TORONTO, April 13, 2016 /CNW/ - Anaconda Mining Inc.
("Anaconda" or the "Company") – (TSX:ANX) is pleased to report its
financial and operating results for the three and nine months ended
February 29, 2016. All amounts are
expressed in Canadian Dollars unless otherwise noted. During the
third quarter of fiscal 2016, the Company sold 3,266 ounces of gold
and generated $4,988,063 in revenue
at an average sales price of $1,527
(USD$1,099) per ounce. Cash cost per
ounce sold at the Point Rousse Project for the three months ended
February 29, 2016 was $1,188 (USD$855).
Earnings before interest, taxes, depreciation and amortization and
other non-cash expenses ("EBITDA") at the project level were
$1,106,940. Net loss for the three
months ended February 26, 2016 was
$623,997. As at February 26, 2016, the Company had cash and cash
equivalents of $889,527 and net
working capital of $1,454,913.
President and CEO, Dustin Angelo,
stated, "During the third quarter of fiscal 2016, the Company had
some long term positive developments and some short term
challenges. In February, we acquired, via option, the Viking
project on the Northern Peninsula. It gives us established
historical resources and a great potential to build another
significantly sized project to feed the Pine Cove mill. We also
processed over 15,000 tonnes of ore from Stog'er Tight. In total,
the Pine Cove mill processed over 90,000 tonnes, but at an average
head grade of just under 1.5 grams per tonne. Overall recovery and,
to a lesser extent, throughput were impacted during the quarter by
the failure of the regrind mill in December. Fortunately, as we
moved into the fourth quarter, we were able to gain some experience
with the SMD that has temporarily replaced the regrind mill and
have seen recoveries return to normal as of March. The replacement
component for the regrind mill is on site and currently being
installed, after which, we expect to increase throughput. We
continue to address the reduction in grade and have plans in place
to improve head grade, which, based on the Pine Cove mine plan, is
a short term issue."
Highlights for the three and nine months ended February 29, 2016
- As at February 29, 2016, the
Company had cash and cash equivalents of $889,527 and net working capital of $1,454,913.
- For the three months ended February 29,
2016, the Company sold 3,266 ounces of gold and generated
$4,988,063 in revenue at an average
sales price of $1,527 (USD$1,099) per ounce.
- For the nine months ended February 29,
2016, the Company sold 11,827 ounces of gold and generated
$17,571,939 in revenue at an average
sales price of $1,486 (USD$1,120) per ounce.
- Cash cost per ounce sold at the Point Rousse Project for the
three and nine months ended February 29,
2016 was $1,188 (USD$855) and $1,049 (USD$791)
per ounce respectively.
- All-in sustaining cash cost per ounce sold ("AISC") (see
Reconciliation of Non-GAAP Financial Measures), including corporate
administration, capital expenditures and exploration costs for the
three and nine months ended February 29,
2016 was $1,676 (USD$1,206) and $1,493 (USD$1,126)
per ounce respectively.
- The mill processed 1,038 tonnes of ore per operating day for
the three months ended February 29,
2016.
- The overall recovery in the mill for the three and nine months
ended February 29, 2016 was 81% and
85% respectively.
- At the Point Rousse Project, EBITDA (see Reconciliation of
Non-GAAP Financial Measures) for the three and nine months ended
February 29, 2016 was $1,106,940 and $5,164,219 respectively.
- On a consolidated basis, EBITDA for the three and nine months
ended February 29, 2016 was
$367,888 and $3,339,943, respectively.
- Net loss for the three and nine months ended February 29, 2016 was $623,997 and $42,876 respectively.
- Purchase of property, mill and equipment for the nine months
ended February 29, 2016 was
$2,586,817. Key items included mill
automation and equipment upgrades of $794,000, tailing expansion costs of $472,000, polishing pond construction of
$306,000, construction of ore shed
enclosure of $204,000, pit
development costs of $748,000 at Pine
Cove and Stog'er Tight.
- Production stripping assets for the nine months ended
February 29, 2016 include additions
of $1,238,245 and amortization of
$37,258.
- Approximately $910,000 was spent
at Point Rousse on exploration for the nine months ended
February 29, 2016. The Company's
exploration initiatives included:
- Publishing a 43-101 Technical Report on the Point Rousse
Project that included a mineral resource estimate at the Stog'er
Tight and Pine Cove deposits;
- Completed a trenching program adjacent to the Stog'er Tight
deposit designed to expose near surface mineralization;
- Initiated a drill program at Stog'er Tight to test the depth
and strike extents of the Stog'er Tight deposit;
- Completed a geological mapping and trenching program at the
Argyle zone;
- Completed a drilling program at the Pine Cove Pond area
adjacent to the Pine Cove pit;
- On February 5, 2016 the Company
completed the acquisition of Viking.
