ALL AMOUNTS DISCUSSED HEREIN ARE
DENOMINATED IN U.S. DOLLARS
THUNDER BAY, ON, Aug. 6, 2019 /CNW/ - Premier Gold Mines
Limited ("Premier" or "The Company")
(TSX:PG) is pleased to report operating results for the
three months ended June 30, 2019. The
Company previously released second quarter production results on
July 17, 2019.
Premier is a growth-oriented, Canadian-based mining company
involved in the exploration, development and production of gold and
silver deposits in Canada,
the United States and
Mexico. The company manages a high-quality pipeline of
precious metal projects in safe, proven, and accessible mining
jurisdictions and is focused on profitable low-cost production from
its two producing gold mines and the ongoing development of
multiple advanced-stage, multi-million ounce gold deposits.
Highlights
- Production of 16,450 ounces of gold and 51,792 ounces of silver
for the quarter, 34,064 ounces of gold and 109,473 ounces of silver
year to date
- Cash costs1 of $1,014
per ounce of gold sold for the quarter, $910 per ounce of gold sold year to date
- AISC1 of $1,228 per
ounce of gold sold for the quarter, $1,166 per ounce of gold sold year to date
- Revenue of $23.0 million for the
quarter, $46.1 million year to
date
- Mine operating loss of $0.7
million for the quarter, mine operating income of
$3.0 million year to date
- Mine development at El Nino continues to advance ahead of
schedule
CEO Commentary
"With stronger production expected during the second half of the
year at Mercedes, and near-term production from the ongoing
construction of the El Nino and Phase I projects at South Arturo,
we look to a future highlighted by growing production and cash
flow" stated Ewan Downie, President
& CEO. "Ongoing permitting initiatives at the Cove and Hardrock
projects provide a peer-best organic growth profile complemented by
a portfolio of high-potential exploration-stage assets".
Three months ended June 30,
2019
Q2 2019 consolidated production is 16,450 gold ounces and 51,792
silver ounces, comparable to Q2 2018.
The Company reported total revenue of $23.0 million and a mine operating loss of
$0.7 million during Q2 2019 compared
to revenue of $27.5 million and a
mine operating loss of $1.2 million
during Q2 2018.
The slight increase in Q2 2019 production when compared to Q2
2018 is due to the improvement in Mercedes gold production from
13,780 to 15,532 ounces offset by the reduction in South Arturo
ounces related to the planned transition from operations to
development over the past year. South Arturo operations
continue to transition from Phase 2 open pit mining to Phase 1 open
pit and El Nino underground operations where development is under
way and production is expected in the second half of
2019.
The Company continues to focus on near term exploration and
pre-development initiatives that will support its longer-term
objective of achieving increased annual production over the next
several years. A total of $5.4
million in exploration and pre-development expenses were
incurred during Q2 2019. These expenses, when factored with
the mine operating loss and non-cash expenses of $2.4 million, contributed to a loss of
$10.1 million reported for the
quarter. A total of $12.4
million in capital expenditures were incurred during the
quarter, including $5.9 million for
mine development and construction at South Arturo, $1.8 million for development at McCoy-Cove, and
the balance for sustaining and expansion related activities at
Mercedes.
Six months ended June 30,
2019
A total of 34,064 ounces of gold and 109,473 ounces of silver
were produced for the six months ended June
30, 2019 compared to 46,557 ounces of gold and 111,572
ounces of silver for the prior year period.
The Company reported total revenue of $46.1 million and mine operating income of
$3.0 million for the six months ended
June 30, 2019 compared to revenue of
$66.6 million and mine operating
income of $8.4 million for the prior
year period. The reduction in production, revenue and operating
income, when compared to the prior year period, is due to the
hiatus in production at South Arturo.
A total of $11.5 million in
exploration and pre-development expenses were incurred during the
six months ended June 30, 2019.
These expenses, when factored with the mine operating income,
contributed to a net loss of $10.7
million reported for the year to date. A total of
$25.8 million in capital expenditures
were incurred during the period, including $10.6 million for mine development and
construction at South Arturo, $4.5
million for development at McCoy-Cove, and the balance for
sustaining and expansion related activities at
Mercedes.
