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 Letter to Shareholders For the Second Quarter Period Ended June 30, 2010 Second Quarter Highlights
Aguas Blancas Iodine Mine - Chile
Letter to Shareholders For the First Quarter Period Ended March 31, 2010 First Quarter Highlights
Financial and Operational Highlights
The Aguas Blancas Mine -- Chile
Salvador Potash Project -- Brazil
Letter to Shareholders For the Year Ended December 31, 2009 Dear shareholders:
In 2009 the Company benefited from operational improvements, higher iodine prices and lower operating costs. Net income for 2009 was US$2.9 million or US$0.02 per share reflecting higher income from mining operations and a foreign currency translation gain from the strengthening of the Canadian funds against the US dollar as the Company maintains a large portion of its cash in Canadian dollars. Subsequent to year end the Company continues to have consecutive months of enhanced production reflecting the determination and strong efforts of the Company's workers. Modifications, optimization and adjustments to the leach pads, processing plant and blow out towers all had a positive effect on throughput and recoveries. I am also proud to inform our shareholders that the Company continues to maintain an excellent safety and environmental record. Our commitment to our people and the environment remains strong. Financial and Operational Highlights 
The Company, however, still had its challenges during the year. Commissioning efforts indicate that the agitated leach plant crushing and grinding circuit needs to be reconfigured, to handle the various ore types found at Aguas Blancas. Options were studied throughout the year and the Company will be installing a fine crushing and screening system in the coming months. We are striving to have the agitated leach plant operational within the next twelve months. Bringing this agitated leach plant on stream will be an important step in improving production and extending the mine life. Once this hurdle is passed, we will turn our attention to developing our nitrate reserves. We had previously completed a feasibility study on constructing a nitrate fertilizer plant that would produce approximately 70,000 tonnes of nitrate fertilizer per year. The nitrate fertilizer plant would process the nitrate salt-bearing brine solution currently produced from our iodine operations. An update of the feasibility study will be undertaken once the agitated leach plant is proven to run at expected capacity, providing the appropriate feed to the nitrate plant. Lastly for Aguas Blancas, our exploration program remains strong. This year we will focus on converting resource to reserve to more than cover mined ore, as well as solidifying the additional resources we are encountering in the area. Aguas Blancas has a long mine life ahead of it because of the success of our exploration strategy. During the year, we commenced an exploration program on our Salvador Potash project in Brazil. This is an exciting new opportunity for the Company which shows excellent potential based on historical work. We are now completing the drilling of our first hole to test that potential -- these are deep holes targeting sylvite potash minerals in sedimentary beds 1,000 to 1,500 metres below surface. We expect the results from our first hole by the end of the second quarter, 2010. Our goal with Atacama is to build it into one of the leading companies in the industrial minerals sector -- one that is capable of competing at the top level internationally. Atacama has a solid foundation and is positioned for that growth. We look forward to another great year in 2010. On behalf of the Board, Tim Miller President and CEO Letter to Shareholders For the Third Quarter Period Ended September 30, 2009 (Figures are in United States Dollars unless otherwise stated)
The Aguas Blancas Mine -- Chile
Effective December 1, 2009, Mr. Tim Miller has been appointed President and Chief Executive Officer and has joined the Board of Directors. Mr. Miller replaces Mr. Edward Posey who has resigned from the Company and as a Director in view of his planned retirement. Mr. Posey will remain as an advisor to the Company until January 31, 2010 to ensure a smooth transition. Letter to Shareholders For the Second Quarter Period Ended June 30, 2009 (Figures are in United States Dollars unless otherwise stated)
To our shareholders: Atacama Minerals is pleased to report quarterly net income of $2.2 million or $0.01 per share for the three months ended June 30, 2009 (net loss of $1.7 million or $0.01 for the six months ended June 30, 2008). The Company had cash and cash equivalents of $30 million, working capital of $34 million, and long term debt of $5.7 million as of June 30, 2009. The 2009 unaudited interim consolidated financial statements together with Management's Discussion and Analysis are available on the SEDAR website (www.sedar.com). Highlights for the Second Quarter  The increase in income for the quarter was primarily due to higher income from mining operations at the Aguas Blancas mine and a foreign currency translation gain of $2.1 million as a result of the strengthening of the Canadian dollar against the US dollar and the fact that the Company maintains a large portion of its cash in Canadian dollars. The increase in income for the first half of 2009 was primarily due to higher income from mining operations