(All dollar amounts are United
States dollars unless otherwise stated)
VANCOUVER, BC, May 5, 2022
/PRNewswire/ - Galiano Gold Inc. ("Galiano" or the
"Company") (TSX: GAU) (NYSE: GAU) reports first quarter
("Q1") 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: GFI) (NYSE: GFI) which is managed and operated by
Galiano. All financial information contained in this release
is unaudited and reported in US$.
Asanko Gold Mine Key Metrics (100% basis):
- Production: Gold production of 42,343 ounces, in line
with 2022 production guidance of 100,000- 120,000 ounces of
gold.
- Cost performance: Total cash costs per ounce1
of $1,361 and all-in sustaining
costs1 ("AISC") of $1,559/oz during the quarter, resulting in
positive cash flows from operations of $3.9
million and AISC margin1 of $12.0 million.
- Financial performance: Reported gold revenue of
$77.4 million generated from 41,929
gold ounces sold at an average realized price of $1,846/oz. Reported a net loss of $13.6 million during the quarter following the
recognition of a $21.0 million
severance liability, and Adjusted EBITDA1 of
$13.1 million.
- Focus on exploration: Deep directional drilling
commenced at the Nkran deposit aimed at defining the continuity and
extension of mineralization below the limits of observed Mineral
Resources. The results of this program will be used to evaluate the
underground potential of Nkran. Exploration drilling continued at
Greater Midras South while additional resource definition drilling
progressed at Miradani and Nkran Cut 3.
- Culture of Safety: Strong safety performance with no
lost-time injuries ("LTI") nor total recordable injuries ("TRI")
reported during the quarter, resulting in 12-month rolling LTI and
TRI frequency rates of 0.11 and 0.21 per million employee hours
worked, respectively. The AGM has now achieved 6.3 million employee
hours worked without an LTI.
- Stable liquidity: $45.3
million in cash, $13.1 million
in gold sales receivables and $4.1
million in gold on hand and no debt as of March 31, 2022.
- Workforce optimization: Undertook a process of
rationalizing the AGM's workforce. Severance notifications were
issued and personnel necessary to maintain current operations have
been retained with new employment contracts. Management expects to
realize near-term and sustainable cost savings and a more
streamlined and efficient operation over the remaining life of mine
as a result of the rationalization.
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1 See
"Non-IFRS performance measures"
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Galiano Gold Highlights:
- Stable balance sheet: Cash on hand of $50.4 million and $8.7
million in receivables as at March
31, 2022, while remaining debt-free.
- Earnings: Reported a net loss of $1.5 million or $0.01 per share for Q1 2022.
- Board and management changes: Marcel De Groot and Shawn Wallace confirmed that they will not be
standing for re-election at the Company's upcoming Annual General
Meeting, and Greg Martin, former CFO
of SSR Mining Inc., will be nominated for election at that meeting.
On March 23, 2022, the Company
announced that Fausto Di Trapani had
stepped down as CFO of the Company to pursue another opportunity,
and the Company appointed Matt
Freeman, SVP Finance, as its new CFO, in line with the
Company's succession plan.
"Production for the quarter was in line with expectations and is
on track to meet 2022 production guidance." said Matt Badylak, President and Chief Executive
Officer. "We are nearing completion of mining at both Esaase and
Akwasiso and have started to supplement mill feed with stockpile
material which currently is performing in line with our
expectations. We continue to advance the technical work we have
previously outlined and will provide periodic updates as we
progress through these work programs. We anticipate providing
an update to the AGM's Mineral Reserves post the completion of this
work, in Q1 2023. Finally, during the quarter, we successfully
initiated a rationalization of the AGM's workforce which, despite
an upfront cost, will deliver immediate cost savings and enable a
more streamlined and efficient operation going forward."
Asanko Gold Mine - Summary of Q1 2022 Operational and
Financial Results (100% basis)
Asanko
Gold Mine (100% basis)
|
Q1
2022
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
Q1
2021
|
Ore mined
('000t)
|
1,075
|
1,623
|
1,464
|
1,333
|
1,841
|
Waste mined
('000t)
|
5,279
|
8,752
|
10,017
|
9,073
|
9,552
|
Total mined
('000t)
|
6,354
|
10,375
|
11,481
|
10,406
|
11,393
|
Strip ratio
(W:O)
|
4.9
|
5.4
|
6.8
|
6.8
|
5.2
|
Average gold grade
mined (g/t)
|
1.3
|
1.2
|
1.3
|
1.2
|
1.3
|
Mining cost ($/t
mined)
|
4.64
|
3.75
|
3.28
|
3.03
|
3.31
|
Ore transportation from
Esaase ('000 t)
|
1,304
|
1,264
|
1,272
|
1,261
|
870
|
Ore transportation cost
($/t trucked)
|
5.82
|
6.13
|
5.88
|
6.20
|
6.48
|
Ore milled
('000t)
|
1,482
|
1,472
|
1,542
|
1,475
|
1,444
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Average mill head grade
(g/t)
|
1.3
|
1.2
|
1.1
|
1.1
|
1.4
|
Average recovery rate
(%)
|
69
|
91
|
90
|
94
|
95
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Processing cost ($/t
treated)
|
9.46
|
10.07
|
9.68
|
9.87
|
10.31
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Gold production
(oz)
|
42,343
|
50,278
|
49,543
|
50,421
|
59,999
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Gold sales
(oz)
|
41,929
|
51,368
|
48,435
|
53,348
|
62,925
|
Average realized gold
price ($/oz)
|
1,846
|
1,771
|
1,758
|
1,782
|
1,757
|
Operating cash
costs1 ($/oz)
|
1,268
|
1,168
|
1,185
|
1,147
|
901
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Total cash
costs1 ($/oz)
|
1,361
|
1,257
|
1,273
|
1,236
|
989
|
All-in sustaining
costs1 ($/oz)
|
1,559
|
1,539
|
1,598
|
1,497
|
1,158
|
All-in sustaining
margin1 ($/oz)
|
287
|
232
|
160
|
285
|
599
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Asanko Gold Mine
(100% basis)
|
Q1
2022
|
Q4
2021
|
Q3
2021
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Q2
2021
|
Q1
2021
|
All-in sustaining
margin1 ($m)
|
12.0
|
11.9
|
7.8
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15.2
|
37.7
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Revenue ($m)
|
77.5
|
91.1
|
85.3
|
95.2
|
110.8
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Income (loss) from mine
operations ($m)
|
10.6
|
(8.9)
|
13.0
|
18.1
|
35.9
|
Adjusted net income
(loss)1 ($m)
|
7.4
|
(11.4)
|
7.7
|
12.7
|
29.7
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Cash provided by
operating activities ($m)
|
3.9
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14.0
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26.5
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10.8
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35.4
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- The AGM produced 42,343 ounces of gold during the quarter, as
the processing plant achieved milling throughput of 1.5Mt of ore
processed at a grade of 1.3g/t with metallurgical recovery
averaging 69%. Refer to the Company's news release dated
February 25, 2022 for further details
on lower plant recovery.
