YAMANA GOLD INC. (TSX:YRI) (NYSE:AUY) (“Yamana” or “the Company”)
is herein reporting its financial and operational results for the
second quarter 2018.
Gold equivalent ounce (“GEO”)(1) production from
Yamana Mines(2) for the second quarter was 240,271, including
224,083 ounces of gold and 1.31 million ounces of silver.
Total Yamana gold production(3) was 248,177
ounces. The Company also produced 31.1 million pounds
of copper.
Higher than expected gold production at Chapada,
Canadian Malartic, Jacobina, and El Peñón together with the
favourable ramp-up at Cerro Moro has the Company well positioned to
exceed previously provided guidance of 900,000 ounces of gold for
Yamana Mines. While the production plan for Gualcamayo this
year is lower than previously indicated, total Yamana gold
production including Gualcamayo is expected to also exceed
previously provided guidance.
On a GEO basis, higher-than-plan gold production
in the first half of the year more than offset slightly
lower-than-plan silver production such that cumulative precious
metals production is expected to exceed guidance. Silver
production is expected to improve in the second half of 2018 with
higher silver grades at El Peñón and production increases from
Cerro Moro.
Copper production was higher than plan for the
second consecutive quarter and full-year copper production is
expected to also exceed previously provided guidance of 120 million
pounds.
The continuation of strong operational
performance, which has been in place since 2016 and extended into
the first half of 2018, is directly related to the Company’s
improved production platform and the benefits of completed
optimization plans at various mines. Planned further
improvements at all operations are expected to continue this trend
in the second half of the year.
Second quarter costs for Yamana Mines included
all-in sustaining costs (“AISC”) on a by-product basis (4) of $694
per GEO; cash costs on a by-product basis (4) of $489 per GEO; and
total cost of sales of $986 per GEO.
Co-product costs and AISC for 2018 are expected
to be within the previously guided ranges. Costs are
benefiting from higher production, operational efficiencies and the
impact of the depreciation of local currencies, which began to
positively impact costs late in the second quarter. Costs on a
by-product basis are also anticipated to be within the previously
guided ranges.
Refer to page 5 of this press release for
additional information on costs by metal on a co-product and
by-product basis.
Net earnings from operations attributable to
Yamana equityholders for the three months ended June 30, 2018, were
$18.0 million or $0.02 per share basic and diluted.
The business combination between Leagold Mining
Corporation ("Leagold") and Brio Gold Inc. (“Brio Gold”) closed May
24, 2018, resulting in the Company’s ownership percentage interest
in Leagold of 20.5%, which is accounted for as an investment in
associate using the equity method. During the quarter, the
Company recognized a gain of $32.0 million in respect of this
transaction representing the increase in the equity consideration
from Leagold between March 31, 2018, and the date the transaction
closed and the change in the value of Brio Gold for the current
period.
A summary of certain non-cash and other items
that may not be reflective of current and ongoing operations is
included in the table on page 3 of this press release, the most
notable of which is a $111.7 million non-cash unrealized foreign
exchange loss on the calculation of deferred income tax expense
during the quarter.
Cash flows from operating activities for the
second quarter were $102.4 million and cash flows from operating
activities before net change in working capital (4) were $157.5
million.
The balance sheet as at June 30, 2018, includes
cash and cash equivalents of $114.4 million, and available credit
of $765.0 million, for total liquidity to the Company of $879.4
million. Net debt(4) as at June 30, 2018, was $1.58
billion.
(All amounts are expressed in United States Dollars unless
otherwise indicated.)
- Gold equivalent ounces include gold plus silver at a ratio of
80.93:1.
- Yamana Mines include Chapada, El Peñón, Canadian Malartic,
Minera Florida, Jacobina and Cerro Moro.
- Total production includes production from Gualcamayo.
- Refers to a non-GAAP financial measure or an additional line
item or subtotal in financial statements as described at the end of
this press release. Reconciliations for all non-GAAP
financial measures are available at
http://www.yamana.com/Q22018 and in Section 1 and Section 10
of the Company’s second quarter 2018 Management’s Discussion &
Analysis, which has been filed on SEDAR.
