AuRico Gold Reports Strong Operational Results with a 42% Increase in Cash Position to $145 Million
Gold equivalent production of 76,6301 ounces, a 68% increase over the same period in 2010
TORONTO, Oct. 13, 2011 /CNW/ - AuRico Gold Inc. (TSX:AUQ) (NYSE:AUQ), ("AuRico", "AuRico Gold" or "the Company") is pleased to announce preliminary results for the third quarter that includes increased production and operating cash flows resulting in a significantly enhanced quarter-end cash position.
During the third quarter the Company continued to deliver strong performance across the key operational and financial metrics including production, cash costs and operating cash flow, and reported a significantly increased quarter-end cash position of $145 million. The Company is well positioned for continued production growth from its three wholly-owned mines in Mexico and is scheduled this month to complete the strategic acquisition of Northgate Minerals Corporation ("Northgate"). This transaction has the potential to create a new leading intermediate gold producer.
AuRico remains on track to meet its 2011 operational guidance: 265,000 to 295,000 gold equivalent ounces, at cash costs of $445 to $475 per gold equivalent ounce (using the Company's long-term gold equivalent ratio of 55:1).
Third Quarter Highlights
- Increased quarter-end cash balance by 42% to $145 million as compared to a cash balance of $102 million at the end of Q2 2011.
- Revenues of $112 million, representing a 102% increase over Q3 2010.
- Strong cash flow from operations of $51 million, a 63% increase over Q3 2010.
- Strong production of 45,686 gold ounces and 1.4 million silver ounces, or 76,630 gold equivalent ounces using the actual gold equivalency ratio of 44:1 realized during the quarter, representing an increase of 68% over the same period in 2010, or 70,658 gold equivalent ounces using the Company's long-term gold equivalency ratio of 55:1, a 45% increase, or one of the best quarterly production results reported by the Company.
- Sales of 40,779 gold ounces and 1.1 million silver ounces, or 65,429 gold equivalent ounces using the actual gold equivalency ratio of 44:1 realized during the quarter, or 60,650 gold equivalent ounces using the Company's long-term gold equivalency ratio of 55:1. At the end of the quarter, approximately 11,000 gold equivalent ounces produced remained in inventory in order to realize a more advantageous metal price in the current volatile metal price environment.
- Strong cash cost performance. Using the gold equivalency ratio of 44:1 realized in the quarter, consolidated cash costs were $488 per gold equivalent ounce ($526 per gold equivalent ounce at the Company's long-term gold equivalency ratio of 55:1), which includes non-recurring commissioning costs related to the resumption of production at the El Cubo mine.
- Announced the proposed acquisition of Northgate on August 29th. Upon completion of the transaction, which is scheduled to occur this month, the Company will be a new leading intermediate gold producer with significant growth potential. The key Northgate asset, the prospective Young-Davidson mine, is targeting production in Q1 2012 and is expected to be a cornerstone operation in AuRico's expanded asset base.
1. Using the gold equivalency ratio of 44:1 realized in the quarter
"Our production base expanded this quarter to include three operating mines contributing to our growing production profile with all three operations expected to deliver increased production in the fourth quarter and beyond. Ocampo has delivered another strong quarter, the expansion program at the El Chanate mine is well advanced and the El Cubo mine reported positive operating cash flow in its first quarter of production following resumption of operations. Our robust cash flow continued to fully fund our expansion and exploration programs and contributed to the increased quarter-end cash position of $145 million," stated René Marion, President and Chief Executive Officer. "During the quarter the Company also announced the proposed acquisition of Northgate. This transformational acquisition will expand our resource inventory to over 19 million gold equivalent ounces and our asset base will be underpinned by two cornerstone operations, Ocampo and Young-Davidson, which alone have the potential to produce over 500,000 gold equivalent ounces at lowest quartile cash costs. We are particularly excited by the exploration potential at Young-Davidson, which is located in the Abitibi gold belt in Northern Ontario, the second largest gold belt in the world."
Ocampo Highlights
- Consistent performance at the Northeast and Santa Eduviges underground mines averaged 1,939 tonnes per day in the quarter (2,011 tonnes per day in September).
