TORONTO, ONTARIO--(CCNMatthews - Aug. 8, 2006) - Metallica Resources Inc. (TSX:MR)(AMEX:MRB) is pleased to report its second quarter financial results. All figures are in United States dollars unless otherwise noted. Complete quarterly results are available on SEDAR, EDGAR and on the Company's website at www.metal-res.com.
Selected Financial Data
(unaudited)
Three Three
Months Months Six Months Six Months
Ended June Ended June Ended June Ended June
30, 2006 30, 2005 30, 2006 30, 2005
Net income
(loss) $ 9,199 $ (993,277) $ (357,806) $ (1,720,173)
Basic and
diluted net
income (loss)
per share 0.00 (0.01) (0.00) (0.02)
Cash flows
used in
operating
activities (662,774) (623,561) (963,835) (439,330)
Cash flows
used in
investing
activities (5,840,783) (1,674,207) (9,863,244) (3,216,707)
Cash flows
from
financing
activities 327,241 129,899 821,549 136,756
Effect of
exchange rate
changes on
cash
and cash
equivalents 759,131 (320,809) 705,486 (683,020)
---------------- ------------ ------------ -----------
Decrease in
cash and cash
equivalents $ (5,417,185) $(2,488,678) $(9,300,044) $ (4,202,301)
---------------- ------------ ------------ -----------
---------------- ------------ ------------ -----------
June 30, December 31,
2006 2005
Current
assets:
Cash $ 33,369,786 $ 42,669,830
Value-
added
tax and
other
current
assets 2,008,424 969,947
---------------- -----------
Total
current
assets 35,378,210 43,639,777
Mineral
properties,
plant and
equipment 69,069,891 56,033,836
Other assets 276,795 246,271
---------------- -----------
Total assets $ 104,724,896 $ 99,919,884
---------------- -----------
---------------- -----------
Current
liabilities:
Accounts
payable and
accrued
liabilities $ 4,761,487 $ 1,323,571
Restricted
stock units 229,918 59,435
Asset
retirement
obligation 477,143 343,164
---------------- -----------
Total
liabilities 5,468,548 1,726,170
Shareholders'
equity:
Share
capital 109,265,373 108,158,077
Contributed
surplus 1,484,554 1,484,554
Warrants 5,883,108 5,889,285
Stock options 1,750,335 1,431,014
Deficit (19,127,022) (18,769,216)
---------------- -----------
Total
shareholders'
equity 99,256,348 98,193,714
---------------- -----------
Total
liabilities
and
shareholders'
equity $ 104,724,896 $ 99,919,884
---------------- -----------
---------------- -----------
The Company is in the development stage with the majority of its expenditures being made on the Cerro San Pedro gold and silver project, all of which have been capitalized. The Company does not have any revenue from operations. Financial results of operations primarily consist of interest income, general and administrative expenses, exploration expenses, foreign exchange gains and losses, and other non-cash expenses.
The Company reported net income of $0.01 million ($0.00 per share) for the three months ended June 30, 2006 as compared to a loss of $0.99 million ($0.01 per share) for the three months ended June 30, 2005. The increase in net income of $1.00 million in the current period was primarily due to a $1.54 million increase in foreign exchange gains on cash balances held in Canadian dollars.
The Company reported a loss of $0.36 million ($0.00 per share) for the six months ended June 30, 2006 as compared to a loss of $1.72 million ($0.02 per share) for the six months ended June 30, 2005. The decrease in loss of $1.36 million in the current period primarily resulted from a $1.85 million increase in foreign exchange gains on cash balances held in Canadian dollars.
The Company's cash and cash equivalents decreased by $5.42 million for the three months ended June 30, 2006 as compared to a decrease in cash and cash equivalents of $2.49 million for the three months ended June 30, 2005. The $2.93 million increase in 2006 cash outflows is primarily due to an increase in cash expenditures on construction activities at the Cerro San Pedro project in the current period totaling $4.08 million, which was partially offset by an increase in unrealized foreign exchange gains on Canadian dollar cash balances in the current period totaling $1.08 million.
The Company's cash and cash equivalents decreased by $9.30 million for the six months ended June 30, 2006 as compared to a decrease in cash and cash equivalents of $4.20 million for the six months ended June 30, 2005. The $5.10 million increase in 2006 cash outflows principally results from an increase in payments for construction activities at the Cerro San Pedro project totaling $7.06 million due to commencement of project construction in February 2006. Expenditures on the Cerro San Pedro project were partially offset by an increase in unrealized foreign exchange gains on Canadian dollar cash balances in the current period totaling $1.39 million, and an increase in proceeds from the exercise of stock options in the current period totaling $0.63 million.
The Company had working capital of $30.62 million at June 30, 2006 as compared to working capital of $42.32 million at December 31, 2005. The $11.70 million decrease in working capital primarily results from accrual basis additions totaling $13.04 million to mineral properties, plant and equipment on the Company's exploration and development projects, principally the Cerro San Pedro project.
The Company held Canadian dollar cash and cash equivalents totaling Cdn$22.89 million at June 30, 2006.
Year to date activities at the Cerro San Pedro project include construction on the leach pad, solution ponds, haul road tunnel, process plant foundation and pre-stripping in the pit area. It is anticipated that construction of the process plant and related project facilities will be completed by the end of 2006. The Company awaits the court's ruling regarding the legal action brought against Secretaria de Defensa National ("SEDENA") that prohibits the Company's use of explosives on land owned by Ejido Cerro de San Pedro, which includes the mine haul road and pit area. This legal action is substantially the same as an earlier lawsuit that was resolved in favor of SEDENA in early 2006. The restriction has resulted in a delay in the Company's ability to produce ore from the mine area.
At the La Fortuna deposit area of the El Morro project, Falconbridge has completed a 75-hole, 27,691 meter drilling program, and is working on a 1,150 meter decline. Falconbridge has informed the Company that it intends to complete a prefeasibility study for the La Fortuna deposit by the end of 2006. The cost of the prefeasibility study, including the drilling program and decline, is estimated by Falconbridge to be $40 million, all of which will be borne by Falconbridge.
Metallica Resources is a Canadian precious and base metal exploration and development company focused on the Americas with approximately 84.1 million shares outstanding. For further details on Metallica Resources, please visit the Company's website at www.metal-res.com
ON BEHALF OF THE BOARD OF DIRECTORS
Richard J. Hall
President and CEO
Information in this news release that is not current or historical factual information may constitute forward-looking information or statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Implicit in this information, particularly in respect of statements as to future operating results and economic performance of the Company, and resources and reserves at the Company's mineral projects, are assumptions regarding projected revenue and expense, gold, silver and copper prices, and mining costs. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including risks relating to general economic conditions and mining operations, and could differ materially from what is currently expected. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Metallica Resources Inc.
Richard J. Hall
President and CEO
(303) 796-0229, Ext. 304
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