EarningsCrocodile Gold Corp.
TSX :
CRK
OTCQX : CROCF
FRANKFURT : XGC
November 11, 2011 08:30 ET
Crocodile Gold Reports Revenue of $30 Million on the Sale of 17,900 Ounces Gold in the Third Quarter of 2011
- Company focused on development efforts to ensure success in 2012
- Maintains strong cash position with $50 million in working capital
- Excellent drilling results at both Cosmo and Union Reefs
TORONTO, ONTARIO--(Marketwire - Nov. 11, 2011) -Crocodile Gold Corp.(TSX:CRK)(OTCQX:CROCF)(FRANKFURT:XGC) ("Crocodile Gold" or the"Company") today announces its financial and operating results for thethird quarter of 2011 and nine months ended September 30, 2011. Allfigures are in U.S. dollars, unless stated otherwise.
Crocodile Gold produced record quarterly tonnage and achievedexcellent gold recovery rates at the Union Reefs production facility inthe three months ended September 30, 2011. Good progress was made atCosmo with the completion of pit dewatering and the continued progressof the underground development, but further efforts will be required tocomplete the infrastructure plans. With modifications to the Cosmoschedule and much lower than expected head grades from the open pits,the Company now expects to mine 66,000 ounces to 69,000 ounces of goldat a cash cost of $1,400 to $1,500 per ounce in 2011.
In reporting these results, Chantal Lavoie, President andChief Executive Officer of Crocodile Gold commented: "I am happy withthe progress of the Company since joining Crocodile Gold, particularlyat Cosmo. Unfortunately, in October, unexpected geotechnical conditionsassociated with the excavation of the top 20 metres of the mainventilation shaft forced us to re-assess how this critical phase of thedevelopment work would be completed, therefore delaying the ramp-up ofCosmo by approximately 6 weeks. The changes are necessary to properlyset up the infrastructure so that we can ensure an efficient ramp-up ofCosmo, which is key to our long-term strategy. The decision to delayramp-up was a difficult one because it affects our 2011 production,however, I am confident that the modifications we are making will set upCosmo, and the Company, so that both will be successful in 2012 andbeyond. On the exploration front, the drilling at Cosmo and Union Reefsunderground has returned excellent results, confirming our expectationand, in the case of Union Reefs, the short to mid-term potential tobring high quality ounces to our production profile."
In the three months ended September 30, 2011 the Company:
- Recorded revenue of $30,595,899 on the sale of 17,900 ounces of gold for an average realized price of $1,714 per ounce–up from revenue of $30,206,274 in the second quarter of 2011.
- Milled a record total of 559,447 tonnes of ore at an average grade of 1.09 g/t and a recovery rate of 92.8% to produce 18,186 ounces of gold.
- Recorded a net loss of $6,078,437 or
.02 per share.
- Maintained net working capital of $50,936,471, including cash and cash equivalents of $49,200,630 or
.16 per share.
- Completed 589 metres of development at the Cosmo underground mine, in addition to the 543 metres in the previous six months, with a third mining level now accessed.
- Mined first development ore from Cosmo including 838 tonnes at 2.80 g/t.
- Completed 18,660 metres of surface drilling at Union Reefs, Cosmo, Maud Creek, Yam Creek, Rising Tide and Iron Blow, including 7,787 metres of reverse circulation (RC) and 10,873 metres of diamond drilling.
Financial Discussion
In the third quarter, the Company recorded gold sale revenueof $30,595,899 on the sale of 17,900 ounces of gold, for an averagerealized price of $1,714 per ounce. In the previous two quarters, goldsale revenue was $30,206,274 (20,200 ounces) and $19,858,346 (14,300ounces) respectively.
The mine operating loss in the three months ended September30, 2011 was $1,964,513. The operating earnings were $349,963 on a cashbasis, net of depletion and depreciation of $2,314,476. The cash costper ounce of gold sold since the start of the dry season in April 2011was $1,432 per ounce (refer to non-GAAP measures below). This cash costwas about $250 per ounce higher than planned as a result of the lowerthan expected average head grade from the open pits. Also, costs wereaffected by a strong Australian Dollar (increase of $60 per ounce) andwith the fluctuations in the price of diesel (increase of $26 perounce).
Crocodile Gold recorded a net loss of $6,078,437 for thethree months ending September 30, 2011 and a loss of $11,887,347 for thenine months ending September 30, 2011. This represents a
.02 pershare third quarter loss and a
.04 per share loss for the nine monthsended September 30, 2011.
The net loss includes exploration expenditures of $1,259,122for the three months ended September 30, 2011, $324,135 for the threemonths ended June 30, 2011, and $355,709 for the three month ended March31, 2011 respectively. Exploration expenditures are expensed in respectof properties where mineral resources have not yet been identified andthe Company has not yet made a development decision.
