Solid first year of production sees year-end
cash & cash equivalent balance of USD$89.2 million (CAD$119.7 million)
Shares Issued: 201,530,687
THUNDER BAY, ON, March 23, 2017 /CNW/ - PREMIER GOLD MINES
LIMITED (TSX: PG) ("Premier", "the Company") is pleased to
announce its operational and financial results for the three months
and year-ended December 31, 2016. The
Company previously released its production results for the fourth
quarter and full year in its news release dated January 12, 2017. This press release should be
read in conjunction with the Company's Consolidated Financial
Statements and related Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") for the
year ended December 31, 2016, which
are available on SEDAR (www.sedar.com). All dollar amounts included
in this press release are expressed in Canadian dollars, unless
otherwise noted, and are based on the Company's MD&A and
Consolidated Financial Statements, which were prepared in
accordance with International Financial Reporting
Standards.
2016 Fourth Quarter Highlights
- Consolidated production of 81,511 ounces of gold and 98,401
ounces of silver(i)
- Consolidated Gold revenue of USD$102.0
million (CAD$135.1 million) on
sales of 82,188 ounces at an average realized price of USD$1,241 (CAD$1,644) per ounce
- Consolidated co-product cash costs(ii) of
USD$306 per ounce of gold sold
- Consolidated co-product all-in sustaining costs(ii)
of USD$356 per ounce of gold
sold
- Net income for the quarter of USD$20.4
million (CAD$27.0
million)
- Cash flow from operating activities of USD$73.0 million (CAD$96.7
million)
(i)
|
Final gold production
lower by 279 ounces and silver higher by 410 ounces than previously
released on January 12, 2017 due to final year end
reconciliation
|
(ii)
|
See "Non-IFRS
Measures". A cautionary note and further information
regarding Non-IFRS metrics is included in the "Non-IFRS
Measures" section of the MD&A
|
2016 Full Year Highlights
- Consolidated production 111,739 ounces of gold and 98,401
ounces of silver(i)
- Consolidated gold revenue of USD$112.5
million (CAD$149.0 million) on
sales of 90,263 ounces at an average realized price of USD$1,246 (CAD$1,651) per ounce
- Consolidated co-product cash costs(ii) of
USD$310 per ounce of gold, below 2016
guidance of USD$451 per ounce
- Consolidated co-product all-in sustaining costs(ii)
of USD$370 per ounce of gold, below
2016 guidance of USD$489 per
ounce
- Year-end cash balance of USD$89.2
million (CAD$119.7
million)
- Year-end inventory of 23,386 ounces of gold and 40,492 ounces
of silver
- Cash flow from operating activities of USD$43.7 million (CAD$57.9
million)
- EBITDA USD$58.2 million
(CAD$77.1 million), or USD$.31 per share (CAD$.41 per share)(ii)
- Net loss USD($549,099), CAD($727,447)
(i)
|
Final gold production
lower by 279 ounces and silver higher by 410 ounces than previously
released on January 12, 2017 due to final year end
reconciliation
|
(ii)
|
See "Non-IFRS
Measures". A cautionary note and further information regarding
Non-IFRS metrics is included in the "Non-IFRS Measures" section of
the MD&A
|
2016 Financial Highlights – For the three months and year
ended December 31, 2016
2016 was Premier's first year as a producer, with the fourth
quarter being Premier's first full quarter of production.
Continued strong performance at South Arturo, and the addition of
the Mercedes Mine during the fourth quarter, led to increased
production and substantial cash flow for both the fourth quarter
and the full year. 2016 gold production of 111,739 ounces exceeded
the Company's guidance of 100,000-110,000 ounces for the year.
At December 31, 2016, the Company
remained in a strong financial position with cash and cash
equivalents of USD$89.2 million
(CAD$119.7 million) compared to
USD$31.3 million (CAD$42.1 million) at September 30, 2016. At year-end the Company also
carried precious metals inventories of 23,386 ounces gold and
40,492 ounces silver.
