ALL AMOUNTS DISCUSSED ARE DENOMINATED IN
U.S. DOLLARS
THUNDER BAY, ON, Nov. 4, 2020 /CNW/ - Premier Gold Mines
Limited ("Premier" or "The Company") (TSX: PG) (OTCPK: PIRGF)
is pleased to report operating and financial results for the three
months ended September 30, 2020.
Significantly improved production costs at Mercedes were realized,
and when combined with continued strong production from South
Arturo, has resulted in the Company's best operational quarter in
2020. The Company previously released third quarter production
results on October 14, 2020.
2020 Third Quarter Highlights
- 50% reduction in Mercedes mine cash cost and all-in
sustaining cost (US$885/oz) compared
to Q1 2020
- 19,278 ozs gold production
- $30.5 million in
revenue
- $13.9 million mine operating
income and a net income of $1.6
million for the quarter
- $51.9 million in cash and cash
equivalents
CEO Commentary
"With a focus on achieving operating margins, the revised mine
plan implemented at Mercedes has exceeded our expectations since
the mine resumed operations late in the second quarter," stated
Ewan Downie, President & CEO.
"In addition, Nevada Gold Mines
continues to over-deliver at South Arturo with year-to-date
production now having surpassed the annual production plan, and the
strong drill results from El Nino at depth suggest further
potential to expand resources and mine life."
Three months ended September 30,
2020
A total of 19,278 ounces of gold and 50,576 ounces of silver
were produced in the quarter, a significant increase compared Q3
2019 when 16,484 ounces of gold and 37,856 ounces of silver were
produced.
The Company reported total revenue of $30.5 million and significantly improved mine
operating income of $13.9 million
during the third quarter compared to revenue of $18.7 million and mine operating loss of
$0.4 million during Q3 2019. The
increase in Q3 revenue when compared to the same period in 2019 is
attributed to the impact of the increased production and related
revenue generated from the South Arturo and Mercedes operations and
an increase in the average realized selling price of gold. The
average realized gold price was $1,876 per ounce, an increase of $494 per ounce when compared to Q3 2019.
Total mine operating income of $13.9
million for Q3 2020 compared to a loss of $0.4 million in Q3 2019 is the result of the
increased production, higher gold selling price, a 34% reduction in
the cash costs per ounce of gold sold to $724 for Q3 2020 compared from $1,095 for Q3 2019, and a 29% reduction in the
all-in-sustaining costs per ounce of gold sold to $965 for Q3 2020 compared from $1,354 for Q3 2019. Improvements in production
and costs at the Mercedes mine were the primary contributors to the
reduced unit cost for the period. A total of $6.2 million in exploration and pre-development
expenditures were incurred during the quarter.
Nine months ended September 30,
2020
A total of 42,359 ounces of gold and 103,974 ounces of silver
were produced for the nine months ended September 30, 2020 compared to 50,547 ounces of
gold and 147,328 ounces of silver for the prior year period.
The Company reported total revenue of $68
million and mine operating income of $15.6 million for the nine months ended
September 30, 2020 compared to
revenue of $64.9 million and mine
operating income of $2.6 million for
the prior year period. The reduction in production, when compared
to the prior year period is due to the impact of the COVID-19
pandemic which resulted in no gold produced at Mercedes during the
second quarter due to a government mandate that suspended all
mining operations. The increase in revenue and mine operating
income during the quarter is attributable to the increase in the
average gold selling price of $345
per ounce of gold sold and the reduction of operating unit costs at
the Mercedes mine in Q3 2020.
