Aur Resources Inc. Reports Cash Flow From Operating Activities of $31.6 Million and Net Earnings of $20.7 Million in the Third Quarter of 2004.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Declares a Dividend of CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $0.10 Per Share Aur Resources Aur Resources Inc. (TSX: AUR) is a Toronto, Ontario, Canada, based, international mining company active in the acquisition, exploration, development and mining of mineral properties. Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :AUR): (All dollar amounts unless otherwise stated are expressed in United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. currency) Highlights for the Third Quarter - Net earnings were $20.7 million or $0.22 (CDN$0.29) per share compared to $3.1 million or $0.03 per share in the third quarter of 2003. - Cash flow from operating activities was $31.6 million in the third quarter compared with $11.2 million in the third quarter of 2003. - Cash and working capital increased to $160.5 million and $187.2 million as at September September: see month. 30, 2004. - Aur's cash per share increased to CDN$2.14 as at September 30, 2004. - Aur's share of copper production from the Louvicourt, Andacollo Andacollo is a city in the Coquimbo Region, Chile. It is located at around . and Quebrada Blanca mines was 54.7 million pounds in the third quarter compared to 58.7 million pounds in the third quarter of 2003. - Aur realized $1.38 per pound of copper sold in the third quarter of 2004. - Aur declares a dividend of CDN$0.10 per share payable on January January: see month. 1, 2005 to shareholders of record on December December: see month. 1, 2004 and establishes an ongoing dividend policy. Financial Results Overview Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. were $80.1 million in the third quarter of 2004, being approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 58% higher than the $50.7 million for the same period in 2003. Net earnings were $20.7 million, equal to $0.22 per share for the quarter, compared to net earnings of $3.1 million or $0.03 per share for the same quarter last year. Cash flow from operating activities was $31.6 million, equal to $0.34 (CDN$0.44) per share, compared to $11.2 million or $0.12 per share in the third quarter of 2003. Aur's cash position at September 30, 2004 increased by $26.5 million to $160.5 million from June June: see month. 30, 2004, and working capital increased by $32.3 million to $187.2 million. Aur's cash exceeded its $125 million senior note debt by $35.5 million at September 30, 2004. Operating revenues for the nine month period ending September 30, 2004 were $239.0 million, approximately 55% higher than the $154.2 million for the same period in 2003. Net earnings were $63.4 million, equal to $0.67 (CDN$0.89) per share for the period, compared to $4.1 million or $0.04 per share, in 2003. Cash flow from operating activities was $106.2 million, equal to $1.13 (CDN$1.50) per share for the nine months ended September 30, 2004, compared to $38.5 million or $0.41 per share in 2003. Aur's cash position at September 30, 2004 increased by approximately 113%, or $85.2 million, from December 31, 2003, and working capital increased by $89.0 million. Aur realized an average price of $1.38 per pound and $1.34 per pound of copper sold in the third quarter and year to date, respectively, compared to the LME See London Metal Exchange. LME See London Metal Exchange (LME). average price for the quarter of $1.29 per pound and $1.27 per pound for the year to date. In 2003, Aur realized an average price of $0.82 and $0.80 per pound of copper sold in the third quarter and for the nine month period, respectively. The following table presents a summary of and changes between Aur's Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Operations for the periods ended September 30, 2004 and 2003.
Three months ended Nine months ended
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2004 2003 Change 2004 2003 Change
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$000's $000's $000's $000's $000's $000's
Mining revenues 80,139 50,507 29,632 238,996 150,663 88,333
Hedging revenues - 145 (145) - 3,505 (3,505)
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Operating revenues 80,139 50,652 29,487 238,996 154,168 84,828
Mining expenses (37,030)(31,226) (5,804)(105,585)(95,548) (10,037)
Depreciation &
amortization (8,600) (9,052) 452 (27,815)(29,828) 2,013
Mine closure &
restoration (785) (724) (61) (1,842) (2,012) 170
Non-controlling
interests (3,875) (803) (3,072) (12,109) (1,797) (10,312)
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Operating earnings 29,849 8,847 21,002 91,645 24,983 66,662
Business
development (641) (565) (76) (2,904) (2,248) (656)
Administration (1,658) (1,553) (105) (4,888) (4,098) (790)
Interest on
long-term debt (2,110) (2,039) (71) (6,352) (5,476) (876)
Financing costs
written-off - - - - (4,279) 4,279
Stock-based
compensation (96) (67) (29) (283) (226) (57)
Taxes (4,670) (1,466) (3,204) (14,319) (3,478) (10,841)
Other 55 (101) 156 498 (1,119) 1,617
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Net earnings 20,729 3,056 17,673 63,397 4,059 59,338
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Basic earnings
per share 0.22 0.03 0.19 0.67 0.08 0.59
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Metal Production and Sales Aur's share of metal production from the Louvicourt, Andacollo and Quebrada Blanca mines in the third quarter of 2004 was 54.7 million pounds of copper, 3.9 million pounds of zinc zinc, metallic chemical element; symbol Zn; at. no. 30; at. wt. 65.38; m.p. 419.58°C;; b.p. 907°C;; sp. gr. 7.133 at 25°C;; valence +2. Zinc is a lustrous bluish-white metal. It is found in Group 12 of the periodic table. , 43,000 ounces of silver and 1,400 ounces of gold, compared to 58.7 million pounds of copper, 4.3 million pounds of zinc, 60,000 ounces of silver and 1,200 ounces of gold in the third quarter of 2003. Copper production was 4.0 million pounds lower in the third quarter of 2004 than in 2003 due to lower than planned production at the Quebrada Blanca Mine. Minesite revenues were $80.1 million in the third quarter of 2004, compared to $50.5 million for the same period in 2003. Operating revenues were $29.5 million higher than in the third quarter of 2003, primarily due to a $0.56 per pound higher realized copper price. The lower copper sales resulted in $2.4 million less revenue while the higher copper price generated $31.8 million more revenue in the third quarter of 2004 compared to 2003. Cathode cathode, electrode through which current leaves an electric device. In electrolysis, it is the negative electrode in the electrolytic cell. cathode copper inventory was reduced by 1.7 million pounds to 3.5 million pounds at September 30, 2004. Copper sales were 2.9 million pounds lower in the third quarter of 2004 compared to the third quarter of 2003 due to lower production at Quebrada Blanca offset in part by higher production at both Louvicourt and Andacollo. Operating revenues in the third quarter were $10.1 million higher than in the second quarter of 2004 as a result of higher copper prices. Copper sales were 3.5 million pounds higher in the third quarter compared to the second quarter of 2004 due to reductions in copper inventories. In the third quarter, the 3.5 million pounds more copper sold and the $0.11 per pound higher realized copper prices resulted in $4.4 million and $6.0 million more revenue, respectively, than in the second quarter of this year. Minesite cash operating costs operating costs npl → gastos mpl operacionales were $37.0 million in the third quarter of 2004, compared to $31.2 million in 2003. Aur's cash operating cost per pound of copper sold was $0.61 for the quarter, $0.12 per pound higher than in the third quarter of 2003. Mining costs were $5.8 million higher in the third quarter of 2004 compared to 2003 and resulted from $7.3 million of additional costs partially offset by $1.5 million of lower mining expenses resulting from lower copper sales, both principally at Quebrada Blanca. The higher costs resulted from the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. payment of workforce bonuses related to the execution of the new collective agreements in June at Quebrada Blanca and Andacollo of $1.7 million (approximately $0.03 per pound of copper sold), significantly higher energy, acid and ocean freight The price or compensation paid for the transportation of goods by a carrier. Freight is also applied to the goods transported by such carriers. The liability of a carrier for freight damaged, lost, or destroyed during shipment is determined by contract, statute, or costs related to the strong global economic activity and the negative impact of the strong Chilean peso versus the United States dollar. Aur's metal production from the Louvicourt, Andacollo and Quebrada Blanca mines in the nine months ended September 30, 2004 was 172.7 million pounds of copper, 10.4 million pounds of zinc, 142,000 ounces of silver and 4,900 ounces of gold, compared to 182.9 million pounds of copper, 10.4 million pounds of zinc, 170,000 ounces of silver and 4,600 ounces of gold in the nine months ended September 30, 2003. The 10.3 million pounds lower copper production in 2004 compared to the same period in 2003 was principally due to the planned lower production at Louvicourt and lower production at Quebrada Blanca. Minesite revenues were up approximately 59% to $239.0 million for the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , compared to $150.7 million in 2003. Operating revenues for the year to date were $84.8 million higher than in 2003 primarily due to a $0.58 per pound higher realized copper price and $1.4 million of additional by-product by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. by-product Noun 1. credits. Lower copper sales, due to lower production, resulted in $9.4 million less revenue, while the higher copper price generated $96.3 million more revenue in 2004, compared to 2003. Minesite cash operating costs were $105.6 million to September 30, 2004, compared to $95.5 million for the first three quarters of 2003. Aur's cash operating cost per pound of copper sold was $0.57 for the year to date, compared to $0.48 in 2003. Mining costs were $10.0 million higher in the first three quarters of 2004 compared to 2003 and resulted from $16.2 million of additional costs partially offset by $6.2 million of lower mining expenses resulting from the 12.0 million fewer pounds of copper sold, both principally at Quebrada Blanca. Aur's 2004 copper production is forecast to be approximately 234.0 million pounds and cash operating costs are forecast to be $0.57 per pound of copper sold. The following table presents the calculation of cash operating costs per pound of copper sold for the three months ended September 30, 2004 and 2003.
