(All dollar amounts are United
States dollars unless otherwise stated)
VANCOUVER, May 7, 2020 /CNW/ - Galiano Gold Inc.
("Galiano" or the "Company") (TSX, NYSE American: GAU) (formerly
Asanko Gold Inc.) reports first quarter ("Q1") 2020
operating and financial results 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 Galiano.
Q1 2020 Asanko Gold Mine Highlights (100% basis)
- Record quarterly gold production of 66,333 ounces at all-in
sustaining cost1 ("AISC") of $805/oz
- The AGM delivered its best financial performance since
commercial production was announced in April
2016.
- Gold sales of 67,820 ounces at an average realized price of
$1,542/oz, generating record gold
sales proceeds of $104.6 million
- Strong cash flow generation with operating cash flow of
$37.0 million, and free cash
flow1 of $27.0 million
- As at March 31, 2020, the JV had
cash of $55.6 million, $9.6 million in gold receivables and $0.5 million in gold on hand
- Revolving credit facility of $30
million drawn down as a proactive measure in response to
current economic uncertainty
- Filed 43-101 technical report with updated Mineral Resource and
Mineral Reserve Estimate
- Precautionary measures in place in response to the COVID-19
global pandemic
Q1 2020 Quarterly Highlights for Galiano Gold Inc.
- Net income after tax of $21.8
million and Adjusted EBITDA1 of $21.9 million
- At March 31, 2020, Galiano had
cash and receivables of $53.7
million
- Continued returning capital to shareholders through the normal
course issuer bid ("NCIB") program with 2,431,409 common shares
repurchased and cancelled for $2.0
million
- Appointed Paul N. Wright as
Chairman of the Board of Directors as of May
5, 2020
- Appointed Judith Mosely to the
Board of Directors as of January 1,
2020
- Appointed Todd Romaine as
Executive Vice President, Sustainability as of May 1, 2020
- Appointed Paul Klipfel as Senior
Vice President, Exploration as of April 20,
2020
"We delivered an exceptional quarter in the context of a very
challenging global backdrop," said Greg
McCunn, Chief Executive Officer. "With record production and
gold sales proceeds we continued to execute on our strategy of
generating free cash flow at the Asanko Gold Mine and returning
capital with distributions to the joint venture partners totalling
$45 million during the
quarter."
"During the quarter the team delivered on an important
milestone with the completion of the life of mine plan and the
updated Mineral Resource and Mineral Reserve estimate for the
Asanko Gold Mine providing a baseline on which we are working to
optimize. Included in the optimization is our cost initiative to
drive down our all-in sustaining costs by $100/oz. Another key focus area where we see
potential to drive value is within exploration and I am pleased to
announce that Paul Klipfel has
joined us as our newly appointed Vice President, Exploration. The
focus on exploration in the short-term is on replacing depletion
and during 2020 we have a $10 million
program underway with 4 drill rigs currently turning on-site. We
expect to have approximately 36,000 metres drilled by early August
at near-mine targets which will form our updated reserve and
resource estimate for year-end. We expect to see a sustained
exploration effort in the medium term.
"During the quarter and subsequent to quarter-end we have
also undertaken some changes to the board with the addition of
Judith Mosely and our newly
appointed Chairman Paul Wright. We
have also recently appointed Todd
Romaine as our EVP, Sustainability. With sustainability a
key focus area, we are pleased to enhance our capability across the
Environmental, Social and Governance spheres. We also received
shareholder support at our Annual General and Special Meeting to
change the Company's name and effective May
5, 2020 we began trading as Galiano
Gold. This provides us a clear distinction between the
corporate level entity and the Asanko Gold Mine whilst maintaining
our vision to create a sustainable business capable of
long-term value creation for all our
stakeholders."
