Rio Narcea Gold Mines
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NEWS RELEASE
October 12, 2006 Trading Symbol: TSX: RNG
Amex: RNO
Rio Narcea Announces Increased Mineral Reserve Estimate for its Tasiast Gold Project
Open Pit Gold Ounces Increase by 18%
Toronto, Ontario – Rio Narcea Gold Mines, Ltd. (“Rio Narcea” or “the Company”) is pleased to announce that a revised open pit mineral reserve estimate for its 100% owned Tasiast gold project, located in Mauritania, West Africa has been received by the Company from A.C.A. Howe International Limited, independent mining and geological consultants. The project is currently under construction, with completion expected in the first half of 2007 and first production shortly thereafter.
The new estimate included use of a revised gold price and revised unit cost inputs, which together have increased the mineral reserve. The new diluted open pit mineral reserve is estimated at 1,040,000 ounces of gold contained in 11,984,000 tonnes grading 2.70 g/t. This estimate was based on a gold price of US$491 per ounce of gold. The previous reserve estimate, calculated at a gold price of US$370 per ounce, was 885,000 ounces of gold contained in 8,939,000 tonnes grading 3.08 g/t.
Projected capital expenditures for Tasiast are US$73 million.
“We are delighted to report this increase in our Tasiast mineral reserve to our shareholders and we look forward to the results of the 5,000-meter exploration drilling program we have embarked upon adjacent to the planned pits and below where higher grade mineralization is open at depth. We believe Tasiast holds a great deal of potential and our 16,000 km² land position on one of Africa’s least explored archean greenstone belts should occupy our gold exploration team for quite some time,” said Chris von
Christierson, Chairman and CEO of Rio Narcea.
The total proven and probable mineral reserve is shown in the table below:
Rio Narcea, Tasiast Gold Project, Mineral Reserve Estimate
Diluted Mineral Reserve as at October 5, 2006
(tonnages are rounded)
Diluted Mineral Reserve Waste Stripping
Proven Probable Proven and
Probable
Waste
Stripping
Ratio
Open
Pit tonnes Gold
grade
(g/t)
tonnes Gold
grade
(g/t)
tonnes Gold
grade
(g/t)
tonnes Tonnes of
waste to 1
tonne of ore
Pit S1
Piment
South-
South
Extension
425,000 3.03 2,283,000 2.71 2,708,000 2.76 8,913,000 3.3
Pit S2
Piment
South –
North
Extension
4,000 2.95 635,000 2.58 639,000 2.59 3,650,000 5.7
Pit S3
Piment
Central
243,000 3.43 7,323,000 2.56 7,566,000 2.59 21,056,000 2.8
Pit S4
Piment
North
89,000 3.82 982,000 3.37 1,071,000 3.41 3,511,000 3.3
Totals
761,000
3.24
11,223,000
2.66
11,984,000
2.70
37,130,000
3.1 overall
Notes: (g/t) stands for grams of gold per tonne. The diluted mineral reserve is estimated based on a projected gold price of US$491.00 per troy ounce and a cut-off of 0.8 gram of gold per tonne as well as 10% dilution where the diluting material is assumed to have a grade of zero grams of gold per tonne, and 95% mining recovery.
The revised mineral reserve estimate dated October 5, 2006 was prepared by Ignacio Vélez Pérez, Mining Engineer for Rio Narcea’s Tasiast Gold Project under the supervision of David A. Orava, M. Eng., P. Eng., Associate Mining Engineer of A.C.A. Howe International Ltd. who is a Qualified Person for the purposes of National Instrument 43-101.
Rio Narcea Gold Mines, Ltd. is a growing Canadian mineral resource company with operations, development projects and exploration activities in Spain, Portugal and Mauritania. The Company currently produces nickel at its Aguablanca nickel-copper-platinum group metals (PGM) mine in southern Spain and gold at it’s at El Valle and Carlés projects in northern Spain. Closure of the northern Spanish gold mines is planned for by the end of 2006. Construction of its new Tasiast gold project in Mauritania, West Africa, is underway, with production expected in 2007.
Forward-looking Statements
This press release may contain certain “forward looking statements” within the meaning of the United States securities laws. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, capital expenditures, exploration efforts, financial needs, and other information that is not historical
information. The forward-looking statements contained herein are based on Rio Narcea’s current expectations and various assumptions as of the date such statements are made. Rio Narcea cannot give assurance that such statements will prove to be correct. Factors that could cause Rio Narcea's actual results to differ materially from these
statements include, but are not limited to, changes in gold and nickel prices, the timing and amount of estimated future production, unanticipated grade changes, unanticipated recovery problems, mining and milling costs, determination of reserves, costs and timing of the development of new deposits, metallurgy, processing, access,
transportation of supplies, water availability, results of current and future exploration activities, results of pending and future feasibility studies, changes in project parameters as plans continue to be refined, political, economic and
operational risks of foreign operations, joint venture relationships, availability of materials and equipment, the timing of receipt of governmental approvals, capitalization and commercial viability, the failure of plant, equipment or
processes to operate in accordance with specifications or expectations, accidents, labour disputes, delays in start-up dates, environmental costs and risks, local and community impacts and issues, and general domestic and international economic and political conditions.
Rio Narcea undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The reader is cautioned not to place undue reliance on forward looking statements.
For further information please contact:
Chris von Christierson
Chairman & CEO
Tel: + (44) 207 629 2252
E-Mail: cvc@sprospecting.com
Omar Gomez
C.F.O.
Tel: + (34) 98 573 3300
E-Mail: omar.gomez@rngm.es
Michelle Roth
Roth Investor Relations, Inc.
