(All amounts in US dollars, unless otherwise indicated)
Q3 2018 highlights include:
- Gold production of 93,269 ounces;
- Sales of 91,733 gold ounces;
- Revenue of $111.3 million;
- Earnings from mine operations of $19.6
million;
- Net income of $14.9 million or
$0.05 cents per share;
- All-in sustaining costs (AISC)1 of $966 per ounce of gold sold;
- AISC margin1 of $22.1
million; and
- Cash balance of $47.0 million at
September 30, 2018.
VANCOUVER, Nov. 14, 2018 /CNW/ - Leagold Mining Corporation
(TSX:LMC; OTCQX:LMCNF) ("Leagold" or the "Company") reports third
quarter financial and operating results for its four wholly owned
gold mines: the Los Filos mine in Mexico, and the RDM, Fazenda, and Pilar mines
in Brazil. Consolidated gold
production during the period totalled 93,269 ounces (oz) at all-in
sustaining costs (AISC) of $966 per
oz sold, resulting in an AISC margin of $22.1 million.
Leagold CEO Neil Woodyer
commented: "During Q3 we made significant progress toward
integrating our three new mines by making some important changes to
the reporting and organizational structures in Brazil. We completed the updated feasibility
study on the Santa Luz project in October, which demonstrates that
it is a very attractive growth opportunity. A key next step for
Leagold is the completion of our site-wide review of the Los Filos
mine in Mexico, so we can then
determine our preferred capital allocation priorities. The Los
Filos study is on schedule for completion by year end.
"Among our mines, Fazenda and Pilar both performed as expected
in the quarter. Los Filos production was below expectations in Q3,
mainly due to the significant increase in contained gold placed on
the pads that has caused recovery delays. With Los Filos production
set to increase in the near term, the restart of RDM now scheduled
for November 20, and the expected
cost savings from optimizations in Brazil, we are looking forward to increased
production and cash flow in 2019."
Q3 Financial and Operating Results
At the Los Filos mine in Mexico, Q3 production totalled 42,617 oz at
AISC of $1,060 per oz sold. Total
material mined from the open pit was 7,400K tonnes at an average grade of 0.65 g/t
gold. Ore mined from underground was 172K tonnes – a 19% increase over Q2 – at
an average grade of 6.26 g/t. Q3 production was similar to Q2,
despite a 49% increase in contained gold placed on the heap leach
pads in Q3, due to lower than anticipated recoveries of the lower
grade, uncrushed and unagglomerated open pit material. The large
increase in material placed on the pads may have extended the
normal leaching curve by interrupting solution flow and saturation
rates. The processing team is now focused on optimizing recoveries
for the lower grade material, and production is expected to
increase as recovery rates normalize. Production in October
improved to 16,026 oz, a 13% increase over the monthly average of
14,206 ounces in Q3.
________________________________
|
1 AISC and AISC margin are non-IFRS
financial performance measures with no standard meaning under
IFRS.
|
Also at Los Filos, Leagold launched initiatives in Q3 which are
expected to result in annualized savings of up to $4 million, including staff reductions, new
supply chain procedures and controls, and elimination of air
charter transportation.
In Brazil, Leagold continued to
make progress in Q3 with the integration of the three operating
mines acquired in May 2018. Programs
were launched to transform each mine into stand-alone profit
centres, which included increased management responsibility and the
transfer of financial and operating accountability to the mines.
Workforce reductions at the Belo
Horizonte office were implemented in Q3 and are expected to
total 50% by year-end. Excess mine site personnel reduction
programs were also introduced in Q3, with total reductions of more
than 400 positions representing approximately 15% of the total
Brazilian workforce. In addition, operating and maintenance
programs have been strengthened to improve long-term performance
and cost reductions, and new forecasting and purchasing procedures
that include new supply chain and inventory controls were launched
during the quarter.
