Karora will host a call/webcast on March 14, 2022 at 10:00
a.m. (Eastern Time) to discuss the fourth quarter and full
year 2021 results. North American callers please dial:
1-888-664-6392, international callers please dial: (+1)
416-764-8659. For the webcast of this event click
[here] (replay access information
below).
TORONTO, March 14, 2022 /CNW/ - Karora Resources Inc.
(TSX: KRR) (OTCQX: KRRGF) ("Karora" or the "Corporation") is
pleased to announce its financial results and review of activities
for the three and twelve months ended December 31, 2021. 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 audited consolidated financial statements
for the years ended December 31, 2021
and 2020.
Highlights
- Record annual gold production of 112,814 ounces (including
27,925 ounces in the fourth quarter) achieving the upper end of
2021 guidance target of 105,000 - 115,000 ounces. Gold sales for
2021 were a record 113,628 ounces (28,734 ounces for the fourth
quarter).
- AISC1 was US$1,012 per
ounce for 2021, achieving the lower end of the 2021 guidance range
of US$985 – US$1,085 per ounce sold (US$1,042 per ounce for the fourth quarter),
representing an improvement compared to AISC of US$1,026 per ounce sold for 2020.
- Net earnings for 2021 of $27.5
million ($0.18 per share) was
down compared to $88.1 million for
2020. Net earnings during the fourth quarter of 2021 were
$6.1 million ($0.04 per share), compared to $42.9 million ($0.30 per share) for the fourth quarter of 2020.
In 2020, Karora recorded a positive impact of an after-tax
impairment reversal of property, plant and equipment of
$25.3 million ($0.18 per share) and the fourth quarter of 2020
included a $26.1 million deferred tax
benefit.
- Adjusted earnings1 for 2021 of $48.6 million ($0.33 per share) down $23.5 million compared to 2020. For the fourth
quarter of 2021, adjusted earnings were $12.0 million ($0.08 per share) compared to $39.0 million ($0.27 per share) in 2020.
- Adjusted EBITDA1 for 2021 of $104.3 million ($0.70 per share) up $8.2
million compared to 2020. For the fourth quarter of 2021,
Adjusted EBITDA was $25.0 million
($0.16 per share) compared to
$31.7 million ($0.22 per share) in 2020.
- Cash flow from operating activities of $106.5 million, a 13% increase compared to 2020.
For the fourth quarter of 2021, cash flow from operating activities
was $33.5 million, a 12% decrease
compared to $38.0 million in
2020.
- Karora increased its cash position to $91.0 million at December
31, 2021 after high utilization of capital at the new mining
operations at Higginsville and accelerated exploration programs
across operations.
- During 2021 Karora became one of the world's first carbon
neutral gold producers for emissions from its own operations (Scope
1 emissions) and purchased electricity consumption (Scope 2
emissions) following the purchase and retirement of verified carbon
offset credits. The offset projects include reforestation and
conservation initiatives in Australia, among other projects.
- Production commenced at the Spargos open pit mine in the fourth
quarter of 2021 in line with schedule. Planning and approvals are
underway to extend the open pit at depth.
- The fourth quarter saw the completion of the Phase I mill
upgrade to 1.6 million tonnes per annum ("Mtpa"). Advanced
engineering is underway for the Phase II mill expansion to 2.5
Mtpa.
- Beta Hunt Second Decline commenced waste development from
underground in the fourth quarter of 2021, having advanced 60
metres as at December 31, 2021. The
box cut and portal contracts were awarded in early 2022 and
contractors have mobilized on site.
- Drilling at Beta Hunt has extended Fletcher Shear Zone (Beta Hunt) gold
mineralization to over 500 metres along strike and 150 metres in
vertical extent. Potential exists for gold mineralization to extend
for up to 2 kilometres of strike length. New results include 3.3
g/t over 9.5 metres, including 5.5 g/t over 4.4 metres and 18.5 g/t
over 0.8 metres.
- Results received early 2022 for Gamma Block (Beta Hunt)
drilling completed in 2021 show the 50C nickel trough extends
greater than 200 metres in strike and up to 120 metres in width. In
addition to the discovery intersection of 11.6% Ni over 4.6 metres,
recent drilling intersected 3.2% Ni over 3.1 metres and 5.1% Ni
over 2.1 metres.
- New gold mineralized setting intersected beneath the 50C nickel
trough in the Gamma Block (Beta Hunt) where drilling has confirmed
significant mineralization over a 200 metre strike length including
intercepts of returned an intercepts of 40.5 g/t over 4.0 metres,
3.4 g/t over 33.6 metres (including 6.0 g/t over 10.5 metres), and
7.6 g/t over 4.6 metres.
- West of the Larkin Gold Zone (Beta Hunt), drilling returned the
widest ever mineralized interval ever recorded at Beta Hunt of 1.5
g/t over 90.0 metres, including 50.9 g/t over 0.4 metres.
