TIDMASO
RNS Number : 2497W
Avesoro Resources Inc.
13 November 2017
13 November 2017
Avesoro Resources Inc.
TSX: ASO
AIM: ASO
RESULTS FOR THE THREE MONTHSED 30 SEPTEMBER 2017
Avesoro Resources Inc. ("Avesoro" or the "Company"), the TSX and
AIM listed West African gold producer, is pleased to announce the
release of its unaudited results for the quarter ended 30 September
2017 (the "Quarter").
Financial Highlights
-- Revenues of US$25.5 million, a 32% increase on Q2 2017, from
gold sales of 19,797 ounces, with an average realised gold price of
US$1,286 per ounce;
-- Adjusted EBITDA of US$5.5 million, a fivefold increase on Q2
2017 and the Company's third consecutive quarter of EBITDA
growth;
-- EBITDA margin of 21%, predominantly due to reduced operating
cash costs per ounce and an increase in realised gold price for
sales during the Quarter;
-- Capital expenditure of US$9 million during the Quarter,
including US$5.4 million of capitalised stripping costs;
-- Available cash facilities of US$18.2 million and inventory of
US$12.9 million at the end of the Quarter; and
-- Borrowings of US$107.9 million at the end of the Quarter.
Operational Highlights
-- Total gold production was 19,885 ounces, a 26% increase on
the prior quarter, and a 38% increase on Q3 2016;
-- Total material movement of 3.2 million tonnes, a decrease of
15% on the prior quarter, due to the impact of heavy rain towards
the end of the wet season that caused periods of in-pit
flooding;
-- Ore mined 247,000 tonnes, an increase of 15% on the prior
quarter at an average grade of 2.75g/t, an increase of 4% on the
previous quarter;
-- Ore processed 254,000 tonnes, a decrease of 14% on the
previous quarter due to a lack of run of mine ore feed for a short
period of time caused by pit flooding as a result of heavy rain
which disrupted mining operations;
-- Plant feed grade averaged 2.59g/t throughout the Quarter an
improvement of 30% on the previous quarter;
-- Gold recovery increased from 88% in the prior quarter to 91%,
with recovery in excess of 92% achieved throughout September
2017;
-- Mining cost US$3.19 per tonne, compared to US$2.38 per tonne
achieved in the prior quarter as a result of reduced material
movement;
-- Processing costs of US$26.17 per tonne, a decrease of 4% on
the prior quarter due to reduced mill utilisation arising from a
shortage of ore feed;
-- Operating cash costs of US$877 per ounce, an improvement of
15% compared to the prior quarter mainly due to higher mined ore
grades, improved gold recoveries and the realisation of operational
efficiencies implemented earlier in the year; and
-- All-In Sustaining Costs ("AISC") of US$1,447 per ounce sold,
a 10% improvement from Q2 2017, but a slightly lower rate of
improvement than achieved for operating cash costs due to the
continued focus on waste stripping.
Commenting on the Company's improved quarterly performance,
Serhan Umurhan, Chief Executive Officer of Avesoro Resources, said:
"I am pleased with the continued improvement in performance at New
Liberty, including strengthening revenues and further improvement
in EBITDA margin to give us our third consecutive quarter of
positive EBITDA and quarter on quarter increase in production
levels. The focus at New Liberty throughout this year has been on
delivering improvements in operational performance and the results
achieved this Quarter further reflect our success in this
regard.
We expect Q4 2017 to deliver further improvements across all
these metrics, including a continued reduction in unit mining costs
which were inflated this Quarter due to stoppages and
inefficiencies arising from heavy rains during the tail end of the
wet season. We expect to end the year with a strong final quarter
and to deliver against our production guidance which is maintained
at 70,000 - 80,000 ounces of gold.
The acquisition of the Youga and Balogo Gold Mines in Burkina
Faso that we announced on 31 October 2017 will bring geographic
diversity to our asset portfolio and significantly increase the
Company's gold production levels. The transaction will also
strengthen the Company as a platform for further growth as we
continue on our path towards becoming a premier mid-tier African
gold producer."
