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, Aug. 7, 2018 /CNW/ - PREMIER GOLD MINES
LIMITED (TSX: PG) ("Premier", "the Company") is pleased
to announce its operating results for the three months ended
June 30, 2018. The Company previously
released its production results for the second quarter in its news
release dated July 12, 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. Premier's team is focused on creating
a low-cost, mid-tier gold-producer from its two producing gold
mines and two advanced-stage, multi-million ounce, development
projects.
2018 Second Quarter Highlights
- Consolidated production of 16,007 ounces of gold and 51,746
ounces of silver
- Sales of 20,642 ounces of gold at an average realized
price1 of $1,283 per
ounce
- Cash costs1 of $963
per ounce of gold sold
- AISC1 of $1,088 per
ounce of gold sold
- Revenue of $27.5 million
- Operating loss of $1.2
million
- Net loss of $7.7 million
- Debt repayment of $20.0
million
- Cash balance of $67.8
million
- Inventory of 3,956 ounces of gold and 17,073 ounces of
silver
2018 Financial Highlights – Three months ended June 30, 2018
The Company produced a total of 16,007 ounces of gold and 51,746
ounces of silver during Q2 2018 compared to 37,617 ounces of gold
and 97,007 ounces of silver during Q2 2017.
Co-product cash costs(1) were $963 and AISC(1) were $1,088 per ounce of gold sold. Co-product cash
costs(1) were $12 and
AISC(1) were $13 per ounce
of silver sold.
The Company reported $27.5 million
in revenue compared to $55.5 million
during Q2 2017. The reduction in revenue and operating income when
compared to Q2 2017 is primarily a result of decreased production
from South Arturo where mining of the Phase 2 pit was completed in
2017 and the requirement to redesign stopes in new mining zones
following changes in geologic interpretations at Mercedes. This
redesign at Mercedes resulted in a development intensive first half
of the year, with increased costs per ounce. Production at
Mercedes will be weighted toward the second half of 2018 following
the completion of stope designs in the new Diluvio, Lupita and Rey de Oro deposits.
Numerous programs are underway to support the Company's
longer-term growth objective of increased annual production over
the next several years. During the quarter, $6.2 million was invested in exploration expenses
that, when factored with the reduction in mine operating income
during the period, contributed to a net loss of $7.7 million. Total capital spending was
$6.1 million.
The Company carried a cash balance of $67.8 million after paying down its debt of
$20 million. The Company held
inventory of 3,956 ounces of gold and 17,073 ounces of silver at
the end of the quarter.
Consolidated quarter and year-to-date operating results are
provided in Table 1 below.
Table 1: Selected Consolidated Operational and Financial
Information
|
|
|
|
|
|
Three months
ended
June
30
|
Six months
ended
June
30
|
(in millions of
U.S. dollars, unless otherwise stated)
(iv)
|
|
2018
|
2017
|
2018
|
2017
|
Ore milled
|
tonnes
|
177,821
|
290,349
|
491,671
|
611,192
|
|
|
|
|
|
|
Gold
produced
|
ounces
|
16,007
|
37,617
|
46,556
|
88,596
|
Silver
produced
|
ounces
|
51,746
|
97,007
|
111,572
|
195,388
|
Gold sold
|
ounces
|
20,642
|
43,212
|
49,916
|
94,806
|
Silver
sold
|
ounces
|
58,098
|
97,356
|
124,308
|
171,190
|
Realized
Price (2017 as restated)
(iii)
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,283
|
1,251
|
1,293
|
1,239
|
Average realized
silver price (i,ii)
|
$/ounce
|
16
|
17
|
17
|
17
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
963
|
481
|
811
|
427
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,088
|
607
|
934
|
511
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
12
|
10
|
11
|
9
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
13
|
12
|
13
|
10
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
949
|
465
|
798
|
412
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,079
|
596
|
924
|
498
|
Financial
Measures (2017 as restated)
(iii)
|
|
|
|
|
|
Gold
revenue
|
m $
|
26.4
|
53.9
|
64.4
|
117.2
|
Silver
revenue
|
m $
|
1.1
|
1.6
|
2.3
|
2.9
|
|
Total
revenue
|
m $
|
27.5
|
55.5
|
66.6
|
120.1
|
Mine operating income
/ (loss)
|
m $
|
(1.2)
|
21.5
|
8.4
|
43.0
|
Net income /
(loss)
|
m $
|
(7.7)
|
12.5
|
(9.7)
|
17.6
|
Earnings / (loss) per
share
|
/share
|
(0.04)
|
0.06
|
(0.05)
|
0.09
|
EBITDA
(i,ii)
|
m $
|
0.4
|
24.9
|
9.8
|
58.6
|
Cash & cash
equivalents balance
|
m $
|
67.8
|
121.0
|
67.8
|
121.0
|
Cash flow from
operations
|
m $
|
(0.7)
|
11.8
|
(0.4)
|
41.4
|
Free cash flow
(i,ii)
|
m $
|
(6.8)
|
7.4
|
(11.7)
|
32.5
|
Exploration
expenditures
|
m $
|
6.2
|
8.0
|
12.6
|
14.9
|
Capital expenditures
- sustaining (i,ii)
|
m $
|
1.8
|
2.3
|
3.6
|
4.2
|
Capital expenditures
- expansionary (i,ii)
|
m $
|
4.3
|
2.6
|
7.8
|
4.4
|
|
(i) A cautionary note regarding
Non-IFRS financial metrics is included in the "Non-IFRS Measures"
section of the Q2 2018 Management's 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 Q2 2018
Management's Discussion and Analysis.
