(All dollar amounts are United
States dollars unless otherwise stated)
VANCOUVER, BC, Aug. 11,
2022 /CNW/ - Galiano Gold Inc. ("Galiano" or the
"Company") (TSX: GAU) (NYSE American: GAU) reports second
quarter ("Q2") operating and financial results for the Company and
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$.
Asanko Gold Mine Key Metrics (100% basis):
- Production and revised guidance: Gold production of
50,010 ounces during the quarter. Year-to-date production of 92,353
ounces. Full year gold production guidance has been revised from
100,000 to 120,000 ounces to 140,000 to 160,000 ounces.
- Milling performance: Achieved milling throughput of
1.4Mt of ore at a grade of 1.3g/t and metallurgical recovery
averaging 84% during the quarter, a significant improvement in
recoveries quarter on quarter.
- Cost performance and cash flow: Total cash costs per
ounce1 of $1,218 and
all-in sustaining costs1 ("AISC") of $1,431/oz during the quarter, resulting in
positive cash flows from operations of $34.3
million and free cash flow1 of $25.3 million.
- Financial performance: Reported gold revenue of
$84.7 million generated from 46,236
gold ounces sold at an average realized price of $1,832/oz. Reported net income after tax of
$15.8 million during the quarter and
Adjusted EBITDA1 of $21.1
million.
- Focus on exploration: Deep directional drilling
continued at the Nkran deposit aimed at defining the continuity and
extension of mineralization below the limits of observed Mineral
Resources. The results of this program will be used to evaluate the
underground potential of Nkran. Resource definition drilling
continued at Nkran Cut 3 and Miradani to support an updated Mineral
Resource model, while exploration drilling also continued at
Greater Midras South.
- Culture of Safety: Strong safety performance with no
lost-time injuries ("LTI") and 1 total recordable injury ("TRI")
recorded during the quarter, resulting in 12-month rolling LTI and
TRI frequency rates of 0.11 and 0.33 per million employee hours
worked, respectively. At June 30,
2022, the AGM had achieved 8.2 million employee hours worked
without an LTI.
- Improving liquidity: $70.3
million in cash, $8.2 million
in gold on hand, $1.4 million in gold
sales receivables and no debt as of June 30,
2022.
- Workforce optimization: Continued the process of
rationalizing the AGM's workforce. Management expects to realize
near-term and sustainable cost savings and a more streamlined and
efficient operation over the remaining life of mine as a result of
the rationalization.
_______________________________
|
1
|
See "Non-IFRS
performance measures"
|
Galiano Gold Highlights:
- Stable balance sheet: Cash and cash equivalents of
$53.0 million and $5.2 million in receivables as at June 30, 2022, while remaining debt-free.
- Earnings: Reported net income of $12.6 million or $0.06 per common share during the quarter.
- Board changes: Marcel De
Groot and Shawn Wallace did
not stand for re-election at the Company's Annual General Meeting,
and Greg Martin, former CFO of SSR
Mining Inc., was elected to the Board of Directors effective
June 2, 2022.
"We are pleased with the strong gold production for the quarter
which, in combination with higher all-in sustaining
margins1, served to significantly improve the cash
balance at the AGM. Higher production for the quarter was driven by
improved metallurgical recoveries, the Akwasiso pit delivering more
tonnes and higher grade than planned and stockpile material
performing better than expected," said Matt
Badylak, President and Chief Executive Officer. "As a result
of robust year to date production and improved confidence in
metallurgical recoveries, we are revising 2022 gold production
guidance for the AGM to 140,000 to 160,000 ounces. We continue to
advance the metallurgical test work at Esaase with third party
results scheduled for delivery by late Q3 2022, and anticipate
providing an update to the AGM's Mineral Resources and Reserves
with a new life of mine plan scheduled for Q1 2023."
