Anaconda Mining earns $3.98-million in Q3
2020-11-05 07:45 ET - News Release
Mr. Kevin Bullock reports
ANACONDA MINING REPORTS THIRD QUARTER 2020 RESULTS; GENERATES $6.2 MILLION OF CASH FLOW FROM OPERATING ACTIVITIES IN Q3 2020
Anaconda Mining Inc. has provided its financial and operating results for the three and nine months ended Sept. 30, 2020. The condensed interim consolidated financial statements and management discussion & analysis documents can be found at www.sedar.com and the Company's website, www.anacondamining.com. All dollar amounts are in Canadian dollars unless otherwise noted.
Third Quarter 2020 HighlightsAnaconda sold 5,105 ounces of gold in Q3 2020, generating metal revenue of $12.7 million at an average realized gold price* of $2,486 (US$1,866) per ounce sold.Cash flow from operating activities in Q3 2020 were $6.2 million, a 92% increase from the corresponding period of 2019, the result of strong production and a high gold price environment.Operating cash costs per ounce sold* at the Point Rousse Project in Q3 2020 were C$901 (US$677), compared to C$1,057 (US$800) in the three months ended September 30, 2019, mainly driven by increased gold sales.All-in sustaining cash costs per ounce sold* were C$1,261 (US$947) for Q3 2020, a 22% improvement over Q3 2019 as a result of higher ounces sold and lower corporate administration costs.The Company invested $2.2 million in its growth projects during Q3 2020, including $1.5 million on the Goldboro Gold Project and $0.7 million on exploration programs at the Tilt Cove Project and Point Rousse Project.The Point Rousse Complex generated EBITDA* of $8.1 million in Q3 2020 and $15.8 million in the nine months ended September 30, 2020, compared with $3.7 million and $8.2 million for the respective 2019 periods, with the year over year increase in driven by the strong gold price and increase in ounces sold over the comparative periods.Net income for the three months ended September 30, 2020 was $4.0 million, or $0.03 per share, compared to $1.1 million, or $0.01 per share, for the three months ended September 30, 2019. The improved net income for the period was driven by a 45% increase in revenue.On July 31, 2020, Anaconda completed a non-brokered flow-through private placement for $5.5 million, which will accelerate its highly prospective exploration and diamond drill programs in Atlantic Canada, particularly at the Goldboro Gold Project and the Tilt Cove Gold Project.As at September 30, 2020, the Company had a cash balance of $14.8 million and working capital* of $12.3 million.
*Refer to Non-IFRS Measures section below. A full reconciliation of Non-IFRS Measures can be found in the Management Discussion and Analysis for the three and nine months ended September 30, 2020.
"We are pleased to report a successful quarter of production and financial results, with Anaconda generating $6.2 million in cash flow from operations on 5,105 ounces of gold sold. We ended the third quarter with a treasury balance of $14.8 million and continue to generate free cash flow at the Point Rousse operation, which allows us to aggressively pursue our growth strategy. Anaconda continues to provide a unique opportunity to investors in a strong gold market, providing immediate leverage to higher gold prices through free cash flow generation, gold production growth through development at the Goldboro Gold Project, and exposure to significant exploration upside at prospective properties in Newfoundland and Nova Scotia, including the Tilt Cove Gold Project."
~Kevin Bullock, President and CEO, Anaconda Mining Inc.
