Unless otherwise stated, all amounts discussed herein are
denominated in Canadian dollars.
Shares Issued: 201,313,187
THUNDER BAY, ON, Nov. 14, 2016 /CNW/ - PREMIER GOLD MINES
LIMITED (TSX:PG) ("Premier", "the Company") is pleased to
announce its operating results for the three months ended
September 30, 2016 the first
production quarter in the history of the Company. This release
should be read in conjunction with the Company's third quarter 2016
financial statements and MD&A report on the Company's website,
www.premiergoldmines.com, in the "Financials" section under
"Investors", or on the SEDAR website at www.sedar.com.
Third Quarter 2016 Highlights
- Mercedes Mine acquisition completed September 30, 2016
- Commercial production at South Arturo achieved August 1, 2016 on time and under budget
- Attributable Gold production at South Arturo of 30,228 ounces
during the quarter
- Average processed gold grade of ore from South Arturo pit of
0.259 Oz/t
- Gold sales at South Arturo of 8,075 ounces during the quarter
for proceeds of $13,912,088
- Realized gold price of $1,723
(US$1,303)
- Average Cash Costs of $477
(US$361) per ounce for South
Arturo
- Average AISC of $494 (US$374) per ounce for South Arturo
- Closing cash balance at September 30,
2016 of $42,079,070
- Precious metals inventory of $27,982,275
- Mineralized material in stockpile of $24,473,108
Third Quarter 2016 Financial Results
As at September 30, 2016, the
Company remained in a strong financial position with cash and cash
equivalents of $42,079,070 (excluding
inventory) compared to cash and cash equivalents of $73,056,817 at December
31, 2015.
Financial Data (in
millions except for earnings (loss) per share)
|
3 months ended
September 30, 2016
|
Revenue
|
$13.9
|
Gross profit
(loss)
|
$3.4
|
Net income
(loss)
|
($5.1)
|
Earnings (loss) per
share – basic and diluted
|
($0.03)
|
Cash flow from
operating activities before changes in non-cash operating working
capital and other items
|
($7.4)
|
Cash and cash
equivalents
|
$42.1
|
Third Quarter 2016 Operational Results
Gold production from the in the third quarter of 2016, Premier's
first as a gold producer, was 83,605 ounces, of which 30,228 ounces
are attributable to Premier, approximately 50% above budget.
The South Arturo Mine was brought into production on time and under
budget and has been achieving excellent performance since the start
of production on Aug. 1, 2016.
Owing to the excellent start at South Arturo, and owing to higher
grades being processed, 2016 annual production guidance has been
increased to between 100,000 to 110,000 ounces of gold.
Gold Production
and Cost Data
|
3 months ended
September 30, 2016
|
Tons Processed
(1)
|
322,614
|
Contained Ounces
(1)
|
83,605
|
Ounces Produced
(2)
|
30,228
|
Grade Processed
(oz/t)
|
0.259
|
Recovery
Rate
|
90.4%
|
Realized gold
price
|
$1,723
|
Average cash cost per
gold ounce
|
$477
|
Average all-in
sustaining cost per gold ounce
|
$494
|
(1)
South Arturo - 100% (2) South Arturo –
40% attributable to Premier
|
|
|
2016 Q3 and Recent Company Highlights
South Arturo
The South Arturo Mine was brought into production on time and
under budget during the third quarter. The mine, which
achieved commercial production on August 1,
2016, has exceeded production guidance by approximately 50%
YTD owing to revised scheduling of ore through the roaster.
Realized recoveries have also been slightly higher than budget
(90.4% actual vs. 86.4% budget) due to grade processed.
