TORONTO, Oct. 13, 2017 /CNW/ - Anaconda Mining Inc.
("Anaconda" or the "Company") – (TSX:ANX) is pleased to report its
financial and operating results for three months ended August 31, 2017 ("Q1 FY 2018"). The condensed
consolidated interim financial statements and management discussion
& analysis documents can be found at www.sedar.com and the
Company's website, www.anacondamining.com. All dollar amounts are
in Canadian dollars unless otherwise noted.
Highlights for the first quarter ended August 31, 2017
- Anaconda achieved record quarterly gold sales of 4,723 ounces
in Q1 FY 2018, and recorded revenue of $7.6
million based on an average gold price of $1,612 per ounce, a 55% increase in revenue over
Q1 FY 2017
- The mill achieved record mill throughput of 119,401 tonnes, a
20% increase over the first quarter of FY 2017, while the mine
produced 158,857 tonnes of ore at a significantly reduced strip
ratio of 2.3:1 waste tonnes to ore tonnes
- Operating cash costs per ounce sold* were $1,067 (US$829)
during Q1 FY 2018, an 18% improvement over the corresponding period
in fiscal 2017.
- Strong revenue and lower costs enabled the Point Rousse Project
to generate EBITDA* of $2.6 million,
up significantly from $1.2 million in
Q1 FY 2017
- The Company generated $0.5
million from the sale of waste rock as aggregate from its
Pine Cove Pit
- All-in sustaining cash costs per ounce sold* ("AISC"),
including corporate administration, sustaining capital expenditures
and sustaining exploration costs for the three months ended
August 31, 2017 was $1,419 (US$1,102)
- On a consolidated basis, EBITDA* for the three months ended
August 31, 2017, was $1.7 million.
- The Company invested $0.7 million
in its strategic exploration and evaluation projects, including
$0.5 million on the Goldboro Project
in Nova Scotia
- As at August 31, 2017, the
Company had cash and cash equivalents of $1.6 million, net working capital of $3.7 million and additional available liquidity
of $1,000,000 from an undrawn
revolving line of credit facility
*Refer to Non-IFRS Measures section below.
~ Dustin Angelo, President &
CEO
Anaconda has begun its 2018 fiscal year with a quarter of strong
operational performance and financial results. The Point Rousse
Project achieved record quarterly gold sales of 4,723 ounces in Q1
FY 2018, on track to meet our annual guidance of 15,500 ounces.
Furthermore, we maintained low operating cash costs per ounce sold
of $1,067, or US$829, which generated $2.6 million in Pointe Rousse Project EBITDA.
Strong performance from our operations continues to allow Anaconda
to invest in its assets and execute on its growth strategy,
including the advancement of the high-grade Goldboro Project in
Nova Scotia and the Argyle
Discovery at Point Rousse.
Consolidated Results Summary – For the Three Months Ended
August 31, 2017 and 2016
Financial
Results
|
|
|
Q1 FY
2018
|
Q1 FY 2017
(restated)
|
Revenue
($)
|
|
|
$7,613,170
|
$4,919,737
|
Cost of operations,
including depletion and depreciation ($)
|
|
|
7,309,870
|
5,133,623
|
Mine operating income
(loss) ($)
|
|
|
303,300
|
(213,886)
|
Net loss
($)
|
|
|
(324,033)
|
(957,066)
|
Net loss per share
($/share) – basic and diluted
|
|
|
(0.00)
|
(0.00)
|
Cash generated from
operating activities ($)
|
|
|
540,472
|
(419,492)
|
Capital investment in
property, mill and equipment ($)
|
|
|
(179,471)
|
(1,926,123)
|
Capital investment in
exploration and evaluation assets ($)
|
|
|
(681,732)
|
(759,850)
|
Average realized gold
price per ounce ($)*
|
|
|
1,612
|
1,685
|
Operating cash costs
per ounce sold ($)*
|
|
|
1,067
|
1,297
|
All-in sustaining
cash costs per ounce sold ($)*
|
|
|
1,419
|
2,477
|
Total
assets
|
|
|
44,710,322
|
31,945,999
|
Non-current
liabilities
|
|
|
5,575,206
|
4,561,184
|
Operational
Results
|
|
|
Q1 FY
2018
|
Q1 FY
2017
|
Ore mined
(t)
|
|
|
158,857
|
108,305
|
Waste mined
(t)
|
|
|
364,380
|
890,120
|
Strip
ratio
|
|
|
2.3
|
8.2
|
Ore milled
(t)
|
|
|
119,401
|
99,441
|
Grade (g/t
Au)
|
|
|
1.35
|
1.17
|
Recovery
(%)
|
|
|
87
|
86
|
Gold Oz
Produced
|
|
|
4,581
|
3,184
|
Gold Oz
Sold
|
|
|
4,723
|
2,919
|
Restatement of Prior Period Financial Information
As part of the preparation of the audited consolidated financial
statements for the year ended May 31,
2017, the Company undertook a comprehensive review of the
capitalization and units-of-production depletion calculations for
its production stripping asset and property, mill infrastructure
and equipment and deferred taxes and discovered that certain errors
had been made. The adjustments are non-cash in nature, and do
not impact any production historical production and operational
results.
