TORONTO, Aug 2, 2019 /CNW/ - Anaconda Mining Inc.
("Anaconda" or the "Company") (TSX: ANX) (OTCQX: ANXGF) is pleased
to report its financial and operating results for the three and six
months ended June 30, 2019 ("Q2
2019"). 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.
Second Quarter 2019 Highlights
- Anaconda sold 3,153 ounces of gold in Q2 2019, generating metal
revenue of $5.5 million at an average
realized gold price of $1,739
(US$1,300) per ounce sold*. The
Company also had over 565 ounces in gold doré and bullion inventory
at June 30, 2019, which were
subsequently sold in July 2019.
- The Company produced 78,123 tonnes of ore during the second
quarter, predominantly from mining at the Stog'er Tight Mine, a
138% increase over Q2 2018. Material moved also included 270,552
tonnes of waste development for a pushback of the Pine Cove Pit,
which also contributed 14,960 tonnes of ore in Q2 2019.
- The Pine Cove Mill processed 96,895 tonnes during Q2 2019, a
20% reduction compared to Q2 2018 due to lower mill availability
resulting from planned maintenance activities on the main ball
mill, unplanned maintenance of the regrind mill, and the decision
to accelerate other maintenance programs to minimize future down
time. Mill availability was back up over 92% for the month of
June.
- The Point Rousse Complex generated EBITDA* of $0.7 million in Q2 2019 and $4.5 million for the first half of 2019, compared
with $3.5 million and $7.0 million for the three and six months ended
June 30, 2018, respectively.
- Operating cash costs per ounce sold* at the Point Rousse
Project in Q2 2019 was $1,421
(US$1,062), and $1,144 (US$858) for
the first six months of 2019, reflecting reduced gold production
due to low mill availability during the second quarter of
2019.
- All-in sustaining cash costs per ounce sold*, including
corporate administration and sustaining capital expenditures, was
$2,276 (US$1,702) for Q2 2019, and $1,674 (US$1,255)
for the first half of 2019, reflecting lower gold ounces sold in
the three months ended June 30,
2019.
- In the first half of 2019, the Company invested $6.9 million in its exploration and development
projects, including $6.3 million on
the Goldboro Gold Project in Nova
Scotia relating to the 10,000 tonne bulk sample, the
commencement of the feasibility study, and ongoing diamond drilling
programs.
- Net loss for the three months ended June
30, 2019 was $1.6 million, or
$0.01 per share, compared to
$0.5 million, or $0.01 per share, for the three months ended
June 30, 2018.
- As at June 30, 2019, the Company
had a cash balance of $3.1 million, a
working capital* deficiency of $0.8
million, and additional available liquidity of $1,000,000 from an undrawn revolving line of
credit facility.
- On July 10, 2019, Anaconda
successfully completed a non-brokered private placement for
$4.7 million, which will fund
exploration at the Tilt Cove Gold Project and the continued
advancement of the Goldboro Gold Project, in addition to continued
investment at the Point Rousse Project and other corporate
initiatives.
*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 and six months ended
June 30, 2019.
"The second quarter of 2019 was very difficult for the Point
Rousse operation as unplanned maintenance issues, combined with
opportunistic mill upgrades, impacted mill availability, leading to
reduced gold production and higher operating costs. We are pleased
to note that in July the mill was fully back on-line and achieving
its operating targets. With the investments in the mill and new
experienced site management, Anaconda is poised to potentially
expand the life of the Pine Cove Mine, as recent successful
expansion drilling has been able to expand the mineralization near
the margins of the existing Pine Cove pit. With this
expansion, Anaconda will continue to optimize the Argyle deposit
which will now be deferred to 2020. Looking to the second half of
2019, we look forward to reporting on our ongoing exploration
program at the Tilt Cove project in Newfoundland and the pre-development work on
our Goldboro Gold Project in Nova
Scotia"
~Kevin Bullock, Chief Executive Officer, Anaconda Mining
Inc.
