Minefinders pours first gold at Dolores, Mexico

Minefinders’ (MFL-T, MFN-X) Dolores mine in Chihuahua, Mexico is expected to produce more than 1.7 million oz. gold and 64 million oz. silver over an estimated 15-year open-pit mine life.

So it was with great enthusiasm that the company announced today that the mine had produced its first gold and silver dore – an achievement that brings the company one step closer to its goal of becoming a low-cost, mid-tier gold and silver producer once the mine moves into commercial level production in the first quarter of next year.

Dolores is in the Sierra Madre Occidental range of northern Mexico, about 250 km west of the city of Chihuahua.

About 650,000 tonnes of ore is stacked on the leach pad at Dolores, (425,000 tonnes are presently under leach). The three-stage crushing and stacking rates are at 12,000 to 16,000 tonnes per day and are expected to reach design capacity (18,000 tonnes per day) by the end of the year.

In addition, Minefinders has fully commissioned its Merrill Crowe plant.

According to a March 25 technical report, Dolores contains proven and probable reserves of 99.3 million tonnes grading 0.77 gram gold per tonne (total contained gold of 2.4 million oz.) and grading 39.67 grams silver per tonne (total contained silver of 126.64 million oz.).   

The company’s financial results may have dampened the mood somewhat, however, although losses were primarily due to expenditures at Dolores. 

Net losses for the nine-month period rose to US$20.044 million ($0.40 per share), up from US$12.135 million ($0.25 per share) for the same period last year.

The higher losses for the nine months were due primarily to greater activity as the Dolores mine moved toward production. Also contributing to the higher losses in the period were lower foreign exchange gains and lower interest income.

In the third quarter, Minefinders narrowed its losses. It posted a net loss of US$6.764 million ($0.14 per share), slightly less than its net loss of US$8.176 million ($0.17 per share) in the same quarter of 2007.

Lower year-on-year losses in the third quarter were due to stock-based compensation expenses. Minefinders did not have stock-based compensation expenses in the third quarter of 2008, compared with US$4.2 million of stock-based compensation expensed in the third quarter of 2007.

The company spent US$19.50 million on mineral property, plant and equipment in the third quarter, largely on construction and commissioning Dolores and in pre-commercial production operating expenditures. By contrast it spent US$22.03 million in the same period last year.

Expenditures for the nine-month period this year reached US$55.077 million, down from US$67.934 million in 2007. The decrease is due to the wind down of construction activities at the Dolores Mine during the first quarter of 2008 and to the ongoing transition to commercial operations.

At the end of September, Minefinders had cash and cash equivalents of US$2.5 million and net working capital of US$2.4 million. On top of that, the company had US$7 million available under a US$50 million revolving three-year term credit facility with Scotia Capital.

In October it arranged a second revolving credit facility with Scotia Capital for another US$10 million. The company expects to draw down the entire credit facility this year.

In Toronto, Minefinders is trading at about C$4.90 per share. Over the last year it has traded in a C$4.05-$14.05 per share range.

The precious metals mining and exploration company has about 49.8 million shares outstanding.