Anaconda Mining Sells 3,597 Ounces and Generates $0.4M of EBITDA at the Point Rousse Project for Q3 Fiscal 2017

TORONTO, April 14, 2017 /CNW/ - Anaconda Mining Inc. ("Anaconda" or the "Company") – (TSX:ANX) is pleased to report its financial and operating results for the three months ended February 28, 2017 (the "Quarter").  The Company sold 3,597 ounces of gold resulting in $5,643,411 in revenue at an average sales price of $1,569 (USD$1,188) per ounce. Cash cost per ounce sold at the Point Rousse Project for the three months ended February 28, 2017 was $1,195 (USD$904). The Company generated positive earnings before interest, taxes, depreciation and amortization and other non-cash expenses ("EBITDA") of $368,968 at the Point Rousse Project. Net loss for the three months ended February 28, 2017 was $1,135,108, largely due to non-cash charges such as amortization of production stripping assets of $894,302, a write-down of stockpile inventory of $557,375 and depletion and depreciation expense of $1,247,773. All dollar amounts are in Canadian dollars unless otherwise noted.

Due to timing of payments of normal-course accounts payable and gold doré shipments, the Company utilized $317,199 of its line of credit, leaving liquidity of approximately $683,000 available as at February 28, 2017. At the end of the Quarter, the Company had net working capital of $1,269,923. Subsequent to the end of the third quarter, Anaconda received $750,000 from its insurance company for an outstanding business interruption claim. By March 31, 2017, the Company had cash and cash equivalents of $911,699 and $1,000,000 available on its line of credit.

President and CEO, Dustin Angelo, stated, "Operationally, the Point Rousse Project continues to perform well as we have strung together two consecutive quarters of high throughput, good recovery and improving grade since a slow start in the first quarter. As expected, all-in sustaining cash cost per ounce has decreased significantly after the first quarter as production improved and we wound up capital projects and exploration. With improved operating performance and a decrease in total cash costs during the third quarter, along with the receipt of funds from an insurance claim, we were in a much-improved liquidity position by the end of March."

In a press release dated October 18, 2016 announcing the financial and operating results of the first quarter of fiscal 2017, the Company indicated that it expected its cash operating cost per ounce to return to historical levels of approximately $1,100 and all-in sustaining cash cost per ounce to average approximately $1,520 for the remaining three quarters of the fiscal year. Anaconda believes it is on track to meet that guidance.

Highlights for the three and nine months ended February 28, 2017

  • As at February 28, 2017, the Company had cash and cash equivalents of $nil, net working capital of $1,269,923 and available liquidity of approximately $683,000 through a revolving line of credit facility. The cash balance at the end of the Quarter was primarily due to timing of gold shipments and payments made to reduce accounts payable. As at March 31, 2017, the Company had cash and cash equivalents of $911,699 and $1,000,000 available on its line of credit.
  • For the three months ended February 28, 2017, the Company sold 3,597 ounces of gold and generated $5,643,411 in revenue at an average sales price of $1,569 (USD $1,188) per ounce.
  • For the nine months ended February 28, 2017, the Company sold 10,904 ounces of gold and generated $17,974,427 in revenue at an average sales price of $1,648 (USD $1,254) per ounce.
  • Cash cost per ounce sold at the Point Rousse Project for the three and nine months ended February 28, 2017, was $1,195 (USD $904) and $1,144 (USD $870) per ounce, respectively.
  • All-in sustaining cash cost per ounce sold ("AISC") (see Reconciliation of Non-GAAP Financial Measures), including corporate administration, capital expenditures and exploration costs for the three and nine months ended February 28, 2017, was $1,641 (USD $1,243) and $1,840 (USD $1,399) per ounce, respectively.
  • The mill processed 1,268 tonnes of ore per operating day for the three months ended February 28, 2017.
  • The overall recovery in the mill for the three and nine months ended February 28, 2017, was 85%.
  • At the Point Rousse Project, EBITDA (see Reconciliation of Non-GAAP Financial Measures) for the three and nine months ended February 28, 2017, was $368,968 and $4,685,615, respectively.
  • On a consolidated basis, EBITDA for the three and nine months ended February 28, 2017, was ($258,758) and $2,705,622, respectively.
  • Net loss for the three and nine months ended February 28, 2017, was $1,135,108 and $791,492, respectively primarily due to non-cash charges including amortization of production stripping assets, a write-down of stockpile inventory and depletion and depreciation expense.
  • Adjusted net loss for the three and nine months ended February 28, 2017, was $528,023 and $221,583, respectively.
  • Purchase of property, mill and equipment for the nine months ended February 28, 2017, was $2,057,830. Key items included tailings and polishing pond construction of $1,472,000, mill equipment upgrades of $291,000 and permitting/legal costs of $109,000 related to the construction of the dock facility for the Aggregates Venture.
  • Production stripping assets for the nine months ended February 28, 2017, include additions of $1,283,856 and amortization of $1,085,739.
  • Approximately $2,544,000 was spent on exploration for the nine months ended February 28, 2017, which included drilling, trenching, mapping and mineral resource estimates.

