(All dollar amounts are United
States dollars unless otherwise stated)
VANCOUVER, BC, March 29,
2022 /CNW/ - Galiano Gold Inc. ("Galiano" or
the "Company") (TSX: GAU) (NYSE American: GAU) reports fourth
quarter ("Q4") and full year 2021 operating and financial results
for the Company and the Asanko Gold Mine ("AGM"), located in
Ghana, West Africa. The AGM is a 50:50 joint venture
("JV") with Gold Fields Ltd (JSE, NYSE: GFI) which is managed and
operated by Galiano. All financial information contained in this
release is reported in US$.
Asanko Gold Mine Key Metrics (100% basis):
- Production performance: Annual gold production of
210,241 ounces, below revised 2021 production guidance of
215,000-220,000 ounces as mined grades were lower than plan. Fourth
quarter production of 50,278 ounces.
- Cost performance: Total cash costs per
ounce1 of $1,177 and all-in sustaining costs1
("AISC") of $1,431/oz during the
year, in line with revised cost guidance (as of Q2 2021) of
$1,350-$1,450/oz. Total cash costs per ounce1
and AISC1 for Q4 2021 were $1,257 and $1,539,
respectively.
- Financial performance: Reported gold revenue of
$381.7 million generated from 216,076
gold ounces sold at an average realized price of $1,767/oz, and Adjusted EBITDA1 of
$76.7 million during the year.
- Impairment of mineral properties: The AGM recorded a
$153.2 million impairment charge
against its mineral properties, plant and equipment and,
accordingly, the JV reported a net loss for the year totaling
$114.5 million and adjusted net
income1 of $38.7
million.
- 2022 production guidance: While technical work to
support a Mineral Reserve at the AGM is ongoing, mining will
continue at Akwasiso Cut 3 and Esaase Cut 3 until their depletion
(expected in Q2 2022). Following this, the process plant is
expected to continue to operate at full capacity (5.8Mtpa)
processing a portion of the existing 9.5Mt of stockpiles (as
outlined in the press release titled "Galiano Gold Provides Updated
Mineral Resource Estimate and an Update on Mining Operations" dated
March 29, 2022). For 2022, the AGM is
targeting 100,000-120,000 ounces of gold production.
- Focus on exploration: During the year, drilling was
completed at Miradani in support of its maiden Mineral Resource
estimate. Additionally, drilling at Dynamite Hill, and near-mine
targets at Kaniago West and Midras South all showed positive
exploration results.
- Culture of safety: Strong safety performance with 1
lost-time injury ("LTI") and 2 total recordable injuries ("TRI")
reported during the year, resulting in 12-month rolling LTI and TRI
frequency rates of 0.10 and 0.21 per million employee hours worked,
respectively.
- Stable liquidity: $49.2
million in cash, $13.6 million
in gold sales receivables and $3.2
million in gold on hand and no debt as of December 31, 2021.
_____________________________
|
1 See
"8. Non-IFRS measures"
|
Galiano Gold Highlights:
- Stable balance sheet: Cash on hand of $53.5 million and $7.4
million in receivables as at December
31, 2021, while remaining debt-free.
- Earnings: Reported a net loss of $68.9 million or $0.31 per share during the year due to
impairments recorded on the Company's equity investment in the AGM
JV and the recognition of the Company's share of the JV's net loss,
while adjusted net income1 and Adjusted
EBITDA1 for the year were $7.7
million and $28.5 million,
respectively.
- Management changes and additions to Board of Directors:
During the year, Matt Badylak, the
Company's former COO, was appointed to the position of CEO and also
joined the Company's Board of Directors. The Company further
augmented the Board of Directors through the addition of
Dawn Moss as a director of the
Company. On March 23, 2022, the
Company announced that Fausto Di
Trapani had stepped down as CFO of the Company to pursue
another opportunity. Following Mr. Di
Trapani's departure, the Company intends to appoint
Matt Freeman, current SVP Finance,
as its new CFO, in line with the Company's succession plan.