Operations overview
During the three months ended February
29, 2016, the gold sales volume of 3,266 ounces represented
a 28% decrease over the same period in fiscal 2015, due to reduced
grade and recovery. This was slightly offset by increased ore
tonnes processed as well as an increased average gold sales price
for the three months ended February 29,
2016. As a result of the lower sales volume, gross revenue
for the three months ended February 29,
2016 of $4,988,063 was lower
period over period by $1,278,691 or
20%.
The following table summarizes the key operating metrics for the
three and nine months ended February 29,
2016 and February 28,
2015:
OPERATING
STATISTICS:
|
For the three
months ended
|
For the nine
months ended
|
February
29
2016
|
February 28
2015
|
February 29
2016
|
February 28
2015
|
Mill
|
|
|
|
|
Operating
days
|
88
|
83
|
255
|
251
|
Availability
|
98%
|
92%
|
93%
|
92%
|
Dry tonnes
processed
|
91,370
|
87,386
|
283,531
|
256,683
|
Tonnes per 24-hour
period
|
1,038
|
1,053
|
1,112
|
1,023
|
Grade (grams per
tonne)
|
1.48
|
1.84
|
1.59
|
1.75
|
Overall mill
recovery
|
81%
|
83%
|
85%
|
84%
|
Gold sales volume
(troy oz.)
|
3,266
|
4,508
|
11,827
|
11,872
|
Mine -
Total
|
|
|
|
|
Operating
days
|
62
|
59
|
204
|
186
|
Ore production
(tonnes)
|
78,196
|
81,459
|
299,607
|
248,187
|
Waste production
(tonnes)
|
584,345
|
370,209
|
1,787,134
|
1,319,636
|
Total production
(tonnes)
|
662,541
|
451,668
|
2,086,741
|
1,567,823
|
Waste: Ore
ratio
|
7.5
|
4.5
|
6.0
|
5.3
|
Mine - Pine Cove
Pit
|
|
|
|
|
Operating
days
|
62
|
59
|
204
|
186
|
Ore production
(tonnes)
|
69,849
|
81,459
|
280,074
|
248,187
|
Waste production
(tonnes)
|
564,832
|
370,209
|
1,737,378
|
1,319,636
|
Total production
(tonnes)
|
634,681
|
451,668
|
2,017,452
|
1,567,823
|
Waste: Ore
ratio
|
8.1
|
4.5
|
6.2
|
5.3
|
Mine - Stog'er
Tight
|
|
|
|
|
Operating
days
|
8
|
-
|
17
|
-
|
Ore production
(tonnes)
|
8,347
|
-
|
19,533
|
-
|
Waste production
(tonnes)
|
19,513
|
-
|
49,756
|
-
|
Total production
(tonnes)
|
27,860
|
-
|
69,289
|
-
|
Waste: Ore
ratio
|
2.3
|
-
|
2.5
|
-
|
MILLING OPERATIONS
The Pine Cove mill operated for 88 days during the third quarter
of fiscal 2016 at an availability rate of 98% compared to 92% in
the third quarter of fiscal 2015. Grade for the three months ended
February 29, 2016 was 1.48 g/t, a 20%
decrease from the same period in fiscal 2015. Recovery also
decreased from 83% to 81% period over period. For the Quarter, the
mill processed 91,370 dry tonnes of ore, an increase of 5% compared
to the third quarter of fiscal 2015. The mill's run rate for the
Quarter was 1,038 tonnes per operating day.
The Company processed 15,167 tonnes of ore from the Stog'er
Tight deposit at an average grade of 1.66 g/t, producing 638 ounces
of gold. For this initial tonnage, the Company did not experience
any material differences in processing the Stog'er Tight ore
compared to the Pine Cove ore.
Mill throughput per operating day and recovery were lower than
normal during the third quarter due to mechanical issues with the
regrind mill, which ensures the proper feed size of the ore prior
to leaching. In the early part of the Quarter, throughput at the
primary ball mill was reduced to get a finer grind than usual at
that stage to compensate for the loss of the regrind mill. The
Company, then, implemented a contingency plan where it replaced the
regrind mill with a stirred media detritor ("SMD"). The
commissioning of the SMD still required a slightly finer product
from the primary ball mill (thus, hindering throughput) to manage
the requisite product size from the SMD. Because of the
inconsistent grind size going into the leaching circuit, recovery
suffered during the quarter. By the end of the Quarter and the
beginning of the fourth quarter, the Company began to optimize the
new system and return to normal throughput and recovery levels. The
Company expects the repairs to the regrind mill to be completed by
the end of April, at which time it plans to switch from the SMD
back to the original regrind mill.
