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Roxgold Reports Financial Results for Quarter Ended March 31, 2017
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PR Newswire
TORONTO, May 15, 2017
TORONTO, May 15, 2017 /PRNewswire/ - Roxgold Inc. ("Roxgold" or the "Company") (TSX: ROXG) (OTC: ROGFF) today reported its financial results for the three month period ended March 31, 2017.
For complete details of the unaudited Condensed Interim Consolidated Financial Statements and associated Management's Discussion and Analysis please refer to the Company's filings on SEDAR (www.sedar.com) or the Company's website (www.roxgold.com). All amounts are in US dollars unless otherwise indicated.
1. HIGHLIGHTS
For the three month period ended March 31, 2017, the Company:
- Achieved 2,000,000 hours free of lost time injuries ("LTI") in February;
- Sold 34,979 ounces of gold totalling revenues of $42,977,000 at a cash operating cost1 of $404 per ounce produced for a total cash cost1 of $454 per ounce sold and an all-in sustaining cost1 of $720 per ounce sold;
- Produced 112,709 ounces of gold, since first gold pour in May 2016 until March 31, 2017, at an average cash operating cost1 of $384 per ounce produced;
- Generated cash flow from mining operations1 totalling $23,747,000 for cash flow per share1 of $0.064 (C$0.085/share);
- Mined 69,237 tonnes of ore for the quarter including 29,530 tonnes of ore from stoping activities;
- Connected to the Burkina Faso high voltage grid on February 1, 2017 with 99% availability;
- Successfully passed Lenders' Completion test and amended its $75M Credit Facility to a $60M Amended Facility; and
- Graduated to the Toronto Stock Exchange on March 30, 2017.
"The operational success of the first quarter of 2017 poises us to deliver on our production guidance for 2017", commented John Dorward, President and CEO of Roxgold. "On our 12 month anniversary, we have produced over 125,000 ounces since start-up at a class leading cash cost of $384 per ounce".
2. NEAR-TERM OBJECTIVES for 2017
- Gold production of between 105,000 and 115,000 oz;
- Cash operating cost per ounce produced1 between $445 and $490/oz;
- All-in sustaining costs per ounce sold1 between $740 and $790/oz;
- Sustaining capital expenditures between $24 million and $28 million;
- Mineral Resource growth at depth at 55 Zone;
- Development of Bagassi South, further to an updated Mineral resource estimate; and
- Explore regional exploration potential.
3. MINE OPERATING ACTIVITIES
The Company considers that pre-commercial production operations at the Yaramoko gold mine commenced in June 2016 as the construction of the processing plant and associated infrastructure was completed, the contractual performance test associated with the engineering, procurement, and construction ("EPC") lump sum contract with the DRA/Group Five Joint Venture was passed and a first gold shipment was exported and refined. Ramp-up of pre-commercial production continued during the third quarter ended September 30, 2016 leading to the declaration of commercial production on October 1, 2016. Accordingly, there are no comparable gold sales and operational results from mine operations. The Company is providing the fourth quarter of 2016 results as comparative figures.
| | Three months | Three months | Three months |
| | | | |
| Operating Data | | | |
| Ore mined (tonnes) | 69,237 | - | 72,561 |
| Ore processed (tonnes) | 63,955 | - | 61,265 |
| Head grade (g/t) | 17.3 | - | 15.45 |
| Recovery (%) | 99.2 | - | 98.9 |
| Gold ounces produced | 35,594 | - | 29,688 |
| Gold ounces sold | 34,979 | - | 34,271 |
| | | | |
| Financial Data (in thousands of dollars) | | | |
| Revenues – Gold sales | 42,977 | - | 41,385 |
| Mining operating expenses | 14,164 | - | 14,127 |
| Government royalties | 1,719 | - | 1,685 |
| | | | |
| Statistics (in dollars) | | | |
| Average realized selling price (per ounce) | 1,229 | - | 1,208 |
| Cash operating cost (per ounce produced)1 | 404 | - | 414 |
| Cash operating cost (per tonne processed)1 | 225 | - | 201 |
| Total cash cost (per ounce sold)1 | 454 | - | 461 |
| Sustaining capital cost (per ounce sold) 1 | 226 | - | 203 |
| All-in sustaining cost (per ounce sold)1 | 720 | - | 702 |
A. Operational performance
During the three-month period ended March 31, 2017, the Yaramoko gold mine continued to operate in line with expectations. Operations are now in their third full quarter and exhibiting good adherence to plan. During the period, the Yaramoko gold mine achieved a significant milestone in reaching two million hours worked without a Lost Time Injury. Roxgold feels that this is indicative of the maturity and stability that has been established at the Yaramoko gold mine in the year since commencing operations.
In the period, the Yaramoko gold mine produced 35,594 ounces and sold 34,979 ounces of gold. This was in line with expectations of a relatively strong first quarter.
The mine produced 69,237 tonnes of ore at 14.74 g/t Au with 1,740 metres of development completed. With two stoping areas operating at quarter end, the mine remains well established to continue to deliver consistent production. The plant processed 63,955 tonnes at an average head grade of 17.30 g/t Au. Plant availability was 94% and overall recovery was 99.2% during the quarter.
