Aura Minerals Inc. ("Aura Minerals" or the "Company") (TSX:ORA) announces
financial and operating results for the first quarter of 2014.
This release does not constitute management's discussion and analysis ("MD&A")
as contemplated by applicable securities laws and should be read in conjunction
with the MD&A and the Company's condensed interim consolidated financial
statements for the three months ended March 31, 2014, which are available on
SEDAR at www.sedar.com and on the Company's website.
Highlights:
-- Operating cash flow(1) of $9,005 for the three months ended March 31,
2014 compared to $11,467 for the three months ended March 31, 2013;
-- Net sales revenue in the first quarter of 2014 decreased by 27% over the
first quarter of 2013;
-- Gold oz production for the three months ended March 31, 2014 was 14%
lower as compared to the three months ended March 31, 2013;
-- Copper concentrate sales are from the shipment of 7,422 dry metric
tonnes ("DMT") and 5,370 DMT of copper concentrate for the three months
ended March 31, 2014 and 2013, respectively;
-- Copper production at Aranzazu for the three months ended March 31, 2014
and 2013 was 3,715,688 pounds and 2,855,500 pounds, respectively, an
increase of 30%. On-site average cash cost(1) per pound of copper
produced, net of gold and silver credits was $2.78 for the three months
ended March 31, 2014 compared to $3.69 for the three months ended March
31, 2013;
-- Gross margin of $(1,656) for the three months ended March 31, 2014,
compared to a gross margin of $(7,195) for the three months ended March
31, 2013;
-- Loss of $9,073 or $0.04 per share for the three months ended March 31,
2014 compared to a loss of $10,734 or $0.05 per share for the three
months ended March 31, 2013; and
-- On March 17, 2014, the Company obtained a $22,500 gold loan from Auramet
International LLC which was utilized to settle the Company's Credit
Facility obligation.
(1) Please see cautionary note at the end of this press release.
Jim Bannantine, the Company's President and CEO, stated "Building upon our 2013
operational results, and in light of the continued commodity price volatility,
Aura continues to focus on creating value through both operational efficiencies
and cost reduction. The first quarter of 2014 was relatively in-line with our
expectations and we are on track to meet 2014's guidance.
At San Andres, during late 2013 and continuing into 2014, we conducted labor
negotiations with the local union in order to achieve a necessary reorganization
which is now substantially complete and will realize further cost reductions. We
experienced a brief industrial action at San Andres in January which resulted in
three weeks of operational down-time at the mine and which was peacefully
resolved. We have continued to consult with and engage the union and local
communities on a number of key matters. Despite the operational down-time, we
were able to implement further operational efficiencies and cost savings, and
achieved the lowest cash cost per ounce produced at San Andres in the Company's
history.
Aranzazu's first quarter of 2014 showed an increase in production and continued
decreases in treatment charges, refining charges and penalties through our
blending program. The plant expansion and partial roasting facility remain on
hold pending financing. Our mine development remains focused on near-term
development.
The first quarter's results from the Brazilian Mines, primarily consisting of
Sao Francisco, were affected by exceptionally heavy rains. Mining at Sao
Francisco was temporarily impeded in the bottom of the pit. Sao Francisco did
take the opportunity to create an extra push-back in the south area of the mine
which will extend its mine life into 2015, but also caused a higher cash cost
per ounce.
At Serrote, we continue to pursue a number of options to realize the value of
the project including reviewing a revised development and operating plan. This
plan would result in lower capital expenditures and features an earlier phased
execution schedule than previously anticipated by the feasibility study.
As previously announced, we obtained a $22.5 million gold loan facility which
was used to refinance our balance sheet. This has enabled us to continue
negotiations on a larger corporate financing package. The Company continues to
work towards obtaining a financing that will allow achievement of our future
operating and expansion goals.
Earlier today, we held our 2014 AGM in which shareholders re-elected the Board
of Directors. I thank all of our shareholders for attending the AGM in person or
by proxy and for their continued support."
Production and Cash Costs
The Company's production and cash costs for the three months ended March 31,
2014 and 2013 are summarized in the table below:
For the three months ended For the three months ended
March 31, 2014 March 31, 2013
Cash Cash
Oz Produced Costs(1) Oz Produced Costs(1)
----------------------------------------------------------------------------
San Andres 17,665 $ 764 15,714 $ 1,116
Sao Francisco 20,357 1,328 25,652 1,332
Sao Vicente 5,220 1,098 9,048 1,410
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Total / Average 43,242 $ 1,070 50,414 $ 1,279
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(1) Please see cautionary note at the end of this press release.