Summary of Certain Non-Cash and Other
Items Included in Net Earnings
(In United States Dollars, per share amounts may not add due to
rounding, unaudited) |
Three Months Ended June 30, 2018 |
|
2018 |
2017 |
Non-cash unrealized foreign exchange (gains)/losses |
(4.3) |
2.4 |
Share-based payments/mark-to-market of deferred share units |
3.7 |
2.5 |
Mark-to-market on derivative contracts |
0.1 |
- |
Mark-to-market on investment and other assets |
5.1 |
(1.0) |
Revision in estimates and liabilities including contingencies |
8.4 |
(0.9) |
Gain on sale of Brio Gold |
(32.0) |
- |
Reorganization costs |
2.7 |
1.2 |
Other provisions, write-downs and adjustments |
0.6 |
20.8 |
Non-cash tax unrealized foreign exchange losses |
111.7 |
25.1 |
Income tax effect of adjustments and other one-time tax
adjustments |
(62.1) |
(5.2) |
TOTAL ADJUSTMENTS |
33.9 |
44.9 |
Increase to earnings per share attributable to Yamana
equityholders |
0.04 |
0.04 |
Note: For the three months ended June 30, 2018,
net earnings, attributable to Yamana Gold Inc. equityholders, would
be adjusted by an increase of $33.9 million (2017 – increase of
$44.9 million).
For a full discussion of Yamana’s operational and financial
results, please refer to the Company’s second quarter 2018
Management’s Discussion & Analysis and Condensed Consolidated
Interim Financial Statements, which have been filed on SEDAR and
are also available on the Company’s website.
KEY STATISTICS
Key operating and financial statistics for the
second quarter 2018 are outlined in the following tables.
Financial Summary
|
Three Months Ended Jun 30th |
(In millions of United States Dollars except for shares and per
share amounts, unaudited) |
2018 |
2017 |
Revenue |
431.5 |
428.1 |
Cost of sales excluding depletion, depreciation and
amortization |
(234.1) |
(261.0) |
Depletion, depreciation and amortization ("DDA") |
(93.9) |
(111.9) |
Total cost of sales |
(328.0) |
(372.9) |
Mine operating earnings/(loss) |
103.5 |
55.2 |
General and administrative expenses |
(23.9) |
(25.9) |
Exploration and evaluation expenses |
(3.2) |
(5.3) |
Net earnings/(loss) |
12.4 |
(42.8) |
Net earnings/(loss) attributable to Yamana Gold equity holders |
18.0 |
(39.9) |
Net earnings/(loss) per share - basic and diluted |
0.02 |
(0.04) |
Cash flow generated from continuing operations after changes in
non-cash working capital |
102.4 |
124.6 |
Cash flow from operations before changes in non-cash working
capital |
157.5 |
122.8 |
Revenue per ounce of gold |
1,289 |
1,255 |
Revenue per ounce of silver |
16.61 |
16.85 |
Revenue per pound of copper |
2.76 |
2.27 |
Average realized gold price per ounce |
1,304 |
1,268 |
Average realized silver price per ounce |
16.53 |
16.89 |
Average realized copper price per pound |
3.09 |
2.52 |
- For the three months ended June 30, 2018, the weighted average
numbers of shares outstanding, basic and diluted, was 948,952
thousand and 950,078 thousand, respectively.
Cost Summary
|
Three Months Ended Jun 30th |
Gold |
2018 |
2017 |
Total cost of sales per ounce sold - Yamana Mines |
$987 |
$1,004 |
Total cost of sales per ounce sold - Total Yamana |
$1,010 |
$1,096 |
Total cost of sales per ounce sold - consolidated |
$1,028 |
$1,105 |
Co-product cash costs per ounce produced - Yamana Mines |
$618 |
$611 |
Co-product cash costs per ounce produced - Total Yamana |
$651 |
$671 |
All-in sustaining co-product costs per ounce produced - Yamana
Mines |
$815 |
$816 |
All-in sustaining co-product costs per ounce produced - Total
Yamana |
$837 |
$869 |
By-product cash costs per ounce produced - Yamana Mines |
$434 |
$523 |
All-in sustaining by-product costs per ounce produced - Yamana
Mines |
$682 |
$805 |
Silver |
2018 |
2017 |
Total cost of sales per ounce sold |
$16.13 |
$13.92 |
Co-product cash costs per ounce produced |
$10.58 |
$10.19 |
All-in sustaining co-product costs per ounce produced |
$14.03 |
$14.04 |
By-product cash costs per ounce produced |
$6.91 |
$9.33 |
All-in sustaining by-product costs per ounce produced |
$11.24 |
$13.75 |
Copper |
2018 |
2017 |
Total cost of sales per copper pound sold - Chapada |
$1.57 |
$1.91 |
Co-product cash costs per pound of copper produced - Chapada |
$1.41 |
$1.61 |
All-in sustaining costs per pound of copper produced - Chapada |
$1.65 |
$1.98 |
Production Summary
|
Three Months Ended Jun 30th |
Gold Ounces |
2018 |
2017 |
Chapada |
30,329 |
25,404 |
El Peñón |
37,800 |
43,005 |
Canadian Malartic (50%) |
91,863 |
82,509 |
Minera Florida |
16,717 |
22,051 |
Jacobina |
37,730 |
34,275 |
Cerro Moro (1) |
9,644 |
- |
Total production - Yamana Mines |
224,083 |
207,244 |
Gualcamayo |
24,094 |
37,363 |
TOTAL |
248,177 |
244,607 |
- Includes pre-commercial production of 8,625 ounces of gold and
commercial production of 1,019 ounces of gold.
