Asanko Gold Inc. (“Asanko” or the “Company”) (TSX, NYSE
American: AKG) reports fourth quarter (“Q4”) and full year
(“FY”) 2018 operating and financial results and provides 2019
guidance for the Asanko Gold Mine (“AGM”), located in Ghana, West
Africa. The AGM is a 50:50 joint venture (“JV”) with Gold Fields
Ltd (JSE, NYSE: GFI), which is managed and operated by
Asanko. All amounts are in US dollars unless otherwise
stated.
Asanko Gold Mine Highlights (100%
basis)
- FY2018 gold production of 223,152
ounces at AISC1 $1,072/oz, exceeding 2018 production guidance and
within the lower end of cost guidance
- FY2018 gold sales of 227,772 ounces
at an average realized price of $1,247/oz, generating gold revenue
of $283.9 million, including by-product sales and after
capitalization of gold sales related to pre-production activities
at Esaase
- For FY2018, the JV generated
operating cash flows of $72.5 million and $100.5 million in
operating cash flows before working capital changes
- For FY2018, the JV reported
adjusted net income1 after tax of $2.0 million, after accounting
for the $126.9 million fair value adjustment associated with the JV
transaction
- Q4 2018 gold production of 59,823
ounces at AISC1 of $1,072/oz
- Q4 2018 gold sales of 61,821 ounces
at an average realized price of $1,215/oz, generating gold revenue
of $74.2 million, including by-product sales and after
capitalization of gold sales related to pre-production activities
at Esaase
- For Q4 2018, the JV posted a net
loss after tax of $3.1 million
- At December 31, 2018, the JV had
cash of $21.6 million on hand and $4.3 million in receivables from
gold sales
Quarterly Consolidated Financials for
Asanko Gold Inc.
- In Q4 2018, the Company reported net loss of $0.9 million and
Adjusted EBITDA1 of $6.1 million
- At December 31, 2018, Asanko had a cash position of $10.4
million
2019 Guidance for the Asanko Gold Mine
(100% basis)
- 225,000 – 245,000 ounces at AISC1
of $1,040 – 1,060/oz and AIC2 of $1,130 – $1,150/oz
- Capital expenditure forecast to be
$25.0 million, of which $9.0 million is sustaining capex and $16.0
million is development capital for Esaase (included in AIC2)
- Exploration budget of $8.0 million
(included in AIC2)
Commenting on the Q4 and FY 2018 performance,
Peter Breese, President and CEO, said: “The Asanko Gold Mine
delivered a fourth consecutive quarter of strong operating
performance, enabling the mine to set a new production record for
the year, which exceeded guidance and met the lower end of cost
guidance. This enabled the mine to deliver exceptional operating
cash flows after working capital of $72.5 million in the year. This
is a particularly pleasing result and allowed the mine to focus on
investing in its future as we continued with the substantial
pushback of the Nkran pit and commenced the initial development of
the large greenfields deposit, Esaase.
Whilst the mine’s AISC1 were within the lower
end of cost guidance for the year, Q4 AISC1 were impacted by a
NRV adjustment to the mine’s lower-grade stockpile inventory
value, the planned continued focus on the large Nkran pushback and
inflationary pressures on mining unit rates. These costs translated
into a net loss after tax of $3.1 million for the JV.
Looking to the year ahead, the Asanko Gold Mine
is targeting 225,000 to 245,000 ounces of gold production at AISC1
of $1,040 – $1,060/oz for 2019. Whilst forecasted AISC1 for 2019
are in line with 2018, they include a continued investment on the
large Nkran pushback, which will be complete in 2019, resulting in
high strip ratios for the year. In addition we have provided for
two additional costs items that were not incurred for the full year
in 2018. These are $35/oz for the recently introduced Esaase
trucking operation and $25/oz to account for the new 5%
non-refundable levy on goods and services that attract VAT in
Ghana.
Alongside meeting the operational plan for the
year, we will be focusing on the continued development of Esaase
and re-starting exploration. Working with our Joint Venture
partners, we have put together an $8 million exploration program
for the year. Our priority targets are located within the highly
prospective South Camp area, as well as near-mine oxides close to
existing infrastructure.”