MINING OPERATIONS
During the third quarter of fiscal
2016, the mining operations at Point Rousse included 62 days of
production at the Pine Cove pit and 8 days of production at the
Stog'er Tight deposit. Total production was 78,196 tonnes of ore
and 584,345 tonnes of waste including 8,347 tonnes of ore and
19,513 tonnes of waste from Stog'er Tight. Mining production
increased 47% in the third quarter of fiscal 2016 compared to the
third quarter of fiscal 2015 to gain greater access to new areas of
ore in the third phase of the Pine Cove pit. The Company has
benefited from the use of the North Pit Waste Dump, which has
reduced haul distance and per tonne cost of waste mined.
EXPLORATION
The Company is pursuing a strategy to
leverage the existing infrastructure at Point Rousse by exploring
and developing its mineral licenses and mining leases at the Point
Rousse and Viking Projects in search of two general mineralization
styles: Pine Cove-like, quartz-carbonate-pyrite hosted (2+ g/t)
mineralization (baseload production sources) and higher grade (5+
g/t) quartz vein ± carbonate ± pyrite mineralization. The Company
is working on expanding the current Pine Cove pit resource and
bringing the Stog'er Tight and Thor deposits into production to
extend the life of Point Rousse by expanding resources and
reserves. Anaconda is also exploring and delineating potentially
higher-grade deposits to blend with relatively lower grade Pine
Cove, Stog'er Tight and Thor ore. With the high grade "layer" and a
marginal increase to throughput, the Company's goal is to increase
annual production to approximately 30,000 ounces. The Company
envisions creating an operating complex on the Ming's Bight
Peninsula and at Viking with multiple pits and trucking the ore or
processed ore back to the Pine Cove mill.
Consistent with this strategy, in the quarter ended February 29, 2016, the Company has made the
following advances in exploration:
- Published a 43-101 Technical Report outlining mineral resources
at the Stog'er Tight and Pine Cove deposits and the Point Rousse
mineral project;
- Completed a trenching program adjacent to the Stog'er Tight
deposit designed to expose near surface mineralization;
- Initiated a drill program at Stog'er Tight to test the depth
and strike extents of the Stog'er Tight deposit;
- Completed a geological mapping and trenching program at the
Argyle zone;
- Completed a drilling program at the Pine Cove Pond area
adjacent to the Pine Cove pit;
- Completed the acquisition of the Viking Project.
The Point Rousse Project
During the course of Anaconda's exploration and development
efforts at the Point Rousse Project, three primary gold trends have
been identified within the Point Rousse area, with a cumulative
prospective strike length of approximately 20 kilometres. The
Company's recent exploration work, combined with historical
results, has brought more clarity, understanding and confidence to
the Company's geological interpretations and models. The Company
believes it has the potential to discover and develop multiple
deposits on the Ming's Bight Peninsula. As a result, Anaconda
believes that the Point Rousse Project area has the potential to
host resources which could allow the Company to realize its goals
of doubling production and continuing to mine for 10 years or more.
Exploration and development efforts during the past year has
focused entirely on implementing this strategy by focusing on
extending the baseload production centered on Pine Cove and Stog'er
Tight, as well as the discovery of a high-grade gold source in the
project area.
Below is a brief overview of the gold trends on the Ming's Bight
Peninsula and Anaconda's exploration efforts within them with
specific reference to the Pine Cove and Stog'er Tight deposits and
recent exploration work on these deposits.
The Scrape Trend
The Scrape Trend consists of a belt
of highly prospective rocks approximately 7 kilometres long and
approximately 1 to 2 kilometres wide. It begins southwest of the
Pine Cove pit and continues eastward to the community of Ming's
Bight. The Scrape Trend includes the Pine Cove and Stog'er Tight
deposits as well as the Romeo & Juliet, Anaroc and Animal Pond
prospects and a new discovery referred to as the Argyle zone. These
gold occurrences align with a fault delineated by a topographic
lineament. The Scrape Trend hosts both baseload and high-grade
styles of mineralization.
The Stog'er Tight and Pine Cove Resource
Calculation
On October 22,
2015, the Company announced the results of a 43-101
compliant mineral resource estimate at the Stog'er Tight and Pine
Cove deposits. The technical report was filed on SEDAR on
December 8, 2015. These resource
calculations represent an important step in the Company's strategy
to extend the life of the Point Rousse Project. With these new
resource calculations, the Company is beginning to build a
portfolio of ounces and demonstrate the potential of the Point
Rousse Project.
