TORONTO, May 3, 2018 /CNW/ - Anaconda Mining Inc.
("Anaconda" or the "Company") – (TSX:ANX) is pleased to report its
financial and operating results for the three months ended
March 31, 2018 ("Q1 2018"). The
condensed interim consolidated financial statements and management
discussion & analysis documents can be found at www.sedar.com
and the Company's website, www.anacondamining.com. All dollar
amounts are in Canadian dollars unless otherwise noted.
In 2017, the Company changed its fiscal year-end to December 31, from its previous fiscal year end of
May 31. Consequently, Anaconda has
now reverted to a customary quarterly reporting calendar based on a
December 31 financial year-end, with
fiscal quarters ending on the last day in March, June, September,
and December each year. For comparative purposes, the results
for the three months ended March 31,
2018, have been compared to the three months ended
February 28, 2017.
First Quarter 2018 Highlights
- Anaconda sold 4,526 ounces of gold in Q1 2018, a 25.8% increase
over the three months ended February 28,
2017, generating gold revenue of $7.6
million at an average realized gold price per ounce sold* of
C$1,677.
- Strong revenue and lower costs enabled the Point Rousse Project
to generate EBITDA* of $3.3 million
for the first quarter of 2018, compared with $0.8 million for the three months ended
February 28, 2017.
- On a consolidated basis, EBITDA* for the three months ended
March 31, 2018 was $2.4 million, an increase of $1.8 million over the comparative period.
- Operating cash costs per ounce sold* at the Point Rousse
Project in Q1 2018 was $900
(US$712), well below 2018 annual
guidance of around $1,100, and a
32.6% improvement over the comparative fiscal quarter.
- All-in sustaining cash costs per ounce sold*, including
corporate administration and sustaining capital expenditures, was
$1,377 (US$1,090) for Q1 2018, a 23.5% improvement over
the three months ended February 28,
2017.
- The Company invested $1.5 million
in its exploration and development projects, including $1.0 million on the Goldboro Gold Project in
Nova Scotia.
- Significant development progress was achieved at Stog'er Tight,
achieving 159,927 tonnes of waste development, the dewatering of
Fox Pond, and the completion of a settling pond and pit dewatering
system.
- The Company has commenced the conversion of the Pine Cove Pit
into a fully permitted tailings storage facility, which will
provide 15 years of capacity based on throughput rates of 1,350
tonnes per day.
- Net income for the three months ended March 31, 2018 was $149,218, or $0.00
per share, compared to a net loss of $940,032, or $0.02
per share, for the three months ended February 28, 2017.
- As at March 31, 2018, the Company
had cash of $2.8 million, net working
capital* of $6.6 million, and
additional available liquidity of $1,000,000 from an undrawn revolving line of
credit facility.
*Refer to Non-IFRS Measures section below. A full
reconciliation of Non-IFRS Measures can be found in the Management
Discussion and Analysis for the three months ended March 31, 2018.
"Anaconda continues to demonstrate its ability to operate in a
safe, responsible, and profitable manner, driving down unit
operating costs and generating strong operating cash flows from its
Point Rousse Project in the first quarter of 2018, while making
significant progress developing the Stog'er Tight Mine. Our
established and robust physical infrastructure and experienced
workforce, together with the consistent performance at Point
Rousse, form the platform for a well-defined growth strategy in
Atlantic Canada. Leveraging the
Pine Cove Mill and the fully-permitted Pine Cove tailings facility,
Anaconda has the ability to accelerate the development of gold
projects such as the Hammerdown Mine owned by Maritime Resources
Corp, for which Anaconda has made a take-over offer, which will
drive long-term shareholder value for both Maritime and
Anaconda."
~Dustin Angelo, President and CEO, Anaconda Mining
Inc.
Consolidated Results Summary
Financial
Results
|
Three months
ended March 31,
2018
|
Three months
ended February 27,
2017 (restated)
|
Revenue
($)
|
7,596,600
|
5,643,411
|
Cost of operations,
including depletion and depreciation ($)
|
5,511,353
|
6,757,527
|
Mine operating income
(loss) ($)
|
2,085,247
|
(1,114,116)
|
Net income (loss)
($)
|
149,218
|
(940,032)
|
Net income (loss) per
share ($/share) – basic and diluted
|
0.00
|
(0.02)
|
Cash generated from
operating activities ($)
|
991,805
|
323,145
|
Capital investment in
property, mill and equipment ($)
|
563,973
|
528,707
|
Capital investment in
exploration and evaluation assets ($)
|
1,535,364
|
561,337
|
Average realized gold
price per ounce ($)*
|
1,677
|
1,568
|
Operating cash costs
per ounce sold ($)*
|
900
|
1,337
|
All-in sustaining
cash costs per ounce sold ($)*
|
1,377
|
1,800
|
|
*Refer to Non-IFRS
Measures section below.
