TORONTO, Aug. 14,
2023 /CNW/ - Karora Resources Inc. (TSX:
KRR) ("Karora" or the "Company") today announced
financial and operating results for the second quarter ("Q2 2023")
and first six months ("YTD 2023") of 2023. The Company's full
unaudited condensed interim financial statements and management
discussion & analysis ("MD&A) are available on SEDAR at
www.sedar.com and on the Company's website at
www.karoraresources.com. All dollar amounts are in Canadian
dollars, unless otherwise noted.
RECORD QUARTERLY AND YTD GOLD
PRODUCTION
- Record production of 40,823 ounces in Q2 2023 exceeded target
levels and increased 33% from the second quarter of 2022 ("Q2
2022") and 3% from 39,827 ounces in the first quarter of 2023 ("Q1
2023" or "the previous quarter").
- YTD 2023 production totalled 80,650 ounces, 39% higher than
58,141 ounces in the first six months of 2022 ("YTD 2022"), with
the Company ending the second quarter on track to achieve full-year
2023 production guidance of 145,000 – 160,000 ounces.
IMPROVED UNIT COST PERFORMANCE –
AISC ON TRACK TO ACHIEVE 2023 GUIDANCE
- Cash operating costs1 and all-in sustaining costs
("AISC")1 per ounce sold averaged US$1,068 and US$1,160, respectively, in Q2 2023 compared to
US$1,130 and US$1,190, respectively, in Q2 2022 and
US$1,124 and US$1,213 the previous quarter.
- Cash operating costs1 and AISC1 per ounce
sold for YTD 2023 averaged US$1,094
and US$1,184, respectively, versus
US$1,214 and US$1,285, respectively, for YTD 2022; YTD 2023
AISC1 per ounce sold in line with full-year 2023
guidance of US$1,100 – US$1,250.
RECORD QUARTERLY AND YTD
REVENUE
- Revenue in Q2 2023 of $110.6
million increased 50% and 14%, respectively, from Q2 2022
and Q1 2023 driven by record quarterly gold ounces sold of 42,172
ounces and a higher average gold price.
- YTD 2023 revenue totalled $207.4
million, 49% higher than $138.9
million in YTD 2022 mainly reflecting a 38% increase in gold
sales to 78,317 ounces.
SOLID OPERATING CASH FLOW
GENERATION
- Cash flow provided by operating activities in Q2 2023 of
$34.4 million tripled from
$11.2 million in Q2 2022 and
increased 65% from $20.9 million in
Q1 2023.
- YTD 2023 cash flow provided by operating activities of
$55.3 million more than doubled from
$23.4 million in YTD 2022.
STRONG EARNINGS
PERFORMANCE
- Net earnings of $6.6 million
($0.04 per share) compared to net
loss of $0.3 million ($0.00 per share) in Q2 2022 and net loss of
$2.9 million (0.02 per share) in Q1
2023. Adjusted earnings of $13.9
million ($0.08 per share) more
than doubled from $4.7 million
($0.03 per share) in Q2 2022 and
$4.8 million ($0.03 per share) the previous quarter.
- Net earnings for YTD 2023 of $3.7
million ($0.02 per share)
compared to net loss of $4.0 million
($0.03 per share) for the same period
in 2022; Adjusted earnings totalled $18.7
million ($0.11 per share),
more than triple the $5.8 million
($0.04 per share) reported in YTD
2022.
CONTINUED PROGRESS WITH GROWTH
PLAN
- Following completion of a second (west) decline and first of
three ventilation raises at Beta Hunt during the first quarter of
2023, the second ventilation raise was completed in Q2 2023, with
the expansion project remaining on track to support growth to an
annualized production rate of 2.0 Mtpa during 2024.
ADDITIONAL EXPLORATION SUCCESS
HIGHLIGHTS FUTURE POTENTIAL OF BETA HUNT
- Drilling at Beta Hunt continued to extend mineralization
with new, high-grade gold intersections being released from the
Fletcher Shear Zone ("FSZ"), which extended the drill-supported
strike potential of the FSZ by 900 metres for a total potential
strike length of 1.4 km; Key intersections included 6.5 g/t over
26.0 metres and 46.5 g/t over 7.0 metres. Additional drill results
released on August 7, 2023, included
the intersection of strong mineralization in targeted areas, which
provided further confidence in the continuity of the FSZ
mineralization.
KALI METALS LIMITED
- On May 8, 2023, the Company
announced an agreement with Kalamazoo Resources Limited (ASX: KZR)
("Kalamazoo") to create a lithium and critical metals exploration
company to be called Kali Metals Limited ("Kali"); The Company will
own a 45% interest in Kali, with both Karora and Kalamazoo to
vend their lithium exploration projects into the new company with a
goal of creating a new, jointly owned but separately run
lithium-focused, ASX-listed exploration company to be led by an
experienced board and management team (see news release dated
May 8, 2023).
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
"Non-IFRS Measures" section of this news release and in the
MD&A for the three and six months ended June 30,
2023.
|
Karora will host a call/webcast on
August 14, 2023 at
10:00 am
(Eastern Time) to discuss
the second quarter 2023 results. North American callers please
dial:
1-888-664-6383; Local and international
callers please dial: 416-764-8650. To join the conference call
without operator assistance, you may register and enter your phone
number at the Callback Link to receive an instant automated call
back and be placed into the call. For the webcast of this event
click
https://app.webinar.net/JA2m9q2blwj
(replay access information is
provided below).
