(expressed in United States dollars, unless otherwise noted) -
Luna Gold Corp. (TSX VENTURE:LGC)(BVLAC:LGC) ("Luna" or the
"Company") today announces its results for the three and nine
months ended September 30, 2011. The complete financial statements
and management discussions and analysis are available for review at
www.lunagold.com and should be read in conjunction with this news
release.
OVERVIEW
Luna Gold Corp. (the "Company") is a publicly listed company on
the TSX Venture Exchange trading under the symbol "LGC". The
Company is actively engaged in the operation, exploration,
acquisition and development of gold properties in Brazil. The
Company currently has one gold mining operation, one development
project and one large greenfield exploration project located in
northeast Brazil.
The Aurizona gold mining operation ("Aurizona") consists of an
open pit mine and gold process plant. Aurizona consists of the
Piaba and Tatajuba deposits and over 10 near mine exploration
targets which are being actively explored by the Company. It covers
approximately 15,500 hectares of land and includes a mining license
and three exploration permits.
The Maranhao Greenfields exploration property ("Maranhao
Greenfields") is located next to Aurizona and consists of an
extensive landholding of exploration licenses totalling 190,000
hectares. This land holding is highly prospective due to its
location in the southern extension of the Guyana Shield and
displays strong geologic and structural similarities to major West
African gold deposits. The area contains over 100 artisanal gold
workings that are being explored by the Company.
The Cachoeira gold project ("Cachoeira") is a development gold
project with a National Instrument 43-101 compliant resource
estimate in three gold deposits consisting of quartz vein systems,
hydrothermally altered host rocks and stockworks within a
north-south trending shear zone.
The Company's near term focus is to:
-- Significantly increase the size of the Aurizona mineral resource and
reserve; release an updated NI 43-101 resource and reserve estimate for
the Piaba gold deposit and drill certain near mine exploration targets;
-- Increase Aurizona gold production above current feasibility study levels
through plant optimization and plant expansion;
-- Complete a scoping study on the expansion options for the Aurizona mine;
-- Complete a structural analysis at Aurizona and assess possible deep
drill targets;
-- Continue the exploration programs at Maranhao Greenfields to define
drill targets for the 2012 exploration season; and
-- Complete a scoping study on the Cachoeira resource and advance the
project to a feasibility study.
The Company's longer term focus is to:
-- Increase Aurizona gold production to greater than 100,000 ounces per
annum;
-- Continue to invest in brownfield exploration activities to attempt to
increase the mineral resources and mineral reserves at Aurizona to
replace production and provide a longer mine life;
-- Develop Cachoeira as an organic growth pipeline project for the Company;
and
-- Identify new gold resources through the exploration of the 190,000
hectare Maranhao Greenfields property and business development programs.
HIGHLIGHTS
-- Record quarterly gold production of 13,473 ounces was achieved in Q3
with feasibility study rates achieved in August and September. Gold
production for the nine month period was 28,277 ounces;
-- Net income was $2.7 million in Q3 and the net loss of the nine month
period was $4.8 million;
-- Operating cash inflow before working capital was $2.4 million in Q3 and
operating cash outflow before working capital for the nine month period
was $3.9 million;
-- Q3 unit cash cost of production was $830 per ounce and for the nine
month period was $1,117 per ounce;
-- The Company successfully raised CA$42 million through a combination of a
marketed public offering and private placement in Q3;
-- Aurizona resource definition drilling continued with significant gold
intercepts:
-- Priority gold target defined at Maranhao Greenfields with major gold in
soil anomaly measuring 1.70 kilometre by 0.45 kilometre at a 50 ppb Au
cut-off with maximum values of 8.97 g/t Au with garimpeiro workings,
mineralized quartz vein sets and sulfidized felsic intrusives;
OUTLOOK
-- Aurizona gold production target for the 2011 year revised to between
42,000 and 44,000 ounces for the 2011 year at a targeted unit cash cost
of between $990 and $1,000 per ounce. The Q4 targeted unit cash cost(1)
is between $750 and $780 per ounce of production;
-- The Company remains on target to release an updated NI 43-101 compliant
resource on Aurizona in Q4 2011; and
-- Cachoeira and Aurizona Expansion scoping study to be completed and the
results released in Q2 2012.
For further information on the Company, reference should be made
to its public filings (including its most recently filed annual
information form ("AIF")) which are available on SEDAR at
www.sedar.com. Information is also available on the Company's
website at www.lunagold.com. Information on risks associated with
investing in the Company's securities and technical and scientific
information under National Instrument 43-101 concerning the
Company's material property, including information about mineral
resources and reserves, are contained in the Company's most
recently filed AIF. This Management's Discussion and Analysis
("MD&A") should be read in conjunction with the unaudited
interim consolidated financial statements for the three months
ended March 31, 2011, six months ended June 30, 2011and nine months
ended September 30, 2011 and related notes thereto which have been
prepared in accordance with International Financial Reporting
Standards.
AURIZONA GOLD MINE - MARANHAO STATE, BRAZIL
The Aurizona gold mine is wholly-owned by the Company and is
situated in the municipality of Godofredo Viana in Maranhao State,
Brazil, near the coast of the Atlantic Ocean. Aurizona contains the
Piaba and Tatajuba deposits and over 10 near mine exploration
targets. The area is covered by a mining licence and three
exploration permits. The Tatajuba deposit is located within an
exploration permit which is in the application process to convert
to a mine license.
Operating Data
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Three months ended Nine months ended
September 30 September 30
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(tabled amounts are expressed in
thousands of US dollars) 2011 2010 2011 2010
---------------------------------------------------------------------------
Mined waste - tonnes 344,894 299,396 702,803 688,335
Mined ore - tonnes 419,243 371,931 644,229 995,889
Ratio of waste to ore 0.8 0.8 1.1 0.7
Ore Grade mined - g/t 1.18 1.13 1.30 1.13
Processed ore - tonnes 416,822 279,654 920,773 418,614
Average grade processed - g/t 1.28 0.90 1.25 0.90
Average recovery rate % 83% 59% 79% 46%
Gold produced (ounces) 13,473 4,774 28,277 5,991
Gold sold (ounces) 12,239 1,462 27,521 2,201
Total cash costs (per ounce) (1) $830 $2,073 $1,117 $2,230
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Mining production
In July 2011, the Company began managing its own mining
activities with the commencement of an interim rental mining fleet
alongside the Company's own purchased equipment. The Company is
currently in process of acquiring a full fleet of mining equipment
to replace the interim rental fleet and deliveries are expected to
arrive between Q4 2011 and Q2 2012.