The amounts of each adjustment and a reconciliation between the
previously published Consolidated Statement of Comprehensive Loss
for the three months ended August 31,
2016, have been presented in Note 3 of the condensed
consolidated interim financial statements.
First Quarter 2018 Review
Operational Overview and Financial Results
The Pine Cove Mill improved on its run rate of 1,200 tonnes per
day in Q4 2017, to over 1,350 tonnes per day in the first quarter
of fiscal 2018, a 13% increase. Consequently, the mill achieved
record quarterly throughput of 119,401 tonnes during the quarter,
leading to record quarterly gold sales of 4,723 ounces of gold. The
mining operation at the Point Rousse Project produced 158,857
tonnes of ore from the Pine Cove Pit, up significantly from the
108,305 tonnes produced in Q1 2017. The strip ratio in the most
recently completed quarter was 2.3:1 waste tonnes to ore tonnes,
down from 4.2:1 in the fourth quarter of FY 2017, and down
significantly from 8.2:1 in Q1 2017.
Anaconda generated $7,613,170 in
revenue during the three months ended August
31, 2017, based on an average gold price of $1,612 per ounce and record quarterly gold sales
of 4,723 ounces. This represents a 55% increase in revenue over the
first three months of the 2017 fiscal year, when the mine operation
was challenged by weather conditions and a higher strip ratio.
The Company also generated $514,282 of other income from the sale of waste
rock as an aggregates product during the first quarter of FY 2018,
for which the Company receives $0.60
per tonne.
Operating expenses for Q1 FY 2018 were $5,037,132, compared to $3,785,305 in the first quarter of 2017. The
increase in operating costs was the result of stronger mine
production volumes, with ore produced up 47% compared to Q1 2017,
and 13% higher mill throughput, all of which contributed to the
quarterly record gold ounces sold. Consequently, the operating cash
costs per ounce sold in the first three months of fiscal 2018 were
$1,067 (US$829), an 18% reduction compared to the prior
year operating cash costs of $1,297
per ounce (US$999). All-in
sustaining costs per ounce were also significantly improved at
$1,419 (US$1,102), down from $2,477 per ounce in Q1 FY 2017.
Depletion and depreciation expense for Q1 FY 2018 was
$2,272,738, an increase from
$1,348,318 during the first quarter
of 2017. The higher depletion and depreciation was the result of
62% higher gold ounces sold, which drives units-of-production
depreciation, and higher depletion of stripping costs for the Pine
Cove Pit, which is approaching its end of life.
Mine operating income for the three months ended August 31, 2017 was $303,300, compared to a mine operating loss of
$213,886 in the corresponding period
of 2017. The improvement was the result of significantly
higher revenue and operating margin, which was partially offset by
the increased depletion and depreciation expense.
During Q1 FY 2018, the Company recognized a write-down of
exploration and evaluation costs of $65,939 relating to tenements under an option
agreement which were removed from the agreement to focus on more
prospective targets.
Corporate administration expenditures were $1,244,616 for the first three months of fiscal
2018, up from $682,788 in 2017. The
increase reflects the increased corporate personnel due to the
addition of the near development Goldboro Project in Nova Scotia, and related increased activity
for marketing and communications. Corporate administration in
Q1 2018 also includes $18,152 in
costs relating to the narrow vein mining research project announced
in June 2017.
Finance expense for the quarter was $24,013 for the three months ended August 31, 2017, compared to $50,214 in Q1 2017. Current finance costs relate
to interest on the Company's capital lease obligations and
accretion on its decommissioning liabilities.
Net comprehensive loss for the three months ended August 31, 2017, was $324,033, or $0.00
per share, compared to a net comprehensive loss of $957,066, or $0.00
per share. The improvement in net loss compared to the previous
year was the result of higher mine operating income, and other
income from the sale of waste rock as aggregate product, which was
partially offset by higher corporate administration expenditures.
Net loss for Q1 FY 2018 also includes estimated income taxes
payable of $59,000 relating to the
Newfoundland and Labrador mining tax regime, and a deferred tax
recovery of $326,000.
Financial Position and Cash Flow Analysis
As at August 31, 2017, the Company
had a positive working capital position of $3,699,743, which included cash and cash
equivalents of $1,579,901. Anaconda
continues to maintain a robust working capital position since
May 31, 2017. In addition, the
Company maintains a $1,000,000
revolving credit facility as well as a $500,000 revolving equipment lease line of credit
with the Royal Bank of Canada. As
at August 31, 2017, the Company had
not drawn against the revolving credit facility.
During the three months ended August 31,
2017, Anaconda generated cash flow from operations of
$540,472. Revenue less operating
expenses from the Point Rousse Project were $2,576,038, based on record quarterly gold sales
at an average price of $1,612 per
ounce sold and operating cash costs of $1,067 per ounce sold. Corporate administration
costs in the first quarter were $1,254,723 and there was a net reduction in
operating cash flows of $1,263,183
from changes in working capital.
