TORONTO, ONTARIO–(Marketwire – March 20, 2013) –
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 audited consolidated financial statements for the year ended December 31, 2012, which are available on SEDAR at www.sedar.com and on the Company’s website.
- Operating cash flow1 of $12.1 million for the fourth quarter of 2012 and $18.6 million for the year ended December 31, 2012 compared to $15.0 million for the fourth quarter of 2011 and $49.5 million for the year ended December 31, 2011;
- Net sales revenue in the fourth quarter of 2012 was consistent with the fourth quarter of 2011 while revenue for the year ended December 31, 2012 increased 7% over the prior year. The average realized prices per oz for the quarters ended December 31, 2012 and 2011 were $1,725 and $1,669 per oz, respectively, which closely compare to the average market prices (London PM Fix);
- Shipments of copper concentrate for the quarters ended December 31, 2012 and 2011 totaled 4,110 dry metric tonnes (“DMT”) and 4,711 DMT, respectively. For the years ended December 31, 2012 and 2011, shipments of copper concentrate were 20,321 DMT and 13,455 DMT, respectively;
- Gold oz production in the fourth quarter of 2012 was 15% higher compared to the fourth quarter of 2011. For the year ended December 31, 2012 gold oz production was 8% higher than the prior year;
- Copper production at Aranzazu for the fourth quarter of 2012 and 2011 was 2,223,100 pounds and 2,856,500 pounds, respectively, a decrease of 22%. On-site average cash cost per pound of payable copper produced, net of gold and silver credits was $5.42 for the fourth quarter of 2012 compared to $2.32 for the fourth quarter of 2011. Copper production at Aranzazu for the years ended December 31, 2012 and 2011 was 10,980,100 and 7,695,300, respectively, an increase of 43%. On-site average cash cost1 per pound of payable copper produced, net of gold and silver credits was $3.63 for the full year of 2012 compared to $2.82 for the full year of 2011;
- Gross margin of $(2.6) million and $(16.9) for the fourth quarter and full year 2012, respectively, compared to a gross margin of $3.7 million and $24.2 million for the fourth quarter and full year 2011, respectively;
- Loss of $9.7 million or $0.04 per share for the fourth quarter of 2012 compared to a loss of $10.1 million or $0.04 per share for the fourth quarter of 2011. Loss for 2012 of $56.8 million or $0.25 per share compared to a loss of $41.8 million or $0.19 per share for 2011;
- For the year ended December 31, 2012, amended the revolving credit facility, extending the maturity to June 30, 2014 and increasing the credit available to $45 million;
- Completed the Preliminary Economic Assessment for the Aranzazu expansion project. Subsequent to year end, in February 2013, a partial roasting facility package has been selected and awarded, with an expected delivery time of 46 weeks;
- Completed the definitive Feasibility Study for the
- The Company optimized the Sao Francisco mine plan in order to maximize the remaining cash flows. It is anticipated that, with current information available, mining activity at Sao Francisco will cease in late 2013 and final processing of the heap treatment will continue during 2014 until closure date. Sao Vicente’s mining activity will cease in mid-2013 and final processing of the heap treatment will continue until closure in 2014. The Company has been investigating multiple options to maximize the value of the assets of these mines; and
- Subsequent to year end, received R$20 million (approximately US$10 million) in preliminary bridge financing for Serrote development.
1 Please see cautionary note at the end of this press release.
Jim Bannantine, the Company’s President and Chief Executive Officer stated, “Aura finished 2012 with a good fourth quarter and demonstrated an upward trend, which is shown by our steady and growing operating cash flow quarter on quarter. This appears to be continuing into 2013 as on a pro-rata, year-to-date basis, the Company has been performing to previously circulated 2013 guidance. Management reconfirms this guidance.
We have made significant operational improvements and addressed the challenges that impacted our existing operations during 2012 with logical and cost-efficient solutions. We have also made significant progress on our expansion and development projects, the future cash flows from which are expected to replace the income stream that we forego following the closure of the Brazilian gold mines. Consideration is being given to exchanging – for value – the assets of the Brazilian operating mines into one or more junior mining companies that will be developing and building new mining projects.
The Aranzazu expansion is on schedule and on budget and we have awarded the partial roasting facility which is expected to substantially reduce the level of Arsenic in the concentrate. Serrote’s development is on schedule and below budget. The required land acquisitions have been substantially completed and we have awarded the engineering and the contracts for the major equipment required for the process plant, with the project financing well underway.
We believe that the Company is better positioned at the end of 2012 than it was at the end of 2011, based on its operational run rate and streamlined organization. The status of development and execution of our new projects will drive our future growth, adding substantial value for all stakeholders.”
Production and Cash Costs
The Company’s production and cash costs for the three and twelve months ended December 31, 2012 are summarized in the table below:
| For the three months ended
December 31, 2012
| For the year ended
December 31, 2012
|Oz Produced||Cash Costs 1||Oz Produced||Cash Costs 1|
|Total / Average||50,256||$||1,201||173,263||$||1,353|
Gold production at San Andres in the fourth quarter 2012 decreased 10% over the comparable period due to lower feed grade and recoveries.
Average cash cost per oz of gold produced1 in the fourth quarter of 2012 was 12% higher than the fourth quarter of 2011. The increased cash cost per oz of gold produced was a result of lower oz produced.
Gold production at Sao Francisco in the fourth quarter of 2012 was 67% higher than the fourth quarter of 2011 primarily due to the higher plant feed.
Average cash cost per oz of gold produced in the fourth quarter of 2012 was 23% lower than the fourth quarter of 2011. The decreased average cash cost per oz of gold produced was primarily a result of focusing mining in the higher grade south end of the Sao Francisco pit to provide a large sump that would allow continued mining of the pit base during rainy season. The higher grade in the base of the pit has confirmed the model predictions of increased grade in the south end and will allow the mine to optimise the short term model reliability.