Paul Andre Huet, Chairman and
CEO, commented: "I am delighted with our team's performance
during the second quarter, which included achieving record gold
production, gold ounces sold and revenue, as well as significantly
improved earnings performance and strong growth in cash flow. We
ended the first half of 2023 well positioned to achieve our
full-year guidance for 2023. We also continued to advance our Beta
Hunt expansion on schedule and budget, with the second decline and
two of three planned ventilation raises completed during the first
half of 2023. We will complete the final ventilation raise before
the end of the year and remain on track to grow Beta Hunt's
annualized production rate to 2.0 Mtpa during 2024.
"Looking at our operating performance in more detail, Beta Hunt
had another excellent quarter, with production growing 34% from Q2
2022 and cash operating costs improving by 10%, to US$1,017. For the year to date, both production
of 52,286 ounces and cash operating costs1 per ounce
sold of $994 were considerably better
than a year ago and outperformed target levels. At HGO, substantial
improvement was achieved in the second quarter, with production
growing 14% and cash operating costs1 per ounce sold
improving 18% compared to the previous quarter. We commenced
production from the Mouse Hollow open pit in the second quarter and
will begin mining from the Pioneer pit during the third quarter,
both of which will support solid operating performance over the
balance of the year.
"Finally, in addition to generating strong results from our gold
operations during the first six months of 2023, we also continued
to make progress with our plans to significantly increase nickel
production at Beta Hunt. Development work to fully integrate key
nickel zones into our existing mining infrastructure continues to
advance on schedule and we remain on track to grow nickel
production to 600 – 800 tonnes by next year. Also, during Q2 2023
we entered into an agreement with Kalamazoo Resources to vend our
respective lithium assets into a new company, Kali Metals, that
will be self-funding and will be run by an independent and highly
experienced management team and board. Our 45% interest in Kali
provides an important new opportunity for value creation. Going
forward, Karora Resources will be a highly competitive gold
producer with a growing nickel mining operation that also offers
exposure to the rapidly growing lithium market."
RESULTS OF
OPERATIONS
Table 1. Results of
Operations
|
|
Three Months
Ended,
|
Six Months
Ended,
|
|
Jun 30,
2023
|
Jun 30,
2022
|
Mar 31,
2023
|
Jun 30,
2023
|
Jun 30,
2022
|
Gold Operations
(Consolidated)
|
|
|
|
|
|
|
Tonnes milled
(000s)
|
536
|
462
|
502
|
1,038
|
856
|
|
Recoveries
|
95 %
|
94 %
|
94 %
|
94 %
|
94 %
|
|
Gold milled, grade (g/t
Au)
|
2.50
|
2.21
|
2.62
|
2.56
|
2.25
|
|
Gold produced
(ounces)
|
40,823
|
30,652
|
39,827
|
80,650
|
58,141
|
|
Gold sold
(ounces)
|
42,172
|
30,398
|
36,145
|
78,317
|
56,685
|
|
Average exchange rate
(C$/US$) 1
|
0.74
|
0.78
|
0.74
|
0.74
|
0.79
|
|
Average realized price
(US $/oz sold)
|
$1,909
|
$1,860
|
$1,877
|
$1,894
|
$1,881
|
|
Cash operating costs
(US $/oz sold)2
|
$1,068
|
$1,130
|
$1,124
|
$1,094
|
$1,214
|
|
All-in sustaining cost
(AISC) (US $/oz sold)2
|
$1,160
|
$1,190
|
$1,213
|
$1,184
|
$1,285
|
Gold (Beta
Hunt)
|
|
|
|
|
|
|
Tonnes milled
(000s)
|
319
|
295
|
298
|
618
|
528
|
|
Gold milled, grade (g/t
Au)
|
2.62
|
2.14
|
2.92
|
2.77
|
2.26
|
|
Gold produced
(ounces)
|
25,709
|
19,169
|
26,577
|
52,286
|
36,277
|
|
Gold sold
(ounces)
|
26,330
|
19,140
|
23,077
|
49,407
|
35,269
|
|
Cash operating cost (US
$/oz sold)2
|
$1,017
|
$1,130
|
$967
|
$994
|
$1,133
|
Gold (HGO
Mine)
|
|
|
|
|
|
|
Tonnes milled
(000s)
|
217
|
167
|
204
|
420
|
328
|
|
Gold milled, grade (g/t
Au)
|
2.31
|
2.32
|
2.18
|
2.25
|
2.24
|
|
Gold produced
(ounces)
|
15,114
|
11,484
|
13,250
|
28,364
|
21,864
|
|
Gold sold
(ounces)
|
15,842
|
11,257
|
13,068
|
28,910
|
21,416
|
|
Cash operating cost (US
$/oz sold)2
|
$1,151
|
$1,130
|
$1,402
|
$1,265
|
$1,346
|
1.
|
Average exchange rate
refers to the average market exchange rate for the
period.
|
2.
|
Non-IFRS: The
definition and reconciliation of these measures are included in the
"Non-IFRS Measures" section of the MD&A for the three and six
months ended June 30, 2023.
|
3.
|
Numbers may not add due
to rounding.
|
Consolidated Operations
Consolidated gold production in the second quarter of 2023 was a
record 40,823 ounces, a 33% increase from the second quarter of
2022 and 3% higher than 39,827 ounces the previous quarter. The
increase from second quarter of 2022 resulted from a 16% increase
in tonnes milled, reflecting the increase in milling capacity
following the acquisition Lakewood Mill, and a 13% improvement in
the average grade.