|
Three Months Ended Jun 30th |
Silver Ounces |
2018 |
2017 |
El Peñón |
925,450 |
1,180,174 |
Cerro Moro (1) |
384,629 |
- |
TOTAL |
1,310,079 |
1,180,174 |
- Includes pre-commercial production of 333,878 ounces of silver
and commercial production of 50,751 ounces of silver
|
Three Months Ended Jun 30th |
Copper Pounds |
2018 |
2017 |
Chapada (millions of pounds) |
31.1 |
29.1 |
TOTAL (millions of pounds) |
31.1 |
29.1 |
SECOND QUARTER 2018 CONFERENCE CALL
The Company will host a conference call and
webcast on Friday, July 27, at 9:00 a.m. ET.
Second Quarter 2018 Conference
Call
Toll Free (North
America): |
|
1-866-223-7781 |
Toronto Local and
International: |
|
416-340-2218 |
Webcast: |
|
www.yamana.com |
Conference Call Replay
Toll Free (North
America): |
|
1-800-408-3053 |
Toronto Local and
International: |
|
905-694-9451 |
Passcode: |
|
7856108 |
The conference call replay will be available
from 12:00 p.m. ET on July 27, 2018, until 11:59 p.m. ET on August
11, 2018.
Qualified Persons
Scientific and technical information contained
in this press release relating to operations at Chapada, Canadian
Malartic and Jacobina has been reviewed and approved by Yohann
Bouchard (Senior Vice President, Operations) and relating to
operations at El Peñón, Cerro Moro, Minera Florida and Gualcamayo
has been reviewed and approved by Carlos Bottinelli (Manager,
Technical Services). Each of Messrs. Bouchard and Bottinelli is an
employee of Yamana Gold Inc. and a "Qualified Person" as defined by
Canadian Securities Administrators' National Instrument 43-101 -
Standards of Disclosure for Mineral Projects.
About Yamana
Yamana is a Canadian-based gold producer with
significant gold production, gold development stage properties,
exploration properties, and land positions throughout the Americas
including Canada, Brazil, Chile and Argentina. Yamana plans
to continue to build on this base through existing operating mine
expansions and optimization initiatives, development of new mines,
the advancement of its exploration properties and, at times, by
targeting other gold consolidation opportunities with a primary
focus in the Americas.
FOR FURTHER INFORMATION PLEASE CONTACT:Investor Relations and
Corporate Communications416-815-02201-888-809-0925Email:
investor@yamana.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS: This news release contains or
incorporates by reference “forward-looking statements” and
“forward-looking information” under applicable Canadian securities
legislation within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
information includes, but is not limited to information with
respect to the Company’s optimization and expansion plans,
strategy, other plans or future financial or operating performance.
Forward-looking statements are characterized by words such as
“plan,” “expect”, “budget”, “target”, “project”, “intend”,
“believe”, “anticipate”, “estimate” and other similar words, or
statements that certain events or conditions “may” or “will” occur.