The following tables summarize the mineral resources and
reserves estimate for the Point Rousse Project:
Stog'er Tight
Resources1
|
Category
|
Cut-Off
(g/t)
|
Tonnes
|
Grade
(g/t)
|
Ounces of
gold
|
Indicated
|
0.8
|
204,100
|
3.59
|
23,540
|
Inferred
|
0.8
|
252,000
|
3.27
|
26,460
|
|
Pine Cove
Resources2
|
Category
|
Cut-Off
(g/t)
|
Tonnes
|
Grade
(g/t)
|
Ounces of
gold
|
Indicated
|
0.7
|
1,499,500
|
1.61
|
77,390
|
Inferred
|
0.7
|
220,700
|
1.59
|
11,260
|
|
Pine Cove
Reserves
|
Category
|
Cut-Off
(g/t)
|
Tonnes
|
Grade
(g/t)
|
Ounces of
gold
|
Probable
|
0.7
|
858,855
|
1.46
|
40,400
|
|
|
|
|
|
1 –
Mineral resources that are not mineral reserves do not have
demonstrated economic viability
2 – The Pine Cove resource statement includes the Pine
Cove reserves
|
The Stog'er Tight deposit trends east-southeasterly and is
exposed over approximately 300 metres of strike. Mineralized
lenses vary from a few, to greater than 10 metres in thickness and
to a depth of approximately 100 metres. The deposit is
characterized by intense carbonate, albite, pyrite alteration of
gabbroic rocks with gold closely associated with pyrite as at the
Pine Cove deposit.
The Pine Cove deposit generally trends easterly and consists of
a series of stacked mineralized zones across 350 metres that vary
in strike length from 25 to 250 metres. Mineralization extends down
dip for approximately 800 metres, though approximately 300 metres
of the dip extent has been excluded from the current resource
estimate since it is not currently feasible for open-pit mining
because of its depth (between 175 and 300 metres from surface). The
deposit is characterized by carbonate, quartz, pyrite, albite
alteration with gold occurring with pyrite. The deposit has been
continually mined since 2009 with a current production rate of
approximately 16,000 ounces per year.
The Stog'er Tight Trenching Program
On December 17, 2015, the Company announced the
results of its fall exploration program on the Stog'er Tight
deposit. The program was focused on continuing to expand mineral
resources along strike and adjacent to the Stog'er Tight deposit.
The program included the excavation of 6 trenches and the
collection of 219 one-metre channel samples in the East, West and
Gabbro zones following up on historical mapping and trenching that
indicated the presence of mineralization.
The primary goal of the program was to test the hypothesis that
the East and West zones are continuous with the Stog'er Tight
deposit at surface and that the East Gabbro zone is a separate zone
of mineralization. The deposit has a known, near-surface strike
length of approximately 300 metres. The results of the trenching
and channel sampling program indicate that the East zone
mineralization is contiguous with the Stog'er Tight deposit over a
distance of 100 metres. The West zone was confirmed to contain
mineralization over a strike length of at least 80 metres, but
appears to be offset by approximately 25-40 metres along a fault
south of the main trend of the deposit. Consequently, the strike
length of mineralization exposed at surface at Stog'er Tight,
including the deposit and the East and offset West zones, is now
approximately 480 metres. Trenches across the East Gabbro zone
intersected alteration, but did not produce appreciable gold
grades.
The table below summarizes the composited grades associated with
the trenching and channel sampling program.
Channel
ID
|
Interval
(m)
|
Grade
(g/t)
|
STtr15-05-A
|
3
|
0.56
|
STtr15-05-B
|
8
|
10.77
|
STtr15-05-C
|
11
|
17.76
|
STtr15-05-D
|
12
|
11.02
|
STtr15-05-E
|
3
|
9.21
|
STtr15-05-F
|
4
|
6.86
|
STtr15-08
|
1
|
1.43
|
STtr15-09
|
12
|
0.98
|
STtr15-10
|
9
|
4.38
|
Composites are 80-95%
of true thickness.
|
|
The recognition of significant near-surface mineralization
immediately along strike from the Stog'er Tight deposit is a
positive sign that near-term growth of mineral resources is
possible. The results of this program enable the Company to develop
a focused diamond drill program targeting near-surface
mineralization with the goal of expanding the mineral resource at
Stog'er Tight.
On January 21, the Company
announced the initiation of a diamond drill program at Stog'er
Tight. The primary goal of the program is to determine if the
surface mineralization, exposed during a recent trenching and
channel sampling program, continues down-dip. If mineralization is
intersected down-dip of that found at surface in the East and West
zones, it may be possible to demonstrate geological continuity, and
ultimately the extension of the Stog'er Tight deposit. A secondary
goal of the program is to test the hypothesis that a third zone of
mineralization, the Gabbro zone, is geologically contiguous with
the West zone. If true, then the results will indicate that the
Gabbro zone, the West zone and, potentially, the Stog'er Tight
deposit are all part of a continuous mineralized system. All drill
holes are planned with the ultimate goal of increasing mineral
resources at Stog'er Tight.
