| | Wed Apr 1, 2009
Farallon Announces Year-End 2008 Financial Results
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| | G-9 MINE COMMISSIONING PHASE SUCCESSFUL, RAMPING UP TO FULL PRODUCTION
April 1, 2009 Vancouver, BC. Farallon Resources Ltd. ("Farallon" or the "Company") (TSX: FAN) announces the Company's year-end financial results at December 31, 2008. Farallon changed its fiscal year-end date from June 30 to December 31; therefore, these financials are for the six month period ended December 31, 2008. All currency amounts are in US$ unless otherwise stated. The full version of the financial statements can be viewed on the Company's web site at www.farallonresources.com or on SEDAR at www.sedar.com.
During the period ending December 31, the Company carried out commissioning and ramp up activities at the G-9 Mine, located in Guerrero State Mexico, to bring the operation towards the full design production capacity of 1,500 tonnes per day. Further to the update of operational activities at the G-9 Mine provided in its news release of January 22, 2009, the Company's initial production targets were met during the period. The Company incurred a loss for the period of $40.1 million, including $19.1 million in commissioning costs that reflect the higher costs associated with commissioning and ramp up. These costs are higher than those anticipated once design production is achieved.
The Company's final reconciliation of the capital costs associated with the construction and development of the G-9 Mine have been completed. The final capital cost is $149.7 million, which is approximately 20% higher than the estimate of $124 million in the December 2007 Preliminary Economic Assessment ("PEA").
Concentrate production at the G-9 Mine during the period was 13,362 tonnes of zinc concentrate, 1,943 tonnes of copper concentrate, and 1,143 tonnes of lead concentrate. Production and grade for each concentrate is provided in the table below.
| G-9 Mine Zinc Concentrate Production |
| Period |
Tonnes |
Grade |
| Zn% |
Ag g/t |
Au g/t |
| July 1 to Dec 31, 2008 |
13,362 |
48.2 |
273 |
2.53 |
| G-9 Mine Copper Concentrate Production |
| Period |
Tonnes |
Grade |
| Cu% |
Ag g/t |
Au g/t |
| July 1 to Dec 31, 2008 |
1,943 |
16.6 |
588 |
8.0 |
| G-9 Lead Concentrate Production |
| Period |
Tonnes |
Grade |
| Pb% |
Ag g/t |
Au g/t |
| July 1 to Dec 31, 2008 |
1,143 |
16.9 |
844 |
22.6 |
The Company has been trucking concentrates to the Port of Manzanillo since October 12, 2008 and at December 31, 2008 had received advance payments of $3.2 million under the terms of its off-take contract. Subsequent to the year-end in February 2009, the Company announced the first vessel shipment of concentrates to smelters in Asia.
Additional highlights from the period include successfully fulfilling the completion guarantee under the Silver Wheaton agreement. The Company fulfilled the main condition of the completion guarantee by averaging more than 1,050 tonnes per day through the milling facility over a 30 day period. During the period, the Company also received the full amount of $80 million as per the agreement (announced in May 2008).
As a result of the deterioration of metal prices during the period and consistent with GAAP accounting practices, a valuation analysis was completed to determine whether there was a value impairment which would necessitate a write-down on the carrying cost of the G-9 mine asset. It was deemed that, at metal prices prevailing at the time of analysis on December 31, 2008, no value impairment had occurred and therefore a write down was not necessary.
The Company is now poised to enter full commercial production, and expects to provide an update in mid-April on commissioning and production activity in the first quarter of 2009. As well, in future producing quarters, the Company plans to hold regular analyst conference calls to discuss both operational and financial results as we progress through this year as an operating mining company.
President and CEO Dick Whittington stated "We are very pleased to have built the G-9 Mine at a cost that is very close to the original PEA estimate. Many other companies with full feasibility studies have come in over budget and have experienced long delays. This is a great achievement for everyone associated with the construction of the G-9 Mine. The mine is now in production and we anticipate being in "Commercial" production shortly. G-9 is now a reality and Farallon is poised to take advantage of any improvements in metal prices and to take the next step in becoming a mid-tier mining company."
For further details on Farallon Resources Ltd., please visit the Company's website at www.farallonresources.com or contact Investor Services at (604) 638-2160 or within North America at 1-800-667-2114.
ON BEHALF OF THE BOARD OF DIRECTORS
J.R.H. (Dick) Whittington
President & CEO
No regulatory authority has approved or disapproved the information contained in this news release
Forward Looking Information
This release includes certain statements that may be deemed "forward-looking statements." All statements in this release, other than statements of historical facts, that address future production, reserve or resource potential, continuity of mineralization, exploration drilling, operational activities, production rates, costs to completion and events or developments that the Company expects are forward-looking statements. Although the Company believes that the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward looking statements and may require achievement of a number of operational, technical, economic and legal objectives. The likelihood of continued future mining at Campo Morado is subject to a large number of risks, including obtaining lower than expected grades and quantities of mineralization and resources, lower than expected mill recovery rates and mining rates, changes in and the effect of government policies with respect to mineral exploration and exploitation, the possibility of local disputes including blockades of the company's property, the possibility of adverse developments in the financial markets generally, fluctuations in the prices of zinc, gold, silver, copper and lead, obtaining additional mining and construction permits, preparation of all necessary engineering for ongoing underground and processing facilities as well as receipt of additional financing to fund mine construction, development and operation, if needed. Such funding may not be available to the Company on acceptable terms or on any terms at all. There is no known ore at Campo Morado and there is no assurance that the mineralization at Campo Morado will ever be classified as ore. For more information on the Company and the risk factors inherent in its business, investors should review the Company's Annual Information Form at www.sedar.com. |
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| | You can view the Next News Releases item: Mon Apr 6, 2009, Farallon Announces Financing Update: Additional Private Placement Secured
You can view the Previous News Releases item: Mon Mar 16, 2009, Farallon Announces Favourable Ruling On Wiltz Case
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