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Alexis Minerals Announces 17.9% Increase in Q3 Revenue

ALEXIS MINERALS CORPORATION (TSX:AMC)(OTCQX:AXSMF) has reported its third quarter 2010 Financial Statements and Management's Discussion and Analysis for the three month period ended September 30, 2010.

Progress at the Snow Lake mine has been encouraging with the recent completion of the Snow Lake Feasibility Study. The study projects 80,000 ounces of annual gold production over a five year operating period. The study includes a revised estimate of Mineral Resources which have increased significantly during the year. Total resources in all categories have passed the million ounce mark. Proven and Probable gold reserves within Resources and supporting the production estimates now total an estimated 451,900 ounces gold (see news release, November 3, 2010, for details regarding the mineral reserve estimates). Our prime issue during recent months has been inconsistent gold grades being mined at our Lac Herbin gold mine. Operating costs are being closely monitored, and as the third quarter progressed certain expenses were reduced or eliminated to preserve cash. We are diligently and continuously assessing all factors to improve the grades and performance at Lac Herbin.

Q3- 2010 Summary:

During the three months ended September 30, 2010 the following occurred at Alexis Minerals:

  • Total revenue of $7.74 million was generated, 17.9% higher than in Q3-2009; 14.7% less than Q2-2010. The latter was due to fewer ounces of gold mined, milled and recovered during Q3-2010.
  • The Company sold 6,498 ounces of gold at an average realized price of $1,250/oz (USD $1,208/oz.), compared to 6,575 ounces sold during Q3-2009 at an average realized price of $1,048/oz (USD $940/oz).
  • Lac Herbin Mine, in Val-d'Or, Quebec, the Company's initial gold operation, mined 4,677 oz. of gold, a 47% reduction compared to 6,874 ounces mined in Q2-2010. The grades realized continued to be lower than expected. Management continues to work to better predict the nature of the gold grades. More drilling and in depth review of the geology has led to a better understanding of the nature of the deposit.
  • Our wholly-owned Aurbel Gold Mill, performed at a more consistent level during this quarter with an average recovery rate of 91.6%, improved from 87.2% in Q2-2010. The Aurbel Mill was refurbished earlier this year with the rationale that Alexis would achieve an estimated 10% reduction in annual operating costs for the Lac Herbin gold mine.
  • Cash cost of sales per ounce (see non-GAAP measures) of the Lac Herbin gold sold was at $1,283/oz Au for the third quarter. The deposit has continued to pose challenges, at the current stage of development, in producing sufficiently high grade ore (see further comments below). As an immediate action, various costs and mining development efforts were reduced in an effort to offset the lower revenue. Alexis is very focused on reducing unit cost.
  • Compared to Q2-2010, cash flow was negatively impacted by the reduction of accumulated accounts payable, significantly depleting working capital.
  • Exploration and delineation drilling totaling 7,714 metres occurred primarily at Snow Lake and Lac Herbin. Year to date drilling totals 55,544 metres.
  • Exploration drilling continued in the Deep West target area, near the past producing Louvicourt mine. Drilling approximately 600 metres above the deep Massive Sulphide discovery intersected broad alteration and stringer sulphide zones. Recognized regional folding in association with geological trends should allow Alexis to align drilling to ultimately locate and test a large seismic-reflection geophysical anomaly in this general area.
  • The Company raised $14.375 million through a public offering at a price of $0.15 per share. A portion of the net proceeds were devoted to reinforcing working capital and general corporate purposes. The Snow Lake Feasibility Study has been completed and key capital programs are being prepared to support the next phase of the Company's strategic plan focused on the Snow Lake Gold Mine in Manitoba.
  • Subsequent to the end of the quarter, Alexis announced that a Letter of Engagement had been signed with Legend Securities, a New York based broker-dealer, in order to advance a facility of up to $60 Million in support of future Capital Cost and Working Capital requirements anticipated in the development of the Snow Lake Mine, Manitoba.
  • Subsequent to the end of the third quarter the Feasibility Study for the Snow Lake mine was completed. Results propose the project to be economic, with the projected annual production of approximately 80,000 oz. of gold for at least five years, and a pre-tax Net Present Value of approximately $100.8 million. The Feasibility Study included an estimate of proven and probable reserves of 3,477,000 tonnes at 4.04 g/t totaling 451,900 oz. of gold (see news release, November 3, 2010).

The acquisition of Garson Gold has allowed Alexis to more than double its estimated gold resources. The recently completed Feasibility Study for Snow Lake added newly estimated Proven and Probable Reserves of 451,900 ounces of gold and estimated the potential for 80,000 ounces of gold production annually for at least five years at an estimated total cash cost of $640 per oz gold.

Our first gold mine, Lac Herbin, has continued to produce gold since late 2008; however there have been challenges in recent months with lower than expected gold grades being mined. Accordingly, the 2010 outlook for gold production from Lac Herbin is revised to be 24,000 ounces of gold as it is expected the shortage of ounces during the first three quarters cannot be recouped. New development that started in Q2-2010 resulted in lower grades of gold and it was expected that additional definition drilling into Q3- 2010 would identify areas of higher grade ore to mine. Where development has been undertaken in Q3, the narrow vein structure of the deposit has continued to deliver less than the target grade of gold. Therefore development was reduced to minimize the impact of the resultant lower than expected revenue stream. The net effect has been an increase in the cash cost (see non-GAAP measures) of sales to $1,283/oz Au.

A bulk sample program at our second gold project at Lac Pelletier was completed earlier in the year. A production commitment notice was issued to Thundermin Resources Ltd. with the Company thereby exercising its option to acquire the property. The Company is in discussion with Thundermin regarding the transfer of full title and ownership of the property to the Company.

The recovery rate from our wholly owned Aurbel Gold mill has been relatively consistent at an average of 91.6%, compared to the target recovery rate of 94%.

Management remains encouraged as exploration continues with many prospective targets. Our drilling program in Snow Lake has discovered significant gold mineralization in a potential, on-strike extension to the Snow Lake Mine. This may represent the discovery of a major new ore zone and characterizes the potential remaining on the property and in proximity to our Snow Lake Gold Mill, currently the only gold mill in the region. As well, two new high-grade gold zones were discovered containing mineralization that is similar in character to that of the Main and the No.3 Zones yet is of significantly higher grade.

Our expectations are high for further significant discovery from focused exploration through 2010 in the immediate vicinity of the Aurbel Gold Mill. Exploration and compilation in this area is already providing indications of untested extensions to the Herbin Mine to the north and northwest, of new zones between the Ferderber and Herbin mines and at greater depth potential at the Herbin and Dumont mines.

Alexis continued with the planned 2010 exploration campaign for over 80,000 metres of drilling, devoting approximately $6 million to the Snow Lake Mine property and $4 million to the Abitibi Mining Camp. This has been funded through the flow through financings completed in 2009.

Non GAAP Measures

The Company has included certain Non-GAAP performance measures, namely cash costs per gold ounce sold and working capital, throughout this document. In the gold mining industry, these are common non- GAAP performance measures but do not have any standardized meaning. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, we and certain investors use this information to evaluate the Company's performance and ability to generate cash, profits and meet financial commitments. These Non GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Working Capital

Quality Control

The technical and scientific content of this press release has been reviewed by Keith Boyle, P.Eng., Chief Operating Officer, Alexis Minerals and Qualified Person as defined under NI 43-101 guidelines.

Source:

ALEXIS MINERALS CORPORATION

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