Tel. +1 732 792 2200
Email: michelleroth@rothir.com
Web Site: www.rionarcea.com
Rio Narcea Gold Mines, Ltd.
TSX: RNG Stock Quote Stock Chart
AMEX: RNO Stock Quote Stock Chart
Other Recent News
October 23, 2006
Rio Narcea Gold Mines, Ltd. Third Quarter Financial Results Conference Call and Webcast November 10, 2006
TORONTO, ONTARIO--(CCNMatthews - Oct. 23, 2006) - Rio Narcea Gold Mines, Ltd. ("Rio Narcea" or "the Company") (TSX:RNG)(AMEX:RNO) today announced that it will release its third quarter 2006 results on Thursday, November 9th, after market close.
Rio Narcea senior management will host a conference call the next morning, Friday, November 10th, at 9:00am ET to discuss its financial results and operating activities.
Conference Call:
To access the live conference call, please dial 416-695-5261 or 1-877-461-2816 on November 10, 2006 at 9:00am.
For a replay of the call, please dial 416-695-5275 or 1-888-509-0081 and enter the passcode: 632593. The call will be archived on this instant replay until November 17, 2006.
Webcast:
There will be a live webcast of the conference call. You can access this webcast by clicking on the following link or by signing in directly through the Rio Narcea Website.
http://events.onlinebroadcasting.com/rionarcea/111006/index.php
Rio Narcea Gold Mines, Ltd. is a growing Canadian mineral resource company with operations, development projects and exploration activities in Spain, Portugal and Mauritania. The Company currently produces nickel at its Aguablanca nickel-copper-platinum group metals (PGM) mine in southern Spain and gold at it's at El Valle and Carles projects in northern Spain. Closure of the northern Spanish gold mines is planned for by the end of 2006. Construction of its new Tasiast gold project in Mauritania, West Africa, is underway, with production expected in 2007.
CONTACT INFORMATION
Rio Narcea Gold Mines, Ltd.
Omar Gomez
C.F.O.
+ (34) 98 573 3300
Fax: (34) 98 573 33 01
Email: omar.gomez@rngm.es
Website: www.rionarcea.com
or
Roth Investor Relations, Inc.
Michelle Roth
(732) 792-2200
Email: michelleroth@rothir.com
INDUSTRY: Manufacturing and Production - Mining and Metals
mfg BoMa
hier uninteressant ???
mfg BoMa
mfg BoMa
Wenn mir etwas an rno auffallen sollte, das mir wichtig erscheint (oder evt. nicht ins pos. Bild passt), stelle ich's zur Diskussion (falls du mich nicht auf ignore hast ;)
froehliches Wochenende
Rio Narcea Gold Mines, Ltd.
NEWS RELEASE
November 3, 2006 Trading Symbol: TSX: RNG
Amex: RNO
Ball Mill Arrives On Site At Tasiast
Last Critical Path Item Delivered As Construction Continues
Toronto, Ontario – Rio Narcea Gold Mines, Ltd. (“Rio Narcea” or “the Company”) is pleased to report an update on the construction of its Tasiast gold mine in Mauritania, West Africa. All critical path items are now on site as construction continues to proceed on schedule. Construction is expected to be completed in the first half of 2007 and production expected shortly thereafter.
The ball mill, which has been manufactured and bench-tested in China, was successfully delivered to the Tasiast mine site in October, 2006. The ball mill represents the final critical path component necessary to proceed, on schedule, with construction at Tasiast. Achievements at Tasiast thus far are as follows:
• Overall progress of SENET works at the end of October was 80%
• Engineering completed and orders procured.
• Shipping is 64% complete. The Cone crushers are already in Mauritania and the thickener and
the jaw crusher are due for arrival at the end of November.
• Civil construction is 92% complete. Pending work is related to the crushing area, foundations,laboratory and ROM tipping bin.
• Structural and mechanical erection is 46% complete and electrical works are 20% complete.
• Permanent camp operational for both local and expatriates residences.
• Access road complete.
• Water supply at the mine, with pipeline successfully pressure tested. Reservoir ready.
• Diesel power plant to be installed and operational in December 2006.
• Tailings storage facilities well advanced with paddock 1 complete and earthworks and plastic
lining of paddock 2 in progress.
• Mining contractor appointed. Brand new mining fleet already secured. Auxiliary and drilling
equipment currently in transit. Explosives permit under negotiation.
• Brown fields exploration drilling at Tasiast underway.
• Lab contract awarded to SGS. Outsourced operation and management.
• Bullion off-take agreement negotiations well advanced.
“
The delivery of the ball mill represents the final critical piece of equipment to arrive safely on site. Our construction timetable continues to progress on schedule. When combined with the recently announced 18% increase in open pit ounces, our optimism for the Tasiast gold project and our ability to augment gold ounces in and around it, has been further enhanced,” said Chris von Christierson, Chairman and Chief Executive Officer.
There are currently 400 people working on the construction at Tasiast. Construction photos of Tasiast can be viewed at http://www.rionarcea.com/s/Tasiast.asp
Page 2/2
Rio Narcea Gold Mines, Ltd. is a growing Canadian mineral resource company with operations, development projects and exploration activities in Spain, Portugal and Mauritania. The Company currently produces nickel at its Aguablanca nickel-copper-platinum group metals (PGM) mine in southern Spain and gold at it’s at El Valle and Carlés projects in northern Spain. Closure of the northern Spanish gold mines is planned for the end of 2006. Construction of its new Tasiast gold project in Mauritania,
West Africa, is underway, with production expected in 2007.