Asanko Gold Mine - Summary of Q2 2022 Operational and
Financial Results (100% basis)
Asanko Gold Mine (100%
basis)
|
Q2
2022
|
Q1
2022
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
Ore mined
('000t)
|
675
|
1,075
|
1,623
|
1,464
|
1,333
|
Waste mined
('000t)
|
1,320
|
5,279
|
8,752
|
10,017
|
9,073
|
Total mined
('000t)
|
1,995
|
6,354
|
10,375
|
11,481
|
10,406
|
Strip ratio
(W:O)
|
2.0
|
4.9
|
5.4
|
6.8
|
6.8
|
Average gold grade
mined (g/t)
|
1.6
|
1.3
|
1.2
|
1.3
|
1.2
|
Mining cost ($/t
mined)
|
8.30
|
4.64
|
3.75
|
3.28
|
3.03
|
Ore transportation from
Esaase ('000 t)
|
901
|
1,304
|
1,264
|
1,272
|
1,261
|
Ore transportation cost
($/t trucked)
|
6.19
|
5.82
|
6.13
|
5.88
|
6.20
|
Ore milled
('000t)
|
1,406
|
1,482
|
1,472
|
1,542
|
1,475
|
Average mill head grade
(g/t)
|
1.3
|
1.3
|
1.2
|
1.1
|
1.1
|
Average recovery rate
(%)
|
84
|
69
|
91
|
90
|
94
|
Processing cost ($/t
milled)
|
10.40
|
9.46
|
10.07
|
9.68
|
9.87
|
G&A cost ($/t
milled)
|
5.40
|
6.17
|
5.86
|
5.78
|
6.99
|
Gold production
(oz)
|
50,010
|
42,343
|
50,278
|
49,543
|
50,421
|
Gold sales
(oz)
|
46,236
|
41,929
|
51,368
|
48,435
|
53,348
|
Average realized gold
price ($/oz)
|
1,832
|
1,846
|
1,771
|
1,758
|
1,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asanko Gold Mine
(100% basis)
|
Q2
2022
|
Q1
2022
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
Total cash
costs1 ($/oz)
|
1,218
|
1,361
|
1,257
|
1,273
|
1,236
|
All-in sustaining
costs1 ($/oz)
|
1,431
|
1,559
|
1,539
|
1,598
|
1,497
|
All-in sustaining
margin1 ($/oz)
|
401
|
287
|
232
|
160
|
285
|
All-in sustaining
margin1 ($m)
|
18.5
|
12.0
|
11.9
|
7.8
|
15.2
|
Revenue ($m)
|
84.9
|
77.5
|
91.1
|
85.3
|
95.2
|
Income (loss) from mine
operations ($m)
|
16.2
|
10.6
|
(8.9)
|
13.0
|
18.1
|
Adjusted net income
(loss) after tax 1 ($m)
|
13.7
|
7.4
|
(11.4)
|
7.7
|
12.7
|
Cash provided by
operating activities ($m)
|
34.3
|
3.9
|
14.0
|
26.5
|
10.8
|
- The AGM produced 50,010 ounces of gold during the quarter, as
the processing plant achieved milling throughput of 1.4Mt of ore
processed at a grade of 1.3g/t with metallurgical recovery
averaging 84%. During Q2 2022, significant work took place to
optimize the AGM's plant performance. This included revising the
mill feed blend regime, increasing the mass pull in the gravity
circuit and adjusting operating parameters and reagent additions in
the carbon-in-leach circuit, which assisted in the higher
recoveries achieved during the period.
- Sold 46,236 ounces of gold in Q2 2022 at an average realized
gold price of $1,832/oz for total
revenue of $84.9 million (including
$0.2 million of by-product silver
revenue), a decrease of $10.3 million
from Q2 2021. The decrease in revenue quarter-on-quarter was a
function of a 13% reduction in sales volumes, partly offset by a 3%
increase in realized gold prices relative to Q2 2021.
- Total cost of sales (including depreciation and depletion and
royalties) amounted to $68.6 million
in Q2 2022, a decrease of $8.5
million from Q2 2021. The decrease in cost of sales was
primarily due to 13% fewer gold ounces sold and a $2.8 million positive net realizable value
("NRV") adjustment on stockpile inventory in Q2 2022.
