Atico Mining Corporation (the “Company” or “Atico”) (TSX.V: ATY |
OTC: ATCMF) today announced its financial results for the three
months ended June 30, 2019, posting income from mining operations
of $0.3 million and a net loss of $0.4 million.
Fernando E. Ganoza, CEO and Director, commented,
“The union negotiations which led to a strike at the El Roble mine
limited our ability to deliver on operational and financial
objectives for the quarter. Despite the limited amount of operating
days in the first six months, the Company’s balance sheet remained
resilient to this event and demonstrated further growth in working
capital,” said Fernando E. Ganoza, CEO. “For the second half of the
year, the Company will continue working towards achieving the
adjusted operational objectives while remaining focused on the
exploration program on the larger land package.”
Second Quarter Financial
Highlights
- Net loss for the three months ended June 30, 2019 amounted to
$0.5 million, compared with income of $2.8 million for the same
period last year (“Q2-2018”). Net loss for the period was
significantly affected by the seventy-five-day strike which lead to
a decrease in quantity of concentrate shipped and provisionally
invoiced along with a decrease in realized copper price as compared
to Q2-2018.
- Sales for the period decreased 66% to $6.9 million when
compared with $20.4 million in Q2-2018. Copper (“Cu”) and gold
(“Au”) accounted for 82.7% and 17.3% of the total amount
provisionally invoiced during Q2-2019. The average realized price
per metal on provisional invoicing was $2.69 (Q2-2018 - $3.16) per
pound of copper and $1,410.62 (Q2-2018 - $1,297.33) per ounce of
gold.
- Loss from operations was $0.8 million (Q2-2018 - income of $4.9
million) while cash flow from operations, before changes in working
capital, was negative $1.2 million (Q2-2018 - positive $5.4
million). Cash used for capital expenditures amounted to 1.8
million (Q2-2018 - $3.8 million).
- Working capital was $9.2 million (December 31, 2018 - $7.2
million), while the Company had no outstanding long-term loans
payable balance.
- Cash costs(1) were $130.76 per tonne of processed ore and $1.59
per pound of payable copper produced, which were decreases of 4%
and 5% over Q2-2018, respectively. The decrease in the cash cost
per pound of payable copper net of by products is primarily
explained by a lower cost per processed tonne.
- At the end of the quarter, 2,655 (December 31, 2018 - 11,036)
wet metric tonnes (“WMT”) of non-invoiced concentrate remained at
the Company’s warehouses.
- All-in sustaining cash cost per payable pound of copper
produced(1)(2) for the period was $2.29 (Q2-2018 - $2.24).
Second Quarter Summary of Financial
Results
|
|
Q22019 |
Q22018 |
%Change |
Revenue |
|
$ |
6,936,341 |
|
$ |
20,401,188 |
|
-66 |
% |
Cost of sales |
|
|
(6,684,378 |
) |
|
(14,489,798 |
) |
-54 |
% |
Income from mining operations |
|
|
251,963 |
|
|
5,911,390 |
|
-96 |
% |
As a % of revenue |
|
|
4 |
% |
|
29 |
% |
-87 |
% |
General and administrative expenses |
|
|
1,017,817 |
|
|
935,396 |
|
9 |
% |
Income (loss) from operations |
|
|
(847,211 |
) |
|
4,880,149 |
|
-117 |
% |
As a % of revenue |
|
|
-12 |
% |
|
24 |
% |
-151 |
% |
Income (loss) before income taxes |
|
|
(914,848 |
) |
|
4,751,767 |
|
-119 |
% |
Net income (loss) |
|
|
(448,411 |
) |
|
2,810,318 |
|
-116 |
% |
As a % of revenue |
|
|
-6 |
% |
|
14 |
% |
-147 |
% |
Operating cash flow before changes in non-cash operating working
capital items(1) |
|
$ |
(1,235,791 |
) |
$ |
5,441,699 |
|
-123 |
% |
Second Quarter Operations Review
During the quarter, the Company produced 3.16
million pounds (“lbs”) of copper, 2,116 ounces (“oz”) of gold, and
6,914 oz of silver. When compared to Q2-2018, production decreased
40.0% for copper and 18.5% for gold. Production for the quarter was
significantly impacted by the strike at the mine which began early
February and ended in April 2019.
