Golden Band Resources Reports Results for The Quarter Ended April 30, 2012 and The Year Then Ended
SASKATOON, SK, Aug. 28, 2012 /CNW/ - Golden Band Resources Inc. (Golden Band or the Company) (TSXV: GBN) (OTCQX: GBRIF) today reported results from fourth quarter 2012, a net loss of $3.0 million and cash provided by operations of $11.0 million compared to a net loss of $1.0 million for the same quarter of the previous year. As commercial production was declared as of April 1, 2011, the 2012 fiscal year was the first full year of operations, limiting the usefulness of comparative analysis between 2012 and 2011 quarterly and annual data. All dollar amounts presented are Canadian dollars, unless otherwise specified.
2012 Fourth Quarter Highlights
- Cash flow from operations of $11.0 million.
- Processed 41,336 tonnes ore at the Jolu mill with a recovery rate of 93.9% and 9,450 poured ounces
- Completed mining at EP mine with 22,177 tonnes ore
- Defined North Bingo zone with 10,000 tonnes grading 5.80 grams per tonne (g/t) gold.
- Appointed Mr. Matthew Conklin to Vice-President, Operations.
For the quarter ended April 30, 2012, the Company had a net loss of $5.3 million, on revenue of $14.9 million from sales of 8,872 gold ounces and an average realized price of $1,676 per ounce. For the year ended April 30, 2012, the Company had a net loss of $6.4 million, on revenue of $67.6 million from sales of 40,822 gold ounces and an average realized gold price of $1,655/ounce. Non-cash costs of sales (depletion and depreciation) of $560 per ounce is higher for the quarter and year as the capitalized costs of the Roy Lloyd mine are being written off over the measured and indicated resources as currently delineated.
Gold production for the quarter ended April 30, 2012 was 9,450 gold ounces at a total cash cost per ounce produced of $1,396 per ounce as lower grades from Roy Lloyd and EP stockpiles and problems with dilution of mined ore at Roy Lloyd mine resulted in lower production. (Total cash cost per ounce produced is a non-GAAP measure and is discussed under 'Non-IFRS Measures" in this news release).
During the quarter ended April 30, 2012, cash provided by operations was $11.0 million reflecting the higher spot price of gold, averaging $1,680 per ounce for the quarter.
Robson Garden, President and Chief Executive Officer of Golden Band Resources commented, "The 2012 fiscal year, our first full year of operations, was certainly one of transition for the Company as production at our mines and mill were ramped up. The first 6 months of the year were successful with higher grades at the Roy Lloyd mine resulting in higher levels of gold production. The last half of the fiscal year was more challenging as operational issues were experienced that affected both production at the Roy Lloyd mine and ore haulage to the mill."
"In addition, we replaced some senior operating personnel, including our Chief Operating Officer (who resigned January 13, 2012), which is a challenge in this tight labour market. I am pleased that we were successful in recruiting Mr. Matthew Conklin, as Vice-President, Operations, who comes to Golden Band with extensive experience leading mining and milling operations.
"One of his first tasks has been to undertake a program to reduce operating costs at Roy Lloyd and Komis mines. An extensive review is underway to identify inefficiencies and redundancies in our operations. The testing of the shrink stoping mining method at the Roy Lloyd mine is an initiative that came out of this review process and could potentially reduce mining costs significantly. We will continue to identify opportunities to reduce our operating costs in order to increase earnings and cash flow"
"The 2013 fiscal year is going to be an exciting one for Golden Band with production from the Komis mine expected in early September, 2012 and the continued development of the Golden Heart deposit with production expected to commence in 2014. The surface and underground drilling programs at Roy Lloyd mine are providing encouraging results, which we will be reporting as soon as the analytical work is complete. Gold production for the 2013 fiscal year is expected to be in the range of 40,000 to 45,000 ounces with total cash costs expected in the $1,000 to $1,100 per ounce range.
