TORONTO, Nov. 10,
2023 /CNW/ - Karora Resources Inc. (TSX: KRR)
("Karora" or the "Company") today announced
financial and operating results for the third quarter ("Q3 2023")
and first nine months ("YTD 2023") of 2023. The Company's full
unaudited condensed interim financial statements and management
discussion & analysis ("MD&A) are available on SEDAR at
www.sedarplus.ca and on the Company's website at
www.karoraresources.com. All dollar amounts are in Canadian
dollars, unless otherwise noted.
STRONG QUARTERLY AND YTD GOLD PRODUCTION
- Production of 39,547 gold ounces increased 3% from 38,437
ounces in the third quarter of 2022, down slightly compared to
record production of 40,823 ounces in the second quarter of 2023
("the previous quarter").
- YTD 2023 production of 120,197 ounces increased 24% from 96,578
ounces for the same period in 2022, with the Company ending the
third quarter well positioned to achieve full-year 2023 production
guidance of 145,000 – 160,000 ounces.
AISC ON TRACK TO ACHIEVE 2023 GUIDANCE
- Cash operating costs1 and all-in sustaining costs
("AISC")1 per ounce sold averaged US$1,062 and US$1,196, respectively, in Q3 2023 compared to
US$991 and US$1,069, respectively, in Q3 2022 and
US$1,068 and US$1,160 the previous quarter. Previous quarter
2023 cash operating cost per ounce included by-product credits of
US$38 per ounce. No nickel by-product
credits were recorded in the third quarter of 2023 due to timing of
sales, however 5,193T at 1.6% of nickel was mined during the
quarter (approximately US$22 per
ounce).
- Cash operating costs1 and AISC1 per ounce
sold for YTD 2023 averaged US$1,083
and US$1,188, respectively, versus
US$1,128 and US$1,202, respectively, for YTD 2022; YTD 2023
AISC1 per ounce sold in line with full-year 2023
guidance of US$1,100 – US$1,250.
ROBUST QUARTERLY AND YTD REVENUE
- Revenue in Q3 2023 of $107.1
million increased 32% from Q3 2022 and was slightly lower
than Q2 2023 which was driven by record quarterly gold ounces sold
of 42,172 ounces. For Q3 2023 41,278 gold ounces were sold at an
average realized gold price of US$1,931 per ounce.
- YTD 2023 revenue totalled $314.5
million, 42% higher than $220.2
million in YTD 2022 mainly reflecting a 30% increase in gold
sales and a realized gold price that was US$89 per ounce higher than comparable period in
2022.
SOLID OPERATING CASH FLOW GENERATION
- Cash flow provided by operating activities in Q3 2023 of
$45.3 million, up 60% from
$28.3 million in Q2 2022 and 32% from
$34.4 million in Q2 2023.
- YTD 2023 cash flow provided by operating activities of
$100.6 million was almost double from
$51.7 million in YTD 2022.
STRONG EARNINGS PERFORMANCE
- Net earnings of $6.9
million ($0.04 per share)
compared to net earnings of $4.4
million ($0.03 per share) in
Q3 2022 and net earnings of $6.6
million (0.04 per share) in Q2 2023. Adjusted
earnings of $14.0 million
($0.08 per share) compared to
$6.6 million ($0.04 per share) in Q3 2022 and $13.9 million ($0.08 per share) the previous quarter.
- Net earnings for YTD 2023 of $10.6 million ($0.06 per share) compared to net earnings of
$0.3 million ($0.00 per share) for the same period in 2022;
Adjusted earnings totalled $32.8
million ($0.19 per share), a
164% increase from $12.4 million
($0.08 per share) reported for YTD
2022.
CONTINUED PROGRESS ON GROWTH PLAN
- Following completion of a second (west) decline the final
ventilation raise (number three of three planned) has been
completed. Primary ventilation fans have been procured and are
expected to be installed and commissioned towards the end of 1H24.
In the interim, temporary ventilation vans are operational. During
the quarter, Karora continued expansion of the mining fleet
with delivery of two new underground trucks and one underground
loader. Further expansion of the fleet is planned in 2024. With the
expected significant improvements to the mine's primary ventilation
circuit to accommodate the increase in mining fleet, the expansion
project remains on track to support growth to an annualized
production rate of 2.0 Mtpa by the end of 2024.
FLETCHER ZONE EXPLORATION SUCCESS AT BETA HUNT
- Fletcher Shear Zone ("FSZ")
drilling results reported during Q3 from Beta Hunt (KRR news
releases of August 7 and September 12) continued to extend mineralization
with new high-grade gold intersections. Results from a nine-hole
FSZ drill program designed to test over 500 metres of strike north
of the Alpha Island Fault were highlighted by broad, high-grade
intersections from the most northern infill line which indicate the
strike of the FSZ within 250 metres of the Western Flanks Mineral
Resource.
KALI METALS LITHIUM SPIN-OFF AND MANAGEMENT CHANGES
- The Kali Metals lithium spin-off transaction, originally
announced during the second quarter, remains on track for
completion by year end. On November 3,
2023, Kali announced that it had lodged a prospectus for its
initial public offering on the ASX (see www.kalimetals.com.au for
more information). The new lithium vehicle involves Karora and a
third party vending their lithium exploration projects into a new
entity, Kali Metals Limited, with a goal of creating a new,
separately run lithium-focused, ASX-listed exploration company to
be led by an experienced board and management team.
