ENP Newswire -
Release date- 14082014 -
Operating cash flow1 of
Net sales revenue in the second quarter of 2014 decreased by 20% over the second quarter of 2013;
Gold ounce ('oz') production for the three months ended
Copper concentrate sales are from the shipment of 6,881 dry metric tonnes ('DMT') and 6,301 DMT of copper concentrate for the three months ended
Copper production at Aranzazu for the second quarter of 2014 and 2013 was 3,800,257 pounds and 3,205,000 pounds, respectively, an increase of 19%. On-site average cash cost1 per pound of copper produced, net of gold and silver credits was
Gross margin of
Through a dedicated continuous improvement program at
The Brazilian Mines' results, primarily Sao Francisco, have been affected by the tightening of the pit and the longer haul distances of both waste and ore. Sao Francisco implemented an additional push-back in the south area of the mine which will extend its mine life into 2015 but resulted in a higher cash cost per ounce than expected in the first half of 2014. Sao Francisco's cash costs are back on plan and guidance as of the end of the second quarter and for the year.
Sao Vicente will continue with its closure during 2014 with its production resulting from ounces yielded during these activities. We're working on additional end of life value maximization opportunities for both Brazilian Mines.
During the first half of 2014 at Aranzazu, we increased production and significantly decreased treatment charges, refining charges and penalties through a combination of blending, better offtake terms negotiated and a focus on lower arsenic areas in the mine. The full plant expansion and partial roasting facility remain on hold pending financing. Our mine development remains focused on near-term production related development.
At Serrote, we continue to pursue a number of options to realize the value of the project including a revised sequential development and operating plan. This plan would result in lower capital expenditures and features an earlier phased execution schedule than that previously anticipated by the feasibility study.
The Company continues to work towards obtaining a structured financing that will allow achievement of our future operating and expansion goals.'
Gold production at
Gold production at Sao Francisco in the second quarter of 2014 was 21% lower than the second quarter of 2013 due primarily to the lower plant feed. Average cash cost per oz of gold produced1 in the second quarter of 2014 was 8% lower than the second quarter of 2013.
As a result of the suspension of mining and plant operations at Sao Vicente in the fourth quarter of 2013, there was no material moved or plant processing in the second quarter of 2014. The production of 1,265 ounces during the second quarter was achieved through the clean up around the plant. The average cash cost per oz of gold produced1 in the second quarter of 2014 was significantly higher than the second quarter of 2013 due to lower ounces yielded and ongoing costs incurred during its closure process.
At Aranzazu, Copper concentrate production increased by 21% in the second quarter of 2014 as compared to the second quarter of 2013, due to the effect of a 2% increase in copper grade and an 11% increase in the copper recovery. Aranzazu's mine development continued to be focused on near-term development in the second quarter of 2014. This is expected to continue throughout the year.
Average cash cost per pound of copper produced1 for the second quarter of 2014 improved by 16% as compared to the second quarter of 2013. These average cash costs are inclusive of net realizable value write-downs of
The average arsenic level in the copper concentrate was 1.05% during the second quarters of 2014 and 2013. Aranzazu continues to implement a successful program of blending to ensure that value is maximized from the sales of concentrate to its two customers, which has resulted in significant improvements in the levels of arsenic encountered in the concentrate production and accompanying decreases in treatment charges, refining charges and penalties on the concentrate shipments.
Brazilian Assets - Value Maximization
The Company continues to investigate multiple options to maximize the closure value of the assets of the Brazilian Mines, including the disposal of the plant and equipment.
Revenues and Cost of Goods Sold
Revenues for the three months ended
The decrease in gold sales is attributable to a 16% decrease in gold sales volumes and an 11% decrease in the realized average gold price per ounce.
The increase in copper concentrate net sales is primarily attributable to a 9% increase in DMT sold and a 30% increase in average price realized. Total revenues for the three months ended
Total concentrate shipment revenues for the three months ended
For the three months ended
At the Brazilian Mines, for the three months ended
Total cost of goods sold from Aranzazu for the three months ended
The cash operating costs for the three months ended
Other expense items for the second quarter of 2014 include general and administrative expenses of
The income tax expense for the three months ended
Outlook and Strategy
Management believes that the short-to-medium term economic environment is likely to remain relatively supportive for commodity prices but with continued volatility. In order to decrease risks associated with commodity price and currency volatility, the Company will continue to evaluate available protection programs.