During the period, the Yaramoko gold mine was connected to the Burkina Faso High Voltage ("HV") national power grid. Connection took place as scheduled on February 1, 2017, and has subsequently enjoyed grid availabilities of 99%. Roxgold is very pleased with the proactive partnership it enjoys with the national power provider, SONABEL, and thanks them for their ongoing support.
B. Financial performance
Based on the Company's accounting policy (refer to note 2 of the Company's annual consolidated financial statements as of December 31, 2016 available on www.sedar.com), commercial production was declared on October 1, 2016 as the Yaramoko gold mine had reached the intended levels of operating capacity as of September 30, 2016. Accordingly, there are no comparable gold sales and operational results from mine operations for the first quarter of 2016. The Company is providing the fourth quarter of 2016 results as comparative figures only.
During the three-month period ended March 31, 2017, a total of 34,979 ounces of gold were sold resulting revenues from gold sales of $43 million at an average realized gold price of $1,229 per ounce sold compared to an average market gold price of $1,219 per ounce.
Mine operating expenses represent mining, processing, and mine site-related general and administrative expenses. Cash operating cost1 per tonne processed totalled $225 per tonne, which is slightly higher than the $201 per tonne processed achieve during the Company's first quarter of commercial production. The variation is associated with quarterly standard preventive maintenance costs which were not incurred previously as the mill had been in operation for less than a year. Another contributing factor is higher mining costs per tonne mined due to a lower ratio of ore vs waste tonnes mined during the period. The cash operating cost1 per ounce produced totaled $404 per ounce for period. This 2% decrease is due to the higher cash operating cost per tonne processed offset by a higher grade and higher throughput. The cash operating cost1 per ounce sold is in line with cash operating cost per ounce produced.
During the first quarter of 2017, Roxgold invested $7,906,000 in underground mine development, representing a sustaining capital cost1 per ounce sold of $226. This reflects the Company's decision to invest in additional metres of development to provide for greater operational flexibility and resilience.
Based on the foregoing, the Company generated cash flow from mining operations1 totalling $23,747,000 for the first quarter of 2017, at an all-in sustaining cost1 of $720 per ounce sold. The all-in sustaining costs for the period stems from underground development costs combined with non-recurring corporate charges associated with the graduation to the Toronto Stock exchange at the end of the period.
C. Exploration Update
On May 8, 2017, the Company announced the results of the Company's infill and extensional drilling program at the Bagassi South deposit, located less than two kilometers from the underground mine located at the 55 Zone.
The drilling program totalled 29,160 meters over 134 holes at Bagassi South with 117 holes drilled along the QV1 structure and 17 holes drilled along the QV Prime structure ("QV'" and "QV Prime", respectively). The program was primarily designed to infill the QV1 structure with sufficient additional intercepts to support the conversion of the existing inferred Mineral Resource Estimate ("MRE") to indicated resource status, ahead of its potential inclusion in a feasibility study which is currently scheduled to be completed in the fourth quarter of 2017. The current MRE at Bagassi South features an inferred MRE of 563,000 tonnes at 12.14 gpt for 220,000 ounces of gold (please see press release dated April 18, 2017 available on SEDAR at www.sedar.com or on the Company's website at www.roxgold.com).
A secondary goal of the program was to test the extent of the recently identified mineralized shoot along the QV' structure which is located approximately 130 meters to the north east of QV1. The QV' structure accounts for approximately 10,000 ounces of the global Bagassi South inferred MRE and the structure remains open down plunge along the contact between the basalt flows and the Bagassi granite.
The drilling results from QV1 confirm the continuity of mineralization from near surface to a vertical depth of approximately 425 meters where the structure was intersected by hole YRM-17-DD-234, the deepest hole drilled along the QV1 structure. Significant widths of over 13 meters were encountered with numerous high grade gold results including 25.0 gpt Au over 13.4m which included 595 gpt over 0.4m in diamond drill hole YRM-17-DD-BGS-164 and 156.3 gpt Au over 1.5m including 220.0 gpt Au over 1.1m in diamond drill hole YRM-17-DD-BGS-199.
Regionally, the Bagassi South structures are located in the footwall of the Yaramoko shear zone and hosted within the Bagassi granite which are similar geological and structural settings as those observed at 55 Zone.
For more information on the Company's infill and extensional drilling program at the Bagassi South deposit, please refer to the Company's press release dated May 8, 2017, available on SEDAR at www.sedar.com or on the Company's website at www.roxgold.com.
4. REVIEW OF FINANCIAL RESULTS
A. Mine operating profit
The Company declared commercial production on October 1, 2016 and consequently there is no comparable mine operating profit for the first quarter of 2016. During the first quarter of 2017, gold sales totalled $42,977,000 while mining operating expenses and royalties totalled $14,164,000 and $1,719,000, respectively, for a total cash cost1 per ounce sold of $454. The 2% decrease compared the total cash cost of the last quarter of 2016 results from higher grade and higher throughput partly offset by higher cash operating cost per tonne processed . For more information on the cash operating costs1 see the financial performance of the Mine Operating Activities section of this MD&A.
Depreciation for the quarter increased compared to the depreciation of the last quarter of 2016 as a result of higher throughput and as all assets including the HV power line were in service during the period January 1 to March 31, 2017. The depreciation expenses for the first quarter of 2016 were capitalized within other development costs.
B. General and administrative expenses
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