TORONTO, July 26, 2018 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX:YRI) (NYSE:AUY) (“Yamana” or “the Company”) is
herein reporting its financial and operational results for the second quarter 2018.
Gold equivalent ounce (“GEO”)(1) production from Yamana Mines(2) for the second quarter
was 240,271, including 224,083 ounces of gold and 1.31 million ounces of silver. Total Yamana gold production(3)
was 248,177 ounces. The Company also produced 31.1 million pounds of copper.
Higher than expected gold production at Chapada, Canadian Malartic, Jacobina, and El Peñón together with the
favourable ramp-up at Cerro Moro has the Company well positioned to exceed previously provided guidance of 900,000 ounces of gold
for Yamana Mines. While the production plan for Gualcamayo this year is lower than previously indicated, total Yamana gold
production including Gualcamayo is expected to also exceed previously provided guidance.
On a GEO basis, higher-than-plan gold production in the first half of the year more than offset slightly
lower-than-plan silver production such that cumulative precious metals production is expected to exceed guidance. Silver
production is expected to improve in the second half of 2018 with higher silver grades at El Peñón and production increases from
Cerro Moro.
Copper production was higher than plan for the second consecutive quarter and full-year copper production is
expected to also exceed previously provided guidance of 120 million pounds.
The continuation of strong operational performance, which has been in place since 2016 and extended into the
first half of 2018, is directly related to the Company’s improved production platform and the benefits of completed optimization
plans at various mines. Planned further improvements at all operations are expected to continue this trend in the second half
of the year.
Second quarter costs for Yamana Mines included all-in sustaining costs (“AISC”) on a by-product basis
(4) of $694 per GEO; cash costs on a by-product basis (4) of $489 per GEO; and total cost of sales of $986
per GEO.
Co-product costs and AISC for 2018 are expected to be within the previously guided ranges. Costs are
benefiting from higher production, operational efficiencies and the impact of the depreciation of local currencies, which began to
positively impact costs late in the second quarter. Costs on a by-product basis are also anticipated to be within the previously
guided ranges.
Refer to page 5 of this press release for additional information on costs by metal on a co-product and
by-product basis.
Net earnings from operations attributable to Yamana equityholders for the three months ended June 30, 2018, were
$18.0 million or $0.02 per share basic and diluted.
The business combination between Leagold Mining Corporation ("Leagold") and Brio Gold Inc. (“Brio Gold”) closed
May 24, 2018, resulting in the Company’s ownership percentage interest in Leagold of 20.5%, which is accounted for as an investment
in associate using the equity method. During the quarter, the Company recognized a gain of $32.0 million in respect of this
transaction representing the increase in the equity consideration from Leagold between March 31, 2018, and the date the transaction
closed and the change in the value of Brio Gold for the current period.
A summary of certain non-cash and other items that may not be reflective of current and ongoing operations is
included in the table on page 3 of this press release, the most notable of which is a $111.7 million non-cash unrealized foreign
exchange loss on the calculation of deferred income tax expense during the quarter.
Cash flows from operating activities for the second quarter were $102.4 million and cash flows from operating
activities before net change in working capital (4) were $157.5 million.
The balance sheet as at June 30, 2018, includes cash and cash equivalents of $114.4 million, and available
credit of $765.0 million, for total liquidity to the Company of $879.4 million. Net debt(4) as at June 30, 2018,
was $1.58 billion.
(All amounts are expressed in United States Dollars unless otherwise indicated.)
- Gold equivalent ounces include gold plus silver at a ratio of 80.93:1.
- Yamana Mines include Chapada, El Peñón, Canadian Malartic, Minera Florida, Jacobina and Cerro Moro.
- Total production includes production from Gualcamayo.
- Refers to a non-GAAP financial measure or an additional line item or subtotal in financial statements as described at the end
of this press release. Reconciliations for all non-GAAP financial measures are available at http://www.yamana.com/Q22018 and in Section 1 and
Section 10 of the Company’s second quarter 2018 Management’s Discussion & Analysis, which has been filed on SEDAR.
