Karora will host a call/webcast on November 7, 2022 at 10:00
a.m. (Eastern Time) to discuss the third quarter 2022
results. North American callers please dial: 1-888-394-8218,
international callers please dial: (+1) 647-794-4605. For
the webcast of this event click
[here] (replay access information
below).
TORONTO, Nov. 7, 2022
/CNW/ - Karora Resources Inc. (TSX: KRR) (OTCQX: KRRGF)
("Karora" or the "Corporation" or the "Company") is pleased to
announce its financial results and review of activities for the
three and nine months ended September 30,
2022. 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 consolidated financial statements for
the three and nine months ended September
30, 2022 and 2021.
Highlights
- Third quarter 2022 consolidated gold production was a record
38,437 ounces, beating the previous record set in Q2 by 25%.
Production for the first three quarters of 2022 was 96,578 ounces,
placing Karora in a strong position to deliver on improved full
year consolidated 2022 gold production guidance of 120,000 to
135,000 ounces (assuming no significant interruption to operations
as a result of the COVID-19 virus in the fourth quarter of 2022).
Third quarter gold sales were 35,513 ounces due to timing of
sales.
- Record tonnage performance at Beta Hunt for the second straight
quarter with 313,000 tonnes mined during the third quarter. Tonnes
mined through the single decline continued to increase as
productivity and operational performance improved.
- Carbon neutrality will be
achieved for the second straight year in 2022 for operations (Scope
1 emissions) and purchased electricity (Scope 2 emissions) through
the purchase and retirement of 95,000 tonnes of verified carbon
offsets. Concurrently, Karora is well underway with its emissions
reduction plan, including the analysis of renewable and hybrid
power solutions for its Higginsville operations.
- Net earnings of $4.4 million, or
$0.03 per share, for the third
quarter of 2022 was down $5.9 million
compared to third quarter 2021 net earnings of $10.3 million, or $0.07 per share. The decrease was mainly
attributable to a materially higher depreciation and amortization
as new mining operations commenced at Higginsville, increases in
production and processing costs, and higher general and
administrative costs.
- Adjusted earnings1 of $6.6
million, or $0.04 per share
for the third quarter of 2022, increased by $2.0 million compared to the prior quarter and
was down $7.6 million compared to
third quarter of 2021.
- Adjusted EBITDA1 of $27.5
million or $0.16 per share for
the third quarter of 2022, increased by $4.9
million from the previous quarter and was down $1.0 million from third quarter of 2021.
- Third quarter 2022 consolidated all-in-sustaining-costs
("AISC")1 per ounce sold improved to US$1,069, a 10% decrease compared to second
quarter 2022 AISC of US$1,190 and a
23% decrease over the first quarter AISC of US$1,396 which were heavily impacted by COVID-19
related disruptions.
- Cash flow from operating activities of $28.3 million increased compared to $27.9 million for the third quarter of 2021 and
$17.1 million higher than the
previous quarter.
- Karora's cash position remains strong at $56.1 million as at September 30, 2022, after the planned deployment
of capital into the Company's growth plan, including the
acquisition of the fully permitted 1.0 Mtpa Lakewood Mill and the
advancement of the second decline at Beta Hunt.
- Karora closed a senior secured $80
million Credit Agreement with Macquarie Bank Limited which
provided for a $40 million term loan
and a $40 million revolving credit
facility. The term of the facility is to June 28, 2024, with an option to renew. The net
proceeds of the term loan were used to refinance the previous
$30 million credit facility and for
general working capital purposes.
- Construction of Beta Hunt's second decline to double mine
capacity to 2 Mtpa advanced by 1,205 metres during the third
quarter. The project remains ahead of schedule with completion
expected in the first quarter of 2023. Surface raise bore civil
works were completed during the quarter and raise bore civil works
have commenced on the 801-vent raise.
- Drilling at Beta Hunt has confirmed the continuity of the
Western Flanks Main shear mineralization up to 250 metres below the
current Mineral Resource. This system remains open at depth and
along strike. Drill results from the new Mason zone has confirmed
gold mineralization over a 300 metre strike length, including the
best result to date of 12.0 g/t over 17.0 metres, demonstrating the
potential for a new mining opportunity south of the Alpha Island
Fault.
- A positive Preliminary Economic Assessment ("PEA") for
increased nickel production from the Beta Hunt Mine was announced
during the third quarter on Karora's initial Nickel Mineral
Resource dated January 2022. Base
case results (nickel price of US$19,500/t) yielded a pre-tax NPV5% of
A$57 million and IRR of 105%. Upside
case results, closer to nickel consensus pricing of US$25,000/t, yielded a pre-tax A$111 million NPV5% and IRR of 232%.
- Karora announced the appointment of Bevan Jones to the position of Chief Operating
Officer, Australia. Bevan has over
27 years of expertise in mine management and leadership in mining.
He joins Karora from Gold Fields where he was the General Manager
of St Ives gold operation, located next to the Beta Hunt Mine.
Paul Andre Huet, Chairman &
CEO, commented: "Another quarter of records for Karora. The third
quarter was very strong operationally, setting both new Company
production and processing records while reducing unit costs. Given
that the current operating environment has been difficult globally
for an extended period of time, I am very pleased with the way in
which the Karora team has responded. After a particularly
challenging first quarter due to COVID-19 and supply chain
interruptions, Karora has certainly resumed its operational
momentum over the course of 2022 and I am confident that we will
carry that momentum through to the completion of our growth plan in
2024.
