PEAK GOLD ANNOUNCES FIRST QUARTER
EARNINGS OF $9.8 MILLION AND
OPERATING CASH FLOW OF $18.4 MILLION
(All figures are in US dollars unless stated otherwise)
Vancouver, British Columbia, May 9, 2008 � Peak Gold Ltd. (PIK:TSX-V)
(�Peak Gold�) today announced its 2008 first quarter operating and financial
results and provided operational guidance for the year.
Q1 Financial and Operating Highlights
� Net Earnings were $9.8 million after charges of $2.6 million in stock based
compensation
� Gold production of 43,300 ounces
� Gold sales of 51,700 ounces
� Cash cost was $427 per ounce (net of by-product sales)1
� Consolidated operating cash flows of $18.4 million
� Ordering of long lead items for the washing circuit at Amapari commenced
� On March 31, 2008 Peak Gold announced a proposed business combination with
New
Gold Inc. and Metallica Resources Inc. The combined company, to be called New Gold
Inc, will own three operating gold mines in Australia, Brazil and Mexico,
development
projects in Canada and Chile and will have a combined market capitalization of
approximately $1.6 billion.
Operational Review
Total gold production for the first quarter 2008 was 43,300 ounces at a cash
cost of $427 per ounce net of by-product credit. Copper production for the
quarter was 2.2 million pounds. Production and cash cost by mine is included in
the table below.
The first quarter production at Amapari was lower than anticipated primarily
due to lower tonnes placed on the leach pads. Ore deliveries were reduced by
the lower equipment availability which was due to unplanned maintenance
requirements on key processing and mining equipment.
Additional site resources have been acquired and improved practices have been
implemented to address these issues. As expected, the high clay content of the
Amapari ores continued to cause low gold recovery. Procurement has commenced
for the long lead items required for the installation of a washing circuit that
would improve recovery and facilitate higher throughput.
Peak Mines gold production was lower than the corresponding quarter of last
year but in line with expectation. With mining progressing through higher grade
copper zones; copper production somewhat off-set the planned, temporarily lower
than historic gold grades.
Unit cash costs at both operations were adversely affected by lower gold
production, stronger Brazilian and Australian currencies against the U.S.
dollar and higher consumable costs, particularly for cyanide and carbon.
Financial Highlights
Cash flow from operations was $18.4 million with a higher gold price
off-setting lower
production.
Net earnings for the first quarter of 2008 were $9.8 million, which includes
$2.6 million related to stock-based compensation.
Cash and cash equivalents totaled $197.6 million at the end of the quarter.
2008 Operating Outlook
Including results of the first quarter, continuing appreciation of the
Brazilian Real and Australian Dollar and continued pressures on the cost of
supplies and services; gold production and cost forecast for 2008 have been
revised downward and are included in the table below. The 2008 copper
production forecast at Peak Mines is 9 to 11 million pounds.
�The Company faced operational challenges during the quarter, particularly at
Amapari which are being addressed�, said Robert Gallagher, President and Chief
Executive Officer. �Assessment of the operational capabilities at Amapari has
been completed and changes are being implemented on both a short and long term
basis. Significant progress was made during the quarter to finalize studies
towards a decision on installation of a wash plant at Amapari with the
objective of significantly increasing metal production and lowering the cash
cost of that operation.�
Per the March 31, 2008 announcement, Peak Gold has progressed towards the
closing of the business combination between Metallica Resources, Peak Gold and
New Gold to create the new intermediate gold mining company with a combined
market capitalization of approximately $1.6 billion.
�We look forward to closing the transaction and are excited about the
opportunities this
transaction presents to our collective shareholders and see it as a step
towards building a superior intermediate gold mining company,� said Robert
Gallagher, President and Chief Executive Officer.
The Unaudited Interim Financial Statements and Management Discussion and
Analysis will be filed on SEDAR at www.sedar.com
before market opens on Friday, May 16, 2008.
Peak Gold will host a conference call at 10:00a.m. Pacific Time to discuss
these results. You may join the call by dialing toll free 1-866-340-2217 or
1-416-340-2217 for calls from outside Canada and the U.S. You can listen to a
recorded playback of the call after the event until June 16, 2008 by dialing
1-800-408-3053 or 1-416-695-5800 for calls outside Canada and the U.S.
Passcode: 3259711#
Peak Gold is a new intermediate gold producer with a strong foundation for
growth. To learn
more about us, please visit our website at www.peakgold.com.
(1) Peak Gold has
included a non-GAAP performance measure, total cash costs per gold ounce,
throughout this news release. Peak Gold reports total cash costs on a sales
basis. In the gold mining industry, this is a common performance measure but
does not have any standardized meaning, and is a non-GAAP measure. Peak Gold
follows the recommendations of the Gold Institute standard. Peak Gold believes
that, in addition to conventional measures, prepared in accordance with GAAP,
certain investors use this information to evaluate Peak Gold�s performance and
ability to generate cash flow. Accordingly, it is intended to provide
additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP
The TSX Venture Exchange does not accept responsibility for the adequacy or
accuracy of this release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This News Release
contains �forward looking information�, within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and applicable Canadian
Securities legislation which may include, but is not limited to, statements
with respect to the future price of gold and copper, the estimation of mineral
reserves and resources, the realization of mineral reserve estimates, the
timing and amount of estimated future production, costs of production, capital
expenditures, costs and timing of the development of new deposits, success of
exploration activities, permitting time lines, currency exchange rate
fluctuations, requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation expenses,
title disputes or claims and limitations on insurance coverage. Generally,
these forward looking statements can be identified by the use of
forward-looking terminology such as �plans�, �expects�, or �does not expect�,
�is expected�, �budget�, �scheduled�, �estimates�, �forecasts� ,�intends� ,� anticipates�,
or �does not anticipate�, or �believes�, or variations (including negative
variations) of such words and phrases or state that certain actions, events or
results �may�, �could�, �would�, �might� or �will� or �will be taken�, �occur�
or �be achieved�. Forward-looking statements are subject to known and unknown
risks, uncertainties and other factors that may cause the actual results, level
of activity, performance or achievements of Peak Gold to be materially
different from those expressed or implied by such forward-looking statements,
including but not limited to: risks related to the integration of acquisitions;
risks related to international operations; actual results of current
exploration activities; actual results of current reclamation activities;
conclusions of economic evaluations; changes in project parameters as plans
continue to be refined; future prices of gold and copper; possible variations
in ore reserves, grade or recovery rates; failure of plant; equipment or
processes to operate as anticipated; accidents; labor disputes and other risks
of the mining industry; delays in obtaining governmental approvals or financing
or in the completion of development or construction activities, as well as
those factors discussed in the section entitled �Risk Factors� in Peak Gold�s
Annual Information Form dated December 18, 2007 and revised on February 25,
2008, available at www.sedar.com. Although
Peak Gold has attempted to identify important factors that would cause actual
results to differ materially from those contained in forward looking
statements, there may be other factors that cause results not to be as
anticipated, estimated, or intended. There can be no assurance that such
statements will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements that are
incorporated by reference herein, except in accordance with applicable
securities laws.
For further information, please contact:
M�lanie Hennessey
Vice President, Investor Relations
Peak Gold Ltd.
3110-666 Burrard Street
Vancouver, British Columbia, V6C 2X8
Telephone: (604) 696-4100
Fax: (604) 696-4110
e-mail: info@peakgold.com
website: www.peakgold.com
Peak Gold
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