Cash operating costs1 per ounce sold for the second
quarter of 2023 averaged US$1,068, a
5% improvement from both $1,130 for
the same period in 2022 and $1,124
the previous quarter. The improvement from the second quarter of
2022 largely reflected the favourable impact of a higher average
grade at Beta Hunt, which more than offset the higher costs related
to continued cost pressures in such areas as labour, contractors,
power and fuel. Lower cash operating costs1 per ounce
sold compared to the first quarter of 2023 related to a higher
average grade and a lower cost production profile at HGO.
AISC1 per ounce sold in the second quarter of 2023
averaged $1,160 compared to
$1,190 in the second quarter of 2022
and $1,213 the previous quarter as
the favourable impact of lower cash operating costs1 per
ounce sold was offset by higher general and administrative expenses
and sustaining capital expenditures.
For the first six months of 2023, gold production totalled
80,650 ounces, 39% higher than 58,141 ounces in the first six
months of 2022 reflecting a 21% increase in tonnes milled and a 14%
improvement in the average grade. The Company ended the first half
of 2023 well positioned to achieve full-year 2023 production
guidance of 145,000 – 160,000 ounces.
Cash operating costs1 per ounce sold for the first
half of 2023 averaged $1,094 compared
to $1,214 for the same period in 2022
with a higher average grade at Beta Hunt largely accounting for the
year-over-year improvement. AISC1 per ounce averaged
US$1,184 in the first six months of
2023 versus $1,285 a year
earlier.
Beta Hunt
During the second quarter of 2023, Beta Hunt mined 297,100
tonnes at an average grade of 2.97 g/t containing 28,416 ounces of
gold. The 28,416 contained ounces during the quarter increased 43%
from 19,916 contained ounces in the second quarter of 2022 (based
on mining 290,000 tonnes at an average grade of 2.14 g/t) and was
5% higher than the 27,100 contained ounces the previous quarter
(based on mining 299,900 tonnes at an average grade of 2.81 g/t).
The majority of the scheduled mined tonnes during the second
quarter came from the A Zone and central section of Western Flanks
with a 39% increase in grade compared to the second quarter of 2022
mainly resulting from mining high-grade ore from the A Zone 17
Level.
Gold production from Beta Hunt in the second quarter of 2023
totalled 25,709 ounces based on milling 319,500 tonnes at an
average grade of 2.62 g/t. Production for the quarter increased 34%
from the second quarter of 2022 reflecting a 22% improvement in the
average grade as well as an 8% increase in tonnes processed.
Production during the second quarter of 2023 compared to 26,577
ounces the previous quarter as the impact of higher tonnes
processed was offset by a reduction in the average grade quarter
over quarter consistent with the mine plan for the year.
Cash operating costs1 per ounce sold at Beta Hunt
averaged US$1,017 in the second
quarter of 2023, a 10% improvement from the second quarter of 2022
mainly reflecting the favourable impact of a higher average grade
compared to the same period a year earlier. Cash operating costs
per ounce sold in Q2 2023 compared to US$967 the previous quarter, with a reduction in
the average grade processed largely accounting for the increase
quarter over quarter.
For the first six months of 2023, Beta Hunt mined 597,100 tonnes
at an average grade of 2.89 g/t containing 55,527 ounces of gold,
which compared to 520,100 tonnes mined at an average grade of 2.28
g/t containing 38,095 ounces of gold in the first half of 2022.
Year-to-date gold production in 2023 totalled 52,286 ounces, a 44%
increase from production of 36,277 ounces in the first half of
2022, which resulted from a 17% increase in tonnes processes and a
23% improvement in the average grade. Cash operating
costs1 per ounce sold averaged US$994 versus $1,133 in the first six months of 2022 with the
improvement largely due to the favourable impact of a higher
average grade.
In addition to gold production, Beta Hunt mined 6,071 tonnes of
nickel ore at an estimated nickel grade of 2.47% during the second
quarter of 2023 compared to 7,693 tonnes of nickel ore mined at an
estimated nickel grade of 1.26% for the same period in 2022 and
7,331 tonnes of nickel ore at an estimated nickel grade of 2.22%
the previous quarter. The level of nickel ore mined in the second
quarter of 2023 was impacted by temporary restrictions on
ventilation in planned mining areas, which had resolved by the end
of the quarter. For the first six months of 2023, 13,402 tonnes of
nickel ore were mined at an estimated nickel grade of 2.34%, which
compared to 12,935 tonnes mined at an estimated average grade of
1.62% a year earlier.
Development of the second ventilation raise was completed
during the second quarter of 2023. The raise boring team is on site
and the third ventilation raise is expected to be completed before
the end of the year. Overall, the Beta Hunt expansion project
remained on track to support the mine's growth to an annualized
production run-rate of 2.0 Mtpa during 2024.
