(All dollar amounts are United
States dollars unless otherwise stated)
VANCOUVER, BC, May 5, 2021 /PRNewswire/ - Galiano Gold Inc.
("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU)
reports first quarter ("Q1") operating and financial results
including results from 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. All financial information contained in this
release is unaudited and reported in US$.
Q1 2021 Asanko Gold Mine Highlights (100% basis):
- Production on plan: Gold production of 59,999 ounces
during the quarter, in line with 2021 production guidance of
225,000-245,000 ounces.
- Consistent cost performance: Total cash costs per
ounce1 of $989 and all-in
sustaining costs1 ("AISC") of $1,158/oz, in line with 2021 cost guidance of
$1,100 - $1,300/oz.
- Strong financial results: Reported gold revenue of
$110.6 million generated from 62,925
gold ounces sold at an average realized price of $1,757/oz, net income after tax of $29.7 million and Adjusted EBITDA1 of
$39.2 million during the quarter.
- Significant cash generation: Generated $35.4 million of cash flows from operating
activities and free cash flow1 of $20.5 million during Q1 2021.
- Return of capital: Returned $10.0
million to joint venture participants through cash
distributions.
- Consistent milling and strong metallurgical performance:
The processing plant delivered a quarterly milling performance of
1.4 million tonnes ("Mt") at an average plant feed grade of 1.4g/t.
The processing facility continued to deliver metallurgical recovery
well above design achieving 95% recovery.
- Focus on exploration: Infill drilling at Miradani North
continued to demonstrate encouraging widths of mineralization and
grade in multiple parallel zones with focus shifting to step out
drilling.
- Excellence in safety: There were no lost-time injuries
("LTI") nor total recordable injuries ("TRI") reported during the
quarter, resulting in 12-month rolling LTI and TRI frequency rates
of 0.10 and 0.58 per million employee hours worked,
respectively.
- Robust liquidity: $59.4
million in cash (including $15.0
million drawn on the $30.0
million revolving credit facility ("RCF")), $10.3 million in gold sales receivables and
$6.1 million in gold on hand at the
JV.
Q1 2021 Galiano Gold Highlights:
- Return on investment in JV: Receipt of a Q1 distribution
of a $5.0 million from the Asanko
Gold Mine joint venture.
- Stable balance sheet: Cash on hand of $61.2 million and $3.8
million in receivables as at March
31, 2021, while remaining debt free.
- Growth: Work on two exploration stage properties in
Ghana and Mali initiated, in both cases adjacent to
active and historic mining and exploration properties.
- Strong earnings: Generated net income after tax of
$13.0 million or $0.06 per share during the quarter.
"The Asanko Gold Mine had another solid operating quarter,
delivering according to plan, enabling a distribution of
$10 million to the JV partners. We
expect production and costs to be weaker in Q2 as we are
undertaking waste stripping of Cut 3 at Akwasiso and will be
supplementing the Esaase ore feeding the mill with low grade
stockpiles. Following completion of the strip, we will be
harvesting ore from Akwasiso in H2 2021 and into 2022 and expect to
deliver on both our cost and production guidance this year," said
Greg McCunn, Chief Executive
Officer. "At Galiano, initiating exploration activity at the
Asumura property in Ghana and
acquiring the early stage exploration properties in Mali give us an opportunity to reinvigorate
our greenfield exploration initiatives and create value through
exploration."
Asanko Gold Mine - Summary of Q1 2021 Operational and
Financial Results (100% basis)
|
|
|
Three months ended
March 31,
|
Asanko Gold Mine
(100% basis)
|
2021
|
2020
|
Ore mined
('000t)
|
1,841
|
1,911
|
Waste mined
('000t)
|
9,552
|
7,051
|
Total mined
('000t)
|
11,393
|
8,962
|
Strip ratio
(W:O)
|
5.2
|
3.7
|
Average gold grade
mined (g/t)
|
1.3
|
1.6
|
Mining cost ($/t
mined)
|
3.31
|
3.89
|
Ore transportation
from Esaase ('000 t)
|
870
|
447
|
Ore transportation
cost ($/t trucked)
|
6.48
|
8.26
|
Ore milled
('000t)
|
1,444
|
1,400
|
Average mill head
grade (g/t)
|
1.4
|
1.6
|
Average recovery rate
(%)
|
95
|
94
|
Processing cost ($/t
treated)
|
10.31
|
11.13
|
Gold production
(oz)
|
59,999
|
66,333
|
Gold sales
(oz)
|
62,925
|
67,820
|
Average realized gold
price ($/oz)
|
1,757
|
1,542
|
Operating cash
costs1 ($/oz)
|
901
|
599
|
Total cash
costs1 ($/oz)
|
989
|
676
|
All-in sustaining
costs1 ($/oz)
|
1,158
|
805
|
All-in sustaining
margin1 ($/oz)
|
599
|
737
|
All-in sustaining
margin1 ($m)
|
37.7
|
50.0
|
Revenue
($m)
|
110.8
|
104.8
|
Income from mine
operations ($m)
|
35.9
|
48.4
|
Cash provided by
operating activities ($m)
|
35.4
|
37.0
|
Free cash
flow1 ($m)
|
20.5
|
27.0
|
- There were no LTIs nor TRIs reported during the quarter and the
AGM has now achieved 4.8 million employee hours worked without a
reported lost-time injury.
- The AGM produced 59,999 ounces of gold during the quarter, as
the processing plant achieved milling throughput of 1.4Mt of ore
processed at a grade of 1.4g/t and metallurgical recovery averaging
95% (well above design).
