Karora will host a call/webcast on August 10, 2020 at 10:00
a.m. (Eastern Time) to discuss the second quarter results.
North American callers please dial: 1-888-231-8191,
international callers please dial: (+1) 647-427-7450. For
the webcast of this event click
[here] (replay access information below).
TORONTO, Aug. 10, 2020 /CNW/ - Karora Resources Inc.
(TSX: KRR) ("Karora" or the "Corporation") is pleased to
announce its financial results and review of activities for the
three and six months ended June 30,
2020. All amounts are expressed in Canadian dollars, unless
otherwise noted. For additional information please refer to
Karora's Management's Discussion & Analysis ("MD&A") and
unaudited condensed interim consolidated financial statements for
the three and six months ended June 30,
2020 and 2019.
Highlights
- Second quarter 2020 consolidated gold production of 24,078
ounces, 2020 gold production guidance of 90,000 to 95,000 ounces is
maintained (assuming no significant interruption in operations as a
result of the COVID-19 virus).
- Second quarter 2020 consolidated all-in-sustaining-costs
("AISC")1 of US$1,065 per
ounce was at the lower end of the 2020 guidance, US$1,050-$1,200 per
ounce. The Corporation continues to target AISC costs of
approximately US $1,000 per ounce by
the end of 2020.
- Net earnings of $9.8 million,
or $0.07 per share for the second
quarter of 2020, up $9.3 million from
$0.5 million in the first quarter of
2020.
- Adjusted earnings1 of $16.6 million, or $0.12 per share for the second quarter of 2020,
up $4.0 million from $12.6 million in the first quarter of
2020.
- Adjusted EBITDA1 was $17.3
million or $0.13 per share for
the second quarter of 2020, up $3.7
million from $13.6 million in
the first quarter of 2020.
- Strengthened cash position and balance sheet: Karora ended
the second quarter of 2020 with a strong cash position of
$50.2 million, and working capital of
$43.8 million, improvements of
$11.8 million and $13.1 million respectively from March 31, 2020. The second quarter cash
balance is net of payments into gold hedge agreements totalling
$3.5 million.
- Fully leveraged to gold price: Gold hedge agreements were
concluded during the second quarter. Karora gold sales are now
fully exposed to market gold prices.
- Closed acquisition of the Spargos Reward high-grade open pit
gold Project in Western Australia
on August 7, 2020.
- Royalty reductions: Eliminated the Morgan Stanley NSR gold
royalty on the Higginsville (HGO) properties and have reached an
agreement with Maverix Metals to reduce the Beta Hunt gold royalty
by 2.75% (subject to certain conditions precedent).
- Eric Sprott share investment:
In connection with the agreement to reduce the Beta Hunt gold
royalty, Eric Sprott increased his
ownership in Karora by 26 million shares (prior to share
consolidation) and, along with an additional institutional
investor, effectively took up the entire planned share issuance
announced June 30, 2020 as part of
the agreement with Maverix Metals to reduce the Beta Hunt gold
royalty.
- Sale of remaining interest in Dumont Nickel Project: on
July 27, 2020, Karora closed the sale
of its 28% interest in the Dumont Nickel Project for proceeds of up
to $47.6 million. Karora immediately
received $10.7 million in cash,
comprised of $7.4 million from
Waterton for its interest and a $3.3
million refund of Karora's share of the cash held within the
Dumont Joint Venture. On a future sale or other monetization event,
the Corporation will be entitled to receive 15% of the net proceeds
from the transaction (net of certain agreed costs and deductions)
up to a maximum of an additional $40.2
million.
- Effective July 31, 2020, the
corporation completed a consolidation of its outstanding common
shares on the basis of one (1) post-consolidation common share for
every four point five (4.5) pre-consolidation common shares (the
"Consolidation"). The exercise price and the number of common
shares issuable under any of the Corporation's outstanding
share-based securities such as warrants, stock options and
restricted share units, as applicable, have been proportionately
adjusted.
1. Non-IFRS: the definition and reconciliation of these
measures are included in the Non-IFRS Measures section 14 of this
MD&A.
