Pacific Rim Mining Corp. ("Pacific Rim" or "the Company") (TSX:
PMU)(NYSE Amex: PMU) reports its financial and operating results
for the three months ended July 31, 2009. Details of the Company's
financial results are provided in its interim consolidated
financial statements and Management's Discussion and Analysis
("MD&A") that will be mailed to shareholders shortly. All
monetary amounts are expressed in United States ("US") dollars
unless otherwise stated.
Overview
Pacific Rim is an environmentally and socially responsible
exploration company focused exclusively on high grade,
environmentally clean gold deposits in the Americas. Pacific Rim's
primary asset and focus of its growth strategy is the high grade,
vein-hosted El Dorado gold project in El Salvador. The Company owns
several similar grassroots gold projects in El Salvador and is
actively seeking additional assets elsewhere in the Americas that
fit its project focus. Pacific Rim's shares trade under the symbol
PMU on both the Toronto Stock Exchange ("TSX") and the NYSE Amex
("NYX").
All references to "Pacific Rim" or "the Company" encompass the
Canadian corporation, Pacific Rim Mining Corp, and its U.S. and
Salvadoran subsidiaries, Pac Rim Cayman LLC ("Pac Rim"), Pacific
Rim El Salvador, S.A. de C.V. ("PRES"), and Dorado Exploraciones,
S.A. de C.V. ("DOREX"), inclusive.
Financial Highlights
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Three Months Ended Three Months Ended
July 31, 2009 July 31, 2008
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Summarized Statement of Loss(i)
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Exploration expenditures $ 488 $ 2,451
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Loss from Continued Operations $ (881) $ (3,751)
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Discontinued Operations - Net income
(loss) of Denton-Rawhide Joint
Venture $ nil $ 482
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Loss for the period $ (881) $ (3,269)
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Loss per share after Discontinued
Operations (basic and diluted) $ (0.01) $ (0.03)
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Weighted Average common shares
outstanding (basic and diluted) 118,043,787 116,915,460
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Summarized Statement of Cash Flows(i)
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Cash Flow used for operating
activities $ (645) $ (3,385)
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Cash Flow provided by investing
activities $ (14) $ 2,254
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Cash Flow provided by financing
activities $ 2 $ nil
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Cash Flow from Continuing
Operations $ (657) $ (1,131)
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Cash Flow from Discontinued
Operations $ nil $ (114)
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Net increase (decrease) in cash $ (657) $ (1,245)
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At July 31, 2009 At April 30, 2009
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Summarized Balance Sheet(i)
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Cash and cash equivalents $ 627 $ 1,284
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Bullion $ 813 $ 1,225
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Receivables, Deposits and Pre-paids $ 139 $ 106
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Current assets $ 1,579 $ 2,615
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Total assets $ 7,147 $ 8,187
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Total liabilities $ 1,466 $ 1,679
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Working Capital $ 1,159 $ 1,982
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(i) all amounts in thousands of US dollars, except share and per share
amounts
Results of Operations
As a result of the sale of its Denton-Rawhide assets during
fiscal 2009, the Company no longer accounts for Revenue and Mine
Operating Costs from the sale of gold and silver as Mine Operating
Income. Revenue and operating costs from the Denton-Rawhide
operation (attributable to the Company's 49% interest until
December 31, 2008) are accounted for, for the current and prior
fiscal years, as Discontinued Operation - Net Income of
Denton-Rawhide Joint Venture.
For the three month period ended July 31, 2009, Pacific Rim
recorded a loss for the period of $(0.9) million or $(0.01) per
share, compared to a loss of $(3.3) million or $(0.03) per share
for the three month period ended July 31, 2008. The $2.4 million
decrease in net loss for Q1 2010 compared to Q1 2009 is primarily
related to significantly lower direct exploration and general and
administrative expenses combined with a small gain on the sale of
bullion, offset in part by expenses related to the CAFTA action
during Q1 2010 for which there is no comparable item in Q1
2009.
Expenses
Due to the cessation of the El Dorado drilling program in July
2008 and the reduction of other exploration expenses at all of the
Company's projects, quarterly exploration expenditures were greatly
reduced year over year, from $2.5 million in Q1 2009 to $0.5
million in Q1 2010.
General and administrative expenses were also lower during Q1
2010 ($0.6 million) than Q1 2009 ($1.3 million) as a result of the
Company's reduction in activities. Of the $0.6 million attributable
to general and administrative costs during Q1 2010, $0.4 million
was spent on the CAFTA action, for which there was no comparable
item during Q1 2009.
