First Quarter Cash & Cash Equivalent Balance
Grows to CA$147.3 Million
Unless otherwise stated, all amounts discussed
herein are denominated in Canadian dollars. Please refer to the
Foreign Exchange Assumptions at the end of this press release for
US$ conversions.
Shares Issued: 201,530,687
THUNDER BAY, ON, May 10, 2017 /CNW/ - PREMIER GOLD MINES
LIMITED (TSX:PG) ("Premier", "the Company") is pleased to
announce its operational and financial results for the three months
ended March 31, 2017. The Company
previously released its gold production results for the first
quarter of 50,979 ounces of gold (see news release dated
January 12, 2017).
2017 First Quarter Consolidated Highlights
- Production of 50,979 ounces of gold and 88,572 ounces of
silver
- Gold sales of 51,593 ounces at an average realized
price(i) of CA$1,621 (US$1,224) per ounce
- Co-product cash costs(i) of US$385 per ounce of gold
- Co-product all-in sustaining costs ("AISC")(i) of
US$432 per ounce of gold
- Revenue of CA$85.3 million (US$64.4
million)
- Operating income of CA$28.4 million (US$21.5 million)
- Net income of CA$6.7 million (US$5.1
million)
- Quarter end cash balance of CA$147.3 million (US$110.7 million)
- Cash flow from operating activities of CA$37.9 million
(US$28.6 million) or CA$0.18/share
(US$0.14/share)
- Free cash flow of CA$27.6 million (US$20.7 million) or CA$0.13/share (US$0.10/share), after investing CA$9.2 million
(US$ 7.0 million) in exploration and
pre-development programs.
(i)
|
See "Non-IFRS
Measures" section. A cautionary note and further information
regarding Non-IFRS financial metrics is included in the "Non-IFRS
Measures" section of the Q1- 2017 Management's Discussion and
Analysis
|
Consolidated Financial Highlights – For the three months
ended March 31, 2017
Strong operating results for the quarter contributed to an
EBITDA of CA$44.6 million (US$33.7
million) and net income of CA$6.7 million (US$5.1 million) or CA$0.033/share (US$0.025/share). Production costs at
Mercedes were under budget as a result of cost-cutting initiatives
implemented at the mine. The Company remains on track to meet
production guidance of 125,000-135,000 ounces of gold in 2017.
These positive results contributed to the Company's strong
financial position with a CA$27.6 million (US$20.7 million) increase in cash and equivalents
to CA$147.3 million (US$110.7
million) and precious metals inventories of 22,772 ounces of
gold and 55,230 ounces of silver as at March
31, 2017.
Capital expenditures during the quarter were CA$6.0 million
(US$4.5 million) and exploration,
evaluation and pre-development costs were CA$9.2 million
(US$7.0 million). Debt
principal and interest paid during the quarter was CA$4.4 million
(US$3.3 million).
Millions CA$, except
for earnings/(loss) per share
|
Three months
ended March 31,
2017
|
Three months
ended March 31,
2017
|
|
|
|
Revenue
|
85.3
|
64.4
|
Mine Operating
Income
|
28.4
|
21.5
|
EBITDA (i)
|
44.6
|
33.7
|
Net income
(loss)
|
6.7
|
5.1
|
Earnings (loss) per
share
|
0.033
|
0.025
|
Change in
cash
|
27.6
|
20.7
|
|
|
|
|
|
|
Millions
CA$
|
Three months
ended March 31,
2017
|
Three months
ended March 31,
2016
|
|
|
|
EBITDA (i)
|
44.6
|
-11.2
|
Cash flow from
operating activities
|
37.9
|
-4.0
|
Cash and cash
equivalents
|
147.3
|
48.7
|
|
|
|
Millions
US$
|
|
|
EBITDA (i)
|
33.7
|
-8.5
|
Cash flow from
operating activities
|
28.6
|
-3.0
|
Cash and cash
equivalents
|
110.7
|
36.3
|
|
|
|
(i) Earnings before
interest, tax, depreciation and amortization
|
Operational Highlights – For the three months ended
March 31, 2017
Mercedes
Performance at the Mercedes Mine exceeded budget for the quarter
with the mine management team focused on all opportunities to
reduce costs and improve operating efficiencies. Mercedes
produced 22,164 ounces of gold and 88,572 ounces of silver in the
first quarter and generated net cash from operating activities of
CA$22.2 million (US$16.8
million).
Cash costs, on a co-product basis, were US$675 per ounce of gold (FY guidance
US$680-710/oz) and AISC, on a
co-product basis, were US$785 per
ounce of gold (FY guidance US$810-840/oz).
Key operational adjustments that resulted in lower operating
costs included a change in the primary mining method to modified
overhand cut and fill (from longhole) and replacing part of the
mining fleet with compact mining equipment designed specifically
for narrow mine workings. These changes reduced mining dilution and
increased operating efficiencies.
