For the second quarter, the Company reported the following
results, inclusive of discontinued operations unless
otherwise noted:
• Revenues of $113.7 million.
• Earnings from mining operations of $21.2 million.
• Adjusted net earnings(1) of $21.5 million, or $0.08 per share.
• Cash position of $56.0 million, prior to cash proceeds of $100 million, equity shares of $100 million, and future contingency payments relating to the divestiture of the El Cubo mine and Guadalupe y Calvo exploration property on July 13, 2012.
• Operating cash flow (after changes in working capital) of $14.2 million, or $0.05 per share.
• Consolidated production of 55,828 gold ounces and 1.1 million silver ounces, or 75,667 gold equivalent ounces using the actual gold equivalency ratio of 56:1 realized in the quarter.
• Consolidated cash costs of $698 per gold
equivalent ounce (realized)(1), prior to a net
realizable value
adjustment on the Ocampo ore-in-process heap leach inventory.
Inclusive of the net realizable adjustment, cash costs were
$822 per gold equivalent ounce (realized).
• Cash costs from continuing operations of $488
per gold equivalent ounce (realized)(1), prior
to a net realizable value adjustment on the Ocampo
ore-in-process heap leach inventory. Inclusive of the net
realizable adjustment, cash costs were $661 per gold
equivalent ounce (realized).
o As pre-stripping activities are predominately completed at Ocampo's Picacho open pit, mining activities have been accessing the lower grade halo of the ore body with grades expected to slowly increase over the next four quarters as mining activities move closer to the higher grade core of the pit.
o The costs of mining activities charged to the Ocampo low grade ores added to the leach pad (open pit mining and processing costs, including applicable overhead, depreciation and amortization), combined with the 16% decrease in spot silver prices, were not expected to be fully recoverable at the end of the second quarter.
o This resulted in a non-cash flow inventory valuation adjustment of $14.4 million to revalue this inventory at its estimated net realizable value. Should metal prices appreciate in the immediate future, a portion of this non-cash adjustment could be reversed. Conversely, should metal prices decline further or should there be a delay in accessing higher grade ores in the open pit, there is a potential for further net realizable value adjustments.
• Average realized margin from continuing operations of $942 per ounce, or 59%.
(1) See the table at the end of this press release for a reconciliation of adjusted net earnings and refer to the discussion of Non-GAAP measures below.
"During the quarter, we have continued to deliver on our
strategic plan, advancing the Young-Davidson mine towards
commercial production, aggressively addressing the Ocampo
underground ore inventory and streamlining our asset base
through the divestiture of the high-cost, non-core
operations." said René Marion, Chief Executive Officer. He
continued, "Our exclusive focus is now on our three North
American-based low-cost, producing assets and on achieving
commercial production at Young-Davidson at the end of the
month."
Quarter Ended June 30, 2012(1) | Quarter Ended June 30, 2011(1) | Six Months Ended June 30, 2012(1) | Six Months Ended June 30, 2011(1) | |
Revenue from mining operations | $113,651 | $112,904 | $290,988 | $183,217 |
Average realized gold price per ounce | $1,616 | $1,509 | $1,667 | $1,463 |
Average realized silver price per ounce | $29.07 | $38.36 | $31.22 | $35.56 |
Earnings from operations | $21,235 | $43,809 | $62,004 | $67,361 |
Net earnings from continuing operations | $14,947 | $28,859 | $20,339 | $48,433 |
Net earnings / (loss) from discontinued operations | $7,137 | ($4,336) | $3,098 | ($12,124) |
Total net earnings | $22,084 | $24,523 | $23,437 | $36,309 |
Net earnings per share from continuing operations, basic | $0.05 | $0.17 | $0.07 | $0.32 |
Net earnings / (loss) per share from discontinued operations, basic | $0.03 | ($0.02) | $0.01 | ($0.08) |
Total net earnings per share, basic | $0.08 | $0.15 | $0.08 | $0.24 |
Adjusted net earnings(2) | $21,510 | $36,484 | $78,503 | $56,649 |
Adjusted net earnings per share | $0.08 | $0.22 | $0.28 | $0.37 |