Gold production at San Andres in the first quarter of 2014 increased by 12% over
the comparable period primarily due to the improved recoveries in both the
leaching and carbon stripping processes. Average cash cost per oz of gold
produced(1) in the first quarter of 2014 decreased by 32% over the first quarter
of 2013. Higher mining costs were experienced in 2013 due to the additional
waste material moved.
Gold production at Sao Francisco in the first quarter of 2014 was 21% lower than
the first quarter of 2013 due primarily to the lower plant feed. Average cash
cost per oz of gold produced in the first quarter of 2014 was relatively flat as
compared to the first quarter of 2013.
As a result of the suspension of mining and plant operations at Sao Vicente in
Q4 2013, there was no material moved in the first quarter of 2014. A low volume
of processing was achieved through the plant as there was sufficient feed
material from clean-up of fill material around the plant area to keep the plant
operating during Q1 2014. The average cash cost per oz of gold produced(1) in
the first quarter of 2014 was 42% lower than the first quarter of 2013 due to
low cost ore sourced from the clean-up, as well as the absence of mining costs,
combined with good gold recoveries during the exhaustion of the heap.
At Aranzazu, copper concentrate production increased by 50% in the first quarter
of 2014 as compared to the first quarter of 2013, due to the effect of the
increased ore mined and milled, a 9% increase in copper grade, offset by a 3%
decrease in copper recoveries. Aranzazu's mine development continued to be
focused on near- term development in the first quarter of 2014. This is expected
to continue throughout the year.
Average cash cost per pound of copper produced(1) for the first quarter of 2014
decreased by 25% as compared to the first quarter of 2013. These average cash
costs are inclusive of net realizable value write-downs of $0.29 and $0.34 for
the first quarters of 2014 and 2013, respectively. The average arsenic level in
the copper concentrate was 0.86% during the first quarter of 2013. Aranzazu
continues to implement a successful program of blending to ensure that value is
maximized from the sales of concentrates. This has resulted in significant
improvements in the levels of arsenic encountered in the concentrate production
and accompanying decreases in treatment charges, refining charges and penalties
on the concentrate shipments.
Brazilian Assets - Value Maximization
The Company continues to investigate multiple options to maximize the closure
value of the assets of the Brazilian Mines, including the disposal of the plant
and equipment and utilizing key members of their operating teams at our other
locations.
Revenues and Cost of Goods Sold
Revenues for the three months ended March 31, 2014 decreased by 27% compared to
three months ended March 31, 2013. The decrease in revenues resulted from a 33%
decrease in gold sales and a 20% increase in copper concentrate sales.
The decrease in gold sales is attributable to a 13% decrease in gold sales
volumes and a 22% decrease in the realized average gold price per ounce.
The increase in copper concentrate net sales is primarily attributable to a 38%
increase in DMT sold offset by a 13% decrease in average price realized. Total
revenues for the three months ended March 31, 2014 at Aranzazu related to the
shipment of 7,422 DMT of copper concentrate compared to 5,370 DMT of copper
concentrate for the three months ended March 31, 2013. Total concentrate
shipment revenues for the three months ended March 31, 2014 and 2013 were $1,622
per DMT and $1,870 per DMT, respectively. The lower concentrate shipment revenue
per DMT is due to lower commodity prices.
(1) Please see cautionary note at the end of this press release.
For the three months ended March 31, 2014 and 2013, total cost of goods sold
from San Andres was $15,023 or $1,021 per oz compared to $20,721 or $1,456 per
oz, respectively. For the three months ended March 31, 2014 and 2013, cash
operating costs were $851 per oz and $1,189 per oz, respectively, while non-cash
depletion and amortization charges were $170 per oz and $267 per oz,
respectively. There were no write- downs of production inventory to net
realizable value for the three months ended March 31, 2014 or 2013,
respectively.
At the Brazilian Mines, for the three months ended March 31, 2014 and 2013,
total cost of goods sold was $35,671 or $1,294 per oz compared to $62,028 or
$1,794 per oz, respectively. For the three months ended March 31, 2014 and 2013,
cash operating costs were $1,219 per oz and $1,404 per oz, respectively, while
non-cash depletion and amortization charges were $75 per oz and $390 per oz,
respectively. The cash operating costs for the three months ended March 31, 2014
included a write-down of $5,193 or $188 per oz to bring production inventory to
its net realizable value (2013: $3,194 or $92 per oz).
Total cost of goods sold from Aranzazu for the three months ended March 31, 2014
and 2013 was $15,989 or $2,154 per DMT and $13,031 or $2,427 per DMT,
respectively. For the three months ended March 31, 2014 and 2013, cash operating
costs were $1,632 per DMT and $2,034 per DMT, respectively, while non-cash
depletion and amortization charges were $522 per DMT and $393 per DMT,
respectively. The cash operating costs for the three months ended March 31, 2014
included a write-down of $1,238 or $166 per DMT to bring production inventory to
its net realizable value (2013: $1,024 or $191 per DMT).
