ALL AMOUNTS DISCUSSED HEREIN ARE
DENOMINATED IN U.S. DOLLARS
THUNDER BAY, ON, Nov. 13, 2019 /CNW/ - Premier Gold Mines
Limited ("Premier" or "The Company")
(TSX:PG) (OTCPK: PIRGF) is pleased to report
operating results for the three months ended September 30, 2019. The Company previously
released third quarter production results on October 30, 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 several advanced-stage, multi-million ounce gold
deposits.
Consolidated Highlights
|
Third
Quarter
|
Year to
date
|
· Gold
Production
|
16,484
ounces
|
50,547
ounces
|
· Silver
Production
|
37,856
ounces
|
147,328
ounces
|
·
Cash costs1
|
$1,095 / oz gold
sold
|
$961 / oz gold
sold
|
·
AISC1
|
$1,354 / oz gold
sold
|
$1,218 / oz gold
sold
|
·
Revenue
|
$18.7 million
|
$64.9 million
|
· Mine
operating Income (loss)
|
($0.4 million)
|
$2.6 million
|
· 953 ounces
of pre-production gold recovered at South Arturo
|
· Commercial
production at El Nino achieved in September
2019
|
CEO Commentary
"We are excited to see the addition of South Arturo to the
Company's production profile, which is expected to positively
affect our fourth quarter", stated Ewan
Downie, President & CEO. "We continue to advance
multiple improvements at Mercedes aimed at increasing production
and reducing costs. Ongoing permitting initiatives at the Cove and
Hardrock projects provide a peer-best organic growth profile that
is further complemented by a portfolio of high-potential
exploration-stage assets".
Three Months Ended September 30,
2019
Consolidated production during Q3 2019 was 16,484 ounces of gold
and 37,856 ounces of silver compared to 20,100 ounces of gold and
89,512 ounces of silver during Q3 2018. The Company reported total
revenue of $18.7 million and a
mine operating loss of $0.4 million during the quarter compared to
revenue of $27.3 million and
mine operating income of $2.0 million during the corresponding period
in 2018.
The decrease in production when compared to Q3 2018 is due
primarily to lower than predicted grades realised in certain
production stopes at Mercedes. Mine performance during the
period was also impacted by several unexpected operational
challenges including a delay in the completion of key ventilation
infrastructure caused by poor ground conditions which led to
changes in stope sequencing, and the discovery of a large natural
void that removed ounces from the mine plan. In response to these
challenges considerable effort has gone into revising geological
interpretations and statistical models for all deposits at the
mine. In addition, numerous changes have been made to support
the development of a strong plan for the coming year. At
South Arturo, attention is focused on construction of the
Phase 1 open pit and continued development of the El Nino
underground mine where commercial production was declared during
the quarter.
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 $6.5 million in exploration and
pre-development expenses were incurred during Q3 2019. These
expenses, when factored with a mine operating loss of $0.4 million, general and administrative expense
of $2.2 million and a gain of
$6 million from the sale of royalties resulted in a loss for
the period of $3.9 million. A
total of $12.6 million in
capital expenditures were incurred during the quarter, including
$8.3 million for mine
development and construction at South Arturo and $3.9 million for sustaining and expansion
related activities at Mercedes with the remainder for development
at McCoy‑Cove.
Nine months ended September 30,
2019
A total of 50,547 ounces of gold and 147,328 ounces of silver
were produced during the nine months ended September 30, 2019, compared to 66,657 ounces of
gold and 201,084 ounces of silver for the prior year period.
The Company reported total revenue of $64.9 million and mine operating income of
$2.6 million for the nine months
ended September 30, 2019, compared to
revenue of $94 million and mine operating income of
$10.5 million for the prior year
period. The reduction in production, revenue, and operating income,
when compared to the prior period, is due primarily to the hiatus
in production at South Arturo during the first half of 2019.
A total of $18 million in exploration and pre-development
expenses were incurred during the nine months ended September 30, 2019. These expenses, when factored
with mine operating income, other income of $13.5 million (including the Greenstone Gold
mines development gain and the royalty sale) and finance expenses
of $2 million contributed to a loss
before income taxes of $14.7 million reported year to date. A total
of $38.4 million in capital
expenditures were incurred during the period, including
$18.8 million for mine
development and construction at South Arturo, $14.4 million for sustaining and expansion
related activities at Mercedes, and $5.2 million for development at
McCoy-Cove.
