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Monument Mining Ltd
Symbol MMY
Shares Issued 322,718,030
Close 2016-09-28 C$ 0.125
Market Cap C$ 40,339,754
Recent Sedar Documents

Monument loses $1.68-million (U.S.) in fiscal 2016

2016-09-28 20:37 ET - News Release

Mr. Robert Baldock reports

MONUMENT'S FISCAL 2016 RESULTS

Monument Mining Ltd. has released its annual financial results for the year ended June 30, 2016. (All amounts are in U.S. dollars unless otherwise indicated (refer to SEDAR for full financial results).)

President and chief executive officer Robert Baldock stated the strategies and objectives set forth by the board that led fiscal 2016 business development: "In fiscal 2016, the company has maintained a clean balance sheet with two primary gold project portfolios at Malaysia and Western Australia. It focused its resources on the sulphide gold treatment study, increase of gold inventory and expansion of its single source of cash flow to multiple cash flow streams for future growth. In the meantime, it continued looking for new opportunities to acquire high-quality gold assets."

Mr. Baldock reported on fiscal 2016 annual production and financial results: "The negative cash flow as a result of implementing fiscal 2016 objectives is not favourable but was expected primarily due to a $7.5-million capital expenditure incurred on development while production has not been able to support it during the transition period from oxide to sulphide at Selinsing; however, it has enabled management to conclude a prefeasibility study at Selinsing, targeting delivery in October, 2016, with potential to increase the life of mine at Selinsing, and to complete an early-stage production plan at Burnakura. Implementation is expected in fiscal 2017 for potential commercial production, subject to financing. We look forward to a new stage of development."

Fiscal 2016 highlights:

  • A total of 23,150 ounces of gold sold for gross revenue of $23.60-million, of which 18,150 ounces were from production for revenue of $21.01-million (2015: 36,500 ounces gold sold for $44.84-million) and 5,000 ounces were from a gold forward sale for revenue of $2.59-million (2015: nil);
  • Profit margin generated from gold production of $5.53-million (2015: $15.89-million);
  • Cash cost per ounce of $606 per ounce (2015: $587 per ounce);
  • Ore processed increased by 4 per cent to 990,000 tonnes (2015: 950,000 tonnes);
  • Prefeasibility study wrapped up to final stages at Selinsing, targeting completion in October, 2016;
  • Intec trial testwork progressed positively and is under independent review; updated capex and opex have been significantly reduced for the Selinsing phase 4 Bioleach alternative;
  • Completed an early-stage production plan at Murchison under review and construction commenced for long-lead items.

   FOURTH QUARTER AND FISCAL YEAR PRODUCTION AND FINANCIAL HIGHLIGHTS

                                      Three months ended       Year ended 
                                              June 30,           June 30,                
                                          2016      2015      2016      2015
Production                                                                  

Ore mined (tonnes)                     110,943   161,033   423,011   421,845
Ore processed (tonnes)                 241,380   241,208   992,070   954,165
Average mill feed grade (g/t)             0.77      1.23      0.88      1.45
Processing recovery rate (%)              57.8%     77.4%     67.4%     82.4%
Gold production (1) (oz)                 4,167     7,432    18,155    36,473
Gold sold (oz)                           4,200     8,600    23,150    36,500
                                                                            
Financial (in thousands of U.S.                                               
dollars)                                    

Revenue                                 $5,128   $10,370   $23,595   $44,838
Net income (net loss) before other                                          
items                                     (965)    3,667     1,619    11,661
Net income (net loss)                      288     3,178    (1,680)   11,383
                                       -------   -------   -------   -------

                                      Three months ended        Year ended 
                                             June 30,             June 30,            
                                          2016      2015      2016      2015
EPS (loss) before other items --                                             
basic (U.S.$/share)                     $(0.00)    $0.01    $(0.01)    $0.04
EPS (loss) -- basic (U.S.$/share)         0.00      0.01     (0.01)     0.04
                                       -------   -------   -------   -------
Other (U.S.$/oz)                                  
Average realized gold price per                                             
ounce sold                              $1,221    $1,206    $1,157    $1,228
Cash cost per ounce (2)                                                     
Mining                                     192       157       114       214
Processing                                 566       318       437       313
Royalties                                   71        64        51        63
Operations, net of silver recovery          10       (15)        4        (3)
                                       -------   -------   -------   -------
Total cash cost per ounce                  839       524       606       587
                                       -------   -------   -------   -------

(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

Fiscal 2016 gold production was 18,155 ounces, a decrease compared with 36,473 ounces in fiscal 2015, primarily due to the delay of mining on the Felda land and a decrease in the average ore head grade to 0.88 gram per tonne gold from 1.45 grams per tonne gold in a previous year as production continued to process superlow-grade gold materials (SLG) in transition toward treating sulphide ore. It was partially offset by increased mill feed to 992,070 tonnes, or 4 per cent in fiscal 2016 from 954,165 tonnes in 2015.