Higginsville Mining Operations
("HGO")
During the second quarter of 2023, HGO mined 178,100 tonnes at
an average grade of 2.76 g/t containing 15,806 ounces, which
compared to 106,000 tonnes mined at an average grade of 3.28 g/t
containing 11,211 ounces in the second quarter of 2022 and 72,200
tonnes at an average grade of 3.85 g/t containing 8,927 ounces the
previous quarter. The level of tonnes mined during the second
quarter of 2023 largely reflected the commencement of mining at the
Mouse Hollow open pit in April 2023,
where a total of 115,300 tonnes were mined during the quarter, with
the remaining tonnes mined coming from the Aquarius underground
mining operation.
Production at HGO in the second quarter of 2023 totalled 15,114
ounces based on milling 216,900 tonnes at an average grade of 2.31
g/t. Production in the second quarter of 2023 increased 32% from
11,484 ounces in the second quarter of 2022, reflecting a 30%
increase in tonnes processed, and was 14% higher than the previous
quarter, with both tonnes processed and the average grade
increasing 6% compared to the first quarter of 2023.
Cash operating costs1 per ounce sold at HGO averaged
US$1,151 in the second quarter of
2023 versus US$1,130 for the same
period in 2022, with the increase largely related to a higher-cost
production profile compared to the second quarter of 2022 when
close to half of tonnes processed were from the Spargos open pit.
Cash operating costs1 per ounce sold in the second
quarter of 2023 improved 18% from US$1,402 the previous quarter with the
improvement mainly reflecting a lower-cost production profile
largely due to the commencement of production from the Mouse Hollow
open pit in April 2023 as well as the
impact of costs related to stockpiled tonnes processed during the
first quarter of 2023.
For the first six months of 2023, HGO mined 250,300 tonnes
at an average grade of 3.07 g/t containing 24,733 ounces of gold,
which compared to 193,015 tonnes mined at an average grade of 3.00
g/t containing 18,656 ounces of gold in the first half of 2022.
Year-to-date gold production in 2023 totalled 28,364 ounces
resulting from processing 420,400 tonnes at an average grade of
2.25 g/t versus gold production of 21,846 ounces based on
processing 328,218 tonnes at an average grade of 2.24 g/t for the
same period a year earlier. Cash operating costs1 per
ounce sold averaged US$1,265
compared to $1,346 in the first six
months of 2022.
During the second quarter of 2023, development activities
at Higginsville were concentrated on preparing for initial mining
at the Pioneer open pit. Activities included haul road
construction, pre-stripping and sterilization drilling to confirm
the location of the planned mining waste storage area.
Processing Operations
A total of 326,131 tonnes were milled at the Higginsville Mill
during the second quarter of 2023 (with 34% of mill feed coming
from Beta Hunt and 66% from HGO) at an average grade of 2.93 g/t.
Recovered gold totalled 29,095 ounces. Throughput at the Lakewood
Mill during the second quarter of 2023 totalled 210,300 tonnes
(98% from Beta Hunt and 2% from HGO) at an average grade of 1.83
g/t. Recovered gold during the quarter totalled 11,728 ounces.
For the first six months of 2023, 707,000 tonnes were milled at
the Higginsville Mill (with 43% of mill feed coming from Beta Hunt
and 57% from HGO) at an average grade of 2.90 g/t. Recovered gold
totalled 62,244 ounces. Throughput at the Lakewood
Mill totalled 331,200 tonnes (94% from Beta Hunt and 6% from
HGO) at an average grade of 1.83 g/t. Recovered gold during the
quarter totalled 18,406 ounces.
At the HGO Mill, construction of a planned tailings
storage facility lift progressed on schedule during the second
quarter as part of the overall HGO capital plan which includes
scheduled plant maintenance. At the Lakewood Processing Plant,
preparation for the tie-in of the existing Dumford ball mill was
advanced. The additional grinding capacity provided by the ball
mill is expected to raise the nameplate capacity at Lakewood from
~0.85 Mtpa to ~1.2 Mtpa beginning in 2024.
|
|
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
"Non-IFRS Measures" section of this news release and in the
MD&A for the three and six months ended June 30,
2023.
|
FINANCIAL REVIEW
Table 2. Financial
Overview
(in thousands of
dollars except per share amounts)
|
Three months
ended,
|
Six Months
Ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Revenue
|
$110,595
|
$73,609
|
$207,401
|
$138,881
|
Production and
processing costs
|
56,567
|
40,093
|
110,960
|
82,529
|
Earnings (loss) before
income taxes
|
12,850
|
1,053
|
11,106
|
(1,100)
|
Net earnings
(loss)
|
6,643
|
(328)
|
3,702
|
(4,037)
|
Net earnings (loss) per
share - basic
|
0.04
|
(0.00)
|
0.02
|
(0.03)
|
Net earnings (loss) per
share - diluted
|
0.04
|
(0.00)
|
0.02
|
(0.03)
|
Adjusted EBITDA
1,2
|
38,812
|
22,602
|
67,448
|
34,805
|
Adjusted EBITDA per
share - basic 1,2
|
0.22
|
0.14
|
0.39
|
0.22
|
Adjusted earnings
1,2
|
13,858
|
4,662
|
18,705
|
5,782
|
Adjusted earnings per
share - basic 1,2
|
0.08
|
0.03
|
0.11
|
0.04
|
Cash flow provided by
operating activities
|
34,407
|
11,242
|
55,266
|
23,392
|
Cash investment in
property, plant and equipment and
mineral property interests
|
(23,911)
|
(35,084)
|
(43,765)
|
(59,868)
|
|
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in
the" Non-IFRS Measures" section of this news release and the
MD&A for the three and six months ended June 30,
2023.
|
For the three months ended June 30,
2023, the Company generated revenue of $110.6 million, a $37.0
million or 50% increase from the second quarter of 2022.