During Q1 2010 the Company realized a gain on the sale of
bullion of $0.2 million for which there was no comparable item in
Q1 2009. The gain represents the difference between the
consideration received for gold and silver when it was sold and its
book value, which is based on the gold price on the date the
bullion was received.
Unusual Items
The Company sold the assets it held through its 49% interest in
the Denton-Rawhide residual leach gold operation. During Q1 2009
the Company received income of $0.5 million from the Denton-Rawhide
operation (of which the Company was a participant until December
31, 2008) related to the production of gold and silver, for which
there is no comparable item in Q1 2010.
Summary
As a result of significantly reduced exploration expenditures
and decreased staffing levels, the Company's loss for Q1 2010 was
substantially reduced from the previous year's first quarter
($(0.9) million or $(0.01) per share for Q1 2010 compared to $(3.3)
million ($(0.03) per share for Q1 2009).
Liquidity and Capital Resources
Cash
During Q1 2010 the Company's cash and cash equivalents decreased
by $0.7 million from $1.3 million at April 30, 2009 to $0.6 million
at July 31, 2009. Bullion (held by the Company and not yet sold)
was $0.8 million at July 31, 2009 compared to $1.2 million at April
30, 2009. Bullion is valued at the gold and silver price on the
date the bullion was received. Current assets were $1.6 million at
July 31, 2009 compared to $2.6 million at April 30, 2009, a
decrease of $1.0 million. This decrease reflects ongoing, though
greatly reduced, expenditures related to the Company's exploration
projects and the general and administrative costs of maintaining a
public company and advancing the CAFTA action.
During fiscal 2009 the Company received $0.6 million from the
sale of bullion and negligible cash flow from interest income and
the sale of shares. Outlays of cash during the quarter included:
$0.5 million in direct exploration expenditures, $0.3 million in
direct general and administrative expenses, $0.3 million in
CAFTA-related expenses and $0.2 million in reductions of accounts
payable and accrued liabilities. The net result was a decrease in
cash and cash equivalents of $0.7 million during Q1 2010.
Working Capital
At July 31, 2009, the book value of the Company's current assets
stood at $1.6 million, compared to $2.6 million at April 30, 2009,
a reduction of $1.0 million. The decrease in current assets is
primarily a result the sale of bullion (for cash) and subsequent
cash expenditures. Property, plant and equipment balances at July
31, 2009 were marginally reduced to $5.5 million from the April 30,
2009 balance of $5.6 million. As a result, the Company's total
assets at the end Q1 2010 were $7.1 million compared to $8.2
million at the end of fiscal 2009.
At July 31, 2009 the Company had current liabilities of $0.4
million compared to $0.6 million at April 30, 2009. This decrease
in current liabilities is entirely due to a $0.2 million decrease
in accounts payable. Future income tax liability, relating to Pac
Rim's investment in El Salvador, did not change between the end of
fiscal 2009 and the end of Q1 2010, and at July 31, 2009 was valued
at $1.0 million. Currently, Pacific Rim has no short- or long-term
debt.
The $1.0 million decrease in current assets combined with the
$0.2 million decrease in current liabilities, resulted in a $0.8
million reduction in working capital from $2.0 million at April 30,
2009 to $1.2 million at July 31, 2009.
The Company does not intend to resume significant exploration
programs in El Salvador until such time as the El Dorado
environmental permit and exploitation concession are received. The
Company can not judge if or when the required permits will be
received and is not currently planning any exploration programs for
its El Dorado, Santa Rita and Zamora-Cerro Colorado properties for
fiscal 2010 beyond what is necessary to keep all of its exploration
licences in good standing. Should the required permits be granted,
the Company will evaluate its options for resuming full scale
exploration work designed to advance its El Salvador projects.
The Company intends to continue to seek new project acquisitions
and during fiscal 2010 intends to continue to conduct low cost
field work, technical and legal due diligence on projects it is
currently evaluating and to seek new prospects for staking or
property acquisitions that fit its exploration focus.
(The foregoing two paragraphs contain forward-looking statements
regarding the scope of exploration and generative work programs
management intends to undertake in the coming fiscal year. See
Forward-Looking Information.)
The Company anticipates that its exploration plans as outlined
above will cost in excess of $1.0 million for the remainder of
fiscal 2010. If regulatory and political conditions warrant, and
adequate financing is available, the Company will resume aggressive
exploration of its El Dorado, Santa Rita and Zamora-Cerro Colorado
projects in El Salvador, which will result in increased exploration
and general and administrative expenditures over those currently
anticipated for fiscal 2010. In order to conduct its basic
exploration program as outlined above, the Company is likely to
require additional financing during the remainder of fiscal 2010,
and to undertake an expanded exploration program additional
financing will be essential.