- During the quarter Mr. Tony
Makuch joined the Company as a Director, Mr. Barry Dahl retired as the Company's Chief
Financial Officer, replaced by Mr. Derek
Humphry, and Mr. Peter Ganza joined Karora's Australian
operations as Chief Operating Officer, Australia.
1. Non-IFRS: the definition
and reconciliation of these measures are included in the "Non-IFRS
Measures" section of this news release and in the MD&A for the
three and nine months ended September 30, 2023.
|
Karora will host a call/webcast on
November 10, 2023 at
10:00 am (Eastern
Time) to discuss the third quarter 2023 results. North
American callers please dial:
1-888-664-6383; Local and international callers
please dial: 416-764-8650. To join the conference call without
operator assistance, you may register and enter your phone number
at the Callback Link to receive an instant automated call back
and be placed into the call. For the webcast of this event click
the Webcast Link
https://app.webinar.net/qxL4W2Gb1mY
(replay access information is
provided below).
Paul Andre Huet, Chairman and
CEO, commented: "I am very pleased with our team's performance
during the third quarter, which included another strong performance
by our Beta Hunt and Higginsville operations which have now
delivered a total of 120,198 ounces through the first three
quarters of 2023. Our gold processing operations have also
performed very well, with average recoveries of 95% through Q3. The
robust operating performance year to date puts us in a great
position to achieve our full-year guidance ranges of between
145,000 to 160,000 ounces for gold production and AISC costs of
between US$1,100 to US$1,250 for 2023.
"Comparing our performance year to date with last year, we've
delivered strong improvements year-over-year with production
growing 24%, average milled grade up 11% and cash operating costs
improving by 4%. At the Beta Hunt Mine, we continued to advance our
expansion on schedule and on budget. The third and final
ventilation raise installation is now complete, which will
facilitate the ongoing expansion of our mining equipment fleet,
putting us on track to grow Beta Hunt's annualized production rate
to 2.0 Mtpa by the end of 2024. At HGO, performance was strong in
the third quarter as higher grades associated with the final stopes
at the Aquarius Mine were processed. HGO production was up 17% and
cash operating costs1 per ounce sold improved by 28%
compared to the previous quarter.
"We ended the third quarter in a very strong financial position
with a cash position of $84 million,
up $13 million from the prior
quarter, placing us in an excellent position to deliver on our
growth objectives. We've also reported some very exciting
exploration results from Beta Hunt, most recently in the Fletcher
and Mason zones that point toward the potential for years of
ongoing Mineral Resource additions outside the main zone of Western
Flanks and A Zone. On this front, I am looking forward to reporting
our next Mineral Resource update, which we expect to issue before
year end."
RESULTS OF OPERATIONS
Table 1. Results of Operations
|
|
Three Months
Ended,
|
Nine Months
Ended,
|
|
Sep 30,
2023
|
Sep 30,
2022
|
June 30,
2023
|
Sep 30,
2023
|
Sep 30,
2022
|
Gold Operations
(Consolidated)
|
|
|
|
|
|
|
Tonnes milled
(000s)
|
516
|
547
|
536
|
1,554
|
1,403
|
|
Recoveries
|
95 %
|
94 %
|
95 %
|
95 %
|
94 %
|
|
Gold milled, grade (g/t
Au)
|
2.51
|
2.33
|
2.50
|
2.54
|
2.28
|
|
Gold produced
(ounces)
|
39,547
|
38,437
|
40,823
|
120,197
|
96,578
|
|
Gold sold
(ounces)
|
41,278
|
35,513
|
42,172
|
119,595
|
92,198
|
|
Average exchange rate
(C$/US$) 1
|
0.75
|
0.77
|
0.74
|
0.74
|
0.78
|
|
Average realized price
(US $/oz sold)
|
$1,931
|
$1,717
|
$1,909
|
$1,907
|
$1,818
|
|
Cash operating costs
(US $/oz sold)2
|
$1,062
|
$991
|
$1,068
|
$1,083
|
$1,128
|
|
All-in sustaining cost
(AISC) (US $/oz sold)2
|
$1,196
|
$1,069
|
$1,160
|
$1,188
|
$1,202
|
Gold (Beta
Hunt)
|
|
|
|
|
|
|
Tonnes milled
(000s)
|
333
|
306
|
319
|
951
|
834
|
|
Gold milled, grade (g/t
Au)
|
2.17
|
2.36
|
2.62
|
2.55
|
2.30
|
|
Gold produced
(ounces)
|
21,926
|
21,977
|
25,709
|
74,212
|
58,254
|
|
Gold sold
(ounces)
|
23,595
|
20,767
|
26,330
|
73,002
|
56,035
|
|
Cash operating cost (US
$/oz sold)2
|
$1,233
|
$953
|
$1,017
|
$1,071
|
$1,067
|
Gold (HGO
Mine)
|
|
|
|
|
|
|
Tonnes milled
(000s)
|
183
|
241
|
217
|
603
|
569
|
|
Gold milled, grade (g/t
Au)
|
3.13
|
2.29
|
2.31
|
2.52
|
2.26
|
|
Gold produced
(ounces)
|
17,621
|
16,460
|
15,114
|
45,985
|
38,324
|
|
Gold sold
(ounces)
|
17,683
|
14,746
|
15,842
|
46,593
|
36,163
|
|
Cash operating cost (US
$/oz sold)2
|
$832
|
$1,043
|
$1,151
|
$1,101
|
$1,223
|
1.
