Cash & cash equivalent balance of
USD$98.4 million
Effective January 1,
2018, the Company has changed its presentation currency to
U.S. dollars. This change is applied retroactively to restate
comparative financial statements. Unless otherwise stated, all
amounts discussed herein are denominated in U.S. dollars
(2)
THUNDER BAY, ON, May 8, 2018 /CNW/ - PREMIER GOLD MINES
LIMITED (TSX: PG) ("Premier", "the Company") is pleased to
announce its operating results for the three months ended
March 31, 2018. The Company
previously released its production results for the first quarter in
its news release dated April 17,
2018.
Premier 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. Cash flows generated from
operations are being used to aggressively advance several projects
within the Company's portfolio including two new mining operations
to be built in 2018.
2018 First Quarter Highlights
- Consolidated production of 30,550 ozs Au and 59,826 ozs Ag
- Sales of 29,275 ozs Au at an average realized
price(1) of $1,300/oz
- Cash costs(1) of $705/oz Au sold
- All-in-sustaining costs ("AISC")(1) of $824/oz Au sold
- Revenue of $39.2 million
- Operating income of $9.6
million
- Net loss of $2.0 million
- Cash balance of $98.4 million and
inventory of 8,591 ozs Au and 30,805 ozs Ag
- Released updated mineral reserve and resource estimates for the
South Arturo and Mercedes Mine Properties
2018 Financial Highlights – For the three
months ended March 31, 2018 and
2017
The Company produced a total of 30,550 ounces of gold and 59,826
ounces of silver during Q1 2018 compared to 50,979 ounces of gold
and 98,382 ounces of silver during Q1 2017.
Co-product cash costs(1) were $705 and AISC(1) were $824 per ounce of gold sold. Co-product
cash costs(1) were $11 and
AISC(1) were $13 per ounce
of silver sold.
The Company reported $39.2 million
in revenue and income from mining operations of $9.6 million during Q1 2018. The reduction
in revenue and operating income when compared to Q1 2017 is
primarily a result of decreased production from South Arturo where
mining of the Phase 2 pit was completed in 2017. Programs to
support the Company's longer-term objective of increased annual
production over the next three to five years resulted in
$6.5 million in exploration expense,
that when factored with the reduction in mine operating income
during the period contributed to a net loss of $2.0 million. Total capital spending was
$5.3 million.
The Company carried a cash balance of $98.4 million and inventory of 8,591 ounces of
gold and 30,805 ounces of silver at the end of the quarter.
Table 1: Selected Operational and Financial Information
|
|
Three months
ended
March
31
|
(in millions of
U.S. dollars, unless otherwise stated)
(iv)
|
|
2018
|
2017
|
Ore milled
|
tonnes
|
313,850
|
320,843
|
|
|
|
|
Gold
produced
|
ounces
|
30,550
|
50,979
|
Silver
produced
|
ounces
|
59,826
|
98,382
|
Gold sold
|
ounces
|
29,275
|
51,594
|
Silver
sold
|
ounces
|
66,210
|
73,834
|
Realized
Price (2017 as restated)
(iii)
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,300
|
1,230
|
Average realized
silver price (i,ii)
|
$/ounce
|
17
|
17
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
705
|
385
|
Co-product all in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
824
|
432
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
11
|
7
|
Co-product all in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
13
|
8
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
691
|
371
|
By-product all in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
816
|
420
|
Financial
Measures (2017 as restated)
(iii)
|
|
|
|
Gold
revenue
|
m $
|
37.9
|
63.3
|
Silver
revenue
|
m $
|
1.2
|
1.3
|
|
Net
revenue
|
m $
|
39.2
|
64.5
|
Mine operating
income
|
m $
|
9.6
|
21.5
|
Net income
(loss)
|
m $
|
(2.0)
|
5.1
|
Earnings (loss) per
share
|
/share
|
(0.01)
|
0.02
|
EBITDA
(i,ii)
|
m $
|
9.4
|
33.7
|
Cash & cash
equivalents balance
|
m $
|
98.4
|
110.7
|
Cash flow from
operations
|
m $
|
0.4
|
29.6
|
Free cash flow
(i,ii)
|
m $
|
(5.0)
|
25.1
|
Exploration
expenditures
|
m $
|
6.5
|
7.0
|
Capital expenditures
- sustaining (i,ii)
|
m $
|
1.8
|
1.9
|
Capital expenditures
- expansionary (i,ii)
|
m $
|
3.5
|
2.6
|
|
|
|
|
(i) A cautionary note regarding
Non-IFRS financial metrics is included in the "Non-IFRS Measures"
section of the Q1-2018 Management 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 the Q1-2018 Management
Discussion and Analysis.
|
(iii) 2017
restated for the presentation currency change as discussed in the
"Critical Accounting Judgement and Estimates, Policies and Changes"
section of Q1-2018 Management Discussion and Analysis.
|
(iv)
May not add due to rounding.
|
South Arturo
The South Arturo Mine in Nevada, a joint venture operated by Barrick
Gold Corporation ("Barrick"), delivered exceptional results during
the quarter. Processing of stockpiled ore from the Phase 2
open pit during the first quarter exceeded full-year gold
production guidance with a total of 15,541 ounces delivered to
Premier.