Paul Andre Huet, Chairman &
CEO, commented: "We have been extremely busy at Karora since the
start of the second quarter, with yet another strong operational
performance of sustainable gold production and steadily reducing
costs, despite challenges associated with COVID-19. Not only did we
return a strong financial quarter, but we also achieved several
major corporate objectives which have transformed the Corporation
into a top tier junior producer and have laid the foundation for
the next stage of Karora's growth as a business.
As always, our success begins with delivering on our production
results and the second quarter continued the trend of strong
results since we acquired the Higginsville mine and mill one year
ago. During the second quarter, we produced 24,078 ounces, bringing
our total production during the first six months of 2020 to 48,895
ounces, or 54% of the lower end of our 2020 guidance. Not only did
we deliver strong production, but we also continued our downward
trend in AISC despite the elevated costs associated with important
COVID-19 precautions we have initiated across our operations in
Western Australia. AISC of
US$1,065 per ounce sold during the
quarter was a US$36 per ounce
improvement over the first quarter of 2020 and continues our trend
towards our gold of US$1,000 per
ounce by the end of 2020.
On the corporate front, we have completed a number of actions
that will further strengthen our position as a gold focused
producer and which leave us well positioned to deliver exceptional
operational and financial performance in the second half of 2020.
We eliminated the Morgan Stanley NSR gold royalty on the
Higginsville properties and announced an agreement with Maverix
Metals to reduce the Beta Hunt gold royalty by 2.75%, essentially
unlocking HGO and Beta Hunt for renewed exploration growth. We also
recently announced the closing of the Spargos high-grade gold
project acquisition, which we expect to fast track into our
production profile 2021.
Further bolstering our financial position and focus on gold, we
announced the sale of our remaining 28% stake Dumont Nickel Project
providing immediate cash of nearly $11
million that can be re-invested in growing our gold
business, while retaining significant upside exposure to the value
of Dumont upon a potential future sale.
All these initiatives have already and are expected to continue
to drive substantial value for our shareholders. Looking ahead, we
expect to update the market with a resource and reserve update for
our Australian operations during the fourth quarter of 2020.
With a quarter end cash balance of $50.2
million, Karora is rapidly improving on an already strong
financial position. I am pleased to announce that we are now
unhedged on 100% of our gold production moving forward and we look
forward to full exposure to the excellent gold prices in today's
market."
COVID-19 Preparedness
Karora has continued to maintain strict control measures at its
operations in response to the COVID-19 pandemic. Procedures are in
place to ensure operating sites remain as prepared and responsive
to the situation as possible. While the situation in
Western Australia with respect to
COVID-19 has broadly improved, Karora continues to actively monitor
the advice of local health authorities and has employed a full-time
nurse and supporting medical staff to monitor the status of
individuals entering and leaving site. Furthermore, the company has
adjusted rotations for personnel on site and has chartered
Karora-only flights where prudent to ensure the health and safety
of its employees and stakeholders, which remains the company's top
priority.
Results of Operations
Table 1 - Highlights of operational results for the periods
ended June 30, 2020 and 2019
|
|
|
|
Three months
ended,
|
Six months
ended,
|
For the periods ended
June 30,
|
2020
|
2019
|
2020
|
2019
|
Gold Operations
(Consolidated)
|
|
|
|
|
Tonnes milled
(000s)
|
326
|
89
|
640
|
139
|
Recoveries
|
92%
|
93%
|
93%
|
93%
|
Gold milled, grade
(g/t Au)
|
2.26
|
3.32
|
2.30
|
3.17
|
Gold produced
(ounces)
|
24,078
|
8,418
|
48,895
|
13,196
|
Gold sold
(ounces)
|
23,185
|
8,482
|
47,811
|
14,857
|
Average realized price
(US $/ounce sold)
|
$1,609
|
$1,335
|
$1,549
|
$1,310
|
Cash operating costs
(US $/ounce sold)1
|
$935
|
$1,264
|
$950
|
$1,107
|
All-in sustaining cost
(AISC) (US $/ounce sold)1
|
$1,065
|
$1,316
|
$1,084
|
$1,193
|
Gold (Beta Hunt
Mine)1
|
|
|
|
|
Tonnes milled
(000s)
|
186
|
82
|
372
|
132
|
Gold milled, grade
(g/t Au)
|
2.64
|
3.32
|
2.61
|
3.17
|
Gold
produced(ounces)
|
16,818
|
8,114
|
33,988
|
12,892
|
Gold sold
(ounces)
|
16,024
|
8,187
|
33,102
|
14,562
|
Cash operating cost
(US $/ounce sold)1
|
$982
|
$1,026
|
$963
|
$970
|
Gold (HGO
Mine)
|
|
|
|
|
Tonnes milled
(000s)
|
140
|
7
|
268
|
7
|
Gold milled grade (g/t
Au)
|
1.75
|
1.38
|
1.87
|
1.38
|
Gold produced
(ounces)
|
7,260
|
304
|
14,907
|
304
|
Gold sold
(ounces)
|
7,161
|
295
|
14,709
|
295
|
Cash operating cost
(US $/ounce sold)1
|
$829
|
N/A2
|
$923
|
N/A2
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section 14 of Karora's MD&A dated August 10,
2020.