- Sold 41,929 ounces of gold in Q1 2022 at an average realized
gold price of $1,846/oz for total
revenue of $77.5 million (including
$0.1 million of by-product silver
revenue), a decrease of $33.3 million
from Q1 2021. The decrease in revenue quarter-on-quarter was a
function of a 33% reduction in sales volumes partly offset by a 5%
increase in realized gold prices relative to Q1 2021.
- Total cost of sales (including depreciation and depletion and
royalties) amounted to $67.0 million
in Q1 2022, a decrease of $7.9
million from Q1 2021. The decrease in cost of sales was
primarily due to fewer gold ounces sold and a $4.5 million positive net realizable value
("NRV") adjustment on stockpile inventory due to higher gold prices
in Q1 2022, which were partly offset by higher ore transportation
costs ($2.0 million increase).
- Total cash costs per ounce1 were $1,361 in Q1 2022 compared to $989 in Q1 2021, a 38% increase. Cash costs were
higher in Q1 2022 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. These
factors were partially offset by the above mentioned positive NRV
adjustment on stockpile inventory in Q1 2022 that was credited
against production costs.
- Income from mine operations for Q1 2022 totaled $10.6 million compared to income from mine
operations of $35.9 million in Q1
2021. The reduction in income from mine operations was due to a
$33.3 million decrease in revenue,
partly offset by a $7.9 million
decrease in cost of sales (as described above).
- The AGM generated $3.9 million of
cash flows from operating activities during Q1 2022 compared to
$35.4 million of cash flows from
operating activities during Q1 2021. The decrease in cash flows
from operations was primarily due to lower revenues from lower gold
production and higher AISC1.
- In light of the changing nature of operations at the AGM, the
JV has undertaken a process of rationalizing its workforce.
Severance notifications were issued resulting in a $21.0 million severance liability recorded by the
AGM at March 31, 2022, and personnel
necessary to maintain current operations have been retained with
new employment contracts. Despite the upfront cost associated with
the restructuring, management expects to realize near-term and
sustainable costs savings and a more streamlined and efficient
operation going forward as well as ensuring the severance liability
is permanently eliminated over the next two years.
Galiano Gold Inc. – Summary Q1 2022 Financial Results
Galiano Gold Inc.
(consolidated)
|
Q1 2022
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
Q1
2021
|
Net (loss) income after
tax ($m)
|
(1.5)
|
(91.0)
|
4.1
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5.0
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13.0
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Net (loss) income after
tax per share
|
(0.01)
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(0.40)
|
0.02
|
0.02
|
0.06
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Adjusted net (loss)
income1 ($m)
|
(1.5)
|
(14.5)
|
4.1
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5.0
|
13.0
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Adjusted net (loss) per
share1
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(0.01)
|
(0.06)
|
0.02
|
0.02
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0.06
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- The Company reported a net loss after tax of $1.5 million in Q1 2022 compared to net income
after tax of $13.0 million in Q1
2021. The decrease in earnings during Q1 2022 was due to a
reduction in the JV's net earnings.
- Cash used in operating activities in Q1 2022 was $3.2 million, compared to $4.7 million in Q1 2021. The decrease in cash
used in operations was primarily due to an increase in accounts
payable and accrued liabilities, partly offset by an increase in
receivables related to the Company's JV service fee.
- As at March 31, 2021, the Company
had cash on hand of $50.4 million and
$8.7 million in receivables for a
gross liquidity position of $59.1
million and no debt.
This news release
should be read in conjunction with Galiano's Management's
Discussion and Analysis and the Unaudited Condensed Consolidated
Interim Financial Statements for the three months ended March 31,
2022 and 2021, which are available at www.galianogold.com and filed
on SEDAR.
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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.
- 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's vision is to build a sustainable business capable of
long-term value creation for its stakeholders through a combination
of exploration, accretive M&A activities and the 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.