|
Operational
Results
|
Three months
ended March 31,
2018
|
Three months
ended February 27,
2017
|
Ore mined
(t)
|
143,840
|
102,531
|
Waste mined
(t)
|
250,132
|
325,076
|
Strip
ratio
|
1.7
|
3.2
|
Ore milled
(t)
|
109,219
|
107,762
|
Grade (g/t
Au)
|
1.44
|
1.28
|
Recovery
(%)
|
85.2
|
85.0
|
Gold ounces
produced
|
4,293
|
3,767
|
Gold ounces
sold
|
4,526
|
3,597
|
First Quarter 2018 Review
Operational Overview
The Pine Cove Mill processing facility remains a cornerstone
asset of the Company. Availability during the quarter of 93.4% was
lower compared to the 98.6% availability during the final four
months of 2017 due to a planned preventative maintenance
activities. During Q1 2018, the mill processed 109,219 tonnes of
ore at a throughput rate of 1,300 tonnes per day, consistent with
the throughput rate maintained during the final months of 2017.
Average grade during Q1 2018 was 1.44 g/t, an 11.6% increase
over the final four months of 2017. The mill achieved an average
recovery rate of 85.2%, consistent with previous periods, resulting
in gold production of 4,293 ounces.
The later part of December 2017
saw mining activity focused on development activity at Stog'er
Tight and the completion of mining in the main Pine Cove Pit, which
continued into the first quarter of 2018. In Q1 2018, the nearby
Fox Pond dewatering was completed prior to mining at Stog'er Tight,
the operation established a settling pond and dewatering system for
the Stog'er Tight West Pit, and work was commenced on a fish
passage. The Company achieved 159,927 tonnes of waste removal at
Stog'er Tight, which will be capitalized as development. In
addition, 5,033 tonnes of ore were mined from Stog'er Tight during
development activities, which were in a stockpile at
quarter-end.
During Q1 2018, mine operations produced 143,840 tonnes of ore,
which included 138,807 tonnes from the Pine Cove Pit, where mining
of the main pit finished in the middle of March. The grade of ore
delivered to the mill was high compared to previous periods as the
mine operation focused on delivering higher grade ore from the
lower benches of the Pine Cove Pit, while maintaining its existing
stockpile of ore, which will be fed over the coming months as the
operation transitions to Stog'er Tight. As at March 31, 2018, the mine operation had an ore
stockpile of 176,807 tonnes.
With mining in the main pit now complete, the Company is
converting the Pine Cove Pit into a 7 million-tonne in-pit storage
facility, which is fully permitted by the Newfoundland and Labrador Department of
Natural Resources and has approximately 15 years of capacity, based
on a throughput rate of 1,350 tonnes per day. Following the
establishment of the in-pit tailings facility, the Pine Cove pit
will see mining of two pushbacks in 2019, known as the Pine Cove
Pond and North-West Extension.
Financial Results
Anaconda sold 4,526 ounces of gold during the first quarter of
2018, generating gold revenue of $7.6
million based on an average realized gold price of
C$1,677. The Company is well on track
to meet its 2018 production guidance of 18,000 ounces at operating
cash costs of C$1,100 per ounce.
Operating expenses for the three months ended March 31, 2018 were $4,074,347, compared to $4,810,528 in the three months ended February 28, 2017. The decrease in operating
costs was the result of lower mining costs as the operation moved
8% less material during the quarter, as well as a large inventory
adjustment recorded for the three months ended February 28, 2017 due to a decrease in
stockpiles. The operating cash costs per ounce sold in the first
three months of fiscal 2018 were $900
(US$712), a 33% reduction compared to
the comparative period operating cash costs of $1,337 per ounce (US$962), and below the Company's operating cash
cost guidance of C$1,100 as a result
of better than expected grades in the bottom of the Pine Cove
Pit.
Depletion and depreciation expense for the first three months of
fiscal 2018 was $1,437,006, a
decrease from $1,946,999 during the
comparative period. The lower depletion and depreciation was the
result of lower depletion of stripping costs for the Pine Cove Pit,
where mining was completed in Q1 2018.