Consequently, process recovery rate decreased to 67.4 per cent compared with 82.4 per cent in fiscal 2015 mainly due to superlow-grade mill feed. Lack of stripping efficiency also contributed to lower gold production and higher quantities of gold remaining in circuit, which has been resolved subsequent to year-end.

Financial results and discussion

For fiscal 2016, gross profit from mining operations was $5.53-million compared with $15.89-million in the prior year, and corporate expenses were reduced by $320,000 or 8 per cent to $3.91-million from $4.23-million. Net loss for the year was $1.68-million, or one cent per share (basic), compared with $11.38-million net income, or four cents per share (basic), in the prior year.

Gold sales generated $23.60-million for fiscal 2016 compared with $44.84-million in the prior year, composed of 18,150 ounces of gold sold from production (2015: 36,500 ounces) at an average realized gold price of $1,157 per ounce (2015: $1,228 per ounce), and 5,000 ounces gold settled on a forward sale at an average realized gold price of $519 per ounce. The average London Fix PM gold price was $1,168 per ounce for fiscal 2016 compared with $1,224 per ounce for the prior year.

Total production costs decreased by $10.88-million or 38 per cent in fiscal 2016 to $18.07-million, compared with $28.95-million in the prior year. The significant decrease in cost was mainly attributed to lower weighted-average mining cost per tonne due to the reclassification of stockpiled SLG from waste to inventory, as the company began to economically process the SLG in April, 2015.

Corporate expenditure for fiscal 2016 of $3.91-million (2015: $4.23-million) was $320,000 or 8 per cent lower compared with the prior year. General and administration costs were $1.87-million (2015: $1.72-million), or 9 per cent higher for the year, primarily due to $230,000, or a 17-per-cent increase in salary and wage expenses to $1.59-million (2015: $1.36-million). The increase was due to changes in salary reallocation, offset by legal, accounting and audit expenses that decreased by $410,000, or 28 per cent, to $1.04-million in fiscal 2016 compared with $1.45-million in the prior year.

Loss from other items for fiscal 2016 was $610,000 compared with $540,000 in the prior year. The change for the year was mainly due to gains on marketable securities of $1.13-million (2015: loss of $570,000), related to the fair value and sale of shares in Gascoyne and impairment recovery from a court award and return of shares on the previously impaired Mersing gold project for $1.33-million, offset by an impairment loss on the spare ball mill of $470,000 and by a foreign currency exchange loss of $2.67-million (2015: $210,000).

The company's cash and cash equivalents, including the restricted cash balance as at June 30, 2016, were $20.91-million, a decrease of $8.44-million from the balance held at June 30, 2015, of $29.35-million, largely due to development, therefore increasing the value in its two gold portfolios in Malaysia and Western Australia.

The company focused on sustainability of gold production, including completion of a new resource evaluation and economic study for Selinsing under an updated NI 43-101 technical report, and development of an early-stage production plan for Murchison. During the year, exploration and evaluation expenditures at Selinsing were $3.03-million (2015: $4.49-million) and $3.80-million (2015: $7.60-million) at Murchison. This was the main cause of the $8.44-million reduction of cash flow in fiscal 2016. Working capital was $28.34-million at June 30, 2016, a decrease of $5.15-million compared with $33.49-million at June 30, 2015.

Development

Intec technology and commercialization testwork

At the Selinsing gold mine, the Intec pilot plant was constructed and commissioned in the first quarter of fiscal 2016 to demonstrate that bench-scale batch testwork results can be duplicated in a continuous flow process and that the process can be scaled up. Two trial runs were conducted through fiscal 2016.

Further testwork is in progress, and subsequent to fiscal 2016, an independent metallurgical testwork program at a bench-scale level was designed by Orway and is being carried out independently by Orway and the company in parallel, following the same protocols. This will provide an independent confirmation of the recoveries of gold from sulphide resources that is planned to be mined from Buffalo Reef using the Intec Process technology. Subject to results, this may lead to a further pilot plant run. Monument is encouraged by the results of metallurgical testwork programs undertaken at the Selinsing in-house laboratory to date and will announce the results of the independent testwork program when completed, which is expected by December, 2016.

