(All dollar amounts are in U.S. dollars (“$”)
unless otherwise specified)
Ascendant Resources Inc. (TSX:ASND) (OTCQX:ASDRF)
(FRA:2D9) ("Ascendant" or the "Company”) reports results for its
fourth quarter and full year 2017, achieving free cash flow of
$0.75 million in the fourth quarter 2017 and attaining the second
strongest month of production ever achieved at the El Mochito mine
in December 2017. Operations at the El Mochito mine are now well
positioned for increased profitability in 2018 as demonstrated by
recently released 2018 guidance. (see press release dated January
11, 2018)
Fiscal 2017 represented the first full year of
operations at the El Mochito mine by the Ascendant management team
since its acquisition in late December 2016. During the year,
significant progress was made improving the overall operations as
well as the financial performance of the mine as demonstrated by an
81% increase in monthly tonnes processed and a 31% reduction in
direct operating costs from January to December 2017. This success
was driven by a marked improvement in equipment availability,
equipment utilization, general working conditions underground,
safety, and increased employee supervision and accountability.
President and CEO Chris Buncic stated:
“Ascendant ended 2017 on an exceptionally high note having
completed the successful rehabilitation of the El Mochito mine,
achieving free cash flow ahead of expectations and exceeding annual
production targets. The mine has demonstrated the potential to be a
capable asset with the opportunity to generate significant free
cash flow over the long-term.”
He continued, “Throughout 2018, we are looking
forward to maintaining this momentum while layering in further
operational improvements. The Company remains dedicated to further
operational improvements and increasing head grade to the mill to
improve value per tonne milled, while evaluating opportunities to
improve contribution margins and cut costs.”
Summary of key operational and financial
performance for the fourth quarter and full year 2017 is provided
in the tables below:
|
|
|
|
|
|
|
|
|
Key Operating
Information |
|
|
|
December
31, |
December 31, |
September 30, |
June 30, |
March 31, |
|
|
|
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
Total Tonnes Mined |
|
tonnes |
|
|
657,287 |
|
|
197,303 |
|
|
177,631 |
|
|
151,028 |
|
|
131,325 |
|
|
|
|
|
|
|
|
|
|
Total Tonnes Milled |
|
tonnes |
|
|
656,291 |
|
|
198,354 |
|
|
176,035 |
|
|
150,785 |
|
|
131,116 |
|
Operating Days |
|
days |
|
|
348 |
|
|
89 |
|
|
91 |
|
|
87 |
|
|
81 |
|
|
|
|
|
|
|
|
|
|
Average Head Grades |
|
|
|
|
|
|
|
|
Average
Zn grade |
|
% |
|
|
3.50 |
% |
|
3.65 |
% |
|
3.51 |
% |
|
3.36 |
% |
|
3.43 |
% |
Average
Pb grade |
|
% |
|
|
1.39 |
% |
|
1.40 |
% |
|
1.46 |
% |
|
1.34 |
% |
|
1.33 |
% |
Average
Silver grade |
|
g/t |
|
|
42.6 |
|
|
35.2 |
|
|
38.3 |
|
|
48.9 |
|
|
52.1 |
|
ZnEq
Head grade |
(1 |
) |
% |
|
|
5.42 |
% |
|
5.31 |
% |
|
5.36 |
% |
|
5.50 |
% |
|
5.56 |
% |
|
|
|
|
|
|
|
|
|
Average Recoveries |
|
|
|
|
|
|
|
|
Zinc |
|
% |
|
|
88.9 |
% |
|
88.5 |
% |
|
88.8 |
% |
|
88.9 |
% |
|
89.8 |
% |
Lead |
|
% |
|
|
74.2 |
% |
|
74.6 |
% |
|
73.7 |
% |
|
72.3 |
% |
|
76.9 |
% |
Silver |
|
% |
|
|
77.4 |
% |
|
75.0 |
% |
|
78.0 |
% |
|
79.3 |
% |
|
78.8 |
% |
|
|
|
|
|
|
|
|
|
Contained Metal Production |
|
|
|
|
|
|
|
|
Zinc |
|
lbs |
|
|
45,054,075 |
|
|
14,133,122 |
|
|