|
Higginsville ("HGO")
During the second quarter of 2020, 140 kt of HGO material was
milled at a grade of 1.75 g/t for production of 7,260 ounces of
gold.
Production from Baloo continued throughout the second quarter
with mining now at the 226RL north end and 228 RL south. The lower
mined grade during the second quarter when compared to the first
quarter was a result of processing of lower grade stockpiles due to
heavy rainfall restricting access to mill feed from Baloo and Beta
Hunt during the start of the second quarter. Despite these heavy
rains and increased ground water inflows into the Baloo pit, the
mining team performed exceptionally well by effectively managing
the dewatering activities and limiting its impact on productivity,
as reflected in the second quarter numbers. Recent grade control
drilling has intersected additional high grade +2 g/t material at
depth leading to a re-optimization of the entire pit. The
re-optimization is expected to deliver further mineable ounces to
the Baloo resource inventory. Completion of this work is expected
during the third quarter of 2020.
The Fairplay North pit is currently being mined in two stages to
optimize mining activities with final production originally
expected to be completed by the end of the third quarter 2020.
However, recent drilling has raised the potential for this to be
extended.
As originally announced on February 27,
2020, Karora drilling has extended mineralization at the
Hidden Secret and Mousehollow projects. Subsequent to the end of
the second quarter, the corporation began pre-stripping and mining
at Hidden Secret which will provide a third source of mill feed
from HGO for the Higginsville plant along with additional
operational flexibility. Additional metallurgical test work has
also been received confirming recoveries in excess of 90%.
An updated mineral resource estimate for the Hidden Secret
and Mousehollow projects is expected to be delivered in fourth
quarter of 2020 as part of the planned update for the Australian
operations.
Beta Hunt
During the second quarter of 2020, 186 kt of Beta Hunt material
was milled at a grade of 2.64 g/t for production of 16,818 ounces
of gold.
Beta Hunt production continues to focus on the Western Flanks
and A Zone mining areas. Mining areas within the Western Flanks
have shown widths up to 20m wide
which help underpin the increase in Beta Hunt mined production to
approximately 65,000 tonnes per month compared to budget 50,000 to
55,000 tonnes per month.
Consolidated Milling
On a consolidated basis, 326 kt were milled in the second
quarter of 2020 at an average gold grade of 2.26 g/t, to produce a
total of 24,078 ounces of gold. Mill availability remained in a
stable range, averaging over 95% which was consistent with prior
quarters. Milling operations had a third consecutive quarter of
improved cost performance with processing costs decreasing to
$21 per tonne compared to
$27 per tonne in the first
quarter of 2020. This is despite wet and clayey oxide material from
Fairplay North causing some throughput issues during the quarter.
To overcome this issue, a number of mitigation methods have been
put in place. These include the addition of a temporary screening
plant which allows the fines to bypass the crushing circuit.
For the second quarter, the HGO mill feed was approximately 60%
Beta Hunt and approximately 40% at HGO open pits. Longer term, the
aim is a mill feed ratio of approximately 50:50 Beta Hunt to HGO,
which will assist in fully optimizing the HGO plant.
Cash operating costs1 and
AISC1 were US$935 and
US$1,065 per ounce sold respectively
on a consolidated basis for the second quarter of 2020.
