TORONTO, March 9, 2012 /PRNewswire/ - Cerro Grande Mining Corporation (the "Company" or "CEG") (TSX-CEG; OTCQX-CEGMF) reported today its first fiscal quarter earnings for the period ending December 31, 2011 compared to the comparable period a year ago. These financial results were reported in accordance with International Financial Reporting Standards ("IFRS").
The Company's sales of gold, copper and silver for the period ended December 31, 2011 were considerably lower than in the period ended December 31, 2010 due to the production stoppage for approximately three weeks during the period, while a fatigued ball mill crown gear was substituted for a new one. During the three months of fabrication time for the new ball mill crown gear, mine production was lowered to less than 100 tpd so as not to cause a major failure of the repaired crown gear during the time required to fabricate the new crown gear. On the positive side, during the down time of installing the new crown gear a new 600 kva generator was installed as well as a new ball mill electric motor and a hydraulic clutch. The new generator has lead to a 10% drop in fuel consumption despite an increase in plant production. This combined with a decrease in the gold grade lead to a decrease from 4,027 ounces of gold sales for the quarter ended December 31, 2010 to 2,855 ounces of gold sales during the quarter ended December 31, 2011. The mine is currently preparing high grade stopes to compensate for the drop in head grades and estimates a significant increase in grades and plant production for the next quarter.
The mine operating expenses also increased during the period ended December 31, 2011 primarily due to the hiring of more miners to prepare the mine for the planned production increases, as well as higher labor costs as wage pressure increased.
The total fleet of available mining and related equipment is being increased with the purchase of three 8 ton mine trucks and a rebuilt small Jumbo drill. The Company expects the mine to gradually increase production above the current 110 to 120 tons per day during the period ending March 31, 2012 at current reserve grades.For the first fiscal quarter ended December 31, 2011 the Company reported total revenues of $5,289,000 which included gold sales of $4,790,000 (2,855 ounces of gold and $499,000 of copper and silver sales) compared to $6,163,000 of total revenues for the comparable quarter a year ago which included $5,482,000 of gold sales (4,027 ounces of gold and $681,000 of copper and silver sales). Reported net income was $42,000 for the three months ended December 31, 2011 compared to $938,000 for the comparable period ended December 31, 2010. The Company reported a current ratio of 1.69 to 1.00 which included cash of $1,558,000 for the first quarter ended December 31, 2011. Cerro Grande Mining Corporation is a minerals producing, exploration and development company with properties and activities currently focused in Chile. Cautionary Statement on Forward-looking Information