- Total cash costs per ounce1 were $1,218 in Q2 2022 compared to $1,236 in Q2 2021. Although gold sales volumes
decreased by 13% in Q2 2022, total cash costs per ounce1
were largely unchanged from Q2 2021 as a result of lower mining
costs resulting from the winding down of operations at Esaase and a
positive $2.8 million NRV adjustment
on stockpile inventory as mentioned above. These factors were
partly offset by general inflationary pressures on fuel and
consumables. Total cash costs per ounce for Q2 2022 includes
approximately $391/oz of historical
costs associated with stockpiled ore.
- Income from mine operations for Q2 2022 totaled $16.2 million compared to income from mine
operations of $18.1 million in Q2
2021. The reduction in income from mine operations was due to a
$10.3 million decrease in revenue,
partly offset by an $8.5 million
decrease in cost of sales (as described above).
- The AGM generated $34.3 million
of cash flows from operating activities during Q2 2022 compared to
$10.8 million of cash flows from
operating activities during Q2 2021. The increase in cash flows
from operations was primarily due to improved AISC
margins1, a $17.5 million
decrease in working capital requirements and lower labour costs
resulting from the restructuring of the AGM's workforce.
Galiano Gold Inc. – Summary Q2 2022 Financial Results
Galiano Gold Inc.
(consolidated)
|
Q2 2022
|
Q1 2022
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
Net income (loss) after
tax ($m)
|
12.6
|
(1.5)
|
(91.0)
|
4.1
|
5.0
|
Net income (loss) after
tax per share
|
0.06
|
(0.01)
|
(0.40)
|
0.02
|
0.02
|
Adjusted net income
(loss) 1 ($m)
|
12.6
|
(1.5)
|
(14.5)
|
4.1
|
5.0
|
Adjusted net income
(loss) per share1
|
0.06
|
(0.01)
|
(0.06)
|
0.02
|
0.02
|
- The Company reported net income after tax of $12.6 million in Q2 2022 compared to net income
after tax of $5.0 million in Q2 2021.
The increase in earnings during Q2 2022 was due to a $13.2 million positive fair value adjustment on
the Company's preferred share investment in the JV and a
$1.8 million reduction in corporate
general and administrative ("G&A") expenses resulting from a
lower headcount. These factors were partly offset by a $5.7 million reduction in the Company's share of
the JV's net earnings from Q2 2021.
- Cash generated by operating activities in Q2 2022 was
$2.6 million, compared to cash used
in operating activities of $3.1
million in Q2 2021. The increase in cash generated from
operations during Q2 2022 was primarily due to a $4.8 million collection of the Company's JV
service fee receivable and lower G&A costs as mentioned
above.
- As at June 30, 2022, the Company
held cash and cash equivalents of $53.0
million and $5.2 million in
receivables for a gross liquidity position of $58.2 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 and six months ended
June 30, 2022 and 2021, which are available at www.galianogold.com
and filed on SEDAR.
|
1 Non-IFRS Performance
Measures
The Company has included certain non-IFRS
performance measures in this press release. These non-IFRS
performance measures do not have any standardized meaning and
therefore may not be comparable to similar measures presented by
other issuers. 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 IFRS. Refer to the Non-IFRS Measures section of
Galiano's Management's 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.
- Total Cash Costs per ounce
Management of the Company
uses total cash costs per gold ounce sold to monitor the operating
performance of the JV. Total cash costs include the cost of
production, adjusted for share-based compensation expense,
by-product revenue per ounce of gold sold and production royalties
of 5%. Excluded from total cash costs are one-time severance
charges and net realizable value adjustments on stockpile inventory
resulting from lower expected gold recovery recorded in Q4 2021 as
the magnitude of such adjustments were not indicative of costs in
that period.
- 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, reclamation cost accretion and lease payments made
to and interest expense on the AGM's mining and
service contractors 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.