2004 2003
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$000's $/lb. $000's $/lb.
Mining expenses 37,030 0.66 31,226 0.53
By-product credits
Zinc (1,677) (0.03) (1,679) (0.03)
Silver (293) (0.01) (304) (0.00)
Gold (590) (0.01) (403) (0.01)
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Cash operating costs 34,470 0.61 28,840 0.49
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Copper sold (000's lbs.) 56,344 59,251
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The following table presents the calculation of cash operating costs
per pound of copper sold for the nine months ended September 30, 2004
and 2003.
2004 2003
------------------------------------------
$000's $/lb. $000's $/lb.
Mining expenses 105,585 0.61 95,548 0.51
By-product credits
Zinc (4,748) (0.03) (3,809) (0.02)
Silver (912) (0.00) (799) 0.00
Gold (1,963) (0.01) (1,631) (0.01)
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Cash operating costs 97,962 0.57 89,309 0.48
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Copper sold (000's lbs.) 172,644 184,632
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The following table presents a summary of and changes between mine
operating earnings(1) for the periods ended September 30, 2004
and 2003.
Three months ended Nine months ended
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2004 2003 Change 2004 2003 Change
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$000's $000's $000's $000's $000's $000's
Louvicourt 4,697 1,867 2,830 14,946 6,581 8,365
Andacollo 8,948 3,028 5,920 27,288 9,203 18,085
Quebrada Blanca 29,464 14,386 15,078 91,177 39,331 51,846
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43,109 19,281 23,828 133,411 55,115 78,296
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(1) Mine operating earnings equals mining operating revenues less
mining operating expenses.
Cash flow from mine operating activities was $37.4 million in the third quarter of 2004 and $121.6 million for the year to date, compared to $17.1 million and $47.2 million, respectively, for the same periods last year. Louvicourt Mine The Louvicourt Mine produced 16.1 million pounds of copper and 13.1 million pounds of zinc from 308,116 tonnes of ore ore, metal-bearing mineral mass that can be profitably mined. Nearly all rock deposits contain some metallic minerals, but in many cases the concentration of metal is too low to justify mining the ore. milled during the third quarter of 2004, compared to 15.7 million pounds of copper and 14.5 million pounds of zinc from 283,675 tonnes of ore milled in 2003. Mill throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. and copper production were 24,441 tonnes higher and 0.3 million pounds higher, respectively, than in the third quarter of last year, while zinc production was 1.4 million pounds lower. Copper production was 0.7 million pounds higher and zinc production was 0.6 million pounds lower than budgeted for the third quarter, principally due to mine stope stope n. An excavation in the form of steps made by the mining of ore from steeply inclined or vertical veins. tr.v. stoped, stop·ing, stopes To remove (ore) from or mine by means of a stope. sequencing. Aur's share of Louvicourt's revenues was $9.2 million in the third quarter of 2004, compared to $6.3 million in 2003. The higher revenue was principally due to higher metal prices and higher copper production and sales. Cash operating costs were $0.03 per pound lower than in the corresponding period in 2003 principally due to lower operating and smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. and refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar costs. Cash operating costs of $0.41 per pound of copper sold for the quarter, net of by-product credits, were lower than budgeted due to higher than budgeted by-product credits, higher copper production and lower smelting and refining costs. Mine site operating costs were $2.77 per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. under budget at $27.15 per tonne milled, and were $1.55 per tonne lower than the $28.70 per tonne milled in 2003. Aur's cash flow from Louvicourt's operating activities was $4.8 million in the third quarter of 2004, compared to $1.9 million in 2003. There were no expenditures on property, plant and equipment in either the third quarter of this year or last year. Louvicourt produced 53.5 million pounds of copper and 34.6 million pounds of zinc from 910,935 tonnes of ore milled during the nine months ended September 30, 2004, compared to 65.1 million pounds of copper and 34.5 million pounds of zinc from 967,821 tonnes of ore milled during the nine months ended September 30, 2003. Mill throughput was, as planned, 56,886 tonnes lower and copper production was 11.6 million pounds lower, while zinc production was essentially the same as last year. Copper and zinc production for the year to date were 4.6 million pounds and 3.1 million pounds, respectively, higher than budgeted due to higher tonnes milled. Aur's share of Louvicourt's revenues was $29.2 million for the nine months ended September 30, 2004, compared to $21.4 million in 2003. The higher revenue was principally due to higher metal prices, somewhat offset by lower copper sales volume. Cash operating costs were $0.02 per pound lower than in the corresponding period in 2003 due to higher by-product credits and lower operating costs. Cash operating costs of $0.42 per pound of copper sold for the year to date, net of by-product credits, were $0.14 per pound lower than budgeted principally due to higher than budgeted copper production and by-product credits, along with lower smelting and refining costs. Mine site operating costs were under budget at $29.15 per tonne milled, and were $0.64 per tonne higher compared to $28.51 per tonne milled in 2003. Aur's cash flow from operating activities was $11.6 million in the first three quarters of 2004, compared to $7.7 million in 2003. There were no expenditures on property, plant and equipment for the year-to-date in either 2004 or 2003. The Louvicourt Mine had an excellent performance in the third quarter of 2004. Aur's share of copper production for 2004 is forecast to be 20.5 million pounds at a cash operating cost, net of by-product credits, of $0.43 per pound of copper sold. The Louvicourt mine is expected to close in the third quarter of 2005. Aur holds a 30% interest in and is the operator of the Louvicourt Mine. Andacollo Mine The Andacollo Mine produced 10.5 million pounds of high quality LME Grade A cathode copper during the third quarter of 2004, 0.3 million pounds more than in the second quarter of 2004 and 0.8 million more than the third quarter of 2003. Production was 1.3 million pounds lower than budgeted due to wet weather conditions which restricted mine production and the impact of the 13 day labour strike in June on the normal leaching leaching, method of extraction in which a solvent is passed through a mixture to remove some desired substance from it. A simple example is the passage of boiling water through ground coffee to dissolve and carry out the chemicals necessary for producing the beverage. cycle. A total of 3.8 million tonnes of rock, of which 0.7 million tonnes was ore, was mined at a strip ratio of 4.7:1. A total of 4.1 million tonnes of rock, of which 0.8 million tonnes was ore, was mined at a strip ratio of 4.1:1 in the third quarter of 2003. Andacollo's revenues of $15.2 million, generated from the sale of 11.0 million pounds of copper in the third quarter of 2004, were $7.4 million higher than the revenues of $7.9 million in 2003 as a result of higher copper prices and sales. Revenues were $2.6 million higher than budget as a result of higher copper prices partially offset by 0.8 million fewer pounds of copper sold. Cash operating costs were on budget at $6.3 million and were $1.5 million higher than in 2003. The cash operating costs in the third quarter of 2004 were $0.57 per pound of copper sold, $0.03 per pound higher than budgeted and $0.07 per pound higher than the $0.50 per pound for the same period in 2003. Cash operating costs per pound of copper sold were higher due to a combination of a one-time $0.2 million (approximately $0.02 per pound of copper sold) bonus payment to unionized employees upon signing the new four year collective agreement, the impact of higher energy, acid and ocean freight costs as well as the impact of the strong Chilean peso versus the United States dollar. Cash flow from operating activities was $8.0 million in the third quarter of 2004, compared to $2.2 million in 2003. Expenditures on property, plant and equipment were $0.6 million in the third quarter compared to $0.4 million in 2003. Andacollo produced 33.4 million pounds of high quality LME Grade A cathode copper during the nine months ended September 30, 2004, 2.3 million pounds less than budgeted and 1.3 million pounds less than in 2003. A total of 11.4 million tonnes of rock, of which 2.4 million tonnes was ore, was mined at a strip ratio of 3.8:1. A total of 12.3 million tonnes of rock, of which 2.7 million tonnes was ore, was mined at a strip ratio of 3.6:1 in 2003. Andacollo's revenues of $44.7 million, generated from the sale of 33.1 million pounds of copper in the nine months ended September 30, 2004, were $17.0 million higher than the revenues of $27.7 million in 2003 and $6.2 million higher than budgeted, primarily as a result of higher copper prices. Cash operating costs were $17.4 million, $2.3 million lower than budgeted as a result of fewer pounds of copper sold and cost efficiencies throughout the mine in the first three quarters of 2004. Cash operating costs were also $1.1 million less than in 2003. The cash operating costs for the year to date were $0.53 per pound of copper sold, $0.02 per pound better than budget, due to cost efficiencies throughout the mine, and $0.01 per pound higher than the $0.52 per pound in 2003. Cash flow from operating activities was $24.4 million, compared to $9.6 million for the same nine month period in 2003. Expenditures on property, plant and equipment were $2.5 million for the year-to-date, compared to $1.3 million in 2003, as the heap leach leach v. leached, leach·ing, leach·es v.tr. 1. To remove soluble or other constituents from by the action of a percolating liquid. 