Operational statistics for South Arturo on a 100% project basis
are as follows:
OPERATIONAL
STATISTICS
|
3 months ending
September 30, 2016
|
9 months ending
September 30, 2016
|
MINING
|
|
|
Tons Mined
|
12,717,404
|
61,751,136
|
Tons of
Ore
|
987,492
|
1,006,939
|
Grade
|
0.166
|
0.164
|
Contained
Ounces
|
164,124
|
165,371
|
Operating
Waste
|
5,788,143
|
5,788,143
|
Capitalized Tons
Waste
|
5,941,769
|
54,956,054
|
Tons Waste
|
11,729,912
|
60,744,197
|
Tons Moved
|
12,717,404
|
61,751,136
|
|
|
|
PROCESSING
|
|
|
Tons
Processed
|
322,614
|
322,614
|
Contained
Ounces
|
83,605
|
83,605
|
Ounces
Produced
|
75,570
|
75,570
|
Grade
Processed
|
0.259
|
0.259
|
Recovery
Rate
|
90.4%
|
90.4%
|
|
|
|
FINANCIAL
STATISTICS
|
|
|
Mining Cost Per Ton
($USD)
|
$1.70
|
$1.33
|
Processing Cost Per
Ton ($USD)
|
$24.02
|
$24.02
|
On a 100% project basis, South Arturo mined a total 12,717,404
short tons of material during the third quarter, including 987,492
short tons of ore at a grade of 0.166 ounces per ton and containing
164,124 ounces of gold. South Arturo began processing ore
during Q3 2016 where a total of 322,614 tons of ore grading 0.259
ounces per ton was processed through the roaster recovering a total
of 75,570 ounces of gold at a recovery rate of 90.4%.
Premier's (40%) share of the gold ounces processed at South Arturo
during the quarter totaled 30,228.
The joint venture is also advancing two additional mining
opportunities on the property: the El Nino underground project and
the Dee pit expansion project (Phases 1&3).
A Plan of Operations for the construction of a ramp at El Nino
to access high grade mineralization down dip of the current pit has
been submitted for approval with Nevada regulatory authorities. Drilling in H1
2017 will focus on the further definition of the ore zones from
surface to infill previous surface exploration programs.
Drilling and bulk sampling are in process for the Dee pit
expansion, a potential run of mine heap leach operation located to
the west of the current Phase 2 pit. Updated metallurgical
recoveries and optimized capital and operating assumptions will be
used for a revised economic assessment for this potential second
pit operation prior to making a construction decision.
Mercedes
The acquisition of the Mercedes Mine located in Sonora, Mexico closed on September 30, 2016. For the nine months ended
September 30, 2016 under Yamana's
ownership and control, the Mercedes Mine produced 70,274 ounces of
gold and 326,876 ounces of silver at average all-in sustaining cost
of US$807 per ounce of gold and
US$9.03 per ounce of silver (see
table below).
In October, the first month of operations under Premier
ownership, Mercedes produced 7,548 ounces of gold and 34,888 ounces
of silver with all in sustaining costs ("AISC") of US$725 per ounce of gold and US$10.56 per ounce of silver.
Production and
Cost Data
|
9 months
ended September 30, 2016
|
Tons
Processed
|
513,279
|
Ounces Produced
Gold
|
70,274
|
Ounces Produced
Silver
|
326,876
|
Gold Grade Processed
(g/t)
|
4.52
|
Silver Grade
Processed (g/t)
|
48.38
|
Recovery Rate
Gold
|
94.26%
|
Recovery Rate
Silver
|
40.90%
|
Average cash cost per
gold ounce (US$)
|
$687
|
Average cash cost per
Silver ounce (US$)
|
$9.03
|
Average all-in
sustaining cost per gold ounce (US$)
|
$807
|
Average all-in
sustaining cost per Silver ounce (US$)
|
$10.60
|
In total, 137 metres of primary development and 139 metres of
expansionary development were completed in the month and the mine
is on track to meet its production and cost guidance (as per Yamana
Press Release dated 01/13/2016) for the fourth quarter.
Drilling continued with three surface rigs and two underground rigs
completing 22 core holes for a total of 4,223 metres of infill,
extension and exploration focused drilling.
In October, the site achieved one year without a Long Term
Injury. Management would like to congratulate the mines
management, employees and contractors on this important
milestone.
Greenstone Gold Mines
During the third quarter of 2016, Greenstone Gold spent
$6,692,662 on project development
activities ($21,591,862, cumulative
to September 30, 2016) as work
continued on the feasibility study for the Hardrock Project.
The primary focus during the quarter was finalizing the
optimization of key feasibility inputs supported by the results of
extensive peer reviews and the continuation of consultation with
local communities in parallel with the ongoing regulatory review of
the Hardrock environmental assessment. Finalization of the
feasibility study is expected during Q4 of 2016. A
comprehensive review of historical geological, geophysical and
geochemical datasets and an IP geophysical study to supplement and
upgrade existing data is ongoing.
Exploration activity during the third quarter at Greenstone Gold
included various orientation till sampling programs as well as line
cutting, core re logging and orientation geophysical surveys.
Diamond drilling originally planned for Q3 2016 has been deferred
until 2017.
