ARBN 108 066 986
TORONTO, Aug. 6 /CNW/ - Equinox Minerals Limited (TSX and ASX symbol: "EQN") ("Equinox" or the "Company") today released its results of operations and financial condition for the three and six months ended June 30, 2009, and its financial position as at June 30, 2009.
All currencies specified in this press release are denominated in U.S. dollars.
HIGHLIGHTS
<<
- 24,413 tonnes of copper was produced during the quarter at an average
(C1) operating cost of $1.44 per pound;
- Lumwana mine commenced commercial production as of April 01, 2009
achieving an operating profit of $36.1 million for the quarter;
- The operating profit was subsequently offset by a non-cash hedging
instrument loss, resulting from the rising copper price, leading to a
net loss position, after tax, for the quarter of $38.7 million or
$0.06 per share. For hedge details refer to the "Financial Results
and Liquidity" section; and
- As at June 30, 2009, Equinox had cash resources of $187.2 million, an
undrawn contingent funding facility of $45 million, and an undrawn
FMO town infrastructure financing facility of $25 million.
Outstanding project and fleet debt facilities was $626.5 million.
>>
DEVELOPMENTS IN THE QUARTER
Operations
During the quarter, the Lumwana mine continued to ramp up both the mine and process plant operations. Production at Lumwana for the quarter was 3,031,783 dry metric tonnes of ore, producing 62,603 dry metric tonnes of concentrate at an average copper grade of approximately 39.1%, an increase of 9.7% from the prior quarter resulting in copper produced in concentrate of 24,413 tonnes (53,821,388 pounds) at an average (C1) operating cost of $1.44 per pound.
While ore production increased from last quarter, it was less than expected due to:
<<
- Availability of the mine truck and shovel mobile equipment fleet:
Although substantially improved from Q1-2009 (from 71% availability
in March, to 89% in June), this availability needs to further improve
and be maintained to meet production targets;
- Shovel and truck productivity and cycle times: Although also
significantly improved from last quarter (shovel productivity
increased from 1,700tph in March, to 2,800tph in June), with total
mine material movement increasing 134% from Q1-09, productivity needs
to further improve and be maintained to meet production targets;
- Transitional ore zones: Significant tonnages of transitional (mixed
sulphide-oxide) ore are being encountered where primary sulphide ore
was expected. Substantially lower metallurgical recoveries are
achieved in transition ore (ranging 5-65%) compared to sulphide ores
which during May achieved 94% recovery; and
- Uranium: The pits currently being developed on the Malundwe copper
orebody include the uranium zones at Valeria South and Valeria North.
As these uranium zones are being selectively mined (applying a cutoff
grade of 200ppm U, compared to the 700ppm U cutoff used in the
original mine plan) and stockpiled, they are not treated by the
copper concentrator and are effectively classified as 'waste' to the
copper project. This uranium-rich copper ore stockpile may be treated
at a later date, if and when the Company builds a uranium plant, but
is not contributing to current production cash flow. To the end of
Q2-2009 approximately 345,000 tonnes of uranium ore at a grade of
800ppm uranium and 0.7% copper had been stockpiled at Lumwana.
>>
The orebody-related issues are expected to improve in the coming months as the mine moves below the weathering profile and the uranium zones and into more consistent sulphide ore. Availability and productivity parameters continue to improve and management is implementing measures to further increase productivity and mine output. These measures include engaging specialist productivity consultants, Jamieson Group, internal training programs to better focus and improve workforce skills and expertise. In addition, Golder Associates have been contracted to review and assist in the optimization of the Lumwana mining reserve reconciliation and mine scheduling.
The 20Mtpa processing plant continues to perform to expectation and is capable of producing in excess of its design capacity based on achieved through put rates to date.
As of April 1, 2009, the Lumwana mine was deemed to be in commercial production for accounting purposes and therefore no further costs are being capitalized.