and a foreign currency translation gain in the second quarter of 2009. The increase in income from mining operations for both the second quarter and first half of 2009 compared to the same periods in 2008 was primarily due to higher iodine prices and tonnes sold. The Aguas Blancas Mine - northern Chile Iodine production from the Aguas Blancas Mine in northern Chile is expected to increase throughout the remainder of the year to a total in excess of 1,000 tonnes as heap leach operations continue to be optimized and cold weather conditions subside. During the first half of 2009, the Company installed modifications to the crushing/grinding system of the agitated leach plant based on recommendations provided by independent consultants. Results from the startup and test work completed indicate that further modifications are required to resolve the material processing problems. When fully operational, the new agitated leach plant is designed to increase production capacity from 1,000 tonnes of iodine per year to 1,500 tonnes per year. Salvador Potash Project - Brazil The Company expects to commence drilling upon receipt of environmental permits for the drill sites, which are anticipated to be received late in the third quarter or early fourth quarter of 2009. Drill sites have been selected based on historical drill results and studies of geophysical and geological data. On behalf of the Board Edward F. Posey, President August 27, 2009 Letter to Shareholders For the First Quarter Period Ended March 31, 2009 (Figures are in United States Dollars unless otherwise stated)
To our shareholders: Atacama Minerals is proud to have achieved a positive financial result on iodine operations at its Aguas Blancas Mine in northern Chile in the first quarter of 2009, despite the negative effects of the economic downturn facing the international mining community. Management believes a significant turnaround has been made going forward with Company operations. This result is attributable to a number of factors which occurred during the first quarter. The price of iodine increased to an all time high while a number of operational challenges were met for improving iodine production. A new mine manager, Mr. Chris Harrison, was appointed in January and several measures were undertaken to improve operations. The design of the heap leaching process was improved and modifications were made to the iodine plant to accommodate increased production. The results of these measures are expected to support the continued success of the Company in the coming months and years. The first quarter of 2009 saw the Company report a positive income from iodine mining operations of $1.3 million, up from $283,000 for the same period in 2008. Net loss for the quarter was $561,000, down from $848,000 for the same period in 2008. The positive income from mining operations was partly due to a record iodine price slightly in excess of $28 per kilogram coupled with lower production costs. Iodine prices are expected to remain at favorable levels for the remainder of the year, but will naturally depend on world economic developments. Financial Highlights
Sales revenue for the first quarter of 2009 was higher at $5.6 million as compared to $5.1 million from the previous year. The increase in revenues was a result of higher iodine prices offset in part by lower tonnes sold. Production costs for the first quarter of 2009 were lower at $3.3 million compared to $3.7 million for 2008, due to lower costs for fuel, sulfur, sulfuric acid and other operating supplies when compared to the same period in 2008. Expenses for the first quarter of 2009 were higher at $1.8 million compared to $1.2 million for 2008 mainly due to a $714,000 foreign currency translation loss and $195,000 in stock based compensation. The large foreign exchange translation loss resulted from the weakening of the Canadian dollar against the US dollar. As of March 31, 2009, the Company is in a strong liquidity position with cash and cash equivalents of $28.5 million and working capital of $26.5 million. Short term bank debt as of March 31, 2009 was $12 million. Tonnes of ore mined during the first quarter of 2009 were higher compared to the same period of 2008 as the Company increased the tonnes of mined ore to the heap leach pads. The increase in tonnes mined is expected to lead to an increase in iodine production, noting that there is a delay of 3 to 4 months before ore on leach pads produces significant amounts of iodine. Iodine production for the first quarter of 2009 was impacted by operational downtime due to electrical power supply interruptions, solution pumps failure and heap leach solution system changes. These operational issues have been addressed and normal monthly production is expected to be achieved in the second quarter of 2009. During the first quarter of 2009, modifications were made to the feeding system of the new agitated leach plant and testing is now underway. The Company expects the agitated leach plant to be operational toward the end of the third quarter of this year. The agitated leach plant is designed to increase production capacity from 1,000 tonnes of iodine per year to 1,500 tonnes per year. An on-going drill program is being conducted at the Aguas Blancas mine for the purpose of converting caliche ore in the resource category to the reserve category. In addition, exploration drilling for discovery of new resources outside the current limits is continuing. The Company expects to report on the results of this program during the fourth quarter of this year. Ground work is underway for the selection and permitting of drill targets for the Company's potash exploration project located near Salvador, Brazil. Drilling is expected to begin in early third quarter of this year. On behalf of the Board Edward F. Posey, President May 29, 2009 Letter to Shareholders For the Year Ended December 31, 2008 (Figures are in United States Dollars unless otherwise stated)
