Peru Copper reports first quarter financial results
12 Mai 2006 - 9:06PM
PR Newswire (US)
VANCOUVER, May 12 /PRNewswire-FirstCall/ -- Peru Copper Inc.
(TSX:PCR / AMEX:CUP / BVL: CUP) ("Peru Copper" or the "Company")
today filed its financial results for the three months ended March
31, 2006. Peru Copper is involved in the acquisition and
exploration of potentially mineable deposits of copper in Peru. On
June 11, 2003, Peru Copper entered into the Toromocho Option
Agreement ("Toromocho Option") with Empresa Minera del Centro del
Peru S.A. ("Centromin"), a Peruvian state-owned mining company,
whereby Centromin granted the Company the option to acquire its
interest in the mining concessions and related assets of the
Toromocho Project. Financial Results The Company prepares its
financial statements in accordance with accounting policies and
practices generally accepted in Canada ("Canadian GAAP") and in
U.S. dollars. For the first quarter of 2006, the Company recorded a
loss of $1.0 million as compared to a loss of $0.7 million for the
same period in 2005. Peru Copper's administration expenses
increased to $1.3 million for the first quarter of 2006, up from
$1.0 million for the same period in the 2005 year, primarily as a
result of increased stock-based compensation and increased
accounting and legal costs. Peru Copper expenses all costs not
directly related to its exploration and drilling efforts at the
Toromocho Project. The Company capitalizes all stock-based
compensation of the vesting of options to employees and consultants
that work directly on the Toromocho Project. All other stock-based
compensation is expensed. In the current period, stock-based
compensation of $0.5 million was expensed in respect to the vesting
of options to directors, officers, employees and consultants,
compared to $0.4 million in 2005. Professional fees increased to
$0.4 million in the current quarter, up from $0.2 million in 2005
primarily due to the costs associated with meeting filing
obligations in Canada as well as the United States, including F-1
amendments and internal control documentation in preparation of SOX
404 compliance. Additionally, the total administrative expenses
were offset by $0.3 million of interest earned on cash balances.
The Company maintains its cash and short-term, low risk investments
in institutions with high credit worthiness. All of the Company's
$3.1 million of exploration expenses during the first quarter of
2006 have been capitalized under Canadian GAAP as exploration
properties and all administration expenses of the Company have been
expensed. Included in the $3.1 million are: $0.4 million for
drilling; salaries and consulting of $1.0 million; supplies and
general of $0.8 million; value added tax of $0.3 million; assays
and sampling of $0.1 million; stock-based compensation of $0.1
million; acquisition and lease of $0.3 million and other costs of
$0.2 million. The Company has 57 employees and several consultants
working on the Toromocho Project. Cash flows from operating
activities in the period ended March 31, 2006 was $1.6 million as
compared to cash flow used in operating activities of $0.5 million
for the period ended March 31, 2005. The increase in cash from
operating activities relates to the accruals of $1.8 million
related to the acquisition of loans of Sociedad Minera Austria
Duvaz S.A.C. ("Austria Duvaz"). Cash used in investing activities
in the period ended March 31, 2006 was $5.4 million as compared to
$3.1 million in the period ended March 31, 2005. The cash used for
the current quarter was substantially all for capitalized
expenditures on the Toromocho Project. In addition to cash invested
in the Toromocho Project, the Company invested $0.5 million for a
deposit on an option agreement and an additional $1.8 million for
the acquisition of loans. Cash from financing activities in the
period ended March 31, 2006 was comprised of $40.4 million from the
exercise of 20,268,100 warrants, broker warrants and agent options.