Forward-looking Statements
This press release may contain certain “forward looking statements” within the meaning of the United States securities laws. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events, capital expenditures, exploration efforts, financial needs, and other information that is not historical
information. The forward-looking statements contained herein are based on Rio Narcea’s current expectations and various assumptions as of the date such statements are made.
Rio Narcea cannot give assurance that such statements will prove to be correct.
Factors that could cause Rio Narcea's actual results to differ materially from these statements include, but are not limited to, changes in gold and nickel prices, the timing and amount of estimated future production, unanticipated grade changes, unanticipated recovery problems, mining and milling costs, determination of reserves, costs and timing of the development of new deposits, metallurgy, processing, access, transportation of supplies, water availability, results of current and future exploration activities, results of pending and future feasibility studies,
changes in project parameters as plans continue to be refined, political, economic and operational risks of foreign operations, joint venture relationships, availability of materials and equipment, the timing of receipt of governmental approvals, capitalization and commercial viability, the failure of plant, equipment or processes to operate in
accordance with specifications or expectations, accidents, labour disputes, delays in start-up dates, environmental costs and risks, local and community impacts and issues, and general domestic and international economic and political conditions.
Rio Narcea undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The reader is cautioned not to place undue reliance on forward looking statements.
For further information please contact:
Chris von Christierson
Chairman & CEO
Tel: + (44) 207 629 2252
E-Mail: cvc@sprospecting.com
Omar Gomez
C.F.O.
Tel: + (34) 98 573 3300
E-Mail: omar.gomez@rngm.es
David Baril
C.O.O.
Tel. +(34) 98 573-3300
E-Mail: david.baril@rngm.es
Michelle Roth
Roth Investor Relations, Inc.
Tel. +1 732 792 2200
Email: michelleroth@rothir.com
Web Site: www.rionarcea.com
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Rio Narcea Gold Mines, Ltd.
NEWS RELEASE
November 9, 2006 Trading Symbol: TSX: RNG
Amex: RNO
Rio Narcea Reports Record Net Income and
Record Cash Flow from Nickel Operations
for the Third Quarter 2006
Net Income of $15.6 million on Revenues of $59.1 million
Cash Flow from Nickel of $23.6 million
(All amounts are reported in U.S. dollars unless otherwise indicated)
Toronto, Ontario – Rio Narcea Gold Mines, Ltd. (“Rio Narcea” or “the Company”) today announced
its results for the third quarter ended September 30, 2006.
Third Quarter Highlights
§ Record net income of $15.6 million after derivative loss of $8.4 million arising from compulsory
hedging instruments associated with project debt financing
§ Record quarterly cash flow from Aguablanca operation of $23.6 million
§ Production from Aguablanca of 3.4 million pounds of nickel and 3.7 million pounds of copper.
Sales of 3.2 million pounds of nickel at a cash cost of $4.84 per pound (a).
§ Buy back of Aguablanca nickel royalty from Atlantic Copper, S.A. for $6 million.
§ Aguablanca project finance fully repaid ($22.0 million paid in 2006).
§ Construction of Tasiast gold project on schedule for completion by mid-2007. Total capital
expenditures estimated at $73 million.
§ $53.2 million held in cash and cash equivalents.
§ Closure of El Valle and Carlés gold operations on target for mid-December.
Subsequent Events
§ 18% increase in open pit gold reserves at Tasiast. Site exploration underway.
§ Completed acquisition of 16.4% strategic shareholding in Chariot Resources Limited (17.5%
including warrants).
§ October throughput at Aguablanca of 140,000 tonnes per month (“tpm”).
§ Water reserve at Aguablanca exceeds 500,000 m3.
Third Quarter Financial Results
For the third quarter ended September 30, 2006, Rio Narcea reported net income of $15.6 million or
$0.10 per share on total revenues of $59.1 million. This compares to a net loss of $9.1 million and $0.06
per share on revenues of $30.1 million in the same period in 2005. Revenues from nickel operations
Page 2/13
totalled $37.3 million for the third quarter of 2006, compared with $11.5 million in the same period of
2005. Revenues from gold operations for the third quarter of 2006 were $21.8 million, of which $13.9
million were sales from Nalunaq ore, compared with $18.6 million, of which $10.1 million was from
Nalunaq ore, during the third quarter of 2005.
Operating cash flow provided by the Aguablanca operation was $23.6 million in the third quarter of 2006,
while consolidated operating cash flow amounted to $18.5 million for the quarter compared to $6.3 million
in the same period of the prior year.
Net income for the third quarter of 2006 includes derivative losses of $8.4 million arising from the effect of
the higher copper and gold prices on the hedging instruments that were required to be entered into by the
Company for the project finance of its Aguablanca and Tasiast projects.
For the nine months ended September 30, 2006, the Company reported net income of $24.1 million or
$0.15 per share on total revenues of $159.8 million. This compares to a net loss of $ 29.8 million or
$0.19 per share on total revenues of $71.4 million for the same period in 2005. Operating cash flow was
positive $35.0 million for the first nine months of 2006, compared with ($2.6) million in the corresponding
period in 2005.
The positive operating cash flow during the first nine months of 2006 was mainly attributable to the
increase in nickel sales from Aguablanca. Cash provided by operating activities before changes in
components of working capital amounted to $54.0 million in the first nine months of 2006, compared to
($1.7) million in the same period of 2005. (a)
“
We are extremely pleased to report this record net income for the Company. The fact that our operating
cash flow has increased 25% over the previous quarter is not only a function of higher nickel prices, but
also the effectiveness of the technical initiatives we have implemented at Aguablanca,” said Chris von
Christierson, Chairman and Chief Executive Officer. “We are delighted with the strong revenue
generation from Aguablanca and the progress being made by the construction team at Tasiast.”