2. pad expansion was completed in the first quarter of 2004. The Andacollo Mine continues to produce very high quality cathode copper and maintain a high standard of operating performance. Andacollo's copper production for 2004 is forecast to be approximately 45.5 million pounds at a cash operating cost of $0.55 per pound of copper sold. Quebrada Blanca Mine The Quebrada Blanca Mine produced 39.4 million pounds of LME Grade A cathode copper in the third quarter of 2004, 2.0 million pounds less than budgeted, compared to 40.7 million pounds in the second quarter of 2004 and 44.4 million pounds in 2003. A total of 9.0 million tonnes of rock, of which 1.9 million tonnes was heap leach ore and 2.7 million tonnes was dump leach ore, was mined at a strip ratio of 1.0:1 in the third quarter of 2004, compared to 9.5 million tonnes of rock, of which 1.8 million tonnes was heap leach ore and 1.9 million tonnes was dump leach ore, and a strip ratio of 1.5:1 for the third quarter of last year. Unusually harsh winter weather conditions continued throughout most of the third quarter which restricted crusher crusher, machine used to reduce materials such as ore, coal, stone, and slag to particle sizes that are convenient for their intended uses. Crushers operate by slowly applying a large force to the material to be reduced. throughput and therefore reduced ore tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. stacked Stacked is an American television sitcom that premiered on Fox on April 13, 2005. On May 18, 2006, Stacked was cancelled, leaving five episodes unaired in the United States. The last episode aired on January 11, 2006. for leaching and was the principal reason for the lower copper production in the third quarter. Quebrada Blanca's revenues, generated from the sale of 40.5 million pounds of copper, were $55.7 million in the third quarter of 2004, compared to $36.3 million generated from the sale of 44.8 million pounds of copper in 2003. The $19.3 million increase in revenue is due to higher realized copper prices somewhat offset by lower copper sales. Operating revenues were $11.1 million higher than budget, principally due to realized copper prices being $0.30 per pound higher than budget, partially offset by 0.9 million fewer pounds of copper sold. Cash operating costs were $4.4 million higher than budgeted at $26.2 million, and were $4.2 million higher than in 2003. Cash operating costs were $0.65 per pound of copper sold, $0.07 per pound higher than in the second quarter of 2004 and $0.16 per pound higher than last year. The costs were higher due to a combination of a one-time $1.5 million (approximately $0.04 per pound of copper sold) bonus payment to unionized employees upon signing the new four-year collective agreement, lower copper production and sales, fluctuations in the copper in-process inventories on the leach pads, higher energy and acid costs and the negative impact of a strong Chilean peso versus the United States dollar. Cash flow from operating activities was $24.6 million in the third quarter of 2004 compared to $13.0 million in 2003. Expenditures on property, plant and equipment were $0.4 million in the third quarter of 2004, compared to $0.4 million in 2003. Quebrada Blanca produced 123.2 million pounds of LME Grade A copper in the nine months ended September 30, 2004, 6.0 million pounds less than budgeted, compared to 128.8 million pounds in 2003. A total of 25.6 million tonnes of rock, of which 5.3 million tonnes was heap leach ore and 5.7 million tonnes was dump leach ore, was mined at a strip ratio of 1.3:1 in 2004. A total of 25.9 million tonnes of rock, of which 5.4 million tonnes was heap leach ore and 4.4 million tonnes was dump leach ore, was mined at a strip ratio of 1.6:1 in 2003. Quebrada Blanca's revenues, generated from the sale of 123.5 million pounds of copper, were $165.1 million for the nine months ended September 30, 2004, compared to $101.6 million generated from the sale of 129.7 million pounds of copper in 2003. The $63.5 million increase is due to higher realized copper prices somewhat offset by lower copper sales. Operating revenues were $25.8 million higher than budget, principally due to realized copper prices being $0.26 per pound higher than budget, partially offset by 5.8 million fewer pounds of copper being sold. Cash operating costs were $8.1 million higher than budgeted at $73.9 million, $11.7 million higher than in 2003. Cash operating costs were $0.60 per pound of copper sold, $0.12 per pound higher than last year. The higher costs were for the reasons mentioned above. Cash flow from operating activities for the year to date 2004 was $85.6 million, compared to $29.9 million in 2003. Expenditures on property, plant and equipment were $1.1 million for the year to date 2004, compared to $1.1 million in 2003. In 2004, Quebrada Blanca's copper production is forecast to be approximately 168.0 million pounds at a cash operating cost of $0.59 per pound of copper sold. Expenditures on property, plant and equipment are expected to total $1.7 million, as budgeted, in 2004. Other Financial Information Dividend Aur's board of directors has determined that Aur will pay to shareholders yearly dividends of CDN$0.10 per share beginning in 2004. The dividend of CDN$0.10 per share for 2004 will be paid on January 1, 2005 to shareholders of record at December 1, 2004. In future years, it is anticipated that a dividend of CDN$0.05 per share will be paid to shareholders of record on each of June 1 and December 1. This dividend policy was established as Aur's financial strength permits the payment of regular dividends while still being able to meet its future financing needs to achieve its growth objectives, including the development of currently owned mining projects, from current cash resources, expected continued operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and available borrowing capacity. Business development Aur's decision to proceed with the construction of the Duck Pond A duck pond is a pond for ducks and other water birds. Often such ponds are artificial and ornamental in nature, in public parks for example. Sometimes they may be less ornamental, in a farmyard for example. Some duck ponds are purposefully built for the shooting of duck. Mine in central Newfoundland Newfoundland, breed of dog Newfoundland, breed of massive, powerful working dog developed in Newfoundland, probably in the 17th cent., and later perfected in England. It stands from 25 to 28 in. (63.5–71. awaits receiving a commitment from the Government of Newfoundland and Labrador Newfoundland and Labrador, province, Canada Newfoundland and Labrador (ny  `fənlənd, ny to provide financial
support for surface infrastructure. A decision regarding this
Government's commitment is expected by mid-November n. 1. the middle part of November.Noun 1. mid-November - the middle part of November period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue 2004. Business development expenses were lower than budgeted at $0.6 million and $2.9 million in the third quarter and year-to-date 2004, respectively, compared to $0.6 million and $2.2 million, respectively, in 2003. Costs incurred for the cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. merger with Inmet Mining The 'Inmet Mining Corporation is a Canadian mining corporation that currently holds an 18% stake in Ok Tedi Mining Limited. Corporation of approximately $0.5 million were included in the business development expenses in the second quarter of 2004. The evaluation of new acquisition opportunities in North, Central and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. continues. Business development expenses are expected to be as budgeted at $5.4 million for the year. Administration Administration expenses were as budgeted at $1.7 million and $4.9 million in the third quarter and year-to-date 2004, respectively, compared to $1.6 million and $4.1 million, respectively, in 2003. Administration expenses are expected to be as budgeted at $6.0 million for the year. Depreciation and amortization Depreciation and amortization expenses were lower than budgeted at $8.6 million and $27.8 million in the third quarter and year-to-date 2004, respectively, compared to $9.0 million and $29.8 million, respectively, in 2003. Depreciation and amortization expenses are expected to be essentially as budgeted at $39 million for the year. Mine closure and site restoration Non-cash mine closure and site-restoration expenses were as budgeted at $0.8 million and $1.8 million in the third quarter and year-to-date 2004, respectively, compared to $0.7 million and $2.0 million, respectively, in 2003. Non-cash mine closure and site restoration costs are expected to be as budgeted at $2.2 million for the year. Interest on long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. Interest expense on Aur's long-term debt was as budgeted at $2.1 million and $6.4 million in the third quarter and year-to-date 2004, respectively, compared to $2.0 million and $5.5 million, respectively, in 2003. The principal reason for the higher interest expense this year compared to 2003 is that the 6.75% fixed interest rate on the $125.0 million senior notes issued on March 10, 2003, is higher than the lower Libor denominated floating interest rates on Aur's previous bank loan, which was repaid on March 10, 2003. Interest expense is expected to be as budgeted at $8.4 million for the year. Bank financing costs written-off On March 10, 2003, Aur issued $125.0 million of 6.75% senior notes. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). were used primarily to fully repay the balance of Aur's bank loan. A one-time, non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to earnings of $4.3 million, being the unamortized balance of the previously capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. financing costs associated with obtaining the bank loan, was recorded in the first quarter of 2003. Stock-based compensation Stock-based compensation expense was $0.1 million and $0.3 million in the third quarter and year to date 2004, respectively, the same as in 2003. Based upon options granted during the period January 1, 2003 to September 30, 2004, stock-based compensation expense for the year would total $0.4 million. Other expenses (revenues) Other expenses (revenues) resulted in a net revenue of $0.1 million and $0.5 million in the third quarter and year to date 2004, respectively, compared to a net expense of $0.1 million and $1.1 million in 2003. Net revenues in 2004 were primarily due to proceeds from property option payments resulting from the optioning of certain of Aur's Val d'Or Val d'Or (väl dôr), town (1991 pop. 23,842), SW Que., Canada, SE of Rouyn-Noranda. It is a mining center. Gold was discovered in the region in 1909; copper, zinc, lead, and molybdenum are also mined. properties in 2003 and favourable foreign exchange gains at Aur's Chilean mining operations. Other expenses (revenues) are expected to be approximately $1.1 million better than the $0.6 million net expense originally budgeted for the year. Provision for income and resource taxes Provision for taxes was $0.8 million higher than budget at $4.7 million in the third quarter of 2004 and was $2.9 million higher than budget at $14.3 million for the year to date, compared to $1.5 million and $3.5 million, respectively, in 2003. Year to date cash taxes, primarily related to Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. mining duties on Aur's share of Louvicourt's income, totalled $2.6 million while non-cash future taxes totalled $11.7 million. Cash taxes in 2003 totalled $0.7 million. The higher tax expense in 2004 is as a result of higher earnings. As a result of higher than expected copper prices, the provision for taxes is expected to be $7.0 million higher than budgeted at $8.5 million for cash taxes and $15.0 million for future taxes in 2004. Non-controlling interests Non-controlling interests expense, related to Aur's partners' interests in the Andacollo and Quebrada Blanca mines, was $1.6 million and $4.8 million, respectively, higher than budget at $3.9 million and $12.1 million, respectively, in the third quarter and year to date 2004. Non-controlling interests expense was $0.8 million and $1.8 million, respectively, in 2003. Cash payments to non-controlling interests totalled $2.3 million and $10.3 million, respectively, in the third quarter and year to date 2004, compared to $nil in 2003. Due to preferential pref·er·en·tial adj. 1. Of, relating to, or giving advantage or preference: preferential treatment. 