(The foregoing paragraph contains forward-looking statements
regarding the Company's exploration plans and anticipated costs
during fiscal 2010. See Forward-Looking Information.)
The Company's general and administrative costs during the
remainder of fiscal 2010 are anticipated to increase due to legal
costs associated with the CAFTA action undertaken by Pac Rim. The
Company may require additional financing during the remainder of
fiscal 2010 for general working capital expenses and/or the
expenses related to the CAFTA action.
(The previous paragraph contains forward-looking statements
regarding anticipated increases in general and administrative
expenses as a result of anticipated increased legal costs during
fiscal 2010, and the potential requirement for additional financing
to fund these legal costs and/or general working capital expenses.
See Forward-Looking Information.)
The Company will require additional funding to maintain its
ongoing exploration programs and property commitments as well as
for administrative purposes and CAFTA arbitration and negotiation.
These requirements, among existing conditions and risks, cast
substantial doubt on the validity of the going concern
assumption.
The Company's ability to continue operations and exploration
activities as a going concern is dependent upon its ability to
obtain additional funding. The Company will need to raise
sufficient funds to pursue ongoing exploration and administration
expenses as well as its costs under its CAFTA arbitration. While
the Company has been successful in obtaining its required funding
in the past, there is no assurance that sufficient funds will be
available to the Company in the future. The Company has no
assurance that such financing will be available or be available on
favourable terms. Factors that could affect the availability of
financing include the progress and results of the El Dorado project
and its permitting application, the resolution of international
arbitration proceedings over the non-issuance of permits in El
Salvador, the state of international debt and equity markets,
investor perceptions and expectations and the global financial and
metals markets. The Company will have to obtain additional
financing through, but not limited to, the issuance of additional
equity.
Outlook
The Company will continue to curtail its exploration programs
and expenditures in El Salvador until such time as PRES receives
the El Dorado environmental permit and exploitation concession. The
Company anticipates expending approximately $1.0 million on
exploration-related expenses during the remainder of fiscal 2010,
primarily on low-cost exploration work required to keep all of its
El Salvador projects in good standing, limited community relations
initiatives, and due diligence evaluation of new projects outside
of El Salvador. This work will be revised should circumstances
change and depending on the Company's working capital balances
and/or financing opportunities. In order to fulfil this exploration
program the Company will likely require additional financing during
fiscal 2010 and will undoubtedly require additional financing in
order to undertake an expanded exploration program should the
Company receive the required permits to do so.
(The foregoing paragraph contains forward-looking statements
regarding the Company's exploration plans and anticipated costs
during fiscal 2010. See Forward-Looking Information.)
The Company's general and administrative costs during the
remainder of fiscal 2010 are anticipated to increase due to legal
costs associated with the CAFTA action undertaken by Pac Rim. The
Company will require additional financing during fiscal 2010 for
general working capital expenses and/or the expenses related to the
CAFTA action.
(The previous paragraph contains forward-looking statements
regarding anticipated increases in general and administrative
expenses as a result of anticipated increased legal costs during
fiscal 2010, and the potential requirement for additional financing
for general working capital purposes and/or legal fees related to
the CAFTA action. See Forward-Looking Information.)
The Company will continue its extensive outreach efforts to the
newly elected federal government and administration, municipal
government officials, church leaders, business leaders, and
Salvadoran citizens during the remainder of fiscal 2010. The
Company and its subsidiaries have a well documented history of
supporting local inhabitants and building relationships with all
stakeholders. This is a key component of the Company's approach to
exploration and development, and will continue in all jurisdictions
in which it and its subsidiaries operate.
Notwithstanding these diplomatic efforts, until resolved, Pac
Rim's CAFTA claim will proceed during fiscal 2010. Documentation
supporting its CAFTA claim is currently being collected and
submitted to ICSID, and it is anticipated that the formal arbitral
panel will be convened during the Company's second quarter of
fiscal 2010 and the arbitration process will commence during the
second half of fiscal 2010. Ongoing pursuit of this claim will
require the Company to undertake financing during fiscal 2010
specifically ear-marked for legal expenses.
