(All dollar amounts are United States dollars unless otherwise stated)
VANCOUVER, BC, March 11, 2021 /CNW/ - Galiano Gold Inc. ("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU) reports fourth quarter ("Q4") 2020 operating and financial results for Company and for the Asanko Gold Mine ("AGM"), located in Ghana, West Africa. The AGM is a 50:50 joint venture ("JV") with Gold Fields Ltd (JSE, NYSE: GFI), which is managed and operated by Galiano.
Highlights of the Asanko Gold Mine (on a 100% basis)
- Exceeded annual production guidance: Annual gold production of 249,904 ounces, exceeding the upper end of 2020 production guidance of 225,000-245,000 ounces, with 65,571 ounces produced in the fourth quarter.
- Strong cash generation: Generated $152.3 million of cash flows from operating activities (after taking into account unfavourable working capital changes of $30.7 million) and free cash flow1 of $66.9 million during 2020.
- Return of capital: Returned $75.0m to joint venture participants through cash distributions in 2020.
- Consistent cost performance: For the year ended December 31, 2020, total cash costs per ounce1 of $889 and all-in sustaining costs1 ("AISC") of $1,115/oz, below revised guidance (as of Q3 2020) of $1,150/oz.
Highlights of the Company
- Record earnings: Generated net income after tax for the year of $57.4 million or $0.26 per share.
- Stable balance sheet: Cash on hand of $62.2 million and $2.9 million in receivables at December 31, 2020, while remaining debt free.
- Refreshed Board and Vancouver based management team: During the year, appointed Paul Wright as Chair of the Board of Directors, formed a new Sustainability sub-committee of the Board under the leadership of Chair of the Sustainability Committee Judith Mosely and augmented the Vancouver-based management team with the appointment of a Chief Operating Officer and various other senior management positions.
"2020 was a strong operational year at the Asanko Gold Mine, despite the challenges presented by COVID-19," said Greg McCunn, Chief Executive Officer. "The AGM exceeded annual production guidance for a second consecutive year, generated record operating cash flows, and executed on a number of exploration programs with promising results at Nkran, Akwasiso and Miradani North. At the corporate level, we delivered record earnings in 2020 and have strengthened our balance sheet with corporate treasury growing to in excess of $62m."
Asanko Gold Mine - Summary of FY 2020 and Q4 2020 Operational and Financial Results (100% basis)
| | Three months ended
December 31 | Year ended
December 31 |
| Asanko Gold Mine (100% basis) | 2020 | 2019 | 2020 | 2019 |
| Ore mined ('000t) | 1,964 | 1,405 | 6,193 | 5,071 |
| Waste mined ('000t) | 11,773 | 4,956 | 38,272 | 25,719 |
| Total mined ('000t) | 13,737 | 6,361 | 44,465 | 30,790 |
| Strip ratio (W:O) | 6.0 | 3.5 | 6.2 | 5.1 |
| Average gold grade mined (g/t) | 1.4 | 1.6 | 1.5 | 1.5 |
| Mining cost ($/t mined) | 3.20 | 4.86 | 3.40 | 4.52 |
| Ore transportation from Esaase ('000 t) | 622 | 357 | 2,133 | 1,464 |
| Ore transportation cost ($/t trucked) | 7.15 | 8.62 | 7.65 | 8.83 |
| Ore milled ('000t) | 1,438 | 1,460 | 5,943 | 5,498 |
| Average mill head grade (g/t) | 1.5 | 1.5 | 1.4 | 1.5 |
| Average recovery rate (%) | 95 | 94 | 94 | 94 |
| Processing cost ($/t treated) | 10.46 | 10.83 | 10.51 | 10.91 |
| Gold production (oz) | 65,571 | 66,112 | 249,904 | 251,044 |
| Gold sales (oz) | 60,655 | 66,095 | 243,807 | 248,862 |
| Average realized gold price ($/oz) | 1,828 | 1,465 | 1,711 | 1,376 |
| Operating cash costs1 ($/oz) | 801 | 790 | 803 | 776 |
| Total cash costs1 ($/oz) | 892 | 863 | 889 | 845 |
| All-in sustaining costs1 ($/oz) | 1,179 | 969 | 1,115 | 1,112 |
| All-in sustaining margin1 ($/oz) | 649 | 496 | 596 | 264 |
| All-in sustaining margin1 ($m) | 39.4 | 32.8 | 145.3 | 65.7 |
| Revenue ($m) | 111.1 | 97.1 | 418.1 | 341.0 |
| Income from mine operations ($m) | 46.3 | 9.1 | 147.9 | 29.2 |
| Cash provided by operating activities ($m) | 48.0 | 45.4 | 152.3 | 120.4 |
| Free cash flow1 ($m) | 21.5 | 28.9 | 66.9 | 44.0 |
- There was one Lost Time Injury ("LTI") and three Total Recordable Injuries ("TRI") reported during the quarter. The AGM's LTI and TRI frequency rates for the three months ended December 31, 2020 were 0.37 and 1.10 per million employee hours worked, respectively.
- Produced 65,571 and 249,904 ounces of gold in Q4 2020 and FY 2020, respectively, exceeding the upper-end of 2020 production guidance of 225,000-245,000 ounces.
- Sold 60,655 ounces of gold in Q4 2020 at an average realized gold price of $1,828/oz for record total gold sales proceeds of $110.9 million, an increase of $14.0 million from Q4 2019. The increase in revenue quarter-on-quarter was a function of a 25% improvement in average realized gold prices, partly offset by an 8% decrease in sales volumes in Q4 2020.