Our third quarter gold production of 38,437 ounces is our second
straight quarterly production record, beating the prior record by
25% and, with a boost following the acquisition of the Lakewood
Mill at the end of July, we also set a new Karora processing record
of 547 kt milled, 18% higher than the second quarter. AISC costs
continued to trend down, achieving a 10% improvement in the third
quarter compared to the second quarter and a 23% improvement
compared to the first quarter.
Beta Hunt was once again the driving force behind our mined gold
production for the third quarter, achieving a second straight
record with output of 313,000 tonnes, beating the prior quarter by
8%. On an annualized basis, this equates to mined production of
~1.25 Mtpa, well above the targeted mining rate of 1.0 Mtpa in our
growth plan from a single decline. This is a significant
achievement by our operating team and provides further confidence
in our ability to ramp up production to 2.0 Mtpa once construction
of the second Beta Hunt decline is complete. Construction of that
second decline continues to advance well and we remain on track to
reach our accelerated completion date in the first quarter of
2023.
Beta Hunt is also progressing very well on the gold exploration
and drilling front with several strong results being turned out
over the last several months. Most recently, we announced the best
intercept to-date from the new Mason
Zone, parallel and west of the Larkin Zone, of 12.0 g/t over
17.0 metres, which provides additional confidence for a new mining
opportunity south of the Alpha Island Fault. At Western Flanks, we
reported the shear mineralization has now been extended 250 metres
below the existing Mineral Resource. These results, plus several
other potential new mining areas exemplify the growth potential of
Beta Hunt.
We have also been very active in advancing the nickel side of
the Beta Hunt story. Most recently, we reported high grade nickel
drill results from the 4C Offset discovery, including an intercept
of 6.5% Ni over 11.9 metres. The 4C Offset zone is only 25 metres
from existing development at Western Flanks, meaning it has very
real near-term mining potential. In August, we announced a nickel
PEA for Beta Hunt that outlines the low-cost nickel potential of
the mine for a modest capital investment of ~A$18 million, with just A$7 million expended in year one. This mine
within a mine is a tremendous advantage for Karora and reflects the
benefits of our dual-purpose infrastructure. Once fully ramped up,
the nickel production from this initial PEA has the potential to
reduce our AISC by A$80 to
A$100 per ounce. As we continue to
drill out the extents of our initial resource, there is potential
for even stronger by-product credits.
Overall, I am extremely pleased with the record third quarter
results across our critical operational metrics of mining,
production and costs. We are well positioned to deliver on our 2022
guidance and with our strong team and balance sheet, advance toward
our target of becoming a 200,000 ounce per year producer."
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this news release and Karora's
MD&A dated November 7, 2022.
|
|
|
COVID-19 Protocols
In response to the global COVID-19 pandemic, Karora's protocols
and contingency plans have helped mitigate impacts of the pandemic
but did not eliminate them. Karora's ongoing response to the
COVID-19 pandemic continues to prioritize the safety of its
workforce and host communities. The Australian government
officially brought Australia's
emergency response to COVID to an end on October 14, 2022 by removing the COVID-19
mandatory isolation requirements and the majority of rules for
wearing face masks.
Results of Operations
Table 1 – Highlights
of operational results for the periods ended September 30, 2022 and
2021
|
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
2022
|
2021
|
2022
|
2021
|
Gold Operations
(Consolidated)
|
|
|
|
|
Tonnes milled
(000s)
|
547
|
358
|
1,403
|
1,074
|
Recoveries
|
94 %
|
94 %
|
94 %
|
94 %
|
Gold milled, grade
(g/t Au)
|
2.33
|
2.81
|
2.28
|
2.63
|
Gold produced
(ounces)
|
38,437
|
30,365
|
96,578
|
84,889
|
Gold sold
(ounces)
|
35,513
|
28,935
|
92,198
|
84,894
|
Average exchange rate
(USD/CAD)
|
1.3056
|
1.2600
|
1.2829
|
1.2514
|
Average realized price
(US $/oz sold)
|
$1,717
|
$1,778
|
$1,818
|
$1,788
|
Cash operating costs
(US $/oz sold)1
|
$991
|
$887
|
$1,128
|
$902
|
All-in sustaining cost
(AISC) (US $/oz sold)1
|
$1,069
|
$967
|
$1,202
|
$1,002
|
Gold (Beta Hunt
Mine)1
|
|
|
|
|
Tonnes milled
(000s)
|
306
|
224
|
834
|
678
|
Gold milled, grade
(g/t Au)
|
2.36
|
3.22
|
2.30
|
3.06
|
Gold
produced(ounces)
|
21,977
|
21,742
|
62,059
|
62,356
|
Gold sold
(ounces)
|
20,767
|
20,692
|
56,035
|
62,438
|
Cash operating cost
(US $/oz sold)1
|
$953
|
$761
|
$1,067
|
$812
|
Gold (HGO
Mine)
|
|
|
|
|
Tonnes milled
(000s)
|
241
|
134
|
569
|
396
|
Gold milled grade (g/t
Au)
|
2.29
|
2.14
|
2.26
|
1.89
|
Gold produced
(ounces)
|
16,460
|
8,623
|
35,397
|
22,533
|
Gold sold
(ounces)
|
14,747
|
8,243
|
36,163
|
22,456
|
Cash operating cost
(US $/oz sold)1
|
$1,043
|
$1,202
|
$1,223
|
$1,151
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this news release and Karora's
MD&A dated November 7, 2022.
