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To: LoneClone who wrote (130577)11/7/2018 12:24:09 PM
From: LoneClone  Read Replies (1) | Respond to of 194043
 
Premier Gold Mines Reports 2018 Third Quarter Results


newswire.ca

Premier Gold Mines Limited Nov 06, 2018, 22:54 ET

Effective January 1, 2018, the Company has changed its presentation currency to U.S. dollars. This change is applied retroactively to restate comparative financial statements. Unless otherwise stated, all amounts discussed herein are denominated in U.S. dollars (2)

THUNDER BAY, ON, Nov. 6, 2018 /CNW/ - PREMIER GOLD MINES LIMITED (TSX: PG) ("Premier", "the Company") is pleased to announce operating results for the three months ended September 30, 2018. The Company previously released its production results for the third quarter in a news release dated October 16, 2018.

Premier is a gold-producer and respected exploration and development company with high-quality precious metal projects in proven, accessible and safe mining jurisdictions in Canada, the United States, and Mexico. Premier's team is focused on creating a low-cost, mid-tier gold-producer from its two producing gold mines and two advanced-stage, multi-million ounce, development projects.

2018 Third Quarter Highlights

  • Consolidated production of 20,100 ounces of gold and 89,512 ounces of silver
  • Cash costs1 of $858 per ounce of gold sold
  • AISC1 of $1,008 per ounce of gold sold
  • Revenue of $27.3 million
  • Mine operating income of $2.0 million
  • Net loss of $1.8 million
  • Cash balance of $56.4 million
  • Construction underway of two new mining centers at South Arturo
  • High-grade gold discovery at the McCoy-Cove joint venture property



  • 2018 Financial Highlights – Three months ended September 30, 2018

    A total of 20,100 ounces of gold and 89,512 ounces of silver was produced during Q3 2018 compared to 26,677 ounces of gold and 85,431 ounces of silver during Q3 2017. Co-product cash costs(1) during the period were $858 and AISC(1) were $1,008 per ounce of gold sold.

    The Company reported $27.3 million in revenue during the third quarter compared to $50.0 million during Q3 2017. The reduction in revenue and operating income, when compared to Q3 2017, is a result of decreased production from South Arturo where mining of the Phase 2 pit was completed in 2017 and adjustments to stope designs in a new mining zone at Mercedes. This redesign at Mercedes resulted in a development-intensive first half of the year and increased unit operating costs so far in 2018. With adjustments complete, production at Mercedes will be favorably weighted to the second half of 2018.

    In keeping with its longer-term objective of increased annual production over the next several years, the Company invested $5.2 million in exploration and pre-development initiatives. This expense when factored with the reduction in mine operating income during the period contributed to the net loss of $1.8 million. Capital expenditures during the quarter totaled $8.5 million, which includes the construction of two new mining projects that have been initiated at South Arturo.

    The Company closed the quarter with cash and cash equivalents of $56.4 million and inventory of 2,555 ounces of gold and 19,988 ounces of silver.

    Consolidated quarter and year to date operating results are provided in Table 1 below.

    Table 1: Selected Consolidated Operational and Financial Information







    Three months ended
    September 30


    Nine months ended
    September 30


    (in millions of U.S. dollars, unless otherwise stated) (iv)


    2018

    2017

    2018

    2017

    Ore milled

    tonnes

    180,942

    235,881

    672,613

    847,073







    Gold produced

    ounces

    20,100

    26,677

    66,657

    115,273

    Silver produced

    ounces

    89,512

    85,431

    201,084

    280,819

    Gold sold

    ounces

    21,466

    37,920

    71,383

    132,726

    Silver sold

    ounces

    85,376

    90,545

    209,684

    261,735

    Realized Price (2017 as restated) (iii)






    Average realized gold price (i,ii)

    $/ounce

    1,209

    1,282

    1,268

    1,252

    Average realized silver price (i,ii)

    $/ounce

    15

    17

    16

    17

    Non-IFRS Performance Measures






    Co-product cash costs per ounce of gold sold (i,ii)