The Company closed the quarter with cash and cash equivalents of
$26.4 million, inventory of 1,353
ounces of gold and 4,588 ounces of silver and an undrawn
$50 million credit facility in
place.
Consolidated operating results are provided in Table 1
below.
Table 1: Selected Consolidated Operational and Financial
Information
|
|
|
|
|
|
Three months
ended
June 30
|
Six months
ended
June 30
|
(in millions of
U.S. dollars, unless otherwise stated)
(iii)
|
|
2019
|
2018
|
2019
|
2018
|
Ore milled
|
tonnes
|
176,035
|
177,821
|
354,806
|
491,671
|
|
|
|
|
|
|
Gold
produced
|
ounces
|
16,450
|
16,007
|
34,064
|
46,557
|
Silver
produced
|
ounces
|
51,792
|
51,746
|
109,473
|
111,572
|
Gold sold
|
ounces
|
17,358
|
20,642
|
34,878
|
49,917
|
Silver
sold
|
ounces
|
56,484
|
58,098
|
119,065
|
124,308
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,283
|
1,283
|
1,277
|
1,293
|
Average realized
silver price (i,ii)
|
$/ounce
|
15
|
16
|
15
|
16
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,014
|
963
|
910
|
811
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,228
|
1,088
|
1,166
|
934
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
12
|
12
|
11
|
11
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
15
|
13
|
14
|
13
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,005
|
949
|
895
|
798
|
By-product all- in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,227
|
1,079
|
1,162
|
924
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
22.2
|
26.4
|
44.3
|
64.4
|
Silver
revenue
|
m $
|
0.8
|
1.1
|
1.8
|
2.3
|
Total
revenue
|
m $
|
23.0
|
27.5
|
46.1
|
66.6
|
Mine operating income
/ (loss)
|
m $
|
(0.7)
|
(1.2)
|
3.0
|
8.4
|
Net loss
|
m $
|
(10.1)
|
(7.7)
|
(11.0)
|
(9.7)
|
Earnings / (loss) per
share
|
/share
|
(0.05)
|
(0.04)
|
(0.05)
|
(0.05)
|
EBITDA
(i,ii)
|
m $
|
(3.7)
|
0.4
|
0.8
|
9.8
|
Cash & cash
equivalents balance
|
m $
|
26.4
|
67.8
|
26.4
|
67.8
|
Cash flow from
operations
|
m $
|
(3.4)
|
(0.7)
|
(8.2)
|
(0.4)
|
Free cash flow
(i,ii)
|
m $
|
(15.9)
|
(6.8)
|
(34.0)
|
(11.7)
|
Exploration,
evaluation & pre-development expense
|
m $
|
5.4
|
6.2
|
11.5
|
12.6
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
12.4
|
6.1
|
25.8
|
11.4
|
Capital
expenditures - sustaining (i,ii)
|
m $
|
2.4
|
1.8
|
6.6
|
3.6
|
Capital
expenditures - expansionary (i,ii)
|
m $
|
10.0
|
4.3
|
19.2
|
7.8
|
|
|
(i)
|
A cautionary note
regarding Non-IFRS financial metrics is included in the "Non-IFRS
Measures" section of this Management's Discussion and
Analysis.
|
(ii)
|
Cash costs, all-in
sustaining costs, free cash flow, EBITDA, sustaining and
expansionary capital expenditures as well as average realized
goldsilver price per ounce are Non-IFRS metrics and discussed in
the section "Non-IFRS Measures" of this Management's Discussion and
Analysis.
|
(iii)
|
May not add due to
rounding.
|
Mercedes
The Mercedes Mine is 150 kilometres northeast of the city of
Hermosillo in the state of Sonora, Mexico. Operations are
exploiting low-sulfidation quartz veins and quartz veinlet
stockwork for gold and silver with an ore extraction rate targeting
2,000 tonnes per day. Quarter and year to date operating
results are provided in Table 2 below.
