Vancouver, British Columbia, May 17th, 2005. Candente Resource Corp. - DNT:TSX (the "Company) confirms that its unaudited interim financial statements for the first quarter ended March 31st, 2005 were filed on SEDAR on May 16th, 2005 as required by applicable securities laws.
The following discussion and analysis is for the period ended March 31st, 2005 compared with the period ended December 31st, 2004. This information is current to May 13, 2005 and has not been reviewed by the Company's auditors. (All amounts in U.S. Dollars)
The discussion and analysis of the operating results and financial position of the Company should be read in conjunction with the attached Consolidated Financial Statements and related Notes (the "Financial Statements"), which have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) (see Summary of Significant Accounting Policies and Note 1: Nature of Operations) in United States dollars. This discussion and analysis may contain forward-looking statements about the Company's future prospects, and the Company provides no assurance that actual results will meet management's expectations.
Results of Operations
The Net Loss for the Quarter totaled ($320,344), or ($0.01) per share, compared to a loss of (446,656), or ($0.01) per share, in the prior year. The main differences in expenses between the two years are as follows:
- International Security expense of ($2,039) has decreased compared to ($27,668) in the first quarter of 2004 as the Company had less personnel in the field during this period;
- Legal, audit and accounting of ($23,561) versus ($17,617) in 2004 due to higher legal expenses related to the Company's being listed on the Toronto Stock Exchange;
- Management and Office salaries of ($46,359) versus ($26,132) in 2004;
- Promotion and Travel rose to ($63,762) from ($54,088) in 2004 and Corporate Development rose to ($55,917) from ($7,327) in 2004 as management attended several additional industry conferences during the period and traveled to Peru to review new exploration programs;
- Stock based compensation expense decreased to (89,574) from ($196,191) in 2004;
- The Company received a recovery of $77,310 in exploration bonds that had been written off at December 31, 2004.
The company earned interest income of $2,013 in 2005 compared to $19,656 in 2004 due to lower average cash balances, which was offset by a lower Foreign Exchange loss of $23,111 in 2005 compared to a loss of $38,330 in 2004, which was due to favorable exchange rates for the Canadian dollar against the US Dollar.
The operational effectiveness of the Company's activities in Peru has improved due to an increasingly favourable Canadian to U.S. dollar and Peruvian soles exchange rate. The Company maintains its own equipment, premises and staffing in Peru and as a result management believes that cost control is very good. The Company's properties are located in various climate zones in Peru and as a result the Company is always able to conduct activities on some of its properties.
The following is a summary of the key exploration projects the Company has been working on:
Peru Properties: Cañariaco, Alto Dorado/Toril, El Tigre and Las Sorpresas
Newfoundland Properties: Staghorn, Linear, Virgin Arm, Island Pond, Duder Lake, Paul's Pond and Eastern Pond
Refer to Management Discussion and Analysis of annual audited financial statements for the fiscal year ended December 31st, 2004, which was issued on March 28th, 2005. There have been no changes to the status of the Company's properties since March 28th, 2005.
Summary of Quarterly Results
Net loss by quarter
As the Company is still in the exploration and development stage, variances in its quarterly losses are not affected by sales or production-related factors. Year over year increased costs are generally attributed to successful financing activities which result in the Company being able to conduct more exploration, which results in additional overhead costs to maintain.
Capital Resources and Liquidity
Subsequent to the first quarter the company raised gross proceeds of Cdn$3,725,000 on closing the private placement on April 22, 2005 the company issued 7,450,000 shares @ $0.50. In consideration of introductions made to two of the placees, Meridian Capital International Inc. received a commission in the amount Cdn$173,250 and 300,000 share purchase warrants. The commission is 7% of proceeds from the two placees and the warrants are equal to 6% of the number of the shares sold to the two placees. Each warrant entitles the holder to purchase one common share of Candente at a price of $0.70 for a period of eighteen months until October 22, 2006.
During the Quarter the Company did not issue any shares on the exercise of options or warrants.
