Calibre reports 2Q21 and year-to-date results

2Q21 highlights

• Gold production of 43 506 oz.
• Gold sales of 43 682 oz, generating US$78.8 million in revenue at an average realised price of US$1804/oz.
• Net income of US$11.9 million with basic net income per share of US$0.04.
• Cash on hand of US$66.3 million at 30 June 2021, an increase of US$8.1 million from 1Q21.
• Consolidated total cash costs and all-in sustaining costs (AISC) of US$1066 and US$1216/oz, respectively.
• Cash generated from operating activities of US$29.1 million.
• 550 tpd of ore delivered from the Pavon Norte mine to the Libertad mill, a 57% increase over 1Q21 and targeting 1000 tpd by the end of 2021.
• First deliveries of Panteon South development ore in 2Q21, reaching commercial production in July 2021.
• Released inaugural 2020 Sustainability Report.
  • Advancing the high-grade Eastern Borosi Project (EBP), including:
  • Completed 75% of the infill, metallurgical, geotechnical, and hydrological drilling.
  • Acquired the majority of the required surface rights during the quarter.
• Advanced social, technical, and environmental work targeting a permittable product ready for submission by the end of 2021, and updated resource estimates during 1Q22.
• Rio Tinto Exploration and Calibre joint venture copper-porphyry drill programme well underway.
• 16 exploration drills active across 100%-owned mine sites and satellite opportunities.
• Updating guidance for growth capital and exploration, increasing its investment in the business and prospects for future growth and expansion.

Year-to-date (YTD) 2021 highlights

• Gold production: 88 958 oz.
• Gold sales of 89 564 oz generating US$160.8 million in revenue, at an average realised price of US$1796/oz.
• Cash on hand of US$66.3 million at 30 June 2021, an increase of 24.7% or US$13.1 million from 31 December 2020; working capital increased to US$79.3 million from US$70 million over the same period.
• Generated US$54.9 million in cash from operating activities.
• Net income of US$28.5 million, with basic net income per share of US$0.08.
• Consolidated total cash costs and AISC of US$1022 and US$1154/oz, respectively.

Darren Hall, President and CEO of Calibre, stated: “The Calibre team delivered another solid quarter of production demonstrating the quality and reliability of our assets as we continue to deliver strong operating cash flows by executing on our hub-and-spoke operating strategy. I am pleased with the ramp up at Pavon Norte, with ore hauled to Libertad in 2Q21 increasing 57% over 1Q21, to 550 tpd. This trend has continued into 3Q21 with the team averaging 770 tpd during July, positioning us well for our targeted 1000 tpd by the end of 2021.

“The team has made excellent progress advancing the high-grade Eastern Borosi Project, our next ‘Mining Spoke’ to feed the Libertad mill. Since commencing work in February, we have advanced infill drilling, pre-feasibility study level engineering, and importantly land acquisitions; with over 95% of the surface rights required to develop the mines being purchased. This excellent progress will allow us to commence permitting in 1Q22, a year earlier than we contemplated when providing our initial 2021 guidance. With the accelerated advancement of the Eastern Borosi Project we are pleased to be increasing our full year 2021 growth capital guidance by US$10 million to US$45 – US$50 million.

“Additionally, with 16 drills active across our operations and the success of our drilling to date we are also increasing our exploration guidance by US$2 million to US$17 – US$19 million which includes an additional 22 km of infill, geotechnical and hydrogeological drilling at Eastern Borosi Project. This is in addition to the planned resource expansion drilling around the high-grade open pit and underground deposits at Eastern Borosi Project where we have previously reported numerous high-grade intercepts outside of existing resources, demonstrating strong growth potential along the tens of kilometres of defined vein systems.

“For the balance of the year, with US$66 million in cash and no debt, production on track for the upper end of guidance, strong cash flow from operations, an 85 000 m discovery and resource expansion drilling programme well underway and a proven and expanding hub-and-spoke operating strategy, Calibre is well positioned for substantial continued growth.

Operating results

Opencast mining operations

During 2Q21, opencast mining consisted of 412 529 ore t at an average grade of 2.16 g/t. The majority of the opencast production came from Limon Central (LC) Phase 2 totalling 215 586 ore t at an average grade of 2.63 g/t, with additional ore from Pavon Norte ore in the amount of 59 621 t at a grade of 3.38 g/t, 135 678 t at a grade of 0.74 g/t of previously processed ‘spent ore’, and 1644 t at 12.96 g/t from artisanal small miners. Effective 1 June 2020, the company considers LC Phase 2 to be in commercial production and defer stripping waste material above the average life of mine waste:ore strip ratio. Pavon Norte began operations in 1Q21 with initial ore deliveries to the Libertad mill in January 2021 and the company achieving commercial production status in March 2021.

As previously discussed on 25 March 2020, the company announced a temporary suspension of its operations at the Limon and Libertad mines and all exploratory drilling activity due to the COVID-19 pandemic. While the company was able to re-establish a steady state of operation in July 2020, the suspension had a significant impact on the operations and financial results for 2Q20.

