ENP Newswire -
Release date- 20022014 -
'Early in 2013, we recognized that the gold environment was deteriorating and took several critically important proactive steps to lessen the effect on our business and to better position
The proactive steps I'm referring to included balancing our cost structure in light of lower earnings and production levels, reducing costs by
In the fourth quarter, we adjusted asset values to reflect our forecast of continuing relatively flat gold prices and took a non-cash charge to earnings. As a result of these actions,
'Given the gold price climate, our near-term focus is on mining profitable ounces, rigid cost containment, optimization of assets and economic returns and the preservation of liquidity,' continued
Cost reductions of
Total cash costs per ounce 1,2 for the fourth quarter:
Gold mines3 -
Total cash costs per ounce for full year 2013:
Gold mines -
All-in sustaining costs per ounce1 for the fourth quarter.
Gold mines -
All-in sustaining costs per ounce for full year 2013:
Gold mines -
Attributable gold production of 195,000 ounces for the fourth quarter.
Commercial production of 175,000 ounces with attributable gold sales of 173,000 ounces.
Attributable gold production of 835,000 ounces for full year 2013.
Commercial production of 762,000 ounces with attributable gold sales of 740,000 ounces.
Record niobium production of 5.3 million kilograms for 2013 with operating margin1 of
With no impact on cash, after-tax impairment charges of
Reported net loss attributable to equity holders of
Adjusted net earnings4 attributable to equity holders of
Net cash from operating activities before changes in working capital4 of
Cash, cash equivalents, and gold bullion (at market value) of
Capital spending of
Dividend suspended in
FOURTH QUARTER AND FULL-YEAR 2013 HIGHLIGHTS
Non-Cash Impairment Charge
We reported after-tax impairment charges of
After-tax impairment charges were recognized in the fourth quarter 2013 comprising
Revenues for the fourth quarter 2013 were
Cost of sales for the fourth quarter 2013 was
The increase was due to higher operating costs (
Net losses attributable to equity holders for the fourth quarter 2013 were
The decrease mainly related to the
Adjusted net earnings attributable to equity holders4 for the fourth quarter 2013 were
Net cash from operating activities for the fourth quarter 2013 was
Net cash from operating activities before changes in working capital4 for the fourth quarter 2013 was
Cash, cash equivalents and gold bullion (at market value) were
Changes in the market price of gold significantly impact our liquidity. In 2013, we suspended the dividend to conserve cash and we reduced costs by
In 2014, we plan to look for further opportunities to reduce costs and improve the efficiency of business processes and systems. We plan to monetize a portion of the non-cash items within working capital, such as supplies and consumables inventory. We will also focus on optimizing our asset portfolio through the further evaluation of life of mine plans and the efficient allocation of capital and human resources. The undrawn credit facility of
Production, Costs and Margins
Attributable gold production, inclusive of joint venture operations, was 195,000 ounces in the fourth quarter, compared to 214,000 ounces in the same quarter 2012. The decline was mainly due to lower grades at Rosebel and Essakane, partially offset by increased production at the Doyon division. For the full year 2013, attributable gold production, inclusive of joint venture operations, was 835,000 ounces, up 5,000 ounces from 2012.
The increase was due to pre-commercial production from the
Attributable gold sales volume, inclusive of joint venture operations, for the fourth quarter 2013 was 173,000 compared to attributable commercial production of 175,000 ounces. Attributable gold sales volume, inclusive of joint venture operations, for 2013 was 740,000 ounces compared to attributable gold commercial production of 762,000 ounces. The variance of 22,000 ounces was mainly related to timing differences.
Total cash costs1,2 - gold mines3 for the fourth quarter 2013 were
All-in sustaining costs1 - gold mines3 for the fourth quarter 2013 were
All-in sustaining costs - total5 for the fourth quarter 2013 were
In the fourth quarter niobium production was 1.6 million kilograms, up 33% from the same prior year period. Niobium production for 2013 was a record 5.3 million kilograms, up 13% from the prior year.
The operating margin1 in the fourth quarter 2013 was
Commitment to Zero Harm Continues
Regarding health and safety, the frequency of all types of serious injuries (measured as DART rate6) for 2013 was 1.01, compared to 1.08 for 2012, representing a 6.5% improvement. Unfortunately, we reported a death of a local contractor at Rosebel during the third quarter 2013.
2013 COST REDUCTION PROGRAM
In the first quarter 2013, we initiated a
Reduced Labour Costs
Reduced staffing requirements in mining and maintenance through business process and operating efficiency improvements and improved contract maintenance.
