Elgin Mining Inc. ("Elgin Mining" or the "Company") (TSX:ELG)(TSX:ELG.WT)
reports its financial and operational results for the three months and year
ended December 31, 2013. Elgin Mining owns and operates the Bjorkdal gold mine
("Bjorkdal Mine") in Sweden, and holds the past-producing Lupin gold mine
("Lupin") and the Ulu gold property in Nunavut, Canada. All figures are in
Canadian dollars ($ or CAD) unless otherwise indicated.
A copy of the Company's financial statements and Management's Discussion and
Analysis can be viewed on the Company's website at www.elginmining.com or on
SEDAR at www.sedar.com.
Fourth Quarter 2013 Highlights
-- Record quarterly gold production of 13,818 ounces;
-- Cash cost(1) per ounce produced of US$862, an improvement of 24% from
Q3-2013 cash cost per ounce produced of US$1,127;
-- Successfully completed a full transition to owner-operated underground
("UG") mining operations at the Bjorkdal Mine;
-- Saw continued improvements in operations in terms of grade and costs in
all areas of the Bjorkdal Mine;
-- Cash provided by operating activities of $2.5 million despite lower gold
prices in the quarter; and
-- Net loss of $8.1 million which included non-cash impairment charges of
$4.2 million primarily for Ulu, $2.0 million in reclamation expense on
the Company's US depleted coal properties, and $0.4 million in Lupin
care and maintenance costs.
Fiscal Year 2013 Highlights
-- Gold production of 46,946 gold ounces was at the top end of the
Company's revised 2013 guidance, and a record since re-start of
operations in 2006;
-- Cash cost per gold ounce produced of US$1,097 per ounce was below the
low-end of the
Company's revised 2013 guidance of US$1,125 per ounce; and
-- Net loss of $25.4 million which included non-cash impairment charges of
$9.2 million and $4.8 million in Lupin care and maintenance costs.
2013 Operational Highlights
-- Transition from contractor to owner mining in the UG at the Bjorkdal
Mine has exceeded early expectations(2). With owner operated mining, the
Bjorkdal Mine now has full control over all aspects of the UG operations
which will lead to better mine planning, pace of UG development, and
grade control practices;
-- Rectified operational issues in the Open Pit ("OP") by Q4 that had
caused significant increases in the cost per tonne mined and the overall
cash cost per ounce produced in earlier part of 2013;
-- Commenced other operational improvements in Q2-2013 at the Bjorkdal Mine
took effect in the last quarter of 2013 and resulted in higher average
mill feed grades and lower per tonne mining costs which management
believes will be sustainable over the long-term;
-- Released an updated mineral resource and reserve estimate for the
Bjorkdal Mine in June 2013 showing an overall increase in reserves and
resources, net of mine depletion, from the previous estimate released in
March 2012;
-- Continued exploration of the OP and UG extensions of the Bjorkdal Mine
by completing 8,805 metres and 1,631 metres of diamond drilling in the
UG and OP, respectively. Assay results of drill intercepts from the 2013
drill program demonstrated that the Bjorkdal ore body remains open in
multiple directions and holds a resource base that is supportive of
management's future mine and mill expansion plans;
-- Streamlined corporate general and administration costs rapidly in
response to the precipitous drop in the gold price starting in April
2013, and the Company's decision to place Lupin back into care and
maintenance;
-- Secured a Swedish krona ("SEK") 40 million equipment loan facility with
a Swedish bank at a favourable variable interest rate below 3.5% per
annum to fund approximately US$6.1 million of new mining equipment.
Approximately, SEK 27 million of this facility remains available at the
end of 2013; and
-- Strengthened the flexibility of the Company's balance sheet upon the
completion of a $2.95 million private placement of 24.6 million units on
September 13, 2013 and a $5.0 million bridge loan facility due March 25,
2015 on September 25, 2013.
Patrick Downey, President and CEO, commented, "We finished 2013 strongly and I
am very pleased that the operational improvements that we commenced in Q3
continued through Q4, which was a record in terms of gold production for the
Bjorkdal Mine. The OP is now operating extremely well and the transition to
fully owner-operated mining during Q4 has exceeded our expectations. This has
resulted in lower unit costs and higher grades to the mill and, at the same
time, improved mine planning and reduced sustaining capital development costs.
Training of the new underground miners is still on-going and we can expect to
see greater productivity and lower unit costs as final ramp-up is achieved later
in 2014. Based on this successful transition, we are currently planning a 15%
mill expansion to increase processing capacity from 1.3 million tonnes to 1.5
million tonnes annually. This additional capacity could increase overall gold
production to 55,000 to 60,000 ounces per year with expected low capital
expenditures, mainly related to mill upgrades.
"We also had a very successful exploration program during 2013. Results have
shown that the resource is still wide open along strike to the east and west and
down-dip. Exploration results have also shown that there are areas of
significantly higher grade that appear to be associated with folding of the main
hanging wall, and we plan to focus on expanding those areas and testing new
targets down-dip.