Forward-looking statements are based on the opinions, assumptions
and estimates of management considered reasonable at the date the
statements are made, and are inherently subject to a variety of
risks and uncertainties and other known and unknown factors that
could cause actual events or results to differ materially from
those projected in the forward-looking statements. These
factors include the Company’s expectations in connection with the
production and exploration, the impact of declaring commercial
production, development and expansion plans at the Company's
projects discussed herein being met, the impact of proposed
optimizations at the Company's projects, changes in national and
local government legislation, taxation, controls or regulations
and/or changes in the administration or laws, policies and
practices, and the impact of general business and economic
conditions, global liquidity and credit availability on the timing
of cash flows and the values of assets and liabilities based on
projected future conditions, fluctuating metal prices (such as
gold, copper, silver and zinc), currency exchange rates (such as
the Brazilian real, the Chilean peso, and the Argentine peso versus
the United States dollar), the impact of inflation, possible
variations in ore grade or recovery rates, changes in the Company’s
hedging program, changes in accounting policies, changes in Mineral
Resources and Mineral Reserves, risks related to asset disposition,
risks related to metal purchase agreements, risks related to
acquisitions, changes in project parameters as plans continue to be
refined, changes in project development, construction, production
and commissioning time frames, unanticipated costs and expenses,
higher prices for fuel, steel, power, labour and other consumables
contributing to higher costs and general risks of the mining
industry, failure of plant, equipment or processes to operate as
anticipated, unexpected changes in mine life, final pricing for
concentrate sales, unanticipated results of future studies,
seasonality and unanticipated weather changes, costs and timing of
the development of new deposits, success of exploration activities,
permitting timelines, government regulation and the risk of
government expropriation or nationalization of mining operations,
risks related to relying on local advisors and consultants in
foreign jurisdictions, environmental risks, unanticipated
reclamation expenses, risks relating to joint venture operations,
title disputes or claims, limitations on insurance coverage and
timing and possible outcome of pending and outstanding litigation
and labour disputes, risks related to enforcing legal rights in
foreign jurisdictions, as well as those risk factors discussed or
referred to herein and in the Company's Annual Information Form
filed with the securities regulatory authorities in all provinces
of Canada and available at www.sedar.com, and the Company’s Annual
Report on Form 40-F filed with the United States Securities
and Exchange Commission. Although the Company 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 not to be anticipated, estimated or
intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. The Company undertakes no obligation to update
forward-looking statements if circumstances or management’s
estimates, assumptions or opinions should change, except as
required by applicable law. The reader is cautioned not to place
undue reliance on forward-looking statements. The forward-looking
information contained herein is presented for the purpose of
assisting investors in understanding the Company’s expected
financial and operational performance and results as at and for the
periods ended on the dates presented in the Company’s plans and
objectives and may not be appropriate for other purposes.
NON-GAAP FINANCIAL MEASURES AND ADDITIONAL LINE
ITEMS AND SUBTOTALS IN FINANCIAL STATEMENTS
The Company has included certain non-GAAP
financial measures to supplement its Condensed Consolidated Interim
Financial Statements, which are presented in accordance with IFRS,
including the following:
- Cash costs per ounce produced on a co-product and by-product
basis, for gold and silver;
- Co-product cash costs per pound of copper produced;
- All-in sustaining costs per ounce produced on a co-product and
by-product basis, for gold and silver;
- All-in sustaining co-product costs per pound of copper
produced;
- Net debt;
- Average realized price per ounce of gold/silver sold; and
- Average realized price per pound of copper sold.
The Company believes that these measures,
together with measures determined in accordance with IFRS, provide
investors with an improved ability to evaluate the underlying
performance of the Company. Non-GAAP financial measures do
not have any standardized meaning prescribed under IFRS, and
therefore they may not be comparable to similar measures employed
by other companies. The 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. Management's determination of the components of
non-GAAP and additional measures are evaluated on a periodic basis
influenced by new items and transactions, a review of investor uses
and new regulations as applicable. Any changes to the
measures are duly noted and retrospectively applied as
applicable.
CASH COSTS AND ALL-IN SUSTAINING
COSTS
The Company discloses “cash costs” because it
understands that certain investors use this information to
determine the Company’s ability to generate earnings and cash flows
for use in investing and other activities. The Company
believes that conventional measures of performance prepared in
accordance with IFRS do not fully illustrate the ability of its
operating mines to generate cash flows. The measures, as
determined under IFRS, are not necessarily indicative of operating
profit or cash flows from operating activities. Cash costs
figures are calculated in accordance with a standard developed by
The Gold Institute, which was a worldwide association of suppliers
of gold and gold products and included leading North American gold
producers. The Gold Institute ceased operations in 2002, but
the standard remains the generally accepted standard of reporting
cash costs of production in North America. Adoption of the standard
is voluntary and the cost measures presented herein may not be
comparable to other similarly titled measures of other
companies.