Paul Andre Huet, Chairman &
CEO, commented: "During 2021 we produced a record 112,814 ounces of
gold placing us in the upper end our guidance range of 105,000
-115,000 ounces. AISC1 costs for 2021 were very strong
at US$1,012 per ounce sold, despite
numerous headwinds, placing us at the lower end of our guidance
range of US$985 -US$1,085 for 2021. The fact that we were able to
achieve guidance for production and costs is an accomplishment our
team is very proud of given all the uncertainties due to Covid-19
pressures that impacted labour availability and caused numerous
supply chain issues that are certainly well known. Over the last
two years, we have demonstrated an ability to overcome many
challenges and I am confident we will continue to do so with
whatever 2022 brings. I am also proud that that Karora became one
of the first junior gold producers to achieve carbon neutrality in
2021 for Scope 1 and 2 at its own operations following the
purchase and retirement of verified carbon offset credits.
We . We continue to be focused on our efforts in this area
across the organization and we are now developing a pathway to a
long-term carbon emissions reduction strategy. We will include more
information on our strategy development in our inaugural ESG report
expected in the coming weeks.
Karora delivered solid financial performance in 2021 with
Adjusted EBITDA1 of $104.3
million or $0.70 per share and
operating cash flow of $106.5 million
or $0.71 per share. Our 2021 Adjusted
earnings1 were $48.6
million or $0.33 per share.
Karora ended 2021 with a strong cash balance of $91.0 million. With a very healthy balance sheet,
we are well positioned to deliver our fully funded organic growth
plan to double production from approximately 100,000 gold ounces in
2020 to approximately 200,000 ounces in 2024.
Given the recent increased nickel market activity, I am
particularly excited about our prospects to increase our nickel
production, having recently provided Karora's first payable nickel
production guidance of 450 - 550 tonnes in 2022. With our recent
nickel exploration successes, we look forward to nickel production
increases beginning in 2023 that I expect will be a real
differentiator for Karora going forward. With the current strong
nickel price environment, we expect to see increase by-product
credits to lower our gold production costs. We are making every
effort to capitalize on this opportunity and are moving as quickly
as possible to bring new nickel areas such as the 50C and 30C
discoveries into production early next year. Additionally, we will
be providing an updated nickel resource at Beta Hunt around mid
year."
- Non-IFRS: the definition and reconciliation of these measures
are included in the Non-IFRS Measures section of this news release
and Karora's MD&A dated March 14,
2022.
COVID-19 Protocols
In response to the global COVID-19 pandemic, protocols and
contingency plans have been established by Karora to comply with
government actions and mitigate operational impacts which include
the charter of our own aircraft to service our operations, review
of staff rostering to run two distinctive crews, employment of a
full time medical team to oversee screening and testing protocols
on site and the immunization of our workforce. Karora's management
has maintained its Run of Mine ("ROM") stockpile levels should
disruptions to the mining operations or supply chain occur in the
future.
Management continues to monitor developments in order to be in a
position to take appropriate actions to minimize any significant
impact on the Corporation's operations including with respect to
suppliers, service providers and employees due to the ongoing
global COVID-19 pandemic.
Results of Operations
Table 1 - Highlights of operational results for the periods
ended September 30, 2021 and
2020
|
Three months
ended,
|
Year
ended,
|
For the periods ended
December 31,
|
2021
|
2020
|
2021
|
2020
|
Gold Operations
(Consolidated)
|
|
|
|
|
Tonnes milled
(000s)
|
367
|
331
|
1,441
|
1,325
|
Recoveries
|
94%
|
93%
|
94%
|
93%
|
Gold milled, grade
(g/t Au)
|
2.53
|
2.52
|
2.60
|
2.33
|
Gold produced
(ounces)
|
27,925
|
25,637
|
112,814
|
99,249
|
Gold sold
(ounces)
|
28,734
|
27,933
|
113,628
|
98,656
|
Average exchange rate
(USD/CAD)
|
1.2603
|
1.3030
|
1.2536
|
1.3377
|
Average realized price
(US $/ounce sold)
|
$1,802
|
$1,871
|
$1,792
|
$1,480
|
Cash operating costs
(US $/oz sold)1
|
$961
|
$843
|
$917
|
$925
|
All-in sustaining cost
(AISC) (US $/oz sold)1
|
$1,042
|
$912
|
$1,012
|
$1,026
|
Gold (Beta Hunt
Mine)
|
|
|
|
|
Tonnes milled
(000s)
|
206
|
182
|
884
|
745
|
Gold milled, grade
(g/t Au)
|
2.61
|
3.13
|
2.95
|
2.77
|
Gold produced
(ounces)
|
16,120
|
16,965
|
78,476
|
66,479
|
Gold sold
(ounces)
|
16,372
|
18,234
|
78,810
|
65,838
|
Cash operating cost
(US $/oz sold)1
|
$944
|
$836
|
$840
|
$943
|
Gold (HGO
Mine)
|
|
|
|
|
Tonnes milled
(000s)
|
161
|
149
|
557
|
580
|
Gold milled grade (g/t
Au)
|
2.43
|
1.95
|
2.05
|
1.90
|
Gold produced
(ounces)
|
11,805
|
8,672
|
34,338
|
32,770
|
Gold sold
(ounces)
|
12,362
|
9,698
|
34,818
|
32,818
|
Cash operating cost
(US $/oz sold)1
|
$984
|
$858
|
$1,092
|
$886
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section
of this news release and Karora's MD&A dated March 14,
2022.
|
Consolidated Operations
For 2021, Karora's gold operations milled 1,441,000 tonnes of
material at an average grade of 2.60 g/t to produce 112,814 ounces
of gold. Tonnes milled were 9% higher in 2021 compared to 2020
primarily due to increase throughput resulting from the Phase I
expansion of the milling capacity of approximately 15%, or 550
tonnes per day, to 1.6 million tonnes per annum from the prior
capacity which was completed in the fourth quarter of 2021. For the
fourth quarter, tonnes milled were 367,000 tonnes at a grade of
2.53 g/t for gold production of 27,925 ounces.