    $/ounce

    858

    646

    826

    496

    Co-product all-in sustaining costs per ounce of gold sold (i,ii)

    $/ounce

    1,008

    782

    956

    595

    Co-product cash costs per ounce of silver sold (i,ii)

    $/ounce

    10

    10

    11

    9

    Co-product all-in sustaining costs per ounce of silver sold (i,ii)

    $/ounce

    12

    13

    13

    11

    By-product cash costs per ounce of gold sold (i,ii)

    $/ounce

    840

    632

    810

    481

    By-product all-in sustaining costs per ounce of gold sold (i,ii)

    $/ounce

    997

    776

    946

    584

    Financial Measures (2017 as restated) (iii)






    Gold revenue

    m $

    25.8

    48.5

    90.2

    165.7

    Silver revenue

    m $

    1.5

    1.5

    3.8

    4.4

    Total revenue

    m $

    27.3

    50.0

    94.0

    170.1

    Mine operating income

    m $

    2.0

    13.8

    10.5

    56.8

    Net income / (loss)

    m $

    (1.8)

    2.3

    (11.5)

    19.8

    Earnings / (loss) per share

    /share

    (0.01)

    0.01

    (0.06)

    0.10

    EBITDA (i,ii)

    m $

    4.9

    16.1

    14.7

    74.7

    Cash & cash equivalents balance

    m $

    56.4

    137.6

    56.4

    137.6

    Cash flow from operations

    m $

    (2.8)

    22.7

    (3.2)

    64.1

    Free cash flow (i,ii)

    m $

    (11.3)

    15.3

    (23.0)

    47.8

    Exploration, evaluation & pre-development expense

    m $

    5.2

    5.6

    17.8

    20.5

    Total capital expenditures (iii)

    m $

    8.5

    7.4

    19.9

    16.3

    Capital expenditures - sustaining (i,ii)

    m $

    1.9

    4.0

    5.5

    8.2

    Capital expenditures - expansionary (i,ii)

    m $

    6.6

    3.4

    14.4

    8.1



    (i)

    A cautionary note regarding Non-IFRS financial metrics is included in the "Non-IFRS Measures" section of the Q3 2018 Management's Discussion and Analysis.

    (ii)

    Cash costs, all-in sustaining costs, free cash flow, EBITDA, sustaining and expansionary capital expenditures as well as average realized gold\silver price per ounce are Non-IFRS metrics and discussed in the section "Non-IFRS Measures" of the Q3 2018 Management's Discussion and Analysis.

    (iii)

    2017 restated for the presentation currency change as discussed in the "Critical Accounting Judgements and Estimates, Policies and Changes" section of this Management's Discussion and Analysis.

    (iv)

    May not add due to rounding.




    South Arturo

    The South Arturo Mine in Nevada, a joint venture operated by Barrick Gold Corporation ("Barrick"), continued to over perform during the quarter. Processing of stockpiled ore from the Phase 2 open pit during the third quarter contributed to gold production in excess of initial 2018 guidance with a total of 20,403 ounces delivered to Premier year-to-date.

    Construction at two new mining centers at South Arturo has commenced with stripping of the Phase 1 open pit and development of the El Nino underground mine.

    Quarter and year to date operating results are provided in Table 2 below.

    Table 2: South Arturo Selected Financial and Operating Results







    Three months ended
    September 30


    Nine months ended
    September 30


    (in millions of U.S. dollars, unless otherwise stated) (v)


    2018

    2017

    2018

    2017

    Ore & Metals






    Ore milled

    tonnes

    21,334

    79,479

    190,249

    345,998

    Gold produced

    ounces

    2,635

    8,113

    20,403

    52,652

    Gold sold

    ounces

    1,932

    13,026

    19,996

    64,559

    Silver produced

    ounces

    1,122

    2,575

    10,958

    19,918

    Average gold grade

    grams/t

    4.48

    3.79

    3.96

    5.42

    Average gold recovery rate

    %

    85.7

    83.8

    84.2

    87.4

    Realized Price (2017 as restated) (iv)






    Average realized gold price (i,ii)