To our shareholders: The year 2008 was one of significant positive developments for the Company as well as challenges, not only for the Company, but for the global economy in general. Atacama Minerals continues to focus on iodine production at its Aguas Blancas Mine in northern Chile. Several important events took place in furthering the Company's objectives of becoming a major producer of iodine and fertilizer in South America. In April of 2008, a new agitated leach plant was built with the aim of converting from existing heap leach operations to more efficient, productive iodine production. The agitated leach plant is expected to allow for a production increase to 1,500 Mt per annum of prilled iodine from the current 1,000 Mt per annum level. During the commissioning phase certain problems were encountered with the crushing and grinding section of the plant, which was found to be inadequate for the caliche ore being processed. New equipment is now on site and undergoing testing. The plant is now expected to be operational toward the end of the third quarter of 2009. Meanwhile, steps have been taken to maintain and increase iodine production by increasing the amount of ore delivered to the heap leach operations. As part of the new agitated leach plant, a sediment containment pond was completed and a new powerline was connected to the local electrical grid. In June, 2008, the Board of Directors approved the development of a specialty nitrate fertilizer plant at Aguas Blancas. The plant is estimated to require an investment of $60 million and is designed to produce 70,000 tonnes of specialty nitrate fertilizers per year. In light of the recent global financial crisis, the Company decided to temporarily defer major capital expenditures for the development of the new plant. In July, 2008, the Company announced the acquisition of a new potash exploration project on the northeastern coast of Brazil. The "Salvador Potash Project", located along the Atlantic coast within the highly prospective on-shore portion of the Reconcavo Basin, covers an area of approximately 1,700 square kilometers. The project is located 45 kilometers west of the port city of Salvador, Bahia with excellent infrastructure. Ground work is underway for selection and permitting of drill targets designed to intercept a silvinite-bearing layer of the Matarandiba formation at approximate depths of 1,000 meters. A drilling program is planned to commence the second quarter of this year. In August, 2008, the Company announced the completion of a financing through a brokered and non-brokered private placement for gross proceeds of $47.2 million. At the end of the 2008 the Company had $32.7 million in cash with a short term debt of $13.1 million. Operating and Financial Highlights  Total production of iodine for 2008 was 844 tonnes, less than the 1,300 tonnes anticipated at the beginning of the year. Sales revenue for the year ended December 31, 2008 was lower at $20.6 million as compared to $25.2 million from the previous year. The decrease in revenues was a result of lower sales volumes due to lower production. The lower production in 2008 as compared to 2007 was due primarily to a planned reduction of material placed on the heap leach pads in anticipation of the transition from heap leaching to agitated leaching. Production costs for the year ended December 31, 2008 were higher at $17.9 million compared to $15.3 million for 2007 with higher costs for fuel, sulfur, sulfuric acid and other operating supplies compared to the same period in 2007. Nevertheless, recent price decreases in consumables such as sulfur, sulfuric acid, fuel and electricity, as well as decreasing freight rates are expected to benefit profit margins going into 2009. Expenses were higher at $12.2 million versus $2.1 million in 2007 due to a $5.6 million foreign exchange loss and the reclassification of the agitated leach expenses, of $1.2 million, which were expensed in 2008. Stock based compensation also was higher in 2008. The net loss for 2008 was impacted by a foreign exchange loss of $5.6 million, resulting from the weakening of the Canadian dollar against the US dollar and as a result of the Company holding Canadian funds generated from the financing completed in August, 2008. The iodine market remained stable in 2008 in spite of recent decrease in prices of other commodities. Iodine prices are expected to remain at fairly stable levels into 2009. Quarterly contract sales in 2008 maintained an all time high averaging $24.25 per kilogram. Chile currently produces approximately 58% of the worlds' 30,000 tonne demand for iodine. Tonnes of ore mined during the year ended December 31, 2008 were lower compared to the same period of 2007 as a result of a new mine plan implemented in 2008 in anticipation of the commencement of the new agitated leach system. In