- At the Santa Eduviges underground mine, development continues vertically into the main deposit and in addition, development was initiated on the new Yatana and Veta Libre veins within the complex.
- Mining from the Picacho open pit continues to ramp up and is expected to reach full production in the fourth quarter.
- The Ocampo mill facility continued its strong performance and averaged 3,137 tonnes per day with gold and silver recoveries of 97% and 90%, respectively.
- Engineering studies are underway to evaluate the economics associated with the commissioning of the existing shaft system immediately adjacent to the mill facility. The study will incorporate the favourable cost efficiencies and productivity enhancements attributable to hoisting ore from the Northeast underground mine, which would significantly reduce truck haulage to the processing facilities.
- The Company continues to evaluate the development and commissioning of Level 2, a potential third underground mine exploiting recently delineated orebody extensions. A commissioning decision is expected by the end of Q1 2012.
- Additional underground capacity would necessitate the potential evaluation of increasing the mill capacity beyond the current 3,200 tonnes per day.
El Chanate Highlights
- At the end of the quarter, the initial phase of a 5-phase expansion program was near completion. Phase 1 of the program targets an average crushing and stacking rate of 18,000 tonnes per day with stacking rates in September averaging 17,314 tonnes per day (23% increase over Q1 2011 average of approximately 14,125 tonnes per day).
- Phase 2 of the expansion program is well advanced with a target stacking and crushing rate of 21,000 tonnes per day. Crushing and stacking rates are expected to reach 21,000 tonnes per day by the end of Q1 2012.
- Upgrades to the conveyor system are underway and expected to be completed in November.
- A new stacker is now fully operational at the heap leach facility that will support the increased stacking rates.
- At the end of the quarter the main water distribution pipeline to the heap leach pad was increased from an 8" to an 18" line to allow for adequate irrigation of additional stacked tonnage. Concurrently, two additional pumps were installed at the heap leach facility and a third is scheduled to be operational by the end of October. With the increase in solution capacity, it will be possible to place more surface area under leach, including an estimated 1.33 million tonnes of ROM (Run of Mine) material placed in the past two quarters that in combination, is expected to result in increased metal production in the fourth quarter.
- An additional ADR (Adsorption-Desorption-Recovery) plant is under construction and is expected to be completed in early January.
- The decision to proceed with the final 3 phases of the expansion program, which have an ultimate target of 26,000 tonnes per day, will be made at the end of Q1 2012 upon the release of the Company's reserve and resource update.
- The 2011 exploration program launched in April continues to deliver encouraging results. With two drills currently on-site, the objective of the 20,000 metre program is to increase in-pit reserves, add new reserves outside of the existing ultimate pit limit and identify new targets for follow-on drilling.
El Cubo Highlights
- Processing El Cubo ores at the Las Torres mill resumed on July 23rd and production continues to ramp up to ultimate target levels of 1,800 tonnes per day of in-situ ore. During the quarter, the mill processing rate was ahead of schedule and averaged 1,752 tonnes per day at near historic metallurgical recoveries utilizing a smaller and more efficient work force than in previous years.
- The ramp-up in production underground is progressing well, averaging 1,113 tonnes per day of in-situ ore, with September averaging 1,338 tonnes per day.
- The conversion to long-hole mining continues to advance with four long-hole mining stopes currently in various stages of mining and development. Engineering studies indicate that up to 95% of production will come from long-hole mining (original target of 40%) by year end 2012. It is anticipated that the conversion to long-hole mining will result in improvements in productivity, dilution and costs, similar to those achieved at the Ocampo mine.
- Of the 122,637 tonnes milled during the quarter, 51,563 tonnes were sourced from high cost stockpiles (established by early July) with the remainder from direct underground ore feed. Operating costs of $1,083 per gold equivalent ounce1 are estimated to be comprised of $872 per gold equivalent ounce1 direct mined and $1,385 per gold equivalent ounce1 from previously stockpiled material. It is anticipated that costs will continue to decrease over the coming quarters as the underground operations ramp up to full production and the contribution from longhole mining increases.
