Trading Symbol: TSX: GGD
Shares Outstanding: 171,376,481
HALIFAX, Aug. 14, 2017 /CNW/ - GoGold Resources Inc.
(TSX: GGD) ("GoGold", "the Company") announces the release of
financial results for the quarter ending June 30, 2017. Revenue attributed to the Parral
tailings project ("Parral") was $4.65
million (of total revenue of $5.02
million) on the sale of 286,063 silver equivalent ounces at
a cash cost of $9.61 per silver
equivalent ounce (including Santa Gertrudis high-grade, total sales
were 310,833 silver equivalent ounces at a cash cost of
$16.20 per ounce) (all amounts are in
U.S. dollars).
Financial highlights for the quarter ending June 30, 2017:
- Production growth of 13% at Parral over previous quarter
- Revenue of $5.02 million from the
sale of 310,833 silver equivalent ounces, a realized price of
$16.15 per silver equivalent
ounce
- Parral cash cost per silver equivalent ounce of $9.61
- Parral demonstrated its fourth consecutive quarter of
production growth
- Operating loss of $2.1 million,
mainly due to slowed operation at Santa Gertrudis High Grade
Material ("HGM") project
GoGold produced 2,557 gold ounces and 151,442 silver ounces for
a total of 339,730 silver equivalent ounces in the quarter ending
June 30, 2017.
The Company's Parral project contributed 2,237 gold and 151,422
silver ounces for a total of 314,910 silver equivalent ounces,
which is a 13% increase over the 278,230 silver equivalent ounces
produced in the previous quarter. Parral production increased
for the fourth consecutive quarter and management has implemented
changes to mitigate any potential effects of the rainy season for
the upcoming quarter, including the construction of an additional
overflow pond to aide in diverting heavy rains. The Company expects
to see a continued increase in production at Parral.
The Santa Gertrudis HGM project produced 320 ounces of gold
(24,820 silver equivalent ounces) which was a decrease over Q2 2017
due to increased stripping of lower grade material required to
access the high-grade ore which could be economically trucked to
the off-site process plant. This resulted in lower production and
increased costs for the quarter. Mining at HGM has been put on hold
pending completion of a mine plan and evaluation of next steps.
Financial highlights for the nine months ending June 30, 2017:
- Revenue of $19.0 million from the
sale of 1,137,897 silver equivalent ounces, a realized price of
$16.69 per silver equivalent
ounce
- Operating income of $1.9
million
- Cash cost per silver equivalent ounce of $10.42
- All in sustaining cost per silver equivalent ounce of
$14.68
- Produced 1,166,048 silver equivalent ounces
Summarized
Consolidated Financial Information
|
Three months ended
June 30
|
|
Nine months ended
June 30
|
(in thousands USD, except per share and per ounce
amounts)
|
2017
|
2016
|
|
2017
|
2016
|
Revenue
|
$5,020
|
$5,965
|
|
$18,987
|
$14,047
|
Cost of
sales
|
6,212
|
3,528
|
|
14,917
|
9,235
|
Operating
income
|
(2,094)
|
1,366
|
|
1,928
|
1,728
|
Net (loss)
income
|
(355)
|
208
|
|
916
|
-19,343
|
Cash flow from
operations, before changes in non-cash working capital
|
(1,709)
|
2,449
|
|
1,552
|
4,182
|
Basic net income
(loss) per share
|
$0.00
|
$0.00
|
|
$0.01
|
($0.12)
|
Cash cost per silver
equivalent ounce1,2
|
16.20
|
6.36
|
|
10.42
|
6.49
|
All in sustaining
cost per silver equivalent ounce1,2
|
25.91
|
9.59
|
|
14.68
|
9.61
|
Realized silver
price2
|
16.15
|
17.10
|
|
16.69
|
15.32
|
|
|
|
|
|
|
|
1
|
Gold is converted
using actual market metal price for the period based on the London
Fixed price
|
2
|
Unaudited non-IFRS
measure
|
All in sustaining costs per silver equivalent ounce increased
from $9.59 in Q3 2016 to $25.91 in Q3 2017. Factors contributing to the
increase are the higher stripping costs at the Santa Gertrudis
project, as well as increased sustaining capital at Parral, where
$2.1 million was spent primarily on
heap leach pad expansions.
Liquidity Update
At June 30,
2017, the Company had a working capital deficit of
$35.1 million. The Company was not in
compliance with the financial covenants of its senior revolving
credit facility ("Credit Facility"), and as a result $46.3 million of debt was classified as current
and included in current liabilities. A waiver of these
financial covenants was obtained subsequent to quarter end on
August 11, 2017. As a result of
the waiver, further drawdowns on the Credit Facility are currently
restricted and the Company must maintain a minimum cash balance of
$1 million. In the
event that the Company is unable to obtain amendments or waivers
from the lender in the future, the lender may demand repayment.