The Argyle Zone Trenching Program
On January 8, 2015, the Company announced the
discovery of the Argyle zone through a trenching program. The new
discovery is located approximately 5 kilometres from the Pine Cove
mill and consists of two areas of mineralization located
approximately 200 metres apart. On November
16, 2015, the Company announced a geological mapping and
trenching program to better understand the geological controls and
surface distribution of mineralization. The mapping indicated that
the Argyle zone is associated with a style of alteration very
similar to the Stog'er Tight deposit – specifically the
albitization and carbonatization of gabbroic rocks. Four trenches
were designed to expose the potential along strike to the two zones
of mineralization.
On January 21, 2016, the Company
announced the results of its second trenching program at Argyle.
The program consisted of the excavation of overburden along four
trenches over 181 metres and channel sampling of 68 metres of the
exposed bedrock. The goal of the program was to determine if the
two previously exposed zones of mineralization are contiguous and
demonstrate geological continuity along the Argyle prospect.
Three of the four trenches tested the eastern portion of the
prospect where it was previously constrained by a single trench. A
fourth trench tested the western limits of the prospect.
In the eastern area, trench AEtr15-18 returned 1.89 g/t Au over
10 metres. It is located 40 metres west of trench AEtr14-12, which
contained 1.31 g/t Au over 11 metres, and 160 metres east of trench
AEtr14-08, which contained 3.75 g/t Au over 16 metres (the latter
two results were previously reported on January 8, 2015 and referred to as trenches A8
and A12). Trench AEtr15-19 intersected anomalous mineralization and
a broad alteration zone consistent with alteration throughout the
prospect area, but was not sampled across the entire trench due to
poor ground conditions. Trench AEtr15-17 did not intersect
alteration or mineralization. Trench AEtr15-20 exposed anomalous
gold mineralization and the continuation of the alteration zone at
the most westerly end of the Argyle prospect.
Geological mapping and interpretation of the analytical results
indicate that the two previously exposed zones of mineralization
are contiguous and that there is geological continuity throughout
the Argyle prospect over a strike length of 300 metres. Gold grades
and alteration character are similar in style and tenor to those
observed at the Stog'er Tight deposit.
Drilling at the Pine Cove Deposit
On November 16, 2015 the Company announced it
initiated a targeted diamond drilling program adjacent to the Pine
Cove deposit focused on the southern margins of the mine in an area
known as Pine Cove Pond. On January 25,
2016 the Company announced results of the drill program,
which consisted of 1,156 metres of diamond drilling within 14
shallow holes. The program was focused on the southern margins of
the Pine Cove deposit at a maximum depth of 75 metres in an area
known as Pine Cove Pond, which is currently not part of the mine
plan. Geological and geophysical evidence suggest that the Pine
Cove Pond area may contain the easterly and westerly continuation
of the southern portion of the Pine Cove deposit. The goal of the
drill program was to understand the limits of known mineralization
and establish Mineral Reserves in the Pine Cove Pond area to extend
the mine life of the Pine Cove deposit.
Highlights of the drilling included:
- 2.11 g/t Au over 10.5 metres from 9.5 – 20.0 metres and 1.4 g/t
Au over 9.0 metres from 24.0 – 33.0 metres in hole PC-15-256
- 2.68 g/t Au over 15.9 metres from 6.1 – 21.0 metres in hole
PC15-257
- 3.16 g/t Au over 5.5 metres from 3.5 – 9.0 metres in hole
PC15-252
- 1.14 g/t Au over 4.0 metres from 41.0 – 45.0 metres in hole
PC15-259
- 1.47 g/t Au over 2.8 metres from 38.0 - 41.8 metres in hole
PC15-253
The drill program was successful in extending known
mineralization at the Pine Cove deposit 25 metres to the south,
east and west of the current compliant resource. The results
indicate that the southern portion of the deposit is open for
expansion to the west, near surface, in the area of the hole
PC15-257 intersection, and open for expansion east and west of the
hole PC15-252 intersection. The Company plans follow up drilling to
better outline resources in these areas and test the limits of the
deposit. The Company will incorporate this information to determine
if current and other potential resources can be included in the
Pine Cove deposit mine plan.
The discovery of near-surface mineralization at these grades,
that is open for expansion at the southern margins of the mine, is
a positive sign that this part of the Pine Cove deposit could be
expanded and potentially included in our mine plan.
The Goldenville Trend
The Goldenville Trend is an
8-kilometre long trend of highly prospective rocks centered on an
iron stone unit referred to as the Goldenville Horizon. The Company
believes the trend to be highly prospective because the trend is
thought to contain ironstone hosted gold deposits including the
Corkscrew deposit recently optioned from Seaside Realty (see press
release of August 4, 2015).
Mineralization within the Goldenville Trend is a well-established
geological model and the region is known to host these deposits.