Outlook
Following the strong first half of the year, Karora is
maintaining its consolidated production and cost guidance for its
Australian operations (Beta Hunt and HGO) of 90,000 to 95,000
ounces of gold at an average AISC1 of US$1,050 to US$1,200 per ounce sold. Karora continues to
target AISC1 costs of approximately US$1,000 per ounce sold by the end of 2020.
1.
Reference is made to the Non-IFRS Measure section 14 of Karora's MD&A
dated August 10, 2020.
HGO Royalty Elimination
On May 11, 2020 the Corporation
announced it had reached an agreement with Morgan Stanley Capital
Group Inc. ("Morgan Stanley") to acquire the remaining 1.75% NSR
royalty for US$9 million in cash
which covers a large number of tenements at Karora's Higginsville
Gold Operations. This transaction removed the remaining NSR royalty
obligations in respect of the affected tenements, with the
exception of the mandatory Western
Australia state royalty of 2.5%. The current participation
payment arrangement with Morgan Stanley remains in place. See
Karora news release dated December 19,
2019 for details of the arrangement.
HGO Exploration
During the second quarter, resource, infill and extensional
drilling at the current Baloo and Fairplay North open pit
operations continued to support ongoing mining activities of both
pits. Grade control drilling has also commenced at the Hidden
Secret open pit, to be closely followed at Mousehollow. Mining of
these pits is expected to commence in the third quarter of 2020
with all necessary approvals now in place. Both pits are within 10
km of the HGO treatment plant.
Resource definition drilling at the Pioneer deposit continues
with the aim of advancing the project to mine ready as part of
Higginsville pipeline of open pit projects. The HGO production
pipeline strategy is to maintain a minimum of two open pits
operating in tandem at any time, to ensure flexibility with
production and fully optimize the feed blend into the HGO
plant.
The Eundynie area which surrounds the Hidden Secret and
Mousehollow pits has been identified as having significant
exploration potential with particular interest around the old
historic Eundynie mining centre located only 500m north of the planned pits. Last known mining
at Eundynie occurred in 1915, with records showing multiple
historic shafts, some extending to depths of up to 120m and grades as high as 210 g/t over
approximately 0.9m. The exploration
potential below these workings is yet to be tested and could
provide an opportunity for additional high-grade mineralization.
Drilling is planned for later in the year.
Figure 1 below shows some of the areas where Karora is either
actively advancing or evaluating as high-priority exploration
targets at HGO. In addition to ongoing exploration at Baloo and
Fairplay North, a number of tenements covered under the now
eliminated Morgan Stanley NSR royalty are now considered high
priority. These areas include Aquarius, Hidden Secret, Mousehollow,
Pioneer, the Two Boys extension, Paleochannel extensions and
Barcelona.
Given the large number of exploration brown field and greenfield
targets within close proximity of the HGO plant, the corporation is
considering options to fast track exploration. A review to
re-prioritize exploration targets is currently underway.
Preliminary observations from the work completed to date show
significant and well-recognised structural trends associated with
known economic primary mineralization plus substantial paleochannel
systems. Karora plans to undertake a targeting study as the basis
for a drill program.
Beta Hunt Royalty Reduction
On June 30, 2020, Karora and
Maverix Metals Inc. ("Maverix") announced an agreement to reduce
the gold royalty at Karora's Beta Hunt mine through the creation of
a strategic partnership which align both parties in unlocking the
significant value at Beta Hunt for their respective shareholders.
Karora reached an agreement with Maverix to reduce the royalty on
Beta Hunt gold production from 7.5% to 4.75% effective July 1, 2020, subject to certain conditions. The
reduced royalty burden on the Beta Hunt mine will allow both Karora
and Maverix shareholders to benefit from a renewed focus on
exploration, development and potential future production growth at
Beta Hunt. As consideration for the reduction, Karora will pay
US$18 million in cash to Maverix.
In connection with this transaction, which was to be paid in
cash and shares issued to Maverix as previously announced (see
Karora news release dated June 30,
2020), Karora worked alongside Maverix to effectively place
the entire planned share issuance with Eric
Sprott and one other institutional investor (see Karora news
releases dated July 14 and
July 17, 2020). Karora issued a total
of 36.5 million common shares at $0.506 per pre-consolidation share, which is the
same price per share that had been agreed with Maverix Metals Inc.