The Company has adequate financial resources to conduct its activities for the balance of the year and currently does not anticipate difficulties in raising additional funding if needed. Of the total 3,971,250 options outstanding 1,671,400 options are "in the money" at May 13, 2005, and are potentially exercisable to generate $675,000 in additional funding.
There is however, no assurance that any future funding can be accomplished as it would be wholly dependent on the state of the capital markets for junior gold exploration companies. The Company does not anticipate the payment of dividends in the future.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Related Party Transactions
Details of these related party transactions, including the purpose and recorded amounts of the transactions are identified in Note 5 to the Financial Statements.
Changes in Accounting Policy
Financial and Other Instruments
The Company's financial assets and liabilities consist of cash, gold, short-term investments, receivables, accounts payable and accrued liabilities, some of which are denominated either in Canadian dollars, U.S. dollars or Peruvian soles. These accounts are recorded at their fair market value. The Company is at risk for a financial gain or loss as a result of foreign exchange movements against the United States dollar. In the months ended March 31, 2005, the Company recorded a foreign exchange loss of $23,111 compared to a loss of $38,330 in 2004. The Company does not have major commitments to acquire assets in foreign currencies at this time, but does expect that certain significant future expenditures will be denominated in soles or U.S. dollars.
The Company has placed its cash and cash equivalents in liquid bank deposits which provide a variable rate of interest.
Outstanding Share Data
The Company has one class of common shares: as at May 13, 2005 there were 43,718,954 common shares outstanding.
The Company has a stock option plan: As at May 13, 2005, there were 3,971,250 stock options outstanding, of which 2,910,750 have vested.
The Company has outstanding as at May 13, 2005 2,737,500 warrants.
Risk and Uncertainties
Except for historical information contained in this discussion and analysis, disclosure statements contained herein are forward-looking, which statements are subject to risks and uncertainties, which could cause actual results to differ materially from those in such forward-looking statements.
The Company is a mineral exploration and development company and is exposed to a number of risks and uncertainties that are common to other companies in the same business; some of these risks have been discussed elsewhere in this report.
The Company's financial success is subject to general market conditions which affect mining and exploration companies. The value of the Company's mineral resources and future operating profit and loss is affected by fluctuations in gold prices, over which the Company has no control, although it may choose to hedge some of its future production. The cost of exploration and future capital and operating costs are affected by foreign exchange rates for the U.S. dollar and Peruvian sole. The Company can mitigate the effects of these rate fluctuations, to some extent, through forward purchases. The Company's ability to hedge future foreign exchange rates is affected by its creditworthiness. Because of its limited operating record and history of losses, it may not be able to hedge future risk to the extent it feels is warranted. The Company also competes with other mining companies which are larger and have more economic resources to acquire prospective exploration properties or producing mines.
The Company also faces certain risks and uncertainties specific to its circumstances. The Company's ability to obtain financing to explore for mineral deposits and to continue and complete the development of those properties it has classified as assets is not assured; nor is there assurance that the expenditure of funds will result in the discover of an economic mineral deposit. The Company has not completed a feasibility study on any of its deposits to determine if it hosts a mineral resource that can be economically developed and profitably mined. While the Company has used its best efforts to endure title to all its properties and secured access to surface rights, these titles or rights may be disputed.
Candente is a diversified copper and gold exploration company. Our focus is to increase shareholder value through discovery. Candente has an advanced exploration stage copper project, Cañariaco, and several other gold and gold-copper projects in Peru and Newfoundland. Candente's directors have individual track records in both the discovery and development of multi-million ounce gold and silver, and multi-billion pound copper deposits. Candente subscribes to principles, which ensure that its exploration and development activities are beneficial to the local communities. For more information visit www.candente.com, call us at (604) 689-1957, toll free 1-877-689-1964 or e-mail to email@example.com.
ON BEHALF OF THE BOARD OF DIRECTORS
"Peter de Visser"
Peter de Visser, Chief Financial Officer
Candente Resource Corp. - Release No. 131
This News Release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Candente relies upon litigation protection for forward-looking statements.