Lake Shore Gold (LSG-T) Oct 29, '14 today announced financial and operating results for the third quarter and first nine months of 2014. Full details of the results are provided in the Company's Management's Discussion & Analysis, which is available on the Company's website at www.lsgold.com and on SEDAR at www.sedar.com.
Third Quarter 2014 ("Q3/14")
58% increase in gold production from third quarter 2013 ("Q3/13") to 45,600 ounces 41% growth in sales from Q3/13 to 45,500 ounces 15% improvement in cash operating cost(1) per ounce sold to US$594 from US$701 in Q3/13 16% improvement in all-in sustaining cost(2) per ounce sold to US$858 from US$1,207 in Q3/13 Total production costs(3) of $29.6 million Capital expenditures of $15.2 million Net earnings of $7.9 million versus net loss of $1.7 million in Q3/13Nine-Month 2014 ("9M/14")
Record production of 142,500 ounces, up
72% from first nine months 2013 ("9M/13") 65% growth in sales from 9M/13 to 142,000 ounces 31% improvement in cash operating cost per ounce to US$588 from US$856 in 9M/14 34% improvement in all-in sustaining cost per ounce sold to US$861 from US$1,307 in 9M/13 Total production costs of $91.6 million Capital expenditures of $39.4 million Net earnings of $25.7 million compared to net loss of $7.8 million in 9M/13Cash and bullion(4)at September 30, 2014 totaled $67.3 million, an increase of $33.3 million or 98% from $34.0 million at December 31, 2013.
Tony Makuch , President and CEO of Lake Shore Gold, commented: "Q3/14 is our fourth consecutive quarter of generating net free cash flow, a period during which our cash and bullion has increased by over $50 million. We have achieved solid production growth year over year, and are one of the lowest cost producers within our industry. Total cash costs per ounce sold were US$594 in Q3/14 and US$588 in 9M/14, while all-in sustaining costs averaged US$858 per ounce in Q3/14 and US$861 per ounce year to date. Given our results to date, we will produce at least 180,000 ounces of gold in 2014 at costs lower than our guidance.
"We are also very encouraged by our recent exploration results as we advance work to both replenish reserves and explore for new resources. Last week, we announced the intersection of high-grade mineralization close to existing resources in both the north and south limbs of the S2 Fold Nose at Timmins Deposit. At 144, we have intersected wide, high-grade mineralization within 770 metres of Thunder Creek, highlighting the significant potential for additional gold deposits to the southwest along the TC-144 Trend. Recent drilling at Bell Creek is supporting our work to add reserves and extend mine life by accessing the next 275 metres below our current reserve. Our goal this year is to replace mined reserves while we continue work to expand our orebodies and discover new deposits."
| Consolidated Financial Information | | | | | | | | | | | | Three months ended | | Nine months ended | | | Sept. 30, | | Sept. 30, | | Sept. 30, | | Sept. 30, | | | 2014 | | 2013 | | 2014 | | 2013 | | | (in $'000, except the per share amounts) | | | | | | | | | | Revenue | $63,514 | | $44,301 | | $200,064 | | $126,833 | | | Production costs | $29,554 | | $23,428 | | $91,625 | | $75,539 | | | Earnings from mine operations | $16,144 | | $7,554 | | $52,825 | | $13,211 | | | Earnings (loss) from continuing operations | $7,889 | | ($1,718 | ) | $25,716 | | ($3,474 | ) | | Net earnings (loss) | $7,889 | | ($1,718 | ) | $25,716 | | ($7,776 | ) | | | | Basic net income (loss) per share from continuing operations | $0.02 | | $0.00 | | $0.06 | | ($0.01 | ) | | Basic net income (loss) per share | $0.02 | | $0.00 | | $0.06 | | ($0.02 | ) | | Cash flows from continuing operating activities | $28,368 | | $11,365 | | $90,122 | | $32,535 | | | | | Key Performance Drivers | | | | | | | | | | | | Three months ended | | Nine months ended | | | Sept. 30, | | Sept. 30, | | Sept. 30, | | Sept. 30, | | | 2014 | | 2013 | | 2014 | | 2013 | | | Tonnes milled | 320,800 | | 202,300 | | 914,400 | | 630,900 | | | Grade (gpt) | 4.6 | | 4.7 | | 5.0 | | 4.3 | | | Average mill recoveries | 96.7 | % | 95.2 | % | 96.6 | % | 95.5 | % | | Ounces produced | 45,600 | | 28,900 | | 142,500 | | 82,900 | | | Ounces poured | 44,900 | | 25,900 | | 144,100 | | 78,200 | | | Ounces sold | 45,500 | | 32,300 | | 142,000 | | 86,000 | | | Average price (US$/oz) | $1,284 | | $1,324 | | $1,289 | | $1,444 | | | Average price ($/oz) | $1,397 | | $1,372 | | $1,410 | | $1,476 | | | Cash operating costs (US$/oz) | $594 | | $701 | | $588 | | $856 | | | Cash operating costs ($/oz) | $647 | | $726 | | $643 | | $875 | | | All - in sustaining costs (US$/oz) | $858 | | $1,027 | | $861 | | $1,307 | | | All - in sustaining costs ($/oz) | $935 | | $1,065 | | $942 | | $1,336 | | | Cash earnings from mine operations ($000s) | $34,059 | | $20,846 | | $108,734 | | $51,572 | | | Adjusted net earnings (loss) ($000s) | $7,935 | | $997 | | $26,679 | | ($5,903 | ) | | Adjusted net earnings (loss) per share ($/share) | $0.02 | | $0.00 | | $0.06 | | ($0.01 | ) |
Outlook
After the first nine months of 2014, the Company is on track to produce at least 180,000 ounces in 2014 and to beat its full-year 2014 guidance for both cash operating costs and all-in sustaining costs. Effectively managing unit costs is a priority as the Company continues to focus on building its financial strength. After repaying $21.1 million of debt in 9M/14, the Company is targeting total debt repayments of $25.0 million for the full year, including monthly payments on the Company's gold loan in the fourth quarter of 2014.
In addition to generating strong operating results, continued exploration will remain an important focus during the final quarter of 2014. Drilling activity during the quarter is increasing as the Company builds on recent exploration results at Timmins Deposit, 144 and Bell Creek. Additional mine development is also planned for the fourth quarter of 2014 in support of reserve replacement, underground exploration and execution of the 2015 mine plan.
The Company's full-year 2014 guidance includes:
Gold production of 160,000 - 180,000 ounces; Cash operating cost per ounce sold of US$675 to US$775; All-in sustaining cost per ounce sold between US$950 and US$1,050; Total production costs of $128.0 million; and, Total principal debt repayments of $25.0 million.The Company's Outlook section contains forward-looking information within the meaning of certain securities laws. The Outlook section, also included in the Company's MD&A, represents the Company's guidance and forms the basis for most of the forward-looking information disclosed elsewhere in these documents and in other areas such as other press releases, newsletters, fact sheets and the Company's website. Readers are directed to the Forward-Looking Statements advisory at the end of this press release for cautionary language relating to forward-looking information.
Conference Call & Webcast
Lake Shore Gold will also host a conference call and webcast on Thursday, October 30, 2014 at 2 pm EST to discuss the Company's third quarter and nine-month 2014 financial and operating results (see call-in numbers that follow). The call will also be webcast and available on the Company's website.
Conference & Re-dial ID: 21210366
Participant call-in: 647-788-4919 or 877-291-4570 (North American toll free number)
Replay number: 416-621-4642 or 800-585-8367 (North American toll free number)
Available until: 11:59 pm (November 6, 2014)
Qualified Person
Scientific and technical information contained in this press release related to mine engineering and production has been reviewed and approved by Natasha Vaz , P.Eng., Vice-President, Technical Services, who is an employee of Lake Shore Gold Corp., and a "qualified person" as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").
Scientific and technical information related to resources, exploration drilling and all matters involving mine production geology contained in this press release, or source material for this press release, was reviewed and approved by Eric Kallio , P.Geo., Senior Vice-President, Exploration. Mr. Kallio is an employee of Lake Shore Gold Corp., and is a "qualified person" as defined by NI 43-101.