|
Average exchange rate
refers to the average market exchange rate for the
period.
|
2.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
"Non-IFRS Measures" section of this news release and in the
MD&A for the three and six months ended September 30,
2023.
|
3.
|
Numbers may not add due
to rounding.
|
Consolidated Operations
Consolidated gold production in the third quarter of 2023 was
39,547 ounces, a 3% increase from the third quarter of 2022 and 3%
lower than the record 40,823 ounces in the previous quarter. The
increase from the third quarter of 2022 resulted primarily from an
8% improvement in the average grade reflecting final stoping at the
Aquarius underground gold mine at the Higginsville gold operation.
Tonnage was 6% down on the comparative period in 2022 due to
crushing interruptions at the Higginsville gold operation. Contract
crushers were utilized while crusher bridge repairs continue and
expected to be concluded during the final quarter of the year.
Cash operating costs1 per ounce sold for the third
quarter of 2023 averaged US$1,062
compared to US$991 for the same
period in 2022 and $1,068 the
previous quarter. The increase from the third quarter of 2022
largely reflected the impact of higher processing costs during the
quarter due to two months contract crushing following the crusher
bridge failure at HGO, and continued cost pressures in areas such
as labour, contractors, power and fuel. In addition, nickel
produced in the third quarter 2023 was not sold during the quarter.
During the previous quarter, the cash operating cost1
per ounce included nickel by-product credits of US$38 per ounce. AISC1 per ounce
sold in the third quarter of 2023 averaged US$1,196 compared to US$1,069 in the third quarter of 2022 and
$1,160 the previous quarter due to
the impact of the higher cash operating costs per ounce sold and
higher sustaining capital for the quarter.
For the first nine months of 2023, gold production totalled
120,197 ounces, 24% higher than 96,578 ounces in the first nine
months of 2022 reflecting a 11% increase in tonnes milled and a 11%
improvement in the average grade. Higher tonnes milled reflected an
increase in milling capacity following the acquisition of Lakewood
Mill in August 2022. The Company
ended the first nine months of 2023 well positioned to record
achieve an annual production record and target annual production
above the midpoint of the 145,000 – 160,000 ounces gold production
guidance range for 2023.
Cash operating costs1 per ounce sold for the first
nine months of 2023 averaged $1,083
compared to $1,128 for the same
period in 2022 with volume and grade improvements largely
accounting for the year-over-year improvement. AISC1 per ounce sold
averaged US$1,188 in the first nine
months of 2023 versus $1,202 a year
earlier.
Beta Hunt
During the third quarter of 2023, Beta Hunt mined 357,204 tonnes
at an average grade of 2.00 g/t containing 22,912 ounces of gold.
This represented a 14% improvement on the third quarter of 2022,
and a 20% improvement on the prior quarter ore tonnes reflecting
progress in the ongoing production ramp up at the Beta Hunt
mine. Contained gold was 5% lower than the third quarter of
2022 (313,000 tonnes at 2.40 g/t for 24,188 contained ounces) and
19% lower than the prior quarter (297,100 tonnes at 2.97 g/t for
28,416 contained ounces) reflecting the mining of a planned lower
grade section of Beta Hunt during the current quarter with
improved grade planned in the final quarter. The majority of the
scheduled mined tonnes during the third quarter came from the
central section of Western Flanks with fewer scheduled higher grade
ore zones.
Gold production from Beta Hunt in the third quarter of 2023
totalled 21,926 recovered ounces based on milling 333,311 tonnes at
an average grade of 2.17 g/t and 94% plant recovery. The lower
mined grade contributed to 0.2% lower gold production for the
quarter (21,977 ounces) compared to the third quarter of 2022 and
15% lower than the prior quarter (25,709 ounces).
Cash operating costs1 per ounce sold at Beta Hunt
averaged US$1,233 in the third
quarter of 2023, which compared to US$953 in the third quarter of 2022, and
US$1,017 the previous quarter with
the increase from the previous quarter of 2023 reflecting the
impact of lower grade and no by-product credits, as the nickel
produced in the quarter was not sold in the period (US$61/oz reduction of cash cost per ounce for the
previous quarter).
For the first nine months of 2023, Beta Hunt mined 954,304
tonnes at an average grade of 2.56 g/t containing 78,439 ounces of
gold, which compared to 828,984 tonnes mined at an average grade of
2.33 g/t containing 62,152 ounces of gold in the first nine months
of 2022. Year-to-date gold production in 2023 totalled 74,212
ounces, a 27% increase from production of 58,254 ounces in the
first nine months of 2022, which resulted from 14% higher mill
throughput and 12% higher grade. Cash operating costs1
per ounce sold averaged US$1,071
broadly in line with the US$1,067 in
the first nine months of 2022.
