All dollar amounts are stated in Canadian dollars, unless otherwise indicated
TORONTO, Feb.
16, 2012 /CNW/ - St Andrew Goldfields Ltd.
(T-SAS), ("SAS" or the "Company") earned net income attributable to shareholders
for the fourth quarter of 2011 of $12.9 million or $0.04 per share as
compared to a loss of $0.2 million, or nil on a per share basis, for
the same period last year.
Operating cash flow before repayment of the
Gold Notes(1) in the quarter was $17.1 million or $0.05 per share, compared to $9.3
million, or $0.03 per share for the same period last year.
For the full
year in 2011, SAS earned net income attributable to shareholders of
$17.2 million or $0.05 per share as compared to a net income of $2.1
million, or $0.01 per share for the same period in 2010.
"We had a great fourth quarter achieving record production, record
earnings and record cash flow," said Jacques Perron, President and CEO
of SAS.
"We saw a steady increase in production and as expected, our
mine cash costs in the fourth quarter reduced to under US$800 per
ounce.
Holt continues to perform well, and we are on track to reach
1,000 tpd by the end of the first quarter.
We are committed to continue
to improve at each operation.
We will grow our production on a
quarterly basis to achieve our 2012 objective of 90,000 to 100,000
ounces of gold production while reducing our cash cost per ounce.
I
want to thank our dedicated employees for their commitment to achieving
success, and look forward to a promising 2012."
Q4 and ANNUAL 2011 HIGHLIGHTS
ACHIEVEMENTS | |
Net income attributable to shareholders for the fourth quarter and 2011,
of $12.9 million, or $0.04 per share, and $17.2 million, or $0.05 per
share, respectively. Adjusted net earnings(1) for the fourth quarter and 2011 of $6.6 million or, $0.02 per share and $6.2 million, or $0.02 per share, respectively. | Record year of earnings with net income increasing by 56% over the previous quarter. |
Produced 22,350 ounces of gold in the fourth quarter and 74,022 ounces during 2011, from three operations (Holt, Holloway and Hislop). | A record year of production representing a 12% increase in gold production over the previous quarter, and a 5% increase over 2010. |
Sold 23,368 ounces of gold during the quarter, at an average realized
price(1) of US$1,690, and a total of 69,528 ounces of gold during 2011, at an
average realized price(1) of US$1,592. Earned revenues in the fourth quarter and 2011 of $40.4 million and $111.9 million, respectively. | An increase in gold sales revenues by 21% over the previous quarter, and 25% over the previous year. |
Mine cash costs of US$772 per ounce and a royalty cost of US$137 per
ounce, for a total cash cost per ounce of gold sold(3) of US$909 per ounce in the fourth quarter. Mine cash costs for 2011 were US$960 per ounce with a royalty cost of US$120 per ounce, for a total cash cost per ounce of gold sold(3) of US$1,080. |
Mine cash costs increased in 2011 due to the delay in start up at the
Holt Mine and the transition in mining areas at the Holloway Mine,
compounded by a high royalty cost due to the increase in the price of
gold. However, cash costs improved by 20% over the previous quarter in 2011, and are expected to reduce further throughout 2012. |
Earned cash margin from mine operations(1) of $18.7 million in the fourth quarter, and $37.5 million for 2011. | An increase of $6.7 million or 56% in cash margin from mine operations(1) when compared to previous quarter in 2011, as a result of the increase in throughput and an increase in ore grade. |
Operating cash flow before repayment of the Gold Notes(1) of $17.1 million, or $0.05 on a per share basis, for the fourth quarter, and $35.0 million, or $0.10 on a per share basis, for annual 2011. | A record year of operating cash flow since the restart of mine operations in 2009, an increase of 58% over the previous quarter, and an increase by $9.1 million over the previous year. |
Holt achieved commercial production at the beginning of the second quarter of 2011. | Commenced commercial production at our flag ship mine, which saw progressive ramp up throughout 2011, from the initial 500 tonnes per day ("tpd"). |
Smoke Deep Zone at the Holloway Mine commenced production in October. | Production commenced in the western portion of the zone and contributed approximately 18% of the Holloway mines throughput for the year. Development continues towards the eastern portion of the zone and production rates and ore grade are anticipated to increase in 2012. |
Incurred total capital expenditures at the three operations of $8.6 million in the quarter, and $33.8 million for 2011. |
At Hislop, the Company spent capital expenditures of $10.7 million in
2011 and $0.7 million during the fourth quarter as the overburden
