All amounts discussed herein are denominated
in U.S. dollars
THUNDER BAY, ON, May 8, 2019 /CNW/ - Premier Gold Mines Limited
("Premier" or "The Company") (TSX:PG) is pleased to report
operating results for the three months ended March 31, 2019. The Company previously released
first quarter production results on April
30, 2019.
Premier is a growth oriented, Canadian based mining company
involved in the exploration, development and production of gold and
silver deposits in Canada,
the United States and
Mexico. The company manages a high-quality pipeline of
precious metal projects in safe, proven, and accessible mining
jurisdictions and is focused on profitable low-cost production from
its two producing gold mines and the development of two
advanced-stage, multi-million ounce gold deposits.
2019 First Quarter Highlights
- Production of 17,614 ounces of gold and 57,681 ounces of
silver
- Cash costs1 of $806
per ounce of gold sold
- AISC1 of $1,105 per
ounce of gold sold
- Revenue of $23.1 million
- Mine operating income of $3.7
million
CEO Commentary
"With the next two phases of production under construction at
South Arturo, and better grades expected in the first half of the
year at Mercedes, the Company's is well positioned to return to
higher levels of production and reduced costs in the near future,"
stated Ewan Downie, President &
CEO. "The ongoing permitting initiatives at the Cove and Hardrock
Projects and the recent high-grade gold discoveries by Barrick as
they earn-in to our property around Cove, provide Premier with one
of the best and highly leveraged organic growth profiles amongst
its peers."
Three months ended March 31,
2019
A total of 17,614 ounces of gold and 57,681 ounces of silver
were produced during Q1 2019 compared to 30,550 ounces of gold and
59,826 ounces of silver during Q1 2018.
The Company reported total revenue of $23.1 million and mine operating income of
$3.7 million during the first quarter
compared to revenue of $39.2 million
and mine operating income of $9.6
million during Q1 2018. The reduction in first quarter
production, revenue and operating income when compared to the prior
year period, is due to a hiatus in production at South
Arturo. South Arturo operations have transitioned from Phase
2 open pit mining to Phase 1 open pit and El Nino underground
operations where development is underway and production is expected
by early 2020.
The Company continues to focus on near term exploration and
pre-development initiatives that will support its longer‑term
objective of increased annual production over the next several
years. A total of $6.2 million
in exploration and pre-development expenses were incurred during
the quarter. These expenses, when factored with the reduction
in mine operating income, contributed to a net loss of $0.9 million reported for the
quarter. A total of $13.4
million in capital expenditures were incurred during the
quarter, including $4.6 million for
mine development and construction at South Arturo, $2.6 million for development at McCoy-cove, and
the balance for sustaining and expansion related activities at
Mercedes.
The Company closed the quarter with cash and cash equivalents of
$43.5 million, and inventory of 2,304
ounces of gold and 9,902 ounces of silver.
Consolidated quarter operating results are provided in Table 1
below.
Table 1 - Selected Consolidated Operational and Financial
Information
|
|
Three months ended
March 31
|
(in millions of
U.S. dollars, unless otherwise
stated) (iii)
|
|
2019
|
2018
|
Ore milled
|
tonnes
|
178,771
|
313,850
|
|
|
|
|
Gold
produced
|
ounces
|
17,614
|
30,550
|
Silver
produced
|
ounces
|
57,681
|
59,826
|
Gold sold
|
ounces
|
17,520
|
29,275
|
Silver
sold
|
ounces
|
62,581
|
66,210
|
Realized
Price
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,271
|
1,300
|
Average realized
silver price (i,ii)
|
$/ounce
|
16
|
17
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
806
|
705
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,105
|
824
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
10
|
11
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
13
|
13
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
786
|
691
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,098
|
816
|
Financial
Measures
|
|
|
|
Gold
revenue
|
m $
|
22.2
|
37.9
|
Silver
revenue
|
m $
|
1.0
|
1.2
|
Total
revenue
|
m $
|
23.1
|
39.2
|
Mine operating
income
|
m $
|
3.7
|
9.6
|
Net loss
|
m $
|
(0.9)
|
(2.0)
|
Loss per
share
|
/share
|
-
|
(0.01)
|
EBITDA
(i,ii)
|
m $
|
4.4
|
9.4
|
Cash & cash
equivalents balance
|
m $
|
43.5
|
98.4
|
Cash flow from
operations
|
m $
|
(4.7)
|
0.4
|
Exploration,
evaluation & pre-development expense
|
m $
|
6.2
|
6.4
|
Capital
|
|
|
|
Total capital
expenditures
|
m $
|
13.4
|
5.3
|
Capital
expenditures - sustaining (i,ii)
|
m $
|
4.2
|
1.8
|
Capital
expenditures - expansionary (i,ii)
|
m $
|
9.2
|
3.5
|
(i) A cautionary
note regarding Non-IFRS financial metrics is included in the
"Non-IFRS Measures" section of this Management's Discussion and
Analysis.
|
(ii) Cash
costs, all-in sustaining costs, 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 Q1 2019 Management's Discussion and
Analysis.
|
(iii) May not
add due to rounding.
|
Mercedes
The Mercedes Mine is 150 kilometers 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 with an ore extraction rate targeting
2,000 tonnes per day. Quarter and year to date operating
results are provided in Table 2 below.
