Asanko Gold Inc. (“Asanko” or the “Company”) (TSX, NYSE
American: AKG) reports its third quarter (“Q3”) 2018
operating and financial results. On October 17, 2018 the Company
released its Q3 2018 production and revenue 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 Asanko. All amounts are in US
dollars unless otherwise stated.
The Company will host a conference call and
webcast today, Thursday, November 8th at 9am Eastern Time, further
details below.
Q3 2018 Highlights of the JV
(100% basis):
- Record quarterly gold production of 61,599 ounces and year to
date production of 163,329 ounces, tracking the higher end of 2018
production guidance of 200,000-220,000 ounces
- Quarterly gold sales of 65,267 ounces, generating $78.2 million
in gold revenue at an average realized price of $1,198 per
ounce
- Mining operations ahead of plan, bolstered by resumption of
steady state operations at Nkran
- Strong quarterly mill performance, processing 1.3 million
tonnes of ore with recoveries of 94%
- Esaase pre-production program on schedule, with bulk sample
planned in Q4 2018
- No LTIs for the quarter, continuing industry-leading safety
Lost Time Injury Frequency Rate performance on a rolling 12-month
basis of zero
- Quarterly operating cash costs per ounce1 of $743 (Q2 2018:
$582) and total cash costs per ounce1 of $803 (Q2 2018: $646)
- AISC1 were $971 (Q2 2018: $1,068) for the quarter, within H2
guidance and $1,072 for the year to date, tracking the lower end of
2018 AISC1 guidance of $1,050-$1,150
- Approximately $33.4 million held by the JV in unaudited cash
and immediately convertible working capital balances, as at
September 30, 2018
Q3 2018 Asanko Consolidated
Highlights:
- On July 31, 2018, the JV Transaction with Gold Fields was
completed and the Red Kite debt repaid in full; Asanko now
debt-free
- Consolidated results of the Company include consolidation of
the JV results for July and equity accounted results of the JV for
August and September
- Reported Adjusted EBITDA1 of $13.3 million (Q2 2018: $28.1
million)
- Asanko cash balance $14.3 million as at September 30, 2018
Commenting on the results Peter Breese,
President and CEO, said: “At the end of July we completed our JV
transaction with Gold Fields and transitioned to managers and
operators of the Asanko Gold Mine. The timing of the
completion of the transaction is reflected in our financial
statements where we changed to equity accounting from August 1,
2018 for our interest in the JV as joint owners. The proceeds from
the JV transaction were used to repay the Red Kite debt in full and
we are now a debt-free company.
The mine delivered its third consecutive quarter
of strong operational results, with Nkran back at steady-state
operations for the full quarter, following completion of the
Eastern portion of the Cut 2 pushback, and the mill continuing to
outperform against its throughput design of 5Mtpa.
AISC1 continued to decrease quarter on quarter
to $971, which is towards the lower end of H2 2018 cost guidance,
despite the impact of a recent change in Ghanaian VAT levies,
equating to approximately $20/oz, that were implemented during the
quarter. Although the average realized gold price was around $88/oz
weaker than the prior quarter at $1,198/oz, all-in sustaining
margins for the mine remained strong at $227/oz.
As we enter the final quarter of the year, with
production of 163,329 ounces and AISC1 of $1,072 year to date, the
mine is well positioned to meet the top end of 2018 guidance of
200,000-220,000 ounces at AISC1 of $1,050-$1,150.
The development of the Esaase mine is
progressing to plan. We have commenced site operations with bush
clearing and grade control drilling. As part of our pre-production
risk mitigation strategy, we will mine a bulk sample of ore during
Q4 2018 and commercially test the sample through the mill.
The JV partners are expected to make an investment decision
during Q4 2018 on whether to proceed with a mining and trucking
operation which, if approved, would commence in Q1 2019.”