The Company closed the quarter with cash and cash equivalents of
$33.1 million, inventory of
5,020 ounces of gold and 6,418 ounces of silver and an undrawn
$42.5 million credit facility in
place. A total of $7.5 million
was drawn from the credit facility during the quarter for working
capital purposes.
Consolidated operating results are provided in Table 1
below.
Table 1:
Selected Consolidated Operational and Financial
Information
|
|
|
Three months
ended
September 30
|
Nine months
ended
September 30
|
(in millions of
U.S. dollars, unless otherwise stated)
(iii)
|
|
2019
|
2018
|
2019
|
2018
|
Ore milled
|
tonnes
|
174,285
|
180,942
|
529,091
|
672,613
|
Gold
produced
|
ounces
|
16,484
|
20,100
|
50,547
|
66,657
|
Silver
produced
|
ounces
|
37,856
|
89,512
|
147,328
|
201,084
|
Gold sold
|
ounces
|
13,187
|
21,466
|
48,065
|
71,383
|
Silver
sold
|
ounces
|
35,587
|
85,376
|
154,651
|
209,684
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,382
|
1,209
|
1,306
|
1,268
|
Average realized
silver price (i,ii)
|
$/ounce
|
17
|
15
|
16
|
16
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,095
|
858
|
961
|
826
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,354
|
1,008
|
1,218
|
956
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
14
|
10
|
12
|
11
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
17
|
12
|
15
|
13
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,086
|
840
|
948
|
810
|
By-product all- in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,353
|
997
|
1,214
|
946
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
18.1
|
25.8
|
62.4
|
90.2
|
Silver
revenue
|
m $
|
0.6
|
1.5
|
2.4
|
3.8
|
Total
revenue
|
m $
|
18.7
|
27.3
|
64.9
|
94.0
|
Mine operating income
/ (loss)
|
m $
|
(0.4)
|
2.0
|
2.6
|
10.5
|
Net income /
(loss)
|
m $
|
(4.1)
|
(1.8)
|
(15.1)
|
(11.5)
|
Earnings / (loss) per
share
|
/share
|
(0.02)
|
(0.01)
|
(0.07)
|
(0.06)
|
EBITDA
(i,ii)
|
m $
|
1.1
|
4.9
|
1.9
|
14.7
|
Cash & cash
equivalents balance
|
m $
|
33.1
|
56.4
|
33.1
|
56.4
|
Cash flow from
operations
|
m $
|
8.6
|
(2.8)
|
0.5
|
(3.2)
|
Free cash flow
(i,ii)
|
m $
|
(3.9)
|
(11.3)
|
(37.9)
|
(23.0)
|
Exploration,
evaluation & pre-development expense
|
m $
|
6.5
|
5.2
|
18.0
|
17.8
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
12.6
|
8.5
|
38.4
|
19.9
|
Capital expenditures -
sustaining (i,ii)
|
m $
|
1.9
|
1.9
|
8.6
|
5.4
|
Capital expenditures -
expansionary (i,ii)
|
m $
|
10.6
|
6.6
|
29.8
|
14.4
|
|
|
|
|
|
|
(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 km 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
September 30
|
Nine months
ended
September 30
|
(in millions of
U.S. dollars, unless otherwise
stated) (iii)
|
|
2019
|
2018
|
2019
|
2018
|
Ore &
Metals
|
|
|
|
|
|
Ore milled
|
tonnes
|
159,450
|
159,608
|
505,809
|
482,364
|
Gold
produced
|
ounces
|
14,481
|
17,465
|
47,627
|
46,254
|
Silver
produced
|
ounces
|
37,462
|
88,390
|
146,496
|
190,126
|
Gold sold
|
ounces
|
13,187
|
19,534
|
47,147
|
51,387
|
Silver
sold
|
ounces
|
35,587
|
85,376
|
154,651
|
209,684
|
Average gold
grade
|
grams/t
|
2.94
|
3.52
|
3.05
|
3.11
|
Average silver
grade
|
grams/t
|
22.60
|
39.40
|
25.80
|
31.75
|
Average gold recovery
rate
|
%
|
95.9
|
96.6
|
96.0
|
95.9
|
Average silver
recovery rate
|
%
|
32.3
|
43.7
|
34.9
|
38.6
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,382
|
1,210
|
1,306
|
1,253
|
Average realized
silver price (i,ii)
|
$/ounce
|
17
|
15
|
16
|
16
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,095
|
904
|
973
|
983
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,354
|
1,059
|
1,226
|
1,147
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
14
|
10
|
12
|
11
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
17
|
12
|
15
|
13