the fourth quarter of 2008, the Company increased the tonnes of mined ore to the heap leach pads in order to increase iodine production until such time the agitated leach plant is fully operational. In response to the global credit crisis, the Company has taken measures to preserve existing capital, which includes deferring capital expenditures which do not relate directly to the production of iodine. In this regard, the nitrate fertilizer project, approved by the Board in July 2008, has been temporarily deferred and new business development has also been suspended. These measures are expected to continue well into 2009. It is important to note that the Company is in a strong liquidity position due to the equity financing in August of 2008. Management is confident sufficient funds exist to complete necessary capital expenditures in 2009 for general working capital and completion of the new agitated leach system. In spite of the current financial crisis, the Company is optimistic about building an important industrial minerals company in South America based on the long term future of iodine and specialty fertilizers. Management continues to vigorously pursue the interests of our shareholders in building Atacama Minerals into a significant player in the industrial minerals sector of South America. Management would like to sincerely thank our shareholders for their continuing support and extend our gratitude to the dedication and hard work of all our employees. On behalf of the Board Edward F. Posey, President April 27, 2009 Letter to Shareholders For the Third Quarter Period Ended September 30, 2008 To our shareholders: Atacama Minerals continues to focus on iodine production at its Aguas Blancas Mine in northern Chile, noting that the price of iodine is so far unaffected by the global financial crisis. It is also notable that the Company has working capital of US$37 million as at September 30, 2008 due to a financing closed in August of this year of CDN $50 million. Nevertheless, in response to continuing global financial developments, as well as lower than anticipated Company performance during the third quarter, efforts are being made to conserve cash and defer major capital expenditures which do not relate directly to the production of iodine. Measures are being taken to maintain and improve iodine production by placing more ore on the leach pads while equipment has been ordered for the modification to the agitated leach plant, now expected to be operational toward the end of March 2009. Meantime, comprehensive cost-saving measures are being taken in efforts to reduce production and administrative costs, including downsizing of non-essential personnel and staff. During the quarter, Mr. Brian Kennedy left his position with the Company as Vice President, Operations, to pursue other opportunities. Agitated Leach plant During the second quarter of 2008, the Company initiated the commissioning of a new agitated leach plant designed to replace the existing heap leaching system. During the commissioning phase certain problems were encountered with the crushing and grinding section of the plant, found to be inadequate for the caliche ore being processed. New equipment has been ordered and the plant is now expected to be operational in the first half of 2009. The agitated leach plant is expected to allow for a production increase to 1,500 Mt per annum of prilled iodine from the current 1,000 Mt per annum level using the heap leaching method. Meanwhile, as a step to maintain and increase iodine production, the Company has increased the amount of ore delivered to the heap leach operations. Total production of iodine by year's end is expected to total 865 tonnes of high quality prill, instead of the 1,300 tonnes targeted at the beginning of the year. This amount will result in lower sales revenue for this year compared to 2007. Recent price decreases in consumables such as sulfur and sulfuric acid, as well as decreasing freight rates and the strengthening of the U.S. dollar should assist in the reduction of costs for the remainder of fiscal 2008. The iodine market has remained stable in the third quarter in spite of the recent decrease in prices of other commodities. Iodine prices are expected to remain at fairly stable levels for the remainder of the year and possibly into 2009. Quarterly contract sales are currently maintaining an all time high averaging US$24.25 per kilogram. Chile currently produces approximately 58% of the worlds' 30,000 tonne demand for iodine. In conjunction with the construction of the new agitated leach plant, the Company completed a new powerline in May of this year, connecting to the local power grid. The new powerline replaces the existing diesel generators and is expected to provide a reliable, cost effective, long-term source of electricity for the current and future Aguas Blancas operations. Nitrate Fertilizer As previously announced, the Board of Directors approved the development for the production of specialty nitrate fertilizers at Aguas Blancas The plant is estimated to require an investment of $60 million and take approximately 27 months to complete and is designed to produce 70,000 tonnes of specialty nitrate fertilizers per year. In light of the recent unprecedented global financial crisis the Company has decided to temporarily defer major capital expenditures for the development of the nitrate fertilizer plant. Chile currently produces an estimated 56% of the worlds' 1.1 million tonne demand for specialty nitrate fertilizers and it is intended to re-start the project as soon as conditions allow. Salvador Project As announced in June of this year, the Company has started a potash exploration program on the northeastern coast of Brazil. Ground work is underway in the form of geophysical and geological work for selection and permitting of drill targets covering an area of approximately 1,700 square kilometers. The Company's response to the current global financial crisis may affect the timing of the drill program. Operating and Financial Highlights 