12,099,991 |
|
|
9,932,559 |
|
|
8,888,403 |
|
Lead |
|
lbs |
|
|
14,904,550 |
|
|
4,555,570 |
|
|
4,175,226 |
|
|
3,216,476 |
|
|
2,957,279 |
|
Silver |
|
ozs |
|
|
698,506 |
|
|
169,039 |
|
|
168,181 |
|
|
188,245 |
|
|
173,041 |
|
ZnEq |
(1 |
) |
lbs |
|
|
66,120,114 |
|
|
19,576,311 |
|
|
17,494,814 |
|
|
15,377,231 |
|
|
13,671,758 |
|
|
|
|
|
|
|
|
|
|
Payable Production |
|
|
|
|
|
|
|
|
Zinc |
(3 |
) |
lbs |
|
|
38,295,964 |
|
|
12,013,154 |
|
|
10,284,992 |
|
|
8,442,675 |
|
|
7,555,143 |
|
Lead |
(3 |
) |
lbs |
|
|
14,159,322 |
|
|
4,327,791 |
|
|
3,966,464 |
|
|
3,055,652 |
|
|
2,809,415 |
|
Silver |
(3 |
) |
ozs |
|
|
488,954 |
|
|
118,327 |
|
|
117,727 |
|
|
131,771 |
|
|
121,129 |
|
ZnEq |
(1 |
) |
lbs |
|
|
56,204,301 |
|
|
16,639,864 |
|
|
14,872,797 |
|
|
13,070,646 |
|
|
11,620,995 |
|
|
|
|
|
|
|
|
|
|
Payable Metal Sold |
|
|
|
|
|
|
|
|
Zinc |
|
lbs |
|
|
35,625,672 |
|
|
11,006,646 |
|
|
10,037,649 |
|
|
9,889,939 |
|
|
4,691,438 |
|
Lead |
|
lbs |
|
|
12,074,742 |
|
|
6,190,603 |
|
|
3,902,183 |
|
|
- |
|
|
1,981,956 |
|
Silver |
|
ozs |
|
|
460,980 |
|
|
162,619 |
|
|
171,593 |
|
|
24,062 |
|
|
102,706 |
|
ZnEq |
(1 |
) |
lbs |
|
|
50,725,071 |
|
|
17,599,373 |
|
|
15,132,403 |
|
|
10,245,777 |
|
|
7,747,518 |
|
|
|
|
|
|
|
|
|
|
Direct operating cost per tonne milled (Excl. CAPEX) |
(2 |
) |
$/tonne |
|
$ |
88.22 |
|
$ |
80.13 |
|
$ |
87.86 |
|
$ |
89.97 |
|
$ |
98.91 |
|
(1) Assumes average spot metal prices for the
period. |
(2) This is a non-IFRS performance measure, see
Non-IFRS Performance Measures section at the end of this
document. |
(3) Payability calculation has been modified to
conform with industry standards. Deductions for treatment and
refinement charges are not included. |
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
Q4 |
Q3 |
Q2 |
Q1 |
Financial |
|
|
|
December
31, |
December 31, |
September 30, |
June 30, |
March 31, |
|
|
|
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
Revenue |
|
$ |
|
|
59,199,358 |
|
|
23,933,898 |
|
|
17,399,214 |
|
|
9,941,830 |
|
|
7,924,416 |
|
Net income (loss) |
|
$ |
|
|
(12,057,595 |
) |
|
(1,429,234 |
) |
|
821,009 |
|
|
(8,555,453 |
) |
|
(2,893,917 |
) |
Adjusted EBITDA |
(2 |
) |
$ |
|
|
(2,496,666 |
) |
|
2,281,018 |
|
|
2,423,205 |
|
|
(5,511,504 |
) |
|
(1,689,385 |
) |
Operating cash flow before movements in working capital |
(2 |
) |
$ |
|
|
(6,009,302 |
) |
|
577,578 |
|
|
2,130,707 |
|
|
(6,175,510 |
) |
|
(2,542,077 |
) |
Operating cash flow |
|
$ |
|
|
(6,468,437 |
) |
|
5,825,155 |
|
|
(881,626 |
) |
|
(3,077,655 |
) |
|
(8,334,311 |
) |
Cash and cash equivalents |
|
$ |
|
|
8,041,307 |
|
|
8,041,307 |
|
|
6,642,497 |
|
|
9,702,058 |
|
|
16,813,122 |
|
Working capital |
|
$ |
|
|
12,504,909 |
|
|
12,504,909 |
|
|
15,914,934 |
|
|
16,874,186 |
|
|
27,159,637 |
|
Capital Expenditures |
|
$ |
|
|
13,445,155 |
|
|
5,076,994 |
|
|
2,550,099 |
|
|
4,212,327 |
|
|
1,605,735 |
|
(1) Assumes average spot metal prices for the
period. |
(2) This is a non-IFRS performance measure, see
Non-IFRS Performance Measures section at the end of this
document. |
(3) Payability calculation has been modified to
conform with industry standards. Deductions for treatment and
refinement charges are not included. |
|
|
|
|
|
|
|
|
|
Full Year and Fourth Quarter 2017
Operational Performance
During the fourth quarter, contained zinc
equivalent1 metal production was 19.58 million lbs composed of