    $/ounce

    1,200

    1,264

    1,306

    1,249

    Non-IFRS Performance Measures






    Co-product cash costs per ounce of gold sold (i,ii)

    $/ounce

    396

    363

    421

    295

    Co-product all-in sustaining costs per ounce of gold sold (i,ii)

    $/ounce

    498

    371

    465

    336

    By-product cash costs per ounce of gold sold (i,ii,iii)

    $/ounce

    396

    363

    421

    295

    By-product all-in sustaining costs per ounce of gold sold (i,ii,iii)

    $/ounce

    498

    371

    465

    336

    Financial Measures (2017 as restated) (iv)






    Gold revenue

    m $

    2.3

    16.5

    26.1

    80.6

    Mine operating income

    m $

    1.0

    6.7

    11.7

    30.2

    Exploration, evaluation & pre-development expense

    m $

    0.4

    0.4

    1.1

    0.5

    Total capital expenditures (iv)

    m $

    2.8

    0.5

    4.8

    0.6

    Capital expenditures - sustaining (i,ii)

    m $

    -

    -

    -

    0.1

    Capital expenditures - expansionary (i,ii)

    m $

    2.8

    0.5

    4.8

    0.5






    (i)

    A cautionary note regarding Non-IFRS metrics is included in the "Non IFRS Measures" section of the Q3 2018 Management's Discussion and Analysis.

    (ii)

    Cash costs, all-in sustaining costs, sustaining and expansionary capital expenditures as well as average realized gold\silver price per ounce are Non-IFRS metrics and discussed in the section "Non-IFRS Measures" of the Q3 2018 Management's Discussion and Analysis.

    (iii)

    Given the small nature and timing of South Arturo silver output, no silver by-product credits are reported.

    (iv)

    2017 restated for the presentation currency change as discussed in the "Critical Accounting Judgements and Estimates, Policies and Changes" section of this Management's Discussion and Analysis.

    (v)

    May not add due to rounding.




    South Arturo produced a total of 2,635 ounces of gold during the third quarter compared to 8,113 ounces during the corresponding period last year. This was expected, as the source of Phase 2 production transitioned to lower grade stockpiled ore. Processing of lower grade Phase 2 ore is expected to continue on a limited basis for the remainder of the year. El Nino underground development and Phase 1 open pit stripping continue to ramp up in anticipation of production in 2019. Cash costs(1) for Q3 2018 were $396 and AISC(1) were $498 per ounce of gold sold.

    Capital expenditures of $2.8 million were mainly related to stripping for the Phase 1 open pit, along with exploration at El Nino. Both portals are now collared at El Nino and stripping of the Phase 1 pit has proceeded to several benches utilizing a fully-autonomous trucking fleet. Stockpiling of potential heap leach material has started.

    Drilling in 2018 will continue to focus on near-pit delineation, underground expansion, and testing of additional prospective target areas.

    Mercedes

    The Mercedes Mine is 150 kilometers northeast of the city of Hermosillo in the state of Sonora, Mexico. Operations are exploiting low-sulfidation quartz veins and quartz veinlet stockwork for gold and silver utilizing underground modified overhand cut-and-fill and longhole mining methods at an ore extraction rate targeting 2,000 tonnes per day.

    Quarter and year to date operating results are provided in Table 3 below.

    Table 3: Mercedes Selected Financial and Operating Results







    Three months ended
    September 30


    Nine months ended
    September 30


    (in millions of U.S. dollars, unless otherwise stated) (iv)


    2018

    2017

    2018

    2017

    Ore milled

    tonnes

    159,608

    156,402

    482,364

    501,075

    Gold produced

    ounces

    17,465

    18,564

    46,254

    62,621

    Silver produced

    ounces

    88,390

    82,856

    190,126

    260,902

    Gold sold

    ounces

    19,534

    24,894

    51,387

    68,167

    Silver sold

    ounces

    85,376

    90,545

    209,684

    261,735

    Average gold grade

    grams/t

    3.52

    3.88

    3.11

    4.09

    Average silver grade

    grams/t

    39.40

    36.50

    31.75

    38.97

    Average gold recovery rate

    %

    96.6

    95.4

    95.9

    95.3

    Average silver recovery rate

    %

    43.7

    45.2

    38.6

    41.6

    Realized Price (2017 as restated) (iii)






