Mr. Robert Baldock reports
MONUMENT REPORTS THIRD QUARTER FISCAL 2016 RESULTS
Monument Mining Ltd. has released its third quarter production and financial results for the three and nine months ended March 31, 2016. All amounts are in U.S. dollars unless otherwise indicated (refer to SEDAR for full financial results).
Commented on the third quarter fiscal 2016 financial results, president and chief executive officer Robert Baldock said: "Gold production was sustained in the quarter at the Selinsing gold mine, generating free cash flow by feeding superlow grade of ore to the mill. It is expecting that gold production can be lifted by December, 2016, when the conversion of Felda Land into mining lease is anticipated to be completed."
He further commented: "During the quarter, we have focused on finalizing the Burnakura production plans, including preproduction site preparation, mine optimization and planning, and heap-leach facilities construction engineering, targeting completion of wet heap-leach commissioning by the end of December, 2016. Monument is also continuously looking for high-quality gold projects to add to the growing project portfolio."
Third quarter highlights:
- Gold production of 3,875 ounces (third quarter fiscal 2015 -- 9,346 ounces);
-
Cash cost per ounce of $665 per ounce (third quarter fiscal 2015 -- $560 per ounce);
-
Gross revenue from gold sales of $4.46-million on 3,850 ounces sold (third quarter fiscal 2015 -- $12.46-million on 18,950 ounces sold);
-
Net income of $2.5-million (third quarter fiscal 2015 net profit -- $3.62-million);
-
Profit from gold production of $1.13-million (third quarter fiscal 2015 -- $4.76-million);
-
Average ore head grade of 0.95 gram per tonne gold (third quarter fiscal 2015 -- 1.44 g/t Au);
-
Processing recovery rate of 69.1 per cent (third quarter fiscal 2015 -- 82.2 per cent);
-
Aggressively progressed mine development at Burnakura;
-
Continued trial testwork at the Intec pilot plant;
-
Carried out studies and due diligence on gold projects based in the Democratic Republic of the Congo (DRC).
THIRD QUARTER PRODUCTION AND FINANCIAL HIGHLIGHTS
Three months ended Nine months ended
March 31, March 31,
2016 2015 2016 2015
Production
Ore mined (tonnes) 110,138 96,761 312,067 260,812
Ore processed (tonnes) 264,159 225,644 750,690 712,957
Average mill feed grade (g/t) 0.95 1.44 0.91 1.52
Processing recovery rate (%) 69.1% 82.2% 69.9% 83.8%
Gold production(1) (oz) 3,875 9,346 13,988 29,041
Gold sold (oz) 3,850 10,200 18,950 27,900
-------- -------- -------- --------
Financial (in thousands of U.S. dollars)
Revenue $ 4,457 $ 12,459 $ 18,467 $ 34,468
Net income before other items 371 3,665 2,584 7,994
Net income (net loss) 2,500 3,622 (1,968) 8,205
Cash flows from operations 757 9,063 836 20,165
Working capital 28,803 34,493 28,803 34,493
-------- -------- -------- --------
EPS (loss) before other items -- basic (U.S.$/share) 0.00 0.01 0.01 0.03
EPS (loss) -- basic (U.S.$/share) 0.01 0.01 (0.01) 0.03
-------- -------- -------- --------
Other (in U.S. dollars per ounce)
Average realized gold price per ounce sold 1,158 1,221 1,138 1,235
-------- -------- -------- --------
Cash cost per ounce(2)
Mining 115 211 96 231
Processing 476 282 410 311
Royalties 70 65 47 63
Operations, net of silver recovery 4 2 2 2
Total cash cost per ounce 665 560 555 607
======== ======== ======== ========
1. Defined as good delivery gold bullion according to London Bullion Market Association (LBMA), net of gold dore
in transit and refinery adjustment.
2. Total cash cost includes production costs such as mining, processing, tailing facility maintenance and camp
administration, royalties, and operating costs such as storage, temporary mine production closure, community
development cost and property fees, net of byproduct credits. Cash cost excludes amortization, depletion,
accretion expenses, capital costs, exploration costs and corporate administration costs.
Production results
Third quarter operations continued to process mainly superlow-grade ore in transition to treat sulphide ore, which resulted in lower recovery rates. As a result, gold production for the quarter, net of gold dore in transit and refinery adjustment, was 3,875 ounces (defined as good delivery gold bullion according to LBMA), a 59-per-cent decrease compared with 9,346 ounces in the corresponding period last year. The decrease was primarily caused by superlow-grade ore mill feed, delay of oxide ore production at Felda Land deposits and higher gold ounces maintained in circuit for the quarter due to, among other things, local intermittent power outage issues from the power distribution grid. The company is expediting the process of preparation for gold mining start up at Felda Land, while cautiously monitoring and improving gold production productivity.
