TORONTO, Nov. 14, 2016 /CNW/ - Roxgold Inc. ("Roxgold" or
"the Company") (TSX.V: ROG) today reported its financial results
for the three and nine month periods ended September 30, 2016.
For complete details of the unaudited Condensed Interim
Consolidated Financial Statements and associated Management's
Discussion and Analysis ("MD&A") please refer to the Company's
filings on SEDAR (www.sedar.com) or the Company's website
(www.roxgold.com). All amounts are in US dollars unless otherwise
indicated.
1. HIGHLIGHTS
For the three month period ended September 30, 2016, the Company:
- Achieved 1,000,000 hours free of lost time injuries ("LTI") in
August;
- Pre-commercial production of 32,990 ounces of gold;
- Sold 34,590 ounces of gold totalling pre-commercial production
revenue of $46,181,000;
- Incurred a cash operating cost1 of $348 per ounce produced for a total cash
cost2 of $417 per ounce
sold and an all-in sustaining cost3 of $702 per ounce sold, including additional
investment to advance underground development 46% ahead of the
initial mine plan;
- Generated pre-commercial production cash flow from
operations4 totalling $29,482,000 for cash flow per share5
of $0.08/share (C$0.10/share);
- Mined 49,270 tonnes of ore at an average grade of 17.0 grams
per tonne ("gpt") including two stopes with an overall dilution of
10.7% and 17.9%, respectively, which compares favourably to the
Company's Feasibility Study ("FS") assumption of 20.5%;
- Deep drilling program resumed at 55 Zone, with results expected
to be included in mineral resource estimate planned for Q1
2017;
- Received $9 million from the
early exercise of all outstanding warrants, held by International
Finance Corporation ("IFC");
- Declared commercial production as of October 1, 2016; and
- Was awarded the "Prix Responsabilité Sociale des Entreprises
minières 2016" or "2016 CSR Award of Mining Companies" by
Redevabilité in Burkina Faso.
1
|
Cash operating cost
is a non-IFRS measure with no standard definition under IFRS and is
calculated using ounces produced and tonnes processed. See the
"Non-IFRS financial performance measures" section of the Company's
2016 Third Quarter MD&A.
|
2
|
Total cash cost is a
non-IFRS financial performance measure with no standard definition
under IFRS and represents the mining operation expenses and the
government royalties per ounce sold.
|
3
|
All-in sustaining
cost is a non-IFRS financial performance measure with no standard
definition under IFRS. See the "Non-IFRS financial performance
measures" section of the Company's 2016 Third Quarter
MD&A.
|
4
|
Pre-commercial
production cash flow from operations is a non-IFRS financial
performance measure with no standard definition under IFRS. See the
"Non-IFRS financial performance measures" section of the Company's
2016 Third Quarter MD&A.
|
5
|
Cash flow per share
is a non-IFRS financial performance measure with no standard
definition under IFRS. See the "Non-IFRS financial performance
measures" section of the Company's 2016 Third Quarter
MD&A.
|
|
|
2.
PRE-COMMERCIAL PRODUCTION
The Company considers that pre-commercial production operations
at the Yaramoko gold mine commenced in June
2016 as the construction of the processing plant and
associated infrastructure was completed, the contractual
performance test associated with the engineering, procurement, and
construction ("EPC") lump sum contract with DRA/Group Five Joint
Venture was passed and a first gold shipment was exported and
refined. Ramp-up of pre-commercial production continued during the
third quarter ended September 30,
2016 with higher productivity from the mine being realized
month-over-month.
The Company has combined the month of June 2016 and the third quarter pre-commercial
production financial operating results in the financial performance
section table below as the Company believes that this grouping more
accurately represents its overall activities during the ramp-up
period, leading to the declaration of commercial production on
October 1, 2016.
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June
2016
|
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Three
months
ended September
30, 2016
|
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Four
months
ended September
30, 2016
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Operating
Data
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Ore mined (tonnes)
.......................................................
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11,770
|
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49,270
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61,040
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Ore processed
(tonnes) ...............................................
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21,710
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60,880
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82,590
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Head grade (g/t)
............................................................
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14.9
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17.0
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16.4
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Recovery (%)
................................................................
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97.7
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98.7
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98.4
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Gold ounces produced
..................................................
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12,400
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32,990
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45,390
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Gold ounces sold
...........................................................
