TORONTO, Aug 2, 2019 /CNW/ - Anaconda Mining Inc. ("Anaconda" or the "Company") (TSX: ANX) (OTCQX: ANXGF) is pleased to report its financial and operating results for the three and six months ended June 30, 2019 ("Q2 2019"). 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.
Second Quarter 2019 Highlights
- Anaconda sold 3,153 ounces of gold in Q2 2019, generating metal revenue of $5.5 million at an average realized gold price of $1,739 (US$1,300) per ounce sold*. The Company also had over 565 ounces in gold doré and bullion inventory at June 30, 2019, which were subsequently sold in July 2019.
- The Company produced 78,123 tonnes of ore during the second quarter, predominantly from mining at the Stog'er Tight Mine, a 138% increase over Q2 2018. Material moved also included 270,552 tonnes of waste development for a pushback of the Pine Cove Pit, which also contributed 14,960 tonnes of ore in Q2 2019.
- The Pine Cove Mill processed 96,895 tonnes during Q2 2019, a 20% reduction compared to Q2 2018 due to lower mill availability resulting from planned maintenance activities on the main ball mill, unplanned maintenance of the regrind mill, and the decision to accelerate other maintenance programs to minimize future down time. Mill availability was back up over 92% for the month of June.
- The Point Rousse Complex generated EBITDA* of $0.7 million in Q2 2019 and $4.5 million for the first half of 2019, compared with $3.5 million and $7.0 million for the three and six months ended June 30, 2018, respectively.
- Operating cash costs per ounce sold* at the Point Rousse Project in Q2 2019 was $1,421 (US$1,062), and $1,144 (US$858) for the first six months of 2019, reflecting reduced gold production due to low mill availability during the second quarter of 2019.
- All-in sustaining cash costs per ounce sold*, including corporate administration and sustaining capital expenditures, was $2,276 (US$1,702) for Q2 2019, and $1,674 (US$1,255) for the first half of 2019, reflecting lower gold ounces sold in the three months ended June 30, 2019.
- In the first half of 2019, the Company invested $6.9 million in its exploration and development projects, including $6.3 million on the Goldboro Gold Project in Nova Scotia relating to the 10,000 tonne bulk sample, the commencement of the feasibility study, and ongoing diamond drilling programs.
- Net loss for the three months ended June 30, 2019 was $1.6 million, or $0.01 per share, compared to $0.5 million, or $0.01 per share, for the three months ended June 30, 2018.
- As at June 30, 2019, the Company had a cash balance of $3.1 million, a working capital* deficiency of $0.8 million, and additional available liquidity of $1,000,000 from an undrawn revolving line of credit facility.
- On July 10, 2019, Anaconda successfully completed a non-brokered private placement for $4.7 million, which will fund exploration at the Tilt Cove Gold Project and the continued advancement of the Goldboro Gold Project, in addition to continued investment at the Point Rousse Project and other corporate initiatives.
*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 six months ended June 30, 2019.
"The second quarter of 2019 was very difficult for the Point Rousse operation as unplanned maintenance issues, combined with opportunistic mill upgrades, impacted mill availability, leading to reduced gold production and higher operating costs. We are pleased to note that in July the mill was fully back on-line and achieving its operating targets. With the investments in the mill and new experienced site management, Anaconda is poised to potentially expand the life of the Pine Cove Mine, as recent successful expansion drilling has been able to expand the mineralization near the margins of the existing Pine Cove pit. With this expansion, Anaconda will continue to optimize the Argyle deposit which will now be deferred to 2020. Looking to the second half of 2019, we look forward to reporting on our ongoing exploration program at the Tilt Cove project in Newfoundland and the pre-development work on our Goldboro Gold Project in Nova Scotia"
~Kevin Bullock, Chief Executive Officer, Anaconda Mining Inc.
As a result of recent successful infill and expansion drilling at the Pine Cove open pit mine announced in February 2019, the Company continues to see the potential for continued expansion at Pine Cove and consequently will defer the development of the Argyle Deposit into 2020. As a result, the Company is revising its guidance for 2019 to 16,000 to 17,000 ounces of gold from its initial guidance of 19,000 to 20,000 ounces. The Pine Cove Mine is immediately adjacent to the Company's processing facility and is very well understood geologically and from a mining perspective, limiting technical risk, and requires low capital expenditure to continue production. Ongoing mining at Pine Cove also has the benefit of increasing the Company's permitted in-pit tailings storage capacity. This will allow the Company to continue to optimize the Argyle Deposit, incorporating recent drilling results, and complete all required permitting activities, while deferring the related capital to develop the site. The Company has now received a Mining Lease for the Argyle Deposit and has submitted the development and rehabilitation plan for regulatory review.
The Company is revising its operating cash costs guidance for the full year from between $1,050 and $1,100 per ounce of gold sold to between $1,325 and $1,375 per ounce of gold sold (US$990 - US$1,025 at an approximate exchange rate of 0.75), reflecting the impact of lower gold sales in Q2 2019 and the continued mining at Pine Cove for the balance of 2019 at lower grades than the previous production plan, which included Argyle.
