Anaconda Mining Inc. (“Anaconda” or the “Company”) – (TSX:ANX) is pleased to report its financial and operating results for the fiscal year ended May 31, 2017. Full 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. … Continued
Highlights for the year ended May 31, 2017
- Anaconda achieved gold sales of 15,562 ounces during the fiscal year ended May 31, 2017, in line with revised mid-year guidance for fiscal 2017 of 15,500 – 16,000 ounces.
- The Company generated $25.7 million in revenue at an average sale price of $1,651 (USD $1,248) per ounce, a 5% increase in revenue from the 2016 fiscal year and in line with revised mid-year guidance for fiscal 2017 of $1,625 – $1,675.
- The Pine Cove Mill increased throughput by 8% to 1,223 tonnes per day compared to the previous fiscal year, while maintaining an increased grade profile for the second half of fiscal 2017 in line with mid-year revised guidance.
- The Company generated a further $0.9 million from the sale of waste rock as aggregate from its Pine Cove pit.
- As at May 31, 2017, the Company had cash and cash equivalents of $2.5 million, net working capital of $3.3 million and additional available liquidity of $1,000,000 from an undrawn revolving line of credit facility.
- Operating cash cost per ounce sold* at the Point Rousse Project for the year ended May 31, 2017, was $1,126 (USD $856), in line with revised mid-year guidance for fiscal 2017 of $1,100 – $1,175.
- All-in sustaining cash cost per ounce sold (“AISC”)*, including corporate administration, capital expenditures and exploration costs for the year ended May 31, 2017, was $1,735 (USD $1,318), in line with revised mid-year guidance for fiscal 2017 of $1,675 – $1,750.
- At the Point Rousse Project, EBITDA* for the year ended May 31, 2017, was $8,010,964.
- On a consolidated basis, EBITDA* for the year ended May 31, 2017, was $6,311,777.
- Net loss for the year ended May 31, 2017, was $3,602,188 primarily due to higher non-cash charges including depletion and depreciation expense and deferred tax expense.
- Additions of property, mill and equipment for the year ended May 31, 2017 were $4.2 million. Key items included tailings and polishing pond construction of $1.9 million, mill equipment upgrades of $0.7 million, production stripping asset additions of $1.1 million and permitting/legal costs of $0.1 million related to the construction of the dock facility to enable to sale of waste rock as an aggregates product.
- The acquisition of Orex Exploration Inc. resulted in the addition to the Company’s exploration and evaluation assets of $14.9 million for the Goldboro Project in Nova Scotia.
- Approximately $3.3 million was spent on exploration for the year ended May 31, 2017, which included drilling, trenching, mapping and mineral resource estimates.
*Refer to Non-IFRS Measures section below.
President and CEO, Dustin Angelo, stated, “Fiscal 2017 was another successful year for Anaconda Mining due to the dedication and commitment of our employees and contractors. The Point Rousse Project continued to be the steady cash flow contributor that has supported all of our corporate objectives to date, generating over $8.0 million in EBITDA, a 21% increase compared to fiscal 2016. The Pine Cove Mill, the cornerstone of our operation, attained a new record annual throughput of over 420,000 tonnes, a 9% increase from fiscal 2016. Year over year, the mill has increased throughput levels through consistent operations, automation and an improved preventative maintenance program. Together with the recently added port facility and plenty of tailings storage capacity, we have built up a tremendous amount of valuable infrastructure that serves as our platform for growth in Atlantic Canada. Because of our infrastructure, we were able to make our first significant corporate acquisition, the Goldboro Project in Nova Scotia, during the fourth quarter. Going forward, we are focused on demonstrating the mineral resource growth potential at Point Rousse and Goldboro while advancing Goldboro towards production. Anaconda is well positioned to leverage the infrastructure at Point Rousse to grow and develop these and other potential projects, extending the pipeline of resources available and the life of the operations.”
Looking ahead to 2018, the Company is projecting to produce and sell approximately 15,500 ounces of gold. Production in the first three quarters will be from the Pine Cove Pit, and will transition to the Stog’er Tight pit early in the 2018 calendar year. Operating cash costs for the upcoming year are projected to be in the range of $1,000 – $1,050 per ounce of gold sold, lower than historical levels of $1,100 over the past three years as the Company continues to focus on cost savings and operational efficiencies.