Mine operating income for the three months ended March 31, 2018 was $2,085,247, compared to a mine operating loss of
$1,114,116 in the corresponding
period of 2017, due to significantly higher revenue and lower
mining costs.
Corporate administration expenditures were $1,094,354 for the first three months of fiscal
2018, up from $627,726 for the
comparative period. The high comparative expenditures reflect the
expanded senior management team and greater market presence after
the acquisition of Goldboro, and
the timing of certain corporate costs as a result of the change in
year-end to December 31.
Share-based compensation was $150,473 during Q1 2018, compared to $22,630 in the three months ended February 28, 2017, reflecting the stock options
granted during the quarter, as well as the impact of the share
consolidation on the fair value of the options as determined by the
Black-Scholes option pricing model.
The deferred premium on flow-through shares was a recovery of
$156,872, reflecting a proportion of
the total deferred premium based on qualifying exploration
expenditures spent during the three months ended March 31, 2018, as a percentage of the total
exploration expenditures to be made under the flow-through
financing that was completed on October 31,
2017. The remaining deferred flow-through premium liability
of $96,663 is expected to be
amortized into comprehensive income in Q2 2018 as the remaining
qualifying exploration expenditures are incurred.
Net comprehensive income for the three months ended March 31, 2018, was $149,218, or $0.00
per share, compared to a net comprehensive loss of $940,032, or $0.02
per share. The improvement compared to the three months ended
February 28, 2017 was the result of
higher mine operating income, which was partially offset by higher
corporate administration expenditures, as well as other income from
the sale of waste rock as aggregate product in the comparative
period. The Company also recorded a current income tax expense of
$473,000 relating to provincial
mining tax and a deferred income tax expense of $262,000 during the three months ended
March 31, 2018 (three months ended
February 28, 2017 – $nil and recovery
of $463,000, respectively).
Financial Position and Cash Flow Analysis
As at March 31, 2018, the Company
continued to maintain a robust working capital position of
$6,578,210, which included cash and
cash equivalents of $2,787,147. In
addition, the Company maintains a $1,000,000 revolving credit facility as well as a
$500,000 revolving equipment lease
line of credit with the Royal Bank of Canada. As at March 31,
2018, the Company had not drawn against the revolving credit
facility.
During the three months ended March 31,
2018, Anaconda generated cash flow from operations of
$991,805. Revenue less operating
expenses from the Point Rousse Project in the first quarter were
$3,522,253, corporate administration
costs were $1,094,354, and there was
a net reduction in operating cash flows of $1,348,977 from changes in working capital. Trade
and other receivables increased by $772,888 due to an increase in the Company's HST
recoverable balance, and prepaid expenses and deposits increased by
$345,334, predominantly due to
transaction costs related to the takeover bid of Maritime Resources
Corp.
During the first quarter of 2018, the Company continued to
invest in its key growth projects in Newfoundland and Nova Scotia. The Company spent $1,535,364 on exploration and evaluation assets
(adjusted for amounts included in trade payables and accruals at
March 31, 2018), which includes
$984,645 on the continued advancement
of the Goldboro Project and $412,077
on the Argyle Resource at Point Rousse. The Company also invested
$563,973 into the property, mill and
equipment at the Point Rousse Project, with capital investment
focused on development activity at Stog'er Tight.
Restatement of Prior Period Financial Information
As part of the preparation of the audited consolidated financial
statements for the year ended May 31,
2017, the Company undertook a comprehensive review of the
capitalization and units-of-production depletion calculations for
its production stripping asset and property, mill infrastructure
and equipment and deferred taxes and discovered that certain errors
had been made. As a result, the Company amended the treatment of
these balance sheet items resulting in a restatement of prior
periods.
The amounts of each adjustment and a reconciliation between the
previously published consolidated statement of comprehensive loss
for the three months ended February 28,
2017, have been presented in Note 4 of the condensed interim
consolidated financial statements.
ABOUT ANACONDA
Anaconda Mining is a TSX-listed gold mining, development, and
exploration company, focused in the prospective Atlantic Canadian
jurisdictions of Newfoundland and
Nova Scotia. The Company operates
the Point Rousse Project located in the Baie Verte Mining District
in Newfoundland, comprised of the
Pine Cove open pit mine, the Stog'er Tight Mine, the Argyle Mineral
Resource, the fully-permitted Pine Cove Mill and tailings facility,
and approximately 5,800 hectares of prospective gold-bearing
property. Anaconda is also developing the Goldboro Gold Project in
Nova Scotia, a high-grade Mineral
Resource, with the potential to leverage existing infrastructure at
the Company's Point Rousse Project.