Millions CAD$, except
for
earnings/(loss) per share
|
Three months
ended
December 31,
2016
|
Twelve
months ended
December 31,
2016
|
Millions USD $,
except for
earnings/(loss) per share
|
Three months
ended
December 31,
2016
|
Twelve
months ended
December 31,
2016
|
|
|
|
|
|
|
Revenue
|
136.6
|
150.5
|
Revenue
|
103.1
|
113.6
|
Gross
profit
|
40.3
|
43.7
|
Gross
profit
|
30.4
|
33.0
|
EBITDA
(i)(ii)
|
96.8
|
77.1
|
EBITDA
(i)(ii)
|
73.1
|
58.2
|
Net income
(loss)
|
27.0
|
(0.7)
|
Net income
(loss)
|
20.4
|
(0.5)
|
Earnings (loss) per
share
|
0.16
|
0.00
|
Earnings (loss) per
share
|
0.12
|
0.00
|
Change in
cash
|
77.6
|
46.6
|
Change in
cash
|
57.8
|
34.7
|
Millions
CAD$
|
For the year
ended
December
31, 2016
|
For the year
ended
December
31, 2015
|
Millions
USD$
|
For the year
ended
December
31, 2016
|
For the year
ended
December
31, 2015
|
EBITDA
(i)(ii)
|
77.1
|
20.4
|
EBITDA
(i)(ii)
|
58.2
|
16.0
|
Cash flow from
operating activities
|
57.9
|
(19.6)
|
Cash flow from
operating activities
|
43.7
|
(15.3)
|
Cash and cash
equivalents
|
119.7
|
73.1
|
Cash and cash
equivalents
|
89.2
|
52.8
|
|
|
(i)
|
Earnings before
interest, tax, depreciation and amortization
|
(ii)
|
See "Non-IFRS
Measures". A cautionary note and further information regarding
Non-IFRS metrics is included in the "Non-IFRS Measures" section of
the MD&A
|
Capital expenditures during the fourth quarter were USD$5.5 million (CAD$7.3
million) and exploration, evaluation and pre-development
expenses were USD$8.3 million
(CAD$11.1 million). Capital
expenditures during the year were USD$37.1
million (CAD$49.8 million) and
exploration, evaluation and pre-development expenses were
USD$26.2 million (CAD$34.7 million).
Strong operating results from both mines contributed to an
EBITDA(ii) of USD$73.1
million (CAD$96.8 million) for
the fourth quarter and USD$58.2
million (CAD$77.1 million) for
the year. Net income of USD$20.4
million (CAD$27.0 million) was
reported for the fourth quarter, Premier's first full quarter of
production. A net loss of USD$0.5
million (CAD$0.7 million) was
recorded for the year due primarily to the expensing of exploration
expenditures and depletion, depreciation and
amortization.
2016 Operational Highlights – For the three months and year
ended December 31, 2016
South Arturo
The South Arturo Mine, which is 40% owned by Premier and is
operated by joint venture partner Barrick
Gold, was brought into production in Q3-2016 and has been a
solid performer with industry-low production costs. The mine
achieved commercial production on August 1,
2016 and has exceeded production guidance primarily due to
revised scheduling of ore through the roaster and positive grade
reconciliation.
South Arturo
Operating Results in CAD $, unless otherwise
stated
|
|
Three months
ended
December 31,
2016
|
Twelve months
ended
December 31,
2016
|
Ore milled
|
tonnes
|
213,346
|
330,415
|
|
|
|
|
Gold
produced
|
ounces
|
59,030
|
89,258
|
Gold sold
|
ounces
|
67,569
|
75,644
|
|
|
|
|
Average gold
grade
|
grams/tonne
|
9.48
|
9.27
|
Average gold recovery
rate
|
%
|
90.8
|
90.6
|
Revenues and
realized prices
|
|
|
|
Gold
revenue
|
000s
|
111,587
|
125,499
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,651
|
1,659
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold
(i,ii)
|
USD
$/oz
|
223
|
236
|
Co-product all in
sustaining costs per ounce of gold sold
(i,ii)
|
USD
$/oz
|
258
|
285
|
|
|
|
|
(i)
|
See "Non-IFRS
Measures". A cautionary note regarding Non-IFRS metrics is included
in the "Non-IFRS Measures" section of 2016 Management's Discussion
and Analysis
|
(ii)
|
Cash costs, all-in
sustaining costs as well as average realized gold price per ounce
are Non-IFRS metrics and discussed in the "Non-IFRS Measures"
section of the Company's MD&A
|
Performance for the fourth quarter and for the year was better
than plan both in production and costs. Production attributed to
Premier was 59,030 ounces of gold compared to 30,228 ounces of gold
for the prior quarter. Gold recovery of 90.6% was greater than
plan. Lower cash costs compared to the third quarter were due
to achieving full efficiencies after start-up.
