Jul 09
23
Since our last update, Farallon Mining Ltd. continues to advance on many fronts as it ramps up production at the G-9 Mine in Guerrero State, Mexico.
Back on May 7, 2009, Farallon announced a $30 million four-year term loan with Credit Suisse out of Switzerland, that significantly reduced the interest rate from approximately 15% to 6.9%. As well, the term allows the company to restructure the balance sheet by reducing current liabilities and replacing them with longer term debt that significantly improves the working capital position of the company. This loan, which was completed on June 8, 2009, is a testament to Farallon’s asset they have in the G-9 Mine and in the overall Campo Morado property. More importantly, posting a four year, term loan, together at a fixed interest rate of 6.9% in today’s credit and debt market environment is another milestone for Farallon’s management to crow over. While other small -and some much larger -companies are struggling to secure debt, Farallon has put an exceptional deal together that once again vindicates my confidence in this team. And all this, without a feasibility study is truly impressive.
Another milestone of note was reached on May 25, 2009 when the company announced a corporate name change from Farallon Resources Ltd. to Farallon Mining Ltd. The new name is more reflective of the current status of the company as a full commercially producing mining company. The Company management mantra was “Mine by ‘09” and they have done that! The ultimate intention of the management of Farallon is to create a mid-tier, low-cost, multi-mine producer. Management has been very diligent in bringing into production the G-9 Mine, under 4 years from the timing of the first blind discovery hole back in June 2005 up until the announcement of commercial production on April 1, 2009. This is a management team that has performed!
The management team has recently been strengthened. On June 10, 2009, Kevin Weston joined the company as the Chief Operating Officer. Mr. Weston comes over to Farallon from Capstone Mining, where he was in charge of the Minto operations in the Yukon. When Mr. Weston started with Capstone Mining (formerly Sherwood Copper) his mandate was to bring the Minto mine up to the full design efficiency and he was successful on that front. Mr. Weston’s mandate with Farallon is to improve the efficiencies of the operation to maximize the value gained through the G-9 mine plan. Mr. Weston is a specialist in getting operations up to the full design capacity in the shortest time-frame. Farallon is very pleased to have secured his services and look forward to an even more efficient operation at G-9.
As well, Farallon has been shipping concentrates to several Asian smelter destinations over the past several months. However in late June Farallon’s zinc concentrates were shipped to Teck’s smelter in Trail, B.C. for the first time. This marks the first North American delivery of Farallon G-9 concentrates to a North American based smelter, which proves that Farallon’s concentrates are being very well-received in the marketplace. This further enhances Farallon’s reputation as world-class producer of mineral concentrates.
Going forward, with the asset at G-9 projecting to produce positive cash flow in the second half of the year, and also making continuous improvements to the efficiency of the operation, the time is ripe to re-establish exploration on the Campo Morado project in order to unlock further value from the property. Farallon’s intention is to start exploration drilling again in October 2009 and to add further resources to the current mine-life at G-9. The team is very optimistic that further areas of 10% + zinc are likely on the property particularly adjacent to the current G-9 mine workings. The exploration potential at a stratigraphic horizon that is 200 metres lower than the existing deposits Reforma, Naranjo, El Largo, and El Rey shows signs of great promise. As well, with the restructured balance sheet, the company can now focus on looking at potential accretive acquisitions that meet the overall corporate objective of building a mid-tier, low-cost, multi-mine producer.
All in all, the future at Farallon is looking very bright indeed and it is shaping up to be the next major player in the mid-tier mining space.