|
(iii) 2017
restated for the presentation currency change as discussed in the
"Critical Accounting Judgements and Estimates, Policies and
Changes" section of the Q2 2018 Management's 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"), continued to deliver exceptional
results during the quarter. Processing of stockpiled ore from
the Phase 2 open pit during the second quarter has contributed to
gold production that has exceeded full-year gold guidance with a
total of 17,767 ounces delivered to Premier in the first half of
the year. Accordingly, the Company recently updated its production
guidance from 5,000-10,000 to 15,000-20,000 ounces of gold.
The construction of two new mining operations at South Arturo
has commenced with stripping of the Phase 1 open pit started during
the quarter and commissioning of the El Nino underground mine now
underway.
Quarter and year-to-date operating results are provided in Table
2 below.
Table 2: South Arturo Selected Financial and Operating
Results
|
|
|
|
|
|
Three months
ended
June 30
|
Six months
ended
June 30
|
(in millions of
U.S. dollars, unless otherwise stated)
(v)
|
|
2018
|
2017
|
2018
|
2017
|
Ore &
Metals
|
|
|
|
|
|
Ore milled
|
tonnes
|
23,379
|
112,466
|
168,915
|
266,519
|
Gold
produced
|
ounces
|
2,227
|
15,724
|
17,767
|
44,539
|
Gold sold
|
ounces
|
5,969
|
16,833
|
18,064
|
51,533
|
Silver
produced
|
ounces
|
7,380
|
7,533
|
9,836
|
17,343
|
Average gold
grade
|
grams/t
|
3.58
|
5.01
|
3.90
|
5.90
|
Average gold recovery
rate
|
%
|
82.8
|
86.7
|
83.9
|
88.1
|
Realized
Price (2017 as restated)
(iv)
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,318
|
1,253
|
1,318
|
1,246
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
475
|
332
|
424
|
272
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
506
|
451
|
461
|
322
|
By-product cash costs
per ounce of gold sold (i,ii,iii)
|
$/ounce
|
475
|
332
|
424
|
272
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii,iii)
|
$/ounce
|
506
|
451
|
461
|
322
|
Financial
Measures (2017 as
restated) (iv)
|
|
|
|
|
|
Gold
revenue
|
m $
|
7.9
|
21.1
|
23.8
|
64.2
|
Mine operating
income
|
m $
|
3.5
|
7.6
|
10.7
|
23.4
|
Exploration
expenditures
|
m $
|
0.6
|
0.1
|
0.7
|
0.1
|
Capital expenditures
- sustaining (i,ii)
|
m $
|
0.0
|
-
|
-
|
0.1
|
Capital expenditures
- expansionary (i,ii)
|
m $
|
1.6
|
-
|
2.0
|
-
|
|
(i)
A cautionary note regarding Non-IFRS metrics is included in the
"Non IFRS Measures" section of the Q2 2018 Management's 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 Q2 2018 Management's
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 Judgements and Estimates, Policies and
Changes" section of the Q2 2018 Management's Discussion and
Analysis.
|
(v) May
not add due to rounding.
|
Q2 2018 production of 2,227 ounces of gold was lower when
compared to 15,724 ounces in Q2 2017. Lower production output at
South Arturo was expected. Production has transitioned from the
completed Phase 2 open pit to processing of lower grade stockpiled
ore during the planning and development of the El Nino underground
extension and the Phase 1 open pit mining phase. Cash
costs(1) for Q2 2018 were $475 and AISC(1) were $506 per ounce of gold sold.
Capital expenditures of $1.6
million were incurred for machinery and equipment, and
stripping of the Phase 1 pit.