stripping was substantially complete. Ongoing mine capital is expected to be minimal. Mine development and capital expenditures for the Holt Mine and Mill, and the Holloway Mine during the fourth quarter and 2011 were $7.9 million and $23.1 million, respectively. |
Finalized an updated resource estimate for the Taylor Project which was utilized as part of a pre-feasibility study outlining 173,000 ounces of probable reserves at the West Porphyry Zone |
Incurred $2.7 million in 2011 to advance the Taylor Project towards the
pre-feasibility stage. The Taylor pre-feasibility study outlines 985,000 tonnes at an average grade of 5.01 g/t Au for 173,000 ounces of contained gold in the West Porphyry Zone. The results of the pre-feasibility study are being released concurrently with this press release. |
In May 2011, the Company received a favourable ruling from the Ontario Court of Appeal concerning the Holt Royalty. | Receiving this final judgement successfully removes the contingent liability which significantly improves the economics of the Holt Mine and the Companys value. |
In May 2011, SAS employees celebrated 1 million hours worked without a lost time accident. | The Company achieved a mine safety record, and continues to operate without a Lost Time Accident. |
A summary of the 2011 Mineral Resources and Mineral Reserves estimate as at December 31, 2011, are included as part of the Companys Management Discussion and Analysis for 2011, which is being filed today, February 16, 2012, and is available under the Companys profile on SEDAR at www.sedar.com, and on the Companys website at www.sasgoldmines.com.
Holt Mine, Operations and Financial Review (see Operating and Financial Statistics on page 12)
In the fourth quarter, the Holt Mine ("Holt") produced 11,421 ounces of gold from processing 67,778 tonnes of ore at
a head grade of 5.57 g/t Au, which was substantially derived from Zone
4.
Since the commencement of commercial production at the beginning of
the second quarter in 2011, Holt produced 26,941 ounces of gold from a
throughput of 188,872 tonnes at a grade of 4.74 g/t Au.
Mill recoveries
in the fourth quarter and in 2011 of 94.1% and 93.5%, respectively,
were at the expected level.
Mine development in the first half of 2011 was negatively impacted by a
four month delay in ramp up of operations due to the limited
availability of skilled manpower and equipment issues.
The
implementation of an underground employee training program in the
second quarter of 2011, coupled with improved equipment availability,
resulted in a 36% increase in development productivity over the first
half of 2011, and the mine currently has its full complement of skilled
workers.
The mining rate during 2011 ramped up from the initial 500
tonnes per day ("tpd") in the second quarter, and continued to progress towards the
anticipated steady state rate of production of 1,000 tpd expected by
the end of the first quarter of 2012, which will positively impact unit
costs.
During the second and third quarter of 2011, most of the production ore
was derived from the C-103 Zone, which achieved lower than expected
grade.
The head grade saw a steady increase during the last few months
of 2011, as the C-103 Zone was depleted at the end of the third
quarter, and the mine saw better development grade ore from Zone 4
coupled with production ore which was in line or better than the
reserve grade of 4.34 g/t Au (as of December 31, 2010).
Holt achieved a cash margin from mine operations(1) of $12.1 million during the fourth quarter.
The mine saw a steady
increase in throughput quarter over quarter; which led to consecutive
decreases in mine-site cost per tonne milled(1) of $15 per tonne from the second quarter of 2011 to the third quarter,
and another $11 per tonne in the fourth quarter.
In conjunction with
the improvement in ore grade in the third and fourth quarters, total
cash cost per ounce of gold sold(1) decreased by US$377 per ounce and US$292 per ounce, respectively.
The
Company expects operating costs at Holt will continue to decrease as
the mining rate increases towards its steady state levels.
Holt is expected to contribute approximately 50% of the annual gold production for 2012.
Holloway Mine, Operations and Financial Review (see Operating and Financial Statistics on page 13)
The Holloway Mine ("Holloway") produced 6,126 ounces of gold in the fourth quarter from three areas,
the Lightning Zone ("Lightning Zone"), Blacktop Footwall Lower Zone ("BFWL"), and the Smoke Deep Zone ("Smoke Deep").
During 2011, approximately 45% of production was derived from
Lightning, 37% from the BFWL, and in the fourth quarter, 18% from Smoke
Deep.
Production was negatively impacted throughout 2011 due to the
shift in mining from the BFWL and Lightning zones, while preparing
Smoke Deep for production.