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8,250
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34,590
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42,840
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Financial Data (in
thousands of dollars)
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Pre-commercial
production revenues – Gold sales........
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10,445
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46,181
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56,625
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Mining operating
expenses
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(excluding government
royalties) ........................
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2,616
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12,112
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14,728
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Government royalties
.....................................................
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410
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2,320
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2,730
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Sustainability and
other in-country costs........................
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160
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300
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460
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Investment in
underground development ........................
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2,400
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8,697
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11,097
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Statistics (in
dollars)
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Average realized
selling price (per ounce) .....................
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1,265
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1,335
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1,322
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Cash operating cost
(per ounce
produced)1 ...................
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355
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348
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350
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Cash operating cost
(per tonne
processed)1 ..................
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202
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189
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192
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Total cash cost (per
ounce
sold)2 ...................................
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367
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417
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408
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Sustaining capital
cost (per ounce sold)
3........................
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291
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251
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259
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All-in sustaining
cost (per ounce
sold)4 ...........................
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729
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702
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707
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1.
|
Cash operating cost
is a non-IFRS measure with no standard definition under IFRS and is
calculated using ounces produced and tonnes processed. See the
"Non-IFRS financial performance measures" section of the Company's
2016 Third Quarter MD&A.
|
2
|
Total cash cost is a
non-IFRS financial performance measure with no standard definition
under IFRS and represents the mining operation expenses and the
government royalties per ounce sold.
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3
|
Sustaining capital
cost per ounce sold is a non-IFRS financial performance measure
with no standard definition under IFRS and represents the
investment in underground development per ounce sold.
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4
|
All-in sustaining
cost is a non-IFRS financial performance measure with no standard
definition under IFRS. See the "Non-IFRS financial performance
measures" section of the Company's 2016 Third Quarter
MD&A.
|
|
|
A. Operational
Performance
During the three month period ended September 30, 2016, 49,270 tonnes of ore were
extracted from the underground mine as stoping operations were
established, resulting with the successful mining and extraction of
the first three stoping panels. Mining extraction was effective,
with clean hanging wall contacts observed and the overall dilution
was 10.7% and 17.9% for the first and second stope, respectively,
which compared favourably to the Company's Feasibility Study ("FS")
assumption of 20.5%.
During the reporting period, a full gold reconciliation for the
project-to-date at the 55 Zone was completed. Overall, the
reconciliation compared to the FS model shows good global accuracy
as the reconciled gold contained in ore mined to date is within
5.1% of the FS model prediction of the contained gold in those
corresponding areas mined to date. This is well within the expected
accuracy of an Indicated Resource (Probable Reserve) level model.
85% of this comparison was based on development ore. Since the
commencement of stoping in recent months, a positive trend has been
observed whereby the contained gold reconciled in the three stopes
to September 30, 2016 have positively
reconciled by a cumulative amount of 14.83%. The positive variation
is supported by a 15% reduction in tonnes when compared to the FS
model due to mining a more discrete vein with less dilution, offset
by a 35% over-performance in grade.
As of September 30, 2016, in the
underground operation, four sublevels were fully developed
throughout the eastern, central and western extents of the
resource, representing 1,878 meters of ore development.
During the third quarter of 2016, the Company took advantage of
high productivity rates from the underground mining contractor. As
a result, the Company is 46% ahead of the initial mine plan and is,
as such, benefiting from additional flexibility.
Since commissioning commenced, the processing plant continues to
operate well with high availabilities. The processing plant
processed an average throughput of 676 tonnes per day ("tpd") in
the third quarter. During the month of June, the processing plant
performed for seven consecutive days at throughputs of over 750 tpd
milled, including a record day of 819 tpd. The average gold
recovery rate of 98.7%, during the third quarter of 2016, has been
above the FS assumption of 96.9% in all months with over 99.1%
recovery experienced in August. The plant team continues to observe
improved operating performance in the gravity circuit as the
gravity circuit contribution to overall recovery was 59% in
September.
For the three month period ended September 30, 2016, 60,880 tonnes were milled to
produce 32,990 ounces of gold. As at September 30, 2016, there was approximately 2,182
contained ounces of gold-in-circuit, with an additional 4,583
ounces in gold doré poured in the gold room ready to be shipped and
refined.
