TORONTO, ONTARIO–(Marketwired –
This release does not constitute management’s discussion and analysis (“MD&A”) as contemplated by applicable securities laws and should be read in conjunction with the MD&A and the Company’s condensed interim consolidated financial statements for the three and six months ended
- Record gold ounce (“oz”) production in the second quarter of 2013 which was 24% higher compared to the second quarter of 2012. Average cash cost per oz of gold produced1 in the second quarter of 2013 was 19% lower compared to the second quarter of 2012;
- Net sales revenue in the second quarter of 2013 increased 12% over the second quarter of 2012;
- Copper production at Aranzazu for the second quarter of 2013 and 2012 was 3,205,000 pounds and 2,960,700 pounds, respectively, an increase of 8%. On-site average cash cost1 per pound of payable copper produced, net of gold and silver credits was
$3.63for the second quarter of 2013 compared to $2.92for the second quarter of 2012;
- Gross margin of
$(14.5) millionand $(8.3) millionfor the three months ended June 30, 2013and 2012, respectively;
- Loss of
$50.1 millionor $0.22per share for the second quarter of 2013 compared to a loss of $11.5 millionor $0.05per share for the second quarter of 2012. The loss for the second quarter of 2013 includes an impairment charge of $16.0 millionon the Sao Francisco Mineand $40.2 millionon the San Andres Mineresulting from the consensus gold price declining significantly to below the gold price assumptions used in the most recent annual impairment tests;
- Operating cash flow1 of
$11.1 millionfor the second quarter of 2013 compared to $3.2 millionfor the second quarter of 2012; and
- The Company has appointed Banco Itaú
BBA S.A.and RBC Capital Marketsto manage the process to maximize the value of the Serrote project including, but not limited to, a disposal of a majority interest in the project equity.
Although the decline in the gold price has led to an accounting impairment of both
Aranzazu’s full expansion phase, including the installation of the partial roasting facility and expansion to 4,500 tonnes per day, is currently on hold pending the outcome of the financing and refinancing. Management believes that even in today’s market substantial value can be created for our shareholders by accessing available financing to expand Aranzazu, and we are considering multiple corporate funding alternatives. Aura is currently in advanced negotiations with its lenders to finalize an extension to the forbearance and expects to obtain this imminently.
The Serrote development project continues to be under its capital budget and while negotiations for long-term project financing are progressing, we have appointed two well-placed investment advisors to manage the process of a sale of a majority interest in Serrote. We are also exploring options to maximize the value of the Brazilian Mines in addition to optimizing their near term cash flows.”
Production and Cash Costs
The Company’s production and cash costs for the three and six months ended
|For the three months ended||For the three months ended|
|June 30, 2013||June 30, 2012|
|Oz Produced||Cash Costs 1||Oz Produced||Cash Costs1|
|Total / Average||52,425||$||1,100||42,361||$||1,361|
|For the six months ended||For the six months ended|
|June 30, 2013||June 30, 2012|
|Oz Produced||Cash Costs 1||Oz Produced||Cash Costs1|
|Total / Average||102,839||$||1,188||79,948||$||1,548|
Gold production at
Gold production at Sao Francisco in the second quarter of 2013 was 49% higher than the second quarter of 2012 due to higher plant throughput and grade and the recovery of additional gold from the staged leach on the heap. The second quarter of 2012 operations continued to reflect that quarter’s recovery to normalized operations from the structural failure of the primary crusher feed bin in early
Mining at Sao Francisco is expected to continue to the end of
During the second quarter of 2013, 22% more gold oz were produced at Sao Vicente as compared to the second quarter of 2012. The average cash cost per oz of gold produced1 in the second quarter of 2013 was 27% lower than the average cash cost1 in the second quarter of 2012.
There is sufficient feed material in stockpiles at Sao Vicente to keep the plant full at 120,000 tonnes per month until late 2013. The heap leach pads will continue to operate with cyanide addition in early 2014, while we continue to irrigate the heap.
At Aranzazu, copper concentrate production increased by 10% in the second quarter of 2013 as compared to the second quarter of 2012 and the copper recovery increased by 6%. Average cash cost per payable pound of copper produced1 for the three months ended
|1||Please see cautionary note at the end of this press release.|
Brazilian Assets – Value Maximization
The Company has been investigating multiple options to maximize the disposal and closure value of the assets of the Sao Francisco and Sao Vicente mines, including selling the plant and equipment and utilizing key members of their operating teams in our other group locations. The Company is considering options to maximize the value of Serrote including, but not limited to, a disposal of a majority interest in the project equity and has appointed Banco Itaú
Revenues and Cost of Goods Sold
Revenue for the three months ended
Revenues for the three months ended
The increase in gold sales is mainly attributable to a 27% increase in oz sold partially offset by a 10% decrease in the realized average gold price per oz.