The measure of cash costs, along with revenue
from sales, is considered to be a key indicator of a company’s
ability to generate operating earnings and cash flows from its
mining operations. This data is furnished to provide
additional information and is a non-GAAP financial measure.
The terms co-product and by-product cash costs per ounce of gold or
silver produced, co-product cash costs per pound of copper
produced, co-product and by-product AISC per ounce of gold or
silver produced and co-product AISC per pound of copper produced do
not have any standardized meaning prescribed under IFRS, and
therefore they may not be comparable to similar measures employed
by other companies. Non-GAAP financial measures should not be
considered in isolation as a substitute for measures of performance
prepared in accordance with IFRS and is not necessarily indicative
of operating costs, operating profit or cash flows presented under
IFRS.
By-Product and Co-Product Cash
CostsCash costs include mine site operating costs such as
mining, processing, administration, production taxes and royalties
which are not based on sales or taxable income calculations, but
are exclusive of amortization, reclamation, capital, development
and exploration costs. The Company believes that such measure
provides useful information about the Company’s underlying cash
costs of operations. Cash costs are computed on a weighted
average basis, net of by-product sales and on a co-product basis as
follows:
Cash costs of gold and silver on a
by-product basis - shown on a per ounce basis.
- The attributable cost for each metal is calculated net of
by-products by applying copper and zinc net revenues, which are
incidental to the production of precious metals, as a credit to
gold and silver ounces produced, thereby allowing the Company’s
management and stakeholders to assess net costs of precious metal
production. These costs are then divided by gold and silver
ounces produced.
Cash costs of gold and silver on a
co-product basis - shown on a per ounce basis.
- Costs directly attributed to gold and silver will be allocated
to each metal. Costs not directly attributed to each metal will be
allocated based on the relative value of revenues which will be
determined annually.
- The attributable cost for each metal will then be divided by
the production of each metal in calculating cash costs per ounce on
a co-product basis for the period.
Cash costs of copper on a co-product
basis - shown on a per pound basis.
- Costs attributable to copper production are divided by
commercial copper pounds produced.
By-Product and Co-Product
AISCAll-in sustaining costs per ounce of gold and silver
produced seeks to represent total sustaining expenditures of
producing gold and silver ounces from current operations, based on
co-product costs or by-product costs, including cost components of
mine sustaining capital expenditures, corporate general and
administrative expense excluding stock-based compensation, and
exploration and evaluation expense. All-in sustaining costs
do not include capital expenditures attributable to projects or
mine expansions, exploration and evaluation costs attributable to
growth projects, income tax payments, financing costs and dividend
payments. Consequently, this measure is not representative of
all of the Company's cash expenditures. In addition, the
calculation of all-in sustaining costs does not include depletion,
depreciation and amortization expense as it does not reflect the
impact of expenditures incurred in prior periods.
All-in sustaining co-product costs reflect
allocations of the aforementioned cost components on the basis that
is consistent with the nature of each of the cost component to the
gold, silver or copper production activities. Similarly,
all-in sustaining by-product costs reflect allocations of the
aforementioned cost components on the basis that is consistent with
the nature of each of the cost component to the gold and silver
production activities but net of by-product revenue credits from
sales of copper and zinc.
A reconciliation of total cost of sales of gold,
silver and copper sold (cost of sales excluding depreciation,
depletion and amortization, plus depreciation, depletion and
amortization) per the Consolidated Financial Statements to
co-product cash costs of gold produced, co-product cash costs of
silver produced, co-product cash costs of copper produced,
co-product AISC of gold produced, co-product AISC of silver
produced, co-product AISC of copper produced, by-product cash costs
of gold produced, by-product cash costs of silver produced,
by-product AISC of gold produced and by-product AISC of silver
produced is provided in Section 10: of the MD&A for the
three and six months ended June 30, 2018 and comparable period of
2017 which has been filed on SEDAR.