This news release should be read in
conjunction with Asanko’s Management Discussion and Analysis and
the Unaudited Condensed Consolidated Interim Financial Statements
for the three and nine months ended September 30, 2018, which are
available at www.asanko.com and filed on SEDAR. |
Key Operating and Financial Highlights
Asanko
Gold Mine (100% Basis) |
|
Q3
2018 |
|
|
Q2
2018 |
|
|
Q3
2017 |
Waste mined
(‘000t) |
|
9,084 |
|
|
9,814 |
|
|
7,339 |
Ore mined (‘000t) |
|
1,730 |
|
|
945 |
|
|
1,181 |
Strip ratio (W:O) |
|
5.3:1 |
|
|
10.4:1 |
|
|
6.2:1 |
Average gold grade
mined (g/t) |
|
1.4 |
|
|
1.5 |
|
|
1.8 |
Mining costs ($/t
mined) |
|
3.63 |
|
|
3.65 |
|
|
3.35 |
Ore treated
(‘000t) |
|
1,299 |
|
|
1,374 |
|
|
862 |
Gold feed grade
(g/t) |
|
1.6 |
|
|
1.4 |
|
|
1.9 |
Gold recovery (%) |
|
94 |
|
|
94 |
|
|
94 |
Processing costs ($/t
treated) |
|
11.26 |
|
|
9.95 |
|
|
12.94 |
Gold
production (oz) |
|
61,599 |
|
|
53,501 |
|
|
49,293 |
Gold sales (oz) |
|
65,267 |
|
|
51,785 |
|
|
50,241 |
Average realized gold
price ($/oz) |
|
1,198 |
|
|
1,286 |
|
|
1,265 |
Operating cash costs1
($/oz) |
|
743 |
|
|
582 |
|
|
485 |
Total cash costs1
($/oz) |
|
803 |
|
|
646 |
|
|
549 |
All-in sustaining
costs1 ($/oz) |
|
971 |
|
|
1,068 |
|
|
975 |
All-in sustaining
margin1 ($/oz) |
|
227 |
|
|
218 |
|
|
290 |
All-in
sustaining margin1 ($m) |
|
14.8 |
|
|
11.3 |
|
|
14.6 |
Revenue ($m) |
|
78.4 |
|
|
66.8 |
|
|
63.7 |
Income from mine
operations ($m) |
|
0.6 |
|
|
16.1 |
|
|
17.9 |
Net income (loss) after
tax ($m) |
|
(128.8) |
|
|
3.5 |
|
|
8.1 |
Adjusted
net income (loss) after tax1 ($m) |
|
(2.1) |
|
|
3.5 |
|
|
8.1 |
Cash provided by
operating activities |
|
21.1 |
|
|
18.4 |
|
|
42.7 |
|
|
|
|
Consolidated
Results for Asanko Gold Inc. |
|
|
|
Revenue ($m) |
|
30.7 |
|
|
66.8 |
|
|
63.5 |
Production costs,
including royalties ($m) |
|
21.7 |
|
|
33.8 |
|
|
28.0 |
Income (loss) from mine
operations ($m) |
|
(2.7) |
|
|
16.1 |
|
|
17.9 |
Share of
net earnings related to JV ($m) |
|
0.3 |
|
|
- |
|
|
- |
Net income (loss)
attributable to common shareholders ($m) |
|
(0.3) |
|
|
(142.3) |
|
|
4.2 |
Net income (loss) per
share attributable to common shareholders |
|
($0.00) |
|
|
($0.63) |
|
|
$0.02 |
Adjusted net income
(loss) attributable to common shareholders1 ($m) |
|
(1.6) |
|
|
2.3 |
|
|
4.2 |
Adjusted
net income (loss) per share attributable to common
shareholders1 |
|
($0.01) |
|
|
$0.01 |
|
|
$0.02 |
Adjusted EBITDA1
($m) |
|
13.3 |
|
|
28.1 |
|
|
31.8 |
Attributable all-in
sustaining costs1 ($/oz) |
|
997 |
|
|
1,068 |
|
|
975 |
Attributable all-in
sustaining margin1 ($/oz) |
|
201 |
|
|
218 |
|
|
290 |
Attributable all-in
sustaining margin1 ($m) |
|
8.7 |
|
|
11.3 |
|
|
14.6 |
Q3 2018 Operating Results of the AGM (100%
basis)
- Record quarterly gold production of 61,599 ounces and 163,329
ounces year to date, on track to meet top end 2018 production
guidance of 200,000-220,000 ounces.