Gold revenue totalled $108.3 million,
$35.1 million or 48% higher than the
second quarter a year earlier, with $28.4
million of the increase resulting from higher gold sales and
$6.8 million relating to rate
factors, including the impact of a stronger US dollar compared to
the Canadian dollar as well as a 3% increase in the average
realized gold price. Beta Hunt contributed $67.9 million of total gold revenue in the second
quarter of 2023, with HGO contributing $40.4
million. During the comparable period in 2022, Beta Hunt
contributed $46.1 million of gold
revenue, with the remaining $27.1
million coming from HGO.
For the six months ended June 30,
2023, revenue totalled $207.4
million, $68.5 million or 49%
higher than $138.9 million for the
same period in 2022. Gold revenue for the first half of 2023
totalled $200.0 million, a
$64.0 million or 47% increase from a
year earlier. Of the increase, $51.9
million related to a 38% increase in gold ounces sold, with
rate factors contributing the remaining $12.1 million of revenue growth mainly due to the
impact of a significantly stronger US dollar compared to the
Canadian dollar. Beta Hunt contributed $126.1 million of year-to-date gold revenue, with
HGO contributing $73.9 million.
During the first half of 2022, Beta Hunt contributed $84.7 million of gold revenue, with $51.3 million coming from HGO.
Net earnings for the three months ended June 30, 2023 totalled $6.6 million ($0.04
per basic share) compared to net loss of $0.3 million ($0.00
per basic share) for the three months ended June 30, 2022. The significant improvement in net
earnings performance compared to the second quarter of 2022 mainly
reflected a 61% increase in operating margin (revenue less
production and processing costs), to $20.5
million, and lower other expenses, net, which more than
offset the impact of increased general and administrative,
depreciation and amortization and royalty expenses as well as
higher income tax expense.
Net earnings for the six months ended June 30, 2023, was $3.7
million ($0.02 per basic
share) compared to net loss of $4.0
million ($0.03 per basic
share) in the first half of 2022, with a $40.1 million or 71% increase in operating margin
more than offsetting higher depreciation and amortization, general
and administrative and royalty expenses, as well as higher other
expenses, net, and increased income tax expense.
Adjusted earnings1 for the three months ended
June 30, 2023 totalled $13.9 million ($0.08 per share) versus $4.7 million ($0.03
per share) in the second quarter of 2022. The difference between
net earnings and adjusted earnings1 in the second
quarter of 2023 resulted from the exclusion from adjusted
earnings1 of the after-tax impact of $7.1 million of foreign exchange losses and
$1.2 million related to non-cash,
share-based payments. The difference between net earnings and
adjusted earnings1 in the second quarter of 2022 largely
resulted from the exclusion from adjusted earnings1 of
the after-tax impact of $9.1 million
of foreign exchange losses and $1.2
million related to sustainability initiatives, partially
offset by $3.8 million of non-cash
share-based payments. The increase in adjusted earnings1
compared to the second quarter of 2022 mainly reflected the 61%
increase in operating margin, driven by significantly higher
revenue in the second quarter of 2023.
For the six months ended June 30,
2023, adjusted earnings1 totalled $18.7 million ($0.11 per share) versus $5.8 million ($0.04
per share) in the same period in 2022. The difference between net
earnings and adjusted earnings1 for year-to-date 2023
reflected the exclusion from adjusted earnings1 of the
after-tax impact of $10.9 million of
foreign exchange losses and $2.9
million related to non-cash share-based payments, partially
offset by the exclusion from adjusted earnings1 of a
$1.0 million unrealized loss on the
revaluation of marketable securities. The difference between net
earnings and adjusted earnings1 in the first six months
of 2022 mainly related to the exclusion from adjusted
earnings1 of the after-tax impact of $6.2 million of foreign exchange losses,
$1.9 million of non-cash, share-based
payments, a $1.5 million unrealized
loss on the revaluation of marketable securities and $1.2 million related to sustainability
initiatives. The 71% improvement in operating margin mainly
accounted for the increase in year-to-date adjusted
earnings1.
|
|
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
"Non-IFRS Measures" section of this news release and in the
MD&A for the three and six months ended June 30,
2023.
|
Table 3. Highlights of Liquidity
and Capital Resources
(in thousands of
dollars)
|
Three months
ended,
|
Six Months
Ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Cash provided by
operations prior to changes in working capital
|
$38,987
|
$21,652
|
$67,629
|
$33,853
|
Changes in non-cash
working capital
|
(4,526)
|
(9,988)
|
(12,309)
|
(9,692)
|
Asset retirement
obligations
|
-
|
(94)
|
-
|
(441)
|
Income taxes
paid
|
(54)
|
(328)
|
(54)
|
(328)
|
Cash provided by
operating activities
|
34,407
|
11,242
|
55,266
|
23,392
|
Cash used in investing
activities
|
(23,766)
|
(34,735)
|
(43,456)
|
(59,474)
|
Cash provided by (used
in) financing activities
|
(4,138)
|
61,342
|
(7,427)
|
60,325
|
Effect of exchange rate
changes on cash and cash equivalents
|
(1,554)
|
(1,855)
|
(2,343)
|
(1,154)
|
Change in cash and cash
equivalents
|
$4,949
|
$35,994
|
$2,040
|
$23,089
|
|
|
|
|
1.