During the quarter, the Company mined approximately 764,000
tonnes of material, of which, approximately 419,000 tonnes was ore
at an average head grade of 1.18 grams per tonne. This represented
an increase of 14% of total material mined versus the comparative
quarter of 2010. The nine month period mining production in the
current year was 20% lower than the prior year. These variances
were due to the demobilization of the mining contractor on site
earlier in the year, which resulted in lower production for the
year to date due to the downtime in mining activities. However,
Q3's mining production was higher than the comparative quarter of
2010 due to an increase in production efficiencies under the
Company's own management.
Waste stripping has remained lower than planned due to the need
to feed ore to the mill and the changeover from contractor mining
to owner-operator mining. Mining activities are increasing as the
new mining fleet is being mobilized in conjunction with the rental
fleet. This will result in an increase in the run of mine stockpile
for the upcoming wet season, continue ore feed to maintain
production levels and increase waste removal to access future
ore.
Mill Processing
Production in Q3 and the current year to date were significantly
higher than the comparative periods of 2010 as the plant was
commissioned in early 2010 and first gold production was achieved
in Q2 2010. Subsequent to the completion of the strategic plant
upgrades and improvements in the prior quarter, the Company had
record production of 13,473 ounces of gold in Q3. Feasibility
targeted monthly production was achieved in August and September
with gold production of 5,018 ounces and 5,075 ounces,
respectively.
Ore throughput significantly improved this quarter due to the
plant improvements. The hopper, apron feeder, SAG and pumps were
all upgraded and maintenance planning and execution was improved in
the current quarter, resulting in a significant decrease in plant
downtime.
The following chart displays the monthly gold production
subsequent to the plant shutdown and capital upgrades:
http://media3.marketwire.com/docs/lgc-1110-fig-1.pdf
Recoveries are continuing to improve by minimizing carbon
breakdown and loss to tails through optimizing grind and particle
size classification fed to the carbon-in-leach ("CIL") circuit.
Additional recovery improvements will be achieved with the
installation of a carbon regeneration kiln, which is expected in
the first half of 2012.
Q3 gold production met the requirements of the Completion
Guarantee in the agreement with Sandstorm Gold exceeding the three
month production minimum whereby the Company was required to
produce 12,500 ounces of gold in a three month period before April
2012.
October 2011's monthly production was approximately 5,100 ounces
of gold.
Cash Costs (1)
The unit cash cost of production for 2011 remained higher than
target primarily due to low production and higher than planned
employee and maintenance costs. Over 60% of operating costs are
fixed through employee related costs. Employee costs were higher
than planned due to high inflationary costs in Brazil and the
competition for employee talent in the mining industry. The Company
recruited and replaced a number of key employee positions during Q2
and Q3 that were key to the contribution of the production
increases. Maintenance costs were higher than planned due to the
plant shutdown and upgrades in Q2 and ongoing plant upgrades in Q3
to improve operating efficiencies. In addition, diesel consumption
for the power generators was higher than planned due to the
insufficient power supply from CEMAR, state utility company, which
is targeted for completion in August 2012. Q3 unit cash cost of
production was approximately $830 per ounce, which was lower than
previous quarters due to the increase in gold production.
Cash cost in general were lower than the comparative 2010
periods because the operations were in its operational ramp up
stage in 2010.
AURIZONA EXPLORATION
The Company's exploration team completed the 40,000 metre
resource drill program and remains on target to deliver the
resource upgrade in Q4 2011. SRK Denver has been retained to
prepare the updated Aurizona resource and preliminary reserve
estimate in conjunction with the Company. The NI 43-101 report will
be delivered in Q1 2012. The Company's exploration strategy of
surface exploration techniques combined with magnetic geophysical
surveys continues to be very successful in defining the principal
mineralized shear zones which host the near mine targets.
Diamond Drilling
The Company currently is currently demobilizing 6 drill rigs
from the project. Two remaining drill rigs will commence drilling
at the Boa Esperanca target in November. Assays from 72 Piaba holes
totalling 19,490 metres have been received and samples from 43
additional holes are currently at the assay lab. Of particular
significance is the recent definition of new eastern and western
strike extensions to the Piaba orebody which will have a positive
impact on the Q4 resource update. Geological modeling is well
advanced and in house specific gravity data is being acquired to
support the resource update. On completion of the Piaba drill
program, certain rigs will be demobilized and the remaining rigs
will focus on drilling the Boa Esperanca near mine exploration
target. Recent significant diamond drill intercepts (not true
widths) from the ongoing program are listed below:
-- 68.00 metres @ 2.46 g/t Au including 11.00 metres @ 6.02 g/t Au and 3.00
metres @ 5.04 g/t Au;
-- 50.00 metres @ 3.87 g/t Au including 7.00 metres @ 8.47 g/t Au and 1.00
metres @ 53.30 g/t Au;
-- 13.00 metres @ 33.63 g/t Au including 4.00 metres @ 104.83 g/t Au;
-- 13.50 metres @ 3.15 g/t Au including 3.00 metres @ 8.12 g/t Au;
-- 4.00 metres @ 9.46 g/t Au including 0.50 metres @ 59.10 g/t Au; and
-- 36.00 metres @ 1.54 g/t Au including 1.00 metres @ 4.99 g/t Au and 1.00
metres @ 17.75 g/t Au.
Auger and Shallow Reverse Circulation (RC) Drilling
Exploration teams completed a significant number of shallow
auger and RC drill holes targeting eastern and western extensions
to the Piaba deposit in the quarter. 403 auger holes were completed
totalling 3,109 metres and 73 RC holes were completed totalling
1,083 metres. These holes were drilled to a maximum depth of 15
metres on a 50 by 10 metre section spacing. The holes were planned
to define new near surface zones of mineralization beyond the
eastern and western boundaries of the current resource model prior
to the siting of diamond holes in these areas. This low cost
program has been highly successful in the definition of new surface
mineralization at Piaba from sections 1800W to 2000W and from
sections 700E to 1300E. The total strike length of the Piaba
deposit is now 3.30 kilometres. Diamond drill holes are currently
being completed to test for fresh rock mineralization underneath
these surface anomalies. These auger and RC data will also be
utilized in the Q4 resource update.
A shallow auger drill program (1,365 metres in 141 holes) was
also completed at the Tatajuba gold deposit. This follows a review
of the 2008 Tatajuba resource estimate which identified a lack of
near surface drill data. The samples are currently at the assay
laboratory, though preliminary results confirm that the orebody is
outcropping along the deposit strike and these holes should have a
positive effect on future Tatajuba resource estimates.
A shallow auger drill program was also completed over the
Pirocaua SE gold-in-soil anomaly with overall negative results.
