TORONTO – October 13, 2017 – Anaconda Mining Inc. (“Anaconda” or the “Company”) – (TSX:ANX) is pleased to report its financial and operating results for three months ended August 31, 2017 (“Q1 FY 2018”). The condensed consolidated interim 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.
Highlights for the first quarter ended August 31, 2017
- Anaconda achieved record quarterly gold sales of 4,723 ounces in Q1 FY 2018, and recorded revenue of $7.6 million based on an average gold price of $1,612 per ounce, a 55% increase in revenue over Q1 FY 2017
- The mill achieved record mill throughput of 119,401 tonnes, a 20% increase over the first quarter of FY 2017, while the mine produced 158,857 tonnes of ore at a significantly reduced strip ratio of 2.3:1 waste tonnes to ore tonnes
- Operating cash costs per ounce sold* were $1,067 (US$829) during Q1 FY 2018, an 18% improvement over the corresponding period in fiscal 2017.
- Strong revenue and lower costs enabled the Point Rousse Project to generate EBITDA* of $2.6 million, up significantly from $1.2 million in Q1 FY 2017
- The Company generated $0.5 million from the sale of waste rock as aggregate from its Pine Cove Pit
- All-in sustaining cash costs per ounce sold* (“AISC”), including corporate administration, sustaining capital expenditures and sustaining exploration costs for the three months ended August 31, 2017 was $1,419 (US$1,102)
- On a consolidated basis, EBITDA* for the three months ended August 31, 2017, was $1.7 million.
- The Company invested $0.7 million in its strategic exploration and evaluation projects, including $0.5 million on the Goldboro Project in Nova Scotia
- As at August 31, 2017, the Company had cash and cash equivalents of $1.6 million, net working capital of $3.7 million and additional available liquidity of $1,000,000 from an undrawn revolving line of credit facility
*Refer to Non-IFRS Measures section below.
~ Dustin Angelo, President & CEO
Anaconda has begun its 2018 fiscal year with a quarter of strong operational performance and financial results. The Point Rousse Project achieved record quarterly gold sales of 4,723 ounces in Q1 FY 2018, on track to meet our annual guidance of 15,500 ounces. Furthermore, we maintained low operating cash costs per ounce sold of $1,067, or US$829, which generated $2.6 million in Pointe Rousse Project EBITDA. Strong performance from our operations continues to allow Anaconda to invest in its assets and execute on its growth strategy, including the advancement of the high-grade Goldboro Project in Nova Scotia and the Argyle Discovery at Point Rousse.
Consolidated Results Summary – For the Three Months Ended August 31, 2017 and 2016
|Financial Results||Q1 FY 2018||Q1 FY 2017 (restated)|
|Cost of operations, including depletion and depreciation ($)||7,309,870||5,133,623|
|Mine operating income (loss) ($)||303,300||(213,886)|
|Net loss ($)||(324,033)||(957,066)|
|Net loss per share ($/share) – basic and diluted||(0.00)||(0.00)|
|Cash generated from operating activities ($)||540,472||(419,492)|
|Capital investment in property, mill and equipment ($)||(179,471)||(1,926,123)|
|Capital investment in exploration and evaluation assets ($)||(681,732)||(759,850)|
|Average realized gold price per ounce ($)*||1,612||1,685|
|Operating cash costs per ounce sold ($)*||1,067||1,297|
|All-in sustaining cash costs per ounce sold ($)*||1,419||2,477|
|Operational Results||Q1 FY 2018||Q1 FY 2017|
|Ore mined (t)||158,857||108,305|
|Waste mined (t)||364,380||890,120|
|Ore milled (t)||119,401||99,441|
|Grade (g/t Au)||1.35||1.17|
|Gold Oz Produced||4,581||3,184|
|Gold Oz Sold||4,723||2,919|
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 amounts of each adjustment and a reconciliation between the previously published Consolidated Statement of Comprehensive Loss for the three months ended August 31, 2016, have been presented in Note 3 of the condensed consolidated interim financial statements.
First Quarter 2018 Review
Operational Overview and Financial Results
The Pine Cove Mill improved on its run rate of 1,200 tonnes per day in Q4 2017, to over 1,350 tonnes per day in the first quarter of fiscal 2018, a 13% increase. Consequently, the mill achieved record quarterly throughput of 119,401 tonnes during the quarter, leading to record quarterly gold sales of 4,723 ounces of gold. The mining operation at the Point Rousse Project produced 158,857 tonnes of ore from the Pine Cove Pit, up significantly from the 108,305 tonnes produced in Q1 2017. The strip ratio in the most recently completed quarter was 2.3:1 waste tonnes to ore tonnes, down from 4.2:1 in the fourth quarter of FY 2017, and down significantly from 8.2:1 in Q1 2017.
