Chile Mining Technologies, Inc. (OTCBB: LVEN) (“CMT”), today provided the following business update for the first quarter of fiscal 2011, ended June 30, 2010.
While CMT saw significant progress toward its overall business plan during the first quarter of fiscal 2011, the company also addressed several short term challenges. First, CMT management, recognizing additional opportunities with the Ana Maria plant, chose to take the facility off-line in May 2010 in order to increase the facility’s overall capacity by 50%. Management determined that the available supply of minerals at the Ana Maria plant (including deliveries from third parties) was sufficient to provide greater long-term benefits from the added capacity than the short-term challenges of taking the facility off-line. The upgrades took approximately 3 months and cost approximately $800,000. The facility has now resumed production and the first batch of copper is expected in early September 2010.
The Company determined that taking the facility off-line while still ramping its production would result in significantly less lost revenue than had it taken the plant off line toward the end of its current fiscal year. The upgrades increased monthly output capacity from 120 metric tons per month to 180 metric tons per month. Assuming a copper price of $3.25 per pound, the spot price of copper on the London Metal Exchange on August 24, 2010, the added capacity alone would result in approximately $430,000 of additional revenue per month. Therefore, due to the additional opportunity, management determined the long-term benefits of the added capacity outweighed the short-term disadvantages of taking the plant off-line.
During the Company’s fiscal quarter ended June 30, 2010, in accordance with generally accepted accounting principles in the U.S., approximately $500,000 of the transaction costs associated with the reverse merger and private placement transactions that were consummated on May 12, 2010, were expensed during the quarter. These one-time expenses are not expected to have a material effect on future profitability.
There were many additional positives during the fiscal first quarter. Management has been working with ENAMI, the state-run mineral company in Chile designated to support the Chilean mining industry, to amend the contractual relationship between CMT and ENAMI to extend more flexible terms to CMT and potential support for the Company’s operations. In addition, the Company has retained a US based Vice President, Gerry Pascale, an expert at guiding emerging companies through the process of operating as a publicly traded US company, who will assist the Company by providing financial management expertise and advisory services. The Company has also elected Bill Thomson to serve as a member of its Board of Directors and appointed him to serve as its Audit Committee Chairman. Mr. Thomson is a seasoned professional with a long history of experience as a CPA, financial executive and Audit Committee Chairman of publicly traded companies, including Canadian companies. The Company continues to make progress toward its Canadian listing, and is working closely with its legal and financial advisors, and the TSX toward this goal.
As discussed, the Ana Maria plant has resumed production and is ramping up its production levels. Management expects the plant to be operating at full capacity by December 2010. In addition, construction is 65% complete on the Company’s second plant, Filomena. This facility is expected to begin production by November 2010 and the Company anticipates that it will be operating at full capacity by January 2011. At present, Management expects the Company to be cash flow positive by December 2010.
About Chile Mining Technologies, Inc.
Chile Mining Technologies, Inc. (OTCBB: LVEN) (“CMT”) is a mineral extraction company based in the Republic of Chile, with copper as its principal “pay metal.” The Company has refined the electrowin process in a way that permits it to be used at relatively small mine and/or tailings sites. By utilizing Minimum Intrusion Non-traditional Input plants (“MINI plants”), CMT is able to build scalable, less expensive plants closer to source material deposits, and operate where it is not economical for larger open-pit mining companies to operate. As a result, CMT is able to reduce costs and operate profitably with smaller deposits. Since starting construction in the fall of 2008, CMT has successfully completed its first scalable MINI plant, designated as the Ana Maria plant, located about 30 kilometers northeast of the town of Illapel, in the mining district of Matancilla.
This press release contains statements that are forward-looking in nature, including statements regarding the Company's results of operations. These statements are based on current expectations on the date of this press release and involve a number of risks and uncertainties, which may cause actual results to differ significantly from such estimates. The risks include, but are not limited to, market demand for copper; market competition; dependence on strategic partners; and the Company's ability to manage its business effectively. Certain of these and other risks are set forth in more detail in the Company’s current report on Form 8-K filed on May 14, 2010, and other filings with the Securities and Exchange Commission. The Company does not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.
Gerry Pascale, 703-798-6296
Vice President, US Representative
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