2. rights to cash flows related to shareholder debt obligations of Andacollo, Aur has the right to receive, as at September 30, 2004, 70% of the first $22.1 million, plus interest, of Andacollo's net cash flow and 63% of all cash distributions thereafter. Due to preferential rights to cash flows related to shareholder debt obligations of Quebrada Blanca, Aur has the right to receive, as at September 30, 2004, $69.5 million (plus interest on $35.5 million) of the first $73.3 million of Quebrada Blanca's net cash flow and 76.5% of all cash distributions thereafter. No expenses for net profits interests for these mines are expected in 2004 as the debt owed to the shareholders is not expected to be fully repaid by the end of 2004; however, at current copper prices, it is expected that net profits interests expenses will commence in early 2005 at Quebrada Blanca and in the fourth quarter of 2005 at Andacollo. Non-controlling interests expense and related cash payments are expected to be $9.5 million higher than budgeted at $19.3 million for the year as a result of higher revenues due to higher forecast copper prices for the year than was originally budgeted. Working capital Working capital increased $32.2 million and $89.0 million during the third quarter and year to date 2004, to $187.2 million at September 30, 2004, primarily due to increased cash resources resulting from operating activities. The final $2.3 million annual payment to a Chilean government entity in satisfaction of the purchase of Quebrada Blanca was made on June 30, 2004. On June 30, 2003, Aur repaid the $35 million convertible debenture Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. owed to Teck Cominco Teck-Cominco TSX | TCK.B[1], NYSE: TCK) is a Canadian mining company. It was formed from the amalgamation of Teck and Cominco in 2001. Cominco started in 1906 as The Consolidated Mining and Smelting Company of Canada, formed by the amalgamation of several Limited ("Teck Cominco") with cash. The repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan eliminated the liability and equity portions of the convertible debenture, resulting in a $33.5 million reduction in shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. , reduced interest expense by $0.1 million, eliminated the accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of the equity portion in shareholders' equity of $1.4 million and eliminated the cash interest payment to Teck Cominco of $1.5 million that would otherwise have been incurred pursuant to the debenture debenture (dəbĕn`chər), document acknowledging indebtedness. In Great Britain a debenture is practically the same as a bond, and debenture stock is similar to preferred stock. . Under the terms of the purchase agreement for the Quebrada Blanca mine, Teck Cominco is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to a payment of $10.0 million per year (or after 2006 or the repayment of the senior notes, $2.5 million quarterly) to a maximum of $40.0 million should average yearly (or after 2006 or the repayment of the senior notes, quarterly) copper prices equal or exceed at the end of the relevant period a specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. price per pound of copper, adjusted for United States inflation until December 31, 2012, which price at December 31, 2003 was $1.19 per pound. No payment was required for this commitment in 2003. Based upon the actual average copper price for the first three quarters of 2004 and the period end forward copper price for the balance of the year, the average copper price for 2004 is expected to exceed the Adjusted Copper Price for 2004. Accordingly, a $10.0 million liability to Teck Cominco remains accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. at September 30, 2004 with a corresponding amount in property, plant and equipment assets at Quebrada Blanca, amortization for which would commence in 2005. Property, plant and equipment Investments in property, plant and equipment and mineral property development totalled $1.3 million and $4.4 million, respectively, in the third quarter and year to date 2004 compared to $1.4 million and $3.8 million, respectively, in 2003. Aur anticipates that expenditures on property, plant and equipment in 2004 will be as budgeted at $5.2 million, excluding any expenditures in 2004 should development of the Duck Pond deposit commence in the fourth quarter of the year. No new capital leases were entered into in the third quarter of 2004. In the second quarter of 2004, Quebrada Blanca entered into a capital lease to acquire a ninth new mine haulage truck, resulting in mine equipment under capital lease totalling a net $13.4 million at Quebrada Blanca. Mine equipment under capital lease at Quebrada Blanca increased in the first three quarters of 2003 by $6.1 million to a net $14.5 million at September 30, 2003 as a result of the acquisition of three of the eight new mine haulage trucks required to complete the replacement of the existing fleet and a new loader A program routine that copies a program into memory for execution. and a drill. The replaced haulage fleet was disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of for proceeds of $0.4 million in the first quarter of 2003. Hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. Aur's forward sale of 4.2 million and 45.8 million pounds of copper and matching call options at $0.83 per pound in the third quarter and year to date 2004, respectively, did not generate any net revenue. In the third quarter of 2003, revenues from the forward sale of 4.2 million pounds of copper at $0.83 per pound totalled $0.1 million and assisted Aur in realizing an average of $0.82 per pound of copper sold. In the first nine months of 2003, revenues from the forward sales forward sales npl → ventas fpl a término of 45.8 million pounds of copper at $0.83 per pound totalled $3.5 million and assisted Aur in realizing an average of $0.80 per pound of copper sold. No revenue was realized from the matching call options that expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. during the relevant periods in 2003. For the balance of 2004, Aur has sold forward and holds matching call options for 4.2 million pounds of copper at a price of $0.83 per pound. Aur, therefore, participates fully in copper prices above $0.83 per pound while remaining protected from prices below $0.83 for 4.2 million pounds of its remaining copper production in 2004. Aur does not have any other hedges. Contingency contingency n. an event that might not occur. The disputed reassessment Reassessment The process of re-determining the value of property or land for tax purposes. Notes: Property is usually reassessed on an annual basis. You may request a "reassessment" if you disagree with your assessment. of guarantee fees issued by the Chilean Internal Revenue Service (the "IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. ") to Compania Minera Minera (Welsh: Mwynglawdd) is a small village in the county borough of Wrexham in north-east Wales. It borders Coedpoeth to the east and Bwlchgwyn to the west. Quebrada Blanca S.A. ("CMQB"), as described in note 11 to Aur's unaudited interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the period ended September 30, 2004, has not been resolved to date. It is the opinion of management and CMQB's legal counsel that CMQB's income tax filings to 1997 with respect to the guarantee fees are correct and that no amounts are owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the IRS. Aur's third quarter analyst conference call will be held at 9:00 a.m., ET, on Wednesday Wednesday: see week. , October October: see month. 27, 2004. This listen-only webcast can be accessed by going directly to CCN CCN Cloud Condensation Nuclei CCN Church Communication Network CCN Conseil Canadien des Normes (Standards Council of Canada) CCN Critical Care Nurse CCN Certified Clinical Nutritionist CCN Community Care Network CCN Cyclin Matthews Matthews may refer to: In places:
This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are based on current expectations and which involve risks and uncertainties, including those referred to in Aur's 2003 Annual Report and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. in Aur's Annual Information Form dated March 18, 2004 and filed with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . Such forward-looking statements include statements regarding financial results and expectations for 2004 and include estimates and/or assumptions in respect of copper production, copper prices and operating costs. There can be no assurance that such statements or assumptions will prove to be accurate as actual results and future events can differ materially.
PRODUCTION STATISTICS
Three months ended September 30
---------------------------------------------------------------------
Louvicourt Andacollo Quebrada Total
2004 Blanca
---------------------------------------------------------------------
Ore (tonnes) 308,116 659,799 1,827,664 n/a
Grade
Copper (%) 2.45 0.79 1.21 n/a
Soluble copper (%) n/a 0.67 1.08 n/a
Zinc (%) 2.33 - - n/a
Gold (oz/t) 0.03 - - n/a
Silver (oz/t) 0.84 - - n/a
Copper (pounds)
Produced 4,815,000 10,462,000 39,393,000 54,670,000
Sold 4,815,000 11,016,000 40,513,000 56,344,000
Less: non-controlling
interests - (3,305,000) (4,051,000) (7,356,000)
Net to Aur 4,815,000 7,711,000 36,462,000 48,988,000
Inventory - 939,000 2,586,000 3,525,000
Other metals produced
and sold
Zinc (pounds) 3,933,000 - - 3,933,000
Gold (ounces) 1,400 - - 1,400
Silver (ounces) 43,000 - - 43,000
Cost per pound of copper
sold $0.41 $0.57 $0.65 $0.61
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Louvicourt Andacollo Quebrada Total
2003 Blanca
---------------------------------------------------------------------
Ore (tonnes) 283,675 853,924 1,774,418 n/a
Grade
Copper (%) 2.59 0.87 1.14 n/a
Soluble copper (%) n/a 0.82 1.01 n/a
Zinc (%) 2.71 - - n/a
Gold (oz/t) 0.02 - - n/a
Silver (oz/t) 1.19 - - n/a
Copper (pounds)
Produced 4,714,000 9,647,000 44,357,000 58,718,000
Sold 4,714,000 9,722,000 44,815,000 59,251,000
Less: non-controlling
interests - (2,916,000) (4,482,000) (7,398,000)
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Net to Aur 4,714,000 6,806,000 40,333,000 51,853,000
Inventory - 74,000 1,206,000 1,280,000
Other metals produced
and sold
Zinc (pounds) 4,346,000 - - 4,346,000
Gold (ounces) 1,200 - - 1,200
Silver (ounces) 60,000 - - 60,000
Cost per pound of copper
sold $0.44 $0.50 $0.49 $0.49
---------------------------------------------------------------------
Notes: 1. Tonnes of ore milled at Louvicourt and stacked at Andacollo and Quebrada Blanca and all metal production figures are shown on a 100% basis with the exception of metal production figures for Louvicourt, which represents Aur's 30% joint venture interest. Net copper to Aur represents Aur's 30%, 70% and 90% beneficial interests in Louvicourt, Andacollo and Quebrada Blanca, respectively. At Quebrada Blanca, the ore is material stacked in the period and excludes 2,708,430 tonnes (2003-1,926,043 tonnes) of dump leach ore. 2. Cash operating cost per pound of copper sold includes smelting, refining, transportation and marketing costs, settlement adjustments, provisional Temporary; not permanent. Tentative, contingent, preliminary. A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment. pricing, and is net of by-product credits where applicable.