This data will be interpreted in conjunction with the ground
magnetic data currently being acquired at Aurizona. Pirocaua SE
could represent a transported (i.e. not in situ) gold-in-soil
anomaly downslope from the main Piaba orebody.
Soil Surveys
Soil assay and geochemical data have been received for all soil
samples collected in the unexplored western portion of the Aurizona
area (LDW Grid) that was designed to target the discovery of new
gold mineralization within extensions to the west-southwest
trending structures that host the gold mineralization in the
Aurizona area. Several cohesive gold-in-soil anomalies have been
defined in this area associated with magnetic lineaments. Follow-up
work on these targets will be determined at year end.
Trenching
Assay data were received for trench samples from the Ferradura
and Conceicao near mine targets which will be reported in due
course.
Ground Magnetic Geophysical Surveys
Ground magnetic surveying focused at Aurizona during the quarter
and surveys were completed at the Micote, Pirocaua, Sao Lourenco
and Barriguda gold targets. All these targets are located to the
east of the Piaba deposit within the Aurizona mine licence area.
The survey data will assist in vectoring into the main mineralized
structures in this area.
Permitting
The process of converting the Tatajuba exploration licence,
which hosts the Tatajuba deposit, to a mining license advanced
during the quarter with the preparation of the mine application
documentation due for submittal to the National Department of
Mineral Production in Brazil in November.
CACHOEIRA GOLD PROJECT
The Cachoeira Gold Project is located in northern Brazil in the
Gurupi Greenstone Belt, approximately 220 kilometres southeast of
the Para State capital of Belem and about 270 kilometres northwest
of the port city of Sao Luis, Maranhao State. Cachoeira comprises
one contiguous block consisting of two mining and three exploration
licenses covering approximately 4,742 hectares.
In October 2007, the Company announced that it had finalized an
option agreement whereby it could earn a 100% interest in the
property from a consortium of vendors. According to the terms of
the agreement the Company can earn its interest by making a
one-time cash payment and by incurring work expenditures of at
least BRL 9.5 million over a 50 month period. As at the date of
this MD&A, the Company had achieved this commitment. The
Company's interest in the property is subject to a 4.0% net profits
royalty with a provision for a partial buy-out of this royalty.
The major asset associated with Cachoeira is a series of shear
zone hosted gold deposits consisting of quartz veins, stockworks
and wall rock alteration. Three deposits, Tucano, Arara and Coruja,
have been defined to date within the north-south trending Cachoeira
Shear Zone. In December 2010, the Company released a maiden NI
43-101 compliant mineral resource estimate at Cachoeira and filed
the technical report on February 7th, 2011 on SEDAR.
Recent work at Cachoeira has included:
-- Positive site visit by DNPM officials ahead of an official review to
extend the date for the Company to commence mine construction, currently
set for April 2012;
-- Gazetting of new Cachoeira exploration licence which increases the
project size from 3,826 hectares to 4,742 hectares;
-- Finalization of the Cachoeira census and resettlement plan; and
-- Community awareness programs in the municipal schools.
Cachoeira Regional
The Company completed an auger drill program at the Arara North
target and samples are at the assay laboratory.
MARANHAO GREENFIELDS EXPLORATION PROPERTY - MARANHAO STATE,
BRAZIL
The Maranhao Greenfields exploration property is located to the
southwest and southeast of Aurizona and contains multiple shear
zones and over 100 historic artisanal gold workings (garimpos). It
consists of over 190,000 hectares of contiguous exploration
licenses and is located within the Sao Luis Craton, southeast of
the Guiana shield, which hosts several major gold deposits
including Rosebel and Las Cristinas. Geologic reconstruction of the
South American and African continents places the Sao Luis Craton in
close proximity to the Birimian Gold Belt of West Africa. Strong
geologic and structural similarities exist between the Sao Luis
Craton, the Guiana shield and the West African Craton. The area is
characterized by low relief and an extensive sedimentary cover
sequence with deep weathering profiles. Historic exploration in the
district was limited to soil and rock sampling, auger drilling,
geophysical surveys and some shallow reconnaissance drill
holes.
The Company currently has exploration teams working four targets
simultaneously in the Maranhao Greenfields project area.
Two new Maranhao Greenfields exploration licences were gazetted
in the quarter bringing the total landholding to 190,000
hectares.
Advanced Areal Gold Target
All exploration data (geochemical, geophysical and geological)
were received and interpreted for Areal that have identified this
as a highly prospective large-scale gold target which can be
summarized as:
-- Major gold in soil anomaly measuring 1.70 kilometre by 0.45 kilometre at
a 50 ppb Au cut-off with maximum values of 8.97 g/t Au associated with
garimpeiro workings, mineralized quartz vein sets and sulfurized felsic
intrusives
-- Gold anomaly is associated with elevated Bi and Mo values and is hosted
within a major NW trending shear corridor with well-defined footwall
mafic volcanics - prospective structural corridor
-- Reconnaissance rock grab and channel sampling program returned gold
values up to 1.60 g/t Au
An auger drill program was designed to test the Areal gold
anomaly on a 200 metre by 20 metre grid. This program commenced in
September and is 50% complete with 1,200 metres finalized in 187
holes. A topographic survey was also completed.
Nova Vida Grid Extension
The Nova Vida east extension soil sampling program was completed
and samples are at the assay laboratory. Geologic mapping was also
conducted. Nova Vida is a large low-grade gold-in-soil anomaly
associated with recent and paleo-conglomerates and several alluvial
gold garimpos. It will be reported when the field programs are
completed.
JST Grid
Assay data for soil samples from the JST Grid have been received
and have defined three discrete gold-in-soil anomalies centered on
old garimpo pits. The JST targets are located in the far southwest
of the Maranhao Greenfields project area and are significant in
that they extend surface gold mineralization in the project area to
the extreme southwestern limit of the Company's claim boundaries.
Geologic mapping and ground geophysical surveys will be conducted
at JST and the targets will be reported on finalization of these
programs.
PC, CPB, PJP, BML Grids
Work continued at these targets in the quarter and assay data
are being uploaded to the databases. The results from these
programs will be reported before year end. The Company is
aggressively exploring its extensive and prospective landholding at
Maranhao Greenfields to deliver drill targets on 100% owned mineral
rights in 2012.