McCoy-Cove
A total of 6,389 metres of drilling was completed on the McCoy
Cove property in the third quarter, including 4,067 metres of core
drilling. Drilling costs on a YTD basis are
$65.83 per metre.
Premier made multiple press releases of significant drilling
results including PG16-09 that graded 7.75 g/t Au and 3.92 g/t Ag
over 38.6m. These results were supported by additional favourable
results including PG16-06 grading 7.96 g/t Au and 4.68 g/t Ag over
38.0m. The success of the drilling program to date continues to
demonstrate the potential to delineate a significant high grade
gold and silver mineral resource at McCoy Cove in horizons that had
seen previously very limited testing.
The company is working towards a mineral resource estimate
expected in H1-2017 and followed by a PEA in H2-2017. The
Cove-Helen Underground Exploration Plan of Operations (PoO) was
approved in 2013 granting Premier the option of pursuing an
underground exploratory drill program as well as test mining in the
Helen Zone. A supplementary 2016 budget has led Premier to initiate
preliminary engineering, dewatering and baseline studies required
to advance the underground exploration PoO towards development.
Dewatering was an important aspect of historic mine operations at
Cove and as a result, the installation of vibrating wire
piezometers in select exploration drill holes commenced in Q2 in
order to monitor groundwater in the vicinity of the Helen and CSD
Gap deposits. Preliminary dewatering simulations of the proposed
test mining scenario are now complete and results indicate that the
potential dewatering outflow levels for the test mining scenario
would fall within the currently permitted PoO. Further optimization
and validation of the dewatering scenario is ongoing including a
pump test that is planned for Q1 2017 to confirm dewatering rates
prior to initiating a PEA in H2 2017.
Hasaga
A total of 15,477 metres of drilling was completed at Hasaga
during the third quarter, bringing the year to date total to 45,223
metres. Drilling continues to delineate wide lower grade
mineralization in the Central Zone area as well as at the historic
Buffalo Mine area at the southwest corner of the property. One of
the best intersections being HMP136 that graded 3.66 g/t Au over
67.0m beginning at 170.0m downhole (and includes 7.17 g/t Au across
20.0m).
The drilling was divided between the Buffalo Horizon (23 holes)
and the Central Zone in (19 holes). The summer program of
bulldozer stripping, mapping and channel sampling was continuing at
the end of quarter. The metallurgical test work to
investigate the heap leach potential of the Hasaga mineralized
material suggested recoveries of less than 50% could be anticipated
for grind sizes not finer than ¼ inch.
Other Exploration
In Red Lake a total of 1,907
metres were drilled in the quarter focusing on defining the extent
of and expanding the "Fold Target" discovery that was made in
2015. The Company expects to meet with Goldcorp in the Q4 to
discuss exploration plans for 2017.
During the fourth quarter, exploration activities commenced on
the Goldbanks and Alto-Cristina Properties.
CEO Commentary
Ewan Downie, President and CEO
stated, "It is with great pleasure that we announce the operational
and financial results relating to Premier's first quarter as a
producing company. A fluid ramp-up at the Arturo JV with
Barrick, including higher than budgeted mine grades, combined with
solid performance realized at Mercedes has allowed the Company to
increase its 2016 production guidance to between 100,000 and
110,000 ounces of gold". The transition of Mercedes is
progressing very well as we continue to integrate the operation
into Premier. Exploration intended to increase
mine life on the project is underway and early results have been
positive in several key target areas. A full exploration
update for the Company's portfolio of projects is planned later in
the current quarter".
Financial Results – Third Quarter 2016
Loss for the three months ended September
30, 2016 was $5,057,525
compared to income of $5,341,819 for
the same period of 2015 for a negative variance of $10,399,344. $15,384,240 of the variance was from a reduction
in other income and expense offset by a positive variance of
$5,676,971 from a decrease in
operating loss.