For 2021, the mill feed was made up of approximately 61%
material from the Beta Hunt underground and 39% material from
Higginsville Central and Spargos, in line with the expected feed
ratios for the year.
Beta Hunt
For 2021, 884,000 tonnes of material was milled at a grade of
2.95 g/t, increases of 19% and 6%, respectively, compared to 2020.
For the fourth quarter of 2021, 206,000 tonnes were milled at a
grade of 2.61 g/t.
Beta Hunt continued its staged fleet replacement program during
the fourth quarter with the acquisition of two new AD60 trucks, and
a new jumbo drill was acquired which will be delivered in the
second quarter of 2022. The replacement program is aimed at
improving equipment reliability and positioning the Company for
increased production as Karora moves forward with its growth plan.
The stage 1 ventilation upgrade was also delivered after completion
of two underground raise bores and associated development and
infrastructure. Increased ventilation capacity is a critical
component for future higher mining rates. With these two
investments complete, Karora's growth plan remains on schedule.
Currently, nickel production at Beta Hunt is limited to remnant
nickel Mineral Resources south of the Alpha Island Fault, which is
the source of 2022 planned nickel production of between 450 - 550
tonnes of payable nickel. In the future, nickel production is
expected to increase as new nickel areas such as the 30C and 50C
discoveries are developed for mining. A resource update for these
areas is expected by mid year 2022.
Higginsville ("HGO") Central
HGO material milled during 2021 was 557,000 tonnes at a grade of
2.05 g/t, a 2% decrease and 8% increase, respectively compared to
2020. For the fourth quarter, 161,000 tonnes of HGO material was
milled at an average grade of 2.43 g/t.
Hidden Secret was the main source of ore for processing during
the fourth quarter at HGO. Mine production from Hidden Secret
is expected to end in the first quarter of 2022 as it will be
replaced with production from the new Spargos open pit, which began
ramping up production in the fourth quarter of 2021.
At Spargos, the initial pre-strip development was completed
during the fourth quarter and all infrastructure is in place
for the Stage 1 open pit to continue ramping up mine production.
Preparations for Stage 2 of the mine are in progress to extend the
pit at depth ahead of future potential underground
operations.
Mine production from the Two Boys Mine continued in the fourth
quarter. Mine development is ongoing and will provide underground
drilling access to upper levels of the mine, along with
rehabilitation activities to enable access to the higher grade
mineralized zones at depth.
At the Aquarius underground mine, decline development continued,
advancing to approximately 200 metres during the fourth quarter.
First mineralized material from development is expected to be
delivered to the mill in the first quarter of 2022, to be followed
by stope production.
Cash Operating Costs and AISC1
The AISC1 cost performance for 2021 of US$1,012 per ounce sold was at the lower end of
the full year 2021 AISC1 guidance range of US$985-$1,085 per
ounce. For the fourth quarter, consolidated cash operating
costs1 and AISC1 were US$961 and US$1,042
per ounce sold, increases of 14% and decrease of 14%, respectively
relative to the comparable 2020 periods, primarily due to Covid-19
related cost pressures including a tight labour market. Karora is
pleased with the announcement of the Western Australia border opening which, over
time, is expected to alleviate some of the labour availability
issues experienced across the region.
Outlook
On June 28, 2021 Karora announced
three-year production guidance as part of a multi-year growth plan
that is expected to see gold production increase from 99,249 ounces
in 2020 to a range of 185,000 – 205,000 ounces in 2024 at an AISC
of US$885 – US$985 per ounce sold. On February 7, 2022 Karora announced production
guidance for 2022 of between 110,000 to 135,000 ounces of gold at
an AISC of US$950 to US$1,050 per ounce sold. Payable nickel
production guidance for 2022 is between 450 to 550 tonnes and is
treated as a by-product credit that is reflected in AISC. The
growth plan and 2022 guidance assumes no significant disruption in
operations as a result of the COVID-19 virus and any associated
regulatory actions.
Table 2 below outlines production, cost and capital investment
guidance for 2022-2024.
