TORONTO, May 2, 2019 /CNW/ - Anaconda Mining Inc.
("Anaconda" or the "Company") – (TSX: ANX) (OTCQX: ANXGF) is
pleased to report its financial and operating results for the three
months ended March 31, 2019 ("Q1
2019"). 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.
First Quarter 2019 Highlights
- Anaconda sold 5,251 ounces of gold in Q1 2019, a 16% increase
over Q1 2018, generating metal revenue of $8.8 million at an average realized gold price of
$1,671 per ounce sold*. The Company
also had 749 ounces in gold doré bars in inventory at March 31, 2019, which were sold in early
April.
- Strong revenue enabled the Point Rousse Project to generate
EBITDA* of $3.8 million for the first
quarter of 2019, compared with $3.5
million for the three months ended March 31, 2018.
- On a consolidated basis, EBITDA* for the three months ended
March 31, 2019 was $2.7 million, an increase of $0.3 million over the comparative period.
- Operating cash costs per ounce sold* at the Point Rousse
Project in Q1 2019 was $977
(US$735), below 2019 annual guidance
of $1,050-$1,100, due to the high number of gold ounces
sold.
- All-in sustaining cash costs per ounce sold*, including
corporate administration and sustaining capital expenditures, was
$1,312 (US$987) for Q1 2019, a 5% improvement over Q1
2018.
- The Company invested $4.4 million
in its exploration and development projects, including $3.9 million on the Goldboro Gold Project in
Nova Scotia mostly relating to the
10,000 tonne bulk sample and exploration programs.
- Net income for the three months ended March 31, 2019 was $1,157,851, or $0.01 per share, compared to $149,218, or $0.00
per share, for the three months ended March
31, 2018.
- In March 2019, the Company
executed a $5 million term loan with
the Royal Bank of Canada ("RBC")
with a two-year term and 4.6% interest rate, to provide enhanced
financial flexibility and to complete all pre-construction activity
at its 100%-owned Goldboro Gold Project in Nova Scotia ("Goldboro").
- As at March 31, 2019, the Company
had a cash balance of $10.7 million,
working capital* of $4.6 million, and
additional available liquidity of $1,000,000 from an undrawn revolving line of
credit facility.
*Refer to Non-IFRS
Measures section below. A full reconciliation of Non-IFRS Measures
can be found in the Management Discussion and Analysis for the
three months ended March 31, 2019.
|
"Despite unplanned maintenance at the Pine Cove Mill during
the first quarter, particularly for the regrind mill, Anaconda was
able to generate $3.8 million of
EBITDA from the mining operations at its Point Rousse Project, at
operating cash costs per ounce below 2019 guidance. While lower
throughput impacted gold production from a timing perspective, the
Company continues on track to produce and sell between 19,000 and
20,000 ounces of gold in 2019.The consistent and continued ability
of Point Rousse to generate cash flow from operations is
demonstrated by a $5 million term
loan facility entered into with the Royal Bank of Canada and with the support of Export
Development Canada, with a two-year term and a low cost of capital.
The company remains well positioned to continue to generate cash
from its Point Rousse operations while advancing the Goldboro Gold
Project to a construction-decision stage in early 2020."
~Kevin Bullock, Chief Executive Officer, Anaconda Mining
Inc.
Consolidated Results Summary
Financial
Results
|
|
Three months
ended
March 31, 2019
|
Three months
ended
March 31, 2018
|
Revenue
($)
|
|
8,776,703
|
7,596,600
|
Cost of operations,
including depletion and depreciation ($)
|
|
6,454,694
|
5,511,353
|
Mine operating income
($)
|
|
2,322,009
|
2,085,247
|
Net income
($)
|
|
1,157,851
|
149,218
|
Net income per share
($/share) – basic and diluted
|
|
0.01
|
0.00
|
Cash generated from
operating activities ($)
|
|
4,135,073
|
991,805
|
Capital investment in
property, mill and equipment ($)
|
|
289,177
|
563,973
|
Capital investment in
exploration and evaluation assets ($)
|
|
4,357,390
|
1,535,364
|
Average realized gold
price per ounce*
|
|
US$1,257
|
US$1,327
|
Operating cash costs
per ounce sold*
|
|
US$735
|
US$712
|
All-in sustaining
cash costs per ounce sold*
|
|
US$987
|
US$1,090
|
|
|
March 31,
2019
|
December 31,
2018
|
Total assets
($)
|
|
64,802,769
|
57,942,367
|
Non-current
liabilities ($)
|
|
7,709,935
|
5,290,646
|
*Refer to Non-IFRS
Measures section below.