Asanko Gold Mine - Summary of Q4 2021 Operational and
Financial Results (100% basis)
Asanko Gold
Mine (100% basis)
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
Q1
2021
|
Q4
2020
|
Ore mined
('000t)
|
1,623
|
1,464
|
1,333
|
1,841
|
1,964
|
Waste mined
('000t)
|
8,752
|
10,017
|
9,073
|
9,552
|
11,773
|
Total mined
('000t)
|
10,375
|
11,481
|
10,406
|
11,393
|
13,737
|
Strip ratio
(W:O)
|
5.4
|
6.8
|
6.8
|
5.2
|
6.0
|
Average gold grade
mined (g/t)
|
1.2
|
1.3
|
1.2
|
1.3
|
1.4
|
Mining cost ($/t
mined)
|
3.75
|
3.28
|
3.03
|
3.31
|
3.20
|
Ore transportation from
Esaase ('000 t)
|
1,264
|
1,272
|
1,261
|
870
|
622
|
Ore transportation cost
($/t trucked)
|
6.13
|
5.88
|
6.20
|
6.48
|
7.15
|
Ore milled
('000t)
|
1,472
|
1,542
|
1,475
|
1,444
|
1,438
|
Average mill head grade
(g/t)
|
1.2
|
1.1
|
1.1
|
1.4
|
1.5
|
Average recovery rate
(%)
|
91
|
90
|
94
|
95
|
95
|
Processing cost ($/t
treated)
|
10.07
|
9.68
|
9.87
|
10.31
|
10.46
|
Gold production
(oz)
|
50,278
|
49,543
|
50,421
|
59,999
|
65,571
|
Gold sales
(oz)
|
51,368
|
48,435
|
53,348
|
62,925
|
60,655
|
Average realized gold
price ($/oz)
|
1,771
|
1,758
|
1,782
|
1,757
|
1,828
|
Operating cash
costs1 ($/oz)
|
1,168
|
1,185
|
1,147
|
901
|
801
|
Total cash
costs1 ($/oz)
|
1,257
|
1,273
|
1,236
|
989
|
892
|
All-in sustaining
costs1 ($/oz)
|
1,539
|
1,598
|
1,497
|
1,158
|
1,179
|
All-in sustaining
margin1 ($/oz)
|
232
|
160
|
285
|
599
|
649
|
All-in sustaining
margin1 ($m)
|
11.9
|
7.8
|
15.2
|
37.7
|
39.4
|
Revenue ($m)
|
91.1
|
85.3
|
95.2
|
110.8
|
111.1
|
(Loss) income from mine
operations ($m)
|
(8.9)
|
13.0
|
18.1
|
35.9
|
46.3
|
Cash provided by
operating activities ($m)
|
14.0
|
26.5
|
10.8
|
35.4
|
48.0
|
Free cash
flow1 ($m)
|
(3.6)
|
11.9
|
(2.9)
|
20.5
|
21.5
|
- The AGM produced 50,278 ounces of gold during the quarter, as
the processing plant achieved milling throughput of 1.5Mt of ore
processed at a grade of 1.2g/t.
- Produced 210,241 ounces of gold in FY 2021 below the lower end
of 2021 production guidance of 215,000‐220,000 ounces as mined
grades were lower than plan.
- Sold 51,368 ounces of gold in Q4 2021 at an average realized
gold price of $1,771/oz for total
revenue of $91.1 million (including
$0.1 million of by-product silver
revenue), a decrease of $20.0 million
from Q4 2020. The decrease in revenue quarter-on-quarter was a
function of a 15% reduction in sales volumes and a 3% decrease in
realized gold prices in Q4 2021.
- Total cost of sales (including depreciation and depletion and
royalties) amounted to $100.0 million
in Q4 2021, an increase of $35.2
million from Q4 2020. The increase in cost of sales was
primarily due to a $26.9 million
downward net realizable value ("NRV") adjustment on stockpile
inventory due to lower expected recoveries from Esaase material and
higher ore transportation costs, partly offset by fewer gold ounces
sold.
