Amarillo Gold Corporation (Amarillo or the
Company)
(TSXV: AGC, OTCQB: AGCBF) today announced
its financial results for the six months ended June 30, 2020.
Amarillo achieved several key
corporate milestones in the second quarter of
2020.
Completed the positive
definitive feasibility study for the Posse Gold
Project
- It supports an open pit mine and carbon-in-leach operation with
dry stack tailings that has low capital and operating costs and a
strong financing return.
- Mine life of 10 years with gold production of 102,000 ounces
per year in the first four years, and average annual production of
84,000 ounces.
- After-tax net present value 5% of US$183 million, internal rate
of return of 25%, and all-in sustaining cost of US$738 per ounce,
based on US$1,400 gold and foreign exchange rate of Brazilian Reais
4.2 to US$1.
Project development at Mara
Rosa
- Permitting – the State of Goiás announced its formal support of
the Posse Gold Project on May 26, and the Water Use Permit was
issued by Brazil’s National Water Agency subsequent to quarter end
in July. The Deforestation Permit is expected shortly. The License
to Install continues to undergo review, and the Company anticipates
it will be issued this fall.
- Land acquisition – 762 hectares have been purchased or are
under contract to purchase. Negotiations to purchase the remaining
339 hectares are continuing with landowners.
- Exploration – results from 3,000-metre drill program on
northeastern extension of Posse Gold Deposit showed potential to
find near-surface gold deposits along its Posse North Gold
Trend.
Equity portion of construction financing successfully
closed
- Successful $57.2 equity offerings announced and closed
subsequent to Q2
- Negotiations are in progress under direction of Auramet
International, the Company’s financial adviser, to finalize the
balance of the construction financing for Posse.
“We achieved our goal of completing the feasibility study for
our Posse Gold Project in the second quarter,” said Mike Mutchler,
Amarillo’s Chief Executive Officer. “Our next goal is to secure the
construction financing, and we successfully closed the equity
portion of that financing subsequent to quarter end. We’re
continuing to work with Auramet on the debt portion and anticipate
finalizing that before the end of the year.
“We’re very fortunate that Covid-19 has not had a material
impact on our operations, and our thoughts are with the many people
in Brazil who are suffering from this pandemic.”
Brazil has been hit hard by Covid-19. It had more
than 3 million reported cases of the virus, however the number of
new cases reported daily has started to decline.
On March 27, 2020, Brazil announced a temporary ban
on foreign air travel. Most state governors have imposed
quarantines to prevent the spread of the virus, and the State of
Goiás, home to Mara Rosa, imposed a set of restrictions on
non-essential businesses (including mining) that were in effect
until April 4, 2020.
Amarillo has followed the guidelines set by the
local governments and health authorities where it operates. Its
management team and employees in Toronto, Canada, and Belo
Horizonte, Brazil, have been working from home since mid-March, and
the Company has continued to operate effectively while working
remotely. It has also instituted a series of operational and
monitoring protocols to ensure the health and safety of its
employees, who are closely monitored in the event of a Covid-19
outbreak.
The operations at Mara Rosa and Lavras do Sul have
not been affected by Covid-19, and so far, the pandemic has not had
a material impact on the Company’s operations, financial condition,
cash flows, and financial performance.
While it is hard to predict what impact the
outbreak will have on implementing the Company’s exploration and
development activities, Amarillo’s management team remains
confident that the delays may be minimal. The Company has full
access to its properties, and its consultants have been able to
continue their work uninterrupted.
Financial results
The following table summarizes the Company’s major
operating expense categories for the second quarter of 2020 and
2019 (Q2 2020 and Q2 2019) and for the six months ended June 30,
2020 and 2019.
|
Three months endedJune 30 |
Six months ended June 30 |
|
2020 |
|
2019 |
2020 |
|
2019 |
|
$ |
|
$ |
$ |
|
$ |
General and administrative (G&A) |
|
|
|
|
Consulting |
66,751 |
|
57,571 |
127,466 |
|
115,471 |
Professional |
186,988 |
|
224,908 |
391,398 |
|
387,332 |
Salaries/benefits and management fees |
168,305 |
|
176,351 |
353,811 |
|
353,998 |
Directors’ fees |
52,500 |
|
25,000 |
105,000 |
|
50,000 |
Marketing and promotion |
20,595 |
|
90,743 |
53,054 |
|
161,026 |
Filing and transfer agent |
22,116 |
|
30,638 |
49,966 |
|
41,693 |
Travel |
- |
|
7,052 |
9,625 |
|
14,757 |
Other G&A |
38,204 |
|
50,081 |
108,743 |
|
123,965 |
Total G&A |
555,459 |
|
662,344 |
1,199,063 |
|
1,248,242 |
Recovery of legal fees from WPC |
(187,000 |
) |
- |
(187,000 |
) |
- |
Stock-based compensation |
- |
|
43,893 |
- |
|
92,004 |
Financial advisory services |
- |
|
- |
37,289 |
|
- |
Foreign exchange (gain) loss |
64,060 |
|
248,006 |
(102,251 |
) |
232,142 |
Interest and finance charges |
3,142 |
|
21,395 |
24,691 |
|
23,118 |
Net loss and comprehensive loss |
435,661 |
|
975,638 |
971,792 |
|
1,595,506 |
For the three months ended June 30, 2020, the Company recorded a
loss of $435,661 (Q2 2019: $975,638) mostly as a result of the
following.