In the coming months, the focus of the operations team at site
is to continue to ramp up mine productivity to take advantage of
mill capacity. The Company expects to increase the proportion of
production ore from stoping activities as more active stopes become
established.
B. Financial Performance
Based on the Company's accounting policy (refer to note 2 of the
Financial Statements for the period), commercial production was
declared on October 1, 2016 as the
Yaramoko gold mine had reached the intended levels of operating
capacity as of September 30, 2016.
Accordingly, pre-commercial production revenue totalling
$56,625,000 (Q3 2016: $46,181,000) has been offset against mine
operating costs, totalling $14,728,000 (Q3 2016: $12,112,000), and other capitalized costs,
including previously capitalized development costs, on the
statement of financial position.
During the four-month pre-commercial production period ended
September 30, 2016, a total of 42,840
ounces of gold (Q3 2016: 34,590 ounces) were sold resulting in
pre-commercial production revenues of $56.6
million (Q3 2016: $46.2
million) at an average realized gold price of $1,322 per ounce sold (Q3 2016: $1,335 per ounce sold). This amount was recorded
to Mineral properties under development within property, plant and
equipment during the nine month period ended September 30, 2016.
Mining operating expenses represent mining, processing, and mine
site-related general and administrative expenses. Cash operating
cost1 per tonne processed totalled $192 per tonne (Q3 2016: $189 per tonne), which is slightly higher than
the $182 per tonne processed cost
included in the FS for the first six months of commercial
production. The higher cost per tonne processed is mainly due
to higher operational costs typically associated with a ramp-up
period and as a result of higher energy costs because the high
voltage ("HV") power line is not yet in operation. The cash
operating cost1 per ounce produced totaled $350 per ounce, for the four-month period ended
September 30, 2016 (Q3 2016:
$348 per ounce) compared to the
life-of-mine cash operating cost1 per ounce produced of
$402 per ounce included in the FS.
The lower cash operating cost1 per ounce is the result
of higher grade and lower reagent consumption, offset by higher
energy costs when compared to the FS' assumptions.
In Burkina Faso, all gold
shipments with gold spot prices lower or equal to $1,000 per ounce are subject to a royalty rate of
3% while a 4% rate is applied to all shipments with gold spot
prices between $1,000 and $1,300 per
ounce, and a 5% royalty rate is applied to all shipments with a
gold spot price greater than $1,300
per ounce. During the four month pre-commercial period ended
September 30, 2016, the Company was
subject to a royalty rate of 4% and 5% which was calculated using
the retail market value of gold ounces sold at the time of
shipment.
In-country and corporate social responsibility expenses refer to
expenditures incurred to maintain Roxgold's current licence to
operate in Burkina Faso, as well
as investments made in sustainability and community projects
related to current operations.
During the four month period ending September 30, 2016, Roxgold invested $11.1 million in underground mine development (Q3
2016: $8.7 million), representing a
sustaining capital cost2 per ounce sold of $259 per ounce compared to the life-of-mine
average cost of $101 per ounce
included in the FS. It was expected that there would be a higher
sustaining capital cost2 per ounce as the FS anticipated
that the underground mine development would be completed in the
first 48 months of the 8-year mine life and then reducing
thereafter. Accordingly, the average sustaining capital
cost2 per ounce sold for the first four years was
estimated to be $176 per ounce sold.
Another factor influencing the sustaining capital cost2
per ounce is the underground development progress to the end
of the third quarter of 2016 represents 146% of the anticipated
mine development for the same period. The investment in the
additional meters of development was made to provide for greater
operational flexibility and resilience as well as the opportunity
to benefit from the high availabilities of the mill.
Based on the foregoing, $35,936,000 (Q3 2016: $29,482,000) of pre-commercial production cash
flow from operations3 was generated during the
four-month pre-commercial production period while the all-in
sustaining cost4 totalled $707 and $702 per
ounce sold for the four and three month period ended September 30, 2016, respectively.
C. Development Update
As the majority of Project activities were completed during the
second quarter of 2016, with the exception of the HV power line
which is based on lump-sum contracts, the final Project capital
cost estimate is forecasted to be approximately US$107 million. This is approximately 3% below
the Company's earlier Project capital cost estimate of US$110.8 million (for more information on the
capital cost estimate, please refer to the Company's press release
dated April 7, 2015, available on
SEDAR at www.sedar.com).