Ramp development at Smoke Deep was completed
during the third quarter of 2011, and production commenced at the end
of October 2011.
Mill recovery of 84.1% in the fourth quarter was
slightly lower than anticipated due to the processing of graphitic ore
from the BFWL and the slower leach kinetics associated with ore from
the western portion of Smoke Deep, where initial production was derived
from.
Gold sales for 2011 were 23,698 ounces or 61% lower than the 61,447
ounces of gold sold in 2010 due to the reasons mentioned above.
Cash
margin from mine operations(1) for the fourth quarter and for 2011 were $4.1 million and $12.0
million, respectively.
Mine site cost per tonne milled increased by 14%
from $86 per tonne in 2010 to $98 per tonne in 2011, which was
attributable to a 40% decrease in throughput when compared to 2010,
partially offset by the improved efficiencies in operating activities
at the mine.
The Company expects mine site cost per tonne in 2012 will
reduce as production rates at Smoke Deep continue to increase, and the
mined ore grade improves.
Holloway is expected to contribute approximately 30% of the annual gold production for 2012.
Hislop Mine, Operations and Financial Review (see Operating and Financial Statistics on page 14)
The Hislop Mine ("Hislop") produced 4,803 ounces of gold in the fourth quarter of 2011.
The head
grade for the Hislop Mine in the fourth quarter increased by
approximately 15% from the previous quarter and 13% over 2010.
The ore
grade mined continued to improve in the fourth quarter as mining
progressed deeper and into the eastern portion of the pit.
Mill
recovery in the fourth quarter of 83.0% was negatively impacted by
processing a higher portion of ore that requires a finer grind.
Operations at Hislop were impacted since the second quarter of 2011, by
the additional overburden removal and waste rock mining activities as a
result of overburden slope failures during the year, and delayed
stripping of the eastern portion of the pit.
Rehabilitation activities
commenced in the third quarter and are now complete, and all overburden
has been stripped.
Waste rock mining was reduced in the second half of
2011 but remained higher than expected due to the change in mining
sequence required to accommodate overburden stripping activities.
The
strip ratio for 2012 is expected to decrease to 3.8, which is lower
than the life-of-mine strip ratio of 4.8.
Gold sales in the fourth quarter were 4,985 ounces, and 19,806 ounces
for 2011, 87% higher than the 10,592 ounces of gold sold in 2010 (as
the mine only commenced commercial mining operations in the second half
of 2010).
Hislop contributed gold sales revenue of $31.2 million in
2011 as compared to $12.1 million in 2010, a 150% increase due to the
increase in throughput and the improvement in ore grade as mentioned
above, as well as a 39% increase in the average realized price per
ounce of gold sold(1).
Mine site costs per tonne milled increased by 14% from $51 per tonne
in 2010 to $58 per tonne in 2011, which was attributable to the
additional waste rock mining activities mentioned above.
The Company
expects the remaining life‐of‐mine mine site cost per tonne milled to
remain closer to $59 per tonne.
The higher cost is primarily due to the
complexity of the ore body, the rock hardness and the increased fuel
costs.
Production cash cost per ounce of gold sold in the fourth quarter and
2011 was US$1,196 per ounce and US$1,272 per ounce, respectively.
The
Company anticipates the cash cost per ounce of gold sold for the Hislop
Mine during 2012, will remain at the level experienced in the fourth
quarter of 2011, despite a lower strip ratio, as a consequence of the
increase in mine operating costs mentioned above.
Hislop is expected to contribute approximately 20% of the annual gold production for 2012.
Taylor Project
As of December 31, 2011, the Company completed an updated resource
estimate and calculation of mineral reserves for the Taylor Project ("Taylor"), as part of preparation for a Pre-feasibility study.
The study
outlined mineral reserves for the West Porphyry Zone ("WPZ") of approximately 1.0 million tonnes at a grade of 5.45 g/t Au
containing approximately 173,000 ounces of gold, included within
measured and indicated mineral resources (which include the West
Porphyry and Shoot Zone) totalling 2.6 million tonnes grading 5.42 g/t
Au for 457,000 ounces of contained gold in the indicated category, and
1.9 million tonnes grading 3.96 g/t Au for 246,000 million ounces of
contained gold in the inferred category.
Results of the Pre-feasibility study are being released concurrently
with the financial information on February 16, 2012.
