(All amounts in US dollars, unless otherwise indicated)
- For Q2 2018, Leagold reports financial and operating results
that incorporate a partial quarter of results from the newly
acquired Brazilian assets. Highlights include:
-
- Gold production of 64,517 ounces
- Sales of 66,982 gold ounces
- Revenue of $86.9 million
- Earnings from mine operations of $10.1
million
- All-in sustaining costs (AISC)1 of $950 per ounce of gold sold, and
- AISC margin1 of $23.1
million
- At June 30, 2018, Leagold had
cash and cash equivalents of $69.4
million
- Following completion of the acquisition of Brio Gold, Leagold's
2018 full-year production guidance has been updated to
325,000-350,000 ounces of gold at AISC of $940-$975 per
ounce
VANCOUVER, Aug. 14, 2018 /CNW/ - Leagold Mining
Corporation (TSX:LMC; OTCQX:LMCNF) ("Leagold" or the "Company")
today reports Q2 2018 results and provides updated 2018 guidance
for its four producing gold mines: the Los Filos mine in
Mexico, which the Company acquired
in April 2017, and the Riacho dos
Machados (RDM), Fazenda Brasileiro
(Fazenda), and Pilar de Goias
(Pilar) mines in Brazil, which
were acquired in May 2018.
Consolidated gold production in Q2 2018 totalled 64,517 ounces (oz)
at AISC of $950 per oz of gold sold,
resulting in an AISC margin1 of $23.1 million. These results include a full
quarter of operations at Los Filos and the 38-day period of
operations since acquisition at the three mines in Brazil (May 24-June 30,
2018).
Leagold CEO Neil Woodyer
commented: "We are pleased to have completed the acquisition of
Brio Gold, and we are now focused on using our experienced
operations team to identify and implement short- and long-term
optimizations at each of the mines. We are also reorienting each of
the mines in Brazil into
individual profit centres. Some of these changes will take time to
deliver results.
"Our newly acquired Santa Luz project in Brazil is a key growth opportunity; however,
the first priority is assuming control of and optimizing the three
newly acquired operating mines. As a result, we are not expecting
to re-start construction of Santa Luz until later this year or
early next year.
__________________________________
1 AISC and AISC margin are non-IFRS financial
performance measures with no standard meaning under IFRS. Refer to
the section Non-IFRS Measures in the Company's Q2 2018 MD&A,
available on SEDAR or www.leagold.com.
|
"At Los Filos, production in Q2 lagged Q1 due to lower volumes
of contained gold oz placed on the heap leach pads in Q1 2018 and
leaching recovery time lag, combined with lower than expected
underground grades. The agglomerator has now been commissioned and
we are segregating the processing of high-grade material. The Los
Filos processing plan now schedules a significant increase in the
uncrushed, un-agglomerated material placed on the pads, which will
improve gold production and cash flow in H2 2018.
"On a consolidated basis, we expect to be producing at an
annualized rate of approximately 450,000 oz in the second half of
this year, at AISC of approximately $950 per oz."
Q2 2018 Financial and Operating Results
At the Los Filos mine, gold production in Q2 totalled
43,541 oz at AISC of $967 per oz.
Production was 15% lower than Q1 2018, primarily due to lower
volumes of contained gold placed on the heap leach pads in Q1 2018.
This is expected to reverse in Q3 2018, as contained gold placed on
the pads increased in Q2 2018 over Q1 2018. Additionally,
production grades at the Los Filos Underground were 2.0-2.5 grams
per tonne (g/t) lower than planned. A review of the production plan
has resulted in a more conservative cap on the high-grade material
to address this discrepancy.
At the RDM mine, gold production totalled 7,889 oz for
the 38-day period following closing of the acquisition, at AISC of
$818 per oz. Grades in Q2 averaged
1.27 g/t and recoveries were 82%. Leagold recently completed the
power line permitting process and is now fast-tracking connection
to the national power grid expected in Q4 2018. The power line will
replace the current lower capacity diesel power generators and is
expected to reduce costs, improve reliability, and facilitate
increased mill throughput.
At the Fazenda mine, gold production totalled 7,460 oz
for the 38-day period following closing of the acquisition, at AISC
of $891 per oz. Grades in Q2 averaged
1.93 g/t and recoveries were 92%. Mining efficiencies are expected
to improve with new equipment purchased in H1 2018 being delivered
in H2 2018.
At the Pilar mine, gold production totalled 5,627 oz for
the 38-day period following closing of the acquisition, at AISC of
$1,060 per oz. Grades in Q2 averaged
1.32 g/t and recoveries were 94%. Production was impacted by an
area of lower than anticipated grades. The mining sequence has
since been adjusted to prioritize areas with higher grades.
Table 1 provides a mine-by-mine breakdown of key financial and
operating statistics for Q2 2018.