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,086
|
884
|
960
|
962
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,353
|
1,046
|
1,223
|
1,134
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
18.1
|
23.5
|
61.3
|
64.1
|
Silver
revenue
|
m $
|
0.6
|
1.5
|
2.4
|
3.8
|
Total
revenue
|
m $
|
18.7
|
25.0
|
63.7
|
67.9
|
Mine operating income
/ (loss)
|
m $
|
(0.4)
|
1.0
|
1.9
|
(1.3)
|
Exploration,
evaluation & pre-development expense
|
m $
|
0.6
|
0.6
|
1.3
|
1.3
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
3.9
|
5.5
|
14.4
|
14.3
|
Capital expenditures -
sustaining (i,ii)
|
m $
|
1.9
|
1.9
|
8.6
|
5.4
|
Capital expenditures -
expansionary (i,ii)
|
m $
|
1.9
|
3.6
|
5.9
|
8.8
|
|
|
|
|
|
|
(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, 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 Q3 2019 was 14,481 ounces of
gold and 37,462 ounces of silver compared to 17,465 ounces of gold
and 88,390 ounces of silver during Q3 2018. Year to date, mine
production totalled 47,627 ounces of gold and 146,496 ounces of
silver compared to 46,254 ounces of gold and 190,126 ounces of
silver in the prior year period. The increase in year to date gold
ounces produced compared to the prior year period is primarily due
to higher tonnes mined and milled. Silver production was down
as a result of lower grade. Unit operating costs at Mercedes during
the period, on a co-product basis, were cash costs(1) of
$1,095 and all-in sustaining costs
(AISC)(1) of $1,354 per
ounce of gold sold and year to date, on a co-product basis, cash
costs(1) of $973 and
all-in sustaining costs (AISC)(1) of $1,226 per ounce of gold sold. To date,
sustaining capital costs at Mercedes are $8.6 million.
During Q4 2019, production at Mercedes will come largely from
Diluvio, Lupita and Rey de Oro, with some early production
also anticipated from Marianas. Production from Mercedes
continues to trend below and unit costs consequently above
guidance. South Arturo, having reached commercial production a
full quarter ahead of schedule, is expected to compensate for
operational challenges experienced at Mercedes and we anticipate
that full year consolidated production and related unit costs will
reflect this.
Exploration activities continued during the quarter with a total
of 12,694 m of drilling at Lupita Extension, San Martin, and Marianas veins to replace
reserves, support mine production, test extensions of the main mine
trends, and to investigate new geological targets. Highlights of
the ongoing program include the continued success in expanding
mineralization at Lupita Extension and at the recent San Martin discovery where drilling is
demonstrating the potential for significant mineral resources at
grades in excess of the current mine reserve grade.
Capital expenditures were primarily required for exploration and
underground mine development to support transition to the new
mining zones. In Q3 2019, total capital expenditures at Mercedes
were $3.9 million which includes
$1.9 million of sustaining
capital, $1.4 million of
exploration capital and $0.5 million of expansionary capital.
Capital spending in Q3 2018 was $5.5 million.
South Arturo
The South Arturo Mine in Nevada
is a joint venture operated by Nevada Gold Mines Limited (with
Barrick Gold Corporation ("Barrick") as operator). Mine development
is underway at two new mining centers: the El Nino underground
mine and the Phase 1 open pit. El Nino has now declared
commercial production, ahead of schedule, and is expected to
contribute positively to the Company's production profile, with the
fourth quarter being the first full quarter of production from this
new operation. Stripping of the Phase 1 open pit is
ongoing with an expectation that ore will be accessed in late
2020.
