THUNDER BAY, ON, Nov. 7, 2017 /CNW/ - PREMIER GOLD MINES
LIMITED (TSX:PG) ("Premier", "the Company") is pleased to
announce its operating results for the third quarter ended
September 30, 2017.
Note: Unless otherwise stated, all amounts discussed
herein are denominated in Canadian dollars.
2017 Third Quarter Consolidated Highlights
- Production of 26,677 ounces of gold and 82,856 ounces of
silver
- Gold sales of 37,920 ounces at an average realized price(i) of
$1,604 (US$1,282) per ounce
- Co-product cash costs(i) of US$646 per ounce of gold (ii)
- Co-product all-in sustaining costs ("AISC")(i) of
US$782 per ounce of gold
- Net revenue of $62.3 million
(US$47.7 million)
- Operating income of $17.0 million
(US$13.0 million)
- Net income of $3.9 million
(US$3.0 million)
- Quarter end cash balance of $171.8
million (US$137.6 million)
plus inventory of 5,933 ounces of gold and 39,659 ounces of
silver
- Cash flow from operating activities of $25.6 million (US$19.6
million) or $0.12/share
(US$.09/share)
- Free cash flow(i) of $17.1
million (US$13.1 million) or
$0.08/share (US$0.06/share) after an investment of
$6.9 million (US$5.3 million) in exploration and
pre-development programs and $8.4
million (US$6.4 million) in
capital expenditures.
(i) See
"Non-IFRS Measures" section. A Cautionary note and further
information regarding Non-IFRS financial metrics is included in the
"Non-IFRS Measures" section of the Q3-2017 Management's Discussion
and Analysis
(ii) Cash costs, all-in sustaining costs, free cash flow,
EBIDTA, as well as average realized gold price per ounce are
Non-IFRS metrics and discussed in the "Non-IFRS Measures" section
of the Q3-2017 Management's Discussion and Analysis
|
"Strong operating cash flows since establishing production just
over one year ago have brought strength to our balance sheet and
continue to be the sole source of funding for project development
initiatives across the Company," stated Steve Filipovic, CFO of Premier. "This has
allowed us to reduce short term debt while continuing to build
value across our portfolio of advanced stage projects."
Consolidated Financial Highlights – For the three months
ended September 30, 2017
Mining operations during the third quarter generated earnings
before interest, taxes, depreciation and amortization ("EBITDA") of
$20.4 million (US$15.6 million), and net income of $3.9 million (US$3.0
million) or $0.02/share
(US$0.01/share). This resulted in a
record quarter-end cash balance of $171.8
million (US$137.6
million). Production from South Arturo continues to
surpass plan and budget, and with targeted mining initiatives at
Mercedes we remain on track to meet 2017 full-year gold production
guidance of 130,000-140,000 ounces.
The Company remains focused on aggressively pursuing its
portfolio of advanced stage development projects. Exploration,
evaluation and pre-development costs expensed during the quarter
totalled $6.9 million (US$5.3 million). Despite this significant
investment, the Company generated earnings per share of
$0.02 during the quarter. After
taking into account this investment, and the $8.4 million (US$6.4
million) in capital expenditures the Company generated free
cash flow of $17.1 million
(US$13.1 million) during the
quarter. Strong operating results have enabled the Company to
continue to build its balance sheet while adding value to its
development portfolio.
