TORONTO, Aug. 2, 2018 /CNW/ - Anaconda Mining Inc.
("Anaconda" or the "Company") – (TSX: ANX) (OTCQX: ANXGF) is
pleased to report its financial and operating results for the three
and six months ended June 30, 2018
("Q2 2018"). The condensed interim consolidated financial
statements and management discussion & analysis documents can
be found at www.sedar.com and the Company's website,
www.anacondamining.com. All dollar amounts are in Canadian dollars
unless otherwise noted.
In 2017, the Company changed its fiscal year-end to December 31, from its previous fiscal year end of
May 31. For comparative purposes, the
results for the three and six months ended June 30, 2018, have been compared to the three
and six months ended May 31,
2017.
Second Quarter 2018 Highlights
- Anaconda sold 4,330 ounces of gold in Q2 2018, generating metal
revenue of $7.4 million at an average
realized gold price* of $1,695 per
ounce; the Company also generated $0.1
million from the sale of aggregates.
- Strong revenue and lower costs enabled the Point Rousse Project
to generate EBITDA* of $3.3 million
for the second quarter of 2018, and $6.6
million for the first half of 2018.
- Operating cash costs per ounce sold* at the Point Rousse
Project in the three and six months ended June 30, 2018 were $872 (US$675) and
$885 (US$693), respectively.
- The Company has revised its 2018 annual guidance for operating
cash costs per ounce sold from $1,100
to below $1,000, as a result of the
strong operational performance from the first half of 2018, as well
as the forecasted operating cost profile as the Company fully
transitions to higher-grade production from Stog'er Tight.
- On a consolidated basis, EBITDA* for the three and six months
ended June 30, 2018 was $2.3 million and $4.6
million, respectively, compared with $3.0 million and $3.6
million in the comparative periods.
- All-in sustaining cash costs per ounce sold*, including
corporate administration and sustaining capital expenditures, were
$1,360 (US$1,053) and $1,368 (US$1,071)
for the three and six months ended June 30,
2018.
- In the first half of 2018, the Company invested $2.7 million in its exploration and development
projects, including $2.0 million on
the Goldboro Gold Project in Nova
Scotia.
- Net loss for the three months ended June
30, 2018 was $549,543, or
$0.01 per share, which included
transaction costs related to the takeover bid for Maritime
Resources Corp. ("Maritime") of $740,018, or $0.01
per share. Excluding transaction costs, Q2 2018 net income was
$190,475, or $0.00 per share.
- As at June 30, 2018, the Company
had a cash balance of $7.9 million,
net working capital* of $9.9 million,
and additional available liquidity of $1,000,000 from an undrawn revolving line of
credit facility.
- Anaconda successfully completed a non-brokered private
placement for $4.5 million in
June 2018, which will enable
continued drilling at the Goldboro Gold Project, the Argyle
Deposit, and other prospective targets at the Point Rousse
Project.
*Refer to Non-IFRS Measures section below. A full
reconciliation of Non-IFRS Measures can be found in the Company's
Management Discussion and Analysis for the three and six months
ended June 30, 2018.
"Anaconda has had an excellent first half of 2018, with the
Point Rousse operations continuing to exceed expectations,
achieving strong operational results, including record throughput
in the mill, while generating significant cash flow and driving
down operating cash costs to below $900 per ounce or US$675. With cash generated from
operations of $2.9 million in Q2
2018, after all corporate costs, and the recent $4.5 million flow-through financing, we have
built a significant treasury of $7.9
million. We are well positioned to continue to create
shareholder value from the continued investment in the organic
growth opportunities at our Point Rousse and Goldboro
Projects."
~Dustin Angelo, President and CEO, Anaconda Mining
Inc.
Consolidated Results Summary
Financial
Results
|
Three
months
ended
June 30,
2018
|
Three months
ended
May 31,
2017
|
Six
months
ended
June 30,
2018
|
Six
months
ended
May 31,
2017
(restated)
|
Revenue
($)
|
7,451,617
|
7,831,048
|
15,048,217
|
13,904,846
|
Cost of operations,
including depletion and depreciation ($)
|
5,586,145
|
6,182,586
|
11,097,498
|
12,940,113
|
Mine operating income
($)
|
1,865,472
|
1,648,462
|
3,950,719
|
964,733
|
Net loss
($)
|
(549,543)
|
(1,890,260)
|
(400,325)
|
(2,830,292)
|
Net loss per share
($/share) – basic and diluted
|
(0.01)
|
(0.03)
|
(0.00)
|
(0.05)
|
Cash generated from
operating activities ($)
|
2,944,700
|
3,172,938
|
3,936,505
|
3,496,083
|
Capital investment in
property, mill and equipment ($)
|
817,139
|
225,612
|
1,381,112
|
786,949
|
Capital investment in
exploration and evaluation assets ($)
|
1,121,070
|
763,988
|
2,656,434
|
1,292,695
|
Average realized gold
price per ounce ($)*
|
1,695
|
1,658
|
1,686
|
1,613
|
Operating cash costs
per ounce sold ($)*
|
872
|
866
|
885
|
1,019
|
All-in sustaining
cash costs per ounce sold ($)*
|
1,360
|
1,234
|
1,368
|
1,428
|
*Refer to Non-IFRS
Measures section below.