The Goldenville Trend has numerous gold prospects including four
small, historical, hand-dug shafts, which were developed to mine
visible gold. Anaconda is exploring the Goldenville Trend for
high-grade deposits on the order of approximately 250,000 ounces of
gold at 5 g/t or more (based on similar deposits and historical
production within the region). If the Company is successful, it
will have a longstanding high-grade feed source for the Pine Cove
mill to layer on top of the baseload production from other sources
like Pine Cove or Stog'er Tight.
No significant exploration field work was conducted during the
three months ended February 29,
2016.
The Deer Cove Trend
The Deer Cove Trend is located in
the northern part of the Ming's Bight Peninsula and consists of a
belt of prospective rocks approximately 3.5 kilometres in strike
length. It is associated with the Deer Cove thrust fault and
includes the Deer Cove deposit as well as various other showings
and prospects.
Historical drill results suggest that the Deer Cove deposit
could be a source of high-grade feed for the Pine Cove mill. Past
development work includes a drill program on the Deer Cove deposit
in 2014 to better outline the distribution of high-grade gold
within the vein and to test the vein down-dip. The program
consisted of 2,090 metres of diamond drilling in 20 holes (see
press release dated February 27,
2015). The results indicate that the deposit does continue at
depth but that the high-grade portion of the deposit was not
present to the depths tested.
No significant exploration field work was conducted during the
three months ended February 29, 2015.
The Company plans to update the deposit model with the most recent
drill results and assess the deposits ability to be developed as a
source of high-grade ore.
Future Plans
The goal at the Stog'er Tight deposit is
to outline and begin development of at least five years of
production. Consistent with this goal, the Company conducted
a stripping and channel sampling program to expose and characterize
the deposit and the associated geology. This was followed up with a
small drill program to test the extents of mineralization adjacent
to the deposit. Plans were also developed to conduct metallurgical
test work and to take a bulk sample for processing at the Pine Cove
mill. Following a resource calculation the Company began work to
expand on that resource by testing the limits of surface exposures
of mineralization along strike from the deposit and also within
adjacent areas. Based on the success of the most recent trenching,
the Company has initiated a drill program to test the down dip
extents of mineralization exposed at surface, outside of the
current resource.
The Company plans to further evaluate the resource potential
along the Goldenville trend and the Argyle zone. In the Goldenville
trend the Company is exploring for a high-grade (5+ g/t) source of
gold that can be processed with the baseload production. Plans are
being made to make advances on this trend in fiscal 2017.
Similarly, work is being planned to advance the Argyle zone.
The Viking Project
On February 10, 2016 the Company
announced it acquired the Viking Project, which contains the Thor
deposit and adjacent, contiguous prospective geology. Viking is
located near the communities of Pollards
Point and Sop's Arm in White Bay, Newfoundland and Labrador, approximately 180 km by road (100 km
by barge) from Point Rousse, and is accessible via a 2.5 km forest
road from provincially maintained paved road networks. Viking
encompass 6,225 hectares of highly prospective mineral lands.
The Thor deposit contains a historical mineral resource estimate
as summarized below:
Resource
Category
|
Cut-off
(g/t)
|
Tonnes
|
Grade
(g/t)
|
Ounces of gold
(Au)
|
Indicated
|
1.0
|
937,000
|
2.09
|
63,000
|
Inferred
|
1.0
|
350,000
|
1.79
|
20,000
|
The Company plans to verify all available historical data, fully
integrate the data into its database, and complete an assessment of
the Thor deposit and exploration potential of the entire project
area. It will refine the Thor deposit geological model to
incorporate a new geologic interpretation and ultimately generate a
new mineral resource estimate. Contemporaneous with data and
resource model assessment, Anaconda will create a preliminary
development plan to evaluate the project viability based on
leveraging the Pine Cove mill.
The Company is planning a field program, based on the
aforementioned work, for early summer of 2016 to advance the
project. Additionally, metallurgical testing will be completed on
mineralized intervals from the Thor deposit drill core to further
assess compatibility with the Pine Cove mill flowsheet.
The historical mineral resource estimate referenced above is
taken from a technical report filed on SEDAR titled "MINERAL
RESOURCE ESTIMATE UPDATE FOR THE THOR TREND GOLD DEPOSIT, NORTHERN
ABITIBI MINING CORP., White Bay Area, Newfoundland and Labrador, Canada, Latitude 49o 42' N Longitude
57 o 00' W." prepared for Northern Abitibi Mining Corp. by Dr.
Shane Ebert, P. Geo. and
Gary Giroux, P. Eng. MASc.,
December 30, 2011. The historical
mineral resource estimate of the Thor deposit is based on 109
diamond drill holes totaling 15,574m and 74 lines of surface
channel samples cut from trenches using a diamond saw. Gold
mineralization was constrained within a 3-dimensional geological
solid built using Gemcom software. Gold assays within the
mineralized solid were capped at 66.0 g/t Au while those outside
the solid were capped at 4.0 g/t Au. Drill hole assay samples were
composited into 2.5m intervals and a block model with 5m x 5m x 5m
block size was created. Gold grades were interpolated into all
blocks, by a combination of ordinary and indicator kriging. The
Company considers the NI 43-101 report to be relevant and reliable
given that the report was published recently and that no additional
work of significance has been completed since the issuance of the
historical mineral resource estimate.