14.13 million lbs of zinc, 4.56 million lbs of lead and 169,039
ounces of silver, which increased by 12% from the third quarter
2017. For the year ended December 31, 2017, total contained metal
production was 66.1 million lbs of zinc equivalent metal including
45.05 million lbs of zinc, 14.90 million lbs of lead and 698,506
ounces of silver, exceeding the Company’s guidance of 65.8 million
lbs of zinc equivalent metal.
Milled production for the fourth quarter was
198,354 tonnes, a 13% increase against the third quarter. Milled
production for the month of December was 69,578 tonnes,
representing the second strongest month of production ever achieved
at the El Mochito mine, and an overall increase in monthly
production of 81% since January 2017. This substantial increase in
milling rates was a result of the introduction of additional new
mining equipment, an improved operating environment and the start
of conventional underground mining operations in narrow but
high-grade areas. Average head grades for the quarter were 3.65%
zinc, 1.40% lead and 35.2 grams per tonne silver. The zinc
equivalent grade was 5.31% using average metal pricing for the
period, remaining relatively flat over the third quarter. Milled
production for the full year 2017 was 656,291 tonnes with average
grades of 3.50% zinc, 1.39% lead and 42.6 grams per tonne silver
resulting in a zinc equivalent grade of 5.42%. Head grades in 2018
are expected to improve from reduced dilution measures and a
production shift towards higher-grade ore zones, namely Esperanza
and Nueva Este.
During the fourth quarter, recoveries averaged
88.5% for zinc, 74.6% for lead and 75.0% for silver, a slight
improvement from Q3 2017. For the year ended December 31, 2017,
recoveries averaged 88.9% for zinc, 74.2% for lead and 77.4% for
silver, representing relatively consistent recovery rates
throughout the year.
Operations benefited from the improvements to
health and safety, supervisor training, operator training,
improving underground working conditions (improved ventilation,
better roadways etc.), increasing productive hours per day and a
general focus on overall efficiently throughout all operational
areas. Ascendant also commenced a full underground mine fleet
replacement ordering 10 new underground mine trucks, 6 scoops, 2
jumbos and 2 bolters in 2017. In addition, the Company overhauled
two of the older trucks and two scoops. The remainder of the new
equipment is expected to be delivered and deployed by mid-2018 and
support further operational improvements while lowering overall
direct operating costs with increased equipment availability and
reduced maintenance costs.
_________________________________
1 This figure was calculated on a spot
metal price basis.
Full Year and Fourth Quarter 2017
Financial Performance
The Company reports financial results for the
three months and full year ended December 31, 2017 with 17.6
million zinc equivalent lbs sold in the fourth quarter 2017 with
income from mining operations of $3.59 million. In 2017, the
Company sold 50.7 million zinc equivalent lbs realizing a loss from
mining operations of $0.05 million. Average realized metal prices
for the quarter were $1.46 per pound of zinc, $1.13 per pound of
lead and $16.99 per ounce of silver and provisional prices for the
full year are $1.36 per pound of zinc, $1.06 per pound of lead and
$17.17 per ounce of silver.
