Mr. Rod Husband reports
MAJESTIC
GOLD
REPORTS
4,891
OZ
OF
GOLD
PRODUCED
AT
SONG
JIAGOU
IN
Q3
2012
Majestic Gold Corp. is releasing its third quarter of 2012 unaudited financial and operational results for the period ended June 30, 2012, and gold production results of its Chinese joint venture, Yantai Zhongjia Mining Enterprise Ltd., at the Song Jiagou property. Readers should refer to the third-quarter 2012 management's discussion and analysis and consolidated financial statements for more complete information. The financial results are expressed in United States dollars unless otherwise stated.
Third-quarter 2012 highlights:
- 133-per-cent increase in gold production:
- The joint venture produced 4,891 ounces of gold and sold 3,215 ounces of gold during third-quarter 2012, compared with gold produced of 2,099 ounces and 1,893 ounces sold during third-quarter 2011.
- 162-per-cent increase in revenues:
- Third-quarter 2012 joint venture revenues were $6.8-million, compared with $2.6-million in third-quarter 2011.
- 143-per-cent increase in gross profit:
- Gross joint venture profit from operations was $1.7-million in third-quarter 2012, compared with $700,000 in third-quarter 2011.
- 200-per-cent increase in quarterly operating profit:
- Majestic's share of joint venture operating profit during third-quarter 2012 was $600,000, compared with $200,000 in third-quarter 2011. Majestic effectively owns 94 per cent of 75 per cent, or 70.5 per cent, of operating profit.
- Increased milling capacity:
- Increased joint venture revenues and profits are a result of increased throughput of ore following the commissioning of the 6,000-tonne-per-day mill in May, 2011.
- $6.76-million of estimated gold inventory:
- The joint venture has 4,055 ounces of gold in inventory valued at cost according to international financial reporting standards at $3,743,919 against an estimated market value of $6,758,063 (based on spot close of $l,666.60 per ounce on Aug. 28, 2012).
Year-to-date highlights:
- 225-per-cent increase in gold production:
- The joint venture produced 14,237 ounces of gold and sold 10,403 ounces during the nine months ended June 30, 2012, compared with producing 4,384 ounces and selling 4,015 ounces during the nine months ended June 30, 2011.
- 240-per-cent increase in revenues:
- Joint venture revenues for the nine months ended June 30, 2012, were $19.4-million, compared with $5.7-million for the nine months ended June 30, 2011.
- 374-per-cent increase in gross profit:
- Gross joint venture profit for the nine months ended June 30, 2012, was $7.87-million, compared with $1.66-million for the nine months ended June 30, 2011.
- Shift to cash-plow-positive operations:
- Majestic's share of the operating profit for the nine months ended June 30, 2012, was $2.9-million, compared with a $400,000 loss for the same period in 2011, representing a shift from operating loss to profit.
- 19-per-cent reduction in cash costs per ounce:
- Cash cost per ounce of $806 for the nine months ended June 30, 2012, decreased significantly from $995 during the nine months ended June 30, 2011, due to a contract renegotiation for a lower mining and processing rate and efficiencies experienced through the commissioning of the new 6,000-tonne-per-day mill.
SUMMARIZED INTERIM FINANCIAL STATEMENTS AND OPERATING RESULTS
Quarter ended June 30,
2012 2011
Sales (ounces) 3,215 1,893
Average realized gold price per ounce $1,604 $1,384
Gold revenues 5,156,063 2,620,658
Other revenue, including adjustments for
smelting fees 1,641,790
Total revenues 6,797,853 2,620,658
Operating costs, excluding depletion and
depreciation 3,384,546 1,884,084
Other operating costs, including
adjustments for smelting fees 1,641,790
Total operating cost 5,026,336 1,884,084
Cost per ounce (1) 1,028 968
Earnings before income tax and non-cash
items 1,497,068 480,584
Earnings before tax 1,206,141 324,624
Net profit (loss) at subsidiary level 765,427 215,240
Majestic's share of operating (net) profit
(loss) 607,280 201,129
Operational results -- Song Jiagou mine
Tonnes of ore mined 655,057 303,140
Tonnes of ore milled 516,353 284,131
Tonnes per day milled 5,674 3,122
Effective head grade (g/t) 0.35 0.28
Gold produced (ounces) 4,891 2,099
Recovery 84.2% 82.1%
Gold realized net of smelting fees 4,578 1,947
(1) Operating costs for the three months ended June 30, 2012,
included charges relating to the first quarter and second quarter
totalling $1,067,516. This resulted in cash costs per gold ounce
being adjusted by $219 per ounce. Excluding such costs would have
resulted in a cash cost per ounce of $809.
Operations:
- 98-per-cent increase in tonnes mined:
- In the nine months ended June 30, 2012, the company mined 1,752,420 tonnes of ore, a 98-per-cent increase compared with 884,081 tonnes in the same period of the previous year.
- 182-per-cent increase in tonnes milled:
- In the nine months ended June 30, 2012, the company milled 1,465,259 tonnes of ore, a 182-per-cent increase compared with 519,203 tonnes in the same period of the previous year.
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