In addition to gold production, Beta Hunt mined 5,193 tonnes of
nickel ore at an estimated grade of 1.66% nickel during the third
quarter of 2023 compared to 5,915 tonnes of nickel ore mined at an
estimated grade of 1.76% nickel for the same period in 2022 and
6,071 tonnes of nickel ore at an estimated grade of 2.47% nickel
the previous quarter. For the first nine months of 2023, 18,035
tonnes of nickel ore were mined at an estimated grade of 2.14%
nickel, which compared to 18,851 tonnes mined at an estimated
average grade of 1.66% nickel a year earlier.
Higginsville Mining Operations ("HGO")
During the third quarter of 2023, HGO mined 96,367 tonnes at an
average grade of 5.16 g/t containing 15,994 ounces, which compared
to 171,000 tonnes mined at an average grade of 3.05 g/t containing
16,742 ounces in the third quarter of 2022 and 178,100 tonnes at an
average grade of 2.76 g/t containing 15,806 ounces the previous
quarter. The quantity of tonnes mined during the third quarter of
2023 largely reflected the completion of stoping activities at the
Aquarius underground mine in the quarter as the Pioneer open pit
mine was brought into production.
Production at HGO in the third quarter of 2023 totalled 17,621
recovered ounces based on milling 182,489 tonnes at an average
grade of 3.13 g/t. Production in the third quarter of 2023
increased 7% from 16,460 ounces in the third quarter of 2022
(241,000 tonnes at 2.29 g/t for 16,460 ounces), reflecting the 37%
higher grade processed, and was 17% higher than the previous
quarter (216,894 tonnes at 2.31 g/t for 15,114 ounces), again
reflecting the 36% higher grade in the current quarter driven by
final stoping from the Aquarius underground mine.
Cash operating costs1 per ounce sold at HGO averaged
US$832 in the third quarter of 2023
versus US$1,043 for the same period
in 2022, with the 20% improvement reflecting the higher processing
grade and resultant 20% higher ounces sold for the period. Cash
operating costs1 per ounce sold in the third quarter of
2023 improved 28% from US$1,151 the
previous quarter with the improvement again reflecting the higher
processed grade from the Aquarius stoping ore and associated higher
produced ounces.
For the first nine months of 2023, HGO mined 346,667 tonnes at
an average grade of 3.65 g/t containing 40,727 contained ounces of
gold, which compared favourably to the 363,853 tonnes mined at an
average grade of 3.03 g/t containing 35,397 ounces of gold in the
first nine months of 2022 reflecting ore source timing in
accordance with the mine plan. Year-to-date gold production in 2023
totalled 45,985 ounces resulting from processing 602,932 tonnes at
an average grade of 2.52 g/t versus gold production of 38,324
ounces based on processing 568,581 tonnes at an average grade of
2.26 g/t for the same period a year earlier. Cash operating
costs1 per ounce sold averaged US$1,101 compared to $1,223 in the first nine months of 2022 with the
lower cash costs largely due to a higher grade.
Processing Operations
A total of 515,800 tonnes were milled at an average grade of
2.51 g/t with average recoveries of 95% for production of 39,547
ounces during the third quarter.
Beta Hunt contributed 100% of the throughput at the Lakewood
Mill during the third quarter of 2023, totalling 217,347
tonnes at an average grade of 1.92 g/t. Recovered gold during the
quarter totalled 12,297 ounces. The balance of Beta Hunt was
dedicated to the Higginsville mill with Beta Hunt contributing 39%
of the mill throughput and HGO providing the remaining 61% with the
higher-grade Aquarius ore prioritized. At Higginsville mill,
298,453 tonnes of material were processed at an average grade of
2.95 g/t for a recovered gold of 27,250 ounces.
For the first nine months of 2023, throughput at the Lakewood
Mill totalled 548,590 tonnes (97% from Beta Hunt and 3% from
HGO) at an average grade of 1.98 g/t. Recovered gold during the
nine-month period totalled 32,712 ounces. 1,005,466 tonnes were
milled at the Higginsville Mill (with 42% of mill feed coming from
Beta Hunt and 58% from HGO) at an average grade of 2.84 g/t.
Recovered gold totalled 87,485 ounces.
1. Non-IFRS: the
definition and reconciliation of these measures are included in the
"Non-IFRS Measures" section of this news release and in the
MD&A for the three and six months ended September 30,
2023.
|
FINANCIAL REVIEW
Table 2. Financial Overview
(in thousands of
dollars except per share amounts)
|
Three Months
Ended,
|
Nine Months
Ended,
|
For the periods ended
September 30,
|
2023
|
2022
|
2023
|
2022
|
Revenue
|
$107,136
|
$81,326
|
$314,537
|
$220,207
|
Production and
processing costs
|
55,525
|
42,430
|
166,485
|
124,959
|
Earnings before income
taxes
|
13,536
|
7,946
|
24,642
|
6,846
|
Net earnings
|
6,923
|
4,378
|
10,625
|
341
|
Net earnings per share
- basic
|
0.04
|
0.03
|
0.06
|
0.00
|
Net earnings per share
- diluted
|
0.04
|
0.03
|
0.06
|
0.00
|
Adjusted EBITDA
1
|
37,012
|
27,510
|
104,460
|
62,315
|
Adjusted EBITDA per
share - basic 1
|
0.21
|
0.16
|
0.60
|
0.39
|
Adjusted earnings
1
|
14,049
|
6,640
|
32,754
|
12,422
|
Adjusted earnings per
share - basic 1
|
0.08
|
0.04
|
0.19
|
0.08
|
Cash flow provided by
operating activities
|
45,345
|
28,294
|
100,611
|
51,686
|
Cash investment in
property, plant and equipment and mineral property
interests
|
(26,950)
|
(89,822)
|
(70,715)
|
(149,690)
|
1. Non-IFRS: the definition
and reconciliation of these measures are included in the" Non-IFRS
Measures" section of this news release and the MD&A for the
three and nine months ended September 30, 2023.