Consolidated Results Summary – For the Periods ended May 31, 2017 and 2016
|Financial Results||Q4 2017||Q4 2016
|FY 2017||FY 2016
| FY 2015
|Cost of operations, including depletion and
|Mine operating income ($)||1,539,616||357,229||906,208||1,569,736||1,996,476|
|Net (loss) income ($)||(1,890,260)||(456,641)||(3,602,188)||(1,356,233)||(1,835,071)|
|Net (loss) income per share ($/share) – basic
|Cash generated from operating activities ($)||3,172,938||2,029,157||4,782,426||5,387,441||3,085,137|
|Capital investment in mine development,
property, plant and equipment ($)
|Average realized gold price per ounce ($)*||1,658||1,618||1,651||1,520||1,279|
|Operating cash costs per ounce sold ($)*||699||1,231||1,126||1,091||1,086|
|All-in sustaining cash costs per ounce sold ($)*||1,066||1,733||1,735||1,648||1,370|
|Operational Results||Q4 2017||Q4 2016||FY 2017||FY 2016||FY 2015|
|Ore Mined (t)||92,167||98,214||432,081||397,821||321,532|
|Waste mined (t)||386,387||634,746||2,197,251||2,421,880||1,762,312|
|Ore Milled (t)||107,956||104,163||423,204||387,694||343,178|
|Grade (g/t Au)||1.49||1.26||1.33||1.5||1.72|
|Gold Oz Produced||4,442||3,606||15,566||15,818||15,228|
|Gold Oz Sold||4,658||4,196||15,562||16,023||15,821|
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. The adjustments are non-cash in nature, and do not impact any production, historical production and operational results.
The Company is committed to improving its control environment and internal control over financial reporting, and has committed to resolving the material weaknesses leading to the errors. The Company’s new CFO, who has strong experience with public operating mining companies and the related regulatory and risk management requirements of being a public company in Canada, is currently assessing the review processes related to financial reporting, as well as management oversight and tone at the top, and mitigating controls.
The amounts of each adjustment and a reconciliation between the previously published statement of financial position as at May 31, 2015 and May 31, 2016, as well as the statement of comprehensive loss for the year ended May 31, 2016, have been presented in note 4 of the audited consolidated financial statements.
Annual 2017 Review
Anaconda sold 15,562 ounces of gold during the 2017 fiscal year compared to 16,023 ounces sold in fiscal 2016. The decrease was attributable to a decrease in grade of 11%, which was partially offset by 9% higher throughput, with 423,204 tonnes of ore being processed during the year, up from 387,694 tonnes in fiscal 2016.
The Company mined 432,081 tonnes of ore during the 2017 fiscal year, a 9% increase over the prior year. The increased production is notable given weather-related challenges experienced in the fourth quarter, which limited operation to 58 days. As the mine operations advance to lower levels of the Pine Cove Pit, the strip ratio continues to decrease as expected, down to a 5.1 waste to ore ratio, down from 6.1 in 2016. This is expected to continue into the 2018 fiscal year, as the Company expects to deplete the Pine Cove Pit by the end of the calendar year, when it will transition production to its Stog’er Tight deposit.
Increased mill throughput was driven by the continued strong mill availability throughout the 2017 fiscal year, which included a 98% availability rate in the fourth quarter. Preventative maintenance continues to be the focus, which will assist in maintaining higher throughput into the 2018 fiscal year. The Company has also introduced a new furnace in its refinery, which is now operational, and is expected to contribute to optimized recovery rates, lower costs and safer operations.
In September of 2016, the Company executed an agreement with a third party to mine, crush, and ship 3,500,000 tonnes of the Company’s surplus stockpile and in-situ waste rock as an aggregates product for a project located on the eastern seaboard of the United States. Under the agreement, which is expected to last approximately 14 months, Anaconda has granted a right to Shore Line Aggregates (“SLA”) to mine, crush and ship an aggregates product made from Anaconda’s surplus stockpiled rock and in-situ rock for $0.60 per tonne. The Company generated other income of $938,089 from this agreement in the 2017 fiscal year.
The Company also continued to expand its footprint over prospective mineral properties in proximity to its mine and mill infrastructure. In addition to the transformational acquisition of the Goldboro Project, the Company in November 2016 acquired the Jackson’s Arm property on the Northern Peninsula of Newfoundland, and staked a further 5,050 hectares of contiguous mineral lands, which is collectively known as the Great Northern Project. The Company also acquired 350 hectares referred to as the Tilt Cove Property in November 2016, located 60 kilometers east of the Company’s Point Rousse Project.
For the year ended May 31, 2017, the Company generated $25,696,629 in revenue, a 5% increase from the year ended May 31, 2016. The comparatively higher revenue was primarily a result of a 9% increase in mill throughput and a 9% increase in realized gold price from CAD$1,520 to CAD$1,651 per ounce sold. The Company also generated other revenue of $938,089 from the sale of waste rock to be used as aggregates, compared to $nil in fiscal 2016.