Table 2 - Mercedes Selected Financial and Operating
Results
|
|
|
|
|
Three months ended
March 31
|
(in millions of
U.S. dollars, unless otherwise
stated) (iii)
|
|
2019
|
2018
|
Ore &
Metals
|
|
|
|
Ore milled
|
tonnes
|
178,771
|
168,314
|
Gold
produced
|
ounces
|
17,614
|
15,009
|
Silver
produced
|
ounces
|
57,681
|
57,370
|
Gold sold
|
ounces
|
17,520
|
17,180
|
Silver
sold
|
ounces
|
62,581
|
66,210
|
Average gold
grade
|
grams/t
|
3.18
|
2.91
|
Average silver
grade
|
grams/t
|
27.31
|
31.78
|
Average gold recovery
rate
|
%
|
96.2
|
95.2
|
Average silver
recovery rate
|
%
|
36.8
|
33.4
|
Realized
Price
|
|
|
|
Average realized gold
price (i,ii)
|
$/ounce
|
1,271
|
1,287
|
Average realized
silver price (i,ii)
|
$/ounce
|
16
|
17
|
Non-IFRS
Performance Measures
|
|
|
|
Co-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
806
|
921
|
Co-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,105
|
1,096
|
Co-product cash costs
per ounce of silver sold (i,ii)
|
$/ounce
|
10
|
11
|
Co-product all-in
sustaining costs per ounce of silver sold
(i,ii)
|
$/ounce
|
13
|
13
|
By-product cash costs
per ounce of gold sold (i,ii)
|
$/ounce
|
786
|
897
|
By-product all-in
sustaining costs per ounce of gold sold
(i,ii)
|
$/ounce
|
1,098
|
1,081
|
Financial
Measures
|
|
|
|
Gold
revenue
|
m $
|
22.2
|
22.0
|
Silver
revenue
|
m $
|
1.0
|
1.2
|
Total
revenue
|
m $
|
23.1
|
23.2
|
Mine operating income
/ (loss)
|
m $
|
3.7
|
2.4
|
Exploration,
evaluation & pre-development expense
|
m $
|
0.6
|
0.6
|
Capital
|
|
|
|
Total capital
expenditures
|
m $
|
6.1
|
4.4
|
Capital
expenditures - sustaining (i,ii)
|
m $
|
4.2
|
1.8
|
Capital
expenditures - expansionary (i,ii)
|
m $
|
1.9
|
2.6
|
(i)
A cautionary note regarding Non-IFRS financial metrics is included
in the "Non-IFRS Measures" section of this 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 Q1 2019 Management's
Discussion and Analysis.
|
(iii) May not
add due to rounding.
|
|
|
|
Mine production at Mercedes during Q1 2019 was 17,614 ounces of
gold and 57,681 ounces of silver compared to 15,009 ounces of gold
and 57,370 ounces of silver during Q1 of the prior year. The
increased gold production is the result of higher mined grades
realized upon transitioning to the new Rey
de Oro and Lupita zones as well as consistent stope
production from within the Diluvio zone. Unit operating costs
at Mercedes during the period, on a co-product basis, were cash
costs (1) of $806 and
all-in sustaining costs (AISC) (1) of $1,105 per ounce of gold sold. While AISC
reported by Mercedes for this first quarter exceed annual guidance,
AISC is tracking to the 2019 mine plan where mine development is
weighted heavily toward the first half of 2019 and gold production
toward the second half. During the first quarter the Company
incurred capital sustaining costs of $4.2
million, representing over 40% of the annual capital
sustaining cost budget for Mercedes in 2019. With gold
production and unit operating costs at Mercedes tracking in line
with the mine plan, the Company is currently on pace to meet its
annual production and unit operating cost guidance.
Exploration activities continued during the quarter with a total
of 7,659 feet of drilling targeting Diluvio, Marianas and
Barrancas veins to replace
reserves, support mine production, test extensions of the main mine
trends and to test new geological targets.
In addition to the $4.2 million in
sustaining capital expenditures incurred during the quarter, the
Company capitalized another $1.9
million in expansionary mine development and exploration
related costs.
