Pacific Rim Mining Corp. ("Pacific Rim" or "the Company") (TSX:
PMU)(NYSE Amex: PMU) reports its financial and operating results
for the three months and six months ended October 31, 2009. Details
of the Company's financial results are provided in its interim
consolidated financial statements and Management's Discussion and
Analysis ("MD&A") that will be mailed to shareholders shortly.
All monetary amounts are expressed in United States ("US") dollars
unless otherwise stated.
Overview
Pacific Rim is an environmentally and socially responsible
exploration company focused exclusively on high grade,
environmentally clean gold deposits in the Americas. Pacific Rim's
primary asset and focus of its growth strategy is the high grade,
vein-hosted El Dorado gold project in El Salvador. The Company owns
several similar grassroots gold projects in El Salvador and is
actively seeking additional assets elsewhere in the Americas that
fit its project focus. Pacific Rim's shares trade under the symbol
PMU on both the Toronto Stock Exchange ("TSX") and the NYSE
Amex.
All references to "Pacific Rim" or "the Company" encompass the
Canadian corporation, Pacific Rim Mining Corp, and its U.S. and
Salvadoran subsidiaries, Pac Rim Cayman LLC ("Pac Rim"), Pacific
Rim El Salvador, S.A. de C.V. ("PRES"), and Dorado Exploraciones,
S.A. de C.V. ("DOREX"), inclusive.
Financial Highlights
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Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
October 31, October 31, October 31, October 31,
2009 2008 2009 2008
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Summarized Statement of
Loss(i)
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Exploration
expenditures $ 417 $ 1,236 $ 855 $ 3,687
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Loss from Continued
Operations $ (1,355) $ (2,602) $ (2,236) $ (6,353)
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Discontinued Operations
- Net income (loss) of
Denton-Rawhide Joint
Venture $ 38 $ 1,390 $ 38 $ 1,872
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Loss for the period $ (1,317) $ (1,212) $ (2,198) $ (4,481)
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Loss per share after
Discontinued Operations
(basic and diluted) $ (0.01) $ (0.01) $ (0.02) $ (0.04)
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Weighted average shares
outstanding (basic and
diluted) 118,050,308 116,915,460 118,047,047 116,915,460
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Summarized Statement of
Cash Flows(i)
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Cash Flow used for
operating activities $ (96) $ (3,197) $ (741) $ (6,582)
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Cash Flow provided by
investing activities $ nil $ 5,075 $ (14) $ 7,329
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Cash Flow provided by
financing activities $ nil $ nil $ 2 $ nil
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Cash Flow from
Continuing Operations $ (96) $ 1,878 $ (753) $ 747
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Cash Flow from
Discontinued
Operations $ 38 $ 1,220 $ 38 $ 1,106
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Net increase (decrease)
in cash $ (58) $ 3,098 $ (715) $ 1,853
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At October 31, 2009 At April 30, 2009
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Summarized Balance Sheet(i)
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Cash and cash equivalents $ 569 $ 1,284
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Bullion $ 154 $ 1,225
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Receivables, Deposits and Pre-paids $ 175 $ 106
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Current assets $ 898 $ 2,615
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Total assets $ 6,448 $ 8,187
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Total liabilities $ 1,792 $ 1,679
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Working Capital $ 152 $ 1,982
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(i) all amounts in thousands of US dollars, except share and per share
amounts
Results of Operations
For the three month period ended October 31, 2009, Pacific Rim
recorded a loss for the period of $(1.3) million or $(0.01) per
share, compared to a loss of $(1.2) million or $(0.01) per share
for the three month period ended October 31, 2008. Although the
loss for both periods is relatively unchanged, the loss from
continuing operations during Q2 2010 was $(1.4) million or $(0.01)
per share, compared to $(2.6) million or $(0.02) per share during
Q2 2009, the difference being primarily attributable to
significantly lower direct exploration expenditures during Q2 1010
compared to the same period a year earlier. During Q2 2009, the
Company realized net income from discontinued operations (the
Denton-Rawhide Joint Venture) of $1.4 million, which substantially
offset the loss from continuing operations during that period.
There was only a minor recovery of income taxes from this source
during Q2 2010.