Summary of Certain Non-Cash and Other Items Included in Net Earnings
(In United States
Dollars, per share amounts may not add due to rounding, unaudited) |
Three Months Ended June 30, 2018 |
|
2018 |
2017 |
Non-cash unrealized foreign exchange
(gains)/losses |
(4.3) |
2.4 |
Share-based payments/mark-to-market of
deferred share units |
3.7 |
2.5 |
Mark-to-market on derivative
contracts |
0.1 |
- |
Mark-to-market on investment and other
assets |
5.1 |
(1.0) |
Revision in estimates and liabilities
including contingencies |
8.4 |
(0.9) |
Gain on sale of Brio Gold |
(32.0) |
- |
Reorganization costs |
2.7 |
1.2 |
Other provisions, write-downs and
adjustments |
0.6 |
20.8 |
Non-cash tax unrealized foreign
exchange losses |
111.7 |
25.1 |
Income tax effect of adjustments and
other one-time tax adjustments |
(62.1) |
(5.2) |
TOTAL
ADJUSTMENTS |
33.9 |
44.9 |
Increase to earnings per share
attributable to Yamana equityholders |
0.04 |
0.04 |
Note: For the three months ended June 30, 2018, net earnings, attributable to Yamana Gold Inc. equityholders,
would be adjusted by an increase of $33.9 million (2017 – increase of $44.9 million).
For a full discussion of Yamana’s operational and financial results, please refer to the Company’s second quarter 2018
Management’s Discussion & Analysis and Condensed Consolidated Interim Financial Statements, which have been filed
on SEDAR and are also available on the Company’s website.
KEY STATISTICS
Key operating and financial statistics for the second quarter 2018 are outlined in the following tables.
Financial Summary
|
Three Months Ended Jun 30th |
(In
millions of United States Dollars except for shares and per share amounts, unaudited) |
2018 |
2017 |
Revenue |
431.5 |
428.1 |
Cost of sales excluding depletion,
depreciation and amortization |
(234.1) |
(261.0) |
Depletion, depreciation and
amortization ("DDA") |
(93.9) |
(111.9) |
Total cost of sales |
(328.0) |
(372.9) |
Mine operating earnings/(loss) |
103.5 |
55.2 |
General and administrative
expenses |
(23.9) |
(25.9) |
Exploration and evaluation
expenses |
(3.2) |
(5.3) |
Net earnings/(loss) |
12.4 |
(42.8) |
Net earnings/(loss) attributable to
Yamana Gold equity holders |
18.0 |
(39.9) |
Net earnings/(loss) per share - basic
and diluted |
0.02 |
(0.04) |
Cash flow generated from continuing
operations after changes in non-cash working capital |
102.4 |
124.6 |
Cash flow from operations before
changes in non-cash working capital |
157.5 |
122.8 |
Revenue per ounce of gold |
1,289 |
1,255 |
Revenue per ounce of silver |
16.61 |
16.85 |
Revenue per pound of copper |
2.76 |
2.27 |
Average realized gold price per
ounce |
1,304 |
1,268 |
Average realized silver price
per ounce |
16.53 |
16.89 |
Average
realized copper price per pound |
3.09 |
2.52 |
- For the three months ended June 30, 2018, the weighted average numbers of shares outstanding, basic and diluted, was 948,952
thousand and 950,078 thousand, respectively.