- Adjusted net (loss) income
The Company has included
the non-IFRS performance measures of adjusted net (loss) income and
adjusted net (loss) income per common share. Neither adjusted net
(loss) income nor adjusted net (loss) income per share have any
standardized meaning and are therefore unlikely to be comparable to
other measures presented by other issuers. Adjusted net (loss)
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.
About Galiano Gold Inc.
Galiano's vision is to build a sustainable business capable of
long-term value creation for its stakeholders through a combination
of exploration, accretive M&A activities and the 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: the operating plans for the AGM under the JV
between the Company and Gold Fields; planned drilling programs and
use of the results; the expected positive impact of the workforce
restructuring; plans to transition from mining to processing
stockpiles (and the benefits that may arise therefrom);
advancement of the metallurgical test work at Esaase and timing
of scheduled results; and timing of update to Mineral Resources and
Reserves and life of mine plan. Such forward-looking statements are
based on a number of material factors and assumptions, including,
but not limited to: the Company and Gold Fields will agree on the
manner in which the JV will operate the AGM, including agreement on
development plans and capital expenditures; the price of gold will
not decline significantly or for a protracted period of time; the
accuracy of the estimates and assumptions underlying Mineral
Resources estimates; the ability of the AGM to continue to operate,
produce and ship doré from the AGM site to be refined during the
COVID-19 pandemic or any other infectious disease outbreak; the
Company's ability to raise sufficient funds from future equity
financings to support its operations, and general business and
economic conditions; the global financial markets and general
economic conditions will be stable and prosperous in the future;
the ability of the JV and the Company to comply with applicable
governmental regulations and standards; the mining laws, tax laws
and other laws in Ghana applicable
to the AGM and the JV will not change, and there will be no
imposition of additional exchange controls in Ghana; the success of the JV and the Company
in implementing its development strategies and achieving its
business objectives; the JV will have sufficient working capital
necessary to sustain its operations on an ongoing basis and the
Company will continue to have sufficient working capital to fund
its operations and contributions to the JV; and the key personnel
of the Company and the JV will continue their employment.
The foregoing list of assumptions cannot be considered
exhaustive.
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 mineral resource estimates may change
and may prove to be inaccurate; mineral reserves may not be
reinstated; metallurgical recoveries may not be economically
viable; risks associated with the Company ceasing its mining
operations during 2022; 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; 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; 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; outbreaks of COVID-19 and
other infectious diseases may have a negative impact on global
financial conditions, demand for commodities and supply chains and
could adversely affect the Company's business, financial condition
and results of operations and the market price of the common shares
of the Company; 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 effects of
climate change or extreme weather events may cause prolonged
disruption to the delivery of essential commodities which could
negatively affect production efficiency; 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; geotechnical risks
associated with the design and operation of a mine and related
civil structures; 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 reinstate mineral reserves; risks associated with
establishing new mining operations; the Company's common shares may
experience price and trading volume volatility; the Company has
never paid dividends; 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 the control of
AGM cashflows and operation through a joint venture; risks related
to changes in interest rates and foreign currency exchange rates;
risks relating to credit rating downgrades; changes to taxation
laws applicable to the Company may affect the Company's
profitability and ability to repatriate funds; ability to
repatriate funds; risks related to the Company's internal controls
over financial reporting and compliance with applicable accounting
regulations and securities laws; non-compliance with public
disclosure obligations could have an adverse effect on the
Company's stock price; the carrying value of the Company's assets
may change and these assets may be subject to impairment charges;
risks associated with changes in reporting standards; 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; the
Company may be liable for uninsured or partially insured losses;
the Company may be subject to litigation; damage to the Company's
reputation could result in decreased investor confidence and
increased challenges in developing and maintaining community
relations which may have adverse effects on the business, results
of operations and financial conditions of the joint venture and the
Company and the Company's share price; 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; risks related to information systems security threats;
the Company's growth, future profitability and ability to obtain
financing may be impacted by global financial conditions; and the
risk factors described under the heading "Risk Factors" in the
Company's Annual Information Form.
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.