VANCOUVER, BRITISH COLUMBIA
Sherwood Copper Corporation (TSX VENTURE: SWC)(TSX VENTURE:
SWC.DB) today announced significantly improved operating results
for the three months ending June 30, 2008 from its high grade Minto
copper-gold mine located in the Yukon, as well as a significant
reduction in its bank debt.
Second quarter 2008 production totalled 12.8 million pounds of
payable copper at an estimated total cash cost(i) of $0.96 per
pound of payable copper (after estimated by-product credits and
offsite costs) versus 11.0 million pounds of payable copper at
total cash cost(i) of $1.04(4) per pound in the first quarter of
2008. These improved operating results were achieved as a result of
processing ramping up to and then exceeding design capacity (with
mill throughput increased 35% over that in the first quarter),
while unit operating costs per tonne fell 21% over the same period,
despite higher fuel prices.
Further, on June 30, 2008, Sherwood's subsidiary, Minto
Explorations Ltd. ("MintoEx"), repaid an additional US$12 million
of its project loan facility ("PLF"), on top of a US$5 million
payment made on March 30, 2008, reducing the amount outstanding
under the PLF to US$40.9 million. In addition, MintoEx placed
US$7.5 million into its banks' debt service reserve account to
partially cover the next payment (due on September 30, 2008).
"Operations at our high grade Minto copper-gold mine delivered
an excellent quarter, with 12.8 million pounds of copper produced
at total cash costs(i) of under $1.00 per pound," said Stephen
Quin, President & CEO. "Our operating group made tremendous
progress over the second quarter; completing the commissioning of
the Phase 2 mill expansion and increasing throughput to levels
above design on a sustained basis. This production, combined with
strong metal prices, has enabled us to aggressively reduce our
project debt," he said. "Going forward, we continue to push down to
much higher grades in the latter part of 2008, which should result
in production targets being met in 2008 and in a significantly
stronger 2009 than previously planned."
During the second quarter 2008, Sherwood continued its project
optimization process, developing and implementing a rescheduled
open pit mine plan that should result in significantly increased
production in 2009 versus what was previously forecast as a result
of bringing high grade production forward from 2010. Production
forecasts for 2008 of approximately 55 million pounds of payable
copper and 24,000 oz of payable gold remain unchanged. "The
rescheduled open pit should result in more copper production
sooner, which should increase value to all of our stakeholders,"
said Mr. Quin.
Operating Highlights from Second Quarter 2008
During the three months ended June 30, 2008, Sherwood made
significant progress at its high grade Minto copper-gold mine,
including the following:
- Production increased approximately 17% to 13.23 million pounds
of contained and 12.80 million pounds of payable copper at an
estimated total cash cost(i) of $0.96 per pound of payable copper,
after by-product credits, treatment charges and selling costs. In
the first quarter production totalled 11.32 million pounds of
contained copper and 10.95 million pounds of payable copper at a
total cash cost(i) of $1.04(4) per pound.
- Cash costs per tonne milled fell 21% from $86/tonne in the
first quarter to $68/tonne in the second quarter. Going forward,
unit costs should continue to trend down as a result of increased
production and mill throughput, and conversion to grid electrical
power before the end of 2008. The conversion to grid power should
result in an immediately reduction in operating costs.
- No ore was mined during the second quarter and all mill
production was drawn from material stockpiled over the prior 12
months, and all mining activity was focused on stripping waste for
the Phase 3 pit to expose high grade ore by the end of the third
quarter of 2008, which should result in high production in the
fourth quarter of 2008 and in 2009. Costs related to waste
stripping completed in the quarter were deferred. Costs related to
the mining and stripping of ore that was drawn from the stockpile
and processed in the quarter had previously been deferred but have
now been expensed and are included in the total cash costs for the
second quarter.
- Processed 206,263 tonnes of ore at an average grade of 3.26%
copper versus 152,368 tonnes processed at an average grade of 3.61%
in the first quarter. Mill throughput increased from an average of
1,674 tpd in Q1 to 2,266 tpd in Q2, a 35% increase in throughput.
In June 2008, throughput averaged 2,521 tpd.
- Shipped 9,849 dry metric tonnes ("dmt") of concentrate from
the Port of Skagway in April 2008, with similar amounts scheduled
to be shipped in each of July and August 2008. Revenue and costs
related to the April shipment will be recognized in the second
quarter of 2008, while those for the July and August shipments in
the third quarter of 2008. As a result of Sherwood's revenue
recognition policy, Sherwood's net income or loss may vary
significantly from quarter to quarter based on revenue recognition
timing.
- Held 15,936 dmt of copper concentrate grading approximately
40.3% copper in inventory at June 30, 2008.
- Significant progress was made in the construction of the
powerline and related facilities, which should connect the Minto
Mine to the Yukon power grid before year-end 2008 and should result
in a significant reduction in operating costs once connected.