Financial and Operating Summary
|Three Months Ended April 30, 2012||Year Ended April 30, 2012|
|Revenue - CDN $ 000's||14,873||4,206||254%||67,565||4,206||1,506%|
|Cost of sales - CDN $ 000's||20,084||2,935||584%||66,784||2,935||2,175%|
|Gross margin - CDN$ 000's||-5,211||1,271||-510%||781||1,271||-39%|
|Loss from operations - CDN $ 000's||-7,519||593||-1,368%||-6,041||-3,430||-76%|
|Net loss -CDN $ 000's||-5,327||-958||-456%||-6,424||-5,055||-27%|
|Cash provided by operations - CDN$ 000's||10,969||-13,673||180%||33,216||-4,107||909%|
|Capital expenditures - CDN $ 000's||5,962||8,007||-26%||21,298||42,729||-50%|
Weighted average common shares
outstanding basic (000's)
Weighted average common shares
outstanding diluted (000's)
|Average gold spot price - $/oz||1,680||1,386||21%||1,654||1,335||24%|
|Average realized gold price - $/oz||1,676||1,428||17%||1,655||1,428||16%|
|Gold sold - ounces||8,872||2,945||201%||40,822||2,945||1,286%|
|Cost of sales - CDN $oz sold||2,264||997||207%||1,636||997||64%|
|Gold produced - ounces||9,450||2,945||221%||41,932||2,945||1,324%|
|Total cash cost - CDN $||13,189||2,237||490%||45,689||2,237||1,942%|
|Total cash cost - CDN $/oz produced||1,396||760||84%||1,090||760||43%|
|Total production cost - CDN $/oz produced||1,942||1,230||58%||1,657||1,230||35%|
|Roy Lloyd - underground||47,873||11,555||314%||178,554||11,555||1,445%|
|EP - open pit||104,785||-||-||616,108||-||-|
|Alimak/Jolu - open pit||-||-||-||206,035||-||-|
|Three Months Ended April 30, 2012||Year Ended April 30, 2012|
|Tonnes ore mined|
|Roy Lloyd - underground||23,215||11,555||101%||98,425||6,516||1,411%|
|EP - open pit||22,177||-||-||41,575||-||-|
|Alimak/Jolu - open pit||-||-||-||6,284||-||-|
|Roy Lloyd - underground - CDN $ 000's||4,240||1,277||232%||11,159||17,645||-37%|
|Komis - open pit - CDN $ 000's||1,114||178||526%||8,103||735||1,002%|
|EP - open pit - CDN $ 000's||-||940||-100%||-||1,735||-100%|
|Other - CDN $ 000's||608||5,612||-89%||2,036||22,614||-91%|
|Average mill head grade - g/t||7.12||14.15||-50%||9.82||14.15||-31%|
|Recovery - %||93.90%||96.30%||-2%||93.87%||96.30%||-3%|
|Gold produced - ounces||9,450||2,945||221%||41,932||2,945||1,324%|
Revenue in the fourth quarter of 2012 was $14.9 million on sales of 8,872 gold ounces, an average realized price of $1,676 per ounce compared to $1,428 per ounce for sales in April, 2011, the first month of commercial production.
The Company produced 9,450 gold ounces in the fourth quarter of 2012. Production was impacted by lower ore grades as the milling of the higher grade super gene ore from EP mine was completed in the quarter and replaced by lower grade EP ore that had been stockpiled. The production plan had included a transition from the EP supergene ore to Komis ore; however, it has taken longer than planned to put the Komis mine into production, now expected in early September 2012. In addition, there continued to be issues with the mining method at Roy Lloyd mine, resulting in dilution, which lowered grades. Late in the fourth quarter, the Company tested the shrinkage stoping mining method to minimize dilution and maximize grade and recovery.
There were 41,336 tonnes processed at the Jolu mill in the fourth quarter of 2012 with a mill head grade of 7.12 g/t gold, compared to an average head grade for the 2012 fiscal year of 9.82 g/t gold.
For the fourth quarter of 2012, total cash cost per ounce produced was $1,396 as total cash costs were $13.2 million and production was 9,450 ounces due to a number of factors leading to reduced production volumes and lower grades from the Roy Lloyd and EP mines.
Cash provided by operations was $11.0 million for the fourth quarter of 2012 reflecting an average gold spot price of $1,680 per ounce partially offset by a lower sales volume of 8,872 gold ounces.
Capital expenditures for the fourth quarter of 2012 were $6.0 million with $3.5 million spent at Roy Lloyd on approximately 20,000 tonnes of waste decline development and $700,000 in resource delineation drilling below the 1175 level at the Roy Lloyd mine. This drill program also provided information for a surface mining operation called Bingo North, with expectations of 10,000 tonnes of ore grading 5.80 g/t gold. There was approximately $1.1 million in structural and waste development and pre-stripping spent in the fourth quarter of 2012 at Komis in preparation for mining of the deposit.
Year ended April 30, 2012
For the year ended April 30, 2012, revenue was $67.6 million on sales of 40,822 gold ounces at an average realized price of $1,655 per ounce. The spot price of gold average $1,654 for the full year 2012 compared to $1,335 per ounce for the full year 2011.
Gold production for the full year 2012 was 41,932 ounces, just under the Company's guidance. Production for the full year was impacted by the issues with productivity and the ore grade, especially in the fourth quarter of fiscal 2012, as described above.
Total cash cost per ounce produced for the full year 2012 was $1,090 per ounce (Total cash cost per ounce produced is a non-IFRS measure and is discussed under "Non-IFRS Measures".) This was higher than expected and reflects the lower grades mined in the second half of the full 2012 year as well as higher operating costs as Roy Lloyd mine.
Exploration expenditures in the full year 2012 were $1.3 million compared to nil for the full year 2011. As the Company is now in production, it is once again focusing on development of an exploration program to identify future mineable reserves and resources.
Other expenses for the full year 2012 were $6.8 million, up from $4.7 million for the full year 2011, mainly due to payment of wages and benefits for a full 12 months, the first full year of commercial production.
