16th May 2006 08:20
Thistle Mining Inc.16 May 2006 THISTLE MINING INC. Toronto, May 15, 2006. Results for the first quarter ended March 31, 2006 Thistle Mining Inc. ("Thistle" or the "Company") (AIM:TMG) wishes to announcethat the Company's unaudited Consolidated Financial Statements and ManagementsDiscussion and Analysis ("MD & A") for the three month period ended March 31,2006 will be filed on SEDAR today. The Company is particularly pleased to disclose the results of the bankablefeasibility study relating to the Company's Masbate gold project, located in thePhilippines. A technical report for this project will also be filed on SEDARtoday. All dollar references are in US $. A copy of the Company's 2006 first quarterreport can be obtained from the Company's website: www.thistlemining.com. 2006 First Quarter Results - Highlights Q1 2006 Q1 2005 Fresh Start(1) Pre Fresh StartSales ($ millions) 19.8 18.8Net loss ($ millions) (4.6) (7.7)Loss per share ($)(1) (0.10) (3.32)Cash used in operations ($ millions) (1.1) (8.0)Gold sold (000's oz) 35 43Realised ($/oz) 552 428Cash costs ($/oz) (1) 555 570Total costs ($/oz) 608 589 • Cash flow used in operations was $1.1 million in the first quarter of 2006 compared to $8.0 million in the first quarter of 2005. The improvement reflects an increase in sales and a 2.6% reduction in unit costs. • Investment in property, plant and equipment, as well as additions to mining properties, decreased in the first quarter of 2006 relative to the first quarter of 2005. Total funds invested amounted to $1.8 million in the first quarter of 2006 and $2 million in the first quarter of 2005. In the first quarter of 2006, $1.0 million was invested at President Steyn Gold Mines (Free State) (Pty) Ltd. ("PSGM") principally on development and $0.8 million was invested in the Company's Philippine project. • Following the improvement in operational cash flow and a decrease in investments, financing raised was less in the first quarter of 2006 relative to the corresponding quarter in 2005. Casten Holdings Limited ("Casten") and MC Resources Limited ("MC") advanced $0.68 million for the first quarter of 2006 compared to $11.1 million in the first quarter of 2005. • The consolidated net loss in accordance with Canadian GAAP for the first quarter of 2006 was $4.6 million, or $0.10 per share compared to $7.7 million, or $3.32 per share2, in the first quarter of 2005. • Gold sold in the first quarter of 2006 was 34,868 oz, a decrease of 19% compared to the same period in 2005. Production for the quarter was adversely effected by a fall of ground at the Number 1 incline Shaft on February 18, 2006 which has turned out to be more disruptive to production than initially anticipated, the decision to stop unprofitable production from the Number 1A Ventilation Shaft in February and production problems experienced at the Big Bertha section. • Compared to the first quarter of 2005, PSGM's unit cash3 costs decreased by 2.6 % to $555 and total costs increased by 3% to $608 per ounce of gold, respectively. The decrease in unit cash cost occurred despite a significant reduction in production reflecting the reduced cost of production that followed the restructuring of PSGM's labour force in the last quarter of 2005. The increase in total costs per unit reflects the significant increase in depreciation, depletion and amortisation relative to the same period in 2005 and the mark to market impact of the derivative financial instrument not present in the same period in 2005. • The Company realized an average spot price of $552 per ounce of gold in the first quarter of 2006, slightly lower than the average spot price of $554 for the first quarter of 2006. The price realized is $124 per ounce higher than that realized in the first quarter of 2005. • The focus on quality of mining as opposed to emphasis on volume has resulted in an increase in gold yields. The yield for the first quarter of 2006 averaged 5.92 g/tonne compared to an average of 5.28 g/tonne in the first quarter of 2005 and 5.43 g/tonne and 4.56 g/tonne for calendar years 2005 and 2004 respectively. • On March 28, 2006, each of MC and Casten entered into an arrangement with Thistle (the "Memorandum of Agreements ") wherein they agreed subject to certain conditions to continue to assist the Company by: o Deferring repayment of interest and principal on loans advanced to the Company until April 1, 2007, o Providing a credit facility of up to $8.62 million and deferring repayment of the additional loans until April 1, 2007. In connection with the Memorandum of Agreements Thistle has pledged its shares in PGO. • Gold production in 2006 is expected to total approximately 