Table 3:
South Arturo Selected Financial and Operating
Results
|
|
|
Three months
ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars, unless otherwise
stated) (iv)
|
|
2019
|
2018
|
2019
|
2018
|
Ore &
Metals
|
|
|
|
|
|
Ore milled
|
tonnes
|
14,835
|
21,334
|
23,282
|
190,249
|
Gold
produced
|
ounces
|
2,003
|
2,635
|
2,920
|
20,403
|
Gold sold
|
ounces
|
-
|
1,932
|
918
|
19,996
|
Silver
produced
|
ounces
|
394
|
1,122
|
832
|
10,958
|
Average gold
grade
|
grams/t
|
5.09
|
4.48
|
4.73
|
3.96
|
Average gold recovery
rate
|
%
|
82.4
|
85.7
|
82.4
|
84.2
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
-
|
1,200
|
1,271
|
1,306
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
-
|
396
|
308
|
421
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
-
|
498
|
768
|
465
|
By-product cash costs
per ounce of gold sold (i,ii,iii)
|
$/ounce
|
-
|
396
|
308
|
421
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii,iii)
|
$/ounce
|
-
|
498
|
768
|
465
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
-
|
2.3
|
1.2
|
26.1
|
Mine operating
income
|
m $
|
-
|
1.0
|
0.7
|
11.7
|
Exploration,
evaluation & pre-development expense
|
m $
|
-
|
0.4
|
0.1
|
1.1
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
8.3
|
2.8
|
18.8
|
4.8
|
Capital expenditures -
sustaining (i,ii)
|
m $
|
-
|
-
|
-
|
-
|
Capital expenditures -
expansionary (i,ii)
|
m $
|
8.3
|
2.8
|
18.8
|
4.8
|
(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.
|
|
|
|
|
|
Mine development at El Nino has advanced ahead of schedule
with processing of ore now underway, resulting in 562 gold ounces
of pre-production and 1,130 gold ounces post commercial production
during the quarter. Additionally, processing of the Phase 2
stockpile continued with 873 gold ounces produced in Q3 2019 and
1,790 year to date.
Capital expenditures of $8.3 million were incurred during the third
quarter, and $18.8 million year
to date, primarily for stripping for the Phase 1 open pit and
underground mine development at El Nino.
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. Underground drilling at El
Nino has returned numerous high-grade intercepts, including 20.60
g/t Au across 24.4 m in hole SEC19010
and 11.13 g/t Au across 51.8 m,
suggesting excellent potential for expansion.
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 Q3 2019, work on the
ground water modeling continued. Pump test results were obtained
from the first of two wells drilled, and the second pump test is
underway that is expected to be completed before the end of the
year. The power line to the planned portal location was completed
and commissioned. This work, as well as the construction of an
underground exploration ramp to complete infill drilling, will
provide critical inputs for a feasibility study.
Greenstone Gold Mines
The Greenstone Gold property is located in northern Ontario, Canada approximately 275 km
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 third quarter, the Greenstone Partnership completed
the update of the Hardrock open pit resource model using the
results from drilling campaigns completed in 2018 and 2019. The
drill campaigns consisted of 38,000 m drilled on the principal
zones in the initial mine plan. The Greenstone Partnership
has obtained provincial and federal environmental assessment and is
in the process of submitting applications for permits. All expected
Long Term Relationship Agreements with First Nations are nearing
completion.
The Greenstone Partnership spent $8.4 million during the quarter and
$21.9 million year to date,
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
September 30, 2019, Centerra's
contribution toward its C$185 million commitment in the
Greenstone Partnership totalled C$125 million
($95 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.
Q3 financial results and conference call details:
Senior management will be hosting a conference call to discuss
these results at 10:00 a.m. EST on November 13, 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: 04117197
Webcast Link:
https://event.on24.com/wcc/r/2121292/6207C243C68E718C853E843EC337B798
Conference Call Replay
The conference call replay will be available from 1:00 p.m.
EST on November 13, 2019, until
11:59 p.m. EST on November 20,
2019.
Toll Free Replay Call (North
America): (+1) 888 390 0541
International Replay Call: (+1) 416 764 8677
Passcode: 117197 #
A cautionary note regarding Non-IFRS financial metrics is
included in the "Non-IFRS Measures" section of the September 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