2017 Full Year Guidance
Gold production for the full year 2017 is expected to be between
70-80koz at an operating cash cost of between US$900-950 per ounce
with unit mining costs reducing during Q4 2017 as material movement
ramps up throughout the dry season following the arrival of
additional Heavy Mining Equipment ("HME").
The Company has now taken delivery of two Sandvik 1500i drill
rigs, one Komatsu PC1250 excavator and four Komatsu HD785 haul
trucks which are being commissioned on site and are expected to
start work later this month.
Outlook
As announced on 31 October 2017, the Company has entered into a
conditional agreement to acquire the Youga Gold Mine and Balogo
Gold Mine in Burkina Faso for a total consideration of
approximately US$69.5 million, and has conditionally raised
approximately US$20.0 million to fund the cash component of the
acquisition consideration and for working capital purposes. The
acquisition and fundraising remain subject to shareholder approval
and are expected to complete on or around 18 December 2017. The
acquisition is expected to increase proforma 2017 combined gold
production to 180-190koz, and increase forecast gold production for
2018 by approximately 60% to 230koz.
The Company also announced on 11 October 2017, the results of an
updated Mineral Resource and Mineral Reserve estimate for New
Liberty and an updated Life of Mine ("LOM") schedule. The updated
Mineral Resource and Mineral Reserve estimates are as follows:
-- Proven and Probable Mineral Reserve of 7.4Mt containing
717,000 ounces of gold grading 3.03g/t;
-- Measured and Indicated Mineral Resource of 9.6Mt containing
985,000 ounces of gold grading 3.2g/t; and
-- Inferred Mineral Resource of 6.4Mt containing 620,000 ounces of gold grading 3.0g/t.
The updated LOM schedule reflects the existing and planned
further increase in process plant throughput rate of 140ktm by the
end of the year. As a consequence, the future mining rates at New
Liberty will also increase to provide this extra plant feed,
reducing New Liberty's current LOM to 4.5 years based on existing
Reserves. Additional HME is expected to be ordered later this year
to support this increase in mining rate with delivery to site
anticipated early in 2018. The Company also expects to complete an
in-fill drilling programme to upgrade the resource classification
of clearly identified in-pit resource upside during Q1 2018 and add
several additional years to the LOM.
Notes
The financial statements should be read in conjunction with the
accompanying management's discussion and analysis. These documents
have been filed on SEDAR and are available on the Company's website
www.avesoro.com or at www.sedar.com.
Non-GAAP Financial Measures: The Company has included certain
non-GAAP financial measures in this press release, including
operating cash costs and all-in sustaining costs ("AISC") per ounce
of gold produced. These non-GAAP financial measures do not have any
standardised meaning. Accordingly, these financial measures are
intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with International Financial
Reporting Standards ("IFRS").
Operating cash costs and all-in-sustaining cash costs are a
common financial performance measure in the mining industry but
have no standard definition under IFRS. Operating cash costs are
reflective of the cost of production and include a net-smelter
royalty of 3%.
AISC include operating cash costs, corporate costs, sustaining
capital expenditure, sustaining exploration expenditure and
capitalised stripping costs.
Adjusted EBITDA is a non-IFRS financial measure calculated by
excluding one-off costs or credits relating to non-routine
transactions from EBITDA. It excludes other credits and charges,
that individually or aggregate, if of a similar type, are of a
nature or size that requires explanation to provide additional
insight into the underlying business performance. Other companies
may calculate adjusted EBITDA differently.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Contact Information
Avesoro Resources Inc. Camarco
Geoff Eyre / Nick Smith Gordon Poole / Nick Hennis
Tel: +44(0) 20 3874 4740 Tel: +44(0) 20 3757 4980
-------------------------- -----------------------------
Numis Securities Limited Hannam & Partners (Advisory)
(Nominated Adviser and LLP
Joint Broker) (Joint Broker)
John Prior / James Black Rupert Fane / Ingo Hofmaier
/ Paul Gillam / Ernest Bell
Tel: +44(0) 20 7260 1000 Tel: +44(0) 20 7907 8500
-------------------------- -----------------------------
About Avesoro Resources Inc.