Table 2 – Consolidated Multi-Year Guidance to 2024
Production &
Costs
|
|
2022
|
2023
|
2024
|
Gold
Production
|
Koz
|
110 – 135
|
150 – 170
|
185 - 205
|
All-in sustaining
costs
|
US$/oz
|
950 – 1,050
|
890 – 990
|
885 - 985
|
Capital
Investments
|
Sustaining
Capital
|
A$ (M)
|
9 – 15
|
11 – 16
|
18 - 23
|
Growth
Capital
|
A$ (M)
|
52 – 65
|
47 – 57
|
30 - 40
|
Exploration &
Resource
Development
|
A$ (M)
|
21 – 24
|
22 –
25
|
20 – 23
|
(1)
|
2021 Guidance, which
was announced in January 2021 (see Karora news release dated
January 19, 2021), is unchanged. This production guidance
through 2024 is based on the 2020 year-end Mineral Reserves and
Mineral Resources announced on December 16, 2020.
|
(2)
|
The Capital Investment
amounts listed above, which the Corporation expects to fund with
cash on hand and cashflow from operations, includes the capital
required during the applicable periods to expand the capacity of
the Higginsville mill to 2.5 Mtpa. See below for further detail
regarding this expansion.
|
(3)
|
The
material assumptions associated with the expansion of Beta Hunt
mining production rate to 2.0 Mtpa in 2024 include the addition of
a second ramp decline system driven parallel to the ore body,
ventilation and other infrastructure that is required to support
these areas, and an expanded trucking fleet. The Capital Investment
amounts listed above, which the Corporation expects to fund with
cash on hand and cashflow from operations, include the capital
required during the applicable periods to fund this production
expansion. See below for further detail regarding this
expansion.
|
(4)
|
The Corporation's
guidance assumes targeted mining rates and costs, availability of
personnel, contractors, equipment and supplies, the receipt on a
timely basis of required permits and licenses, cash availability
for capital investments from cash balances, cash flow from
operations, or from a third-party debt financing source on terms
acceptable to the Corporation, no significant events which impact
operations, such as COVID-19, nickel price of US$16,000 per tonne,
as well as an A$ to US$ exchange rate of 0.78 and A$ to C$ exchange
rate of 0.91. Assumptions used for the purposes of guidance may
prove to be incorrect and actual results may differ from those
anticipated. See below "Cautionary Statement Concerning
Forward-Looking Statements".
|
(5)
|
Exploration expenditures include capital expenditures related to
infill drilling for Mineral Resource conversion, capital
expenditures for extension drilling outside of existing Mineral
Resources and expensed exploration. Exploration expenditures also
includes capital expenditures for the development of exploration
drifts.
|
(6)
|
Capital expenditures
exclude capitalized depreciation.
|
(7)
|
AISC
guidance includes general and administrative costs and excludes
share-based payment expense.
|
(8)
|
See "Non-IFRS
Measures" set out at the end of this news release Karora's MD&A
dated for the period ended December 31, 2021.
|
The growth plan will be driven by an expansion of Beta Hunt
underground mine production to 2.0 Mtpa by 2024, from 886 Mt
recorded in 2021. Increased production from Beta Hunt will be
complemented by ore from Spargos and HGO Central. The increased
tonnage will be processed by the Higginsville mill, which will be
expanded to a capacity of 2.5 Mtpa by 2024 (Phase II). This Phase
II expansion follows the recent Phase I expansion to 1.6 Mtpa from
1.4 Mtpa.
Exploration and Resource Definition Drilling
At Beta Hunt, almost 10,000 metres of exploration and resource
development drilling was completed during the fourth quarter.
Drilling during the quarter was focused on 1) extensional and
infill drilling from underground aimed at extending and upgrading
the Western Flanks along the northern and southern margin of the
current Mineral Resource; 2) extensional drilling from the surface,
targeting A Zone North; 3) nickel drilling directed at
outlining the strike extent of the 50C Gamma Block and upgrading
the parallel 10C nickel Mineral Resource; and 4) gold exploration
holes targeting new and parallel gold mineralized systems in the
Hunt, Beta and Gamma Blocks (see figure 1 for location
references).
Drilling at Beta Hunt is primarily directed at supporting
Karora's multi-year growth plan and continues to deliver strong
results, with the aim to upgrade and extend the gold mineralized
shear zones. Results are to be incorporated into a gold Mineral
Resource update planned for early 2022. With respect to nickel,
drilling at the 50C nickel trough discovery in the Gamma Block has
extended the strike length to over 200 metres and up to 120 metres
in width in just 10 months since the discovery hole, leveraging the
significant advantage of the extensive infrastructure in place at
Beta Hunt. The 50C nickel discovery remains open to the southeast
for up to 2.6 kilometres of potential strike length, including a
historical of 11.1% Ni over 9.5 metres located 1 kilometre to the
southeast of the discovery hole. An updated nickel Mineral Resource
incorporating the 50C discovery, 30C discovery and 10C upgrade and
extension is expected to be completed by mid year 2022.
Figure 1: Beta Hunt plan view showing recent drill traces and
significant gold intersections
At Higginsville, resource definition drilling totaled 16,334
metres during the fourth quarter of 2021 and for the full year
exploration and resource definition drilling totaled 79,408 metres.
Drilling operations utilized up to five rigs operating at any one
time during the quarter.
Resource definition drilling programs at HGO were implemented to
support life of mine objectives for the active Two Boys, Aquarius
and Hidden Secret mines. Drilling was focused on extensions and
upgrades to the Two Boys and Aquarius deposits and extensions to
the Hidden Secret open pit and Mousehollow open pit Mineral
Resources.
