Intrepid Mines Limited (TSX: IAU)(TSX: IXN)(ASX: IAU), an international precious metals production, development and exploration company, reports operating activities for the quarter ended September 30, 2007. All dollar figures are in United States dollars unless otherwise indicated. Intrepid today filed its Activities Report for the quarter ended September 30, 2007 which is available on the Intrepid website www.intrepidmines.com and at www.asx.com.au. A summary of that report is provided below.
- Gold production 16,690 ounces, an increase of 5% from the prior quarter (15,854 ounces)
- Site cash costs $426 per ounce, a decrease of 9% from prior quarter ($467 per ounce)
- Gold production in the month of October 2007 on target to exceed 7,000 ounces
- Positive response to Casposo Environmental Impact Assessment submission - awaiting approval
- The Company is reviewing the opportunity to participate in the San Juan government initiative to extend the hydro power sourced national grid system to the municipality of Calingasta, which hosts in excess of 6,000 people. Casposo provides an important impetus for the initiative, and Intrepid as a principal customer may see cost savings over the life of the mine.
- Updated Casposo resource estimate expected from AMEC in the current quarter
- Taviche drilling program of 3,800 meters (phase 1) commenced in October 2007
- Gold revenue was $10 million
- Cash of $1.5 million at period end
- Gold deliveries reduce hedging below 53,000 ounces at date of report
- Proposed merger with ASX listed Emperor Mines Limited announced and A$5 million loan accepted
- Merger due diligence completed post quarter end
- Post quarter end DRD Gold share placement of its 79% shareholding in Emperor completes a significant condition precedent to merger
- Conversion of A$5.3 million convertible note into equity
PRODUCTION UPDATE 3 months 3 months 3 months 3 months 3 months to to to to to September 30, June 30, March 31, December 31, September 30, 2007 2007 2007 2006 2006 ---------------------------------------------------------------- Site production cash cost $426/oz $467/oz $361/oz $451/oz $389/oz ---------------------------------------------------------------- Total cash cost $442/oz $485/oz $380/oz $468/oz $406/oz ---------------------------------------------------------------- Gold produced 16,690 oz 15,854 oz 17,494 oz 14,672 oz 16,388 oz ----------------------------------------------------------------
In the September 30, 2007 quarter, Intrepid produced 16,690 ounces of gold at a total site production cash cost of $426 per ounce. Total revenue for the quarter was $10.0 million. Cash balance at the period end was $1.5 million.
Unit operating costs for the quarter decreased from $90 to $84 per tonne of ore mined/processed as indicated last quarter primarily due to the more normal levels of mined and processed tonnes in the September 2007 quarter compared to the June 2007 quarter which more than offsets the impact of foreign exchange movements. The lower unit costs combined with higher head grade reduced site operating costs from $467 in the June 2007 quarter to $426 per ounce of gold produced in the September 2007 quarter.
While inherent grade variability will always exist with the high grade orebody at Paulsens, improved understanding of the orebody, and the transition into the higher grade areas of the Upper Zone ore system is expected to deliver improved performance.
A final feasibility report for the Casposo project was delivered to the Company by AMEC (Peru) in March 2007. The highlights of the study include: mineral resources (Indicated only) 2.2 million tonnes of ore containing 313,278 ounces gold and 8.2 million ounces silver, grading 4.46 grams per tonne gold and 116 grams per tonne silver. Within this resource a mineral reserve has been developed of 1.8 million tonnes of ore containing 270,089 ounces of gold at 4.69 grams per tonne and 6.5 million ounces of silver grading 114 grams per tonne silver. This is the inaugural ore reserve estimate for the Casposo deposit.
The feasibility describes capital costs (with contingency) of $45.5 million through to operation over a construction period of fifteen months from project financing and foresees an average annual production of 50,478 ounces of gold and 1.1 million ounces of silver (68,500 ounces of gold equivalent) annually.
Casposo Environmental Impact Assessment (EIA)
During the previous quarter subcontractor Knight Piesold S.A. completed and submitted the Casposo Environmental Impact Assessment Report ("EIR") and all supporting documents in San Juan, Argentina to the Province's Mining Secretariat. The EIA process began on June 19. EIR documents for Casposo, together with the Spanish version of the executive summary of the feasibility study were filed in the San Juan Mines Department.