Total operating cash flow | $14,188 | $54,413 | $79,361 | $88,034 |
Total net free cash flow | ($139,186) | $20,096 | ($239,623) | $26,029 |
(1) The information in this table includes the results of both continuing and discontinued operations, except where indicated. (2) See the table at the end of this press release for a reconciliation of adjusted net earnings and refer to the discussion of Non-GAAP measures below. |
Ocampo | Young- (5) Davidson | ||||
Three months ended June 30, 2012 | Ocampo | El Chanate | Young- (5) Davidson | Q2 2012 | Q2 2011 |
Ocampo | Young- (5) Davidson | ||||
Gold eq. oz. produced (realized)(1) | 37,579 | 17,882 | 11,950 | 67,411 | 74,439 |
Gold eq. oz. sold (realized)(1) | 33,548 | 16,504 | 5,209 | 55,261 | 73,998 |
Cash costs per gold eq. oz. (realized)(1)(3)(4) | $515 | $433 | - | $488 | $372 |
Net realizable value adjustment per gold eq. oz.(1)(3) | $259 | - | - | $173 | - |
Total cash costs per gold eq. oz. (realized)(1)(3) | $774 | $433 | - | $661 | $372 |
Margins per gold eq. oz. (realized) | $824 | $1,177 | - | $942 | $1,137 |
Gold eq. oz. produced (55:1)(2) | 37,531 | 17,882 | 11,950 | 67,363 | 65,722 |
Gold eq. oz. sold (55:1)(2) | 33,543 | 16,504 | 5,209 | 55,256 | 65,419 |
Cash costs per gold eq. oz. (55:1)(2)(3)(4) | $515 | $433 | - | $488 | $420 |
Net realizable value adjustment per gold eq. oz.(1)(3) | $259 | - | - | $173 | - |
Total cash costs per gold eq. oz. (55:1)(2)(3) | $774 | $433 | - | $661 | $420 |
Margins per gold eq. oz. (55:1) | $824 | $1,177 | - | $942 | $1,089 |
(1) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the ratio of the realized sales prices of the commodities. (2) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the long-term gold equivalency ratio of 55:1. (3) Cash costs for the Ocampo 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. Refer to the discussion of Non-GAAP measures below. (4) Prior to the net realizable value adjustment recorded on ore-in-process heap leach inventory at the Ocampo mine during the quarter. (5) The Young-Davidson mine has not yet declared commercial production, and therefore, has not yet reported cash costs. |
Ocampo | Young- Davidson(5) | ||||
Six months ended June 30, 2012 | Ocampo | El Chanate | Young- Davidson(5) | Q2 2012 | Q2 2011 |
Ocampo | Young- Davidson(5) | ||||
Gold eq. oz. produced (realized)(1) | 76,956 | 36,975 | 11,950 | 125,881 | 124,293 |
Gold eq. oz. sold (realized)(1) | 68,881 | 35,165 | 5,209 | 109,255 | 124,679 |
Cash costs per gold eq. oz. (realized)(1)(3)(4) | $526 | $420 | - | $490 | $376 |
Net realizable value adjustment per gold eq. oz.(1)(3) | $126 | - | - | $84 | - |
Total cash costs per gold eq. oz. (realized)(1)(3) | $652 | $420 | - | $574 | $376 |
Margins per gold eq. oz. (realized) | $996 | $1,250 | - | $1,085 | $1,087 |
Gold eq. oz. produced (55:1)(2) | 75,841 | 36,975 | 11,950 | 124,766 | 110,425 |
Gold eq. oz. sold (55:1)(2) | 67,858 | 35,165 | 5,209 | 108,232 | 110,728 |
Cash costs per gold eq. oz. (55:1)(2)(3)(4) | $534 | $420 | - | $495 | $423 |
Net realizable value adjustment per gold eq. oz.(1)(3) | $128 | - | - | $85 | - |
Total cash costs per gold eq. oz. (55:1)(2)(3) | $662 | $420 | - | $580 | $423 |
Margins per gold eq. oz. (55:1) | $986 | $1,250 | - | $1,079 | $1,040 |
(1) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the ratio of the realized sales prices of the commodities. (2) Gold equivalent ounces include silver ounces produced / sold converted to a gold equivalent, based on the long-term gold equivalency ratio of 55:1. (3) Cash costs for the Ocampo 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. Refer to the discussion of Non-GAAP measures below. (4) Prior to the net realizable value adjustment recorded on ore-in-process heap leach inventory at the Ocampo mine during the second quarter of 2012. (5) The Young-Davidson mine has not yet declared commercial production, and therefore, has not yet reported cash costs. |
• The Young-Davidson mine continues to advance to commercial production with the operation currently operating at, or above, required commissioning threshold levels(1) as indicated in the table below. The Company anticipates declaring commercial production at the end of August 2012.
