Aura Minerals Inc. ("Aura Minerals" or the "Company") (TSX:ORA) announces
financial and operating results for the second quarter of 2013.
This release does not constitute management's discussion and analysis ("MD&A")
as contemplated by applicable securities laws and should be read in conjunction
with the MD&A and the Company's condensed interim consolidated financial
statements for the three and six months ended June 30, 2013, which are available
on SEDAR at www.sedar.com and on the Company's website.
Highlights:
-- Record gold ounce ("oz") production in the second quarter of 2013 which
was 24% higher compared to the second quarter of 2012. Average cash cost
per oz of gold produced(1) in the second quarter of 2013 was 19% lower
compared to the second quarter of 2012;
-- Net sales revenue in the second quarter of 2013 increased 12% over the
second quarter of 2012;
-- Copper production at Aranzazu for the second quarter of 2013 and 2012
was 3,205,000 pounds and 2,960,700 pounds, respectively, an increase of
8%. On-site average cash cost(1) per pound of payable copper produced,
net of gold and silver credits was $3.63 for the second quarter of 2013
compared to $2.92 for the second quarter of 2012;
-- Gross margin of $(14.5) million and $(8.3) million for the three months
ended June 30, 2013 and 2012, respectively;
-- Loss of $50.1 million or $0.22 per share for the second quarter of 2013
compared to a loss of $11.5 million or $0.05 per share for the second
quarter of 2012. The loss for the second quarter of 2013 includes an
impairment charge of $16.0 million on the Sao Francisco Mine and $40.2
million on the San Andres Mine resulting from the consensus gold price
declining significantly to below the gold price assumptions used in the
most recent annual impairment tests;
-- Operating cash flow(1) of $11.1 million for the second quarter of 2013
compared to $3.2 million for the second quarter of 2012; and
-- The Company has appointed Banco Itau BBA S.A. and RBC Capital Markets to
manage the process to maximize the value of the Serrote project
including, but not limited to, a disposal of a majority interest in the
project equity.
Jim Bannantine, the Company's President and Chief Executive Officer stated,
"Aura again achieved record gold production for the second quarter in a row,
surpassing the first quarter's result and we expect to meet our annual copper
and gold guidance with continued efforts over the second half of the year. A
combination of better-than-expected production and a focus on cost savings at
our existing gold operations as well as Aranzazu producing to expectations with
a substantially reduced arsenic content, has resulted in the Company continuing
to generate cash flow from operations and yielded a trailing twelve month
operating cash flow of $58.6 million.
Although the decline in the gold price has led to an accounting impairment of
both San Andres and Sao Francisco, we believe that both projects will continue
to contribute financially to the future cash flows of the Company. There exist
additional opportunities to realize ounces at Sao Francisco and we expect to
implement a small expansion capital programme and announce an updated NI 43-101
for San Andres in the later part of Q3 2013. This updated NI 43-101 is expected
to result in increased reserves and resources and extend the life of the
property along with the expansion increasing annual production.
Aranzazu's full expansion phase, including the installation of the partial
roasting facility and expansion to 4,500 tonnes per day, is currently on hold
pending the outcome of the financing and refinancing. Management believes that
even in today's market substantial value can be created for our shareholders by
accessing available financing to expand Aranzazu, and we are considering
multiple corporate funding alternatives. Aura is currently in advanced
negotiations with its lenders to finalize an extension to the forbearance and
expects to obtain this imminently.
The Serrote development project continues to be under its capital budget and
while negotiations for long-term project financing are progressing, we have
appointed two well-placed investment advisors to manage the process of a sale of
a majority interest in Serrote. We are also exploring options to maximize the
value of the Brazilian Mines in addition to optimizing their near term cash
flows."
