SASKATOON, Dec. 21, 2012 /CNW/ - Golden Band Resources Inc. (Golden Band or Company) (TSXV: GBN; OTCQX: GBRIF) today reported results for the quarter ended October 31, 2012. All dollar amounts presented are Canadian dollars, unless otherwise specified.
2013 Second Quarter Highlights
- Completed the transition to shrink stoping mining at Roy Lloyd.
- Mining costs at Roy Lloyd reduced by more than 20%.
- Processed 28,407 tonnes ore at the Jolu mill with a recovery rate of 94.3% and 7,039 poured ounces.
- Completed mining at Roy Lloyd North with 10,727 tonnes grading 5.93 grams per tonne (g/t) gold.
- Commenced first blast at Komis open pit.
For the quarter ended October 31, 2012 (Q2 2013), the Company had a net loss of $2.8 million on gold sales revenue of $12.7 million, from the sale of 7,920 gold ounces at an average realized gold price of $1,601 per ounce. For the quarter ended October 31, 2011 (Q2 2012), the Company had net income of $0.3 million, on gold sales revenue of $20.7 million, from sales of 11,950 gold ounces at an average realized gold price of $1,731 per ounce.
Cash costs per ounce of gold sold in Q2 2013 were $1,579, up from $900 per ounce of gold sold in Q2 2012, largely as a result of the lower grade ore from Roy Lloyd mine and Komis mine as well as stockpiled ore from EP mine. The average mill head grade for Q2 2013 was 6.71 g/t gold compared to 10.91 g/t gold for the same period in the previous year. Non-cash cost of sales (depletion and depreciation) was $437 per ounce of gold sold in Q2 2013, which is lower than Q2 2012 of $541 per ounce due to the decrease in poured ounces. The capitalized costs of the Roy Lloyd mine and Jolu mill are being depreciated over the measured and indicated resources as currently delineated at a rate that is equal to produced ounces.
Robson Garden, President and Chief Executive Officer of Golden Band commented, "The second quarter of our 2013 fiscal year was certainly a challenge. The transition to the shrink stoping method of mining continued and there were some technical challenges. This impacted mine production at Roy Lloyd, with a lower mine grade than expected. We are working through these transition challenges and have recently seen higher mine grades and lower dilution associated with the shrink stoping.
In addition, negotiations with third party mining contractors took longer than expected and resulted in delays getting Komis into production. In response, we are developing a self-mining capability at Golden Band and will begin work at Greywacke early in 2013 calendar year and then move over to Golden Heart.
We knew Q2 2013 was going to be challenging; however, with the move to shrink stoping now completed at Roy Lloyd, with other cost reduction initiatives there having a positive impact, along with Komis in production and the move to self-mining at Golden Heart, we have taken the steps necessary to reduce costs and improve cash flow from operations. These and other initiatives will continue through the remainder of the 2013 fiscal year and beyond."
Financial and Operating Summary
|Three Months Ended October 31st||Six Months Ended October 31st|
|2012||2011||% Change||2012||2011||% Change|
|Revenue - CDN $ 000's||12,678||20,683||-39%||25,360||35,639||-29%|
|Cost of sales - CDN $ 000's||15,969||17,222||-7%||31,259||30,952||1%|
|Gross margin - CDN$ 000's||-3,291||3,461||-195%||-5,899||4,687||-226%|
|Income/loss from operations - CDN $ 000's||-5,761||1,726||-434%||-10,957||1,389||889%|
|Net loss -CDN $ 000's||-2,754||289||1,053%||-6,334||-1,016||-523%|
|Cash provided by/used in operations - CDN$ 000's||-1,460||8,703||117%||-1,295||20,608||106%|
|Capital expenditures - CDN $ 000's||4,821||7,550||-36%||9,449||9,872||-4%|
|Average gold spot price -CDN $/oz||1,682||1,731||-3%||1,650||1,609||24%|
|Average realized gold price - CDN$/oz||1,601||1,731||-8%||1,600||1,621||16%|
|Gold sold - ounces||7,920||11,950||-34%||15,849||21,981||-28%|
|Cost of sales - CDN $/oz sold||2,016||1,441||40%||1,972||1,408||40%|
|Gold produced - ounces||7,039||11,870||-41%||15,434||22,803||-32%|
|Total cash cost - CDN $ 000's||9,868||11,038||-11%||21,432||19,914||8%|
|Total cash cost - CDN $/oz produced||1,402||930||51%||1,389||873||59%|
|Total production cost - CDN $/oz produced||1,631||1,482||31%||1,783||1,390||54%|
|Roy Lloyd - underground (1)||19,634||30,278||-35%||45,809||110,902||-59%|
|Roy Lloyd North - open pit||45,400||
|Komis - open pit (2)||139,601||
|EP - open pit||
|Alimak/Jolu - open pit||
|Roy Lloyd - underground - CDN $ 000's||430||3,049||-86%||1,821||4,113||-56%|
|Komis - open pit - CDN $ 000's||3,482||3,615||-4%||5,950||4,239||40%|
|Other - CDN $ 000's||909||886||1%||1,678||1,500||12%|
|Three Months Ended October 31, 2012||Six Months Ended October 31, 2012|
|2012||2011||% Change||2012||2011||% Change|
|Average mill head grade - g/t||6.71||10.91||-38%||7.43||11.06||-33%|
|Recovery - %||94.28%||93.20%||1%||94.50%||93.91%||1%|
|Gold produced - ounces||7,039||11,870||-41%||15,434||22,803||-32%|
|(1)||Roy Lloyd includes only operating waste ore tonnes.|
|(2)||Komis open pit activity has been capitalized as part of commissioning|
Revenue in Q2 2013 was $12.7 million on sales of 7,920 gold ounces at an average realized price of $1,601 per ounce compared to $1,731 per ounce for sales in Q2 2012.
