FAN.to Ready To Run
Mill Expansion Project at G-9 Underway
VANCOUVER, Nov. 16 /CNW/ - Dick Whittington, President and CEO of Farallon Mining Ltd. ("Farallon" or the "Company") (TSX:FAN) is pleased to announce the quarterly operating and financial results for the Company for the three months ending September 30, 2009 and to provide a G-9 mill update.
This news release should be read in conjunction with the Company's financial statements and MD&A, which are available on SEDAR. Currency is United States dollars unless otherwise indicated. Farallon will hold a conference call tomorrow, Tuesday November 17th, at 8:00 am Pacific time (11:00 am Eastern) to discuss these results. Call-in details are provided at the end of this release.
The Company generated cash flow from operations of $0.3 million and a loss for the period of $0.6 million. Production included zinc contained in zinc concentrates of 22.1 million pounds, copper in copper concentrate of 1.8 million pounds and additional by-product silver and gold. The total cash cost(1) including transportation, treatment and refining charges and by-product credits, was $0.45/lb of payable zinc.
In addition, the Company's Board of Directors has approved capital expenditure of $5.3 million to proceed with a mill expansion to increase production at the G-9 mine from 1,500 tonnes per day ("tpd") to 2,000 tpd. The Company has engaged Axxent Engineering for engineering, procurement and construction management services related to the project which is expected to be complete by July 2010.
President and CEO Dick Whittington said "The third quarter was an exciting period for the Company in which underground development activity at the mining operations at G-9 were completed. We are now producing high-grade ore at over 1,500 tpd on a consistent basis. As well, many initiatives were undertaken in the milling operations that allowed us to exceed our design throughput rates in the mill during the month of October, operating at an average rate of 1,600 tpd. These initiatives have us well placed to capitalize on strong base metal prices during the fourth quarter, and the initiation of the mill expansion project will further enhance our position as a low-cost zinc producer. We are also very enthusiastic about the resumption of exploration drilling on the property".
Financial and operational highlights for the three months ended September 30, 2009 ("Q3" or "the period") compared to the three months ended June 30, 2009 ("Q2") are as follows:
<< - Loss of $0.6 million, down from a loss of $8.0 million for Q2. - Cash flow from operations of $0.3 million, up from cash used of $0.4 million in Q2. - Gross profit of $2.9 million, down from $5.7 million in Q2. - Production of 20,462 tonnes of zinc concentrate and 4,894 tonnes of copper concentrate containing an estimated 22.1 million pounds of zinc, 1.8 million pounds of copper, 301,202 ounces of silver and 3,355 ounces of gold from the G-9 mine. Zinc and copper production was up from 21.3 million pounds and 1.7 million pounds, respectively, in Q2. - Processed 117,318 tonnes of ore with a grade of 10.8% zinc, 1.5% copper, 203 g/t silver and 2.7 g/t gold. Production was up from 114,644 tonnes of ore in Q2. - Sold approximately 27,004 dry metric tonnes of zinc concentrate averaging 51% zinc, 5,947 dry metric tonnes of copper concentrate averaging 15% copper and 2,234 tonnes of lead concentrate averaging 20% lead. Sales were up from 25,750 tonnes of zinc concentrate, 2,310 tonnes of copper concentrate and zero lead concentrate in Q2.
Subsequent to the quarter end, the Company:
<< - Exceeded design throughput rates in the mill during the month of October, processing approximately 49,600 tonnes of ore (1,600 tpd or 107% of design). - Closed a bought-deal equity financing with net proceeds of approximately $10.2 million, increasing cash on-hand to approximately $22.5 million as at November 1, 2009. - Initiated a Mill Expansion Project to 2,000 tpd with anticipated capital cost of $5.3 million and completion by July 2010. - Re-started exploration drilling at Campo Morado with two surface drills and one underground drill operational. G-9 Operations -------------- >>
During the period, mining continued in the high-grade Southeast zone as well as the North zone and West Extension. Development activity was completed in the Southeast zone opening up access to the area from the south and the east and there are currently thirteen open mining faces at G-9, nine of which are in the Southeast zone. As well, an ore pass was completed at the end of the quarter, significantly improving the efficiency of ore hauling from the Southeast zone to the mill. Cemented rock backfilling was initiated during the period in the lower portion of the North zone to allow for mining of high-grade pillars.
In the mill, the design capacity of 1,500 tonnes per day was achieved for extended periods of time during Q3. However, mill availability was lower than design leading to production rates averaging 1,270 tonnes per day, compared to 1,260 tonnes per day in Q2. At the same time, enhanced maintenance programs were implemented in the quarter and various capital projects were undertaken to improve availability and throughput. As a result, during the month of October 2009, the mill processed approximately 49,600 tonnes of ore or an average of 1,600 tonnes per day (107% of design).
Metallurgy continues to be a key focus for the operations. As a result, zinc recovery has improved to 79% in Q3 from 77% in Q2. This trend has continued into the fourth quarter with average zinc recovery of 83% during the month of October. Copper recovery was 46% in Q3, down from 55% in Q2; however, continued improvements were observed into the fourth quarter with an average copper recovery of 55% in October. During the third quarter, the Company did not produce lead concentrate and continued not to do so into the fourth quarter.
During the period, the Company formed a Technical Support Team to assist in improving metallurgical recovery in the milling operations. The team includes 24 hour metallurgical coverage at the mill site as well as off-site metallurgical test work support. Continued enhancements are expected to improve zinc and copper recovery to 85% and 75%, respectively, during the fourth quarter. Changes to mill management have also strengthened mill operating performance.
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