Consolidated Results Summary
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Cost of operations, including depletion
Mine operating income ($)
Net loss ($)
Net loss per share ($/share) – basic and diluted ($)
Cash generated from operating activities ($)
Capital investment in property, mill and equipment
Capital investment in exploration and evaluation
Average realized gold price per ounce*
Operating cash costs per ounce sold*
All-in sustaining cash costs per ounce sold*
June 30, 2019
December 31, 2018
Total assets ($)
Non-current liabilities ($)
*Refer to Non-IFRS Measures section for reconciliation
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Ore mined (t)
Waste mined (t)
Ore milled (t)
Grade (g/t Au)
Gold ounces produced
Gold ounces sold
Second Quarter 2019 Review
The Pine Cove Mill processed 96,895 tonnes during Q2 2019, down 20% compared to the second quarter of 2018, as the mill was ramping up from a series of unplanned maintenance on the head of the regrind mill, delayed shipment of trunnion liners, and planned maintenance programs on the main ball mill. Once the regrind mill trunnion liners and mill head were installed in April, the mill was able to ramp up its throughput to 1,241 tonnes per day for the quarter, a 9.3% increase from Q1 2019 when the mill issues began.
Average grade during Q2 2019 was 1.25 g/t, a 9.9% decrease from the second quarter of 2018, and lower than Q1 2019 when Stog'er Tight was the main ore feed to the Pine Cove Mill. The mill achieved an average recovery rate of 74.7%, 10% below planned and historically achieved levels, resulting in gold production of 2,907 ounces for the second quarter of 2019. The coarse concentrate in circuit impacted recovery levels during the ramp-up, and consistency through the regrind mill was initially a challenge while the operating parameters for bearing temperature were calibrated, which further impacted leach recovery. With the circuit now in full operation the mill is now achieving recoveries in line with plan and historical trends.
During the second quarter of 2019, the mine operations produced 78,123 tonnes of ore, predominantly from the Stog'er Tight Mine. Total material moved included of 505,548 tonnes also included 295,082 tonnes of waste development for a pushback at the Pine Cove Pit, which also contributed 14,690 tonnes of ore in Q2 2019.
Ore mined during Q2 2019 was up significantly over the second quarter of 2018, when mining activity in the main Pine Cove Pit was finishing and the focus was on the development of the Stog'er Tight Pit, while stockpiles from Pine Cove provided mill throughput. Going forward in 2019, mine operations will remain focused on pushbacks and mine production from the south and southwest areas of the Pine Cove Pit. Permitting activities continue to advance with respect to the Argyle Deposit, and with the shift of the current year mine plan to Pine Cove, the Company will continue to optimize the Argyle Deposit, incorporating recent drilling results.
Anaconda sold 3,153 ounces of gold during the second quarter of 2019, generating gold and silver revenue of $5.5 million, and had over 565 ounces in gold doré and bullion inventory at June 30, 2019, which were sold in early July 2019. The Company generated metal revenue of $14.3 million during the first half of the year on gold sales of 8,404 ounces.
Operating expenses for the three and six months ended June 30, 2019 were $4,337,552 and $9,224,166, respectively, compared to $3,865,256 and $7,939,603 in the three and six months ended June 30, 2018, respectively. Processing costs were higher due to $331,000 of abnormal costs expensed as a result of the temporary mill shutdown to allow for repairs to the regrind mill and the completion of other maintenance programs, as well as a write-down to inventory of $180,000. This was offset by insurance proceeds of $615,820 relating to the failure of the jaw crusher in 2018. Mining costs were higher in both the second quarter and first half of 2019 relative to prior year periods due to 10% more material moved and higher haulage costs from Stog'er Tight, compared to the first half of 2018 when the Company was winding down mining in the bottom of the main Pine Cove Mine, which is closer to the mill. Operating cash costs per ounce sold during Q2 2019 were $1,421 (US$1,062) as a result of lower gold sales during the period, contributing to operating cash costs of $1,144 (US$858) for the first half of 2019, above the Company's initial 2019 annual operating cash cost guidance of C$1,050-C$1,100.
In Q2 2019, the Company recorded a royalty expense of $145,436 on production from Stog'er Tight, which carries a 3% net smelter return royalty, compared to $19,077 in the previous year when Pine Cove was the predominant ore feed.
Depletion and depreciation expense for the three and six months ended June 30, 2019 was $878,403 and $2,198,188, respectively, with decreases from the comparative periods of 2018 due to lower ounces produced in Q2 2019.
Mine operating income for the three months ended June 30, 2019 was $124,304, compared to $1,865,472 in the corresponding period of 2018, as a result of higher comparable operating costs and lower gold sales during Q2 2019.