<<
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LUMWANA MINE PRODUCTION STATISTICS
Q1 2009 Q2 2009 TOTAL
Total mine material
movement Tonnes 8,882,640 20,801,485 29,684,125
Ore mined - sulphide Tonnes 1,837,530 3,030,659 4,868,189
Ore processed Tonnes 2,877,141 3,031,783 5,908,924
Head grade Copper % 0.93 0.98 0.96
Copper recovery Copper % 82.90 82.35 82.60
Concentrate grade Copper % 39.00 39.14 39.07
Copper produced in
concentrate Tonnes 22,263 24,413 46,676
Copper produced in
concentrate Pounds 49,081,908 53,821,388 102,903,296
Average (C1) operating
cost Per Pound - $1.44 $1.44
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>>
Revised Production Guidance
The various challenges that have impacted ramp-up and production at Lumwana in 2009 are considered to be of a short term nature. However, the cumulative impact of these challenges has resulted in the Company revising its production guidance for 2009. Management estimate production guidance for the 2009 calendar year, including production to June 30, 2009 of 46,676 tonnes, will be in the range of 110,000 - 120,000 tonnes (or 242 - 265 million pounds) of copper metal in concentrates at the average estimated (C1) operating cost of between $1.35 - $1.50 per pound.
Management believes that it is taking appropriate remediation action to meet the challenges specified in this report and believes that the Lumwana mine and ore body have not been impaired due to the events and issues discussed herein.
Off-take Update
During the quarter, concentrate delivery was predominantly directed to Chambishi Copper Smelter Limited ("CCS"). On May 6, 2006, the Company reported that a five year concentrate offtake agreement with Konkola Copper mines Plc ("KCM") had been signed for the smelting at KCM's new Nchanga smelter on the Zambian Copperbelt, of annual quantities of between 70,000 and 80,000 dry metric tonnes of concentrates from the Lumwana copper mine. The agreement also permits an option by mutual agreement for the smelting of additional annual quantities of Lumwana copper concentrates under the same terms. KCM is majority owned by Vedanta Resources Plc, a London listed metals and mining company. During the quarter, the Company terminated its offtake with Mopani Copper Mines Plc. The KCM offtake supplements the Company's primary long-term offtake agreement with CCS, which when combined, will account for a large majority of Lumwana's forecast production.
Concentrate deliveries to KCM have commenced and Equinox continues to make shipments of Lumwana copper concentrates to international traders active on the Zambian Copperbelt to maintain distribution flexibility.
ZESCO Update
The Company has previously announced that it is in dispute with ZESCO Limited ("ZESCO"), Zambia's national power supply utility, over electricity charges believed by ZESCO to be incurred by the Company between 2007 and 2008. ZESCO has claimed invoice values totalling $9.0 million for the period up to December 31, 2008. However, based on legal advice, the Company has determined a value of $2.0 million is payable based on the terms of the contract. The Company disputes ZESCO's claim, and has paid $2.0 million to ZESCO while conducting negotiations in an effort to resolve the matter. During the quarter the board and the CEO of ZESCO were replaced. The ZESCO Notice of Termination has been withdrawn and management discussions continue with ZESCO. Equinox believes that the matter can be resolved in a reasonable manner.
Town Development
The Lumwana town development continues to advance with 539 houses completed to date. The commercial and retail developments, including the recently opened Lumwana supermarket, are advancing and a self-sustaining modern town environment is being developed.
The Company's subsidiary, Lumwana Property Development Company ("LPDC") was established to act as a special purpose vehicle to own and manage the new Lumwana town. LPDC has secured a $25 million debt facility with Nederlandse Financierings-Maatshappij voor Ontwikkelingslanden N.V. ("FMO"), the Dutch Government development funding institution, to cover some town infrastructure costs. Drawdown of this facility can commence once Equinox meets a number of conditions precedent. No drawdowns of this facility have occurred to date.