At the RDM mine, Q3 production totalled 16,596 oz,
slightly below Leagold's August 2018
guidance for H2 2018 as water conservation measures due to regional
drought conditions began to impact production. Total material mined
in Q3 was 6,993K tonnes at an average
grade of 1.18 g/t gold. AISC in Q3 totalled $1,002 per oz sold, higher than anticipated due
to limited power availability from expensive diesel power
generators. To improve availability, additional diesel gensets were
rented in Q3 and the grid power project was re-started. Once
completed, the lower cost grid power is expected to reduce costs by
$6 million annually, from approx.
$0.23/kwh to approx. $0.06/kwh. The increased availability of power
from the grid will also permit the use of a full load of steel
balls in the mill, improving grind size and gold recovery and
enabling increased mill throughput.
Subsequent to quarter end, RDM was temporarily shut down due to
regional drought conditions. With the onset of the rainy season,
the water storage facilities have now accumulated the required
water to support the restart of operations scheduled for
November 20, 2018. Leagold is now
implementing a phased restart of RDM using the existing diesel
gensets, and will transition to the national grid during the
commissioning of the new power line expected in late December. As
the water in the reservoir builds up over the rainy season
(typically October through April), and as RDM continues to
implement water use reduction programs, RDM is expected to be well
positioned for stable and continuous operations in 2019.
At the Fazenda mine, Q3 production totalled 20,167 oz,
trending ahead of Leagold's August
2018 guidance of 33,000-36,000 oz for H2. AISC of
$727 per oz sold in Q3 was also ahead
of H2 guidance of $875-$925 per oz. Total ore mined from the open pit
was 40K tonnes at an average grade of
1.24 g/t gold. Ore mined from underground was 343K tonnes at an average grade of 1.87 g/t.
Efficiencies are expected to continue to improve at Fazenda
following delivery of new underground mining equipment in Q3.
At the Pilar mine, Q3 production totalled 13,889 oz,
trending slightly ahead of Leagold's August
2018 guidance of 25,000-27,000 oz for H2. AISC of
$977 per oz sold in Q3 was also ahead
of H2 guidance of $1,000-$1,050 per oz. Ore mined from underground was
267K tonnes at an average grade of
1.38 g/t. The plant achieved record throughput in the quarter which
resulted in strong production performance.
Table 1: Production and Costs for the Three-month Period
July 1 to September 30, 2018
|
Mining
Physicals
|
Unit
|
Los
Filos
|
RDM
|
Fazenda
|
Pilar
|
Total
|
Gold ounces
produced
|
oz
|
42,617
|
16,596
|
20,167
|
13,889
|
93,269
|
Gold ounces
sold
|
oz
|
41,868
|
16,956
|
19,526
|
13,383
|
91,733
|
|
|
|
|
|
|
|
Cash Cost
Details
|
|
|
|
|
|
|
Gold
revenue
|
$000s
|
50,676
|
20,326
|
23,524
|
16,148
|
110,674
|
Mining costs – open
pit
|
|
7,835
|
4,541
|
1,201
|
-
|
13,577
|
Mining costs –
underground
|
|
12,300
|
-
|
7,483
|
7,346
|
27,129
|
Processing
costs
|
|
20,274
|
8,256
|
3,923
|
3,279
|
35,732
|
Site general and
admin costs
|
|
4,954
|
1,493
|
1,576
|
1,132
|
9,155
|
Change in
inventory
|
|
(10,552)
|
1,307
|
(1,916)
|
(370)
|
(11,531)
|
Other
|
|
192
|
232
|
302
|
375
|
1,101
|
Total cash
costs1
|
|
35,003
|
15,829
|
12,569
|
11,762
|
75,163
|
Land access
payments
|
|
3,904
|
-
|
-
|
11
|
3,915
|
Royalties
|
|
525
|
508
|
349
|
256
|
1,638
|
Sustaining
capital1
|
|
2,821
|
645
|
1,283
|
1,047
|
5,796
|
Sustaining
capital1 – stripping costs
|
|
2,111
|
-
|
-
|
-
|
2,111
|
AISC1
|
|
44,364
|
16,982
|
14,201
|
13,076
|
88,623
|
AISC
margin1
|
|
6,312
|
3,344
|
9,323
|
3,072
|
22,051
|
Cash costs per
gold ounce sold1
|
$/oz
|
836
|
934
|
644
|
879
|
819
|
AISC per gold
ounce sold1
|
$/oz
|
1,060
|
1,002
|
727
|
977
|
966
|
1
Cash costs, sustaining capital, AISC, and AISC margin are
non-IFRS financial performance measures with no standard meaning
under IFRS.
