Karora will host a call/webcast on May 7, 2021 at 10:00 a.m.
(Eastern Time) to discuss the first quarter 2021 results.
North American callers please dial: 1-888-231-8191,
international callers please dial: (+1) 647-427-7450. For
the webcast of this event click
[here] (replay access information
below).
TORONTO, May 7, 2021 /CNW/ - Karora Resources
Inc. (TSX: KRR) ("Karora" or the "Corporation") is pleased to
announce its financial results and review of activities for the
three months ended March 31, 2021.
All amounts are expressed in Canadian dollars, unless otherwise
noted. For additional information please refer to Karora's
Management's Discussion & Analysis ("MD&A") and unaudited
condensed interim financial statements for the three months ended
March 31, 2021 and 2020.
Highlights
- First quarter 2021 consolidated gold production of 24,694
ounces and gold sales of 25,547 ounces was precisely on track with
budget, positioning the Company well to deliver 2021 guidance. Full
year consolidated 2021 gold production guidance of 105,000 to
115,000 ounces is maintained (assumes no significant interruption
in operations as a result of the COVID-19 virus).
- First quarter 2021 consolidated all-in-sustaining-costs
("AISC")1 of US$1,049 per oz. was in line with the full year
2021 guided range of US$985-$1,085 per
ounce and sets the pace for continued strong cost performance
during 2021.
- Net earnings of $5.6 million or
$0.04 per share for the first quarter
of 2021 compared to $0.5 million in
the first quarter of 2020. First quarter earnings were negatively
impacted by a non-cash unrealized foreign exchange loss of
$4.5 million (or $0.03 per share).
- Adjusted earnings1 of $8.1
million or $0.06 per share for
the first quarter of 2021.
- Adjusted earnings before interest, taxes depreciation and
amortization ("EBITDA")1 was $21.2 million or $0.15 per share for the first quarter of 2021, a
$1.8 million increase compared to
$19.4 million for the first quarter
of 2020.
- Cash flow from operating activities of $18.7 million or $0.13 per share, a 53% increase compared to
$12.2 million for the first quarter
of 2020.
- Cash Position and Balance Sheet: Karora ended the first quarter
of 2021 with a strong cash position of $76.7
million, and working capital of $63.2
million, slightly lower by $3.0
million and slightly higher by $6.4
million respectively from December
31, 2020. The cash position decrease was due to timing of
planned investment into Karora's assets as part of 2021's capital
program as well as a scheduled US$2.5
million cash payment to Maverix Metals as part of the Beta
Hunt royalty buy back agreement announced in 2020.
- Phase I mill expansion to increase capacity by 15%, or 550
tonnes per day, to 1.6 million tonnes per annum is proceeding ahead
of schedule having already achieved an annualized production rate
of 1.5 million tonnes per annum (up from the prior capacity of 1.4
million tonnes per annum).
- At Beta Hunt's Larkin Zone, drilling intersected 19.0 g/t gold
over 9.0 metres, including 542 g/t over 0.3 metres in hole
EL-EA2-023E with visible gold mineralization observed in the drill
core. The Larkin Zone discovery was announced in September 2020.
- Second new high grade nickel discovery at Beta Hunt in the last
six months, known as the "Gamma Zone - 50C", where 1.6% nickel over
4.6 metres, including 18.4% nickel over 2.2 metres was intersected
in hole G50-22-005E. The drilling, which was targeting nickel, also
intersected gold mineralization above and below the 50C trough and
suggests the Beta Hunt gold mineralized system extends for over 3.5
kilometres of strike from the northern end of the A Zone.
- At the Lake Cowan prospect, air core drilling on the dry salt
lake returned an interval of 1.35 g/t gold over 50 metres,
including 3.64 g/t over 16 metres from hole HIGA8864, an excellent
result from first pass drilling in this underexplored area.
- At the Spargos Reward Gold Project, continued strong drilling
results were announced, including 6.1 g/t over 14.0 metres in hole
SPDD0003, which confirmed the interpreted high grade gold plunging
shoot thesis by extending the shoot to over 300 metres down-plunge
(remains open down-plunge).
