VANCOUVER, April 4, 2017 /CNW/ - INCA ONE GOLD
CORP. (TSXV: IO, Frankfurt: SU9.F, SSEV: IOCL)
("Inca One" or the "Company") reports its
interim consolidated financial statements for the third quarter
ended January 31, 2017 ("Q3
2017") and the accompanying management's discussion and
analysis ("MD&A"). All figures in this press
release are in Canadian dollars unless stated otherwise. These
documents have been filed electronically with SEDAR and will be
available on the Company's website.
Restructuring Enacted in Q2 2017
During Q2 2017 the Company enacted a comprehensive capital
restructuring (the "Restructuring") which negotiated
approximately $13.5 million of the
Company's long and short term debt into 20.3 million common shares,
10.7 million warrants, and approximately $4.6 million debt and warrant liabilities of
which approximately $1.7 million was
repaid during the nine months ended Q3 2017. Concurrently the
Company also raised approximately $6.3
million in gross proceeds from two tranches of a private
placement. These proceeds were used in priority towards working
capital to ramp-up operations at the Chala One SAC plant (the
"Chala Plant") as well as certain settlement payments.
Q3 2017 Operational Highlights
- Mineral purchases were 6,459 tonnes in Q3 2017 as compared with
3,522 tonnes in Q3 2016, an increase of 83%.
- Mineral processed was 7,298 tonnes in Q3 2017 as compared with
3,853 tonnes in Q3 2016, an increase of 89%, including an all-time
company high of 2,985 tonnes in December
2016.
- Average grade of gold processed was 0.50 ounces/tonne in Q3
2017 as compared to 0.60 ounces/tonne in Q3 2016, a decrease of
17.4%.
- Gold production was 3,149 ounces in Q3 2017, compared with
2,015 ounces in Q3 2016, an increase of 56%.
- Sales of approximately $5.1
million were achieved in Q3 2017, compared with $3.1 million in the same quarter in Q3 2016, an
increase of 63%.
- Daily throughput averaged 79.3 tonnes per day ("TPD") in Q3
2017, as compared to 45.1 TPD in Q3 2016, an increase of 76%.
- In December 2016, the Chala Plant
operated successfully in excess of 100 TPD for approximately 20
days including throughput up to 130 TPD (to compensate for lower
production days, as applicable).
- As at January 31, 2017, there
were approximately 181 ounces of finished goods gold inventory, 180
ounces of gold in process inventory, and 165 ounces of gold in 230
tonnes of stockpiled material.
Post-Restructuring Highlights - Q2 2017 and Q3 2017
For analysis purposes the post-Restructuring period began in Q2
2017. Analysis below includes results of Q3 2017 and Q2 2017
combined which is a critical component to evaluate the
post-Restructuring performance of the Company.
On a post-Restructuring basis (Q3 2017 and Q2 2017 combined) the
Company had gold and silver sales of $7,494,745 with total cost of goods sold of
$7,475,474 resulting in a gross
margin of $19,271. This
post-Restructuring period processed approximately 10,368 tonnes of
mineral with an average gold grade of 0.49 ounces/tonne at an
average daily processing volume of 65.7 TPD.
Quarter over
Quarter highlights
|
Q3 2017
|
Q2
2017
|
Q1 2017
|
Variance
% Q3 to
Q2
|
Variance
% Q2 to
Q1
|
Tonnes processed in
COGS (t)
|
6,970
|
2,860
|
2,399
|
143.8%
|
19.2%
|
Tonnes processed in
period (t)
|
7,298
|
3,070
|
2,370
|
137.8%
|
29.5%
|
Average daily
processing volume (t)
|
79.3
|
33.4
|
25.8
|
137.8%
|
29.5%
|
Mineral grade
processed (oz/t gold)
|
0.50
|
0.46
|
0.51
|
6.8%
|
(8.9%)
|
Gold sold
(equivalent) (oz)
|
3,208
|
1,399
|
1,256
|
129.2%
|
11.4%
|
Gold sold
(oz)
|
3,149
|
1,367
|
1,227
|
130.3%
|
11.5%
|
Silver sold
(oz)
|
4,119
|
2,256
|
2,173
|
82.6%
|
3.8%
|
Sales revenue
($)
|
5,056,691
|
2,438,054
|
2,075,562
|
107.4%
|
17.5%
|
Cost of goods sold
("COGS") ($)
|
5,594,639
|
1,880,835
|
2,394,169
|
197.5%
|
(21.4%)
|
Gross operating
margin (deficit) ($)
|
(537,948)
|
557,219
|
(318,607)
|
(196.5%)
|
(274.9%)
|
Revenue per tonne
($)
|
725
|
853
|
865
|
(14.9%)
|
(1.5%)
|
Cost per tonne
($)
|
803
|
658
|
998
|
22.0%
|
(34.1%)
|
Gross margin per
tonne ($)
|
(77)
|
195
|
(133)
|
(139.5%)
|
(246.6%)
|
Average gold price
per oz sold ($)
|
1,576
|
1,742
|
1,652
|
(9.5%)
|
5.4%
|
Cost per oz sold
($)
|
1,744
|
1,344
|
1,906
|
24.1%
|
(25.8%)
|
Gross margin per oz
sold ($)
|
(168)
|
398
|
(254)
|
(142.2%)
|
(256.7%)
|
Average London Close
price ($)
|
1,593
|
1,721
|
1,674
|
(7.4%)
|
2.8%
|
Average London Close
price ($USD)
|
1,196
|
1,312
|
1,291
|
(8.8%)
|
1.6%
|
Results of Operations – Q3 2017 compared to Q3 2016
Revenue for Q3 2017 was $5,056,691
and cost of goods sold was $5,594,639
resulting in a gross deficit of $537,948. Comparable revenues for Q3 2016 were
$3,105,726 and cost of goods sold was
$3,710,062 resulting in a gross
deficit of $604,336. The primary
reason for the deficit in Q3 2017 is due to the Company incurring
one-time post-Restructuring ramp up costs including required
maintenance on the Chala Plant, re-establishing the mineral
purchase team and purchase zones, and certain December accruals
relating to prior periods.