- Sold 62,925 ounces of gold in Q1 2021 at an average realized
gold price of $1,757/oz for total
revenue of $110.8 million (including
$0.2 million of by-product silver
revenue), an increase of $6.0 million
from Q1 2020. The increase in revenue quarter-on-quarter was a
function of a 14% improvement in average realized gold prices,
partly offset by a 7% decrease in sales volumes in Q1 2021.
- The AGM incurred operating cash costs per ounce1 of
$901, total cash costs per
ounce1 of $989 and
AISC1 of $1,158 per ounce
in Q1 2021. Total cash costs were higher in Q1 2021 relative to Q1
2020 primarily due to a positive NRV adjustment on stockpile
inventory in Q1 2020 (improvement in stockpile quality), the cash
cost component of which represented a decrease in production costs
of $7.7 million, as well as a 27%
increase in total tonnes mined. Ore transportation costs were also
higher in Q1 2021 associated with trucking ore from Esaase to the
process plant as a higher proportion of ore was sourced from Esaase
($36/oz increase for the quarter).
Total cash costs per ounce1 was also impacted by a
higher royalty expense arising from improvement in the gold price
during Q1 2021 compared to Q1 2020.
- Total cost of sales (including depreciation and depletion and
royalties) amounted to $74.9 million
in Q1 2021, an increase of $18.5
million from Q1 2020. The increase in cost of sales was
primarily due to higher operating cash costs per ounce1
as described above, while cost sales benefitted from lower sales
volumes in Q1 2021. Also impacting cost of sales in Q1 2021
relative to Q1 2020 was the reversal of previously recorded NRV
adjustments on stockpile inventory as described above. Depreciation
and depletion expense was also $2.2
million higher in Q1 2021 due to a reversal of previously
recorded NRV adjustments in Q1 2020, which was partly offset by
higher depreciation expense on right-of-use assets (capitalized
service and lease agreements) and Esaase mine development costs as
a higher proportion of ore was sourced from Esaase during Q1
2021.
- Income from mine operations for Q1 2021 totaled $35.9 million compared to $48.4 million in Q1 2020. The decrease in income
from mine operations was due to an $18.5
million increase in cost of sales (as described above),
partly offset by a $6.0 million
increase in revenues.
- The AGM generated $35.4 million
of cash flows from operating activities (after considering
unfavorable working capital changes of $7.6
million) and free cash flow1 of $20.5 million during Q1 2021. This compares to
$37.0 million of cash flows from
operating activities (after considering unfavorable working capital
changes of $19.5 million) and
$27.0 million of free cash
flow1 during Q1 2020. The reduction in free cash
flow1 was the result of a $6.0
million increase in cash flows associated with capital
expenditures during Q1 2021.
- Reported Adjusted EBITDA1 of $39.2 million in Q1 2021 compared to $51.4 million in Q1 2020.
- As at March 31, 2021, the JV held
cash and cash equivalents of $59.4
million (including $15.0
million drawn on the $30.0
million RCF), $10.3 million in
receivables from gold sales and $6.1
million in gold on hand.
Galiano Gold Inc. – Summary Q1 2021 Financial Results
|
|
|
Three months ended
March 31,
|
Galiano Gold Inc.
(consolidated)
|
2021
|
2020
|
Net income after tax
($m)
|
13.0
|
21.8
|
Net income after tax
per share
|
0.06
|
0.10
|
Adjusted
EBITDA1 ($m)
|
15.8
|
21.9
|
- The Company reported net income after tax of $13.0 million in Q1 2021 compared to net income
after tax of $21.8 million in Q1
2020. The decrease in earnings during Q1 2021 was predominantly due
to a reduction in the Company's 45% interest in the net earnings of
the JV which totaled $13.4 million
for the quarter, compared to $20.5
million in Q1 2020. Additionally, the Company's general and
administrative expenses were $1.3
million higher in Q1 2021 due to an increase in share-based
compensation expense resulting from the Company granting deferred
share units which have no specific vesting conditions and as such
the expense is recognized immediately on the grant date.
- Adjusted EBITDA1 for Q1 2021 amounted to
$15.8 million, compared to
$21.9 million in Q1 2020. The
decrease in Adjusted EBITDA1 was primarily a result of
an increase in the AGM's total cash costs1.
- Cash used in operating activities in Q1 2021 was $4.7 million, compared to $0.8 million in Q1 2020. The increase in cash
used in operations was primarily due to a reduction in accounts
payable and accrued liabilities associated with the payment of
short-term and long-term incentive plan awards.
- As at March 31, 2021, the Company
had cash on hand of $61.2 million and
$3.8 million in receivables for a
gross liquidity position of $65.0
million and no debt.
This news release
should be read in conjunction with Galiano's Management's
Discussion and Analysis and the Unaudited Condensed Consolidated
Interim Financial Statements for the three months ended March 31,
2021 and 2020, which are available at www.galianogold.com and filed
on SEDAR.
|
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 and the JV'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%. Excluded from operating cash costs are one-time
severance charges.
- 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 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 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: projected gold production and cost estimates
for calendar 2021, the target date for the Company releasing its
full financial and operational results and the target date for ore
delivery at Akwasiso Cut 3. Such forward-looking statements are
based on a number of material factors and assumptions, including,
but not limited to: that projected gold production and cost
estimates for calendar 2021 will be representative of actual
production and cost results for calendar 2021, 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
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 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 projected gold production and cost
estimates for calendar 2021 referred to in this news release may
not be representative of actual production and cost results for
calendar 2021; the Company may not begin ore delivery at Akwasiso
Cut 3 by the target date for such delivery, or at all; 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.