|
|
|
Consolidated Operations
For the third quarter of 2022, a record 547,000 tonnes of
material was milled at an average grade of 2.33 g/t to produce a
record 38,437 ounces of gold. Tonnes milled were 18% higher than
the second quarter of 2022. The feed blend through the Higginsville
mill during the third quarter of 2022 comprised 49% material from
the Beta Hunt underground mine with an average grade of 2.50 g/t,
with the remaining 51% feed coming from the HGO operations at an
average grade of 2.68 g/t, for a combined average grade of 2.59
g/t. The feed blend through the Lakewood mill during the third
quarter of 2022 comprised 73% material from the Beta Hunt
underground mine with an average grade of 2.27 g/t, with the
remaining 27% feed coming from the HGO operations at an average
grade of 0.70 g/t, for a combined average grade of 1.84 g/t. Lower
grade stockpile material from Beta Hunt and HGO operations was also
treated through the Lakewood mill prior to Karora's purchase during
the third quarter of 2022 with an average grade of 1.28 g/t. The
total average grade milled during the third quarter of 2022 was
2.33g/t.
Beta Hunt Mine
Operations
Mined production was a record 313,000 tonnes during the third
quarter of 2022 at an average grade of 2.40 g/t containing 24,188
ounces of gold, which was 40% greater than tonnes mined in the
third quarter of 2021. The majority of mined tonnes during the
third quarter came from Western Flanks and A Zone with production
from several large, lower grade stopes, in line with the mine plan
for 2022.
Production for the third quarter of 2022 was 306,000 tonnes
milled at a grade of 2.36 g/t, a 4% and 10% increase respectively
compared to the second quarter of 2022.
5,915 tonnes of nickel ore was mined at an estimated nickel
grade of 1.76% during the third quarter of 2022. Nickel production
was sourced from remnant nickel resources or extensions to
previously mined stopes.
The Beta Hunt expansion to double mined tonnes to 2 Mtpa by 2024
is a key part of the Company's plan to increase gold production to
a range of 185,000 – 205,000 ounces by 2024. Construction of a
second decline commenced in the first quarter of 2022 and remains
ahead of schedule with completion expected during the first quarter
of 2023 (original expected completion date was for the second
quarter of 2023) and on budget. Contract development on the second
decline advanced 1,205 metres during the quarter. Surface raise
bore civil works were completed during the quarter and raise bore
civil works commenced on the 801-vent raise.
Higginsville ("HGO") Mine
Operations
HGO mined production was 171,000 tonnes during the third quarter
of 2022, 28% higher than the third quarter of 2021, at an average
grade of 3.05 g/t containing 16,746 ounces of gold. The higher
tonnes were achieved during the quarter due to the treatment of
lower grade stockpile at Lakewood mill.
Planned production ramped up by 36% at the Spargos open pit mine
compared to the prior quarter. Planning and approvals are now
underway to extend the Spargos open pit to underground. Two Boys
and Aquarius underground operations also contributed to mined
tonnes and ounces.
HGO material milled for the third quarter of 2022 was 241,000
tonnes at a grade of 2.29 g/t, 44% higher and flat, respectively,
compared to the second quarter of 2022.
Processing Operations
Tonnes milled at the HGO mill during the third quarter of 2022
were 381,000 (49% from Beta Hunt and 51% from HGO) at an average
grade of 2.59 g/t. Recovered gold was 29,839 ounces.
Tonnes milled at the Lakewood mill and a third-party mill during
the third quarter of 2022 were 166,000 (71% from Beta Hunt and 29%
from HGO) at an average grade of 1.72 g/t. Recovered gold was 8,598
ounces.
Total gold ounces sold were 35,514 ounces during the third
quarter of 2022. The lag between produced and sold ounces was
due to timing of sales.
Cash Operating Costs and
AISC1
For the third quarter of 2022 consolidated cash operating
costs1 and AISC1 were US$991 and US$1,069
per ounce sold, decreases of 12% and 10%, respectively compared to
the prior quarter.
Financial Highlights
Table 4 – Highlights
of Third Quarter (in thousands of dollars except per share
amounts)
|
|
Three months
ended
|
Nine months
ended
|
For the periods ended
June 30,
|
2022
|
2021
|
2022
|
2021
|
Revenue
|
$81,326
|
$68,360
|
$220,207
|
$197,214
|
Production and
processing costs
|
42,430
|
30,508
|
124,959
|
89,379
|
Earnings (loss) before
income taxes1
|
7,946
|
16,005
|
6,846
|
36,541
|
Net earnings
(loss)
|
4,378
|
10,340
|
341
|
21,355
|
Net earnings (loss) per
share – basic
|
0.03
|
0.07
|
0.00
|
0.15
|
Net earnings (loss) per
share – diluted
|
0.03
|
0.07
|
0.00
|
0.14
|
Adjusted
EBITDA1,2
|
27,510
|
28,541
|
62,316
|
79,232
|
Adjusted EBITDA per
share – basic1,2
|
0.16
|
0.19
|
0.39
|
0.54
|
Adjusted
earnings1
|
6,640
|
14,240
|
12,422
|
36,597
|
Adjusted earnings per
share – basic1
|
0.04
|
0.10
|
0.08
|
0.25
|
Cash flow provided by
operating activities
|
28,294
|
27,916
|
51,686
|
72,945
|
Cash investment in
property, plant and
equipment and mineral property interests
|
(89,822)
|
(31,050)
|
(149,690)
|
(66,225)
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this news release and Karora's
MD&A dated August 12, 2022.
|
2.
|
Earnings before
interest, taxes, depreciation, and amortization
("EBITDA").
|
|
|
Revenue for the third quarter of 2022 was $81.3 million, a 19% increase over the comparable
period in 2021. The increase in revenue in 2022 was mainly the
result of higher gold ounces sold, reflecting higher
production.