Table 1: Financial and Operating Highlights for the
Three Months Ended June 30,
20181
|
|
|
|
|
|
Mining Physicals
(oz)
|
Los
Filos
|
RDM
|
Fazenda
|
Pilar
|
Total
|
Gold
produced
|
43,541
|
7,889
|
7,460
|
5,627
|
64,517
|
Gold sold
|
43,411
|
6,859
|
9,691
|
7,021
|
66,982
|
|
|
|
|
|
|
Cash Cost and AISC
Details ($000s)
|
|
|
|
|
|
Gold
revenue
|
56,715
|
8,677
|
12,357
|
8,980
|
86,729
|
Mining costs – open
pit
|
10,391
|
3,626
|
454
|
-
|
14,471
|
Mining costs –
underground
|
11,731
|
-
|
2,713
|
3,508
|
17,952
|
Processing
costs
|
17,473
|
2,831
|
1,432
|
1,367
|
23,103
|
Site general and
administration
|
6,106
|
471
|
492
|
449
|
7,518
|
Change in
inventory
|
(11,197)
|
(1,777)
|
2,684
|
1,513
|
(8,777)
|
Other
|
403
|
129
|
153
|
214
|
899
|
Total cash
costs
|
34,907
|
5,280
|
7,928
|
7,051
|
55,166
|
Land access
payments
|
3,905
|
-
|
2
|
-
|
3,907
|
Royalties
|
350
|
218
|
143
|
109
|
820
|
Sustaining
capital2
|
2,817
|
114
|
561
|
280
|
3,772
|
AISC2
|
41,979
|
5,612
|
8,634
|
7,440
|
63,665
|
AISC
margin2
|
14,736
|
3,065
|
3,723
|
1,540
|
23,064
|
|
|
|
|
|
|
Cash costs and
AISC ($/oz)
|
|
|
|
|
|
Cash
costs2 per gold oz sold
|
804
|
770
|
818
|
1,004
|
824
|
AISC per gold oz
sold
|
967
|
818
|
891
|
1,060
|
950
|
1 For Q2
2018, the results for RDM, Fazenda and Pilar are included in
Leagold's results for the 38-day post-acquisition period from May
24, 2018 to June 30, 2018 (inclusive).
|
2
Sustaining capital, AISC, AISC margin, and cash costs are non-IFRS
financial performance measures with no standard meaning under IFRS.
Refer to the section Non-IFRS Measures in the Company's Q2
2018 MD&A, available on SEDAR or
www.leagold.com.
|
Los Filos Expansion Project
During Q2 2018 Leagold continued to advance the Bermejal
Underground project at the Los Filos mine in Mexico, in the context of developing a
long-term and site-wide mine production and processing plan.
Development of the exploration portal and ramp construction
continues on schedule, with over 960 metres of the planned 1,300
metres of advance completed in the main ramp. Surface facilities at
the underground portal and the first raise bore for ventilation are
complete, and mine design and engineering is expected to be
completed later this year. Concurrent with the Bermejal Underground
project, studies are under way to evaluate overall processing
alternatives at Los Filos, including the potential for a CIL
plant.
Santa Luz Project
Santa Luz was built and placed into operation in mid-2013;
however production was suspended in September 2014 after 14 months of operation due
to process difficulties, poor recoveries, and mechanical problems.
In 2017, Brio commenced the construction of a new ore-processing
facility that incorporated the crushing, crushed-ore storage, and
semi-autogenous (SAG) mill of the original plant. The rest of the
plant, with the exception of the refinery, will be new and based on
resin-in-leach processing. In 2018 and prior to the acquisition,
the ball mill, process tanks and agitators were delivered, and the
tailings pond was relined. At the time of the acquisition in
May 2018, the principal activity at
site was limited to the completion of the construction for the
nearby re-settlement village of Nova Esperança, expected to be
completed by October 2018.
Santa Luz is a key growth opportunity for Leagold. However,
Leagold's first priority is optimizing the three operating mines in
Brazil. As a result, Leagold is
not expecting to re-start construction of the Santa Luz project
until later this year or early next year.
Outlook and Revised Guidance
As a result of the Brio acquisition, Leagold expects to be
producing at an annualized rate of approximately 450,000 oz in H2
2018. Full-year 2018 gold production guidance is between
325,000-350,000 oz, at AISC of $940-$975 per oz,
as detailed in Tables 2 and 3 below.