    Average realized gold price (i,ii)

    $/ounce

    1,210

    1,292

    1,253

    1,254

    Average realized silver price (i,ii)

    $/ounce

    15

    17

    16

    17

    Non-IFRS Performance Measures






    Co-product cash costs per ounce of gold sold (i,ii)

    $/ounce

    904

    793

    983

    687

    Co-product all-in sustaining costs per ounce of gold sold (i,ii)

    $/ounce

    1,059

    998

    1,147

    839

    Co-product cash costs per ounce of silver sold (i,ii)

    $/ounce

    10

    10

    11

    9

    Co-product all-in sustaining costs per ounce of silver sold (i,ii)

    $/ounce

    12

    13

    13

    11

    By-product cash costs per ounce of gold sold (i,ii)

    $/ounce

    884

    772

    962

    658

    By-product all-in sustaining costs per ounce of gold sold (i,ii)

    $/ounce

    1,046

    988

    1,134

    818

    Financial Measures (2017 as restated) (iii)






    Gold revenue

    m $

    23.5

    32.0

    64.1

    85.0

    Silver revenue

    m $

    1.5

    1.5

    3.8

    4.4

    Total revenue

    m $

    25.0

    33.5

    67.9

    89.4

    Mine operating income / (loss)

    m $

    1.0

    7.0

    (1.3)

    26.6

    Exploration, evaluation & pre-development expense

    m $

    0.6

    0.3

    1.3

    0.8

    Total capital expenditures (iii)

    m $

    5.5

    6.5

    14.2

    15.2

    Capital expenditures - sustaining (i,ii)

    m $

    1.9

    4.0

    5.4

    8.1

    Capital expenditures - expansionary (i,ii)

    m $

    3.6

    2.5

    8.8

    7.1






    (i)

    A cautionary note regarding Non-IFRS financial metrics is included in the "Non-IFRS Measures" section of the Q3 2018 Management's Discussion and Analysis.

    (ii)

    Cash costs, all-in sustaining costs, sustaining and expansionary capital expenditures as well as average realized gold\silver price per ounce are Non-IFRS metrics and discussed in the section "Non-IFRS Measures" of the Q3 2018 Management's Discussion and Analysis.

    (iii)

    2017 restated for the presentation currency change as discussed in the "Critical Accounting Judgements and Estimates, Policies and Changes" section of this Management's Discussion and Analysis.

    (iv)

    May not add due to rounding.




    Mercedes production for Q3 2018 was 17,465 ounces of gold and 88,390 ounces of silver compared to 18,564 and 82,856 respectively in Q3 2017. Co-product cash costs(1) during the period were $904 and AISC(1) were $1,059 per ounce of gold sold. Year to date production levels and unit operating costs at Mercedes have been impacted primarily by stope design adjustments in the new Diluvio zone. While the Company began to see the positive impact of these adjustments during the third quarter, these adjustments did result in additional delineation drilling and lower processed grades from the mining of more development ore and less stope ore during the first three quarters of 2018. Third quarter gold production, however, increased by 27% over that of the second quarter. This is in line with the Company's revised forecast where planned production levels are weighted toward the second half of 2018. Production in October totaled 7,918 ounces of gold, representing the best month so far in 2018.

    Initiatives to improve grade include increased drilling and blasting quality control in ore headings, and optimization of ground support systems. These initiatives will capitalize on production opportunities in narrow vein zones and improve advance rates in more difficult rock conditions.

    Exploration drilling continued during the third quarter with 12,993 meters completed for a total drilling of 38,748 meters for the year. Drilling continued to target the Diluvio, Marianas and Barrancas veins with a focus on replacing reserves, supporting mine production, testing extensions of the main mine trends and new geological targets.

    Capital expenditures of $5.5 million were incurred for mine development in support of expanded mining operations and increased production including the construction of a new tailings facility at the mine.