Net earnings of $4.4 million for
the three months ended September 30,
2022 decreased by $5.9 million
from the same period in 2021 reflecting primarily higher
depreciation and amortization and general and administrative
expenses.
Adjusted net earnings1 for the third quarter of 2022
were $6.6 million, or $0.04 per share, a 53% decrease compared to the
same period in 2021, primarily due to the aforementioned
depreciation and amortization impact.
Adjusted EBITDA1 for the third quarter of 2022
was $27.5 million, or $0.16 per share, down $1.0
million, in the third quarter of 2021, with the reduction
mainly due to higher general and administrative expenses.
Table 5 – Highlights
of Karora's Financial Position (in thousands of
dollars):
|
For the period
ended
|
September 30,
2022
|
December 31,
2021
|
Cash and cash
equivalents
Working
capital*
PP&E &
MPI
Total assets
Total
liabilities
Shareholders'
equity
|
56,081
49,204
409,836
520,126
190,999
329,127
|
91,005
64,447
300,680
436,333
184,968
251,365
|
*
|
Working capital is a
measure of current assets (including cash and cash equivalents)
less current liabilities.
|
|
|
Karora's cash position decreased to $56.1
million as at September 30,
2022 compared to $91.0 million
as at December 31, 2021. During the
third quarter of 2022, the Company continued its planned deployment
of capital into its growth plan, including the acquisition of the
fully permitted 1.0 Mtpa Lakewood Mill (A$80
million made up of A$70
million cash and A$10 million
in Karora shares) and the advancement of the second decline at Beta
Hunt.
For a complete discussion of financial results, refer to
Karora's MD&A and unaudited condensed interim financial
statements for the three months ended June
30, 2022 and 2021.
Outlook
Karora's full year 2022 consolidated production guidance is
maintained at a range of between 120,000 – 135,000 ounces of gold.
Full year 2022 AISC1 guidance is maintained at a
range of US$1,100 – US$1,200 per ounce sold. Payable nickel
production guidance for 2022 remains at 450 to 550 tonnes, which is
treated as a by-product credit in AISC1.
On June 28, 2021 the Corporation
announced three-year production guidance as part of a multi-year
growth plan that is expected to see gold production increase from
99,249 ounces in 2020 to a range of 185,000 – 205,000 ounces in
2024 at an AISC1 of US$885
– US$985 per ounce sold.
Table 3 –
Consolidated Multi-Year Guidance to 2024
|
Production &
Costs
|
|
2022
|
2023
|
2024
|
Gold
Production
|
Koz
|
120 – 135
|
150 – 170
|
185 – 205
|
All-in sustaining
costs
|
US$/oz
|
1,100 –
1,200
|
890 – 990
|
885 – 985
|
Capital
Investments
|
|
Sustaining
Capital
|
A$ (M)
|
9 – 15
|
11 – 16
|
18 – 23
|
Growth
Capital
|
A$ (M)
|
57 – 70
|
47 – 57
|
30 – 40
|
Exploration &
Resource
Development
|
A$ (M)
|
21 – 24
|
22 – 25
|
20 – 23
|
|
|
|
|
|
|
(1)
|
The 2022 guidance was
updated August 12, 2022. 2023 and 2024 guidance was announced in
January 2021 (see Karora news release dated January 19, 2021), is
unchanged. This production guidance through 2024 is based on the
2020 year-end Mineral Reserves and Mineral Resources announced on
December 16, 2020.
|
(2)
|
The Corporation expects
to fund the capital Investment amounts listed above with cash on
hand and cashflow from operations, includes the capital required
during the applicable periods to expand the capacity of the
Higginsville mill to 2.5 Mtpa. See below for further detail
regarding this expansion.
|
(3)
|
The material
assumptions associated with the expansion of Beta Hunt mining
production rate to 2.0 Mtpa in 2024 include the addition of a
second ramp decline system driven parallel to the ore body,
ventilation and other infrastructure that is required to support
these areas, and an expanded trucking fleet.
|
(4)
|
The Corporation's
guidance assumes targeted mining rates and costs, availability of
personnel, contractors, equipment and supplies, the receipt on a
timely basis of required permits and licenses, cash availability
for capital investments from cash balances, cash flow from
operations, or from a third-party debt financing source on terms
acceptable to the Corporation, no significant events which impact
operations, such as COVID-19, nickel price of US$22,000 per tonne,
as well as an A$ to US$ exchange rate of 0.70 in the second half of
2022 and 0.78 in 2023 and 2024. And A$ to C$ exchange rate of 0.91.