- In mid-September, ramp development to the new Dolores-Capulin discovery and other key areas of the mine was accelerated.
1. Using the Company's long-term gold equivalency ratio of 55:1
Operational Results
| Three Months Ended Sept. 30 |
Ocampo |
El Chanate |
El Cubo |
Consolidated |
|
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 |
2010 |
| Gold Ounces Produced |
24,844 |
27,018 |
16,444 |
- |
4,398 |
- |
45,686 |
27,018 |
| Silver Ounces Produced |
1,064,906 |
1,189,769 |
- |
- |
308,528 |
- |
1,373,434 |
1,189,769 |
| Gold eq. Oz. Produced (realized) |
48,826 |
45,520 |
16,444 |
- |
11,360 |
- |
76,630 |
45,520 |
| Gold eq. Oz. Produced (55:1)(2) |
44,206 |
48,650 |
16,444 |
- |
10,008 |
- |
70,658 |
48,650 |
| Cash Costs(2) (realized)(1) |
$436 |
$436 |
$466 |
- |
$963 |
$1,386 |
$488 |
$445 |
| Cash Costs(2) (55:1)(1)(2) |
$482 |
$408 |
$466 |
- |
$1,083 |
$1,290 |
$526 |
$416 |
| Gold Ounces Sold |
22,153 |
26,167 |
16,426 |
- |
2,200 |
194 |
40,779 |
26,361 |
| Silver Ounces Sold |
945,704 |
1,188,135 |
- |
- |
147,155 |
14,578 |
1,092,859 |
1,202,713 |
| Gold eq. Ounces Sold (realized) |
43,520 |
44,672 |
16,426 |
- |
5,483 |
427 |
65,429 |
45,099 |
| Gold eq. Ounces Sold (55:1)(2) |
39,348 |
47,769 |
16,426 |
- |
4,876 |
459 |
60,650 |
48,228 |
| (1) |
Cash costs for the Ocampo mine, El Cubo mine, and on a consolidated basis are calculated on a per gold equivalent ounce basis. Cash costs for the El Chanate mine are calculated on a per gold ounce basis, using silver revenues as a by-product cost credit. |
| (2) |
Using the Company's long-term gold equivalency ratio. |
| Nine Months Ended Sept. 30 |
Ocampo |
El Chanate |
El Cubo |
Consolidated |
|
2011 |
2010 |
2011(1) |
2010 |
2011 |
2010 |
2011 |
2010 |
| Gold Ounces Produced |
79,569 |
73,836 |
31,315 |
- |
4,398 |
10,844 |
115,282 |
84,680 |
| Silver Ounces Produced |
3,310,509 |
3,217,584 |
- |
- |
308,528 |
536,457 |
3,619,037 |
3,754,041 |
| Gold eq. Oz. Produced (realized) |
158,248 |
123,428 |
31,315 |
- |
11,360 |
19,108 |
200,923 |
142,536 |
| Gold eq. Oz. Produced (55:1)(2) |
139,760 |
132,338 |
31,315 |
- |
10,008 |
20,596 |
181,083 |
152,934 |
| Cash Costs(2) (realized)(2) |
$381 |
$449 |
$476 |
- |
$963 |
$807 |
$414 |
$499 |
| Cash Costs(2) (55:1)(2)(3) |
$433 |
$418 |
$476 |
- |
$1,083 |
$748 |
$459 |
$464 |
| Gold Ounces Sold |
76,104 |
72,408 |
32,304 |
- |
2,200 |
11,160 |
110,608 |
83,568 |
| Silver Ounces Sold |
3,195,176 |
3,244,585 |
- |
- |
147,155 |
555,469 |
3,342,331 |
3,800,054 |
| Gold eq. Ounces Sold (realized) |
152,321 |
122,277 |
32,304 |
- |
5,483 |
19,713 |
190,108 |
141,990 |
| Gold eq. Ounces Sold (55:1)(2) |
134,198 |
131,400 |
32,304 |
- |
4,876 |
21,259 |
171,378 |
152,659 |
| (1) |
Represents results subsequent to the acquisition of the El Chanate mine on April 8, 2011. |
| (2) |
Cash costs for the Ocampo mine, El Cubo mine, and on a consolidated basis are calculated on a per gold equivalent ounce basis. Cash costs for the El Chanate mine are calculated on a per gold ounce basis, using silver revenues as a by-product cost credit. |
| (3) |
Using the Company's long-term gold equivalency ratio. |
About AuRico Gold
AuRico Gold is a leading intermediate Canadian gold and silver producer with a diversified portfolio of high quality mines and projects in Mexico. The Company's three wholly-owned operating properties include the Ocampo mine in Chihuahua State, the El Chanate mine in Sonora State and the El Cubo mine in Guanajuato State. AuRico's strong pipeline of development and exploration stage projects include the Guadalupe y Calvo advanced development property in Chihuahua State and the Orion advanced development property in Nayarit State, along with several exploration properties throughout Mexico. The Company's proposed acquisition of Northgate Minerals Corporation is scheduled to occur in late October 2011. AuRico's head office is located in Toronto, Ontario, Canada.
