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Thu Jan 12, 2012
Palladon Ventures - CML Update
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Palladon Ventures Ltd. ("Palladon" or the
"Company") (TSX-V: PLL.V) announces the
following update from Dale Gilbert, CEO of CML
Holdings Inc.
CML Holdings Shareholder Update
Dear Shareholder,
I am pleased to provide the following shareholder
update regarding CML's construction of the
concentrate plant, 2011 performance and additional
2012 operational guidance.
2011 was a great year of accomplishments for CML as
the company completed many important steps to
advance its plan to produce iron ore concentrate at
its Iron Mountain facility. In 2011 we were pleased
to have achieved the following:
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Successfully began shipments of run of mine ore
to multiple west coast ports
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Secured multiple offtake partners and
agreements
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Secured rail capacity and fleet of railcars
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Ramped up ocean shipments of CML ore to China
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Raised $91 million in financing in total,
including $46 million of equity and $45 million
of debt
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Proved out greater than 2 million tons of
annualized transportation logistics
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Achieved revenue in excess of $120 million
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Opened new corporate facility in Cedar City,
Utah
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On track to complete 2 million ton capacity
concentrate facility on-time and on-budget
Concentrate Plant Construction
CML is now near completion of the construction of
its two million ton per year concentrate facility.
I am pleased to announce the project is expected to
be completed on-time and on-budget, an
accomplishment attributable to our team at CML, our
superb engineering team at Samuel Engineering and
the tireless efforts of each of our vendors. We are
currently finishing the last phase of the plant and
are simultaneously commissioning other parts of the
facility. We expect the plant to be substantially
completed by mid-January and the commissioning
stage to be completed by the end of January. Upon
completion of the plant commissioning, we will
start to run material through the plant. We
currently expect to be fully ramped to our 167,000
ton of concentrate per month capacity by the end of
February.
With the completion of the concentrate plant we
will shift our production from run-of-mine ore to
ore concentrate, which we expect to positively
change the operating dynamics of our business.
Instead of selling run of mine ore at a contained
iron level of 52-54% Fe, we will transition to the
processing and sale of concentrate at levels
expected to be up to 67% Fe, or 5% over the world
benchmark standard of 62% Fe. In exchange for a
marginally higher cost to process our ore to
concentrate form we expect to receive a relatively
more attractive price per ton.
2011 Performance and Operations Update
For the ten-month period ended December 31, 2011,
the company processed and sold approximately
1,425,000 tons of run of mine iron ore at an
average Iron Content level of 54% Fe.
Operations continue to run smoothly at CML both at
the mine and through our established transport
logistics. As stated in our previous update, we
believe the company's existing logistics can
accommodate the sale and transportation of more
than two million tons on an annualized basis.
Shipments in December totaled 140,588 tons. The
company's railcar fleet now stands at 539 cars,
and is running, on average, five unit trains per
week from Iron Mountain to two west coast
ports.
Liquidity Update
As of January 9th the company's cash balance
was approximately $46 million. We project
approximately $24 million of additional plant
expenses, largely related to the payment of
invoices for parts and services already consumed.
We therefore expect the company to have cash of
approximately $22 million upon final payment of all
expenses related to the completion of the
concentrate plant and expect to generate additional
cash as we ramp up concentrate production.
2012 Guidance
Our 2012 guidance is substantially unchanged from
the last shareholder update.
Though we will start production of concentrate at
the plant a few weeks sooner than projected, we are
keeping our production guidance for concentrate
sales (below) static in order to build in some
extra commissioning time.
Run-of-mine sales
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300,000-400,000 DMT
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Concentrate sales
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1,600,000-1,700,000 DMT
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Total
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1,900,000-2,100,000 DMT
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Since our last update, we have increased hedged
tonnage under our hedging agreements with Credit
Suisse. As of January 9th we have 870,000 tons
hedged for 2012 at $142 per ton. Again, this hedged
price excludes the Fe premium we expect to receive
for our ore as well as the marketing fees paid to
our offtake partners. Hedges of 1,200,000 tons at
$136 for 2013 production remain unchanged from our
last update.
Operating Goals for 2012
Our primary operating goal for 2012 continues to be
to bring the concentrate plant on-line as soon as
possible and to quickly ramp to an annual
production rate of two million tons. As we have
previously stated, we want to ensure that the plant
operates at its capacity, produces the optimal
premium concentrate and does so within the
parameters we have projected for our shareholders,
our lenders, and the Board of Directors.
Expansion of Logistics and Production Capacity
We continue to study the feasibility of increasing
of capacity to four million tons annually for 2013.
Prior to making additional investment in increased
capacity substantially beyond two million tons, we
must first secure additional port capacity and rail
contracts. We are currently working with our
logistics partners toward that end.
Resources
The company's compliant resources remain
unchanged from our July 28th update, but we have
been active on several fronts to increase our
stated reserves. First, we are currently twin
drilling several core holes on the Rex deposit.
Secondly, we have just recently completed four RC
drill holes at the Tip Top deposit.
As always, thank you for your continued
support.
Dale
Dale Gilbert
CEO CML Holdings Inc.
John Cutler, CEO of Palladon, commented: "This
CML update confirms the concentrator is essentially
built and we expect a successful commissioning and
ramp up. We congratulate the team at CML Metals on
this significant accomplishment and look forward to
progress on additional initiatives."
For Further Information Please Contact:
John W. Cutler
President & Chief Executive Officer
801. 521. 5252 Tel
604. 681. 4760 Fax
Email: info@palladonventures.com
About Palladon Ventures Ltd.
Palladon Ventures Ltd. holds a 19.3% interest in
CML Holding, Inc., who is focused on advancing the
Iron Mountain Project, an iron ore mine located
seventeen miles west of Cedar City, Utah.
Disclaimer for Forward-Looking Information:
Certain statements in this release may be
forward-looking statements, which reflect the
expectations of management. Forward-looking
statements consist of statements that are not
purely historical, including any statements
regarding beliefs, plans, expectations or
intentions regarding the future. Such statements
are subject to risks and uncertainties that may
cause actual results, performance or developments
to differ materially from those contained in the
statements. No assurance can be given that any of
the events anticipated by the forward-looking
statements will occur or, if they do occur, what
benefits the Company will obtain from them. These
forward-looking statements reflect management's
current views and are based on certain
expectations, estimates and assumptions which may
prove to be incorrect. A number of risks and
uncertainties could cause our actual results to
differ materially from those expressed or implied
by the forward-looking statements, including: (1) a
downturn in general economic conditions in North
America and internationally, (2) the inherent
uncertainties and speculative nature associated
with mineral exploration and production, (3) a
decreased demand for minerals, (4) any number of
events or causes which may delay or cease
exploration and development of the Company's
property interests, such as environmental
liabilities, weather, mechanical failures, safety
concerns and labor problems; (5) the risk that the
Company does not execute its business plan, (6)
inability to retain key employees, and (7)
inability to finance operations and growth, (8)
other factors beyond the Company's control.
These forward-looking statements are made as of the
date of this news release and, except as required
by law, the Company assumes no obligation to update
these forward-looking statements, or to update the
reasons why actual results differed from those
projected in the forward-looking statements.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
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