Corporate administration expenditures were $1,065,942 and $2,079,122 for the first three and six months of fiscal 2019, respectively, down from $1,148,342 and $2,242,696 for the comparative periods. Corporate administration includes senior management and corporate compensation, regulatory and listing costs, marketing and investor relations, and general office expenses. The Company also recorded research and development costs of $125,621 in the first half of 2019 relating to the narrow vein mining research project.
Share-based compensation was $308,736 during Q2 2019, compared to $190,407 in the three months ended June 30, 2018, and $419,501 in the first half of 2019, compared to $340,880 in the first six months of 2018. The increase reflects the higher fair value and vesting expense of the share units granted during the first half of 2019.
Finance expense for the quarter was $156,346 for Q2 2019 and $192,502 for the first half of 2019, compared to $38,055 and $72,860 for the comparative periods. Finance costs increased during the quarter due to the $5 million term loan with Royal Bank of Canada ("RBC") in March 2019.
Net comprehensive loss for the three months ended June 30, 2019, was $1,638,464, or $0.01 per share, compared to $549,543, or $0.01 per share. The decline compared to the three months ended June 30, 2018 was the result of lower mine operating income, offset by a lower net income tax expense, as the Company recorded a current income tax recovery of $20,000 relating to provincial mining tax and a deferred income tax expense of $54,000 during the three months ended June 30, 2019 (three months ended June 30, 2018 – expenses of $199,445 and $169,000, respectively). For the six months ended June 30, 2019, net loss was $480,613, or $0.00 per share, compared to $400,325 for the first half of 2018.
Financial Position and Cash Flow Analysis
As at June 30, 2019, the Company had cash and cash equivalents of $3,118,038, a $1,000,000 undrawn revolving line of credit, and a working capital deficit of $787,450. Other current assets include a deposit of $237,188 related to the Goldboro bulk sample, which was returned to the company in July, and insurance claim proceeds receivable of $373,974 which were received in July as well. Working capital was also impacted by lower trade and other payables which decreased primarily due to the ongoing payments relating to the underground bulk sample at Goldboro. On July 10, 2019, Anaconda successfully completed a non-brokered private placement for $4.7 million, which will fund exploration at the Tilt Cove Gold Project and the continued advancement of the Goldboro Gold Project, in addition to continued investment at the Point Rousse Project and other corporate initiatives.
The Company entered into a $5 million, two-year term loan at a 4.6% interest rate in March 2019. The term loan was arranged with the support of Export Development Canada, to whom the Company will pay a 1.85% guarantee fee with respect to a guarantee issued over half the principal amount. The Company also maintains a $1,000,000 revolving credit facility as well as a $750,000 revolving equipment lease line of credit with RBC. Under the terms of the Agreement, RBC maintains a first-ranking general security agreement including a specific security interest in the Company's ball mill and cone crushers. As at June 30, 2019, the Company had not drawn against the revolving credit facility.
In Q2 2019, Anaconda used $2,770,728 in operating cash flows, due to the impact of lower gold revenue, a net decrease of $1,367,494 from changes in non-cash working capital, and a payment of $932,261 relating to current Newfoundland mining taxes. Revenue less operating expenses and royalties from the Point Rousse Project were $1,002,707, based on quarterly gold sales of 3,153 ounces at an average price of C$1,739 per ounce sold and operating cash costs of C$1,421 per ounce sold. Corporate administration costs in the second quarter were $1,065,942. Unearned revenue decreased $1,151,667 as the Company delivered 792 ounces in June 2019, under a gold prepayment agreement with Auramet International LLC (the remaining 346 ounces were delivered in July 2019). Current taxes payable decreased $932,261 as a result of the Company's payment of its 2018 provincial mining tax expense.
During the second quarter of 2019, the Company continued to invest in its key growth projects in Newfoundland and Nova Scotia. The Company spent $2,538,791 on exploration and evaluation assets (adjusted for amounts included in trade payables and accruals at June 30, 2019), primarily on the continued advancement of the Goldboro Project. The Company also invested $1,235,873 into the property, mill and equipment at the Point Rousse Project, with capital investment focused on development activity on a pushback of the Pine Cove Mine.
Financing activities in the three months ended June 30, 2019 were limited to the repayment of the RBC term loan, lease obligations, and government loans. The Company also received $33,750 from the exercise of stock options.
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.
This news release contains "forward-looking information" within the meaning of applicable Canadian and United States securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Anaconda to be materially different from those expressed or implied by such forward-looking information, including risks associated with the exploration, development and mining such as economic factors as they effect exploration, future commodity prices, changes in foreign exchange and interest rates, actual results of current production, development and exploration activities, government regulation, political or economic developments, environmental risks, permitting timelines, capital expenditures, operating or technical difficulties in connection with development activities, employee relations, the speculative nature of gold exploration and development, including the risks of diminishing quantities of grades of resources, contests over title to properties, and changes in project parameters as plans continue to be refined as well as those risk factors discussed in Anaconda's annual information form for the year ended December 31, 2018, available on www.sedar.com. Although Anaconda has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. 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. Anaconda does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
SOURCE Anaconda Mining Inc.
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