TORONTO, ONTARIO (TSX VENTURE: PAT) has released financial and
operational results for its third quarter which ended Sept. 30,
2007. Financial results are based on Canadian GAAP (generally
accepted accounting principles).
The Company's main asset is a 45% interest in the Island Gold
Mine located approximately 50 km northeast of Wawa, Ontario. The
650 tonne-per-day carbon-in-pulp mill was successfully restarted in
September 2006 and the first gold was poured in November 2006.
3rd Quarter Highlights and Milestones:
- Commercial production at the Island Gold Mine was declared as
of October 1, 2007. In the third quarter of 2007, a total of 7,202
ounces of gold were sold at an average price of US$643 per ounce
for total proceeds of $5,093,711 from the Mine.
- In the fourth quarter, the Island Gold Mine plan calls for the
development and drilling of five stopes, in addition to the initial
two stopes that produced ore in the third quarter.
- The mill throughput is expected to be increased in the first
quarter of 2008 towards a targeted capacity of approximately 675
tonnes per day at a 95% gold recovery rate. Production of over
32,000 ounces is forecast for 2007 and is expected to increase to
over 54,000 ounces in 2008.
"With the Island Gold Mine now in commercial production and the
majority of ore coming from long hole stopes, we have seen an
encouraging improvement in ore grade" stated Chris Chadder,
Patricia's CEO, "After a long development phase, we expect that the
Mine will now start to produce positive cash flow."
Summary of Operations
The Company accounts for the Island Gold Project as a Variable
Interest Entity (VIE) with Richmont Mines Inc. ("Richmont Mines")
being the primary beneficiary. Accordingly, the Company's interest
in the Project is accounted for using the equity method. Summarized
operational information for the joint venture is as follows:
Three Months ended Nine Months ended
September September September September
30, 2007 30, 2006 30, 2007 30, 2006
-------------------------------------------------
Tonnes processed from
development activities 44,968 - 124,152 -
Ounces sold 7,202 - 23,031 -
Recovered Grade (g/t) 4.98 - 5.77 -
Investment in exploration
and development ($)
Capitalized exploration
and development costs 6,186,445 6,024,547 18,536,459 15,742,312
Gold sales from
development activities (5,093,711) - (16,774,926) -
Property 152,367 501,695 534,725 1,055,997
Mill - 729,845 132,375 983,220
Mining Properties - 60,608 - 60,608
-------------------------------------------------
1,245,101 7,316,695 2,428,633 17,842,137
-------------------------------------------------
-------------------------------------------------
Exploration expenses ($) 38,811 61,477 265,964 177,164
Development metres 989 778 3,335 2,518
Exploration Drilling (metres)
Underground 3,087 9,199 10,079 20,956
Surface - 3,898 - 10,602
- 7,202 ounces of gold were produced and sold at an average
price of US$643 by the joint venture participants during the
quarter. The proceeds for these sales totalling $5,093,711 were
deducted from the development costs. For the nine months ended
23,031 ounces of gold were sold at an average price of US$662 for
proceeds of $16,774,926.
- 44,968 tonnes of mineralized material were processed at the
Island Gold mill during the quarter. For the nine months ended
124,152 tonnes were processed.
- During the quarter 3,087 metres of underground diamond
drilling was completed in zones that have demonstrated strong
potential to confirm the mineralization model and increase mineral
resources. For the nine months ended September 30, 2007, 10,079
metres of underground diamond drilling was completed.
- Underground development of 989 metres was completed during the
quarter for a total of 3,335 meters for the first nine months of
the year.
As of May 2007, the Island Gold Mine Proven and Probable
Reserves have been assessed at 1,013,854 tonnes of ore at an
average diluted grade of 8.55 grams per tonne, for a total of
278,711 ounces of gold at the project, representing more than four
years production. In addition to the reserves, a total of 454,705
tonnes at an average grade of 10.26 g/t or 149,972 ounces of gold,
were categorized as Measured and Indicated Resources, while
Inferred Resources were evaluated at 610,728 tonnes at a grade of
9.96 g/t, or 195,549 ounces of gold. The results of the reserve
calculation were completed by the independent firm Genivar and a
technical report prepared according to the requirements of
Regulation 43-101 was filed on SEDAR on May 25, 2007. Reserve
tonnage has been reduced by mining since the release of the Reserve
report.