During Q3 2017, the Company reported a net loss of $2,211,970, a decrease from the net loss of
$2,656,596 during Q3 2016, primarily
as a result of cost cutting measures. The most significant
components of the loss were (in addition to the gross operating
deficit of $537,948), a net
restructuring loss of $524,490,
management fees and salaries of $373,939; office, rent, utilities, insurance and
other of $171,596, and finance costs
of $293,735.
The Company recorded a net restructuring deficit of $524,490 composed of restructuring costs of
$207,665, amortized marketing
restructuring costs of $322,929.
There were no restructuring costs in the comparable period.
Management fees and salaries during Q3 2017 decreased by
$177,369 to $373,939 compared to $551,308 during Q3 2016, primarily due to cost
cutting measures in fiscal 2017.
Finance costs during Q3 2017 decreased by $266,518 to $293,735 compared to $560,253 during Q3 2016 primarily due to
significantly lower debt and interest post-Restructuring.
Commenting on the Company's performance, Chief Financial Officer
Oliver Foeste said, "2016 was a
highly transitional year for Inca One with the comprehensive
balance sheet Restructuring and refinancing which enabled the
Company to begin its operational ramp up plan for Chala One
beginning in Q2 2017. The benefits of the Restructuring were not
fully realized by the Company during Q3 2017 as the Company
incurred many ramp-up costs while production levels were gradually
increasing. Overall we have been very pleased with our Peruvian
team's progress, and that we realized a positive gross margin at an
average daily processing volume of 66 TPD over the
post-Restructuring period. We plan to focus on continued
improvement to our bottom line and operational effectiveness in the
coming quarters."
Beneficial Permit Received at Chala Plant
During the three months ended January 31,
2017, the final permitting steps were completed to attain
the beneficial permit at the Chala Plant and transfer of the
beneficial permit to the control of the Company was enacted during
this time. As part of the terms of the original purchase agreement
for the Chala Plant, Inca One had an agreement between its wholly
owned subsidiary, Chala One, and the seller and initial permit
applicant, to operate under the umbrella of formalization until the
successful completion of all the environmental and operating
permits. With completion of the beneficial permit allowing 100 TPD
production capacity, the Company will be proceeding with the
application of commercial permits to incrementally increase
capacity up to 350 TPD. The Chala Plant currently sits on 21
hectares of land, and has ample room for plant expansion.
About Inca One
Inca One is a Canadian-based mineral processing company. The
Company's activities consist of the production of gold and silver
from the processing of purchased minerals located in Peru. Peru is
the 6th largest producer of gold in the world and the Peruvian
government estimates the small scale mining sector accounts for a
significant portion of all Peruvian gold production, to be valued
at approximately US$3 billion
annually. The Company purchases its minerals from government
registered small-scale mining producers from various regions and
processes it at its Chala One milling facility located in Chala,
Southern Peru.
On behalf of the Board,
Edward Kelly,
President and CEO
INCA ONE GOLD CORP.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS NEWS RELEASE.
Statements regarding the Company which are not historical facts
are "forward-looking statements" that involve risks and
uncertainties. Such information can generally be identified by the
use of forwarding-looking wording such as "may", "expect",
"estimate", "anticipate", "intend", "believe" and "continue" or the
negative thereof or similar variations. Since forward-looking
statements address future events and conditions, by their very
nature, they involve inherent risks and uncertainties. Actual
results in each case could differ materially from those currently
anticipated in such statements due to factors such as: (i)
fluctuation of mineral prices; (ii) a change in market conditions;
and (iii) the fact that the Company has limited operating
experience with its Chala plant and future operational results may
not be accurately predicted based on this limited information to
date. Except as required by law, the Company does not intend
to update any changes to such statements. Inca One believes
the expectations reflected in those forward-looking statements are
reasonable but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements
included herein should not be unduly relied upon.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state in which such offer, solicitation, or
sale would be unlawful prior to registration or qualification under
the securities laws of any such state.
SOURCE Inca One Gold Corp.