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.
Quarter and year-to-date operating results are provided in Table
3 below.
Table 3: Mercedes Selected Financial and Operating Results
|
|
|
|
|
|
Three months
ended
June 30
|
Six months
ended
June
30
|
(in millions of
U.S. dollars, unless otherwise stated)
(iv)
|
|
2018
|
2017
|
2018
|
2017
|
Ore milled
|
tonnes
|
154,442
|
177,883
|
322,756
|
344,673
|
Gold
produced
|
ounces
|
13,780
|
21,893
|
28,789
|
44,057
|
Silver
produced
|
ounces
|
44,366
|
89,474
|
101,736
|
178,045
|
Gold sold
|
ounces
|
14,673
|
26,379
|
31,853
|
43,272
|
Silver
sold
|
ounces
|
58,098
|
97,356
|
124,308
|
171,190
|
Average gold
grade
|
grams/t
|
2.90
|
4.03
|
2.91
|
4.18
|
Average silver
grade
|
grams/t
|
23.82
|
36.47
|
27.97
|
40.07
|
Average gold recovery
rate
|
%
|
95.8
|
94.9
|
95.5
|
95.2
|
Average silver
recovery rate
|
%
|
37.5
|
43.0
|
35.1
|
40.2
|
Realized
Price (2017 as restated)
(iii)
|
|
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,269
|
1,249
|
1,279
|
1,232
|
Average realized
silver price (i,ii)
|
$/ounce
|
16
|
17
|
17
|
17
|
Non-IFRS
Performance Measures
|
|
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,161
|
577
|
1,031
|
613
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,325
|
707
|
1,201
|
735
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
12
|
10
|
11
|
9
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
13
|
12
|
13
|
10
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
1,142
|
550
|
1,010
|
580
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,312
|
688
|
1,187
|
709
|
Financial
Measures (2017 as restated)
(iii)
|
|
|
|
|
|
Gold
revenue
|
m $
|
18.5
|
32.8
|
40.6
|
53.0
|
Silver
revenue
|
m $
|
1.1
|
1.6
|
2.3
|
2.9
|
|
Total
revenue
|
m $
|
19.6
|
34.4
|
42.8
|
55.9
|
Mine operating income
/ (loss)
|
m $
|
(4.7)
|
13.9
|
(2.3)
|
19.6
|
Exploration
expenditures
|
m $
|
0.0
|
0.2
|
0.7
|
0.5
|
Capital expenditures
- sustaining (i,ii)
|
m $
|
1.8
|
2.3
|
3.6
|
4.1
|
Capital expenditures
- expansionary (i,ii)
|
m $
|
2.6
|
2.6
|
5.2
|
4.4
|
|
(i)
A cautionary note regarding Non-IFRS financial metrics is included
in the "Non-IFRS Measures" section of the Q2 2018 Management's
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 Q2 2018 Management's
Discussion and Analysis.
|
(iii) 2017
restated for the presentation currency change as discussed in the
"Critical Accounting Judgements and Estimates, Policies and
Changes" section of the Q2 2018 Management's Discussion and
Analysis.
|
(iv)
May not add due to rounding.
|
Mercedes production for Q2 2018 was 13,780 ounces of gold and
44,366 ounces of silver compared to 21,893 and 89,474 respectively
in Q2 2017. Co-product cash costs(1) were $1,161 and AISC(1) were $1,325 per ounce of gold sold with production and
costs being impacted by differences in the orebody geometries as
compared to the original models in the new ore zones at Diluvio and
Rey de Oro. This led to additional
delineation drilling and required adjustments to stope designs,
resulting in lower mined grades from the processing of
development ore and less stope ore during the transition
period. As a result, planned production levels continue to be
weighted to the second half of 2018. The mine has begun to realize
benefit from planning adjustments during the first half of 2018
with July posting the highest monthly production output from
Mercedes so far this year.
Mining initiatives to improve grade include increased use of
split-blasting in ore headings 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.
During the second quarter, 14,165 metres were drilled for a
total drilling of 25,666 metres for the year. An average of six
drill rigs were on site during the quarter. Drilling continued to
target the Diluvio, Rey de Oro and
Barrancas veins with encouraging
results for replacing reserves. Surface drilling on the Aida vein
focused on confirming the continuity of the veining with the goal
of converting resources in the vein to reserves.
The 2018 exploration program will follow a similar pattern as
the 2017 program with preliminary testing of several targets early
in the year and converting resources to reserves later in the year.
The focus remains on adding near mine resources and reserves,
supporting mine production, extensions of the main mine trend and
testing new geological targets.