|
For the three months ended September 30,
2023, the Company generated revenue of $107.1 million, a $25.8
million or 32% increase from the third quarter of 2022. Gold
revenue totalled $106.9 million,
$27.3 million or 34% higher than the
third quarter a year earlier, with $12.9
million of the increase resulting from higher gold ounces
sold and $14.4 million relating to
rate factors, including the impact of a stronger US dollar as well
as a 12% increase in the average US$ realized gold price.
Beta Hunt contributed $60.8 million
of total
gold revenue in the third quarter of 2023, with HGO contributing
$46.1 million. During the comparable
period in 2022, Beta Hunt contributed $46.6
million of gold revenue, with the remaining $33.1 million coming from HGO.
For the nine months ended September 30,
2023, revenue totalled $314.5
million, $94.3 million or 43%
higher than $220.2 million for the
same period in 2022. Gold revenue for the nine months of 2023
totalled $306.9 million, a
$91.2 million or 42% increase from a
year earlier. Of the increase, $64.1
million related to a 30% increase in gold ounces sold, with
rate factors contributing the remaining $27.1 million of revenue growth reflecting the 5%
improvement in the average realized US$ gold price and the impact
of a significantly stronger US dollar. Beta Hunt contributed
$186.9 million of year-to-date gold
revenue, with HGO contributing $120.0
million. During the first nine months of 2022, Beta Hunt
contributed $131.2 million of gold
revenue, with $84.4 million coming
from HGO.
Net earnings for the three months ended September 30, 2023 totalled $6.9 million ($0.04
per basic share) compared to $4.4
million ($0.03 per basic
share) for the three months ended September
30, 2022. The improvement in net earnings performance
compared to the third quarter of 2022 mainly reflected a 33%
increase in operating margin (revenue less production and
processing costs), to $51.6 million,
offsetting the impact of higher general and administrative,
depreciation and amortisation, royalty, other and income tax
expenses.
Net earnings for the nine months ended September 30, 2023, was $10.6 million ($0.06 per basic share) compared to net earnings
of $0.3 million ($0.00 per basic share) in the nine months of
2022, with a $52.8 million or 55%
increase in operating margin more than offsetting the impact of
higher general and administrative, depreciation and amortisation,
royalty, other and income tax expenses.
Adjusted earnings1 for the three months ended
September 30, 2023 totalled
$14.0 million ($0.08 per share) versus $6.6 million ($0.04
per share) in the third quarter of 2022. The difference between net
earnings and adjusted earnings1 in the third quarter of
2023 resulted from the exclusion from adjusted earnings1
of the after-tax impact of $3.9
million related to non-cash share-based payments,
$2.4 million foreign exchange losses,
$1.2 million related to
sustainability initiatives, $0.9
million in unrealized loss on marketable securities, and
$0.9 million credit for
rehabilitation cost adjustment for closed sites. The difference
between net earnings and adjusted earnings1 in the third
quarter of 2022 largely resulted from the exclusion from adjusted
earnings1 of the after-tax impact of $1.2 million related to non-cash share-based
payments, $1.0 million related to
loss on derivatives, and $0.5 million
in unrealized loss on marketable securities. The increase in
adjusted earnings1 compared to the third quarter of 2022
mainly reflected the 33% increase in operating margin, driven by
$27.4 million or 34% higher gold
revenue.
For the nine months ended September 30,
2023, adjusted earnings1 totalled $32.7 million ($0.19 per share) versus $12.4 million ($0.08 per share) in the same period in 2022. The
difference between net earnings and adjusted earnings1
for year-to-date 2023 reflected the exclusion from adjusted
earnings1 of the after-tax impact of $13.4 million foreign exchange losses,
$7.0 million related to non-cash
share-based payments, $5.3 million
related to loss on derivatives, $1.2
million related to sustainability initiatives, and
$0.9 million credit for
rehabilitation cost adjustment for closed sites. The difference
between net earnings and adjusted earnings1 in the first
nine months of 2022 mainly related to the exclusion from adjusted
earnings1 of the after-tax impact of $6.4 million foreign exchange losses,
$3.2 million related to non-cash
share-based payments, $2.0 million in
unrealized loss on marketable securities, $1.3 million related to loss on derivatives, and
$1.2 million in related to
sustainability initiatives. The $52.8
million or 55% improvement in operating margin driven by 43%
higher gold revenue and the add back of foreign exchange losses
mainly accounted for the increase in year-to-date adjusted
earnings1.