Other initiatives included; (1) waste reduction and recycling
initiatives; (2) reduced reliance on contractor services; and (3)
increased on-site maintenance capacity. These changes resulted in
reduced materials consumption, improved ground support and paste
backfill techniques and delivery methods, and increased equipment
availability.
When combined with the development of additional mine workings,
including access to the Diluvio deposit in mid-March, all of the
above initiative resulted in a sustained increase in mill
throughput during the quarter with daily processing rates now
regularly exceeding 2,000 tonnes per day.
Mercedes
Operational Results
|
|
|
|
in CA$, unless
otherwise stated
|
|
|
|
|
|
|
Three months
ended
March 31, 2017
|
|
|
|
|
Ore milled
|
|
tonnes
|
166,790
|
|
|
|
|
Gold
produced
|
|
ounces
|
22,164
|
Silver
produced
|
|
ounces
|
88,572
|
Gold sold
|
|
ounces
|
16,894
|
Silver
sold
|
|
ounces
|
73,834
|
|
|
|
|
Average gold
grade
|
|
grams/tonne
|
4.34
|
Average silver
grade
|
|
grams/tonne
|
43.90
|
|
|
|
|
Average gold recovery
rate
|
|
%
|
95.4
|
Average silver
recovery rate
|
|
%
|
37.3
|
|
|
|
|
Revenues and
realized prices
|
|
|
|
Gold
revenue
|
|
000s
|
26,890
|
Silver
revenue
|
|
000s
|
1,683
|
|
Total
revenues
|
|
000s
|
28,573
|
|
|
|
|
Average realized gold
price (i,ii)
|
|
$/ounce
|
1,592
|
Average realized
silver price (i,ii)
|
|
$/ounce
|
23
|
|
|
|
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
|
US$/oz
|
675
|
Co-product all in
sustaining costs per ounce of gold
sold (i,ii)
|
|
US$/oz
|
785
|
|
|
|
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
|
US$/oz
|
7.30
|
Co-product all in
sustaining costs per ounce of silver
sold (i,ii)
|
|
US$/oz
|
8.48
|
|
|
|
|
By-product cash costs
per ounce of gold sold (i,ii)
|
|
US$/oz
|
632
|
By-product all in
sustaining costs per ounce of gold
sold (i,ii)
|
|
US$/oz
|
746
|
(i)
|
See "Non-IFRS
Measures" section. A cautionary note regarding Non-IFRS metrics is
included in the "Non-IFRS Measures" section of the Q1-2017
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 Q1-2017 Management's Discussion and
Analysis
|
Capital expenditures during the quarter totaled CA$4.9 million
(US$3.7 million), including CA$1.5
million (US$1.1 million) in
underground sustaining development, CA$0.9 million (US$0.7 million) in equipment and building
infrastructure, CA$1.8 million (US$1.4
million) in underground expansion development and CA$0.7
million (US$0.5 million) in
exploration.
Exploration and development drilling ramped up steadily during
the quarter with nine operating drill rigs now active at site
including four underground rigs. The 2017 drilling program has been
increased to approximately 50,000 metres for the year and will
focus on several new vein zones that have been identified proximal
to existing mine workings. A more fulsome exploration and drilling
update will be provided in the near future.
South Arturo
Premier owns a 40% interest in the South Arturo Mine, which is
60% owned and operated by joint venture partner Barrick Gold. The mine was brought into
production in Q3-2016 and continues to operate at industry-low
production costs.
First quarter production, attributable to Premier, was 28,815
ounces of gold. A substantial stockpile remains to be
processed and mining will continue through the balance of the
second quarter. The mine is on track to meet the upper end of the
2017 full-year production guidance.
South Arturo
Operating Results
|
|
|
|
in CA$, unless
otherwise stated
|
|
|
|
|
|
|
Three months
ended
March 31, 2017
|
|
|
|
|
Ore milled
|
|
tonnes
|
154,053
|
|
|
|
|
Gold
produced
|
|
ounces
|
28,815
|
Gold sold
|
|
ounces
|
34,700
|
|
|
|
|
Average gold
grade
|
|
grams/tonne
|
6.55
|
Average gold recovery
rate
|
|
%
|
88.8
|
|
|
|
|
Revenues and
realized prices
|
|
|
|
Gold
revenue
|
|
000s
|
56,718
|
Average realized gold
price (i,ii)
|
|
$/ounce
|
1,635
|
|
|
|
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
|
US$/oz
|
244
|
Co-product all in
sustaining costs per ounce of gold sold
(i,ii)
|
|
US$/oz
|
261
|
(i)
|
See "Non-IFRS
Measures" section. A cautionary note regarding Non-IFRS metrics is
included in the "Non-IFRS Measures" section of the Q1-2017
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 Q1-2017 Management's Discussion and
Analysis
|
There were no material capital expenditures at South Arturo
during the first quarter.