Operations overview

During the three months ended February 28, 2017, gold sales volume of 3,597 ounces represented a 10% increase over the same period in fiscal 2016, largely due to a 18% increase in throughput and a 4% increase in recovery. This was partially offset by a decline in grade of 14% compared to the third quarter in fiscal 2016. Average sales price for the three months ended February 28, 2017, of $1,569 per ounce was 3% more than the $1,527 per ounce realized during the same period in fiscal 2016. Driven by the higher gold price and mill throughput, gross revenue for the three months ended February 28, 2017, of $5,643,411 was higher than the same period in fiscal 2016 by $655,348, or 13%.

MILLING OPERATIONS

The following table summarizes the key mill operating metrics for the three and nine months ended February 28, 2017 and February 29, 2016:

OPERATING STATISTICS:

For the three months ended

For the nine months ended

 February 28 

 February 29 

 February 28 

 February 29 

2017

2016

2017

2016

Mill





Operating days

85

88

256

255

Availability

95%

98%

94%

93%

Dry tonnes processed

107,762

91,370

315,248

283,531

Tonnes per 24-hour period

1,268

1,038

1,231

1,112

Grade (grams per tonne)

1.28

1.48

1.28

1.59

Overall mill recovery

85%

81%

85%

85%

Gold sales volume (troy oz.) 

3,597

3,266

10,904

11,827

 

The Pine Cove Mill operated for 85 days during the third quarter of fiscal 2017 at an availability rate of 95%. The mill achieved an average run rate of 1,268 tonnes per operating day compared to 1,038 tonnes per operating day in the third quarter of fiscal 2016, a 22% increase. The Pine Cove Mill processed 107,762 dry tonnes of ore during the quarter compared to 91,370 dry tonnes of ore in the similar period of fiscal 2016. Overall mill recovery was 85% compared to 81% in third quarter fiscal 2016. Average feed grade during the quarter was 1.28 grams per tonne. Grade of ore to be processed in the fourth quarter of fiscal 2017 is expected to increase by approximately 10% compared to the third quarter of fiscal 2017.

MINING OPERATIONS

The following table summarizes the key mining operating metrics for the three and nine months ended February 28, 2017 and February 29, 2016:

OPERATING STATISTICS:

For the three months ended

For the nine months ended

 February 28 

 February 29 

 February 28 

 February 29 

2017

2016

2017

2016

Mine - Total





Operating days

51

70

208

221

Ore production (tonnes)

102,531

78,196

339,914

299,607

Waste production (tonnes)

325,076

584,345

1,810,864

1,787,134

Total production (tonnes)

427,607

662,541

2,150,778

2,086,741

Waste: Ore ratio

3.2

7.5

5.3

6.0

Mine - Pine Cove Pit





Operating days

50

62

207

204

Ore production (tonnes)

101,105

69,849

338,488

280,074

Waste production (tonnes)

325,076

564,832

1,810,864

1,737,378

Total production (tonnes)

426,181

634,681

2,149,352

2,017,452

Waste: Ore ratio

3.2

8.1

5.3

6.2

Mine - Stog'er Tight





Operating days

1

8

1

17

Ore production (tonnes)

1,426

8,347

1,426

19,533

Waste production (tonnes)

-

19,513

-

49,756

Total production (tonnes)

1,426

27,860

1,426

69,289

Waste : Ore ratio

-

2.3

-

2.5

 