PRODUCTION STATISTICS
Nine months ended September 30
---------------------------------------------------------------------
Louvicourt Andacollo Quebrada Total
2004 Blanca
---------------------------------------------------------------------
Ore (tonnes) 910,935 2,356,992 5,247,671 n/a
Grade
Copper (%) 2.77 0.78 1.23 n/a
Soluble copper (%) n/a 0.67 1.08 n/a
Zinc (%) 2.05 - - n/a
Gold (oz/t) 0.03 - - n/a
Silver (oz/t) 0.88 - - n/a
Copper (pounds)
Produced 16,044,000 33,369,000 123,248,000 172,661,000
Sold 16,044,000 33,132,000 123,468,000 172,644,000
Less: non-
controlling
interests - (9,940,000) (12,347,000) (22,287,000)
---------------------------------------------------------------------
Net to Aur 16,044,000 23,192,000 111,121,000 150,357,000
Inventory - 939,000 2,586,000 3,525,000
Other metals
produced and sold
Zinc (pounds) 10,387,000 - - 10,387,000
Gold (ounces) 4,900 - - 4,900
Silver (ounces) 142,000 - - 142,000
Cost per pound of
copper sold $0.42 $0.53 $0.60 $0.57
---------------------------------------------------------------------
Louvicourt Andacollo Quebrada Total
2003 Blanca
---------------------------------------------------------------------
Ore (tonnes) 967,821 2,623,187 5,384,425 N/a
Grade
Copper (%) 3.15 0.79 1.28 N/a
Soluble copper (%) n/a 0.71 1.14 N/a
Zinc (%) 1.91 - - N/a
Gold (oz/t) 0.02 - - N/a
Silver (oz/t) 0.93 - - N/a
Copper (pounds)
Produced 19,544,000 34,629,000 128,765,000 182,938,000
Sold 19,544,000 35,347,000 129,741,000 184,632,000
Less: non-
controlling
interests - (10,604,000) (12,974,000) (23,578,000)
---------------------------------------------------------------------
Net to Aur 19,544,000 27,743,000 116,767,000 161,054,000
Inventory - 74,000 1,206,000 1,280,000
Other metals
produced and sold
Zinc (pounds) 10,361,000 - - 10,361,000
Gold (ounces) 4,600 - - 4,600
Silver (ounces) 170,000 - - 170,000
Cost per pound of
copper sold $0.44 $0.52 $0.48 $0.48
---------------------------------------------------------------------
Notes: 1. Tonnes of ore milled at Louvicourt and stacked at Andacollo and Quebrada Blanca and all metal production figures are shown on a 100% basis with the exception of metal production figures for Louvicourt, which represents Aur's 30% joint venture interest. Net copper to Aur represents Aur's 30%, 70% and 90% beneficial interests in Louvicourt, Andacollo and Quebrada Blanca, respectively. At Quebrada Blanca, the ore is material stacked in the period and excludes 5,725,669 tonnes (2003-4,419,412 tonnes) of dump leach ore. 2. Cash operating cost per pound of copper sold includes smelting, refining, transportation and marketing costs, settlement adjustments, provisional pricing, and is net of by-product credits where applicable.
Consolidated Statements of Operations Three months Nine months
(in thousands of United States dollars ended ended
except earnings per share) September 30 September 30
(Unaudited) -------------------------------
2004 2003 2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
Operating revenues
Mining 80,139 50,507 238,996 150,663
Hedging - 145 - 3,505
---------------------------------------------------------------------
80,139 50,652 238,996 154,168
---------------------------------------------------------------------
Expenses
Mining 37,030 31,226 105,585 95,548
Business development 641 565 2,904 2,248
Administration 1,658 1,553 4,888 4,098
Depreciation and amortization 8,600 9,052 27,815 29,828
Mine closure and site restoration 785 724 1,842 2,012
Interest on long-term debt 2,110 2,039 6,352 5,476
Bank financing costs written-off
(note 5) - - - 4,279
Stock-based compensation 96 67 283 226
Other expenses (revenues) (note 8) (55) 101 (498) 1,119
---------------------------------------------------------------------
50,865 45,327 149,171 144,834
---------------------------------------------------------------------
Earnings before taxes and
non-controlling interests 29,274 5,325 89,825 9,334
Income and resource taxes (4,670) (1,466) (14,319) (3,478)
---------------------------------------------------------------------
Earnings before non-controlling
interests 24,604 3,859 75,506 5,856
Non-controlling interests (3,875) (803) (12,109) (1,797)
---------------------------------------------------------------------
Net earnings for the period 20,729 3,056 63,397 4,059
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic and diluted earnings per
share (note 7(b)) 0.22 0.03 0.67 0.04
---------------------------------------------------------------------
---------------------------------------------------------------------
Consolidated Statements of Retained Earnings
(in thousands of United States dollars)
(Unaudited) Three months Nine months
ended ended
September 30 September 30
----------------------------
2004 2003 2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
Retained earnings - beginning of period 82,335 29,809 39,667 29,450
Net earnings for the period 20,729 3,056 63,397 4,059
Accretion of equity portion of
convertible debt - - - (644)
---------------------------------------------------------------------
Retained earnings - end of period 103,064 32,865 103,064 32,865
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Consolidated Segmented Information on Operations for the three months
ended September 30
(in thousands of United States dollars)
(Unaudited)
Que-
Louvicourt Anda- brada Corp- Total
2004 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating revenues
Mining 9,230 15,246 55,663 - 80,139
Hedging - - - - -
---------------------------------------------------------------------
9,230 15,246 55,663 - 80,139
---------------------------------------------------------------------
Expenses
Mining 4,533 6,298 26,199 - 37,030
Business development - - - 641 641
Administration - - - 1,658 1,658
Depreciation and amortization 627 1,910 5,821 242 8,600
Mine closure and site restoration 21 168 596 - 785
Interest on long-term debt - - - 2,110 2,110
Stock-based compensation - - - 96 96
Other expenses (revenues) 54 113 457 (679) (55)
---------------------------------------------------------------------
5,235 8,489 33,073 4,068 50,865
---------------------------------------------------------------------
Earnings (loss) before taxes 3,995 6,757 22,590 (4,068) 29,274
Income and resource taxes (1,895) - (4,111) 1,336 (4,670)
---------------------------------------------------------------------
Earnings (loss) before
non-controlling interests 2,100 6,757 18,479 (2,732) 24,604
Non-controlling interests - (2,027) (1,848) - (3,875)
---------------------------------------------------------------------
Net earnings (loss) 2,100 4,730 16,631 (2,732) 20,729
---------------------------------------------------------------------
---------------------------------------------------------------------
Que-
Louvicourt Anda- brada Corp- Total
2003 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating revenues
Mining 6,319 7,852 36,336 - 50,507
Hedging - - - 145 145
---------------------------------------------------------------------
6,319 7,852 36,336 145 50,652
---------------------------------------------------------------------
Expenses
Mining 4,452 4,824 21,950 - 31,226
Business development - - - 565 565
Administration - - - 1,553 1,553
Depreciation and amortization 728 1,965 6,180 179 9,052
Mine closure and site restoration 25 115 584 - 724
Interest on long-term debt - - - 2,039 2,039
Stock-based compensation - - - 67 67
Other expenses (revenues) (2) 91 21 (9) 101
---------------------------------------------------------------------
5,203 6,995 28,735 4,394 45,327
---------------------------------------------------------------------
Earnings (loss) before taxes 1,116 857 7,601 (4,249) 5,325
Income and resource taxes (582) (274) (1,321) 711 (1,466)
---------------------------------------------------------------------
Earnings (loss) before
non-controlling interests 534 583 6,280 (3,538) 3,859
Non-controlling interests - (175) (628) - (803)
---------------------------------------------------------------------
Net earnings (loss) 534 408 5,652 (3,538) 3,056
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Consolidated Segmented Information on Operations for the nine months
ended September 30
(in thousands of United States dollars)
(Unaudited)
Que-
Louvicourt Anda- brada Corp- Total
2004 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating revenues
Mining 29,247 44,679 165,070 - 238,996
Hedging - - - - -
---------------------------------------------------------------------
29,247 44,679 165,070 - 238,996
---------------------------------------------------------------------
Expenses
Mining 14,301 17,391 73,893 - 105,585
Business development - - - 2,904 2,904
Administration - - - 4,888 4,888
Depreciation and
amortization 1,805 6,049 18,479 1,482 27,815
Mine closure and site
restoration 101 338 1,403 - 1,842
Interest on long-term debt - - - 6,352 6,352
Stock-based compensation - - - 283 283
Other expenses (revenues) (11) 63 221 (771) (498)
---------------------------------------------------------------------
16,196 23,841 93,996 15,138 149,171
---------------------------------------------------------------------
Earnings (loss) before
taxes 13,051 20,838 71,074 (15,138) 89,825
Income and resource taxes (5,796) - (12,498) 3,975 (14,319)
---------------------------------------------------------------------
Earnings (loss) before
non-controlling interests 7,255 20,838 58,576 (11,163) 75,506
Non-controlling interests - (6,251) (5,858) - (12,109)
---------------------------------------------------------------------
Net earnings (loss) 7,255 14,587 52,718 (11,163) 63,397
---------------------------------------------------------------------
---------------------------------------------------------------------
Que-
Louvicourt Anda- brada Corp- Total
2003 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating revenues
Mining 21,428 27,665 101,570 - 150,663
Hedging - - - 3,505 3,505
---------------------------------------------------------------------
21,428 27,665 101,570 3,505 154,168
---------------------------------------------------------------------
Expenses
Mining 14,847 18,462 62,239 - 95,548
Business development - - - 2,248 2,248
Administration - - - 4,098 4,098
Depreciation and amortization 2,479 6,964 19,506 879 29,828
Mine closure and
site restoration 98 404 1,510 - 2,012
Interest on long-term debt - - - 5,476 5,476