Paul Andre Huet, Chairman &
CEO, commented: "I am pleased with Karora's first quarter
performance, which places us on a very strong footing to achieve
our full year 2021 gold production guidance of between 105,000 and
115,000 ounces and AISC1 of US$985-$1,085 per
ounce sold. First quarter gold production of just under 25,000
ounces was right on budget as we prepared new higher grade mining
areas at Higginsville Central. Over the course of 2021, as we have
previously stated, we expect quarterly grade improvements resulting
from Spargos and Two Boys to drive increased production towards the
second half of the year.
After recently visiting site upon my relocation to Australia, I am extremely happy to announce
that our Phase I mill expansion is proceeding well ahead of
schedule. We have already achieved an annualized production rate of
1.5 million tonnes per annum. Once completed, as previously
announced, the Phase I expansion will increase production capacity
at our Higginsville mill in 2021 by approximately 15%, or 550
tonnes per day, to 1.6 million tonnes per annum from the prior
capacity of 1.4 million tonnes per annum.
Karora delivered a solid financial performance in the first
quarter of 2021 with adjusted EBITDA of $21
million or $0.15 per share,
operating cash flow of $19 million or
$0.13 per share and consolidated
AISC1 of US$1,049 per
ounce sold. Net earnings of $5.6
million or $0.04 per share
were negatively impacted by an unrealized non-cash foreign exchange
loss of $4.5 million or $0.03 per share, primarily related to
intercompany loans due to quarter over quarter currency
fluctuations. We reiterate that these are unrealized intercompany
loans as we do not transfer cash out of the Australian business
unit. Adjusted for these fluctuations, earnings were $8.1 million or $0.06 per share. On the cost front, despite
planned lower grades during the first quarter, we recorded yet
another strong three month period of disciplined cost control with
AISC of US$1,049 per ounce well
within our 2021 guidance range.
With Karora's strong cash balance of $76.7 million at the end of the first quarter,
and much of the ground work to bring on higher grade mining areas
over the balance of 2021 completed, we are in a very strong
position to deliver on our 2021 organic growth commitments. In this
regard, I am looking forward to delivering our multi-year growth
profile to the market later in the second quarter."
- Non-IFRS: the definition and reconciliation
of these measures are included in the Non-IFRS Measures section 17
of Karora's MD&A dated May 7, 2021.
|
COVID-19 Protocols
In response to the global COVID-19 pandemic, Karora's protocols
and contingency plans have mitigated impacts of the pandemic.
Karora's operations continued at expected levels, consistent with
the Corporation's full year 2021 guidance for the first quarter of
2021. Karora's ongoing response to the COVID-19 pandemic continues
to prioritize the safety of its workforce and host communities
while mitigating potential operational impacts.
Results of Operations
Table 1 - Highlights of operational results for the periods
ended March 31, 2021 and 2020
|
Three months
ended
|
For the periods ended
March 31,
|
2021
|
2020
|
Gold Operations
(Consolidated)
|
|
|
Tonnes milled
(000s)
|
371
|
314
|
Recoveries
|
93%
|
93%
|
Gold milled, grade
(g/t Au)
|
2.16
|
2.35
|
Gold produced
(ounces)
|
24,694
|
24,816
|
Gold sold
(ounces)
|
25,547
|
24,626
|
Average realized price
(US $/oz sold)
|
$1,762
|
$1,493
|
Cash operating costs
(US $/oz sold)1
|
$952
|
$965
|
All-in sustaining cost
(AISC) (US $/oz sold)1
|
$1,049
|
$1,101
|
Gold (Beta Hunt
Mine)1
|
|
|
Tonnes milled
(000s)
|
233
|
186
|
Gold milled, grade
(g/t Au)
|
2.63
|
2.58
|
Gold
produced(ounces)
|
18,261
|
17,170
|
Gold sold
(ounces)
|
18,754
|
17,078
|
Cash operating cost
(US $/oz sold)1
|
$899
|
$944
|
Gold (HGO
Mine)
|
|
|
Tonnes milled
(000s)
|
138
|
128
|
Gold milled grade (g/t
Au)
|
1.57
|
2.00
|
Gold produced
(ounces)
|
6,433
|
7,646
|
Gold sold
(ounces)
|
6,793
|
7,548
|
Cash operating cost
(US $/oz sold)1
|
$1,100
|
$1,013
|
- Non-IFRS: the definition and reconciliation
of these measures are included in the Non-IFRS Measures section 14
of Karora's MD&A dated May 7, 2021.