For the six months ended October 31, 2009, Pacific Rim recorded
a loss for the period of $(2.2) million or $(0.02) per share,
compared to a loss of $(4.5) million or $(0.04) per share for the
six months ended October 31, 2008. The $2.2 million decrease in net
loss period over period is primarily attributable to significantly
decreased exploration expenditures, lower general and
administrative expenditures (notwithstanding significant
CAFTA-related expenses during the six months ended October 31, 2009
for which there was no comparable item for the same period a year
earlier). As described above, there was a substantial decrease in
loss from continuing operations between the first six months of
fiscal 2009 ($(6.4) million) and the first six months of fiscal
2010 ($(2.2) million) as result of significant decreases in
exploration and general and administrative expenses. During the six
months ended October 31, 2008, the loss from continuing operations
was offset in part by $1.9 million in income from discontinued
operations (the Denton-Rawhide Joint Venture) compared to $0.04
million during the six months ended October 31, 2009.
Expenses
Quarterly exploration expenditures were greatly reduced year
over year, from $1.2 million in Q2 2009 to $0.4 million in Q2 2010.
Although significant exploration work ceased at the Company's El
Salvador exploration projects in July 2008 (Q1 2009), residual
expenses and ongoing community relation programs continued into Q2
2009. During Q2 2010, exploration expenditures included El Salvador
project maintenance costs and expenditures related to the
evaluation of potential project acquisitions.
General and administrative expenses were lower during Q2 2010
($0.4 million) than Q2 2009 ($1.4 million) as a result of the
Company's reduction in activities. In addition, $0.6 million was
spent on the CAFTA action, for which there was no comparable item
during Q2 2009 and a value of $0.2 million was assigned using the
Black-Scholes model for valuing the extension of warrants.
During Q2 2010 the Company realized a gain on the sale of
bullion of $0.3 million for which there was no comparable item in
Q2 2009. The gain represents the difference between the
consideration received for gold and silver when it was sold and its
book value, which is based on the gold price on the date the
bullion was received.
Unusual Items
During Q2 2009 the Company received income of $1.4 million from
the Denton-Rawhide operation (of which the Company was a
participant until December 31, 2008) related to the production of
gold and silver, for which there is no comparable item in Q2
2010.
Summary
Although the Company's loss from continuing operations decreased
from Q2 2009 ($(2.6) million) to Q2 2010 ($(1.4) million), the $1.4
million income received from discontinued operations during Q2 2009
offset a substantial portion of that loss, leading to a loss for
the Q2 2009 period of $(1.2) million. Income from discontinued
operations during Q2 2010 was $0.04 million, leading to a loss for
the Q2 2010 period of $(1.3) million, virtually unchanged from the
same period a year earlier.
Liquidity and Capital Resources
Cash
At October 31, 2009 the Company's cash and cash equivalents
totalled $0.6 million, unchanged from the $0.6 million balance as
of July 31, 2009 (the end of the Company's first quarter of fiscal
2010) and a decrease of $0.7 million from the April 30, 2009
balance of $1.3 million, (the end of the Company's previous fiscal
year). Bullion (held by the Company and not yet sold) was valued at
$0.2 million at October 31, 2009 compared to $0.8 million at July
31, 2009 and $1.2 million at April 30, 2009. Bullion is valued at
the gold and silver price on the date the bullion was received.
Current assets were $0.9 million at October 31, 2009 compared to
$1.6 million at July 31, 2009 and $2.6 million at April 30, 2009, a
decrease of $1.6 million since the end of the Company's previous
fiscal year. This decrease reflects bullion sales to fund the
expenditures of cash on exploration expenses and project generation
efforts, general and administrative costs associated with
maintaining a public company, and expenditures related to advancing
the CAFTA action.
During Q2 2010 the Company received $1.0 million from the sale
of bullion and $0.3 million in expenses were added to accounts
payable. Outlays of cash during the quarter included: $0.4 million
in direct exploration expenditures, $0.4 million in direct general
and administrative expenses and $0.6 million in CAFTA-related
expenses. The net result was a marginal ($0.06 million) decrease in
cash between July 31 and October 31, 2009.