- The AGM incurred operating cash costs per ounce1, total cash costs per ounce1 and AISC1 per ounce of $801, $892 and $1,179, respectively, in Q4 2020.
- Total cost of sales (including depreciation and depletion and royalties) amounted to $64.8 million in Q4 2020, a decrease of $23.2 million from Q4 2019. The decrease in cost of sales was primarily due to lower depreciation and depletion expense associated with a lower depreciable asset cost base in the current quarter. This factor was partly offset by a higher royalty expense arising from improvement in the gold price during Q4 2020 compared to Q4 2019.
- Net income for Q4 2020 totaled $41.5 million compared to a net loss of $285.1 million in Q4 2019. The Q4 2019 net loss was due to an impairment recognized on the AGM's non-current assets associated with an updated LOM plan. The remaining improvement in net income during the current quarter was due to higher realized gold prices and the above-mentioned reduction in depreciation and depletion expense.
- The AGM generated $48.0 million of cash flows from operating activities (after taking into account unfavorable working capital changes of $5.9 million) and free cash flow1 of $21.5 million during Q4 2020. This compares to $45.4 million of cash flows from operating activities (after taking into account favorable working capital changes of $11.6 million) and $28.9 million of free cash flow1 during Q4 2019. The reduction in free cash flow1 was the result of a $17.5 million unfavorable increase in cash invested in non-cash working capital when comparing Q4 2020 to Q4 2019 and a $10.0 million increase in cash flows associated with capital expenditures during Q4 2020. These factors were partly offset by a $17.0 million increase in the AGM's Adjusted EBITDA1.
- AISC1 for the FY 2020 was $1,115/oz, below revised guidance (as of Q3 2020) of $1,150/oz, and was in line with FY 2019 AISC1 of $1,112/oz.
- Reported Adjusted EBITDA1 of $169.0 million in FY 2020 compared to $99.4 million in FY 2019.
- For FY 2020, the JV generated $152.3 million in operating cash flow and free cash flow1 of $66.9 million.
- As at December 31, 2020, the JV held cash and cash equivalents of $64.3 million (including $30.0 million fully drawn on the AGM's revolving credit facility), $10.9 million in receivables from gold sales and $8.2 million in gold on hand.
Galiano Gold Inc. – Summary FY 2020 and Q4 2020 Financial Results
| | Three months ended
December 31 | Year ended
December 31 |
| Galiano Gold Inc. (consolidated) | 2020 | 2019 | 2020 | 2019 |
| Net income (loss) after tax ($m) | 17.7 | (21.2) | 57.4 | (167.9) |
| Net income (loss) after tax per share | $0.08 | ($0.09) | $0.26 | ($0.74) |
| Adjusted net income (loss)1 ($m) | 17.7 | 0.9 | 57.4 | 2.5 |
| Adjusted net income (loss) per share1 | $0.08 | $0.00 | $0.26 | $0.01 |
| Adjusted EBITDA1 ($m) | 20.4 | 12.6 | 68.3 | 36.0 |
- The Company reported net income after tax of $17.7 million in Q4 2020 compared to a net loss after tax of $21.2 million in Q4 2019. The improvement in earnings during Q4 2020 was predominantly due to the fact that the Q4 2019 net loss included a $20.2 million downward fair value adjustment on the Company's redeemable preference shares in the JV associated with an update to the AGM LOM plan. Additionally, the improvement in earnings in Q4 2020 was also partly due to an increase in the Company's 45% interest in the net earnings of the JV which totaled $18.7 million for the quarter.
- Reported Adjusted EBITDA1 of $20.4 million for Q4 2020, compared to $12.6 million in Q4 2019. The increase in Adjusted EBITDA1 was primarily a result of the increase in the Company's interest in the AGM's net earnings.
- For FY 2020, the Company reported net income after tax of $57.4 million compared to a net loss of $167.9 million in FY 2019. The improvement in earnings in FY 2020 was due to an increase in the Company's 45% interest in the net earnings of the JV which totaled $59.2 million for the year, while FY 2019 including impairment charges associated with an update to the AGM's LOM plan.
- Reported Adjusted EBITDA1 of $68.3 million for FY 2020 compared to $36.0 million in FY 2019. The improvement in Adjusted EBITDA1 was primarily a result of an increase in the Company's interest in the AGM's net earnings.
- The Company held cash and cash equivalents of $62.2 million and $2.9 million in receivables as at December 31, 2020, while remaining debt-free.
2021 Outlook
In 2021, the AGM is targeting 225,000 to 245,000 ounces of gold production at AISC1 of $1,100 to $1,300 per ounce. AISC1 includes budgeted sustaining capital expenditures of $20 million, with approximately $13 million for a tailings storage facility lift.
The mine plan for 2021 plans to source ore primarily from Akwasiso and Esaase. These ore sources are expected to be augmented where necessary with run-of-mine stockpile material. Accordingly, budgeted AISC1 for 2021 includes approximately $60 to $80 per ounce of non-cash charges associated with processing stockpiled ore.
Development capital is forecast at $18 million, primarily for completion of the Tetrem village relocation and work on the Obotan and Esaase water treatment plants. In addition, $20 million is budgeted for exploration, mainly around the Miradani mineralized trend.