Millions
CA$,
except for earnings
per share
|
Three
months
ended
September
30, 2017
|
Nine
months
ended
September
30, 2017
|
Millions
US$,
except for earnings
per share
|
Three
months
ended
September
30, 2017
|
Nine
months
ended
September
30, 2017
|
|
|
|
|
|
|
Net
revenue
|
62.3
|
222.2
|
Net
revenue
|
47.7
|
170.1
|
Mine operating
Income
|
17.0
|
74.2
|
Mine operating
Income
|
13.0
|
56.8
|
EBITDA
(i)
|
20.4
|
96.0
|
EBITDA
(i)
|
15.6
|
73.4
|
Net income
|
3.9
|
25.2
|
Net income
|
3.0
|
19.3
|
Earnings per
share
|
0.02
|
0.12
|
Earnings per
share
|
0.01
|
0.09
|
Change in
cash
|
15.0
|
52.1
|
Change in
cash
|
12.0
|
41.7
|
|
|
|
|
|
|
|
Nine
months
ended
September
30, 2017
|
Nine
months
ended
September
30, 2016
|
|
Nine
months
ended
September
30, 2017
|
Nine
months
ended
September
30, 2016
|
|
|
|
|
|
|
EBITDA
(i)
|
96.0
|
(19.7)
|
EBITDA
(i)
|
73.4
|
(14.9)
|
Cash flow from
operating activities
|
81.2
|
(38.9)
|
Cash flow from
operating activities
|
62.2
|
(29.4)
|
Cash and cash
equivalents
|
171.8
|
42.1
|
Cash and cash
equivalents
|
137.6
|
32.1
|
|
(i) See
"Non-IFRS Measures" section. A cautionary note and further
information regarding Non-IFRS financial metrics is included in the
"Non-IFRS Measures" section of the Q3-2017 Management's Discussion
and Analysis
|
Operational Highlights – For the three months ended
September 30, 2017
Mercedes Mine - Sonora State, Mexico
Third quarter co-product cash costs were US$793 per ounce of gold sold and AISC were
US$998 per ounce of gold. Production
during the third quarter was 18,564 ounces of gold and 82,856
ounces of silver, which is slightly below budget due to the mine
site team assisting the local community in suppressing forest and
grass fires in the area over a two week period as well as
adjustments to the mining sequence to address localized ground
conditions.
To achieve future throughput and stockpile targets, the Mercedes
mine team continues to develop additional mine workings including
the Diluvio deposit, which will be fully operational in the fourth
quarter, and the Rey De Oro deposit where access was gained late in
the third quarter.
Key capitalized expenditures during the quarter included
$2.4 million (US$1.9 million) in exploration, $2.8 million (US$2.2
million) in equipment and building infrastructure, and
$2.2 million (US$1.8 million) in underground mine
development.
The 2017 exploration program, targeting the conversion of
resources to reserves and drilling near-mine resource
opportunities, will continue for the remainder of 2017. The focus
remains on new mineralization close to existing workings to
supplement production, extensions to mineralization along strike of
the main mine trend and testing new geological targets. During the
third quarter up to ten underground and surface drill rigs were
active on the property.
Mercedes
Operational Results
|
|
Three months
ended
September 30,
2017
|
Nine months
ended
September 30,
2017
|
Ore milled
|
Tonnes
|
156,402
|
501,075
|
Gold
produced
|
Ounces
|
18,564
|
62,621
|
Silver
produced
|
Ounces
|
82,856
|
260,902
|
Gold sold
|
Ounces
|
24,894
|
68,167
|
Silver
sold
|
Ounces
|
90,545
|
261,735
|
Average gold
grade
|
grams/tonne
|
3.88
|
4.09
|
Average silver
grade
|
grams/tonne
|
36.50
|
38.97
|
Average gold recovery
rate
|
%
|
95.4
|
95.3
|
Average silver
recovery rate
|
%
|
45.2
|
41.6
|
Average realized gold
price (i,ii)
|
US$/ounce
|
1,292
|
1,254
|
Average realized
silver price (i,ii)
|
US$/ounce
|
16.91
|
16.98
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
US$/ounce
|
793
|
687
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
US$/ounce
|
998
|
839
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
US$/ounce
|
10.35
|
9.34
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
US$/ounce
|
13.49
|
11.49
|
|
|
(i)
|
See "Non-IFRS
Measures" section. A cautionary note regarding Non-IFRS metrics is
included in the "Non-IFRS Measures" section of the Q3-2017
Management's Discussion and Analysis
|
(ii)
|
Cash costs, all-in
sustaining costs as well as average realized gold price per ounce
are Non-IFRS metrics and discussed in the "Non-IFRS Measures"
section of the Q3-2017 Management's Discussion and
Analysis
|
South Arturo Mine – Carlin
Trend, Nevada
The South Arturo Mine is a joint venture between Premier and
Barrick Gold Corporation's wholly-owned subsidiary of Barrick Gold
Exploration Inc. ("Barrick"). The mining of the Phase 2 pit
continues to exceed production forecasts and has resulted in a
substantial stockpile that remains to be processed.