If the lender demands repayment and management is unable to
secure alternate sources of funding, the Company's liquidity
position could be impacted.
Management is currently focused on increasing free cash flow at
the Parral project and is actively exploring alternatives to
de-lever its balance sheet. These alternatives may include seeking
strategic investments, acquisitions and divestitures of or joint
ventures on certain of the Company's assets. There can be no
assurances that the Company will be successful in obtaining any of
these alternate sources of funding.
This news release should be read in conjunction with the
condensed consolidated interim financial statements, notes to the
financial statements, and management's discussion and analysis for
the quarter ended June 30, 2017,
which have been filed on SEDAR and are available on the Company's
website.
Technical information contained in this news release with
respect to GoGold has been reviewed and approved by Mr.
Bob Harris, P.Eng., who is a
qualified person for the purposes of NI 43-101.
CAUTIONARY STATEMENT:
The securities described herein
have not been, and will not be, registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"), or
any state securities laws, and may not be offered or sold within
the United States or to, or for
the benefit of, U.S. persons (as defined in Regulation S under the
U.S. Securities Act) except in compliance with the registration
requirements of the U.S. Securities Act and applicable state
securities laws or pursuant to exemptions therefrom. This release
does not constitute an offer to sell or a solicitation of an offer
to buy of any of GoGold's securities in the United States.
This news release may contain "forward-looking information" as
defined in applicable Canadian securities legislation. All
statements other than statements of historical fact, included in
this release, including, without limitation, statements regarding
the future plans and objectives of GoGold, constitute
forward-looking information that involve various risks and
uncertainties. Forward-looking information is based on a
number of factors and assumptions which have been used to develop
such information but which may prove to be incorrect, including,
but not limited to, assumptions in connection with the continuance
of GoGold and its subsidiaries as a going concern, general economic
and market conditions, mineral prices, the accuracy of mineral
resource estimates, and the ability to satisfy all conditions to
funding of the second tranche under the credit
agreement. There can be no assurance that such
information will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
forward-looking information.
Important factors that could cause actual results to differ
materially from GoGold's expectations include exploration and
development risks associated with the GoGold's projects, the
failure to establish estimated mineral resources or mineral
reserves, volatility of commodity prices, variations of recovery
rates and global economic conditions. For additional information
with respect to risk factors applicable to GoGold, reference should
be made to GoGold's continuous disclosure materials filed from time
to time with securities regulators, including, but not limited to,
GoGold's Annual Information Form. The forward-looking information
contained in this release is made as of the date of this
release.
Cautionary non-IFRS Measures and Additional IFRS
Measures
The Company believes that investors use certain
non-IFRS and additional IFRS measures as indicators to assess
mining companies. They are intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared with IFRS. Non-IFRS
and additional IFRS measures do not have a standardized meaning
prescribed under IFRS and therefore may not be comparable to
similar measures presented by other companies.
Additional IFRS measures that are presented on the face of the
Company's consolidated statements of comprehensive income include
"Operating (loss) income". These measures are intended to provide
an indication of the Company's mine and operating performance.
"Cash flow from operating activities before changes in non-cash
working capital" is a non-IFRS performance measure that could
provide an indication of the Company's ability to generate cash
flows from operations, and is calculated by adding back the change
in non-cash working capital to "Net cash used in operating
activities" as presented on the Company's consolidated statements
of cash flows. Per ounce measures are calculated by dividing the
relevant mining and processing costs and total costs by the ounces
of metal sold in the period. "Cash costs per ounce" and "all-in
sustaining costs per ounce" as used in this analysis are non-IFRS
terms typically used by mining companies to assess the level of
gross margin available to the Company by subtracting these costs
from the unit price realized during the period. These non-IFRS
terms are also used to assess the ability of a mining company to
generate cash flow from operations. There may be some variation in
the method of computation of these metrics as determined by the
Company compared with other mining companies. In this context,
"cash costs per ounce" reflects the cash operating costs allocated
from in-process and dore inventory associated with ounces of silver
and gold sold in the period. "Cash costs per ounce" may vary from
one period to another due to operating efficiencies, grade of
material processed and silver/gold recovery rates in the period.
"All-in sustaining costs per ounce" include total cash costs,
exploration, corporate and administrative, share based compensation
and sustaining capital costs. For a reconciliation of non-IFRS and
IFRS measures, please refer to the Management Discussion and
Analysis dated August 14, 2017, for
the quarter ended June 30, 2017, as
presented on SEDAR.
SOURCE GoGold Resources Inc.