Asanko Gold Mine - Summary of Q1 2020 Operational and
Financial Results (100%)
AGM (100% Basis
before any
impairment adjustments)
|
Q1
2020
|
Q4
2019
|
Q1
2019
|
Ore mined
('000t)
|
1,911
|
1,405
|
1,505
|
Waste mined
('000t)
|
7,051
|
4,956
|
6,584
|
Total mined
('000t)
|
8,962
|
6,361
|
8,089
|
Strip ratio
(W:O)
|
3.7
|
3.5
|
4.4
|
Average gold grade
mined (g/t)
|
1.6
|
1.6
|
1.4
|
Mining
cost2 ($/t mined)
|
3.89
|
4.86
|
4.48
|
Ore milled
('000t)
|
1,400
|
1,460
|
1,224
|
Average mill head
grade (g/t)
|
1.6
|
1.5
|
1.6
|
Average recovery rate
(%)
|
94
|
94
|
93
|
Processing cost ($/t
treated)
|
11.13
|
10.83
|
11.93
|
Gold production
(oz)
|
66,333
|
66,112
|
60,425
|
Gold sales
(oz)
|
67,820
|
66,095
|
53,421
|
Average realized gold
price ($/oz)
|
1,542
|
1,465
|
1,292
|
Operating cash
costs1 ($/oz)
|
599
|
790
|
878
|
Total cash
costs1 ($/oz)
|
676
|
863
|
943
|
All-in sustaining
costs1 ($/oz)
|
805
|
969
|
1,123
|
All-in sustaining
margin1 ($/oz)
|
737
|
496
|
169
|
All-in sustaining
margin1 ($m)
|
50.0
|
32.8
|
9.0
|
Revenue
($m)
|
104.8
|
97.1
|
67.0
|
Income (loss) from
mine operations ($m)
|
48.4
|
9.1
|
(11.9)
|
Cash provided by
operating activities
|
37.0
|
45.4
|
8.8
|
|
|
|
|
2
For the three months ended March 31,
2019, mining cost per tonne excluded a provision for a one-time
contract termination fee.
|
- During the quarter, the Company aligned its health and safety
reporting standards with those of the International Council on
Mining & Metals ("ICMM"). During Q1, there was one lost time
injury ("LTI") and four total recordable injuries ("TRI") reported
resulting in an LTI frequency rate ("LTIFR") of 0.51 per million
employee hours worked and a TRI frequency rate ("TRIFR") of 2.02
per million employee hours worked.
- Record gold production of 66,333 ounces during the three months
ended March 31, 2020
- During Q1 2020, the AGM sold 67,820 ounces of gold at an
average realized gold price of $1,542/oz. Revenues totalled $104.8 million, an increase of $37.8 million from Q1 2019. The increase in sales
proceeds was a function of higher sales volumes and higher averaged
realized gold prices in Q1 2020.
- The AGM incurred operating cash costs per ounce1,
total cash costs per ounce1 and AISC of $599, $676 and
$805/oz, respectively, in Q1 2020.
The reduction in total cash costs per ounce and AISC from Q1 2019
was primarily due to the impact of higher gold sales volumes which
had the effect of decreasing fixed costs on a per unit basis, a
reduction in ore transportation costs associated with trucking ore
from Esaase to the process plant and a $41/oz decrease in deferred stripping costs.
- Total cost of sales (including depreciation and depletion and
royalties) amounted to $56.4 million
in Q1 2020, a decrease of $22.5
million from Q1 2019. The decrease in cost of sales was
primarily due to a reduction in depreciation and depletion expense
following the impairment recorded in Q4 2019 which had the effect
of lowering the mineral properties, plant and equipment
("MPP&E") depreciable asset cost base. In addition, operating
cash costs decreased as a result of a reduction in NRV adjustments
to stockpiles. Cost of sales for Q1 2019 also included an accrual
for a one-time mining contractor services agreement termination
fee. These factors were partly offset by an increase in gold ounces
sold in Q1 2020 compared to Q1 2019.
- Strong cash flow generation with operating cash flow of
$37.0 million ($56.5 million before working capital
adjustments), and free cash flow of $27.0
million. This compares to $8.8
million of operating cash flow and negative $5.2 million of free cash flow during Q1 2019.
The improvement in free cash flow was mainly from the increase in
income from operations partly offset by an unfavorable change in
non-cash working capital.
- Working capital investments during the quarter included
investments in strategic supply chain interventions with respect to
the ongoing COVID-19 pandemic bolstering supplies of key reagents,
critical spares and diesel.
- As at March 31, 2020, the JV had
cash of $55.6 million (including the
funds from the fully drawn $30.0
million revolving line of credit), $9.6 million in receivables from gold sales and
$0.5 million in gold on hand.