(see Karora news release dated June
30, 2020).The proceeds of the share issuance will be used to
complete the Maverix transaction. As a result, no common shares of
Karora will be issued to Maverix.
Spargos Reward Project Acquisition
On August 7, 2020, Karora
completed the acquisition of the Spargos Reward Gold Project for
A$4 million, which the corporation
elected to pay for in cash. Karora is subject to a minimum spending
commitment of A$2.5 million on
exploration and development at the Spargos Reward project during
the two-year period from the closing date. The seller is entitled
to an additional (i) A$1.5 million in
Karora shares on commencement of gold production from Spargos, and
(ii) A$1.0 million in Karora shares
if a new additional indicated gold resource of at least 165,000
ounces is delineated at the Project.
Spargos, located approximately 65 km from our Higginsville mill,
is expected to provide a new high-grade source of feed for the HGO
mill. Karora intends to fast tract Spargos into our growing
production pipeline beginning in 2021. Follow up is planned on the
exciting exploration upside at Spargos, as demonstrated by RC
drillhole 19SPRRC004 intersection of 37.1 g/t over 18m (62m to
80m), including 93.1 g/t over
2m from 78m downhole1,2. (See Karora news
release dated August 7, 2020).
- Historical drill information for hole 19SPRRC004, as provided
in Corona Resources Limited news release
(www.coronaresources.com.au), December 6,
2019.
- Downhole thickness. True thickness cannot be estimated with
available information.
Financial Highlights
Table 5 - Highlights of Second Quarter Financial
Results
(in thousands of dollars except per share amounts)
|
|
|
For the periods ended
June 30, 2020
|
Three months
ended,
|
Six months
ended,
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
56,100
|
17,249
|
110,382
|
28,112
|
Production and
processing costs
|
25,775
|
14,044
|
53,061
|
20,542
|
Earnings (loss)
before income taxes
|
17,242
|
(14,348)
|
18,126
|
(15,925)
|
Net earnings
(loss)
|
9,818
|
(14,452)
|
10,357
|
(16,029)
|
Net earnings (loss)
per share - basic
|
0.07
|
(0.13)
|
0.08
|
(0.15)
|
Net earnings (loss)
per share - diluted
|
0.07
|
(0.13)
|
0.07
|
(0.15)
|
Adjusted
EBITDA1,2
|
17,348
|
(6,613)
|
30,929
|
(6,779)
|
Adjusted EBITDA per
share - basic1,2
|
0.13
|
(0.06)
|
0.23
|
(0.06)
|
Adjusted earnings
(loss)1
|
16,579
|
(7,033)
|
29,179
|
(7,406)
|
Adjusted earnings
(loss) per share1
|
0.12
|
(0.06)
|
0.22
|
(0.07)
|
Cash flow provided by
(used in) operating activities
|
21,822
|
(4,255)
|
33,298
|
(8,014)
|
Cash investment in
property, plant and equipment and mineral property
interests
|
10,523
|
5,651
|
18,225
|
13,394
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of Karora's MD&A dated August 10,
2020.
|
2.
|
Earnings before
interest, taxes, depreciation and amortization
("EBITDA").
|
Adjusted EBITDA and Adjusted Earnings of $17.3 million and $16.6
million, respectively, were up from $(6.6) million and $(7.0)
million in 2019. During the second quarter of 2019, bulk
mining was temporarily ramped down at Beta Hunt for drilling and
there was no contribution from HGO which was acquired in
June 2019.
Table 6 - Highlights of Karora's Financial Position
(in thousands of dollars):
|
|
|
For the period
ended
|
June 30,
2020
|
December 31,
2019
|
Cash and cash
equivalents
|
50,167
|
34,656
|
Working
capital1
|
43,759
|
26,506
|
PP&E &
MPI
|
147,831
|
98,955
|
Total
assets
|
231,699
|
177,777
|
Total
liabilities
|
128,152
|
85,495
|
Shareholders'
equity
|
103,547
|
92,282
|
1
|
Working capital is a
measure of current assets (including cash and cash equivalents)
less current liabilities.
|
Karora ended the second quarter of 2020 with a strong cash
position of $50.2 million, an
increase of $11.8 million compared to
March 31, 2019. As of June 30, 2020, the Corporation has zero gold
ounces remaining in the hedge program and Karora is now hedge free.