(The foregoing section contains forward-looking statements
regarding the scope of the Company's fiscal 2010 planned work
programs, anticipated expenditures and the expectation of ongoing
legal undertakings. See Forward-Looking Information)
On behalf of the board of directors,
Thomas C. Shrake, President and CEO
Forward-Looking Information
The information contained herein contains "forward-looking
statements" within the meaning of Section 21E of the United States
Securities Exchange Act of 1934 (as amended) and applicable
Canadian securities legislation. Forward-looking statements relate
to analyses and other information that are based on forecasts of
future results, estimates of amounts not yet determinable and
assumptions of management. Any statements that express predictions,
expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance are not statements of historical
fact and may be "forward-looking statements." Statements concerning
reserves and mineral resource estimates may also be deemed to
constitute forward-looking statements to the extent that they
involve estimates of the mineralization that will be encountered if
the property is developed, and in the case of mineral reserves,
such statements reflect the conclusion based on certain assumptions
that the mineral deposit can be economically exploited.
This report contains forward-looking statements regarding:
- the scope of exploration and generative work programs
management intends to undertake in the coming fiscal year. These
expectations are based on various assumptions including but not
limited to the Company and/or its subsidiaries' continued title and
access to the El Dorado, Santa Rita and Zamora-Cerro Colorado
properties, the availability and accessibility of projects the
Company may be interested in acquiring, the availability of
sufficient working capital and, if necessary, access to
financing.
- the Company's intent to forego significant exploration work at
the El Salvador projects until certain permits are granted, the
implication being that if and when these permits are granted
increased investments in exploration will be made. Readers are
cautioned that this statement conveys management's intent but that
resumption of a large-scale exploration program at the El Salvador
projects is dependent on the availability of adequate financing,
the ability to procure adequate experienced staff, the availability
of contractors, and other risks and uncertainties. Should any of
these assumptions prove incorrect or requirements not be met, the
Company's project generation and exploration plans and for fiscal
2010 may not occur as planned.
- the Company's exploration plans and anticipated costs during
fiscal 2010. The anticipated exploration expenditures reflect
estimations made by management based on current levels of
expenditure and anticipated work programs as described previously.
Should unexpected costs arise, exploration expenditures may differ
from those currently anticipated.
- anticipated increases in general and administrative expenses
as a result of anticipated increased legal costs during fiscal
2010, and the potential requirement for additional financing to
fund these legal costs and/or general working capital expenses.
These statements are based on management's assumption that the
CAFTA action will continue through fiscal 2010 and the anticipated
costs of pursuing this action, plus the Company's anticipated burn
rate for general and administrative costs. Should PRES receive the
El Dorado permits at any time, the necessity to continue the action
may be averted and the anticipated impact on general and
administrative costs may not materialize.)
Forward-looking statements are subject to a variety of risks and
uncertainties, which could cause actual events or results to differ
from those reflected in the forward-looking statements, including
the risks and uncertainties outlined above and other risks and
uncertainties related to the Company's prospects, properties and
business detailed in its fiscal 2009 MD&A, in the Company's
Annual Information Form for the year ended April 30, 2009 and in
the Company's Form 20F filed with the US Securities and Exchange
Commission. Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in
forward-looking statements. Investors are cautioned against
attributing undue certainty to forward-looking statements. The
Company does not undertake to update any forward-looking statements
that are incorporated by reference herein, except in accordance
with applicable securities laws.
National Instrument 43-101 Disclosure
Mr. William Gehlen, Vice President Exploration, supervises
Pacific Rim's exploration work on the El Dorado project. Mr. Gehlen
is a Certified Professional Geologist with the AIPG (No. 10626), an
employee of the Company and a Qualified Person as defined in NI
43-101.
Mr. David Ernst, Chief Geologist, supervises the Company's
project generation initiatives. Mr. Ernst is geologist licensed by
the State of Washington, an employee of Pacific Rim Mining Corp.
and a Qualified Person as defined in National Instrument
43-101.
Pacific Rim's sampling procedures follow the Exploration Best
Practices Guidelines outlined by the Mining Standards Task Force
and adopted by The Toronto Stock Exchange. Samples are assayed
using fire assay with a gravimetric finish on a 30-gram split.
Quality control measures, including check- and sample
standard-assaying, are being implemented. Samples are assayed by
Inspectorate America Corporation in Reno, Nevada USA, an ISO 9002
certified laboratory, independent of Pacific Rim Mining Corp.
The TSX and the NYX have neither reviewed nor accept
responsibility for the adequacy or accuracy of this release.
Contacts: Pacific Rim Mining Corp. Barbara Henderson
604-689-1976 or 1-888-775-7097 604-689-1978 (FAX)
general@pacrim-mining.com www.pacrim-mining.com
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