Mr. Kevin Drover reports

AURCANA REPORTS 3RD QUARTER FINANCIAL RESULTS

Aurcana Corp. has released its unaudited financial results for the third quarter ended Sept. 30, 2014. The summary of the selected financial information should be read in conjunction with the condensed interim consolidated financial statements (unaudited) and the related management's discussion and analysis for the quarter ended Sept. 30, 2014, dated Nov. 28, 2014, together referred to as the financial statements, which have been filed on SEDAR and are also available on the company's website. All figures are in U.S. dollars unless otherwise noted.

Significant highlights for the third quarter ending Sept. 30, 2014, are:

• Revenues increased 10 per cent to $11.4-million in Q3 2014 from $10.4-million in Q3 2013 and 23 per cent from $9.2-million in second quarter 2014. The higher revenues resulted from significant increases in silver, zinc, lead and copper production, despite lower metals prices.
• Silver-equivalent ounces produced increased 32 per cent, marking record production of 997,530 ounces in Q3 2014, compared with 754,788 ounces produced in Q3 2013. This is a 27-per-cent increase over the 786,505 equivalent ounces produced in Q2 2014.
• At the La Negra operations the cash cost per silver-equivalent ounce produced decreased 17 per cent to $7.79 in Q3 2014 as compared with $9.40 in Q3 2013. Cash cost per silver-equivalent ounce produced, including treatment and refining charges in Q3 2014, was $11.86 as compared with Q3 2013 of $12.60.
• Earnings from mining operations were $600,000 in Q3 2014, down from $2.6-million in Q3 2013, due to the lower market prices of metals (down 17 per cent) and changes in inventory of $2.2-million. Earnings from mining operations improved from a loss of $1.1-million in Q2 2014.
• Comprehensive loss decreased to $2.2-million in Q3 2014, compared with loss of $15.3-million in Q3 2013, with operating cash flow before changes in working capital of $600,000 in Q3 2014, compared with negative cash flows of $5.1-million in Q3 2013.

Revenue

During the quarter ended Sept. 30, 2014, the company generated revenues from the sale of 333,254 ounces of silver (Q3 2013: 245,149 ounces), 3,127 tonnes of copper concentrate (Q3 2013: 2,338 tonnes), 4,667 tonnes of zinc concentrate (Q3 2013: 4,026 tonnes) and 950 tonnes of lead concentrate (Q3 2013: 739 tonnes) for total net revenues of $11.4-million (Q3 2013: $10.4-million). This was mainly due to an increase in the silver grade, the benefit of which is partially offset by a combination of lower metal prices and higher TCRC deductions.

The average price for sales of silver, copper, zinc and lead during the quarter were Ag $19.01 (Q3 2013: $22.30) per ounce, Cu $3.17 (Q3 2013: $3.27) per pound, Zn $1.05 (Q3 2013: 86 cents) per pound and Pb 99 cents (Q3 2013: 97 cents) per pound.

Earnings

The company had earnings from mining operations of $600,000 for the quarter ended Sept. 30, 2014 (Q3 2013: $2.6-million), loss before taxes of $4.1-million (Q3 2013: $15.0-million) and comprehensive loss of $2.2-million (Q3 2013: $15.3-million).

The decrease in earnings from operations was related to market prices of the silver sold, which averaged a decrease of 17 per cent as compared with the same period last year.

Operations highlights

• During Q3 2014, significant progress was made on four primary initiatives implemented by Aurcana's executive team: safety, cost reduction, La Negra management reviews, and productivity and efficiency improvements.
• Increased emphasis on safety training/programs and working standards resulted in a significant drop in lost-time accidents during Q3 versus previous quarters.
• Cost reduction measures implemented during Q3 such as work force reduction and controls on spending resulted in annualized cost savings of approximately $4.0-million. Other initiatives currently in various stages of implementation and completion are expected to result in an additional estimated $2.0-million cost savings over the next year.
• A reorganization of senior management at the mine is nearly complete. The current commodity price and operating environment required reassigning some supervisors. While some of the management team was promoted to new positions, others were replaced with new hires. The emphasis remains on safety, planning, problem solving/troubleshooting, and achieving both short-term and long-term goals.
• Considerable progress has been made in the productivity and efficiency of drilling and blasting, along with much-improved planning, engineering and geologic controls in the mine.
• Aurcana continued to increase the head grade of silver mined at the La Negra mine during the third quarter.
• At La Negra the company has successfully extended, outlined and developed new zones of mineralization such that approximately 35 per cent of production has come from outside the published resource estimate. Therefore a revised resource estimate has been initiated. Current low silver and base metal prices are also a factor in developing the new resource estimate.
• The company has engaged AMC Mining Consultants (Canada) Ltd. to complete this new resource estimate. The resource estimate will be done in accordance with Canadian Institute of Mining, Metallurgy and Petroleum standards for the estimation of mineral resources and mineral reserves best practice guidelines and supported by a technical report conforming to National Instrument 43-101. The objective in preparing a new resource estimate is to provide shareholders with updated information on the grade, tonnages and metal potential at La Negra and to provide Aurcana's mine management with a more reliable and current model for production planning.
• To improve the company's short-term liquidity Orion Mine Finance (Master) Fund I LP, an affiliate of Orion Mine Finance Group, agreed to defer principal and interest payments during Q3 2014, which would otherwise be due under Aurcana's senior secured credit facility with Orion. These amounts were added as a principal and amortized over the remaining 43 months of the term of the credit facility, with payments by the company recommencing on Oct. 31, 2014. In return, Aurcana agreed to extend the copper, zine and lead off-take agreements with Orion by one additional year to 2021.
• In October, 2014, subsequent to the end of the third quarter, $6.1-million was generated from the sale of surplus equipment located at both La Negra and Shafter. These transactions are not included in Q3 numbers.

Kevin Drover, president and chief executive officer, stated: "La Negra continues to improve and is on target to achieve its 2014 guidance of 3.5 [million] to four million ounces of silver-equivalent. We will continue to focus on improving our safety performance and reducing costs, as well as improving productivity and efficiency in the coming months."

We seek Safe Harbor.