- Total cash costs per ounce1 were $1,257 in Q4 2021 compared to $892 in Q4 2020, a 41% increase. Cash costs were
higher in Q4 2021 due in part to lower gold sales volumes which had
the effect of increasing fixed production costs on a per unit
basis, higher ore transportation costs, and general inflationary
pressures on fuel and consumables and government levies. In
addition, a negative NRV adjustment on stockpile inventory was
recorded against production costs during the current period;
whereas, during the prior period, a positive NRV adjustment on
stockpile inventory was recorded resulting in a decrease in
production costs of $7.1
million.
- Loss from mine operations for Q4 2021 totaled $8.9 million compared to income from mine
operations of $46.3 million in Q4
2020. The reduction in income from mine operations was due to a
$20.0 million decrease in revenue and
$35.2 million increase in cost of
sales (as described above).
- As the AGM was not in a position to declare mineral reserves at
the balance sheet date as a result of current metallurgical
uncertainty of the material mined from Esaase, an impairment charge
of $153.2 million was recorded by the
AGM in Q4 2021.
- The AGM generated $14.0 million
of cash flows from operating activities and free cash
flow1 of negative $3.6
million during Q4 2021. This compares to $48.0 million of cash flows from operating
activities and $21.5 million of free
cash flow1 during Q4 2020. The decrease in free cash
flow1 was primarily due to lower revenues from lower
gold production and higher AISC1.
- AISC1 for the FY 2021 was $1,431/oz, in line with revised guidance (as of
Q2 2021) of $1,350-$1,450/oz, and was higher than FY 2020
AISC1 of $1,115/oz.
AISC1 was higher in 2021 primarily due to fewer gold
ounces sold, higher ore transportation costs at Esaase and
inflationary cost pressures.
- Reported Adjusted EBITDA1 of $76.7 million in FY 2021 compared to $169.0 million in FY 2020. The decrease in
Adjusted EBITDA1 was primarily due to lower mine
operating income in 2021.
Galiano Gold Inc. – Summary Q4 2021 Financial Results
Galiano Gold Inc.
(consolidated)
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
Q1
2021
|
Q4
2020
|
Net (loss) income after
tax ($m)
|
(91.0)
|
4.1
|
5.0
|
13.0
|
17.7
|
Net (loss) income after
tax per share
|
(0.40)
|
0.02
|
0.02
|
0.06
|
0.08
|
Adjusted net (loss)
income1 ($m)
|
(14.5)
|
4.1
|
5.0
|
13.0
|
17.7
|
Adjusted net (loss) per
share1
|
(0.06)
|
0.02
|
0.02
|
0.06
|
0.08
|
Adjusted
EBITDA1 ($m)
|
0.3
|
6.2
|
6.1
|
15.8
|
20.4
|
- The Company reported a net loss after tax of $91.0 million in Q4 2021 compared to net income
after tax of $17.7 million in Q4
2020. The decrease in earnings during Q4 2021 was due to
impairments recorded on the Company's equity investment in the AGM
JV and the recognition of the Company's share of the JV's net
loss.
- Adjusted EBITDA1 for Q4 2021 amounted to
$0.3 million, compared to
$20.4 million in Q4 2020. The
decrease in Adjusted EBITDA1 was primarily a result of
the Company's share of the lower earnings from the AGM.
- Cash used in operating activities in Q4 2021 was $2.3 million, compared to $1.6 million in Q4 2020. The increase in cash
used in operations was primarily due to an increase in receivables
related to the Company's JV service fee.
- As at December 31, 2021, the
Company had cash on hand of $53.5
million and $7.4 million in
receivables for a gross liquidity position of $60.9 million and no debt.
2022 AGM Outlook
While technical work to support a Mineral Reserve at the AGM is
ongoing, mining will continue at Akwasiso Cut 3 and Esaase Cut 3
until their depletion (expected in Q2 2022). Following this, the
process plant is expected to continue to operate at full capacity
(5.8Mtpa) processing a portion of the existing 9.5Mt of stockpiles
(as outlined in the press release titled "Galiano Gold Provides
Updated Mineral Resource Estimate and an Update on Mining
Operations" dated March 29,
2022).
