TSX: ASO
AIM: ASO
TORONTO, Aug. 11, 2017
/CNW/ - Avesoro Resources Inc. ("Avesoro" or the "Company"), the
TSX and AIM listed West African gold producer, is pleased to
announce the release of its unaudited results for the quarter ended
30 June 2017 (the "Quarter").
Financial Highlights
- Revenues of US$19.3 million for
the Quarter, a 31% increase on Q2 2016, from gold sales of 15,382
ounces, with an average realised gold price of US$1,255 per ounce;
- EBITDA of US$0.9 million;
- Cash of US$2.8 million and
inventory of US$15.1 million at the
end of the Quarter;
- Debt of US$107.4 million,
including US$15.6 million borrowed
from Avesoro Jersey Limited ("Avesoro Jersey"), the Company's
majority shareholder; and
- Capital expenditure of US$5.4
million during the Quarter, predominantly consisting of
capitalised stripping costs and upgrades to the process plant.
Operational Highlights
- Total gold production for the Quarter was 15,825 ounces, an
increase of 6% on the prior quarter, and a 91% increase on Q2
2016;
- Total Material Movement of 3.8 million tonnes, including
214,000 tonnes of ore, a decrease of 12% on the prior quarter, and
a 38% increase on Q2 2016;
- Mined ore grades averaged 2.64 g/t during the Quarter, whilst
plant feed grades averaged 2.0 g/t;
- Mill throughput increased from 145 tonnes per hour to 175
tonnes per hour, resulting in record plant throughput in the
Quarter of 295,000 tonnes, an increase of 5% on the previous
quarter, and a 196% increase on Q2 2016;
- Plant utilisation of 89% compared with 92% in the previous
quarter. The reduction in plant utilisation during the Quarter was
due to a planned mill reline and other plant optimisation
works;
- Mining cost of US$2.38 per tonne
mined and processing costs of US$27.34 per tonne processed;
- Operating cash costs of US$1,035
per ounce, a reduction of 2% compared to the US$1,051 per ounce achieved in the previous
quarter, and
- All-in Sustaining Costs ("AISC") of US$1,600 per ounce sold.
Operational Review
Total gold production for the Quarter was 15,825 ounces, an
increase of 6% on the prior quarter, at an operating cash cost of
US$1,035 per ounce.
Total material movement of 3,779,000 tonnes was achieved during
the Quarter which equates to a reduction of 12% on that achieved
during the previous quarter. This reduction was primarily caused by
a decrease in drill rig availability which had a knock-on effect on
the availability of broken stock for mining, resulting in an
under-utilisation of available mining equipment.
Notwithstanding reduced drill rig availability, the Company
continued to focus on opening access to new areas of fresh ore and
catching up on previously postponed waste pushbacks, resulting in a
stripping ratio of 16.7:1 (Waste: Ore) throughout the Quarter, an
increase from 11.2:1 during Q1 2017. As a result of the reduced
material movement, unit mining cost increased from US$2.19/t mined during Q1 2017 to US$2.38/t mined during Q2 2017. The Company
expects to produce a significant increase in broken stock
throughout the remainder of 2017 following the purchase of three
further production drill rigs which are now operational at New
Liberty. This will in turn improve mining equipment utilisation and
further reduce unit mining costs.
During the Quarter, total ore mined was 214,000 tonnes at an
average mined grade of 2.64 g/t, reflecting a month on month
positive improvement throughout the Quarter of approximately 55,500
tonnes of ore at an average grade of 2.47 g/t in April, 64,000
tonnes at an average grade of 2.60 g/t in May and 94,200 tonnes at
an average grade of 2.76 g/t in June.
Throughout the Quarter, various activities were undertaken with
the aim of fine-tuning the grade control measures to reduce ore
loss and dilution levels. Blast monitoring technology, which tracks
the effects of blasting on ore movement and heave, was introduced
to improve ore blast designs and limit movement during blasting. As
a result, bench heights in ore blasts have been reduced to 5m in
the Marvoe pit to reduce ore dilution. Additionally, revised grade
control procedures have been implemented, including reducing the
reverse circulation drill spacing to a 10m x 10m grid in the more
sensitive areas of the pits, and close spaced channel sampling
across the pit floor has been introduced to tighten up the grade
definition and ore boundaries. During June, the Company also
commenced a more selective mining approach by tightening up on ore
boundary outlines in critical areas of the pits and resampling the
waste rock mined from the boundary of the ore to minimise ore loss
and dilution. This approach has continued to give positive results,
with 78,000 tonnes of ore mined throughout July at an average grade
of 3.18 g/t.