|
2018 Guidance
As a result of the unplanned temporary shutdown of the RDM mine,
and the Los Filos mine experiencing an extended recovery cycle on
the heap leach pads, Leagold is updating its 2018 full-year
production forecast from the previous guidance range of between
325,000 to 350,000 ounces to a revised guidance range of between
295,000 to 305,000 ounces. The updated guidance range accounts for
the unexpected shutdown and considers the restart of RDM in late
November with a two-week production ramp up. Leagold is expecting
full year AISC to be similar to the nine months ended September 30, 2018 of $979 per ounce.
Expansion and Development Projects
At the Los Filos mine in Mexico, Leagold continued to advance and
evaluate the long-term site-wide production and processing
alternatives during Q3. Studies related to the Bermejal underground
mine, a potential CIL plant, and an enlarged Los Filos open pit
mine plan are expected to be complete by year-end. On completion of
these studies, Leagold anticipates making a decision on the Los
Filos expansion opportunities in 2019.
At the Santa Luz project in Brazil, Leagold announced the results of an
updated feasibility study in Q3. Santa Luz is a previously
operating open pit mine and processing plant which was shut
down in 2014 by a previous owner to focus on optimizing gold
recoveries. Leagold's updated feasibility study demonstrates that
resin-in-leach (RIL) processing will successfully achieve gold
recoveries of 84%. The feasibility study outlines the potential for
Santa Luz to add 100,000 oz per year of gold production within a
10-month construction period at a modest capital cost of
$82 million. With a high IRR and low
costs, Santa Luz is a very attractive project. Leagold anticipates
making a decision on the construction and re-start of Santa Luz in
2019.
Financial Results
Leagold reported revenue of $111.3
million in Q3 2018 and net earnings of $15.5 million, or $0.05 per share, as detailed below.
Table 2: Financial Results for the Three Months ended
September 30, 2018
|
$000s
|
Three months
ended
Sept 30,
2018
|
Revenue
|
111,259
|
Operating
expenses
|
75,185
|
Depreciation and
depletion
|
14,827
|
Royalties
|
1,639
|
Earnings from mine
operations
|
19,608
|
Exploration
costs
|
273
|
Share-based
payments
|
(157)
|
Transaction
costs
|
271
|
General and
administration costs
|
3,749
|
Foreign exchange
loss
|
961
|
Finance and accretion
expense1
|
755
|
Other
income
|
(626)
|
Earnings/(loss)
before taxes
|
14,382
|
Current income tax
expense
|
2,136
|
Deferred income tax
(recovery)/expense
|
(2,686)
|
Net
income
|
14,932
|
Basic and diluted
earnings per share
|
0.05
|
1 Finance
and accretion expense includes income of $6.9 million from the
revaluation of the derivative warrant liability.
|
Supporting Documents
Leagold's Q3 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 Thursday, November 15 at 7am PST/10am EST.
Participants may dial in to the conference call using the numbers
below, quoting conference ID 8561047:
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/svbwb5mf
The conference call will be available for playback until
1pm EST on November 22, 2018 by dialling 1-855-859-2056
(North America toll free) or
+1-404-537-3406 (international), quoting conference ID 8561047. The
webcast playback will be available on Leagold's website here.
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. All statements other than statements of
historical fact, included herein, including without limitation,
statements related to full-year production forecasts and AISC,
expectations for increased recovery rates and the impact of cost
savings initiatives at Los Filos, cost savings from low-cost grid
power and anticipation of stable and continuous operations at RDM,
statements about potential future production at Santa Luz, future
operating costs and capital costs, and the projected IRR for the
Santa Luz project are forward looking statements. 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". 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 general economic
conditions and credit availability, 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.
SOURCE Leagold Mining Corporation