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 McCoy-Cove "Earn-in" agreement was signed with Barrick Gold in December
2017 to explore the claims surrounding the Cove project.
During the quarter, the Earn-in completed 3,129 metres of drilling
with a focus on an initial test of two target areas that have
little historic drilling straddling the Cove pit. The drilling was
split between the Windy Point and Lakeside east extension target
areas, both with encouraging results. Exploration on the Joint
Venture Property began in April and also included detailed
geophysics, surface mapping and soil sampling.
A Preliminary Economic Assessment ("PEA") was completed in the
first half of 2018 on the Cove project. Preliminary engineering,
dewatering studies and baseline studies have been initiated to
advance an underground exploration program planned in the second
half of 2018. Dewatering simulations, including a pump test of the
proposed underground advanced exploration areas around the Helen
Zone were completed during 2017 and further optimization and
validation of the dewatering scenario is ongoing. During the
quarter, spending focused on pre-development mainly in engineering
design changes to the regulatory agencies, such as the portal and
power line locations. Bids for underground development took place
during the quarter. The received bids were in line with
estimates contained in the Cove PEA. Hydrologic wells
placement and evaluation of the optimal portal construction
schedule will be a focus during the third and fourth quarters.
Greenstone Gold Mines
The Greenstone Gold Mines Partnership (the "Partnership")
continued to progress toward near term environmental, community and
aboriginal engagement milestones during the quarter. The
Partnership previously submitted its Environmental Impact Statement
and 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 with community and aboriginal engagement activities has
progressed with a Long Term Relationship Agreement having been
signed with Long Lake #58 First
Nation in June 2018. Optimization
activities continue, including an ongoing Reverse Circulation
Drill Program designed to refine the resource and better assess
dilution. A total of $6.2
million was spent by Greenstone Gold during the second
quarter ($2.4 million in 2017). All
project expenditures will continue to be funded 100% by joint
venture partner Centerra Gold Inc. until the remaining development
commitment of $81.1 million
(C$103.7 million) has been drawn
down.
Hasaga
A total of 10,819 metres of drilling was completed at Hasaga
during the second quarter for a total of 18,261 metres year to
date. The drilling continues to infill and expand
mineralization within the C-Zone and to test and define the
D-Zone. An expanded follow-up drilling program is being
considered based on excellent assay results on the C and D-Zones
and as a result of the better understanding of the structural
controls. The 1.6 km gap west of Hasaga zones to the Buffalo zone
provides for significant potential for additional new
discoveries.
CEO Commentary
"With strong consolidated production realized from Premier's
mining operations during the first half of the year, we have fully
paid down the Company's debt and expect to meet or beat
consolidated annual gold production guidance in 2018" stated
Ewan Downie, President and CEO of
Premier. "Our 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
that are now underway".
2018 Guidance
Production estimates for 2018 were derived from life of mine
operating plans prepared on the basis of mineral reserves
associated with each property. As indicated in its July 12, 2018 press release, the Company has
revised its full-year consolidated gold production guidance
from 85,000 - 95,000 to 90,000 - 100,000 ounces. Accordingly, the
following table represents the assumptions and guidance for
2018.
Table 4: 2018 production and cost guidance
Mine
|
Guidance
2018
|
Production
ounces
|
Cash Cost
per ounce
(1)
|
All-in Sustaining
Cost
per ounce
(1)
|
South
Arturo
|
15,000 -
20,000
|
$600 -
$650
|
$620 -
$670
|
Mercedes
|
75,000 -
80,000
|
$700 -
$750
|
$820 -
$870
|
Consolidated
|
90,000 -
100,000
|
$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 Second Quarter Results - Conference
Call
A conference call with senior management to discuss the
financial results for the three months ended June 30, 2018 will be held at 10:00 am EDT, on August
8, 2018.
Details for the conference call and webcast can be found below
and will be accessible on the Company's website at
www.premiergoldmines.com.
Toll Free (North
America): 1-888-390-0605
International: 1-416-764-8609
Conference ID: 56942802
Webcast Link
https://event.on24.com/wcc/r/1794406/82F06DEFD22FC9455430F56D15914A16
Conference Call Replay
The conference call replay will be available from 1:00pm EDT on August 8,
2018 until 11:59 pm EST on
August 15, 2018.
Toll Free Replay Call (North
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Notes
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1.
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A cautionary note
regarding Non-IFRS financial metrics is included in the "Non-IFRS
Measures" section of the Q2 2018 Management Discussion and
Analysis.
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2.
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Accounting policy
change is discussed in Note 2(c) to the June 30, 2018 unaudited
condensed
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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 (expansionary), 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