Asanko Gold Mine – Summary of FY2018 and
Q4 2018 Operational and Financial Results
Asanko
Gold Mine (100% Basis) |
Q4
2017 |
Q3
2018 |
Q4
2018 |
FY
2017 |
FY
2018 |
Waste mined
(‘000t) |
10,692 |
9,084 |
8,370 |
30,108 |
39,244 |
Ore mined (‘000t) |
802 |
1,730 |
1,370 |
4,048 |
4,898 |
Strip ratio (W:O) |
13.3 |
5.3 |
6.1 |
7.4 |
8.0 |
Average gold grade
mined (g/t) |
1.5 |
1.4 |
1.5 |
1.7 |
1.4 |
Mining costs ($/t
mined) |
2.82 |
3.63 |
4.13 |
3.25 |
3.62 |
Ore treated
(‘000t) |
1,087 |
1,299 |
1,238 |
3,745 |
5,180 |
Gold feed grade
(g/t) |
1.5 |
1.6 |
1.6 |
1.8 |
1.5 |
Gold recovery (%) |
94 |
94 |
95 |
94 |
94 |
Processing costs ($/t
treated) |
12.91 |
11.26 |
12.39 |
13.00 |
11.16 |
Gold
production (oz) |
51,550 |
61,599 |
59,823 |
205,047 |
223,152 |
Gold sales
(oz) |
49,561 |
|
65,267 |
|
61,821 |
|
206,079 |
227,772 |
|
Average realized gold
price ($/oz) |
1,264 |
|
1,198 |
|
1,215 |
|
1,243 |
1,247 |
|
Operating cash costs1
($/oz) |
586 |
|
743 |
|
811 |
|
556 |
688 |
|
Total cash costs1
($/oz) |
649 |
|
803 |
|
872 |
|
618 |
750 |
|
All-in sustaining
costs1 ($/oz) |
1,171 |
|
971 |
|
1,072 |
|
1,007 |
1,072 |
|
All-in sustaining
margin1 ($/oz) |
93 |
|
227 |
|
143 |
|
236 |
175 |
|
All-in
sustaining margin1 ($m) |
4.6 |
|
14.8 |
|
8.8 |
|
48.6 |
39.9 |
|
Revenue ($m) |
62.8 |
|
78.4 |
|
74.2 |
|
256.2 |
283.9 |
|
Income (loss) from
mineoperations ($m) |
15.1 |
|
0.6 |
|
(0.8 |
) |
62.6 |
35.3 |
|
Net income (loss) after
tax ($m) |
(9.3 |
) |
(128.8 |
) |
(3.1 |
) |
12.6 |
(124.9 |
) |
Adjusted
net income (loss) after tax1 ($m) |
(9.3 |
) |
(2.1 |
) |
(2.9 |
) |
12.6 |
2.0 |
|
Cash provided by
operating activities |
36.6 |
|
21.1 |
|
12.9 |
|
133.2 |
72.5 |
|
- There were no lost time injuries
(“LTI”) reported during the quarter, and the AGM has now achieved
over 21 months and more than 10.9 million man hours worked without
a single LTI.
- For the year 2018 gold sales were
227,772 ounces at an average realized price of $1,247/oz,
generating gold revenue of $283.9 million
- Strong cash generation for the
year, the JV generated $72.5 million in operating cash flow after
working capital
- Produced 59,823 and 223,152 ounces
of gold in Q4 2018 and FY2018, respectively, exceeding 2018
production guidance of 200,000-220,000 ounces.
- In Q4 2018, ore mined was 456,667
tonnes per month at an average mining grade of 1.5 g/t and a strip
ratio of 6.1:1.
- Completed the initial development
and bulk sampling exercise of the large-scale Esaase deposit in Q4
2018. Trial mining operations commenced in January 2019.
- The processing plant delivered
another strong quarterly milling performance of 1.2 million tonnes
at a plant feed grade of 1.6g/t.
- Q4 2018 gold recovery was 95%,
continuing to exceed design.
- The AGM incurred operating cash
costs per ounce1, total cash costs per ounce1 and all-in sustaining
costs (“AISC”)1 of $811, $872 and $1,072/oz, respectively, in Q4
2018. These costs included a $106/oz impact associated with an
adjustment to the carrying value of stockpile inventory in order to
reflect the net realizable value of lower-grade stockpiled
ore.
- AISC1 for the FY2018 was $1,072/oz,
which was within guidance for the year of $1,050-$1,150/oz.
- During Q4 2018, the AGM sold 61,821
ounces of gold at an average realized gold price of $1,215/oz for
total revenue of $74.2 million (including $0.2 million of
by-product revenue and net of $1.1 million of gold sales related to
pre-production activities at Esaase that were capitalized to
mineral properties, plant and equipment), an increase of $11.5
million from Q4 2017. The increase in revenues quarter-on-quarter
was a function of higher sales volumes in Q4 2018, partially offset
by lower average realized gold prices.