|
|
Operational
Results
|
|
Three months
ended
March 31, 2019
|
Three months
ended
March 31, 2018
|
Ore mined
(t)
|
|
77,367
|
143,840
|
Waste mined
(t)
|
|
279,412
|
250,132
|
Strip
ratio
|
|
3.6
|
1.7
|
Ore milled
(t)
|
|
79,758
|
109,219
|
Grade (g/t
Au)
|
|
1.92
|
1.44
|
Recovery
(%)
|
|
84.8
|
85.2
|
Gold ounces
produced
|
|
4,176
|
4,293
|
Gold ounces
sold
|
|
5,251
|
4,526
|
First Quarter 2019 Review
Operational Overview
The Pine Cove Mill processed 79,758 tonnes during Q1 2019, down
27% compared to the first quarter of 2018 due to lower mill
availability from a combination of the planned maintenance on the
main ball mill with routine replacement of the mill liners, lifters
and trunnions and delayed shipment of trunnion liners and unplanned
maintenance on the head of the regrind mill. The failure of the
regrind mill also impacted the throughput rate during the quarter,
in addition to adverse weather conditions in the earlier part of
the quarter impeding the rate of crushing.
Average grade during Q1 2019 was 1.92 g/t, a 33% increase over
the first quarter of 2018, and consistent with the fourth quarter
of 2018 when Stog'er Tight became the main ore feed to the Pine
Cove Mill. The mill achieved an average recovery rate of 84.8%,
resulting in gold production of 4,176 ounces for the first quarter
of 2019. The average recovery rate decreased compared to both Q1
2018 and the fourth quarter of 2018, as leach recoveries were
impacted by the absence of the regrind mill in March, and the
back-up stirred media detritor ("SMD") system was not able to
maintain the optimal grind size and corresponding leach
capabilities, leading to recovery loss. To minimize any loss of
gold production, the mill temporarily ceased operations to allow
for the completion of rebuild of the regrind mill head and to
opportunistically complete many significant maintenance programs.
In February, however, when ore feed was predominantly from Stog'er
Tight and the regrind mill was on-line, the mill achieved an
average recovery of 88.5%.
During the first quarter of 2019, the mine operations produced
77,367 tonnes of ore from the Stog'er Tight Mine. Mine operations
also included 45,120 tonnes of waste from pushbacks at the Pine
Cove Pit, where development activity is ongoing in preparation for
mining in the second quarter. Ore tonnes for the quarter were
higher than expected, with production results demonstrating a
positive variance against the block model underlying the mine plan.
As at March 31, 2019, the operation
had stockpiled over 30,600 tonnes of ore with an estimated average
grade of 1.73 g/t.
Financial Results
Anaconda sold 5,251 ounces of gold during the first quarter of
2019, generating gold revenue of $8.8
million, and had 749 ounces in gold doré bars in inventory
at March 31, 2019, which were sold in
early April.
Operating expenses for the three months ended March 31, 2019 were $4,886,614, compared to $4,074,347 in the three months ended March 31, 2018. Operating expenses were higher
due to relatively higher haulage costs from Stog'er Tight in 2019,
compared to the comparative period when the Company was mining from
the Pine Cove Mine which is closer to the mill. Operating expenses
were also lower in Q1 2018 due to the capitalization of
approximately $470,000 in Stog'er
Tight development costs. Operating cash costs per ounce sold in the
first three months of fiscal 2019 were $977 (US$735),
below the Company's 2019 annual operating cash cost guidance of
C$1,050-C$1,100, due to the higher gold ounces sold.
Operating expenses in Q1 2019 also included a royalty expense of
$248,295 on production from Stog'er
Tight, which carries a 3% net smelter return royalty, compared to
$nil in the previous year as the Pine Cove Mine is not subject to a
royalty.