    Cove and McCoy-Cove

    During the quarter, 5,167 meters were drilled at the joint-venture, concentrating on the top two priority target areas of Lake Side and Windy Point with a focus on vectoring towards the most favorable geologic controls. The drilling was split between the Windy point and Lake side east extension areas, both with encouraging results.

    During the quarter, Premier announced the discovery of high-grade gold mineralization in hole HE-18-02, a piezometer hole drilled to support Premier's hydrology modeling at Cove. This hole is the first drilled in this target area and intersected Carlin-style mineralization approximately 320 meters south of the main deposit on the joint venture property, returning an impressive 12.69 g/t Au across 4.6 meters (15 feet). More recently, a second piezometer hole drilled approximately 300 meters to the southwest of Hole HE-18-02, on Premier's 100% held property, intersected similar mineralization in the same host rock unit returning 8.04 g/t Au across 3.0 meters (10 feet). Follow-up drilling on both the Joint venture and Premier 100% lands will be completed during the current quarter.

    A Preliminary Economic Assessment ("PEA") was completed in the first half of 2018 on the Cove project, including designs for underground exploration, development and drilling, preliminary engineering, dewatering, environmental baseline studies, and a life of mine plan. Underground advanced-exploration development is now expected to begin in the second half of 2019. Dewatering simulations, including a pump test of the proposed underground advanced exploration areas around the Helen Zone, were conducted during 2017. During the third quarter, spending focused on pre-development initiatives including engineering design changes for the portal and power line locations and the waste rock stockpile. In addition, drilling and installation of several piezometers began and pump test wells were designed to further characterize the groundwater model. Well drilling and updating of the groundwater model will begin in the fourth quarter of 2018 and are expected to be completed in the first quarter of 2019.

    Greenstone Gold Mines

    The Greenstone Gold Mines Partnership (the "Partnership") continued to progress toward near term environmental, community and aboriginal engagement milestones during the quarter. The Partnership previously submitted its Environmental Impact Statement and Environmental Assessment ("EIS/EA") to the Canadian Environmental Assessment Agency ("CEAA") and the Ministry of the Environment and Climate Change ("MOECC") in July 2017. Each of these submissions has progressed through its regulated comment period and is now in the final stage of evaluation.

    Progress with community and aboriginal engagement activities is now evident as the first of three anticipated Long Term Relationship Agreements was signed with Long Lake #58 First Nation in June 2018 that outlines provisions for environmental monitoring, employment, training, business and contracting opportunities, along with a framework for regulatory permitting that extends not only to the Hardrock open pit, but to all properties within the Partnership's regional portfolio that lie within the traditional territory of Long Lake #58 First Nation.

    The Partnership continues to pursue optimization opportunities related to the previously released Feasibility Study (see November 16, 2016 press release), including a Reverse Circulation Drill Program designed to refine the resource, better assess dilution and further de-risk the project. A total of $4.9 million was spent by the Partnership during the third quarter ($2.0 million in Q3 2017). All project expenditures will continue to be funded 100% by our joint venture partner Centerra Gold Inc. until the remaining development commitment of $75.5 million (C$97.3 million) has been drawn down.

    Hasaga

    A total of 1,268 meters of drilling was completed at Hasaga during the third quarter for a total of 19,529 meters year to date. The drilling sought to infill and expand mineralization within the C-Zone and to test and define the D-Zone. A follow-up drilling program is being considered in 2019 based on excellent assay results on the C and D-Zones and also as result of the better understanding of the structural controls. The 1.6 km gap west of Hasaga zones to the Buffalo zone provides for significant potential for additional new discoveries.

    CEO Commentary

    "Improved operating performance at Mercedes during the third quarter combined with continued outperformance at South Arturo puts us on track to meet 2018 annual consolidated gold production guidance" stated Ewan Downie, President and CEO of Premier. "Our strong cash position will continue to fund near-term development, including the construction of two new mining centers at South Arturo and the Cove Gold Project in Nevada".