Galiano Gold Inc. – Summary Q1 2020 Financial Results
Consolidated
|
Q1
2020
|
Q4
2019
|
Q1
2019
|
Net income (loss)
($m)
|
21.8
|
(21.2)
|
(5.3)
|
Net income (loss) per
share
|
$0.10
|
($0.09)
|
($0.02)
|
Adjusted net income
(loss)1 ($m)
|
21.8
|
0.9
|
(5.3)
|
Adjusted net income
(loss) per share1
|
$0.10
|
$0.00
|
($0.02)
|
Adjusted
EBITDA1 ($m)
|
21.9
|
12.6
|
1.2
|
- The Company reported net income after tax of $21.8 million in Q1 2020 compared to a net loss
of $5.3 million in Q1 2019. The
improvement in earnings during Q1 2020 was predominantly the result
of an increase in the Company's 45% interest in the net earnings of
the JV which totaled $20.5 million
for the quarter.
- The Company continued to return capital to shareholders through
its normal course issuer bid ("NCIB") program. During Q1 2020, the
Company repurchased and cancelled a total of 2,431,409 common
shares under the NCIB program for $2.0
million (average acquisition price of $0.83 per share).
- During the quarter, the Company received the $22.5 million in distributions from the JV. These
payments were recorded as redemptions of the previously recognized
preference shares.
- As at March 31, 2020, the Company
had cash on hand of $50.6 million and
$3.1 million in receivables for a
gross liquidity position of $53.7
million and no debt.
- Adjusted EBITDA1 for Q1 2020 amounted to
$21.9 million, compared to
$1.2 million in Q1 2019. The increase
in Adjusted EBITDA1 was primarily a result of the
increase in the AGM's net earnings.
- Cash used in operating activities in Q1 2020 was $0.8 million, compared to cash used in operating
activities of $1.6 million in Q1
2019. The decrease in cash used in operations was partly due cash
inflows associated with working capital changes during Q1 2020,
along with a reduction in cash general and administrative
expenses.
2020 Outlook
The Asanko Gold Mine is on track to meet 2020 guidance of
225,000 – 245,000 ounces at AISC of $1,000 – $1,100/oz. It is expected that AISC will
increase in Q2 and Q3 2020 as construction of the next lift on
the Tailings Storage Facility is completed.
Guidance
|
Q1 2020
(Actual)
|
FY 2020
(Forecast)
|
Gold Production
(oz)
|
66,333
|
225,000 –
245,000
|
AISC
($/oz)
|
805
|
1,000 –
1,100
|
Appointment of Todd Romaine as
Executive Vice President, Sustainability
The Company is pleased to announce that Todd Romaine has been appointed Executive Vice
President of Sustainability. Todd has over 20 years'
experience in the environmental, social and community aspects of
the extractive sector as well as public and aboriginal governments.
Most recently he worked as the Chief Sustainability Officer for
Danakali Limited, an Australian junior potash mining company that
is developing a 200-year Sulphate of Potash deposit in Eritrea. Prior to this role, Todd was the Vice
President, Corporate Social Responsibility & Government
Relations at Nevsun Resources Ltd, a Canadian mid-tier mining
company and played a central role developing leading edge CSR
initiatives to establish social license and responsible operations
in challenging jurisdictions. Previously, he worked in senior
management roles at Enbridge Pipelines Inc., Inuvialuit Regional
Corporation and the Government of Nunavut. Todd holds designations with the
Canadian Institute of Planners, International Right of Way
Association and has a Master's of International Relations, a
Master's of Leadership, a Bachelor of Science in Environmental
Planning, and a Bachelor of Arts in Environmental
Studies.
Appointment of Paul Klipfel as
Senior Vice President, Exploration
The Company is pleased to announce that Paul Klipfel has been appointed Vice President
in Exploration. Paul has 40 years of exploration experience in a
wide variety of geologic settings and deposit types. Most of
his work for the past 13 years has been in Ghana and other countries of West
Africa. He was an original mapper on the Esaase project for
Keegan Resources and has been a consultant to many companies over
the past 17 years in West Africa,
North and South America,
Australia, and Asia. He also
served as President for Abzu Gold and as Chief Geologist / COO for
Ashanti Gold. Dr. Klipfel
holds a Ph.D. in Economic Geology from Colorado School of Mines and M.S. degrees in
Mineral Economics from Colorado School of
Mines and Geology from University of
Idaho.
COVID-19 Update
The JV has taken precautionary measures in response to the
COVID-19 global pandemic to protect the health and safety of its
employees and the operating and financial well-being of the AGM.
There are no known or presumptive cases of COVID-19 with employees
of Galiano or at the AGM. The Company's offices in
Vancouver, Johannesburg and Accra are observing local regulations.
The AGM continues to operate with strict hygiene, monitoring and
social distancing protocols in place in accordance with the
Ghanaian Ministry of Health guidelines. The AGM has continued
to build its supply chain and now holds eight to nine months of key
reagents, consumables and critical spares and three months of
diesel supply. The AGM's primary refiner based in South Africa continues to receive shipments
and refine gold doré from the AGM.