The Company's assets include the New Liberty Gold Mine in
Liberia (the "New Liberty Gold Mine," "New Liberty" or the "mine")
which has an estimated proven and probable mineral reserve of 7.4Mt
with 717,000 ounces of gold grading 3.03g/t and an estimated
measured and indicated mineral resource of 9.6Mt with 985,000
ounces of gold grading 3.2g/t and an estimated inferred mineral
resource of 6.4Mt with 620,000 ounces of gold grading 3.0g/t. The
foregoing Mineral Reserve and Mineral Resource estimates and
additional information in connection therewith will be set out in
an NI 43-101 compliant Technical Report for the New Liberty Project
to be filed on SEDAR within 45 days of the Company's disclosure of
the new Mineral Resource estimate made on October 11, 2017.
The New Liberty Gold Mine is located within the Southern Block
of the 100% owned Bea Mountain mining licence. This licence covers
478 km(2) and has a 25 year, renewable, mineral development
agreement. The Bea Mountain mining license also hosts additional
gold projects of Ndablama, Gondoja, Weaju and Leopard Rock which
host indicated and inferred mineral resources. The Company also
owns the Yambesei, Archaen West, Mabong and Mafa West licences, in
addition to a gold exploration permit in Cameroon.
Qualified Persons
The Company's Qualified Person is Mark J. Pryor, who holds a BSc
(Hons) in Geology & Mineralogy from Aberdeen University, United
Kingdom and is a Fellow of the Geological Society of London, a
Fellow of the Society of Economic Geologists and a registered
Professional Natural Scientist (Pr.Sci.Nat) of the South African
Council for Natural Scientific Professions. Mark Pryor is an
independent technical consultant with over 25 years of global
experience in exploration, mining and mine development and is a
"Qualified Person" as defined in National Instrument 43 -101
"Standards of Disclosure for Mineral Projects" of the Canadian
Securities Administrators and has reviewed and approved this press
release. Mr. Pryor has verified the underlying technical data
disclosed in this press release.
Forward Looking Statements
Certain information contained in this press release constitutes
forward looking information or forward looking statements with the
meaning of applicable securities laws. This information or
statements may relate to future events, facts, or circumstances or
the Company's future financial or operating performance or other
future events or circumstances. All information other than
historical fact is forward looking information and involves known
and unknown risks, uncertainties and other factors which may cause
the actual results or performance to be materially different from
any future results, performance, events or circumstances expressed
or implied by such forward-looking statements or information. Such
statements can be identified by the use of words such as
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "would", "project", "should", "believe", "target",
"predict" and "potential". No assurance can be given that this
information will prove to be correct and such forward looking
information included in this press release should not be unduly
relied upon. Forward looking information and statements speaks only
as of the date of this press release.
Forward looking statements or information in this press release
include, among other things, statements of annual gold production
guidance of 70,000 to 80,000 ounces of gold for 2017 at an
operating cash cost of US$900 to US$950 per ounce, statements
regarding forecasts of ore mined, head grade and material milled
and statements regarding the timing and delivery of new HME,
upgrade of the classification of resources, increasing the LOM and
increased gold production rate per quarter in 2018 by approximately
60% to 230koz;
In making the forward looking information or statements
contained in this press release, assumptions have been made
regarding, among other things: general business, economic and
mining industry conditions; interest rates and foreign exchange
rates; the continuing accuracy of Mineral Resource and Reserve
estimates; geological and metallurgical conditions (including with
respect to the size, grade and recoverability of Mineral Resources
and Reserves) and cost estimates on which the Mineral Resource and
Reserve estimates are based; the supply and demand for commodities
and precious and base metals and the level and volatility of the
prices of gold; market competition; the ability of the Company to
raise sufficient funds from capital markets and/or debt to meet its
future obligations and planned activities and that unforeseen
events do not impact the ability of the Company to use existing
funds to fund future plans and projects as currently contemplated;
the stability and predictability of the political environments and
legal and regulatory frameworks including with respect to, among
other things, the ability of the Company to obtain, maintain, renew
and/or extend required permits, licences, authorizations and/or
approvals from the appropriate regulatory authorities; that
contractual counterparties perform as agreed; and the ability of
the Company to continue to obtain qualified staff and equipment in
a timely and cost-efficient manner to meet its demand.