- Quarterly gold sales of 65,267 ounces generating gold revenue
of $78.2 million at an average realized gold price of $1,198 per
ounce.
- No lost time injuries (“LTI”) were reported during the quarter,
and the AGM has now achieved over eighteen months and more than 9.2
million man hours worked without a single LTI.
- During the quarter, the AGM sourced ore from Nkran, Nkran
Extension, Akwasiso and Dynamite Hill, as well as on-surface
stockpiles.
- Ore mining rates for Q3 2018 averaged 576,667 tonnes per month
(“tpm”) at an average mining grade of 1.4 g/t and a strip ratio of
5.3:1. Ore tonnes mined increased from Q2 2018 as Nkran operated at
steady state levels of ore production during the quarter, following
the substantial completion of the Eastern pushback in June
2018.
- At Nkran, 1,104,000 tonnes of ore was mined at an average grade
of 1.5 g/t with operations returning to steady state levels of ore
production following the substantial completion of the Eastern Cut
2 pushback. The Akwasiso satellite deposit delivered
approximately 402,000 tonnes of ore at a grade of 1.1 g/t and
Dynamite Hill delivered 218,000 tonnes of ore at an average grade
of 1.7 g/t.
- The processing plant delivered another strong milling
performance of 1.3 million tonnes (“Mt”) for the quarter, which
exceeds the design throughput rate of the recently upgraded 5Mtpa
processing plant, at a plant feed grade of 1.6g/t.
- Gold feed grades processed through the mill were higher than
those mined during the quarter due to the differential stockpiling
and feed arrangement process, in line with the ongoing Life of Mine
planning.
- Gold recovery continued to exceed design at 94% despite the
elevated mill throughput rates and lower feed grade.
Q3 2018 Financial Performance
of the AGM (100% basis)
- The AGM recognized revenues of $78.4 million in Q3 2018
compared to $63.7 million in Q3 2017. The $14.7 million
increase in revenues was a result of higher sales volumes,
partially offset by lower average realized selling prices.
- Total cost of sales (including depreciation and depletion and
royalties) amounted to $77.8 million in Q3 2018, an increase of
$32.0 million from Q3 2017. The increase in cost of sales was
predominantly due to a $16.5 million impact of higher cash cost,
which in large part was driven by an adjustment to the carrying
value of the JV’s stockpile inventory in order to reflect the net
realizable value of lower-grade stockpile ore. In addition, cost of
sales was also higher due to 30% higher sales volumes which had a
$7.4 million impact on cost of sales. Depreciation and depletion
also increased by $7.3 million in Q3 2018 compared to Q3 2017 as a
result of a higher asset cost base being depreciated, as well as
increased ore tonnes mined and higher mill throughput.
- Income from mine operations was $0.6 million for Q3 2018
compared to $17.9 million in Q3 2017. The decrease in mine
operating income was primarily due to higher cash operating costs
driven primarily by an adjustment to the carrying value of the JV’s
stockpile inventory in order to reflect the net realizable value of
lower-grade ore, as well as higher depreciation expense in Q3
2018.
- Mining costs averaged $3.63/t mined during Q3 2018 compared to
$3.35/t in Q3 2017. Mining costs per tonne were higher than Q3 2017
partly as a result of a new non-refundable 5% levy on goods and
services that was introduced by the Ghanaian government effective
August 1, 2018. In addition, fuel and supply costs were higher due
to price increases over the 12-month period, while ore rehandle
costs also increased and the AGM mined a higher proportion of fresh
material during Q3 2018 compared to Q3 2017, which required more
drilling and blasting. Of the mining costs incurred during Q3 2018,
a total of $8.0 million was deferred as stripping costs.
