Asanko Gold Inc. (“Asanko” or the “Company”) (TSX, NYSE
American: AKG) reports its second quarter (“Q2”) 2018
operating and financial results. The Company released its
production and revenue results for Q2 on July 12, 2018. All amounts
are in US dollars unless otherwise stated. Management will host a
conference call and webcast today at 9am Eastern Time, further
details below.
Q2 2018 Highlights:
- Gold production of 53,501 ounces and half year production of
101,731 ounces, exceeding upper end of H1 2018 guidance of 90,000 –
100,000 ounces
- Quarterly gold sales of 51,785 ounces at an average realized
price of $1,286 per ounce generating gold revenue of $66.6
million
- Mining operations at Nkran returned to steady state levels in
June, mining 178,000 tonnes at 1.9g/t
- Another record quarterly mill throughput achieved with 1.37
million tonnes of ore processed
- No LTIs during the quarter or on a rolling 12-month basis,
maintaining industry leading LTIFR of zero per million man hours
worked
- Operating cash costs2 of $582/oz (Q1 2018: $571/oz) and total
cash costs2 of $646/oz (Q1 2018: $637/oz)
- AISC3 decreased 13% quarter on
quarter to $1,068/oz (Q1 2018: $1,226/oz), while AISC3 of $1,145/oz
for the half year was below the Company’s H1 2018 cost guidance of
$1,200-1,300/oz
- Cash provided by operating
activities of $13.4 million ($28.6 million before working capital
changes), compared to $19.1 million in Q1 2018. The reduction in
cash provided by operating activities was primarily due to change
in non-cash working capital and higher exploration
expenditures
- Net loss attributable to common
shareholders of $142.3 million ($0.63/common share) solely
attributable to the recognition of a loss ($144.6 million) due to
the reclassification of the Company’s Ghanaian subsidiaries to
assets and associated liabilities held for sale, resulting from the
Gold Fields JV Transaction
- Adjusted net income attributable to
common shareholders of $2.3 million ($0.01/common share)
- As at June 30, 2018, including
assets classified as held for sale, the Company had cash and
immediately convertible working capital of $48.1 million, of which
$18.8 million is attributable to Asanko post-completion of the Gold
Fields JV Transaction
- Receipt of amended Environmental
Permit for Esaase which includes a trucking operation
- Completion of $185.0 million Gold
Fields JV Transaction, with Gold Fields acquiring a 50% interest in
all of Asanko’s Ghanaian interests, including the Asanko Gold Mine.
Asanko to remain operator and manager of the Asanko Gold Mine
- Repayment in full of the Red Kite
project debt facility with proceeds from the Gold Fields JV
Transaction, Asanko now debt free
Commenting on the quarter Peter Breese,
President and CEO, said: “The mine’s solid operational
performance for the quarter, predominantly the mill’s fantastic
performance and Nkran resuming steady-state operations, enabled us
to beat the top end of our guidance for the first half of 2018,
producing 101,731 ounces at AISC3 of $1,145/oz. We are well
positioned to meet our H2 2018 and full year guidance.
AISC3 decreased by 13% to $1,068/oz quarter on
quarter, as the Eastern portion of the Nkran Cut 2 pushback was
completed ahead of schedule, resulting in a 32% reduction in
deferred stripping costs. Processing costs also dropped again this
quarter as a result of the mill’s record throughput, posting a 23%
decrease since we commissioned the P5M volumetric plant upgrade in
Q4 2017. We maintained profitable operations this quarter,
reporting an adjusted net income attributable to common
shareholders of $2.3 million or $0.01 per common share.
This quarter pre-production work at Esaase got
underway in anticipation of commencing mining operations in Q1
2019. The focus was primarily on additional infill exploration
drilling and an extensive core re-logging exercise to improve the
understanding of the geology and controls to mineralization within
the Esaase pit. In addition, we also received an amended
Environmental Permit that includes a trucking operation to
transport ore from Esaase to the central processing facility, which
completes the permitting process for Esaase. We expect an initial
development decision to be made by the Joint Venture management
committee in Q4 2018.”