- Total cost of sales (including
depreciation and depletion and royalties) amounted to $75.1 million
in Q4 2018, an increase of $27.4 million from Q4 2017. The increase
in production costs was primarily driven by a $9.3 million
adjustment to the carrying value of the AGM’s stockpile inventory
to reflect the net realizable value of lower-grade stockpiled ore,
higher mining and overhead costs associated with the achievement of
production performance targets, inflationary pressures on unit
mining costs as well as higher gold ounces sold. Additionally,
depreciation and depletion during Q4 2018 accounted for $5.7
million of the increase in cost of sales, compared to Q4 2017.
- The AGM’s net loss after tax
amounted to $3.1 million in Q4 2018, compared to a net loss of $9.3
million in Q4 2017. The reduction in net loss was due mainly to a
reduction in deferred income tax expense and interest expense, the
latter resulting from the settlement of the Red Kite debt in July
2018. These factors were partly offset by lower mine operating
earnings in Q4 2018.
- As at December 31, 2018, the JV had
cash of $21.6 million on hand and $4.3 million in receivables from
gold sales.
Asanko Gold Inc. – Summary of FY2018 and
Q4 2018 Financial Results
Asanko Gold Inc. (consolidated) |
Q4 2017 |
Q3 2018 |
Q4 2018 |
FY 2017 |
FY 2018 |
Net income (loss)
attributable to common shareholders ($m) |
|
(6.7 |
) |
|
(0.3 |
) |
|
(0.9 |
) |
|
5.8 |
|
(141.4 |
) |
Net income (loss) per
share attributable to common shareholders |
|
($0.03 |
) |
|
($0.00 |
) |
|
($0.00 |
) |
|
$0.03 |
|
($0.64 |
) |
Adjusted net income
(loss)attributable to common shareholders1 ($m) |
|
(6.7 |
) |
|
(1.6 |
) |
|
(0.9 |
) |
|
5.8 |
|
1.9 |
|
Adjusted
net income (loss) per share attributable to common
shareholders1 |
|
($0.03 |
) |
|
($0.01 |
) |
|
($0.00 |
) |
|
$0.03 |
|
$0.01 |
|
Adjusted EBITDA1
($m) |
|
27.0 |
|
|
13.3 |
|
|
6.1 |
|
|
114.5 |
|
79.0 |
|
- The Company reported a net loss
attributable to common shareholders of $0.9 million in Q4 2018
compared to a net loss of $6.7 million in Q4 2017. The reduction in
net loss for Q4 2018 was predominantly a result of the
deconsolidation of the Company’s former Ghanaian subsidiaries and
the recognition of $1.1 million in service fees (net of withholding
tax) earned as operators of the JV.
- Reported Adjusted EBITDA1 of $6.1
million for Q4 2018 compared to $27.0 million in Q4 2017. The
decrease in Adjusted EBITDA1 was primarily a result of the higher
cash costs incurred by the AGM in Q4 2018, as well as a reduction
in the Company’s interest in the AGM from 100% to 45%.
- For FY2018, the Company reported a
net loss attributable to common shareholders of $141.4 million
compared to net income attributable to common shareholders of $5.8
million in 2017. The reduction in net income for the year was
predominantly the result of a $143.3 million loss associated with
the loss of control of the AGM on July 31, 2018. In addition, the
Company deconsolidated the results of its former Ghanaian
subsidiaries effective July 31, 2018.
- Reported Adjusted EBITDA1 of $79.0
million for FY2018 compared to $114.5 million in 2017. The decrease
in Adjusted EBITDA1 was primarily a result of the higher cash costs
incurred by the AGM in 2018, as well as a reduction in the
Company’s interest in the AGM from 100% to 45%.
2019 GuidanceThe Asanko Gold
Mine JV announces 2019 production guidance of 225,000 – 245,000
ounces at AISC1 of $1,040 – $1,060/oz and AIC2 of $1,130 –
US$1,150/oz, based on a $1,200/oz gold price. Corporate costs
for Asanko Gold Inc. are expected to be $60 per attributable ounce
over and above the AGM AISC1 and AIC2.
The AGM’s AISC1 in 2019 also includes $35/oz for
the recently introduced Esaase trucking operation and $25/oz to
account for the impact of the recent 5% non-refundable levy on
goods & services that attract VAT in Ghana.
Total capital expenditure for 2019 is forecast
to be $25 million. Sustaining capex is estimated at $9 million and
includes a tailings dam lift. Development capital is forecast at
$16 million, primarily for the development of Esaase and includes
the commencement of a village relocation and the installation of
two water treatment plants. In addition, $8 million is
budgeted for exploration, mainly around the highly prospective
Tontokrom – Miradani – Fromenda mineralized trend.
