| 11 September 2022
Vancouver, BC, Canada
Dear shareholders,
With the recent filing of the Company’s annual financial statements, it is a good time to review Newlox Gold’s recent progress and outline the Company’s plans. Newlox has made significant progress in operations this year while adapting to a new post-COVID paradigm.
Newlox ended its fiscal 2022 with over $3.5 million in cash, up from 2.9 million a year before, while investing significantly in property, plant, and equipment. This included teeing up significant advancement at the upcoming Boston Project, where $2 million has been deployed.
Careful maintenance of a strong treasury while making investments in the future is especially important in the current environment, where volatility makes predicting the trajectory of capital markets challenging. Newlox Gold's Boston Plant 2 Expansion is fully permitted for operation, allowing the Company to execute its plan to deliver increasing precious metals revenues.
Over fiscal 2021 the Company consistently increased productivity, quarter-over-quarter. However, the ramp-up of production has progressed more slowly than planned due to difficulties related to the global pandemic as well as unavoidable procurement challenges, which slowed the Company’s ability to make adjustments to processes in the field. This is especially true in Costa Rica, where there are limited local options for parts and consumables.
As a result of slower than expected growth, the effects of a reduced gold price, and foreign exchange fluctuations between the US dollar and Canadian Dollar, revenues were range bound between December of 2021 ($784,419) and June of 2022 ($718,560) despite the increased gold recovery. However, when compared to the previous year, Newlox Gold logged a rewarding 757.5% increase in revenue from $242,730 to $2,081,516 in fiscal 2022.
Going forward, Newlox Gold is focused on shortening supply chains, building inventories, and planning for longer delivery times as an adjustment to the current global business environment. Although growth is expected to be slower than in the pre-pandemic environment, management believes that a proactive approach to supply chains will allow Newlox Gold to accelerate productivity at Project 1 and make excellent progress at the advanced construction stage Boston Expansion Project. This approach will also serve well in the upcoming expansion into the Colombian market.
At Project 1, the Company hired Wilmer iquen as VP of Operations and set about addressing metallurgical challenges in operations. Lab work undertaken by Mr. iquen and his team identified the issue and provided a metallurgical solution, including the addition of an additional Peruvian-style flotation system and adjustment to the reagents. These changes have begun to show improvement in productivity. Mr. iquen also improved the water treatment and tailings management systems, garnering praise from local regulators.
Construction at the new Boston Project advanced over the summer, with earthmoving, pouring foundations, installation of inertia blocks, construction of a loading ramp, installation of the grizzly, construction of a fine ore bin, and procurement of equipment in the Spring and Summer of 2022. Installation of the crushing and grinding system is underway. Newlox’s construction contractors anticipate testing the systems in the fall of 2022. |