TRADING SYMBOL TSX VENTURE EXCHANGE - ZRI
VANCOUVER, May 30 /CNW/ - Zarcan International Resources Inc. (the "Company") wishes to announce the financial results for the first quarter ended March 31, 2003, and provides an update on its operating activities. The Company has released its BC Form 51-901F First Quarter Report containing financial statements prepared without audit, for the three months ended March 31, 2003 (the "Quarterly Report"). Pursuant to the requirements of National Instrument 54-102, this news release provides a reasonable summary of the information contained in the Quarterly Report. Concurrently with this news release, the Company is filing the Quarterly Report with the regulatory authorities through SEDAR (www.sedar.com) and has mailed it to shareholders whose names appear on the Company's Supplemental List. A copy of the Quarterly Report is available upon request.
Corporate Updates
The Company continues to implement cost cutting measures. These measures included vacating the Company's 4,000 square foot leased facility in Vancouver and the subsequent lease of a smaller 1,224 square foot facility nearby as of January 2003. Monthly rent savings from this move will be approximately $6,200.00 with additional savings in utilities and other occupancy costs.
Financial Review - Discussion and Analysis of First Quarter Results
At the end of the current quarter the company had a working capital deficit of $1,555,137 and a long-term loan payable of $1,292,444. During this quarter the Company and its subsidiaries spent a total of $58,612 on its properties compared to $194,068 (70%) in the first quarter of 2002. The distribution is as follows:
-------------------------------------------------------------------------
Q1 2003 Q1 2002 Change
-------------------------------------------------------------------------
Iran (Agh Darreh and Sistan
va Baluchestan) $42,815 $83,548 ($40,733) (49%)
-------------------------------------------------------------------------
Brazil (Parauna) $15,797 $110,520 ($94,723) (86%)
-------------------------------------------------------------------------
Total $58,612 $194,068 ($135,456) (70%)
-------------------------------------------------------------------------
Comparative figures for the first quarter shows an overall decrease of 70% with a decrease of 49% for the Iranian projects and 86% for the Brazilian project, indicating the reduced funding.
IRANIAN PROJECTS
Sistan va Baluchestan Exploration Project
On May 16, 2003 the management of the Company announced that it had received the extension of exploration licenses granted by the Iranian Ministry of Industries and Mines (the "Ministry") for 10 concession areas located in the Province of Sistan va Baluchestan in southeastern Iran.
The concessions, each about 40 sq km, were selected after four years of regional mapping by geologists of Madani Zarcan Taftan Co., the Company's wholly owned subsidiary, of 30,800 square kilometers in that province (Phase I program). The concessions contain favorable exploration targets based on regional geological mapping, geochemistry, historical mining and geophysics.
The Phase II exploration program was continued in the current quarter with the aim to secure proper title documents for the following 10 concession areas. The company received the Exploration Licenses at the beginning of the year. The Company currently has problems of local access to the area known as "Kutan". Currently the Company is trying to reach an agreement. Progress of the exploration work follows:
The concession areas for which Exploration Licenses were extended are described below.
-------------------------------------------------------------------------
Concession Area Extension Mineralization
-------------------------------------------------------------------------
1 Assagie (N 30 degrees 36'
and E 60 degrees 12') Lead, zinc, copper
2 Seyasteragi (N 30 degrees 35'
and E 60 degrees 27') Copper, lead, gold
3 Kuh-e Malusan (N 30 degrees 00'
and E 60 degrees 04') Copper, lead
4 Shoveyn Valley (N 29 degrees 40'
and E 60 degrees 07') Copper, gold
5 Chah Brish (N 29 degrees 43'
and E 60 degrees 07') Copper, gold
6 Shurchah (N 29 degrees 12'
and E 60 degrees 52') Antimony, gold
7 Kharestan (N 28 degrees 42'
and E 60 degrees 54') Copper, zinc, lead
8 Bidester (N 28 degrees 40'
and E 61 degrees 00') Copper, lead
9 Eskalabad (N 28 degrees 34'
and E 60 degrees 45') Gold, lead, zinc
10 Kuten (N 28 degrees 25'
and E 61 degrees 21') Copper, gold
-------------------------------------------------------------------------
Agh Darreh Gold Project
PZA, the affiliate of Zarcan Minerals Inc., has received Exploration Licenses for 4 additional concessions that cover new mineralization found in the area. Exploration work continues with 14 new trenches sampled and logged. Design work of the road between the mine site and the plant site has been completed and road construction between the existing road and the plant site is currently underway (3 km.). A contract has been signed for heap leach metallurgical tests in Iran. Forty tons of samples have been gathered and transported to the test site, the tests have been completed, and the preliminary results are favorable. The Company is currently waiting for final results of these tests.