Cost Summary
|
Three Months Ended Jun 30th |
Gold |
2018 |
2017 |
Total cost of sales per ounce sold -
Yamana Mines |
$987 |
$1,004 |
Total cost of sales per ounce sold -
Total Yamana |
$1,010 |
$1,096 |
Total cost of sales per ounce sold -
consolidated |
$1,028 |
$1,105 |
Co-product cash costs per ounce
produced - Yamana Mines |
$618 |
$611 |
Co-product cash costs per ounce
produced - Total Yamana |
$651 |
$671 |
All-in sustaining co-product costs per
ounce produced - Yamana Mines |
$815 |
$816 |
All-in sustaining co-product costs per
ounce produced - Total Yamana |
$837 |
$869 |
By-product cash costs per ounce
produced - Yamana Mines |
$434 |
$523 |
All-in
sustaining by-product costs per ounce produced - Yamana Mines |
$682 |
$805 |
Silver |
2018 |
2017 |
Total cost of sales per ounce
sold |
$16.13 |
$13.92 |
Co-product cash costs per ounce
produced |
$10.58 |
$10.19 |
All-in sustaining co-product costs per
ounce produced |
$14.03 |
$14.04 |
By-product cash costs per ounce
produced |
$6.91 |
$9.33 |
All-in
sustaining by-product costs per ounce produced |
$11.24 |
$13.75 |
Copper |
2018 |
2017 |
Total cost of sales per copper pound
sold - Chapada |
$1.57 |
$1.91 |
Co-product cash costs per pound of
copper produced - Chapada |
$1.41 |
$1.61 |
All-in
sustaining costs per pound of copper produced - Chapada |
$1.65 |
$1.98 |
Production Summary
|
Three Months Ended Jun 30th |
Gold Ounces |
2018 |
2017 |
Chapada |
30,329 |
25,404 |
El Peñón |
37,800 |
43,005 |
Canadian Malartic (50%) |
91,863 |
82,509 |
Minera Florida |
16,717 |
22,051 |
Jacobina |
37,730 |
34,275 |
Cerro Moro (1) |
9,644 |
- |
Total production
- Yamana Mines |
224,083 |
207,244 |
Gualcamayo |
24,094 |
37,363 |
TOTAL |
248,177 |
244,607 |
- Includes pre-commercial production of 8,625 ounces of gold and commercial production of 1,019 ounces of gold.
|
Three Months Ended Jun 30th |
Silver Ounces |
2018 |
2017 |
El Peñón |
925,450 |
1,180,174 |
Cerro Moro
(1) |
384,629 |
- |
TOTAL |
1,310,079 |
1,180,174 |
- Includes pre-commercial production of 333,878 ounces of silver and commercial production of 50,751 ounces of silver
|
Three Months Ended Jun 30th |
Copper Pounds |
2018 |
2017 |
Chapada (millions of
pounds) |
31.1 |
29.1 |
TOTAL (millions
of pounds) |
31.1 |
29.1 |
SECOND QUARTER 2018 CONFERENCE CALL
The Company will host a conference call and webcast on Friday, July 27, at 9:00 a.m. ET.
Second Quarter 2018 Conference Call
Toll Free (North America): |
|
1-866-223-7781 |
Toronto Local and International: |
|
416-340-2218 |
Webcast: |
|
www.yamana.com |
Conference Call Replay
Toll Free (North America): |
|
1-800-408-3053 |
Toronto Local and International: |
|
905-694-9451 |
Passcode: |
|
7856108 |
The conference call replay will be available from 12:00 p.m. ET on July 27, 2018, until 11:59 p.m. ET on August
11, 2018.
Qualified Persons
Scientific and technical information contained in this press release relating to operations at Chapada, Canadian
Malartic and Jacobina has been reviewed and approved by Yohann Bouchard (Senior Vice President, Operations) and relating to
operations at El Peñón, Cerro Moro, Minera Florida and Gualcamayo has been reviewed and approved by Carlos Bottinelli
(Manager, Technical Services). Each of Messrs. Bouchard and Bottinelli is an employee of Yamana Gold Inc. and a "Qualified Person"
as defined by Canadian Securities Administrators' National Instrument 43-101 - Standards of Disclosure for Mineral Projects.