Fourth Quarter 2017 Financial
Highlights:
- Net concentrate sales revenue of $23.93 million, up 37% from Q3
2017
- Net loss of $1.43 million and loss per share of $0.02
- Adjusted EBITDA2 of $2.28 million
- Operating cash flow before changes in working capital of $0.57
million
- Quarterly milled tonnes increased 13% to 198,354 tonnes, up
from 176,037 tonnes in Q3 2017
- Quarterly payable zinc equivalent production increased 12% to
16.6 million lbs from Q3 2017 with payable zinc, lead and silver
production of 12.0 million lbs, 4.3 million lbs and 118,327 ozs
produced respectively
Full Year 2017 Financial
Highlights:
- Net concentrate sales revenue of $59.19 million in 2017, the
first year of commercial production since the acquisition of the El
Mochito mine
- Net loss of $12.05 million and loss per share of $0.18 as
result of the higher operating costs at the beginning of the year
and various one-time items in the rehabilitation of operations
- Adjusted EBITDA of ($2.49) million
- Operating cash flow before changes in working capital of
($6.01) million
- Direct Operating Costs decreased by 31% to $77.80 in December
as compared to $112.21 in January 2017
- Total cash position of $8.04 million exiting 2017
- Payable zinc equivalent production in 2017 of to 56.2 million
lbs with payable zinc, lead and silver payable production of 38.3
million lbs, 14.2 million lbs and 488,954 ozs produced
respectively
_________________________________
2 Adjusted EBITDA is a Non-IFRS measure and is
calculated by considering the Company's earnings before interest
payments, tax, depreciation and amortization, share-based payments,
adjusted for net foreign exchange expenses.
Adjusted EBITDA for the fourth quarter ending
December 31, 2017 totaled $2.28 million representing the sixth
consecutive month of positive adjusted EBITDA and overall improved
financial performance. During the fourth quarter 2017, the Company
also reported its first quarter of free cash flow totaling $0.75
million. Adjusted EBITDA for the full year 2017 totaled negative
$2.49 million as the operational turnaround took hold and both zinc
and lead prices remained strong. As detailed in the reiterated
guidance below, the Company expects robust adjusted EBITDA and free
cash flow generation in 2018 as a result of its dedication to
further operational improvements at the mine level.
Direct operating cost per tonne milled for the
fourth quarter 2017 at El Mochito were $80.13, a 9% decrease versus
third quarter direct operating cost per tonne milled of $87.86 as a
result of cost optimization, operational efficiencies, and
increased production achieved throughout the quarter. Direct
operating costs per tonne milled for 2017 at El Mochito averaged
$88.22. During the year direct operating costs decreased from
$112.21/t in January 2017 to $77.80/t in December representing a
31% decrease. Further decreases in costs are expected in 2018 as
full commissioning and implementation of the new mining fleet is
completed and an increase in lower-cost, long-hole stoping is
undertaken. Cost reduction is an ongoing focus for the Company and
with many initiatives in place the Company expects to see further
reduction over the medium and longer term.
Exploration Activities and Resource
Update
During 2017, Ascendant commenced a successful
26,877-meter exploration and resource definition drilling program
at El Mochito. Work is currently underway on a new NI 43-101
Technical Report to be presented in early Q2 2018. It is expected
that the updated Mineral Resource and Reserve statement will
significantly increase the life of mine and highlight the long-term
production potential of El Mochito.
The 2017 exploration program targeted extensions
of known high-grade ore bodies, Palmar Dyke, Santa Elena, Victoria
and Esperanza, all of which are close to current workings and can
be brought into the mine plan within the next six to twelve months.
Mining at Esperanza has already commenced in the fourth quarter of
2017. The exploration results published highlight consistent
mineralization of grades and intercepts well in excess of those
currently being mined (see press releases issued in June 26, 2017,
October 3, 2017, and January 22, 2018).
2018 Outlook - Strong Production
Supporting Meaningful Free Cash Flow
The Company issued its 2018 production and cost
guidance on January 11, 2018 and is provided below. In 2018, the
Company plans to continue to build on the solid operating
performance achieved in 2017 while focusing on maximizing free cash
flow and long-term profitability during a period of continued
stable operations. During 2018, management remains focused on
further operational improvements while increasing mill feed grades
and reducing costs. Contained metal production and cash flow should
trend higher as the year progresses due to mine sequencing laid out
in the Company’s internal mine plan and the receipt of expected new
equipment.