On June 29, the "CEMAM", a multi-sectorial evaluation Committee of government agencies and institutions was formed to study the Casposo EIR. Based on the size classification of the Casposo deposit, defined via reserves and production rates as a small project there is a 60 working day time frame for in which deliberations of "CEMAM", public disclosure and Company responses are to be completed subject to requested time extension by the "CEMAM". The evaluation included site visits and presentations regarding community matters, history, geology, principal aspects of the feasibility study, socio-economic studies, geology, mining methods and process as well as a complete description of the EIR.
Site visits were made to Casposo by the "CEMAM" and the "Mining Consultative Council" on August 1 and August 10 respectively.
On September 14 the "CEMAM" completed its revision of the Casposo EIR having requested and been provided increased information on some subjects. No extension of time was requested and their report was delivered to the Department of the Secretary of Mines. The Department of the Secretary of Mines is preparing Casposo's "DIA" (Environmental Impact Statement, "Declaracion de Impacto Ambiental") based on "CEMAM's" report. The "DIA" will outline the environmental, industrial and social conditions that Intrepid will put in practice during the construction and mine life at Casposo. At the end of the quarter the "DIA" had not been received.
In August, the Company was contacted by the Province of San Juan power authority and asked to reconsider the diesel power model proposed in the Casposo feasibilty study, replacing it with power to be delivered by a jointly funded power line connected to the provincial grid. This alternative has been made possible by recent power infrastructure developments which now bring this solution within physical and economic reach of the project. Intrepid is in discussions with the power authority to discuss how the power line can be financed and built to service Casposo when the power will be required in early 2009 and to service the municipality of Calingasta offering the Company's neighbours an efficient and cost effective option to the diesel generated power they now use.
During the quarter, the company continued work with an independent financial advisor reviewing alternatives for financing the Casposo Project.
Casposo Project Exploration
A total of 3,315 metres of core drilling was completed in the program that concluded in the previous quarter. Approximately 600 metres (in nine holes) were used specifically to support mine geotechnical design. Drill information and assay results from these holes were not part of the Company's feasibility study for Casposo Project, having been completed after the cut-off date for information to be included in the study.
This information, along with quality control and survey data was supplied to AMEC Toronto in August to be incorporated into the resource model for Casposo. It is anticipated that the new information will lead to consideration of a larger pit design for the Kamila pit and additional underground mining potential. Intrepid has requested only resource information at this time. Reserve estimation would involve redesign of pit and underground workings, which is more appropriately left to the detailed mine design process anticipated with starting Engineering, Purchasing, Construction and Management ("EPCM") activities. An updated resource estimate is expected in November.
No additional drilling was undertaken in the quarter at Casposo however surface exploration continued in a 12km2 area to the north of the Mercado deposit and east of the Julieta prospect. Detailed mapping has encountered additional vein systems which will undergo detailed sampling. Exploration in this area was ongoing at the end of the quarter.
Exploration in Australia was primarily focused on the Apollo zone at Paulsens with regional work primarily focused on desk top studies based on the Carlin style concepts developed by staff from its Central American operation.
Intrepid optioned the Taviche property located in Oaxaca State, Mexico in 2006 from Plata Panamericana S.A. de C.V. The Taviche Property comprises two concessions totalling 13,724 hectares. Subsequently in 2007, Intrepid entered into an agreement with Aura Silver Resources Inc. whereby the companies will jointly earn a 70 percent interest in the concessions. Aura Silver completed funding of the first year agreement commitments with Plata Panamericana, and all future expenses will be jointly funded. Intrepid acts as operator and began field activities in January 2007.
A 3,800 metre diamond drilling program for the Taviche West property, after a short delay due to environmental approvals and drill availability, was initiated on October 10th. A total of 18 holes from 100 to 225 meters in depth are planned to test areas of known high grade silver-gold mineralization including those adjacent to historic mines, strongly mineralized surface exposures and at significant vein structure intersections. The East and West Taviche concessions contain numerous historic underground mines. Most of these former mines are shallow. Little drilling has been done to test depth potential at the property.