Consolidated Results Summary Three months ended Nine months ended Sept. 30, Sept. 30, Financial Results 2020 2019 2020 2019 Revenue ($) 12,703,630 8,778,562 31,594,739 23,040,960 Cost of operations, including depletion and depreciation ($) 5,540,360 5,954,877 18,368,320 17,770,962 Mine operating income ($) 7,163,270 2,823,685 13,226,419 5,269,998 Net income ($) 3,982,777 1,083,438 7,436,040 602,825 Net income per share ($/share) - basic and diluted ($) 0.03 0.01 0.05 0.00 Cash generated from operating activities ($) 6,183,727 3,217,085 12,007,716 4,581,431 Capital investment in property, mill and equipment ($) 387,383 523,237 1,577,708 2,048,287 Capital investment in exploration and evaluation assets ($) 2,150,374 2,595,838 4,638,061 9,492,019 Average realized gold price per ounce* US$1,866 US$1,428 US$1,672 US$1,327 Operating cash costs per ounce sold* US$677 US$800 US$830 US$837 All-in sustaining cash costs per ounce sold* US$947 US$1,208 US$1,121 US$1,238
Three months ended Nine months ended Sept. 30, Sept. 30, Operational results 2020 2019 2020 2019 Ore mined (t) 187,185 134,347 401,573 289,837 Waste mined (t) 387,116 545,873 1,510,830 1,252,710 Strip ratio 2.1 4.1 3.8 4.3 Ore milled (t) 120,359 114,373 351,828 291,026 Grade (g/t Au) 1.59 1.49 1.42 1.53 Recovery (%) 88.5 85.6 87.5 81.7 Gold ounces produced 5,444 4,687 14,098 11,770 Gold ounces sold 5,105 4,652 13,948 13,057
Third Quarter 2020 Review
Operational Overview - The Point Rousse operation produced 5,444 ounces of gold in Q3 2020, an increase of 16% compared to the third quarter of 2019 due to higher throughput and better recovery. The Pine Cove Mill processed 120,359 tonnes during Q3 2020, an increase of 5% compared to the third quarter of 2019 due to better mill availability. Average grade during Q3 2020 was 1.59 g/t, a 7% increase over the third quarter of 2019 and an increase of 43% from Q2 2020 when the mine experienced variability to the block model in certain lower areas of the pit. The mill achieved an average recovery rate of 88.5%, an increase from 85.6% achieved in Q3 2019 as a result of the higher-grade profile in Q3 2020.
During the third quarter of 2020, the mine operations produced 187,185 tonnes of ore from the Pine Cove Pit, a 39% increase from Q3 2019, which reflects the lower strip ratio at the lower levels at the Pine Cove Pit compared to the comparative period where the focus was on pushbacks to the Pit. The Company ended the third quarter with an ore stockpile of 100,000 tonnes, which will provide mill throughput in the fourth quarter as the development of Argyle is completed. The Pine Cove Pit has now transitioned to a fully permitted in-pit tailings facility, with over 15 years of capacity at current throughput rates.
During the third quarter, the Company received required permits to initiate development at Argyle. Initial development activities have commenced, including cutting, land clearing and access construction, which allowed for the mining of ore to commence in the middle of October 2020.
Financial Results - Anaconda sold 5,105 ounces of gold during the third quarter of 2020, generating gold revenue of $12.7 million at an average realized gold price of C$2,486 per ounce (US$1,866).
Operating expenses for the three and nine months ended September 30, 2020 were $4,616,353 and $15,657,270, respectively, compared to $4,916,099 and $14,140,265 in the three and nine months ended September 30, 2019. Operating expenses for Q3 2020 included mining costs of $2,432,583 and were lower than Q3 2019 primarily due to the 16% decrease in material mined during the quarter. Mining costs of $7,494,140 for the first nine months of 2020 were higher than the comparative 2019 period due to a 24% increase in material mined at Pine Cove in 2020 compared to Stog'er Tight in 2019. Processing costs of $2,264,310 in Q3 2020 were lower than the comparative period due to a one-time hydro credit of approximately $100,000 from the province of Newfoundland. Operating cash costs per ounce sold in the first nine months of 2020 were C$1,124 (US$830), and the Company is on track to meet its revised operating cash costs per ounce guidance of C$1,150 and C$1,250 per ounce of gold sold (US$850 - US$950 at an approximate exchange rate of 0.75).
There was no royalty expense for Q3 2020 compared to $6,769 in Q3 2019 when production included a small amount of ore from Stog'er Tight, which carries a 3% net smelter royalty. Depletion and depreciation for the three months ended September 30, 2020 was $924,007 compared with $1,032,009 recognized in Q3 2019.
Mine operating income for the three months ended September 30, 2020 was $7,163,270, compared to $2,823,685 in the corresponding period of 2019, with higher revenue resulting from significantly higher gold prices driving the increase in mine operating income.