Production and Cash Costs
The Company's production and cash costs for the three and six months ended June
30, 2013 and 2012 are summarized in the tables below:
For the three months ended For the three months ended
June 30, 2013 June 30, 2012
Oz Oz
Produced Cash Costs(1) Produced Cash Costs(1)
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San Andres 15,374 $ 1,146 18,131 $ 918
Sao Francisco 26,771 1,053 15,826 1,752
Sao Vicente 10,280 1,153 8,404 1,581
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Total / Average 52,425 $ 1,100 42,361 $ 1,361
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For the six months ended For the six months ended
June 30, 2013 June 30, 2012
Oz Oz
Produced Cash Costs(1) Produced Cash Costs(1)
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San Andres 31,088 $ 1,131 31,517 $ 1,008
Sao Francisco 52,423 1,190 31,175 2,083
Sao Vicente 19,328 1,273 17,256 1,567
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Total / Average 102,839 $ 1,188 79,948 $ 1,548
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Gold production at San Andres in the second quarter of 2013 decreased by 15%
over the comparable period primarily due to significantly below average
recoveries. The cause at the ADR plant has been identified and the solution is
being implemented and is in progress. Average cash cost per oz of gold
produced(1) in the second quarter of 2013 increased 25% over the second quarter
of 2012.
Gold production at Sao Francisco in the second quarter of 2013 was 49% higher
than the second quarter of 2012 due to higher plant throughput and grade and the
recovery of additional gold from the staged leach on the heap. The second
quarter of 2012 operations continued to reflect that quarter's recovery to
normalized operations from the structural failure of the primary crusher feed
bin in early February 2012, which resulted in Sao Francisco not having use of
the primary crusher for 47 days during the first quarter of 2012. The structural
issues were rectified and the repaired crusher was re-installed in late-March
2012 and resumed operation. Average cash cost per oz of gold produced(1) in the
second quarter of 2013 was 40% lower than the second quarter of 2012. The higher
average cash cost per oz of gold produced(1) in the second quarter of 2012 was
primarily due to lower leached gold after the structural failure of the primary
crusher during the first quarter of 2012 while Q2 2013's average cash cost was
improved by the weakening of the Brazilian real.
Mining at Sao Francisco is expected to continue to the end of August 2014 as
exploration drilling in Q1 and Q2 of 2013 has located additional mineralized
material below the ramp in the northwest area of the pit. An updated
reconciliation indicates that certain waste and low grade zones could
potentially convert to additional plant feed. Indications are that the plant
processing at SF could extend to Q4 2014 as a result.
During the second quarter of 2013, 22% more gold oz were produced at Sao Vicente
as compared to the second quarter of 2012. The average cash cost per oz of gold
produced(1) in the second quarter of 2013 was 27% lower than the average cash
cost(1) in the second quarter of 2012.
There is sufficient feed material in stockpiles at Sao Vicente to keep the plant
full at 120,000 tonnes per month until late 2013. The heap leach pads will
continue to operate with cyanide addition in early 2014, while we continue to
irrigate the heap.
At Aranzazu, copper concentrate production increased by 10% in the second
quarter of 2013 as compared to the second quarter of 2012 and the copper
recovery increased by 6%. Average cash cost per payable pound of copper
produced(1) for the three months ended June 30, 2013 increased by 24% as
compared to the three months ended June 30, 2012.
(1) Please see cautionary note at the end of this press release.
Brazilian Assets - Value Maximization
The Company has been investigating multiple options to maximize the disposal and
closure value of the assets of the Sao Francisco and Sao Vicente mines,
including selling the plant and equipment and utilizing key members of their
operating teams in our other group locations. The Company is considering options
to maximize the value of Serrote including, but not limited to, a disposal of a
majority interest in the project equity and has appointed Banco Itau BBA S.A.
and RBC Capital Markets to manage this process.
Revenues and Cost of Goods Sold
Revenue for the three months ended June 30, 2013 and 2012 was $81,256,000 and
$72,594,000, respectively. The Company's revenue for the second quarter 2013 is
comprised of sales of gold from the Company's gold mines of $73,020,000 and
copper concentrate sales from Aranzazu of $8,236,000 compared to $63,782,000
from the gold mines and $8,812,000 from Aranzazu for the second quarter of 2012.
Revenues for the three months ended June 30, 2013 increased 12% compared to the
three months ended June 30, 2012. The increase in revenues resulted from a 14%
increase in gold sales partially offset by a 7% decrease in copper concentrate
sales.
The increase in gold sales is mainly attributable to a 27% increase in oz sold
partially offset by a 10% decrease in the realized average gold price per oz.