|
|
|
|
|
|
|
|
|
|
Operational
Results
|
Three months
ended
June 30,
2018
|
Three months
ended
May 31,
2017
|
Six
months
ended
June 30,
2018
|
Six
months
ended
May 31,
2017
|
Ore mined
(t)
|
32,833
|
92,167
|
176,673
|
194,698
|
Waste mined
(t)
|
356,642
|
386,387
|
606,774
|
711,463
|
Strip
ratio
|
10.9
|
4.2
|
3.4
|
3.7
|
Ore milled
(t)
|
121,299
|
107,956
|
230,518
|
215,718
|
Grade (g/t
Au)
|
1.38
|
1.49
|
1.41
|
1.35
|
Recovery
(%)
|
85.9
|
85.8
|
85.6
|
85.5
|
Gold ounces
produced
|
4,632
|
4,442
|
8,925
|
8,209
|
Gold ounces
sold
|
4,330
|
4,658
|
8,856
|
8,255
|
Second Quarter 2018 Review
Operational Overview
The Pine Cove Mill processing facility achieved record quarterly
throughput of 121,299 tonnes in the second quarter of 2018.
Mill throughput was 1,350 tonnes per day ("tpd") in Q2 2018, a 12%
increase over the comparative three months ended May 31, 2017, and an improvement from the 1,300
tpd in Q1 2018.
Average grade during the second quarter of 2018 was 1.38 g/t, a
decrease over both Q1 2018 and the three-month comparative period
ending May 31, 2017. The lower grade
profile was in line with plan, with throughput being comprised
mainly of ore stockpile from the Pine Cove Pit. The Company expects
an increased grade profile in the second half of 2018, as ore feed
is predominantly sourced from Stog'er Tight. The mill achieved an
average recovery rate of 85.9%, an improvement over Q1 2018,
resulting in gold production in Q2 2018 of 4,632 ounces.
Mining activity in Q2 2018 focused on the completion of
development at Stog'er Tight, removing a further 133,576 tonnes of
waste, which will be capitalized as development. Commercial ore
production began in May, with 28,974 tonnes of ore mined from
Stog'er Tight in May and June. Given the focus on development
in the West Pit, the strip ratio of 10.9 waste tonnes to ore tonnes
was high compared to previous periods; however, the strip ratio is
expected to decrease over the life of the pit.
Mine activity in the Pine Cove Pit finished in the middle of
March, and the Company has commenced planning for two pushbacks to
the pit, which are expected to contribute ore in 2019. The Company
is now converting the Pine Cove Pit into a fully-permitted in-pit
tailings storage facility, which has approximately 15 years of
capacity based on a throughput rate of 1,350 tonnes per day.
Anaconda expects to begin tailings deposition in the third quarter
of 2018.
Financial Results
Anaconda sold 4,330 ounces of gold during the second quarter of
2018, generating metal revenue of $7,351,525, and year-to-date has sold 8,856
ounces of gold to generate metal revenue of $14,948,125. As at June
30, 2018, the Company also had over 750 ounces of gold doré
and bullion inventory, which were sold in early July. In addition,
the Company generated a further $100,092 in revenue from the sale of aggregates
during Q2 2018.
Operating expenses for the three months ended June 30, 2018 were $3,865,256, compared to $4,151,450 in the three months ended May 31, 2017. The decrease in operating costs was
the result of lower mining costs as the operation moved 19% less
material during the quarter, which was partially offset by higher
processing costs, which were driven by a 12% increase in throughput
in Q2 2018. The operating cash costs per ounce sold in the first
three and six months of fiscal 2018 were $872 (US$675) and
$885 (US$693), a reduction of 13% compared to
operating cash costs of $1,019 per
ounce sold (US$746) in the six months
ended May 31, 2017, which has led the
Company to revise its operating cash cost guidance from
C$1,100 to below C$1,000, mainly due to better than expected
grades in the bottom of the Pine Cove Pit.