Capital expenditures during the fourth quarter were USD$0.10 million (CAD$0.13
million). Capital expenditures totaling USD$31.5 million (CAD$42.3
million) during 2016 consisted mainly of pre-production
development costs.
The joint venture continues to advance additional development
opportunities including potential open pit (Phases 1&3) and the
El Nino underground.
Earlier in 2016, Barrick submitted permits for potential
underground mine development at El Nino which would utilize a ramp
from the bottom of the current open pit. Drilling to support
initial planning at El Nino is expected be completed in 2017 and
2018.
Mercedes
The acquisition of the Mercedes Mine located in Sonora, Mexico closed on September 30, 2016. Production during the
fourth quarter was 22,481 ounces of gold and 98,401 ounces of
silver. Costs for the quarter, on a co-product basis,
remained under budget with average all-in sustaining costs coming
in at USD$811 per ounce of gold and
USD$11 per ounce of silver.
Mercedes
Operational Results in CAD $, unless otherwise
stated
|
|
Three months
ended December
31, 2016 (i)
|
Twelve months
ended
December 31,
2016 (i)
|
Ore milled
|
tonnes
|
175,007
|
175,007
|
|
|
|
|
Gold
produced
|
ounces
|
22,481
|
22,481
|
Silver
produced
|
ounces
|
98,401
|
98,401
|
Gold sold
|
ounces
|
14,619
|
14,619
|
Silver
sold
|
ounces
|
65,380
|
65,380
|
|
|
|
|
Average gold
grade
|
grams/tonne
|
4.27
|
4.27
|
Average silver
grade
|
grams/tonne
|
44.49
|
44.49
|
|
|
|
|
Average gold recovery
rate
|
%
|
94.8
|
94.8
|
Average silver
recovery rate
|
%
|
39.1
|
39.1
|
|
|
|
|
Revenues and
realized prices
|
|
|
|
Gold
revenue
|
000s
|
23,521
|
23,521
|
Silver
revenue
|
000s
|
1,490
|
1,490
|
Total
revenues
|
000s
|
25,011
|
25,011
|
|
|
|
|
Average realized gold
price (ii,iii)
|
$/ounce
|
1,609
|
1,609
|
Average realized
silver price (ii,iii)
|
$/ounce
|
23
|
23
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (ii,iii)
|
USD
$/oz
|
690
|
690
|
Co-product all in
sustaining costs per ounce of gold
sold (ii,iii)
|
USD
$/oz
|
811
|
811
|
|
|
|
|
Co-product cash costs
per ounce of silver sold (ii,iii)
|
USD
$/oz
|
10
|
10
|
Co-product all in
sustaining costs per ounce of silver sold
(ii,iii)
|
USD
$/oz
|
11
|
11
|
|
|
|
|
By-product cash costs
per ounce of gold sold (ii,iii)
|
USD
$/oz
|
656
|
656
|
By-product all in
sustaining costs per ounce of gold sold
(ii,iii)
|
USD
$/oz
|
785
|
785
|
|
|
(i)
|
Twelve month results
include Mercedes Q4 2016
|
(ii)
|
See "Non-IFRS
Measures". A cautionary note regarding Non-IFRS metrics is included
in the "Non-IFRS Measures" section of 2016 Management's Discussion
and Analysis
|
(iii)
|
Cash costs,
all-in sustaining costs as well as average realized gold price per
ounce are Non-IFRS metrics and discussed in the "Non-IFRS Measures"
section of the Company's 2016 MD&A
|
Mercedes continued to deliver improved performance during the
fourth quarter as a result of revised mine planning, operational
improvements and reductions in the mine's cost structure. At
the processing plant, Mercedes commissioned an oxygen injection
system, resulting in an increase in recoveries for gold in the
range of 1% and silver in the range of 4%. With a continued focus
on business optimization and operating efficiencies, Mercedes
delivered on expectations for 2016. Additional production
initiatives, including development of the Diluvio deposit, are
expected to positively impact the future mining rate at
Mercedes.