2018 Production Guidance is provided in the
table below:
Contained Metals in Concentrate |
Zinc equivalent
metal |
93 –
109 million lbs |
Zinc |
65 –
73 million lbs |
Lead |
24 –
28 million lbs |
Silver |
900,000 – 1,200,000 ozs |
|
|
Direct
Operating Costs |
$70 –
$80 / tonne |
Capital
Expenditure |
$16 –
$18 million |
|
|
Financial
Metrics |
|
Adjusted EBITDA1 |
$32 –$
40 million |
Free Cash Flow2 |
$14 –
$20 million |
All figures in the above table are based on the
following metal price assumptions; $1.50/lb zinc, $1.10/lb lead and
$18/oz silver.1Adjusted EBITDA is a Non-IFRS measure and is
calculated by considering the Company's earnings before interest
payments, tax, depreciation and amortization, share-based payments,
adjusted for net foreign exchange expenses.2Free Cash Flow is a
Non-IFRS measure and is calculated by considering the Company's
cash flows from operations, less the cash used in investing
activities.
Conference Call
A conference call will be held tomorrow, March
22, 2018, at 10:00am EST to discuss fourth quarter and full year
2017 operational and financial results.
Conference Call Details:Date of
Call: Thursday, March 22, 2018Time of Call: 10:00am ESTConference
ID: 3399598Dial-In Numbers:North American Toll-Free:
1-833-696-8362International: 1-612-979-9908
A recorded playback of the call will be
available until April 21, 2018 by dialing: 1-855-859-2056 or
1-404-537-3406 and entering the call back passcode 3399598.
The information provided within this release
should be read in conjunction with Ascendant’s unaudited condensed
consolidated interim financial statements and management's
discussion and analysis for the year ended December 31, 2017, which
are available on Ascendant’s website and on SEDAR. As at January 1,
2017, the Company has changed its presentation currency to the U.S.
dollar (US). All financial figures are in US dollars unless
otherwise stated.
Technical Disclosure/Qualified
PersonAll technical information contained herein has been
reviewed and approved by Robert A. Campbell, M.Sc, P.Geo, a
director of the Company. Mr. Campbell is a "qualified person"
within the meaning of NI 43-101 – Standards of Disclosure for
Mineral Projects (“NI 43-101”).
About Ascendant Resources
Inc.Ascendant is a Toronto-based mining company focused on
its 100%-owned producing El Mochito zinc, silver and lead mine in
west-central Honduras, which has been in production since 1948.
After acquiring the mine in December 2016, Ascendant implemented a
rigorous optimization program aimed at restoring the historic
potential of the El Mochito mine. In 2017, the Company successfully
completed the operational turnaround it set out to achieve with
sustained production at record levels and profitability restored.
The Company now remains focused on cost reduction and further
operational improvements to drive robust free cash flow in 2018 and
beyond. Ascendant is also focused on expanding and upgrading known
resources through extensive exploration work for near-term growth.
With a significant land package of 11,000 hectares and an abundance
of historical data there are several regional targets providing
longer term exploration upside which could lead to further resource
growth. The Company is also engaged in the evaluation of producing
and development stage mineral resource opportunities, on an ongoing
basis. The Company's common shares are principally listed on the
Toronto Stock Exchange under the symbol "ASND". For more
information on Ascendant Resources, please visit our website
at www.ascendantresources.com.
Neither the Toronto Stock Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX) accepts responsibility for the adequacy or
accuracy of this release. For further information please
contact:
Katherine PrydeDirector, Communications &
Investor RelationsTel: 888-723-7413info@ascendantresources.com
Cautionary Notes to US
Investors
The information concerning the Company’s mineral
properties has been prepared in accordance with National Instrument
43-101 (“NI-43-101”) adopted by the Canadian Securities
Administrators. In accordance with NI-43-101, the terms
“mineral reserves”, “proven mineral reserve”, “probable mineral
reserve”, “mineral resource”, “measured mineral resource”,
“indicated mineral resource” and “inferred mineral resource” are
defined in the Canadian Institute of Mining, Metallurgy and
Petroleum (the “CIM”) Definition Standards for Mineral Resources
and Mineral Reserves adopted by the CIM Council on May 10,
2014. While the terms “mineral resource”, “measured mineral
resource”, “indicated mineral resource” and “inferred mineral
resource” are recognized and required by NI 43-101, the U.S.