Depletion and depreciation expense for the three and six months
ended June 30, 2018 was $1,701,812 and $3,138,818, respectively, a decrease from
$2,031,136 and $3,978,135 during the comparative periods. The
lower depletion and depreciation was the result of lower depletion
of stripping costs for the Pine Cove Pit, where mining was
completed in Q1 2018. Capitalized development costs for Stog'er
Tight for 2018 of $993,502 are now
being depreciated from May 1, 2018,
the beginning of production.
Mine operating income for the three months ended June 30, 2018 was $1,865,472, compared to $1,648,462 in the comparative period of 2017, as
higher revenues due to higher gold sales in the prior year were
offset by lower operating and depletion and depreciation
expenses.
Corporate administration expenditures were $1,148,342 and $2,242,696 for the first three and six months of
fiscal 2018, up from $657,283 and
$1,285,009 for the comparative
periods. The lower comparative balances reflect the previously
lower corporate cost profile prior to the significant Goldboro Gold
Project acquisition, which occurred in May
2017. The higher expenditures in the current periods reflect
the expanded senior management team to execute the Company's growth
plans, greater market presence and investor relations activity, and
the timing of certain corporate costs as a result of the change in
year-end to December 31.
Share-based compensation was $190,407 during Q2 2018 and $340,880 for the first half of 2018, compared to
$22,737 and $45,367 in the comparative periods, reflecting
the stock options granted during Q1 2018, as well as the impact of
the share consolidation on the fair value of the options as
determined by the Black-Scholes option pricing model.
The drawdown of the deferred premium on flow-through shares
resulted in recoveries of $96,663 and
$253,535 in the three and six months
ended June 30, 2018, as the remaining
exploration commitments from the October 31,
2017 flow-through financing were incurred.
Net loss for the three months ended June
30, 2018, was $549,543, or
$0.01 per share, compared to
$1,890,260, or $0.03 per share, in the comparative period. Net
loss for the period was impacted by the recognition of $740,018 in transaction costs related to the
takeover bid of Maritime; however, still improved over the prior
comparative period due to higher mine operating income, which was
partially offset by higher corporate administration expenditures
and share-based compensation.
Financial Position and Cash Flow Analysis
As at June 30, 2018, the Company
continued to maintain a robust working capital position of
$9,914,191, which included cash and
cash equivalents of $7,853,330. In
addition, the Company maintains a $1,000,000 revolving credit facility as well as a
$500,000 revolving equipment lease
line of credit with the Royal Bank of Canada. As at June 30,
2018, the Company had not drawn against the revolving credit
facility.
During the three months ended June 30,
2018, Anaconda generated cash flow from operations of
$2,944,700, after accounting for
corporate administration costs. Revenue less operating expenses
from the Point Rousse Project were $3,586,361 in the second quarter, corporate
administration costs were $1,148,342,
and there was a net increase in operating cash flows of
$1,348,388 from changes in working
capital. Trade and other receivables decreased by $552,288 due to the collection of HST
refunds.
During the second quarter of 2018, the Company continued to
invest in its key growth projects in Newfoundland and Nova Scotia. The Company spent $1,121,070 in Q2 2018 on exploration and
evaluation assets (adjusted for amounts included in trade payables
and accruals at June 30, 2018),
primarily on the continued advancement of the Goldboro Project. The
Company also invested $817,139 during
Q2 2018 and $1,381,112 during the
first half of 2018 into the property, mill and equipment at the
Point Rousse Project, with capital investment focused largely on
development activity at Stog'er Tight, where a total of
$993,502 was capitalized in the first
half of 2018.
In June 2018, the Company
successfully completed a flow-through financing of $4,465,290. Other financing activities during the
second quarter of 2018 were primarily limited to the repayment of
capital lease obligations and government loans. The Company also
received cash proceeds of $116,000
from the exercise of stock options in Q2 2018.
Restatement of Prior Period Financial Information
As part of the preparation of the audited consolidated financial
statements for the year ended May 31,
2017, the Company undertook a comprehensive review of the
capitalization and units-of-production depletion calculations for
its production stripping asset and property, mill infrastructure
and equipment and deferred taxes and discovered that certain errors
had been made. As a result, the Company amended the treatment of
these balance sheet items resulting in a restatement of prior
periods.
The amounts of each adjustment and a reconciliation between the
previously published consolidated statement of comprehensive loss
for the six months ended June 30,
2017, have been presented in Note 4 of the condensed interim
consolidated financial statements.
