The Mission Group Regulatory News (TMG)

31 Mar 2006 18:30

Thistle Mining Inc.31 March 2006 THISTLE MINING INC Toronto, March 31, 2006. Annual Results for the year ended December 31, 2005 Thistle Mining Inc. (the "Company") (AIM:TMG) wishes to announce that theCompany's Audited Consolidated Financial Statements and Managements Discussionand Analysis for the year ended December 31, 2005 will be filed on SEDAR today .All dollar references are in US $. A copy of the Company's 2005 Annual reportcan be obtained from the Company's website: www.thistlemining.com. The financial information in this announcement has been extracted from but doesnot constitute full statutory accounts. The Annual Report and FinancialStatements for the year ended December 31, 2005 will be sent to shareholdersshortly. 2005 Annual Results - Highlights Q4 2005 Q4 2004 H1 2005 H2 2005 2004 Fresh Pre Fresh Pre Fresh Fresh Pre Fresh Start Start Start Start StartSales ($ Millions) 20.3 18.9 37.5 42.6 65.9 Netearnings/(loss) (6.7) 8.7 (14.4) (16.7) (56.5)($ millions) Earnings /(loss) Pershare ($) (0.15) 3.76 (6.23) (0.36) (28.47) Cash from /(used in)operations ($ millions) (4.1) (5.3) (5.7) (16.0) (35.3) Gold sold(000s ozs) 41 39 90 85 165 Cash costs($/oz) (1) 499 668 508 482 566 Total costs($/oz) (2) 595 1,042 564 572 698 • Cash flow used in operations was $16 million in the first half of 2005 and $5.7 million in the second half (post fresh start accounting), compared to $35.3 million in 2004. The improvement of 2005 relative to 2004 reflects an increase in sales and an 8% reduction in unit costs. • Investment in property, plant and equipment, as well as additions to mining properties, increased in the second half of the year (post fresh start accounting) relative to the first half, and in 2005 relative to 2004. Total funds invested amounted to $4.5 million in the first half of 2005, $7.3 million in the second half of 2005, and $4.9 million in 2004. In 2005, $5.8 million was invested at President Steyn Gold Mines ("PSGM") and $4.3 million was invested in the Company's Philippine project. • Following the improvement in operational cash flow and despite an increase in investments, financing raised was less in 2005 than in 2004. Casten Holdings Limited ("Casten") and MC Resources Limited ("MC") advanced approximately $21.8 million in short-term funding for the period January 7, 2005, to June 30, 2005, and advanced a further $12.6 million to the Company for the period July 1, 2005, to December 31, 2005. Financing activities during 2004 amounted to $39 million by way of common shares and warrants placed. • The consolidated net loss in accordance with Canadian GAAP for 2005 was $14.4 million, or $6.23 per share (3) , in the first half of 2005, and $16.7 million, or $0.36 per share (3), in the second half (post fresh start accounting), compared to $56.5 million, or $28.47 per share (3) , in 2004. Included in the loss for the second half of 2005 are adjustments of $5.6 million relating mainly to impairment of South African assets. • PSGM's gold sold in 2005 was 174,490 ounces, an increase of 6% compared to 2004. • Compared to the prior year, PSGM's share of unit cash 1 and total costs decreased by 8% and 17% to $521 and $578 per ounce of gold, respectively. The decrease in cash costs per ounce occurred despite a marginal appreciation of the South African rand against the U.S. dollar and higher input labour and commodity costs. The cost of sales for 2005 includes a once-off adjustment of $2.8 million, or $18 per oz, relating mainly to the Section 189 Restructuring cost. • The Company realized an average price of $443 per ounce of gold in 2005, slightly lower than the average spot price of $445 during the year. This is approximately $33 per ounce higher than that realized in 2004 before hedging activities. • The focus on quality of mining as opposed to emphasis on volume has resulted in an increase in yields over the year. The yield for 2005 averaged 5.43 g/tonne compared to 4.56 g/tonne for 2004. For the first, second, third and fourth quarters of 2005, the yield was 5.28, 4.93, 5.86 and 5.56 g/tonne respectively. • PSGM's proven and probable mineral reserves at December 31, 2005, were 26 % greater than stated reserves at October 25, 2005. PSGM's estimated proven and probable mineral reserves as at December 31, 2005 were 2.27 million ounces of gold. Additions were primarily due to the discovery of the "B' reef channel at PSGM's No. 3 shaft. The estimates of mineral reserves and resources are compliant with the Canadian Securities Regulators' National Instrument 43-101 ("NI 43-101") and conform to the Canadian Institute of Mining, Metallurgy and Petroleum definitions of those terms as at the date of estimation. For additional information relating to the mineral and resource estimates on PSGM, refer to the technical report titled "NI 43-101 Document for President Steyn Gold Mines Situated in the Witwatersrand Basin, Free State Goldfield, South Africa" dated March 30, 2006, which was prepared by Mr. Peter Camden-Smith, an independent qualified person for the purposes of NI 43-101, and is available to the public at www.sedar.com. At the Company's Masbate project, a NI 43-101, compliant mineral reserve and resource report is expected to be made public in May, 2006 when the Masbate feasibility study is finalized. The information in the Annual Report that relates to mineral reserves and resources has been approved for release by Mr. Peter Camden Smith. He has consented to the inclusion of the material in the form and context in which it appears. Fourth Quarter 2005 - Highlights • Revenue for the fourth quarter of 2005 was $20.3 million, an increase of 7% or $1.4 