At Sao Vicente, 32% less gold oz were produced during the quarter ended December 31, 2012 compared to the quarter ended December 31, 2011 due to lower grades and the unexpected failure of the primary crusher at Sao Vicente during the third quarter. A rented crusher was utilized to mitigate this failure. The original primary crusher was replaced at the end of December 2012 and is working well with high availability.
The average cash cost per oz of gold produced1 in the fourth quarter of 2012 was 8% higher than the average cash cost in the fourth quarter of 2011. The increase in the average cash cost per oz produced over the comparable period in 2011 was due to the lower grade processed.
Copper concentrate produced decreased by 14% in the fourth quarter 2012 when compared to the fourth quarter of 2011.
Average cash cost per payable pound of copper produced1 for the fourth quarter of 2012 increased 134% compared to the fourth quarter of 2011. Average cash cost per payable pound of copper produced1 increased to $5.42 from the third quarter of 2012 of $4.48 per payable pound of copper due to low production volumes and excess penalties and charges related to elevated arsenic levels. The impact on the fourth quarter of 2012’s average cash cost1 as a result of arsenic related charges and penalties is estimated to be $1.21 per payable pound of copper against the third quarter of 2012 of $1.14 per payable pound of copper.
1 Please see cautionary note at the end of this press release.
Brazilian Mines – 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 other group locations.
Revenues and Cost of Goods Sold
Revenue for the three months ended December 31, 2012 and 2011 was $86,404,000 and $85,750,000, respectively. The Company’s revenue for the fourth quarter 2012 is comprised of sales of gold from the Company’s gold mines of $81,469,000 and copper concentrate sales from Aranzazu of $4,935,000 compared to $75,468,000 from the gold mines and $10,282,000 from Aranzazu for the fourth quarter of 2011.
| For the three
|For the three
| For the
|San Andres, (oz)||12,632||15,921||52,690||65,988|
|Sao Francisco, (oz)||26,790||17,156||77,350||55,559|
|Sao Vicente, (oz)||8,164||13,028||34,912||44,289|
|Total ounces sold||47,586||46,105||164,952||165,836|
|Realized average gold price per ounce (“oz”)||$||1,725||$||1,669||$||1,667||$||1,572|
|Gold sales revenues (in ‘000’s) net of local sales taxes||$||81,469||$||75,468||$||270,445||$||257,147|
|Copper concentrate sales (in ‘000’s)||$||4,935||$||10,282||$||36,967||$||31,293|
|Total net sales (in ‘000’s)||$||86,404||$||85,750||$||307,412||$||288,440|
The 8% increase in gold sales resulted from a 3% increase in oz sold and a 3% increase in the realized average gold price per oz. The 52% decrease in copper concentrate sales resulted from a 13% decrease in DMT sold and a 45% decrease in the average price realized per DMT. The average price realized per DMT decreased due to the impact of the arsenic penalties and charges.
For the three months ended December 31, 2012, the Company recorded total cost of goods sold of $89,027,000. Cost of gold sold of $76,453,000 or $1,607 per ounce consisted of cash costs of $58,309,000 or $1,225 per ounce and non-cash depletion and amortization charges of $18,144,000 or $382 per ounce. Cost of copper concentrate sold of $12,574,000 or $3,059 per DMT consisted of cash costs of $11,246,000 or $2,736 per DMT and non-cash costs of $1,328,000 or $323 per DMT.
For the three months ended December 31, 2011, the Company recorded total cost of goods sold of $82,044,000. Cost of gold sold of $67,754,000 or $1,470 per ounce consisted of cash costs of $56,462,000 or $1,225 per ounce and non-cash depletion and amortization charges of $11,292,000 or $245 per ounce. Cost of copper concentrate sold of $14,290,000 or $3,033 per DMT consisted of cash costs of $6,891,000 or $1,462 per DMT and non-cash costs of $7,399,000 or $1,571 per DMT.
Other expense items for the fourth quarter of 2012 include general and administrative expenses of $4,935,000 (2011: $4,577,000) and exploration expenses of $419,000 (2011: $3,779,000). The fourth quarter 2011 exploration primarily consisted of expenditures at the
Additionally, for the fourth quarter of 2012, the Company recorded finance costs of $2,837,000 (2011: $1,082,000), interest and other income of $17,000 (2011: $523,000), and other gains of $899,000 (2011: loss of $3,580,000). Loss before income taxes for the fourth quarter of 2012 was $9,932,000 (2011: $9,835,000).
For the quarter ended December 31, 2012, the Company recorded income tax recovery of $251,000 (2011: expense of $286,000) comprising a current income tax expense of $1,564,000 (2011: $1,655,000) relating to the San Andres Mine, offset by a future income tax recovery of $1,313,000 (2011: $1,369,000).
For the fourth quarter of 2012, the Company recorded a loss of $9,681,000 or $0.04 per share. This compares to a loss of $10,121,000 or $0.04 per share for the fourth quarter 2011.
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|
|Tot||$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 $3.10 to $3.60 average cash cost per payable pound of copper.
In the first quarter of 2013 and to the date of this press release, the indicators have been that the pro-rata guidance will be achieved at each operating mine.
For 2013, capital spending is expected to be $101 million. Of this amount, $53 million relates to growth and sustaining capital for existing mines – including $36 million on the Aranzazu expansion and roaster installation and $7 million on Phase V of the heap leach expansion and community expenditures at San Andres. The remaining $48 million relates to the development and initial construction of Serrote.
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,
Bruce Butcher, P. Eng., Vice President, Technical Services.
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.