South Arturo
The South Arturo Mine in Nevada
is a joint venture operated by Barrick Gold Corporation
("Barrick"), where mining of the Phase 2 open pit has concluded and
construction is well underway on two new mining centers; the Phase
1 open pit and the El Nino underground operations which are
expected to ramp-up production in 2019 and 2020. Capital
expenditures of $4.6 million were
incurred during the first quarter for stripping for the Phase 1
open pit and underground ramp development at El Nino.
Exploration activities are focused on opportunities near
existing mine infrastructure, including further refinement of a
potential heap leach operation, and resource definition and
expansion drilling from underground drill stations located within
El Nino underground workings.
Cove and McCoy-Cove
A Preliminary Economic Assessment ("PEA") was completed for the
Cove Helen-Gap deposits in the first half of 2018, including
designs for underground exploration development and drilling,
preliminary engineering, dewatering, environmental baseline
studies, and a life of mine plan. Development of a ramp and
underground exploration drill stations is planned to start in the
third quarter of 2019. During the first quarter of
2019, drilling the first of two new water wells required for
groundwater modelling was completed and drilling of the second well
is underway. Pump tests, interpretation of results and
groundwater modeling will be completed in the third quarter as part
of the work required for an eventual feasibility study for the
project.
On the ground surrounding the Cove Project, Barrick continues to
explore and earn-in to the McCoy-Cove joint venture with positive
results. Several regional targets were identified, and 1,977 meters
of drilling was completed. Ongoing drilling is focused on testing
for mineralization in the Favret and Dixie
Valley rock formations that host the deposits on the
carve-out lands 100% owned by Premier. Drilling has
intersected mineralization and alteration at several target areas
including Lighthouse, Alpha, Windy
Point and more recently at Antenna where a new discovery was
recently announced with an intercept of 118.9 meters of 4.12 g/t
gold in hole PB19-03R. Higher grade intervals within the intercept
include 6.1 meters of 15.74 g/t gold beginning at 606.6
meters. On a grade-thickness basis, this drill intercept
represents one of the most significant ever drilled on the property
and the hole terminated still in high grade mineralization.
Greenstone Gold Mines
On March 26, 2019, the Provincial
Environmental Assessment ("EA") for the Hardrock Project was
approved by the Minister of Environment, Conservation & Parks
of Ontario.
A total of $6.5 million in
expenditures were incurred during the quarter on a range of project
activities including definition drilling to further validate and
potentially upgrade the resource block model, detailed engineering,
project permitting and First Nations consultation. Centerra
Gold Inc. ("Centerra") continues to fund 100% of expenditures
incurred at the project. As at March
31, 2019 Centerra had contributed $76.5 million toward its funding obligation to
the Greenstone Partnership.
All abbreviations used in this press release are available by
following this link (click
here).
Stephen McGibbon, P. Geo., is the
Qualified Person for the information contained in this press
release and is a Qualified Person within the meaning of National
Instrument 43 - 101. Assay samples were sent to ALS
Laboratories prep facilities located in Elko, Nevada and Reno, Nevada and analysis was performed at
their Vancouver, Canada analytical
facility utilizing 30-gram fire assay with an AA finish for Au and
ICP-MS 48 elements scan from 4-acid digestion for RC and Core
samples. For a complete description of Premier's sample
preparation, analytical methods and QA/QC procedures refer to the
technical report dated June 29, 2018 (effective date
March 31, 2018), entitled "Preliminary Economic Assessment for
the Cove Project, Lander County,
Nevada" located on Premier's website and at
www.sedar.com.
Q1 financial results and conference call details:
Full financial results for the three months ended March 31, 2019, will be released before market
open on May 8, 2019 and a conference
call with senior management will be held at 10:00am EST.
Details for the conference call and webcast can be found below
and will be accessible on the Company's website.
Toll Free (North America): (+1)
888 390 0605
International: (+1) 416 764 8609
Conference ID: 90889716
Webcast Link
https://event.on24.com/wcc/r/1989861/7E60C55C7426BC143258EA66DA8C6155
Conference Call Replay
The conference call replay will be available from 1:00pm EST on May 8,
2019 until 11:59pm EST on
May 15, 2019.
Toll Free Replay Call (North
America): (+1) 888 390 0541
International Replay Call: (+1) 416 764 8677
Passcode: 889716 #
- A cautionary note regarding Non-IFRS financial metrics is
included in the "Non-IFRS Measures" section of the March 31, 2019 Management Discussion and
Analysis.
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"), adjusted earnings
before interest, tax, depreciation and amortization ("Adjusted
EBITDA"), adjusted earnings / (loss) per share, 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 about strategic plans, including
future operations, future work programs, capital expenditures,
discovery and production of minerals, price of gold and currency
exchange rates, timing of geological reports 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