Working Capital
At October 31, 2009, the book value of the Company's current
assets was $0.9 million, compared to $2.6 million at April 30,
2009, a reduction of $1.7 million. The decrease in current assets
is primarily a result the sale of bullion (for cash) and subsequent
cash expenditures. Property, plant and equipment balances at
October 31, 2009 were marginally reduced to $5.5 million from the
April 30, 2009 balance of $5.6 million. As a result, the Company's
total assets at the end Q2 2010 were $6.4 million compared to $8.2
million at the end of fiscal 2009.
At October 31, 2009 the Company had current liabilities of $0.7
million compared to $0.6 million at April 30, 2009. This small
increase in current liabilities is entirely due to a $0.1 million
increase in accounts payable. Future income tax liability, relating
to Pac Rim's investment in El Salvador, did not change between the
end of fiscal 2009 and the end of Q2 2010, and at October 31, 2009
was valued at $1.0 million. Currently, Pacific Rim has no short- or
long-term debt.
The $1.7 million decrease in current assets combined with the
$0.1 million increase in current liabilities, resulted in a $1.8
million reduction in working capital from $2.0 million at April 30,
2009 to $0.2 million at October 31, 2009.
The Company's ability to continue operations and exploration
activities as a going concern is dependent upon its ability to
obtain additional funding. The Company plans to raise sufficient
funds during Q3 2010 to pursue ongoing exploration and
administration expenses as well as its costs under the CAFTA
arbitration. While the Company has been successful in obtaining its
required funding in the past, there is no assurance that sufficient
funds will be available to the Company in the future. The Company
has no assurance that such financing will be available or be
available on favourable terms. Factors that could affect the
availability of financing include the progress and results of the
El Dorado project and its permitting application, the resolution of
international arbitration proceedings over the non-issuance of
permits in El Salvador, the state of international debt and equity
markets, investor perceptions and expectations and the global
financial and metals markets. The Company will have to obtain
additional financing through, but not limited to, the issuance of
additional equity.
(The foregoing paragraph contains forward-looking statements
regarding the requirement for future financing and the use of funds
that may be raised. See Forward-Looking Information.)
The Company does not intend to resume significant exploration
programs in El Salvador until such time as the El Dorado
environmental permit and exploitation concession are received. The
Company can not judge if or when the required permits will be
received and is not currently planning any exploration programs for
its El Dorado, Santa Rita and Zamora-Cerro Colorado properties for
fiscal 2010 beyond what is necessary to keep all of its exploration
licences in good standing. Should the required permits be granted,
the Company will evaluate its options for resuming full scale
exploration work designed to advance its El Salvador projects.
The Company intends to continue to seek new project acquisitions
and during fiscal 2010 intends to continue to conduct low cost
field work, technical and legal due diligence on projects it is
currently evaluating and to seek new prospects for staking or
property acquisitions that fit its exploration focus.
(The foregoing two paragraphs contain forward-looking statements
regarding the scope of exploration and generative work programs
management intends to undertake in the coming fiscal year. See
Forward-Looking Information.)
The Company anticipates that its exploration plans as outlined
above will cost approximately $0.5 million for the remainder of
fiscal 2010. If regulatory and political conditions warrant, and
adequate financing is available, the Company will resume aggressive
exploration of its El Dorado, Santa Rita and Zamora-Cerro Colorado
projects in El Salvador, which will result in increased exploration
and general and administrative expenditures over those currently
anticipated for fiscal 2010.
(The foregoing paragraph contains forward-looking statements
regarding the Company's exploration plans and anticipated costs
during fiscal 2010. See Forward-Looking Information.)
The Company's general and administrative costs during the
remainder of fiscal 2010 are anticipated to increase due to legal
costs associated with the CAFTA action undertaken by Pac Rim. In
addition to its immediate financing requirements, the Company may
require additional financing during the remainder of fiscal 2010
for general working capital expenses and/or the expenses related to
the CAFTA action.
(The previous paragraph contains forward-looking statements
regarding anticipated increases in general and administrative
expenses as a result of increased legal costs during fiscal 2010,
and the requirement for additional financing to fund these legal
costs and/or future general working capital expenses. See
Forward-Looking Information.)