Work continues to progress on the connection to the HV national
electricity grid in Burkina Faso.
The transmission line construction is complete and Eiffage, the
substation contractor, has established civil works for the
substation.
Progress is positive and the Company anticipates drawing on the
power supply in the first quarter of 2017.
3. FINANCING ACTIVITIES
A. Project
Finance
The Credit Facility, which has a six-year term and will bear
interest at a rate of LIBOR plus 4.75% pre-completion and 4.25%
post completion, was fully drawn during the second quarter ended
June 30, 2016 as the Project was
being completed. During the three-month period ended
September 30, 2016, the Company has
not had to utilize funds from its equity-funded $15 million cost overrun facility, as required by
the Credit Facility, and does not anticipate using it as commercial
production was declared on October 1,
2016.
B. Equity
On July 14, 2016, IFC exercised
the 12.9 million warrants issued to them on September 9, 2015, exercisable for one additional
common share of the Company, at a conversion price equal to
C$0.90 per share, fourteen months
prior to the warrants' expiry date of September 9, 2017. This represented approximately
$9 million of total proceeds for the
Company. These proceeds will be invested to support organic growth
initiatives, such as expansion drilling at the 55 Zone, which
started to delineate potential extension to strike below the floor
of the current mine plan at 430 metres, as well as further drilling
at the QV1 and QV' Zones at Bagassi South to further delineate and
define the recently released maiden resource.
4.
EXPLORATION ACTIVITIES
A. 55
Zone
During the third quarter of 2016, the Company resumed drilling
at 55 Zone following the end of the rainy season in September.
Drilling commenced with one diamond drill rig on September 8th, followed by a second
diamond drill rig on September
24th. The drilling program aims at testing the 55
Zone at vertical depths between 550m and 975m, a total of 2,722
meters was drilled during the period and two holes, YRM-16-DD-422A
and 423 were completed.
The drilling program is expected to continue at Zone 55 until
the end of 2016, the results of which will be included in an
updated mineral resource estimate planned for the end of Q1
2017.
B. Bagassi
South
There were no exploration activities at Bagassi South during the
period under review due to the rainy season. A drilling program has
been planned for Bagassi South for the end of the fourth quarter
which consists of approximately 4,000 meters of drilling targeting
the QV' structure.
The Yaramoko exploration permit expired in September 2016. The Company has submitted an
application for a new permit and has received confirmation from the
Burkina Faso authorities that the
new permit is pending and will be delivered in due course.
C. Houko Permit
There were no exploration activities at Houko during the period
under review due to the rainy season.
5.
CORPORATE SOCIAL RESPONSIBILITIES ACTIVITIES
In line with its suitability strategy and based on Roxgold's
participative approach with the adjacent communities, a list of
multiple corporate social responsibility projects and initiatives
has been established for completion during the twelve-month period
to be ending December 31, 2016. All
the selected projects originated from the community and focus on
education, water supply, women's entrepreneurship, assistance for
the physically disabled and health. These projects will impact
approximately 10,000 people.
More specifically, the solar electrification of three health
centers in small villages (Kahin, Pahin, Vy), currently with no
electricity, will support the improvement of services that can be
offered to the community. In addition, Roxgold is attending to the
solar electrification of three schools. There are also projects
that focus on training and providing equipment for weaving leather
goods, rehabilitation of 20 boreholes in the Bagassi Municipality
and three projects aimed at empowering women with the establishment
of a pigsty, a cattle fattening project and the opening of a new
soap production unit.
Roxgold has also developed programs to enhance local procurement
and employment to improve the environment (village reforestation)
with the goal of leaving a legacy of positive socio-economic and
environmental impacts in the areas in which the Company
operates.
During the three-month period ended September 30, 2016, the initiatives realized have
been part of the 2016 livelihood restoration program and involved
the distribution of NPK and urea fertilizer in favor of the
population affected by the mine to improve the production of their
crops. The solar electrification of the health facility was also
completed during period while training to improve the local
suppliers' capacity was ongoing. In addition, the
rehabilitation of the main Bagassi road started after the rainy
season.