April 2012 | May 2012 | June 2012 | |
Open Pit (tpd) | 27,137 | 27,151 | 32,311 |
Mill throughput (tpd) | 2,670 | 4,075 | 6,163 |
Mill grade (g/t) | 0.73 | 1.05 | 1.40 |
Recoveries (%) | 60% | 82% | 88% |
Production (gold ounces) | 1,170 | 3,489 | 7,291 |
Mill Availability (%) | 57% | 66% | 95% |
(1) Commercial production can be declared once mill throughput averages a minimum of 5,100 tonnes per day and the open pit averages 29,750 tonnes per day of ore and waste mining, both over a 30-day period as well as commissioning of the flotation and gravity circuits. |
• Mechanical commissioning of the flotation and gravity circuits is complete and process commissioning is ongoing.
• The Company has established a separate 178,000 tonne high-grade stockpile at grades of approximately 1.52 g/t that is in addition to the over one million tonne stockpile.
• Production from the underground mine is expected to begin in the fourth quarter, with expected grade of approximately 3.5 grams per tonne gold. A production drilling contract has been awarded and the contractor is currently mobilized on site.
• Commissioning of the primary crusher as well as the conveyor system and ore bins is complete, which will optimize the introduction of mill feed into the mill circuit and allows site management to test maximum throughput rates and eliminate re-handling costs.
• Raiseboring of the second leg (450 metres) of the Northgate shaft is expected to begin in August 2012 and reach a targeted vertical depth of 890 metres (9440 level), with a final target of 1,500 vertical metres.
• EPCM work has been completed and construction crews have largely demobilized from site.
• On June 5, 2012 the Young-Davidson mine reported 2 million hours without a lost time injury.
Ocampo• Production in the quarter was negatively impacted by the unusually high turnover of skilled labour that significantly reduced underground ore development at the Northeast underground mine. In response, the Company has launched the following initiatives:
• An aggressive recruiting campaign is progressing well with more than 90% of the open positions filled and training programs well advanced.
• Two underground contractors have been engaged to support an accelerated underground development program and will be mobilized in mid-August and early September. The contractors will focus on ore development in the northwest and southwest portions of the main Northeast underground mine.
• During the quarter, the underground averaged 1,623 tonnes per day at 5.38 g/t.
• During the quarter the open pits averaged approximately 102,001 tonnes per day. Planned mining rates are expected to reduce to approximately 80,000 tonnes per day as the 2012 pre-stripping program is largely complete. As a result, six open pit trucks utilized in the pre-stripping programs have been idled.
• The mill facility reported an average of 3,198 tonnes per day, consistent with throughput in previous quarters and with gold and silver recoveries increasing to 97% and 93% respectively.
• Stacking at the heap leach facility increased to 10,155 tonnes per day, a 14% increase over the previous quarter. Grades to the heap leach facility are expected to increase over the next four months as mining activities move closer to the higher grade core of the pit.
El Chanate• Late completion of phase 6 leach pads delayed the commencement of leaching and deferred metal ounces produced in the quarter. These areas have since been placed under irrigation and are currently producing in line with expectations.
• Additional upgrades, including replacing 8" diameter water distribution pipes with 16" diameter pipes, is nearing completion that will allow the Company to increase the area under leach to over 80% by the end of the year.
• Crushing and stacking rates increased to approximately 20,080 tonnes per day with an additional 11,697 tonnes per day of run-of-mine ores, a combined increase of 40% over Q2 2011.
Corporate Highlights• On July 13, 2012 the Company closed the sale of the El Cubo mine and the Guadalupe y Calvo project that included a cash payment of $100 million, $100 million in equity shares of Endeavour Silver.
• On May 4, 2012, the Company completed the divestment of the Stawell and Fosterville mines for a cash payment of CDN$55 million.
• On April 25, 2012, the Company's revolving credit facility was expanded to $250 million.