ABOUT ANACONDA
Anaconda is a TSX-listed gold mining, development, and
exploration company, focused in the prospective Atlantic Canadian
jurisdictions of Newfoundland and
Nova Scotia. The Company operates
the Point Rousse Project located in the Baie Verte Mining District
in Newfoundland, comprised of the
Stog'er Tight Mine, the Pine Cove open pit mine, the Argyle Mineral
Resource, the fully-permitted Pine Cove Mill and tailings facility,
deep water port, and approximately 5,800 hectares of prospective
gold-bearing property. Anaconda is also developing the Goldboro
Project in Nova Scotia, a
high-grade Mineral Resource, with the potential to leverage
existing infrastructure at the Company's Point Rousse Project.
The Company also has a pipeline of organic growth opportunities,
including the Great Northern Project on the Northern Peninsula of
Newfoundland and the Tilt Cove
Property on the Baie Verte
Peninsula, also in Newfoundland.
FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking information"
within the meaning of applicable Canadian and United States securities legislation.
Generally, forward-looking information can be identified by the use
of forward-looking terminology such as "plans", "expects", or "does
not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "does not anticipate", or
"believes" or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would",
"might", or "will be taken", "occur", or "be achieved".
Forward-looking information is based on the opinions and estimates
of management at the date the information is made, and is based on
a number of assumptions and is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of Anaconda to be
materially different from those expressed or implied by such
forward-looking information, including risks associated with the
exploration, development and mining such as economic factors as
they effect exploration, future commodity prices, changes in
foreign exchange and interest rates, actual results of current
production, development and exploration activities, government
regulation, political or economic developments, environmental
risks, permitting timelines, capital expenditures, operating or
technical difficulties in connection with development activities,
employee relations, the speculative nature of gold exploration and
development, including the risks of diminishing quantities of
grades of resources, contests over title to properties, and changes
in project parameters as plans continue to be refined as well as
those risk factors discussed in the annual information form for the
fiscal year ended December 31, 2017,
available on www.sedar.com. Although Anaconda has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such information will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not
place undue reliance on forward-looking information. Anaconda does
not undertake to update any forward-looking information, except in
accordance with applicable securities laws.
NON-IFRS MEASURES
Anaconda has included certain non-IFRS performance measures
as detailed below. In the gold mining industry, these are common
performance measures but may not be comparable to similar measures
presented by other issuers. The Company believes that, in addition
to conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate the Company's
performance and ability to generate cash flow. Accordingly, it is
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.
Operating Cash Costs per Ounce of Gold – Anaconda calculates
operating cash costs per ounce by dividing operating expenses per
the consolidated statement of operations, net of silver sales and
aggregate sales by-product revenue, by the gold ounces sold during
the applicable period. Operating expenses include mine site
operating costs such as mining, processing and administration as
well as royalties, however excludes depletion and depreciation and
rehabilitation costs.
All-In Sustaining Costs per Ounce of Gold – Anaconda has
adopted an all-in sustaining cost performance measure that reflects
all of the expenditures that are required to produce an ounce of
gold from current operations. While there is no standardized
meaning of the measure across the industry, the Company's
definition conforms to the all-in sustaining cost definition as set
out by the World Gold Council in its guidance dated June 27, 2013. The World Gold Council is a
non-regulatory, non-profit organization established in 1987 whose
members include global senior mining companies. The Company
believes that this measure will be useful to external users in
assessing operating performance and the ability to generate free
cash flow from current operations.
The Company defines all-in sustaining costs as the sum of
operating cash costs (per above), sustaining capital (capital
required to maintain current operations at existing levels),
corporate administration costs, sustaining exploration, and
rehabilitation accretion and amortization related to current
operations. All-in sustaining costs excludes capital expenditures
for significant improvements at existing operations deemed to be
expansionary in nature, exploration and evaluation related to
growth projects, financing costs, debt repayments, and taxes.
Canadian and US dollars are noted for realized gold price,
operating cash costs per ounce of gold and all-in sustaining costs
per ounce of gold. Both currencies are considered relevant and the
Company uses the average foreign exchange rate for the
period.
Average Realized Gold Price per Ounce Sold – In the gold
mining industry, average realized gold price per ounce sold is a
common performance measure that does not have any standardized
meaning. The most directly comparable measure prepared in
accordance with IFRS is gold revenue. The measure is intended to
assist readers in evaluating the revenue received in a period from
each ounce of gold sold.
Earnings before Interest, Taxes, Depreciation and
Amortization ("EBITDA") - EBITDA is earnings before finance
expense, deferred income tax expense and depletion and
depreciation.
Point Rousse Project EBITDA is EBITDA before corporate
administration and other expenses (income).
Working Capital – Working capital is a common measure of
near-term liquidity and is calculated by deducting current
liabilities from current assets.
SOURCE Anaconda Mining Inc.