Exploration and Development Program On January 4, 2006, the Company
announced that effective January 16, 2006, its shares will be
traded on the venture capital segment of the Lima Stock Exchange
(Bolsa de Valores de Lima). On February 9, 2006, the Company
announced the completion of its pre- feasibility study on the
Toromocho Project. At an estimated average annual production rate
of 272,788 tonnes of copper and 5,387 tonnes of molybdenum, the
pre-feasibility study estimates a Net Present Value (NPV) of US$814
million from commencement of construction and an after-tax Internal
Rate of Return (IRR) of 16.0%. Base assumptions include a copper
price of $1.10/lb.; a molybdenum price of $10.00/lb.; a silver
price of $6.50/oz.; a discount rate of 8%; capital costs of $1.524
billion; and a daily production rate of 150,000 tonnes per day of
mill ore to the primary crushers. On March 17, 2006, the Company
signed an option agreement, which will give it an option to acquire
the Morococha mining concessions, surface areas and assets of
Austria Duvaz, a privately held Peruvian mining company. PCI has
paid $500,000 and may pay an additional $500,000 for a six-month
option period during which a due diligence review will be made of
the Austria Duvaz assets and liabilities. This second $500,000 is
to be paid, provided that Austria Duvaz fulfills certain conditions
during the due diligence review period. After the due diligence
period, the Company will have the right, but not the obligation, to
sign another option agreement to purchase all of the Austria Duvaz
assets within a period of up to five years. On March 27, 2006, the
Company filed an updated Technical Report based on the results of
the recent pre-feasibility study for the Company's Toromocho
Project. The technical report was prepared by Independent Mining
Consultants Inc. ("IMC") of Tucson, Arizona. Changes in the
Technical Report result in an increase in the estimated Net Present
Value ("NPV") of the Company's Toromocho Project from US$814
million to US$922 million and increase in the estimated Internal
Rate of Return ("IRR") from 16.0% to 16.7% (both on an after tax
basis) when compared to the NPV and IRR reflected in the
pre-feasibility study. Based upon the updated Technical Report, the
Toromocho Project now has 1.375 billion tonnes of proven and
probable reserves at an average copper equivalent of 0.71% and an
additional 601 million tonnes as measured and indicated resource at
an average copper equivalent of 0.57%. The study also reported 151
million tonnes of inferred mineralized material at an average
copper equivalent of 0.61%. Toromocho is now estimated to have 22
billion pounds of contained copper and 791 million pounds of
molybdenum. During the first quarter of 2006, the Company received
cash proceeds of $40.4 million on the exercise of 20,113,100 common
share purchase warrants and 155,000 share purchase options. Peru
Copper is committed to developing Toromocho on a fast track basis.
However, the Company also recognizes that it may be of more value
for a major company to develop, or assist in developing the
Toromocho Project. Consequently, Peru Copper has retained UBS
Investment Bank as its financial advisor to review strategic
alternatives and has contacted a number of parties that have
expressed an interest in exploring alternatives with the Company.
The pre-feasibility study identifies several "pre-investment"
activities, which are required prior to proceeding to the
construction phase of project implementation. A full feasibility
study will commence to confirm and further refine key assumptions,
conclusions, and recommendations from the pre- feasibility study
including further metallurgical testing to confirm process
parameters. For further information please contact: Patrick De
Witt, Director of Investor Relations at (604) 689-0234 or .
Cautionary Note to U.S. Investors--The United States Securities and
Exchange Commission permits U.S. mining companies, in their filings
with the SEC, to disclose only those mineral deposits that a
company can economically and legally extract or produce. We use
certain terms in this press release, such as "mineral deposit",
that the SEC guidelines strictly prohibit U.S. registered companies
from including in their filings with the SEC. U.S. Investors are
urged to consider closely the disclosure in our Form F-1
Registration Statement, File No. 333-121527, which may be secured
from us, or from the SEC's website at
http://www.sec.gov/edgar.shtml. Forward-Looking Statements:
Statements in this release that are forward-looking statements are
subject to various risks and uncertainties concerning the specific
factors identified in the Peru Copper Inc. periodic filings with
Canadian Securities Regulators. Such forward-looking information
represents management's best judgment based on information
currently available. No forward-looking statement can be guaranteed
and actual future results may vary materially. Peru Copper does not
assume the obligation to update any forward-looking statement. Safe
Harbor Statement under the United States Private Securities
Litigation Reform Act of 1995: Except for the statements of
historical fact contained herein, the information presented
constitutes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements, including but not limited to those with
respect to the price of copper, the timing of completion of
exploration activities and the determination and amount of
estimated mineral resources involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievement of Peru Copper Inc. to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such
factors include, among others, risks related to the exploration and
potential development of the properties owned by the company, risks
related to international operations, the actual results of current
exploration activities, conclusions of economic evaluations,
changes in project parameters as plans continue to be refined,
future prices of copper, silver, molybdenum and gold, as well as
those factors discussed in the section entitled "Risk Factors" in
the Form F-1 as on file with the Securities and Exchange Commission
in Washington, D.C. Although Peru Copper Inc. has attempted to
identify important factors that could cause actual results to
differ materially, there may be other factors that cause results
not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. DATASOURCE:
Peru Copper Inc. CONTACT: Patrick De Witt, Director of Investor
Relations at (604) 689-0234 or .
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