Sales revenue for the third quarter of 2008 was 14% lower at $5.1 million as compared to $5.9 million for the same period in 2007. The decrease in revenue was due to lower sales volume. The lower production for the third quarter of 2008 was due primarily to lower tonnages of caliche ore delivered to the leach pads in anticipation of decommissioning of the heap leach system. Costs of goods sold for the third quarter of 2008 was 35% higher at $5.5 million when compared to $4.1 million for the same period in 2007. Lower production and higher costs for fuel, sulfur, sulfuric acid and other operating supplies have increased the unit cost of goods sold. EBITDA was significantly lower for the third quarter of 2008 as compared to the same period in 2007 primarily due to significantly lower net operating profit. The lower net operating profit was due substantially to reduced production during the transition from the heap leach system to the full agitated leach process. In spite of the current financial crisis, the Company is optimistic about building an important industrial minerals company in South America based on the quality and life of our ore reserves and the long term future of iodine and specialty nitrate fertilizers from Chile. These are products for which Chile produces more than 50% of the world consumption. For potash, current worldwide consumption is 50 million tonnes for which Brazil is a net importer of approximately 7 million tonnes. Management of Atacama Minerals will persist in vigorously pursuing the interests of our shareholders in building the asset base of the Company based on the long term worldwide demand for our products. On behalf of the Board Edward F. Posey, President November 25, 2008 Letter to Shareholders For the Second Quarter Ended June 30, 2008 Atacama Minerals continues to grow towards becoming an important iodine and fertilizer producer in South America. Internal growth at the Aguas Blancas Mine, coupled with the new Salvador Potash Project in Brazil is expected to result in significant future growth for the Company. During the second quarter, the Company announced the initiation of commissioning of a new agitated leach plant, the completion of a new power line system and the completion of a positive feasibility study for the production of specialty nitrate fertilizers. The new agitated leach plant is expected to greatly improve operating and cost efficiencies as it replaces the current heap leaching system. Currently the commissioning process which consists of testing and optimizing plant components is experiencing some unanticipated challenges in the crushing and grinding section which may delay full start up until the fourth quarter of this year. The Company is taking all necessary measures to address these issues. When commissioning is complete and full start-up begins, iodine production levels are expected to increase by more than 50% to approximately 1,500 tonnes per annum, recovery of iodine-nitrate salts from the caliche ore is anticipated to ramp up to more than 75% and the processing time for leaching the ore in the new plant will be significantly reduced. Additionally, the water requirements for the new plant are expected to be reduced by an estimated 25%. The Company anticipates these improvements will result in long-term lower costs of production, reduced working capital requirements and an extended life of mine. The Company successfully completed a new power line system hooking up the Aguas Blancas mine with the local power grid. The connection point is located 28 kilometers northeast of the Aguas Blancas mine and consists of two new substations and a 69 kilovolt transmission line. The new power line has replaced the current diesel powered generators and is expected to provide for a reliable, cost effective and longterm source of energy for future operations. During the quarter, the Company announced Board approval for construction of a new specialty nitrate fertilizers plant at Aguas Blancas. The new plant will use spent brine emitted from the iodine operations. A positive feasibility study on development of this resource estimates construction of the new plant at a cost of US$60 million over a period of 27 months. The new plant will have the capacity to produce 70,000 tonnes of nitrate fertilizer per year. On August 19, 2008, the Company completed a private placement financing of C$50,025,000, a portion of which will be used to partially fund construction of the nitrate plant. The new fertilizer plant will have the capability to produce three different specialty nitrate fertilizer products -- potassium nitrate, sodium nitrate and sodium potassium nitrate. Permitting is already in place and engineering and procurement have started. Nitrate fertilizers