On November 12 the Company announced it received notice from the
NYSE Amex LLC ("NYSE Amex" or the "Exchange") that, based on their
review of the Company's fiscal 2010 first quarter results, the
Company is not in compliance with Section 1003(a)(iii) of the
Company Guide, having at July 31, 2009 stockholders' equity of less
than $6,000,000 while sustaining losses from continuing operations
and net losses in its five most recent fiscal years. In order to
maintain listing of the Company's common shares on the NYSE Amex,
the Company must submit a plan to the Exchange by December 11, 2009
addressing how it intends to regain compliance with Section
1003(a)(iii) by May 11, 2011.
The Company will submit a plan (the "Plan") before the deadline
of December 11, 2009. If the Exchange accepts the Plan, then the
Company may be able to continue its NYSE Amex listing during the
Plan period, up to May 11, 2011, during which time the Company will
be subject to periodic review to determine whether it is making
progress consistent with the Plan. If the Company fails to submit a
Plan acceptable to the Exchange, or even if accepted, if the
Company is not in compliance with the continued listing standards
at the end of the Plan period or the Company does not make progress
consistent with the Plan during the period, then the Exchange may
initiate delisting proceedings.
Outlook
The Company will continue to curtail its exploration programs
and expenditures in El Salvador until such time as PRES receives
the El Dorado environmental permit and exploitation concession. The
Company anticipates expending approximately $0.5 million on
exploration-related expenses during the remainder of fiscal 2010,
primarily on low-cost exploration work required to keep all of its
El Salvador projects in good standing and due diligence evaluation
of new projects outside of El Salvador. This work will be revised
should circumstances change and depending on the Company's working
capital balances and/or financing opportunities. The Company will
require additional financing during fiscal 2010 to fund its
proposed exploration plans and will require additional financing in
the future in order to undertake an expanded exploration program
should the Company receive the required permits to do so.
(The foregoing paragraph contains forward-looking statements
regarding the Company's exploration plans and anticipated costs
during fiscal 2010. See Forward-Looking Information.)
The Company's general and administrative costs during the
remainder of fiscal 2010 are anticipated to increase due to legal
costs associated with the CAFTA action undertaken by Pac Rim. The
Company will require additional financing during fiscal 2010 for
the expenses related to the CAFTA action.
(The previous paragraph contains forward-looking statements
regarding anticipated increases in general and administrative
expenses as a result of anticipated increased legal costs during
fiscal 2010, and the potential requirement for additional financing
for general working capital purposes and/or legal fees related to
the CAFTA action. See Forward-Looking Information.)
The Company will continue its extensive outreach efforts to the
newly elected federal government and administration, municipal
government officials, church leaders, business leaders, and
Salvadoran citizens during the remainder of fiscal 2010. The
Company and its subsidiaries have a well documented history of
supporting local inhabitants and building relationships with all
stakeholders. This is a key component of the Company's approach to
exploration and development, and will continue in all jurisdictions
in which it and its subsidiaries operate.
Notwithstanding these diplomatic efforts, until resolved, Pac
Rim's CAFTA claim will proceed during fiscal 2010. With the
Arbitral Tribunal recently announced, the CAFTA arbitration is now
officially constituted and the next step is expected to be for the
Arbitral Tribunal to convene a hearing to set out the further
procedures in the arbitration.
(The foregoing section contains forward-looking statements
regarding the scope of the Company's fiscal 2010 planned work
programs, anticipated expenditures and the expectation of ongoing
legal undertakings. See Forward-Looking Information)
On behalf of the board of directors,
Thomas C. Shrake, President and CEO
Forward-Looking Information
The information contained herein contains "forward-looking
statements" within the meaning of Section 21E of the United States
Securities Exchange Act of 1934 (as amended) and applicable
Canadian securities legislation. Forward-looking statements relate
to analyses and other information that are based on forecasts of
future results, estimates of amounts not yet determinable and
assumptions of management. Any statements that express predictions,
expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance are not statements of historical
fact and may be "forward-looking statements." Statements concerning
reserves and mineral resource estimates may also be deemed to
constitute forward-looking statements to the extent that they
involve estimates of the mineralization that will be encountered if
the property is developed, and in the case of mineral reserves,
such statements reflect the conclusion based on certain assumptions
that the mineral deposit can be economically exploited.
