Glass Earth Gold Limited: Financial Statements and Management's Discussion & Analysis for the First Quarter Ended March 31, 2...
May 24 2013 - 4:30PM
Marketwired Canada
Glass Earth Gold Limited (TSX VENTURE:GEL)(NZAX:GEL) ("Glass Earth" or the
"Company") announced today that it has filed its March 31, 2013 first quarter
Financial Statements and associated Management's Discussion and Analysis
("MD&A") report pertaining to that period with regulatory authorities.
Operational Activities
The Company's corporate and exploration activities for the quarter are
summarized in the attached Quarterly Overview. The Company's cash position as at
March 31, 2013 was $1,192,000 with trade payables of $497,000.
The Company faced a highly challenging quarter with the profitability of its
placer mining operations pressured from a drop in gold prices and lower than
expected productivity and grade. As a result, the Company reports a net loss for
the three months ending March 31, 2013 of $820,000 vs $1,236,000 for the similar
period in 2012.
Three months Three months Notes
ended ended
Mar 31 2013 Mar 31 2012
--------------- ---------------
Gold Mining Revenue 1,381,000 167,000 1
Mining costs (1,627,000) (185,000) 2
Depreciation and amortisation (270,000) (6,000)
--------------- ---------------
--------------- ---------------
Gross (Loss) (516,000) (24,000) 2
Administrative and Personnel
expenses (215,000) (346,000)
Salaries (net of exploration costs) (69,000) (64,000)
Finance (loss)/income (20,000) 14,000
Non-cash items
Stock based compensation - (556,000)
Write down of mineral properties - (260,000)
--------------- ---------------
--------------- ---------------
Loss before & after Income Taxes (820,000) (1,236,000)
--------------- ---------------
--------------- ---------------
Notes:
1. Sales revenues of $1.38m for Q1, from mining operations, matched the
previous Q4 sales of $1.4m and were a significant advance on the prior
year period.
2. The mining operations reported a cash operating loss of $246,000 for the
3 months. Depreciation of equipment and amortisation of exploration and
acquisition costs for the quarter stood at $270,000.
Placer Mining
While management devoted a considerable time to setting up placer mining
operations, its profitability has been disappointing. It reported a negative
cash cost of $246,000 for the quarter, with lower cash losses expected for Q2.
This is due to continuing productivity and cost inefficiencies in operating two
sites, during the day only, coupled with a dramatic drop in the price of gold.
During Q1 2013, 78,000m3 of gold bearing wash was processed at a recovered grade
of 330mg/m3 for 830oz gold. That was 20% under budget and the major reason for
cash generation underperformance.
Therefore, the Company's response to the losses incurred is to maximise
efficiencies and reduce leased equipment costs by changing to a mining regime on
a 24/7 basis on one site only. Grade control is also being reassessed in the
light of the reduced gold price. The changeover is scheduled for late May.
"In spite of the severity of the adverse market conditions, management believes
in the benefits of a consistent and focused strategy, supported by the full
support and dedication of our team", said Simon Henderson, CEO of Glass Earth
Gold.
In Q2, Glass Earth is expecting to report a cash loss from placer mining but
that trend is expected to reverse with the above noted changes and placer mining
is expected to generate positive cash flow in Q3 and Q4 while producing
approximately 2,600 oz of gold.
Simon Henderson added: "The uncertainties around the price of gold remain a
major concern. Our forecasts for the next quarter points towards modest
profitability and positive cash generation, based on price of US$1,400/oz, which
we believe is sustainable. Moreover, the Glass Earth gold team remains committed
to delivering enhanced results on operational metrics, therefore supporting the
validity of our business model at this stage. We believe that consistency and
determination in the execution of our business model remains the Company's best
asset and will enable us to ride through this challenging period."
About Glass Earth Gold
Glass Earth Gold is one of New Zealand's most active gold exploration companies
with landholdings proximal to producing deposits and cash flow from its wholly
owned placer projects. With an experienced geological team the Company is
exploring promising gold prospects across both the North and South Islands.
In the North Island, exploration efforts are focused on large epithermal gold
systems in the Hauraki Region, akin to the operating Martha Hill mine, (Newmont
Mining).
In the Hauraki Region, Glass Earth Gold has identified and developed significant
ground positions around the active Martha Hill gold mine operations at Waihi.
The Newmont-Glass Earth Gold Waihi West JV (Newmont earning in) and Hauraki JV
(65/35), including drilling at the WKP discovery, are being actively explored
and managed by Newmont in collaboration with Glass Earth Gold.
The recent announcement that Glass Earth Gold has acquired option rights to the
Neavesville gold/silver prospect (just north of WKP) will mean an increased
exploration focus in the Hauraki region.