|
Consolidated Operations
For the first quarter of 2021, Karora's gold operations milled
371,000 of material at an average grade of 2.16 g/t to produce
24,694 ounces of gold, the Corporation's seventh consecutive
quarter of consistent production of approximately 25,000 gold
ounces since the acquisition of the Higginsville Mill in mid-2019.
Cash operating costs for the first quarter were US$952 per ounce.
The mill feed was made up of approximately 63% material from
Beta Hunt underground and 37% material from Higginsville Central
open pit compared to an average 55% from Beta Hunt and 45% from HGO
in 2020. The increased weighting of Beta Hunt material was due
primarily to increased productivity at Beta Hunt and a lower
contribution from Higginsville Central as part of the planned
ongoing transition to higher grade mining areas throughout
2021.
Beta Hunt
Production for the first quarter of 2021 was 219,000 tonnes
mined, a 33% increase over the first quarter of 2020, and 233,000
tonnes milled, a 25% increase over the first quarter of 2020. Gold
production was 18,261 ounces and cash operating costs of
US$899 per ounce sold.
The increased production is a direct reflection of improved
mining techniques and a staged fleet replacement and upgrade
program, including the addition of a CAT R2900 underground loader
and two CAT AD60 trucks into the mining fleet. Two additional CAT
R2900 underground loaders and two CAT AD60 trucks are planned for
2021 which are required as part of the continued production ramp up
in 2021. The first of these two new trucks recently hauled its
first load of ore at Beta Hunt in May.
Nickel production is currently limited to remnant nickel
resources south of the Alpha Fault; however, recent drilling has
identified a number of new areas including the high grade 30C
Nickel Trough discovery where production can potentially be
increased.
Furthermore, on April 6, 2021
Karora announced the second new high grade nickel discovery at Beta
Hunt in the last six months, known as the "Gamma Zone - 50C", where
11.6% nickel over 4.6 metres, including 18.4% nickel over 2.2
metres was intersected in hole G50-22-005E. The drilling, which was
targeting nickel, also intersected gold mineralization above and
below the 50C trough and suggests the Beta Hunt gold mineralized
system extends for over 3.5 kilometres of strike from the northern
end of the A Zone.
Higginsville ("HGO") Central
During the first quarter, 138,000 of HGO material was milled at
an average grade of 1.57 g/t to produce 6,433 ounces of gold and
cash operating costs of US$1,100
per ounce sold.
In the first quarter of 2021 mine production from Hidden Secret
totaled 141,078 tonnes and metallurgical recoveries were aligned
with expectations at 92-93%. At Mousehollow, grade control work
commenced during the quarter which will provide valuable additional
operational flexibility for mill feed optimization.
With Higginsville Central mining primarily focused at Hidden
Secret, minimal production occurred during the first quarter of
2021 at Baloo. Mine production from Baloo totaled 21,355 tonnes for
the quarter. A re-optimization of the pit was completed with
additional mineralization identified in the northern portion of the
pit which has driven the development of a new ramp from the south
to allow additional open pit material to be mined from the North
eastern corner. Karora continues to evaluate the underground
potential at Baloo.
At Two Boys dewatering and exploratory work was significantly
advanced during the first quarter of 2021. Mining is on track to
commence as planned in the second quarter of 2021.