Working capital is calculated as current assets (including
cash and cash equivalents) less current liabilities.
|
|
|
|
|
2.
Financial liabilities include long-term debt and lease
obligations.
|
For the three months ended June 30,
2023, cash provided by operating activities, prior to
changes in working capital, totalled $39.0
million compared to $21.7
million for the same period in 2022. The increase compared
to the second quarter of 2022 largely reflected significantly
higher operating margin, driven by strong revenue growth, partially
offset by increased general and administrative and royalty
expenses. Changes in working capital represented a net use of cash
totalling $4.5 million during the
three months ended June 30, 2023,
reflecting a $5.1 million reduction
in accounts payable and accrued liabilities, partially offset by
the impact of lower inventories and prepaid expenses.
For the six months ended June 30,
2023, cash provided by operating activities, prior to
changes in working capital, was $67.6
million compared to $33.9
million for the same period in 2022, with the increase
mainly reflecting higher revenue and improved operating margin in
the first half of 2023. Changes in working capital used
$12.3 million of cash during the six
months ended June 30, 2023 reflecting
a $14.0 million reduction in accounts
payable and accrued liabilities and a $1.5
million increase in inventories, partially offset by lower
trade and other receivables and prepaid expenses. Changes in
working capital in the first half of 2022 used $9.7 million of cash as a $12.5 million reduction in accounts payable and
accrued liabilities was only partially offset by lower levels of
trade and other receivables, inventories, and prepaid expenses.
The Company had cash of $70.8
million at June 30, 2023
compared to $65.9 million at
March 31, 2023 and $68.8 million at December
31, 2022. During the second quarter of 2023, the Company
paid a one-time stamp duty totalling $4.0
million (A$4.5 million)
related to the acquisition of the Lakewood Mill in 2022.
OUTLOOK
TWO-YEAR GUIDANCE (2023 – 2024)
The Company is maintaining its 2023 and 2024 production and cost
guidance. The targets included in the Company's outlook relate only
to the 2023 to 2024 period. This outlook includes forward-looking
information about the Company's operations and financial
expectations and is based on management's expectations and outlook
as of the date of this MD&A. This outlook, including expected
results and targets, is subject to various risks, uncertainties and
assumptions, which may impact future performance and the Company's
ability to achieve the results and targets discussed in this
section. The Company may update its outlook depending on changes in
metal prices and other factors.
Table 4. Two-Year Guidance (2023 –
2024)
|
|
2023
|
2024
|
Gold
Production
|
(Koz)
|
145 – 160
|
170 – 195
|
All-in Sustaining
Costs
|
(US$/oz
sold)
|
1,100 –
1,250
|
1,050 –
1,200
|
Sustaining
Capital
G
|
(A$M)
|
10 – 15
|
15 – 20
|
Growth
Capital
|
(A$M)
|
57 – 68
|
63 – 73
|
Exploration &
Resource Development
|
(A$M)
|
18 – 22
|
20 – 25
|
Nickel
Production
|
(Ni Tonnes)
|
450 - 550
|
600
– 800
|
1.
|
Production guidance is
based on the September 2022 Mineral Reserves and Mineral Resources
announced on February 13, 2023.
|
2.
|
The Company expects to
fund the capital investment amounts listed above with cash on hand,
cashflow from operations and through the financing of heavy
equipment.
|
3.
|
The material
assumptions associated with the expansion of Beta Hunt mining
production rate to 2.0 Mtpa during 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 mining equipment and trucking
fleet.
|
4.
|
The Company'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 Company, no significant events which
impact operations, such as COVID-19,
nickel price of US$22,000 per tonne, as well as an A$ to US$
exchange rate of 0.70 in 2023 and 2024 and A$ to C$ exchange rate
of 0.90. 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
Australian general and administrative costs and excludes
share-based payment expense.
|
8.
|
See "Non-IFRS Measures"
set out at the end of the MD&A for the three and six months
ended June 30, 2023.
|
CONFERENCE CALL / WEBCAST
Karora will be hosting a conference call and webcast today,
August 14, 2023, beginning at
10:00 a.m. (Eastern time). The
accompanying presentation can be found on Karora's website,
www.karoraresources.com.