Table 2: Mercedes Selected Financial and Operating Results
|
|
|
|
|
|
Three months
ended
June 30
|
Six months
ended
June 30
|
(in millions of
U.S. dollars, unless otherwise
stated) (iii)
|
|
2019
|
2018
|
2019
|
2018
|
Ore &
Metals
|
|
|
|
|
|
Ore milled
|
tonnes
|
167,588
|
154,442
|
346,359
|
322,756
|
Gold
produced
|
ounces
|
15,532
|
13,780
|
33,146
|
28,789
|
Silver
produced
|
ounces
|
51,354
|
44,366
|
109,035
|
101,736
|
Gold sold
|
ounces
|
16,440
|
14,673
|
33,960
|
31,853
|
Silver
sold
|
ounces
|
56,484
|
58,098
|
119,065
|
124,308
|
Average gold
grade
|
grams/t
|
3.00
|
2.90
|
3.10
|
2.91
|
Average silver
grade
|
grams/t
|
27.24
|
23.82
|
27.28
|
27.97
|
Average gold recovery
rate
|
%
|
95.9
|
95.8
|
96.1
|
95.50
|
Average silver
recovery rate
|
%
|
35.0
|
37.5
|
35.9
|
35.10
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,283
|
1,269
|
1,277
|
1,279
|
Average realized
silver price (i,ii)
|
$/ounce
|
15
|
16
|
15
|
17
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,053
|
1,161
|
926
|
1,031
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,254
|
1,325
|
1,177
|
1,201
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
12
|
12
|
11
|
11
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
15
|
13
|
14
|
13
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,044
|
1,142
|
911
|
1,010
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,252
|
1,312
|
1,173
|
1,187
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
21.0
|
18.5
|
43.1
|
40.6
|
Silver
revenue
|
m $
|
0.8
|
1.1
|
1.8
|
2.3
|
Total
revenue
|
m $
|
21.8
|
19.6
|
44.9
|
42.8
|
Mine operating income
/ (loss)
|
m $
|
(1.3)
|
(4.7)
|
2.4
|
(2.3)
|
Exploration,
evaluation & pre-development expense
|
m $
|
0.1
|
0.0
|
0.7
|
0.7
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
4.5
|
4.4
|
10.6
|
8.8
|
Capital
expenditures - sustaining (i,ii)
|
m $
|
2.4
|
1.8
|
6.6
|
3.6
|
Capital
expenditures - expansionary (i,ii)
|
m $
|
2.0
|
2.6
|
4.0
|
5.2
|
(i)
|
A cautionary note
regarding Non-IFRS financial metrics is included in the "Non-IFRS
Measures" section of this Management's Discussion and
Analysis.
|
(ii)
|
Cash costs, all-in
sustaining costs, sustaining and expansionary capital expenditures
as well as average realized goldsilver price per ounce are Non-IFRS
metrics and discussed in the section "Non-IFRS Measures" of this
Management's Discussion and Analysis.
|
(iii)
|
May not add due to
rounding.
|
Mine production at Mercedes during Q2 2019 was 15,532 ounces of
gold and 51,354 ounces of silver compared to 13,780 ounces of gold
and 44,366 ounces of silver during the Q2 2018. Year to date,
mine production totalled 33,146 ounces of gold and 109,035 ounces
of silver compared to 28,789 ounces of gold and 101,736 ounces of
silver in the prior year to date. The increased gold production is
the result of higher mined grades upon transitioning to the new Rey
de Oro and Lupita zones as well as
consistent stope production from the Diluvio zone. Unit
operating costs at Mercedes during the period, on a co-product
basis, were cash costs (1) of $1,053 and all-in sustaining costs (AISC)
(1) of $1,254 per ounce of
gold sold and year to date, on a co-product basis, cash costs
(1) of $926 and all-in
sustaining costs (AISC) (1) of $1,177 per ounce of gold sold. To date,
sustaining capital costs at Mercedes are $6.6 million.
Although production from Mercedes in 2019 is weighted to the
second half with increased output from Diluvio planned to account
for approximately half of the gold ounces produced, it is trending
towards the low end of guidance and the high-end of projected
costs. Mining during the second half of the year will draw
more heavily on the Rey de Oro and
Lupita zones where grades are higher which should help to bring
down costs.