Karora continues to target the development of a starter pit at
the high-grade Aquarius deposit, located less than two kilometres
from the HGO treatment plant. As previously reported, near surface
drilling identified a number of high grade supergene gold
intersections, including 43.5 g/t over 3.0 metres and 5.7 g/t over
6.0 metres (see Karora news release dated November 9, 2020). A starter pit will be
developed to access the higher grade underground gold
mineralization. Development of the Aquarius starter pit could
commence as early as mid 2021.
The existing Aquarius historical resource1,2 is 20 kt
@ 19.5 g/t (Measured and indicated) and 43 kt @ 4.2g/t (Inferred)
will be updated as part of the Corporation's 2021 resource
report.
¹ Karora Resources
profile at www.sedar.com technical report, February 6th,
2020.
|
² Westgold 2018
Annual Update of Mineral Resources & Ore Reserves dated October
2, 2018 and is available to view on the ASX
(www.asx.com.au).
|
A qualified person has not done sufficient work on behalf of
Karora to classify the historical estimate noted as current mineral
resources and Karora is not treating the historical estimates as
current mineral resources.
Spargos Reward Gold Project
The first stage of a reverse circulation ("RC") drilling program
designed to test the offset southerly strike extension of the main
Spargos Reward zone was completed in the first quarter. This
program was part of HGO's larger resource definition program with
the aim of improving the confidence of the Spargos Reward main zone
ahead of mining activities schedule to begin by mid-year. An
updated gold Mineral Resource statement is expected later in the
second quarter of 2021.
Results from the RC drilling program were reported in Karora
news release dated March 1, 2021. The
intersection of 6.1 g/t over 14.0 metres in diamond drill hole
SPDD003 supports the interpretation of high grade gold
mineralization extending over a down-plunge distance of over 300
metres. The down-plunge extension of this shoot remains open at
depth and highlights the underground growth opportunity remaining
to be tested.
Cash Operating Costs and AISC1
For the first quarter, consolidated cash operating
costs1 and AISC1 were US$952 and US$1,049
per ounce sold, respectively (reductions of 1% and 5% compared to
the first quarter of 2020). The first quarter cost performance is
within full year 2021 AISC guidance range of US$985-$1,085 per
ounce.
Outlook
Karora is maintaining its previously announced full year
consolidated 2021 production guidance of between 105,000 - 115,000
ounces of gold at an AISC range of US$985 to US$1,085
per ounce. The high-end of 2021 production guidance represents a
21% increase over the high-end of 2020 guidance (19% mid-point to
mid-point). The mid-point of 2021 AISC cost guidance represents an
8% reduction when compared to the mid-point of 2020 guidance. The
reduced AISC guidance reflects Karora's continued focus on cost
reduction initiatives following a very successful year of reducing
AISC during 2020.
The above guidance assumes no significant disruption in
operations as a result of the COVID-19 pandemic.
Exploration
Karora has identified multiple high priority exploration targets
for 2021 as part of its significantly expanded A$20 million exploration budget across its +1,900
km2 land package. The increase in the drilling and
exploration budget was driven by Karora's strong success in 2020 in
increasing consolidated Reserves and Resources. Exploration is
separated into brown fields drilling which is predominantly aimed
at upgrading and extending existing Mineral Resources and
greenfields exploration, which is targeting new +250k oz discoveries.
At Beta Hunt, 7,837 metres of exploration drilling during the
first quarter continued to focus on upgrading and extending the
northern, up-plunge margin of the A Zone Mineral Resource and the
recently discovered Larkin Gold
Zone. Drill results from both these areas are planned to be
incorporated in the upcoming Beta Hunt Mineral Resource update
expected in later in 2021.
At Beta Hunt's Larkin Zone, drilling intersected 19.0 g/t gold
over 9.0 metres, including 542 g/t over 0.3 metres in hole
EL-EA2-023E with visible gold mineralization observed in the drill
core (see Karora news release dated February
1, 2021). The results support the potential of this
mineralization as a third gold resource area in addition to the A
Zone and Western Flanks Mineral Resource. The Larkin Zone discovery
was initially announced in September
2020.