Securities Exchange Commission (“SEC”) does not recognize
them. The reader is cautioned that, except for that portion
of mineral resources classified as mineral reserves, mineral
resources do not have demonstrated economic value. Inferred
mineral resources have a high degree of uncertainty as to their
existence and as to whether they can be economically or legally
mined. It cannot be assumed that all or any part of any
inferred mineral resource will ever be upgraded to a higher
category. Therefore, the reader is cautioned not to assume
that all or any part of an inferred mineral resource exists, that
it can be economically or legally mined, or that it will ever be
upgraded to a higher category. Likewise, you are cautioned
not to assume that all or any part of a measured or indicated
mineral resource will ever be upgraded into mineral reserves.
Readers should be aware that the Company’s
financial statements (and information derived therefrom) have been
prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting
Standards Board and are subject to Canadian auditing and auditor
independence standards. IFRS differs in some respects from United
States generally accepted accounting principles and thus the
Company’s financial statements (and information derived therefrom)
may not be comparable to those of United States companies.
Forward Looking
Information
This news release contains "forward-looking statements" and
"forward-looking information" (collectively, "forward-looking
information") within the meaning of applicable Canadian securities
legislation. All information contained in this news release, other
than statements of current and historical fact, is forward-looking
information. Often, but not always, forward-looking information can
be identified by the use of words such as "plans", "expects",
"budget", "guidance", "scheduled", "estimates", "forecasts",
"strategy", "target", "intends", "objective", "goal",
"understands", "anticipates" and "believes" (and variations of
these or similar words) and statements that certain actions, events
or results "may", "could", "would", "should", "might" "occur" or
"be achieved" or "will be taken" (and variations of these or
similar expressions). Forward-looking information is also
identifiable in statements of currently occurring matters which may
continue in the future, such as "providing the Company with", "is
currently", "allows/allowing for", "will advance" or "continues to"
or other statements that may be stated in the present tense with
future implications. All of the forward-looking information in this
news release is qualified by this cautionary note.
Forward-looking information in this news release
includes, but is not limited to, statements regarding the
consistency of processing recovery levels, improvements of grades
in 2018, deployment of new mining equipment, increase in contained
metal production, maintenance of production rates, increase of mill
feed grades, reduction of costs, monthly shipments of concentrate,
the ability to fully fund planned development, exploration and
capital expenditures, completion of an NI 43-101 report, robust
adjusted EBITDA and free cash flow generation in 2018 and the
undertaking of various long-term optimization programs.
Forward-looking information is not, and cannot be, a guarantee of
future results or events. Forward-looking information is based on,
among other things, opinions, assumptions, estimates and analyses
that, while considered reasonable by Ascendant at the date the
forward-looking information is provided, inherently are subject to
significant risks, uncertainties, contingencies and other factors
that may cause actual results and events to be materially different
from those expressed or implied by the forward-looking information.
The material factors or assumptions that Ascendant identified and
were applied by Ascendant in drawing conclusions or making
forecasts or projections set out in the forward-looking information
include, but are not limited to, the ability of the Company to
maintain the consistency of processing recovery levels, to improve
grades in 2018, to deploy new mining equipment, increase contained
metal production, maintain production rates, increase mill feed
grades, reduce costs, make monthly shipments of concentrate, fully
fund planned development, exploration and capital expenditures,
complete an NI 43-101 report, maintain robust adjusted EBITDA and
free cash flow in 2018 and undertake various long-term optimization
programs and other events that may affect Ascendant's ability to
develop its project; and no significant and continuing adverse
changes in general economic conditions or conditions in the
financial markets.
The risks, uncertainties, contingencies and
other factors that may cause actual results to differ materially
from those expressed or implied by the forward-looking information
may include, but are not limited to, risks generally associated
with the mining industry, such as economic factors (including
future commodity prices, currency fluctuations, energy prices and
general cost escalation), uncertainties related to the development
and operation of Ascendant's projects, dependence on key personnel
and employee and union relations, risks related to political or
social unrest or change, rights and title claims, operational risks
and hazards, including unanticipated environmental, industrial and
geological events and developments and the inability to insure
against all risks, failure of plant, equipment, processes,
transportation and other infrastructure to operate as anticipated,
compliance with government and environmental regulations, including
permitting requirements and anti-bribery legislation, volatile
financial markets that may affect Ascendant's ability to obtain
additional financing on acceptable terms, the failure to obtain
required approvals or clearances from government authorities on a
timely basis, uncertainties related to the geology, continuity,
grade and estimates of mineral reserves and resources, and the
potential for variations in grade and recovery rates, uncertain
costs of reclamation activities, tax refunds, hedging transactions,
as well as the risks discussed in Ascendant's most recent Annual
Information Form on file with the Canadian provincial securities
regulatory authorities and available at www.sedar.com.