"After a tough start to the year, we exited very strongly, have improved our
balance sheet, have minimal debt and are well-positioned to generate significant
free cash flow in the current gold price environment."
(1) "Cash cost per ounce" is a non-IFRS measure. Refer to the "Non-IFRS
Measures" section of the Company's Management's Discussion and Analysis
for an explanation and reconciliation of this measure to the Company's
financial statements.
(2) The operations have seen a significant decrease in cost per tonne mined
and improved head grade to the mill. Monthly production has been above
expectations and the Company expects to achieve full ramp-up by end of
H1-2014 when all mining positions are filled and equipment utilization
is fully achieved.
Fourth Quarter and 2013 Operational and Financial Summary
Due to the Company changing its fiscal year end from November 30 to December 31
in the previous fiscal year, the Company's results discussed below are for the
three months and year ended December 31, 2013 with comparatives for the three
and thirteen months ended December 31, 2012.
For the
For the three For the three For the thirteen
months ended months ended year ended months ended
December 31, December 31, December 31, December 31,
2013 2012 2013 2012
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FINANCIAL DATA
Revenue $ 16,595,280 $ 19,910,285 $ 60,994,073 $ 75,435,834
Production costs,
excluding
depreciation and
depletion $ 12,555,714 $ 11,566,536 $ 51,319,196 $ 45,937,412
Income (loss) from
mining operations $ 1,590,936 $ 4,768,278 $ (846,374) $ 20,859,338
Exploration expense $ 7,293 $ 2,127,794 $ 362,063 $ 11,689,783
Corporate
administration $ 1,309,223 $ 1,710,141 $ 5,383,592 $ 5,662,471
Lupin care and
maintenance $ 387,128 $ 1,957,988 $ 4,840,879 $ 1,957,988
Net loss (a) $ (8,110,418) $ (1,833,097) $(25,385,093) $ (2,584,741)
Net loss per share
- Basic $ (0.05) $ (0.01) $ (0.16) $ (0.02)
- Diluted $ (0.05) $ (0.01) $ (0.16) $ (0.02)
Cash flow provided
by operating
activities $ 2,538,822 $ 4,983,070 $ 1,235,283 $ 6,779,891
Cash and cash
equivalents $ 13,349,614 $ 15,762,363 $ 13,349,614 $ 15,762,363
Working capital $ 13,751,883 $ 20,370,842 $ 13,751,883 $ 20,370,842
Long-term debt, non-
current $ 8,136,540 $ 620,871 $ 8,136,540 $ 620,871
Capital expenditures $ 2,884,543 $ 3,028,115 $ 18,291,430 $ 17,239,323
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OPERATING DATA
Gold ounces sold 13,482 12,572 46,535 46,529
Gold ounces produced 13,818 11,401 46,946 46,808
Average realized
gold price (USD per
ounce) $ 1,216 $ 1,608 $ 1,324 $ 1,658
Cash cost per gold
ounce sold (USD per
ounce)(1) $ 953 $ 938 $ 1,120 $ 1,023
Cash cost per gold
ounce produced (USD
per ounce)(1) $ 862 $ 1,026 $ 1,097 $ 1,034
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(a) Net loss of $8.1 million for Q4-2013 includes $4.2 million in
impairment charges and $2.0 million in reclamation expense on the
Company's US depleted coal properties that are not separately shown in
the above table.
2014 Outlook
The Company is re-iterating its 2014 production and cost guidance as follows:
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2014 2013 %
Forecast Actual Change
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Gold production (ounces) 44,000 - 49,000 46,946 -6% to 4%
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Plant throughput (tonnes) 1,300,000 1,261,368 3%
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Open pit 483,200 515,225 -6%
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Underground 649,700 699,880 -7%
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Stockpile 167,100 46,263 261%
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Plant head grade (gold gpt) 1.21 - 1.33 1.32 -8% to 1%
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Plant recovery rate (%) 87.7% 87.8% 0%
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Capital expenditures (net) at
Bjorkdal (USD) $7.9 million $14.1 million -44%
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Corporate general and
administration costs(3) (USD) $1.9 million $4.2 million -55%
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Debt principal and interest
cash payments (USD) $1.6 million $1.8 million -11%
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SEK per USD exchange rate 6.50 6.51 0%
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CAD per USD exchange rate 1.10 1.03 7%
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The Company intends to adopt the reporting of "All-in Sustaining Costs"(4)
("AISC") per gold ounce produced/sold for its Bjorkdal Mine commencing in the
first quarter of 2014. AISC for 2014 is expected to be in the range of US$1,100
to US$1,235 per ounce as detailed in the table below.