As at June 30, 2020, Karora had a
working capital surplus of $43.8
million compared to a $26.5
million surplus as at December 31,
2019 for an improvement of $17.3
million.
For a complete discussion of financial results, please refer to
Karora's MD&A and unaudited condensed interim financial
statements for the three and six months ended June 3, 2020 and 2019.
Conference Call / Webcast
Karora will be hosting a conference call and webcast today
beginning at 10:00 a.m. (Eastern
time). A copy of the accompanying presentation can be found
on Karora's website at www.karoraresources.com.
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-231-8191
Local and international callers please dial: 647-427-7450
A live webcast of the call will be available through Cision's
website at:
Webcast Link
(https://produceredition.webcasts.com/starthere.jsp?ei=1348439&tp_key=97f01a6d91)
A recording of the conference call will be available for replay
through the webcast link, or for a one-week period beginning at
approximately 1:00 p.m. (Eastern
Time) on August 10, 2020,
through the following dial in numbers:
North American callers please dial: 1-855-859-2056; Pass Code:
7790889
Local and international callers please dial: 416-849-0833; Pass
Code: 7790889
Compliance Statement (JORC 2012 and NI 43-101)
The disclosure of scientific and technical information contained
in this news release has been reviewed and approved by Stephen
Devlin, FAusIMM, Vice-President, Exploration & Growth, Salt
Lake Mining Pty Ltd, a 100% owned subsidiary of Karora, a Qualified
Person for the purposes of NI 43-101.
About Karora Resources
Karora is focused on growing gold production and reducing costs
at its integrated Beta Hunt Gold Mine and Higginsville Gold
Operations ("HGO") in Western
Australia. The Higginsville treatment facility is a low-cost
1.4 Mtpa processing plant which is fed at capacity from Karora's
underground Beta Hunt mine and open pit Higginsville mine. At Beta
Hunt, a robust gold mineral resource and reserve is hosted in
multiple gold shears, with gold intersections along a 4 km strike
length remaining open in multiple directions. HGO has a substantial
historical gold resource and highly prospective land package
totaling approximately 1,800 square kilometers. Karora has a strong
Board and management team focused on delivering shareholder value.
Karora's common shares trade on the TSX under the symbol KRR.
Karora shares also trade on the OTCQX market under the symbol
KRRGD.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains "forward-looking information"
including without limitation statements relating to the liquidity
and capital resources of Karora, production guidance and the
potential of the Beta Hunt Mine, Higginsville Gold Operation and
Spargos Gold Project.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Karora to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; results of exploration programs; accidents,
labour disputes and other risks of the mining industry; political
instability, terrorism, insurrection or war; or delays in obtaining
governmental approvals, projected cash operating costs, failure to
obtain regulatory or shareholder approvals. For a more detailed
discussion of such risks and other factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, refer to Karora 's filings with
Canadian securities regulators, including the most recent Annual
Information Form, available on SEDAR at
www.sedar.com.
Although Karora has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this news release and Karora disclaims any obligation to update
any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable securities laws.
Cautionary Statement Regarding the Higginsville Mining
Operations
A production decision at the Higginsville gold
operations was made by previous operators of the mine, prior to the
completion of the acquisition of the Higginsville gold operations
by Karora and Karora made a decision to continue production
subsequent to the acquisition. This decision by Karora to continue
production and, to the knowledge of Karora, the prior production
decision were not based on a feasibility study of mineral reserves,
demonstrating economic and technical viability, and, as a result,
there may be an increased uncertainty of achieving any particular
level of recovery of minerals or the cost of such recovery, which
include increased risks associated with developing a commercially
mineable deposit. Historically, such projects have a much higher
risk of economic and technical failure. There is no guarantee that
anticipated production costs will be achieved. Failure to achieve
the anticipated production costs would have a material adverse
impact on the Corporation's cash flow and future profitability.
Readers are cautioned that there is increased uncertainty and
higher risk of economic and technical failure associated with such
production decisions.
SOURCE Karora Resources Inc.