Financial Highlights
Table 3 – 2021 Financial Highlights
(in thousands of
dollars except per share amounts)
|
Three months
ended
|
Year ended
|
For the periods ended
December 31,
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
$66,972
|
$69,349
|
$264,186
|
$239,136
|
Production and
processing costs
|
32,514
|
27,787
|
121,893
|
108,880
|
Earnings before income
taxes1
|
9,523
|
26,799
|
46,064
|
95,133
|
Net earnings
|
6,112
|
42,906
|
27,467
|
88,130
|
Net earnings per share
- basic
|
0.04
|
0.30
|
0.18
|
0.63
|
Net earnings per share
- diluted
|
0.04
|
0.28
|
0.18
|
0.61
|
Adjusted
EBITDA1,2
|
25,048
|
31,654
|
104,280
|
96,040
|
Adjusted EBITDA per
share - basic1,2
|
0.16
|
0.22
|
0.70
|
0.69
|
Adjusted
earnings1
|
12,042
|
38,950
|
48,639
|
72,125
|
Adjusted earnings per
share – basic1
|
0.08
|
0.27
|
0.33
|
0.52
|
Cash flow provided by
operating activities
|
33,515
|
37,956
|
106,460
|
94,398
|
Cash investment in
property, plant and equipment and
mineral property interests
|
(25,791)
|
(19,985)
|
(92,016)
|
(46,305)
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this news release and Karora's
MD&A dated March 14, 2022.
|
2.
|
Earnings before
interest, taxes, depreciation, and amortization
("EBITDA").
|
For the year ended December 31,
2021, Karora generated revenue of $264.2 million compared to 2020 revenue of
$239.1 million. The increase in
revenue in 2021 was the result of higher gold ounces sold and
higher average realized prices on ounces sold which increased by
15% and 21%, respectively.
Revenue for the fourth quarter of 2021 was $67.0 million. During the comparable period in
2020, Karora generated revenue of $69.3
million. The slight decrease in year-over-year revenue in
2021 was the primarily due to lower 4% lower average realized
prices on ounces sold in the 2021 fourth quarter compared to the
fourth quarter of 2020.
Net earnings for the 2021 were $27.5
million, or $0.18 per share
compared to net earnings of $88.1
million, or $0.63 per share,
for the comparable period in 2020. The year-over-year decrease is
primarily due to the impairment reversal on property, plant and
equipment of $36.1 million recorded
in 2020 as well as a tax restructuring recovery within the
Australian operations of $26.1
million during the comparable 2020 period.
Net earnings for the fourth quarter of 2021 were $6.1 million, or $0.04 per share compared to $42.9 million, or $0.30 per share for the comparable period in
2020, a decrease of $36.1 million.
The decrease was mainly attributable to a decrease in operating
earnings of $8.1 million as well as a
tax restructuring recovery within the Australian operations of
$26.1 million during the comparable
2020 period.
Adjusted net earnings1 for 2021 were $48.6 million or $0.33 per share. Compared to $72.1 million or $0.52 per share in 2020. Adjusted net
earnings1 for the fourth quarter were $12.0 million, or $0.08 per share, compared to $39.0 million or $0.27 per share in the comparable period in
2020.
Adjusted EBITDA1 for 2021 was $104.3 million, or $0.70 per share, an $8.3
million increase compared to $96.0
million, or $0.69 per share,
in 2020. Adjusted EBITDA1 for the fourth quarter of 2021
was $25.0 million, or $0.16 per share, $6.7
million lower compared to $31.7
million, or $0.22 per share,
in the fourth quarter of 2020.
- Non-IFRS: the definition and reconciliation of these measures
are included in the Non-IFRS Measures section of this news release
and Karora's MD&A dated March 14,
2022.
Table 4 - Highlights of Karora's Financial Position
(in thousands of dollars):
For the period
ended
|
December 31,
2021
|
December 31,
2020
|
Cash and cash
equivalents
Working
capital1
PP&E &
MPI
Total
assets
Total
liabilities
Shareholders'
equity
|
91,005
64,447
300,680
436,333
184,968
251,365
|
79,695
56,835
239,044
350,099
142,895
207,204
|
1
|
Working capital is a
measure of current assets (including cash and cash equivalents)
less current liabilities.
|
Karora's cash position increased to $91.0
million as at December 31,
2021, an increase $11.3
million compared to December 31,
2020. Karora's working capital was $64.4 million as of December 31, 2021.
For a complete discussion of financial results, refer to
Karora's MD&A and audited consolidated financial statements for
the years ended December 31, 2021 and
2020.
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: 1-888-664-6392
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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 March 14, 2022,
through the following dial in numbers:
North American callers please dial: 1-888-390-0541; Pass Code:
834178 #
Local and international callers please dial: 416-764-8677; Pass
Code: 834178 #
Non-IFRS Measures
This news release refers to cash operating cost, cash operating
cost per ounce, all-in sustaining cost, EBITDA, adjusted EBITDA and
adjusted EBITDA per share, adjusted earnings, adjusted earnings per
share and working capital which are not recognized measures under
IFRS. Such non-IFRS financial measures do not have any standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other issuers.
