Oracle Ridge Copper Mine - Tucson, Arizona
2.17% copper - Production facility construction is expected to begin in the first half of 2012
Message: Announces 2008 Financial Results
| April 30, 2009 |
| Gold Hawk Resources Announces 2008 Financial Results |
| VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 30, 2009) - Gold Hawk Resources Inc. ("Gold Hawk" or the "Company") (TSX VENTURE:CGK) announces its financial results for the year and quarter ended December 31, 2008. This media release should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2008, and management's discussion & analysis ("MD&A") for the year ended December 31, 2008, both available on SEDAR at www.sedar.com. 2008 Highlights - Attaining greatest production since purchase of the Coricancha Mine with average daily ore processed of 407 tonnes per day, more than 52,000 tonnes of ore prior to May 9, 2008, containing 2,164 ounces of gold, 117,568 ounces of silver, 1,195,068 pounds of lead and 1,356,391 pounds of zinc; - Generating revenue from metal sales of $6.0 million during the period ended May 9, 2008; - Improving recoveries in floatation and gold circuits with gold concentrate achieving budgeted recovery levels for the first time and lead and zinc metallurgical recoveries exceeding test grades; - Achieving slope stability in and around Coricancha tailings and processing plant in late July; - Receiving a US$2.0 million advance on insurance claim associated with business interruption and property insurance on assets affected by the ground displacement near its Coricancha facilities; - Completing engineering and design for new long-term tailings handling facility at Chinchan - construction permit awarded in January 2009; - Subsequent to year-end, completing a new independent National Instrument 43-101 compliant mineral reserve and resources technical report for the Coricancha Mine filed on SEDAR in March 2009; and - Completing financings for pre-start-up activities, including a $3.3 million private placement, new US$2.0 million secured bridge loan and subsequent to year-end, restructuring the existing loan agreement and debt while securing an additional $US2.0 million and an additional $1.0 private placement. 2008 financial results For the year ended December 31, 2008, revenues from the sale of gold and silver dore, and from lead and zinc concentrates, totaled $5,993,331 (2007 $1,665,525) and direct operating costs totaled $10,058,181 (2007 $5,884,098). Direct operating costs include non cash expenses of depreciation and depletion of $1,606,144 (2007 $1,007,100) and accretion of asset retirement obligation of $1,043,361 (2007 $1,061,195). Production cost per tonne of ore processed was higher than anticipated primarily due to the costs associated with higher than anticipated tailings management costs. The dike construction and maintenance costs for the tailings facility added approximately $1,093,000 (2007 $701,000) of direct costs in 2008. Since the suspension of mining operations on May 8, 2008, the Company has not realized any revenues or operating costs. From May 9 to the end of the year site care and maintenance costs to keep the mine on standby totaled $3,053,682. During the year, the Company recorded a net loss of $ 13,964,813 ($0.07 basic and diluted loss per share) compared to a net loss of $12,261,804 ($0.08 basic and diluted loss per share) in 2007. CEO comment on 2008 Results "The events of 2008 tested us all at Gold Hawk but it also demonstrated our strengths and resiliency when faced with the significant challenges the year offered," said Mr. Kevin Drover, President and CEO of Gold Hawk. "We have an excellent asset in the Coricancha Mine: it has a large resource position, a decades-long history of mining, excellent exploration potential that we think will more than double the existing resources, a fully developed mine, an operational processing facility in place that was "de-bugged" during its operation in 2008, all permits are in place and excellent projected cash flows at current metal prices. "Given the quality of the assets and the potential cash flows, the current share price does not reflect the value of the assets and we believe there is room for significant appreciation," said Mr. Drover. "We remain confident and committed that we will resume operations at the Coricancha Mine and then continue on the path toward achieving the goal of growing the Company and increasing shareholder value. "The progress we made toward becoming cash flow positive and attaining targeted operating rates and metal recoveries in 2008 was unfortunately overshadowed by the global financial crisis and the discovery of the ground movement around our tailings storage area. Although there was little we could do to shield ourselves from the effects of the financial crisis, we did make significant positive progress toward positioning the Company for the re-start of operations at the Coricancha Mine in central Peru," said Mr. Drover. Gold Hawk determined the cause of the ground movement to be excessive amounts of water from an irrigation system that had been installed by a third party on the mountainside above the Coricancha processing plant and tailings facility and without notification to the Company. The cause determination has been confirmed and documented by independent geotechnical consultants as well as by the Peruvian government's geotechnical experts. The Company is currently pursuing insurance claims associated with business interruption and property affected by the ground displacement. During the year ended December 31, 2008, the Company received a US$2.0 million advance on its insurance claims. Subsequent to the year end, the Company received the final permit for the construction of its new permanent tailings facility at Chinchan and signed an indicative term sheet with one of its lenders to provide the Company with US$2.0 million of new funds, repay the existing bank debt and restructure all of the loans under one new US$13.0 million loan facility with a repayment date of February 2010. The net proceeds of the loan were received by the Company in February 2009. With receipt of its final permit to construct a new permanent tailings facility at Chinchan and all other operational permits in place, the Company foresees a return to production in the third quarter of 2009, contingent on obtaining relief from the requirement to move the plant and receipt of additional financing. For complete details of the fourth quarter ended December 31, 2008, as well as the audited annual Financial Statements and Management's Discussion and Analysis please see the Company's filings on SEDAR (www.sedar.com). Re-prices Options grant On April 20, 2009, the Company announced that, subject to regulatory approval, the Board of Directors has granted stock options to directors, officers and employees of the Company as well as to employees of its wholly owned subsidiary, Compania Minera San Juan (Peru) S.A. to purchase 6,440,000 common shares in the capital of the Company, exercisable for a period of five years at a price of $0.05 per share. The Company is increasing the exercise price of the options' grant announced, from $0.05 to $0.10 to reflect the Discounted Market Price as per the TSX Venture Exchange regulations. The employee share options vest one-third immediately upon the date of grant, one-third will vest 12 months from the date of grant and the final one-third of the options will vest 24 months from the date of grant. Share options granted to Directors vest immediately. Following regulatory approval, the Company will have 6,100,000 remaining options available for grant under the Stock Option Plan. Annual General Meeting Gold Hawk Resources will hold its 2008 Annual General Meeting on Thursday, June 4, 2009 at 2 p.m. PDT at the offices of Fraser Milner Casgrain LLP, 15th Floor Grosvenor Building, 1040 West Georgia Street Vancouver, B.C. Shareholders of record as at the close of business on April 27, 2009 are entitled to notice of, and vote at, the meeting. About Gold Hawk Resources Inc. Gold Hawk (TSX VENTURE:CGK) is a Canada-based precious metals company with reserves and resources containing gold, silver, lead, zinc and copper and a near-term production project at the Coricancha Mine and 600 tonnes of ore per day processing facility, located 90kms east of Lima, Peru. On January 7, 2009 the Company received its final permit to construct a new permanent tailings facility at Chinchan and has all of the other permits required for the re-start of the mine. Gold Hawk is based in Vancouver, Canada and is operated by an experienced management team. Gold Hawk and its wholly owned subsidiary, Compania Minera San Juan (Peru) S.A. also have exploration properties in Peru and Canada (Quebec). |
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