NET DEBT
The Company uses the financial measure "Net
Debt", which is a non-GAAP financial measure, to supplement
information in its Consolidated Financial Statements. The
Company believes that in addition to conventional measures prepared
in accordance with IFRS, the Company and certain investors and
analysts use this information to evaluate the Company’s
performance. The non-GAAP financial measure of net debt does
not have any standardized meaning prescribed under IFRS, and
therefore it may not be comparable to similar measures employed by
other companies. The 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.
Net Debt is calculated as the sum of the current
and non-current portions of long-term debt net of the cash and cash
equivalent balance as at the balance sheet date. A
reconciliation of Net Debt is provided in Section 10: of the
MD&A for the period ended June 30, 2018 and comparable period
of 2017 which has been filed on SEDAR.
AVERAGE REALIZED METAL
PRICES
The Company uses the financial measures "average
realized gold price", "average realized silver price" and "average
realized copper price", which are non-GAAP financial measures, to
supplement in its Consolidated Financial Statements. Average
realized price does not have any standardized meaning prescribed
under IFRS, and therefore they may not be comparable to similar
measures employed by other companies. The Company believes
that in addition to conventional measures prepared in accordance
with IFRS, the Company and certain investors and analysts use this
information to evaluate the Company’s performance vis-à-vis average
market prices of metals for the period. The presentation of
average realized metal prices is not meant to be a substitute for
the revenue information presented in accordance with IFRS, but
rather should be evaluated in conjunction with such IFRS
measure.
Average realized metal price represents the sale
price of the underlying metal before deducting sales taxes,
treatment and refining charges, and other quotational and pricing
adjustments. Average realized prices are calculated as the
revenue related to each of the metals sold, i.e. gold, silver and
copper, divided by the quantity of the respective units of metals
sold, i.e. gold ounce, silver ounce and copper pound.
Reconciliations of average realized metal prices to revenue
provided in Section 10: of the MD&A for the three and six
months ended June 30, 2018 and comparable periods of 2017, which
has been filed on SEDAR.
ADDITIONAL LINE ITEMS OR SUBTOTALS IN
FINANCIAL STATEMENTS
The Company uses the following additional line
items and subtotals in the Consolidated Financial Statements as
contemplated in IAS 1: Presentation of Financial Statements:
- Gross margin excluding depletion, depreciation and
amortization — represents the amount of revenue in excess
of cost of sales excluding depletion, depreciation and
amortization. This additional measure represents the cash
contribution from the sales of metals before all other operating
expenses and DDA, in the reporting period.
- Mine operating earnings — represents the
amount of revenue in excess of cost of sales.
- Operating earnings — represents the amount of
earnings before net finance income/expense and income tax
recovery/expense. This measure represents the amount of
financial contribution, net of all expenses directly attributable
to mining operations and overheads. Finance income, finance
expense and foreign exchange gains/losses are not classified as
expenses directly attributable to mining operations.
- Cash flows from operating activities before income
taxes paid and net change in working capital — excludes
the payments made during the period related to income taxes and tax
related payments and the movement from period-to-period in working
capital items including trade and other receivables, other assets,
inventories, trade and other payables. Working capital and
income taxes can be volatile due to numerous factors, such as the
timing of payment and receipt. As the Company uses the
indirect method prescribed by IFRS in preparing its statement of
cash flows, this additional measure represents the cash flows
generated by the mining business to complement the GAAP measure of
cash flows from operating activities, which is adjusted for income
taxes paid and tax related payments and the working capital change
during the reporting period.
- Cash flows from operating activities before net change
in working capital — excludes the movement from
period-to-period in working capital items including trade and other
receivables, other assets, inventories, trade and other
payables. Working capital can be volatile due to numerous
factors, such as the timing of payment and receipt. As the
Company uses the indirect method prescribed by IFRS in preparing
its statement of cash flows, this additional measure represents the
cash flows generated by the mining business to complement the GAAP
measure of cash flows from operating activities, which is adjusted
for the working capital change during the reporting period.
The Company’s management believes that their
presentation provides useful information to investors because gross
margin excluding depletion, depreciation and amortization excludes
the non-cash operating cost item (i.e. depreciation, depletion and
amortization), cash flows from operating activities before net
change in working capital excludes the movement in working capital
items, mine operating earnings excludes expenses not directly
associated with commercial production and operating earnings
excludes finance and tax related expenses and
income/recoveries. These, in management’s view, provide
useful information of the Company’s cash flows from operating
activities and are considered to be meaningful in evaluating the
Company’s past financial performance or the future prospects.
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