SUMMARY OF OPERATING RESULTS
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Three months ended Nine months ended
September 30 September 30
----------------------------------------------------------------------------
(tabled amounts are expressed in
thousands of US dollars) 2011 2010 2011 2010
----------------------------------------------------------------------------
Gold sales (ounces) 12,239 1,462 27,521 2,201
----------------------------------------------------------------------------
Revenue 15,910.5 1,620.3 35,447.3 2,449.8
Operating expense (9,009.2) (5,576.2) (28,728.8) (7,969.6)
Depreciation and amortization (2,012.9) (303.8) (4,118.5) (350.7)
----------------------------------------------------------------------------
4,888.4 (4,259.7) 2,600.0 (5,870.5)
General & administration (2) (2,370.5) (1,367.6) (5,610.6) (3,423.7)
Exploration expense 263.2 (1,334.5) (3,371.9) (2,123.4)
Financing (cost) income, net (1,979.1) (327.4) (2,959.2) (375.2)
Unrealized gains (losses) from
derivative liability (73.8) 472.7 2,291.8 (48.2)
Foreign exchange and other 1,994.2 30.4 2,269.5 384.5
----------------------------------------------------------------------------
Net income (loss) 2,722.4 (6,786.1) (4,780.4) (11,456.5)
----------------------------------------------------------------------------
Basic/Diluted Income (loss) per
share 0.01 (0.02) (0.01) (0.03)
----------------------------------------------------------------------------
2. General and administration ("G&A") consists of general and
administrative expenses, professional fees and stock based compensation
charges.
Revenue increased over the comparative periods of 2010 due to
the increase in gold production and the increase in the price of
gold. The Company's average realized price of gold received was
$1,590 for Q3 and $1,490 for the nine month period, excluding gold
sales to Sandstorm and delivery of gold to RMB. The Company also
achieved net positive operating profit for Q3 and the nine month
period of 2011, which was driven by the lower unit cash cost of
production and the increase in the price of gold.
G&A expense was significantly higher than comparative
periods due to stock based compensation expense related to the
hiring of new management. Excluding stock based compensation, the
G&A was higher than comparative periods due to increases in
marketing and investor relations related costs.
The Company spent approximately $8.3 million in exploration
related costs in Q3 of which, $7.1 million was on the Aurizona
resource definition (capitalized in mineral properties for
accounting purpose), $0.9 million at Cachoeira and $0.3 million at
Maranhao Greenfields. The Company reclassed $1.2 million of
exploration expense to mineral properties in Q3 as management
revised its estimate of allocation of overhead between Maranhao
Greenfields and Aurizona. This allocation in the current quarter
resulted in an exploration cost recovery and an increase in the
Aurizona mineral property asset. For the nine month period, the
Company spent approximately $15.6 million in exploration of which,
$12.2 million was capitalized as mineral property on the Aurizona
resource definition, $2.4 million at Cachoiera and $1.0 million at
Maranhao Greenfields. The increase in overall exploration
expenditure in 2011 compared to 2010 is due to the Company focusing
most of its resources on mine development and production in 2010
resulting in lower amounts spent on exploration activities.
Net financing cost was higher due to the non-cash $0.8 million
accreted interest (for accounting purpose) from the settlement of
RMB financing and $0.8 million of interest and penalties from
accounts payable due to late payments from cash conservation
efforts in the prior quarters.
Unrealized gains (losses) from derivative liability were due
revaluation of the foreign exchange and interest rate foreign
exchange contracts and warrants liability related to the transition
to IFRS, whereby the warrants outstanding were reclassified as a
derivative liability on the balance sheet and subject to
mark-to-market adjustments through the profit and loss
statement.
Foreign exchange gain was unrealized and the result of currency
movements and the US dollar on its WestLB revolving credit
facility, accounts payable and funds held in foreign
currencies.
Operating results - 2 year historic trend
----------------------------------------------------------------------------
(tabled amounts are
expressed in thousands of
US dollars) (3) Q3 11 Q2 11 Q1 11
----------------------------------------------------------------------------
Revenue 15,910.5 9,179.4 10,357.4
Operating expense (9,009.2) (10,990.7) (8,728.9)
Depreciation and
amortization (2,012.9) (1,203.5) (902.1)
----------------------------------------------------------------------------
4,888.4 (3,014.8) 726.4
General &
administration(4) (2,370.5) (2,178.1) (1,062.0)
Exploration expense 263.2 (2,236.4) (1,398.7)
Financing (cost) income,
net (1,979.1) (624.5) (355.6)
Unrealized gains (losses)
from derivative liability (73.8) 737.3 1,628.3
Foreign exchange and other 1,994.2 (375.1) 650.4
----------------------------------------------------------------------------
Net income (loss) 2,722.4 (7,691.6) 188.8
----------------------------------------------------------------------------
Basic/Diluted Income
(loss) per share 0.01 (0.02) 0.00
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(tabled amounts are
expressed in thousands of
US dollars) (3) Q4 10 Q3 10 Q2 10 Q1 10 Q4 09
----------------------------------------------------------------------------
Revenue 13,656.7 1,620.3 829.5 - -
Operating expense (13,922.3) (5,576.2) (2,393.4) - -
Depreciation and
amortization (1,783.0) (303.8) (46.9) - -
----------------------------------------------------------------------------
(2,048.6) (4,259.7) (1,610.8) - -
General &
administration(4) (1,320.7) (1,367.6) (1,037.0) (1,019.1) (813.4)
Exploration expense (665.4) (1,334.5) (725.7) (63.2) (576.1)
Financing (cost) income,
net (491.2) (327.4) (78.6) 30.8 977.4
Unrealized gains (losses)
from derivative liability (899.0) 472.7 (520.9) - -
Foreign exchange and other 519.1 30.4 349.5 4.6 (891.2)
----------------------------------------------------------------------------
Net income (loss) (4,905.8) (6.786.1) (3,623.5) (1,046.9) (1,303.3)
----------------------------------------------------------------------------
Basic/Diluted Income
(loss) per share (0.01) (0.02) (0.01) (0.00) (0.00)
----------------------------------------------------------------------------
3. The quarterly comparatives from 2009 are presented under Canadian GAAP.
IFRS transition began on January 1, 2010.
4. General and administration consists of general and administrative
expenses, professional fees and stock based compensation charges.
Revenue's began in Q2 2010 with the Company's first ounce of
gold produced and increased up to Q4 2010 due to higher production
output and rising gold prices. However, production decreased in Q1
2011 and Q2 2011 due to the planned shutdown and plant upgrade and
was re-commissioned resulting in production increases from Q2 to Q3
in 2011. Operating expenses followed the same trend as gold sales
with movements in quarterly operating expense directly related to
the number of ounces of gold sold within that period. In addition,
operating expenses on a unit cash cost basis were directly impacted
by the number of ounces produced in each quarter, resulting in
lower unit cash cost related to increases in production. General
and administration expense remained consistent quarter on quarter
since production began in Q2 2010, except for Q2 2011 and Q3 2011,
which was impacted by an increase in stock based compensation
expense related to the hiring of new management and increases in
marketing and investor relations related costs.