For further information please visit the AuRico Goldwebsite at https://www.auricogold.com.
Cautionary Statement
Cautionary Note to US Investors - The United States Securities and Exchange Commission permits US mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. This press release uses certain terms, such as "measured", "indicated" and "inferred" "resources", that the SEC guidelines strictly prohibit US registered companies from including in their filings with the SEC. US Investors are urged to consider closely the disclosure in AuRico Gold's Annual Report on Form 40-F, which may be secured from AuRico Gold, or from the SEC's website at https://www.sec.gov/edgar.shtml.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Certain statements included herein, including information as to the future financial or operating performance of the Company, its subsidiaries and its projects, constitute forward-looking statements. The words ''believe'', ''expect'', ''anticipate'', ''target'', ''continue'', ''estimate'', ''may'', and similar expressions identify forward-looking statements. Forward-looking statements include, among other things, statements regarding the likelihood of meeting updated 2011 operational guidance, the likelihood of completing the acquisition of Northgate Minerals Corporation in October, if the acquisition is completed, the likelihood of Young-Davidson commencing production in 2012, Picacho open pit reaching full production in the fourth quarter, crushing and stacking rates reaching 21,000 tonnes per day during the end of 2011, the El Chanate conveyor system upgrades being completed in November, the completion of the ADR by early January 2012, the benefits of additional long-hole mining at El Cubo, the decrease of operating costs at El Cubo in the fourth quarter of 2011, the ability to delineate additional measured and indicated resources or reserves as a result, the suitability of targets for future open pit mining at El Chanate, anticipated future financial and operational performance, the future price of gold and silver, the de-risking of operations, future exploration results of its exploration and development program at El Chanate and the success of the Company's exploration approach, the Company's ability to delineate additional resources and reserves as a result of such program, and, statements regarding its financial exposure to litigation, targets, estimates and assumptions in respect of gold and silver production and prices, operating costs, results and capital expenditures, mineral reserves and mineral resources and anticipated grades, recovery rates, future financial or operating performance, margins, operating and exploration expenditures, costs and timing of completion of the Ocampo expansion program and improvements to the heap leach pad, costs and timing of the development and commencement of production of new deposits, costs and timing of construction, costs and timing of future exploration and reclamation expenses including, anticipated 2011 results, operating performance projections for 2011, the Company's ability to fully fund its business model internally, 2011 gold and silver production and the cash and operating costs associated therewith, the ability to achieve productivity and operational efficiencies, and the timing of each thereof. 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, competitive, political and social uncertainties and contingencies. The operating and financial performance of the Company will be affected by changes in the actual gold equivalency ratio realized in 2011. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Such factors include, among others, known and unknown uncertainties and risks relating to additional funding requirements, reserve and resource estimates, commodity prices, hedging activities, exploration, development and operating risks, illegal miners, political and foreign risk, uninsurable risks, competition, limited mining operations, production risks, environmental regulation and liability, government regulation, currency fluctuations, recent losses and write-downs, restrictions in the Company's loan facility, dependence on key employees, possible variations of ore grade or recovery rates, failure of plant, equipment or process to operate as anticipated, accidents and labour disputes. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.