Alacer Gold announces Q1 financial and operating results
TORONTO, April 30, 2013 /CNW/ - Alacer Gold Corp. ("Alacer" or the "Corporation") the mid-tier gold producer with mines in Turkey and Australia, has released its financial results and related management's discussion and analysis ("MD&A") for the first quarter of 2013.
Against the backdrop of a weaker gold price and challenging Q1 cost results, Alacer is reviewing its 2013 production goals on an "all in" cost basis and will focus on quality ounces with emphasis on cost reductions and maximizing high margin production.
Accordingly, the Corporation has, over the past two weeks, re-evaluated all project work currently in progress, all on-going exploration work, all mine development expenditures and all G & A costs to ensure that there is a disciplined approach that reflects price risk and the possibility of a further decline or lack of recovery in the gold price.
As a result of the re-evaluation work undertaken, Alacer is targeting approximately $60M in cash savings and incremental production revenue for the remainder of 2013.
Key Points from the first quarter are as follows:
OPERATIONAL - PHYSICALS
- Total gold production of 98,420 ounces down 2% on Q1/12
- Attributable gold production 87,499 ounces down 4% on Q1/12
- Overall 2013 production guidance of 330,000 to 365,000 ounces remains unchanged
- Third consecutive increase in quarterly gold production (100%) of 54,604 ounces
- Heavy snowfall impacted production in January
- Çöpler head grades of ore stacked increased 27% over Q1/12
- Higginsville gold production of 28,213 ounces in line with guidance
- Access to high grade ore bodies Helios, Artemis and Olympus achieved ahead of schedule
- Heavy rain impacted production at Higginsville in February and March
- South Kalgoorie Operations gold production of 4,836 ounces in line with guidance
- Commenced toll treatment of La Mancha ore on 16 February at Jubilee Mill
- Heavy rain impacted operations at South Kalgoorlie in February and March
- Frog's Leg gold production of 3,917 ounces in line with guidance
- Q1 gold production from Frog's Leg derived from carried over Q4 ROM and crushed stocks
- Attributable total cash costs1 $932/oz compared to $759/oz in Q1/12
- Attributable net profit of $4.2M compared to $53.9M in Q1/12
- Attributable adjusted net profit1 of $9.1M compared to $27.0 M in Q1/12
- Working capital decreased by $23.8M to $164.7M during the period due to payment of $31.2M dividend to minority interest holder of the Çöpler mine and decline in cash at the Australian Business Unit
- Balance sheet remains strong with $254.6M cash in Q1/13 compared with $277.3M cash in Q4/12
- Processing costs higher due to sharp increase in cyanide cost and consumption
- Processing costs increased due to higher electricity unit costs and consumption
- Includes one-off cost of approximately $15/oz due to complete 2012 business improvement initiatives
- Mining costs rose approximately $187/oz due to increased mine development focused on gaining access to the new higher grade ore bodies
- Geology costs increased $21/oz due to additional drilling
- Higginsville power consumption costs rose $31/oz due to an increase in electricity usage, an increase in electricity unit costs and the cost of diesel fuel due to the introduction of Australia's carbon tax compared with Q1/12
- Costs increased approximately $274/oz primarily due to disruption from well above average rainfall for the quarter
- Lower Q1 gold sold at South Kalgoorlie Operations has resulted in a revaluation of stockpiles resulting in a non-cash $576/oz charge
CORPORATE & STRATEGIC
- Executed binding sale agreement with La Mancha Resources Pty Ltd for 49% interest of Frog's Leg Mine JV, 24.5% interest in Lake Greta JV and 40% interest in Avoca JV plus a 18 month toll treatment agreement for a total of A$166M/US$173M (sale completion occurred 5 April 2013)
- Agreement reached on a new strategic mining agreement with current Çöpler mining contractor (Ciftay Group) resulting in the reduction of mining costs of approximately $60/oz
1 Total cash costs/ounce and adjusted net profit are non-IFRS financial performance measures with no standardized definitions under IFRS. For further information and detailed reconciliations, see the "Non-IFRS Measures" section of the MD&A for the three month period ended March 31, 2013.
While gold production from both Turkey of 43,683/oz (attributable) and Australia of 33,049/oz (excluding Frog's Leg) was in accordance with our previously advised guidance, costs at Alacer's operations in Turkey and Australia were both impacted by adverse weather conditions in the first quarter. The adverse weather conditions in Australia were further compounded by lower than expected grades at Higginsville and reduced gold sales from South Kalgoorlie.
The first quarter was a transition period for our South Kalgoorlie Operations. This quarter saw the signing of a binding sale agreement for Alacer's 49% share in the Frog's Leg Mine to La Mancha Resources and the signing of an interdependent toll treatment agreement to provide 345 days of toll milling services at South Kalgoorlie over an 18 month period with La Mancha for a combined transaction value of approximately A$166M/US$171 million.
At Higginsville's Trident and Chalice underground mines, development accessing the three higher grade Artemis, Helios and Olympus ore zones was achieved during the quarter approximately one month ahead of schedule. Management remains committed to a turnaround at the Australian operations during the year led by a return to higher grades and for the Australian Business Unit to be cash positive in 2013.