About Lake Shore Gold
Lake Shore Gold is a Canadian-based gold producer that is generating net free cash flow from its wholly owned operations in the Timmins Gold Camp. The Company produces gold from two mines, Timmins West and Bell Creek, with material being delivered for processing to the Bell Creek Mill. In addition to current operations, the Company also has a number of highly prospective projects and exploration targets, all located in and around the Timmins Camp. The Company's common shares trade on the TSX and NYSE MKT under the symbol LSG.
Footnotes
Cash operating costs and cash operating cost per ounce are Non-GAAP measures. In the gold mining industry, cash operating costs and cash operating costs per ounce are common performance measures but do not have any standardized meaning. Cash operating costs are derived from amounts included in the Consolidated Statements of Comprehensive Income (Loss) and include mine site operating costs such as mining, processing and administration as well as royalty expenses, but exclude depreciation, depletion and share-based payment expenses and reclamation costs. Cash operating costs per ounce are based on ounces sold and are calculated by dividing cash operating costs by commercial gold ounces sold; US$ cash operating costs per ounce sold are derived from the cash operating costs per ounce sold translated using the average Bank of Canada C$/US$ exchange rate. The Company discloses cash operating costs and cash operating costs per ounce as it believes the measures provide valuable assistance to investors and analysts in evaluating the Company's operational performance and ability to generate cash flow. The most directly comparable measure prepared in accordance with GAAP is total production costs. A reconciliation of cash operating costs and cash operating cost per ounce to total production costs for the three and nine months ended September 30, 2014 and 2013 is set out on page 19 of the Company's MD&A filed on SEDAR at www.sedar.com and at www.lsgold.com. Starting in the second quarter 2013, the Company has adopted a total all-in sustaining cost performance measure, which is a non-GAAP measure. The measure is intended to assist readers in evaluating the total costs of producing gold from current operations. While there is no standardized meaning across the industry for this measure, the Company's definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance note dated June 27, 2013. The Company defines all-in sustaining cost as the sum of production costs, sustaining capital (capital required to maintain current operations at existing levels), corporate general and administrative expenses, in-mine exploration expenses and reclamation cost accretion related to current operations. All-in sustaining cost excludes growth capital, reclamation cost accretion not related to current operations, interest and other financing costs and taxes. The most directly comparable measure prepared in accordance with GAAP is total production costs. A reconciliation of all-in sustaining cost to amounts included in the Consolidated Statements of Comprehensive Loss (Income) for the three and nine months ended September 30, 2014 is set out on page 20 of the Company's MD&A filed on SEDAR at www.sedar.com and at www.lsgold.com. Total production cost is the most directly comparable GAAP measure for both cash operating costs and all-in sustaining costs. Included in total production cost for the periods covered in this press release are non-cash share based payment expense including: $0.1 million for both the third quarter of 2014 and 2013, as well as $0.3 million for both the first nine months of 2014 and 2013. The calculation of cash operating cost per ounce sold and all-in sustaining cost per ounce sold exclude this non-cash payment expense. Bullion relates to gold poured in doré which has not yet been included in revenues and for which cash has not yet been received. The $67.3 million of cash and bullion at September 30, 2014 included $62.2 million of cash and $5.1 million of bullion. Cash earnings from mine operations is a Non-GAAP measure and does not have any standardized meaning. The Company discloses cash earnings from mine operations as it believes this measure provides valuable assistance to investors and analysts in evaluating the Company's ability to finance its ongoing business and capital activities. The most directly comparable measure prepared in accordance with GAAP is earnings from mine operations. Cash earnings from mine operations represent the earnings from mine operations prior to deducting non-cash expenses, and is calculated by adding depletion, depreciation and share based payments in production costs to earnings from mine operations". A reconciliation of cash earnings from mine operations to earnings from mine operations for the three and nine months ended September 30, 2014 and 2013 is set out on page 20 of the Company's MD&A filed on SEDAR at www.sedar.com and www.lsgold.com. FORWARD-LOOKING STATEMENTS
FOR FURTHER INFORMATION PLEASE CONTACT:
Tony Makuch
President & CEO
(416) 703-6298
Mark Utting
Vice-President, Investor Relations
Lake Shore Gold Corp.
(416) 703-6298
Website: www.lsgold.com |
