Q1 2006 RIO NARCEA GOLD MINES INC Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good morning and welcome to the Rio Narcea first-quarter 2006 financial results conference call for May 17, 2006. I would now like to turn the conference over to Chris von Christierson. Mr. von Christierson, please go-ahead, sir.

CHRIS VON CHRISTIERSON, CEO, RIO NARCEA GOLD MINES, LTD.: Thank you, operator. Good morning, everyone in North America, and good afternoon, those in the UK, Spanish time zone. I am Chris von Christierson; I'm the Chairman and CEO of Rio Narcea. With me on the line are Alberto Lavandeira, who is President, Omar Gomez, who is our Chief Financial Officer, and David Baril, who is on the line from (indiscernible) in Mauritania, who is our Chief Operating Officer.

It gives me pleasure to present the first-quarter 2006 results of the Company.

Firstly, the financial results -- the Company reported a net income of $2.9 million on total revenues of 47.4 million. This compares with a net loss of 15.3 million on revenues of 9 million in the same period in 2005.

Our revenues from nickel operations totaled 27.2 million for the first quarter of 2006, and there were no comparable revenues from nickel operations in the same period. Revenues from gold operations for the first quarter of this year were $20.2 million, of which 13.1 million was sales from Nalunaq or compared to 9 million in the same period last year. There were no sales of Nalunaq during the first quarter of 2005.

Net income for the first quarter of 2006 includes a derivative loss of $9.7 million mainly as a result of copper hedging, which is required in terms of our project debt arrangements of the Aguablanca project. The Aguablanca nickel operation enabled the Company to report a positive operating cash flow of 1.8 million in the first quarter of 2006, compared to -10.6 million in the same period in 2005. However, cash provided by operating activities in the first quarter of this year, before changes in working capital, was $12.1 million. This was basically cash received from sales during the first quarter but was only actually received in the first part of April.

Our cash and cash equivalents on hand at the 31 of March were $34.742 million, down from $53.624 million as of the 31 of December, 2005.

Turning now to a review of operations, Aguablanca produced 3.5 million pounds of nickel and 3.4 million pounds of copper during the quarter from the processing of 314,730 tons of ore. This represents a 15% improvement in throughput. Head grades during the quarter were 0.68% and 0.54% for nickel and copper respectively with recoveries of 75.4% and 90.9% respectively. Head grades continue to reconcile with the ore block model -- (technical difficulty).

Production during the fourth quarter of 2005 was 4.1 million pounds of nickel and 3.2 million pounds of copper from processing 274,434 tons of ore. …