1. Non-IFRS: the definition
and reconciliation of these measures are included in the "Non-IFRS
Measures" section of this news release and in the MD&A for the
three and nine months September 30, 2023.
|
Table 3. Highlights of Liquidity and Capital
Resources
(in thousands of
dollars)
|
Three months
ended,
|
Nine Months
Ended,
|
For the periods ended
September 30,
|
2023
|
2022
|
2023
|
2022
|
Cash provided by
operations prior to changes in working capital
|
$36,125
|
$27,898
|
$103,754
|
$61,751
|
Changes in non-cash
working capital
|
9,220
|
547
|
(3,089)
|
(9,145)
|
Asset retirement
obligations
|
-
|
-
|
-
|
(441)
|
Income taxes
paid
|
-
|
(151)
|
(54)
|
(479)
|
Cash provided by
operating activities
|
45,345
|
28,294
|
100,611
|
51,686
|
Cash used in investing
activities
|
(26,988)
|
(89,612)
|
(70,444)
|
(149,086)
|
Cash provided by (used
in) financing activities
|
(4,285)
|
3,170
|
(11,712)
|
63,495
|
Effect of exchange rate
changes on cash and cash equivalents
|
(739)
|
135
|
(3,082)
|
(1,019)
|
Change in cash and cash
equivalents
|
$13,333
|
$(58,013)
|
$15,373
|
$(34,924)
|
1. Working
capital is calculated as current assets (including cash and cash
equivalents) less current liabilities.
|
2.
Financial liabilities include long-term debt and lease
obligations.
|
For the three months ended September 30,
2023, cash provided by operating activities, prior to
changes in working capital, totalled $36.1
million compared to $27.9
million for the same period in 2022. The increase compared
to the third quarter of 2022 largely reflected significantly higher
operating margin, driven by strong revenue growth, partially offset
by increased general and administrative and royalty expenses.
Changes in working capital represented a net source of cash
totalling $9.2 million during the
three months ended September 30,
2023, reflecting a $7.6
million increase in accounts payable due to increased
operating and growth capital activity particularly in September 2023.
For the nine months ended September 30,
2023, cash provided by operating activities, prior to
changes in working capital, was $103.8
million compared to $61.8
million for the same period in 2022, with the increase
mainly reflecting higher gold revenue and operating margin in the
first nine months more than offsetting increases in royalty and
general and administration expenses. Changes in working capital
used $3.1 million of cash during the
nine months ended September 30, 2023
of which $6.4 million related to a
reduction in accounts payable and accrued liabilities following
completion of the Beta Hunt decline development and $4.0 million relates to reduced trade and other
receivables reflecting no nickel sales for the quarter. Changes in
working capital in the first nine months of 2022 used $9.1 million, mainly represented by a
$8.4 million increase in inventories
and $2.9 million reduction in
accounts payable and accrued liabilities.
The Company had cash of $84.2
million at September 30, 2023
compared to $70.8 million at
June 30, 2023 and $68.8 million at December
31, 2022.
OUTLOOK
TWO-YEAR GUIDANCE (2023 – 2024)
The Company is maintaining its 2023 and 2024 production and cost
guidance. The targets included in the Company's outlook relate only
to the 2023 to 2024 period. This outlook includes forward-looking
information about the Company's operations and financial
expectations and is based on management's expectations and outlook
as of the date of this news release. This outlook, including
expected results and targets, is subject to various risks,
uncertainties and assumptions, which may impact future performance
and the Company's ability to achieve the results and targets
discussed in this section. The Company may update its outlook
depending on changes in metal prices and other factors. The Company
expects to announce updated Mineral Resources and Mineral Reserves
during December 2023.
Table 4. Two-Year Guidance (2023 – 2024)
|
|
2023
|
2024
|
Gold
Production
|
(Koz)
|
145 –
160
|
170 – 195
|
All-in Sustaining
Costs
|
(US$/oz
sold)
|
1,100 –
1,250
|
1,050 –
1,200
|
Sustaining
Capital
|
(A$M)
|
10 –
15
|
15 – 20
|
Growth
Capital
|
(A$M)
|
57 –
68
|
63 – 73
|
Exploration &
Resource Development
|
(A$M)
|
18 –
22
|
20 – 25
|
Nickel
Production
|
(Ni Tonnes)
|
450 -
550
|
600
– 800
|
1.
|
Production guidance is
based on the September 2022 Mineral Reserves and Mineral Resources
announced on February 13, 2023.
|
2.
|
The Company expects to
fund the capital investment amounts listed above with cash on hand,
cashflow from operations and through the financing of heavy
equipment.
|
3.
|
The material
assumptions associated with the expansion of Beta Hunt mining
production rate to 2.0 Mtpa during 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 mining equipment and trucking
fleet.
|
4.
|
The Company'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
Company, 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 2023 and 2024 and A$ to C$ exchange
rate of 0.90. Assumptions used for the purposes of guidance may
prove to be incorrect and actual results may differ from those
anticipated. See below "Cautionary Statement Regarding
Forward-Looking Information".
|
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 calculations are
for the Australian operations only, and exclude non-cash
share-based payments expense, derivative settlements, and net
realizable value adjustments to prior period stockpiles. The
Company acquired the Lakewood mill in 2022 and embarked on an
expansion program to grow the Beta Hunt gold mine to 2Mtpa mining
rate during 2024. All mine development, equipment acquisition, and
growth leases are being attributed to growth capital during this
growth phase.
