Busy start to year for International Minerals

Vancouver – International Minerals (IMZ-T) released its latest quarterly report during a busy time for the company. Since its second quarter ended Dec. 31, International Minerals has completed one acquisition, lined up a second that is set to close shortly, and reported a significantly improved resource at its Inmaculada project in Peru. The second quarter itself, meanwhile, saw modest gains in net income and production.

The gold and silver producer has three key properties in Peru and Ecuador. Pallancata, in southern Peru, went online in late 2007 and is now a world top-10 primary silver producer, as well as a gold producer. International Minerals holds a 40% stake in Pallancata, while Hochschild Mining (HOC-L) has the majority 60% stake. Meanwhile, the company’s Rio Blanco gold-silver project and Gaby gold project in Ecuador are on hold because of the Ecuadorian Mining Mandate, which has suspended the issuing of mining permits since mid-2008 as the government reviews its mining program.

Net income for the quarter was US$5.1 million, or 6¢ per share, compared with US$4.8 million, or 5¢ per share, for the same quarter in 2008. The source of the income shifted however, with much higher gains from joint ventures and much less from foreign exchange earnings.

In the last quarter of 2008 International Minerals saw foreign exchange gains of US$4.85 million compared with a loss of US$1 million for the same quarter in 2009, largely due to a weakening U.S. dollar against the Canadian loonie. Equity income from joint ventures went from US$637,000 for the last three months of 2008 to US$8.1 million for the last three months of 2009, including US$7.6 million from its 40% stake in the Pallancata mine.

Production at Pallancata for the quarter was approximately 2.7 million oz. silver and 10,244 oz. gold, a 9% increase compared to the prior quarter ended Sept. 30, 2009. The gain was due to an increase in tonnes processed and in silver head grade. Total cash costs at Pallancata were US$4.69 per oz. silver, including the gold by-product credit.

Cash dividends for the quarter were approximately US$6.4 million.

Since the quarter ended and the New Year began, the company has completed the acquisition of Ventura Gold. The all-share deal saw each outstanding Ventura share converted to 0.1 International Minerals share for a total of 13.7 million new shares, or 13% of International Minerals’ total count.

International Minerals shareholders will soon vote to finalize another acquisition, this one of Metallic Ventures Gold (MVG-T). If approved, the deal will see International Minerals pay US$24 million in cash and 8.5 million in shares to Metallic shareholders, at a rate of US46¢ and 0.16 share of International Minerals for each Metallic share.

The two company acquisitions add a stake in the Inmaculada gold-silver project in Peru and ownership of the Goldfield and Converse gold projects in Nevada to the International Minerals fold, as well as a 3% net smelter return from Barrick Gold’s Ruby Hill mine in Nevada.

International Minerals calculated a new resource for the Inmaculada project soon after taking over 51% ownership. Indicated resources now stand at 1.2 million tonnes grading 3.9 grams gold per tonne and 122 grams silver, and inferred resources of 4.7 million tonnes averaging 3.4 grams gold and 147 grams silver. International Minerals plans to continue drilling at Inmaculada to further delineate the deposit and then work through a feasibility study. Completing a feasibility study will increase the company’s ownership stake to 70%.

Measured and indicated resources at the Converse property stand at 239 million tonnes with 0.51 grams gold and 2 grams silver, while Goldfield has measured and indicated resources of 28.7 million tonnes grading 1.16 grams gold.

International Mineral’s share price has moved between $4.15 and $4.40 during February, near the upper end of its 52-week share price range of $2.88 to $4.70. The company has 106 million shares outstanding.