At Çöpler, in addition to standard operational activities, the first quarter saw the progression of site work associated with the construction of the SART plant and the clay sizing and materials handling circuit and agglomerator.
OUTLOOK & STRATEGY
In response to the less than acceptable Q1 financial results at the Australian operations and the recent volatility in the gold price, the Corporation has immediately developed and commenced the implementation of a comprehensive strategy to reduce costs across all areas of its operations. Efforts will also focus on increasing production of higher margin ounces to maintain previously forecast 2013 cost guidance.
As we have stated previously, all options are being considered in respect to enhancing value for Alacer shareholders.
Alacer has identified the following key areas where it expects to realize approximately $60M in cash savings including incremental production revenue to ensure it delivers on production and cost guidance for 2013.
- Reduce both mine capital and operating development in 2013 at Higginsville Operation without affecting production in 2014 and 2015
- Exploration reductions
- Increase incremental high margin production at Çöpler
- Increase incremental higher margin production from the Artemis lode at Trident Mine
- Reduce mining costs across all operations
- Reduce G&A at both corporate and sites
- Eliminate discretionary expenditures
Mr. David Quinlivan, President and Chief Executive Officer stated, "Alacer faces the same issues that the gold mining industry globally is experiencing due to the recent drop in the gold price. Management is responding quickly to address our first quarter performance and ensure cost reductions are introduced immediately across all operations while aiming to increase production to deliver value for shareholders. While we expect better production results in the next quarter as we process higher grade ore, given that the outlook globally is uncertain, our approach will be to scrutinize all expenditures and take action where necessary."
About Alacer Gold
Alacer is a leading mid-tier gold producer with mines and processing facilities in Turkey and Australia.
- 80% interest in the Çöpler Gold Mine;
- 100% interest in the Higginsville Gold Operations; and
- 100% interest in the South Kalgoorlie Gold Operations.
Alacer's primary focus is to maximize portfolio value, maximize free cash flow, minimize project risk, and returning value to shareholders. Alacer has a strong balance sheet and is committed to responsibly developing its current operations and focused exploration programs creating value.
Conference Call Details
Alacer will host a conference call on Tuesday, April 30 at 7:00 pm (North America Eastern Daylight Time) and Wednesday, May 1 at 9:00 am (Australian Eastern Standard Time).
You may participate in the conference call by dialing:
|1-877-723-9523||for U.S. and Canada|
|800-968-835||for Hong Kong|
|0-808-101-7162||for United Kingdom|
A presentation for the conference call will be available on Alacer's website at www.AlacerGold.com prior to the call commencing.
If you are unable to participate in the call, a recording of the call will be available on Alacer's website at www.AlacerGold.com or through replay until Tuesday, May 14, 2013 by using passcode 9992651 and calling:
|1-888-203-1112||for U.S. and Canada|
|800-901-108||for Hong Kong|
|0-808-101-1153||for United Kingdom|
Except for statements of historical fact relating to Alacer, certain statements contained in this press release constitute forward-looking information, future oriented financial information, or financial outlooks (collectively "forward-looking information") within the meaning of Canadian securities laws. Forward-looking information may be contained in this document and other public filings of Alacer. Forward-looking information often relates to statements concerning Alacer's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "could", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "projects", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts.
Forward-looking information includes, but is not limited in any manner to, statements concerning, among other things, the payment of dividends, matters relating to proposed exploration, communications with local stakeholders and community relations, status of negotiations of joint ventures, weather conditions at our operations, commodity prices, mineral resources, mineral reserves, realization of mineral reserves, existence or realization of mineral resource estimates, the development approach, the timing and amount of future production, timing of studies and analyses, the timing of construction of proposed mines and process facilities, capital and operating expenditures, economic conditions, availability of sufficient financing, exploration plans and any and all other timing, exploration, development, operational, financial, budgetary, economic, legal, social, regulatory and political factors that may influence, or be influenced by, future events or conditions. Such forward-looking information and statements are based on a number of material factors and assumptions, including, but not limited in any manner to, those disclosed in any other of Alacer's filings, and include assumptions about the legal restrictions regarding the payments of dividends by Alacer, exploration results and the ability to explore, the ultimate determination of mineral reserves, availability and final receipt of required approvals, titles, licenses and permits, sufficient working capital to develop and operate the mines, access to adequate services and supplies, commodity prices, ability to meet production targets, foreign currency exchange rates, interest rates, access to capital markets and associated cost of funds, availability of a qualified work force, ability to negotiate, finalize and execute relevant agreements, lack of social opposition to the mines, lack of legal challenges with respect to the property of Alacer and the ultimate ability to mine, process and sell mineral products on economically favorable terms. While we consider these factors and assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.
You should not place undue reliance on forward‐looking information and statements. Forward‐looking information and statements are only predictions based on our current expectations and our projections about future events. Actual results may vary from such forward‐looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in Alacer's filings at www.sedar.com and other unforeseen events or circumstances. Other than as required by law, Alacer does not intend, and undertakes no obligation to update any forward‐looking information to reflect, among other things, new information or future events.
SOURCE ALACER GOLD CORP.