Operating loss for the three months ended September 30, 2016 was $7,641,932 compared to a loss of $13,318,903 for the same period of 2015 for a
positive variance of $5,676,971
mainly due to:
- $3,208,933 in mine operating
income from the start of gold production at the South Arturo
project
- a reduction in share based payments of $2,742,654 due to timing of option grants
The operating variances for the period are:
For the three months
ended September 30,
|
2016
|
2015
|
Variance
|
|
$
|
$
|
$
|
|
|
|
|
Revenue
|
13,912,088
|
-
|
13,912,088
|
Cost of
sales
|
(10,467,275)
|
-
|
(10,467,275)
|
|
|
|
|
Mine operating
income
|
3,444,813
|
-
|
3,444,813
|
|
|
|
|
EXPENSES
|
|
|
|
Exploration,
evaluation, and pre‑development
|
8,750,479
|
8,196,852
|
553,627
|
Property
maintenance
|
141,892
|
225,198
|
(83,306)
|
General and
administrative
|
2,194,499
|
1,592,016
|
602,483
|
Share‑based
payments
|
357,956
|
3,100,610
|
(2,742,654)
|
Depreciation on
property, plant and equipment
|
47,511
|
27,035
|
20,476
|
Long term debt
accretion
|
299,017
|
153,569
|
145,448
|
Environmental
rehabilitation accretion
|
27,584
|
23,623
|
3,961
|
Remeasurement of
environmental rehabilitation
|
(732,193)
|
-
|
(732,193)
|
Operating
loss
|
(7,641,932)
|
(13,318,903)
|
5,676,971
|
|
|
|
|
|
|
|
|
- increase of $553,627 in
exploration, evaluation and pre development which includes a
reduction of $451,968 for feasibility
related spending at the 50% owned Hardrock and Brookbank
properties, a decrease of $1,009,517
at the 100% Hasaga property in Red
Lake and an increase of $2,014,989 at the 100% owned McCoy Cove property
in Nevada
- increase in general and administration of $602,483
- $271,713 related to Premier's
share of project administration costs for the Greenstone Gold joint
arrangement and the South Arturo co ownership, agreements entered
into during 2015
- $207,608 increase in corporate
salaries and benefits
- $732,193 was recorded in 2016 for
remeasurement of environmental rehabilitation liabilities on
non-core properties that have been previously fully impaired based
on an updated assessment of the properties, mainly the Faymar
Deloro property
Other income for the three months ended September 30, 2016 was $977,071 compared to $16,361,311 for the same period of 2015 for a
negative variance of $15,384,240
which was mainly due to the settlement of contingent consideration
on the Greenstone Gold divestment during this period of 2015 of
$10,970,081 and due to expensed legal
and advisory fees related to the Mercedes Mine purchase on
September 30, 2016 of $3,488,371.
The components of other income and expense are:
For the three months
ended September 30,
|
2016
|
2015
|
Variance
|
|
$
|
$
|
$
|
|
|
|
|
Investment gains /
(losses)
|
|
|
|
Investment and other
income
|
13,232
|
103,918
|
(90,686)
|
Unrealized net gain
on investments
|
1,764,350
|
318,513
|
1,445,837
|
Realized net loss on
sale of investments
|
(300,485)
|
(358,515)
|
(58,030)
|
|
|
|
|
Derivative gains /
(losses)
|
|
|
|
Unrealized gain on
derivatives
|
810,193
|
-
|
810,193
|
Realized loss on
derivatives
|
(1,312,295)
|
-
|
(1,312,295)
|
|
|
|
|
Foreign exchange
gains / (losses)
|
|
|
|
Unrealized foreign
exchange gain
|
289,195
|
1,466,387
|
(1,177,192)
|
Realized foreign
exchange gain / (loss)
|
(145,770)
|
14,806
|
(160,576)
|
|
|
|
|
Gains / (losses)
attributable to property, plant and equipment
|
|
|
|
Gain on disposal of
equipment
|
692
|
-
|
692
|
Gain on divestment of
mineral property interest
|
-
|
10,970,081
|
(10,970,081)
|
|
|
|
|
Transaction costs on
the acquisition of Mercedes Mine
|
(3,488,371)
|
-
|
(3,488,371)
|
Gain attributable to
Greenstone Gold development commitment
|
3,346,330
|
3,846,121
|
(499,791)
|
|
|
|
|
Total other
income
|
977,071
|
16,361,311
|
(15,384,240)
|
|
|
|
|
|
|
|
|
Other significant variances are due to:
- increase in unrealized net gains on investments of $1,445,858 due to the recognition of a fair value
gain on warrants of $367,759 and mark
to market gains on Canadian equities held of $1,078,099
- unrealized gain on derivatives of $810,193 includes
- reversal of the unrealized loss on put options that settled
during the quarter of $965,119
(offset by the actual loss of $1,312,295 included in realized loss on
derivatives)
- an unrealized loss for the recognition of losses on forward
contracts of $529,000
- a net unrealized gain of $374,074
on the change in the valuation of the offtake obligation recorded
in the second quarter Orion financing
- realized loss on derivatives is the loss on options that
settled (expired) during the quarter
2016 Guidance
The Corporation is currently targeting between 100,000 and
110,000 ounces of gold production for 2016 from its operations at
South Arturo and the recently acquired Mercedes Mine in
Sonora, Mexico. Approximately 70%
of targeted production is anticipated during the fourth
quarter. In Mexico, our
Mercedes Mine is also expected to produce 90,000 to 100,000 ounces
of silver during the fourth quarter.