This news release should be read in conjunction with Asanko’s
Management Discussion and Analysis and the Unaudited Condensed
Consolidated Interim Financial Statements for the three and six
months ended June 30, 2018, which are available at www.asanko.com
and filed on SEDAR. |
Key Operating
and Financial Highlights |
|
|
|
Asanko
Gold Mine 100% Basis |
|
|
|
|
Q2 2018 |
Q1 2018 |
Q2 2017 |
Waste Mined
(‘000t) |
|
9,814 |
|
|
11,976 |
|
6,457 |
Ore Mined (‘000t) |
|
945 |
|
|
767 |
|
1,049 |
Average Gold Grade
Mined (g/t) |
|
1.5 |
|
|
1.3 |
|
1.5 |
Strip Ratio (W:O) |
10.4:1 |
15.7:1 |
6.2:1 |
Mining Cost ($/t
mined) |
|
3.65 |
|
|
3.23 |
|
3.22 |
Ore Treated
(‘000t) |
|
1,374 |
|
|
1,269 |
|
887 |
Gold Feed Grade
(g/t) |
|
1.4 |
|
|
1.3 |
|
1.7 |
Gold Recovery (%) |
|
94 |
|
|
93 |
|
94 |
Processing Cost ($/t
treated) |
|
9.95 |
|
|
11.17 |
|
12.80 |
Gold Production
(oz) |
|
53,501 |
|
|
48,229 |
|
46,017 |
|
|
|
|
Gold Sales (oz) |
|
51,785 |
|
|
48,899 |
|
48,461 |
Average Realized Gold
Price ($/oz) |
|
1,286 |
|
|
1,314 |
|
1,238 |
Operating Cash Costs2
($/oz) |
|
582 |
|
|
571 |
|
572 |
Total Cash Costs2
($/oz) |
|
646 |
|
|
637 |
|
634 |
All-in Sustaining
Costs3 ($/oz) |
|
1,068 |
|
|
1,226 |
|
930 |
All-in Sustaining
Margin1 ($/oz) |
|
218 |
|
|
88 |
|
308 |
|
|
|
|
Revenue ($m) |
|
66.8 |
|
|
64.4 |
|
60.2 |
Production Costs,
including Royalties ($m) |
|
33.8 |
|
|
31.6 |
|
31.3 |
Income from Mine
Operations ($m) |
|
16.1 |
|
|
19.5 |
|
14.5 |
Net income (loss)
attributable to common shareholders ($m) |
|
(142.3) |
|
|
2.1 |
|
0.6 |
Net income (loss) per
share attributable to common shareholders |
|
($0.63) |
|
|
$0.01 |
|
$0.00 |
Adjusted net income
attributable to common shareholders ($m) 1 |
|
2.3 |
|
|
2.1 |
|
0.6 |
Adjusted net income per
share attributable to common shareholders1 |
|
$0.01 |
|
|
$0.01 |
|
$0.00 |
|
|
|
|
Cash provided by
operating activities ($m) |
|
13.4 |
|
|
19.1 |
|
33.7 |
Cash provided by
operating activities before working capital changes ($m) |
|
28.6 |
|
|
30.5 |
|
26.7 |
Cash provided by
operating activities per common share1 |
|
$0.06 |
|
|
$0.09 |
|
$0.17 |
|
|
|
|
|
|
|
|
Q2 2018 Operating Results
• The Company produced 53,501 ounces of gold for
Q2 2018 and 101,731 ounces of gold for the half year, exceeding the
upper end of H1 2018 guidance of 90,000 – 100,000 ounces.• Ore
mining rates for Q2 2018 averaged 315,000 tonnes per month (“tpm”)
at an average mining grade of 1.5g/t and a strip ratio of 10.4:1.
Ore tonnes and average grade mined increased from Q1 2018 as steady
state mining operations resumed at Nkran in June.• During the
quarter, the Asanko Gold Mine (“AGM”) sourced ore from Nkran,
Akwasiso, Dynamite Hill and on-surface stockpiles:
- At Nkran, 321,000 tonnes of ore was mined at an average grade
of 1.8 g/t while mining operations focused on progressing the
Eastern portion of the Cut 2 pushback. In June, steady state
operations resumed a month ahead of schedule, mining 178,000 tonnes
at 1.9g/t.
- The Akwasiso satellite deposit delivered 356,000 tonnes of ore
at a grade of 1.1g/t and Dynamite Hill delivered 251,000 tonnes of
ore at an average grade of 1.9 g/t.