|
8.
|
See "Non-IFRS Measures"
set out at the end of this news release and the MD&A for the
three and nine months ended September 30, 2023.
|
CONFERENCE CALL / WEBCAST
Karora will be hosting a conference call and webcast today,
November 10, 2023, 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: 1-888-664-6383:
Local and international callers please dial: 416-764-8650
A live webcast of the call will be available through Cision's
website at: https://app.webinar.net/qxL4W2Gb1mY
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 10, 2023,
through the following dial in numbers:
North American callers please dial: 1-888-390-0541; Pass Code:
571836 #
Local and international callers please dial: 416-764-8677; Pass
Code: 571836 #
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
Consolidated
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
2023
|
2022
|
2023
|
2022
|
Production and
processing costs
|
$55,525
|
$42,430
|
$166,485
|
$124,959
|
Inventory adjustment
1
|
(2,441)
|
-
|
(2,441)
|
-
|
Royalty
expense
|
5,915
|
5,128
|
17,810
|
12,948
|
By-product credits
2,3
|
(218)
|
(1,670)
|
(7,646)
|
(4,538)
|
Operating costs
(C$)
|
$58,781
|
$45,888
|
$174,208
|
$133,369
|
General and
administrative expense – Australia 3,4
|
3,431
|
2,465
|
12,265
|
6,605
|
Sustaining capital
expenditures
|
4,035
|
1,186
|
4,763
|
2,203
|
All-in sustaining costs
(C$)
|
$66,247
|
$49,539
|
$191,236
|
$142,177
|
Ounces of gold
sold
|
41,278
|
35,513
|
119,595
|
92,198
|
Australian
dollars per ounce sold
|
|
|
|
|
Cash operating
costs
|
$1,622
|
$1,448
|
$1,619
|
$1,596
|
All-in sustaining
costs 5
|
$1,828
|
$1,564
|
$1,778
|
$1,702
|
United States
dollars per ounce sold
|
|
|
|
|
Cash operating
costs
|
$1,062
|
$991
|
$1,083
|
$1,128
|
All-in sustaining
costs 5
|
$1,196
|
$1,069
|
$1,188
|
$1,202
|
Average exchange
rate
|
|
|
|
|
C$:A$
|
0.88
|
0.89
|
0.90
|
0.91
|
A$:US$
|
0.65
|
0.68
|
0.67
|
0.71
|
1.
|
Relates to an
adjustment to net realizable value of gold stockpiles. Refer
to note 5 of the September 30, 2023, unaudited condensed interim
consolidated financial statements
|
2.
|
Refer to Note 19 of the
September 30, 2023, unaudited condensed interim consolidated
financial statements
|
3.
|
By-product credits for
the three and nine month ended September 30, 2023, include external
toll treatment revenue of $nil and $2,527 respectively (same
periods in 2022 - $319)
|
4.
|
General and
administrative expense for the three and nine months ended
September 30, 2022, periods exclude amounts related to research and
development and due diligence expenses of $805 and $2,855
respectively
|
5.
|
AISC calculations are
for the Australian operations only, exclude non-cash share-based
payments expense, derivative settlements, and net realisable value
adjustments to prior period stockpiles. The Company acquired the
Lakewood mill in 2022 and embarked on an expansion program to grow
the Beta Hunt gold mine to 2.0 Mtpa mining rate during 2024. All
mine development, equipment acquisition, and growth leases are
being attributed to growth capital during this growth
phase.
|
Beta Hunt
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
2023
|
2022
|
2023
|
2022
|
Production and
processing costs 1,2
|
$34,461
|
$22,810
|
$95,469
|
$70,024
|
Royalty expense
1
|
$4,733
|
$4,361
|
14,713
|
10,795
|
By-product credits
1
|
(160)
|
(1,326)
|
(4,994)
|
(4,140)
|
Operating costs
(C$)
|
$39,034
|
$25,845
|
$105,188
|
$76,679
|
Ounces of gold
sold
|
23,595
|
20,767
|
73,002
|
56,035
|
Australian
dollars per ounce sold
|
|
|
|
|
Cash operating costs
per ounce sold
|
$1,884
|
$1,395
|
$1,602
|
$1,509
|
United States
dollars per ounce sold
|
|
|
|
|
Cash operating costs
per ounce sold
|
$1,233
|
$953
|
$1,071
|
$1,067
|
Average exchange
rate
|
|
|
|
|
C$:A$
|
0.88
|
0.89
|
0.90
|
0.91
|
A$:US$
|
0.65
|
0.68
|
0.67
|
0.71
|
|
|
|
|
|
|
|
|
|
1.
|
Refer to Note 19 of the
September 30, 2023 unaudited condensed interim consolidated
financial statements.
|
2.
|
Includes $12,137 and
$33,081 cost of processing the Betta Hunt ore at the HGO mills,
respectively for the three and nine months ended September 31, 2023
($9,754 and $22,527 respectively, for same periods in
2022).