This news release
should be read in conjunction with Galiano's Management's
Discussion and Analysis
and the Condensed Consolidated Interim Financial Statements for the
three months ended
March 31, 2020 and 2019, which are available at www.galianogold.com
and filed on SEDAR.
|
Notes:
1 Non-GAAP
Performance Measures
The 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 Galiano'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
ounce
Operating 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
shareholders
The 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 EBITDA
EBITDA 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.
- Free cash flow
The Company believes that in addition
to conventional measures prepared in accordance with IFRS, the
Company and certain investors and analysts use free cash flow to
evaluate the JV's performance with respect to its operating cash
flow capacity to meet non-discretionary outflows of cash. The
presentation of free cash flow is not meant to be a substitute for
the cash flow information presented in accordance with IFRS, but
rather should be evaluated in conjunction with such IFRS measures.
Free cash flow is calculated as cash flows from operating
activities of the JV adjusted for cash flows associated with
sustaining and non-sustaining capital expenditures and payments
made to mining contractors for leases capitalized under IFRS
16.
About Galiano Gold Inc.
Galiano is focused on creating a sustainable
business capable of long-term value creation for its
stakeholders through organic production growth, exploration
and disciplined deployment of its financial resources. The company
currently operates and manages the Asanko Gold Mine, located in
Ghana, West Africa which is jointly owned with Gold
Fields Ltd. 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.galianogold.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements and information contained in this news
release constitute "forward-looking statements" within the meaning
of applicable U.S. securities laws and "forward-looking
information" within the meaning of applicable Canadian securities
laws, which we refer to collectively as "forward-looking
statements". Forward-looking statements are statements and
information regarding possible events, conditions or results of
operations that are based upon assumptions about future conditions
and courses of action. All statements and information other than
statements of historical fact may be forward looking statements. In
some cases, forward-looking statements can be identified by the use
of words such as "seek", "expect", "anticipate", "budget", "plan",
"estimate", "continue", "forecast", "intend", "believe", "predict",
"potential", "target", "may", "could", "would", "might", "will" and
similar words or phrases (including negative variations) suggesting
future outcomes or statements regarding an outlook.
Forward-looking statements in this news release include, but
are not limited to: estimates regarding the AGM's consumption
of key reagents, consumables, critical spares and diesel
fuel; the ability of the AGM to maintain current inventory
levels; expected gold production; cost estimates; and the expected
date of the announcement of preliminary production and cost data;
and statements with respect to the Company's share buy-back
program. Such forward-looking statements are based on a number of
material factors and assumptions, including, but not limited to:
the ability of the AGM to continue to operate during the COVID-19
pandemic; that gold production and other activities will not be
curtailed as a result of the COVID-19 pandemic; that the AGM will
be able to continue to ship doré from the AGM site to be
refined; that the doré produced by the AGM will
continue to be able to be refined at similar rates and costs to the
AGM, or at all; that the other current or potential future effects
of the COVID-19 pandemic on the Company's business, operations and
financial position, including restrictions on the movement of
persons (and in particular, the AGM's workforce), restrictions on
business activities, including access to the AGM, restrictions on
the transport of goods, trade restrictions, increases in the cost
of necessary inputs, reductions in the availability of necessary
inputs and productivity and operational constraints, will not
impact its 2020 production and cost guidance; that the Company's
and the AGM's responses to the COVID-19 pandemic will be effective
in continuing its operations in the ordinary
course; the accuracy of the estimates and assumptions
underlying the Mineral Resource and Mineral Reserve estimates,
including future gold prices, cut-off grades and production
and processing estimates; the successful completion of development
and exploration projects, planned expansions or other projects
within the timelines anticipated and at anticipated production
levels; that mineral resources can be developed as planned; that
the Company's relationship with joint venture partners will
continue to be positive and beneficial to the Company; interest and
exchange rates; that required financing and permits will be
obtained; general economic conditions; that labour disputes or
disruptions, flooding, ground instability, geotechnical failure,
fire, failure of plant, equipment or processes to operate are as
anticipated and other risks of the mining industry will not be
encountered; that contracted parties provide goods or services in a
timely manner; that there is no material adverse change in the
price of gold or other metals; competitive conditions in the mining
industry; title to mineral properties; costs; taxes; the retention
of the Company's key personnel; and changes in laws, rules and
regulations applicable to Galiano.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements to differ materially from those
anticipated in such forward-looking statements. The Company