Assumptions used for the purposes of guidance may prove to be
incorrect and actual results may differ from those anticipated. See
below "Cautionary Statement Concerning Forward-Looking
Statements".
|
(5)
|
Exploration
expenditures include capital expenditures related to infill
drilling for Mineral Resource conversion, capital expenditures for
extension drilling outside of existing Mineral Resources and
expensed exploration. Exploration expenditures also includes
capital expenditures for the development of exploration
drifts.
|
(6)
|
Capital expenditures
exclude capitalized depreciation.
|
(7)
|
AISC guidance includes
Australian general and administrative costs and excludes
share-based payment expense.
|
(8)
|
See "Non-IFRS Measures"
set out at the end of this news release and Karora's MD&A dated
for the period ended June 30, 2022.
|
|
|
The growth plan will be driven by an expansion of Beta Hunt
underground mine production to 2.0 Mtpa by 2024, from 0.8 Mtpa
recorded in 2020. Increased production from Beta Hunt will be
complemented by ore from HGO Central and Spargos. The increased
tonnage is expected to be processed by the Higginsville mill and
the Lakewood mill, which combine for approximately 2.6 Mtpa of
capacity.
Further details on the growth plan can be found in Karora's news
release dated June 28, 2021, and the
third quarter MD&A.
Exploration and Resource
Definition Drilling
At Beta Hunt, 15,426 metres of gold and nickel exploration and
resource definition drilling was completed during the third
quarter.
Gold drilling during the quarter focused on testing the down-dip
extensions of Western Flanks and A Zone, targeting Larkin parallel
shear zones known as Mason and Cowcill and infill drilling the
Larkin Zone. Nickel exploration and resource definition
activities targeted extensions to the 44C nickel trough and the 30C
Ni Mineral Resource. A new nickel discovery, the 4C Offset, was
intersected 25 metres west of active Western Flanks development and
was intersected as part of infill drilling at the top of the
Western Flanks gold mineral Resource.
A number of significant gold and nickel intersections and
discoveries were reported during and subsequent to the third
quarter at Beta Hunt including:
- High grade gold drill results from the Larkin Zone, including
29.8 g/t over 7.8 metres (Karora news release dated July 19, 2022)
- Western Flanks drill results confirming the main shear gold
mineralization extends up to 250 metres below the current gold
Mineral Resource
- Mason and Cowcill interpreted as new gold mineralized shear
zones parallel to the Larkin Mineral Resource. Previously
highlighted drill results include 12.0 g/t over 17.0 metres and 6.0
g/t over 13.0 metres at Mason (Karora news releases dated
August 23, 2022 and October 25, 2022)
- High grade nickel drill results from the 4C Offset discovery
located above the Western Flanks Gold Mineral Resource and only
approximately 25 metres from existing mining infrastructure.
Results from the 4C Offset included 6.5% Ni over 11.9 metres and
3.0% Ni over 4.6 metres (Karora news release dated September 14, 2022)
On August 12, 2022, Karora
reported the results of a Nickel Preliminary Economic Assessment
("PEA") for the Beta Hunt Mine. The PEA supports an initial 8-year
mine life producing 9,435 payable nickel tonnes. Highlights from
the PEA include:
- Strong Economics on Initial Resource: Base case results (nickel
price of US$19,500/t) yields a
pre-tax NPV5% of A$57 million and IRR
of 105%. Upside case results, closer to nickel consensus pricing of
US$25,000/t yields a pre-tax
A$111 million NPV5% and IRR of
232%.
- Leverage to Nickel Prices: A 20% increase in the nickel price
increases pre-tax NPV5% to A$95.2
million, or 66% compared to the Base Case.
- Low-Cost: Nickel net C1 cash costs are expected to be
A$14,542/t. Base Case net all-in
sustaining costs are expected to be A$16,946/t. On a per gold ounce produced basis,
this equates to an approximate annual average of $A80 to A$100 per
ounce.
- Upside Potential: The Beta Hunt Nickel Mineral Resource occurs
in two main blocks, the Beta Block and Gamma Block, both of which
have significant potential for Mineral Resource additions,
including the 50C nickel trend where continuous nickel
mineralization has been defined over 800 metres in strike length,
with the potential to extend up to 2.6 km in strike length. The
current PEA results are based on the current Beta Hunt Nickel
Mineral Resource, with significant expansion potential
remaining.
- Nickel drilling: Nickel-dedicated drilling for the remainder of
the year will comprise both resource definition to upgrade the 40C
and 50C Mineral Resource and exploration drilling targeting the 44C
and 90C nickel troughs. The 44C is the interpreted position of the
40C trough, offset and north of the Alpha Island Fault and west of
the Western Flanks gold deposit. The 90C represents the interpreted
offset extension of the Beta West mineralization previously mined
by Consolidated Minerals. Both the 44C and 90C are untested by
existing drilling.
Conference Call /
Webcast
Karora will be hosting a conference call and webcast today
beginning at 10:00 a.m. (Eastern
time). The accompanying presentation can be found on
Karora's website, www.karoraresources.com.