Corporate administration costs were $1,010,599 for Q3 2020, a decrease of 39% from Q3 2019, as a result of one-time severance costs incurred in the comparative period as part of the Company's effort to streamline corporate overhead. The Company also recorded an after-tax gain of $296,353 (pre-tax loss of $547,647) associated with the spin-out of the Great Northern and Cape Spencer Projects to Magna Terra Minerals Inc.
Finance expense for the quarter was $47,153 for Q3 2020 and $171,714 for the nine months ended September 30, 2020, compared to $111,165 and $303,667 for the three and nine months ended September 30, 2019, respectively. Finance costs in the prior year were higher as a result of a gold loan that was delivered into in Q2 and Q3 2019.
Net comprehensive income for the three months ended September 30, 2020, was $3,982,777, or $0.03 per share, compared to a net income of $1,083,438, or $0.01 per share. The improvement compared to the three months ended September 30, 2019 was the result of higher mine operating income which was partially offset by a higher net income tax expense, as the Company recorded a current income tax expense of $973,000 relating to provincial mining tax and a deferred income tax expense of $688,000 during the three months ended September 30, 2020 (three months ended September 30, 2019 - expense of $351,000 and a recovery of $693,000, respectively). For the nine months ended September 30, 2020, net income was $7,436,040, or $0.05 per share, compared to $602,825, or $0.00 per share for the first nine months of 2019, similarly due to the higher period over period mine operating income, partially offset by a higher net income tax expense, predominantly driven by a significantly higher gold price environment.
Financial Position and Cash Flow Analysis
As at September 30, 2020, the Company had working capital of $12,324,785, which included cash and cash equivalents of $14,755,538. Current taxes payable reflect an estimate of the Newfoundland mining taxes payable for the first three quarters of 2020, with mining taxes of $563,126 relating to 2019 being paid in the three months ended September 30, 2020.
The current portion of loans includes $1,465,609 outstanding from a $5.0 million term loan with the Royal Bank of Canada ("RBC"). The term loan carries a fixed interest rate of 4.6% and performance guarantee fee by Export Development Canada ("EDC") of 1.85%, payable quarterly based on the proportional amount outstanding.
Anaconda generated $6,183,727 in operating cash flows during the three months ended September 30, 2020, after accounting for corporate administration costs of $1,010,599. The Point Rousse Project generated EBITDA of $8,065,905, based on gold sales of 5,105 ounces at an average gold price of C$2,486 per ounce sold and operating cash costs of C$901 per ounce sold.
During Q3 2020, the Company continued to invest in its key growth projects in Newfoundland and Nova Scotia. The Company spent $2,150,374 on exploration and evaluation assets (adjusted for amounts included in trade payables and accruals at September 30, 2020), primarily on the continued advancement of the Goldboro Gold Project and exploration activities at Tilt Cove, and invested $387,383 into capitalized development for Argyle and sustaining capital for the Pine Cove Mill. During the three months ended September 30, 2020, the Company also generated $216,140 in net proceeds from the sale of marketable securities.
Financing activities during the three months ended September 30, 2020 included the net proceeds of $5,463,763 from a non-brokered flow-through private placement completed in July 2020, the ongoing repayment of the RBC term loan, and the repayment of other loans and lease obligations. The Company also received $330,997 from the exercise of warrants and $169,701 from the exercise of stock options.
ABOUT ANACONDA
Anaconda is a TSX and OTCQX-listed gold mining, development, and exploration company, focused in Atlantic Canada. The company operates mining and milling operations in the prolific Baie Verte Mining District of Newfoundland which includes the fully-permitted Pine Cove Mill, tailings facility and deep-water port, as well as ~11,000 hectares of highly prospective mineral lands including those adjacent to the past producing, high-grade Nugget Pond Mine at its Tilt Cove Gold Project. Anaconda is also developing the Goldboro Gold Project in Nova Scotia, a high-grade resource and the subject of an on-going feasibility study.
We seek Safe Harbor.
© 2020 Canjex Publishing Ltd. All rights reserved.