2019 Guidance
As a result of recent successful infill and expansion drilling
at the Pine Cove open pit mine announced in February 2019, the Company continues to see the
potential for continued expansion at Pine Cove and consequently
will defer the development of the Argyle Deposit into 2020. As a
result, the Company is revising its guidance for 2019 to 16,000 to
17,000 ounces of gold from its initial guidance of 19,000 to 20,000
ounces. The Pine Cove Mine is immediately adjacent to the Company's
processing facility and is very well understood geologically and
from a mining perspective, limiting technical risk, and requires
low capital expenditure to continue production. Ongoing mining at
Pine Cove also has the benefit of increasing the Company's
permitted in-pit tailings storage capacity. This will allow the
Company to continue to optimize the Argyle Deposit, incorporating
recent drilling results, and complete all required permitting
activities, while deferring the related capital to develop the
site. The Company has now received a Mining Lease for the Argyle
Deposit and has submitted the development and rehabilitation plan
for regulatory review.
The Company is revising its operating cash costs guidance for
the full year from between $1,050 and
$1,100 per ounce of gold sold to
between $1,325 and $1,375 per ounce of gold sold (US$990 - US$1,025
at an approximate exchange rate of 0.75), reflecting the impact of
lower gold sales in Q2 2019 and the continued mining at Pine Cove
for the balance of 2019 at lower grades than the previous
production plan, which included Argyle.
Consolidated Results Summary
Financial
Results
|
Three
months
ended
June 30,
2019
|
Three months
ended
June 30,
2018
|
Six
months
ended
June 30,
2019
|
Six
months
ended
June 30,
2018
|
Revenue
($)
|
5,485,695
|
7,451,617
|
14,262,398
|
15,048,217
|
Cost of operations,
including depletion
and depreciation ($)
|
5,361,391
|
5,586,145
|
11,816,085
|
11,097,498
|
Mine operating income
($)
|
124,304
|
1,865,472
|
2,446,313
|
3,950,719
|
Net loss
($)
|
(1,638,464)
|
(549,543)
|
(480,613)
|
(400,325)
|
Net loss per share
($/share) – basic and diluted ($)
|
(0.01)
|
(0.01)
|
(0.00)
|
(0.00)
|
Cash generated from
operating activities ($)
|
(2,770,728)
|
2,944,700
|
1,364,346
|
3,936,505
|
Capital investment in
property, mill and equipment
($)
|
1,235,873
|
817,139
|
1,525,050
|
1,381,112
|
Capital investment in
exploration and evaluation
assets ($)
|
2,538,791
|
1,121,070
|
6,896,181
|
2,656,434
|
Average realized gold
price per ounce*
|
US$1,300
|
US$1,313
|
US$1,272
|
US$1,320
|
Operating cash costs
per ounce sold*
|
US$1,062
|
US$675
|
US$858
|
US$693
|
All-in sustaining
cash costs per ounce sold*
|
US$1,702
|
US$1,053
|
US$1,255
|
US$1,071
|
|
|
|
June 30,
2019
|
December 31,
2018
|
Total assets
($)
|
|
|
60,292,316
|
57,942,367
|
Non-current
liabilities ($)
|
|
|
6,967,280
|
5,290,646
|
|
*Refer to Non-IFRS
Measures section for reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational
Results
|
Three months
ended
June 30,
2019
|
Three months
ended
June 30,
2018
|
Six
months
ended
June 30,
2019
|
Six
months
ended
June 30,
2018
|
Ore mined
(t)
|
78,123
|
32,833
|
155,490
|
176,673
|
Waste mined
(t)
|
427,425
|
356,642
|
706,837
|
606,774
|
Strip
ratio
|
5.5
|
10.9
|
4.6
|
3.4
|
Ore milled
(t)
|
96,895
|
121,299
|
176,653
|
230,518
|
Grade (g/t
Au)
|
1.25
|
1.38
|
1.55
|
1.41
|
Recovery
(%)
|
74.7
|
85.9
|
79.3
|
85.6
|
Gold ounces
produced
|
2,907
|
4,632
|
7,083
|
8,925
|
Gold ounces
sold
|
3,153
|
4,330
|
8,404
|
8,856
|
Second Quarter 2019 Review
Operational Overview
The Pine Cove Mill processed 96,895 tonnes during Q2 2019, down
20% compared to the second quarter of 2018, as the mill was ramping
up from a series of unplanned maintenance on the head of the
regrind mill, delayed shipment of trunnion liners, and planned
maintenance programs on the main ball mill. Once the regrind mill
trunnion liners and mill head were installed in April, the mill was
able to ramp up its throughput to 1,241 tonnes per day for the
quarter, a 9.3% increase from Q1 2019 when the mill issues
began.