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)
|
|
2020
|
2019
|
2020
|
2019
|
Ore milled
|
tonnes
|
147,167
|
174,285
|
354,608
|
529,091
|
Gold
produced
|
ounces
|
19,278
|
16,484
|
42,359
|
50,547
|
Silver
produced
|
ounces
|
50,576
|
37,856
|
103,974
|
147,328
|
Gold sold
|
ounces
|
15,665
|
13,187
|
40,039
|
48,065
|
Silver
sold
|
ounces
|
45,269
|
35,587
|
101,810
|
154,651
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,876
|
1,382
|
1,651
|
1,306
|
Average realized
silver price (i,ii)
|
$/ounce
|
26
|
17
|
20
|
16
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
724
|
1,095
|
965
|
961
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
965
|
1,354
|
1,253
|
1,218
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
8
|
14
|
11
|
12
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
12
|
17
|
16
|
15
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
673
|
1,086
|
942
|
948
|
By-product all- in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
925
|
1,353
|
1,243
|
1,214
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
29.3
|
18.1
|
65.9
|
62.4
|
Silver
revenue
|
m $
|
1.2
|
0.6
|
2.1
|
2.4
|
Total
revenue
|
m $
|
30.5
|
18.7
|
68.0
|
64.9
|
Mine operating income
/ (loss)
|
m $
|
13.9
|
(0.4)
|
15.6
|
2.6
|
Net income /
(loss)
|
m $
|
1.6
|
(4.1)
|
(24.4)
|
(15.1)
|
Gain / (loss) per
share
|
/share
|
0.01
|
(0.02)
|
(0.11)
|
(0.07)
|
EBITDA
(i,ii)
|
m $
|
7.8
|
1.1
|
(6.4)
|
1.9
|
Cash & cash
equivalents balance
|
m $
|
51.9
|
33.1
|
51.9
|
33.1
|
Cash flow from
operations
|
m $
|
3.1
|
8.6
|
(36.6)
|
0.5
|
Free cash flow
(i,ii)
|
m $
|
0.4
|
(3.9)
|
(46.6)
|
(37.9)
|
Exploration,
evaluation & pre-development expense
|
m $
|
6.2
|
6.5
|
13.9
|
18.0
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
2.3
|
12.6
|
8.6
|
38.4
|
Capital expenditures -
sustaining (i,ii)
|
m $
|
1.5
|
1.9
|
6.9
|
8.6
|
Capital expenditures -
expansionary (i,ii)
|
m $
|
0.8
|
10.6
|
1.6
|
29.8
|
|
(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.
|
A total of $13.9 million in
exploration and pre-development expenses were incurred during the
nine months ended September 30, 2020.
These expenditures along with the care and maintenance costs
incurred on the shut down at Mercedes mine of $5.1 million and restructuring costs of
$1.9 million, contributed to a net
loss of $24.4 million reported for
the year to date period.
A total of $8.6 million in capital
expenditures were incurred during the period, including
$7.9 million for mine development and
equipment at Mercedes. The Company closed the quarter with cash and
cash equivalents of $51.9 million, an
increase from the previous quarter.
Mercedes
The Mercedes mine is located 150 kilometres northeast of the
city of Hermosillo in the
state of Sonora, Mexico.
Significant progress has been made with respect to cost reduction
initiatives at the mine primarily due to lower unit mining costs
resulting from a reduction in fixed costs for labour and
contractors as the workforce was downsized to align with the new
mine plan. The result was co-product cash costs per ounce of
gold sold of $608 (a 44% reduction vs
Q3 2019) and co-product all-in sustaining costs per ounce of gold
sold of $885 in Q3 (a 35% reduction
vs Q3 2019), the lowest cost quarter of 2020. Although the grade
had a positive impact on the cost per ounce, the primary driver of
the overall improvement was the reduction in mine unit cost per
tonne processed.
As previously announced, Mercedes was placed into care and
maintenance during the second quarter as mandated to help protect
the health of our employees, their families, and neighbouring
communities from the growing threat of the COVID-19 pandemic.
Extensive technical work was carried out during the two-month
shutdown to assess alternative mine plans with renewed attention to
increasing profit margins. As a result, a new simplified operating
plan with a more focused mining and development strategy was
implemented when operations resumed late in the second quarter. The
outcome is enhanced productivity and reduced costs, which is
ensuring the mine's ability to reliably deliver cash flow.
A phased re-start of the mine in June began with limited mining
activities and the stockpiling of ore to ensure the safe and
successful implementation of the plan and meet sanitation
requirements necessitated by our COVID-19 protocols. Processing
commenced on a batch milling basis in early July. The initial focus
of the phased approach prioritizes completion of key access ramps
to the Diluvio West and Lupita Extension stoping areas,
delineation/definition drilling at Marianas and Diluvio West, and
San Martin delineation drilling.
During the third quarter operations were not affected by the
pandemic and were executed according to the revised plan.