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-664-6383:
Local and international callers please dial: 416-764-8650
A live webcast of the call will be available through Cision's
website at: https://app.webinar.net/JA2m9q2blwj
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 14, 2023,
through the following dial in numbers:
North American callers please dial: 1-888-390-0541; Pass Code:
331851 #
Local and international callers please dial: 416-764-8677; Pass
Code: 331851 #
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
|
Three months
ended,
|
Six months
ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Production and
processing costs 1
|
$66,977
|
$47,193
|
$131,904
|
$95,302
|
Royalty expense
1
|
6,142
|
4,186
|
11,895
|
7,820
|
By-product credits
1,2
|
(2,255)
|
(415)
|
(4,901)
|
(2,868)
|
Adjustment for toll
milling costs 1,3
|
(10,410)
|
(7,100)
|
(23,471)
|
(12,773)
|
Operating costs
(C$)
|
$60,454
|
$43,864
|
$115,427
|
$87,481
|
General and
administrative expense - Australia
|
5,034
|
1,908
|
8,834
|
4,140
|
Sustaining capital
expenditures
|
205
|
406
|
728
|
1,018
|
All-in sustaining costs
(C$)
|
$65,693
|
$46,178
|
$124,989
|
$92,639
|
Ounces of gold
sold
|
42,172
|
30,398
|
78,317
|
56,684
|
Operating costs (A$)
4
|
$67,383
|
$48,128
|
$126,763
|
$95,663
|
All-in sustaining costs
(A$) 4
|
$73,222
|
$50,668
|
$137,264
|
$101,300
|
Cash operating costs
per ounce sold (A$)
|
$1,598
|
$1,583
|
$1,619
|
$1,688
|
All-in sustaining costs
per ounce sold (A$)
|
$1,736
|
$1,667
|
$1,753
|
$1,787
|
Operating costs (US$)
4
|
$45,021
|
$34,355
|
$85,651
|
$68,802
|
All-in sustaining costs
(US$) 4
|
$48,922
|
$36,168
|
$92,746
|
$72,860
|
Cash operating costs
per ounce sold (US$)
|
$1,068
|
$1,130
|
$1,094
|
$1,214
|
All-in sustaining costs
per ounce sold (US$)
|
$1,160
|
$1,190
|
$1,184
|
$1,285
|
|
1.
|
Refer to Note 19 of the
June 30, 2023 unaudited condensed interim consolidated financial
statements.
|
|
2.
|
For the six months
ended June 30, 2023, by-product credits exclude $2,527 of
third-party tolling revenue.
|
|
3.
|
For the three and six
months ended June 30, 2023, adjustments for toll treatment costs
include $10,410 and $20,944, respectively, related to
intercompany tolling costs and, for the six months ended June 30,
2023, $2,527 related to third-party tolling costs at Lakewood
mill.
|
|
4.
|
Average exchange rates
for the three and six months ended June 30, 2023 include C$1-US$1
of 0.74 and 0.74, respectively, and A$1-US$1 of $0.67 and 0.68,
respectively. Average exchange rates for the three and six months
ended June 30, 2022 include C$1-US$1 of 0.78 and 0.79,
respectively, and A$1-US$1 $0.71 and 0.72, respectively.
|
BETA HUNT
|
Three months
ended,
|
Six months
ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Production and
processing costs 1
|
$33,013
|
$24,475
|
$61,008
|
$47,214
|
Royalty expense
1
|
$5,166
|
$3,535
|
9,980
|
6,434
|
By-product credits
1
|
(2,218)
|
(393)
|
(4,834)
|
(2,814)
|
Operating costs
(C$)
|
$35,961
|
$27,617
|
$66,154
|
$50,834
|
Ounces of gold
sold
|
26,330
|
19,140
|
49,407
|
35,268
|
Operating costs (A$)
2
|
$40,083
|
$30,302
|
$72,650
|
$55,567
|
Cash operating costs
per ounce sold (A$)
|
$1,522
|
$1,583
|
$1,470
|
$1,577
|
Operating costs (US$)
2
|
$26,781
|
$21,630
|
$49,088
|
$39,999
|
Cash operating costs
per ounce sold (US$)
|
$1,017
|
$1,130
|
$994
|
$1,133
|
|
1.
|
Refer to Note 19 of the
June 30, 2023 unaudited condensed interim consolidated financial
statements.
|
|
2.
|
Average exchange rates
for the three and six months ended June 30, 2023 include C$1-US$1
of 0.74 and 0.74, respectively, and A$1-US$1 of $0.67 and 0.68,
respectively. Average exchange rates for the three and six months
ended June 30, 2022 include C$1-US$1 of 0.78 and 0.79,
respectively, and A$1-US$1 $0.71 and 0.72, respectively.
|
|
Three months
ended,
|
Six months
ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Production and
processing costs 1
|
$33,964
|
$22,718
|
$70,896
|
$48,088
|
Royalty expense
1
|
$976
|
$651
|
1,915
|
1,386
|
By-product credits
1,2
|
(37)
|
(22)
|
(67)
|
(54)
|
Adjustment for toll
milling costs 1,3
|
(10,410)
|
(7,100)
|
(23,471)
|
(12,773)
|
Operating costs
(C$)
|
$24,493
|
$16,247
|
$49,273
|
$36,647
|
Ounces of gold
sold
|
15,842
|
11,258
|
28,910
|
21,416
|
Operating costs (A$)
4
|
$27,300
|
$17,827
|
$54,112
|
$40,059
|
Cash operating costs
per ounce sold (A$)
|
$1,723
|
$1,584
|
$1,872
|
$1,871
|
Operating costs (US$)
4
|
$18,240
|
$12,725
|
$36,562
|
$28,836
|
Cash operating costs
per ounce sold (US$)
|
$1,151
|
$1,130
|
$1,265
|
$1,346
|
|
1.
