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Message: Centenario Reports Results for the Year Ended December 31, 2008
| March 30, 2009 |
| Centenario Reports Results for the Year Ended December 31, 2008 |
| TORONTO, ONTARIO--(Marketwire - March 30, 2009) - Centenario Copper Corporation ("Centenario" or the "Company") (TSX:CCT) reports its financial results for the year ended December 31, 2008. Set out herein are the highlights from the MD&A for the year ended December 31, 2008. The annual Financial Statements and Management Discussion and Analysis of the Company are available on the Company's web site at www.centenariocopper.com and on SEDAR at www.sedar.com. All amounts are expressed in US dollars unless otherwise stated. Highlights: - Sale of company to Quadra Mining -- On February 9, 2009 the Company entered into a definitive agreement with Quadra under which Quadra is expected to acquire all of the issued and outstanding common shares of Centenario (the "Arrangement Agreement") at an exchange ratio of 0.28 Quadra common shares for each Centenario common share. The closing of the Arrangement Agreement is subject to a number of standard conditions as well as the restructuring of the Franke Credit Facility on terms satisfactory to Quadra (the "Debt Restructuring"). -- On March 20, 2009 Quadra and Centenario announced the receipt of a signed commitment letter for $37.5 million from West LB in connection with a syndicated $50 million project loan facility (the "New Project Facility") to partially refinance the Franke Credit Facility. Discussions are ongoing with Centenario's existing lenders and other lenders to complete the syndication. However, in the event the syndication does not complete on a timely basis, Quadra will fund the $12.5 million difference until the syndication can be completed. -- On March 20, 2009 Quadra announced a "Bought Deal" equity financing for CAD $75.3 million. The net proceeds are intended to be used to partially refinance the Franke Credit Facility, pay obligations to project contractors and complete development of the Franke Project, as well as for general working capital and corporate purposes. The offering is conditional upon, among other things, the completion of the Arrangement. -- Based on the funding from the New Project Facility and the Bought Deal financing, Quadra has announced that it appears that the Debt Restructuring condition of the Arrangement Agreement will be satisfied. -- On March 26, 2009 Quadra and Centenario announced they have settled the terms of a convertible loan agreement to provide interim financing of up to $12.5 million. The original pre-closing $3.5 million loan and $6.5 million private placement contemplated in the Arrangement Agreement will be replaced by this convertible loan. -- Centenario shareholder meeting set for April 7, 2009 for vote on the Arrangement Agreement; closing expected in April 2009. - Franke Project funding status and partial re-purchase of copper hedge book -- On November 13, 2008, Centenario reported that the Franke project faced a projected funding shortfall of $ 26 million -- On November 19, 2008, Centenario repurchased a portion of its outstanding 2010 copper hedge contracts for net proceeds of $26.2 million (the "Hedge Proceeds"), which were placed into an escrow account with its Lenders. -- In March, 2009, the Company reached agreement with its Lenders to use the $26.3 million of Hedge Proceeds and $10 million from Centenario's previously funded $15 million Cost Overrun account to make a $36.3 million prepayment of the Franke Credit Facility and to avoid the continued negative carry on the Company's outstanding loan balance. After this prepayment, the principal amount outstanding is approximately $69.0 million. -- The company's remaining copper hedge contracts consist of 44.3 million pounds of forwards sales for settlement over the May 2009 - May 2010 period, at an average sale price of $2.77/lb. As of March 27, these contracts had a positive mark-to-market value of approximately $40.6 million, before close out costs. -- The combination with Quadra should allow Centenario to restructure or refinance the remaining Franke Credit Facility and resolve its ongoing funding shortfall. However, there is no certainty that the Company will be able to restructure its debt on terms acceptable to Quadra and that the proposed transaction will be completed. The Company's ability to continue as a going concern is dependent on the Company's ability to refinance its debt and to resolve its funding shortfall. - Franke SX-EW copper project substantially complete -- Franke plant construction and pre-commissioning are substantially complete and the plant is ready to operate; startup has been delayed due to lack of funding resolution with the Company's lenders; resolution is anticipated in connection with proposed Arrangement Agreement with Quadra. - Revised Mine Plan for Franke - includes oxide starter pit from China -- New Mine Plan based on Franke and China Oxide Leachable Measured & Indicated Mineral Resources of 48.6 million tonnes @ 0.77% CuT and excludes China Mixed and Secondary Sulphide Mineral Resource of 17.1 million tonnes @ 0.53% CuT, which may be considered for inclusion in the mine plan following feasibility level metallurgical test work. -- Proven & Probable Mineral Reserves increase by 10.0 million tonnes to 41.7 million tonnes @ 0.75% CuT, from 31.7 million tonnes @ 0.83% CuT. o Life-of-Mine copper cathode production increases by 93 million lbs (19%) from 501 million lbs to 594 million lbs. -- Pending timely environmental approvals, China oxide ore to be blended with Franke ore on a 75% China / 25% Franke basis for most of the first two years of production. Metallurgical test work confirms blending of Franke and China ores to significantly reduce overall acid consumption, compared to 100% Franke scenario. -- LOM cash cost of $1.29/lb, using a Base Case flat copper price of $1.75/lb. - Earnings: 2008 earnings of $74.4 million ($1.52 earnings per share basic and $1.51 fully diluted) - The net earnings for the period reflects a realized gain of $26.2 million on the closeout of certain copper forward delivery contracts and a non-cash mark-to-market gain of $87.8 million with respect to a change in value of derivative instruments, partially offset by exploration expenses of $17.2 million and future income tax expense of $8.7 million. The $87.8 million non-cash derivative gain amount is comprised primarily of a $68.8 million non-cash unrealized mark-to-market gain on the copper forward delivery contracts held by the Company and a non-cash $16.9 million mark-to-market gain on the long-term acid supply contract. Other Information Additional information related to the Company including the 2008 Financial Statements and MD&A are available for viewing on SEDAR at www.sedar.com and at the Company's website at www.centenariocopper.com. CENTENARIO COPPER CORPORATION Richard Colterjohn, President and CEO About Centenario Copper Corporation: The Company was founded in 2004 with the goal of becoming a mid-tier copper producer and consolidator, active in regions of low sovereign risk. Centenario currently operates exclusively in Regions II and III of Chile. The Franke Property, located in Region II, is currently in construction and is projected to produce 30,000 tonnes of cathode copper per year, starting in early 2009. The Company believes that the contiguous Pelusa Property is highly prospective for developing additional leachable copper resources and is evaluating possible production scenarios, including processing at the Franke plant. The Pan de Azucar Property, located 45 km. from the Franke Property, is currently being evaluated as a possible nucleus for a second property cluster. Copies of NI 43-101 Technical Reports are posted on SEDAR and on the Company's website. |
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