believes the expectations reflected in such forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and you are cautioned not to
place undue reliance on forward-looking statements contained
herein. Some of the risks and other factors which could cause
actual results to differ materially from those expressed in the
forward-looking statements contained in this news release, include,
but are not limited to: the Company's and/or the AGM's operations
may be curtailed or halted entirely as a result of the COVID-19
pandemic, whether as a result of governmental or regulatory law or
pronouncement, or otherwise; that the
doré produced at the AGM may not be able to be
refined at expected levels, on expected terms or at all; that the
Company and/or the AGM will experience increased operating costs as
a result of the COVID-19 pandemic; that the AGM may not be able to
source necessary inputs on commercially reasonable terms, or at
all; the Company's and the AGM's responses to the COVID-19 pandemic
may not be successful in continuing its operations in the ordinary
course; mineral reserve and resource estimates may change and may
prove to be inaccurate; life of mine estimates are based on a
number of factors and assumptions and may prove to be incorrect;
AGM has a limited operating history and is subject to risks
associated with establishing new mining operations; sustained
increases in costs, or decreases in the availability, of
commodities consumed or otherwise used by the Company may adversely
affect the Company; actual production, costs, returns and other
economic and financial performance may vary from the Company's
estimates in response to a variety of factors, many of which are
not within the Company's control; adverse geotechnical and
geological conditions (including geotechnical failures) may result
in operating delays and lower throughput or recovery, closures or
damage to mine infrastructure; the ability of the Company to treat
the number of tonnes planned, recover valuable materials, remove
deleterious materials and process ore, concentrate and tailings as
planned is dependent on a number of factors and assumptions which
may not be present or occur as expected; the Company's operations
may encounter delays in or losses of production due to equipment
delays or the availability of equipment; the Company's operations
are subject to continuously evolving legislation, compliance with
which may be difficult, uneconomic or require significant
expenditures; the Company may be unsuccessful in attracting and
retaining key personnel; labour disruptions could adversely affect
the Company's operations; the Company's business is subject to
risks associated with operating in a foreign country; risks related
to the Company's use of contractors; the hazards and risks normally
encountered in the exploration, development and production of gold;
the Company's operations are subject to environmental hazards and
compliance with applicable environmental laws and regulations; the
Company's operations and workforce are exposed to health and safety
risks; unexpected costs and delays related to, or the failure of
the Company to obtain, necessary permits could impede the Company's
operations; the Company's title to exploration, development and
mining interests can be uncertain and may be contested; the
Company's properties may be subject to claims by various community
stakeholders; risks related to limited access to infrastructure and
water; the Company's exploration programs may not successfully
expand its current mineral reserves or replace them with new
reserves; the Company's common shares may experience price and
trading volume volatility; the Company's revenues are dependent on
the market prices for gold, which have experienced significant
recent fluctuations; the Company may not be able to secure
additional financing when needed or on acceptable terms; Company
shareholders may be subject to future dilution; risks related to
changes in interest rates and foreign currency exchange rates;
changes to taxation laws applicable to the Company may affect the
Company's profitability and ability to repatriate funds; the
Company's primary asset is held through a joint venture, which
exposes the Company to risks inherent to joint ventures, including
disagreements with joint venture partners and similar risks; risks
related to the Company's internal controls over financial reporting
and compliance with applicable accounting regulations and
securities laws; the carrying value of the Company's assets may
change and these assets may be subject to impairment charges; the
Company may be liable for uninsured or partially insured losses;
the Company may be subject to litigation; the Company may be
unsuccessful in identifying targets for acquisition or completing
suitable corporate transactions, and any such transactions may not
be beneficial to the Company or its shareholders; the Company must
compete with other mining companies and individuals for mining
interests; and risks related to information systems security
threats.
Although the Company has attempted to identify important
factors that could cause actual results or events to differ
materially from those described in the forward-looking statements,
you are cautioned that this list is not exhaustive and there may be
other factors that the Company has not identified. Furthermore, the
Company undertakes no obligation to update or revise any
forward-looking statements included in, or incorporated by
reference in, this news release if these beliefs, estimates and
opinions or other circumstances should change, except as otherwise
required by applicable law.
Neither Toronto Stock Exchange nor the Investment Industry
Regulatory Organization of Canada
accepts responsibility for the adequacy or accuracy of this
release.
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SOURCE Galiano Gold Inc.