Exploration activities continued during the quarter with a total
of 11,281 meters of drilling targeting Diluvio, Marianas and
Barrancas veins to replace
reserves, support mine production, test extensions of the main mine
trends and to test new geological targets.
Capital expenditures were primarily required for exploration and
underground mine development to support transition to the new
mining zones. For Q2 2019, total capital expenditures at Mercedes
were $4.5 million which includes
$2.4 million of sustaining capital,
$1.2 million of exploration capital
and $0.7 million of expansionary
capital. Capital spending in the Q2 2018 was $4.4 million.
South Arturo
The South Arturo Mine in Nevada
is a joint venture operated by Barrick Gold Corporation
("Barrick"), where mining of the Phase 2 open pit has concluded and
construction is underway on two new mining centers; the El Nino
underground operations and the Phase 1 open pit which are expected
to ramp up production in 2019 and 2020, respectively. Capital
expenditures of $5.9 million were
incurred during the second quarter, $10.6
million year to date, primarily for stripping for the Phase
1 open pit and underground ramp development at El Nino.
Mine development at El Nino is advancing ahead of schedule with
processing of ore now expected to begin during the current
quarter.
Exploration activities are focused on opportunities near
existing mine infrastructure, including further refinement of a
potential heap leach operation, and resource definition and
expansion drilling from underground drill stations located within
El Nino underground workings.
Table 3: South Arturo Selected Financial and Operating
Results
|
|
|
|
|
|
Three months
ended
June 30
|
Six months
ended
June 30
|
(in millions of
U.S. dollars, unless otherwise
stated) (iv)
|
|
2019
|
2018
|
2019
|
2018
|
Ore &
Metals
|
|
|
|
|
|
Ore milled
|
tonnes
|
8,447
|
23,379
|
8,447
|
168,915
|
Gold
produced
|
ounces
|
918
|
2,227
|
918
|
17,767
|
Gold sold
|
ounces
|
918
|
5,969
|
918
|
18,064
|
Silver
produced
|
ounces
|
438
|
7,380
|
438
|
9,836
|
Average gold
grade
|
grams/t
|
4.52
|
3.58
|
4.52
|
3.90
|
Average gold recovery
rate
|
%
|
82.5
|
82.8
|
82.5
|
83.9
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,271
|
1,318
|
1,271
|
1,318
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
308
|
475
|
308
|
424
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
768
|
506
|
768
|
461
|
By-product cash costs
per ounce of gold sold (i,ii,iii)
|
$/ounce
|
308
|
475
|
308
|
424
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii,iii)
|
$/ounce
|
768
|
506
|
768
|
461
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
1.2
|
7.9
|
1.2
|
23.8
|
Mine operating
income
|
m $
|
0.7
|
3.5
|
0.7
|
10.7
|
Exploration,
evaluation & pre-development expense
|
m $
|
0.1
|
0.6
|
0.1
|
0.7
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
5.9
|
1.6
|
10.6
|
2.0
|
Capital
expenditures - sustaining (i,ii)
|
m $
|
0.0
|
0.0
|
0.0
|
0.0
|
Capital
expenditures - expansionary (i,ii)
|
m $
|
5.9
|
1.6
|
10.6
|
2.0
|
|
|
(i)
|
A cautionary note
regarding Non-IFRS metrics is included in the "Non IFRS Measures"
section of this Management's Discussion and Analysis.
|
(ii)
|
Cash costs, all-in
sustaining costs, sustaining and expansionary capital expenditures
as well as average realized goldsilver price per ounce are Non-IFRS
metrics and discussed in the section "Non-IFRS Measures" of this
Management's Discussion and Analysis.
|
(iii)
|
Given the small
nature and timing of South Arturo silver output, no silver
by-product credits are reported
|
(iv)
|
May not add due to
rounding.
|
Cove and McCoy-Cove
A Preliminary Economic Assessment ("PEA") was completed for the
Cove Helen-Gap deposits in the first half of 2018, including
designs for underground exploration development and drilling,
preliminary engineering, dewatering, environmental baseline
studies, and a life of mine plan. During the second quarter
of 2019, drilling the first of two new water wells required for
groundwater modelling were completed. Pump tests, interpretation of
results, and groundwater modeling will be completed in the second
half of the year. This work, as well as an underground exploration
ramp and infill drilling, will provide critical inputs for a
feasibility study.