About Yamana
Yamana is a Canadian-based gold producer with significant gold production, gold development stage properties,
exploration properties, and land positions throughout the Americas including Canada, Brazil, Chile and Argentina. Yamana
plans to continue to build on this base through existing operating mine expansions and optimization initiatives, development of new
mines, the advancement of its exploration properties and, at times, by targeting other gold consolidation opportunities with a
primary focus in the Americas.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations and Corporate Communications
416-815-0220
1-888-809-0925
Email: investor@yamana.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release contains or
incorporates by reference “forward-looking statements” and “forward-looking information” under applicable Canadian securities
legislation within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information
includes, but is not limited to information with respect to the Company’s optimization and expansion plans, strategy, other plans
or future financial or operating performance. Forward-looking statements are characterized by words such as “plan,” “expect”,
“budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain
events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions, assumptions and estimates of
management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and
uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those
projected in the forward-looking statements. These factors include the Company’s expectations in connection with the
production and exploration, the impact of declaring commercial production, development and expansion plans at the Company's
projects discussed herein being met, the impact of proposed optimizations at the Company's projects, changes in national and local
government legislation, taxation, controls or regulations and/or changes in the administration or laws, policies and practices, and
the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and
the values of assets and liabilities based on projected future conditions, fluctuating metal prices (such as gold, copper, silver
and zinc), currency exchange rates (such as the Brazilian real, the Chilean peso, and the Argentine peso versus the United States
dollar), the impact of inflation, possible variations in ore grade or recovery rates, changes in the Company’s hedging program,
changes in accounting policies, changes in Mineral Resources and Mineral Reserves, risks related to asset disposition, risks
related to metal purchase agreements, risks related to acquisitions, changes in project parameters as plans continue to be refined,
changes in project development, construction, production and commissioning time frames, unanticipated costs and expenses, higher
prices for fuel, steel, power, labour and other consumables contributing to higher costs and general risks of the mining industry,
failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, final pricing for concentrate
sales, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of the development
of new deposits, success of exploration activities, permitting timelines, government regulation and the risk of government
expropriation or nationalization of mining operations, risks related to relying on local advisors and consultants in foreign
jurisdictions, environmental risks, unanticipated reclamation expenses, risks relating to joint venture operations, title disputes
or claims, limitations on insurance coverage and timing and possible outcome of pending and outstanding litigation and labour
disputes, risks related to enforcing legal rights in foreign jurisdictions, as well as those risk factors discussed or referred to
herein and in the Company's Annual Information Form filed with the securities regulatory authorities in all provinces of Canada and
available at www.sedar.com, and the Company’s Annual Report on
Form 40-F filed with the United States Securities and Exchange Commission. Although the Company has attempted to
identify important factors that could cause actual actions, events or results to differ materially from those described in
forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or
intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update
forward-looking statements if circumstances or management’s estimates, assumptions or opinions should change, except as required by
applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information
contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and
operational performance and results as at and for the periods ended on the dates presented in the Company’s plans and objectives
and may not be appropriate for other purposes.
NON-GAAP FINANCIAL MEASURES AND ADDITIONAL LINE ITEMS AND SUBTOTALS IN FINANCIAL STATEMENTS
The Company has included certain non-GAAP financial measures to supplement its Condensed Consolidated Interim
Financial Statements, which are presented in accordance with IFRS, including the following:
- Cash costs per ounce produced on a co-product and by-product basis, for gold and silver;
- Co-product cash costs per pound of copper produced;
- All-in sustaining costs per ounce produced on a co-product and by-product basis, for gold and silver;
- All-in sustaining co-product costs per pound of copper produced;
- Net debt;
- Average realized price per ounce of gold/silver sold; and
- Average realized price per pound of copper sold.
The Company believes that these measures, together with measures determined in accordance with IFRS, provide
investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not
have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with IFRS. Management's determination of the components of
non-GAAP and additional measures are evaluated on a periodic basis influenced by new items and transactions, a review of investor
uses and new regulations as applicable. Any changes to the measures are duly noted and retrospectively applied as
applicable.
CASH COSTS AND ALL-IN SUSTAINING COSTS
The Company discloses “cash costs” because it understands that certain investors use this information to
determine the Company’s ability to generate earnings and cash flows for use in investing and other activities. The Company
believes that conventional measures of performance prepared in accordance with IFRS do not fully illustrate the ability of its
operating mines to generate cash flows. The measures, as determined under IFRS, are not necessarily indicative of operating
profit or cash flows from operating activities. Cash costs figures are calculated in accordance with a standard developed by
The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American
gold producers. The Gold Institute ceased operations in 2002, but the standard remains the generally accepted standard of
reporting cash costs of production in North America. Adoption of the standard is voluntary and the cost measures presented herein
may not be comparable to other similarly titled measures of other companies.