- Processing costs averaged $11.26/t milled in Q3 2018 compared
to $12.94/t in Q3 2017. Processing unit costs were lower than
Q3 2017 due to the very strong operating performance of the plant,
which on an annualized basis surpassed the recently upgraded
throughput levels of 5Mtpa. As a result, there was a 51% increase
in treated tonnes compared to Q3 2017, which had the impact of
decreasing fixed processing costs on a per unit basis. In addition,
the Company benefitted from a reduction in the unit price of
power.
- In Q3 2018, the AGM incurred operating cash costs per ounce1 of
$743 and total cash costs per ounce1 of $803 compared to $485 and
$549 respectively for Q3 2017. These costs included a $122/oz
impact associated with an adjustment to the carrying value of the
JV’s stockpile inventory in order to reflect the net realizable
value of lower-grade stockpiled ore.
- AISC1 were $971 for the quarter and $1,072 for the year to
date, tracking 2018 AISC1 guidance of $1,050-$1,150, compared to
$975 and $955 for the same periods respectively in 2017. Relative
to Q2 2018, AlSC1 decreased by 9%, despite the higher total cash
cost per ounce1, due to the significant reduction in attributable
sustaining stripping costs as the Eastern portion of Cut 2 was
substantially completed in the prior quarter, while the
attributable general and administrative expense and sustaining
capital expenditures were also lower in Q3 2018.
- As at September 30, 2018, the JV had cash of $30.4 million on
hand, $1.2 million in receivables from gold sales and unrefined
gold dore at a cost of $1.8 million (and a market value of $2.2
million).
Q3 2018 Corporate
Developments
- On July 31, 2018, the Company announced the completion of the
JV Transaction with Gold Fields under which Gold Fields acquired a
50% interest in the JV.
- Concurrent with the closing of the JV Transaction, the Company
repaid the Red Kite debt in full, including all outstanding debt
principal and accrued interest, totaling $163.8 million, and is now
debt-free.
- Following the completion of the JV Transaction, the Company no
longer consolidates the results of the AGM but rather equity
account for its interest in the JV from August 1, 2018
onwards.
Q3 Key Consolidated Financial
Information for Asanko Gold Inc.
- Cash provided by operating activities in Q3 2018 was $2.9
million, a 93% decrease from Q3 2017, as the Q3 2018 cash flows
only include one month (July 2018) of operating cash flows from the
AGM. Following the completion of the JV Transaction on July 31,
2018, the Company no longer consolidates the cash flows from the
AGM in its consolidated statements of cash flows, but rather equity
accounts for its interest in the JV. Similarly, operating cash flow
before working capital changes was $5.9 million in Q3 2018, 81%
lower than Q3 2017 of $31.7 million.
- The Company recognized revenues of $30.7 million in Q3 2018
compared to $63.7 million in Q3 2017, as the Company’s consolidated
results for Q3 2018 only include one month (July 2018) of the
operating results of the AGM. Following the completion of the JV
Transaction on July 31, 2018, the Company no longer consolidates
the results of the AGM in its consolidated statements of operations
and comprehensive income, but rather equity accounts for its
interest in the JV for the period August 1, 2018 to September 30,
2018.
- Loss from mine operations was $2.7 million for Q3 2018 compared
to income from mine operations of $17.9 million in Q3 2017. The
decrease in mine operating income was a result of the Company
commencing equity accounting for its interest in the AGM effective
July 31, 2018. Notwithstanding the aforementioned, the
decrease in mine operating earnings was further impacted by higher
total cash costs per ounce1 in Q3 2018 when compared to Q3
2017.
- The Company reported a net loss attributable to common
shareholders of $0.3 million in Q3 2018 compared to net income of
$4.2 million in Q3 2017. The reduction in net income for Q3 2018
was predominantly a result of lower mine operating earnings in the
JV as previously explained, while the Company commenced equity
accounting for its interest in the AGM effective July 31, 2018,
resulting in the financial results of the AGM only being
consolidated for the period July 1, 2018 to July 31, 2018. In
addition, production costs and depreciation for the AGM were higher
than in Q3 2017 as previously explained.