Management uses these measures internally. The use of these
measures enables management to better assess performance trends.
Management understands that a number of investors and others who
follow the Corporation's performance assess performance in this
way. Management believes that these measures better reflect the
Corporation's performance and are better indications of its
expected performance in future periods. This data is 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.
In November 2018, the World Gold
Council ("WGC") published its guidelines for reporting all-in
sustaining costs and all-in costs. The WGC is a market development
organization for the gold industry and is an association whose
membership comprises leading gold mining companies. Although the
WGC is not a mining industry regulatory organization, it worked
closely with its member companies to develop these non-IFRS
measures. Adoption of the all-in sustaining cost and all-in cost
metrics is voluntary and not necessarily standard, and therefore,
these measures presented by the Corporation may not be comparable
to similar measures presented by other issuers.
The following tables reconcile these non-IFRS measures to the
most directly comparable IFRS measures:
Mining Operations
Cash Operating and All-in Sustaining Costs
The Corporation uses these measures internally to evaluate the
underlying operating performance of the Australian Operations.
Management believes that providing cash operating cost data allows
the reader the ability to better evaluate the results of the
underlying operations.
Australian Mining
Operations Consolidated
Mining Operations
|
|
Three months
ended,
|
Years ended,
|
For the periods ended
December 31,
|
2021
|
2020
|
2021
|
2020
|
Production and
processing costs
|
$38,855
|
$34,361
|
$146,941
|
$135,060
|
Royalty expense:
Government of Western Australia
|
1,780
|
1,738
|
6,547
|
5,541
|
Royalty expense:
Other
|
1,876
|
2,635
|
9,871
|
11,266
|
By-product
credits
|
(1,357)
|
(1,466)
|
(7,728)
|
(3,671)
|
Adjustment
1
|
(6,341)
|
(6,574)
|
(25,048)
|
(26,180)
|
Operating costs
(C$)
|
$34,813
|
$30,694
|
$130,583
|
$122,016
|
General and
administrative expense – Australia 2,3
|
2,503
|
1,954
|
8,302
|
6,084
|
Sustaining capital
expenditures
|
422
|
549
|
5,215
|
7,247
|
All-in sustaining costs
(C$)
|
$37,738
|
$33,197
|
$144,100
|
$135,347
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.77
|
0.80
|
0.76
|
Operating costs
(US$)
|
$27,623
|
$23,556
|
$104,186
|
$91,272
|
All-in sustaining
costs (US$)
|
$29,944
|
$25,477
|
$114,995
|
$101,204
|
Operating costs
(A$)
|
$37,910
|
$32,231
|
$138,840
|
$132,145
|
All-in sustaining
costs (A$)
|
$41,096
|
$34,859
|
$153,182
|
$146,709
|
Ounces of gold
sold
|
28,734
|
27,933
|
113,628
|
98,656
|
Cash operating costs
per ounce sold (US$)
|
$961
|
$843
|
$917
|
$925
|
All-in sustaining
cost per ounce sold (US$)
|
$1,042
|
$912
|
$1,012
|
$1,026
|
Cash operating costs
per ounce sold (A$)
|
$1,319
|
$1,154
|
$1,222
|
$1,339
|
All-in sustaining
cost per ounce sold (A$)
|
$1,430
|
$1,248
|
$1,348
|
$1,487
|
1.
|
Negative adjustment for
intercompany tolling transactions
|
2.
|
G&A costs were
reduced with R&D and Due Diligence costs
|
3.
|
G&A: share-based
payments were excluded in calculating AISC
|
Beta Hunt
Mine
|
|
Three months
ended,
|
Years ended,
|
For the periods ended
December 31,
|
2021
|
2020
|
2021
|
2020
|
Production and
processing costs
|
$18,027
|
$17,878
|
$76,660
|
$73,236
|
Royalty expense:
Government of Western Australia
|
1,013
|
1,190
|
4,704
|
3,927
|
Royalty expense:
Other
|
1,764
|
2,253
|
9,178
|
9,531
|
By-product
credits
|
(1,320)
|
(1,466)
|
(7,630)
|
(3,577)
|
Operating costs
($)
|
$19,484
|
$19,855
|
$82,912
|
$83,117
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.77
|
0.79
|
0.75
|
Operating costs
(US$)
|
$15,460
|
$15,238
|
$66,176
|
$62,117
|
Operating costs
(A$)
|
$21,218
|
$20,848
|
$70,752
|
$90,072
|
Ounces of gold
sold
|
16,372
|
18,234
|
78,810
|
65,838
|
Cash operating costs
per ounce sold (US$)
|
$944
|
$836
|
$840
|
$943
|
Cash operating costs
per ounce sold (A$)
|
$1,296
|
$1,143
|
$1,117
|
$1,368
|
Higginsville
Mine
|
|
Three months
ended,
|
Years ended,
|
For the periods ended
December 31,
|
2021
|
2020
|
2021
|
2020
|
Production and
processing costs
|
$20,828
|
$16,483
|
$70,281
|
$61,824
|
Royalty expense:
Government of Western Australia
|
767
|
548
|
1,843
|
1,614
|
Royalty expense:
Other
|
112
|
382
|
693
|
1,735
|
By-product
credits
|
(37)
|
-
|
(98)
|
(94)
|
Adjustment1
|
(6,341)
|
(6,574)
|
(25,048)
|
(26,180)
|
Operating costs
($)
|
$15,328
|
$10,839
|
$47,671
|
$38,899
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.77
|
0.80
|
0.75
|
Operating cost
(US$)
|
$12,162
|
$8,318
|
$38,010
|
$29,092
|
Operating cost
(A$)
|
$13,191
|
$11,383
|
$50,847
|
$42,073
|
Ounces of gold
sold
|
12,362
|
9,698
|
34,818
|
32,818
|
Cash operating costs
per ounce sold (US$)
|
$984
|
$858
|
$1,092
|
$886
|
Cash operating
costs per ounce sold (A$)
|
$1,350
|
$1,174
|
$1,460
|
$1,282
|
1.