The Company poured 7,039 gold ounces in Q2 2013 compared to 11,870 gold ounces in Q2 2012. The reduction in gold production was a result of lower grade ore from Roy Lloyd mine as mining of the first shrink stope was completed in Q2 2013. As this was the first shrink stoping done by Golden Band, there were some technical challenges that affected the efficiency of the operation. These have been addressed and the Company expects future mining to produce the lower tonnage and higher grade associated with shrink stoping. The delay in getting Komis mine into production also impacted gold poured in Q2 2013 as a higher percentage of mill feed was sourced from near-surface ore, which has a lower grade than ore at depth.
The Company processed 28,407 tonnes of ore at the Jolu mill with a mill head grade of 6.71 g/t gold in Q2 2013, compared 33,822 tonnes at an average head grade of 10.91 g/t gold in Q2 2012.
Total cash cost per ounce poured was $1,402 in Q2 2013 compared to total cash cost per ounce poured of $930 in Q2 2012. The increase in total cash per ounce is attributable to the lower production due to lower mine grades from Roy Lloyd, Komis, and EP stockpiles (total cash cost per ounce produced is a non-IFRS measure and is discussed under 'Non-IFRS Measures" in this news release). At Roy Lloyd total mine operating costs were lower by more than 20% as Company initiatives to reduce operating costs started produce positive results. These initiatives include the transition to shrink stoping as well as reductions in manpower and equipment.
Cash consumed in operations was $1.5 million for Q2 2013 reflecting lower production and sales compared to Q2 2012 as well as an average realized gold price of $1,601 per ounce compared to $1,731 per ounce in Q2 2012.
Capital expenditures for the Q2 2013 were $4.8 million with $298,000 spent on mine development and $132,000 on resource delineation drilling below the 1175 level at the Roy Lloyd mine. There was approximately $3.5 million spent on waste development and pre-stripping in Q2 2013 at Komis as commissioning of the mine continued. In addition, approximately $909,000 was spent on resource properties, upgrading of the tailings management facilities at the Jolu mill and mine, mill and equipment purchases.
Six months ended October 31, 2012
Revenue for the six months ended October 31, 2012 was $25.4 million on sales of 15,849 gold ounces at an average realized price of $1,600 per ounce. The spot price of gold average $1,650 for the six months ended October 31, 2012 compared to $1,609 per ounce six months ended October 31, 2011.
Gold production for the six months ended was October 31, 2012 was 15,434 ounces. Production for the six months was impacted by the transition to shrink stoping method of mining at Roy Lloyd mine and the delay getting Komis into production.
Total cash cost per ounce produced for the six months ended was $1,389 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.
Other expenses for the six months ended 2013 were $5.1 million, up from $3.3 million for the six months ended October 31, 2012, mainly due to interest expense and other financing costs.
The Company incurred a net loss of $6.3 million in the six months ended October 31, 2012 compared to a net loss of $1.0 million in the six months ended October 31, 2011. This included a loss from operations of $10.9 million in the six months ended 2013, attributable to production issues at the Roy Lloyd mine which impacted grade, and the processing of low grade Komis ore during Q2 2013.
For the six months ended October 31, 2012, capital expenditures were $9.4 million. Approximately $1.8 million of that was spent at Roy Lloyd mine on development and resource delineation. That program included both surface and underground drilling to delineate additional ounces below the 1175 level. At Komis, $5.9 million was expended on pre-stripping & stripping costs of the open pit, which was capitalized during the commissioning phase. In addition, $1.7 million was expended on the tailings management facilities, other capital resource property projects and mine, mill and equipment.
For the six months ended October 31, 2012, the Company consumed cash in operations of $1.3 million, mainly due lower production, compared to cash provided by operations for the six months ended October 31, 2011 of $20.6 million. For the six months ended October 31, 2012, the Company received loan proceeds of $12.5 million and made investments in mine, mill and equipment and exploration and development assets of $12.3 million, compared to a repayment of a loan of $8.7 million and investments in mine, mill and equipment and exploration and development assets of $14.5 million for the six months ended October 31, 2011.
On April 30, 2012, the Company had an accumulated working capital deficit $15.0 million and in early August 2012, entered into a $20 million term debt agreement, with $12.5 million drawn to October 31, 2012. Principal repayments of $1.7 million per month commence in August, 2013. (See note 9 to the financial statements as well as the news release dated August 3, 2012 for loan terms).
As of October 31, 2012, the working capital deficit was $20.8 million, most of which is owed to the third party mining contractor. The Company is in discussions with the third party mining contractor to agree on terms of repayment of the obligation amendable to both parties.
2013 Fiscal Year Outlook
Golden Band's gold production is now forecast to be between 35,000 and 40,000 ounces.
The Komis mine came into production in early October, 2012 and is expected to 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 160,000 and 170,000 tonnes with a recovery of approximately 95%.
For the remainder of the 2013 fiscal year, approximately $1 million in capital is required for the development of the initial pit for mining of the Golden Heart deposit.
For exploration for the 2013 fiscal year, the Company will be participating, along with its joint venture partner Masuparia Gold Corporation, in a bulk sample of the Greywacke deposit. The bulk sample is expected to be approximately 15,000 tonnes at an average grade of 8.40 g/t gold and will be processed at the Jolu mill.
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, Roy Lloyd and Komis. Processing is at the centrally located Jolu mill, with a nominal capacity of 650 tonnes per day. The Company has been actively exploring the La Ronge Gold Belt since 1994 and has assembled a land package of 870 km2, including 13 known gold deposits and four former producing mines, being Jolu, Decade, Star Lake and Komis. The Company plans to undertake aggressive drill programs throughout the La Ronge Gold Project 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