|
HGO
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
2023
|
2022
|
2023
|
2022
|
|
Production and
processing costs 1
|
$33,201
|
$29,374
|
$104,097
|
$77,462
|
|
Adjustment for
intercompany and toll milling costs 1 2
|
(12,137)
|
(10,073)
|
(35,608)
|
(22,846)
|
|
Adjustment for
inventory for net realizable value 3
|
(2,441)
|
-
|
(2,441)
|
-
|
|
Royalty expense
1
|
1,182
|
$767
|
3,097
|
2,153
|
|
By-product credits
1
|
(58)
|
(25)
|
(125)
|
(79)
|
|
Operating costs
(C$)
|
$19,747
|
$20,043
|
$69,020
|
$56,690
|
|
Ounces of gold
sold
|
17,683
|
14,746
|
46,593
|
36,163
|
|
Australian
dollars per ounce sold
|
|
|
|
|
|
Cash operating
costs
|
$1,272
|
$1,525
|
$1,647
|
$1,729
|
|
United States
dollars per ounce sold
|
|
|
|
|
|
Cash operating
costs
|
$832
|
$1,043
|
$1,101
|
$1,223
|
|
Average exchange
rate
|
|
|
|
|
|
C$:A$
|
0.88
|
0.89
|
0.90
|
0.91
|
|
A$:US$
|
0.65
|
0.68
|
0.67
|
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Refer to Note 19 of the
September 30, 2023 unaudited condensed interim consolidated
financial statements.
|
2.
|
Includes third party
toll milling costs at Lakewood mill of $nil and $2,527,
respectively for the three and nine months ended September 30, 2023
($319 for same periods in 2022).
|
3.
|
Relates to an
adjustment to net realizable value for gold stockpiles in respect
of prior periods. Refer to note 5 of the September 30, 2023
unaudited condensed interim consolidated financial
statements.
|
Adjusted EBITDA and Adjusted Earnings
Management believes that adjusted EBITDA and adjusted earnings
are valuable indicators of the Company'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,
|
Six Months
Ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Net earnings (loss) for
the period - as reported
|
$6,923
|
$4,378
|
$10,625
|
$341
|
Finance expense,
net
|
2,049
|
1,657
|
5,926
|
3,772
|
Income tax
expense
|
6,613
|
3,568
|
14,017
|
6,505
|
Depreciation and
amortization
|
13,864
|
14,973
|
48,246
|
37,416
|
EBITDA
|
29,449
|
24,576
|
78,814
|
48,034
|
Adjustments:
|
|
|
|
|
Non-cash share-based
payments 1
|
3,865
|
1,218
|
6,785
|
3,150
|
Unrealized loss (gain)
on revaluation of marketable securities2
|
914
|
511
|
(97)
|
2,038
|
Other expense (income),
net 2
|
2
|
(29)
|
29
|
199
|
Loss on derivatives
2
|
40
|
1,044
|
5,265
|
1,332
|
Foreign exchange loss
3
|
2,431
|
190
|
13,353
|
6,381
|
Rehabilitation cost
adjustment for closed sites 2
|
(932)
|
-
|
(932)
|
-
|
Sustainability
initiatives 4
|
1,243
|
-
|
1,243
|
1,181
|
Adjusted
EBITDA
|
$37,012
|
$27,510
|
$104,460
|
$62,315
|
Weighted average number
of common shares - basic
|
176,199,462
|
171,809,550
|
175,086,173
|
161,426,709
|
Adjusted EBITDA per
share - basic
|
$0.21
|
$0.16
|
$0.60
|
$0.39
|
1.
|
Primarily non-operating
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-operating 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,
|
2023
|
2022
|
2023
|
2022
|
Net earnings for the
period - as reported
|
$6,923
|
$4,378
|
$10,625
|
$341
|
Non-cash share-based
payments 1
|
3,865
|
1,218
|
6,785
|
3,150
|
Unrealized loss (gain)
on revaluation of marketable securities2
|
914
|
511
|
(97)
|
2,038
|
Loss on derivatives
2
|
40
|
1,044
|
5,265
|
1,332
|
Foreign exchange loss
3
|
2,431
|
190
|
13,353
|
6,381
|
Sustainability
initiatives 4
|
(932)
|
-
|
(932)
|
-
|
Tax impact of the above
adjusting items
|
1,243
|
-
|
1,243
|
1,181
|
Adjusted
earnings
|
(435)
|
(701)
|
(3,488)
|
(2,001)
|
Weighted average number
of common shares - basic
|
$14,049
|
$6,640
|
$32,754
|
$12,422
|
Adjusted earnings per
share - basic
|
176,199,462
|
171,809,550
|
175,086,173
|
161,426,709
|
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.
|
September
30,
|
December 31,
|
(in thousands of
dollars)
|
2023
|
2022
|
Current
assets
|
$134,710
|
$115,857
|
Less: Current
liabilities
|
65,765
|
77,837
|
Working
Capital
|
$68,405
|
$38,020
|
Compliance Statement (JORC 2012 and NI 43-101)
The technical and scientific information contained in this
MD&A has been reviewed and approved by Steve Devlin, Group Geologist, Karora Resources
Inc., and a qualified person for the purposes of National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
About Karora Resources
Karora is focused on increasing gold production 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. In July
2022, Karora 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 5 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. 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 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, consolidated
production guidance and the potential of the Beta Hunt Mine,
Higginsville Gold Operation, the Spargos Gold Mine, 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.sedarplus.ca.
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.