Mon Nov 17, 2008
Farallon Announces First Quarter Fiscal 2009 Results
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November 17, 2008, Vancouver, BC - Farallon Resources Limited (TSX: FAN; OTCBB: FRLLF) ("Farallon" or the "Company") reports its results for the three months ended September 30, 2008. This release should be read with the Company's Financial Statements and Management Discussion & Analysis, available at www.farallonresources.com and filed on www.sedar.com. Currency values are in United States dollars unless otherwise indicated.
The Company began commissioning activity at its G-9 polymetallic (zinc, copper, lead, silver, gold) operation on the Campo Morado Property in Guerrero State, Mexico during the first quarter of fiscal 2009 (see News Release dated November 10, 2008). Commissioning activities will continue during November and December with ramp-up to design production of 45,000 tonnes processed per month by January 2009.
Cash and equivalents at the end of September 30, 2008 were $16.9 million. Subsequent to the end of the period, on October 17th, the Company announced the closing of further working capital financing via convertible promissory notes for a net amount of $6.9 million.
In addition to the above, the Company has rights under its mineral off-take agreement to request Advance Payments in the amount of 90% of the estimated value of zinc, copper and lead concentrates delivered to the port of Manzanillo. The Advance Payments are currently being requested for concentrates produced during the commissioning activity and carry an interest rate of LIBOR + 1.5%. The Advance Payments can be received as cash within 1-2 weeks of the concentrate being produced at site.
The Company continues to monitor the recent volatility in metal prices. During the period and subsequent to the period, there was a substantial decline in the pricing for the Company's products with zinc declining 42% and Copper declining 60%. However, there was also a 26% increase in the value of the US Dollar versus the Mexican Peso in the same period. As the Company receives all of its revenue in US Dollars and predominantly has expenditures in Mexican Pesos, the exchange rate change partly offsets the decline in metal pricing.
President and CEO Dick Whittington said: "The recent rapid decline in metal prices has had a significant impact on our forecasts for cash generation during the commissioning period. The Company has cash and equivalents of $16.9 million as at September 30, 2008 and proceeds from the October 17, 2008 financing of $6.9 million to supplement Advance Payments from concentrate produced during the commissioning period. This position allows us to move forward with completion of our mine development and commissioning activities in a depressed metal price environment. We believe our current focus on minimizing costs and achieving ramp-up targets will leave us well positioned, even at current metal prices, in January and February when mining is scheduled to begin in the high-grade Southeast zone. We are pleased with progress to date, and look forward to the commencement of commercial operations in early 2009."
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.
ON BEHALF OF THE BOARD OF DIRECTORS
J.R.H. (Dick) Whittington
President and CEO
1 London Inter Bank Offered Rate
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 and the Company's annual report on Form 20-F at www.sec.gov.
You can view the Previous News Releases item: Mon Nov 10, 2008, Farallon Updates G-9 Production Status While Managing Project Expenditures
