Liberty Mines reports financial results for second quarter 2012

TSX: LBE

TORONTO , Aug. 14, 2012 /CNW/ - Liberty Mines Inc. (LBE.TO) ("Liberty" or the "Company") today reported its financial results for the three- and six-month periods ended June 30, 2012 . All amounts are in Canadian currency.

"Our second quarter performance was effectively marked by the re-start of operations and the ramp-up of production," said Chris Stewart , President and CEO of Liberty Mines. "While Q2 results included our highest production of concentrate and our highest revenue total in nearly two years, our progress was impeded by the nickel price declining by more than 25 percent in the past six months and generally unfavorable market conditions.In response to the current market environment, we are undertaking a full review of our strategy and operational activities to reduce costs and improve efficiencies. To maximize the value of our ore for when nickel prices recover, we are temporarily suspending production immediately."

Adverse market conditions, including the declining price of nickel, has resulted in JIIL deciding to re-evaluate the terms of the restructuring and the parties were unable to resolve the outstanding issues prior to the completion of the Company's financial statements for the six monthsending June 30 , 2012. As a result, approximately $52.6 million in debt that comes due on December 31 , 2012and a further $10 million advanced in 2012 pursuant to promissory notes will continue to be treated as a short term liabilities.The remaining $25.5 million that was to be included in the restructuring continues to have a due date of June 30 , 2014. The Company will keepshareholders advised on developments with respect to this matter.

Q2 2012 Financial and Operational Highlights

Selected Q2 financial highlights

Review of Q2 Financial Performance Revenue for Q2 2012 was $5.4 million , up from negative $117,000 for the corresponding period of 2011. The growth was due to a re-start of mining and milling operations effective March 31 , 2012. In Q2 2011, Liberty had suspended mining and milling operations and its revenue total included an adjustment from previous periods. For the six-month period of 2012, Liberty generated revenue of $5.4 million , up 170% from $2.0 million for 2011. In Q2 2012, the average price of nickel was $7.78 per pound.

Liberty generates revenue through the sale of nickel concentrate and related by-products produced from its mining and milling operations in Timmins, Ontario. Liberty has a 100 percent off-take agreement with Xstrata.

Operating expenses for Q2 2012 were $7.4 million , up from $1.4 million last year. The increase in operating expenses is primarily due to the re-start and subsequent ramp-up of production activities throughout Q2 2012. In Q2 2011, Liberty's production activities had been suspended and the Company was chiefly in a maintenance and care-take mode. For the six-month period 2012, operating expenses were $10.7 million , up from $4.8 million .

Net loss for Q2 2012 was $10.3 million or $0.05 per share (basic and fully diluted). The loss included amortization/depletion expenses of $3.2 million , interest on long-term debt of $2.5 million and dividends on preferred shares of $0.3 million . Liberty recorded a net loss of $4.5 million or $0.03 per share for the same period in 2011 when its operations were suspended. For the six month period of 2012, Liberty recorded a net loss of $18.3 million or $0.09 per share. This compares to a net loss of $9.7 million or $0.06 per share for the six-month period of 2011.

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Liberty Mines reports financial results for second quarter 2012