Adjusted Net EarningsAdjusted Net Earnings Reconciliation | ||||
(in thousands, except per share metrics) | Quarter Ended June 30, 2012 | Quarter Ended June 30, 2011 | Six Months Ended June 30, 2012 | Six Months Ended June 30, 2011 |
Net earnings from continuing operations | $14,947 | $28,859 | $20,339 | $48,433 |
Adjustments: | ||||
Unrealized foreign exchange (gain) / loss | ($6,539) | $574 | $6,537 | $770 |
Net realizable value adjustment on Ocampo ore-in-process heap leach inventory | $14,336 | - | $14,336 | - |
Fair value adjustment on option component of convertible senior notes | ($9,618) | - | $4,184 | - |
Unrealized and realized loss / (gain) on investments | $2,590 | ($3,060) | $2,951 | ($2,570) |
Unrealized (gain) / loss on derivative liabilities | ($896) | $2,017 | ($1,193) | $2,017 |
Loss on the extinguishment of debt | $2,406 | - | $2,406 | - |
Acquisition-related costs | - | $8,673 | - | $9,360 |
Impairment charge | $1,537 | - | $1,537 | - |
Tax effect of adjustments | ($4,987) | $442 | ($4,987) | $442 |
Adjusted net earnings from continuing operations | $13,776 | $37,505 | $46,110 | $58,452 |
Adjusted net earnings from continuing operations per share | $0.05 | $0.22 | $0.16 | $0.38 |
Net earnings from discontinued operations | $7,137 | ($4,336) | $3,098 | ($12,124) |
Adjustments: | ||||
Impairment charge | - | - | $22,857 | - |
Mine standby costs | - | $3,591 | - | $11,146 |
Loss on disposal of Australian operations | $1,736 | - | $1,736 | - |
Unrealized foreign exchange (gain) / loss | ($910) | $729 | $4,931 | $2,295 |
Tax effect of adjustments | ($229) | ($1,005) | ($229) | ($3,120) |
Adjusted net earnings from discontinued operations | $7,734 | ($1,021) | $32,393 | ($1,803) |
Adjusted net earnings from discontinued operations per share | $0.03 | ($0.00) | $0.11 | ($0.01) |
Adjusted net earnings | $21,510 | $36,484 | $78,503 | $56,649 |
Adjusted net earnings per share | $0.08 | $0.22 | $0.28 | $0.37 |
The Company uses the measures adjusted net earnings, cash
costs per ounce, and net free cash flow in this press
release, which do not have a standardized meaning prescribed
by International Financial Reporting Standards ("IFRS" or
"GAAP"). They are, therefore, considered to be non-GAAP
measures and may not be comparable to similar measures
presented by other companies. The non-GAAP measures cash
costs per ounce and net free cash flow are reconciled to the
Company's financial statements on page 26 of the Company's
Management's Discussion and Analysis.
Adjusted net earnings is comprised of net earnings from both
continuing and discontinued operations, adjusted for specific
items. While the adjustments to net earnings in this measure
include items that are recurring, adjusted net earnings is a
useful measure as the unrealized gains / losses on foreign
exchange, fair value adjustments on investments and
derivative liabilities, and other non-recurring items do not
reflect the underlying operating performance of the Company's
core mining business in the current period and are not
necessarily indicative of future operating results.
The interim financial statements and related Management's Discussion and Analysis can be found on the Company's website at www.auricogold.comor under the Company's profile on www.sedar.comand with the Securities and Exchange Commission at www.sec.gov/edgar.shtml("Edgar").
Conference Call Details
A webcast and conference call will be held on Monday, August
13, 2012 starting at 10:00 a.m. Eastern Time. Senior
management will be on the call to discuss the results.
Canada & U.S. Toll Free: 1-888-231-8191
International & Toronto: 1-647-427-7450
The conference call will be broadcast live on the internet
via webcast.
To access the webcast, please follow the link below:
http://www.newswire.ca/en/webcast/detail/976025/1049671
If you are unable to attend the conference call, a replay
will be available until midnight, August 20, 2012 by dialing
the appropriate number below:
Local Toronto Participants: 1-416-849-0833 Passcode:
#82941091
North America Toll Free: 1-855-859-2056 Passcode: #82941091
The webcast will be archived for 90 days by following the
link provided below:
http://www.newswire.ca/en/webcast/detail/976025/1049671
AuRico Gold is a leading Canadian gold producer with a
diversified portfolio of three high quality mines and
projects in North America that have significant production
growth and exploration potential. AuRico's core operations
include the Ocampo mine in Chihuahua State, the El Chanate
mine in Sonora State and the Young- Davidson gold mine in
northern Ontario that is expected to declare commercial
production in August of 2012. AuRico is currently focused on
organic expansion and optimization of the core asset base
that will support production growth to upwards of 530,000
gold equivalent ounces in 2014. AuRico's strong project
pipeline also includes several advanced development
opportunities in Mexico and British Columbia. AuRico's head
office is located in Toronto, Ontario, Canada.
For further information please visit the AuRico Gold website
at http://www.auricogold.comor contact:
René Marion
Chief Executive Officer
AuRico Gold Inc.
1-647-260-8880
Anne Day
Vice President, Investor Relations and Communications
AuRico Gold Inc.
1-647-260-8880
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