Corporate Activities
On April 22, 2009, Equinox closed its public offering of 102,235,000 common shares, including the exercise of the over-allotment option, at a price of Cdn$1.80 per share raising gross proceeds of Cdn$184.0 million (US$148.3 million). The net proceeds from the public offering have been used for the improvement of the Company's cash position, and will be used to evaluate and fund expansion opportunities at the Lumwana Project, to purchase and extinguish an existing net smelter return royalty in connection with the Lumwana Project, and for general corporate purposes.
The Company held its annual shareholders' meeting on May 7, 2009 at which the re-election of the directors and the amended and restated shareholder rights plan were approved.
The Company recorded a net loss for the quarter of $38.7 million or $0.06 per share.
Exploration Activities
The following exploration work continued its focus on the evaluation and ranking of targets on the Lumwana mining license LML49:
<<
- At the North Dome Prospect, soil sampling was completed over an
historical RST copper soil anomaly, which coincides with a
radiometric anomaly. The increased density and better detection
limits of soil sampling by the Company resulted in the RST soil
anomaly resolving into one main and two lesser anomalies, aligned
along a north easterly trend. A spectrometer survey showed the
radiometric anomaly coincided with the main peak of the soil anomaly.
Chargeability anomalies identified using IP time domain geophysics
also coincided with the soil anomalies, as well as identifying an
additional anomaly for which no copper soil anomaly was found.
- Detailed dipole-dipole IP surveys were conducted across each soil-IP
anomaly at North Dome as well as on IP targets identified on the
Mwombezhi Dome in 2004-2008 at the Kababisa, Kamaranda, Malundwe West
and Lubwe prospects to establish the depth to the chargeable source
material; and.
- Soil sampling was initiated at the Kamasingo North (NE of Lubwe) and
Kamaranda prospects.
>>
FINANCIAL RESULTS AND LIQUIDITY
Equinox recorded a consolidated net loss for the three month period ended June 30, 2009 of $38.7 million, or approximately $0.06 per share. This compares to a consolidated net loss of $1.8 million, or approximately $nil per share, for the corresponding three month period ended June, 30, 2008. The major items affecting the net loss for the period were as follows:
<<
1. Operating profit following Lumwana achieving commercial production:
Lumwana commenced commercial production on April 1, 2009 achieving an
operating profit of $36.1 million for three months ended June 30,
2009. Prior to achieving commercial production the majority of costs
incurred, included debt financing costs were capitalized as mine
development.
2. Non-cash hedging instrument losses
The Company's derivative instrument position has created a derivative
instrument loss of $74.3 million during the period due to the
strengthening copper price from $1.83 per pound at March 31, 2009 to
$2.32 per pound at June 30, 2009. In three months ended June 30,
2008, no derivative instrument gain or loss was recognized. The
Company's hedge book at June 30, 2009 consists of forward contracts
totalling 53,015 tonnes of copper at an average strike price of
$5,672 per tonne ($2.57 per pound) and put options totalling 40,510
tonnes of copper at an average strike price (net of premium payable)
of $4,443 per tonne ($2.02 per pound).
3. Income tax benefit
Due principally to the decrease in mark-to-market value of the
derivative instruments and the carried forward losses held by the
company, a future income tax benefit of $22.7 million was recognized
for the three months ended June 30, 2009 (June 30, 2008: $0.1 million
expense).
>>
Equinox recorded a consolidated net loss for the six month period ended June 30, 2009 of $99.3 million, or approximately $0.16 per share. This compares to a consolidated net loss of $9.9 million, or approximately $0.02 per share, for the corresponding six month period ended June, 30, 2008. The major items affecting the net loss for the period were as follows:
<<
1. Operating profit following Lumwana achieving commercial production:
Lumwana commenced commercial production on April 1, 2009 achieving an
operating profit of $36.1 million for six months ended June 30, 2009.
Prior to achieving commercial production the majority of costs
incurred, included debt financing costs were capitalized as mine
development.