    2018 Guidance

    Production estimates for 2018 were derived from life of mine operating plans prepared on the basis of mineral reserves associated with each property. The Company maintains its full-year consolidated gold production guidance of 90,000 - 100,000 ounces with an increase in production from South Arturo and a decrease from Mercedes. Additionally, cash costs and all-in sustaining costs are expected to be lower than previously guided at South Arturo and higher at Mercedes. The following table represents the assumptions and guidance for 2018.

    Table 4: 2018 Production and Cost Guidance





    Gold Guidance 2018

    Mine

    Production
    ounces

    Cash Cost

    per ounce (1)

    All-in Sustaining Cost

    per ounce (1)

    South Arturo

    20,000 – 25,000

    $425 - $475

    $475 - $525

    Mercedes

    70,000 – 75,000

    $875 - $925

    $1000 - $1050

    Consolidated

    90,000 - 100,000

    $775 - $825

    $900 - $950





    Updated Mercedes mine silver forecast of 225,000 - 250,000 oz for 2018.




    Subsequent Event

    Premier has been advised that Republic Metals Corporation ("RMC") filed for chapter 11 bankruptcy protection in the Southern District of New York's Federal Bankruptcy Court on November 2, 2018. RMC processes gold and silver doré ("material") produced from Premier's Mercedes Mine, located in Sonora, State of Mexico under a toll arrangement and is currently processing approximately 7,000 ounces of Premier's material. Premier is working with its counsel to assert its legal rights for the return of its material and is assessing alternative processing arrangements with respect to the Mercedes mine.

    All abbreviations used in this press release are available by following this link ( click here).

    Third Quarter Results - Conference Call

    A conference call with senior management to discuss the financial results for the three months ended September 30, 2018 will be held at 10:00 am EDT, on November 7, 2018.

    Details for the conference call and webcast can be found below and will be accessible on the Company's website at www.premiergoldmines.com.

    Toll Free (North America): 1-888-390-0605
    International: 1-416-764-8609
    Conference ID: 50238865

    Webcast Link

    event.on24.com

    Conference Call Replay

    The conference call replay will be available from 1:00 pm ET on November 7, 2018 until 11:59 pm ET on November 14, 2018.

    Toll Free Replay Call (North America): 1-888-390-0541
    International Replay Call: 1-416-764-8677
    Passcode: 238865#
  • A cautionary note regarding Non-IFRS financial metrics is included in the "Non-IFRS Measures" section of the Q3 2018 Management Discussion and Analysis.
  • Accounting policy change is discussed in Note 2(c) to the September 30, 2018 unaudited condensed consolidated interim financial statements of the Company.
  • Non-IFRS Measures

    The Company has included certain terms and performance measures commonly used in the mining industry that are not defined under International Financial Reporting Standards ("IFRS") within this document. These include: cash cost per ounce sold, all in sustaining cost ("AISC") per ounce sold, earnings before interest, tax, depreciation and amortization ("EBITDA"), free cash flow, capital expenditures (expansionary), capital expenditures (sustaining) and average realized price per ounce. Non-IFRS 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 presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and should be read in conjunction with the Company's consolidated financial statements. Readers should refer to the Company's Management Discussion and Analysis under the heading "Non-IFRS Measures" for a more detailed discussion of how such measures are calculated.

    This press release contains certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the Company's achievement of the full-year projections for ounce production, production costs, ASIC costs per ounce, cash cost per ounce and realized gold/silver price per ounce, the Company's ability to meet annual operations estimates, and statements about strategic plans, including future operations, future work programs, capital expenditures, discovery and production of minerals, price of gold and currency exchange rates and corporate and technical objectives. Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information, including the risks inherent to the mining industry, adverse economic and market developments and the risks identified in Premier's annual information form under the heading "Risk Factors". There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. Premier disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

    SOURCE Premier Gold Mines Limited

    For further information: Ewan Downie, President & CEO, Phone: 807-346-1390, e-mail: Info@premiergoldmines.com, Web Site: www.premiergoldmines.com

    Related Links www.premiergoldmines.com


    Organization Profile



    Premier Gold Mines Limited