Other key factors influencing profitability and operating cash flows are production levels (impacted by grades, ore quantities, labour, plant and equipment availabilities, and process recoveries) and production and processing costs (impacted by production levels, prices and usage of key consumables, labour, inflation, and exchange rates).
Aranzazu's production for 2014 is expected to be between 18,000,000 and 19,500,000 pounds of copper at a range of
For 2014, total capital spending is expected to be
This news release includes certain non-GAAP performance measures, in particular, the average cash cost of gold per oz, average cash cost per pound of copper and operating cash flow which are non-GAAP performance measures. These non-GAAP measures do not have any standardized meaning within IFRS and therefore may not be comparable to similar measures presented by other companies.
The Company believes that these measures provide investors with additional information which is useful in evaluating the Company's performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Average cash costs per oz of gold or per pound of copper are presented as they represent an industry standard method of comparing certain costs on a per unit basis. Total cash costs of gold produced include on-site mining, processing and administration costs, off-site refining and royalty charges, reduced by silver by-product credits, but exclude amortization, reclamation, and exploration costs, as well as capital expenditures. Total cash costs of gold produced are divided by oz produced to arrive at per oz cash costs.
Similarly, total cash costs of copper produced include the above costs, and are net of gold and silver by-products, but include offsite treatment and refining charges. Total cash costs of copper produced are divided by pounds of copper produced to arrive at per pound cash costs.
Operating cash flow is the term the Company uses to describe the cash that is generated from operations excluding depletion and amortization, stock based compensation, impairment charges and the effect of changes in working capital.
National Instrument 43-101 Compliance
Unless otherwise indicated,
Readers are encouraged to review the full text of the Disclosure Documents which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents.
This news release contains certain 'forward-looking information' and 'forward-looking statements', as defined in applicable securities laws (collectively, 'forward-looking statements'). All statements other than statements of historical fact are forward-looking statements.
Forward-looking statements relate to future events or future performance and reflect the Company's current estimates, predictions, expectations or beliefs regarding future events and include, without limitation, statements with respect to: the amount of mineral reserves and mineral resources; the amount of future production over any period; the amount of waste tonnes mined; the amount of mining and haulage costs; cash costs; operating costs; strip ratios and mining rates; expected grades and ounces of metals and minerals; expected processing recoveries; expected time frames; prices of metals and minerals; mine life and gold hedge programs.
Often, but not always, forward-looking statements may be identified by the use of words such as 'expects', 'anticipates', 'plans', 'projects', 'estimates', 'assumes', 'intends', 'strategy', 'goals', 'objectives' or variations thereof or stating that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved, or the negative of any of these terms and similar expressions.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
Forward-looking statements in this news release and related MD&A are based upon, without limitation, the following estimates and assumptions: the presence of and continuity of metals at the Company's Mines at modeled grades; the capacities of various machinery and equipment; the availability of personnel, machinery and equipment at estimated prices; exchange rates; metals and minerals sales prices; appropriate discount rates; tax rates and royalty rates applicable to the mining operations; cash costs; anticipated mining losses and dilution; metals recovery rates, reasonable contingency requirements and receipt of regulatory approvals on acceptable terms.
Known and unknown risks, uncertainties and other factors, many of which are beyond the Company's ability to predict or control could cause actual results to differ materially from those contained in the forward-looking statements.
Specific reference is made to the most recent Annual Information Form on file with certain Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements, which include, without limitation, gold and copper or certain other commodity price volatility, changes in debt and equity markets, the uncertainties involved in interpreting geological data, increases in costs, environmental compliance and changes in environmental legislation and regulation, interest rate and exchange rate fluctuations, general economic conditions and other risks involved in the mineral exploration and development industry.
Readers are cautioned that the foregoing list of factors is not exhaustive of the factors that may affect the forward-looking statements.
All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.
For further information, please visit
Tel: (416) 649-1033
Fax: (416) 649-1044
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