2. Non-cash hedging instrument losses
The Company's derivative instrument position has created a derivative
instrument loss of $172.4 million during the period due to the
strengthening copper price from $1.38 per pound at December 31, 2008
to $2.32 per pound at June 30, 2009. In the six months ended June 30,
2008 no derivative instrument gain or loss was recognized. The
Company's hedge book at June 30, 2009 consists of forward contracts
totalling 53,015 tonnes of copper at an average strike price of
$5,672 per tonne ($2.57 per pound copper) and put options totalling
40,510 tonnes of copper at an average strike price (net of premium
payable) of $4,443 per tonne ($2.02 per pound copper).
3. Income tax benefit
Due principally to the decrease in mark-to-market value of the
derivative instruments and the carried forward losses held by the
company, a future income tax benefit of $65.4 million was recognized
for the six months ended June 30, 2009 (June 30, 2008: $(0.2) million
expense).
As at June 30, 2009, Equinox had cash resources of $187.2 million, an
undrawn Contingent Funding Facility totalling $45 million and an undrawn FMO
financing facility of $25 million which remains subject to conditions
precedent. Project and fleet debt facilities outstanding total $626.5 million.
>>
SUBSEQUENT EVENTS
Change to Management and Board
On July 24 it was announced that Mr. Harry Michael, Vice President, Operations and Chief Operating Officer intends to leave the Company effective December 2009. Mr. Michael has been with Equinox for over four years and has played a key role during the construction of the Lumwana Mine, managing site activities through a very challenging period of growth for the Company with the transition from developer to producer.
The Company has retained an international executive search firm and is actively seeking Mr. Michael's replacement. As a consequence of his intended resignation from management in December, Mr. Michael has also resigned from the Board of Equinox with effect from July 24, 2009. The Company and Mr. Michael have agreed that during this transitional period Mr. Michael will continue to focus on the continuing ramp up of Lumwana operations.
OUTLOOK
The Company is focused on operating its flagship, 100% owned Lumwana copper mine in Zambia. Lumwana continues to ramp up and management estimates interim production guidance for the 2009 calendar year, including this quarter's production, will be in the range of between 110,000 - 120,000 tonnes (or 242 - 265 million pounds) of copper metal in concentrates at the average estimated (C1) operating cost of between US$1.35 - US$1.50 per pound.
The Company believes that, following the completion of project ramp up, there are significant opportunities at the Lumwana Project to further expand and optimize the concentrator and mine throughput rate, and to assess and evaluate the additional near mine deposits discovered to date. Equinox has also completed the uranium feasibility study ("UFS") investigating the onsite treatment of discrete and high grade uranium mineralization contained within the Lumwana copper pitshells. The UFS has confirmed the potential viability of onsite uranium treatment. Should Equinox be successful in negotiating viable uranium off-take agreements and securing the requisite project capital financing, the Company estimates plant construction to take 18-24 months. The decision to proceed with development of the Lumwana Uranium Project will depend, subject to board approval, on a number of factors including improvements in the international project financing climate, as well as market prices for uranium oxide. The stockpiling of Lumwana uranium ore has commenced.
Equinox will continue to review and assess opportunities for organic growth and expansion, and corporate opportunities to grow the Company.
Q2-2009 CONFERENCE CALL AND WEBCAST
The Company will host a conference call to discuss the Q2-2009 results. The call will be hosted by Equinox President & CEO, Craig R. Williams with participation from Michael Klessens, VP Finance and CFO, and Robert Rigo, VP Project Development:
<<
Date: Thursday August 06, 2009
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Time: 18:00 HRS (Toronto time)
--- 18:00 HRS (New York time)
23:00 HRS (London time)
00:00 HRS (Lusaka time - Midnight Wed/Thurs)
06:00 HRS (Perth time - Friday 07 August, 2009)
08:00 HRS (Sydney / Melbourne time -
Friday 07 August, 2009)
Webcast: The Company's website at www.equinoxminerals.com
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Dial-in International: +1 201 689 8035
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Dial-in Australia: Toll Free 0011-800-4626-6666
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Dial-in North America: Toll-free +1 877 407 8035
----------------------
Dial-in UK & EU: Toll-free - 00 800 4626 6666
----------------
Conference ID: 329442
--------------
Please call in 10 minutes prior to the call and
stay on the line (an operator will be available
to assist you)
Replay: A replay of the telephone conference will be
------ available approximately one hour after the
completion of the conference and until 11:59 HRS
(Eastern Time) on September 06, 2009.
