Peru Copper Reports 2007 Six Month Financial Results
Monday, August 13th, 2007
Peru Copper Inc.
(TSX:PCR / AMEX:CUP / BVL:CUP) (“Peru Copper” or the “Company”) is involved in the acquisition and exploration of potentially mineable deposits of copper in Peru. On June 11, 2003, Peru Copper entered into the Toromocho Option Agreement with a Peruvian state-owned mining company, whereby it acquired exploration rights and an option to acquire development rights in certain mining concessions that are located in Morococha, a historical mining district in central Peru.
On June 25, 2007, Chinalco Canada B.C. Holdings Ltd., a wholly-owned subsidiary of Aluminum Corporation of China, made an offer to purchase all of the outstanding common shares of Peru Copper for C$6.60 per share. In connection with the offer each of the directors and certain other shareholders of Peru Copper entered into lock-up agreements with the offeror, under which they agreed to support the offer and to deposit under the offer all of the Peru Copper shares beneficially owned or controlled by them.
On July 31, 2007, Chinalco announced the completion of its offer to acquire all the issued and outstanding common shares of Peru Copper for cash consideration of C$6.60 per Share. All of the conditions of the Offer were satisfied. Approximately 91% of the outstanding shares had been tendered to the offer. Chinalco intends to acquire all outstanding shares not tendered in the Offer. Chinalco intends to apply to de-list the Peru Copper shares from the Toronto Stock Exchange, the American Stock Exchange and the Lima Stock Exchange and to cause it to cease to be a reporting issuer in Canada and the U.S. in due course.
Effective August 10, 2007, all of the current directors of the Corporation have resigned from office and Mr. Zhengang Zhao, Mr. Wenfu Wang and Mr. Richard Miner have been appointed as directors of the Corporation. In addition, David Lowell has ceased as the Corporation’s Chairman, David De Witt has ceased as Vice President of Corporation Development and Paul Stein has ceased as Corporate Secretary. Gerry Wolfe will continue as the Corporation’s President and Chief Executive Officer, Eric Peitz will continue as Chief Financial Officer, Angel Alvarez will continue as Vice President, Exploration, Tom White will continue as Vice President of Project Development, Patrick De Witt will continue as Director of Investor Relations and Governmental Affairs
(Canada) and Armando Arrieta will continue as Director of Peruvian Legal Affairs.
The Company prepares its financial statements in U.S. dollars and in accordance with accounting policies and practices generally accepted in Canada. Peru Copper expenses all costs not directly related to its exploration and drilling efforts and capitalizes all exploration expenses.
For the six months ended June 30, 2007, the Company recorded a loss of
$2.8 million as compared to a loss of $1.6 million for the six months ended June 30, 2006. Contributing to the Company’s loss was an increase of $0.7 million in management fees and salaries from $0.3 million for the six months ended on June 30, 2006 to $1.0 million for the same period in 2007. The increase in management fees was primarily due to increasing and replacing management level staff.
Also contributing to the Company’s loss for the six months ended June 30, 2007 was an increase in professional fees, from $0.8 million for the six months ended June 30, 2006 to $1.0 million in the same period in 2007. The increase in professional fees resulted primarily for legal fees incurred in connection with negotiations relating to the acquisition of the Company.
Expenses in the current period were offset by interest income of $0.8 million and a small foreign exchange gain of $0.1 million.
Cash and Short term Investments
Peru Copper had cash and cash equivalents of $2.1 million at June 30, 2007, compared to $5.2 million at December 31, 2006, and short term investments of $80.1 million at June 30, 2007 and $30.4 million at December 31, 2006. The increase in short term investments resulted primarily from the receipt, on June 19, 2007 from Chinalco Canada B.C.
Holdings Ltd., of $65.9 million in proceeds for the private placement of 13.2 million common shares at $4.99 per share.
All of the Company’s $20.0 million of exploration costs for the six months ended June 30, 2007 have been capitalized under Canadian GAAP to exploration properties and all administration costs of the Company have been expensed.
The bulk of the capitalized costs for the period were related to $8.3 million in acquisition and lease costs associated with the acquisition of Minera Centenario and payments made to Austria Duvaz. These payments were made in accordance to the agreements signed with Austria Duvaz in 2006.
Contributing to the capitalized expenses were salaries and consulting fees of $6.6 million that were related to costs associated with an increasing number of consultants and employees working on the Company’s feasibility study. Supplies and general expenses totaled $1.3 million in the current period due to the accelerated development of the Feasibility Study and continued drilling activity.
Additional capitalized costs in the current period included drilling expenses of $1.2 million, assay and sampling expenses of $0.6 million, value added taxes of $0.8 million due to the purchase of supplies and
$0.6 million in stock-based compensation for workers and consultants working directly on the Toromocho Project.