|
Negative adjustment for
intercompany tolling transactions
|
Quarterly Consolidated
Mining Operations
|
For the three months
ended,
|
Dec 31,
2021
|
Sep 30,
2021
|
Jun 30,
2021
|
Mar 31,
2021
|
Dec 31,
2020
|
Production and
processing costs
|
$38,855
|
$36,149
|
$35,860
|
$36,077
|
$34,361
|
Royalty expense:
Government of Western Australia
|
1,780
|
1,679
|
1,700
|
1,388
|
1,738
|
Royalty expense:
Other
|
1,876
|
2,972
|
2,656
|
2,367
|
2,635
|
By-product
credits
|
(1,357)
|
(2,821)
|
(1,294)
|
(2,256)
|
(1,466)
|
Adjustment1
|
(6,341)
|
(5,641)
|
(6,290)
|
(6,776)
|
(6,574)
|
Operating costs
($)
|
$34,813
|
$32,338
|
$32,632
|
$30,800
|
$30,694
|
General and
administration expense – Australia3
|
2,503
|
1,916
|
2,762
|
1,121
|
1,954
|
Sustaining capital
expenditures
|
422
|
994
|
1,791
|
2,008
|
549
|
All-in sustaining costs
($)
|
$37,738
|
$35,248
|
$37,185
|
$33,929
|
$33,197
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.79
|
0.81
|
0.79
|
0.77
|
Operating costs
(US$)
|
$27,623
|
$25,665
|
$26,569
|
$24,329
|
$23,556
|
All-in sustaining
costs (US$)
|
$29,944
|
$27,975
|
$30,276
|
$26,800
|
$25,477
|
Operating costs
(A$)
|
$37,910
|
$34,941
|
$34,502
|
$31,487
|
$32,231
|
All-in sustaining
costs (A$)
|
$41,096
|
$38,085
|
$39,316
|
$34,686
|
$34,859
|
Ounces of gold
sold
|
28,734
|
28,935
|
30,412
|
25,547
|
27,933
|
Cash operating costs
per ounce sold (US$)
|
$961
|
$887
|
$874
|
$952
|
$843
|
All-in sustaining
cost per ounce sold (US$)
|
$1,042
|
$967
|
$996
|
$1,049
|
$912
|
Cash operating costs
per ounce sold (A$)2
|
$1,319
|
$1,208
|
$1,134
|
$1,233
|
$1,154
|
All-in sustaining
cost per ounce sold (A$)2
|
$1,430
|
$1,316
|
$1,293
|
$1,358
|
$1,248
|
1.
|
Negative adjustment for
intercompany tolling transactions.
|
2.
|
Quarterly costs in
functional currency.
|
3.
|
G&A: share-based
payments were excluded in calculating AISC
|
Adjusted EBITDA, Adjusted Earnings and Working Capital
Management believes that adjusted EBITDA and adjusted earnings
are valuable indicators of the Corporation's ability to generate
operating cash flows to fund working capital needs, service debt
obligations, and fund exploration and evaluation, and capital
expenditures. Adjusted EBITDA and adjusted earnings exclude the
impact of certain items and therefore is not necessarily indicative
of operating profit or cash flows from operating activities as
determined under IFRS. Other companies may calculate adjusted
EBITDA and adjusted earnings differently.
Adjusted EBITDA is a non-IFRS measure, which excludes the
following from comprehensive earnings (loss): income tax expense
(recovery); interest expense and other finance-related costs;
depreciation and amortization; non-cash other expenses, net;
non-cash impairment charges and reversals; non-cash portion of
share-based payments; acquisition costs; derivatives and foreign
exchange loss; sustainability initiatives.