The decrease in copper concentrate sales is attributable to a 21% decrease in realized revenue per DMT of copper concentrate partially offset by an 18% increase in DMT sold. Total revenues for the three months ended
At the Brazilian Mines, total cost of goods sold for the three months ended
At Aranzazu, total cost of goods sold for the three months ended
Other expense items for the second quarter of 2013 include general and administrative expenses of
For the three months ended
Additionally, for the second quarter of 2013, the Company recorded finance costs of
Income tax recovery for the three months ended
For the three months ended
Outlook and Strategy
Other key factors influencing profitability and operating cash flows are production levels (impacted by grades, ore quantities, labour, plant and equipment availabilities, and process recoveries) and production and processing costs (impacted by production levels, prices and usage of key consumables, labour, inflation, and exchange rates).
|Gold Mines||Cash Cost per oz||2013 Production|
|San Andres||$1,000 – $1,150||60,000 – 65,000 oz|
|Sao Francisco||$1,100 – $1,250||78,000 – 88,000 oz|
|Sao Vicente||$ 950 – $1,100||28,000 – 32,000 oz|
|Total||$1,050 – $1,200||166,000 – 185,000 oz|
Aranzazu’s production for 2013 is expected to be between 13,000,000 and 15,000,000 pounds of copper at a range of
For the remainder of 2013, total capital spending is expected to be
The call is being webcast and can be accessed at
This news release includes certain non-GAAP performance measures, in particular, the average cash cost of gold per oz, average cash cost per payable pound of copper and operating cash flow which are non-GAAP performance measures. These non-GAAP measures do not have any standardized meaning within IFRS and therefore may not be comparable to similar measures presented by other companies. The Company believes that these measures provide investors with additional information which is useful in evaluating the Company’s performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Average cash costs per oz of gold or per payable pound of copper are presented as they represent an industry standard method of comparing certain costs on a per unit basis. Total cash costs of gold produced include on-site mining, processing and administration costs, off-site refining and royalty charges, reduced by silver by-product credits, but exclude amortization, reclamation, and exploration costs, as well as capital expenditures. Total cash costs of gold produced are divided by oz produced to arrive at per oz cash costs. Similarly, total cash costs of copper produced include the above costs, and are net of gold and silver by-products, but include offsite treatment and refining charges. Total cash costs of copper produced are divided by payable pounds of copper produced to arrive at per payable pound cash costs.
Operating cash flow is the term the Company uses to describe the cash that is generated from operations excluding depletion and amortization, stock based compensation, impairment charges and the effect of changes in working capital.
National Instrument 43-101 Compliance
Unless otherwise indicated,
This news release contains certain “forward-looking information” and “forward-looking statements”, as defined in applicable securities laws (collectively, “forward-looking statements”). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements relate to future events or future performance and reflect the Company’s current estimates, predictions, expectations or beliefs regarding future events and include, without limitation, statements with respect to: the amount of mineral reserves and mineral resources; the amount of future production over any period; the amount of waste tonnes mined; the amount of mining and haulage costs; cash costs; operating costs; strip ratios and mining rates; expected grades and ounces of metals and minerals; expected processing recoveries; expected time frames; prices of metals and minerals; mine life; and gold hedge programs. Often, but not always, forward-looking statements may be identified by the use of words such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives” or variations thereof or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements in this news release and related MD&A are based upon, without limitation, the following estimates and assumptions: the presence of and continuity of metals at the Company’s Mines at modeled grades; the capacities of various machinery and equipment; the availability of personnel, machinery and equipment at estimated prices; exchange rates; metals and minerals sales prices; appropriate discount rates; tax rates and royalty rates applicable to the mining operations; cash costs; anticipated mining losses and dilution; metals recovery rates, reasonable contingency requirements; and receipt of regulatory approvals on acceptable terms.
Known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s ability to predict or control could cause actual results to differ materially from those contained in the forward-looking statements. Specific reference is made to the most recent Annual Information Form on file with certain Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements, which include, without limitation, gold and copper or certain other commodity price volatility, changes in debt and equity markets, the uncertainties involved in interpreting geological data, increases in costs, environmental compliance and changes in environmental legislation and regulation, interest rate and exchange rate fluctuations, general economic conditions and other risks involved in the mineral exploration and development industry. Readers are cautioned that the foregoing list of factors is not exhaustive of the factors that may affect the forward-looking statements.
All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.