Capital expenditures totaling USD$5.3
million (CAD$7.1 million)
during the fourth quarter included USD$1.1
million (CAD$1.5 million) in
underground sustaining mine development, USD$0.5 million (CAD$0.7
million) for heavy equipment, USD$1.1
million (CAD$1.5 million) for
expansionary underground development and USD$2.1 million (CAD$2.8
million) in capitalized exploration.
Three drill rigs were active at site during the year, completing
27,442 metres in 135 holes, of which 8,532 metres in 44 holes was
completed during the fourth quarter. Diluvio infill and extension
drilling returned the best results. Several new vein
zones that were identified proximal to existing mine workings will
be the focus of early exploration during 2017.
Mercedes reported no Lost Time Injuries during 2016. Management
would like to recognize and congratulate mine management, employees
and contractors for the achievement of this important
milestone.
McCoy-Cove
A total of 9,370 metres of drilling was completed on the
McCoy‑Cove property during the fourth quarter, including 4,067
metres of core drilling and 2,322 metres of pre‑collar rotary
drilling in 14 drill holes in and near the GAP target area. A total
of 22,199 metres of drilling was completed during the year.
Table 1 – Resource Estimate, McCoy-Cove Property
Property
Deposit
Participating Interest
|
Cut-off
Category
|
Resource
Category
|
Tonnes
(Mt)
|
Gold Grade
(g/t Au)
|
Gold Ounces
(000's)
|
McCoy-Cove
Helen/CSD GAP/2201
100%
|
Underground
|
Measured
(M)
Indicated
(I)
Subtotal M &
I
Inferred
|
-
0.61
0.61
3.38 |
11.55
11.55
12.17
|
-
228
228
1,322
|
*See Press Release
dated March 21, 2017 for the details and assumptions of the mineral
resource estimate.
|
The Company is working toward completing a Preliminary Economic
Assessment ("PEA") in the second half of 2017. The Cove-Helen
Underground Exploration Plan of Operations ("PoO"), which was
approved in 2013, grants Premier the option to pursue an
underground exploratory drill program as well as test mining in the
Helen Zone. Premier has initiated preliminary engineering,
dewatering and baseline studies to advance the underground
exploration PoO toward development. Optimization and
validation of the dewatering scenario is ongoing, and includes a
pump test planned for the first half of 2017 to confirm dewatering
rates prior to completing the PEA in the second half of 2017.
Greenstone Gold Mines
The Hardrock Feasibility Study was released in November, 2016.
Approximately USD$23.4 million
(CAD$31.0 million) was spent by
Greenstone Gold during 2016 on a range of exploration and project
development activities including USD$2.1
million (CAD$2.8 million) on
exploration. Exploration activity during the year included
orientation till sampling programs, line cutting, core re‑logging
and orientation geophysical surveys. A comprehensive review of
historical geological, geophysical and geochemical datasets and an
IP geophysical study to supplement and upgrade existing data was
also conducted.
Hasaga
A total of 2,974 metres of drilling was completed at Hasaga
during the fourth quarter, bringing the year to date total to
48,197 metres. In addition to drilling, a program of bulldozer
stripping, mapping and channel sampling continued through the
quarter.
An initial mineral resource estimate (see Table 2 below) was
released in January of 2017.
Table 2 – Resource Estimate, Hasaga Property
Property
Deposit
Participating Interest
|
Cut-off
Category
|
Resource
Category
|
Tonnes
(Mt)
|
Gold Grade
(g/t Au)
|
Gold Ounces
(000's)
|
Red Lake
District
Hasaga
100%
|
Open Pit
|
Measured
(M)
Indicated
(I)
Subtotal M & I
Inferred
|
-
42.29
42.29
25.14
|
0.83
0.83
0.78
|
-
1,124
1,124
631
|
*see Technical Report
dated December 30, 2016 and press release dated February 24,
2017
|
Goldbanks
Two holes were drilled for a total of 1,306 metres on the
Goldbanks property during the fourth quarter and for the
year. Both drill holes will be used to build a geological
interpretation and model in advance of testing for high grade
structures related to historical drill holes. Assay results
included narrow high grade silver in one drill hole.