Actual results could differ materially from those anticipated in
the forward looking information or statements contained in this
press release as a result of risks and uncertainties (both foreseen
and unforeseen), and should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indicators of whether or not such results will be achieved. These
risks and uncertainties include the risks normally incidental to
exploration and development of mineral projects and the conduct of
mining operations (including exploration failure, cost overruns or
increases, and operational difficulties resulting from plant or
equipment failure, among others); the inability of the Company to
obtain required financing when needed and/or on acceptable terms or
at all; risks related to operating in West Africa, including
potentially more limited infrastructure and/or less developed legal
and regulatory regimes; health risks associated with the mining
workforce in West Africa; risks related to the Company's title to
its mineral properties; the risk of adverse changes in commodity
prices; the risk that the Company's exploration for and development
of mineral deposits may not be successful; the inability of the
Company to obtain, maintain, renew and/or extend required licences,
permits, authorizations and/or approvals from the appropriate
regulatory authorities and other risks relating to the legal and
regulatory frameworks in jurisdictions where the Company operates,
including adverse or arbitrary changes in applicable laws or
regulations or in their enforcement; competitive conditions in the
mineral exploration and mining industry; risks related to obtaining
insurance or adequate levels of insurance for the Company's
operations; that Mineral Resource and Reserve estimates are only
estimates and actual metal produced may be less than estimated in a
Mineral Resource or Reserve estimate; the risk that the Company
will be unable to delineate additional Mineral Resources; risks
related to environmental regulations and cost of compliance, as
well as costs associated with possible breaches of such
regulations; uncertainties in the interpretation of results from
drilling; risks related to the tax residency of the Company; the
possibility that future exploration, development or mining results
will not be consistent with expectations; the risk of delays in
construction resulting from, among others, the failure to obtain
materials in a timely manner or on a delayed schedule; inflation
pressures which may increase the cost of production or of
consumables beyond what is estimated in studies and forecasts;
changes in exchange and interest rates; risks related to the
activities of artisanal miners, whose activities could delay or
hinder exploration or mining operations; the risk that third
parties to contracts may not perform as contracted or may breach
their agreements; the risk that plant, equipment or labour may not
be available at a reasonable cost or at all, or cease to be
available, or in the case of labour, may undertake strike or other
labour actions; the inability to attract and retain key management
and personnel; and the risk of political uncertainty, terrorism,
civil strife, or war in the jurisdictions in which the Company
operates, or in neighbouring jurisdictions which could impact on
the Company's exploration, development and operating
activities.
This press release also contains Mineral Resource and Mineral
Reserve estimates. Information relating to Mineral Resource and
Mineral Reserve contained in this press release is considered
forward looking information in nature, as such estimates are
estimates only, and that involve the implied assessment of the
amount of minerals that may be economically extracted in a given
area based on certain judgments and assumptions made by qualified
persons, including the future economic viability of the deposit
based on, among other things, future estimates of commodity prices.
Such estimates are expressions of judgment and opinion based on the
knowledge, mining experience, analysis of drilling results and
industry practices of the qualified persons making the estimate.
Valid estimates made at a given time may significantly change when
new information becomes available, and may have to change as a
result of numerous factors, including changes in the prevailing
price of gold. By their nature, Mineral Resource and Mineral
Reserve estimates are imprecise and depend, to a certain extent,
upon statistical inferences which may ultimately prove unreliable.
If such Mineral Resource and Mineral Reserve estimates are
inaccurate or are reduced in the future (including through changes
in grade or tonnage), this could have a material adverse impact on
the Company and its operating and financial performance. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability. Due to the uncertainty that may be attached to
inferred mineral resources, it cannot be assumed that all or any
part of an inferred mineral resource will be upgraded to an
indicated or measured mineral resource as a result of continued
exploration.
Although the forward-looking statements contained in this press
release are based upon what management believes are reasonable
assumptions, the Company cannot provide assurance that actual
results or performance will be consistent with these
forward-looking statements. The forward looking information and
statements included in this press release are expressly qualified
by this cautionary statement and are made only as of the date of
this press release. The Company does not undertake any obligation
to publicly update or revise any forward looking information except
as required by applicable securities laws.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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