Anaconda continued to invest in its growth projects, incurring
$681,732 of exploration and
evaluation expenditures, which includes $195,675 on the continued advancement of the
Goldboro Project. The similar expenditures on exploration and
evaluation compared to the first quarter of fiscal 2017 demonstrate
the Company's commitment to investing into its assets.
The Company also invested $179,471
into the property, mill and equipment at the Point Rousse
Project. This is down significantly from the corresponding
period in the prior year, when the Company made a significant
investment to automate many of the operations within the Pine Cove
Mill.
Non-IFRS Measures
Anaconda has included in the MD&A certain non-IFRS
performance measures as detailed below. In the gold mining
industry, these are common performance measures but may not be
comparable to similar measures presented by other issuers. The
Company believes that, in addition to conventional measures
prepared in accordance with IFRS, certain investors use this
information to evaluate the Company's performance and ability to
generate cash flow. Accordingly, it is intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS.
Operating Cash Costs per Ounce of Gold Sold – Anaconda
calculates operating cash costs per ounce by dividing operating
expenses per the consolidated statement of operations, net of
silver sales by-product revenue, by the gold ounces sold during the
applicable period. Operating expenses include mine site operating
costs such as mining, processing and administration as well as
royalties, however excludes depletion and depreciation and
rehabilitation costs.
All-In Sustaining Costs per Ounce of Gold Sold – Anaconda has
adopted an all-in sustaining cost performance measure that reflects
all of the expenditures that are required to produce an ounce of
gold from current operations. While there is no standardized
meaning of the measure across the industry, the Company's
definition conforms to the all-in sustaining cost definition as set
out by the World Gold Council in its guidance dated June 27, 2013. The World Gold Council is a
non-regulatory, non-profit organization established in 1987 whose
members include global senior mining companies. The Company
believes that this measure will be useful to external users in
assessing operating performance and the ability to generate free
cash flow from current operations.
The Company defines all-in sustaining costs as the sum of
operating cash costs (per above), sustaining capital (capital
required to maintain current operations at existing levels),
corporate administration costs, sustaining exploration, and
rehabilitation accretion and amortization related to current
operations. All-in sustaining costs excludes capital expenditures
for significant improvements at existing operations deemed to be
expansionary in nature, exploration and evaluation related to
growth projects, financing costs, debt repayments, and taxes.
Canadian and US dollars are noted for realized gold price,
operating cash costs per ounce of gold and all-in sustaining costs
per ounce of gold. Both currencies are considered relevant and the
Company uses the average foreign exchange rate for the period.
Earnings before Interest, Taxes, Depreciation and Amortization
("EBITDA") – EBITDA is earnings before finance expense, deferred
income tax expense, and depletion and depreciation.
Point Rousse Project EBITDA is EBITDA before corporate
administration and all other expenses and other income.
ABOUT ANACONDA
Anaconda Mining is a TSX-listed gold mining, exploration and
development company, focused in the prospective Atlantic Canadian
jurisdictions of Newfoundland and
Nova Scotia. The Company operates
the Point Rousse Project located in the Baie Verte Mining District
in Newfoundland, comprised of the
Pine Cove open pit mine, the fully-permitted Pine Cove Mill and
tailings facility, the Stog'er Tight deposit, a new discovery
called Argyle, and approximately 5,800 hectares of prospective
gold-bearing property. Anaconda is also developing the recently
acquired Goldboro Project in Nova
Scotia, a high-grade Mineral Resource, with the potential to
leverage existing infrastructure at the Company's Point Rousse
Project.
The Company also has a pipeline of organic growth opportunities,
including the Viking and Great Northern Projects on the Northern
Peninsula and the Tilt Cove Property on the Baie Verte Peninsula.
FORWARD-LOOKING STATEMENTS
This document contains or refers to forward-looking
information. Such forward-looking information includes, among other
things, statements regarding targets, estimates and/or assumptions
in respect of future production, mine development costs, unit
costs, capital costs, timing of commencement of operations and
future economic, market and other conditions, and is based on
current expectations that involve a number of business risks and
uncertainties. Factors that could cause actual results to differ
materially from any forward-looking statement include, but are not
limited to: the grade and recovery of ore which is mined varying
from estimates; capital and operating costs varying significantly
from estimates; inflation; changes in exchange rates; fluctuations
in commodity prices; delays in the development of the any project
caused by unavailability of equipment, labour or supplies, climatic
conditions or otherwise; termination or revision of any debt
financing; failure to raise additional funds required to finance
the completion of a project; and other factors. Additionally,
forward-looking statements look into the future and provide an
opinion as to the effect of certain events and trends on the
business. Forward-looking statements may include words such as
"plans," "may," "estimates," "expects," "indicates," "targeting,"
"potential" and similar expressions. These forward-looking
statements, including statements regarding Anaconda's beliefs in
the potential mineralization, are based on current expectations and
entail various risks and uncertainties. Forward-looking statements
are subject to significant risks and uncertainties and other
factors that could cause actual results to differ materially from
expected results. Readers should not place undue reliance on
forward-looking statements. These forward-looking statements are
made as of the date hereof and we assume no responsibility to
update them or revise them to reflect new events or circumstances,
except as required by law.
SOURCE Anaconda Mining Inc.