On the ground surrounding the Cove Project, Barrick continues to
explore and earn-in to the McCoy-Cove joint venture. Several
regional targets were identified, and 1,977 meters of drilling was
completed. Ongoing drilling is focused on testing for
mineralization in the Favret and Dixie
Valley rock formations that host the deposits on the
carve-out lands 100% owned by Premier. Drilling has
intersected mineralization and alteration at several target areas
including Antenna, Lighthouse, Alpha, and Windy Point.
Greenstone Gold Mines
The Greenstone Gold property is located in northern Ontario, Canada approximately 275 kilometres
northeast of Thunder Bay,
Ontario. Premier has a 50% partnership interest in the
Greenstone Partnership, which owns the Greenstone Gold development
property, including the Hardrock deposit, that hosts mineral
reserves of 4.65 million ounces of gold. Hardrock has received both
Federal and Provincial EA (Environmental Assessment) approvals for
the project and recently completed a two-phase drilling campaign
designed to validate and de-risk the 2016 Feasibility Study block
model.
During the second quarter, the Greenstone Partnership continued
to work towards updating the Hardrock open pit resource model using
the results from drilling campaigns completed in 2018 and 2019,
which consisted of 38,000 metres drilled on the principal zones of
the initial mine plan. The Greenstone Partnership has
obtained provincial and federal environmental assessment and is in
the process of submitting applications for permits.
During the second quarter and first half of 2019, the Greenstone
Partnership spent $8.0 million and
$14.8 million respectively, mainly on
advancing detailed engineering on infrastructure programs, on a
core and reverse circulation drilling program (completed in May)
and incorporating drilling results into an updated resource model,
on permitting activities, and on advancing the agreements with
potentially affected Indigenous groups. As at June 30, 2019, Centerra's funding towards its
C$185 million commitment in the
Greenstone Partnership totalled C$110
million ($84.9
million).
All abbreviations used in this press release are available by
following this link (click
here).
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 samples were sent to ALS
Laboratories prep facilities located in Elko, Nevada and Reno, Nevada and analysis was performed at
their Vancouver, Canada analytical
facility utilizing 30-gram fire assay with an AA finish for Au and
ICP-MS 48 elements scan from 4-acid digestion for RC and Core
samples. For a complete description of Premier's sample
preparation, analytical methods and QA/QC procedures refer to the
technical report dated June 29, 2018 (effective date
March 31, 2018), entitled "Preliminary Economic Assessment for
the Cove Project, Lander County,
Nevada" located on Premier's website and at
www.sedar.com.
Q2 financial results and conference call details:
Senior management will be hosting a conference call to discuss
these results at 10:00am EST on
August 7, 2019.
Details for the conference call and webcast can be found below
and will be accessible on the Company's website.
Toll Free (North America): (+1)
888 390 0605
International: (+1) 416 764 8609
Conference ID: 61236542
Webcast
Link
https://event.on24.com/wcc/r/2048664/19E82578B099665BFCD580E9828E4B74
Conference Call Replay
The conference call replay will
be available from 1:00pm EST on
August 7, 2019 until 11:59pm EST on August 14, 2019.
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- A cautionary note regarding Non-IFRS financial metrics is
included in the "Non-IFRS Measures" section of the June 30, 2019 Management Discussion and
Analysis.
Non-IFRS Measures
The Company has included certain terms and performance measures
commonly used in the mining industry that are not defined under
International Financial Reporting Standards ("IFRS") within this
document. These include: cash cost per ounce sold, all in
sustaining cost ("AISC") per ounce sold, earnings before interest,
tax, depreciation and amortization ("EBITDA"), adjusted earnings
before interest, tax, depreciation and amortization ("Adjusted
EBITDA"), adjusted earnings / (loss) per share, free cash flow,
capital expenditures (expansionary), capital expenditures
(sustaining) 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 Discussion and Analysis under the heading
"Non-IFRS Measures" for a more detailed discussion of how such
measures 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 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