Mercedes mined a total of 106,597 tonnes during Q3 as compared
to 163,030 tonnes during the prior year period as a result of
focusing all mining activities on two production areas (Diluvio and
Lupita) instead of six areas previously. This change had a several
positive impact, with a considerable reduction waste tonnage, a 15%
increase in the average gold grade from 2.94 g/t in Q3 2019 to 3.37
g/t, and a significant decrease in the costs per ounce sold.
The quarterly operating results are summarized 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)
|
|
2020
|
2019
|
2020
|
2019
|
Ore &
Metals
|
|
Ore milled
|
tonnes
|
117,751
|
159,450
|
280,159
|
505,809
|
Gold
produced
|
ounces
|
12,183
|
14,481
|
23,770
|
47,627
|
Silver
produced
|
ounces
|
49,975
|
37,462
|
102,182
|
146,496
|
Gold sold
|
ounces
|
10,882
|
13,187
|
23,628
|
47,147
|
Silver
sold
|
ounces
|
45,269
|
35,587
|
101,810
|
154,651
|
Average gold
grade
|
grams/t
|
3.37
|
2.94
|
2.78
|
3.05
|
Average silver
grade
|
grams/t
|
32.34
|
22.60
|
29.23
|
25.80
|
Average gold recovery
rate
|
%
|
95.6
|
95.9
|
94.8
|
96.0
|
Average silver
recovery rate
|
%
|
40.8
|
32.3
|
38.8
|
34.9
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,875
|
1,382
|
1,640
|
1,306
|
Average realized
silver price (i,ii)
|
$/ounce
|
26
|
17
|
20
|
16
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
608
|
1,095
|
952
|
973
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
885
|
1,354
|
1,384
|
1,226
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
8
|
14
|
11
|
12
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
12
|
17
|
16
|
15
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
535
|
1,086
|
913
|
960
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
827
|
1,353
|
1,367
|
1,223
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
20.3
|
18.1
|
38.6
|
61.3
|
Silver
revenue
|
m $
|
1.2
|
0.6
|
2.1
|
2.4
|
Total
revenue
|
m $
|
21.5
|
18.7
|
40.6
|
63.7
|
Mine operating income
/ (loss)
|
m $
|
10.4
|
(0.4)
|
8.0
|
1.9
|
Exploration,
evaluation & pre-development expense
|
m $
|
0.5
|
0.6
|
1.2
|
1.3
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
2.0
|
3.9
|
7.9
|
14.4
|
Capital expenditures -
sustaining (i,ii)
|
m $
|
1.5
|
1.9
|
6.9
|
8.6
|
Capital expenditures -
expansionary (i,ii)
|
m $
|
0.5
|
1.9
|
1.0
|
5.9
|
|
(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.
|
South Arturo
The South Arturo mine in Nevada
is a joint venture with Nevada Gold Mines LLC, operated by Barrick
Gold Corporation ("Barrick"). Several opportunities exist on the
property including the recently developed El Nino underground mine
that represents the second operation developed at South Arturo and
has delivered consistent production results since being put into
production in the second half of 2019.
For Q3 2020, South Arturo produced 7,095 ounces of gold and 601
ounces of silver from El Nino. Ore production and the average grade
were both above plan for the period. To-date there has been no
material impact on the operations at South Arturo due to the
COVID-19 pandemic as measures have been successfully implemented by
the operator to control the risk to the employees and
communities.
Co-product cash cost per ounce of gold sold was $987 and all-in sustaining cost per ounce of gold
sold was $1,148 during the
quarter.
Expansion drill results previously announced from the El Nino
underground program were announced with highlight results of
39.6 m of 17.11 g/t Au, including
21.3 m of 24.75 g/t Au (SER20019) and
100.6 m of 5.73 g/t Au, including
13.7 m of 8.52 g/t Au (SER20018).
The partners continue to advance additional development
opportunities, including the Phase 1 and Phase 3 open-pit projects,
and are assessing the potential for an on-site heap leach facility.
Surface drilling in the vicinity of these proposed future pit
projects commenced during the third quarter and the Company is in
the final stages of completing a Preliminary Feasibility Study for
South Arturo.