As a result of moving to process stockpiles in the second half
of 2022, the AGM is targeting 100,000 to 120,000 ounces of gold
production in 2022.
Sustaining capital expenditure is budgeted at $22 million, with approximately $8 million for Nkran and Esaase infill drilling
and recovery test work and $7 million
for a lift of the tailings storage facility.
Development capital is forecast at $8
million, primarily for preparation of mining of Abore
expected to begin in 2023. In addition, $15
million is budgeted for exploration, mainly around the
Greater Midras, Abore and Miradani trends and assessing the
underground potential at Nkran.
At prevailing gold prices and the midpoint of 2022 production
guidance, (110,000oz), management expects the AGM to generate
positive operating cash flows of approximately $10 million from the processing of stockpiles in
2022, before non-recurring working capital items related to winding
down mining operations and payment of the Company's service fee as
operator of the JV (approximately $8
million) during Q2 2022.
This news release
should be read in conjunction with Galiano's Management's
Discussion and Analysis and the Audited Consolidated Annual
Financial Statements for the years ended December 31, 2021 and
2020, which are available at www.galianogold.com and filed on
SEDAR.
|
1 Non-IFRS Performance
Measures
The Company has included certain non-IFRS
performance measures in this press release. These non-IFRS
performance measures do not have any standardized meaning.
Accordingly, these performance measures are intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. Refer to the Non-IFRS Measures section of Galiano's
Management's Discussion and Analysis for an explanation of these
measures and reconciliations to the Company's and the JV's reported
financial results in accordance with IFRS.
- Operating Cash Costs per ounce and Total Cash Costs per
ounce
Operating cash costs are reflective of the cost of
production, adjusted for share-based payments and by-product
revenue per ounce of gold sold. Total cash costs include production
royalties of 5%. Excluded from operating cash costs are one-time
severance charges and net realizable value adjustments on stockpile
inventory resulting from lower expected gold recovery recorded in
Q4 2021 as the magnitude of such adjustments are not indicative of
current period costs.
- All-in Sustaining Costs Per Gold Ounce
The Company
has adopted the reporting of "all-in sustaining costs per gold
ounce" ("AISC") as per the World Gold Council's guidance. AISC
include total cash costs, corporate overhead expenses, sustaining
capital expenditure, capitalized stripping costs, reclamation cost
accretion and lease payments made to and interest expense on the
AGM's mining and service contractors per ounce of gold sold.
- Adjusted EBITDA
EBITDA provides an indication of the
Company's continuing capacity to generate income from operations
before taking into account the Company's financing decisions and
costs of amortizing capital assets. Accordingly, EBITDA comprises
net income (loss) excluding interest expense, interest income,
amortization and depletion, and income taxes. Adjusted EBITDA
adjusts EBITDA to exclude non-recurring items and to include the
Company's interest in the adjusted EBITDA of the JV. Other
companies and JV partners may calculate EBITDA and Adjusted EBITDA
differently.
- Free cash flow
The Company believes that in addition
to conventional measures prepared in accordance with IFRS, the
Company and certain investors and analysts use free cash flow to
evaluate the JV's performance with respect to its operating cash
flow capacity to meet non-discretionary outflows of cash. The
presentation of free cash flow is not meant to be a substitute for
the cash flow information presented in accordance with IFRS, but
rather should be evaluated in conjunction with such IFRS measures.
Free cash flow is calculated as cash flows from operating
activities of the JV adjusted for cash flows associated with
sustaining and non-sustaining capital expenditures and payments
made to mining contractors for leases capitalized under IFRS
16.
- Adjusted net (loss) income
The Company has included
the non-IFRS performance measures of adjusted net (loss) income and
adjusted net (loss) income per common share. Neither adjusted net
(loss) income nor adjusted net (loss) income per share have any
standardized meaning and are therefore unlikely to be comparable to
other measures presented by other issuers. Adjusted net (loss)
income excludes certain non-cash items from net income or net loss
to provide a measure which helps the Company and investors to
evaluate the results of the underlying core operations of the
Company and its ability to generate cash flows and is an important
indicator of the strength of our operations and the performance of
our core business.