• There were no lost time injuries (“LTI”)
reported during the quarter, and the AGM has now achieved over
fifteen months and more than 7.7 million man hours worked without a
single LTI.• During Q2 2018, the processing plant achieved
another quarterly record milling performance of 1.37 million tonnes
(“Mt”), which exceeds the design throughput rate of the recently
upgraded 5Mtpa processing plant. In order to meet the
higher-than-planned throughput, mined ore was supplemented with
lower-grade stockpiled ore, resulting in lower plant feed grades
(1.4g/t), compared to the average grade that was mined during the
period.• Completed the commissioning of the recovery circuit
upgrades and installation of the new upgraded mill motor on the SAG
mill. In addition, a secondary cone crusher was installed during
the quarter, which contributed to a finer product being delivered
to the SAG mill. The addition of this crusher to the circuit
contributed to the significant improvement in processing throughput
rate for the quarter.• Gold recovery continued to exceed
design at 94% despite the elevated mill throughput rates and lower
feed grade.• Completed the commissioning of the P5M recovery
circuit upgrades.• On July 31, 2018, the Company announced the
completion of the $185.0 million JV Transaction with Gold Fields
under which Gold Fields acquired a 50% interest in all of Asanko’s
Ghanaian interests, including the AGM. Asanko to remain operator
and manager of the AGM.• The Company received an amended
Esaase Environmental Permit, which allows for a trucking operation
to haul ore from the large-scale Esaase deposit to the central
processing facility at the AGM. With the receipt of the amended
permit, the Esaase mine is now fully permitted.• In support of
commencing mining operations at Esaase in January 2019, an
extensive pre-production program got underway at Esaase, including
additional infill exploration drilling and an extensive core
re-logging exercise to improve the definition of the geology and
controls to mineralization within the proposed pit and to
facilitate a more robust resource model. All the new data will be
incorporated to enhance the Mineral Resource Estimate and
associated mine plan for Esaase which is targeted to be completed
during Q4 2018.
Q2 2018 Financial
Performance
- The Company recognized revenues of
$66.8 million in Q2 2018 compared to $60.2 million in Q2
2017. The $6.6 million increase in revenues was a result of
higher sales volume, augmented by higher average realized selling
prices.
- Total cost of sales (including
depreciation and depletion and royalties) amounted to $50.7 million
in Q2 2018, an increase of $5.0 million from Q2 2017. The
increase in cost of sales was predominantly due to a $2.5 million
increase in depreciation and depletion resulting from a higher
asset cost base, as well as increased mill throughput, in Q2 2018
compared to Q2 2017. In addition, cost of sales was $1.9 million
higher in Q2 2018 compared to the prior year as a result of higher
sales volumes, which also gave rise to a $0.3 million increase in
royalty expense.
- The Company reported a net loss
attributable to common shareholders of $142.3 million in Q2 2018
compared to net income of $0.6 million in Q2 2017. The net loss
during Q2 2018 was solely attributable to the recognition of a loss
($144.6 million) due to reclassification of the Company’s Ghanaian
subsidiaries to net assets held for sale, resulting from the Gold
Fields JV Transaction. In addition, the Company incurred higher
exploration expense ($1.7 million increase) and an increase in
finance expense of $1.0 million. These factors were partially
offset by higher mine operating earnings ($1.6 million increase)
and a lower income tax expense ($2.2 million decrease).
- Adjusted net income attributable to
common shareholders was $2.3 million in Q2 2018, compared to $0.7
million in Q2 2017, corresponding to the $1.6 million higher income
from mine operations.
- Mining costs averaged $3.65/t mined
during Q2 2018 compared to $3.22/t in Q2 2017. Mining costs per
tonne were higher than Q2 2017 as a result of higher drilling and
blasting and loading and hauling costs associated with the
progression of Cut 2 at Nkran. Of the mining costs incurred during
Q2 2018, a total of $17.8 million was deferred as stripping
costs.
- Processing costs averaged $9.95/t
milled compared to $12.80/t in Q2 2017. Processing unit costs
were lower than Q2 2017 due the very strong operating performance
of the plant, which on an annualized basis surpassed the newly
upgraded throughput levels of 5Mtpa. As a result, there was a 55%
increase in treated tonnes compared to Q2 2017, which had the
impact of decreasing fixed processing costs on a per unit basis. In
addition, the Company benefitted from a reduction in the unit price
of power.
- In Q2 2018, the Company incurred
operating cash costs per ounce2, total cash costs per ounce2 and
AISC3 of $582, $646 and $1,068, respectively.
- AISC3 for H1 2018 was $1,145/oz,
which is below the Company’s H1 2018 cost guidance of
$1,200-$1,300/oz. The relatively lower AISC for H1 2018 was a
result of more gold ounces sold relative to plan and lower
processing costs and overhead expenses.
- Cash provided by operating
activities in Q2 2018 was $13.4 million, a 60% decrease from Q2
2017. Operating cash flow before working capital changes was $28.6
million in Q2 2018, 7% higher than Q2 2017 of $26.7 million. The
increase in operating cash flows before working capital changes was
primarily due to higher revenues, partially offset by higher cash
production costs and exploration expenditures.