Average grade during Q2 2019 was 1.25 g/t, a 9.9% decrease from
the second quarter of 2018, and lower than Q1 2019 when Stog'er
Tight was the main ore feed to the Pine Cove Mill. The mill
achieved an average recovery rate of 74.7%, 10% below planned and
historically achieved levels, resulting in gold production of 2,907
ounces for the second quarter of 2019. The coarse concentrate in
circuit impacted recovery levels during the ramp-up, and
consistency through the regrind mill was initially a challenge
while the operating parameters for bearing temperature were
calibrated, which further impacted leach recovery. With the circuit
now in full operation the mill is now achieving recoveries in line
with plan and historical trends.
During the second quarter of 2019, the mine operations produced
78,123 tonnes of ore, predominantly from the Stog'er Tight Mine.
Total material moved included of 505,548 tonnes also included
295,082 tonnes of waste development for a pushback at the Pine Cove
Pit, which also contributed 14,690 tonnes of ore in Q2 2019.
Ore mined during Q2 2019 was up significantly over the second
quarter of 2018, when mining activity in the main Pine Cove Pit was
finishing and the focus was on the development of the Stog'er Tight
Pit, while stockpiles from Pine Cove provided mill throughput.
Going forward in 2019, mine operations will remain focused on
pushbacks and mine production from the south and southwest areas of
the Pine Cove Pit. Permitting activities continue to advance with
respect to the Argyle Deposit, and with the shift of the current
year mine plan to Pine Cove, the Company will continue to optimize
the Argyle Deposit, incorporating recent drilling results.
Financial Results
Anaconda sold 3,153 ounces of gold during the second quarter of
2019, generating gold and silver revenue of $5.5 million, and had over 565 ounces in gold
doré and bullion inventory at June 30,
2019, which were sold in early July 2019. The Company
generated metal revenue of $14.3
million during the first half of the year on gold sales of
8,404 ounces.
Operating expenses for the three and six months ended
June 30, 2019 were $4,337,552 and $9,224,166, respectively, compared to
$3,865,256 and $7,939,603 in the three and six months ended
June 30, 2018, respectively.
Processing costs were higher due to $331,000 of abnormal costs expensed as a result
of the temporary mill shutdown to allow for repairs to the regrind
mill and the completion of other maintenance programs, as well as a
write-down to inventory of $180,000.
This was offset by insurance proceeds of $615,820 relating to the failure of the jaw
crusher in 2018. Mining costs were higher in both the second
quarter and first half of 2019 relative to prior year periods due
to 10% more material moved and higher haulage costs from Stog'er
Tight, compared to the first half of 2018 when the Company was
winding down mining in the bottom of the main Pine Cove Mine, which
is closer to the mill. Operating cash costs per ounce sold during
Q2 2019 were $1,421 (US$1,062) as a result of lower gold sales during
the period, contributing to operating cash costs of $1,144 (US$858) for
the first half of 2019, above the Company's initial 2019 annual
operating cash cost guidance of C$1,050-C$1,100.
In Q2 2019, the Company recorded a royalty expense of
$145,436 on production from Stog'er
Tight, which carries a 3% net smelter return royalty, compared to
$19,077 in the previous year when
Pine Cove was the predominant ore feed.
Depletion and depreciation expense for the three and six months
ended June 30, 2019 was $878,403 and $2,198,188, respectively, with decreases from the
comparative periods of 2018 due to lower ounces produced in Q2
2019.
Mine operating income for the three months ended June 30, 2019 was $124,304, compared to $1,865,472 in the corresponding period of 2018,
as a result of higher comparable operating costs and lower gold
sales during Q2 2019.
Corporate administration expenditures were $1,065,942 and $2,079,122 for the first three and six months of
fiscal 2019, respectively, down from $1,148,342 and $2,242,696 for the comparative periods. Corporate
administration includes senior management and corporate
compensation, regulatory and listing costs, marketing and investor
relations, and general office expenses. The Company also recorded
research and development costs of $125,621 in the first half of 2019 relating to
the narrow vein mining research project.
Share-based compensation was $308,736 during Q2 2019, compared to $190,407 in the three months ended June 30, 2018, and $419,501 in the first half of 2019, compared to
$340,880 in the first six months of
2018. The increase reflects the higher fair value and vesting
expense of the share units granted during the first half of
2019.