In comparison with the corresponding period last year, in the third quarter ended March 31, 2016, ore mined increased to 110,138 tonnes from 96,761 tonnes, and plant throughput increased by 17 per cent to 264,159 tonnes from 225,644 tonnes. Average ore head grade decreased by 34 per cent to 0.95 g/t Au from 1.44 g/t Au, and the processing recovery rate decreased by 16 per cent to 69.1 per cent from 82.2 per cent.
Financial results and discussion
For the three months ended March 31, 2016, compared with the corresponding period last year, income from mining operations was $1.13-million, compared with $4.76-million, and corporate expenses were reduced by 31 per cent to $760,000 from $1.1-million. For the nine months ended March 31, 2016, compared with the corresponding period last year, income from mining operations was $5-million, compared with $11.4-million, and corporate expenses were reduced by 29 per cent to $2.42-million from $3.41-million.
During the quarter, the company sold a total of 3,850 ounces of gold at an average realized price of $1,158 per ounce for gross revenue of $4.46-million, compared with 10,200 ounces of gold sold at $1,221 per ounce for $12.46-million in the corresponding period last year. The average London Fix PM gold price for the quarter was $1,183 per ounce (third quarter fiscal 2015 -- $1,218 per ounce). During the nine months ended March 31, 2016, the company sold a total of 18,950 ounces of gold at an average realized price of $1,138 per ounce for gross revenue of $18.47-million, excluding 5,000 ounces settled on the gold forward sale, compared with 27,900 ounces of gold sold at $1,235 per ounce for $34.47-million in the corresponding period last year. The average London Fix PM gold price for the nine-month period was $1,138 per ounce, compared with $1,235 per ounce in the same period last year.
Total production cost decreased by 57 per cent in the quarter to $3.33-million, compared with $7.7-million in the same period last year. The significant decrease in cost was mainly attributed to lower mining cost from the reclassification of stockpiled superlow-grade gold materials (SLG) from waste to inventory, as the company began to economically process the SLG in April, 2015. Depreciation also contributed to lower overall production cost; it fell to $770,000 for the quarter from $2.96-million in the same period last year.
For the nine months ended March 31, 2016, total production cost decreased by 42 per cent to $13.47-million from $23.07-million in the same period last year. The lower production cost was mainly attributed to mining costs that decreased to $1.83-million (nine months ended March 31, 2015 -- $4.31-million) and depreciation that decreased by 53 per cent to $2.82-million (nine months ended March 31, 2015 -- $5.99-million).
Net income for the quarter was $2.5-million, or one cent per share (basic) (third quarter fiscal 2015 -- $3.62-million, or one cent per share (basic)). The decrease in earnings is mainly due to lower income from mining operations, offset by a foreign exchange gain of $580,000 (third quarter fiscal 2015 -- loss of $220,000), impairment recovery of $490,000 (third quarter fiscal 2015 -- $20,000) related to the Mersing gold project and fair value gain on marketable securities of $720,000 (third quarter fiscal 2015 -- $60,000).
Net loss for the nine-month period was $1.97-million, or one cent per share (basic), compared with net income of $8.21-million, or three cents per share (basic), in the same period last year. The decrease in earnings was mainly due to lower income from mining operations, income tax expenses of $3.69-million (nine months ended March 31, 2015 -- nil) and foreign exchange loss of $2.25-million (nine months ended March 31, 2015 -- gain of $440,000).
During the three and nine months ended March 31, 2016, cash investment in exploration and evaluation activities totalled $1.77-million and $6.4-million, compared with $5.15-million and $12.98-million in the corresponding periods last year, mainly on the Murchison gold portfolio in Australia ($950,000 and $3.58-million, compared with $1.8-million and $7.38-million in the corresponding periods last year) and the Selinsing gold portfolio in Malaysia ($820,000 and $2.29-million, compared with $770,000 and $2.66-million in the corresponding periods last year).
Cash expenditure on property, plant and equipment (PPE) for the three and nine months ended March 31, 2016, was $1.05-million and $2.01-million, compared with $1.27-million and $2.49-million in the corresponding periods last year, on Selinsing equipment and the Intec project in Malaysia ($800,000 and $1.59-million, compared with $1.27-million and $2.38-million in the corresponding periods last year) and on the Burnakura equipment, heap-leach facility development and crushing plant upgrades in Australia ($250,000 and $420,000, compared with nil and nil in the corresponding periods last year).
As at March 31, 2016, the company had positive working capital of $28.8-million, compared with $33.49-million as at June 30, 2015. The decrease of $4.68-million was the result of cash flow from operations, offset by investing activities carried out by the company to expand the mineral base and project pipeline.
Development
Intec technology and commercialization testwork
In the first quarter of fiscal 2016, the Intec pilot plant was constructed and commissioned, and in the second quarter the first trial pilot plant run was successful in achieving steady state for seven days, with various parameters tested using different sulphide feedstock materials drawn from selected ore samples in Buffalo Reef.
A second trial pilot plant run is planned for the fourth quarter to test the response of ores containing varying amounts of pyrite and arsenopyrite using sulphide ores from Buffalo Reef. This trial will allow the gold recovery of sulphide preconcentration by flotation methods to be compared with the first trial on gravity concentrate. The second trial will be carried out with the assistance of Orway Mineral Consultants (WA) Pty. Ltd. of Perth, Western Australia, which is engaged to oversee the pilot plant operation.