Replay International: +1-201-612-7415
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Replay North America: +1-877-660-6853
---------------------
To access the recording, please enter Conference
ID: 329442 followed by the Replay pass code: 286
An archived transcript of the call will also be available on the Company's
website.
CONSOLIDATED BALANCE SHEETS
As at June 30, 2009 and December 31, 2008
(unaudited)
June 30 December 31
2009 2008
-------------------------
ASSETS $'000 $'000
Current assets
Cash and cash equivalents 187,249 51,327
Accounts receivable 83,211 35,409
Inventories 49,695 27,473
Current portion of derivative instruments 22,665 127,570
Prepayments 9,289 6,471
-------------------------
352,109 248,250
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Restricted cash 26,057 26,076
Property, plant and equipment 1,069,056 1,067,290
Derivative instruments 12,944 129,109
Future tax asset 14,290 -
Other financial assets 1,914 406
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1,476,370 1,471,131
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LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 79,163 65,816
Current income tax liability 18,717 6,727
Current portion of future income tax liability - 13,875
Current portion of long term debt 190,000 138,367
Current portion of finance leases 492 923
-------------------------
288,372 225,708
Long term debt 414,942 475,040
Finance lease 3,307 3,418
Future income tax liabilities - 48,963
Asset retirement obligation 5,541 5,358
Long term compensation 1,151 269
Other payables 9,041 2,167
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722,354 760,923
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SHAREHOLDERS' EQUITY
Share capital 722,753 581,477
Retained earnings 9,011 108,343
Contributed surplus 21,125 20,400
Accumulated other comprehensive income/(loss)
(net of tax) 1,127 (12)
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754,016 710,208
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1,476,370 1,471,131
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CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2009 and 2008
(unaudited)
Three months ended Six months ended
June 30 June 30
2009 2008 2009 2008
------------------------------------------
$'000 $'000 $'000 $'000
Sales revenue 112,364 - 112,364 -
Cost of sales (72,756) - (72,756) -
Royalties (3,513) - (3,513) -
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Operating profit 36,095 - 36,095 -
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Other Expense/(Income) 76,948 (7,291) 176,050 (8,000)
Expenditure
Exploration 1,045 1,776 2,109 4,810
General and administration 4,156 2,013 5,885 3,861
Financing costs 15,391 4,076 15,924 5,911
Incentive stock options
expensed 20 1,330 848 3,143
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97,560 9,195 200,816 17,725
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Loss before income tax (61,465) (1,904) (164,721) (9,725)
Future income tax
benefit/(expense) 22,724 127 65,389 (211)
------------------------------------------
Loss for the period (38,741) (1,777) (99,332) (9,936)
------------------------------------------
Basic and diluted loss
per share $0.06 $0.00 $0.16 $0.02
Weighted basic average number
of shares outstanding (000's) 675,762 582,653 636,565 574,190
Weighted diluted average
number of shares outstanding
(000's) 695,423 599,253 656,227 590,790
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three and six months ended June 30, 2009 and 2008
(unaudited)
Three months ended Six months ended
June 30 June 30
------------------------------------------
2009 2008 2009 2008
$'000 $'000 $'000 $'000
Loss for the period (38,741) (1,777) (99,332) (9,936)
Other comprehensive
Income/(losses)
Net unrealized gains on
available-for-sale
securities (net of tax) 1,051 1,521 1,139 1,003
Net unrealized derivative
instrument losses (net
of tax) - (28,390) - (147,680)
-----------------------------------------
Total comprehensive loss (36,790) (28,646) (98,193) (156,613)
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the three and six months ended June 30, 2009 and 2008
(unaudited)
Three months ended Six months ended
June 30 June 30
2009 2008 2009 2008
------------------------------------------
$'000 $'000 $'000 $'000
Share capital
Balance at start of period 581,477 504,615 581,477 499,715
Issue of shares 148,325 - 148,325 4,314
Share issue costs (7,356) - (7,356) -
Conversion of stock options 307 1,050 307 1,400
Conversion of warrants - 71,498 - 71,734