Depletion and depreciation expense for the first three months of
fiscal 2019 was $1,319,785, a
decrease from $1,437,006 during the
comparative period as result of lower comparative ounces produced.
Mine operating income for the three months ended March 31, 2019 was $2,322,009, an increase over Q1 2018 as higher
comparable operating costs during the most recent quarter were
offset by higher gold sales.
Corporate administration expenditures were $1,013,180 for the first three months of fiscal
2019, down from $1,094,354 for the
comparative period. Corporate administration includes senior
management and corporate compensation, regulatory and listing
costs, marketing and investor relations, and general office
expenses. The Company also recorded a net recovery of research and
development costs of $129,558
relating to funding received from the Atlantic Innovation Fund for
the narrow vein mining research project.
Share-based compensation was $110,765 during Q1 2019, compared to $150,473 in the three months ended February 28, 2017, reflecting the share units
granted during the quarter. Stock-based compensation was higher in
the comparative period due to greater vesting expense of the stock
options granted during the three months ended March 31, 2018.
Net comprehensive income for the three months ended March 31, 2019, was $1,157,851, or $0.01 per share, compared to $149,218, or $0.00
per share. The improvement compared to the three months ended
March 31, 2018 was the result of
higher mine operating income, as well as a net income tax recovery,
as the Company recorded a current income tax expense of
$268,163 relating to provincial
mining tax and a deferred income tax recovery of $102,000 during the three months ended
March 31, 2019 (three months ended
March 31, 2018 – $473,000 and expense of $262,000, respectively).
Financial Position and Cash Flow Analysis
As at March 31, 2019, the Company
continued to maintain a robust working capital position of
$4,587,192, which included cash and
cash equivalents of $10,656,289. The
higher cash balance reflects impact of the $5,000,000 term loan from the Royal Bank of
Canada ("RBC") and a $1,727,500 gold prepayment with Auramet
International LLC, offset by the continued investment of
flow-through dollars into exploration programs and the continued
advancement of the Goldboro Gold Project.
The Company maintains a $1,000,000
revolving credit facility as well as a $750,000 revolving equipment lease line of credit
with RBC. Under the terms of the Agreement, RBC maintains a
first-ranking general security agreement including a specific
security interest in the Company's ball mill and cone crushers. As
at March 31, 2019, the Company had
not drawn against the revolving credit facility.
In Q1 2019, Anaconda generated cash flow from operations of
$4,135,074. Revenue less operating
expenses from the Point Rousse Project were $3,890,089, based on quarterly gold sales of
5,251 ounces at an average price of C$1,671 per ounce sold and operating cash costs
of $977 per ounce sold. Corporate
administration costs in the first quarter were $1,013,180 and there was a net increase in
operating cash flows of $1,390,711
from changes in working capital.
During the first quarter of 2019, the Company continued to
invest in its key growth projects in Newfoundland and Nova Scotia. The Company spent $4,351,938 on exploration and evaluation assets
(adjusted for amounts included in trade payables and accruals at
March 31, 2019), which includes
$3,854,831 on the continued
advancement of the Goldboro Project and $368,952 on the Argyle Resource at Point Rousse.
The Company also invested $289,177
into the property, mill and equipment at the Point Rousse Project,
with capital investment focused on development activity on a
pushback of the Pine Cove Mine.
Financing activities in the first three months of 2019 were
limited to the proceeds from the $5,000,000 term loan with RBC, with a two-year
term bearing interest at 4.6% per annum, and the repayment of
capital lease obligations and government loans.
Non-IFRS Measures
Anaconda has included in this press release 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 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.
ABOUT ANACONDA
Anaconda Mining is a TSX and OTCQX-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 11,181 hectares of prospective
gold-bearing property. Anaconda is also developing the Goldboro
Gold Project in Nova Scotia, a
high-grade Mineral Resource, subject to a 2018 preliminary economic
assessment which demonstrates strong project economics. The Company
also has a wholly owned exploration company that is solely focused
on early stage exploration in Newfoundland and New
Brunswick.
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 Anaconda's annual information form
for the year ended December 31, 2018,
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.
SOURCE Anaconda Mining Inc.