Maudore Announces Second Quarter 2013 Results

MONTREAL, Aug. 29, 2013 /CNW Telbec/ - Maudore Minerals Ltd. (TSXV: MAO) (OTCUS: MAOMF) (Frankfurt Exchange: M6L) ("Maudore" or the "Company") today announced the financial results for the second quarter June 30, 2013.

Highlights for Q2-13

• Closing a brokered private placement for $15.5 million on April 12, 2013;
• Production of 4,522 ounces of gold;
• Initiation of exploration drilling underground at Sleeping Giant;
• Suspension of Vezza project's development and re-start of underground mining at Sleeping Giant;
• Completion of a custom milling agreement with Abcourt Mines Inc ("Abcourt").

On March 22, 2013, the Company acquired Aurbec's assets including Sleeping Giant Mill and the Quebec-based gold assets from North American Palladium Ltd. ("NAP"), through the acquisition of all of the outstanding shares of Aurbec.  The Quebec-based gold assets include the processing facility strategically located 60 km west of Maudore's Osbell Deposit and 150 km north of Val-d'Or, Quebec, along Highway 109, a route which continues north to Matagami, Quebec and the Vezza gold project which is in development, located 25 kilometers south of Matagami.

The Company funded the acquisition of Aurbec's shares through a senior secured credit facility of $22 million provided to the Company by FBC Holdings Sarl ("FBC"). The credit facility bears interest at the rate of 15% per annum, payable quarterly in arrears, with a maturity date of March 22, 2016. In order to secure repayment of the Credit Facility, the Company granted to FBC a first-ranking charge over all of its and its subsidiaries' present and future personal property and material real property, including specified mining rights.

On April 12, 2013, the Company completed a brokered private placement of units. Each unit is comprised of one common share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one common share for a period of 24 months at a purchase price of $1.13. The Company issued an aggregate of 17,039,835 units at an issue price of $0.91 per unit for aggregate gross proceeds of $15,506,250.

Vezza Project

During the period from March 23 to June 30, 2013, 39,679 tonnes of ore were extracted at the Vezza Project and trucked to the Sleeping Giant Mill, producing 4,664 ounces of gold after accounting for inventory changes incurred at the time of purchase from NAP. Since the Vezza Project is in development, revenues from the gold sales were used to offset capital development costs. Of the total, 2,212 tonnes were moved and 485 ounces produced during the last week of Q1-13 from March 23 to March 31, 2013.

In mid-April, when the gold price dropped by ~13%, initial steps were taken to cut back the development cost at the Vezza Project in advance of the declining gold prices. This involved a first round of contractor layoffs associated with the long term development plan. While partially effective, cost reductions from this action were not sufficient to meet the further ~12% decline in the gold price in June. At this time, the Company re-evaluated the potential of Vezza as a near term producer and made the strategic decision to optimize the currently developed mining inventory and use this interval to transition mining activities back to the Sleeping Giant mine where significantly higher grade potentials have been identified. This triggered a second round of reductions on July 16, 2013, when the Company announced it was suspending all future development at the Vezza Project and will only mine its developed mineralized inventory. The Company will now focus on targeting higher grade gold opportunities at its Sleeping Giant property. The Company plans to finish mining and processing of developed mineralized material at the Vezza Project over the next several months whilst deploying a small workforce at Sleeping Giant to prepare the underground workings for exploration drilling and remnant mining.

Assets are tested for impairment when events or changes in circumstance indicate that the carrying amount may not be recoverable. As at June 30, 2013, the Company determined that the suspending development at the Vezza Project triggered an impairment testing. The Company used a cash-flow approach to estimate the fair value less cost to sell on the Vezza Project and a $9,830,000 non-cash impairment charge was recognized as at June 30, 2013.

Sleeping Giant Mill

The mill has a capacity of approximately 900 tonnes per day ("tpd") depending on the grind size required to optimize gold recoveries. The mill is currently processing between 500-700 tpd due to increased grinding requirements for the Vezza ore with +/- 91% gold recovery, five days per week, treating underground muck from the Vezza gold project.  Material is fed through a grizzly into a crushing plant with a primary jaw crusher and two cone crushers with screening, then to a rod mill and two ball mills to produce a pulp that undergoes conventional leaching followed by a CIP (carbon in pulp) circuit, stripping facilities, electro winning and an induction furnace to produce gold doré.

During the period from March 23 to June 30, 2013, 39,679 tons of ore were milled at the facility with a recovery rate of 91% for a total production of 4,664 ounces of gold after accounting for inventory changes incurred at the time of purchase from NAP.

Sleeping Giant Property and mine

The Sleeping Giant property is formed by 69 claims and 4 mining leases which cover a total area of 3,140 hectares (31.4 square kilometers).  The mill and mine complex are 80 km north of the town of Amos.  Although exploration work in this area started in 1957, it was not until the late 1970's that gold mineralization was found on the property by Matagami Lake Exploration.  From 1988 to 2008, Sleeping Giant produced 3,127,031 tonnes of ore at an average grade of 10.35 g/t Au for 1,058,924 ounces of gold.