The joint venture continues to advance and consider additional
development opportunities including a potential second open pit
(Phases 1&3) and the El Nino underground deposit.
Earlier in 2016, Barrick submitted permit applications for the
development of the El Nino Mine utilizing a ramp from the bottom of
the current open pit. Drilling at El Nino is expected be
completed in 2017 for initial mine planning.
McCoy-Cove
During the first quarter, the Company released a new mineral
resource estimate (see Table 1) for the McCoy-Cove property and
completed 9,321 feet of additional drilling (2,841
metres).
Table 1 – 2017 Mineral Resource Estimate, McCoy-Cove
Property
|
|
|
|
|
|
|
2017
McCoy-Cove
|
|
INDICATED
RESOURCES
GOLD
|
|
|
INFERRED
RESOURCES
GOLD
|
|
Zone
|
Tonnage (000
t)
|
Grade (g/t
Au)
|
Au Oz
(000's)
|
Tonnage (000
t)
|
Grade (g/t
Au)
|
Au Oz
(000's)
|
Helen
|
409
|
12.41
|
163
|
1,138
|
13.04
|
477
|
CSD
|
180
|
9.26
|
54
|
200
|
8.81
|
57
|
CSD Gap
|
25
|
14.49
|
12
|
1,458
|
11.59
|
543
|
2201-VG
|
-
|
-
|
-
|
582
|
13.09
|
245
|
TOTAL
|
614
|
11.57
|
228
|
3,378
|
12.17
|
1,322
|
Notes:
|
|
|
•
|
Please refer to
"Technical Report on the McCoy-Cove Gold Project, Lander County,
State of Nevada" dated April 15, 2017 on Sedar
|
|
•
|
CIM definitions were
followed for Mineral Resources.
|
|
•
|
Mineral resources
which are not mineral reserves do not have demonstrated economic
viability. The estimate of mineral resources may be
materially affected by environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant
issues.
|
|
•
|
Mineral Resources are
estimated at a cut-off grade of 5.6 g/t Au.
|
|
•
|
Mineral Resources are
estimated using a long-term gold price of US$1400 per ounce, and a
US$/C$ exchange rate of 1:1.25.
|
|
•
|
A minimum mining
width of 8 ft was used.
|
|
•
|
Bulk density is 2.1
t/m3 for CSD, GAP and Helen, and 2.6 t/m3 for 2201 &
VG.
|
|
•
|
Numbers may not add
due to rounding.
|
The company is working towards completing a Preliminary Economic
Assessment ("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. Premier has
initiated preliminary engineering, dewatering and baseline studies
required to advance the underground exploration PoO towards
development. Optimization and validation of the dewatering scenario
is ongoing including a pump test to confirm dewatering rates.
A full metallurgical test program is ongoing and will be completed
prior to initiating the PEA.
Hasaga
During the first quarter, the Company released a new resource
estimate for the 100%-owned Hasaga property following 48,197 metres
of drilling being completed in 2016. An initial mineral
resource estimate (see Table 2 below) was released in January of
2017.
Table 2 – Mineral Resource Estimate, Hasaga Property
|
|
|
|
|
|
|
2017
Hasaga
|
|
INDICATED
RESOURCES
GOLD
|
|
|
INFERRED
RESOURCES
GOLD
|
|
Zone
|
Tonnage (000
t)
|
Grade (g/t
Au)
|
Au Oz
(000's)
|
Tonnage (000
t)
|
Grade (g/t
Au)
|
Au Oz
(000's)
|
Central
|
31,613
|
0.79
|
803,900
|
23,733
|
0.76
|
582,700
|
Hasaga
|
9,050
|
0.89
|
258,100
|
806
|
1.00
|
26,000
|
Buffalo
|
1,632
|
1.18
|
61,900
|
604
|
1.12
|
21,800
|
TOTAL
|
42,294
|
0.83
|
1,123,900
|
25,143
|
0.78
|
630,500
|
Notes:
|
|
|
•
|
Please refer to
"National Instrument 43-101 Technical Report: Hasaga Project" dated
February 24, 2017 on Sedar.
|
|
•
|
Independent Qualified
Persons for the Hasaga Mineral Resources Estimate are Abderazzak
Ladidi P.Geo and Vincent Jourdain, Eng., Ph.D from MRB &
Associates and the effective date of the estimate is December 30th
2016
|
|
•
|
CIM definitions were
followed for Mineral Resources
|
|
•
|
Mineral resources
which are not mineral reserves do not have demonstrated economic
viability. The estimate of mineral resources may be
materially affected by environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant
issues.