Additional Highlights
Other expense items for the first quarter of 2014 include general and
administrative expenses of $3,535,000 (2013: $3,466,000) and exploration
expenses of $218,000 (2013: $676,000). The decrease in exploration costs
reflects the Company's overall reduction in exploration expenditures while it
continues to focus on refinancing.
Additionally, for the first quarter of 2014, the Company recorded finance costs
of $3,118,000 (2013: $1,460,000), and other losses of $1,090,000 (2013: gain of
$1,817,000). Loss before income taxes for the first quarter of 2014 was
$9,612,000 (2013: $10,960,000).
For the quarter ended March 31, 2014, the Company recorded an income tax
recovery of $539,000 (2013: $226,000) comprising a current income tax recovery
of $288,000 (2013: income tax expense of $1,034,000) relating to the San Andres
Mine, and a deferred income tax recovery of $251,000 (2013: $1,260,000).
For the three months ended March 31, 2014, the Company recorded a loss of $9,073
which compares to a loss of $10,734 for the three months ended March 31, 2013.
Outlook and Strategy
Aura Minerals' future profitability, operating cash flows and financial position
will be closely related to the prevailing prices of gold and copper. Key factors
influencing the price of gold and copper include, but are not limited to, the
supply of and demand for these commodities, the relative strength of currencies
(particularly the U.S. dollar) and macroeconomic factors such as current and
future expectations for inflation and interest rates. Management believes that
the short-to-medium term economic environment is likely to remain relatively
supportive for commodity prices but with continued volatility. In order to
decrease risks associated with commodity price and currency volatility, the
Company will continue to evaluate available protection programs.
Other key factors influencing profitability and operating cash flows are
production levels (impacted by grades, ore quantities, labour, plant and
equipment availabilities, and process recoveries) and production and processing
costs (impacted by production levels, prices and usage of key consumables,
labour, inflation, and exchange rates).
Aura Minerals' production and cash cost per oz guidance for the 2014 year has
not changed from previous guidance and is as follows:
Gold Mines Cash Cost per oz 2014 Production
----------------------------------------------------------------------------
San Andres $800 - $950 75,000 - 85,000 oz
Sao Francisco $900 - $1,050 75,000 - 85,000 oz
Sao Vicente $ 525 - $675 5,500 - 7,500 oz
----------------------------------------------------------------------------
Total $850 - $1,000 155,500 - 177,500 oz
----------------------------------------------------------------------------
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Aranzazu's production for 2014 is expected to be between 18,000,000 and
19,500,000 pounds of copper at a range of $2.60 to $3.15 average cash cost per
payable pound of copper.
To date, the indicators have been that the pro-rata guidance will be achieved at
each operating mine.
For 2014, total capital spending is expected to be $36,000. Of this amount,
$20,000 relates to the development and expansion of Aranzazu, while $12,000
relates to San Andres plant upgrades, Phase V of the heap leach expansion and
community expenditures. The remaining portion is being spent on various
miscellaneous projects in the group, including the Serrote development project.
The capital expenditure programs for the expansion of Aranzazu and the
development of Serrote remain dependent upon successful completion of expansion
financing.
Conference Call
Aura Minerals' management will host a conference call and audio webcast for
analysts and investors on Wednesday, May 14, 2014 at 9:00 a.m. (Eastern Time) to
review the first quarter 2014 results. Participants may access the call by
dialing 416-340-9432 or the toll-free access at 1-800-952-4972. Participants are
encouraged to call in 10 minutes prior to the scheduled start time to avoid
delays.
Those who wish to listen to a recording of the conference call at a later time
may do so by dialing 905-694- 9451 or 1-800-408-3053 (Passcode 2201962#). The
conference call replay will be available from 2:00 p.m. on May 14, 2014, until
11:59 p.m. (Eastern Time) on May 29, 2014.
Non-GAAP Measures
This news release includes certain non-GAAP performance measures, in particular,
the average cash cost of gold per oz, average cash cost per payable pound of
copper and operating cash flow which are non-GAAP performance measures. These
non-GAAP measures do not have any standardized meaning within IFRS and therefore
may not be comparable to similar measures presented by other companies. The
Company believes that these measures provide investors with additional
information which is useful in evaluating the Company's performance and should
not be considered in isolation or as a substitute for measures of performance
prepared in accordance with IFRS.