This news release should be read in conjunction with Asanko’s
Management Discussion and Analysis and the Consolidated Annual
Financial Statements for the year ended December 31, 2018, which
are available at www.asanko.com and filed on SEDAR. |
Notes:1
Non-GAAP Performance MeasuresThe Company has
included certain non-GAAP performance measures in this press
release. 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. Refer to the Non-GAAP
Measures section of Asanko’s Management Discussion and Analysis for
an explanation of these measures and reconciliations to the
Company’s reported financial results in accordance with IFRS.
- Operating Cash Costs per
ounce and Total Cash Costs per ounceOperating 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%.
- 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.
- Adjusted net income
attributable to common shareholdersThe Company has
included the non-GAAP performance measures of adjusted net income
(loss) attributable to common shareholders and adjusted net income
(loss) per common share. Neither adjusted net income nor
adjusted net income per share have any standardized meaning and are
therefore unlikely to be comparable to other measures presented by
other issuers. Adjusted net income excludes certain non-cash
items from net income or net loss to provide a measure which helps
the Company and investors to evaluate the results of the underlying
core operations of the Company and its ability to generate cash
flows and is an important indicator of the strength of our
operations and the performance of our core business.
- Adjusted
EBITDAEBITDA provides an indication of the Company’s
continuing capacity to generate income from operations before
taking into account the Company’s financing decisions and costs of
amortizing capital assets. Accordingly, EBITDA comprises net income
(loss) excluding interest expense, interest income, amortization
and depletion, and income taxes. Adjusted EBITDA adjusts EBITDA to
exclude non-recurring items and to include the Company’s interest
in the adjusted EBITDA of the JV. Other companies and JV partners
may calculate EBITDA and Adjusted EBITDA differently.
2 All in Costs Per OunceAll in
Costs per ounce (“AIC") includes AISC as well as costs incurred at
‘new projects’ and costs related to ‘major projects at existing
operations’ where these projects will materially benefit the
operation. A material benefit to an existing operation is
considered to be at least a 10% increase in annual or life of mine
production, net present value, or reserves compared to the
remaining life of mine of the operation.
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.
Q4 2018 Operating & Financial Results Conference Call
& Webcast - 9am ET on February 14, 2019 US/Canada Toll
Free: +1 800 926 5082 UK Toll Free:
0800 496 0822
International:
+1 212 231 2912 Webcast:Please click on the
link: https://cc.callinfo.com/r/1ot8ui8286kun&eom |
About Asanko Gold Inc.Asanko’s
flagship project, located in Ghana, West Africa, is the jointly
owned Asanko Gold Mine with Gold Fields Ltd, which Asanko manages
and operates. The Company is strongly committed to the highest
standards for environmental management, social responsibility, and
health and safety for its employees and neighbouring communities.
For more information, please visit www.asanko.com.
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, investors should review the Company's Annual Form
40-F filing with the United States Securities Commission and its
home jurisdiction filings that are available at www.sedar.com.
Neither Toronto Stock Exchange nor the
Investment Industry Regulatory Organization of Canada accepts
responsibility for the adequacy or accuracy of this release.
Cautionary Note to US Investors
Regarding Mineral Reporting Standards:Asanko has prepared
its disclosure in accordance with the requirements of securities
laws in effect in Canada, which differ from the requirements of US
securities laws. Terms relating to mineral resources in this press
release are defined in accordance with National Instrument 43-101 -
Standards of Disclosure for Mineral Projects under the guidelines
set out in the Canadian Institute of Mining, Metallurgy, and
Petroleum (the “CIM Council”) Standards on Mineral Resources and
Mineral Reserves (the “CIM Definition Standards”). The
Securities and Exchange Commission (the “SEC”) has adopted
amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC. As a result of the adoption of the SEC
Modernization Rules, SEC will now recognize estimates of “measured
mineral resources”, “indicated mineral resources” and “inferred
mineral resources” that are “substantially similar” to the
corresponding terms under the CIM Definition Standards. In
addition, the SEC has amended its definitions of “proven mineral
reserves” and “probably mineral reserves” to be “substantially
similar” to the corresponding CIM Definitions. United States
investors are cautioned that while the above terms are
“substantially similar” to CIM Definitions, there is no assurance
any mineral reserves or mineral resources that the Company may
report as ”proven reserves”, “probable reserves”, “measured mineral
resources”, “indicated mineral resources” and “inferred mineral
resources” under NI 43-101 would be the same had the Company
prepared the reserve or resource estimates under the standards
adopted under the SEC Modernization Rules.
Enquiries:
Alex Buck – Manager, Investor & Media Relations
Toll-Free (N.America): 1-855-246-7341
Telephone: +44 7932 740 452
Email: alex.buck@asanko.com
Andrew J. Ramcharan – SVP, Corporate Development & IR
Toll-Free (N.America): 1-855-246-7341
Telephone: +1 647 309 5130
Email: andrew.ramcharan@asanko.com
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