Exploration expense was related to the Cachoeira and Maranhao
Greenfield exploration programs which began in Q2 2010. Variances
between quarters were due to the timing of executing the planned
exploration programs and the weather.
Net financing costs were directly related to the interest
expense on the outstanding loan balance and interest income on the
cash balance of the Company.
Unrealized derivative gains and losses quarter on quarter was
mainly driven by the volatility in the Company's share price and
its relation to the outstanding warrants.
Foreign exchange movements each quarter are related to changes
in the USD:BRL exchange rate in relation to the Company's working
capital accounts in Brazil and its WestLB revolving credit facility
which is denominated in BRL.
LIQUIDITY AND CAPITAL RESOURCES
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
----------------------------------------------------------------------------
(tabled amounts are expressed in
thousands of US dollars) 2011 2010 2011 2010
----------------------------------------------------------------------------
Cash flows from operating
activities
Before working capital 2,404.4 (6,346.3) (3,894.2) (9,731.5)
After working capital 672.1 (14,514.1) (2,767.8) (20,871.2)
Cash flows from financing
activities 50,957.3 (75.7) 53,378.8 44,031.8
Cash flows from investing
activities (10,480.1) (4,297.7) (20,023.3) (28,491.5)
Effect of exchange rates on cash (207.4) 30.9 66.1 332.6
Net cash flows 41,149.3 (18,887.5) 30,587.7 (5,330.9)
Cash balance 41,357.4 7,567.2 41,357.4 7,567.2
----------------------------------------------------------------------------
At September 30, 2011, the Company had cash and cash equivalents
of $41.4 million and finished gold bullion inventory of
approximately 3,800 ounces.
The Company achieved its first positive operating cash inflow
before working capital on record and positive cash inflow after
working capital movements. This was the direct result of the net
income realized for the quarter. Cash outflow from operations for
the nine month period in 2011 was due to the net loss for the
period. The variance against the comparative periods of 2010 was
due to the change in net income (loss) between the periods.
Cash inflow from financing activities in Q3 included $30.0
million from the WestLB debt facility which was partially used to
repay the remaining $10.0 million outstanding on the RMB debt
facility, $4.9 million of the prepaid gold facility and the balance
was used for capital upgrades. The Company also closed an equity
financing for net proceeds of approximately $36.0 million. Cash
inflow for the nine months ended in 2011 also include $5.5 million
received on a prepaid gold facility and an additional $3.3 million
paid on the RMB debt facility. The prior year's cash inflow was
from the drawdown of the RMB debt facility and the 2010 equity
issuance.
Cash outflow from investing activities in Q3 consisted of $7.8
million on payments to further define the Aurizona resource and
$2.7 million on capital items at the Aurizona plant. The nine month
period consisted of $12.2 million on payments related to the
Aurizona resource definition and $7.8 million on capital items at
Aurizona, which included the plant upgrades.
As at September 30, 2011, the Company had the following
contractual obligations outstanding:
----------------------------------------------------------------------------
(tabled amounts
are expressed in Less
thousands of US than 1 - 2 2 - 3 3 - 4 4 - 5 There-
dollars) Total 1 year years years years years after
----------------------------------------------------------------------------
Long term debt 33,536.7 6,279.3 5,379.3 6,079.3 14,491.8 1,307.0 -
Accounts payables 8,108.2 8,108.2 - - - - -
Asset retirement
obligation 5,895.1 - - - - - 5,895.1
----------------------------------------------------------------------------
Senior secured credit facility with WestLB AG ("WestLB")
In July 2011, the Company closed a senior secured credit
facility with WestLB. This facility is comprised of a $20.0 million
senior secured term loan (the "Term Loan") and a 15.6 million BRL
senior secured revolving loan (the "Revolving Facility"). The Term
Loan also has a cash sweep provision, which has no material impact
to the Company's cash position or financial statements as at
September 30, 2011. The purpose of the Facility was to refinance
the Company's existing debt with RMB Resources and to fund
additional capital expenditures and working capital needs at the
Aurizona gold mine.
The Term Loan is a 5 year loan with semi-annual instalments
commencing on July 1, 2012 and bears interest at LIBOR plus 3.625%.
The Revolving Facility is denominated in Brazilian Reais, matures
on July 1, 2014 and bears interest at CDI plus 3.25%. Any
outstanding commitments under the Revolving Facility shall be
repaid in full on the final maturity date.
The Company has provided security on the facility in the form of
a first fixed floating charge over the Aurizona operation, a first
mortgage over the shares of Mineracao Aurizona S.A. ("MASA") and of
the rights, title and licenses associated with the operation and a
general security agreement by the Company in favour of WestLB
AG.
The Company shall maintain a debt service coverage ratio
("DSCR") to be greater than 1.35, a loan life coverage ratio
("LLCR") to be less than 1.35 and a reserve tail ratio ("RTR") to
be greater than 30% over the life of the loan.
Aurizona Project Debt Facility
In December 2009, the Company entered into a senior secured,
project debt facility (the "RMB Facility") in the amount of up to
$15.0 million with RMB Resources Inc. ("RMB") to assist in the
completion of the Aurizona processing plant. The RMB Facility was
comprised of two tranches in the amount of $7.5 million each that
bore interest at LIBOR plus 7.5% and was to be fully repaid by
December 31, 2012.
As at September 30, this RMB Facility was repaid in full with
the proceeds from the West LB Term Loan.
RMB $5.5 million prepaid gold agreement
On May 25, 2011, the Company entered into a $5.5 million prepaid
gold agreement with RMB. In exchange for the upfront cash received
by the Company, the Company was required to deliver a total of
3,880 ounces of gold to RMB. As at September 30, the Company had
fulfilled this obligation.
Commitment from Acquisition of Aurizona Goldfields
Corporation
In January 2007, the Company acquired the Aurizona property from
Brascan Brasil ("Brascan") and Eldorado Gold Corporation
("Eldorado") in exchange for a series of staged payments (the
"Purchase Agreement"), some of which were conditional upon the
project reaching commercial production, as defined in the Purchase
Agreement. The Company has repaid all outstanding amounts in
relation to this agreement but remained liable for payments of $1.0
million payable to each party on the first, second and third
anniversary of the commencement of commercial production of
Aurizona. As defined under the terms of the Purchase Agreement, the
Company achieved commercial production on December 2, 2010
resulting in the first payment becoming due and payable on December
2, 2011.
In July 2011, the Company entered into an agreement with Brascan
and Eldorado to amend the outstanding debt of $6.0 million of the
Company to Brascan and Eldorado. The Company issued promissory
notes in the aggregate amount of $3.0 million to each of Eldorado
and Brascan in connection with the Purchase Agreement. In
satisfaction of the aforementioned promissory notes, Brascan and
Eldorado will each receive $1.5 million in cash on or before
December 2, 2011, and has received 2,417,949 common shares of the
Company.