(in thousands of
dollars except per share amounts)
|
Three months
ended
|
Year ended
|
For the periods ended
December 31,
|
2021
|
2020
5
|
2021
|
2020
5
|
Net earnings for the
period - as reported
|
$6,112
|
$42,906
|
$27,467
|
$88,130
|
Finance expense,
net
|
871
|
1,599
|
4,021
|
4,618
|
Income tax
expense
|
3,411
|
(16,107)
|
18,597
|
7,003
|
Depreciation and
amortization
|
7,860
|
9,025
|
29,250
|
23,733
|
EBITDA
|
18,254
|
37,423
|
79,335
|
123,484
|
Adjustments:
|
|
|
|
|
Non-cash share-based
payments 1
|
3,952
|
1,310
|
8,258
|
9,374
|
Share of loss of
associates 1
|
-
|
-
|
-
|
425
|
Unrealized loss
(gain) on revaluation of marketable securities
2
|
545
|
(65)
|
902
|
(1,437)
|
Non-cash impairment
charge 2
|
-
|
-
|
-
|
6,006
|
Impairment reversal
1
|
-
|
-
|
-
|
(36,087)
|
Other expense
(income), net 2
|
100
|
(130)
|
223
|
(524)
|
Loss (gain) on
derivatives 2
|
2,644
|
(2,231)
|
3,921
|
6,254
|
Foreign exchange loss
(gain) 3
|
(447)
|
(4,653)
|
11,028
|
(11,455)
|
Sustainability
initiatives 4
|
-
|
-
|
613
|
-
|
Adjusted
EBITDA
|
$25,048
|
$31,654
|
$104,280
|
$96,040
|
Weighted average
number of common shares - basic
|
153,245,430
|
145,307,415
|
148,698,289
|
139,759,510
|
Adjusted EBITDA per
share - basic
|
$0.16
|
$0.22
|
$0.70
|
$0.69
|
1.
|
Primarily non-recurring
items which do not impact cash flow.
|
2.
|
Non-operating in nature
which does not impact cash flows.
|
3.
|
Primarily related to
intercompany loans for which the loss is unrealized.
|
4.
|
Primarily related to
non-recurring environmental initiatives.
|
5.
|
Revised to conform to
current year's presentation.
|
Adjusted earnings is a non-IFRS measure, which excludes the
following from comprehensive earnings (loss): non-cash portion of
share-based payments; revaluation of marketable securities;
derivatives and foreign exchange loss; tax effects of adjustments;
sustainability initiatives.
(in thousands of
dollars except per share amounts)
|
Three months
ended
|
Year ended
|
For the periods ended
December 31,
|
2021
|
2020
|
2021
|
2020
|
Net earnings for the
period - as reported
|
$6,112
|
$42,906
|
$27,467
|
$88,130
|
Non-cash share-based
payments 1
|
3,952
|
1,310
|
8,258
|
9,374
|
Unrealized loss
(gain) on revaluation of marketable securities
2
|
545
|
(65)
|
902
|
(1,437)
|
Non-cash impairment
charge 2
|
-
|
-
|
-
|
6,006
|
Impairment reversal
1
|
-
|
-
|
-
|
(36,087)
|
Loss (gain) on
derivatives 2
|
2,644
|
(2,231)
|
3,921
|
6,254
|
Foreign exchange loss
(gain) 3
|
(447)
|
(4,653)
|
11,028
|
(11,455)
|
Sustainability
initiatives 4
|
-
|
-
|
613
|
-
|
Tax impact of the
above adjusting items
|
(764)
|
1,683
|
(3,550)
|
11,340
|
Adjusted
earnings
|
$12,042
|
$38,950
|
$48,639
|
$72,125
|
Weighted average
number of common shares - basic
|
153,245,430
|
145,307,415
|
148,698,289
|
139,759,510
|
Adjusted earnings per
share - basic
|
$0.08
|
$0.27
|
$0.33
|
$0.52
|
1.
|
Primarily non-recurring
items which do not impact cash flow.
|
2.
|
Non-operating in nature
which does not impact cash flows.
|
3.
|
Primarily related to
intercompany loans for which the loss is unrealized.
|
4.
|
Primarily related to
non-recurring environmental initiatives.
|
Working capital is calculated as current assets (including cash
and cash equivalents) less current liabilities.
(in thousands of
dollars)
|
2021
|
2020
|
2019
|
Current
assets
|
135,426
|
109,857
|
58,698
|
less: Current
liabilities
|
70,979
|
53,022
|
32,192
|
Working
Capital
|
64,447
|
56,835
|
26,506
|
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, Group Geologist, Karora Resources Inc., a
Qualified Person for the purposes of NI 43-101.
About Karora Resources
Karora is focused on doubling gold production to 200,000 ounces
by 2024 compared to 2020 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 1.6 Mtpa processing
plant, expanding to a planned 2.5 Mtpa by 2024, which is fed at
capacity from Karora's underground Beta Hunt mine and Higginsville
mines. 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 gold Mineral Resource and Reserve and prospective land
package totaling approximately 1,900 square kilometers. The Company
also owns the high grade Spargos Reward project which is
anticipated to begin mining in 2021. Karora has a strong Board and
management team focused on delivering shareholder value and
responsible mining, as demonstrated by Karora's commitment to
reducing emissions across its operations. Karora's common shares
trade on the TSX under the symbol KRR and also trade on the OTCQX
market under the symbol KRRGF.
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, the
Aquarius Project and the Spargos Gold Project, the commencement of
mining at the Spargos Gold Project and the completion of the
resource estimate.
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.
SOURCE Karora Resources Inc.