Roxgold reports 1Q19 financial results

Highlights

Safety

• Continued a strong safety record with no lost time injuries recorded in 1Q19 with a 12 month rolling lost time injury frequency rate (LTIFR) of 0.39 per 1 million hours worked.

Operations

• Achieved solid production results of 33 652 oz (1Q18- 40 452 oz);
• Sold 32 798 oz of gold for a total of US$42.8 million in gold sales1 (40,050 ounces and US$53.2 million respectively in 1Q18);
• Cash operating cost of US$468/oz produced and all-in sustaining cost2 of US$775/oz sold were in line with guidance;
• Operating costs of US$147/t processed were 32% lower than 1Q18 as a result of increased throughput and improved efficiencies;
• Mined 98 140 t and achieved a record quarterly throughput of 106 816 t which exceeded increased nameplate capacity of 1100 tpd by approximately 8%;

Financial

• Achieved an EBITDA2 of $16.2 million EBITDA margin of 38% in 1Q19 compared to US$28.8 million and 54% respectively in 1Q18;
• Generated cash flow from mining operations totalling US$23.4 million for cash flow from mining operations per share of US$0.06 (CAN$0.08/share);
• Maintained a strong balance sheet with a net cash position2 of US$13 million;
• Generated a strong return on equity of 16%;
• Repurchased and cancelled 4 949 000 shares at an average price of CAN$0.84/share, for a total cost of US$3.1 million(CAN$4.2 million); Growth
• Announced the completion of the Séguéla gold project acquisition from Newcrest Mining in April 2019 and commenced RC drilling on the Antenna deposit on 24 April;
• First stoping ore mined at Bagassi South Mine at the end of April 2019.

"Yaramoko delivered another solid performance producing 33 652 oz of gold during the quarter resulting in strong EBITDA margins of 38% and a return on equity of 16%, one of the highest in the industry. Operating costs per tonne have decreased markedly over the past 12 months and at Bagassi South, development ramp-up advanced well with first stoping ore mined in April, and we expect to see commercial production begin in the near future.  With grades and tonnes expected to be higher in the second half of the year, we are well-positioned to meet our production guidance of 145 000 - 155 000 oz and costs for 2019," said John Dorward, President & CEO.  "We remain focused on adding accretive value to shareholders through our active drilling program at Yaramoko and our recently completed Séguéla Gold Project acquisition where we have begun an initial 28 000 m drilling programme."

2019 outlook

• Gold production between 145 000 and 155 000 oz;
• Cash operating cost2 between US$440 and US$470/oz;
• All-in sustaining cost2 between US$765 and US$795/oz;
• Exploration budget of US$10 - US$12 million;
• Bagassi South pre-commercial production development spend of US$12 – US$15 million.

In 2019, Yaramoko is expected to produce stronger quarters in 3Q19 and 4Q19 due to the Bagassi South mine commencing stoping operations during 2Q19.

There were no Lost Time Injury (LTI) incidents in the first quarter of 2019 and a 12 month rolling LTIFR of 0.39 per 1 million hours worked.

 Operational performance

The company's gold production in 1Q19 was 33 652 oz compared to 40 452 oz in 1Q18. The decrease in gold production was mainly driven by a lower head grade partially offset by higher tonnes processed in 1Q19. The lower average head grade was primarily due to the ramp-up of the Bagassi South underground mine which is currently delivering development ore.

During the quarter, 98 140 t of ore at 10.4 g/t were extracted from the underground mine along with completing 2264 m of development compared to 88 607 t of ore at 15.1 g/t and 1437 m of development in 1Q18.

At the 55 Zone, 85 460 t of ore were mined at 10.6 g/t Au and 1272 m of development were completed. During the quarter, approximately 80% of ore mined came from stoping activities as a result of extensive development in place at the 55 Zone. At Bagassi South, ramp-up activities continued with 992 m of development completed.

In 1Q19, decline development at the mine reached the 4879 level, approximately 440 m below surface. Ore development was completed between the 4930 and 4896 levels. The mine continues to be well positioned to meet future production requirements with developed reserves for stoping in line with the company's 18 months planned stoping objectives.

The plant processed a record 106 816 t at an average head grade of 10.0 g/t in 1Q19 compared to 71 576 t of ore at 16.8 g/t in 1Q18. The increase of 49% is due to the completion and successful commissioning of the plant expansion project and represents a unit throughput rate which is 8% above nameplate capacity. Plant availability was 95.4% and overall recovery was 98.3% in 1Q19 compared to 97.9% and 99.0% respectively for the comparative quarter.

Cash operating costs2 of US$147 per tonne processed represented a 32% reduction compared to 1Q18 driven by increased throughput and cost control.

 

Financial Performance

During the first quarter of 2019, a total of 32 798 oz of gold were sold resulting in revenue from gold sales1 totalled US$42.8 million.

During this period, the company's average realised gold price was $1307/oz sold compared to an average realised gold price of US$1329/oz in the comparable period in 2018.

With the increase in nameplate capacity to 1100 t/day, the company has continued to see reductions in cash operating cost2  per tonne processed reduce by 32% from US$216 in 1Q18 compared to US$147 in 1Q19. The cash operating cost per ounce produced totalled US$468/oz for the period compared to US$381/oz in the prior year mainly driven by the lower head grade.

The total cash cost per ounce sold of US$527 in 1Q19 compared to US$451/oz sold in 1Q18. As a result, the company achieved a site all-in sustaining cost of US$711/oz sold and an all-in sustaining cost of US$775/oz sold in 1Q19 compared to US$615/oz and US$658/oz sold, respectively.

The company generated a mine operating margin of US$780 which was 11% lower than 1Q18. This is due to a 2% decrease in the average gold sales price and an increase in cash costs.

The company invested US$5.9 million in underground mine development at the 55 Zone mine during the first quarter of 2019 compared to US$6.6 million for the comparable period in 2018. Additionally, the company invested US$6.0 million in pre-commercial production underground mine development at the Bagassi South mine.

 

The company generated strong cash flow from mining operations of US$23.4 million in 1Q19, for cash flow from mining operations per share of US$0.06 (CAN$0.08/share). Comparatively, the company generated cash flow from mining operations of US$30.9 million and US$0.08 (CAN$0.11/share) cash flow from mining operations per share in the comparative period.

Events subsequent to 31 March

On 11 February 2019, the company entered into an agreement with Newcrest West Africa Holdings Pty Ltd (Newcrest) to acquire a portfolio of 11 exploration permits in Côte d'Ivoire which includes the Séguéla gold project for a total consideration of US$20 million, with US$2 million deposit paid in 1Q19. On 18 April 2019, the company completed the acquisition with Newcrest.

To read the full report: https://www.prnewswire.com/news-releases/roxgold-reports-2019-first-quarter-financial-results-delivered-solid-quarterly-performance-and-on-track-to-meet-production-and-cost-guidance-300850191.html

Read the article online at: https://www.globalminingreview.com/finance-business/16052019/roxgold-reports-1q19-financial-results/