FINAME Equipment Purchase Financing ("FINAME")
In February 2011, the Company entered into debt financing in the
amount of 4.0 million Brazilian Reais ("BRL") to purchase mining
equipment through the FINAME financing program, which is
administered through the Brazilian Development Bank ("BNDES").
Interest is calculated at 5.5% per annum and the FINAME is
repayable in equal monthly instalments beginning September 15, 2011
and ending February 15, 2016.
Derivative Contracts
Subsequent to quarter end, the Company entered into the
following derivative contracts as required under the terms of the
WestLB Facility:
BRL / USD Forward Contracts
The Company sells US dollars and buys Brazilian Real as
follows:
----------------------------------------------------------------------------
Expiry Date Notional Amount (USD) BRL / USD Price
----------------------------------------------------------------------------
December 16, 2013 $ 6,000.0 1.86725
June 16, 2014 $ 6,000.0 1.92986
December 15, 2014 $ 6,000.0 1.99265
June 15, 2015 $ 6,000.0 2.04843
December 15, 2015 $ 6,000.0 2.11206
June 15, 2016 $ 6,000.0 2.16633
----------------------------------------------------------------------------
Floating to Fixed Interest Rate Swap Contracts
The Company pays a fixed annual interest rate of 1.495% and
receives 6 month US Libor rate as follows:
----------------------------------------------------------------------------
Start Date End Date Notional Amount (USD)
----------------------------------------------------------------------------
January 25, 2012 July 25, 2012 $ 20,000.0
July 25, 2012 January 25, 2013 $ 12,304.0
January 25, 2013 July 25, 2013 $ 12,304.0
July 25, 2013 January 27, 2014 $ 4,235.7
January 27, 2014 July 25, 2014 $ 4,235.7
----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Shareholders' equity increased over the prior year due to the
Company's equity financing activities during the period, which was
partially offset by an increase in the deficit.
In Q3, the Company closed a marketed public offering and
concurrent private placement of units of the Company for total
gross proceeds of approximately CA$39.4 million and subsequent to
the quarter end, an additional CA$2.6 million was received on the
exercise of the over-allotment option. Each unit consisted of one
common share of the Company plus one half common share purchase
warrant at a price of CA$0.52 per unit. The Company intends to use
the proceeds as follows:
-- Aurizona expansion scoping study / pre-feasibility / feasibility study;
-- Aurizona resource definition expansion;
-- Aurizona plant expansion;
-- Maranhao Greenfield discovery exploration;
-- Cachoeira social impact study;
-- Reduction of debt;
-- Corporate development; and
-- General corporate purposes and working capital.
Each full warrant is exercisable to acquire one common share of
the Company at a price of CA$0.70 for a period of 24 months from
the closing of the offering, which was September 30, 2011.
As at the date of this report the Company had 522,550,895 shares
outstanding, 26,140,000 share purchase options and 47,459,503
common share warrants outstanding.
The following is a summary of stock options outstanding as at
the date of this report:
----------------------------------------------------------------------------
Number of shares
('000s) Vested ('000s) Price per share CA$ Expiry Date
----------------------------------------------------------------------------
100 100 0.50 14-Mar-12
205 205 0.85 8-Aug-12
210 210 1.23 16-Jan-13
165 165 1.05 2-May-13
250 250 0.90 20-Jun-13
700 700 0.90 19-Sep-13
5,100 5,100 0.42 24-Jul-14
750 750 0.37 29-Jul-14
100 100 0.55 4-Jan-15
810 540 0.63 5-Jul-15
5,000 1,500 0.58 24-Sep-15
6,325 900 0.65 12-Apr-16
2,850 - 0.55 18-May-16
2,600 - 0.59 9-Aug-16
975 - 0.46 14-Oct-16
----------------------------------------------------------------------------
26,140 10,520
----------------------------------------------------------------------------
The following is a summary of warrants outstanding as at the
date of this report:
----------------------------------------------------------------------------
Number of warrants ('000s) Price per share CA$ Expiry Date
----------------------------------------------------------------------------
6,859 1.00 20-Jun-12
----------------------------------------------------------------------------
40,600 0.70 29-Sep-13
----------------------------------------------------------------------------
47,459
----------------------------------------------------------------------------
OUTLOOK AND STRATEGY
Aurizona Gold Mine
The Company's 2011 full year production target is estimated
between 42,000 and 44,000 ounces of gold, up from the Q2 estimate
of 40,000 ounces of gold. Cash costs for Q4 are targeted between
$750 and $780 per ounce of gold produced with an estimated cash
cost for the 2011 year between $990 and $1,000 per ounce of
production. The increase is targeted cash costs for 2011 is due to
higher employment costs, power and a planned increase in waste
stripping.
The Aurizona NI 43-101 resource upgrade remains on target for
release in early December of 2011.
Cachoeira Gold Property
The Company has extended its target to complete the Cachoeira
scoping study (the "Scoping Study") to Q2 2012 that will deliver
the path forward to developing Cachoeira into a mining project
feasibility study. This has been delayed to allow management to
focus on the Aurizona resource upgrade and production planning and
completion of Cachoeira census study.
Maranhao Greenfields Property
The Company continues to aggressively explore the extensive
Maranhao Greenfields property to discover new gold deposits and
will maintain exploration crews working four targets simultaneously
throughout 2011. Regional scale exploration is underway designed to
generate large gold-in-soil anomalies consistent with the Aurizona
mineralization style. Through these programs the Company intends to
define between six and nine new target areas, several of which will
be brought to drill ready stage in 2012.