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2014 AISC Guidance (table $ figures are in AISC AISC
USD's) Low-end High-end
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Cash cost of production $ 43.4 million $ 43.2 million
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Cash cost per gold ounce produced
(USD/ounce) $ 886 $ 982
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Sustaining capital (includes capitalized
exploration) $ 7.9 million $ 7.9 million
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Exploration $ 0.0 million $ 0.0 million
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Reclamation cost accretion (non-cash) $ 0.1 million $ 0.1 million
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Corporate general and administrative
expense(5) $ 2.8 million $ 2.8 million
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All-in sustaining costs $ 54.2 million $ 54.0 million
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Forecasted gold production (ounces) 49,000 44,000
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All-in sustaining costs per gold ounce
produced (USD/ounce) $ 1,106 $ 1,227
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AISC per gold ounce produced excluding non-
cash accretion and shared-based
remuneration expense (USD/ounce) $ 1,088 $ 1,207
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(3) Costs shown exclude non-cash stock-based compensation.
(4) "All-in sustaining costs" per gold ounce is a non-IFRS measure and has
been calculated using the guidance established by the World Gold
Council in June 2013. The Company believes that AISC is a more
transparent measure of the overall costs of producing an ounce of gold,
including the cost of replacing reserves through exploration and the
cost of on-going capital requirements needed to maintain current
production levels. A full reconciliation of this measure will be shown
when the Company commences the reporting of AISC in the first quarter
of 2014.
(5) Corporate general and administration costs shown include USD 0.9
million in non-cash share-based remuneration expense.
Conference Call Details
Elgin Mining will host a conference call on Monday, March 24th, 2014 at 2:00 pm
(Eastern Time).
Live Dial-In Information
Toronto and International: 416-340-8527
North America (Toll Free): 800-766-6630
Replay Call Information
Toronto and International: 905-694-9451 passcode 5295680
North America (Toll Free): 800-408-3053 passcode 5295680
The conference call replay will be available from 7 pm (Eastern Time) on March
24, 2014, until 11:59 pm (Eastern Time) on April 7, 2014.
Elgin Mining Inc.
Elgin Mining is a Canadian based company focused on production at the Bjorkdal
gold mine in Sweden. In addition, Elgin Mining's portfolio includes the Lupin
and Ulu gold projects located in Nunavut, Canada.
For further information, please visit the Company's web site at www.elginmining.com.
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" within the meaning of
Canadian securities legislation and "forward- looking statements" within the
meaning of the United States Private Securities Litigation Reform Act of 1995.
Except for statements of historical fact relating to the Company, information
contained herein constitutes forward-looking statements, including any
information as to the Company's strategy, plans or future financial or operating
performance. Forward-looking statements are characterized by words such as
"plan," "expect", "budget", "target", "project", "intend," "believe",
"anticipate", "estimate" and other similar words, or statements that certain
events or conditions "may" or "will" occur. Forward-looking statements are based
on the opinions, assumptions and estimates of management considered reasonable
at the date the statements are made, and are inherently subject to a variety of
risks and uncertainties and other known and unknown factors that could cause
actual events or results to differ materially from those projected in the
forward-looking statements.
These factors include risks relating to variations in the mineral content within
the material identified as mineral reserves and mineral resources from that
predicted, changes in development or mining plans due to changes in logistical,
technical or other factors, the impact of general business and economic
conditions, global liquidity and credit availability on the timing of cash flows
and the values of assets and liabilities based on projected future conditions,
fluctuating metal prices and currency exchange rates, possible variations in ore
grade or recovery rates, changes in accounting policies, changes in the
Company's corporate resources, changes in project parameters as plans continue
to be refined, changes in project development and production time frames, the
possibility of project cost overruns or unanticipated costs and expenses, higher
prices for fuel, steel, power, labour and other consumables contributing to
higher costs and general risks of the mining industry, failure of plant,
equipment or processes to operate as anticipated, unexpected changes in mine
life, unanticipated results of future studies, seasonality and unanticipated
weather changes, costs and timing of the development of new deposits, success of
exploration activities, successful completion of proposed acquisitions,
permitting time lines, government regulation of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims, limitations
on insurance coverage and timing and possible outcome of pending litigation and
labour disputes as well as those risk factors discussed or referred to in the
Company's Annual Information Form dated March 22, 2013, a copy of which is filed
on SEDAR at www.sedar.com. Although the Company has attempted to identify
important factors that could cause actual actions, events or results to differ
materially from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be anticipated,
estimated or intended.
There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such statements. The Company undertakes no obligation to update
forward-looking statements if circumstances or management's estimates,
assumptions or opinions should change, except as required by applicable law. The
reader is cautioned not to place undue reliance on forward-looking statements.
The forward-looking information contained herein is presented for the purpose of
assisting investors in understanding the exploration and development plans and
objectives and may not be appropriate for other purposes.
FOR FURTHER INFORMATION PLEASE CONTACT:
Elgin Mining Inc.
Patrick Downey
President and Chief Executive Officer
(604) 682-3366
(604) 682-3363 (FAX)
info@elginmining.com
www.elginmining.com
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