A National
Instrument 43-101 compliant technical report will be available under
the Companys profile on SEDAR at www.sedar.com and on the Companys website at www.sasgoldmines.com on or before March 30, 2012.
Exploration Programs
The Company recently released its plans for its 2012 exploration program
which will focus on targets that lie near the Holloway-Holt and Hislop
Mines and which has an initial budget of $7.0 million.
Drilling has
resumed on two targets, the Ghost Zone near Holt, and the Hislop North
Project, and results will be released as they become available.
Capital Resources
SAS achieved a record year for cash flow from operations of $23.4
million since the restart of mining operations in the fourth quarter of
2009.
The Company ended the year with cash of $17.6 million, however,
working capital decreased during the third quarter, and in the first
nine months of the year, as a result of a four-month delay in the
development of Holt, and the additional overburden and waste rock
removal activities at Hislop.
These operational issues are now
resolved, and cash flow from operations in the future periods is
expected to improve.
The Company generated $37.5 million in cash margin
from mine operations(1) and $35.0 million in operating cash flow before repayment of Gold Notes(1).
Conference Call Information
A conference call will be held on Friday morning, February 17, 2011 at
10:00 a.m.
(EST) to discuss the fourth quarter and annual 2011 results.
Participants may join the call by dialling toll free 1-866-212-4491 or 1-416-800-1066 for calls from outside Canada and the US.
The Company will post
accompanying power point slides for the call, please visit the website
for more detailed information and any webcast links (www.sasgoldmines.com).
A recorded playback of the call will also be available via the website and will be posted within 24 hours of the call.
Qualified Person
Production at the Holt, Holloway and Hislop mines, and processing at the
Holt Mill are being conducted under the supervision of Duncan
Middlemiss, P.Eng, the Companys Vice President & General Manager, East
Timmins Operations.
The calculation of Mineral Reserves and the Taylor
pre-feasibility study was completed by the Company under the
supervision of Pierre Rocque, P.Eng, the Companys Director of
Engineering.
The exploration programs on the Companys various mineral
properties are under the supervision of Craig Todd, P.Geo, the
Companys Exploration Manager.
Messrs.
Middlemiss, Rocque and Todd are
qualified persons as defined by National Instrument 43-101, and have
reviewed and approved this news release.
Non-GAAP Measures
The Company has included the non-GAAP performance measures: adjusted net
earnings (loss); operating cash flow before repayments of Gold Notes;
average realized price per ounce of gold sold; total cash cost per
ounce of gold sold; cash margin from mine operations; and mine-site
cost per tonne milled throughout this press release, which do not have
standardized meanings prescribed by International Financial Reporting
Standards ("IFRS") and are not necessarily comparable to other similarly titled measures
of other companies due to potential inconsistencies in the method of
calculation.
The Company believes that, in addition to conventional
measures prepared in accordance with IFRS, the Company and certain
investors use this information to evaluate the Companys performance.
Accordingly, it is intended to provide additional information and
should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS.
Refer to pages 8-11 of
this press release for a discussion and the reconciliation of these
non-GAAP measurements to the Companys 2011 Annual Financial
Statements.
(1) See pages 8-11 for non-GAAP Measures
The unaudited Balance Sheets, Statements of Operations and Statements of Cash Flows for the Company for the three and twelve months ended December 31, 2011, can be found on pages 15-17.
To review the complete 2011 Annual Financial Statements and the Annual Managements Discussion and Analysis for 2011, please see SASs SEDAR filings under the Companys profile at www.sedar.com or the Companys website at www.sasgoldmines.com.
About SAS
SAS (operating as "SAS Goldmines") is a gold mining and exploration
company with an extensive land package in the Timmins mining district,
northeastern Ontario which lies within the Abitibi greenstone belt, the
most important host of historical gold production in Canada.
SAS is
focussed on developing its assets in the Timmins Camp with three
producing mines and aggressive exploration activities across 120km of
land straddling the Porcupine-Destor Fault Zone.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information and
forward-looking statements (collectively, "forward-looking
information") under applicable securities laws, concerning the
Companys business, operations, financial performance, condition and
prospects, as well as managements objectives, strategies, beliefs and
intentions.