Average cash costs per oz of gold or per pound of copper are presented as they
represent an industry standard method of comparing certain costs on a per unit
basis. Total cash costs of gold produced include on- site mining, processing and
administration costs, off-site refining and royalty charges, reduced by silver
by- product credits, but exclude amortization, reclamation, and exploration
costs, as well as capital expenditures. Total cash costs of gold produced are
divided by oz produced to arrive at per oz cash costs. Similarly, total cash
costs of copper produced include the above costs, and are net of gold and silver
by-products, but include offsite treatment and refining charges. Total cash
costs of copper produced are divided by pounds of copper produced to arrive at
per pound cash costs.
Operating cash flow is the term the Company uses to describe the cash that is
generated from operations excluding depletion and amortization, stock based
compensation, impairment charges and the effect of changes in working capital.
About Aura Minerals Inc.
Aura Minerals is a Canadian mid-tier gold and copper production company focused
on the development and operation of gold and base metal projects in the
Americas. The Company's producing assets include the copper- gold-silver
Aranzazu mine in Mexico, the San Andres gold mine in Honduras and the Sao
Francisco and Sao Vicente gold mines in Brazil. The Company's core development
asset is the copper-gold-iron Serrote da Laje project in Brazil.
For further information, please visit Aura Minerals' web site at
www.auraminerals.com.
National Instrument 43-101 Compliance
Unless otherwise indicated, Aura Minerals has prepared the technical information
in this press release ("Technical Information") based on information contained
in the technical reports and news releases (collectively the "Disclosure
Documents") available under the Company's profile on SEDAR at www.sedar.com.
Each Disclosure Document was prepared by or under the supervision of a qualified
person (a "Qualified Person") as defined in National Instrument 43-101 -
Standards of Disclosure for Mineral Projects ("NI 43-101"). Readers are
encouraged to review the full text of the Disclosure Documents which qualifies
the Technical Information. Readers are advised that mineral resources that are
not mineral reserves do not have demonstrated economic viability. The Disclosure
Documents are each intended to be read as a whole, and sections should not be
read or relied upon out of context. The Technical Information is subject to the
assumptions and qualifications contained in the Disclosure Documents.
Cautionary Note
This news release contains certain "forward-looking information" and
"forward-looking statements", as defined in applicable securities laws
(collectively, "forward-looking statements"). All statements other than
statements of historical fact are forward-looking statements. Forward-looking
statements relate to future events or future performance and reflect the
Company's current estimates, predictions, expectations or beliefs regarding
future events and include, without limitation, statements with respect to: the
amount of mineral reserves and mineral resources; the amount of future
production over any period; the amount of waste tonnes mined; the amount of
mining and haulage costs; cash costs; operating costs; strip ratios and mining
rates; expected grades and ounces of metals and minerals; expected processing
recoveries; expected time frames; prices of metals and minerals; mine life; and
gold hedge programs. Often, but not always, forward-looking statements may be
identified by the use of words such as "expects", "anticipates", "plans",
"projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives"
or variations thereof or stating that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved, or the
negative of any of these terms and similar expressions.
Forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are inherently
subject to significant business, economic and competitive uncertainties and
contingencies. Forward-looking statements in this news release and related MD&A
are based upon, without limitation, the following estimates and assumptions: the
presence of and continuity of metals at the Company's Mines at modeled grades;
the capacities of various machinery and equipment; the availability of
personnel, machinery and equipment at estimated prices; exchange rates; metals
and minerals sales prices; appropriate discount rates; tax rates and royalty
rates applicable to the mining operations; cash costs; anticipated mining losses
and dilution; metals recovery rates, reasonable contingency requirements; and
receipt of regulatory approvals on acceptable terms.
Known and unknown risks, uncertainties and other factors, many of which are
beyond the Company's ability to predict or control could cause actual results to
differ materially from those contained in the forward-looking statements.
Specific reference is made to the most recent Annual Information Form on file
with certain Canadian provincial securities regulatory authorities for a
discussion of some of the factors underlying forward- looking statements, which
include, without limitation, gold and copper or certain other commodity price
volatility, changes in debt and equity markets, the uncertainties involved in
interpreting geological data, increases in costs, environmental compliance and
changes in environmental legislation and regulation, interest rate and exchange
rate fluctuations, general economic conditions and other risks involved in the
mineral exploration and development industry. Readers are cautioned that the
foregoing list of factors is not exhaustive of the factors that may affect the
forward-looking statements.
All forward-looking statements herein are qualified by this cautionary
statement. Accordingly, readers should not place undue reliance on
forward-looking statements. The Company undertakes no obligation to update
publicly or otherwise revise any forward-looking statements whether as a result
of new information or future events or otherwise, except as may be required by
law. If the Company does update one or more forward- looking statements, no
inference should be drawn that it will make additional updates with respect to
those or other forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Aura Minerals Inc.
Josh Perelman
Sr. Financial Analyst
(416) 649-1056 or (416) 649-1033
(416) 649-1044 (FAX)
info@auraminerals.com
www.auraminerals.com
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