On August 17, 2016, the Company
was awarded the "Prix Responsabilité Sociale des Entreprises
minières 2016" or "2016 CSR Award of Mining Companies" by
Redevabilité in Burkina Faso. This
civil society group is comprised of multiple groups, including:
- The Africa Youth Network (RAJ)
- The Centre for Research and Intervention in Gender and
Development (CRIGED)
- The Centre for Citizens' Monitoring and Analysis of Public
Policy (CDCAP)
- Partners of the Economic and Social Justice Program NGO
DIAKONIA.
6.
EVENTS SUBSEQUENT TO SEPTEMBER 30,
2016
As a result of the successful mining and extraction rates
achieved since commencing stoping in August and September 2016, together with high processing
plant availabilities and gold recoveries above FS assumptions, the
Company's declared commercial production at its Yaramoko gold mine
effective October 1, 2016.
7.
Conference Call Information
The Company will also host a conference call today, Monday, November 14, 2016 at 11:00 am EST to discuss the 2016 third quarter
financial results.
Participants in Canada and the
U.S. can call in by dialing (888) 231-8191 and participants outside
North America can dial in by
calling (647) 427-7450.
A live and archived webcast of the conference call will also be
available on the Company website in the events section:
http://www.roxgold.com/s/Events.asp
As well as through the conference call provider:
http://event.on24.com/r.htm?e=1298652&s=1&k=0349B25E672DA212029BE6425797EE94
A recorded playback of the 2016 third quarter results call will
be available two hours after the call for 90 days by dialing (416)
849-0833 and entering the call back passcode 7604515.
8.
SELECTED FINANCIAL DATA
|
Three-month
period ended
September 30,
2016
$
|
Three-month
period ended
September 30,
2015
$
|
Nine-month
period ended
September 30,
2016
$
|
Nine-month
period ended
September 30,
2015
$
|
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(as
adjusted)
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(as
adjusted)
|
Cost of
operations
|
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|
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General and
administrative expenses..............
|
851,000
|
585,000
|
2,510,000
|
2,006,000
|
Exploration and
evaluation expenses...............
|
1,083,000
|
475,000
|
3,501,000
|
1,739,000
|
Share-based
payments....................................
|
1,094,000
|
855,000
|
1,966,000
|
1,518,000
|
Depreciation......................................................
|
148,000
|
44,000
|
427,000
|
148,000
|
|
|
|
|
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Operating loss for
the period.....................
|
3,176,000
|
1,959,000
|
8,404,000
|
5,411,000
|
|
|
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|
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Other expenses
(income)
|
|
|
|
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Interest
income.................................................
|
(15,000)
|
(2,000)
|
(24,000)
|
(52,000)
|
Standby
fees....................................................
|
35,000
|
349,000
|
175,000
|
349,000
|
Change in fair value
of derivative
|
|
|
|
|
Instruments.......................................................
|
(272,000)
|
5,528,000
|
14,474,000
|
5,528,000
|
Unrealized foreign
exchange loss/(gain).........
|
(493,000)
|
(1,276,000)
|
1,652,000
|
(2,846,000)
|
Indirect
tax........................................................
|
31,000
|
34,000
|
92,000
|
109,000
|
|
|
|
|
|
Loss before income
taxes.........................
|
(2,462,000)
|
(6,592,000)
|
(24,773,000)
|
(8,499,000)
|
|
|
|
|
|
Deferred Income tax
(expense)/income
|
-
|
-
|
-
|
-
|
|
|
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|
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Net loss for the
period................................
|
(2,462,000)
|
(6,592,000)
|
(24,773,000)
|
(8,499,000)
|
|
|
|
|
|
|
Loss per share
(basic and diluted)..........
|
(0.01)
|
(0.02)
|
(0.07)
|
(0.03)
|
|
|
|
|
|
|
A. Third
Quarter of 2016 vs. Third Quarter of 2015
i. Cost of
operations
General and administrative expenses for the three-month period
ended September 30, 2016 increased
compared to the same period in 2015. The net increase is mainly due
to higher salary costs as a result of the enhancement of the
corporate team since 2015, in anticipation of becoming a gold
producer, combined with an intensification of investor relations
activities as the Company transitioned from development to the
pre-commercial production stage of operations. There was also an
increase in consulting expenses during the period due to the hiring
of external consultants for special projects associated with the
transition from development to production. The Company does not
expect these to be recurring expenses.