Selected Quarterly Information
($000 except where stated)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2006 2005 2006 2005
Revenues 59,087 30,070 159,776 71,369
Net income (loss) 15,612 (9,050) 24,141 (29,758)
Net income (loss) per share – basic 0.10 (0.06) 0.15 (0.19)
Net income (loss) per share – diluted 0.10 (0.06) 0.15 (0.19)
Cash provided by (used in) operating
activities 18,454 6,253 35,040 (2,565)
Cash provided by (used in) operating
activities before changes in components
of working capital (a) 18,851 1,184 54,015 (1,657)
(a) Refer to Non-GAAP measures section of the MD&A.
A complete set of Rio Narcea’s Quarterly Report to Shareholders with Management Discussion and Analysis for the third quarterended
September 30, 2006 will be posted on our website at www.rionarcea.com and has been filed with Sedar at www.sedar.com.
Page 3/13
September 30,
2006
December 31,
2005
Cash and cash equivalents 53,173 53,624
Total assets 328,692 249,217
Long-term debt 45,004 15,982
Dividends declared per share - -
Review of Operations
Aguablanca nickel operation
The Company produced 3.4 million pounds of nickel and 3.7 million pounds of copper during the third
quarter of 2006, from processing 375,000 tonnes of ore. Head grades during the quarter were 0.60% and
0.51% for nickel and copper, respectively. This compares with 258,100 tonnes of ore processed in the
third quarter of 2005 which produced 3.7 million pounds of nickel and 2.9 million pounds of copper..
Recoveries amounted to 68.0% and 88.2%, respectively.
While nickel head grades were above the reserve head grade and what the ore block model was
predicting during 2005, the opposite has occurred in 2006. A new ore block model is being prepared and
is scheduled for completion by year end. The lower nickel recovery during the third quarter of 2006 was a
function of both lower nickel head grades in this section of the orebody and poor operating performance
while testing the production of separate nickel and copper concentrates during the months of July and
August. This test has been discontinued.
Throughput improved 4.3% during the third quarter of 2006 compared to the second quarter of 2006 and
19.1% compared to the first quarter of this year. Throughput was up 36.6% when compared to the fourth
quarter of 2005.
Operating Results
Three Months Ended
September 30,
Nine Months Ended
September 30,
2006 2005 2006 2005
Ore milled (tonnes) 375,000 258,100 1,049,400 722,800
Nickel head grade (%) 0.60 0.83 0.63 0.72
Copper head grade (%) 0.51 0.58 0.51 0.54
Nickel recovery (%) 68.0 76.8 72.1 67.8
Copper recovery (%) 88.2 88.5 90.1 88.4
Nickel production (000 lb) 3,399 3,654 10,498 7,778
Copper production (000 lb) 3,740 2,946 10,667 7,552
Cash cost ($/lb) (a) 4.84 2.68 3.39 3.46
(a) Includes smelting, refining and transportation expenses and is net of by -products. Refer to Non-GAAP
measures section of the MD&A.
During the third quarter of 2006, the plant treated an average of 125,000 tonnes per month (“tpm”). This
compares to an average of 112,400 tpm during the first six months of 2006 and an average of 83,100 tpm
during 2005. This improved mill rate is due to the installation of a new conveyor system enabling crushed
pebbles to bypass the SAG mill and feed directly into the ball mill, as well as the installation of a new
secondary crusher that was commissioned during the quarter. Further increases in throughput should be
achievable in the near term.
Grades of nickel and copper in the bulk concentrate during the third quarter of 2006 were 6.3% nickel and
7.0% copper, compared to 6.8% nickel and 6.7% copper during the first six months of 2006. The reasons
Page 4/13
for this temporary decline in concentrate grades are the same as those given for the lower recoveries
above.
Mine production has performed well during the quarter, with mining rates conforming to plant production.
Acquisition of Royalty
On July 5, 2001, the Company acquired from Atlantic Copper, S.A. (“AC”) participation rights in a
consortium with the Spanish state. The consortium is the holder of 100% of certain mineral rights located
in southern Spain, which included the Aguablanca mine property. The original acquisition price payable
to AC for these participation rights included a production royalty in respect of the mineral rights held by
the consortium. In the agreement with AC, the Company had the option to pay a sum of $6.0 million to AC
in exchange for all future royalty payments. This option was exercised on August 2, 2006. The royalty
payable to AC would have been applicable to Aguablanca mine production from August 2006 onward and
comprised variable payments dependent on combined nickel and copper prices. A royalty amounting to
1% of the net smelter return (“NSR”) was also applicable to production from any other future project within
the various mineral rights areas held by the consortium. This 1% NSR obligation has now also ceased as
a result of the Company exercising its option with AC.
Aguablanca News Subsequent to the Close of the Third Quarter
During October, plant throughput at Aguablanca was 140,000 tpm. This is the highest throughput level to
date reported by the Company. In addition, the water reserve at Aguablanca has risen to 500,000 m3,
due to the amount of rainfall in October and thus far in November.
Tasiast gold project
Construction of the project continues to be on time and it is expected to be completed during the first half
of 2007, with first gold production expected in 2007. Highlights of the construction progress, as at
September 30, 2006, are as follows:
§ SENET:
o All engineering has been completed.
o All orders have been procured.
o Shipping is 64% complete with crushers and ball mill now at site.
o Civil construction is 89% complete.
o Structure and mechanical erection is 39% complete.