The decrease in copper concentrate sales is attributable to a 21% decrease in
realized revenue per DMT of copper concentrate partially offset by an 18%
increase in DMT sold. Total revenues for the three months ended June 30, 2013 at
Aranzazu related to the shipment of 6,301 DMT of copper concentrate compared to
5,338 DMT of copper concentrate for the prior comparable period. Total
concentrate shipment revenues for the three months ended June 30, 2013 and 2012
were $1,307 per DMT and $1,651 per DMT, respectively. The lower concentrate
shipment revenue per DMT is due to lower commodity prices on current shipments
as well as price adjustments of $347 per DMT resulting therefrom and the full
effect of the arsenic-related treatment and refining charges and penalties (such
charges were implemented mid-way through Q2 2012) and improvements to off-take
contracts only being in effect in the later part of Q2 2013.
At San Andres, for the three months ended June 30, 2013 and 2012, total cost of
goods sold was $22,801,000 or $1,319 per oz compared to $16,143,000 or $1,163
per oz, respectively. For the three months ended June 30, 2013 and 2012, cash
operating costs were $1,163 per oz and $982 per oz, respectively, while non-cash
depletion and amortization charges were $156 per oz and $181 per oz,
respectively.
At the Brazilian Mines, total cost of goods sold for the three months ended June
30, 2013 and 2012 were $53,832,000 or $1,573 per oz and $51,922,000 or $1,940
per oz, respectively. Cash operating costs for the three months ended June 30,
2013 and 2012 were $1,204 per oz and $1,589 per oz, respectively, while non-
cash depletion and amortization charges were $370 per oz and $351 per oz,
respectively. The cash operating costs for the three months ended June 30, 2013
included a write-down of $12,349,000 or $361 per oz to bring production
inventory to its net realizable value (2012: $4,329,000 or $162 per ounce). The
depreciation portion of the inventory write-down during the three months ended
June 30, 2013 totalled $8,453,000 or $247 per oz (2012: $620,000 or $23 per oz).
At Aranzazu, total cost of goods sold for the three months ended June 30, 2013
and 2012 were $19,112,000 or $3,033 per DMT and $12,808,000 or $2,399 per DMT,
respectively. Cash operating costs for the three months ended June 30, 2013 and
2012 were $2,525 per DMT and $1,926 per DMT, respectively, while non-cash
depletion and amortization charges were $508 per DMT and $473 per DMT,
respectively. The cash operating costs for the three months ended June 30, 2013
included a write-down of $4,699,000 or $746 per DMT to bring production
inventory to its net realizable value (2012: $1,302,000 or $244 per DMT of
concentrate). The depreciation portion of the inventory write-down during the
three months ended June 30, 2013 totalled $3,130,000 or $497 per DMT (2012:
$708,000 or $133 per DMT).
Additional Highlights
Other expense items for the second quarter of 2013 include general and
administrative expenses of $4,325,000 (2012: $3,892,000) and exploration
expenses of $687,000 (2012: $1,298,000). Salaries, wages and benefits increased
41% due to an increase in the annual short-term incentive plan payments and
employee relocation costs. Share-based payment expense decreased 47% as a result
of no stock options being granted in the second quarter of 2013. The decrease in
exploration costs for Serrote and Aranzazu reflect the completion of the
feasibility study and PEA, respectively.
For the three months ended June 30, 2013, the Company recorded an impairment
charge of $16,021,000 related to the long-lived assets of the Sao Francisco Mine
and $40,172,000 related to the long-lived assets of the San Andres Mine.
Additionally, for the second quarter of 2013, the Company recorded finance costs
of $1,948,000 (2012: $1,056,000), interest and other income of $54,000 (2012:
$27,000), and other gains of $10,654,000 (2012: $1,564,000). Loss before income
taxes for the second quarter of 2013 was $66,934,000 (2012: $11,507,000).
Income tax recovery for the three months ended June 30, 2013 was $16,856,000 and
consisted of $484,000 in current income tax expense related to San Andres, and
$17,342,000 in deferred tax recovery, which primarily related to the impairment
charge recorded at San Andres. Income tax recovery for the three months ended
June 30, 2012 was $1,427,000 and consisted of $1,489,000 in current income tax
expense related to San Andres, and $2,916,000 in deferred tax recovery, which
primarily relates to deferred tax assets recognized for Aranzazu during the
period.
For the three months ended June 30, 2013 the Company recorded a loss of
$50,078,000, which compares to a loss of $11,507,000 for the three months ended
June 30, 2012.