Two new mining operations are being constructed at South Arturo
in 2018; the Phase 1 open pit and the El Nino underground mine.
First quarter operating results for South Arturo are provided in
Table 2.
Table 2: South Arturo Financial and Operating Results
|
|
Three months
ended
March
31
|
(in millions of
U.S. dollars, unless otherwise stated)
(v)
|
|
2018
|
2017
|
Ore &
Metals
|
|
|
|
Ore milled
|
Tonnes
|
145,536
|
154,053
|
Gold
produced
|
Ounces
|
15,541
|
28,815
|
Gold sold
|
Ounces
|
12,095
|
34,700
|
Silver
produced
|
Ounces
|
2,456
|
9,810
|
Average gold
grade
|
grams/t
|
3.95
|
6.55
|
Average gold recovery
rate
|
%
|
84.1
|
88.8
|
Realized
Price (2017 as restated)
(iv)
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,317
|
1,242
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
398
|
244
|
Co-product all in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
439
|
261
|
By-product cash costs
per ounce of gold sold (i,ii,iii)
|
$/ounce
|
398
|
244
|
By-product all in
sustaining costs per ounce of gold sold
(i,ii,iii)
|
$/ounce
|
439
|
261
|
Financial
Measures (2017 as
restated) (iv)
|
|
|
|
Gold
revenue
|
m $
|
15.9
|
43.1
|
Mine operating
income
|
m $
|
7.2
|
15.8
|
Exploration
expenditures
|
m $
|
0.1
|
-
|
Capital expenditures
- sustaining (i,ii)
|
m $
|
-
|
0.1
|
Capital expenditures
- expansionary (i,ii)
|
m $
|
0.5
|
-
|
|
(i)
A cautionary note regarding Non-IFRS metrics is included in the
"Non IFRS Measures" section of the Q1-2018 Management Discussion
and Analysis.
|
(ii)
Cash costs, all in sustaining costs, sustaining and growth
capital expenditures as well as average realized goldsilver price
per ounce are Non-IFRS metrics
and discussed in the section "Non-IFRS Measures" of the Q1-2018
Management Discussion and Analysis.
|
(iii) Given the small nature
and timing of South Arturo silver output, no silver by-product
credits are reported.
|
(iv) 2017
restated for the presentation currency change as discussed in the
"Critical Accounting Judgement and Estimates, Policies and Changes"
section of the Q1-2018 Management Discussion and
Analysis.
|
(v) May
not add due to rounding.
|
Cash costs(1) for Q1 2018 were $398 and AISC(1) were $439 per ounce of gold sold.
Capital expenditures of $0.5
million were incurred for machinery and equipment, and
development work continued on the Phase 1 open pit and El Nino
underground deposits. Construction of the Phase 1 pit is expected
during the second quarter and El Nino in H2-2018.
During the quarter, the Company released an updated mineral
reserve and resource estimate which supported organic growth
through successful exploration and technical de-risking of the
Phase 1 and Phase 3 open pit projects as well as the El Nino
underground project. Highlights of this statement included a
333% increase in Proven and Probable mineral reserves to 2.6
million tonnes grading 3.18 g/t Au containing 269,800 oz
Au(3). Mineral Resources include Measured and
Indicated Resources of 7.6 million tonnes grading 1.18 g/t Au
containing 286,200 ozs Au. Inferred Resources totaled 0.58 million
tonnes grading 1.66 g/t Au containing 30,900 ozs
Au(3).
Drilling in 2018 will continue to focus on near-pit delineation,
underground expansion, and testing additional prospective target
areas.
Mercedes
The Mercedes Mine is located 150 kilometres north-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 utilizing underground
modified overhand cut-and-fill and narrow-vein longitudinal
longhole mining methods at an ore extraction rate of approximately
2,000 tonnes per day.
First quarter operating results for the Mercedes Mine are
provided in Table 3.