160,000 oz, approximately 15,000 oz lower than 2005 levels. Cash costs for gold are forecast to be between $510 and $540 per ounce, and total costs are expected to be in the range of $540 to $575 per ounce, all assuming prevailing foreign exchange rates of ZAR 6.10 to 6.40 to the US$. At current gold prices of excess of ZAR 125,000 per kg of gold sold, PSGM is generating positive free cash flow. Masbate Feasibility Study- Highlights • The feasibility study for the Company's Masbate project located in the Philippines has been completed. The bankable feasibility study commenced in 2003 and is supported by extensive exploration and technical work. Since 2002, 25,350 and 714 meters of reverse circulation ("RC") and diamond drilling was undertaken from 332 exploration bore holes. This work augments exploration data obtained over the period 1975 to 1998 which included an additional 30,156 and 58,043 meters of RC and diamond drilling respectively. Consultants that have advised on various technical aspects of the study include Ausenco Limited of Australia which was appointed to carry out the feasibility study, Knight and Piesold, Mining Associates, International Mining Consultants, Sinclair Knight Merz and Leighton Contractors (Philippines) Inc. • The Masbate project is considered to be viable at current gold prices. At a gold price of $500 per oz and West Texas Intermediate ("WTI") crude oil price of $53 per barrel, the after tax Net Present Value ("NPV") of cashflows to Philippine Gold Limited ("PGO"), discounted at rate of 5% is anticipated to amount to $47.8 million on an initial capital investment of $ 92.8 million. At a gold price of $600 per oz and WTI crude oil price of $66 per barrel, the NPV of cashflows to PGO discounted at a rate of 5% is anticipated to increases to $130.0 million. The Masbate project is anticipated to have a cash and total cost of $355 and $424 per oz and $369 and $438 per oz at WTI crude oil prices of $53 and $66 per barrel respectively. For additional information relating to the Masbate project refer to the technical report titled "Masbate Gold Project, Masbate Island, Philippines Form NI-43 101F1 Technical Report" dated April 30,2006, which is available to the public at www.sedar.com. • Following completion of the feasibility study the Board of Directors has decided that the Company will now undertake detailed design work and in parallel will be evaluating financing options for the Masbate project. Contingent on a successful financing, construction work could commence during the first quarter of 2007. Masbate Mineral Reserves and Mineral Resources Statement The Masbate's mineral reserve and mineral resource estimate that follows iscompliant with the Canadian Securities Regulators' National Instrument 43-101("NI 43-101"). Gross Attributable Mineral Reserves for gold (Proven and Probable) at 31 March2006 for the Masbate project (1) (2) (3) Proven Mineral Reserves Probable Mineral Reserves Total Proven and Probable Mineral Reserves Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Recovery%7 000's g/t 0z 000's g/t Oz (000's) 000's g/t Oz (000's) (000's) Gold from - - - 37,400 1.65 1,984 37,400 1.65 1,984 82.0Pits Net Attributable Mineral Reserves for gold (Proven and Probable) at 31 March2006 for the Masbate project 4 5 6 Proven Mineral Reserves Probable Mineral Reserves Total Proven and Probable Mineral Reserves Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Recovery %(1) 000's g/t 0z (000's) 000's g/t Oz (000's) 000's g/t Oz (000's) Gold - - - 23,936 1.65 1,270 23,936 1.65 1,270 82.0fromPits The "operator" as defined in the London Stock Exchange guideline for mining oiland gas companies dated March 2006, is FRC a company incorporated in thePhilippines. FRC owns the license to explore and mine for gold, silver and otherminerals within the contract area that covers an area of approximately 83.36 sqkm in terms of Mineral Production Sharing Agreement for a term of 25 yearcommencing in July 1997. Gross Attributable Mineral Resources for gold (measured, indicated and inferred)at 31 March 2006 for the Masbate Project (4) (5) Measured Mineral Indicated Mineral Resources Total Measured and Inferred Mineral Resources Resources Indicated Mineral Resources Gold Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained 000's g/t 0z 000's g/t Oz 000's g/t Oz 000's g/t Oz (000's) (000's) (000's) (000's) Open - - - 59,300 1.55 3,000 59,300 1.55 3,000 33,700 1.63 1,800PitsLow - - - 18,650 0.61 366 18,650 0.61 366 - - -grade Total 77,950 1.34 3,366 77,950 1.34 3,366 33,700 2.66 1,800 Net Attributable Mineral Resources for gold (measured, indicated and inferred)at 31 March 2006 for the Masbate Project 8,9 