Alto Cristina
Three holes were drilled for a total of 450 metres on the Alto
Cristina property during the fourth quarter and for the year.
These holes at 90 meter horizontal spacing were drilled to test the
continuity of historical high grade intercepts in the Alto and Bajo
vein structures. All drill holes hit the target horizons and
ongoing drilling will continue to assess prospective vein zones on
the property.
CEO Commentary
Ewan Downie, President and CEO
stated, "A well-executed ramp-up at the Arturo JV with Barrick
delivered higher than budgeted mine grades and lower costs.
This, combined with excellent performance delivered by the
operating team at Mercedes, has resulted in an impressive first
year of production and financial performance for Premier.
2017 will see increased annual production and the continued
advancement of several new development initiatives".
2017 Guidance
The Company is currently targeting between an aggregate of
125,000 and 135,000 ounces of gold production for 2017 from its
operations at South Arturo and the recently acquired Mercedes Mine
in Sonora, Mexico.
The Mercedes Mine is also expected to produce 325,000 to 350,000
ounces of silver during 2017.
Production estimates for 2017 are derived from life of mine
operating plans prepared on the basis of mineral reserves
associated with each property. Assumptions underlying 2017 gold
production estimates for South Arturo and Mercedes are presented in
the table below.
USD, unless
otherwise noted
|
Guidance
2017
|
Mine
|
Gold Production
ounces
|
Realized Gold
Price
per ounce (i)
|
Cash Cost per
ounce (i)
|
AISC per ounce
(i)
|
South
Arturo
|
40,000 -
45,000
|
$1,250
|
$440 -
$470
|
$450 -
$480
|
Mercedes
|
85,000 -
90,000
|
$1,250
|
$680 -
$710
|
$810 -
$840
|
Consolidated
|
125,000 -
135,000
|
$1,250
|
$580 -
$610
|
$660 -
$690
|
Premier Gold Mines 2016 Fourth Quarter and Full-Year Results
- Conference Call
The Company will host the 2016 Fourth Quarter and Full-Year
results conference call and webcast Friday,
March 24, 2017 at 10:00 am
EDT.
Q4 and Full-Year 2016 Results Conference Call
Information
Toll Free (North
America): 1-888-231-8191
International: 1-647-427-7450
Conference ID: 79074602
Webcast Link
http://event.on24.com/r.htm?e=1376635&s=1&k=C5DB7DE53A0CCFF952BCBFC8ACCFFE79
The webcast replay will be available 1:00pm EDT on March 24,
2017 until 11:59 pm EST on
March 31, 2016.
Conference Call Replay
Toll Free Replay Call (North
America): 1-855-859-2056
International Replay Call: 1-416-849-0833
Passcode: 79074602
The conference call replay will be available from 1:00pm EDT on March 24,
2017 until 11:59 pm EST on
March 31, 2016.
Stephen McGibbon, P. Geo., is the
Qualified Person for the technical information contained in this
press release and is a Qualified Person within the meaning of
National Instrument 43-101.
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.
Non-IFRS Measures
The Company has included certain terms or performance measures
commonly used in the mining industry that are not defined under
International Financial Reporting Standards ("IFRS") in this
document. These include: earnings before interest, tax,
depreciation, amortization (EBITDA), cash cost per ounce sold, all
in sustaining cost ("AISC") per ounce sold and average realized
price per ounce. Non-IFRS measures do not have any standardized
meaning prescribed under IFRS, and therefore, they may not be
comparable to similar measures employed by other companies. The
data presented is intended to provide additional information and
should not be considered in isolation or as a substitute for
measures prepared in accordance with IFRS and should be read in
conjunction with the Company's consolidated financial
statements. Readers should refer to the Company's
Management's Discussion and Analysis under the heading "Non-IFRS
Measures" for a more detailed discussion of how such measures and
are calculated.
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 regarding the Company's achievement
of the full-year projections for ounce production , production
costs, ASIC costs per ounce, cash cost per ounce and realized gold
price per ounce, the Company's ability to meet annual operations
estimates, and 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