The Company also has a pipeline of organic growth opportunities,
including the Great Northern Project on the Northern Peninsula of
Newfoundland and the Tilt Cove
Property on the Baie Verte
Peninsula, also in Newfoundland.
FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking information"
within the meaning of applicable Canadian and United States securities legislation.
Generally, forward-looking information can be identified by the use
of forward-looking terminology such as "plans", "expects", or "does
not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "does not anticipate", or
"believes" or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would",
"might", or "will be taken", "occur", or "be achieved".
Forward-looking information is based on the opinions and estimates
of management at the date the information is made, and is based on
a number of assumptions and is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of Anaconda to be
materially different from those expressed or implied by such
forward-looking information, including risks associated with the
exploration, development and mining such as economic factors as
they effect exploration, future commodity prices, changes in
foreign exchange and interest rates, actual results of current
production, development and exploration activities, government
regulation, political or economic developments, environmental
risks, permitting timelines, capital expenditures, operating or
technical difficulties in connection with development activities,
employee relations, the speculative nature of gold exploration and
development, including the risks of diminishing quantities of
grades of resources, contests over title to properties, and changes
in project parameters as plans continue to be refined as well as
those risk factors discussed in Anaconda's annual information form
for the seven months ended December 31,
2017, available on www.sedar.com.
Although Anaconda has attempted to identify important factors that
could cause actual results to differ materially from those
contained in forward-looking information, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such information will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information.
Accordingly, readers should not place undue reliance on
forward-looking information. Anaconda does not undertake to update
any forward-looking information, except in accordance with
applicable securities laws.
NON-IFRS MEASURES
Anaconda has included certain non-IFRS performance measures
as detailed below. In the gold mining industry, these are common
performance measures but may not be comparable to similar measures
presented by other issuers. The Company believes that, in addition
to conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate the Company's
performance and ability to generate cash flow. Accordingly, it 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.
Operating Cash Costs per Ounce of Gold – Anaconda calculates
operating cash costs per ounce by dividing operating expenses per
the consolidated statement of operations, net of silver sales
by-product revenue, by the gold ounces sold during the applicable
period. Operating expenses include mine site operating costs such
as mining, processing and administration as well as royalties,
however excludes depletion and depreciation and rehabilitation
costs.
All-In Sustaining Costs per Ounce of Gold – Anaconda has
adopted an all-in sustaining cost performance measure that reflects
all of the expenditures that are required to produce an ounce of
gold from current operations. While there is no standardized
meaning of the measure across the industry, the Company's
definition conforms to the all-in sustaining cost definition as set
out by the World Gold Council in its guidance dated June 27, 2013. The World Gold Council is a
non-regulatory, non-profit organization established in 1987 whose
members include global senior mining companies. The Company
believes that this measure will be useful to external users in
assessing operating performance and the ability to generate free
cash flow from current operations.
The Company defines all-in sustaining costs as the sum of
operating cash costs (per above), sustaining capital (capital
required to maintain current operations at existing levels),
corporate administration costs, sustaining exploration, and
rehabilitation accretion and amortization related to current
operations. All-in sustaining costs excludes capital expenditures
for significant improvements at existing operations deemed to be
expansionary in nature, exploration and evaluation related to
growth projects, financing costs, debt repayments, and taxes.
Canadian and US dollars are noted for realized gold price,
operating cash costs per ounce of gold and all-in sustaining costs
per ounce of gold. Both currencies are considered relevant and the
Company uses the average foreign exchange rate for the
period.
Average Realized Gold Price per Ounce Sold – In the gold
mining industry, average realized gold price per ounce sold is a
common performance measure that does not have any standardized
meaning. The most directly comparable measure prepared in
accordance with IFRS is gold revenue. The measure is intended to
assist readers in evaluating the revenue received in a period from
each ounce of gold sold.
Earnings before Interest, Taxes, Depreciation and
Amortization ("EBITDA") - EBITDA is earnings before finance
expense, deferred income tax expense and depletion and
depreciation.
Point Rousse Project EBITDA is EBITDA before corporate
administration and other expenses (income).
Working Capital – Working capital is a common measure of
near-term liquidity and is calculated by deducting current
liabilities from current assets.
SOURCE Anaconda Mining Inc.