Should one or more risk, uncertainty,
contingency, or other factor materialize, or should any factor or
assumption prove incorrect, actual results could vary materially
from those expressed or implied in the forward-looking information.
Accordingly, the reader should not place undue reliance on
forward-looking information. Ascendant does not assume any
obligation to update or revise any forward-looking information
after the date of this news release or to explain any material
difference between subsequent actual events and any forward-looking
information, except as required by applicable law.
NON-IFRS PERFORMANCE
MEASURES
The non-IFRS performance measures presented do
not have any standardized meaning prescribed by IFRS and are
therefore unlikely to be directly comparable to similar measures
presented by other issuers.
Non-IFRS reconciliation of Adjusted
EBITDA
EBITDA is a non-IFRS measure that represents an
indication of the Company’s continuing capacity to generate
earnings from operations before taking into account management’s
financing decisions and costs of consuming capital assets, and
management’s estimate of their useful life. EBITDA comprises
revenue less operating expenses before interest expense (income),
property, plant and equipment amortization and depletion, and
income taxes. Adjusted EBITDA has been included in this document.
Under IFRS, entities must reflect in compensation expense the cost
of share-based payments. In the Company’s circumstances,
share-based payments involve a significant accrual of amounts that
will not be settled in cash but are settled by the issuance of
shares in exchange for cash. EBITDA and Adjusted EBITDA do not have
any standardized meaning prescribed by IFRS and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA and Adjusted
EBITDA exclude the impact of cash costs of financing activities and
taxes, and the effects of changes in operating working capital
balances, and therefore are not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS. Other
companies may calculate EBITDA and Adjusted EBITDA differently. As
such, the Company has made an entity specific adjustment to EBITDA
for these expenses. The Company has also made an entity-specific
adjustment to the foreign currency exchange (gain)/loss.
The following table provides a reconciliation of
net income (loss) to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
Q4 |
Q3 |
Q2 |
Q1 |
Adjusted EBITDA |
|
|
|
December
31, |
December 31, |
September 30, |
June 30, |
March 31, |
|
|
|
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
|
|
(12,057,595 |
) |
|
(1,429,234 |
) |
|
821,009 |
|
|
(8,555,453 |
) |
|
(2,893,917 |
) |
|
|
|
|
|
|
|
|
|
Adjusted for: |
|
|
|
|
|
|
|
|
Depletion and depreciation |
|
$ |
|
|
3,344,927 |
|
|
1,298,214 |
|
|
689,584 |
|
|
702,721 |
|
|
654,408 |
|
Interest income/expense |
|
$ |
|
|
273,361 |
|
|
53,258 |
|
|
82,783 |
|
|
87,291 |
|
|
50,029 |
|
Accretion expense on rehabilitation
liabilities |
|
$ |
|
|
482,112 |
|
|
(250,049 |
) |
|
316,768 |
|
|
237,467 |
|
|
177,926 |
|
Financing charge on termination
obligations |
|
$ |
|
|
1,471,810 |
|
|
803,453 |
|
|
225,835 |
|
|
377,138 |
|
|
65,384 |
|
Share-based payments |
|
$ |
|
|
1,786,587 |
|
|
368,048 |
|
|
301,106 |
|
|
1,117,433 |
|
|
- |
|
Foreign currency exchange gain/loss |
|
$ |
|
|
1,043,824 |
|
|
279,020 |
|
|
(13,880 |
) |
|
521,899 |
|
|
256,785 |
|
Income taxes |
|
$ |
|
|
1,158,308 |
|
|
1,158,308 |
|
|
- |
|
|
- |
|
|
- |
|
Adjusted EBITDA |
|
$ |
|
|
(2,496,666 |
) |
|
2,281,018 |
|
|
2,423,205 |
|
|
(5,511,504 |
) |
|
(1,689,385 |
) |
|
|
|
|
|
|
|
|
|
Direct operating cost per tonne milled
The Company uses the non-IFRS measure of direct
operating cost per tonne milled to manage and evaluate operating
performance. 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 flows. 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. The Company considers cost of sales per tonne milled to
be the most comparable IFRS measure to direct operating cost per
tonne milled and has included calculations of this metric in the
reconciliations within the applicable tables to follow.