Interim Consolidated Statements of Income (Loss) and Comprehensive Income
(Loss)
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
Three months ended Nine months ended
Note September 30 September 30
------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Revenue
Gold sales 10 $ 15,910.5 $ 1,620.3 $ 35,447.3 $ 2,449.8
----------------------------------------------------------------------------
15,910.5 1,620.3 35,447.3 2,449.8
----------------------------------------------------------------------------
Operating expenses
Cost of goods sold (9,009.2) (5,576.2) (28,728.8) (7,969.6)
Depletion and
amortization (2,012.9) (303.8) (4,118.5) (350.7)
----------------------------------------------------------------------------
4,888.4 (4,259.7) 2,600.0 (5,870.5)
----------------------------------------------------------------------------
Other (expenses)
income, net
Exploration 263.2 (1,334.5) (3,371.9) (2,123.4)
General and
administrative 11 (1,321.1) (939.0) (3,090.7) (1,994.5)
Gain (loss) on
derivative
liability 12 (73.8) 472.7 2,291.8 (48.2)
Foreign exchange
gain 3,336.2 43.4 3,604.3 397.5
Stock-based
compensation 8 (1,049.4) (428.6) (2,519.9) (1,429.2)
Finance income 20.5 147.9 144.8 292.9
Finance cost (1,999.6) (475.3) (3,104.0) (668.1)
Other expenses (1,342.0) (13.0) (1,334.8) (13.0)
----------------------------------------------------------------------------
Net income (loss) and
comprehensive income
(loss) for the period $ 2,722.4 $ (6,786.1) $ (4,780.4) $(11,456.5)
----------------------------------------------------------------------------
Income (Loss) per
common share
Basic 0.01 (0.02) (0.01) (0.03)
Diluted 0.01 (0.02) (0.01) (0.03)
Weighted average
shares outstanding
(000's)
Basic 441,343 409,955 437,855 376,148
Diluted 442,801 409,955 437,855 376,148
----------------------------------------------------------------------------
Total shares issued
and outstanding
(000's) 517,523 418,504 517,523 418,504
----------------------------------------------------------------------------
Interim Consolidated Statements of Financial Position
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
September 30, December 31, January 1,
Note 2011 2010 2010
----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 41,357.4 $ 10,703.6 $ 12,565.5
Accounts receivable and
prepaid expenses 5,549.2 3,647.9 743.7
Inventory 3 9,046.4 6,325.5 393.6
Investments - - 2,942.9
----------------------------------------------------------------------------
55,953.0 20,677.0 16,645.7
Property, plant and
equipment 4 95,388.8 88,166.0 54,867.6
Other assets 1,316.2 1,089.5 408.1
----------------------------------------------------------------------------
Total assets $152,658.0 $109,932.5 $ 71,921.4
----------------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 8,108.2 $ 3,524.2 $ 5,364.6
Current portion of
derivative liability 12 16.2 1,605.8 -
Current portion of debt
instruments 5 6,013.0 8,118.3 301.6
Current portion of other
liabilities 6 755.5 1,748.2 1,787.2
----------------------------------------------------------------------------
14,892.9 14,996.5 7,453.4
Debt instruments 5 25,848.2 9,383.2 4,989.2
Derivative liability 12 3,709.4 1,019.2 -
Other liabilities 6 9,715.4 19,917.9 20,308.8
Asset retirement obligation 2,153.6 2,370.9 2,108.5
----------------------------------------------------------------------------
Total liabilities 56,319.5 47,687.7 34,859.9
----------------------------------------------------------------------------
Shareholders' equity
Share capital 146,107.4 107,233.3 65,687.7
Deficit (49,768.9) (44,988.5) (28,626.2)
----------------------------------------------------------------------------
Total shareholders' equity 96,338.5 62,244.8 37,061.5
----------------------------------------------------------------------------
Total liabilities and
shareholders' equity $152,658.0 $109,932.5 $ 71,921.4
----------------------------------------------------------------------------
Interim Consolidated Statements of Changes in Shareholders' Equity and
Deficit
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
Attributable to equity holders of the Company
----------------------------------------------------------------------------
Shares Share Contributed
Note ('000) capital surplus Deficit Total
----------------------------------------------------------------------------
Balance at
January 1,
2010 358,837 $ 60,063.2 $ 5,624.5 $(28,626.2) $ 37,061.5
Net loss for
the period - - - (11,456.5) (11,456.5)
Escrow shares
returned to
treasury and
cancelled (214) (35.7) 35.7 - -
Stock options
exercised 951 608.8 (231.9) - 376.9
Stock-based
compensation
charges - - 1,571.8 - 1,571.8
Issue of
share
capital, net 58,930 27,689.3 - - 27,689.3
----------------------------------------------------------------------------
Balance at
September
30, 2010 418,504 $ 88,325.6 $ 7,000.1 $(40,082.7) $ 55,243.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance at
January 1,
2010 358,837 $ 60,063.2 $ 5,624.5 $(28,626.2) $ 37,061.5
Net loss for
the year - - - (16,362.3) (16,362.3)
Escrow shares
returned to
treasury and
cancelled (214) (35.7) 35.7 - -
Stock options
exercised 3,267 1,183.2 (405.6) - 777.6
Stock-based
compensation
charges - - 1,952.9 - 1,952.9
Issue of
share
capital, net 72,649 38,701.6 113.6 - 38,815.2
----------------------------------------------------------------------------
Balance at
December 31,
2010 434,539 $ 99,912.3 $ 7,321.1 $(44,988.5) $ 62,244.9
----------------------------------------------------------------------------
Net loss for
the period - - - (4,780.4) (4,780.4)
Stock options
exercised 8 2,475 1,583.6 (596.3) - 987.3
Stock-based
compensation
charges 8 - - 2,519.9 - 2,519.9
Issue of
share
capital, net 7(a) 80,509 35,366.8 - - 35,366.8
----------------------------------------------------------------------------
Balance at
September
30, 2011 517,523 $136,862.7 $ 9,244.7 $(49,768.9) $ 96,338.5
----------------------------------------------------------------------------
Interim Consolidated Statements of Changes in Shareholders' Equity and
Deficit
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
Three months ended Nine months ended
Note September 30 September 30
----------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Cash flows from
operating
activities
Net income (loss)
for the period $ 2,722.4 $ (6,786.1) $ (4,780.4) $ (11,456.5)
Items not
affecting cash
Depletion and
amortization 2,027.3 303.8 4,161.6 359.2
Recognition of
other
liabilities (2,248.2) (38.5) (2,711.2) (74.5)
Unrealized
foreign
exchange
(gains) losses (3,319.6) (60.8) (3,508.0) (392.4)
Unrealized
(gains) losses
from warrant
liability 73.8 (472.7) (2,291.8) 48.2
Stock-based
compensation
charges 8 1,049.4 428.6 2,519.9 1,429.2
Accretion of
asset
retirement
obligation 63.1 47.6 198.1 139.5
Accretion of
interest 889.5 226.7 1,370.9 226.7
Other 1,146.7 5.1 1,146.7 (10.9)
----------------------------------------------------------------------------
2,404.4 (6,346.3) (3,894.2) (9,731.5)
Change in non-cash
operating working
capital
Increase in
accounts
receivable and
prepaid expense 166.1 (496.5) (1,901.3) (564.8)
Increase in
inventory (861.1) (5,160.7) (2,077.6) (8,734.5)
(Increase)
decrease in
accounts payable
and accruals (1,037.3) (2,510.6) 5,105.3 (1,840.4)
----------------------------------------------------------------------------
672.1 (14,514.1) (2,767.8) (20,871.2)
----------------------------------------------------------------------------
Cash flows from
financing
activities
Proceeds from
prepaid gold
agreement 6(a) - - 5,500.0 13,868.8
Payment for
settlement of
prepaid gold
agreement (3,862.7) (3,862.7)
Proceeds from debt
5(d) 30,000.0 - 30,000.0 -
Payment of debt
financing fees (1,034.6) - (1,712.7) -
Repayment to
principal of debt
financing (10,000.0) - (13,333.3) -
Proceeds from
issuance of
special warrants,
net - (269.2) - 29,786.0
Proceeds on
issuance of
common shares 35,854.6 193.5 36,787.5 377.0
----------------------------------------------------------------------------
50,957.3 (75.7) 53,378.8 44,031.8
----------------------------------------------------------------------------
Cash flows from
investing
activities
Proceeds from
disposal of
investments - - - 2,964.2
Payment for
mineral
properties (7,812.9) (608.4) (12,207.2) (1,085.6)
Payments for
property, plant
and equipment (2,667.2) (2,603.7) (7,816.1) (30,370.1)
----------------------------------------------------------------------------
(10,480.1) (4,297.7) (20,023.3) (28,491.5)
----------------------------------------------------------------------------
Effect of exchange
rate changes on
cash (207.4) 30.9 66.1 332.6
Increase
(decrease) in
cash and cash
equivalents 41,149.3 (18,887.5) 30,587.7 (5,330.9)
Cash and cash
equivalents -
beginning of
period 415.5 26,423.8 10,703.6 12,565.5
----------------------------------------------------------------------------
Cash and cash
equivalents - end
of period $ 41,357.4 $ 7,567.2 $ 41,357.4 $ 7,567.2
----------------------------------------------------------------------------
On behalf of the Board of Directors
LUNA GOLD CORP.