In the South Island, exploration efforts are focused on the Otago Region, home
to OceanaGold's Macraes Goldfield, for identification of mesothermal
"Macraes-style" gold targets and revenue generation through placer (alluvial)
gold production.
Mr Simon Henderson, MSc Geology (CODES), an AusIMM Chartered Professional under
the Discipline of Geology; is a Qualified Person as defined by National
Instrument 43-101 and an employee of the Company, and has reviewed and approved
the technical information given above.
For more information on Glass Earth Gold, please visit www.glassearthgold.com.
GLASS EARTH GOLD LIMITED ("GEGL")
For the three months ended March 31, 2013
QUARTERLY OVERVIEW
EXPLORATION
The three key aspects of the Company's strategy are:
1. Transition advanced projects from exploration to delineation
2. Demonstrate not just geological potential; but also the skills,
resources and determination to deliver on the promised value.
3. A third key ingredient here is the focus on just two projects,
Wharekirauponga (WKP) and Neavesville, sustained by the placer mining
being run autonomously by its own Operations Manager. The aim is to
deliver within a 2-3 year timeframe, on both projects.
Progress on these aspects is as follows:
Wharekirauponga (WKP) Gold Project in Hauraki, New Zealand
Newmont Waihi Gold (65%); Glass Earth Gold Limited (35%)
The HJV has commenced a significant exploration programme for 2013, focussing
initially on the evaluation of the Eastern Graben Structure and to include a
project first resource estimate, metallurgical test work, rock engineering
study, geophysics and a 2,500m diamond drill programme. The estimated cost for
this programme is NZ$2.7 million (C$2.2m).
In April 2013, the Company announced the results of drill holes 36 and 37 at the
WKP gold-silver prospect, Hauraki, New Zealand and, after a period of three
months, when drilling was interrupted due to the drought conditions prevailing
in New Zealand, the commencement of its 2013 diamond drill program.
Holes WKP 36 and 37 carried modest grade intersections, and bring useful
information on the structure of the mineralised system that occurs at WKP and
contribute to narrowing down targets for the current drilling campaign.
This marks a further step forward in the development of this project, where
several broad zones of 100m of 1 g/t gold and silver, and significant high grade
intersections 3-9m of 15-60 g/t gold and silver have encouraged the exploration
team. Results to date have demonstrated that the WKP project as a whole
represents a very large gold mineralised system.
Neavesville Gold Project in Hauraki, New Zealand (Glass Earth 50%)
Located immediately north of the WKP project and Martha Mine, Hauraki, New
Zealand).
Prior to work commencing access arrangements with local Iwi landowners is
required, these negotiations are progressing.
Following successful access negotiations, field work is planned to:
-- re-interpret geological model & recalculate resource potential;
-- Commence resource drill programme to update and improve confidence of
resources
-- follow-up on additional multiple gold/silver targets identified.
The Neavesville project offers the opportunity to have management and control
over the development of a significantly advanced gold /silver project. The
project also offers tantalising new targets to increase the size and potential
of the prospect. In the vicinity of GEG's other Hauraki projects (WKP,
Glamorgan, and Waihi West), Neavesville will focus GEG's exploration/development
efforts in the region of Newmont Waihi Gold's, Martha Hill mining operations.
PLACER MINING - Central Otago, New Zealand
The technical work in the NI 43 101 Technical Report on Glass Earth's Placer
Projects, lodged in February 2013, consolidated GEGL's existing knowledge of its
placer gold resources offering potential to extend the placer mining operations
for a significant period.
-- Sales revenues of $1.38m for Q1, from mining operations, matched the
previous fourth quarter sales of $1.4m and were a significant advance on
the prior year period (3 months to 31 March 2012, $0.167m).
-- The mining operations reported a cash operating loss of $246,000 for the
3 months. Depreciation of equipment and amortisation of exploration and
acquisition costs for the quarter stood at $270,000.
-- The Company's response is to mine on a 24/7 basis on one site only, in
order to maximise efficiencies and reduce leased equipment costs. Grade
control is also being reassessed in the light of the reduced gold price.
The changeover is scheduled for late May.
-- In Q2, Glass Earth is expecting to report a lower cash loss from placer
mining but that trend is expected to reverse with the above noted
changes and placer mining is expected to generate positive cash flow in
Q3 and Q4 while producing approximately 2,600 oz of gold.
FINANCIAL
The Company's cash position as at March 31, 2013 was $1,192,000;
-- Trade payables totalled $497,000;
-- Current and term liabilities in relation to the placer acquisition
comprise sixteen monthly payments of NZ$80,000 (C$65,936);
FOR FURTHER INFORMATION PLEASE CONTACT:
Glass Earth Gold Limited
Simon Henderson
President and Chief Executive Officer
+64 4 903 4980
info@glassearthgold.com
www.glassearthgold.com
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