South Arturo
Operating Results
|
|
Three months
ended
September 30,
2017
|
Nine months
ended
September 30,
2017
|
Ore milled
|
Tonnes
|
79,479
|
345,998
|
Gold
produced
|
ounces
|
8,113
|
52,652
|
Gold sold
|
ounces
|
13,026
|
64,559
|
Average gold
grade
|
grams/tonne
|
3.79
|
5.42
|
Average gold recovery
rate
|
%
|
83.8
|
87.4
|
Average realized gold
price (i,ii)
|
US$/ounce
|
1,264
|
1,249
|
Co-product cash costs
per ounce of gold sold (i,ii,iii)
|
US$/ounce
|
363
|
295
|
Co-product all-in
sustaining costs per ounce of gold sold (i,ii,iii)
|
US$/ounce
|
371
|
336
|
|
|
(i)
|
See "Non-IFRS
Measures" section. A cautionary note regarding Non-IFRS metrics is
included in the "Non-IFRS Measures" section of the Q3-2017
Management's Discussion and Analysis
|
(ii)
|
Cash costs, all-in
sustaining costs as well as average realized gold price per ounce
are Non-IFRS metrics and discussed in the "Non-IFRS Measures"
section of the Q3-2017 Management's Discussion and
Analysis
|
(iii)
|
South Arturo had no
silver related by-product credits
|
Third quarter production, attributable to Premier, was 8,113
ounces of gold with co-product cash costs of US$363 per ounce and AISC of US$371 per ounce of gold sold.
Primary mining of the Phase 2 pit was completed early in the
third quarter and ore from the related stockpile will continue to
be processed at Barrick's Goldstrike facility for the balance of
the year. Drilling from the Phase 2 pit into the underlying El Nino
deposit identified additional mineralization proximal to the
existing pit and it is expected that some additional mining will
occur prior to year-end. Backfilling of the Phase 2 pit was
completed in the third quarter of 2017 and drilling of the El Nino
deposit from within the pit is underway. Additional activities
during the quarter included ongoing evaluation of the Phase 1 and
Phase 3 open pit opportunities and exploration on the Ardent
Anticline and South Hinge targets.
Work continues to advance the proposed El Nino underground and
Phase 1 open pit scenarios. If approved, development could begin in
2018. Drilling to complete additional metallurgical and
geotechnical characterization is underway at the Phase 1 pit
including bottle roll and column leach testing to assess the
potential of processing run-of-mine (ROM) material from Phase 1.
This work is being advanced ahead of schedule. Drilling is underway
to further define the El Nino underground deposit down plunge of
the current Phase 2 pit. More than 1,200 metres of core drilling
and 3,000 metres of RC drilling in the Upper Zone are designed to
increase confidence in the geological model and to support
additional metallurgical work. More than 2,000 metres of
Cubex drilling is also planned from the elevation of proposed
underground portals to infill gaps in the Upper Zone, delineate
potential voids, and condemn areas around the potential underground
development.
In an effort to advance the Phase 3 pit project into future mine
planning, drilling and metallurgical work is being performed. The
program is targeting the higher-grade mineralized breccia in the
main zone as well as the potential ROM material in the upper parts
of the deposit. Future drilling will continue to fill significant
gaps in the model and extend the breccia zone in an effort to
increase contained ounces.
Exploration efforts on greenfields targets at South Arturo were
accelerated during the third quarter. Three drill holes will soon
be completed on the Ardent anticline, a higher priority target
consisting of favourable structure and geochemistry with the
potential to host Carlin-style mineralization. North-south trending
faults, a favorable characteristic of Carlin deposits are present
in the area and associated with pronounced soil and rock chip
geochemistry. Drilling at the South Hinge target, characterized by
Carlin-style mineralization located adjacent to the Phase 3 pit
target, will test large gaps in previous drilling with the
potential to expand the breccia target. Results from the 2017 drill
program are expected to be released at year-end.
McCoy-Cove – Battle Mountain Trend, Nevada
Construction of a 2,400-metre pipeline and a 16-acre rapid
infiltration basin (RIB) were completed during the quarter. In
addition, primary and monitoring wells were drilled to complete a
hydrologic flow test to determine expected water flows during the
underground development planned for 2018. Additionally, full
metallurgical studies and detailed engineering work have been
initiated in advance of an updated resource estimate and a
Preliminary Economic Assessment (PEA) that is expected to be
completed during the fourth quarter. As part of the
underground permitting process, Premier is working closely with
community stakeholders as well as State and Federal agencies. A
total of $2.2 million (US$1.7 million) was spent on exploration and
development during the quarter.