|
|
•
|
The estimate includes
13 mineralized zones (3 in Buffalo sector, 6 in Hasaga sector, 4 in
Central sector) and 2 lithological envelopes
|
|
•
|
High gold assays were
capped at 15 g/t
|
|
•
|
Bulk density data
were averaged on a per zone basis (1220, 1230, 1320:2.71 t/m3;
1330, 1510, 1540, 2399: 2.72 t/m3; 1520, 1525: 2.74 t/m3; 1210,
1340: 2.75 t/m3; 1515, 2599: 2.77 t/m3; 1530: 2.79 t/m3; 1310: 2.83
t/m3)
|
|
•
|
Resources were
evaluated from drill hole and channel samples using a 5-pass ID2
interpolation in a block model (block size = 5 x 5 x
5metres)
|
|
•
|
Open pit resources
are constrained to the property limit in an optimized pit shells at
a cut-off grade of 0.5 g/t Au
|
|
•
|
Pit shell
optimization parameters: Mining cost = CAD$2.50/t, milling cost =
CAD$12.00/t, G&A = CAD$3.00/t, Gold price US$1400/oz (exchange
rate CAD$1.30 = US$1.00), milling recovery = 94%, mining recovery =
100%, mining dilution = 0.0%, pit slope = 55°
|
|
•
|
Totals may not add
correctly due to rounding
|
Drilling in 2017 will be focused of testing underground targets
in Red Lake.
CEO Commentary
Ewan Downie, President and CEO
stated, "We are very pleased with the strong results from both
operations providing a solid balance sheet that provides Premier
with the financial flexibility to carry out its future growth
plans. Our low-cost production profile and growing reserves are
expected to continue to generate strong cash flow well into the
future."
2017 Guidance
The Company reiterates its 2017 production guidance of between
125,000 and 135,000 ounces of gold and between 325,000 to 350,000
ounces of silver.
Production estimates for 2017 are derived from life of mine
operating plans prepared on the basis of mineral reserves
associated with each property. Assumptions underlying 2017 gold
production estimates for South Arturo and Mercedes are presented in
the tables below.
US$, unless
otherwise noted
Mine
|
2017 Gold
Production Guidance
|
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 -
$690
|
(i)
|
See "Non-IFRS
Measures" section. A cautionary note regarding Non-IFRS metrics is
included in the "Non-IFRS Measures" section of the Q1-2017
Management's Discussion and Analysis
|
Conference Call
The Company will host a conference call and webcast,
May 11, 2017 at 10:00 am EDT.
Toll Free (North
America):
1-888-231-8191
International:
1-647-427-7450
Conference ID: 18889357
Webcast
URL: https://event.on24.com/wcc/r/1422375/03833F969F294F9A09E50A91D1990181
The webcast replay will be available 1:00pm EDT on May 11,
2017 until 11:59 pm EST on
May 18, 2017.
Conference Call Replay
Toll Free Replay Call (North
America): 1-855-859-2056
International Replay Call: 1-416-849-0833
Passcode: 18889357
The conference call replay will be available from 1:00pm EDT on May 11,
2017 until 11:59 pm EST on
May 18, 2017.
Stephen McGibbon, P. Geo., is the
Qualified Person for the information contained in this press
release and is a Qualified Person within the meaning of National
Instrument 43-101. Assay results from Hasaga are from core
samples sent to either Accurassay Laboratories or Activation Labs,
both accredited mineral analysis laboratories in Thunder Bay, Ontario, for preparation and
analysis utilizing both fire assay and screen metallic methods.
Drill samples from McCoy-Cove were sent to ALS Laboratories in
Reno, Nevada for analysis with the
analytical facility utilizing 30 gram fire assay with an AA finish
for RC samples and 30 gram fire assay with AA finish and ICP-MS 30
element scan from 4-acid digestion for core samples. Over-limit
samples receive an automatic gravimetric finish.
Premier Gold Mines Limited is a gold producer and
respected exploration and development company with a high-quality
pipeline of precious metal projects in proven, accessible and safe
mining jurisdictions in Canada,
the United States, and
Mexico.
Foreign Exchange Assumptions
The Company's formal reporting currency is CA$ however for
convenience to the reader of this press release, US$ are also
quoted. Exchange rates used in this press release are sourced
from The Bank of Canada,
http://www.bankofcanada.ca/rates/exchange/. The balance sheet
closing rate at March 31, 2017 was
$1.33100 and the income statement
year to date weighted average closing rate at March 31, 2017 used was $1.32377.
Non-IFRS Measures
The Corporation 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: 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
Corporation's consolidated financial statements. Readers
should refer to the Corporation's Management 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 about production and exploration
potential and the Mercedes mine, South Arturo, McCoy-Cove and
Hasaga, 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, preliminary economic assessment 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