CEGMF Cerro Grande Mining Corporation (PK)

TORONTO, Aug. 15, 2013 /PRNewswire/ - Cerro Grande Mining Corporation
(the "Company" or "CEG") (TSX: CEG) (OTCQX: CEGMF) announced today its
interim unaudited consolidated Financial Statements and Management
Discussion and Analysis for the 3 months fiscal quarter ended June 30,
2013 compared to the same quarter a year ago and its results for the
nine months fiscal period ended June 30, 2013 compared to the nine
month period ended June 30, 2012 a year ago and have been filed on
SEDAR. The Company refers the reader to those materials for additional
information.

The table below shows the summary of unaudited results of the
consolidated profit and loss statements for three and nine fiscal month
periods ended June 30, 2013 and 2012.

(Expressed in thousands of US dollars except per share amounts)

1. 
   
   
2. 
   Consolidated statements of (loss) income and other comprehensive (loss)
   income for the three fiscal month period ended June 30, 2013 and 2012:
   (Expressed in thousands of US dollars)
   
   
   
   
   a) Revenue for the three month period ended June 30, 2013 decreased over
   the same period in 2012 due to a decrease in gold sales to 1,590 oz
   compared to 3,997 oz in the three month period ended June 30, 2012.
   This, in combination with a drop in the gold price to an average
   closing price on the LME of $1,414 for the quarter ended June 30, 2013
   (2012-$1,611).
   
   
   
   
   b) Operating expenses for the three months ended June 30, 2013 were
   $4,384 compared to $6,460 for the same period in 2012. The decrease of
   $2,076 consists of decreased direct costs of $353; labor cost of $132;
   net smelter return of $285; indirect costs of $199, of which $57
   related to mine insurance and $103 related to a measurement and
   monitoring program. In addition depreciation and amortization decreased
   by $70, refining and metallurgical charges decreased by $39, inventory
   variation decreased by $907 and expansion costs decreased by $91. Costs
   from services provided by Pimenton to CDM including management,
   machinery and equipment rent was $8 (2012 - $932).
   
   
   
   
   c) General and administrative costs for the three months ended June 30,
   2013 were $1,206 compared to $950 for the same period in 2012. This
   $256 increase was due to an increase of $305 in stock based
   compensation; an increase in professional fees of $32; an increase in
   insurance and other expenses of $33. This was offset by a reduction in
   salaries of $67 and a reduction in overhead expenses of $47.
   
   
   
   
   d) The Company expenses its exploration costs on properties until a NI
   43 -101 compliant resource has been established on a property. As a
   result during the three month period ended June 30, 2013, the Company
   expensed $96 (2012 - $2,008) of exploration costs as follows: La Bella
   $nil (2012 - $45); Bandurrias $5 (2012 - $13); Santa Cecilia $263 (2012
   - $1,864); Tordillo $75 (2012- $nil); Catedral $16 (2012 - $14) and
   other $71 (2012 -$72).
   
   
   
   
   e) Impairment charges in mining properties, plant and equipment for the
   three month period ended June 30, 2013 were $2,140 (2012 - $nil). The
   decline in metal prices towards the latter half of the third quarter of
   2013 was an indicator of potential impairment. The Company performs
   impairment testing annually and when impairment indicators are present.
   Impairment testing is performed using value-in-use, which incorporates
   reasonable estimates of interest rates, metal prices, production based
   on current estimates of recoverable mineral reserves and mineral
   resources and future operating cost.
   