PZA has signed an agreement with the Iranian Energy Authority for purchasing 3.5 MW of electricity from the national grid. The earthwork for the plant site will start in late Spring. PZA is currently investigating the purchase of a recently decommissioned CIL processing plant for Agh Darreh. A modern communication system has been installed and connected from the mine site to national system. A new communication station will be installed in the plant site.
PZA has increased its capital from 8,000,000,000 Rials (USD$1 Million) to 20,000,000,000 Rials (USD$2.5 Million) in late March 2003 and applied for a loan from the Iranian Bank Mellat for execution of the plant in the Agh Darreh Gold Project. The government royalty has been paid for the Exploitation Licenses and PZA has selected a qualified mining consultant to direct mine planning.
On April 28, 2003 PZA informed Zarcan Minerals Inc. and the Company, that the capital will be further increased from 20 billion Rials (US$2.5 Million) to 24 billion Rials (US$3 Million), the total capital authorized by the shareholders. Zarcan's contribution is 1.6 billion Rials (US$200,000) which is requested to be paid by June 28, 2003.
BRAZILIAN PROJECT
Parauna Diamond and Gold Project
Zarcan Minerals Inc. owns 95% of Mineracao DF-II Ltda. ("DF-II"), a Brazilian mining company that holds 7 Parauna diamond claims (concessions) in the State of Minas Gerais. DF-II has submitted revised feasibility documentation (PAE) necessary to acquire the Mining Licenses for three claims (24, 25 and 26). This has been approved by the National Department of Mineral Production (DNPM) of Brazil. Once financing is in place the mine can be implanted and production start, subject to the Operation License to be issued by the Environmental Regulator (FEAM). DF-II has been assured by the relevant authorities that issuance of the Operating License will not pose any problem. During the current quarter DF-II also prepared a revised mine plan and feasibility study (PAE) for claims 28 and 29 as requested by the DNPM incorporating i.e. modifications requested by FEAM. The modified report was submitted to the DNPM and well received. The revised plan incorporates new data developed since the earlier submission and provides a greater degree of confidence for the resources. Negotiations with landowners were resumed successfully. DF-II presently is performing topographical surveying and mapping of the areas to be mined, though on a reduced scale awaiting the financing of the mine.
All the reports confirm that it is economically feasible and attractive to mine the concessions.
Liquidity and Capital Resources
The September 11, 2001 events and the subsequent developments in the Middle East region have dried up the financing sources for the company's Iranian projects.
Notwithstanding these difficulties, the Company is presently negotiating various possibilities for joint venture financings of the Parauna Project (which may also include an outright sale) as well as for the Agh Darreh Gold Project.
Interest of Management in Material Transactions
On October 25, 2002 the directors approved a loan offered by a company under the control of Farrokh Elmieh for the principal amount of $135,000. The loan bears an interest rate of six-months LIBOR for Canadian dollars plus 4% p.a. Interest will accrue and is payable together with the principal amount. On December 10, 2003 the Company amended the agreement to a total amount of $300,000. On May 16, 2003 the Company announced that it had further amended the Loan agreement to a total of $450,000. All terms of the agreement remained unchanged from the original agreement.
Under the agreement each disbursement of the Loan is secured by a Promissory Note to be issued by the Company. The Loan and all accrued interest must be paid on or before October 29, 2004.
In the event of default the lender is entitled to receive the amount due to him out of 50% of any dividends paid by Pouya Zarcan Agh Darreh, to Zarcan Minerals Inc. until the Loan and accrued interest has been fully paid. No other collateral or security has been given. The proceeds of the loan are being used by the Company to fund the continued development of its mineral projects in Iran and for working capital.
Financings
No financing was completed in the current quarter. Funds were advanced by certain officers and directors of the Company.
Zarcan International Resources Inc. is a Canadian mineral exploration company incorporated in British Columbia, Canada with its head office in Vancouver, British Columbia, with interests in properties located primarily in Iran and Brazil. The Company's common shares trade on the TSX Venture Exchange under trading symbol ZRI. The Company aims to identify low-cost mining projects internationally and acquire advanced stage projects predominantly in the precious and base metal sectors.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
"Farrokh Elmieh"
----------------------------------------
Farrokh Elmieh
President & CEO
NOTE: If you prefer to receive Zarcan's news through e-mail, please e- mail us at info(at)zarcan.com
For further information: Brigitte McArthur, 1300 - 1100 Melville Street, Vancouver B.C., Canada V6E 4A6, Tel: (604) 683-7837, Fax: (604) 683-7881, Website: www.zarcan.com, E-mail: info@zarcan.com