Silver-gold vein systems are expressed over an aggregate strike length of over 12 kilometers on the Taviche West concession. The significant vein sets identified on the West Taviche Concession are the 7 km long La Noria, El Viejo and San Martin structure and the parallel 6 km long El Portillo, Donaji/Marias and San Jose/Corona structure to the east. Another system, the Veta Karina (Copales) structure in the Garzona area has been traced over several hundred meters but is reported in Government records to be over a kilometre in length and up to 2 meters in width.
Surface sampling from mine dumps and visible veins along these structures have assayed in excess of 5 g/t Au and 200 g/t Ag with values ranging as high as 94.7 g/t Au and 7,148 g/t Ag. The geochemical and textural results in these vein systems are representative of epithermal style mineralization.
El Salvador Exploration
No exploration was conducted at the Company's San Cristobal project pending environmental permit approval for drilling at its San Pedro concession. The Company is planning further exploration work at the Minitas project based on the positive results of drilling reported in 2006. In the interim, the Company continued its work with the community on local development projects.
At Potonico the Company continues discussions with regulatory and government authorities and with the local community with a view to implementing its grassroots programs in the area.
In September 2007 the Company announced plans to merge with ASX listed Gold company Emperor Mines Limited. The new company, which will retain the name Intrepid Mines Limited, will be a dynamic and well funded international gold producer, developer and explorer listed on both the TSX and ASX.
The combination of Emperor's balance sheet strength, Intrepid's producing Paulsens Gold Mine and its Casposo development project, and both companies' exploration assets, together with the combined skills of the two management teams, will create a well balanced company capable of adding significant value for its shareholders. Emperor advanced a A$5 million loan facility for exploration and working capital which is fully drawn.
The merger will take place by way of a scheme of arrangement, with Emperor shareholders receiving one Intrepid share for every 4.25 Emperor shares held.
Post quarter end due diligence conditions precedent have been completed to each parties satisfaction and the book build for the sell down of DRD Gold's 79% shareholding in Emperor was completed. This is a key condition precedent to achievement of the proposed merger.
In September Intrepid received an election from Claymore Capital to convert its A$5.3 million convertible note. The conversion, resulted in the issue of 17,199,176 ordinary shares and 2,000,000 options to acquire ordinary shares with an exercise price of A$0.36 per option and an expiry date of 20 September 2009.
As is customary, the company will host a conference call today at 4:30 pm eastern time (7:30am - October 31 - Sydney time) to discuss the results. Laurence Curtis, President and CEO of Intrepid Mines, will chair the call. To participate in the conference call, please call five minutes prior to the scheduled start time. In North America the dial-in number is: 1-888-300-0053, the International dial-in number is: 1-647-427-3420, and in Australia the dial-in number is: 1-800-287 011 (The Conference ID #20522554).
For those unable to participate in the conference call at the scheduled time, a replay of the call will be available from October 31, 2007 until November 7, 2007. Replay access number is: 1-800-766-3146 or 1-402-220-7733 (Conference ID #20522554).
A recorded version of the call will be available at www.intrepidmines.com for 90 days.
On behalf of the Board of Directors of Intrepid Mines,
Laurence Curtis, President & CEO
About Intrepid Mines:
Intrepid Mines Limited is an international gold and silver production, development and exploration company. The Company's producing property is the Paulsens Gold Mine, located in northwestern Australia. The Company's advanced development property is the Casposo Project located in San Juan Province, Argentina. The Company's exploration properties are located in Argentina, El Salvador, Mexico, Australia and Canada. The issued capital is 181,573,419 shares comprised of 163,686,266 ordinary shares of Intrepid Mines Limited on the TSX (TSX: IAU) and ASX (ASX: IAU) and 17,887,153 Exchangeable Shares of Intrepid NuStar Exchange Corporation quoted on the TSX (TSX: IXN).
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This release contains certain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections. The TSX and ASX has neither approved nor disapproved the information contained in this press release. Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes "forward-looking statements". Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other ecological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward-looking statements.
ABN: 11 060 156 452
Intrepid Mines Limited - TORONTO, CANADA
VP Investor Relations
Intrepid Mines Limited - PERTH, AUSTRALIA
Chief Financial Officer
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