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-394-8218
Local and international callers please dial: 647-794-4605
A live webcast of the call will be available through Cision's
website at:
Webcast Link (https://app.webinar.net/E09BpJVpxXQ)
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 November 7, 2022,
through the following dial in numbers:
North American callers please dial: 1-888-390-0541; Pass Code:
591863 #
Local and international callers please dial: 416-764-8677; Pass
Code: 591863 #
Non-IFRS Measures
This news release refers to cash operating cost, cash operating
cost per ounce, all-in sustaining cost, EBITDA, adjusted EBITDA and
adjusted EBITDA per share, adjusted earnings, adjusted earnings per
share and working capital which are not recognized measures under
IFRS. Such non-IFRS financial measures do not have any standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other issuers.
Management uses these measures internally. The use of these
measures enables management to better assess performance trends.
Management understands that a number of investors and others who
follow the Corporation's performance assess performance in this
way. Management believes that these measures better reflect the
Corporation's performance and are better indications of its
expected performance in future periods. This data 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.
In November 2018, the World Gold
Council ("WGC") published its guidelines for reporting all-in
sustaining costs and all-in costs. The WGC is a market development
organization for the gold industry and is an association whose
membership comprises leading gold mining companies. Although the
WGC is not a mining industry regulatory organization, it worked
closely with its member companies to develop these non-IFRS
measures. Adoption of the all-in sustaining cost and all-in cost
metrics is voluntary and not necessarily standard, and therefore,
these measures presented by the Corporation may not be comparable
to similar measures presented by other issuers.
The following tables reconcile these non-IFRS measures to the
most directly comparable IFRS measures:
Mining Operations
Cash Operating and All-in
Sustaining Costs
The Corporation uses these measures internally to evaluate the
underlying operating performance of the Australian Operations.
Management believes that providing cash operating cost data allows
the reader the ability to better evaluate the results of the
underlying operations.
Consolidated Mining
Operations
|
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
20224
|
20214
|
20224
|
20214
|
Production and
processing costs
|
$47,991
|
$36,149
|
$143,293
|
$108,086
|
Royalty expense:
Government of Western Australia
|
2,313
|
1,679
|
5,763
|
4,767
|
Royalty expense:
Other
|
2,815
|
2,972
|
7,185
|
7,995
|
By-product
credits
|
(1,352)
|
(2,821)
|
(4,219)
|
(6,371)
|
Adjustment
1
|
(5,835)
|
(5,641)
|
(18,608)
|
(18,707)
|
Operating costs
(C$)
|
$45,932
|
$32,338
|
$133,414
|
$95,770
|
General and
administrative expense – Australia 2,3
|
2,465
|
1,916
|
6,605
|
5,799
|
Sustaining capital
expenditures
|
1,186
|
994
|
2,203
|
4,793
|
All-in sustaining costs
(C$)
|
$49,583
|
$35,248
|
$142,222
|
$106,362
|
Average exchange rate
(C$1 – US$1)
|
0.77
|
0.79
|
0.78
|
0.79
|
Operating costs
(US$)
|
$35,181
|
$25,665
|
$103,984
|
$76,563
|
All-in sustaining
costs (US$)
|
$37,978
|
$27,975
|
$110,838
|
$85,051
|
Operating costs
(A$)
|
$51,489
|
$34,941
|
$147,151
|
$100,930
|
All-in sustaining
costs (A$)
|
$55,581
|
$38,085
|
$156,881
|
$112,087
|
Ounces of gold
sold
|
35,513
|
28,935
|
92,198
|
84,894
|
Cash operating costs
per ounce sold (US$)
|
$991
|
$887
|
$1,128
|
$902
|
All-in sustaining
cost per ounce sold (US$)
|
$1,069
|
$967
|
$1,202
|
$1,002
|
Cash operating costs
per ounce sold (A$)
|
$1,450
|
$1,208
|
$1,596
|
$1,189
|
All-in sustaining
cost per ounce sold (A$)
|
$1,565
|
$1,316
|
$1,702
|
$1,320
|
1.
|
Negative adjustment for
intercompany tolling transactions
|
2.
|
G&A costs were
reduced with R&D and Due Diligence costs
|
3.
|
G&A: share-based
payments were excluded in calculating AISC
|
4.
|
Refer to note 18 of the
September 2022 unaudited condensed interim consolidated financial
statements
|
Beta Hunt
Mine
|
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
20221
|
20211
|
20221
|
20211
|
Production and
processing costs
|
$22,810
|
$18,486
|
$70,024
|
$58,633
|
Royalty expense:
Government of Western
Australia
|
1,551
|
1,382
|
3,777
|
3,691
|
Royalty expense:
Other
|
2,810
|
2,786
|
7,017
|
7,414
|
By-product
credits
|
(1,327)
|
(2,804)
|
(4,140)
|
(6,311)
|
Operating costs
($)
|
$25,844
|
$19,852
|
$76,678
|
$63,427
|
Average exchange rate
(C$1 – US$1)
|
0.77
|
0.79
|
0.78
|
0.79
|
Operating costs
(US$)
|
$19,795
|
$15,755
|
$59,761
|
$50,716
|
Operating costs
(A$)
|
$28,971
|
$21,450
|
$84,575
|
$66,775
|
Ounces of gold
sold
|
20,767
|
20,692
|
56,035
|
62,438
|
Cash operating costs
per ounce sold (US$)
|
$953
|
$761
|
$1,067
|
$812
|
Cash operating costs
per ounce sold (A$)
|
$1,395
|
$1,037
|
$1,509
|
$1,069
|
1.