In addition to the historical mineral resource estimate, other
historical exploration efforts include: 146 holes of diamond
drilling totaling 21,271m; excavation of 67 trenches and associated
channel sampling; high-resolution airborne magnetic and
electromagnetic geophysical surveying; ground induced polarization,
magnetic and VLF surveys, rock and soil sampling and geological
mapping.
Viking is the first step out from the Point Rousse Project and
adds significant resources to the Company's portfolio within
striking distance of the Pine Cove mill. Our intent is to process
any ore mined from this property at the Pine Cove mill so as to
leverage our existing infrastructure. Beyond the historical
indicated and inferred mineral resources at Viking, the Company is
encouraged by the overall gold bearing potential of the
project.
The information contained within the exploration section above
has been reviewed and approved by Paul
McNeill, P. Geo., VP Exploration with Anaconda Mining Inc.,
a "Qualified Person", under National Instrument 43-101 Standard for
Disclosure for Mineral Projects.
Reconciliation of Non-GAAP financial measures
The Company has included certain non-GAAP financial measures in
this document. These measures are not defined under IFRS and should
not be considered in isolation. 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. The inclusion of these
measures is meant to provide additional information and should not
be used as a substitute for performance measures prepared in
accordance with IFRS. These measures are not necessarily standard
and therefore may not be comparable to other issuers.
Adjusted net earnings measure the performance of the Company,
excluding certain impacts which the Company believes are not
reflective of the Company's underlying performance for the
reporting period, such as the impact of foreign exchange gains and
losses, impairment charges, and non-hedge derivative gains and
losses. Although some of the items are recurring, the Company
believes that they are not reflective of the underlying operating
performance of its current business and are not necessarily
indicative of future operating results.
The following table provides a reconciliation of adjusted net
earnings for the three and nine months ended February 29, 2016 and February 28, 2015:
|
For the three months
ended
|
For the nine months
ended
|
|
February
29
|
February
28
|
February
29
|
February
28
|
|
2016
|
2015
|
2016
|
2015
|
|
$
|
$
|
$
|
$
|
Net income
(loss)
|
(623,997)
|
(114,122)
|
(48,876)
|
(3,460,106)
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
(744)
|
(1,535)
|
(18,205)
|
(11,700)
|
|
Unrealized loss
(gain) on forward sales contract derivative
|
-
|
288,823
|
(26,615)
|
341,420
|
|
Write down of Chilean
assets
|
-
|
-
|
-
|
2,260,158
|
|
Reclamation
expense
|
15,015
|
14,358
|
45,045
|
43,074
|
Total
adjustments
|
14,271
|
301,646
|
225
|
2,632,952
|
Adjusted net
earnings (loss)
|
(609,726)
|
187,524
|
(48,651)
|
(827,154)
|
Cash cost per ounce sold is cost of sales before depreciation
divided by gold ounces sold. All-in sustaining cash cost per ounce
sold is cash cost, corporate administration, purchase of property,
mill and equipment and purchase of exploration and evaluation
assets divided by gold ounces sold.
The following table provides a reconciliation of cash cost per
ounce sold and all-in sustaining cash cost per ounce sold for the
three and nine months ended February 29,
2016 and February 28,
2015:
|
For the three months
ended
|
For the nine months
ended
|
|
February
29
|
February
28
|
February
29
|
February
28
|
|
2016
|
2015
|
2016
|
2015
|
Cost of
sales
|
4,663,610
|
5,603,145
|
15,502,716
|
16,268,808
|
Less: Depletion and
depreciation
|
(782,487)
|
(1,233,576)
|
(3,094,996)
|
(3,267,132)
|
Cash operating
cost
|
3,881,123
|
4,369,569
|
12,407,720
|
13,001,676
|
Corporate
administration
|
714,909
|
474,300
|
1,758,339
|
1,451,126
|
Purchase of property,
mill and equipment
|
782,398
|
332,491
|
2,586,817
|
1,501,422
|
Purchase of
exploration and evaluation assets
|
96,069
|
349,840
|
910,159
|
1,450,888
|
All-in cash
cost
|
5,474,499
|
5,526,200
|
17,663,035
|
17,405,112
|
|
|
|
|
|
Gold ounces
sold
|
3,266
|
4,508
|
11,827
|
11,872
|
Cash cost per
ounce sold
|
1,188
|
969
|
1,049
|
1,095
|
All-in sustaining
cash cost per ounce sold
|
1,676
|
1,226
|
1,493
|
1,466
|
|
|
|
|
|
(in
USD$)
|
|
|
|
|
Cash cost per
ounce sold
|
855
|
806
|
791
|
968
|
All-in sustaining
cash cost per ounce sold
|
1,206
|
1,020
|
1,126
|
1,320
|
EBITDA is earnings before finance expense, foreign exchange loss
(gain), unrealized gain on forward sales contract derivative,
share-based compensation, income tax recovery and depreciation and
depletion.