Table 3: Mercedes Financial and Operating Results
|
|
|
Three months
ended
March 31
|
(in millions of
U.S. dollars, unless otherwise
stated)(iv)
|
|
2018
|
2017
|
Ore milled
|
tonnes
|
168,314
|
166,790
|
Gold
produced
|
ounces
|
15,009
|
22,164
|
Silver
produced
|
ounces
|
57,370
|
88,572
|
Gold sold
|
ounces
|
17,180
|
16,894
|
Silver
sold
|
ounces
|
66,210
|
73,834
|
Average gold
grade
|
grams/t
|
2.91
|
4.34
|
Average silver
grade
|
grams/t
|
31.78
|
43.90
|
Average gold recovery
rate
|
%
|
95.2
|
95.4
|
Average silver
recovery rate
|
%
|
33.4
|
37.3
|
Realized
Price (2017 as
restated)(iii)
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,287
|
1,204
|
Average realized
silver price (i,ii)
|
$/ounce
|
17
|
17
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
921
|
675
|
Co-product all in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,096
|
785
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
11
|
7
|
Co-product all in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
13
|
8
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
897
|
632
|
By-product all in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,081
|
746
|
Financial
Measures (2017 as restated)
(iii)
|
|
|
|
Gold
revenue
|
m $
|
22.0
|
20.2
|
Silver
revenue
|
m $
|
1.2
|
1.3
|
|
Total
revenue
|
m $
|
23.2
|
21.5
|
Mine operating
income
|
m $
|
2.4
|
5.7
|
Exploration
expenditures
|
m $
|
0.6
|
0.3
|
Capital expenditures
- sustaining (i,ii)
|
m $
|
1.8
|
1.8
|
Capital expenditures
- expansionary (i,ii)
|
m $
|
2.6
|
1.8
|
|
(i)
A cautionary note regarding Non-IFRS financial metrics is included
in the "Non-IFRS Measures" section of the Q1-2018 Management
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 the Q1-2018 Management Discussion and
Analysis.
|
(iii) 2017
restated for the presentation currency change as discussed in the
"Critical Accounting Judgement and Estimates, Policies and Changes"
section of this Management Discussion and Analysis.
|
(iv)
May not add due to rounding.
|
Mercedes production for Q1 2018 was 15,009 ounces of gold and
57,370 ounces of silver. Co-product cash costs(1) were
$921 and AISC(1) were
$1,096 per ounce of gold sold.
The cost increase from that reported for Q1 2017 relates
primarily to differences in orebody geometries identified during
development at Diluvio and Rey de
Oro that led to additional delineation drilling and required
adjustments to stope designs. This resulted in lower mined
grades from the processing of development ore and less than
planned stope ore available during the period. As a
result, production continues to be weighted to the second half
of 2018.
During the quarter, the Company released updated mineral
reserves and mineral resources which highlighted a small increase
in mineral reserves to 3.29 million tonnes grading 3.94 g/t
containing 417,000 ozs Au net of depletion from June 30, 2016. A 34% increase in measured and
indicated mineral resources was realized including 3.68 million
tonnes grading 4.32 g/t containing 511,000 ozs Au and an increase
in inferred mineral resources by 23% to 1.63 million tonnes at 4.2
g/t containing 222,000 ozs Au(4).
Mining initiatives to improve grade include increased use of
split-blasting in ore headings, targeted applications of jackleg
mining, and optimization of ground support systems. These
initiatives will capitalize on production opportunities in narrow
vein zones and improve advance rates in more difficult rock
conditions.
The 2018 exploration program will focus on adding and converting
mineral resources to reserves close to existing workings,
supporting mine production, delineating extensions of the main mine
trend and testing new geological targets.
During the first quarter, five drill rigs completed 11,501
metres in 72 holes. Drilling at Brecha Hill, Casa Blanca, and Corona de Oro yielded the best results and
indicate the potential for additional resources and reserves.
Exploration activity in the quarter included additional testing of
the Aida vein zone that is located proximal to the main mine
workings as well as initial drilling at "Olvidada", a recently
identified near-mine exploration target.
Capital expenditures of $4.4
million were incurred for mine development in support of
expanded mining operations and increased production.
Cove and McCoy-Cove
A total of 2,745 metres of drilling in four holes was completed
on the Cove property during the first quarter and was focused on
defining resources in the Helen and Gap zones.
The Company is in the final stages of completing a Preliminary
Economic Assessment ("PEA") that is expected to be released at the
Company's upcoming Investor Day. Preliminary engineering, and
dewatering and baseline studies have been initiated to advance an
underground exploration program planned in the second half of
2018..
On January 10, 2018 Premier signed
an agreement that provides Barrick with an option to earn up to a
60% interest in the McCoy-Cove Property that surrounds the main
deposit area. Exploration on the Joint Venture Property began in
April and will include detailed geophysics, surface mapping and
soil sampling prior to drill testing several prospective
targets.