Process plant performance remained stable throughout the
Quarter, with record quarterly plant throughput of 295,000 tonnes
of ore achieved, an increase of 5% on the previous quarter, and a
direct result of the plant optimisations and upgrades put into
place during the last six months.
Mill throughput increased from 145 tonnes per hour to 175 tonnes
per hour throughout the Quarter. The mill is now performing
consistently above its designed throughput levels with plant
utilisation reaching a record 97% during June 2017 and averaging 89% for the Quarter. The
reduction in utilisation from the previous quarter was the result
of planned plant shut downs for various scheduled maintenance
programmes, including a mill reline during late May 2017, during which time the relining of the
mill inlet, shell and the discharge grate were completed, alongside
the re-routing of pipes within the mill area in preparation for the
recommissioning of the vertimill.
Whilst plant feed grades averaged 2.0 g/t for the Quarter, gold
recovery levels reduced to 88%, predominantly due to a high
proportion of transitional ore from the Marvoe pit within the plant
feed during May, with recovery levels returning to 89% and 90% in
June and July respectively.
H2 2017 Outlook
As a result of the improvements in mined ore grade, increased
process plant throughput and lower unit costs achieved in recent
months, the Company's 2017 production guidance remains unchanged,
with management's expectation that the lower range of production
guidance will be achieved. Unit costs are expected to move
materially lower throughout the second half of the year as
operational efficiencies put into place during the first half of
the year are realised.
Following the draw down during the Quarter of US$15.6 million of the US$35 million loan facility from Avesoro Jersey,
the Company has made advanced payments to suppliers to secure lower
unit cost pricing and to accelerate the acquisition of capital
items that will further increase mining efficiency and process
plant throughput.
As previously announced, following the improved cost and
operational performance achieved by the Company in H1 2017 and the
further cost savings and efficiencies that are anticipated, the
Company has commenced work on a revised open pit optimisation
exercise and the production of a new life of mine ("LOM")
production schedule for New Liberty. The Company expects to be able
to update the market on the results of this exercise during Q3
2017.
The Company also continues to consider a range of growth
opportunities to deliver on its strategy to become a premier
mid-tier African gold producer, including the potential acquisition
of the Youga Gold Mine and Balogo deposit in Burkina Faso, currently owned by Avesoro
Jersey.
Serhan Umurhan, Chief Executive Officer of Avesoro
Resources, commented: "I am pleased that the
optimisations that we have worked hard to implement at New Liberty
have resulted in a second consecutive positive quarter EBITDA for
New Liberty.
The focus for the second half of 2017 will be to build upon
our improved grade control practices, mining performance and
increased plant throughput to increase our gold production levels
and move our unit costs materially lower.
Looking forward we maintain our production guidance for the
year although we are now targeting the lower end of the guidance
range of 90,000 – 100,000 ounces. I also look forward to updating
the market on a revised life of mine production schedule for the
mine later in Q3 2017."
About Avesoro Resources Inc.
The Company's assets include the New Liberty Gold Mine in
Liberia (the "New Liberty Gold
Mine," "New Liberty" or the "mine") which has an estimated proven
and probable mineral reserve of 8.5 Mt with 924,000 ounces of gold
grading 3.4 g/t and an estimated measured and indicated mineral
resource of 9,796 Kt with 1,143,000 ounces of gold grading 3.63 g/t
and an estimated inferred mineral resource of 5,730 Kt with 593,000
ounces of gold grading 3.2 g/t. A Definitive Feasibility
Study ("DFS") has been completed, the first gold pour has taken
place and commercial production has been declared. The
foregoing mineral reserve and mineral resource estimates and
additional information in connection therewith are set out in the
Company's technical report dated March 25,
2015 and entitled "New Liberty Gold Project, Bea Mountain
Mining Licence Southern Block, Liberia, West
Africa, Definitive Project Plan.