Bank financing costs written-off - - - 4,279 4,279
Stock-based compensation - - - 226 226
Other expenses (revenues) - 248 166 705 1,119
---------------------------------------------------------------------
17,424 26,078 83,421 17,911 144,834
---------------------------------------------------------------------
Earnings (loss) before taxes 4,004 1,587 18,149 (14,406) 9,334
Income and resource taxes (2,082) (656) (2,974) 2,234 (3,478)
---------------------------------------------------------------------
Earnings (loss) before
non-controlling interests 1,922 931 15,175 (12,172) 5,856
Non-controlling interests - (279) (1,518) - (1,797)
---------------------------------------------------------------------
Net earnings (loss) 1,922 652 13,657 (12,172) 4,059
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Consolidated Balance Sheets
(in thousands of United States dollars) As at
--------------------
September December
30 31
2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
(Unaudited)
$ $
Assets
Current
Cash 160,467 75,313
Receivables 14,905 12,187
Inventories and prepaid expenses (note 2) 47,261 44,552
---------------------------------------------------------------------
222,633 132,052
Property, plant and equipment 280,405 291,544
Future income and resource taxes 7,721 7,721
Long-term copper inventory and other (note 3) 21,944 22,265
---------------------------------------------------------------------
532,703 453,582
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current
Accounts payable and accrued liabilities 20,215 27,871
Current portion of obligation under capital lease 5,179 5,944
Copper price participation (note 4) 10,000 -
---------------------------------------------------------------------
35,394 33,815
---------------------------------------------------------------------
Senior notes (note 6) 125,000 125,000
Obligation under capital lease 9,822 11,151
Obligation on properties purchased 437 437
Future income and resource taxes 18,085 6,422
Mine closure and site restoration 22,204 20,702
Non-controlling interests 36,567 34,755
---------------------------------------------------------------------
212,115 198,467
---------------------------------------------------------------------
247,509 232,282
---------------------------------------------------------------------
Contingency (note 11)
Shareholders' equity
Share capital (note 7) 178,052 177,160
Contributed surplus - stock-based compensation 594 311
Cumulative translation adjustment 3,484 4,162
Retained earnings 103,064 39,667
---------------------------------------------------------------------
285,194 221,300
---------------------------------------------------------------------
532,703 453,582
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Consolidated Segmented Balance Sheet Information as at
(in thousands of United States dollars)
Que-
September 30, 2004 Louvicourt Anda- brada Corp- Total
(Unaudited) collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Assets
Current
Cash 556 1,416 32,089 126,406 160,467
Receivables 8,739 975 4,827 364 14,905
Inventories and prepaid
expenses 383 10,081 36,410 387 47,261
---------------------------------------------------------------------
9,678 12,472 73,326 127,157 222,633
Property, plant and equipment 996 35,461 236,253 7,695 280,405
Future income and resource taxes - 4,334 - 3,387 7,721
Long-term copper inventory
and other - - 20,425 1,519 21,944
---------------------------------------------------------------------
10,674 52,267 330,004 139,758 532,703
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities
Current
Accounts payable and accrued
liabilities 1,309 2,428 10,665 5,813 20,215
Current portion of obligation
under capital leases - 1,556 3,623 - 5,179
Copper price participation - - - 10,000 10,000
---------------------------------------------------------------------
1,309 3,984 14,288 15,813 35,394
Senior notes - - - 125,000 125,000
Obligation under capital leases - 186 9,636 - 9,822
Obligation on properties purchased - - - 437 437
Future income and resource taxes - - 18,085 - 18,085
Mine closure and site
restoration 1,663 4,088 15,770 683 22,204
Non-controlling interests - 14,355 22,212 - 36,567
---------------------------------------------------------------------
2,972 22,613 79,991 141,933 247,509
---------------------------------------------------------------------
---------------------------------------------------------------------
Que-
Louvicourt Anda- brada Corp- Total
December 31, 2003 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Assets
Current
Cash 303 1,205 10,928 62,877 75,313
Receivables 7,070 829 3,811 477 12,187
Inventories and prepaid
expenses 523 8,117 35,645 267 44,552
---------------------------------------------------------------------
7,896 10,151 50,384 63,621 132,052
Property, plant and equipment 2,728 39,692 242,116 7,008 291,544
Future income and resource taxes - 4,334 - 3,387 7,721
Long-term copper inventory
and other - - 19,394 2,871 22,265
---------------------------------------------------------------------
10,624 54,177 311,894 76,887 453,582
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities
Current
Accounts payable and accrued
liabilities 1,294 3,169 13,412 9,996 27,871
Current portion of obligation
under capital lease - 2,629 3,315 - 5,944
---------------------------------------------------------------------
1,294 5,798 16,727 9,996 33,815
Senior notes - - - 125,000 125,000
Obligation under capital leases - 365 10,786 - 11,151
Obligation on properties purchased - - - 437 437
Future income and resource taxes - - 6,422 - 6,422
Mine closure and site
restoration 1,472 3,870 14,695 665 20,702
Non-controlling interests - 14,171 20,584 - 34,755
---------------------------------------------------------------------
2,766 24,204 69,214 136,098 232,282
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Consolidated Statements of Cash Flow
(in thousands of United Three months ended Nine months ended
States dollars) September 30 September 30
-------------------------------------
(Unaudited) 2004 2003 2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
Operating activities
Net earnings for the period 20,729 3,056 63,397 4,059
Non-cash items -
Depreciation and amortization 8,600 9,052 27,815 29,828
Future income and resource taxes 3,298 1,282 11,663 2,805
Mine closure and site restoration 785 724 1,842 2,012
Gain on disposal of property,
plant and equipment (29) (206) (48) (496)
Interest on obligation on property
purchased 13 48 387 553
Bank financing costs written-off - - - 4,279
Gain on sale of marketable
securities (38) - (38) -
Stock-based compensation 96 67 283 226
Non-controlling interests 3,875 803 12,109 1,797
---------------------------------------------------------------------
37,329 14,826 117,410 45,063
Net change in non-cash working
capital items (note 9) (5,768) (3,588) (11,182) (6,587)
---------------------------------------------------------------------
31,561 11,238 106,228 38,476
---------------------------------------------------------------------
Financing activities
Senior notes proceeds - - - 125,000
Senior notes financing costs (note 6) - - - (1,749)
Repayments of bank loan (note 5) - - - (120,532)
Repayment of convertible debt - - - (35,000)
Repayments of capital leases (967) (880) (3,721) (2,611)
Payments of non-controlling
interests (2,280) - (10,297) -
Common shares issued 69 1,232 892 2,189
Accretion of equity portion of
convertible debt - - - (644)
Other (669) 169 (1,452) 5
---------------------------------------------------------------------
(3,847) 521 (14,578) (33,342)
---------------------------------------------------------------------
Investing activities
Property, plant and equipment (997) (871) (3,637) (2,509)
Mineral property development (321) (564) (741) (1,298)
Principal payment on property
purchased - - (2,250) (2,250)
Proceeds on disposal of property,
plant and equipment 32 440 94 1,044
Proceeds on sale of marketable
securities 38 - 38 -
---------------------------------------------------------------------
(1,248) (995) (6,496) (5,013)
---------------------------------------------------------------------
Increase in cash for the period 26,466 10,764 85,154 121
Cash - beginning of period 134,001 47,226 75,313 57,869
---------------------------------------------------------------------
Cash - end of period 160,467 57,990 160,467 57,990
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Consolidated Segmented Information on Cash Flow for the three months
ended September 30
(in thousands of United States dollars)
(Unaudited)
Que-
Louvicourt Anda- brada Corp- Total
2004 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating activities
Net earnings (loss) 2,100 4,730 16,631 (2,732) 20,729
Non-cash items 1,963 4,112 11,563 (1,038) 16,600
---------------------------------------------------------------------
4,063 8,842 28,194 (3,770) 37,329
Net change in non-cash
working capital items 693 (854) (3,580) (2,027) (5,768)
---------------------------------------------------------------------
4,756 7,988 24,614 (5,797) 31,561
---------------------------------------------------------------------
Financing activities
Repayments of capital leases - - (967) - (967)
Payments of non-controlling
interests - (2,280) - - (2,280)
Common shares issued - - - 69 69
Other - - (1,030) 361 (669)
---------------------------------------------------------------------
- (2,280) (1,997) 430 (3,847)
---------------------------------------------------------------------
Investing activities
Property, plant and equipment - (569) (402) (26) (997)
Mineral property development - - - (321) (321)
Principal payment on property
purchased - - - - -
Other 32 - - 38 70
---------------------------------------------------------------------
32 (569) (402) (309) (1,248)
---------------------------------------------------------------------
Intersegment distributions (4,518) (5,353) (251) 10,122 -
---------------------------------------------------------------------
Increase (decrease) in cash
for the period 270 (214) 21,964 4,446 26,466
Cash - beginning of period 286 1,630 10,125 121,960 134,001
---------------------------------------------------------------------
Cash - end of period 556 1,416 32,089 126,406 160,467
---------------------------------------------------------------------