Greenstone Gold Mines
Environmental, community and aboriginal engagement activities
continued during the quarter at Hardrock. Recent submissions
include 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") in July
2017. Progress also continues with the optimization of the
previously released Feasibility Study (see November 16, 2016 press release) in order to
further de-risk the project. A total of $3.4 million was spent by Greenstone Gold during
the first quarter ($2.6 million in
2017). All project expenditures will continue to be funded 100% by
our joint venture partner Centerra Gold Inc. until the remaining
development commitment of $87.4
million (C$112.7 million) has
been drawn down.
Hasaga
A total of 7,442 metres of drilling was completed at Hasaga
during the first quarter of 2018. The drilling continues to
infill and expand mineralization within the C-Zone and to further
test the D-Zone and Buffalo target areas. Completion of a mineral
resource estimate for the mineralization located down-plunge of the
historic Hasaga gold mine is envisioned upon completion of the
current drill program.
CEO Commentary
"With strong consolidated production realized from Premier's
mining operations during the first quarter, we expect to meet or
beat consolidated annual gold production guidance in 2018" stated
Ewan Downie, President and CEO of
Premier. "Our continued strong cash position will fund the
near-term development of three additional deposits from within our
project portfolio, including the construction of two new mining
operations at the South Arturo JV in Nevada".
2018 Guidance
The Company expects to meet or exceed consolidated production
guidance for 2018 of 85,000 to 95,000 ounces of gold, cash
operating costs(1) of $690/oz to $740/oz
Au and AISC(1) of $800/oz
to $850/oz Au.
Table 4: 2018 production and cost guidance
|
Guidance
2018
|
Mine
|
Production
ounces
|
Cash Cost
per ounce
(1)
|
All in Sustaining
Cost
per ounce
(1)
|
South
Arturo
|
5,000 -
10,000
|
$600 -
$650
|
$620 -
$670
|
Mercedes
|
80,000 -
85,000
|
$700 -
$750
|
$820 -
$870
|
Consolidated
|
85,000 -
95,000
|
$690 -
$740
|
$800 -
$850
|
Mercedes mine is
forecasting 300,000 - 325,000 oz silver for 2018.
|
All abbreviations used in this press release are available by
following this link (click here).
Premier Gold Mines First Quarter Results - Conference
Call
The Company will host the First Quarter 2018 financial results
conference call and webcast, May 9,
2018 at 10:00 am EDT.
Q1 2018 Results Conference Call Information
Toll Free (North
America): 1-888-231-8191
International: 1-647-427-7450
Conference ID: 6857329
Webcast Link
https://event.on24.com/wcc/r/1658620/590669E23AFEBBECB7A109DD42FFAF70
Conference Call Replay
The conference call replay will be available from 1:00pm EDT on May 9,
2018 until 11:59 pm EDT on
May 16, 2018.
Toll Free Replay Call (North
America): 1-855-859-2056
International Replay Call: 1-416-849-0833
Passcode: 6857329
Investor Day – May 15,
2018
Premier would like to cordially invite all analysts, investors
and interested people to an investor day to highlight exploration
and development initiatives completed by the Company to date and
discuss plans for the remainder of the year. The meeting will be
held Tuesday May 15, 2018 at
10:00am EDT at the Toronto Board of Trade, 1 First Canadian
Place. For those that cannot attend in person a webcast and
conference call dial-in are available.
Details for the conference call and webcast can be found below
and will be accessible on the Company's website.
Toll Free (North America):
1-888-231-8191
International: 1-647-427-7450
Conference ID: 4262118
Investor Day Webcast Link
https://event.on24.com/wcc/r/1658624/8401841F6E9EA071503AA06A24BE1B5D
Investor Day Conference Call Replay
The conference call replay will be available from 3:00pm EDT on May 15,
2018 until 11:59 pm EDT on
May 22, 2018.
Toll Free Replay Call (North
America): 1-855-859-2056
International Replay Call: 1-416-849-0833
Passcode: 4262118
Notes
- A cautionary note regarding Non-IFRS financial metrics is
included in the "Non-IFRS Measures" section of the Q1-2018
Management Discussion and Analysis.
- Accounting policy change is discussed in Note 2(c) to the Q1
2018 unaudited condensed consolidated interim financial statements
of the Company.
- See Technical Report on the South Arturo Mine, Elko County, State
of Nevada, U.S.A. dated March 26,
2018.
- See Press Release dated March 26,
2018
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"), free cash flow,
capital expenditures (growth), 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 regarding the Company's achievement
of the full-year projections for ounce production, production
costs, ASIC costs per ounce, cash cost per ounce and realized
gold/silver price per ounce, the Company's ability to meet annual
operations estimates, and statements about strategic plans,
including future operations, future work programs, capital
expenditures, discovery and production of minerals, price of gold
and currency exchange rates 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