§ Other:
o Access road is complete.
o Tailings facility, paddock 1 stage 1 is 49% complete and completely lined.
o The water line has been tested to kilometre 60, where water is currently being received.
Water is expected to reach site by the end of November.
o Power plant expected to be installed and operational in December.
o Mining contractor has started at site.
Total budget for construction of the project, including working capital and owner’s costs, amounts to $73
million, of which $42 million had been spent as at September 30, 2006.
Remaining project expenditures will be financed from the Company’s existing cash resources. On June
29, 2006, the Company concluded a project debt agreement with Macquarie Bank Ltd. (“Macquarie”) to
Page 5/13
finance the construction of the Tasiast project. Under this agreement, the Company has a term loan of
$42.5 million that was fully drawn down on June 30, 2006.
Tasiast News Subsequent to the Close of the Third Quarter
In October 2006, the Company received a revised resource and open-pit reserve calculation for its
Tasiast project. The new estimate incorporated a revised gold price and revised cost inputs, which
together have increased the proven and probable reserves to 1,040,000 ounces of gold, an increase of
18% over the 885,000 ounces of gold previously estimated.
Tasiast Gold Project - Mineral Reserves and Resources (@0.8 g/t gold cut-off) (a)
Tonnes
(000)
Grade
(g/t)
Contained
Gold
(ounces)
Mineral reserves
Proven 761 3.24 79,000
Probable 11,223 2.66 960,000
Total proven and
probable reserves 11,984 2.70 1,040,000
Mineral resources
Measured 874 3.17 89,000
Indicated 13,840 2.60 1,159,000
Total measured and
indicated resources 14,714 2.64 1,248,000
Inferred resources 12,393 2.17 864,000
(a) Mineral resources included mineral reserves.
These estimates were prepared under the supervision of David A. Orava, M. Eng., P. Eng., Associate
Mining Engineer of A.C.A. Howe International, who is a Qualified Person independent of Rio Narcea for
the purposes of National Instrument 43-101.
On November 3, 2006 the Company announced the arrival of the Ball Mill on site at Tasiast. This was the
last critical path item remaining to be delivered to the project site.
El Valle and Carlés gold operations
During the third quarter of 2006, the Company’s own gold operations in northern Spain produced 10,800
ounces of gold as compared with 20,700 ounces of gold in the same period of 2005. Sales from the
Company’s own gold operations amounted to $7.9 million in the third quarter of 2006, while cost of sales
for those operations were $6.5 million ($8.5 million and $9.2 million, respectively, in the same period of
2005). The El Valle plant processed 80,000 tonnes of the Company’s own ore at an average gold grade
of 4.6 g/t, compared with 99,400 tonnes with an average grade of 6.7 g/t gold in the prior year period.
Recoveries averaged 91.2% in the third quarter of 2006 compared to 95.4% a year earlier. In addition,
the plant processed 41,100 tonnes of Nalunaq ore during the third quarter of 2006 compared with 28,100
tonnes during the same period of 2005.
During the first nine months of 2006, the Company’s own gold operations produced 40,400 ounces of
gold as compared with 57,600 ounces of gold in the same period of 2005. Sales from the Company’s own
gold operations amounted to $28.1 million in the first nine months of 2006, while cost of sales for those
operations were $22.6 million ($26.4 million and $26.0 million, respectively, in the same period of 2005).
Page 6/13
The El Valle plant processed 302,700 tonnes of the Company’s own ore at an average gold grade of 4.5
g/t, compared with 329,000 tonnes with an average grade of 5.8 g/t gold in the prior year period.
Recoveries averaged 91.6% in the first nine months of 2006 compared to 94.0% a year earlier. In
addition, the plant processed 75,100 tonnes of Nalunaq ore during the first nine months of 2006,
compared to 76,343 tonnes treated in the same period of 2005.
In February 2006, after a thorough performance review of the El Valle and Carlés operations, the
Company took the decision to close these operations. Closure of both the El Valle and Carlés mines will
take place at the end of 2006. As a result, remaining mining is being concentrated in developed areas
with better rock conditions and higher grades. There has been no further investment in underground
development since February 2006. On June 22, 2006, the Company reached a collective redundancy
agreement with the local unions and mine workers with respect to the closure of the El Valle and Carlés
gold operations. Subsequently, on July 5, 2006, that agreement received the approval of the Spanish
labour authorities, a requirement when redundancy affects more than 10% of the workforce. As a result of
this agreement, closure costs are now estimated at $4.6 million as at September 30, 2006.
In reaching this decision, the Company was significantly influenced by the decision of the Regional
Authorities of Asturias, not to approve the “change of land use” required to develop the Salave gold
project located some 70 km west of the El Valle. The concentrates that were planned to be produced from
Salave were expected to be processed at the El Valle plant, resulting in improved economics for both
projects.
On March 9, 2006, the Company gave notice to Nalunaq that the existing milling agreement will terminate
on September 30, 2006. The last shipment of ore from Nalunaq arrived in October 2006 and will be
treated by the end of November 2006. The Company is reviewing possibilities for the disposal of the El
Valle and Carlés facilities.