Minto Mine Operating Statistics
--------------------------------------------------------------------------
Q1/08 YTD Total
(3) Q2/08 (5)
--------------------------------------------------------------------------
Production
(contained in concentrates)
--------------------------------------------------------------------------
- Copper (000's lbs) 11,322,942 13,232,620 24,555,562
--------------------------------------------------------------------------
- Gold (oz)(1) N/A N/A N/A
--------------------------------------------------------------------------
- Silver (oz) 63,440 68,300 131,740
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Mining
--------------------------------------------------------------------------
- Waste (tonnes) 1,372,953 3,301,619 4,674,572
--------------------------------------------------------------------------
- Ore (tonnes) 321,431 0 321,431
--------------------------------------------------------------------------
- Total material mined (tonnes) 1,694,384 3,301,619 4,996,003
--------------------------------------------------------------------------
- Copper grade (%) 3.57 N/A 3.57
--------------------------------------------------------------------------
- Gold grade (g/t)(1) 1.46 N/A 1.46
--------------------------------------------------------------------------
- Silver grade (g/t) 14.6 N/A 14.6
--------------------------------------------------------------------------
Milling
--------------------------------------------------------------------------
- Tonnes processed 152,368 206,263 358,631
--------------------------------------------------------------------------
- Copper grade (%) 3.61 3.26 3.34
--------------------------------------------------------------------------
- Gold grade (g/t)(2) 1.73 N/A N/A
--------------------------------------------------------------------------
- Silver grade (g/t) 14.8 12.6 13.5
--------------------------------------------------------------------------
Recoveries
--------------------------------------------------------------------------
- Copper (%) 94.5 93.3 93.3
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- Gold (%)(1) 79.7 N/A N/A
--------------------------------------------------------------------------
- Silver (%) 88.5 86.1 86.7
--------------------------------------------------------------------------
Concentrate
--------------------------------------------------------------------------
- Dry tonnes produced 13,243 14,468 27,711
--------------------------------------------------------------------------
- Copper grade (%) 38.8 41.5 40.3
--------------------------------------------------------------------------
- Gold grade (g/t)(1) N/A N/A N/A
--------------------------------------------------------------------------
- Silver grade (g/t) 148.0 148.5 149.0
--------------------------------------------------------------------------
Operating Costs (C$)
--------------------------------------------------------------------------
- Cash cost per tonne milled $85.65 $67.86 $75.42
--------------------------------------------------------------------------
- Total operating cost/payable lb Cu $1.19 $1.09 $1.14
--------------------------------------------------------------------------
- Estimated by-product
credits/payable lb Cu(4) ($0.56) ($0.48) ($0.52)
--------------------------------------------------------------------------
- Treatment, refining, freight,
port, insurance $0.41 $0.34 $0.37
--------------------------------------------------------------------------
- Total cash cost/payable lb Cu $1.04 $0.96 $0.99
--------------------------------------------------------------------------
1 Gold is not assayed on site, resulting in a significant lag in receiving
this data.
2 Gold grades for ore mined are estimated from the reserve block model,
whereas copper and silver grades are based on blast hole assays.
3 Q1/08 numbers have been adjusted based on concentrate settlement
information available after April 17, 2008.
4 Q2/08 by-product credit numbers (gold and silver) are based on estimates
and will be adjusted after final settlement.
5 YTD totals may not match the totals from individual quarters due to
rounding and post-quarter adjustments.
Note that the first quarter 2008 production statistics,
previously reported on April 17, 2008, have been adjusted as a
result of quarter-end reconciliations completed subsequent to that
announcement, while second quarter precious metal by-product
credits are estimates that will be adjusted after final settlement
with the smelters.
Concentrate Shipments
In April, Sherwood loaded approximately 9,849 dmt of concentrate
grading approximately 38.8% copper on the vessel MV Sanka Eternal
and, in mid-July, an additional approximately 9,800 dmt of
concentrate grading approximately 40% copper will be shipped on the
vessel MV Blundance for sale to Asian smelters. Another shipment,
of approximately 9,800 dmt of concentrates is scheduled for loading
in August 2008. Of these quantities delivered, approximately 42% of
the April shipment and 58% of the July shipment will be delivered
into Sherwood's copper forward sales contracts, while the balance
has been or will be sold at spot between the loading date and final
settlement date. In addition, these concentrates contain
significant gold and silver credits.
Production Outlook
Given that the mill has demonstrated sustained capacity in
excess of the 2,400tpd design, Sherwood aims to average mill
throughput in excess of 2,400 tonnes per day for the balance of
2008 in order to achieve its production forecast of approximately
55 million pounds of payable copper and 24,000 oz of payable gold
in 2008.
As noted in the May 30, 2008 press release, as part of its
optimization plan, Sherwood has rescheduled mine production from
the main pit at Minto in order to accelerate the mining of high
grade ore that was previously scheduled for production in 2010 and
moved it into late 2008 and all of 2009. This rescheduling involves
developing the pit northward from the current pit walls, as opposed
to the prior plan of developing the southern portion of the pit
first. This rescheduled mine plan will expose the largest amount of
high grade copper-gold ore (greater than 4% copper and 2g/t gold)
in the main Minto pit 12-18 months earlier than previously planned,
resulting in increased copper production in 2009 while reducing the
forecast production for 2010 below that set out in the February 17,
2008 press release. Given current very high copper and gold prices,
this change in pit scheduling should result in several million
pounds of copper production being brought forward from 2010 into
2009, without reducing Sherwood's forecast production of
approximately 55 million pounds of copper in 2008. Additional
details will be provided in respect of the rescheduled production
outlook for 2009 and 2010 in the near future.