   
   
   
   f) Other gains and loss for the three months ended June 30, 2013 was a
   net gain of $865 and was principally from a conversion of the $1,568
   convertible unsecured debentures due on June 26, 2013 by the holders,
   Mr. David R.S. Thomson and Mr. Mario Hernandez both Executive Vice
   Presidents and directors of the Company, which were issued to them on
   November 15, 2012 and which were due to mature on November 15, 2017
   into 5,228,076 common shares at a conversion price $0.30 per share.
   These shares were valued at $375 using the TSX closing price of
   CA$0.075 on June 26, 2013 resulting in a gain of $1,252 of which $868
   was recorded as other income for the three months ended June 30, 2013
   and $384 was recorded as contributed surplus. Net losses for the three
   month period ended June 30, 2012 amounted to $55 and were principally
   from a reduction in the value of shares given to the miners of $47;
   labor fines, donations and other expenses of $8.
   
   
   
   
   Net income after taxes was a negative $4,148 for the three month period
   ended June 30, 2013. During the period, the Company had negative cash
   flow of $1,427 after an impairment charge of $2,140.
   
   
   
   
   Net income after taxes for the three month period ended 2012 was a
   negative $2,328. During the period, the Company had a negative cash
   flow of $1,688 after exploration expenses of $2,008.
   
   
   
   
   On a stand alone basis for the three month period ended June 30 2013,
   the Pimenton mine had net loss of $4,417. Depreciation and amortization
   amounted to $574. The Pimenton mine had a negative cash flow of $1,703
   for the three month period ended June 30, 2013. This compares to a
   positive cash flow of $762 in the comparable three month period ended
   June 30, 2012.
   
   
   
   
   Pimenton's cash cost per ounce of gold produced was $1,907 for the three
   month period ended June 30, 2013 compared to $910 in the same period a
   year ago.
   
   
   
   
   
   
   
   
   
   
   
   
3. 
   Consolidated statements of (loss) income and other comprehensive (loss)
   income for the fiscal nine month period ended June 30, 2013 and 2012:
   (Expressed in thousands of US dollars)
   
   
   
   
   a) Revenue for the nine month period ended June 30, 2013 decreased
   compared to the same period 2012 due to lower gold sales of 8,300 oz
   compared to 9,617 oz in the nine month period ended June 30, 2012. This
   combined with a drop in the gold price to an average closing price of
   gold on the LME of $1,588 for the nine ended June 30, 2013 (2012 -
   $1,662)
   
   
   
   
   b) Operating expenses for the nine months ended June 30, 2013 were
   $14,922 compared to $15,445 for the same period in 2012. The change of
   $523 consists of increased labor costs of $87; direct costs of $304;
   indirect costs of $60; depreciation and amortization of $145, refining
   and metallurgical charges of $7. This was offset by a reduction of net
   smelter return of $165; inventory variation of $833 and expansion costs
   and other costs of $128. Costs from services provided by Pimenton to
   CDM including management, machinery and equipment rent was $85 (2012 -
   $1,760).
   
   
   
   
   c) General and administrative costs for the nine months ended June 30,
   2013 were $2,970 compared to $2,408 for the same period in 2012. This
   $562 increase was due to an increase of $155 in salaries; an increase
   in listing fees $68; an increase in stock based compensation of $248;
   an increase in sale expense of $19; an increase in overhead expenses of
   $16, and an increase in patents, notary, licenses and office expenses
   of $111. This was offset by a reduction in professional fees of $55.
   
   
   
   
   d) The Company expenses its exploration costs on properties until a NI
   43 -101 compliant resource has been established on a property. As a
   result during the nine month period ended June 30, 2013, the Company
   expensed $1,105 (2012 - $3,021) of exploration costs as follows: La
   Bella $142 (2012 - $534); Bandurrias $27 (2012 - $31); Santa Cecilia
   $336 (2012 - $2,073); Tordillo $305 (2012- $67); Catedral $58 (2012 -
   $56); Cal Norte $5 (2012 - $5); and other $232 (2012 -$255).
   
   
   
   
   e) Impairment charges in mining properties, plant and equipment for the
   nine month period ended June 30, 2013 were $2,140 (2012 - $nil). The
   decline in metal prices towards the latter half of the third quarter of
   2013 was an indicator of potential impairment. The Company performs
   impairment testing annually and when impairment indicators are present.
   Impairment testing is performed using value-in-use, which incorporates
   reasonable estimates of interest rate, metal prices, production based
   on current estimated of recoverable mineral reserves and mineral
   resources, future operating cost.
   