Greenstone Gold Mines ("GGM") – Ontario, Canada
Environmental and community and aboriginal engagement activities
were the primary focus during the quarter. The GGM team prepared to
submit the Hardrock Project Environmental Impact Statement /
Environmental Assessment (EIS/EA) to the Canadian Environmental
Assessment Agency (CEAA) and the Ministry of the Environment and
Climate Change (MOECC) to initiate the formal environmental review
part of the permitting process. The final EIS/EA was submitted in
July. Progress also continues with the optimization of the
feasibility study as part of a mandate to further de-risk the
project. A total of $2.4
million (US$1.9 million) was
spent by Greenstone Gold during the quarter. All project
expenditures will continue to be funded 100% by our joint venture
partner Centerra Gold Inc. until the remaining development
commitment of $121.0 million
(US$96.9 million) has been
spent.
2017 Guidance
On July 18, 2017 the Company
increased its full-year production guidance to 130,000 to 140,000
ounces of gold and 340,000 to 365,000 ounces of silver.
Production estimates for 2017 are derived from life of mine
operating plans prepared on the basis of mineral reserves
associated with each property. The underlying assumptions for the
estimates are presented in the table below.
Gold
Production
US$
unless otherwise
noted
|
Production
ounces
|
Realized Gold Price
per
ounce (i)
|
Cash Cost per
ounce (i)
|
AISC per
ounce (i)
|
Guidance
Year 2017
|
Guidance
Year 2017
|
Guidance
Year 2017
|
Guidance
Year 2017
|
South
Arturo
|
45,000 -
50,000
|
$1,250
|
$440 -
$470
|
$450 -
$480
|
Mercedes
|
85,000 -
90,000
|
$1,250
|
$680 -
$710
|
$810 -
$840
|
Consolidated
|
130,000 -
140,000
|
$1,250
|
$580 -
$610
|
$660 -
$690
|
|
|
|
|
|
Actual YTD
(Consolidated)
|
115,273
|
$1,252
|
$496
|
$595
|
|
|
(i)
|
See "Non-IFRS
Measures" section. A cautionary note regarding Non-IFRS metrics is
included in the "Non-IFRS Measures" section of the Q3-2017
Management's Discussion and Analysis
|
Conference Call – November 8,
2017 10:00 am
Premier executives will host a conference call and webcast to
discuss the above results on Wednesday,
November 8, 2017 at 10:00 am
EST. To access the call please follow the instructions below
or visit the Company's website at
www.premiergoldmines.com.
Toll Free (North
America): 1-888-231-8191
International: 1-647-427-7450
Conference ID: 2083912
Webcast Link
https://event.on24.com/wcc/r/1529551/12B3E661E06B0DF86F1EB97A1D59FF2D
Conference Call Replay
A recording of the conference call and webcast replay will be
available 1:00pm EST on November 8, 2017 until 11:59 pm EST on November
15, 2017.
Toll Free Replay Call (North
America): 1-855-859-2056
International Replay Call: 1-416-849-0833
Passcode: 2083912
The technical information contained in this press release has
been reviewed by Stephen McGibbon,
P. Geo., (Executive VP Corporate and Project Development) and a
Qualified Person within the meaning of National Instrument
43-101.
All undefined abbreviations used in this press release are
available by following this link (click here).
Premier Gold Mines Limited is a gold producer and
respected exploration and development company with a high-quality
pipeline of precious metal projects in proven, accessible and safe
mining jurisdictions in Canada,
the United States, and
Mexico. Premier's team is focused
on creating a low-cost, mid-tier gold producer through its two
producing gold mines; and two advanced multi-million ounce
development projects where permitting and pre-construction
initiatives are in progress.
Non-IFRS Measures
The Company has included certain terms or performance measures
commonly used in the mining industry that are not defined under
International Financial Reporting Standards ("IFRS") in this
document. These include: cash cost per ounce sold, all-in
sustaining cost ("AISC") per ounce sold, free cash flow, EBIDTA,
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 and are
calculated.
Forward Looking Statement
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,
earnings estimates, discovery and production of minerals, price of
gold and currency exchange rates, timing of geological reports,
economic studies (including timing of the McCoy-Cove PEA) 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