Summary of El Valle and Carlés Gold Operations
Three Months Ended September 30,
2006 2005
Rio
Narcea’s
operations
Nalunaq
ore Total
Rio
Narcea’s
operations Nalunaq ore Total
Tonnes of ore milled 80,000 41,100 121,100 99,400 28,100 127,500
Grade (g/t) 4.6 17.5 9.0 6.7 16.6 8.9
Recovery (%) 91.2 97.2 95.1 95.4 96.7 95.9
Gold production (oz) 10,800 22,400 33,200 20,700 14,600 35,300
Nine Months Ended September 30,
2006 2005
Rio
Narcea’s
operations
Nalunaq
ore Total
Rio
Narcea’s
operations Nalunaq ore Total
Tonnes of ore milled 302,700 75,100 377,800 329,000 76,300 405,300
Grade (g/t) 4.5 19.4 7.5 5.8 15.8 7.7
Recovery (%) 91.6 96.6 94.2 94.0 96.6 95.0
Gold production (oz) 40,400 45,200 85,600 57,600 37,400 95,000
Page 7/13
Salave gold project
In August 2005, the regional Government of Asturias rejected the application for “change of land use”
required to develop the project. The Company has commenced legal proceedings in the Spanish courts
seeking reversal of the decision and/or monetary compensation. In the event that the decision of the
Government of Asturias is maintained, the independent legal advisors of the Company believe Rio
Narcea should succeed in obtaining significant monetary compensation. However, the outcome and
timing of any legal action are presently uncertain.
Acquisition of strategic shareholding in Chariot Resources Limited
During the three months ended September 30, 2006, the Company purchased 6,259,500 common shares
and 1,780,000 warrants of Chariot Resources Limited (“Chariot”) in the market for $3.9 million. In early
October the Company acquired an additional 48,500 common shares and 118,000 warrants. On October
5, 2006 the Company agreed to purchase an additional stake in Chariot from Amerigo Resources Limited
for $21.5 million. The Company now holds a total of 38,120,500 common shares and 13,430,000
warrants of Chariot. This represents 16.4% of the common shares and 17.4% of the common shares and
warrants outstanding of Chariot, and cost a total of $25.5 million.
Chariot’s Marcona copper project is located in Southern Peru on the same Iron Oxide Copper Gold
(IOCG) belt which hosts Mantos Blancos and Candelaria. The Company believes the Marcona project
has potential for significant low cost copper production and through its important stake in Chariot, Rio
Narcea will support sound and effective management to unlock this potential.
Exploration
The Company has active exploration projects on both the Iberian Peninsula and in Mauritania. The
following is a brief update of each project:
Aguablanca
Step out underground drilling conducted to the West of the Aguablanca orebody intersected a large
interval of patchy and disseminated sulfide mineralization hosted by irregular and porphyritic
gabbronorites. Results from one hole, located 225 meters to the West of the closest mineralization,
returned 15.6 meters at 0.45% nickel and 0.21% copper, including a higher grade interval of 5.3 meters at
0.93% nickel and 0.41% copper.
The exploration implications of this particular intersection are encouraging because surface mapping in
this zone only showed the presence of marbles and skarns cut by a few, narrow and barren gabbroic
dikes. This confirms the possibility of finding additional subsurface magmatic sulfide mineralization at
depth in these peripheral zones.
Two rigs will be devoted to exploration in this area.
Ossa Morena (Spain and Portugal)
Regional exploration was focused on the evaluation of several recently delineated nickel and gold stream
sediment anomalies.
In addition, a preliminary and shallow drilling program was completed on the Guijarro–Chocolatero gold
target. The program comprised 1,148 meters in 8 holes. These holes were testing the Guijarro soil
anomaly, directly related to silicified acid volcanics of Upper Precambrian–Lower Cambrian age with
Page 8/13
minor disseminated pyrite. Five of those holes returned low grade gold values over significant widths. The
best results were 21 meters at 3.6 g/t gold in DDH GUI-1 and 38 meters at 0.7 g/t gold in DDH GUI-3.
Guijarro–Chocolatero forms part of the Bodonal–Cala gold belt where the Company is now evaluating
several gold soil anomalies related to the same horizon of volcanic rocks, as well as copper–gold
mineralized systems with iron–oxide–copper–gold (“IOCG”) affinities.
Mauritania
The Company is planning to commence active exploration on its Mauritanian land holdings in the fourth
quarter of this year. The main focus will be the evaluation of geochemical and geophysical targets that
show potential for gold and nickel deposits. One rig has commenced drilling and a second is being
mobilized to site.
El Valle (Spain)
All exploration has been suspended on account of the planned closure of mining operations.
Exploration Agreements
The Company has exploration agreements on its properties with Kinbauri Gold Corp. (for gold in
Corcoesto , Galicia, Spain), C2C Inc. (for gold in Portugal) and Ventura Gold Corp. (for gold in the
Navelgas belt, Asturias, Spain). The exploration results arising from these agreements are reported by
each partner.
Other
Carl Hering (Senior Vice President Exploration and Business Development) is leaving the employ of the
Company effective December 31, 2006 for personal reasons. The Company is evaluating various
alternatives for his replacement. In the interim, Luis Pevida, Exploration Manager and Senior Geologist,
will assume Mr. Hering’s role.
Conference Call and Webcast
On Friday, November 10, 2006 at 9:00 a.m. (EST) management will host a conference call and webcast
to discuss the Company’s third quarter results. In order to join the conference call, in North America
please dial 1-877-461-2816 and outside North America please dial 1-416- 695-5261. The conference
call will be broadcast live as well as recorded and archived on the web at www.rionarcea.com . You can
access this webcast by signing in directly through the Rio Narcea Website or by clicking on the following
link:
http://events.onlinebroadcasting.com/rionarcea/111006/index.php. In order to access this service,
you will need to have Windows Media Player installed on your computer.