   
   
   
   f) Other gains and losses for the three months ended June 30, 2013 were
   $821 and was principally from a conversion of the $1,568 convertible
   unsecured debenture due on June 26, 2013 by the holders, Mr. David R.S.
   Thomson and Mr. Mario Hernandez both Executive Vice Presidents and
   directors of the Company, which was issued to them in November 15, 2012
   and was due to mature on November 15, 2017 into 5,228,076 common shares
   at a conversion price $0.30 per share. These shares were valued at $375
   using the TSX closing price of CA$0.075 on June 26, 2013 resulting in a
   gain of $1,252 of which $868 was recorded as other income for the three
   months ended June 30, 2013 and $384 was recorded as contributed
   surplus. Other gains and losses were $97 in the nine months ended June
   30, 2012. The Company paid a labor fines, donations and other expenses
   of $65; a reduction in the value of labor shares of $47. This was
   offset by interest received of $15.
   
   
   
   
   Net income after taxes was a negative $5,342 for the nine month period
   ended June 30, 2013. During the period, the Company had a negative cash
   flow of $1,345 after exploration expenses of $1,105 and impairment
   charges of $2,140.
   
   
   
   
   Net income after taxes was a negative $3,280 for the nine month period
   ended 2012. During the period, the Company had negative cash flow of 
   $1,568 after exploration expenses of $3,021.
   
   
   
   
   On a stand alone basis for the nine month period ended June 30, 2013,
   the Pimenton mine had negative net earnings of $3,416. Depreciation and
   amortization amounted to $1,831. In total (net earning plus
   depreciation and amortization) the Pimenton mine had a positive cash
   flow of $555 for the nine month period ended June 30, 2013. This
   compares to a positive cash flow of $2,636 in the comparable nine month
   period ended June 30, 2012.
   
   
   
   
   Pimenton's cash cost per ounce of gold produced net of by product
   credits was $1,250 for the nine month period ended June 30, 2013
   compared to $1,042 in the same period a year ago.
   
   
   
   
   As of June 30, 2013, the Company shows a negative working capital of
   $2,942 (2012-$598). This reduction in working capital was principally
   due to a reduction in accounts receivable of $1,376 and an increase in
   payables to related parties consisted principally of cash advances of
   $2,818 provided by David Thomson and Mario Hernandez.
   
   
   
   
   The principal reasons for the poor results in the third quarter ended
   June 30, 2013, compared to the three months ended June 30, 2012, were a
   reduction in gold ounces produced, a lower head grade of ore into the
   mill and a reduction in the price of gold. We are working to improve
   the ore grades into the mill along with cost reductions in the entire
   organization. These cost reductions will not be completely recognized
   until the fourth quarter of our fiscal year ended September 30, 2013.
   
   
   
   
   Cerro Grande Mining Corporation is a minerals producing, exploration and
   development company with properties and activities currently focused in
   Chile.
   
   
   

Cautionary Statement on Forward-looking Information


This news release contains "forward-looking information", which may
include, but is not limited to, statements with respect to the future
financial or operating performance of CEG. Often, but not always,
forward-looking statements can be identified by the use of words such
as "plans", "expects", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "believes" or
variations (including negative variations) of such words and phrases,
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of CEG to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Forward-looking statements contained herein
are made as of the date of this press release based on current
expectations and beliefs and CEG disclaims, other than as required by
law, any obligation to update any forward-looking statements whether as
a result of new information, results, future events, circumstances, or
if management's estimates or opinions should change, or otherwise.
There can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, the
reader is cautioned not to place undue reliance on forward-looking
statements. 

SOURCE Cerro Grande Mining Corporation