Expenses for drilling and geological work for the three-month
period ended September 30, 2016
increased when compared to the same period in 2015. The increase is
primarily due to the 2,722 meters of drilling competed in
September 2016 as part of the
drilling program at the 55 Zone which aims at testing the 55 Zone
at vertical depths between 550m and 975m compared to the drilling
done at Bagassi South on the south side of the dyke in July 2015.
Economic evaluations costs reflect expenditures associated with
assessing the potential for an underground operation at Bagassi
South. Owners' costs are expenditures incurred to support the
exploration team in country.
Share-based compensation expense for the three months ended
September 30, 2016 reflects,
primarily, the valuation of the annual grant of deferred share
units and restricted share units recently granted. The
increase compared to the same period in the prior year is
attributable to the significant increase in the Company's share
price during the year.
ii. Other
expenses
The variation in other expenses is mainly due to the change in
the fair value of the gold forward sale contracts, which were
entered into in July 2015 as a
condition precedent to be able to access funds available through
the Credit Facility. During the three month period ended
September 30, 2016, the decrease in
the market gold price relative to the sale price in the forward
sale contracts resulted in a decrease to the liability relating to
the forward sale contracts when compared to June 30, 2016.
As a result, the Company's net loss for the three-month period
ended September 30, 2016, totalled
$2,462,000 compared to net loss of
$6,592,000 for the three-month period
ended September 30, 2015.
Consequently, the Company recorded a loss per share of $0.01 and loss per share of $0.02 per share for the three-month periods ended
September 30, 2016 and 2015,
respectively.
1
|
Cash operating cost
is a non-IFRS measure with no standard definition under IFRS and is
calculated using ounces produced and tonnes processed. See the
"Non-IFRS financial performance measures" section of the Company's
2016 Third Quarter MD&A.
|
2
|
Total cash cost is a
non-IFRS financial performance measure with no standard definition
under IFRS and represents the mining operation expenses and the
government royalties per ounce sold.
|
3
|
All-in sustaining
cost is a non-IFRS financial performance measure with no standard
definition under IFRS. See the "Non-IFRS financial performance
measures" section of the Company's 2016 Third Quarter
MD&A.
|
4
|
Pre-commercial
production cash flow from operations is a non-IFRS financial
performance measure with no standard definition under IFRS. See the
"Non-IFRS financial performance measures" section of the Company's
2016 Third Quarter MD&A.
|
5
|
Cash flow per share
is a non-IFRS financial performance measure with no standard
definition under IFRS. See the "Non-IFRS financial performance
measures" section of the Company's 2016 Third Quarter
MD&A.
|
|
|
Qualified Persons
Paul Criddle, FAUSIMM, Chief
Operating Officer for Roxgold Inc., a Qualified Person within the
meaning of National Instrument 43-101, has verified and approved
the technical disclosure contained in this press release.
Yan Bourassa, P.Geo, VP Geology
for Roxgold Inc., a Qualified Person within the meaning of National
Instrument 43-101, has verified and approved the technical
disclosure contained in this press release.
About Roxgold
Roxgold is a gold mining company with its key asset, the high
grade Yaramoko Gold Mine, located in the Houndé greenstone region
of Burkina Faso, West Africa. The Company declared commercial
production October 1, 2016. Roxgold
trades on the TSX Venture Exchange under the symbol ROG and as part
of the Nasdaq International Designation program with the symbol
OTC: ROGFF.
"Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release."
These statements are based on information currently available
to the Company and the Company provides no assurance that actual
results will meet management's expectations. In certain cases,
forward-looking information may be identified by such terms as
"anticipates", "believes", "could", "estimates", "expects", "may",
"shall", "will", or "would". Forward-looking information contained
in this news release is based on certain factors and assumptions
regarding, among other things, the estimation of mineral resources
and mineral reserves, the realization of resource estimates and
reserve estimates, gold metal prices, the timing and amount of
future exploration and development expenditures, the estimation of
initial and sustaining capital requirements, the estimation of
labour and operating costs, the availability of necessary financing
and materials to continue to explore and develop the Yaramoko Gold
Project in the short and long-term, the progress of exploration and
development activities, the receipt of necessary regulatory
approvals, including the approval of the TSX Venture Exchange for
the balance of the AUMS Mining Contract Option, and assumptions
with respect to currency fluctuations, environmental risks, title
disputes or claims, and other similar matters. While the Company
considers these assumptions to be reasonable based on information
currently available to it, they may prove to be incorrect.
