TORONTO, March 10, 2016 /CNW/ - Guyana Goldfields Inc. (TSX:GUY) ("GGI" or the "Company") announced today its financial results for the twelve months ended December 31, 2015 ("Fiscal 2015"). All amounts are expressed in U.S. dollars unless otherwise stated.
2015 Report Highlights
Advancement of the Aurora Gold Project ("Aurora" or "the Project")
- Commercial production at the Project was declared January 1, 2016.
- Gold sales for 2015 were made substantially in November and December. For the four-month pre-commercial production period ended December 31, 2015, the Project:
- Produced (poured) 35,901 ounces of gold (within 2015 guidance range of 30,000 to 50,000 ounces).
- Sold 28,850 ounces of gold at an average realized price of $1,079 per ounce, generating $31 million in gross pre-commercial production revenue.
- Incurred operating costs (including royalties) of approximately $23 million over the four-month ramp up period, generating approximately $8 million in operating profit.
- All of the above revenues and operating costs during the 2015 pre-commercial production period were capitalized to development costs.
- Open pit operations at Rory's Knoll mined 1,487,000 tonnes, of which 483,000 tonnes was ore and 1,004,000 tonnes was waste. Saprolite ore was the predominate ore that was mined in the quarter. Blasting commenced in November 2015 with fresh rock being encountered. The initial Rory's Knoll open pit advanced to a depth of -25 metres at December 31, 2015.
- Average tonnes processed were 4,271 tonnes per day ("tpd") in the fourth quarter, with the month of December 2015 seeing seventeen days of over 5,000 tpd milled, including a record day of 6,196 tpd.
- The average head grade during the fourth quarter was 3.32 grams per tonne of gold ("g/t Au"), with recoveries averaging 91.9%.
- At December 31, 2015, included in development costs was approximately $10 million in gold inventory composed of the following:
- Run-of mine stockpile of 66,000 tonnes of ore grading 2.63 g/t Au,
- In-circuit inventory containing approximately 4,817 ounces of doré, and
- Finished goods inventory of 7,328 ounces of doré available for refining.
- The block model reconciliation at December 31, 2015 comparing survey volumes of actual tonnes mined versus the reserve model showed a positive variance of 27% more ounces of gold contained in the ore mined in 2015 than predicted by the ore reserve model. It is not determinable whether this positive reconciliation will continue in the future.
- Final adjustments to Project construction and development costs during the fourth quarter brought overall total development costs to $282 million versus a development budget of $277 million (that included initial development costs of $249 million, and $28 million in financing costs, pre-operating costs and working capital investment).
Overview of Financial Results
- The Tranche 1 facility of the Project Loan Facility of $160 million (see press release dated September 3, 2014) was fully advanced at September 30, 2015. At December 31, 2015, the Company made its first principal debt repayment of $4.34 million.
- The Company did not need to draw on its Tranche 2 $25 million cost overrun facility to fund the construction of the Project. Consequently, the Tranche 2 facility expired on November 30, 2015.
- As of December 31, 2015, the Company had a total of $27 million in overall funds available in restricted bank accounts for the Project. As the Company did not require their use, the $23 million residing in the Owner's cost overrun bank account will be deposited into debt service and mine closure restricted bank accounts at project completion. The $4 million in the Project's restricted completion bank account is expected to become available.
- The extended commissioning and ramp up period in the fourth quarter of 2015 resulted in a consolidated working capital deficiency of approximately $47 million (excluding restricted cash). The Company expects that the working capital deficiency will be funded from the Project's operating cash flows in 2016.
- At December 31, 2015, the Company had a total of 26,400,000 litres of diesel forward contracts at an average rate of $0.44/litre, which will settle on a net basis, covering subsequent periods that end in the third and fourth quarters of 2017.
- Net income for 2015 was $20.1 million (basic and diluted income per share of $0.13). This compares with a net loss of $12.8 million in the prior year ($0.09 basic and diluted loss per share). Net income for 2015 resulted from the recognition in the fourth quarter of approximately $28.9 million in deferred tax assets relating to tax losses available to the Project, and a corresponding income tax recovery.
- For the fourth quarter ended December 31, 2015, net income was $25.3 million (basic and diluted income per share of $0.16). The recognition of the $28.9 million deferred tax asset in the fourth quarter this year increased earnings over the prior year's quarter net loss of $1.7 million (basic and diluted loss per share of $0.01).
The Company does not believe that the 2015 financial information is representative of expected results to be achieved in 2016, as optimal operating performance has not been achieved. Operating costs are higher in the four-month ramp up period as GGI transitioned from development to commercial production. As such, the processing facility had not yet consistently attained its design capacity of milling 5,000 tpd, and the Company expects improvements to mining, processing and G&A costs to be realized in 2016. In addition, gold sales were made substantially in November and December 2015. Extensive costs were incurred in September and October for commissioning and start-up operations.
- In Fiscal 2016 through to March 08, 2016, the Company produced 29,585 ounces of gold and sold 29,137 ounces for total proceeds of $34.3 million, reflecting an average realized price of $1,177 per ounce.
- In January and February 2016, the Company entered into commitments for the purchase of new mining equipment and a used Twin Otter airplane for local employee mine transport between the Aurora mine site and Georgetown, Guyana. These commitments total approximately $6.4 million.
The Company believes it remains on track to achieve its production guidance for 2016 of approximately 130,000 to 150,000 ounces of gold. All-in sustaining cost guidance (assuming a gold price of $1,000 per ounce) remain unchanged and are expected to be between $587 to $637 per ounce.
The Company's focus remains on optimizing gold recovery, reducing reagent consumption rates, reducing freight and equipment rental costs, and other continuous improvement initiatives designed to further improve operating efficiencies and reduce costs.
A complete set of the Company's audited Consolidated Financial Statements and related Notes for Fiscal 2015 and Management's Discussion and Analysis will be posted on the Company's website at www.guygold.com and were filed on March 10, 2016 on Sedar at www.sedar.com.
About Guyana Goldfields Inc.
Guyana Goldfields Inc. is a Canadian based company, focused on the exploration and development of gold deposits in Guyana, South America. The Company is an emerging gold producer with the onset of its 100% owned Aurora Gold Mine which achieved first production in mid-2015. The Aurora Gold Mine has a total gold resource of 6.54 million ounces in the measured and indicated categories (62.83 million tonnes at 3.24 g/t Au) as well as an additional 1.82 million ounces in the inferred category (16.93 million tonnes at 3.34 g/t Au). For further details, please refer to the report entitled "AGM Inc. Aurora Gold Project- Updated Feasibility Study" dated January 18, 2016 available on SEDAR at www.sedar.com.
This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the estimation of mineral resources. Often, but not always, forward-looking statements can be identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are based on various assumptions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the receipt of applicable regulatory approvals, the timing of the advance of the funds pursuant to the project loan facility to fund the development and construction of the Aurora Gold Project (the "Facility"), fulfilling all conditions precedent to the advance of funds pursuant to the Facility, general business, economic, competitive, political and social uncertainties; the actual results of exploration activities; changes in project parameters as plans continue to be refined; accidents, labour disputes and other risks of the mining industry; political instability; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in GGI's annual information form. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
SOURCE Guyana Goldfields Inc.
For further information:
Guyana Goldfields Inc.
Scott A. Caldwell
President and Chief Executive Officer