For the year ended May 31, 2017, cost of operations was $24,790,421, yielding a mine operating income of $906,208 compared to fiscal 2016, which generated cost of operations of $22,791,735, yielding a mine operating income of $1,569,736. Mine operating income was negatively impacted as a result of non-cash charges for depletion and depreciation expense of $1,944,088. Depletion and depreciation expense, which is calculated using the unit-of-production methodology, increased due to a decline in reserve base. Mill operations expense increased by $143,983 largely due to increased maintenance costs and project administration increased by $89,976 for personnel costs. This was partially offset by a decline in mining costs of $59,904, logistics expenses of $55,106 and NSR expenses of $64,351. Mining costs were lower due to purchase discounts received from suppliers. Logistics expenses were reduced due to a change in refiner which resulted in cost savings. NSR expenses only relate to Stog’er Tight production as the obligation for Pine Cove pit was extinguished in fiscal 2016.
Corporate administration expenses consist of consulting/professional fees, corporate salaries/benefits, office and general expenses, travel and regulatory related costs. For the year ended May 31, 2017, administrative expenses totaled $2,637,276 and in line with $2,630,745 in fiscal 2016.
Finance expenses of $176,882 include costs related to the gold prepayment agreement, accretion on the Company’s decommissioning liability and interest paid on loans.
Deferred income tax expense was $2,475,000 compared to a deferred tax recovery of $33,000 in fiscal 2016. The expense resulted from a $2,520,000 increase in unrecognized portion of the deferred tax asset.
Net loss for the year ended May 31, 2017, was $3,602,188 compared with net loss for the year ended May 31, 2016 of $1,356,233. The increase in net loss is primarily due to a decrease in mine operating income of $663,528, increase in deferred tax expense of $2,508,000 partially offset by other revenue of $938,089.
Fourth Quarter 2017 Review
Despite challenging weather conditions impacting mining rates, Anaconda achieved record quarterly gold sales of over 4,600 ounces at the Point Rousse Project. The Pine Cove Mill maintained strong levels of productivity due to continued maintenance and availability at 98% during the fourth quarter of fiscal 2017.
Anaconda sold a record 4,658 ounces of gold in the fourth quarter at an average sales price of $1,658 per ounce, an 11% increase in gold ounces sold over Q4 2016. The Company generated $7.72 million in gold sales revenue in the fourth quarter ended May 31, 2017, an increase of 14% over the corresponding quarter of 2016.
Mining operations were challenged in the fourth quarter of 2017 due to snowfall and related weather conditions, limiting operating days to 58 days. Mine production was 92,167 tonnes of ore and 386,387 tonnes of waste for a strip ratio of 4.2:1 waste to ore. Tonnes mined were significantly lower than the fourth quarter of fiscal 2016, partly due to weather conditions, but also significantly impacted by a lower stripping ratio profile of 4.2:1, compared to 6.5:1 in the corresponding period of 2016. Due to inclement weather conditions, the Company ensured appropriate focus on monitoring final pit walls and dewatering of the open pit to maintain ore production to the mill in the fourth quarter and into the next fiscal year.
The Pine Cove Mill operated at an availability rate of 98%, achieving an average run rate of 1,200 tonnes per operating day compared to 1,197 tonnes per operating day in the fourth quarter of fiscal 2016. The Pine Cove Mill processed 107,956 dry tonnes of ore during the quarter compared to 104,163 dry tonnes of ore in the similar period of fiscal 2016, at relatively similar recovery rates over the comparative periods. Average feed grade during the quarter was 1.49 grams per tonne compared to 1.26 grams per tonne in the similar period of fiscal 2016, an 18% increase. Preventative maintenance continues to be a focus to maintain consistent levels of production which included cone crusher liner changes during the fourth quarter of fiscal 2017. A new refinery is scheduled to be installed in fiscal 2018, with the aim of optimizing recovery rates, reducing related costs, and providing improved safety conditions in the refining process.
Anaconda has included in this MD&A 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.
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).
Anaconda Mining is a TSX listed gold mining, exploration and development company, focused in the mining-friendly and 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, Canada, comprised of the Pine Cove open pit mine, Stog’er Tight deposit, the fully-permitted Pine Cove Mill and tailings facility, a new gold discovery referred to as Argyle, and approximately 6,300 hectares of prospective property. Anaconda is also developing the recently acquired Goldboro 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 to leverage existing infrastructure, including the Viking and Great Northern Projects and the Tilt Cove Property in Newfoundland.
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.