The mining operation at the Point Rousse Project operated for 50 days in the Pine Cove Pit and one day at Stog'er Tight during the third quarter of fiscal 2017. Total production was 102,531 tonnes of ore and 325,076 tonnes of waste for a strip ratio of 3.2 : 1 waste to ore. Anaconda was able to scale back total tonnes mined by 35% compared to the same period in fiscal 2016 and reduce operating days because of the low strip ratio and drew ore feed from large stockpiles that accumulated during the first and second quarters of the fiscal year. Even with the reduction in mining activities, ore production increased from 78,196 tonnes in the third quarter of fiscal 2016 to 102,531 tonnes in the third quarter of fiscal 2017, a 31% increase. The reduced strip ratio is expected to continue throughout the fourth quarter of fiscal 2017.

Reconciliation of Non-GAAP financial measures

The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.

Adjusted net earnings measure the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company's underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, impairment charges, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results.

The following table provides a reconciliation of adjusted net earnings for the three and nine months ended February 28, 2017 and February 29, 2016:


 For the three months ended 

 For the nine months ended 


 February 28 

 February 29 

 February 28 

 February 29 


2017

2016

2017

2016


$

$

$

$

Net loss

(1,135,108)

(623,997)

(791,492)

(48,876)






Adjusting items:






Foreign exchange (gain) loss

3,004

(744)

3,000

(18,205)


Unrealized gain on forward sales contract derivative

36,175

-

(22,059)

(26,615)


Write-down of inventory

557,375

-

557,375

-


Reclamation expense

10,531

15,015

31,593

45,045

Total adjustments

607,085

14,271

569,909

225

Adjusted net loss

(528,023)

(609,726)

(221,583)

(48,651)






 

Cash cost per ounce sold is cost of sales from the period before depletion, depreciation and amortization of production stripping assets divided by the number of ounces of gold sold in the period. AISC per ounce includes total cash costs plus the sum of corporate administrative expenses, sustaining capital expenditures, the addition of production stripping assets and certain exploration and evaluation expenses, all divided by the number of ounces sold in the period. This measure seeks to reflect the full cost to sustain the current level of gold production from the Company's operations. Certain other cash expenditures, including income tax payments and financing costs are not included. Certain prior period amounts included in the calculation of AISC have been changed to conform to the presentation adopted in the current period.

The following table provides a reconciliation of cash cost per ounce sold and all-in sustaining cash cost per ounce sold for the three and nine months ended February 28, 2017 and February 29, 2016:


 For the three months ended 

 For the nine months ended 


 February 28 

 February 29 

 February 28 

 February 29 


2017

2016

2017

2016

Cost of sales

6,952,603

4,663,610

17,687,399

15,502,716

Less: Amortization of production stripping assets

(850,413)

-

(1,085,739)

(37,258)

Less: Write-down of inventory

(557,375)

-

(557,375)

-

Less: Depletion and depreciation

(1,247,773)

(782,487)

(3,569,344)

(3,094,996)

Cash operating cost

4,297,042

3,881,123

12,474,941

12,370,462

Corporate administration

626,394

714,909

1,947,997

1,758,339

Purchase of property, mill and equipment

536,682

623,756

1,924,212

2,107,926

Purchase of exploration and evaluation assets

443,971

18,222

2,430,493

779,100

Additions to production stripping assets



1,283,856

1,238,245

All-in cash cost

5,904,089

5,238,010

20,061,500

18,254,072






Gold ounces sold

3,597

3,266

10,904

11,827

Cash cost per ounce sold

1,195

1,188

1,144

1,046

All-in sustaining cash cost per ounce sold

1,641

1,604

1,840

1,543






(in USD$)





Cash cost per ounce sold

904

855

870

788

All-in sustaining cash cost per ounce sold

1,243

1,335

1,399

1,163






 

EBITDA is earnings before finance expense, foreign exchange loss (gain), unrealized gain on forward sales contract derivative, share-based compensation, income tax recovery and depreciation and depletion.

Point Rousse Project EBITDA is EBITDA before corporate administration and other expenses.