|
Refer to note 18 of the
September 2022 unaudited condensed interim consolidated financial
statements
|
Higginsville
Mine
|
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
20222
|
20212
|
20222
|
20212
|
Production and
processing costs
|
$25,181
|
$17,663
|
$73,269
|
$49,453
|
Royalty expense:
Government of Western Australia
|
762
|
297
|
1,986
|
1,076
|
Royalty expense:
Other
|
5
|
186
|
168
|
581
|
By-product
credits
|
(25)
|
(19)
|
(79)
|
(60)
|
Adjustment1
|
(5,835)
|
(5,641)
|
(18,608)
|
(18,707)
|
Operating costs
($)
|
$20,088
|
$12,486
|
$56,736
|
$32,343
|
Average exchange rate
(C$1 – US$1)
|
0.77
|
0.79
|
0.78
|
0.79
|
Operating cost
(US$)
|
$15,386
|
$9,910
|
$44,222
|
$25,847
|
Operating cost
(A$)
|
$22,518
|
$13,492
|
$62,576
|
$34,155
|
Ounces of gold
sold
|
14,746
|
8,243
|
36,163
|
22,456
|
Cash operating costs
per ounce sold (US$)
|
$1,043
|
$1,202
|
$1,223
|
$1,151
|
Cash operating costs
per ounce sold (A$)
|
$1,527
|
$1,637
|
$1,730
|
$1,521
|
1.
|
Negative adjustment for
intercompany tolling transactions
|
2.
|
Refer to note 18 of the
September 2022 unaudited condensed interim consolidated financial
statements
|
Quarterly
Consolidated Mining Operations
|
For the three months
ended,
|
Sep 30,
2022
|
Jun 30,
2022
|
Mar 31,
2022
|
Dec 31,
2021
|
Sep 30,
20214
|
|
Production and
processing costs
|
$47,991
|
$47,193
|
$48,109
|
$38,855
|
$36,149
|
Royalty expense:
Government of Western Australia
|
2,313
|
1,853
|
1,597
|
1,780
|
1,679
|
Royalty expense:
Other
|
2,815
|
2,333
|
2,036
|
1,876
|
2,972
|
By-product
credits
|
(1,352)
|
(415)
|
(2,453)
|
(1,357)
|
(2,821)
|
Adjustment1
|
(5,835)
|
(7,100)
|
(5,673)
|
(6,341)
|
(5,641)
|
Operating costs
($)
|
$45,932
|
$43,864
|
$43,616
|
$34,813
|
$32,338
|
General and
administration expense – Australia3
|
2,465
|
1,908
|
2,232
|
2,503
|
1,916
|
Sustaining capital
expenditures
|
1,186
|
406
|
611
|
422
|
994
|
All-in sustaining
costs ($)
|
$49,583
|
$46,178
|
$46,459
|
$37,738
|
$35,248
|
Average exchange rate
(C$1 – US$1)
|
0.77
|
0.78
|
0.79
|
0.79
|
0.79
|
Operating costs
(US$)
|
$35,181
|
$34,355
|
$34,447
|
$27,623
|
$25,665
|
All-in sustaining
costs (US$)
|
$37,978
|
$36,168
|
$36,693
|
$29,944
|
$27,975
|
Operating costs
(A$)
|
$51,489
|
$48,128
|
$47,534
|
$37,910
|
$34,941
|
All-in sustaining
costs (A$)
|
$55,581
|
$50,668
|
$50,632
|
$41,096
|
$38,085
|
Ounces of gold
sold
|
35,513
|
30,398
|
26,286
|
28,734
|
28,935
|
Cash operating
costs per ounce sold (US$)
|
$991
|
$1,130
|
$1,310
|
$961
|
$887
|
All-in sustaining
cost per ounce sold (US$)
|
$1,069
|
$1,190
|
$1,396
|
$1,042
|
$967
|
Cash operating
costs per ounce sold (A$)2
|
$1,450
|
$1,583
|
$1,808
|
$1,319
|
$1,208
|
All-in sustaining
cost per ounce sold (A$)2
|
$1,565
|
$1,667
|
$1,926
|
$1,430
|
$1,316
|
1.
|
Negative adjustment for
intercompany tolling transactions.
|
2.
|
Quarterly costs in
functional currency.
|
3.
|
G&A: share-based
payments were excluded in calculating AISC
|
4.
|
Refer to note 18 of the
September 2022 unaudited condensed interim consolidated financial
statements
|
Adjusted EBITDA and Adjusted
Earnings
Management believes that adjusted EBITDA and adjusted earnings
are valuable indicators of the Corporation's ability to generate
operating cash flows to fund working capital needs, service debt
obligations, and fund exploration and evaluation, and capital
expenditures. Adjusted EBITDA and adjusted earnings exclude the
impact of certain items and therefore is not necessarily indicative
of operating profit or cash flows from operating activities as
determined under IFRS. Other companies may calculate adjusted
EBITDA and adjusted earnings differently.
Adjusted EBITDA is a non-IFRS measure, which excludes the
following from comprehensive earnings (loss); income tax expense
(recovery); interest expense and other finance-related costs;
depreciation and amortization; non-cash other expenses, net;
non-cash impairment charges and reversals; non-cash portion of
share-based payments; acquisition costs; derivatives and foreign
exchange loss; sustainability initiatives.