---------------------------------------------------------------------
Que-
Louvicourt Anda- brada Corp- Total
2003 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating activities
Net earnings (loss) 534 408 5,652 (3,538) 3,056
Non-cash items 1,171 2,529 8,485 (415) 11,770
---------------------------------------------------------------------
1,705 2,937 14,137 (3,953) 14,826
Net change in non-cash
working capital items 200 (766) (1,126) (1,896) (3,588)
---------------------------------------------------------------------
1,905 2,171 13,011 (5,849) 11,238
---------------------------------------------------------------------
Financing activities
Capital lease principal payments - - (880) - (880)
Common shares issued - - - 1,232 1,232
Foreign exchange and other - - - 169 169
---------------------------------------------------------------------
- - (880) 1,401 521
---------------------------------------------------------------------
Investing activities
Property, plant and equipment - (447) (427) 3 (871)
Mineral property acquisition
and development - - - (564) (564)
Proceeds on disposal of
property, plant and equipment 31 - 200 209 440
---------------------------------------------------------------------
31 (447) (227) (352) (995)
---------------------------------------------------------------------
Intersegment distributions (1,910) (1,847) (325) 4,082 -
---------------------------------------------------------------------
Increase (decrease) in cash
for the period 26 (123) 11,579 (718) 10,764
Cash - beginning of period 511 2,461 8,632 35,622 47,226
---------------------------------------------------------------------
Cash - end of period 537 2,338 20,211 34,904 57,990
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Consolidated Segmented Information on Cash Flow for the nine months
ended September 30
(in thousands of United States dollars)
(Unaudited)
Que-
Louvicourt Anda- brada Corp- Total
2004 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating activities
Net earnings (loss) 7,255 14,587 52,718 (11,163) 63,397
Non-cash items 5,906 12,638 37,401 (1,932) 54,013
---------------------------------------------------------------------
13,161 27,225 90,119 (13,095) 117,410
Net change in non-cash
working capital items (1,515) (2,852) (4,528) (2,287) (11,182)
---------------------------------------------------------------------
11,646 24,373 85,591 (15,382) 106,228
---------------------------------------------------------------------
Financing activities
Repayments of capital leases - (1,276) (2,445) - (3,721)
Payments of non-controlling
interests - (6,066) (4,231) - (10,297)
Common shares issued - - - 892 892
Other - - (1,030) (422) (1,452)
---------------------------------------------------------------------
- (7,342) (7,706) 470 (14,578)
---------------------------------------------------------------------
Investing activities
Property, plant and equipment - (2,497) (1,064) (76) (3,637)
Mineral property development - - - (741) (741)
Principal payment on property
purchased - - - (2,250) (2,250)
Other 47 - 40 45 132
---------------------------------------------------------------------
47 (2,497) (1,024) (3,022) (6,496)
---------------------------------------------------------------------
Intersegment
distributions (11,440) (14,323) (55,700) 81,463 -
---------------------------------------------------------------------
Increase in cash for
the period 253 211 21,161 63,529 85,154
Cash - beginning of period 303 1,205 10,928 62,877 75,313
---------------------------------------------------------------------
Cash - end of period 556 1,416 32,089 126,406 160,467
---------------------------------------------------------------------
---------------------------------------------------------------------
Que-
Louvicourt Anda- brada Corp- Total
2003 collo Blanca orate
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $ $
Operating activities
Net earnings (loss) 1,922 652 13,657 (12,172) 4,059
Non-cash items 4,093 8,303 24,974 3,634 41,004
---------------------------------------------------------------------
6,015 8,955 38,631 (8,538) 45,063
Net change in non-cash
working capital items 1,650 664 (8,721) (180) (6,587)
---------------------------------------------------------------------
7,665 9,619 29,910 (8,718) 38,476
---------------------------------------------------------------------
Financing activities
Senior notes proceeds - - - 125,000 125,000
Senior notes financing costs - - - (1,749) (1,749)
Convertible debt repayment - - - (35,000) (35,000)
Principal repayment of bank
loan - - - (120,532) (120,532)
Capital lease principal
payments - (1,177) (1,434) - (2,611)
Common shares issued - - - 2,189 2,189
Accretion of equity portion
of convertible debt - - - (644) (644)
Foreign exchange and other - - - 5 5
---------------------------------------------------------------------
- (1,177) (1,434) (30,731) (33,342)
---------------------------------------------------------------------
Investing activities
Property, plant and equipment - (1,331) (1,110) (68) (2,509)
Mineral property acquisition
and development - - - (1,298) (1,298)
Principal payment on property
purchased - - - (2,250) (2,250)
Proceeds on disposal of
property, plant and
equipment 34 - 800 210 1,044
---------------------------------------------------------------------
34 (1,331) (310) (3,406) (5,013)
---------------------------------------------------------------------
Intersegment
distributions (7,568) (5,771) (20,534) 33,873 -
---------------------------------------------------------------------
Increase (decrease) in
cash for the period 131 1,340 7,632 (8,982) 121
Cash - beginning of period 406 998 12,579 43,886 57,869
---------------------------------------------------------------------
Cash - end of period 537 2,338 20,211 34,904 57,990
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
AUR RESOURCES INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine month periods ended September 30, 2004 and
2003
(in thousands of United States dollars except where otherwise noted)
(Unaudited)
1. Accounting policies The interim unaudited consolidated financial statements of Aur Resources Inc. ("Aur") have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of using the same accounting policies as those disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in note 1 to Aur's audited consolidated financial statements for the year ended December 31, 2003. These interim unaudited consolidated financial statements should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with Aur's audited annual consolidated financial statements included in Aur's Annual Report for the year 2003. Comparative figures for 2003 have been restated to reflect the changes in accounting policies disclosed in note 2 to Aur's audited consolidated financial statements for the year ended December 31, 2003. The changes which have been taken place are: the adoption of the new recommendations of the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. ("CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) ") with respect to accounting for asset retirement obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. and with respect to accounting for stock-based compensation in accordance with the fair value method rather than the intrinsic intrinsic /in·trin·sic/ (in-trin´sik) situated entirely within or pertaining exclusively to a part. in·trin·sic adj. 1. Of or relating to the essential nature of a thing. 2. method. The comparative figures for 2003 have also been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the presentation adopted for the current period.
2. Inventories and prepaid expenses
September 30 December 31
2004 2003
------------------------------
$ $
Cathode copper 2,084 1,941
In-process inventories 32,992 31,856
Mine supplies 10,522 9,820
Prepaid expenses 1,663 935
------------------------------
47,261 44,552
------------------------------
------------------------------
3. Long-term copper inventory and other
September 30 December 31
2004 2003
------------------------------
$ $
Long-term in-process copper inventory 18,747 18,747
Deferred financing cost 1,385 1,574
Purchased call options 134 1,297
Other 1,678 647
------------------------------
21,944 22,265
------------------------------
------------------------------
4. Copper price participation Under the terms of the purchase agreement for the Quebrada Blanca mine, Teck Cominco Limited ("Teck Cominco") is entitled to a payment, within five business days after the end of the relevant period, of $10,000 per year (or after 2006 or the repayment of the senior notes, $2,500 quarterly) to a maximum of $40,000, should average yearly (or after 2006 or the repayment of the senior notes, quarterly) copper prices equal or exceed at the end of the relevant period a specified price per pound of copper, adjusted for United States inflation (the "Adjusted Copper Price"), until December 31, 2012, which price at December 31, 2003 was $1.19 per pound. No accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. had been required for this commitment to December 31, 2003. Based upon the actual average copper price for the first three quarters of 2004 and the period end forward copper price for the balance of the year, the average copper price for 2004 is calculated to exceed the Adjusted Copper Price for 2004. Accordingly, a $10,000 liability to Teck Cominco has been accrued at September 30, 2004 with a corresponding amount in property, plant and equipment assets at Quebrada Blanca. 5. Bank loan The bank loan was fully repaid on March 10, 2003 from the proceeds from the issuance of the senior notes (note 6). Upon repayment of the bank loan, Aur incurred a one-time non-cash charge to earnings of $4,279 for the unamortized balance of capitalized financing costs associated with the original $170,000 bank loan. 6 Senior notes Aur completed a $125,000 private placement of senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes on March 10, 2003, which bear interest at 6.75% and are repayable re·pay v. re·paid , re·pay·ing, re·pays v.tr. 1. To pay back: repaid a debt. 2. in four equal annual principal repayments commencing on March 11, 2007. Proceeds from the issuance of the senior notes, net of $1,749 of financing costs, were primarily used to fully repay the balance outstanding of Aur's bank loan (note 5).