Finance expense for the quarter was $156,346 for Q2 2019 and $192,502 for the first half of 2019, compared to
$38,055 and $72,860 for the comparative periods. Finance
costs increased during the quarter due to the $5 million term loan with Royal Bank of
Canada ("RBC") in March 2019.
Net comprehensive loss for the three months ended June 30, 2019, was $1,638,464, or $0.01 per share, compared to $549,543, or $0.01
per share. The decline compared to the three months ended
June 30, 2018 was the result of lower
mine operating income, offset by a lower net income tax expense, as
the Company recorded a current income tax recovery of $20,000 relating to provincial mining tax and a
deferred income tax expense of $54,000 during the three months ended
June 30, 2019 (three months ended
June 30, 2018 – expenses of
$199,445 and $169,000, respectively). For the six months ended
June 30, 2019, net loss was
$480,613, or $0.00 per share, compared to $400,325 for the first half of 2018.
Financial Position and Cash Flow Analysis
As at June 30, 2019, the Company
had cash and cash equivalents of $3,118,038, a $1,000,000 undrawn revolving line of
credit, and a working capital deficit of $787,450. Other current assets include a deposit
of $237,188 related to the
Goldboro bulk sample, which was
returned to the company in July, and insurance claim proceeds
receivable of $373,974 which were
received in July as well. Working capital was also impacted by
lower trade and other payables which decreased primarily due to the
ongoing payments relating to the underground bulk sample at
Goldboro. On July 10, 2019, Anaconda successfully completed a
non-brokered private placement for $4.7
million, which will fund exploration at the Tilt Cove Gold
Project and the continued advancement of the Goldboro Gold Project,
in addition to continued investment at the Point Rousse Project and
other corporate initiatives.
The Company entered into a $5
million, two-year term loan at a 4.6% interest rate in
March 2019. The term loan was
arranged with the support of Export Development Canada, to whom the
Company will pay a 1.85% guarantee fee with respect to a guarantee
issued over half the principal amount. The Company also maintains a
$1,000,000 revolving credit facility
as well as a $750,000 revolving
equipment lease line of credit with RBC. Under the terms of the
Agreement, RBC maintains a first-ranking general security agreement
including a specific security interest in the Company's ball mill
and cone crushers. As at June 30,
2019, the Company had not drawn against the revolving credit
facility.
In Q2 2019, Anaconda used $2,770,728 in operating cash flows, due to the
impact of lower gold revenue, a net decrease of $1,367,494 from changes in non-cash working
capital, and a payment of $932,261
relating to current Newfoundland
mining taxes. Revenue less operating expenses and royalties from
the Point Rousse Project were $1,002,707, based on quarterly gold sales of
3,153 ounces at an average price of C$1,739 per ounce sold and operating cash costs
of C$1,421 per ounce sold. Corporate
administration costs in the second quarter were $1,065,942. Unearned revenue decreased
$1,151,667 as the Company delivered
792 ounces in June 2019, under a gold
prepayment agreement with Auramet International LLC (the remaining
346 ounces were delivered in July
2019). Current taxes payable decreased $932,261 as a result of the Company's payment of
its 2018 provincial mining tax expense.
During the second quarter of 2019, the Company continued to
invest in its key growth projects in Newfoundland and Nova Scotia. The Company spent $2,538,791 on exploration and evaluation assets
(adjusted for amounts included in trade payables and accruals at
June 30, 2019), primarily on the
continued advancement of the Goldboro Project. The Company also
invested $1,235,873 into the
property, mill and equipment at the Point Rousse Project, with
capital investment focused on development activity on a pushback of
the Pine Cove Mine.
Financing activities in the three months ended June 30, 2019 were limited to the repayment of
the RBC term loan, lease obligations, and government loans. The
Company also received $33,750 from
the exercise of stock options.
ABOUT ANACONDA
Anaconda is a TSX and OTCQX-listed gold mining, development, and
exploration company, focused in Atlantic
Canada. The company operates mining and milling operations
in the prolific Baie Verte Mining District of Newfoundland which includes the
fully-permitted Pine Cove Mill, tailings facility and deep-water
port, as well as ~11,000 hectares of highly prospective mineral
lands including those adjacent to the past producing, high-grade
Nugget Pond Mine at its Tilt Cove Gold Project. Anaconda is also
developing the Goldboro Gold Project in Nova Scotia, a high-grade resource and the
subject of an on-going feasibility study.
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 year ended December 31, 2018,
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.
SOURCE Anaconda Mining Inc.