(in thousands of
dollars except per share amounts)
|
Three Months
Ended
|
Nine Months
Ended
|
For the periods ended
September 30,
|
2022
|
2021
|
2022
|
2021
|
Net earnings for the
period - as reported
|
$4,378
|
$10,340
|
$341
|
$21,355
|
Finance expense,
net
|
1,657
|
1,104
|
3,772
|
3,150
|
Income tax
expense
|
3,568
|
5,665
|
6,505
|
15,186
|
Depreciation and
amortization
|
14,973
|
6,389
|
37,416
|
21,390
|
EBITDA
|
24,576
|
28,498
|
48,034
|
61,081
|
Adjustments:
|
|
|
|
|
Non-cash share-based
payments1
|
1,218
|
856
|
3,150
|
4,306
|
Unrealized loss on
revaluation of marketable securities2
|
511
|
(140)
|
2,038
|
357
|
Other expense (income),
net2
|
(29)
|
108
|
199
|
123
|
Loss on
derivatives2
|
1,044
|
1,223
|
1,332
|
1,277
|
Foreign exchange
loss3
|
190
|
2,383
|
6,381
|
11,475
|
Sustainability
initiatives4
|
-
|
613
|
1,181
|
613
|
Adjusted
EBITDA
|
$27,510
|
$28,541
|
$63,315
|
$79,232
|
Weighted average number
of common shares - basic
|
171,809,550
|
148,593,430
|
161,426,709
|
147,194,673
|
Adjusted EBITDA per
share - basic
|
$0.16
|
$0.19
|
$0.39
|
$0.54
|
1.
|
Primarily
non-recurring items which do not impact cash flow.
|
2.
|
Non-operating in
nature which does not impact cash flows.
|
3.
|
Primarily related to
intercompany loans for which the loss is unrealized.
|
4.
|
Primarily related to
non-recurring environmental initiatives.
|
Adjusted earnings is a non-IFRS measure, which excludes the
following from comprehensive earnings (loss): non-cash portion of
share-based payments; revaluation of marketable securities;
derivatives and foreign exchange loss; tax effects of adjustments;
sustainability initiatives.
(in thousands of
dollars except per share amounts)
|
Three Months
Ended
|
Nine Months
Ended
|
For the periods ended
September 30,
|
2022
|
2021
|
2022
|
2021
|
Net earnings for the
period - as reported
|
$4,378
|
$10,340
|
$341
|
$21,355
|
Non-cash share-based
payments1
|
1,218
|
856
|
3,150
|
4,306
|
Unrealized loss on
revaluation of marketable securities2
|
511
|
(140)
|
2,038
|
357
|
Loss on
derivatives 2
|
1,044
|
1,223
|
1,332
|
1,277
|
Foreign exchange
loss 3
|
190
|
2,383
|
6,381
|
11,475
|
Sustainability
initiatives 4
|
-
|
613
|
1,181
|
613
|
Tax impact of the above
adjusting items
|
(701)
|
(1,035)
|
(2,001)
|
(2,786)
|
Adjusted earnings
(loss)
|
$6,640
|
$14,270
|
$12,422
|
$36,597
|
Weighted average number
of common shares - basic
|
171,809,550
|
148,593,430
|
156,149,243
|
147,194,673
|
Adjusted earnings
(loss) per share - basic
|
$0.04
|
$0.10
|
$0.08
|
$0.25
|
1.
|
Primarily
non-recurring items which do not impact cash flow.
|
2.
|
Non-operating in
nature which does not impact cash flows.
|
3.
|
Primarily related to
intercompany loans for which the loss is unrealized.
|
4.
|
Primarily related to
non-recurring environmental initiatives.
|
Working Capital
Working capital is calculated as current assets (including cash
and cash equivalents) less current liabilities.
(in thousands of
dollars)
|
Sep 30,
2022
|
Dec 31, 2021
|
Dec 31, 2020
|
Current
assets
|
$109,417
|
$135,426
|
$109,857
|
less: Current
liabilities
|
60,213
|
70,979
|
53,022
|
Working
Capital
|
$49,204
|
$64,447
|
$56,835
|
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 increasing gold production to a targeted
range of 185,000-205,000 ounces by 2024 at its integrated Beta Hunt
Gold Mine and Higginsville Gold Operations ("HGO") in Western Australia. The Higginsville treatment
facility is a low-cost 1.6 Mtpa processing plant, which is fed at
capacity from Karora's underground Beta Hunt mine and Higginsville
mines. Karora recently acquired the 1.0 Mtpa Lakewood Mill in
Western Australia. At Beta Hunt, a
robust gold Mineral Resource and Reserve are hosted in multiple
gold shears, with gold intersections along a 4 km strike length
remaining open in multiple directions. HGO has a substantial
Mineral gold Resource and Reserve and prospective land package
totaling approximately 1,900 square kilometers. The Corporation
also owns the high grade Spargos Reward project, which came into
production in 2021. Karora has a strong Board and management team
focused on delivering shareholder value and responsible mining, as
demonstrated by Karora's commitment to reducing emissions across
its operations. Karora's common shares trade on the TSX under the
symbol KRR and 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, full year
consolidated 2022 production guidance and the potential of the Beta
Hunt Mine, Higginsville Gold Operation, the Aquarius Project, the
Spargos Gold Project, the Lakewood Mill, and the completion of the
second Beta Hunt decline system.
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.
www.karoraresources.com
SOURCE Karora Resources Inc.