Results of Operations
The Island Gold Joint Venture was formed in November 2005 and,
as such, is responsible for all costs related to the Island Gold
Project. There were limited exploration and development
expenditures incurred directly by Patricia at the Island Gold
property for the quarter ended September 30, 2007. In total the
Company invested $236,650 net of gold sales for the quarter and a
total of $1,049,580 net of gold sales for the nine months ended
September 30, 2007 to continue the development work at the Island
Gold site.
The Company reported no revenues for the quarter ended September
30, 2007. For the quarter ended September 30, 2007, the Company had
a loss before taxes of $138,591 as compared to a loss of $161,969
for the same period in the prior year.
Under the provisions of the Island Gold Project Operating and
Joint Venture Agreement, the Company has entered into a loan
agreement with Richmont Mines. The Company has a loan facility of
up to $4,500,000 for the purposes of financing the Company's
proportionate share of development expenditures relating to the
Island Gold Project. As at December 31, 2006 $4,500,000 of the
facility had been drawn down to fund project expenditures. The loan
bears interest at prime plus 3% and is secured by the Company's
interest in the Island Gold Project. Repayment is required in 36
equal monthly instalments commencing April 1, 2007. As at September
30, 2007 the loan balance was $3,750,000. The loan can be repaid at
any time without penalty. In the event of default, the Company's
participating interest in the Island Gold Joint Venture could be
reduced by 1% for each $166,666 owing. Management believes that
sufficient cash flow from the Company's interest in the Island Gold
Project will be achieved to service this debt obligation.
In 2006, the Company also completed a $2,000,000 non brokered
private placement debenture which resulted in gross proceeds of
$1,960,000 to the Company. The debenture bears interest at 7% and
was due on July 1, 2007. Additional details of this financing are
contained in Note 6 to the unaudited financial statements of the
Company for the six months ended September 30, 2007. This debenture
was not repaid on July 1, 2007 and is in default. The debenture is
due and payable on demand. Interest on the debenture after default
is 14% per annum.
Subsequent to the quarter end, the holder of the $2,000,000
debenture which came due on July 1, 2007 has agreed to convert the
debenture into 3,846,154 units. In lieu of interest, an additional
536,250 units will be issued. Each unit will be priced at $0.52 and
is comprised of one common share and one half of a share purchase
warrant. Each whole share purchase warrant entitles the holder to
acquire one common share at an exercise price of $0.75. The
warrants will expire one year after the date of closing. The
conversion of the debenture is subject to regulatory approval.
In the second quarter, the Company completed a $1,000,000
non-brokered private placement debenture financing with a private
individual. The debenture was issued at 97.5% of face value which
delivered $975,000 to the Company. The debenture yields 9% and is
due on June 1, 2008. The holder of the debenture received 500,000
common share purchase warrants exercisable at $0.85 on or before
July 1, 2008. In the event of default, the debenture is due and
payable on demand and interest on the debenture after default is
14% per annum.
National Instrument 43-101 - The reserve and resource
calculation for the Island Gold property as of May 15, 2007 was
performed by GENIVAR for Richmont Mines Inc. as operator of the
project. Mr. Michel Garon, Eng., of GENIVAR, is the qualified
person under the terms of NI43-101.
This release was prepared by management of the Company who takes
full responsibility for its contents.
Some statements contained in this release are forward-looking
and, therefore, involve uncertainties or risks that could cause
actual results to differ materially. Such forward-looking
statements include comments regarding mining and milling
operations, mineral resource statements and exploration program
performance. Factors that could cause actual results to differ
materially include metal price volatility, economic and political
events affecting metal supply and demand, fluctuations in
mineralization grade, geological, technical, mining or processing
problems, exploration programs and future results of exploration
programs at the Island Gold Project, future profitability and
production.
The securities referred to herein have not been registered under
the US Securities Act of 1933 and may not be offered or sold in the
United States or to a US person absent registration or an
applicable exemption from registration.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this news
release.
Contacts: Patricia Mining Corp. Christopher R Chadder C.A.
President & CEO (416) 214-4900 Patricia Mining Corp. Richard H.
Sutcliffe, Ph.D, P. Geo. Chairman (416) 214-4900 (416) 864-0620
(FAX) Patricia Mining Corp. Mr. Gus Garisto Investor Relations
(416) 805-3106 Email: info@patriciamining.com Website:
www.patriciamining.com
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