| ||Thu Jan 12, 2012|
Palladon Ventures - CML Update
| ||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
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:
Concentrate Plant Construction
- Successfully began shipments of run of mine ore to multiple west coast ports
- Secured multiple offtake partners and agreements
- Secured rail capacity and fleet of railcars
- Ramped up ocean shipments of CML ore to China
- Raised $91 million in financing in total, including $46 million of equity and $45 million of debt
- Proved out greater than 2 million tons of annualized transportation logistics
- Achieved revenue in excess of $120 million
- Opened new corporate facility in Cedar City, Utah
- On track to complete 2 million ton capacity concentrate facility on-time and on-budget
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.
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.
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.
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.
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.
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
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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