About Galiano Gold Inc.
Galiano is focused on creating a sustainable business
capable of long-term value creation for its stakeholders through
exploration and disciplined deployment of its financial resources.
The Company currently operates and manages the Asanko Gold Mine,
located in Ghana, West Africa which is jointly owned with Gold
Fields Ltd. The Company is strongly committed to the highest
standards for environmental management, social responsibility, and
health and safety for its employees and neighbouring communities.
For more information, please visit www.galianogold.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements and information contained in this news
release constitute "forward-looking statements" within the meaning
of applicable U.S. securities laws and "forward-looking
information" within the meaning of applicable Canadian securities
laws, which we refer to collectively as "forward-looking
statements". Forward-looking statements are statements and
information regarding possible events, conditions or results of
operations that are based upon assumptions about future conditions
and courses of action. All statements and information other than
statements of historical fact may be forward looking statements. In
some cases, forward-looking statements can be identified by the use
of words such as "seek", "expect", "anticipate", "budget", "plan",
"estimate", "continue", "forecast", "intend", "believe", "predict",
"potential", "target", "may", "could", "would", "might", "will" and
similar words or phrases (including negative variations) suggesting
future outcomes or statements regarding an outlook.
Forward-looking statements in this news release include, but
are not limited to: the operating plans for the AGM under the JV
between the Company and Gold Fields; plans to transition from
mining to processing stockpiles (and the benefits that may arise
therefrom), and with respect to the re-start of mining operations
thereafter; and activities to be completed while mining activities
are temporarily paused. Such forward-looking statements are based
on a number of material factors and assumptions, including, but not
limited to: the Company and Gold Fields will agree on the manner in
which the JV will operate the AGM, including agreement on
development plans and capital expenditures; the price of gold will
not decline significantly or for a protracted period of time; the
accuracy of the estimates and assumptions underlying Mineral
Resources estimates; the ability of the AGM to continue to operate,
produce and ship doré from the AGM site to be refined during the
COVID-19 pandemic or any other infectious disease outbreak; the
Company's ability to raise sufficient funds from future equity
financings to support its operations, and general business and
economic conditions; the global financial markets and general
economic conditions will be stable and prosperous in the future;
the ability of the JV and the Company to comply with applicable
governmental regulations and standards; the mining laws, tax laws
and other laws in Ghana applicable
to the AGM and the JV will not change, and there will be no
imposition of additional exchange controls in Ghana; the success of the JV and the Company
in implementing its development strategies and achieving its
business objectives; the JV will have sufficient working capital
necessary to sustain its operations on an ongoing basis and the
Company will continue to have sufficient working capital to fund
its operations and contributions to the JV; and the key personnel
of the Company and the JV will continue their employment.
