Rock Solid Q1 earning $14.5m..Resource Expansion continues
Galiano Gold earns $14.45-million (U.S.) in Q1 2024
2024-05-02 17:11 ET - News Release
Mr. Matt Badylak reports
GALIANO GOLD REPORTS Q1 OPERATING AND FINANCIAL RESULTS
Galiano Gold Inc. has released its first quarter (Q1) 2024 operating and financial results for the company. Galiano owns a 90-per-cent interest in the Asanko gold mine (AGM) located on the Asankrangwa gold belt in the Republic of Ghana, West Africa.
All financial information contained in this news release is unaudited and reported in United States dollars.
Acquisition of Gold Fields' 45-per-cent interest in the AGM
On March 4, 2024, the company completed the previously announced acquisition of Gold Fields' 45-per-cent interest in the AGM joint venture. The strategic rationale of the acquisition is to consolidate ownership of the AGM, one of the largest gold mines in West Africa, and establish Galiano as a growing gold producer with robust financial strength. Following the acquisition, the company owns a 90-per-cent interest in the AGM with the government of Ghana continuing to hold a 10-per-cent free-carried interest (non-controlling interest).
The company began consolidating the operating results, cash flows and net assets of the AGM commencing on March 4, 2024.
Asanko gold mine Q1 highlights (100-per-cent basis):
The operational and financial results of the AGM have been consolidated into the company from March 4, 2024. To enable a clear understanding of the operational performance at the mine asset level, the following highlights for the AGM are presented on a 100-per-cent basis for the entire three months ended March 31, 2024.
- Safety: There were no lost-time injuries (LTI), nor total recordable injuries (TRI), recorded during the first quarter. The 12-month rolling LTI and TRI frequency rates as of March 31, 2024, were 0.16 and 0.80 per million employee hours worked, respectively.
- Production performance: Gold production of 30,386 ounces during the first quarter. Gold production is expected to increase in the second half of 2024 after completion of waste stripping at the Abore deposit, and therefore remains in line with 2024 production guidance of 140,000 to 160,000 ounces.
- Milling performance: Achieved mill throughput of 1.5 million tonnes (Mt) of ore at a grade of 0.8 gram per tonne (g/t) during the first quarter. Metallurgical recovery in the first quarter was 83 per cent.
- Cost performance: Total cash costs of $1,180 per gold ounce (oz) and all-in sustaining costs (AISC) of $1,793/oz for the three months ended March 31, 2024. AISC guidance for 2024 is forecast between $1,600/oz to $1,750/oz and is anticipated to be elevated relative to the life of mine average primarily due to waste stripping to access consistent ore feed at Abore, which will benefit future years production.
- Cash flow generation: Generated positive cash flow from operations of $26.1-million and free cash flow of $5.8-million during the first quarter. Free cash flow remained positive despite investing $12.4-million in waste stripping costs at the Abore deposit.
- Financial performance: Gold revenue of $65.5-million generated from 31,840 gold ounces sold at an average realized price of $2,056/oz during the first quarter. Net income of $14.5-million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $21.7-million during the first quarter.
- Growth at Abore: Following successful 2023 and early 2024 infill drilling programs at Abore, a notable increase to the Abore mineral resource estimate was completed effective March 31, 2024. The Abore measured and indicated mineral resource increased by 181,000 ounces or 38 per cent.
- Exploration focus: Planned 2024 exploration programs include drilling at Midras South to advance the deposit toward a potential maiden mineral reserve estimate, infill drilling at Adubiaso, early stage drill testing at target 3 and extension drilling at Gyagyatreso. A property-wide reconnaissance program has also been designed to identify new target areas of interest.
Galiano Q1 highlights:
- Robust liquidity: Following payment of $65.0-million to Gold Fields under the terms of the acquisition, the company ended the quarter with $130.8-million in cash and cash equivalents and no debt. For the three months ended March 31, 2024, the company generated $13.0-million in cash flow from operations.
- Earnings: Net loss of $4.8-million or two cents per common share during the first quarter, which included the consolidation of the AGM's financial results effective from March 4, 2024. Adjusted net income for the first quarter was $6.5-million or three cents per common share.
"The first quarter of 2024 was transformational for the company with the acquisition of Gold Fields' interest in the AGM. The team also delivered continued exploration success at Abore and is moving forward with a clear and focused vision for the AGM under our consolidated ownership," stated Matt Badylak, Galiano's president and chief executive officer. "We are tracking to our annual production and cost guidance, with the mine producing just over 30,000 ounces during the quarter. The required stripping at Abore continues, and while this program will continue through the second quarter, we anticipate transitioning from stockpile processing to higher-grade feed to the mill by the end of the second quarter.