Cash costs(1) for the quarter were $130.76 per
tonne of processed ore, and $1.59 per pound of payable copper
produced, decreases of 4.4% and 4.6% over the same period last
year, respectively. All-in sustaining cash cost per payable pound
of copper produced(1)(2) was $2.29.
Second Quarter Operational
Details
|
|
Q22019 |
Q22018 |
%Change |
Production (Contained in Concentrate)(3) |
|
|
|
|
Copper (000s lbs) |
|
3,157 |
5,220 |
-40 |
% |
Gold (oz) |
|
2,116 |
2,596 |
-19 |
% |
Silver (oz) |
|
6,914 |
10,014 |
-31 |
% |
Mine |
|
|
|
|
Tonnes of material mined |
|
47,321 |
67,255 |
-30 |
% |
Mill |
|
|
|
|
Tonnes processed |
|
47,534 |
67,308 |
-29 |
% |
Tonnes processed per day |
|
839 |
792 |
6 |
% |
Copper grade (%) |
|
3.28 |
3.76 |
-13 |
% |
Gold grade (g/t) |
|
2.34 |
2.02 |
16 |
% |
Silver grade (g/t) |
|
11.10 |
8.54 |
30 |
% |
Recoveries |
|
|
|
|
Copper (%) |
|
91.7 |
93.7 |
-2 |
% |
Gold (%) |
|
58.4 |
59.5 |
-2 |
% |
Silver (%) |
|
40.1 |
56.1 |
-29 |
% |
Concentrates |
|
|
|
|
Copper Concentrates (DMT) |
|
6,561 |
22,191 |
-39 |
% |
Copper (%) |
|
21.8 |
22.1 |
-1 |
% |
Gold (g/t) |
|
10.1 |
7.5 |
35 |
% |
Silver (g/t) |
|
32.8 |
29.1 |
13 |
% |
|
|
|
|
|
Payable copper produced (000s lbs) |
|
2,999 |
4,960 |
-40 |
% |
Cash cost per pound of payable copper ($/lbs)(1)(2) |
|
1.59 |
1.67 |
-5 |
% |
The financial statements and MD&A are
available on SEDAR and have also been posted on the company's
website at http://www.aticomining.com/s/FinancialStatements.asp
Second Quarter Exploration
Update
During the quarter, 4,314 meters of drilling
were completed at the El Roble project, of which 1,041 meters were
drilled underground looking for new massive sulphide deposits. On
surface, the Company completed 3,273 meters at Gorgona target
testing the new IP-DAS anomalies.
The Company’s second quarter exploration plans
and program were much shorter than planned due to the union
negotiations and strike at the El Roble mine which ended late in
April.
Core drilling program will continue in the third
quarter testing IP-DAS and gravity anomalies at depth and to the
southeast of the mine mineralization (Zeus plunge target). In
parallel, the Company plans to further test Archie, Gorgona and the
Eastern trend (regional targets) along with two new regional target
areas.
The Company plans to drill test at least three
to four targets in 2019 along with the follow-up drill program at
Archie and Gorgona.
Update on the Atico and Toachi Plan of
Arrangement
The Company entered into a definitive agreement
dated July 8, 2019 (the “Arrangement Agreement”) to acquire hundred
percent of Toachi Mining Inc. (“Toachi”) shares pursuant to a plan
of arrangement, whereby each of the issued and outstanding shares
of Toachi will be exchanged on a basis of 0.24897 common shares of
the Company. In early August, Toachi received the interim order
from the Ontario Superior Court of Justice in connection with
announced transaction. In addition, Toachi mailed out the
management information circular to all of its shareholders.
Assuming all conditions under the Arrangement Agreement are
satisfied, including the favourable outcome of the Toachi special
meeting of shareholders scheduled on September 3, 2019, Toachi will
seek the final order from the Ontario Court of Justice by September
9, 2019.