7. Share capital, earnings per share and stock-based compensation
(a) Issued and outstanding
2004 2003
---------------------------------------
Shares Amount Shares Amount
---------------------------------------
# 000's $ # 000's $
Common shares
Balance - beginning of period 93,849 177,160 92,452 174,333
Share purchase options
exercised 446 892 447 957
---------------------------------------
Balance - end of period 94,295 178,052 92,899 175,290
---------------------------------------
---------------------------------------
(b) Earnings per common share
Three months ended Nine months ended
September 30 September 30
-----------------------------------------
2004 2003 2004 2003
-----------------------------------------
$ $ $ $
(i) Basic
Numerator
Net earnings 20,729 3,056 63,397 4,059
Accretion of equity portion
of convertible debt charged
to retained earnings, net
of tax - - - (417)
-----------------------------------------
Income available to
shareholders 20,729 3,056 63,397 3,642
-----------------------------------------
Denominator (# 000's)
Weighted average number
of shares 94,156 92,888 94,156 92,888
-----------------------------------------
Basic earnings per share 0.22 0.03 0.67 0.04
-----------------------------------------
-----------------------------------------
(ii) Diluted
Numerator
Income available to
shareholders 20,729 3,056 63,397 3,642
-----------------------------------------
Denominator (# 000's)
Weighted average number
of shares 94,156 92,888 94,156 92,888
Potential incremental
issuance from stock-based
compensation 101 10 101 10
Potential issuance of shares
from purchase options 1,134 931 1,134 931
-----------------------------------------
95,391 93,829 95,391 93,829
-----------------------------------------
Diluted earnings per share 0.22 0.03 0.67 0.04
-----------------------------------------
-----------------------------------------
(c) Stock-based compensation plans At September 30, 2004, Aur had one stock-based compensation plan, a common share purchase option plan (the "Plan"), which is described below. Effective January 1, 2003, Aur adopted the recommendations of the CICA with respect to stock-based compensation and commenced to expense stock options granted since January 1, 2003 using the fair value method. Previously, Aur had applied the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. based method of accounting for stock-based compensation awards granted to employees. The Plan is for directors, officers and senior management personnel of Aur. Options under the Plan are typically granted in such numbers as reflect the level of responsibility of the particular optionee n. 1. (Finance) A person who holds an option to buy or sell a financial instrument. See option. and his or her contribution to the business and activities of Aur. Options granted under the Plan typically have a five year term and are typically made cumulatively exercisable by the holders thereof as to a proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. part of the aggregate number of shares subject to the option over a specified term. Except in specified circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , options are not assignable and terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. upon the optionee ceasing to be employed by or associated with Aur. The terms of the Plan further provide that the price at which shares may be issued under the Plan cannot be less than the market price of the shares when the relevant options are granted. Aur's common shares are listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and trade in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents ("CDN"). The following table summarizes information regarding Aur's outstanding and exercisable common share purchase options as at September 30, 2004:
Outstanding Exercisable
--------------------------------------------------------------------
Weighted Weighted
Range of Weighted average average
exercise average exercise exercise
prices months price price
per share Shares remaining per share Shares per share
--------------------------------------------------------------------
CDN$ # 000's # CDN$ # 000's CDN$
1.96 to 2.25 965 10 2.10 891 2.11
2.26 to 2.95 110 19 2.37 95 2.35
3.30 to 4.98 963 39 3.65 624 3.69
5.60 to 6.75 393 54 6.02 79 5.83
--------------------------------------------------------------------
2,431 1,689
--------------------------------------------------------------------
--------------------------------------------------------------------
The number of stock options outstanding at September 30, 2004 represents 2.6% of Aur's issued and outstanding common shares. The following table summarizes information regarding Aur's common share purchase options as at and for the periods ended September 30, 2004:
Three months ended Nine months ended
---------------------------------------------------------------------
Weighted Weighted
average average
exercise exercise
price price
Shares per share Shares per share
---------------------------------------------------------------------
# 000's CDN$$ # 000's CDN$
Balance-beginning of period 2,371 3.24 2,553 2.85
Granted 100 5.66 372 6.05
Exercised (40) 2.21 (447) 2.53
Expired - - (47) 4.85
---------------------------------------------------------------------
Balance-end of period 2,431 2,431
---------------------------------------------------------------------
---------------------------------------------------------------------
For purposes of stock-based compensation, the fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model option pricing model A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the following weighted average assumptions used for grants as follows: dividend yield of 0% (2003 - 0%), expected volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of 44% (2003 - 42%), risk-free interest rate Risk-Free Interest Rate Describes return available to an investor in a security somehow guaranteed to produce that return. The risk-free interest rate compensataes the investor for the temporary sacrifice of consumption. of 2.7% (2003 - 3.4%) and expected life of 36 months (2003 - 24 months). 8. Other expenses (revenues)
Three months Nine months
ended ended
September 30 September 30
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
Interest on obligation under
capital leases 195 265 585 739
Interest and other income (1,014) (176) (2,138) (1,204)
Interest and financing cost 30 160 489 981
Foreign exchange 692 261 183 724
Gain on disposal of property,
plant and equipment (29) (206) (48) (496)
Gain on sale of marketable
securities (38) - (38) -
Miscellaneous 109 (203) 469 375
--------------------------------------------------------------------
(55) 101 (498) 1,119
--------------------------------------------------------------------
--------------------------------------------------------------------
9. Supplementary cash flow information
Three months Nine months
ended ended
September 30 September 30
--------------------------------------------------------------------
2004 2003 2004 2003
--------------------------------------------------------------------
$ $ $ $
Net change in non-cash working
capital:
Receivables (806) 1,052 (2,718) 4,089
Inventories (1,176) (2,879) (2,709) (4,507)
Accounts payable and accrued
liabilities (3,786) (1,761) (5,755) (6,169)
--------------------------------------------------------------------
(5,768) (3,588) (11,182) (6,587)
--------------------------------------------------------------------
--------------------------------------------------------------------
Other information:
Interest paid 4,219 4,219 8,439 5,774
Income, resource and capital
taxes paid 835 183 1,906 791
Included in accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. is the current portion of obligation on properties purchased. 10. Fair value of financial instruments The carrying amounts of cash, accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. their fair value due to the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. maturities of these instruments. Aur's carrying cost Noun 1. carrying cost - the opportunity cost of unproductive assets; the expense incurred by ownership carrying charge opportunity cost - cost in terms of foregoing alternatives of its portfolio of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has is $nil while the market value as at September 30, 2004 was $1,150 (2003 - $974). Aur's metal settlements receivable are based on fair values as at September 30, 2004 and 2003. The estimated fair value of Aur's forward sales and purchased copper call options based on copper prices as at September 30, 2004 was a loss of $421 (2003 - gain of $842). 11. Contingency The Chilean Internal Revenue Service (the "IRS") has issued to Compania Minera Quebrada Blanca S.A. ("CMQB"), a Chilean indirect subsidiary of Aur that owns the Quebrada Blanca mine, a notice of reassessment for guarantee fee deductions claimed by CMQB for years up to and including 1997. The deductions for guarantee fees totalled $17,531 and relate to third party bank loans to CMQB guaranteed by a previous shareholder of CMQB, Teck Cominco. As part of Aur's acquisition of its interest in CMQB in November November: see month. 2000, Aur Resources Inc. purchased from Teck Cominco the $17,531 of guarantee fees then owed by CMQB. In 2003, CMQB paid to Aur Resources Inc. the full amount of the guarantee fees. The IRS has reassessed CMQB to disallow To exclude; reject; deny the force or validity of. The term disallow is applied to such things as an insurance company's refusal to pay a claim. the deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. by CMQB of $17,531 in years up to and including 1997, thereby reducing by the same amount tax loss carryforwards tax loss carryforward See carryforward. that would otherwise be available to CMQB. In addition, the IRS has reassessed CMQB for withholding taxes The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. of $9,440 also relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the payment of the guarantee fees in 2003. It is the opinion of management and CMQB's legal counsel that CMQB's income tax filings to 1997 with respect to the guarantee fees are correct and that the payment of the guarantee fees in 2003 does not attract withholding taxes. CMQB is not required to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. any amounts related to the
reassessments. Should the IRS reassessment not be overturned, however,
interest would be due on the $9,440 of withholding taxes. At this time,
the outcome of the resolution of this reassessment cannot be determined
and, accordingly, the loss, if any, has not been recorded in the
consolidated financial statements; however, should CMQB ultimately be
unsuccessful in overturning the reassessment, Aur would record a
pre-tax pre-tax adj → anterior al impuestopre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge to earnings equal to its proportionate share of CMQB's expense of $9,440 plus interest. Aur intends to vigorously vig·or·ous adj. 1. Strong, energetic, and active in mind or body; robust. See Synonyms at healthy. 2. Marked by or done with force and energy. See Synonyms at active. contest this reassessment. |
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