During the quarter, a dramatic change in commodity prices affected the industry. Due to the Company's work over the last two years, the Royal Mines of Zacualpan has the flexibility to address lower prices by shifting production to higher grade areas. While the third quarter results reflect the declining price of metals, the rescheduling of production did not occur until the fourth quarter. In order to maintain profitability, some of the scheduled increase in throughput has been delayed to avoid processing non-economic material at this time. Fred Davidson, President and Chief Executive Officer of IMPACT, stated, "We are uniquely positioned with cash reserves and positive cash flow from operations even at these lower metal prices to continue the exploration and development of the Company's numerous projects over the next year."
Cash flows from operations for the quarter increased to $332,000, up from $324,000 in 2007. Cash flows from operations for the nine-month period increased to $2,403,000, up from $377,000 from in 2007. Average mill throughput during the quarter was 302 tpd, up 2% from 296 tpd during the same quarter in 2007.
Nine Months Ended September 30 | 2008 | 2007 | % Change |
|---|---|---|---|
Revenue | $6,687,000 | $5,140,000 | 30% |
Net Income | $918,000 | ($68,000) | 1450% |
Earnings Per Share | $0.02 | ($0.00) |
|
Cash and Cash Equivalents | $7,091,000 | $4,847,000 | 46.3% |
After investing $1.4 million in plant and equipment, as well as $4.1 million on resource properties and exploration at the end of the nine months, the Company had cash and cash equivalents of $7.1 million and net working capital of $8.4 million. The Company's working capital position is expected to remain strong through the 2008 year as cash flow from mining operations should be sufficient to fund the majority of the Company's 2008 resource property cost exploration expenditures.
Mine operating cost per tonne for the quarter was $59.27, up from $38.34 in the third quarter of 2007. Mine operating earnings for the quarter were $201,000, down 44% from $358,000 in the third quarter of 2007. Mine operating costs were significantly higher as lower cost bulk mining was used in 2007 to recover higher grade zinc and lead ore from the Guadalupe mine to take advantage of higher prices prevailing for these metals in 2007. In 2008, production shifted to the recovery of higher grade silver ore from the Chivo mine, which is now being accessed through the new mine adits that are being developed. Ore recovered from this mine incurs higher trucking, mining and amortization costs than ore recovered from the old Guadalupe mine which is immediately adjacent to the mill.
Production for the nine months ended September 30:
| Sept 30, 2008 | Sept 30, 2007 | % Change |
|---|---|---|---|
Total tonnes (t) produced | 76,083 | 75,569 | +1% |
Tonnes produced per day | 278 | 277 | +1% |
Silver production (Oz) | 421,792 | 245,177 | +72% |
Lead production (t) | 555.78 | 448.04 | +24% |
Zinc production (t) | 753.48 | 716.97 | +5% |
Revenue per production tonne sold | $91.25 | $68.01 | +34% |
Direct costs per tonne produced | $54.10 | $43.85 | +23% |
Chivo Mine
During the first nine months of 2008, Chivo provided 56% of the ore and the majority of the high silver grade feed. Ore from Chivo is the principal reason that silver production increased in the first nine months of 2008. A second adit approximately 60 meters vertically lower on the structure has been started and is expected to reach the main vein in the fourth quarter of 2008. At that point, Chivo will provide additional high grade development muck to the mill.
Guadalupe and Gallega Mines
Approximately 42% (2007 -- 100%) of the mill feed for the first nine months was from mining of medium grade mineral at the Guadalupe and nearby Gallega Mines. As a result of intensive underground exploration over the last nine months, the Guadalupe Mine is now undergoing redevelopment with rebuilding of track access to new planned production areas in the Kena-Dolores Zone and a number of nearby veins that are providing limited feed to the mill. Subsequent to the end of the third quarter production was reduced at both mines and efforts directed to mine development of higher grade structures.
Exploration
During the quarter IMPACT announced more high grade drill results that continued to expand the mineral zone at the Chivo Mine to over 300m in strike length and still open for expansion. These results included drill intercepts on the south extension of the Chivo Mine zone, including 3,902 g/t silver, 3.96% zinc, 2.16% lead over 1.9 meters true width ("TW") and on the north extension, including 1,118g/t silver, 5.45% zinc, 1.5% lead over 1.4 meters TW. Subsequent to quarter end, IMPACT announced the commencement of a 5,000 meter drill program to test numerous gold-copper and silver targets in the Noche Buena-Carlos Pacheco Mining Camp on the west side of the Royal Mines of Zacualpan District. During the quarter, IMPACT also announced the acquisition of several new concessions more than doubling the Company's mineral concession holdings in the Royal Mines of Zacualpan District from 125 square kilometers to 272 square kilometers.
IMPACT Silver Corp. is a silver focused mining and exploration company operating in Mexico with a producing silver operation at the Royal Mines of Zacualpan, the 200km2 advanced Mamatla Silver District and a portfolio of projects with a producing mill at Zacatecas.
On behalf of the Directors of IMPACT Silver Corp.,
"Frederick W. Davidson"
President, CEO
For further information, please contact:
Darrell Rader, Corporate Development
Telephone: 604 681 0172