El Roble Mine
The El Roble mine is a high grade, underground
copper and gold mine with nominal processing plant capacity of 850
tonnes per day, located in the Department of Choco in Colombia. Its
commercial product is a copper-gold concentrate.
Since obtaining control of the mine on November
22, 2013, Atico has upgraded the operation from a historical
nominal capacity of 400 tonnes per day.
El Roble has Proven and Probable reserves of
1.47 million tonnes grading 3.40% copper and 1.88 g/t gold, at a
cut-off grade of 1.93% copper equivalent as of June 30, 2018.
Mineralization is open at depth and along strike and the Company
plans to further test the limits of the deposit.
On the larger land package, the Company has
identified a prospective stratigraphic contact between volcanic
rocks and black and grey pelagic sediments and cherts that has been
traced by Atico geologists for ten kilometers. This contact has
been determined to be an important control on volcanogenic massive
sulfide (“VMS”) mineralization on which Atico has identified
numerous target areas prospective for VMS type mineralization
occurrence, which is the focus of the current surface drill program
at El Roble.
Qualified Person
Mr. Thomas Kelly (SME Registered Member
1696580), advisor to the Company and a qualified person under
National Instrument 43-101 standards, is responsible for ensuring
that the technical information contained in this news release is an
accurate summary of the original reports and data provided to or
developed by Atico.
About Atico Mining Corporation
Atico is a growth-oriented Company, focused on
exploring, developing and mining copper and gold projects in Latin
America. The Company operates the El Roble mine and is pursuing
additional acquisition opportunities. For more information, please
visit www.aticomining.com.
ON BEHALF OF THE BOARD
Fernando E. GanozaCEOAtico Mining
Corporation
Trading symbols: TSX.V: ATY | OTC: ATCMF
Investor RelationsIgor DutinaTel:
+1.604.633.9022
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
No securities regulatory authority has either
approved or disapproved of the contents of this news release. The
securities being offered have not been, and will not be, registered
under the United States Securities Act of 1933, as amended (the
‘‘U.S. Securities Act’’), or any state securities laws, and may not
be offered or sold in the United States, or to, or for the account
or benefit of, a "U.S. person" (as defined in Regulation S of the
U.S. Securities Act) unless pursuant to an exemption therefrom.
This press release is for information purposes only and does not
constitute an offer to sell or a solicitation of an offer to buy
any securities of the Company in any jurisdiction.
Cautionary Note Regarding Forward
Looking Statements
This announcement includes certain
“forward-looking statements” within the meaning of Canadian
securities legislation. All statements, other than statements of
historical fact, included herein, without limitation the use of net
proceeds, are forward-looking statements. Forward- looking
statements involve various risks and uncertainties and are based on
certain factors and assumptions. There can be no assurance that
such statements will prove to be accurate, and actual results and
future events could differ materially from those anticipated in
such statements. Important factors that could cause actual results
to differ materially from the Company’s expectations include
uncertainties relating to interpretation of drill results and the
geology, continuity and grade of mineral deposits; uncertainty of
estimates of capital and operating costs; the need to obtain
additional financing to maintain its interest in and/or explore and
develop the Company’s mineral projects; uncertainty of meeting
anticipated program milestones for the Company’s mineral projects;
and other risks and uncertainties disclosed under the heading “Risk
Factors” in the prospectus of the Company dated March 2, 2012 filed
with the Canadian securities regulatory authorities on the SEDAR
website at www.sedar.com
Non-GAAP Financial Measures
The items marked with a "(1)" are alternative
performance measures and readers should refer to Non-GAAP Financial
Measures in the Company's Management's Discussion and Analysis for
the six months ended June 30, 2019 as filed on SEDAR and as
available on the Company's website for further details.
(1) Alternative performance measures; please refer to “Non-GAAP
Financial Measures” at the end of this release.(2) Net of
by-product credits(3) Subject to adjustments on final
settlement
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