During the third quarter, Intec project metallurgical drilling consisted of 14 RC (reverse circulation) precollar drill holes for 1,107 metres and 19 DD (diamond drill) drill holes for 1,901 metres across Buffalo Reef South, Buffalo Reef Central and Felda Land to collect representative ore samples for the second pilot plant run. Those samples have been concentrated by flotation and will be fed into the pilot plant for testing in the fourth quarter. The results of this second pilot plant run are anticipated to be available in July, 2016, for Orway to complete economic analysis of the Intec technology sulphide gold recovery process. The economic analysis will be incorporated into an updated National Instrument 43-101 technical report.
Burnakura project
The Burnakura gold project is aimed to be developed into a second source of gold production for the company. The plan is to develop open-cut mine operations through Alliance/New Alliance (ANA), extended to North of Alliance (NOA) and Federal City. The low-grade ore will be processed at heap-leach facilities, and high-grade ore will be processed at the Burnakura CIL (carbon in leach) plant. Both planned production processes will be optimized to achieve maximum recoveries so that gold can be recovered economically. Metallurgical testwork completed at the ANA deposit supports heap-leach recovery for low-grade ore.
In the third quarter, the company reviewed a proposal for front-end engineering design (FEED) for the planned Burnakura heap-leach/CIL production with capital expenditures (capex) and operating expenditures (opex) prepared by Como Engineers Pty. Ltd., and concluded its internal initial economic study of the project. Based on these studies, the company has made the decision to put the Burnakura gold project into early-stage production. Subsequent to the third quarter, the first purchase order for off-site design work was placed to commence the heap-leach construction and the crushing plant upgrade in May. Site preparation and development for production were continuing, and refurbishing, constructing and commissioning will take approximately six months.
A production decision is not supported by a technical report under the NI 43-101 standards, and it is not based on a feasibility study of mineral reserves demonstrating economic and technical viability. Therefore, there is increased uncertainty and economic and technical risks of failure associated with this project, including but not limited to the risk that mineral quantities and grades might be lower, and that construction or continuing mining and milling operations might be more difficult or more expensive than expected. Production and economic variables may vary considerably, due to the absence of detailed economic and technical analysis prepared in accordance with NI 43-101. There is no guarantee that production will begin as anticipated or at all, or that production will be able to generate positive cash flow as anticipated in order to return the capital investment.
During the third quarter, the company continued to improve open-pit mine optimization and move forward to develop a mine development plan, which includes project management and scheduling for development, construction and site infrastructure preparation, including communications, IT (information technology) network, laboratory, warehousing and logistics, administration, HSE (health, safety and environment) and security, and work force planning. Environmental permitting by independent consultant Animal Plant Mineral Pty. Ltd. (APM) is continuing, and APM is working on an amendment to the environmental licence for the heap-leach facility.
Acquisition
Earn-in and joint venture on Matala gold project
On Feb. 7, 2016, the company announced that it entered into an earn-in and shareholder agreement with Afrimines Resources SARL and its wholly owned subsidiary, Regal Sud Kivu SARL, to earn up to a 90-per-cent joint venture interest in the Matala gold project. On May 9, 2016, subsequent to the quarter, the company announced that it is not proceeding with the Matala transaction and will continue to review a number of opportunities in the search for high-quality gold assets in the DRC.
Exploration progress
Malaysia
Fiscal 2016 exploration programs at Selinsing include: resource definition drilling at Buffalo Reef Central (BRC) and Felda Land, and further exploration drilling at the area between Buffalo Reef North and Central (the Buffalo Reef gap) and the Bukit Ribu prospect, located west of Buffalo Reef. The focus is on replacement of gold inventory to sustain and extend mine life. Geological and economic studies will be done in parallel with an updated NI 43-101 technical report. During the quarter, drilling activities continued at Felda Land for resource definition before moving to the metallurgical drill program for the Intec project. Resource and exploration drilling comprised a total of four DD holes drilled for 538 metres and a total of four RC holes drilled for 462 metres. Diamond drilling produced 1,042 HQ-core samples that were submitted to SGS Mengapur for metallurgical assays.
Western Australia
Fiscal 2016 exploration programs at Murchison are planned at East of Alliance and New Alliance (EANA), NOA, South Banderol, oxide targets in Burnakura, and prospects in Tuckanarra area. The programs are designed to validate the historical resource, study the geological continuity of the mineralization in the Burnakura area and increase gold inventory to extend the life of mine, supporting sustainable early-stage production at Burnakura. Historical data and new drilling data for Gabanintha and Burnakura continued to be transitioned into an in-house database, and Tuckanarra historical data are being compiled to be uploaded and validated in the database. During the quarter, 3,866 assays were received from the second quarter drilling for confirmation and metallurgical work at NOA and Tuckanarra and sterilization drilling was carried out at the NOA waste dump area.
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.