from Chile are considered a specialty fertilizer and have been experiencing strong demand and price increases in recent years (recent potassium nitrate contracts have been priced at in excess of US $1,000 per tonne). This demand, part of a long term trend, is a result of global agricultural growth estimated at more than 5% per year. Development of the Aguas Blancas nitrate resources represents an important new growth phase for the Company. To further expand Atacama's reach in the fertilizer sector, the Company has acquired a large land package in a major new potash region in northeastern Brazil. Application has been made for exploration permits in the state of Bahia covering 1,444 square kilometers (357,000 acres) of lands located 30 kilometers west of the port city of Salvador. The "Salvador Potash Project" is located along the Atlantic coast within the highly prospective southern on-shore portion of the Reconcavo Basin. Historical petrographic work confirmed the existence of the potash minerals sylvite and sylvinite interbedded in halite salt within a 9 meter section of drill core (drill hole MQ-3) drilled in 1972 by others. The potash beds are found in the "Intermediate Interval" of the evaporitic Matarandiba Member at a depth of 1,100 metres. The thickness of the Intermediate Interval varies between 32 and 37 metres. There are no historical resource estimates of grade or tonnage of potash within the project area, but Atacama has initiated an aggressive exploration program to define the economic potential of what is considered a major new potash exploration target in South America. The exploration permits are expected to be granted to the Company in the third quarter of 2008. Existing seismic data are being studied and new gravity surveys will be conducted with plans to initiate a scout drill program in the fourth quarter of this year. Operating and Financial Highlights  Sales revenue for the second quarter of 2008 was 23.6% lower at $5.5 million as compared to $7.2 million for the same period in 2007. The decrease in revenue was due to lower sales volume. The lower production for the second quarter of 2008 was due primarily to lower tonnages of caliche ore delivered to the leach pads in anticipation of decommissioning of the heap leach system and co-incident production from the agitated leach plant. Costs of goods sold for the second quarter of 2008 was 21% higher at $4.9 million when compared to $4.1 million for the same period in 2007. The increase in the cost of goods sold for second quarter of 2008 was primarily due to costs associated with the commissioning of the agitated leach plant as well as increased costs for fuel, sulfur, sulfuric acid and other operating supplies. EBITDA was lower for the second quarter of 2008 as compared to the same period in 2007 primarily due to lower net operating profit. The lower net operating profit was due substantially to reduced production during the transition from the heap leach system to the full agitated leach process. In the first six months of 2008, the iodine market showed continuing demand. World demand for iodine has risen in recent years due to the increase in industrial uses particularly in the manufacturing of LCD screens for computers and televisions, X-ray contrast media and increased use in health care programs around the world. The iodine produced at Aguas Blancas is of high quality and widely accepted in the world markets. Its many uses coupled with growing demand have firmly established the Company as a reliable and key supplier in the market. On behalf of the Board Edward F. Posey, President August 26, 2008 Letter to Shareholders For the First Quarter Ended March 31, 2008 To our shareholders: The first quarter of 2008 saw the Company make significant advancements on several fronts in pursuit of making the Aguas Blancas iodine operation in northern Chile more successful, productive and efficient. This, in spite of production cost challenges and the negative impact of the appreciation of the Chilean peso. Financial and Operating Highlights 
Sales revenue for the three months ended March 31, 2008 was 23% lower at $5.1 million as compared to $6.6 million for the three months ended March 31, 2007. The decrease in revenue was due to a decrease in sales as a result of lower production. The lower production for the first quarter of 2008 was due to lower tonnages of caliche ore delivered to the leach pads combined with unforeseen technical issues involving the lower recovery due to the effect of higher than normal content of insoluble salts. Costs of goods sold for the three months ended March 31, 2008 were slightly higher at $3.7 million, or 8%, compared to $3.4 million for the three months ended March 31, 2007. The increase in the cost of goods sold for first quarter 2008 was attributed to increased costs for fuel, sulfur, sulfuric acid and other operating supplies. In addition, the negative effect of the unprecedented 13% devaluation of the U.S. dollar against the Chilean peso during the period contributed to a rise in labor and supply costs which are paid in local currency. The decrease in income of $2.0 million for the first quarter of 2008 compared to the first quarter of March 31, 2007 is due primarily to lower operating margin and higher overall expenses. Earnings before interest, future income taxes, depletion, depreciation and amortization (EBITDA) was lower for the first quarter of 2008 as compared to the same period in 2007 primarily due lower net operating profit due to decreased sales volumes and increased costs as well as the negative effect of the devaluation of the U.S. dollar against the Chilean peso. On January 31, 2008, the Company announced a significant increase in the Reserve and Resource base of the Aguas Blancas Mine. A new estimate based on drilling results up to October 31, 2007 was released by the Company on January 31, 2008: 