The measure of cash costs, along with revenue from sales, is considered to be a key indicator of a company’s
ability to generate operating earnings and cash flows from its mining operations. This data is furnished to provide
additional information and is a non-GAAP financial measure. The terms co-product and by-product cash costs per ounce of
gold or silver produced, co-product cash costs per pound of copper produced, co-product and by-product AISC per ounce of gold or
silver produced and co-product AISC per pound of copper produced do not have any standardized meaning prescribed under IFRS,
and therefore they may not be comparable to similar measures employed by other companies. Non-GAAP financial measures should
not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and is not necessarily
indicative of operating costs, operating profit or cash flows presented under IFRS.
By-Product and Co-Product Cash Costs
Cash costs include mine site operating costs such as mining, processing, administration, production taxes and royalties which are
not based on sales or taxable income calculations, but are exclusive of amortization, reclamation, capital, development and
exploration costs. The Company believes that such measure provides useful information about the Company’s underlying cash
costs of operations. Cash costs are computed on a weighted average basis, net of by-product sales and on a co-product basis
as follows:
Cash costs of gold and silver on a by-product basis - shown on a per ounce basis.
- The attributable cost for each metal is calculated net of by-products by applying copper and zinc net revenues, which are
incidental to the production of precious metals, as a credit to gold and silver ounces produced, thereby allowing the Company’s
management and stakeholders to assess net costs of precious metal production. These costs are then divided by gold and
silver ounces produced.
Cash costs of gold and silver on a co-product basis - shown on a per ounce basis.
- Costs directly attributed to gold and silver will be allocated to each metal. Costs not directly attributed to each metal
will be allocated based on the relative value of revenues which will be determined annually.
- The attributable cost for each metal will then be divided by the production of each metal in calculating cash costs per ounce
on a co-product basis for the period.
Cash costs of copper on a co-product basis - shown on a per pound basis.
- Costs attributable to copper production are divided by commercial copper pounds produced.
By-Product and Co-Product AISC
All-in sustaining costs per ounce of gold and silver produced seeks to represent total sustaining expenditures of producing gold
and silver ounces from current operations, based on co-product costs or by-product costs, including cost components of mine
sustaining capital expenditures, corporate general and administrative expense excluding stock-based compensation, and exploration
and evaluation expense. All-in sustaining costs do not include capital expenditures attributable to projects or mine
expansions, exploration and evaluation costs attributable to growth projects, income tax payments, financing costs and dividend
payments. Consequently, this measure is not representative of all of the Company's cash expenditures. In addition, the
calculation of all-in sustaining costs does not include depletion, depreciation and amortization expense as it does not reflect the
impact of expenditures incurred in prior periods.
All-in sustaining co-product costs reflect allocations of the aforementioned cost components on the basis that
is consistent with the nature of each of the cost component to the gold, silver or copper production activities. Similarly,
all-in sustaining by-product costs reflect allocations of the aforementioned cost components on the basis that is consistent with
the nature of each of the cost component to the gold and silver production activities but net of by-product revenue credits from
sales of copper and zinc.
A reconciliation of total cost of sales of gold, silver and copper sold (cost of sales excluding depreciation,
depletion and amortization, plus depreciation, depletion and amortization) per the Consolidated Financial Statements to co-product
cash costs of gold produced, co-product cash costs of silver produced, co-product cash costs of copper produced, co-product AISC of
gold produced, co-product AISC of silver produced, co-product AISC of copper produced, by-product cash costs of gold produced,
by-product cash costs of silver produced, by-product AISC of gold produced and by-product AISC of silver produced is provided in
Section 10: of the MD&A for the three and six months ended June 30, 2018 and comparable period of 2017 which has
been filed on SEDAR.
NET DEBT
The Company uses the financial measure "Net Debt", which is a non-GAAP financial measure, to supplement
information in its Consolidated Financial Statements. The Company believes that in addition to conventional measures prepared
in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s
performance. The non-GAAP financial measure of net debt does not have any standardized meaning prescribed under IFRS, and
therefore it may not be comparable to similar measures employed by other companies. The data is intended to provide
additional information and should not be considered in isolation or as a substitute for measures of performance prepared in
accordance with IFRS.
