WELLINGTON, NEW ZEALAND--(Marketwire -08/29/12)- Highlights:
-- Second Gold Recovery Unit operational at Drybread, Otago -- Strategic review of exploration costs and funding allocation
Glass Earth Gold Limited (GEL.V)(GEL.NZ) ("Glass Earth" or the "Company") announced today that it has filed its June 30, 2012 second quarter Financial Statements and associated Management's Discussion and Analysis ("MD&A") report pertaining to that period with regulatory authorities.
The Company had a net loss for the six months ending June 30, 2012 of $8,496,000 versus $323,000 for the same period in 2011.
Three months ended Six months ended Notes June 30, June 30, 2012 2011 2012 2011 $'s $'s $'s $'s Revenue 349,000 176,000 516,000 427,000 Cost of revenue (857,000) (116,000) (1,048,000) (238,000) ------------------------------------------------ Gross (loss)/profit (508,000) 60,000 (532,000) 189,000 1 Administrative expenses (353,000) (290,000) (699,000) (435,000) 3 Salaries (net of exploration costs) (61,000) (56,000) (125,000) (114,000) Finance income (8,000) 24,000 6,000 37,000 Non-cash items Stock based compensation - - (556,000) - Write down of mineral properties (6,330,000) - (6,590,000) - 2 ------------------------------------------------ Loss before & after income taxes (7,260,000) (262,000) (8,496,000) (323,000) ------------------------------------------------
1. In this quarter, Glass Earth worked hard to bring about a sharp increase in gold production from its small-scale placer mining. Thwarted somewhat by snow of the southern winter, the second Gold Recovery Unit ("GRU") became operational in late May and therefore is only partially reflected in the second quarter's result. The third GRU became operational only in the last few days of June. The negative gross profit for the quarter reflects the difficult weather conditions faced during the mine site preparation, establishment and an extended commissioning period due to some technical difficulties, now resolved. All costs of the mine site set ups and establishment have been expensed and form part of the loss for the quarter. With these two plants operational at Drybread, mining at Gunclub has been suspended and equipment transferred to Drybread. Looking forward, the placer operations are expected to provide a positive contribution to the Company. 2. The second quarter has also seen Glass Earth's team working on a strategic review of cash allocation to priority targets and associated accumulated exploration costs. Management must focus the Company's cash resources towards projects that have the best potential for near-term value creation for its shareholders. Holding costs of all prospects were scrutinised and assessed against the potential for near-term exploration spending. As a result, certain older prospects had the costs of early- stage exploration work, carried out between 2005 and 2008 written-off. Together with other pruning of the prospect portfolio, a total write down of $6.3 million was charged to the second quarter. 3. Administrative expenses for the six-month period include an upsurge in investor relations efforts as commented on last quarter. These IR costs have since been reduced significantly.
Commenting on these results, Simon Henderson, CEO of Glass Earth Gold, said: "I would like to thank the Glass Earth team that has worked hard, and is still working hard, to transform the Company into a cash-flow positive enterprise. On the production side, the team spared no effort to complete the placer mine commissioning in spite of difficult weather conditions that have brought about an increase in costs for the period. While these one-off charges have resulted in a loss for the quarter, they will support the Company's ongoing production programme which should generate a steady flow of cash to support its administrative and exploration costs. Similarly, the one-off charge related to the write-off of non-strategic assets was deemed necessary to provide the Company with a better focus and to give a stronger support to the development of projects with the best potential for value creation."
The Company's cash position as at June 30, 2012 was $1,579,000 compared to $2,486,000 for the same date in 2011.
The Company's corporate and exploration activities for the quarter are summarized in the attached Quarterly Overview.
Mr Simon Henderson, MSc Geology (CODES), an AusIMM Chartered Professional under the Discipline of Geology; is a Qualified Person as defined by National Instrument 43-101 and an employee of the Company, has reviewed and approved the technical information given in this press release.
About Glass Earth Gold Limited
Glass Earth is one of the largest New Zealand-based gold exploration companies exploring a large land position in the North and South Islands (refer to map: http://media3.marketwire.com/docs/MapGEL829.jpg).
In the North Island, exploration efforts are focused on large epithermal gold systems in the Hauraki/Central Volcanic Region. This Region is host to the 10 million ounce Martha Gold Mine, (Newmont Mining).
Hauraki Region - Glass Earth occupies a significant ground position around Newmont's currently active Waihi gold operations; The Newmont-Glass Earth Waihi West JV (Newmont earning 60%) and Hauraki JV (North and Central Areas - 65/35) are currently being explored and managed by Newmont.
In the South Island, exploration efforts are focused on the Otago Region for mesothermal "Macraes-style" gold targets and placer/alluvial gold.
Visit the Company's website at www.glassearthgold.com
GLASS EARTH GOLD LIMITED
EXPLORATION (please refer to the individual sections following for fuller description of the exploration activities).
-- WKP gold project in Hauraki, New Zealand (Glass Earth 35%) Newmont and Glass Earth commenced a further 5,500m drill programme at the WKP gold-silver prospect in April 2012. Three drill holes were completed in Q2 2012; WKP32, 33 and 34. A fourth hole is in progress. Full assay results are expected by early September -- MUIRS gold project in Mamaku, New Zealand (Glass Earth 100%) A 17 hole drill programme of approximately 2,350m at the Massey Reef commenced in late November 2011 targeting the Muirs/Massey gold-silver bearing epithermal quartz veins to bring confidence in the resource to Industry standard (JORC/NI 43 101). -- Drillholes MSDH12, MSDH13, MSDH14 were completed within the quarter, MSDH15 continued into July 2012. -- MSDH12 intersected at a greater depth than expected, expanding the cross sectional width of known mineralisation in the central part of Massey Reef. (Press Release 31 May 2012). -- Compilation of results and subsequent interpretation is anticipated early in September. -- GARIBALDI gold project in Otago, New Zealand (Glass Earth 100%) Glass Earth announced in April 2012, that it had made a new gold discovery at its Garibaldi project in Central Otago. -- Exploration continued in the quarter with channel/panel sampling and detailed ground magnetic (geophysical) surveying to clearly delineate the host mafic schist and attendant structures likely to be the focus of gold mineralisation. 168 line kms of surveying was completed in a 12 day period; data has now been post processed and interpreted. -- Planning is underway to drill this project in the third quarter 2012.
PLACER MINING - Acquisition and Growth in Otago, New Zealand
-- Mining operations took a major step forward with the establishment of two additional mining units at Drybread in Otago, successively in late May and late June. Site set-up costs and commissioning costs have been written off as incurred. This, combined with lower productivity (expected in the winter) and amortization of exploration costs, has provided a loss for the quarter. -- Lower productivity in July (mid-winter) has improved in August. -- The full benefits of the increased throughput and 100% ownership should become apparent in the spring/summer in New Zealand, with a significant improvement in gold production and cash generated.
-- The Company's cash position as at June 30, 2012 was $1,579,000; -- Trade payables totaled $689,000; -- Current and term liabilities in relation to the placer acquisition comprise twenty four monthly payments of NZ$80,000 (C$65,768); -- Management and Directors are pursuing several alternatives to ensure funding is available to progress the Company's exploration projects. -- Financial results - The net loss for the three months ended June 30, 2012 was $7,260,000 comprised primarily of a non-cash item: the write- off of accumulated exploration expenditures of $6,330,000. These expenditures, incurred predominantly in 2005-2008, relate to prospects that have been superceded, in terms of prospectivity, by targets and projects that now rank higher for available funds.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor New Zealand Exchange Limited has reviewed this release and neither accepts responsibility for the adequacy or accuracy of this release.