Q2 2018 Liquidity and Capital
Resources
- As at June 30, 2018, the Company
had cash of $42.4 million on hand, $0.8 million in receivables from
gold sales and unrefined gold dore at a cost of $5.1 million (and a
market value of $6.8 million).
- Concurrent with the closing of the
JV Transaction, the Company used the proceeds from the Gold Fields
JV Transaction to repay in full the outstanding debt principal and
accrued interest to Red Kite. Asanko is now debt-free.
2018 Guidance
The Company is on track to meet its 2018
guidance of 200,000 - 220,000 ounces at AISC3 of $1,050 - 1,150/oz
for 2018.
For H1 2018, the Company exceeded guidance
producing 101,731 ounces at AISC3 of $1,145/oz against a forecast
of 90,000 - 100,000 ounces at AISC3 of $1,200 - 1,300/oz.
In H2 2018, with Nkran Cut 2 pushback yielding
steady-state levels of ore production, guidance is expected to be
110,000 - 120,000 ounces at AISC3 $950 - 1,050/oz.
Notes:1 Non-GAAP
Performance Measures
The Company has included certain non-GAAP
performance measures in this press release, including working
capital, operating cash costs, total cash costs, all-in sustaining
costs per ounce of gold produced, all-in sustaining margin and
operating cash flow per common share. These non-GAAP performance
measures do not have any standardized meaning. Accordingly, these
performance measures are intended to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
2 Operating Cash Costs per ounce and
Total Cash Costs per ounce
Operating cash costs are reflective of the cost
of production, adjusted for share-based payments and by-product
revenue per ounce of gold sold. Total cash costs include
production royalties of 5%.
3 All-in Sustaining
Costs Per Gold Ounce The Company has adopted the reporting
of “all-in sustaining costs per gold ounce” (“AISC”) as per the
World Gold Council’s guidance. AISC include total cash costs,
corporate overhead expenses, sustaining capital expenditure,
capitalized stripping costs and reclamation cost accretion per
ounce of gold sold.
Qualified Person
StatementFrederik Fourie, Asanko Senior Mining Engineer
(Pr.Eng) is the Asanko Qualified Person, as defined by Canadian
National Instrument 43-101 (Standards of Mineral Disclosure), who
has approved the preparation of the technical contents of this news
release.
Q2 2018 Operating & Financial Results Conference Call
& Webcast today at 9am ET US/Canada Toll Free:
800 954 0629 UK Toll Free: 0800 496 0445
International: +1 212 231 2933
Webcast:Please click on the link:
https://cc.callinfo.com/r/1l06ddgf0g2fx&eom
Replay:A recorded playback will be available
approximately two hours after the call until September 1, 2018:
US/Canada Toll Free: 800 558 5253 UK Toll Free: 0800
692 0831 International: +1 416 626 4100 Passcode:
21891372 |
About Asanko Gold Inc.Asanko’s
vision is to become a mid-tier gold mining company that maximizes
value for all its stakeholders. The Company’s flagship project is
the multi-million ounce Asanko Gold Mine located in Ghana, West
Africa. Asanko is managed by highly skilled and successful
technical, operational and financial professionals. The Company is
strongly committed to the highest standards for environmental
management, social responsibility, and health and safety for its
employees and neighbouring communities.
Forward-Looking and other Cautionary
InformationThis release includes certain statements that
may be deemed "forward-looking statements". All statements in this
release, other than statements of historical facts, that address
estimated resource quantities, grades and contained metals,
possible future mining, exploration and development activities, are
forward-looking statements. Although the Company believes the
forward-looking statements are based on reasonable assumptions,
such statements should not be in any way construed as guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include market prices for metals, the
conclusions of detailed feasibility and technical analyses, the
timely renewal of key permits, lower than expected grades and
quantities of resources, mining rates and recovery rates and the
lack of availability of necessary capital, which may not be
available to the Company on terms acceptable to it or at all. The
Company is subject to the specific risks inherent in the mining
business as well as general economic and business conditions. For
more information on the Company, Investors should review the
Company’s most recent AIF and 40-F filings, available under the
Company’s profile on SEDAR at www.sedar.com and EDGAR at
www.sec.gov.
Neither Toronto Stock Exchange nor the
Investment Industry Regulatory Organization of Canada accepts
responsibility for the adequacy or accuracy of this release.
Enquiries:
For further information please visit: www.asanko.com, email: info@asanko.com or contact:
Alex Buck - Manager, Investor and Media Relations
Toll-Free (N.America): 1-855-246-7341
Telephone: +44-7932-740-452
Email: alex.buck@asanko.com
Rob Slater – Executive, Corporate Development and Strategy
Telephone: +27-11-467-2758
Email: rob.slater@asanko.com
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