The second new high grade nickel discovery at Beta Hunt at Beta
in the last six months, known as the "Gamma Zone - 50C", was
announced on April 6, 2021. Drill
hole G50-22-005E intersected 1.6% nickel over 4.6 metres, including
18.4% nickel over 2.2 metres. These results are 140 metres from
existing mine development and reinforce the potential for a repeat
of the Beta style mineralization south of the Gamma Island Fault,
potentially representing a significant growth opportunity for
by-product nickel production at Beta Hunt. Current Beta Hunt
Measured and Indicated Resources total 561 kt @ 2.9% Ni for 16,100
contained nickel tonnes (see Karora's Technical Report dated
February 1, 2021 available under
Karora's profile on Sedar.com).
The drilling in Beta Hunt's 50C discovery area, which was
targeting nickel, also intersected gold mineralization above and
below the 50C trough and suggests the Beta Hunt gold mineralized
system extends for over 3.5 kilometres of strike from the northern
end of the A Zone. Significant gold intersections included 2.7g/t
over 12.0 meters, including 10.1g/t over 1.4 metres in hole
G50-22-002E and 5.2 g/t over 3.2 metres in hole G50-22-005E.
At Higginsville, exploration efforts are focused on
completing the scout lake aircore drilling program over the Lake
Cowan dry salt lake area. Following the receipt of assays from this
initial drilling program, Karora intends to prioritize targets
generated with reverse circulation and diamond drill programs to
further test geochemical anomalies and aircore results. The program
is designed to test for anomalous gold (+0.02g/t), however Karora
has already successfully identified several strong targets which
exceeded expectations, including 3.65 g/t gold over 16 metres
within an intersection of 1.35 g/t over 50 metres (see Karora news
release, February 8, 2021).
Additional advanced targets for exploration during 2021 include
the Spargos Project area, Mt Henry and the Sleuth trend which
incorporates the Baloo deposit and the Nanook and Monsoon
prospects. 2021 Resource Definition drilling will initially focus
on testing targets within Higginsville Central, which includes the
Aquarius, Two Boys and Trident deposits. In addition, further
drilling is planned at Spargos to build upon the results from the
Stage 1 drill program.
Financial Highlights
Table 2 - Highlights of First Quarter
(in thousands of
dollars except per share amounts)
|
For the three months
ended March 31,
|
2021
|
2020
|
Revenue
|
$59,284
|
$54,282
|
Production and
processing costs
|
29,301
|
27,286
|
Earnings (loss)
before income taxes1
|
10,336
|
884
|
Net earnings
(loss)
|
5,624
|
539
|
Net earnings (loss)
per share - basic
|
0.04
|
0.00
|
Net earnings (loss)
per share - diluted
|
0.04
|
0.00
|
Adjusted
EBITDA2
|
21,210
|
19,434
|
Adjusted EBITDA per
share - basic2
|
0.15
|
0.14
|
Adjusted
earnings1
|
8,087
|
10,655
|
Adjusted earnings per
share – basic1
|
0.06
|
0.08
|
Cash flow provided by
(used in) operating activities
|
18,658
|
12,204
|
Cash investment in
property, plant and equipment and mineral property
interests
|
(18,193)
|
(7,702)
|
- Non-IFRS: the definition and reconciliation
of these measures are included in the Non-IFRS Measures section of
Karora's MD&A dated May 7, 2021.
- Earnings before interest, taxes,
depreciation, and amortization ("EBITDA").
|
Revenue for the first quarter of 2021, was $59.3 million. During the comparable period in
2020, revenue of $54.3 million. The
increase in revenue in 2021 was the result of a combination of
higher gold ounces sold and higher realized prices which increased
by 4% and 18%, respectively.
Net earnings for the first quarter of 2021 were $5.6 million (or $0.04 per share) compared to net earnings of
$0.5 million (or $0.00 per share) for the comparable period in
2020. First quarter net earnings were negatively impacted by a
non-cash (unrealized) foreign exchange loss of $4.5 million (or $0.03 per share).