Measured Mineral Indicated Mineral Resources Total Measured and Inferred Mineral Resources Resources Indicated Mineral Resources Gold Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained 000's g/t Oz 000's g/t Oz 000's g/t Oz 000's g/t Oz (000's) (000's) (000's) (000's) Open - - - 37,952 1.55 1,920 37,952 1.55 1,920 21,568 1.63 1,152PitsLow - - - 11,936 0.61 234 11,936 0.61 234 - - -gradedumps Total - - - 49,888 1.34 2,154 49,888 1.34 2,154 21,568 1,63 1,152 For additional information relating to the mineral and resource estimates onMasbate, refer to the technical report titled "Masbate Gold Project, MasbateIsland, Philippines Form NI-43 101F1 Technical Report" dated April 30, 2006,which was prepared by Mr. Andrew James Vigar and Mr. Stewart Charles Lewis, whoare independent qualified persons for the purposes of NI 43-101, and isavailable to the public at www.sedar.com. This news release contains forward-looking statements with the meaning ofapplicable securities laws including amongst others, statements made or impliedunder the headings "2006 First Quarter Results - Highlights", "MasbateFeasibility Study- Highlights" and " Masbate Mineral Reserves and MineralResources Statement" above relating to the Company's objectives, strategies toachieve these objectives, future cash flow and financing requirements, andsimilar statements concerning anticipated future events, results, circumstances,performance or expectations that are not historical facts. Such forward-lookingstatements reflect the Company's current beliefs and are based on informationcurrently available to management. These statements are not guarantees of futureperformance and are based on the Company's estimates and assumptions that aresubject to risk and uncertainties inherent in the business of the Companyincluding those discussed in the Company's materials filed with the Canadiansecurities regulatory authorities from time to time, which could cause theactual results and performance of the Company to differ materially from theforward-looking statements contained in this news release. Those risks anduncertainties include, among other things, risks related to: the mining industry(including operational risks in exploration development and production; delaysor changes in plans with respect to exploration or development projects orcapital expenditures; the uncertainties involved in the discovery anddelineation of mineral deposits, resources or reserves; the uncertainty ofmineral resource and mineral reserve estimates and the ability to economicallyexploit mineral resources and mineral reserves; the uncertainty of estimates andprojections in relation to production, costs and expenses; the uncertaintysurrounding the ability of the Company to obtain all permits, consents andauthorizations required for its operations and activities; competition for theacquisition, exploration and development of mineral interests; and health andsafety and environmental risks), the risk of gold and other commodity price andforeign exchange rate fluctuations; the ability of the Company to fund thecapital and operating expenses necessary to achieve the business objectives ofthe Company; the uncertainty associated with commercial negotiations andnegotiating with foreign governments; the risks associated with internationalbusiness activities; the dependence on key personnel; the ability to accesscapital markets; the indebtedness of the Company; and labour relations matters.Material factors or assumptions that were applied in drawing a conclusion ormaking an estimate set out in the forward-looking statements include that thegeneral economy remains stable, the demand and price of gold continues toincrease and the Rand remains strong against the US$. It is also assumed thatthere will be no major disruptions in production including failure ofinfrastructure, seismic activity, underground fires and labour unrest. TheCompany cautions that this list of factors is not exhaustive. Although theforward-looking statements contained in this news release are based upon whatthe Company believes are reasonable assumptions, there can be no assurance thatactual results will be consistent with these forward-looking statements. Allforward-looking statements in this news release are qualified by thesecautionary statements. These forward-looking statements are made as of the datehereof and the Company, except as required by applicable law, assumes noobligation to update or revise them to reflect new information or the occurrenceof future events or circumstances. For further information, contact: Andy Graetz, Chief Financial Officer + 27 57 391 9118 or email [email