Production estimates for 2016 are derived from life of mine
operating plans prepared on the basis of mineral reserves
associated with each property. Assumptions underlying 2016 gold and
silver production estimates for South Arturo and Mercedes are
presented in the tables below.
|
|
|
|
|
|
Production
ounces
|
Realized Gold
Price per ounce
|
Cash Cost per
ounce
|
ASIC per
ounce
|
|
Gold
|
|
|
|
|
|
South
Arturo
|
80,000 -
88,000
|
US$1,100
|
US$361
|
US$374
|
|
Mercedes
|
20,000 -
22,000
|
US$1,100
|
US$706
|
US$815
|
|
Consolidated
|
100,000 -
110,000
|
US$1,100
|
US$451
|
US$489
|
Silver
|
|
|
|
|
|
Mercedes
|
90,000 -
100,000
|
US$17.00
|
US$9.45
|
US$10.91
|
|
Consolidated
|
90,000 -
100,001
|
US$17.00
|
US$9.45
|
US$10.91
|
|
|
|
|
|
Premier Gold Mines Third Quarter 2016 Results - Conference
Call
The Company will host the Q3 financial results conference call
and webcast today, November 14, 2016
at 10:00 am EDT.
Q3 Conference Call Information
Toll Free (North
America): 1-888-231-8191
International: 1-647-427-7450
Conference ID: 15481005
Webcast Link
Webcast URL (EN):
http://event.on24.com/r.htm?e=1308442&s=1&k=1427664CC71E3342925F314F82C7EA42
The webcast replay will be available 1:00pm EDT on November 14,
2016 until 11:59 pm EST on
December 14, 2016.
Q3 Conference Call Replay
Toll Free Replay Call (North
America): 1-855-859-2056
International Replay Call: 1-416-849-0833
Passcode:15481005
The conference call replay will be available from 1:00pm EDT on November 14,
2016 until 11:59 pm EST on
November 21, 2016.
Stephen McGibbon, P. Geo., is the
Qualified Person for the information contained in this press
release and is a Qualified Person within the meaning of National
Instrument 43-101. Assay results from Hasaga are from core
samples sent to either Accurassay Laboratories or Activation Labs,
both accredited mineral analysis laboratories in Thunder Bay, Ontario, for preparation and
analysis utilizing both fire assay and screen metallic methods.
Drill samples from McCoy-Cove were sent to ALS Laboratories in
Reno, Nevada for analysis with the
analytical facility utilizing 30 gram fire assay with an AA finish
for RC samples and 30 gram fire assay with AA finish and ICP-MS 30
element scan from 4-acid digestion for core samples. Over-limit
samples receive an automatic gravimetric finish.
Premier Gold Mines Limited is a gold producer and
respected exploration and development company with a high-quality
pipeline of precious metal projects in proven, accessible and safe
mining jurisdictions in Canada,
the United States, and
Mexico.
This Press Release contains certain information that may
constitute "forward-looking information" under applicable Canadian
securities legislation. Forward-looking information includes, but
is not limited to, statements about strategic plans, including
future operations, future work programs, capital expenditures,
discovery and production of minerals, price of gold and currency
exchange rates, timing of geological reports and corporate and
technical objectives... Forward-looking information is necessarily
based upon a number of assumptions that, while considered
reasonable, are subject to known and unknown risks, uncertainties,
and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such
forward-looking information, including the risks inherent to the
mining industry, adverse economic and market developments and the
risks identified in Premier's annual information form under the
heading "Risk Factors". There can be no assurance that such
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
information. Accordingly, readers should not place undue
reliance on forward-looking information. All forward-looking
information contained in this press release is given as of the date
hereof and is based upon the opinions and estimates of management
and information available to management as at the date
hereof. Premier disclaims any intention or obligation to
update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by law.
SOURCE Premier Gold Mines Limited