Direct operating cost per tonne milled includes
mine direct operating production costs such as mining, processing,
administration, indirect charges as surface maintenance and camp
expenses, and inventory sales adjustments but does not include,
smelting, refining and freight costs, royalties, depreciation,
depletion, amortization, reclamation, and capital costs.
The following table provides a reconciliation of
direct operating costs to cost of sales, as reported in the
Company’s consolidated statement of income (loss) for the year
ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
Q4 |
Q3 |
Q2 |
Q1 |
Direct operating cost per tonne milled |
|
|
|
December
31, |
December 31, |
September 30, |
June 30, |
March 31, |
|
|
|
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
|
2017 |
|
Cost of Sales |
|
$ |
|
|
59,248,063 |
|
|
20,336,296 |
|
|
14,340,222 |
|
|
14,864,422 |
|
|
9,707,123 |
|
Add: Termination Liability Payments |
|
$ |
|
|
284,358 |
|
|
14,136 |
|
|
76,528 |
|
|
(368,886 |
) |
|
562,580 |
|
Add: Variation in Finished Inventory |
|
$ |
|
|
4,470,022 |
|
|
(2,157,809 |
) |
|
2,639,010 |
|
|
255,555 |
|
|
3,733,266 |
|
Deduct: Depreciation in production |
|
$ |
|
|
(3,318,613 |
) |
|
(1,289,851 |
) |
|
(676,335 |
) |
|
(699,442 |
) |
|
(652,985 |
) |
Total cash cost (including royalties) |
|
$ |
|
|
60,683,830 |
|
|
16,902,772 |
|
|
16,379,425 |
|
|
14,051,649 |
|
|
13,349,984 |
|
Deduct: Government taxes and royalties |
(1 |
) |
$ |
|
|
(2,788,417 |
) |
|
(1,009,080 |
) |
|
(912,480 |
) |
|
(485,803 |
) |
|
(381,054 |
) |
Direct operating cost |
|
$ |
|
|
57,895,413 |
|
|
15,893,692 |
|
|
15,466,945 |
|
|
13,565,846 |
|
|
12,968,930 |
|
Tonnes Milled |
|
tonnes |
|
|
656,291 |
|
|
198,354 |
|
|
176,035 |
|
|
150,785 |
|
|
131,116 |
|
Direct operating cost per tonne milled |
(1 |
) |
$/tonne |
|
$ |
88.22 |
|
$ |
80.13 |
|
$ |
87.86 |
|
$ |
89.97 |
|
$ |
98.91 |
|
(1) Direct operating cost per tonne milled
previously included government taxes and royalties, resulting in
YTD/17 - $95.60/t; Q3/17- $93.05/t; Q2/17 - $93.19/t; and Q1/17 -
$101.82. Government taxes and royalties are no longer included in
the Direct Operating Cost per Tonne Milled calculation. |
|
Additional non-IFRS
measures
The Company uses other financial measures, the
presentation of which is not meant to be a substitute for other
subtotals or totals presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. The
following other financial measures are used:
- Operating cash flows before movements in working capital -
excludes the movement from period-to-period in working capital
items including trade and other receivables, prepaid expenses,
deposits, inventories, trade and other payables and the effects of
foreign exchange rates on these items.
The terms described above do not have a
standardized meaning prescribed by IFRS, and therefore the
Company’s definitions are unlikely to be comparable to similar
measures presented by other companies. The Company’s management
believes that their presentation provides useful information to
investors because cash flows generated from operations before
changes in working capital excludes the movement in working capital
items. This, in management’s view, provides useful information of
the Company’s cash flows from operations and are considered to be
meaningful in evaluating the Company’s past financial performance
or its future prospects. The most comparable IFRS measure is cash
flows from operating activities.
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