protected] -------------------------- +-------------------------------------------------------------------------+|Mineral Resources |+--------------------------+----------------------------------------------+|Name and e mail address |Company , Location |+--------------------------+----------------------------------------------+|Andrew James Vigar. |Mining Associates, Level 5, 80 Albert Street, ||[email protected] |Brisbane, Queensland 4001, Australia || |(Telephone +61-7-3012 8499). |+--------------------------+----------------------------------------------+ +-------------------------------------------------------------------------+|Mineral Reserves |+--------------------------+----------------------------------------------+|Name and e mail address |Company , Location |+--------------------------+----------------------------------------------+|Stewart Charles Lewis. |IMC Consultants Pty Ltd, Level 40, Riverside ||[email protected] |Centre, 123 Eagle Street, Brisbane, Queensland|| |4001, Australia (Telephone +61-7-3226 9100). || | |+--------------------------+----------------------------------------------+ (1) Due to the realignment in equity interest and capital structure of Thistleunder the restructuring plan that followed the Company filing protection underthe Companies' Creditors Arrangement Act on January 7, 2005, the Company wasrequired to perform as at July 1, 2005, a comprehensive revaluation of itsbalance sheet referred to as "fresh start accounting,'' which included a numberof adjustments. Accordingly, transactions before and after the application of"fresh start accounting" from 30 June 2005 are separately disclosed in theCompany's unaudited Consolidated Financial Statements and MD & A for the threemonth period ended March 31, 2006. (2) The net loss per share - basic and diluted for periods prior to 30 June 2005 has been adjusted in respect of the consolidation of 200 shares for 1 on 30June 2005. (3) Cash cost per ounce sold is not a recognized measure under Canadian GAAP. Areconciliation to the cost of sales per ounce is included under the heading"South African Operations" in the Company's MD & A for the three months endedMarch 31, 2006. (4) The terms "mineral reserve", "proven mineral reserve" and "probable mineralreserve" conform to CIM definitions of those terms as at the effective date ofestimation, as required by NI 43-101. (5) Based on mine planning tool using direct costs of production and assuming agold price of $450 per oz. Thistle is not aware of any environmental,permitting, legal, title, taxation, socio-political, marketing or other relevantissues which may materially affect Thistle's mineral reserve and mineralresource estimates, other than the factors discussed in Thistle's 2005 AnnualInformation Form publicly available at www.sedar.com. (6) The Masbate's mineral reserve and mineral resource estimate is based oninformation prepared by or under the supervision of a "qualified person", asthat term is defined in NI 43-101. The qualified persons responsible for theMasbate project's mineral reserve and mineral resource estimates as at March 31,2006 listed below are independent of the Company for the purposes of NI 43-101and were at the time the estimates were prepared consultants. Both qualifiedpersons have no direct vested interests in any tenements in the Philippines. Inestimating the applicable mineral reserves and mineral resources, the qualifiedpersons used assumptions, parameters and methods appropriate for the Masbateproject and have verified the underlying data as appropriate in theirprofessional opinion (including sampling, analytical and test data). Thecredentials of Messrs. Lewis and Vigar are included Company's unauditedConsolidated Financial Statements and MD & A for the three month period endedMarch 31, 2006. (7) Based on metallurgical testwork undertaken by Ausenco Limited as applied tothe respective ore types. (8) Mineral resources are in addition to mineral reserves and have beenestimated as at March 31, 2006 using a cut off of 0.7 g/tonne for open pits and0.0 g/tonne for the low grade dumps. The qualified person responsible formineral resource estimates is identified under note 7. Consistent with Thistle'smineral resource estimation practices, independent data verification has beenperformed by third party firms. (9) The terms "mineral resource", "measured mineral resource", "indicatedmineral resource" and "inferred mineral resource" conform to CIM definitions ofthose terms as at the effective date of estimation, as required by NI 43-101.Mineral resources that are not mineral reserves do not have demonstratedeconomic viability. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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