Outlook and Strategy
Aura Minerals' future profitability, operating cash flows and financial position
will be closely related to the prevailing prices of gold and copper. Key factors
influencing the price of gold and copper include the supply of and demand for
these commodities, the relative strength of currencies (particularly the U.S.
dollar) and macroeconomic factors such as current and future expectations for
inflation and interest rates. Management believes that the short-to-medium term
economic environment is likely to remain relatively supportive for both gold and
copper prices but with continued volatility for both commodities. In order to
decrease risks associated with gold price volatility the Company will evaluate
entering into additional hedging 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).
Aura Minerals' production and cash cost per oz guidance for the 2013 year has
not changed from previous guidance and is as follows:
Gold Mines Cash Cost per oz 2013 Production
----------------------------------------------------------------------------
San Andres $1,000 - $1,150 60,000 - 65,000 oz
Sao Francisco $1,100 - $1,250 78,000 - 88,000 oz
Sao Vicente $ 950 - $1,100 28,000 - 32,000 oz
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Total $1,050 - $1,200 166,000 - 185,000 oz
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Aranzazu's production for 2013 is expected to be between 13,000,000 and
15,000,000 pounds of copper at a range of $2.90 to $3.40 average cash cost per
payable pound of copper, which has remained unchanged since our guidance in the
first quarter of 2013.
For the remainder of 2013, total capital spending is expected to be $13 million.
This amount relates to growth and sustaining capital for existing mines -
including $5 million on the development of Aranzazu and $8 million on completing
Phase V of the heap leach expansion, installation of a second secondary crusher
and community expenditures at San Andres. These capital expenditures are
expected to be funded by a combination of internal cash flows and external
financing and may be delayed if financing is not obtained. The Company has also
delayed previously planned development expenditures at Serrote until project
financing is completed.
Conference Call
Aura Minerals' management will host a conference call and audio webcast for
analysts and investors on Thursday, August 15, 2013 at 9:00 a.m. (Eastern Time)
to review the second quarter 2013 results. Participants may access the call by
dialing 416-340-8530 or the toll-free access at 1-888-340-9642. Participants are
encouraged to call in 10 minutes prior to the scheduled start time to avoid
delays.
The call is being webcast and can be accessed at Aura Minerals' website at
www.auraminerals.com. Those who wish to listen to a recording of the conference
call at a later time may do so by dialing 905-694-9451 or 1-800- 408-3053
(Passcode 6892960#). The conference call replay will be available from 2:00 p.m.
on August 15, 2013, until 11:59 p.m. (EST) on August 29, 2013.
Non-GAAP Measures
This news release includes certain non-GAAP performance measures, in particular,
the average cash cost of gold per oz, average cash cost per payable 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 payable 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 payable pounds of copper
produced to arrive at per payable 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.
About Aura Minerals Inc.
Aura Minerals is a Canadian mid-tier gold and copper production company focused
on the development and operation of gold and base metal projects in the
Americas. The Company's producing assets include the copper- gold-silver
Aranzazu mine in Mexico, the San Andres gold mine in Honduras and the Sao
Francisco and Sao Vicente gold mines in Brazil. The Company's core development
asset is the copper-gold-iron Serrote project in Brazil. Recent achievements on
the Serrote project include: completion of basic engineering; significant
progress on land acquisitions and community resettlement, with approximately 70%
of the project area now acquired; and engineering-only award of long lead
equipment. Detailed negotiations for debt and equity financing of the project
are continuing.
National Instrument 43-101 Compliance
Unless otherwise indicated, Aura Minerals has prepared the technical information
in this press release ("Technical Information") based on information contained
in the technical reports and news releases (collectively the "Disclosure
Documents") available under the Company's profile on SEDAR at www.sedar.com.
Each Disclosure Document was prepared by or under the supervision of a qualified
person (a "Qualified Person") as defined in National Instrument 43-101 -
Standards of Disclosure for Mineral Projects ("NI 43-101"). 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. The
disclosure of Technical Information in this MD&A has been reviewed and approved
by Bruce Butcher, P. Eng., Vice President, Technical Services.
Cautionary Note
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 CONTACT:
Aura Minerals Inc.
Alex Penha
Vice President, Corporate Development
(416) 509-0583 or (416) 649-1033
(416) 649-1044 (FAX)
info@auraminerals.com
www.auraminerals.com
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