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)
|
|
2020
|
2019
|
2020
|
2019
|
Ore &
Metals
|
|
Ore milled
|
tonnes
|
29,416
|
14,835
|
74,448
|
23,282
|
Gold
produced
|
ounces
|
7,095
|
2,003
|
18,589
|
2,920
|
Silver
produced
|
ounces
|
601
|
394
|
1,793
|
832
|
Gold sold
|
ounces
|
4,783
|
-
|
16,411
|
918
|
Average gold
grade
|
grams/t
|
8.83
|
5.09
|
8.86
|
4.73
|
Average gold recovery
rate
|
%
|
85.0
|
82.4
|
87.6
|
82.4
|
Realized
Price
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,879
|
-
|
1,666
|
1,271
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
987
|
-
|
984
|
308
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,148
|
-
|
1,065
|
768
|
By-product cash costs
per ounce of gold sold (i,ii,iii)
|
$/ounce
|
987
|
-
|
984
|
308
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii,iii)
|
$/ounce
|
1,148
|
-
|
1,065
|
768
|
Financial
Measures
|
|
|
|
|
|
Gold
revenue
|
m $
|
9.0
|
-
|
27.3
|
1.2
|
Mine operating
income
|
m $
|
3.5
|
-
|
7.6
|
0.7
|
Exploration,
evaluation & pre-development expense
|
m $
|
0.3
|
-
|
0.3
|
0.1
|
Capital
|
|
|
|
|
|
Total capital
expenditures
|
m $
|
0.2
|
8.3
|
0.3
|
18.8
|
Capital expenditures -
sustaining (i,ii)
|
m $
|
-
|
-
|
-
|
0.0
|
Capital expenditures -
expansionary (i,ii)
|
m $
|
0.2
|
8.3
|
0.3
|
18.8
|
|
|
|
(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.
|
|
|
Greenstone Gold Mines
The Company owns a 50% interest in the Greenstone Gold Mines
Partnership ("GGM"). GGM's principal asset is the Hardrock Mine
Project ("Hardrock") located on the Trans-Canada Highway near
Geraldton, Ontario, Canada that
represents one of the most significant large-scale, permitted mine
development projects in North
America.
Operations at Greenstone were not directly impacted by COVID-19.
Greenstone management is closely monitoring the situation and were
able to progressively reopen its offices and the project site
during the period.
Spending at Hardrock during the quarter totaled $5.7 million (CAD$7.7
million) and $14.5 million
(CAD$19.7 million) year-to-date. Key
activities include further advancement of detailed engineering work
for key infrastructure items, permitting, continued implementation
of indigenous agreements, water management modelling and renewed
exploration testing several targets outside of the Hardrock
deposit.
Since inception of GGM in 2015, $120.8
million (CAD$158.9 million)
has been expended on initiatives designed to de-risk and further
optimize the economic model associated with the project. Premier
disclosed a revised resource estimate in late 2019 that was
prepared by G-Mining, the Independent Qualified Person ("QP") for
the project. Significant detailed engineering work was also
completed during that time to further refine project design and
increase the level of confidence associated with costs included in
the economic model. Late in 2019, the QP prepared an updated
economic model which incorporated the cumulative results of each of
the comprehensive work programs over the past three years. The
updated economic model, which was delivered to GGM in December of
2019, indicated significantly enhanced economics. The Company has
commissioned the preparation of an updated technical report to
accompany the economic model presented to the partners in late
December 2019 and expects to have it
completed in the near future.
Q3 2020 Financial Results and Conference Call Details
Full financial results for the quarter ended September 30, 2020 will be released before market
open on November 4th, followed by a
conference call with senior management being held at 10:00am EST.
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
Webcast Link:
https://produceredition.webcasts.com/starthere.jsp?ei=1385431&tp_key=ca1ecfd77a
Conference Call Replay
The conference call replay will be available from 1:00pm EDT on November 4,
2020 until 11:59pm EDT on
November 11, 2020.
Toll Free Replay Call (North
America): (+1) 888 390 0541
International Replay Call: (+1) 416 764 8677
Passcode: 423039#
Qualified Person
Stephen McGibbon, P. Geo.,
Executive Vice-President, Corporate and Project Development at
Premier has reviewed the scientific and technical information
contained in this press release and is a Qualified Person within
the meaning of National Instrument 43 -101.
All abbreviations used in this press release are available by
following this link (click here).
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, strategies to enhance
productivity, capital expenditures, cost reduction, the ability to
deliver free cash-flow, discovery and production of minerals, price
of gold and currency exchange rates, timing of technical 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.
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SOURCE Premier Gold Mines Limited