At this time, the Sleeping Giant underground mine facility remains on care and maintenance while production options are being reviewed. During shutdown, a review of structural geology and exploration potential of the mine was completed through conventional and 3D modeling techniques. Multiple high-grade opportunities have been identified within the existing mine environment where significant additions to resources could be developed. At quarter end, planning was initiated to evaluate a structured re-entry into the mine to permit limited mining of the higher grade remnants while continuing evaluation of longer term potential. At this time, the mine continues to maintain all levels dry and ready for re-start once an economic mining scenario is developed. The hoist and supporting machinery are also kept in operating condition to permit periodic inspections as required to maintain readiness. Whilst suspending Vezza, the Company is deploying a small workforce at Sleeping Giant to prepare the underground workings for exploration and remnant mining for the mining crews that will be moving over from the Vezza Project.

Milling agreement with Abcourt

On August 15, 2013, Aurbec signed a milling agreement with Abcourt to treat mine production from their Elder Mine at the Sleeping Giant Mill. The agreement is in effect for six months and may be extended if both parties agree. Aurbec has applied for environment permits and authorizations to store and process the Elder mineralized material at Sleeping Giant. Shipments of the material will start immediately upon receipt of these permits.

Statistics

Financial results

The Company reported a loss of $10,959,364 for Q2-13 (which includes the $9,830,000 impairment charge related to the Vezza Project) versus a loss of $153,492 for Q2-12. The $176,537 loss from mining operations for Q2-13 represents residual costs relating to the Sleeping Giant mine.

Since the Vezza project is still in the development phase and has not commenced commercial production, the revenues from the sales of any finished products produced by the project have been deducted, net of the cost of inventories, from the related development cost capitalized in the statement of financial position. For the period from March 23 to June 30, 2013, $4,110,806 were capitalized in the Vezza Project mine development, which constitute the net of $8,183,420 costs and $4,072,614 revenues.

On June 30, 2013, the working capital of the Company was at $7,975,637 ($1,157,087 as of December 31, 2012).  The global economy and financial markets have been unpredictable for many months and have impacted our industry and its ability to finance. The equity markets have not recovered and financing remains difficult.

Going concern assumption

The condensed consolidated interim financial statements have been prepared on the basis of the going concern assumption, meaning the Company will be able to realize its assets and discharge its liabilities in the normal course of operations.

The Company has not yet determined whether all of its mineral properties contain mineral deposits that are economically recoverable. The only property currently in active development is the Vezza deposit where the Company has yet to generate any income or positive cash flows at this stage of its development.  Additionally, the re-evaluation of the Sleeping Giant mine has identified significant high grade mineralized targets previously untested. Work has recently been initiated here to physically evaluate its economic viability going forward.

The Company's ability to continue as a going concern is dependent upon its ability to raise additional financing, to generate cash flow from operations, ongoing support from major creditors and the continuing support of its senior lender.  It is uncertain whether the Company will be able to achieve these objectives, and accordingly there is doubt regarding the Company's ability to continue as a going concern.

Furthermore, a Notice of Bankruptcy Proceeding was filed against Aurbec on August 23, 2013 (see press release of the Company dated August 26, 2013). While the Company is vigorously defending these actions and has developed a new business strategy and forward looking plan to address these conditions, these uncertainties cast doubt regarding the Company's ability to continue as a going concern.

About Maudore Minerals Ltd.

Maudore is a Quebec based junior gold company with milling operations and more than 23 exploration projects, of which five are at an advanced stage toward development with reported current and historical resources. The Company's projects span some 120 kilometers, east-west, of the underexplored Northern Volcanic Zone of the Abitibi Greenstone Belt and cover a total area of 144,000 hectares (1,440 km²) with the Sleeping Giant Processing Facility within trucking distance of key development projects.

Cautionary Statement Regarding Forward-Looking Statements
This release and other documents filed by the Company contain forward-looking statements. All statements that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "intend", "anticipate", "believe", "expect", "estimate", "plan" and similar expressions are generally intended to identify forward-looking statements. These forward-looking statements include, without limitation, performance and achievements of the Company, business and financing plans, business trends and future operating revenues. These statements are inherently uncertain and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, financial related risks, unstable gold and metal prices, operational risks including those related to title, significant uncertainty related to inferred mineral resources, operational hazards, unexpected geological situations, unfavourable mining conditions, changing regulations and governmental policies, failure to obtain required permits and approvals from government authorities, failure to obtain any required approvals of the TSXV or from shareholders, failure to obtain any required financing, failure to complete any of the plans and objectives described herein, failure to be able to continue as a going concern, increased competition from other companies many of which have greater financial resources, dependence on key personnel and environmental risks and the other risks described in the Company's continuous disclosure documents.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

MAUDORE MINERALS LTD.
Consolidated Statements of Financial Position
(unaudited, in Canadian dollars)

Maudore Minerals Ltd
Consolidated Statements of Comprehensive Loss
(unaudited, in Canadian dollars)

Maudore Minerals Ltd
Consolidated Statements of Cash Flows
(unaudited, in Canadian dollars)

SOURCE: Maudore Minerals Ltd.