During the three months ended September 30, 2011, the Companyearned interest income of $1,056,037 (June 30: $1,234,804; March 31:$354,657) on the cash and cash equivalents and restricted cash on handduring the period.
Cash Flow
Cash used in operating activities was $7,645,941 for the ninemonths ended September 20, 2011. Cash used in operating activities wasmade up of cash generated by mine operations of $3,380,731, less generaland administrative type costs (net of interest income) of $2,147,476,exploration and care and maintenance costs of $2,272,629, and increasedamounts receivable of $8,227,236, offset by other net decreases inworking capital of $1,620,669. The increase in amounts receivableincluded $4,206,928 from the sale of a surplus ball mill shortly beforethe end of September 2011.
Investing activities used $47,063,093 in the nine monthsended September 30, 2011. This was principally directed to thedevelopment of the Cosmo underground mine, including the dewatering ofthe Cosmo pit that has cost approximately $11 million in 2011, and atUnion Reefs.
The only significant financing activity in the three monthsended September 30, 2011 was the establishment of a $1,227,918 equipmentloan. In the nine months ended September 30, 2011 the issue of sharesand warrants raised $82,187,013.
Financial Position
As at September 30, 2011, the Company had net working capitalof $50,936,471 (June 30: $77,473,864; March 31: $90,010,613), whichincluded cash and cash equivalents of $49,200,630 (June 30: $76,819,172;March 31: $88,191,145).
Outlook
Operations
Most of the ore tonnes mined in 2011 will be from open pitore, sourced from the Howley and Princess Louise open pit mines. Theaverage grade achieved from the open pits during 2011 was 1.10 g/t. TheCompany is stockpiling ore where possible to help maintain productionduring the wet season at the end of 2011 and into the first quarter of2012.
At Cosmo, the priorities for the remainder of 2011 includethe installation of a permanent dewatering system, establishment of afourth mining level, completion of permanent underground pump stationsand underground electrical substations and high voltage powerreticulation, and establishment of the primary ventilation system andsecondary egress.
Exploration
In 2011, definition drilling is being conducted at Cosmo onthe Western and Eastern Lodes, which is expected to add further mineralresources and potentially mineral reserves.
The Union Reefs Project area has also been prioritized tofind additional sources of high-grade mill feed that can ultimately bemined by underground methods with the near term priorities being theProspect and Crosscourse deposits.
Drilling has been supplemented with an airborne geophysicalsurvey over selected areas in order to fully understand the underlyinggeology and define base and precious metal targets of significance.
Further details regarding the Company's operations are available on the Company's website at www.crocgold.com and also www.sedar.comwhere Crocodile Gold's Annual Information Form, audited annualfinancial statements and managements' discussion and analysis (MD&A)are posted.
About Crocodile Gold
Crocodile Gold is a Canadian company with operating goldmines in the Northern Territory of Australia and a land position of over3,300 square kilometres. Crocodile Gold is currently mining from theMottrams and Princess Louise open pit mines and is developing the Cosmounderground mine. Ore is processed at the 2.4 million tonne per yearUnion Reefs Mill. Crocodile Gold has 3.175 million ounces of NationalInstrument 43-101 compliant measured and indicated mineral resources(51.85 million tonnes at an average grade of 1.9 g/t gold) and 2.14million ounces of inferred mineral resources (36.35 million tonnes at anaverage grade of 1.8 g/t gold). The Company has an exploration programin place with a main focus on the Union Reefs Project, the Cosmo Mineand the Maud Creek Deposit.
Qualified Person
David Keough, MAusIMM of Crocodile Gold Australia Operationsis a "qualified person" as such term is defined in National Instrument43-101 and has reviewed and approved the technical information and dataincluded in this press release.
Cautionary Notes
Non-GAAP Measures
Crocodile Gold believes that investors use certain indicatorsto assess gold mining companies. The indicators are intended to provideadditional information and should not be considered in isolation or as asubstitute for measures of performance prepared in accordance withInternational Financial Reporting Standards.
"Cash cost per ounce" is a non-GAAP performance measure whichcould provide an indication of the mining and processing efficiency andeffectiveness at the operations. It is determined by dividing theoperating expenses, excluding stock-based compensation allocated tooperating expense and net of silver revenue, by the number of ounces ofgold sold. There are variations in the method of computation of "cashcost per ounce" as determined by the Company compared with other miningcompanies. The following is a reconciliation of the cash cost per ounceof gold sold, to the reported operating expenses for the six monthsended September 30 (being the period after the wet season ended and notmaterially affected by the underground Brocks Creek mine that ceasedproduction in April 2011) and the three months ended March 31, 2011: