Another 60 days....
Minefinders loses $2.84-million (U.S.) in 2004
2005-03-30 10:25 ET - News Release
Mr. Mark Bailey reports
MINEFINDERS REPORTS ON 2004 FINANCIAL RESULTS AND OPERATIONS
Minefinders Corp. Ltd. has released its financial results and operations for the year ended Dec. 31, 2004. All dollar amounts in this news release are stated in U.S. dollars unless otherwise noted.
2004 financial highlights
The company's financial position at Dec. 31, 2004, remained very good, with $42.35-million in cash (2003 -- $45.68-million) and net working capital of $41.76-million (2003 -- $45-million). At present, the company has 36,476,841 shares outstanding (39,916,841 shares fully diluted).
The principal sources of funds in 2004 were the exercise of stock options for $1.25-million, interest of $1-million (2003 -- $400,000) on the high cash balances brought forward from 2003 and the recovery of value-added taxes of $900,000. In addition, the company had a gain of $3.03-million (2003 -- $2.56-million) arising from the increase in value of the Canadian dollar, in which the company holds almost all of its funds, against the U.S. dollar.
The company recorded a net loss for 2004 of $2.8-million (eight cents per share), compared with $3.9-million (12 cents per share) for 2003. The net loss reflects higher administration and stock option compensation costs in 2004; however, these increases were more than offset by a reduced write-off of mineral properties and exploration costs (2004 -- $339,000; 2003 -- $1,055,000) and by higher interest income earned on cash balances (2004 -- $1,003,000; 2003 -- $398,000).
After deducting non-cash stock option compensation costs of $1,376,000 in 2004 and $1,148,000 in 2003, administrative costs increased from $1,826,000 in 2003 to $2,025,000 in 2004 as the company expanded operations and positioned itself to move from exploration into development and production at the Dolores gold/silver project.
Net expenditures on mineral properties increased during 2004 to $6,221,000 from $5,713,000 in 2003 and $2,968,000 in 2002. These amounts exclude stock option compensation expense that was charged to "deferred exploration costs," and an adjustment for differences in currency exchange rates.
This summary of financial highlights should be read in conjunction with the company's 2004 audited financial statements and management's discussion and analysis thereof, which will be available for review on-line at www.sedar.com.
Reporting currency
Effective Jan. 1, 2004, the company changed its reporting currency from the Canadian dollar to the U.S. dollar. Numbers contained in this news release are presented as if this policy has been in place for all relevant periods, using U.S. dollars. The company's financial statements are prepared in accordance with Canadian generally accepted accounting principles.
Change in accounting policy
Effective Jan. 1, 2004, the company adopted new Canadian accounting standards for stock option expense and adjusted previously published numbers to include the effects of this change in the comparative numbers for previous years.
Summary of 2004 activities and development
The company continued to focus its activities in 2004 on its Dolores gold/silver project, located in Chihuahua, Mexico. Of total expenditures in 2004, 74 per cent was incurred on the Dolores project, 14 per cent on properties in northern Sonora and 12 per cent on properties in the United States. During the year, the company conducted an extensive infill drilling program at Dolores to elevate "inferred" resources to the "measured and indicated" category and directed a comprehensive feasibility study to bring the project to a production decision in 2005. A total of 137,070 metres of drilling have been completed at Dolores as at Dec. 31, 2004.
An audited mineral resource estimate for Dolores was completed in November, 2004 (see news as reported in Stockwatch on Dec. 6, 2004) by the independent consulting firm of Roscoe Postle Associates Inc. (RPA). Using a cut-off grade of 0.3 gram of gold per tonne gold-equivalent, the total measured and indicated resource was 101 million tonnes, containing 2,647,000 ounces of gold and 128,179,000 ounces of silver. Resource estimates were prepared in compliance with the requirements of Canadian National Instrument 43-101 (the RPA report is available at www.sedar.com). The Dolores feasibility study will determine what portion of this resource can be economically mined and support the company's financing of the development to production of the project. Other significant milestones in 2004 included receipt of the final metallurgical reports from SGS Lakefield Research Ltd. and McClelland Laboratories and the pit slope design study by Golder Associates.
The Dolores feasibility study has taken longer than anticipated as a result of workloads experienced by the independent engineering consultants working on it and the expansion of its scope to include a mill and flotation circuit as a possible addition to a heap leach configuration. This expansion necessitated extensive additional engineering and metallurgical testwork.
After evaluating various alternatives, the feasibility study is now being finalized on the basis of a large-scale (approximately 25,000-tonne-per-day) conventional open-pit heap leach operation and is expected to be completed within the next 60 days. Upon receipt of a positive recommendation from the feasibility study, and securing such debt, or debt and equity, financing as is necessary, the company expects to begin equipment and material procurement, project management, and construction later this year.
During 2004, the company also conducted drilling and fieldwork on its northern Sonora, Mexico, project at a cost of $1.25-million and on its Clear and Dottie projects in Nevada at a cost of $826,000. Initial results from the northern Sonora exploration show encouraging potential for significant silver and base metal deposits on the Planchas de Plata and Real Viejo prospects. Program results continue to be evaluated, with follow-up work and significant exploration expenditures planned for 2005.
Minefinders welcomes shareholders to its annual general meeting, to be held on June 16, 2005, at 2 p.m. at the Vancouver Marriott Pinnacle Hotel, 1128 West Hastings St., Vancouver, B.C.
The company will host a conference call tomorrow, March 31, 2005, at 9 a.m. PST to discuss its financial and operating results for 2004. Participants may access the conference call by dialling 1-800-769-8320 (North America), 1-800-422-8835 (international) or 416-695-9753 (Toronto area). When calling, please request access to the Minefinders Corp. Ltd. 2004 year-end results conference call with reservation No. T558181M. A replay of the conference call will be available until April 9, 2005, by dialling 416-695-5797 or 1-877-244-9049, using pin No. 8181.
Mark H. Bailey, MSc, PGeo, a qualified person as defined by National Instrument 43-101, has overall responsibility for Minefinders' mineral exploration programs and supervised the preparation of the technical information in this news release.
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