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Balance at end of period 722,753 577,163 722,753 577,163
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Balance at start of period 47,752 (72,497) 108,343 (64,338)
Loss for the period (38,741) (1,777) (99,332) (9,936)
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Balance at end of period 9,011 (74,274) 9,011 (74,274)
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Balance at start of period 21,228 17,631 20,400 15,941
Stock based compensation 546 1,417 1,374 3,230
Transferred to share capital
on exercise of stock options (123) (371) (123) (494)
Forfeited stock options (526) (87) (526) (87)
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Balance at end of period 21,125 18,590 21,125 18,590
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Balance at start of period - 12,082 - 12,122
Transferred to share capital
on conversion of warrants - (12,081) - (12,121)
Forfeited warrants - (1) - (1)
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Balance at end of period - - - -
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Accumulated other comprehensive
income/(loss)
Balance at start of period 76 (164,910) (12) (45,102)
Net unrealized gain/(losses)
on available-for-sale
securities (net of tax) 1,051 1,521 1,139 1,003
Net unrealized derivative
instrument losses (net
of tax) - (28,390) - (147,680)
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Balance at end of period 1,127 (191,779) 1,127 (191,779)
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CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and six months ended June 30, 2009 and 2008
(unaudited)
Three months ended Six months ended
June 30 June 30
2009 2008 2009 2008
------------------------------------------
$'000 $'000 $'000 $'000
Cash flows (used in)/provided
by operating activities
Loss for the period (38,741) (1,777) (99,332) (9,936)
Items not affecting cash:
Depletion and Amortization 11,806 69 11,859 127
Unrealized foreign exchange
loss 4,474 (3,402) 4,579 (2,857)
Incentive stock option
expense 20 1,330 848 3,143
Future income tax
expense/(benefit) (22,724) (127) (65,389) 211
Financing costs - (12,518) (13,339) (12,102)
Long term compensation
expense 578 100 882 163
Gain / Loss on sale of
property, plant and
equipment - - - 2
Mark to market changes in
derivative instruments 74,312 - 172,414 -
Proceeds from settlement
of derivative instruments 14,419 - 48,654 -
Deferred royalty payments 3,513 - 3,513 -
Accretion Expense 92 - 183 -
Amortization of Finance
fees 2,429 - 2,429 -
Changes in non-cash working
capital
(Increase)/decrease in
inventories (6,204) (6,761) (13,497) (6,761)
Increase/(decrease) in
accounts payable, accrued
liabilities and employee
future benefits 17,362 (1,320) 13,347 (547)
(Increase)/decrease in accounts
receivable and prepayments (36,512) (5,015) (50,620) (3,164)
------------------------------------------
24,824 (29,421) 16,531 (31,721)
------------------------------------------
Cash flows (used in)/provided
by financing activities
Issue of share capital 148,325 60,095 148,325 60,518
Share issue costs (7,356) - (7,356) -
Proceeds from borrowings - 113,174 4,044 202,479
Repayment of borrowings (16,684) (7,611) (17,299) (8,228)
Finance lease principal
repayments (273) - (542) -
------------------------------------------
124,012 165,658 127,172 254,769
------------------------------------------
Cash flows (used in)/provided
by investing activities
Decrease/(increase) in
restricted cash (3) (275) 19 (277)
Additions for property,
plant and equipment (5,312) (91,996) (7,656) (195,349)
------------------------------------------
(5,315) (92,271) (7,637) (195,626)
------------------------------------------
Net increase in cash and
cash equivalents 143,521 43,966 136,066 131,826
Cash and cash equivalents -
start of period 44,174 56,854 51,327 73,367
Exchange rate changes on
cash held in foreign
currencies (446) 3,354 (144) 3,385
------------------------------------------
Cash and cash equivalents -
end of period 187,249 104,174 187,249 104,174
------------------------------------------
Craig R. Williams - President & Chief Executive Officer
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Cautionary Language and Forward Looking Statements
--------------------------------------------------
This press release contains certain information which may constitute
"forward-looking statements" and "forward-looking information", within
the meaning of securities laws. Forward-looking information can often,
but not always, be identified by the use of words such as "plans",