The total Proven and Probable Reserve base increased 53% from the previous estimate of 24 million tonnes published in February 2007. The Company is diligently pursuing a drill program for discovery of new Resources and conversion of existing Resources to the Reserve category. This activity is expected to ensure an extended life of mine for the Aguas Blancas operations. During the first quarter a milestone event occurred with completion of the new mechanical agitated leach plant construction. Commissioning of the agitated leach plant is currently underway. The new agitated leach plant will replace the current heap leaching system which will allow for an increase in production from current levels of 1,000 Mt per annum to 1,500 Mt per annum of high quality iodine. Full conversion from heap leaching to agitated leaching is targeted for early in the third quarter. Besides an increase in production, the new plant will provide several operational and cost efficiencies. The new plant will use less water compared to the current heap leach operations resulting in a direct cost savings. Recovery of iodine-nitrate salts from the caliche ore is expected to increase from the current level of approximately 55% with the heap leach system to in excess of 75% using the new agitated leach plant. The processing time for leaching the ore in the new plant will be significantly reduced and eliminates having to build additional leach pads thereby reducing operating capital requirements. During the quarter, ancillary facility construction to support expanded facilities progressed. A sediment containment pond is being constructed at an estimated cost of $4.4 million with targeted completion in June. A series of new evaporation ponds has been constructed at Aguas Blancas and are being filled with spent brine solutions from the iodine plant for the eventual recovery of nitrate salts. A new $8.6 million powerline project was also completed in April of this year, coinciding with commissioning of the agitated leach plant. The powerline extends 28 kilometers, includes two substations and a 69 kilovolt transmission line. The new powerline will replace the previous source of diesel powered generators and provide for a more cost-effective, reliable, long-term source of energy for future operations. In the first three months of 2008, the iodine market showed continuing strength in demand. World demand has risen due to the increase in industrial uses particularly in the manufacturing of LCD screens for computers and televisions, X-ray contrast media and also due to the various health care programs introduced in China, where it has become a national concern to treat drinking water with iodine to prevent disease. Marginal price increases are expected during the remainder of the year. The Company expects revenues to grow in 2008 due to price increases but also due to increased iodine production as the agitated leach plant becomes fully operational. The iodine produced at Aguas Blancas is of high quality and widely accepted in the world markets. Its many uses coupled with growing demand have firmly established the Company as a reliable and key supplier in the market. In addition to iodine, the Aguas Blancas reserves contain significant amounts of nitrate salts. Current world-wide demand for nitrate fertilizers has grown to record proportions in recent months. The use of inorganic nitrate fertilizers has experienced tremendous growth with prices doubling in the last year. This growth is expected to continue as demand for biofuels, coupled with the increasing demand for food production requires an ever increasing supply of fertilizer. Responding to these trends, management has completed a feasibility study for the production of nitrate fertilizers which has recently been submitted to the Board. We are pleased to report that the Board has approved nitrate facility development for the construction of a US $60 million nitrate fertilizer plant designed to initially produce 70,000 tonnes of nitrate fertilizer per year. 2008 is expected to be another milestone year for the Company. The conversion to agitated leach will increase iodine production and allow the Company to examine further iodine expansion of the Aguas Blancas operations as well as facilitating nitrate salt feed to a new fertilizer plant. As part of this plan, existing solar evaporation ponds will be expanded, a new sediment containment pond will be completed, and drill testing will continue in pursuit of expanding and confirming the overall iodine and nitrate resource base. As the Company grows and expands, new opportunities are constantly being evaluated and management expects the coming months to present many opportunities for growth and expansion. On behalf of the Board Edward F. Posey President May 27, 2008 Previous. All pages. Next. Page 1. Page 2 Previous. All pages. Next. Page 1. Page 2 |
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