As a result of this rescheduling, all production is being drawn
from stockpiles mined in prior periods, with the highest grade
stockpile material (greater than 4% copper) being processed first
followed by medium (2%-4%) and then lower grade (1-2%) before
processing of high grade resumes as soon as fresh ore is exposed in
late third quarter 2008. This means that the lowest production is
expected to occur in the second and third quarters of 2008. Due to
Sherwood's revenue recognition policy, which requires title and
risk be transferred to the purchaser of the concentrates, there is
an approximate three to four month lag between production and
financial results.
Capital Programs
In addition to the $1.2 million in additional exploration
expenditures announced on July 17, 2008, MintoEx has approved
capital allocations for $3.1 million which expenditures include a
number of productivity and throughput expansion related activities.
The crusher is being modified and upgraded so that it should not
have the freezing issues that proved problematic in the extreme
cold weather experienced in the first quarter of 2008, and so that
is easier to maintain, reducing downtime and therefore increasing
availability. In addition, a new concentrate thickener is being
added to handle increased production. Several other improvements
are being made, including improvements to the camp to enhance
living conditions for the employees. In parallel, construction of
the powerline and related facilities required to connect to the
Yukon grid is well advanced, should be completed before year-end
and should result in a significant reduction in costs once
connected.
About Sherwood Copper
Sherwood Copper's objective is the profitable production of base
and precious metals from high grade, open pit mines in Canada.
Sherwood's first operating mine, the high grade Minto copper-gold
mine in Yukon, Canada, was built on budget and ahead of schedule.
The Minto Mine is one of the highest-grade open pit copper-gold
mines in the world, and is forecast to be a low cost producer.
Aggressive exploration on the Minto property has yielded
significant success, providing Sherwood the opportunity to 'grow
from within' by expanding the resource and reserve base,
potentially leading to further production increases. To further
accelerate its production growth, Sherwood intends to pursue merger
& acquisition opportunities that fit its business model and, in
May 2008, Sherwood acquired 100% ownership in Western Keltic Mines
(now Kutcho Copper Corp.), owner of the high-grade Kutcho
copper-zinc-gold-silver deposit in northwestern British Columbia.
Sherwood intends to lever off its successful development of the
Minto Mine and advance the Kutcho project to a production
decision.
Quality Assurance
The technical information in this news release has been prepared
in accordance with Canadian regulatory requirements set out in
National Instrument 43-101 and reviewed by Stephen P. Quin, P.
Geo., President & CEO for Sherwood Copper Corporation. The
operational activities carried out at the Minto Mine has been
carried out under the supervision of Randall Thompson, General
Manager of the Minto Mine, and Kevin Weston, Chief Operating
Officer for Sherwood Copper, who have reviewed and approved the
information contained herein.
Additional Information
Additional information on Sherwood and its Minto Project can be
obtained on Sherwood's website at
http://www.sherwoodcopper.com.
On behalf of the board of directors
SHERWOOD COPPER CORPORATION
Stephen P. Quin, President & CEO
This document may contain "forward-looking statements" within
the meaning of Canadian securities legislation and the United
States Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date of this document
and the Company does not intend, and does not assume any
obligation, to update these forward-looking statements.
Forward-looking statements relate to future events or future
performance and reflect management's expectations or beliefs
regarding future events and include, but are not limited to,
statements with respect to the estimation of mineral reserves and
resources, the realization of mineral reserve estimates, the timing
and amount of estimated future production, costs of production,
capital expenditures, success of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims
and limitations on insurance coverage. In certain cases,
forward-looking statements can be identified by the use of words
such as "plans", "expects" or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved" or the negative of these
terms or comparable terminology. By their very nature
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, among others, risks related to actual results of
current exploration activities; changes in project parameters as
plans continue to be refined; future prices of resources; possible
variations in ore reserves, grade or recovery rates; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; as well as those factors
detailed from time to time in the Company's interim and annual
financial statements and management's discussion and analysis of
those statements, all of which are filed and available for review
on SEDAR at www.sedar.com. Although the Company 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 forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such
statements.
Accordingly, readers should not place undue reliance on
forward-looking statements.
(i) These are non-GAAP performance measures and readers should
refer to notes on non-GAAP performance measures in the Company's
management discussion and analysis for the three month period ended
March 31, 2008 as filed on Sedar for further details.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this press
release.
Contacts: Sherwood Copper Corporation - Investor Contact Stephen
P. Quin (604) 687-7545 Sherwood Copper Corporation - Investor
Contact Chris Curran (604) 687-7545 (604) 689-5041 (FAX) Website:
www.sherwoodcopper.com
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