"expects", "is expected", "is expecting", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "believes", or
variations (including negative 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. Forward-
looking information may relate to management's future outlook and
anticipated events or results and may include statements or information
regarding future plans or prospects of the Company. Without limitation,
statements that the uranium stockpile may be treated at a later date if
the Company builds a uranium plant; orebody-related issues are expected
to improve in the coming months; a comprehensive review is underway that
will provide a revised annual production forecast; 2009 production will
be in the range of 110,000 to 120,000 tonnes of copper metal in
concentrates at the average operating cost of U.S.$1.35 to U.S.$1.50 per
pound; steady state production activities are expected to be reached by
the second quarter of 2010; the Company expects a reduction in unit costs
following the wet season; and the Company estimates uranium plant
construction to take 18 to 24 months; are forward looking statements. The
purpose of forward-looking information is to provide the reader with
information about management's expectations and plans for 2009 and
subsequent years.
Forward-looking information is based on certain factors and assumptions
regarding, among other things, anticipated financial or operating
performances of Equinox, it subsidiaries and their respective projects;
future prices of copper and uranium; the estimation of mineral reserves
and resources; the realization of mineral reserve estimates; the timing
and amount of estimated future production; estimated costs of future
production; the sale of future production and the performance of
offtakers; capital, operating and exploration expenditures; costs and
timing of the development of the Lumwana Project, the costs of Equinox's
hedging policy; costs and timing of future exploration; requirements for
additional capital; government regulation of exploration, development and
mining operations; environmental risks; reclamation and rehabilitation
expenses; title disputes or claims; and limitations of insurance
coverage. Without limitation, in stating that the uranium stockpile may
be treated at a later date if the Company builds a uranium plant and that
the Company estimates uranium plant construction to take 18 to 24 months,
the Company has assumed that the costs of building such a plant will be
feasible, that the materials, labour, regulatory approvals and other
requirements will be available and that the price and demand for uranium
will be profitable. In stating that the orebody related issues are
expected to improve in the coming months, the Company has assumed that it
will successfully mine through the oxide and transitional mineralization
in the weathering profile and reach a more consistent sulphide ore.
Further in relation to the mining of the orebody, it assumes that it will
successfully segregate the uranium mineralization within the copper
orebody at the lower 200 ppm U cutoff grade. In stating that a
comprehensive review is underway that will provide a revised annual
production forecast and that 2009 production will be in the range of
110,000 to 120,000 tonnes of copper metal in concentrates at the average
operating cost of U.S.$1.35 to U.S.$1.50 per pound, that steady stage
production activities are expected to be reached by the second quarter of
2010 and that the Company expects a reduction in unit costs following the
wet season, the Company has assumed that its efficiency study by its
third party consultants will be completed and that the results of the
study will confirm its interim forecast. While the Company continues to
evaluate and address the issues that impacted production during the first
half of 2009, the full impact of them on the Company's revised annual
production forecast, earnings and ability to meet its obligations can not
be ascertained at this time. Similarly, there can be no assurance on the
affect of these issues on the Company's debt service obligations or loan
covenants under its banking facilities and its offtake obligations. The
Company is actively evaluating and addressing these issues with the
expectation of mitigating them in the near future.
Readers are cautioned that forward-looking information involves known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Equinox and/or its subsidiaries
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking information.