Reduced the cost of consultants.
Renegotiated Supplier Contracts
Renegotiated supplier contracts, such as food and security at Essakane.
Consolidated bus contracts for transporting workers to and from the Essakane mine.
Improved Operating Efficiencies and Reduced Maintenance Costs
Improved productivity at Rosebel through an aggressive dewatering process of the pits during the rainy season combined with better coordination of shifts for the drilling and blasting crews.
Reduced the frequency and cost of preventive truck maintenance through the replacement of the oil renewal system.
Redesigned mine roads, resulting in improved tire life and reduced hauling cycle times.
Installed a potable water system at Essakane, eliminating the need for bottled water.
Increased monitoring and management of tire wear at
Realized in 2013:
Downsized exploration teams by 34% mainly in
Reduced drilling activities mainly in
Reprioritized projects and deferred others.
Deferred or redesigned certain study elements related to the Cote Gold project and exploration program.
Realized in 2013:
Reduced use of consultants and renegotiated contractor/supplier agreements.
Lowered stock based compensation.
Increased reliance on communications technology resulting in less travel.
RESERVES AND RESOURCES
Total attributable proven and probable gold reserves were 10.1 million ounces compared to 11.3 million ounces at the end of 2012. The weighted average gold price assumption used to determine mineral reserves as at
Total attributable measured and indicated gold resources (inclusive of reserves) were 23.4 million ounces compared to 22.6 million ounces at the end of 2012. The weighted average gold price assumption used to determine mineral resources as at
Note: In mining operations, measured and indicated resources that are not mineral reserves are considered uneconomic at the price used for reserves estimations, but are deemed to have a reasonable prospect of economic extraction.
Niobium probable reserves were 1,707 million kilograms of contained niobium pentoxide (Nb2O5), compared to 1,768 million kilograms at the end of 2012.
Niobium measured and indicated resources (inclusive of reserves) were 2,653 million kilograms of contained niobium pentoxide (Nb2O5), compared to 2,563 million kilograms at the end of 2012.
Note: Niobium mineral reserves have been estimated based on a Technical Report (NI 43-101) prepared in
Drilling activities on projects and mine sites totaled approximately 320,600 metres for the year. Of the
In 2014, we plan to spend
The outlook for 2014 exploration and project study expenditures of
PRODUCTION AND COST GUIDANCE
GOLD PRODUCTION AND COST GUIDANCE
We are forecasting gold production in the range of 835,000 to 900,000 ounces for 2014. Production is expected to build throughout the year starting with a range of between 175,000 and 195,000 ounces in the first quarter. With the plant expansion completed at Essakane, the new processing line will be milling higher-grade hard rock and we expect a ramp up in the second half of the year, resulting in an approximate 25% increase in 2014 production for this operation. The second half of the year is expected to see a lift in production from
Rehabilitation of the zone impacted by the rockburst at
Total cash costs1,2 - gold mines3 - for 2014 are expected to range between
The growing proportion of harder ore at Rosebel and Essakane is expected to drive up stripping ratios and labour costs, and to exert a greater demand on crushing and grinding capacity, which in turn increases energy consumption and the use of reagents. As a result of the changing production mix through the year from different operations, quarterly variations in cash costs are expected.
Guidance for all-in sustaining costs1 for 2014 remains unchanged from 2013 levels and is expected to range between
The following assumptions have been used for 2014 guidance:
Average realized gold price per ounce of
Average crude oil price per barrel of
U.S. dollar value of the Euro of
Canadian dollar value of the U.S. dollar of
EFFECTIVE TAX RATE
The effective tax rate in 2014 is expected to be about 50% compared to the adjusted effective tax rate of 38% in 2013. The higher rate is primarily attributable to certain costs in various jurisdictions that provide limited tax deductions and in times of shrinking margins have a greater impact on the effective tax rate than in the prior year.
Depreciation expense is expected to increase in 2014 compared to 2013 with the commencement of commercial production at the
CAPITAL EXPENDITURES OUTLOOK
For 2014, we forecast total capital expenditures of
FUTURE EXPANSION AND DEVELOPMENT PROJECTS
The decision to proceed with future expansion and development projects depends on expected economic returns under various assumptions. Our focus at this time is on de-risking the projects with ongoing evaluation of market conditions. Decisions to proceed will be conditional upon a number of factors.