Anaconda generated $7,613,170 in revenue during the three months ended August 31, 2017, based on an average gold price of $1,612 per ounce and record quarterly gold sales of 4,723 ounces. This represents a 55% increase in revenue over the first three months of the 2017 fiscal year, when the mine operation was challenged by weather conditions and a higher strip ratio.
The Company also generated $514,282 of other income from the sale of waste rock as an aggregates product during the first quarter of FY 2018, for which the Company receives $0.60 per tonne.
Operating expenses for Q1 FY 2018 were $5,037,132, compared to $3,785,305 in the first quarter of 2017. The increase in operating costs was the result of stronger mine production volumes, with ore produced up 47% compared to Q1 2017, and 13% higher mill throughput, all of which contributed to the quarterly record gold ounces sold. Consequently, the operating cash costs per ounce sold in the first three months of fiscal 2018 were $1,067 (US$829), an 18% reduction compared to the prior year operating cash costs of $1,297 per ounce (US$999). All-in sustaining costs per ounce were also significantly improved at $1,419 (US$1,102), down from $2,477 per ounce in Q1 FY 2017.
Depletion and depreciation expense for Q1 FY 2018 was $2,272,738, an increase from $1,348,318 during the first quarter of 2017. The higher depletion and depreciation was the result of 62% higher gold ounces sold, which drives units-of-production depreciation, and higher depletion of stripping costs for the Pine Cove Pit, which is approaching its end of life.
Mine operating income for the three months ended August 31, 2017 was $303,300, compared to a mine operating loss of $213,886 in the corresponding period of 2017. The improvement was the result of significantly higher revenue and operating margin, which was partially offset by the increased depletion and depreciation expense.
During Q1 FY 2018, the Company recognized a write-down of exploration and evaluation costs of $65,939 relating to tenements under an option agreement which were removed from the agreement to focus on more prospective targets.
Corporate administration expenditures were $1,244,616 for the first three months of fiscal 2018, up from $682,788 in 2017. The increase reflects the increased corporate personnel due to the addition of the near development Goldboro Project in Nova Scotia, and related increased activity for marketing and communications. Corporate administration in Q1 2018 also includes $18,152 in costs relating to the narrow vein mining research project announced in June 2017.
Finance expense for the quarter was $24,013 for the three months ended August 31, 2017, compared to $50,214 in Q1 2017. Current finance costs relate to interest on the Company’s capital lease obligations and accretion on its decommissioning liabilities.
Net comprehensive loss for the three months ended August 31, 2017, was $324,033, or $0.00 per share, compared to a net comprehensive loss of $957,066, or $0.00 per share. The improvement in net loss compared to the previous year was the result of higher mine operating income, and other income from the sale of waste rock as aggregate product, which was partially offset by higher corporate administration expenditures. Net loss for Q1 FY 2018 also includes estimated income taxes payable of $59,000 relating to the Newfoundland and Labrador mining tax regime, and a deferred tax recovery of $326,000.
Financial Position and Cash Flow Analysis
As at August 31, 2017, the Company had a positive working capital position of $3,699,743, which included cash and cash equivalents of $1,579,901. Anaconda continues to maintain a robust working capital position since May 31, 2017. 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 August 31, 2017, the Company had not drawn against the revolving credit facility.
During the three months ended August 31, 2017, Anaconda generated cash flow from operations of $540,472. Revenue less operating expenses from the Point Rousse Project were $2,576,038, based on record quarterly gold sales at an average price of $1,612 per ounce sold and operating cash costs of $1,067 per ounce sold. Corporate administration costs in the first quarter were $1,254,723 and there was a net reduction in operating cash flows of $1,263,183 from changes in working capital.
Anaconda continued to invest in its growth projects, incurring $681,732 of exploration and evaluation expenditures, which includes $195,675 on the continued advancement of the Goldboro Project. The similar expenditures on exploration and evaluation compared to the first quarter of fiscal 2017 demonstrate the Company’s commitment to investing into its assets.
The Company also invested $179,471 into the property, mill and equipment at the Point Rousse Project. This is down significantly from the corresponding period in the prior year, when the Company made a significant investment to automate many of the operations within the Pine Cove Mill.
Anaconda has included in the 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 Sold – 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 Sold – 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 all other expenses and other income.
Anaconda Mining is a TSX-listed gold mining, exploration and development 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 fully-permitted Pine Cove Mill and tailings facility, the Stog’er Tight deposit, a new discovery called Argyle, and approximately 5,800 hectares of prospective gold-bearing 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, including the Viking and Great Northern Projects on the Northern Peninsula and the Tilt Cove Property on the Baie Verte Peninsula.
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 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.
FOR ADDITIONAL INFORMATION CONTACT:
|Anaconda Mining Inc.
President and CEO
|Anaconda Mining Inc.
VP Public Relations