These factors include risks inherent in the exploration and development
of mineral deposits; operational risks inherent in the conduct of mining
activities; risks relating to changes in copper and uranium prices;
changes in demand and supply of copper and uranium; uncertainties
inherent in the estimation of mineral reserves and resources; risks
inherent in the estimation of future production and future production
costs; the estimation of cash costs of copper production; risks related
to the Company's indebtedness including risks related to meeting its
financial covenants; financing risks; risks related to interest rates;
exchange rates; inflation or deflation; changes in the value of the U.S.
dollar to foreign currencies; political and economic conditions of major
copper producing countries; risks inherent in securing offtake
arrangements and terms and/or enforcing such terms; insurance; government
regulation; licences and permits and environmental risks; risks inherent
in the estimation of reclamation costs; risks related to the Company's
hedging activities; litigation; competition and reliance on key
personnel. These risks are discussed in the section entitled "Risk
Factors" in the Company's Annual Information Form dated March 27, 2009.
Although Equinox has attempted to identify statements containing
important factors that could cause actual actions, event or results to
differ materially from those described in forward-looking information,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended. Forward-looking
information contained herein are made as of the date of this document
based on the opinions and estimates of management on the date statements
containing such forward looking information are made, and Equinox
disclaims any obligation to update any forward-looking information,
whether as a result of new information, estimates or opinions, future
events or results or otherwise. There can be no assurance that forward-
looking information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
information. Accordingly, readers should not place undue reliance on
forward looking information.
The Company has included a non-GAAP performance measure in this news
release: "cash (C1) operating cost". The Company believes that, in
addition to conventional measures prepared in accordance with GAAP,
certain investors use this information to evaluate the Company. It is
intended to provide additional information and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with GAAP. Cash (C1) operating cost is a common performance
measure in the copper industry and is prepared and presented herein on a
basis consistent with the industry standard Brook Hunt definitions. Cash
(C1) operating costs includes direct cash costs, mine site and
realization costs through to refined metal.
Certain technical information in this release is summarized or extracted
from the "Technical Report on the Lumwana Project, North Western
Province, Republic of Zambia" dated June 2008 as re-filed in April 2009
(the "Technical Report"), prepared by Ross Bertinshaw, Principal, Golder
Associates Pty Ltd Daniel Guibal, Corporate Consultant, SRK Consulting
(Australasia) Pty Ltd, Andrew Daley, Director, Investor Resources Finance
Pty Ltd, and Robert Rigo, Vice-President - Project Development, Equinox,
each of whom is a "Qualified Person" in accordance with National
Instrument 43-101 -Standards of Disclosure for Mineral Projects ("NI 43-
101"). Information of a scientific or technical nature contained in this
press release arising since the date of the Technical Report is provided
by Equinox management and was prepared under the supervision of Robert
Rigo, Vice-President - Project Development or John Cooke, Exploration
Manager, each of whom is a "Qualified Person" in accordance with NI 43-
101.
Readers are cautioned not to rely solely on the summary of such
information contained in this release, but should read the Technical
Report which is posted on Equinox's website (www.equinoxminerals.com) and
filed on SEDAR (www.sedar.com) and any future amendments to such report.
Readers are also directed to the cautionary notices and disclaimers
contained herein and therein. Readers are cautioned not to rely solely on
the summary of such information contained in this release, but should
also read the final prospectus dated April 16, 2009 and the documents
incorporated by reference therein, particularly, the Annual Information
Form dated March 27, 2009, all of which are filed on SEDAR
(www.sedar.com). Readers are also directed to the cautionary notices and
disclaimers contained herein.
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For further information: Craig R. Williams (President and Chief Executive Officer), Michael Klessens (V.P. Finance and CFO), Phone: +61 (0) 8 9322 3318, Email: equinox@equinoxminerals.com Or Kevin van Niekerk (V.P. Investor Relations), Phone: +1 (416) 865 3393, Email: kevin.van.niekerk@equinoxminerals.com; For information on Equinox and technical details on the Lumwana Project please refer to the company website at www.equinoxminerals.com
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