- Reported Adjusted EBITDA1 of $13.3 million for Q3 2018 compared
to $31.8 million in Q3 2017. The decrease in Adjusted EBITDA1
quarter-on-quarter was largely due to higher cash costs per ounce
and lower realized sales prices, partly offset by the positive
impact of higher sales volumes.
- As at September 30, 2018, the Company had unaudited cash of
$14.3 million and is scheduled to receive a further $20.0 million
in cash related to the JV transaction by no later than December 31,
2019.
2018 Guidance and Outlook
The Asanko Gold Mine is on track to meet the top
end of its 2018 guidance of 200,000 - 220,000 ounces at AISC1 of
$1,050-$1,150 for 2018, with production of 163,329 ounces at AISC1
of $1,072 for the year to date.
In H2 2018, with the Nkran Cut 2 pushback
yielding steady-state levels of ore production, the AGM is expected
to achieve production and cost guidance of 110,000-120,000 ounces
at AISC1 $950-$1,050.
Development of a fourth deposit at the Asanko
Gold Mine, the large greenfields deposit Esaase, has started with a
pre-production program underway in preparation of commencing mining
operations. This program includes an extensive core relogging and
infill drilling exercise to refine the Mineral Resource Estimate
and update the life of mine plan, which is expected to be published
in H1 2019. In addition, a bulk sample will be mined in Q4
2018 to confirm previous co-leaching test work results and will
feed into updated Esaase pit designs and performance expectations.
The JV partners are expected to make an investment decision in Q4
2018 regarding a mining and trucking operation at the greenfield
Esaase deposit, part of the AGM, with mining operations expected to
commence in Q1 2019.
The JV partners continue to review the
longer-term ore transportation and development options for Esaase
and expect to update the market in H1 2019.
Notes:1 Non-GAAP
Performance MeasuresThe Company has included certain
non-GAAP performance measures in this press release, including
working capital, operating cash costs, total cash costs, all-in
sustaining costs per ounce of gold produced, all-in sustaining
margin, adjusted net income attributable to common shareholders,
adjusted net income per common share and adjusted EBITDA. 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 OunceThe
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.
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.
Q3 2018 Operating & Financial
Results Conference Call & Webcast - 9am ET on November 8,
2018 US/Canada Toll Free: 800 771 6781 UK Toll
Free: 0800 496 0830 International: +1 212 231 2913
Webcast: Please click on the link:
https://cc.callinfo.com/r/1olxigpk29h4v&eom
Replay: A recorded playback will be available
approximately two hours after the call until December 8, 2018:
US/Canada Toll Free: 800 558 5253 UK Toll Free: 0800
692 0831 International: +1 416 626 4100 Passcode:
21895203 |
Enquiries:For further
information please visit: www.asanko.com, email: info@asanko.com or
contact:
Alex Buck - Manager, Investor and Media RelationsToll-Free
(N.America): 1-855-246-7341Telephone: +44-7932-740-452Email:
alex.buck@asanko.com
Andrew J. Ramcharan – SVP, Corporate Development
and Investor RelationsToll-Free (N.America):
1-855-246-7341Telephone: +1 647 309 5130Email:
andrew.ramcharan@asanko.com
About Asanko Gold Inc.Asanko’s
vision is to become a mid-tier gold mining company that maximizes
value for all its stakeholders. The Company’s flagship project,
located in Ghana, West Africa, is the jointly owned Asanko Gold
Mine with Gold Fields Ltd, which Asanko manages and operates.
Asanko is managed by highly skilled and successful technical,
operational and financial professionals. The Company is strongly
committed to the highest standards for environmental management,
social responsibility, and health and safety for its employees and
neighbouring communities.
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 on the Company, investors should review the
Company’s most recent AIF and 40-F filings, available under the
Company’s profile on SEDAR at www.sedar.com and EDGAR at
www.sec.gov.
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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