This report contains forward-looking statements regarding:
-- the Company's requirement for financing and the use of funds that may be
raised. These assumptions are based on management's estimate of working
capital requirements and past expenditures. There are no guarantees that
financing will be available to the Company under acceptable terms and
conditions. Readers are cautioned that without additional financing the
Company's plans for the remainder of 2010 may not be carried out as
planned and its ability to continue its business may be at risk
-- the scope of exploration and generative work programs management intends
to undertake through the remainder of the current fiscal year. These
expectations are based on various assumptions including but not limited
to: the Company and/or its subsidiaries' continued title and access to
the El Dorado, Santa Rita and Zamora-Cerro Colorado properties; the
availability and accessibility of projects the Company may be interested
in acquiring; the availability of sufficient working capital and, if
necessary, access to financing; the ability to procure adequate
experienced staff; the availability of contractors; and other risks and
uncertainties. Should any of these assumptions prove incorrect or
requirements not be met, the Company's project generation and
exploration plans and for fiscal 2010 may not occur as planned.
-- the Company's intent to forego significant exploration work at the El
Salvador projects until certain permits are granted, the implication
being that if and when these permits are granted increased investments
in exploration will be made. Readers are cautioned that this statement
conveys management's intent but that resumption of a large-scale
exploration program at the El Salvador projects is dependent on the
availability of adequate financing, the ability to procure adequate
experienced staff, the availability of contractors, and other risks and
uncertainties. Should any of these assumptions prove incorrect or
requirements not be met, the Company's project generation and
exploration plans and for fiscal 2010 may not occur as planned.
-- the Company's exploration plans and anticipated costs during fiscal
2010. The anticipated exploration expenditures reflect estimations made
by management based on current levels of expenditure and anticipated
work programs as described previously. Should unexpected costs arise,
exploration expenditures may differ from those currently anticipated.
-- anticipated increases in general and administrative expenses as a result
of anticipated increased legal costs during fiscal 2010, and the
requirement for additional financing to fund these legal costs and/or
general working capital expenses. These statements are based on
management's assumption the CAFTA action will continue through fiscal
2010 and the expected costs of pursuing this action, plus the Company's
anticipated burn rate for general and administrative costs. Should PRES
receive the El Dorado permits at any time, the necessity to continue the
CAFTA action may be averted and the anticipated impact on general and
administrative costs may not materialize.
Forward-looking statements are subject to a variety of risks and
uncertainties, which could cause actual events or results to differ
from those reflected in the forward-looking statements, including
the risks and uncertainties outlined above and other risks and
uncertainties related to the Company's prospects, properties and
business detailed in its fiscal 2009 MD&A, in the Company's
Annual Information Form for the year ended April 30, 2009 and in
the Company's Form 20F filed with the US Securities and Exchange
Commission. Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in
forward-looking statements. Investors are cautioned against
attributing undue certainty to forward-looking statements. The
Company does not undertake to update any forward-looking statements
that are incorporated by reference herein, except in accordance
with applicable securities laws.
National Instrument 43-101 Disclosure
Mr. William Gehlen, Vice President Exploration, supervises
Pacific Rim's exploration work on the El Dorado project. Mr. Gehlen
is a Certified Professional Geologist with the AIPG (No. 10626), an
employee of the Company and a Qualified Person as defined in NI
43-101.
Mr. David Ernst, Chief Geologist, supervises the Company's
project generation initiatives. Mr. Ernst is geologist licensed by
the State of Washington, an employee of Pacific Rim Mining Corp.
and a Qualified Person as defined in National Instrument
43-101.
Pacific Rim's sampling procedures follow the Exploration Best
Practices Guidelines outlined by the Mining Standards Task Force
and adopted by The Toronto Stock Exchange. Samples are assayed
using fire assay with a gravimetric finish on a 30-gram split.
Quality control measures, including check- and sample
standard-assaying, are being implemented. Samples are assayed by
Inspectorate America Corporation in Reno, Nevada USA, an ISO 9002
certified laboratory, independent of Pacific Rim Mining Corp.
The TSX and the NYSE Amex have neither reviewed nor accept
responsibility for the adequacy or accuracy of this release.
Contacts: Pacific Rim Mining Corp. Barbara Henderson
604-689-1976 or 1-888-775-7097 604-689-1978 (FAX)
general@pacrim-mining.com www.pacrim-mining.com
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