The following table provides a reconciliation of EBITDA for the three and nine months ended February 28, 2017 and February 29, 2016:


 For the three months ended 

 For the nine months ended 


 February 28 

 February 29 

 February 28 

 February 29 


2017

2016

2017

2016


$

$

$

$

Net income

(1,135,108)

(623,997)

(791,492)

(48,876)






Adjustments:





Finance expense

29,768

15,076

98,341

18,187

Foreign exchange (gain) loss

3,004

(744)

3,000

(18,205)

Unrealized gain on forward sales contract derivative

36,175

-

(22,059)

(26,615)

Share-based compensation

22,630

151,066

158,488

318,456

Deferred income tax recovery

(463,000)

44,000

(310,000)

2,000

Depletion and depreciation

1,247,773

782,487

3,569,344

3,094,996

EBITDA

(258,758)

367,888

2,705,622

3,339,943

Corporate administration

626,394

714,909

1,947,997

1,758,339

Other expenses

1,332

24,143

31,996

65,937

Point Rousse Project EBITDA

368,968

1,106,940

4,685,615

5,164,219






 

ABOUT ANACONDA
Anaconda is a growth-oriented, gold mining and exploration company with a producing project called the Point Rousse Project and three exploration/development projects called the Viking and Great Northern Projects and the Tilt Cove Property in Newfoundland.

The Point Rousse Project is approximately 6,300 hectares of property on the Ming's Bight Peninsula located in the Baie Verte Mining District in Newfoundland, Canada. Since 2012, Anaconda has increased its property control by ten-fold on the peninsula and gold production to nearly 16,000 ounces per year. In an effort to expand production, it is currently exploring three primary, prospective gold trends, which have approximately 20 km of cumulative strike length and include five deposits and numerous prospects and showings, all within 8 km of the Pine Cove Mill. A second project called the Tilt Cove Property, consisting of 350 hectares, is located approximately 60 kilometres by road from the Pine Cove Mill but is also within the Baie Verte Mining District and underlain by similar geology to the Point Rousse Project.

Anaconda also controls the Viking and Great Northern Projects, which have approximately 6,225 and 6,375 hectares of property, respectively, in White Bay, Newfoundland, approximately 100 kilometres by water (180 kilometres via road) from the Pine Cove Mill. The Viking Project contains the Thor Deposit and other gold prospects and showings and the Great Northern Project includes numerous prospects and showings within a similar geological setting as the Viking Project. Anaconda's plan is to discover and develop more resources within these project areas and substantially increase annual production at the Pine Cove Mill from its current rate of nearly 16,000 ounces.

As the only pure play gold producer in Atlantic Canada, Anaconda Mining is turning the rock we live on into a growing and profitable resource. With a young and motivated workforce, innovative technology and the support of local suppliers, Anaconda is investing in the people of Newfoundland & Labrador and giving back to the communities in which we operate – building a better future for all our stakeholders, from the ground up.

FORWARD-LOOKING STATEMENTS

This document contains or refers to forward-looking information. Such forward-looking information includes, among other things, statements regarding targets, estimates and/or assumptions in respect of future production, mine development costs, unit costs, capital costs, timing of commencement of operations and future economic, market and other conditions, and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to: the final approval of the private placement by the Toronto Stock Exchange; the grade and recovery of ore which is mined varying from estimates; capital and operating costs varying significantly from estimates; inflation; changes in exchange rates; fluctuations in commodity prices; delays in the development of the any project caused by unavailability of equipment, labour or supplies, climatic conditions or otherwise; termination or revision of any debt financing; failure to raise additional funds required to finance the completion of a project; and other factors. Additionally, forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "plans," "may," "estimates," "expects," "indicates," "targeting," "potential" and similar expressions. These forward-looking statements, including statements regarding Anaconda's beliefs in the potential mineralization, are based on current expectations and entail various risks and uncertainties. Forward-looking statements are subject to significant risks and uncertainties and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no responsibility to update them or revise them to reflect new events or circumstances, except as required by law.

SOURCE Anaconda Mining Inc.

For further information: Anaconda Mining Inc., Dustin Angelo, President and CEO, (647) 260-1248, DAngelo@anacondamining.com, www.AnacondaMining.com; Anaconda Mining Inc., Lynn Hammond, VP Public Relations, (709) 330-1260, LHammond@anacondamining.com

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