Adjusted EBITDA1 for the first quarter of 2021
were $21.2 million (or $0.15 per share) compared to $19.4 million (or $0.14 per share) in the first quarter of
2021.
Table 3 - Highlights of Karora's Financial Position
(in thousands of
dollars):
|
For the period
ended
|
March 31,
2021
|
December 31,
2020
|
Cash and cash
equivalents
|
76,747
|
79,695
|
Working
capital1
|
63,215
|
56,835
|
PP&E &
MPI
|
237,808
|
239,044
|
Total
assets
|
347,612
|
350,099
|
Total
liabilities
|
134,786
|
142,895
|
Shareholders'
equity
|
212,826
|
207,204
|
- Working capital is a measure of current
assets (including cash and cash equivalents) less current
liabilities.
|
Karora's cash position remained strong at $76.7 million as at March
31, 2021. Karora had a working capital surplus of
$63.2 million as of March 31, 2021.
For a complete discussion of financial results, refer to
Karora's MD&A and unaudited condensed interim financial
statements for the three months ended March
31, 2021 and 2020.
Conference Call / Webcast
Karora will be hosting a conference call and webcast today
beginning at 10:00 a.m. (Eastern
time). A copy of the accompanying presentation can be found
on Karora's website at www.karoraresources.com.
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-231-8191
Local and international callers please dial: 647-427-7450
A live webcast of the call will be available through Cision's
website at:
Webcast
Link (https://produceredition.webcasts.com/starthere.jsp?ei=1457707&tp_key=bad1bad436)
A recording of the conference call will be available for replay
through the webcast link, or for a one-week period beginning at
approximately 1:00 p.m. (Eastern
Time) on May 7, 2021, through
the following dial in numbers:
North American callers please dial: 1-855-859-2056; Pass Code:
6279266
Local and international callers please dial: 416-849-0833; Pass
Code: 6279266
Compliance Statement (JORC 2012 and NI 43-101)
The disclosure of scientific and technical information contained
in this news release has been reviewed and approved by Stephen
Devlin, FAusIMM, Group Geologist, Karora Resources Inc., a
Qualified Person for the purposes of NI 43-101.
About Karora Resources
Karora is focused on growing gold production and reducing costs
at its integrated Beta Hunt Gold Mine and Higginsville Gold
Operations ("HGO") in Western
Australia. The Higginsville treatment facility is a low-cost
1.4 Mtpa processing plant which is fed at capacity from Karora's
underground Beta Hunt mine and open pit Higginsville mine. At Beta
Hunt, a robust gold Mineral Resource and Reserve is hosted in
multiple gold shears, with gold intersections along a 4 km strike
length remaining open in multiple directions. HGO has a substantial
gold Mineral Resource and Reserve and prospective land package
totaling approximately 1,900 square kilometers. The Company also
owns the high grade Spargos Reward project which is anticipated to
begin mining in 2021. Karora has a strong Board and management team
focused on delivering shareholder value. Karora's common shares
trade on the TSX under the symbol KRR. Karora shares also trade on
the OTCQX market under the symbol KRRGF.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains "forward-looking information"
including without limitation statements relating to the liquidity
and capital resources of Karora, production guidance and the
potential of the Beta Hunt Mine, Higginsville Gold Operation, the
Aquarius Project and the Spargos Gold Project, the commencement of
mining at the Spargos Gold Project and the completion of the
resource estimate.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Karora to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; results of exploration programs; accidents,
labour disputes and other risks of the mining industry; political
instability, terrorism, insurrection or war; or delays in obtaining
governmental approvals, projected cash operating costs, failure to
obtain regulatory or shareholder approvals. For a more detailed
discussion of such risks and other factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, refer to Karora 's filings with
Canadian securities regulators, including the most recent Annual
Information Form, available on SEDAR at www.sedar.com.
Although Karora has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this news release and Karora disclaims any obligation to update
any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable securities laws.
SOURCE Karora Resources Inc.