Table 2: Gold production for Q1 and Q2
20181 and Full Year 2018 Guidance
(oz)
Mine
|
Q1 2018
Actual
|
Q2 2018
Actual
|
H1 2018
Actual
|
H2 2018
Forecast
|
Revised
Full-year
2018 Production
Guidance
|
Los Filos
|
51,003
|
43,541
|
94,544
|
115,000-130,000
|
210,000-225,000
|
RDM
|
-
|
7,889
|
7,889
|
38,000-42,000
|
45,000-50,000
|
Fazenda
|
-
|
7,460
|
7,460
|
33,000-36,000
|
40,000-43,000
|
Pilar
|
-
|
5,627
|
5,627
|
24,000-27,000
|
30,000-32,000
|
Total
|
51,003
|
64,517
|
115,520
|
210,000-235,000
|
325,000-350,000
|
Table 3: AISC2 for Q1 and Q2 2018 and Full Year
2018 Guidance ($/oz)
Mine
|
Q1 2018
Actual
|
Q2 2018
Actual
|
H1 2018
Actual
|
H2 2018
Forecast
|
Revised
Full-year
2018 AISC Guidance
|
Los Filos
|
1,039
|
967
|
1,006
|
950-1,000
|
975-1,000
|
RDM
|
-
|
818
|
818
|
800-850
|
800-850
|
Fazenda
|
-
|
891
|
891
|
875-925
|
875-925
|
Pilar
|
-
|
1,060
|
1,060
|
1,000-1,050
|
1,000-1,050
|
Total
|
1,039
|
950
|
989
|
920-970
|
940-975
|
1 For Q2
2018, the results for RDM, Fazenda and Pilar are included in
Leagold's results for the 38-day post-acquisition period from May
24, 2018 to June 30, 2018 (inclusive).
|
2 AISC is
a non-IFRS financial performance measure with no standard meaning
under IFRS. Refer to the section Non-IFRS Measures in the
Company's Q2 2018 MD&A, available on SEDAR or
www.leagold.com.
|
In Mexico, Leagold reiterates
that Los Filos is expected to show significant production growth
(i.e. 22% to 38% increase) in the second half of the year due to
the scheduled open pit mining plan and sustaining the increased
daily underground mining rates that will improve both the tonnes
and average gold grade of tonnes placed on the heap leach pads.
However, as a result of i) the revised processing strategy that
results in a greater proportion of material being placed on the
heap leach pads uncrushed and unagglomerated, and ii) a more
conservative cap being implemented into the Los Filos Underground
production plan, with both changes impacting total production
guidance in 2018, the AISC guidance range at Los Filos has been
increased to $975 to $1,000 per oz. This change in the AISC guidance
range represents an expected increase in full year AISC of
approximately 5%, from $205 million
to $215 million, as some cost savings
related to site G&A have not yet been realized.
Table 4 details the updated Los Filos 2018 production and cost
guidance.
Table 4: Los Filos 2018 Guidance Update
Reconciliation
|
|
|
|
Original Guidance
(January 2018)
|
Revised Guidance
(August 2018)
|
|
Range
|
Mid-point
|
Range
|
Mid-point
|
Production
(oz)
|
215,000-240,000
|
227,500
|
210,000-225,000
|
217,500
|
AISC
($millions)
|
-
|
205
|
-
|
215
|
AISC
($/oz)
|
875-925
|
900
|
975-1,000
|
988
|
In Brazil, the mines are
undergoing a period of significant restructuring and reorientation
with the implementation of Leagold's management structure after the
acquisition of Brio Gold. Leagold has also started implementing
cost reduction programs, many of which will take some time to both
implement and show meaningful results. Leagold continues to
evaluate medium- and long-term optimization opportunities. Progress
in the first few months of ownership has been encouraging and
management will continue to pursue further improvements.
Financial Results
Leagold reported revenue of $86.9
million in Q2 2018 and net earnings of $9.8 million, or $0.05 per share. Table 5 summarizes Leagold's
financial results for the three-month period ended June 30, 2018.
Table 5: Q2 2018 Leagold Financial
Highlights1
|
|
$000s
|
Three months ended
June 30, 2018
|
Revenue
|
$86,929
|
Operating expenses
and royalties
|
65,140
|
Depreciation and
depletion
|
10,869
|
Royalties
|
820
|
Earnings from mine
operations
|
10,100
|
Exploration
costs
|
178
|
Share-based
payments
|
101
|
Transaction
costs
|
3,450
|
General and
administration costs
|
3,114
|
Foreign exchange
(gain)/loss
|
(1,556)
|
Finance and accretion
expense/(income)
|
(3,809)
|
Other
(income)/expenses
|
1,210
|
Earnings/(loss)
before taxes
|
7,412
|
Current income tax
(recovery)
|
(808)
|
Deferred income tax
(recovery)
|
(1,559)
|
Net
earnings/(loss) and comprehensive earnings/(loss) for the
period
|
$9,779
|
Basic and diluted net
earnings/(loss) per share
|
0.05
|
Basic and diluted
earnings/(loss) before taxes per share
|
0.04
|
1 For Q2
2018, the results for RDM, Fazenda and Pilar are included in
Leagold's results for the 38-day post-acquisition period from May
24, 2018 to June 30, 2018 (inclusive).
|
Supporting Documents
Leagold's Q2 2018 financial statements and the related MD&A
are available on SEDAR and in the Investor Relations section of
Leagold's website here.