Although the Company believes the expectations expressed in
such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future
performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include: changes in market conditions,
unsuccessful exploration results, changes in the price of gold,
unanticipated changes in key management personnel and general
economic conditions. Mining exploration and development is an
inherently risky business. Accordingly, actual events may differ
materially from those projected in the forward-looking statements.
This list is not exhaustive of the factors that may affect any of
the Company's forward-looking statements. These and other factors
should be considered carefully and readers should not place undue
reliance on the Company's forward-looking statements. The Company
does not undertake to update any forward-looking statement that may
be made from time to time by the Company or on its behalf, except
in accordance with applicable securities laws.
NON-IFRS PERFORMANCE MEASURES
The Company provides some non-IFRS measures as supplementary
information that management believes may be useful to investors to
explain the Company's financial results.
''Cash operating cost per ounce produced'' and "total cash
cost per ounce sold" are common financial performance measures in
the gold mining industry but with no standard meaning under IFRS.
Management believes that, in addition to conventional measures
prepared in accordance with IFRS, certain investors use this
information to evaluate the Company's performance and ability to
generate cash flow. 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. The measure, along with sales, is considered to be a key
indicator of a Company's ability to generate earnings and cash flow
from its mining operations.
Cash cost figures are calculated in accordance with a
standard developed by The Gold Institute, which was a worldwide
association of suppliers of gold and gold products and included
leading North American gold producers. The Gold Institute ceased
operations in 2002, but the standard is the accepted standard of
reporting cash cost of production in North-America. Adoption of the standard is
voluntary and the cost measures presented may not be comparable to
other similarly titled measures of other companies. Other companies
may calculate these measures differently. Cash operating cost per
ounce produced and tonne processed are derived from mining
operating costs such as mining, processing, mine site general and
administrative expenses. Total cash cost per ounce sold represents
mining operations expenses plus royalties and selling expenses
divided by ounces sold.
The table below shows a reconciliation of cash operating cost
per ounce produced and tonne processed as well as the total cash
cost per ounce sold.
CASH OPERATING COST
|
June
2016
|
Three-month
period
ended September 30,
2016
|
Four-month
period
ended September 30,
2016
|
Per ounce
produced
Gold ounces produced
........................................
|
12,400
|
32,990
|
45,390
|
(in thousands of
dollars except per ounce)
|
|
|
|
Mining operation
expenses (excluding royalties
and selling
expenses)1.........................................
|
2,616
|
12,112
|
14,728
|
Effects of inventory
adjustments (doré bars) .....
|
1,780
|
(630)
|
1,150
|
|
|
|
|
Operating costs
(relating to ounces produced)...
|
4,396
|
11,482
|
15,878
|
Cash operating cost
(per ounce produced) ........
|
355
|
348
|
350
|
|
|
|
|
|
|
|
|
|
June 2016
|
Three-month
period
ended September 30,
2016
|
Four-month
period
ended September 30,
2016
|
Per tonne
processed
Tonnes of ore
processed....................................
|
21,710
|
60,870
|
82,580
|
(in thousands of
dollars except per ounce)
|
|
|
|
Mining operation
expenses (excluding Royalties
and selling
expenses)1........................................
|
2,616
|
12,112
|
14,728
|
Effects of inventory
adjustments (doré bars and
gold in circuit)
.....................................................
|
1,780
|
(630)
|
1,150
|
|
|
|
|
Operating costs
(relating to tonnes processed)
|
4,396
|
11,482
|
15,878
|
Cash operating cost
(per tonne processed) ......
|
202
|
189
|
192
|
|
|
|
|
ALL-IN SUSTAINING COST
In June 2013, the World Gold
Council, a non-regulatory association of the world's leading gold
mining companies established to promote the use of gold to
industry, consumers and investors, provided guidance for the
calculation of the measure "All-in sustaining cost per gold ounce",
which has no standard meaning under IFRS. These standards became
effective January 1, 2014. Management
believes that the all-in sustaining cost per gold ounce measure
provides additional insight into the costs of producing gold by
capturing all of the expenditures required for the discovery,
development and sustaining of gold production and allows the
Company to assess its ability to support capital expenditures to
sustain future production from the generation of operating cash
flows. Management also believes that, in addition to conventional
measures prepared in accordance with IFRS, certain investors use
this information to evaluate the Company's performance. However, 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 and is not necessarily
indicative of cash flow from operations under IFRS or operating
costs presented under IFRS. It should also be noted that the
adoption of the standard is voluntary and the cost measures
presented may not be comparable to other similarly titled measures
of other companies. Other companies may calculate these measures
differently.