During 2Q20, most of the mine production originated from the LC Phase 2 opencast, totalling 26 236 t at an average grade of 3.38 g/t, the LC Phase 1 opencast totalling 9282 t at an average grade of 3.81 g/t, 34 499 t from Jabali Antena opencast grading 3.06 g/t, 102 197 t grading 0.85 g/t from previously processed ‘spent ore’, and 7074 t of ore purchased from artisanal small miners at a grade of 12.90 g/t. The operations at Jabali Antena opencast were completed in 4Q20 with some residual ore processed in 1Q21. The company, however, expects to resume operations at Jabali Antena in the future. The company was able to transition mining operations and production efficiently and effectively from one opencast operation (Jabali Antena) to another (Pavon Norte) from 4Q20 to 1Q21.

For the 6 months ended 30 June 2021, opencast mine production totalled 803 143 ore t at an average grade of 2.72 g/t with production coming from the LC Phase 2 totalling 400 230 ore t at an average grade of 3.03 g/t, Pavon Norte totalling 171 317 t at a grade of 3.75 g/t, 222 236 t at a grade of 0.64 g/t of previously processed ‘spent ore’, and 9360 t at 19.97 g/t from artisanal small miners.

For the 6 months ended 30 June 2020, opencast mine production totalled 736 953 ore t at an average grade of 2.49 g/t with mine production coming from the LC opencast totalling 227 137 t at an average grade of 4.25 g/t, 155 195 t of ore from the Jabali opencast grading 2.80 g/t, 339 013 t grading 0.77 g/t from previously processed ‘spent ore’, and 13 319 t of ore purchased from artisanal small miners at a grade of 13 g/t.

During 2H21, Calibre is looking for an improvement to the LC mine sequencing to generate the mining of higher-grade materials and thereby improve the grade quality from LC. At Libertad, during 2Q21, the company achieved delivery rates of 550 tpd of ore from the Pavon Norte mine to the Libertad mill, a 57% increase over 1Q21. Calibre continues to focus on its target of 1000 tpd by the end of 2021.

Underground mining operations

Underground ore mined during 2Q21 was 95 801 t at a grade of 4.03 g/t compared to 12 057 ore t mined in 2Q20 at a grade of 4.23 g/t. 2Q21 ore production was 42 971 t at a grade of 3.27 g/t from Jabali underground, 13 275 t at a grade of 3.50 g/t from Santa Pancha, 19 058 t at a grade of 3.57 g/t from Veta Nueva, and 20 498 t at a grade of 6.40 g/t from development ore at Panteon South. During 2Q20, the company mined a combined total of 12 057 from Santa Pancha and Veta Nueva.

Underground ore mined during the YTD 2021 was 190 840 t averaging 3.86 g/t of grade compared to 41 977 ore t mined in the 6 months ended 30 June 2020 at a grade of 3.97 g/t. For the 6 months ended 30 June 2021, ore production was 88 025 t at a grade of 3.19 g/t from Jabali underground, 34 970 t at a grade of 3.47 g/t from Santa Pancha, 41 808 t at a grade of 4.20 g/t from Veta Nueva, and 26 037 t at a grade of 6.11 g/t from development ore at Panteon South.

Underground production for 2Q20 was 34 862 ore t for Santa Pancha at a grade of 3.88 g/t with the remaining ore tonnage from Veta Nueva. Jabali underground operations were suspended during 1H20 but resumed operations in 3Q20 when it was reconditioned in 2H20.

Jabali UG production continues to improve as a result of increased technical experience and new UG equipment arriving in 2H21. The Veta Nueva underground mine reached commercial production in January 2021. The Panteon South underground mine which has delivered ore from development drifts in 2Q21 reached commercial production in July 2021. Calibre started developing the Atravesada underground mine in 2Q21 and is expected to commence ore deliveries by 1Q23.

Processing operations

Processing at Limon

During 2Q21, the Limon mill produced 15 767 oz driven by an average mill grade of 4.06 g/t and recovery of 89.6% from 127 465 t of ore milled. The lower tonnage milled in 2Q20 (compared to 1Q21) was the result of the initiation of the temporary pandemic related suspension previously noted that impacted 2Q21 and YTD 2020 operational activity.

During 2Q21, the Limon mill produced 32 104 oz driven by mill grade of 4.23 and a recovery of 89.4% from 251 614 t of ore milled. The grade has been lower for the YTD 2021 vs YTD 2020 mainly from sequencing at the LC ore body.

Processing at Libertad

During 2Q21, the Libertad mill processed 334 378 t of ore at a grade of 2.74 g/t compared to 146 277 t of ore at a grade of 1.54 g/t in 2Q20. The period-over-period increase in tonnage is a consequence of the suspension of operations during the majority of 2Q20. The increase in production also results from the focus on processing higher grade and more profitable ore, which resulted in 27 739 oz of production.

The increase of ore grade (both over the comparative quarters and YTD) is a direct result of the of the implementation and success of the ‘hub-and-spoke’ strategy to deliver higher grade ore to Libertad from a number of different sources. Ore deliveries to Libertad from Limon increased significantly over the past year with 95 760 t of ore delivered to the Libertad processing facility in 2Q21 at a grade of 2.52 g/t compared to 18 912 t at a grade of 2.62 g/t delivered in 2Q20.