Consulting fees of $66,751 in Q2 2020 (Q2 2019:
$57,571) consisted of financial and technical advisory services
paid to various consultants, marketing and investor relations
consultants, and fees in Brazil.
Professional fees (including legal, audit,
accounting and advisory) of $186,988 in Q2 2020 (Q2 2019: $224,908)
consisted of $88,312 (Q2 2019: $123,850) in Canada and $98,676 (Q2
2019: $101,058) in Brazil.
Salaries/benefits of $168,305 in Q2 2020 (Q2 2019:
$176,351) consisted of $131,390 (Q2 2019: $125,313) in Canada and
$36,915 (Q2 2019: $51,038) in Brazil. Salaries in Brazil declined
due to the weakening of the Brazilian real versus the Canadian
dollar.
Marketing and promotion of $20,595 in Q2 2020 (Q2
2019: $90,743) declined due to less trade shows and travel mostly
related to the Covid-19 restrictions.
Filing and transfer agent fees of $22,116 in Q2
2020 (Q2 2019: $30,638) decreased due to reduced shareholders’
requests for transfer agent services.
Other general and administrative expenses of
$38,204 in Q2 2020 (Q2 2019: $50,081) include $24,073 (Q2 2019:
$44,329) related to operations in Brazil, and $14,131 (Q2 2019:
$5,752) related to operations in Canada.
Recovery of legal fees from WPC of $187,000 (Q2
2019: $nil) relate to the settlement with WPC, which agreed to pay
the costs awarded by the Supreme Court of British Columbia. On
January 8, 2020, the Supreme Court of British Columbia rendered
judgment in favour of the Company with respect to the Petition
filed by WPC and two related applications. The court awarded
ordinary costs of the proceedings to May 10, 2019, and special
costs after that date.
Stock-based compensation of $nil in Q2 2020 (Q2
2019: $43,893). There were no stock options granted in Q2 2020. The
Q2 2019 stock compensation relates to unvested options granted in
2018.
Foreign exchange losses and gains relate to the ANM
liability for all periods and to the WPC receivable recorded for
the first time in Q2 2020. Both items are recorded in Brazilian
reais. The decline in the value of the Brazilian real relative to
the Canadian dollar in Q2 2020 accounted for a gain of $91,098
relating to the ANM liability.
This decline in value of the Brazilian real had the
reverse effect on the WPC receivable, which recorded a loss of
$173,552. The aggregate net foreign exchange loss relating to these
two items was $82,454. This was offset by foreign exchange loss of
$18,007 relating to general operations for a net overall foreign
exchange gain of $102,251.
About Amarillo
Amarillo Gold Corporation (www.amarillogold.com) is
advancing two gold projects in Brazil. Both are in mining-friendly
states and have excellent nearby infrastructure.
The development stage Posse Gold Project on its
Mara Rosa Property in Goiás State has received the main permit that
provides social and environmental permission for mining. Work is
underway on receiving the installation permit.
The exploration stage Lavras do Sul Project in Rio
Grande do Sul State has more than 22 prospects centered on historic
gold workings.
Amarillo Gold Corporation trades on the TSXV under
the symbol AGC, and on the OTCQB under the symbol
AGCBF.
For further information, please
contact
Mike Mutchler |
Annemarie Brissenden |
President & CEO |
Investor Relations |
416-294-0736 |
416-844-6284 |
mike.mutchler@amarillogold.com |
annemarie.brissenden@amarillogold.com |
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
the content of this news release.
Non-IFRS financial measuresThe
Company has included certain non-IFRS financial measures in this
MD&A. These measures, which include AISC and AISC per ounce,
are not recognized under IFRS and do not have a standardized
meaning prescribed by IFRS. As a result, these measures may not be
comparable to similar measures reported by other companies.
These measures used are intended to provide
additional information and should not be considered in isolation or
as a substitute for measures in accordance with IFRS. They are
common to the gold mining industry and defined below.
AISC and AISC per ounceAISC reflects all the
expenditures that are required to produce an ounce of gold from
operations. The AISC reported in the news release includes total
cash cost, sustaining capital, and closure cost. AISC per ounce is
calculated as AISC divided by payable gold ounces.
Forward-looking statementsThis
news release contains forward-looking statements regarding the
Company’s current expectations regarding future events, including
its business, operations and condition, and management’s
objectives, strategies, beliefs and intentions.
Various factors may prevent or delay our plans,
including but not limited to, the trading price of the common
shares of the Company, capital market conditions, impacts from the
coronavirus or other epidemics, counterparty risk, TSXV
approval(s), contractor availability and performance, weather,
access, mineral and gold prices, and success and failure of the
exploration and development carried out at various stages of the
program.
Permission from the government and community is
also required to proceed with future mining production. Readers
should review the Company’s ongoing quarterly and annual filings,
as well as any other additional documentation comprising the
Company’s public disclosure record, for additional information on
risks and uncertainties relating to these forward-looking
statements.
Readers should also review the risk factors
applicable to junior mining exploration companies generally to
better understand the variety of risks that can affect the Company.
The Company undertakes no obligation to update publicly or
otherwise revise any Forward-looking statements whether as a result
of new information or future events or otherwise, except as may be
required by law.
PDF
available: http://ml.globenewswire.com/Resource/Download/42e355e1-44fc-4c78-81c5-d4a7bf8529cd
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