The Company incurred a net loss of $6.4 million in the full year 2012 compared to a net loss of $5.5 million in the full year 2011. This included a loss from operations of $6.0 million in the full year 2012, attributable to production issues at the Roy Lloyd mine which impacted grade, the processing of low grade EP ore during the fourth quarter of 2012 fiscal year and a rate of depreciation of $560 per ounce as capitalized costs of the Roy Lloyd mine are being amortized over the measured and indicated resources currently delineated.
For the full year 2012, capital expenditures were $21.3 million as approximately $10.0 million was spent at Roy Lloyd mine on decline and waste development and raising. There was also $1.1 million spent on resource expansion drilling, a program from surface designed to delineate additional ounces below the 1175 level at the Roy Lloyd mine. At Komis, there was $4.0 million expended to dewater the historical underground mine and a geological and engineering assessment completed prior to production development costing $2.5 million. There was also approximately $0.5 million spent on a resource delineation drill program and $.9 million on development costs for the Komis open pit mine. In addition, there was $2.0 million expended on the tailings management facilities and miscellaneous other projects.
For the full year 2012, the Company had cash flow from operations of $33.2 million, mainly due to the spot of gold for the year averaging $1,654 per ounce, compared to a use of cash in operations for the full year 2011 of $4.1 million. For the full year 2012, repayment of notes payable was $8.8 million and investments in mine, mill and equipment and exploration and development assets was $25.1 million.
At April 30, 2012, the Company had a working capital deficit $15.0 million and subsequently, entered into a term debt agreement for $20 million, with repayments commencing in September, 2012. (See note 21 to the financial statements as well as the news release dated August 3, 2012 for loan terms).
2013 Fiscal Year Outlook
Golden Band's gold production is forecast to be between 40,000 and 45,000 ounces.
The Komis mine is expected to come into production in early September, 2012 and provide most of the feed to the Jolu mill, planned for 650 tonnes per day, supplemented by higher grade ore from the Roy Lloyd mine. With the change to the shrinkage stoping mining method at Roy Lloyd mine, the daily production target will be at 150 tonnes per day at a grade averaging just under 10.0 g/t gold.
Milling at Jolu is expected to be in the range of 180,000 to 200,000 tonnes with a recovery of approximately 95%.
The level of capital expenditure for the 2013 fiscal year is being reassessed, pending the outcome of the drilling programs at the Roy Lloyd mine and revisions to the plans for the permanent tailings management facility at Jolu. The remaining costs associated with bringing Komis into production are one month of waste stripping, estimated at approximately $1.75 million which will be funded through cash flow from operations.
For exploration for the 2013 fiscal year, the Company has entered into an expanded joint venture with Masuparia Gold Corporation to carry out exploration on the Preview Lake, North Lake and Greywacke properties (see previous news release of April 2, 2012). The Company is also developing a winter drill program on several of its own properties with plans to be finalized in September, 2012.
Total cash cost per ounce produced is a non-IFRS performance measure used to better assess the Company's performance for the current period and its expected performance in the future. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this measure to evaluate the Company's performance and cash generating capabilities.
Total cash cost per ounce produced is calculated by dividing total cash costs by gold ounces produced for the relevant period. Total production cost per ounce produced includes total cash cost plus depreciation, depletion and amortization divided by gold ounces produced for the relevant period.
About Golden Band
Golden Band Resources is a gold producer operating in the La Ronge gold belt in northern Saskatchewan and publicly listed on the TSX Venture exchange in Canada under the symbol GBN and is traded in the United States on the OTCQX under the symbol GBRIF. Commercial production was declared on April 1, 2011 and the Company has production from two mines, the Roy Lloyd and EP gold mines. A third mine, Komis, is to be brought into production later in the summer of 2012. Processing is at the centrally located Jolu mill, with a nominal capacity of 700 tonnes per day. The Company has been actively exploring for gold since 1994 and has assembled a land package of 870 km2, including 13 known gold deposits and four former producing mines. The Company plans to undertake aggressive drill programs throughout the La Ronge Gold projects with the goal of significantly expanding the existing NI 43-101 gold resources that have been identified to date.
On behalf of the Board of Directors of Golden Band Resources Inc.,
A. Robson Garden, President and CEO
Caution Regarding Forward-Looking Information and Statements
This news release includes certain forward-looking statements or information. All statements other than statements of historical fact included in this release, including, without limitation, statements relating to the potential mineralization and geological merits of the mine properties, estimates of production, costs of production, the sufficiency and availability of capital and financing and other future plans, objectives or expectations of Golden Band Resources Inc. (Company) are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's plans or expectations include risks relating to the actual results of current exploration activities, fluctuating gold prices, possibility of equipment breakdowns and delays, cost overruns, availability of capital and financing, general economic, market or business conditions, regulatory changes, timeliness of government or regulatory approvals and other risks detailed herein and from time to time in the filings made by the Company with securities regulators available on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended. Accordingly, readers should not place undue reliance on forward-looking information. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as otherwise required by applicable securities legislation.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Golden Band Resources Inc.For further information:
Mark J. Thiel, CA VP, Finance and CFO
Golden Band Resources Inc.
Phone: 306 385 7128
Fax: 306 955 0788