Our agreement with the Government of Suriname to reduce power rates at Rosebel supports the transition of the operations to process harder rock. The agreement lowers power costs for the current operations and future expansions. This agreement complements the joint venture agreement with the Government of Suriname relating to areas outside the existing mining concession. With respect to the joint venture agreement, the Company is working to acquire additional properties and to further delineate the surrounding resources.
NIOBEC AND SADIOLA
The timing of capital spending related to the
While we continue to explore a number of alternatives for the Sadiola sulphide project, with the exception of prior commitments, sustaining capital and capitalized stripping, the Company does not intend to proceed with this project without a partner to jointly fund the project
The Cote Gold project is an attractive asset for our longer-term production profile. The terms of reference for an environmental assessment were approved in January of 2014 and we expect to have the required mining permits by the end of 2014. We will begin work on a feasibility study in 2014 with completion expected by the first quarter 2016.
NON-GAAP PERFORMANCE MEASURES - ADJUSTED NET EARNINGS
Adjusted net earnings attributable to equity holders of
Adjusted net earnings attributable to equity holders of
These measures do not have any standardized meaning prescribed by IFRS and should not be considered in isolation or a substitute for measures of performance prepared in accordance with IFRS Adjusted net earnings attributable to equity holders of
NON-GAAP PERFORMANCE MEASURES - NET CASH FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL
The Company makes reference to a non-GAAP performance measure for net cash from operating activities before changes in working capital and net cash from operating activities before changes in working capital per share. Working capital can be volatile due to numerous factors including a build-up of inventories. Management believes that, by excluding these items, this non-GAAP measure provides investors with the ability to better evaluate the cash flow performance of the Company.
A conference call will be held on
Conference Call Information: North America Toll-Free: 1-800-319-4610 or International Number: 1-604-638-5340.
A replay of this conference call will be available from
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
All information included in this news release, including any information as to the Company's future financial or operating performance, and other statements that express management's expectations or estimates of future performance, other than statements of historical fact, constitute forward looking information or forward-looking statements and are based on expectations, estimates and projections as of the date of this news release.
For example, forward-looking statements contained in this news release are found under, but are not limited to being included under, the headings 'Fourth Quarter and Full-Year 2013 Highlights', 'Operations Review with Fourth Quarter Highlights', '2014 Outlook' and 'Future Expansion and Development Projects', and include, but are not limited to, statements with respect to: the Company's guidance for production, total cash costs, all-in sustaining costs, depreciation expense, effective tax rate, niobium production and operating margin, capital expenditures, operations outlook, cost management initiatives, development and expansion projects, exploration, the future price of gold, the estimation of mineral reserves and mineral resources, the realization of mineral reserve and mineral resource estimates, the timing and amount of estimated future production, costs of production, permitting timelines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks and unanticipated reclamation expenses.
Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Forward-looking statements are generally identifiable by, but are not limited to the, use of the words 'may', 'will', 'should', 'continue', 'expect', 'assumption,', 'forecast', 'anticipate', 'estimate', 'believe', 'intend', 'plan', 'suggest', 'guidance', 'outlook', 'potential', 'prospects', 'seek', 'targets', 'strategy' or 'project' or the negative of these words or other variations on these words or comparable terminology.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The Company cautions the reader not to place any reliance whatsoever on forward-looking information or forward-looking statements.
Forward -looking information and forward-looking statements involve risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of
These risks, uncertainties and other factors include, but are not limited to, changes in the global prices for gold, niobium, copper, silver or certain other commodities (such as diesel, aluminum and electricity); changes in U.S. dollar and other currency exchange rates, interest rates or gold lease rates; risks arising from holding derivative instruments; the level of liquidity and capital resources; access to capital markets, and financing; mining tax regimes; ability to successfully integrate acquired assets; legislative, political or economic developments in the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or development activities; laws and regulations governing the protection of the environment; employee relations; availability and increasing costs associated with mining inputs and labour; the speculative nature of exploration and development, including the risks of diminishing quantities or grades of reserves; adverse changes in the Company's credit rating; contests over title to properties, particularly title to undeveloped properties and the risks involved in the exploration, development and mining business.
With respect to development projects,
Actual costs and economic returns may differ materially from
For a more comprehensive discussion of the risks faced by the Company, and which may cause the actual financial results, performance or achievements of
The Company 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 required by applicable law.
Tel: (416) 360-4743
Mobile: (647) 403-5520
Tel: (416) 933-4952
Mobile: (416) 670-3815
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