"The recently announced upgrade to the mineral resources at Abore by 38 per cent, combined with additional stepout and infill drilling across our deposits, will be used to update a consolidated mineral reserve estimate and life of mine plan across the AGM deposits in the fourth quarter. The team is committed to further value creation, through consistent delivery of production and cost targets, an aggressive exploration program and an optimized mine plan that aims to bring the life of mine cash flows forward."
Asanko gold mine -- summary of quarterly operational and financial highlights (100-per-cent basis)
Operating and financial results are on a 100-per-cent basis for all periods presented to enable comparability with prior quarters.
Asanko gold mine -- Financial and operational highlights for the three months ended March 31, 2024, and 2023 (100-per-cent basis)
The attached tables present excerpts of the operating and financial results of the AGM on a 100-per-cent basis for the three months ended March 31, 2024, and 2023, so performance can be compared with the comparative period in the prior quarter.
- The AGM produced 30,386 ounces of gold during Q1 2024, as the processing plant achieved milling throughput of 1.5 Mt of ore at a grade of 0.8 g/t with metallurgical recovery averaging 83 per cent. Mill feed for the quarter was sourced primarily from existing stockpiled ore.
- Sold 31,840 ounces of gold in Q1 2024 at an average realized gold price of $2,056/oz for total revenue of $65.6-million (including $100,000 of byproduct silver revenue), an increase of $400,000 from Q1 2023. The increase in revenue quarter on quarter was due to an 11-per-cent increase in realized gold prices relative to Q1 2023, partly offset by a 10-per-cent reduction in sales volumes.
- Income from mine operations for Q1 2024 totalled $23.5-million compared with $24.7-million in Q1 2023. The decrease in income from mine operations was due to a $2.1-million increase in depreciation and depletion expense resulting from depreciation on capitalized mining services leases, partly offset by a $1.2-million reduction in production costs. The decrease in production costs was primarily due to fewer tonnes trucked from Esaase to the processing plant.
- Reported adjusted EBITDA of $21.7-million in Q1 2024 compared with $22.9-million in Q1 2023. The decrease in adjusted EBITDA was largely driven by the decrease in income from mine operations described above.
- Total cash costs in Q1 2024 amounted to $1,180/oz compared with $1,083/oz in Q1 2023. The increase in total cash costs was primarily driven by lower gold sales volumes, which decreased by 9 per cent in Q1 2024 and had the effect of increasing fixed costs on a per-ounce basis.
- AISC for Q1 2024 was $1,793/oz compared with $1,268/oz in the comparative period. AISC was higher in the current quarter predominately due to the increase in total cash costs per ounce described herein, 9-per-cent fewer gold ounces sold and higher sustaining capital expenditures ($330/oz increase) in Q1 2024 mainly related to waste stripping activities at the Abore deposit. Additionally, lease payments to a mining contractor were $90/oz higher (inclusive of interest expense) in Q1 2024.
- The AGM generated $26.1-million of cash flow from operating activities and free cash flow of $5.8-million during Q1 2024. This compares to $18.9-million of cash flow from operating activities and free cash flow of $12.0-million during Q1 2023. The decrease in free cash flow was primarily due to higher capital spend related to waste stripping activities at the Abore deposit, partly offset by higher realized gold prices during Q1 2024.
- The company consolidated the financial results of the AGM commencing on March 4, 2024, and recognized revenue of $31.7-million relating to 14,912 gold ounces sold at an averaged realized gold price of $2,125/oz.
- The company reported a net loss of $4.8-million in Q1 2024 compared with net income of $8.5-million in Q1 2023. The decrease in net earnings during Q1 2024 was due to cost of sales including the realization of purchase price adjustments on gold-in-process and gold on hand inventories totalling $10.3-million; a $3.5-million increase in share-based compensation expense resulting from an increase in the fair value of cash-settled long-term incentive plan awards linked to the company's share price; and $2.3-million in transaction related costs incurred during Q1 2024. These factors were partly offset by a $1.3-million gain recorded on the derecognition of the company's equity investment in the JV (joint venture) during Q1 2024.
- Adjusted EBITDA for Q1 2024 amounted to $3.7-million, compared with $6.7-million in Q1 2023. The decrease in adjusted EBITDA was primarily due to higher share-based compensation expense in Q1 2024 as described herein.
- Cash generated from operating activities in Q1 2024 was $13.0-million, compared with cash used in operating activities of $500,000 in Q1 2023. The increase in cash generated from operating activities in Q1 2024 was driven by the consolidation of the AGM's cash flows effective March 4, 2024.
- As of March 31, 2024, the company had cash and cash equivalents of $130.8-million and no d