Net Debt is calculated as the sum of the current and non-current portions of long-term debt net of the cash and
cash equivalent balance as at the balance sheet date. A reconciliation of Net Debt is provided in Section 10:
of the MD&A for the period ended June 30, 2018 and comparable period of 2017 which has been filed on SEDAR.
AVERAGE REALIZED METAL PRICES
The Company uses the financial measures "average realized gold price", "average realized silver price" and
"average realized copper price", which are non-GAAP financial measures, to supplement in its Consolidated Financial
Statements. Average realized price does not have any standardized meaning prescribed under IFRS, and therefore they may not
be comparable to similar measures employed by other companies. The Company believes that in addition to conventional measures
prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s
performance vis-à-vis average market prices of metals for the period. The presentation of average realized metal prices is
not meant to be a substitute for the revenue information presented in accordance with IFRS, but rather should be evaluated in
conjunction with such IFRS measure.
Average realized metal price represents the sale price of the underlying metal before deducting sales taxes,
treatment and refining charges, and other quotational and pricing adjustments. Average realized prices are calculated as the
revenue related to each of the metals sold, i.e. gold, silver and copper, divided by the quantity of the respective units of metals
sold, i.e. gold ounce, silver ounce and copper pound. Reconciliations of average realized metal prices to revenue provided in
Section 10: of the MD&A for the three and six months ended June 30, 2018 and comparable periods of 2017, which
has been filed on SEDAR.
ADDITIONAL LINE ITEMS OR SUBTOTALS IN FINANCIAL STATEMENTS
The Company uses the following additional line items and subtotals in the Consolidated Financial Statements as
contemplated in IAS 1: Presentation of Financial Statements:
- Gross margin excluding depletion, depreciation and amortization — represents the amount of revenue
in excess of cost of sales excluding depletion, depreciation and amortization. This additional measure represents the cash
contribution from the sales of metals before all other operating expenses and DDA, in the reporting period.
- Mine operating earnings — represents the amount of revenue in excess of cost of sales.
- Operating earnings — represents the amount of earnings before net finance income/expense and income
tax recovery/expense. This measure represents the amount of financial contribution, net of all expenses directly
attributable to mining operations and overheads. Finance income, finance expense and foreign exchange gains/losses are not
classified as expenses directly attributable to mining operations.
- Cash flows from operating activities before income taxes paid and net change in working capital —
excludes the payments made during the period related to income taxes and tax related payments and the movement from
period-to-period in working capital items including trade and other receivables, other assets, inventories, trade and other
payables. Working capital and income taxes can be volatile due to numerous factors, such as the timing of payment and
receipt. As the Company uses the indirect method prescribed by IFRS in preparing its statement of cash flows, this
additional measure represents the cash flows generated by the mining business to complement the GAAP measure of cash flows from
operating activities, which is adjusted for income taxes paid and tax related payments and the working capital change during the
reporting period.
- Cash flows from operating activities before net change in working capital — excludes the movement
from period-to-period in working capital items including trade and other receivables, other assets, inventories, trade and other
payables. Working capital can be volatile due to numerous factors, such as the timing of payment and receipt. As the
Company uses the indirect method prescribed by IFRS in preparing its statement of cash flows, this additional measure represents
the cash flows generated by the mining business to complement the GAAP measure of cash flows from operating activities, which is
adjusted for the working capital change during the reporting period.
The Company’s management believes that their presentation provides useful information to investors because gross
margin excluding depletion, depreciation and amortization excludes the non-cash operating cost item (i.e. depreciation, depletion
and amortization), cash flows from operating activities before net change in working capital excludes the movement in working
capital items, mine operating earnings excludes expenses not directly associated with commercial production and operating earnings
excludes finance and tax related expenses and income/recoveries. These, in management’s view, provide useful information of
the Company’s cash flows from operating activities and are considered to be meaningful in evaluating the Company’s past financial
performance or the future prospects.