A replay of the call will be available until November 17, 2006 by dialing 1 (416) 695-5275 or 1 (888) 509-
0081, passcode 632593. If you would like to listen to a replay of our conference call on the web, go to the
home page at www.rionarcea.com and click on the link under Investor Centre - Events & Webcast.
Rio Narcea Gold Mines, Ltd. is a growing Canadian mineral resource company with operations,
development projects and exploration activities in Spain, Portugal and Mauritania. The Company
Page 9/13
currently produces nickel at its Aguablanca nickel-copper-platinum group metals (PGM) mine in southern
Spain and gold at it’s at El Valle and Carlés projects in northern Spain. Closure of the northern Spanish
gold mines is planned for the end of 2006. Construction of its new Tasiast gold project in Mauritania,
West Africa, is underway, with production expected in 2007.
Forward-looking Statements
This press release may contain certain “forward looking statements” within the meaning of the United States
securities laws. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future
events, capital expenditures, exploration efforts, financial needs, and other information that is not historical
information. The forward-looking statements contained herein are based on Rio Narcea’s current expectations and
various assumptions as of the date such statements are made. Rio Narcea cannot give assurance that such
statements will prove to be correct.
Factors that could cause Rio Narcea's actual results to differ materially from these statements include, but are not
limited to, changes in gold and nickel prices, the timing and amount of estimated future production, unanticipated
grade changes, unanticipated recovery problems, mining and milling costs, determination of reserves, costs and
timing of the development of new deposits, metallurgy, processing, access, transportation of supplies, water
availability, results of current and future exploration activities, results of pending and future feasibility studies,
changes in project parameters as plans continue to be refined, political, economic and operational risks of foreign
operations, joint venture relationships, availability of materials and equipment, the timing of receipt of governmental
approvals, capitalization and commercial viability, the failure of plant, equipment or processes to operate in
accordance with specifications or expectations, accidents, labour disputes, delays in start-up dates, environmental
costs and risks, local and community impacts and issues, and general domestic and international economic and
political conditions.
Rio Narcea undertakes no obligation to publicly update these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of unanticipated events. The reader is cautioned not
to place undue reliance on forward looking statements.
Page 10/13
CONSOLIDATED BALANCE SHEETS
(stated in U.S. dollars) (unaudited)
September 30, December 31,
2006 2005
$ $
ASSETS
Current
Cash and cash equivalents 53,172,700 53,623,700
Restricted cash 2,044,300 2,191,100
Inventories 13,404,600 10,075,400
Stockpiled ore 1,505,800 4,167,700
Accounts receivable
Government grants 2,932,900 3,521,200
VAT and other taxes 6,450,500 3,831,800
Trade receivables 15,134,600 2,982,000
Other current assets 6,056,200 5,484,700
Current portion of deferred derivative loss 819,700 2,339,200
Total current assets 101,521,300 88,216,800
Mineral properties, net 206,663,800 157,147,600
Other assets 20,506,900 3,852,700
328,692,000 249,217,100
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Short-term bank indebtedness and accrued interest 1,600 4,799,700
Accounts payable and accrued liabilities 61,188,100 51,368,100
Current portion of long-term debt 4,853,700 13,122,900
Total current liabilities 66,043,400 69,290,700
Other long-term liabilities 39,123,300 14,538,500
Long-term debt 45,003,800 15,982,100
Deferred income tax liabilities 3,552,200 7,179,300
Total liabilities 153,722,700 106,990,600
Non-controlling interest 347,600 332,600
Shareholders' equity
Common shares 239,905,500 237,001,700
Contributed surplus 5,868,500 3,538,600
Employee stock options 7,385,000 8,422,800
Non-employee stock options and warrants 10,386,700 10,386,700
Defiance warrants — 1,786,200
Common share purchase options related to debt 3,154,500 3,154,500
Deficit (98,528,900) (122,669,900)
Cumulative foreign exchange translation adjustment 6,450,300 273,300
Total shareholders' equity 174,621,700 141,893,900
328,692,000 249,217,100
Page 11/13
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(stated in U.S. dollars) (unaudited)
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
$ $ $ $
REVENUES
Sales – Gold operations 7,871,800 8,547,200 28,127,600 26,417,800
Sales – Gold operations – Nalunaq ore 13,921,700 10,056,700 30,291,500 16,241,500
Sales – Nickel operations 37,293,500 11,466,000 101,357,100 28,710,100
59,087,000 30,069,900 159,776,200 71,369,400
EXPENSES
Cost of sales – Gold operations (a) (6,522,700) (9,205,700) (22,643,500) (26,037,900)
Cost of sales – Gold operations –
Nalunaq ore (a) (14,117,500) (10,112,600) (30,588,400) (15,995,300)
Cost of sales – Nickel operations (a) (9,890,900) (4,623,000) (27,381,700) (15,095,400)
Depreciation and amortization expenses (3,262,400) (2,467,200) (9,414,400) (5,329,700)
Exploration costs (1,104,100) (900,900) (3,562,700) (4,496,100)
Administrative and corporate expenses (2,375,800) (1,585,600) (6,065,100) (6,150,700)
Accrual for closure of El Valle and Carlés — — (864,500) —
Other income (expenses) (237,700) (565,100) (796,300) (443,200)
Interest income 539,200 187,100 849,400 776,900
Gains on disposal of traded securities — — 1,261,300 —
Foreign currency exchange gain (loss) (630,300) (253,400) 706,100 (10,247,500)
Interest expense and amortization
of financing fees (1,543,000) (272,900) (1,750,000) (805,900)
Derivatives loss (8,362,200) (7,776,900) (38,900,000) (15,441,600)
(47,507,400) (37,576,200) (139,149,800) (99,266,400)
Income (loss) before income tax 11,579,600 (7,506,300) 20,626,400 (27,897,000)
Income tax (expense) benefit 4,027,200 (1,558,900) 3,497,900 (2,100,900)
Net income (loss) before
non-controlling interest 15,606,800 (9,065,200) 24,124,300 (29,997,900)
Non-controlling interest 5,100 15,200 16,700 239,500
Net income (loss) 15,611,900 (9,050,000) 24,141,000 (29,758,400)
Deficit, beginning of period (114,140,800) (101,253,700) (122,669,900) (80,545,300)
Deficit, end of period (98,528,900) (110,303,700) (98,528,900) (110,303,700)
Net income (loss) per share – basic 0.10 (0.06) 0.15 (0.19)
Net income (loss) per share – diluted 0.10 (0.06) 0.15 (0.19)
Weighted average common shares
outstanding – basic 160,829,263 157,967,785 160,442,359 157,781,633
Weighted average common shares
outstanding – diluted 163,641,218 157,967,785 162,719,541 157,781,633
The accompanying notes are an integral part of these consolidated financial statements.
