently the plant has been permitted to operate at an average of 166
tons per day. During the present year the plant has operated at an
average of 100 tons per day and was closed for the period June to
September 2016 due to a snow storm early in June. The Company has
prepared but not yet submitted permits to take the mine up to 500 tons
per day.
-- Non-IFRS Measures:
-- Pimenton's cash cost for the year ended September 30, 2016 was $1,389
per ounce of gold produced net of by-product credits, compared to $1,136
per oz in the prior year.
-- Pimenton's production cost including depreciation and amortization for
the year ended September 30, 2016 was $1,862 per ounce of gold produced
net of by product credit compared to $1,505 per oz in the prior year.
Financial Highlights
-- Loss before income taxes for the year ended September 30, 2016 was
$6,936 compared to a loss of $12,729 in the same period in 2015. Loss
before income taxes for the three month period ended September 30, 2016
was $2,956 (2015 - $8,463)
-- Average price per ounce of gold for the year ended September 30 2016 was
$1,145. This considers only the first nine months of sales due to no
production or sales in Q4 (2015 - $1,164 based on twelve months).
Average price per ounce during the three months ended September 2016 was
$nil due to no production or sales (2015 - $1,099).
-- Net loss after income taxes for the year ended September 30, 2016 was
$6,936 compared to $12,905 in the same period in 2015. Net loss after
income taxes for the three months ended September 30, 2016 was $2,956
compared to $8,639 for the same period in 2015. For both comparative
periods $6,737 was incurred as a result of an impairment charge.
-- Basic loss per share for the year ended September 30, 2016 was a loss of
0.03 cents per share (2015 - loss of 0.08).
-- At September 30, 2016 the Company had cash and cash equivalents of $118
compared to $252 at September 30, 2015.
-- Cash flow from operations for the year ended September 30 2016 was
negative $1,667 (2015 - negative $2,834).
Other Highlights
-- Management believes that the values of the Pimenton gold mine, the
potential porphyry copper deposit, Tordillo exploration and the
Catedral/Rino and Cal Norte limestone deposits are not reflected in the
Company's market capitalization. The Company will continue its effort to
enhance the underlying values of its assets.
-- Subsequent to year end, on December 7, 2016 the Company reported that it
has agreed in principle to extinguish certain outstanding indebtedness
owed to David Thomson and Mario Hernandez (the "Related Parties"), both
directors and officers of the Company, by issuing common shares of the
Company (each, a "Common Share") in settlement of such debt (the "Debt
Settlement"). The Debt Settlement was completed in order to immediately
improve the financial position of the Company given the serious
financial difficulties it is currently facing. Pursuant to the Debt
Settlement, the Company extinguished outstanding indebtedness in the
aggregate amount of US$ 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, by issuing a three year 8% Convertible Debenture convertible
into 92,875,400 Common Shares (representing an issue price of CDN$0.05
per share) in full and final settlement thereof. All dollar amounts have
been converted at an exchange rate of CDN$1.34 per US$1.00. With the
completion of the Debt Settlement on December 7, 2016, the Related
Parties hold 200,516,530 Common Shares representing approximately 74.86%
of the issued and outstanding Common Shares. On a fully diluted basis
they hold an aggregate of 291,002,231 Common Shares of the Company
representing approximately 78.6% of the shares of the Company on a fully
diluted basis.
-- On January 25, 2017 the Company announced approval by SERNAGEOMIN of the
Pillar Recovery and Replacement Plan for the Pimenton Mine. The Pimenton
Mine remnant pillars contain an estimated 28,000 tons of high grade
mineralized material with an estimated grade of 15.8 grams per ton gold
and 1.4% copper, as reported in the latest Technical Report on the
Pimenton Mine dated July 21, 2016.
Cerro Grande Mining Corporation is a minerals producing, 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