The New Liberty Gold Mine is located within the Southern Block
of the 100% owned Bea Mountain mining licence. This licence
covers 478 km² and has a 25 year, renewable, mineral development
agreement. The Bea Mountain mining license also hosts
additional gold projects of Ndablama, Gondoja, Weaju and Leopard
Rock which are the focus of exploration programs during 2016.
Ndablama has an indicated mineral resource of 386,000 ounces of
gold grading 1.6 g/t and inferred mineral resource of 515,000
ounces of gold grading 1.7 g/t and Weaju has an inferred mineral
resource of 178,000 ounces of gold grading 2.1 g/t. The
Yambesei (473 km2), Archaen West (56 km2),
Mabong (36.6 km2) and Mafa West (15.6 km2)
licences will also be subject to preliminary reconnaissance
geological work. The foregoing mineral resource estimates and
additional information in connection therewith are set out in the
Company's technical report dated December 1,
2014 and entitled "Ndablama and Weaju Gold Projects, Bea
Mountain Mining Licence, Northern Block, Technical Report on
Mineral Resources" ("Ndablama and Weaju Technical Report
2014").
The Company also has a gold exploration permit in Cameroon.
Qualified Persons
The Company's Qualified Person is Mark
J. Pryor, who holds a BSc (Hons) in Geology & Mineralogy
from Aberdeen University, United Kingdom and is a Fellow of the
Geological Society of London, a
Fellow of the Society of Economic Geologists and a registered
Professional Natural Scientist (Pr.Sci.Nat) of the South African
Council for Natural Scientific Professions. Mark Pryor is an independent technical
consultant with over 25 years of extensive global experience in
exploration, mining and mine development and is a "Qualified
Person" as defined in National Instrument 43 -101 "Standards of
Disclosure for Mineral Projects" of the Canadian Securities
Administrators and has reviewed and approves this press
release.
Forward Looking Statements
Certain information contained in this Announcement constitutes
forward looking information. This information may relate to future
events or the Company's future performance. All information other
than information of historical fact is forward looking information.
The use of any of the words "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "should",
"believe", "predict" and "potential" and similar expressions are
intended to identify forward looking information. Specific
statements that constitute forward looking information include
statements regarding the timing and completion of legal
documentation required to amend the loan facilities and to document
the guarantees. This forward looking information involves known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward looking information. No assurance can
be given that this information will prove to be correct and such
forward looking information included in this Announcement should
not be unduly relied upon. This information speaks only as of the
date of this Announcement.
Actual results could differ materially from those anticipated in
the forward looking information contained in this news release as a
result of the risk factors, including: the risk that the waiver and
standstill agreement will terminate; the risk that legal
documentation may not be completed as anticipated; risks normally
incidental to exploration and development of mineral properties;
the inability to obtain required waivers and amendments from the
Company's creditors in respect of its debt repayment obligations
and consequential risks of default thereon; risks related to
operating in West Africa; health
risks associated with the mining workforce in West Africa; risks related to the Company's
title to its mineral properties; adverse changes in commodity
prices; risks related to current global financial conditions; the
inability of the Company to obtain, maintain, renew and/or extend
required licences, permits, authorizations and/or approvals from
the appropriate regulatory authorities and other risks relating to
the legal and regulatory frameworks in Liberia, including adverse changes in
applicable laws; competitive conditions in the mineral exploration
and mining industry; risks related to obtaining insurance or
adequate levels of insurance for the Company's operations; risks
related to environmental regulations; uncertainties in the
interpretation of results from drilling; risks related to the legal
systems in Liberia; risks related
to the tax residency of the Company; changes in exchange and
interest rates; risks related to the activities of artisanal
miners; actions of third parties that the Company is reliant upon;
lack of availability at a reasonable cost or at all, of plants,
equipment or labour, including required equipment, explosives and
other necessary material not being delivered in the expected time
frame, or at all; the inability to attract and retain key
management and personnel; political risks; and future unforeseen
liabilities and other factors.
The forward looking information included in this Announcement is
expressly qualified by this cautionary statement and is made as of
the date of this Announcement. The Company does not undertake any
obligation to publicly update or revise any forward looking
information except as required by applicable securities laws.
SOURCE Avesoro Resources Inc.