|
Refer to Note 19 of the
June 30, 2023 unaudited condensed interim consolidated financial
statements.
|
|
2.
|
For the six months
ended June 30, 2023, by-product credits exclude $2,527 of
third-party tolling revenue.
|
|
3.
|
For the three and six
months ended June 30, 2023, adjustments for toll treatment costs
include $10,410 and $20,944, respectively, related to
intercompany tolling costs and, for the six months ended June 30,
2023, $2,527 related to third-party tolling costs at Lakewood
mill.
|
|
4.
|
Average exchange rates
for the three and six months ended June 30, 2023 include C$1-US$1
of 0.74 and 0.74, respectively, and A$1-US$1 of $0.67 and 0.68,
respectively. Average exchange rates for the three and six months
ended June 30, 2022 include C$1-US$1 of 0.78 and 0.79,
respectively, and A$1-US$1 $0.71 and 0.72, respectively.
|
Adjusted EBITDA and Adjusted
Earnings
Management believes that adjusted EBITDA and adjusted earnings
are valuable indicators of the Company'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,
|
Six Months
Ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Net earnings (loss) for
the period - as reported
|
$6,643
|
$(328)
|
$3,702
|
$(4,037)
|
Finance expense,
net
|
2,107
|
1,070
|
3,877
|
2,115
|
Income tax
expense
|
6,207
|
1,381
|
7,404
|
2,937
|
Depreciation and
amortization
|
15,996
|
13,689
|
34,382
|
22,443
|
EBITDA
|
30,953
|
15,812
|
49,365
|
23,458
|
Adjustments:
|
|
|
|
|
Non-cash share-based
payments 1
|
1,246
|
(3,836)
|
2,920
|
1,932
|
Unrealized loss (gain)
on revaluation of marketable securities2
|
526
|
881
|
(1,011)
|
1,527
|
Other expense, net
2
|
(27)
|
249
|
27
|
228
|
Loss (gain) on
derivatives 2
|
(946)
|
(827)
|
5,225
|
288
|
Foreign exchange loss
3
|
7,060
|
9,142
|
10,922
|
6,191
|
Sustainability
initiatives 4
|
-
|
1,181
|
-
|
1,181
|
Adjusted
EBITDA
|
$38,812
|
$22,602
|
$67,448
|
$34,805
|
Weighted average number
of common shares - basic
|
174,874,236
|
157,838,797
|
174,573,254
|
156,149,243
|
Adjusted EBITDA per
share - basic
|
$0.22
|
$0.14
|
$0.39
|
$0.22
|
|
1.
Primarily non-operating 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-operating environmental
initiatives.
|
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,
|
Six Months
Ended,
|
For the periods ended
June 30,
|
2023
|
2022
|
2023
|
2022
|
Net earnings (loss) for
the period - as reported
|
$6,643
|
$(328)
|
$3,702
|
$(4,037)
|
Non-cash share-based
payments 1
|
1,246
|
(3,836)
|
2,920
|
1,932
|
Unrealized loss (gain)
on revaluation of marketable securities2
|
526
|
881
|
(1,011)
|
1,527
|
Loss (gain) on
derivatives 2
|
(946)
|
(827)
|
5,225
|
288
|
Foreign exchange loss
3
|
7,060
|
9,142
|
10,922
|
6,191
|
Sustainability
initiatives 4
|
-
|
1,181
|
-
|
1,181
|
Tax impact of the above
adjusting items
|
(671)
|
(1,551)
|
(3,053)
|
(1,300)
|
Adjusted
earnings
|
$13,858
|
$4,662
|
$18,705
|
$5,782
|
Weighted average number
of common shares - basic
|
174,874,236
|
157,838,797
|
174,573,254
|
156,149,243
|
Adjusted earnings per
share - basic
|
$0.08
|
$0.03
|
$0.11
|
$0.04
|
|
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
Working capital is calculated as current assets (including cash
and cash equivalents) less current liabilities.
|
June
30,
|
December 31,
|
(in thousands of
dollars)
|
2023
|
2022
|
Current
assets
|
$115,376
|
$115,857
|
Less: Current
liabilities
|
55,760
|
77,837
|
Working
Capital
|
$59,616
|
$38,020
|
Compliance Statement (JORC 2012
and NI 43-101)
The technical and scientific information contained in this
MD&A has been reviewed and approved by Steve Devlin, Group Geologist, Karora Resources
Inc., and a qualified person for the purposes of National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
About Karora Resources
Karora is focused on increasing gold production to a targeted
range of 170,000-195,000 ounces by 2024 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, which is fed at
capacity from Karora's underground Beta Hunt mine and Higginsville
mines. In July 2022, Karora acquired
the 1.0 Mtpa Lakewood Mill in Western
Australia. At Beta Hunt, a robust gold Mineral Resource and
Reserve are 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 came into production 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, full year
consolidated 2022 production guidance and the potential of the Beta
Hunt Mine, Higginsville Gold Operation, the Aquarius Project, the
Spargos Gold Project, the Lakewood Mill, and the completion of the
second Beta Hunt decline system.
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.
www.karoraresources.com
SOURCE Karora Resources Inc.