million over the comparative period in 2004. The increase reflects an increase in the gold price realized and higher ounces produced. • Cash flow used in operations for the three months ended December 31, 2005, was $4.1 million, compared with $5.3 million for the same period in 2004. The 23% decrease can be attributed to the increase in sales and reduction in cost of sales. • Despite the closure of No. 9 shaft, gold production in the fourth quarter of 2005 increased by 6% to 40,945 ounces from 38,564 ounces in 2004. Gold production in the fourth quarter of 2005 was adversely affected by problems associated with the redeployment of labour following the Section 189 Restructuring in October 2005. • Thistle's share of cash and total production costs per ounce for the fourth quarter of 2005 were $499 1 and $595 respectively, compared with $668 1 and $1,042 2 in 2004. The total production costs for the fourth quarter of 2004 include impairment adjustments which, together with depletion, depreciation and amortization, amount to $352 per ounce. The decrease in unit costs for 2005 relative to 2004 is due primarily to higher gold production and traction on cost-cutting initiatives, including the closure of unprofitable working places and shafts. • The average realized sales price in the fourth quarter of 2005 of $482 per ounce reflects an increase of $43 per ounce with the prior year period. The increase in the $ gold price has been augmented somewhat by a rand which has weakened from a 2004 fourth quarter average of ZAR/$ of 5.95 to ZAR/$ of 6.51. Outlook Thistle's gold production in 2006 is expected to total approximately 160,000ounces, approximately 9% below 2005 levels. Cash costs for gold are forecast tobe between $510 (1) and $540 per ounce, and total costs are expected to be inthe $540 to $575 per ounce range, assuming prevailing foreign exchange rates inthe ZAR 6.10 to 6.40 to the US $ range and no major production disruptions. Theforecast is, however, subject to uncertainty which could cause actual productionto differ materially. Major risks include failure of infrastructure, marketprices, seismic activity, fires and labour unrest. Capital expenditures at PSGM are anticipated to be approximately $7.3 million in2006. Major investments include $5.5 million in development and equipping.Should the Board of Directors approve the Golden Triangle project, currently infeasibility and scheduled to be completed in May 2006, it is estimated thatadditional capital of $5 to $10 million will need to be incurred in 2006 and2007. Exploration and project development expenditures at PSGM in 2006 areplanned to be approximately $0.4 million. In addition, upon completion of thefeasibility study and detailed design for the Masbate project, Thistle alsoplans to spend approximately $2.1 million on the project for the first half of2006. Expenditures on general and administrative items are forecast to beapproximately $3.1 million in 2006, comparable to the expenditure incurred in2005. Management's key business objective remains to restore the profitability ofPSGM. There are many projects aimed at achieving this objective. The recentdiscovery of a "B' reef channel estimated to contain approximately 1.47 milliontonnes at a projected head grade of 10.55 g/t to yield 480,000 ounces of provenreserves close to the Number 3 Shaft and the development of the Golden TriangleArea, augur well for the future. The "B" reef development, however, will beexpected to begin yielding meaningful results only in the second half of 2007. In the short-term, the outlook remains challenging, notwithstanding the highgold price realized. In the North division of PSGM, tonnage has been reducedfollowing problems encountered with the Big Bertha No. 1 and the decrease inprofitable mining face available for mining. Furthermore, the discovery ofpreviously mined-out horizons at the Big Bertha No. 2 area will significantlyreduce production potential from this area. The Big Bertha sections, exploit theEldorado reef series using bulk mining methods. Following a major fall of groundon February 18, 2006, production from the No. 1 incline shaft at an estimated 30kg's per month has been disrupted for a period of three months. In addition, thedecision to stop unprofitable production from the Number 1A Ventilation Shaft inFebruary 2006 has resulted in a further decrease in production by approximately15 kg per month. Liquidity and Capital Resources Although the Company is benefiting from a reduced and restructured cost base atPSGM as well as high gold prices, the Company still requires additionalfinancing to fund its capital needs at PSGM, fund working capital needs in thePhilippines, service its debt obligations and fund its corporate expenses. On March 28, 2006, each of Casten and MC entered into an agreement with Thistlewherein they have agreed subject to certain conditions to continue to assist theCompany by: • Deferring repayment of interest and principal due on loans advanced to the Company until April 1, 2007, • Providing a credit facility of up to $8.62 million and to defer repayment of these additional loans until April 1, 2007. In connection with this agreement, Thistle pledged its shares in Philippine GoldLimited, a wholly owned subsidiary of the Company incorporated in the UnitedKingdom, which has a 40% interest in Filminera Resource Company and a 100%interest in Philippine Gold Processing and Refining Corporation, both of whichare incorporated in the Philippines. Furthermore, the agreement provides that the commitments thereunder will be voidand of no force or effect when there occurs certain events listed in theagreement, including a material deterioration in the economic