Pavon Norte is another example of how the company’s ‘hub-and-spoke’ strategy for the Libertad processing facility will help increase ore production at higher grades and ultimately, extend the facility’s life. Calibre expects to responsibly ramp up Pavon Norte mill feed haulage to approximately 1000 t by the end of 4Q21.

During the 6 months ended 30 June 2021, the Libertad mill processed 629 569 t of ore at a grade of 2.94 g/t compared to 539 892 t of ore at a grade of 1.65 g/t in 2020. The increase in tonnage in 2021 was the result of the suspension of operations during 2Q20 and from the focus on processing higher grade and more profitable ore, which resulted in 56 854 oz of production. For the periods of 2Q21 and YTD 2021, the processing of higher-grade ore at Libertad was the result of a greater movement of higher-grade ore from Limon, utilisation of ore from the start-up of the Pavon Norte mine, mining from Jabali underground (which was not in operation in YTD 2020), and processing more higher-grade ore purchased from artisanal miners.

Consolidated 2Q21 financial review

Mining operations

During 2Q21, the company sold 43 682 oz of gold at an average realised price of US$1804/oz generating revenue of US$78.8 million. This compares to 2Q20, the company generated revenue of US$15.9 million from the sale of 9426 oz at an average realised price of US$1688/oz. The US$62.9 million increase in revenue is the result of US$57.8 million related to higher ounces sold and US$5.1 million from higher realised gold prices than the prior comparable period.

Gold sold of 43 682 oz in 2Q21 was 34 256 oz higher than 2Q20 because of operations being temporarily suspended in 2Q20 and the result of higher-grade ores processed at Libertad with significantly more ore from LC, ore from the start-up of the Pavon Norte mine, Jabali underground, and ore from artisanal small miners. The increased ounces are a direct result of the company’s ‘hub-and-spoke’ operating strategy to deliver ore to Libertad which increased significantly in 2021 over the prior year.

During YTD 2021, the company sold 89 564 oz of gold at an average realised price of US$1796/oz for total revenue of US$160.8 million. This compares to YTD 2020 revenue of US$77.3 million from selling 48 181 oz at an average realised price of US$1604/oz. The US$83.5 million increase in revenue is the result of US$66.3 million related to higher ounces sold and US$17.2 million from higher realised gold prices.

Total cost of sales for 2Q21 was US$54.5 million which included production costs of US$43.1 million, royalties and production taxes of US$3.2 million, refinery and transportation of US$0.2 million, and depreciation of US$7.9 million. Total production costs were US$43.1 million in 2Q21 compared to US$8.1 million in 2Q20 as a result of the temporary suspension as previously discussed.

Total cost of sales for YTD 2021 was US$106.6 million which included production costs of US$84.6 million, royalties and production taxes of US$6.4 million, refinery and transportation of US$0.5 million, and depreciation of US$15.1 million. Total production costs were US$84.6 million in YTD 2021 compared to US$40.1 million in YTD 2020 mainly from operations being suspended for most of 2Q20. Royalty, production taxes, refinery and transport increased 92% in 2Q21 compared to 2Q20, mainly in line with the 108% increase in gross revenue. Depreciation and amortisation in YTD 2021 was US$15.1 million compared to US$4.4 million for YTD. The higher depreciation and amortisation YTD 2021 relates to higher gold sales, mining more reserves as it relates to the updated reserve and resource estimate as of 31 December 2020, an updated interpretation of the LC opencast, and operations being suspended for the majority of 2Q20.

The increase in gross revenue due to higher gold sales, partially offset by increases in production costs, resulted in income from mine operations for 2Q21 of US$24.3 million and YTD 2021 of US$54.3 million, both favourable increases from 2Q20 of US$5.8 million and YTD 2020 of US$29.1 million, respectively.

Total cash costs) for 2Q21 were US$1066 /oz and AISC were US$1216 /oz. For 2Q20, total cash costs were US$955 and AISC were US$1426/oz. The higher cash costs in 2021 relates to lower-grade ore mined from LC in 2021 from mine sequencing. The lower AISC in 2Q21 compared to 2Q20 relates to a small denominator of ounces sold in 2Q20 when the operations were suspended for most of the period.

Total cash costs for YTD 2021 were US$1022/oz and AISC were US$1154/oz. For YTD 2020, total cash costs) were US$909 and AISC were US$1114/oz. The higher cash costs and AISC in 2021 relates to lower-grade ore mined from LC in 2021 from mine sequencing, mining from the high costs Jabali UG which was suspended in 1H20, and restrictions in mining Pavon Norte related to transportation issues to the Libertad mill. YTD 2020 benefited from the lower cost Jabali Antena opencast mine ore, which concluded its mining phase at the end of 2020.

Read the article online at: https://www.globalminingreview.com/finance-business/06082021/calibre-reports-2q21-and-year-to-date-results/