(a) Exclusive of items shown separately below.
Page 12/13
CONSOLIDATED STATEMENTS OF CASH FLOWS
(stated in U.S. dollars) (unaudited)
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
$ $ $ $
OPERATING ACTIVITIES
Net income (loss) 15,611,900 (9,050,000) 24,141,000 (29,758,400)
Add (deduct) items not requiring cash
Depreciation and amortization 3,262,400 2,467,200 9,414,400 5,329,700
Amortization of deferred financing fees and
prepaid expenses 36,900 36,200 107,900 112,400
Accretion of provision for site restoration 58,100 54,900 169,900 170,500
Foreign exchange 801,500 (436,500) (542,400) 7,822,900
Non-cash derivatives loss 2,887,000 6,516,700 24,905,200 12,759,200
Shared-based compensation 425,400 332,400 975,500 865,400
Non-controlling interest 5,100 (13,800) 16,700 (267,100)
Income taxes (expenses) recovery (4,156,400) 1,558,900 (3,627,100) 2,100,900
Gains on disposal of traded securities — — (1,261,300) —
Restoration expenditures (81,200) (281,700) (284,900) (792,600)
Changes in components of working capital
Inventories (2,133,500) 711,300 (2,553,100) (3,095,600)
Stockpiled ore 341,900 908,000 2,807,800 1,518,600
Government grants (104,700) — 110,400 —
VAT and other taxes (1,353,900) (681,900) (3,019,000) (6,729,800)
Trade receivables 1,937,300 (985,000) (12,151,500) (1,034,300)
Other current assets 174,500 (357,400) (334,200) 215,600
Accounts payable and accrued liabilities 742,000 5,473,500 (3,835,100) 8,217,200
Cash provided by (used in)
operating activities 18,454,300 6,252,800 35,040,200 (2,565,400)
INVESTING ACTIVITIES
Expenditures on mineral properties (14,401,500) (7,190,000) (48,960,400) (18,691,800)
Grants received (reimbursed) — (124,300) 215,100 7,142,600
Restricted cas h 263,600 (824,000) 302,300 (697,600)
Long-term deposits and restricted investments 251,200 (415,200) 630,900 111,800
Long-term investments in traded securities (3,926,900) — (3,926,900) —
Disposal of traded securities — — 2,411,200 —
Cash provided by (used in)
investing activities (17,813,600) (8,553,500) (49,327,800) (12,135,000)
FINANCING ACTIVITIES
Proceeds from issue of common shares 133,400 29,000 1,434,200 695,900
Proceeds from bank loans and other
long-term liabilities 6,299,500 6,358,900 56,020,800 8,940,900
Financing fees on bank loans (813,400) 3,400 (1,932,200) (44,000)
Repayment of bank loans (24,255,600) (10,076,800) (42,409,500) (12,352,700)
Cash provided by (used in)
financing activities (18,636,100) (3,685,500) 13,113,300 (2,759,900)
Foreign exchange gain (loss) on cash and cash
equivalents held in foreign currency (1,035,200) 269,300 723,300 (6,824,500)
Net decrease in cash and cash equivalents
during the period (19,030,600) (5,716,900) (451,000) (24,284,800)
Cash and cash equivalents,
beginning of period 72,203,300 63,320,900 53,623,700 81,888,800
Cash and cash equivalents, end of period 53,172,700 57,604,000 53,172,700 57,604,000
Supplemental cash flow information
Interest paid in cash 1,240,900 742,500 3,631,400 1,661,700
Income taxes paid in cash — — — —
Page 13/13
For further information please contact:
Chris von Christierson
Chairman & CEO
Tel: + (44) 207 629 2252
E-Mail: cvc@sprospecting.com
Omar Gomez
C.F.O.
Tel: + (34) 98 573 3300
E-Mail: omar.gomez@rngm.es
David Baril
C.O.O.
Tel: +(34) 98-573-3300
E-Mail: david.baril@rngm.es
Michelle Roth
Roth Investor Relations, Inc.
Tel. +1 732 792 2200
Email: michelleroth@rothir.com
Web Site: www.rionarcea.com
mfg BoMa
das ist ja seine superrakete
in seinem börsenbrief
nur diese aktie macht den freien fall nach unten
heute wieder minus 10 %
nch dem motto
zwei schritt vor und drei zurück
diese superrakete bricht nun voll ein