circumstancesapplicable to Thistle or any material adverse change in the business, assets,liabilities, condition (financial or otherwise) and prospects of Thistle or anyof its subsidiaries. Relisting on the TSX As of Feb 17, 2006, Thistle officially delisted itself off the Toronto StockExchange (the "TSX"). Many Canadian shareholders have expressed a desire to seethe Company relist on the TSX. The merits of a new placement or relisting willbe considered once the improvement in PSGM's performance has achieved tractionand if the attractiveness of the Masbate and the Golden Triangle projects havebeen confirmed through positive feasibility studies or should circumstanceschange to warrant a new placement or new placement.. Management now believes itis unlikely that a relisting will be undertaken during 2006. Thistles commonshares are currently trading on the Alternative Investment Market ("AIM") inLondon and Canadian shareholders may trade on AIM through a broker that is aparticipant in CREST. Annual Meeting The annual meeting of shareholders will be held on May 16, 2006 at 10:00 a.m.(Toronto time) in the Fraser and Beatty Rooms, Fraser Milner Casgrain LLP, 39thfloor, 1 First Canadian Place, 100 King Street West, Toronto, Ontario, Canada. This news release contains forward-looking statements with the meaning ofapplicable securities laws including amongst others, statements made or impliedunder the headings "2005 Annual Results - Highlights" , "Outlook", and"Relisting on the TSX" above relating to the Company's objectives, strategies toachieve these objectives, future cash flow and financing requirements, andsimilar statements concerning anticipated future events, results, circumstances,performance or expectations that are not historical facts. Such forward-lookingstatements reflect the Company's current beliefs and are based on informationcurrently available to management. These statements are not guarantees of futureperformance and are based on the Company's estimates and assumptions that aresubject to risk and uncertainties inherent in the business of the Companyincluding those discussed in the Company's materials filed with the Canadiansecurities regulatory authorities from time to time, which could cause theactual results and performance of the Company to differ materially from theforward-looking statements contained in this news release. Those risks anduncertainties include, among other things, risks related to: the mining industry(including operational risks in exploration development and production; delaysor changes in plans with respect to exploration or development projects orcapital expenditures; the uncertainties involved in the discovery anddelineation of mineral deposits, resources or reserves; the uncertainty ofmineral resource and mineral reserve estimates and the ability to economicallyexploit mineral resources and mineral reserves; the uncertainty of estimates andprojections in relation to production, costs and expenses; the uncertaintysurrounding the ability of the Company to obtain all permits, consents andauthorizations required for its operations and activities; competition for theacquisition, exploration and development of mineral interests; and health andsafety and environmental risks), the risk of gold and other commodity price andforeign exchange rate fluctuations; the ability of the Company to fund thecapital and operating expenses necessary to achieve the business objectives ofthe Company; the uncertainty associated with commercial negotiations andnegotiating with foreign governments; the risks associated with internationalbusiness activities; the dependence on key personnel; the ability to accesscapital markets; the indebtedness of the Company; and labour relations matters.Material factors or assumptions that were applied in drawing a conclusion ormaking an estimate set out in the forward-looking statements include that thegeneral economy remains stable, the demand and price of gold continues toincrease and the Rand remains strong against the US$. It is also assumed thatthere will be no major disruptions in production including failure ofinfrastructure, seismic activity, underground fires and labour unrest. TheCompany cautions that this list of factors is not exhaustive. Although theforward-looking statements contained in this news release are based upon whatthe Company believes are reasonable assumptions, there can be no assurance thatactual results will be consistent with these forward-looking statements. Allforward-looking statements in this news release are qualified by thesecautionary statements. These forward-looking statements are made as of the datehereof and the Company, except as required by applicable law, assumes noobligation to update or revise them to reflect new information or the occurrenceof future events or circumstances. For further information, contact: Andy Graetz, Chief Financial Officer + 27 57 391 9114 or email toagraetz@disselgroup.com -------------------------- (1) The net loss per share - basic and diluted (both before and afterdiscontinued operations) for periods prior to 30 June 2005 has been adjusted inrespect of the consolidation of 200 shares for 1 on 30 June 2005. (2) The cost of sales per ounce in the 4th quarter of 2004 includes significantimpairment adjustments which, together with depletion, depreciation andamortisation, amounts to $352 per ounce. (3) The net loss per share - basic and diluted (both before and afterdiscontinued operations) for periods prior to 30 June 2005 has been adjusted in respect of the consolidation of 200 shares for 1 on 30 June 2005. This information is provided by RNS The company news service from the London Stock Exchange