Consistent with guidance announced in 2013 by the World Gold
Council, Roxgold defines all-in sustaining cost per ounce as the
sum of total cash cost, underground development that is sustaining
in nature, corporate general and administrative costs, in country
and corporate social responsibility expenditures related to current
operations, and reclamation liability accretion, all divided by the
total gold ounces produced to arrive at a per ounce figure.
As this measure intends to represent the cost of selling gold
from current operations, it does not include capital expenditures
attributable to development projects or mine expansions including
economic evaluation for such projects, non-cash share-based
payments, exploration expenses that are not sustainable in nature,
income tax payments, working capital defined as current assets less
current liabilities (except for inventory adjustments) or interest
costs.
The following table shows a reconciliation of all-in
sustaining cost per ounce to costs as extracted from the unaudited
condensed interim consolidated financial statements:
ALL-IN SUSTAINING COST
Per ounce
sold
|
June
2016
|
Three-month
period
ended September 30,
2016
|
Four-month
period
ended September 30,
2016
|
|
|
|
|
Gold ounces
sold...................................................
|
8,250
|
34,590
|
42,840
|
(in thousands of
dollars except per ounce)
|
|
|
|
Mining operation
expenses (exclu. royalties1) ....
|
2,616
|
12,112
|
14,728
|
Royalties1..............................................................
|
410
|
2,320
|
2,730
|
Total Cash
Cost.....................................................
|
3,026
|
14,432
|
17,458
|
Sustaining and other
in-country costs1................
|
160
|
300
|
460
|
Investment in
underground development1............
|
2,400
|
8,697
|
11,097
|
Corporate and general
administrative expenses..
|
432
|
851
|
1,283
|
All-in sustaining
cost…………………...................
|
6,018
|
24,280
|
30,298
|
All-in sustaining
cost per ounce sold...........
|
729
|
702
|
707
|
|
|
|
|
PRE-COMMERCIAL PRODUCTION CASH FLOW FROM OPERATIONS
The following table sets forth a reconciliation of
pre-commercial production cash flow from operations, a non-IFRS
measure which the Company believes to be relevant to assess the
Company's ability to generate cash flow from operations.
|
June
2016
|
Three-month
period
ended September 30,
2016
|
Four-month
period
ended September 30,
2016
|
(in thousands of
dollars)
|
|
|
|
Pre-commercial
production gold sales1..............
|
10,444
|
46,181
|
56,625
|
Mining operating
expenses1...............................
|
2,616
|
12,112
|
14,728
|
Royalties1...........................................................
|
410
|
2,320
|
2,730
|
In-country and
corporate social responsibility
expenses1...........................................................
|
160
|
300
|
460
|
Corporate and general
administrative expenses
|
432
|
851
|
1,283
|
Interest on long-term
debt1.................................
|
372
|
1,116
|
1,488
|
Cash flow from
Yaramoko operations...............
|
6,454
|
29,482
|
35,936
|
|
|
|
|
CASH FLOW PER SHARE
The following table sets forth the calculation of the
pre-commercial production cash flow per share a non-IFRS measure
which the Company believes to be relevant to assess the Company's
ability to generate cash flow from operations.
|
June
2016
|
Three-month
period
ended September 30,
2016
|
Four-month
period
ended September 30,
2016
|
(in thousands of
dollars except shares and
per share)
|
|
|
|
Cash flow from
Yaramoko operations.................
|
6,454
|
29,482
|
35,936
|
Common shares
outstanding at September 30,
2016.....................................................................
|
369,622,862
|
369,622,862
|
369,622,862
|
Cash flow per
share............................................
|
0.02
|
0.08
|
0.10
|
Cash flow per share
in Canadian dollars2...........
|
0.03
|
0.10
|
0.13
|
|
|
|
|
1
|
As included within
Mineral properties under development in Property, Plant and
Equipment in the Financial Statements.
|
2
|
Translated at
average 2016 Q3 closing USD/CAD rate of 1.3046.
|
|
|
SOURCE Roxgold Inc.