The foregoing list of assumptions cannot be considered
exhaustive.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements to differ materially from those
anticipated in such forward-looking statements. The Company
believes the expectations reflected in such forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and you are cautioned not to
place undue reliance on forward-looking statements contained
herein. Some of the risks and other factors which could cause
actual results to differ materially from those expressed in the
forward-looking statements contained in this news release, include,
but are not limited to: the mineral resource estimates may change
and may prove to be inaccurate; mineral reserves may not be
reinstated; metallurgical recoveries may not be economically
viable; risks associated with the Company ceasing its mining
operations during 2022; the Company does not currently have a LOM
estimate for the AGM due to the withdrawal of the mineral reserve;
actual production, costs, returns and other economic and financial
performance may vary from the Company's estimates in response to a
variety of factors, many of which are not within the Company's
control; AGM has a limited operating history and is subject to
risks associated with establishing new mining operations; sustained
increases in costs, or decreases in the availability, of
commodities consumed or otherwise used by the Company may adversely
affect the Company; adverse geotechnical and geological conditions
(including geotechnical failures) may result in operating delays
and lower throughput or recovery, closures or damage to mine
infrastructure; the ability of the Company to treat the number of
tonnes planned, recover valuable materials, remove deleterious
materials and process ore, concentrate and tailings as planned is
dependent on a number of factors and assumptions which may not be
present or occur as expected; the Company's operations may
encounter delays in or losses of production due to equipment delays
or the availability of equipment; outbreaks of COVID-19 and other
infectious diseases may have a negative impact on global financial
conditions, demand for commodities and supply chains and could
adversely affect the Company's business, financial condition and
results of operations and the market price of the common shares of
the Company; the Company's operations are subject to continuously
evolving legislation, compliance with which may be difficult,
uneconomic or require significant expenditures; the Company may be
unsuccessful in attracting and retaining key personnel; labour
disruptions could adversely affect the Company's operations; the
Company's business is subject to risks associated with operating in
a foreign country; risks related to the Company's use of
contractors; the hazards and risks normally encountered in the
exploration, development and production of gold; the Company's
operations are subject to environmental hazards and compliance with
applicable environmental laws and regulations; the effects of
climate change or extreme weather events may cause prolonged
disruption to the delivery of essential commodities which could
negatively affect production efficiency; the Company's operations
and workforce are exposed to health and safety risks; unexpected
costs and delays related to, or the failure of the Company to
obtain, necessary permits could impede the Company's operations;
the Company's title to exploration, development and mining
interests can be uncertain and may be contested; geotechnical risks
associated with the design and operation of a mine and related
civil structures; the Company's properties may be subject to claims
by various community stakeholders; risks related to limited access
to infrastructure and water; the Company's exploration programs may
not successfully reinstate mineral reserves; risks associated with
establishing new mining operations; the Company's common shares may
experience price and trading volume volatility; the Company has
never paid dividends; the Company's revenues are dependent on the
market prices for gold, which have experienced significant recent
fluctuations; the Company may not be able to secure additional
financing when needed or on acceptable terms; Company shareholders
may be subject to future dilution; risks related to the control of
AGM cashflows and operation through a joint venture; risks related
to changes in interest rates and foreign currency exchange rates;
risks relating to credit rating downgrades; changes to taxation
laws applicable to the Company may affect the Company's
profitability and ability to repatriate funds; ability to
repatriate funds; risks related to the Company's internal controls
over financial reporting and compliance with applicable accounting
regulations and securities laws; non-compliance with public
disclosure obligations could have an adverse effect on the
Company's stock price; the carrying value of the Company's assets
may change and these assets may be subject to impairment charges;
risks associated with changes in reporting standards; the Company's
primary asset is held through a joint venture, which exposes the
Company to risks inherent to joint ventures, including
disagreements with joint venture partners and similar risks; the
Company may be liable for uninsured or partially insured losses;
the Company may be subject to litigation; damage to the Company's
reputation could result in decreased investor confidence and
increased challenges in developing and maintaining community
relations which may have adverse effects on the business, results
of operations and financial conditions of the joint venture and the
Company and the Company's share price; the Company may be
unsuccessful in identifying targets for acquisition or completing
suitable corporate transactions, and any such transactions may not
be beneficial to the Company or its shareholders; the Company must
compete with other mining companies and individuals for mining
interests; risks related to information systems security threats;
the Company's growth, future profitability and ability to obtain
financing may be impacted by global financial conditions; and the
risk factors described under the heading "Risk Factors" in the
Company's Annual Information Form.
Although the Company has attempted to identify important
factors that could cause actual results or events to differ
materially from those described in the forward-looking statements,
you are cautioned that this list is not exhaustive and there may be
other factors that the Company has not identified. Furthermore, the
Company undertakes no obligation to update or revise any
forward-looking statements included in, or incorporated by
reference in, this news release if these beliefs, estimates and
opinions or other circumstances should change, except as otherwise
required by applicable law.
Neither Toronto Stock Exchange nor the Investment Industry
Regulatory Organization of Canada
accepts responsibility for the adequacy or accuracy of this
release.
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SOURCE Galiano Gold Inc.