John Blake, President and CEO
Forward Looking Statements
This MD&A includes certain statements that constitute
"forward-looking statements", and "forward-looking information"
within the meaning of applicable securities laws ("forward-looking
statements" and "forward-looking information" are collectively
referred to as "forward-looking statements", unless otherwise
stated). These statements appear in a number of places in this
MD&A and include statements regarding our intent, or the
beliefs or current expectations of our officers and directors. Such
forward-looking statements involve known and unknown risks and
uncertainties that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. When used in this MD&A, words such
as "believe", "anticipate", "estimate", "project", "intend",
"expect", "may", "will", "plan", "should", "would", "contemplate",
"possible", "attempts", "seeks" and similar expressions are
intended to identify these forward-looking statements.
Forward-looking statements may relate to the Company's future
outlook and anticipated events or results and may include
statements regarding the Aurizona property and other development
projects of the Company's future financial position, business
strategy, budgets, litigation, projected costs, financial results,
taxes, plans and objectives. We have based these forward-looking
statements largely on our current expectations and projections
about future events and financial trends affecting the financial
condition of our business. These forward-looking statements were
derived utilizing numerous assumptions regarding expected growth,
results of operations, performance and business prospects and
opportunities that could cause our actual results to differ
materially from those in the forward-looking statements. While the
Company considers these assumptions to be reasonable, based on
information currently available, they may prove to be incorrect.
Accordingly, you are cautioned not to put undue reliance on these
forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results. To the
extent any forward-looking statements constitute future-oriented
financial information or financial outlooks, as those terms are
defined under applicable Canadian securities laws, such statements
are being provided to describe the current anticipated potential of
the Company and readers are cautioned that these statements may not
be appropriate for any other purpose, including investment
decisions.
Forward-looking statements are based on information available at
the time those statements are made and/or management's good faith
belief as of that time with respect to future events, and are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. These statements
are based on a number of assumptions, including, but not limited
to, assumptions regarding general business and economic conditions,
interest rates, the supply and demand for, deliveries of, and the
level and volatility of prices of gold and other primary metals and
minerals as well as oil, and related products, the timing of the
receipt of regulatory and governmental approvals of our producing
and development projects and other operations, our costs of
production and production and productivity levels, as well as those
of our competitors, power prices, continuing availability of water
and power resources for our operations, market competition, the
accuracy of our reserve estimates (including with respect to size,
grade and recoverability) and the geological, operational and price
assumptions on which these are based, conditions in financial
markets, the future financial performance of the company, our
ability to attract and retain skilled staff, our ability to procure
equipment and operating supplies, positive results from the studies
on our producing and development projects, our gold and other
product inventories, our ability to secure adequate transportation
for our products, our ability to obtain permits for our operations
and expansions, and our ongoing relations with our employees and
business partners. The foregoing list of assumptions is not
exhaustive. Events or circumstances could cause actual results to
vary materially.
Factors that may cause actual results to vary materially
include, but are not limited to, changes in commodity and power
prices, changes in interest and currency exchange rates, acts of
foreign governments, inaccurate geological and metallurgical
assumptions (including with respect to the size, grade and
recoverability of mineral reserves and resources), unanticipated
operational difficulties (including failure of plant, equipment or
processes to operate in accordance with specifications or
expectations, cost escalation, unavailability of materials and
equipment, government action or delays in the receipt of government
approvals, industrial disturbances or other job action, adverse
weather conditions and unanticipated events related to health,
safety and environmental matters), union labour disputes, political
risk, social unrest, failure of customers or counterparties to
perform their contractual obligations, changes in our credit
ratings and changes or further deterioration in general economic
conditions.
Forward-looking statements speak only as of the date those
statements are made. Except as required by applicable law, we
assume no obligation to update or to publicly announce the results
of any change to any forward-looking statement contained or
incorporated by reference herein to reflect actual results, future
events or developments, changes in assumptions or changes in other
factors affecting the forward-looking statements. If we update any
one or more forward-looking statements, no inference should be
drawn that we will make additional updates with respect to those or
other forward-looking statements. You should not place undue
importance on forward-looking statements and should not rely upon
these statements as of any other date. All forward-looking
statements contained in this MD&A are expressly qualified in
their entirety by this cautionary statement.
Other Technical Information
Peter Mah, P.Eng., Certified Mining Engineer, the Company's Vice
President Operations is the Qualified Person as defined under
National Instrument 43-101 responsible for the scientific and
technical work on the development programs and has reviewed and
approved the corresponding technical disclosure throughout this
MD&A. Titus Haggan Ph.D., EurGeol Certified Professional
Geologist #746, the Company's Vice President of Exploration, is the
Qualified Person as defined under National Instrument 43-101
responsible for the scientific and technical work on the
exploration programs and has reviewed and approved the
corresponding technical disclosure throughout this MD&A.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Luna Gold Corp. Investor Relations (604) 558-0560
(604) 558-0561 (FAX)www.lunagold.com
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