Point Rousse Project EBITDA is EBITDA before corporate
administration, other revenues and expenses and write down of
Chilean assets.
The following table provides a reconciliation of EBITDA for the
three and nine months ended February 29,
2016 and February 28,
2015:
|
For the three months
ended
|
For the nine months
ended
|
|
February
29
|
February
28
|
February
29
|
February
28
|
|
2016
|
2015
|
2016
|
2015
|
|
$
|
$
|
$
|
$
|
Net income
(loss)
|
(623,997)
|
(114,122)
|
(48,876)
|
(3,460,106)
|
|
|
|
|
|
Add back:
|
|
|
|
|
Finance
expense
|
15,076
|
97
|
18,187
|
433
|
Foreign exchange loss
(gain)
|
(744)
|
(1,535)
|
(18,205)
|
(11,700)
|
Unrealized loss
(gain) on forward sales contract derivative
|
-
|
288,823
|
(26,615)
|
341,420
|
Share-based
compensation
|
151,066
|
19,821
|
318,456
|
119,018
|
Income tax expense
(recovery)
|
44,000
|
(7,000)
|
2,000
|
(115,865)
|
Depletion and
depreciation
|
782,487
|
1,233,576
|
3,094,996
|
3,267,132
|
EBITDA
|
367,888
|
1,419,660
|
3,339,943
|
140,332
|
Corporate
administration
|
714,909
|
474,300
|
1,758,339
|
1,451,126
|
Other revenues and
expenses
|
24,143
|
3,225
|
65,937
|
(276,747)
|
Point Rousse
Project EBITDA
|
1,106,940
|
1,897,185
|
5,164,219
|
3,574,869
|
ABOUT ANACONDA
Headquartered in Toronto,
Canada, Anaconda is a growth oriented, gold mining and
exploration company with a producing project, called the Point
Rousse Project, and approximately 6,300 hectares of exploration
property on the Ming's Bight Peninsula located in the Baie Verte
Mining District in Newfoundland,
Canada. Since 2012, Anaconda has increased its property
control by ten-fold on the peninsula. It is currently exploring
three primary, prospective gold trends, which have approximately 20
km of cumulative strike length and include three deposits and
numerous prospects and showings, all within 8 kilometres of the
Pine Cove mill. The Company's plan is to discover and develop more
resources within the project area and double annual production from
its current rate of approximately 15,000 ounces to 30,000 ounces.
Anaconda also controls approximately 6,225 hectares of property in
White Bay, Newfoundland,
approximately 180 km via road (100 km by barge) from the Pine Cove
mill. The White Bay property contains the Thor-Trend gold deposit
and other gold prospects and showings.
FORWARD-LOOKING STATEMENTS
This document contains or refers to forward-looking
information. Such forward-looking information includes, among other
things, statements regarding targets, estimates and/or assumptions
in respect of future production, mine development costs, unit
costs, capital costs, timing of commencement of operations and
future economic, market and other conditions, and is based on
current expectations that involve a number of business risks and
uncertainties. Factors that could cause actual results to differ
materially from any forward-looking statement include, but are not
limited to: the final approval of the private placement by the
Toronto Stock Exchange; the grade and recovery of ore which is
mined varying from estimates; capital and operating costs varying
significantly from estimates; inflation; changes in exchange rates;
fluctuations in commodity prices; delays in the development of the
any project caused by unavailability of equipment, labour or
supplies, climatic conditions or otherwise; termination or revision
of any debt financing; failure to raise additional funds required
to finance the completion of a project; and other factors.
Additionally, forward-looking statements look into the future and
provide an opinion as to the effect of certain events and trends on
the business. Forward-looking statements may include words such as
"plans," "may," "estimates," "expects," "indicates," "targeting,"
"potential" and similar expressions. These forward-looking
statements, including statements regarding Anaconda's beliefs in
the potential mineralization, are based on current expectations and
entail various risks and uncertainties. Forward-looking statements
are subject to significant risks and uncertainties and other
factors that could cause actual results to differ materially from
expected results. Readers should not place undue reliance on
forward-looking statements. These forward-looking statements are
made as of the date hereof and we assume no responsibility to
update them or revise them to reflect new events or circumstances,
except as required by law.
SOURCE Anaconda Mining Inc.