First quarter results benefited from continuation of mining a high grade zone in phase two, as a result, the Company remains on track to produce between 190,000 - 210,000 ounces of gold in 2013. Total cash costs guidance for 2013 remains unchanged at $650 to $700 per ounce despite the increase in the royalty rate from 3% to 5% of sales effective January 1, 2013.
In light of market conditions, we have lowered discretionary expenditures in a number of key areas including operations, exploration and administration, as well as, sustaining and development capital.
Reserve development expenditures on the Mine License have been reduced while exploration drilling on the Regional Land Package is being minimized. The Agreement in Principle signed with the Government of Senegal in early April provides for the extension of five key regional exploration licenses which allows the Company to defer regional exploration activity. Exploration expense for 2013 is now expected to total $3 million, a decrease from our original guidance range of $10 to $15 million, while capitalized reserve development costs are now expected at the lower end of our original guidance range of $5 to $10 million.
General and administrative expenses have been reduced to $13 million from the original guidance range of $15 to $20 million, but still provide for the necessary support of operations and development.
Sustaining and development capital expenditures have been reduced by extending the timeline for the development of the Company's first satellite deposit at Gora, where permits are expected in 2013 and production in the first half of 2014. Mine site capital expenditures are expected at the lower end of our original guidance range of $20 to $25 million, even after reflecting the additional costs related to the Agreement in Principle signed with the Republic of Senegal. Development expenditures at Gora in 2013 will be minimized to $5 to $10 million from a previous expected range of $45 to $50 million, of which $23 million was to be financed via the new mobile equipment loan. Capitalized deferred stripping at the Sabodala pit is now expected at the bottom end of the original range of $35 to $40 million.
With these changes, at a gold price of $1,400 per ounce, we expect to generate free cash flow in 2013 which will further improve our financial strength during this period.
At March 31, 2013:
Cash and cash equivalents - $51.0 million
Trade Receivables (bullion) - $6.4 million
Project Finance Facility (balance outstanding) - $60.0 million
Mining Fleet Lease Facility (balance outstanding) - $22.7 million
Hedge Facility - as of April 15, 2013, the forward sales contracts were completely eliminated
Appointment of new Auditors
The Company has appointed Ernst & Young LLP as the Company's new auditors.
AGREEMENT WITH THE REPUBLIC OF SENEGAL
The Company signed a long-term comprehensive Agreement in Principle ("Agreement") with the Republic of Senegal in early April. The Agreement sets out a predictable and stable fiscal operating environment for the Company's future investment in exploration, acquisitions and development to increase reserves and production. The Agreement benefits all stakeholders and gives the Company the ability to invest with certainty in regards to the fiscal and operating parameters. The agreement is expected to be finalized during the second quarter of 2013.
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