Conference Call
A conference call and live webcast will be held on Wednesday, August 15 at 7am PDT/10am EDT.
Participants may dial in to the conference call using the numbers
below, quoting conference ID 5178519:
North America toll-free:
1-844-543-5236
International: +1-703-318-2218
The live webcast can be accessed through the following link:
https://edge.media-server.com/m6/p/u7kmot76
The conference call will be available for playback until
2pm EDT on August 22, 2018 by dialling 1-855-859-2056
(North America toll free) or
+1-404-537-3406 (international), quoting the conference ID 5178519.
The webcast playback will be available on Leagold's website
here.
Qualified Persons
Doug Reddy, P.Geo, Leagold's
Senior Vice President, Technical Services, is a Qualified Person
under National Instrument 43-101 – Standards of Disclosure for
Mineral Projects ("NI 43-101"), and has reviewed and approved
the technical contents of this news release on behalf of
Leagold.
About Leagold Mining Corporation
Leagold is building a mid-tier gold producer with a focus on
opportunities in Latin America.
The Company is based in Vancouver,
Canada and owns four operating gold mines in Mexico and Brazil, along with a near-term gold mine
restart project in Brazil and
additional expansion and growth opportunities. Leagold is listed on
the TSX under the trading symbol "LMC" and trades on the OTCQX
market as "LMCNF".
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This news release contains "forward looking information" or
"forward looking statements" within the meaning of applicable
securities legislation. Forward-looking information and forward
looking statements include, but are not limited to, statements with
respect to [the Company's 2018 forecasted production and AISC,
expected benefits of improved leach pad management, expected timing
of receipt of regulatory approvals and permits, expected benefits
of the power line at RDM; expected gains in efficiencies at the
Fazenda mine on account of delivery of new equipment; expected
timing of mine design and engineering at Bermejal Underground,
completion of the CIL plant study and new technical reports, plans
or future financial or operating performance, the estimation of
mineral reserves and resources, the realization of mineral reserve
estimates, realization of the benefits of certain capital projects,
the timing and amount of estimated future production, costs of
future production, and future capital expenditures]. Generally,
these forward looking information and forward looking statements
can be identified by the use of forward looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", "will continue" or "believes", or variations
of such words and phrases or state that certain actions, events or
results "may", "could", "would", "might" or "will be taken",
"occur" or "be achieved". Statements concerning mineral resource
estimates may also be deemed to constitute forward looking
information to the extent that they involve estimates of the
mineralization that will be encountered. The material factors or
assumptions used to develop forward looking information or
statements are disclosed throughout this document.
Forward looking information and forward looking statements,
while based on management's best estimates and assumptions, are
subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance
or achievements of Leagold to be materially different from those
expressed or implied by such forward-looking information or forward
looking statements, including but not limited to: risks related to
international operations; risks related to successful integration
of Brio, risks related to general economic conditions and credit
availability, actual results of current exploration activities,
unanticipated reclamation expenses; changes in project parameters
as plans continue to be refined; fluctuations in prices of metals
including gold; fluctuations in foreign currency exchange rates,
increases in market prices of mining consumables, possible
variations in mineral reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated; accidents,
labour disputes, title disputes, claims and limitations on
insurance coverage and other risks of the mining industry; delays
in obtaining governmental approvals or financing or in the
completion of development or construction activities, changes in
national and local government regulation of mining operations, tax
rules and regulations, and political and economic developments in
countries in which the Company operates, actual resolutions of
legal and tax matters, as well as those factors discussed in the
section entitled "Description of the Business – Risk Factors" in
Leagold's most recent AIF available on SEDAR at www.sedar.com.
Although Leagold has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking information and forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such information or statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information or statements. The Company has and
continues to disclose in its Management's Discussion and Analysis
and other publicly filed documents, changes to material factors or
assumptions underlying the forward-looking information and
forward-looking statements and to the validity of the information,
in the period the changes occur. The forward-looking statements and
forward-looking information are made as of the date hereof and
Leagold disclaims any obligation to update any such factors or to
publicly announce the result of any revisions to any of the
forward-looking statements or forward-looking information contained
herein to reflect future results. Accordingly, readers should not
place undue reliance on forward-looking statements and
information.
Other Information
Cash costs and AISC are non-GAAP financial performance measures
with no standard meaning under IFRS and are therefore unlikely to
be comparable to similar measures presented by other issuers.
View original content with
multimedia:http://www.prnewswire.com/news-releases/leagold-reports-q2-2018-results-and-updates-2018-guidance-to-include-recently-acquired-brazilian-operations-300697205.html
SOURCE Leagold Mining Corporation