Forward-looking information is frequently identified by
such words as "may", "will", "plan", "expect", "estimate",
"anticipate", "believe", "intend" and similar words referring to future
events and results, including the Companys production budgets, and
planned gold production levels at the Holt, Holloway and the Hislop
mines in 2012; the improvement in throughput and reduction in unit
costs at the Holt Mine; the improvement in the ore grade and production
rates, and reduction in costs at the Holloway Mine; the improvement in
the ore grade and the stabilization in costs at the Hislop Mine; the
anticipated manpower levels at the Companys mining operations (and the
ability to achieve same); the extent of exploration programs in 2012;
the improvement in the Companys cash flow from operations; and the
availability of a NI 43-101 technical report on the Taylor Project, and
the timing thereof.
This forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause actual results to differ
materially from those expressed or implied by the forward-looking
information.
Factors that may cause actual results to vary materially
include, but are not limited to, uncertainties relating to the
interpretation of the geology, continuity, grade and size estimates of
the mineral reserves and resources; unanticipated operational or
technical difficulties which could escalate operating and/or capital
costs and reduce anticipated production levels; the Companys
dependence on key employees and changes in the availability of
qualified personnel; fluctuations in gold prices and exchange rates;
insufficient funding or delays or inability to raise additional
financing on satisfactory terms if required; operational hazards and
risks, including the inability to insure against all risks; changes in
laws, regulations and the risks of obtaining necessary licenses and
permits; changes in general economic conditions and changes in
conditions in the financial markets.
Such forward looking information
is based on a number of assumptions, including but not limited to the
level and volatility of the price of gold, the accuracy of reserve and
resource estimates and the assumptions on which such estimates are
based, the ability to achieve capital and operating cost estimates, the
ability of the Company to retain and attract qualified personnel, the
sufficiency of the Companys cash reserves and operating cash flow to
complete planned development and exploration activities, the
availability of additional financing on acceptable terms if and as
required and the level of stability of general business and economic
conditions.
Should one or more risks and uncertainties materialize or
should any assumptions prove incorrect, then actual results could vary
materially from those expressed or implied in the forward-looking
information and accordingly, readers are cautioned not to place undue
reliance on this forward-looking information.
SAS does not assume the
obligation to revise or update this forward‐looking information after
the date of this release or to revise such information to reflect the
occurrence of future unanticipated events, except as may be required
under applicable securities laws.
A description of these risks and
uncertainties are can also be found in the Companys Annual Information
Form obtained on SEDAR at www.sedar.com.
NON-GAAP MEASURES
Adjusted net earnings (loss)
Adjusted net earnings are calculated by removing the gains and losses,
resulting from the mark-to-market revaluation of the Companys
gold-linked liabilities and foreign currency price protection
derivatives, one-time gains or losses on the disposition of non-core
assets and expenses and significant tax adjustments not related to
current periods earnings, as detailed in the table below.
Adjusted net
earnings does not constitute a measure recognized by IFRS and does not
have a standardized meaning defined by IFRS and may not be comparable
to information in other gold producers reports and filings.
The
Company discloses this measure, which is based on its Financial
Statements, to assist in the understanding of the Companys operating
results and financial position.
Amounts in thousands of Canadian dollars, except | Three months ended December 31, | Year ended December 31, | ||||||||||||||||||||
per share amounts | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
Net income (loss) per Financial Statements | $ | 12,921 | $ | (235) | $ | 17,173 | $ | 2,090 | ||||||||||||||
Reversal of income and mining tax asset valuation allowance | (433) | - | (18,455) | - | ||||||||||||||||||
Mark-to-market loss (gain) on gold-linked liabilities | (1,414) | 2,010 | 3,347 | 6,630 | ||||||||||||||||||
Mark-to-market loss (gain) on foreign currency derivatives | (3,436) | (796) | 3,869 | (1,327) | ||||||||||||||||||
Proceeds from insurance claim | - | - | (338) | - | ||||||||||||||||||
Loss (gain) on the divestiture of non-core assets | (1,049) | - | 304 | - | ||||||||||||||||||
Write-down of mining assets | - | - | 300 | 263 | ||||||||||||||||||
Secured debenture participation fee | - | - | - | 756 | ||||||||||||||||||
Adjusted net earnings | $ | 6,589 | $ | 979 | $ | 6,200 | $ | 8,412 | ||||||||||||||
Weighted average number of shares outstanding (000s) | ||||||||||||||||||||||
Basic | 368,067 | 362,311 | 367,912 | 343,082 | ||||||||||||||||||
Diluted | 368,739 | 366,645 | 369,945 | 345,854 | ||||||||||||||||||
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