Burnakura project

The company has prioritized the commencement of gold processing at the Burnakura gold mine. The current plan is to immediately recommission the existing CIL plant and construct a new heap-leach facility in year two of the life of mine. The production strategy is to develop and optimize open-cut mine operations through Alliance/New Alliance (ANA), extended to North of Alliance (NOA) and Federal City. Low-grade ore will be stockpiled and subsequently processed through heap-leach facilities, and high-grade ore will be processed immediately through the CIL plant.

During fiscal 2016, the company reviewed a proposal for front-end-engineering design for the planned Burnakura heap-leach/CIL production with capital expenditures and operating expenditures prepared by Como Engineers Pty. Ltd. and concluded its initial internal economic study of the project. Based on these studies, the company has made the decision to put the Burnakura project into early-stage production. As a result, the first purchase order for off-site design work was placed to commence the crushing and screening plant upgrade. The company has extended its studies to NOA, Tuckanarra and other areas to further increase the life of mine.

The company continued to improve open-pit mine optimization and moved forward to develop a full implementation mine development plan, including project management and scheduling, site preparation and development, and environmental and safety compliance. Project development will continue in areas, such as infrastructure, where the laboratory will be upgraded to enable a larger number of grade control samples to be completed on a daily basis. Communications and IT (information technology) network upgrades have been completed. Warehousing software procedures are complete, and procurement of first-fill spares is under way. Administration, HSE (health, safety and environment) and security, and work force planning are in progress to support production. The site accommodation and catering are fully functional to start construction work. Refurbishing, constructing and commissioning will take approximately six months.

The company's production decision is not based on a feasibility study of mineral reserves demonstrating economic and technical viability. Therefore, there is increased uncertainty with 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 than expected, and construction or continuing mining and milling operations are more difficult or more expensive than expected; and 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 the production will be able to generate positive cash flow as anticipated to return the company's capital investment.

Acquisition

Earn-in and joint venture on Matala gold project

On Feb. 8, 2016, the company announced that it entered into an earn-in and shareholders 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, 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 Democratic Republic of the Congo and elsewhere.

Exploration

Malaysia

In Malaysia for fiscal 2016, exploration included resource definition at Buffalo Reef Central and Felda land, intended to update resources and metallurgical drilling for the Intec project. The focus was the replacement of gold inventory to sustain and extend mine life. Geological and economic studies were done in parallel for an updated NI 43-101 technical report targeting completion in October, 2016.

Resource and exploration drilling totalled 48 diamond drilling holes for 7,189 metres and 41 reverse circulation holes for 4,157 metres. Significant-intercept assay results at Buffalo Reef Central and Felda land announced in April, 2016, have confirmed the existing oxide and sulphide mineralized zones modelled and also intersected a number of downdip quartz stibnite high-grade intervals, beyond the currently defined shallower, quartz-ankerite mineralization.

The resource model has been completed and was used as a basis to complete the prefeasibility study, which is expected to potentially increase gold inventory to support a new optimized mine plan for sulphide production. The company intends to continue using the bioleach sulphide treatment process in its coming NI 43-101 technical report, and replace it by the Intec process, should the Intec pilot plant testwork complete and achieve lower capital cost in comparison with the bioleaching process, as anticipated.

Subsequent to fiscal 2016, the company has received Selinsing phase 4 prefeasibility-study capex and opex revision, produced by Lycopodium with a significant reduction in capital expenditure from the original cost that is described in the existing NI 43-101 technical report produced by Practical Mining and filed on SEDAR in May, 2013.

Western Australia

Exploration for the company's Murchison gold portfolio is aimed to deliver a preliminary economic assessment study to explore a longer term of economic scale for Burnakura gold mine production. Exploration in fiscal 2016 at the Murchison gold project was at NOA, and Tuckanarra and oxide targets in Burnakura. Drilling comprised a total of 226 reverse circulation holes for 23,225 metres and a total seven DD holes for 629 metres. These programs were mainly designed to validate the historical resource, to study geological continuity of the mineralization at the Burnakura area and to increase gold inventory to extend life of mine, supporting sustainable early-stage production at Burnakura.

Assay results were received from confirmation and infill drilling over Tuckanarra and NOA deposits, where the majority of historical resources was reported. The study of the available information and the continuing resource modelling update based on the new drilling information have evidenced positive indications for the increase of mineralized volume and gold grade/ounces for a good part of NOA, in particular coming from the significant intercepts observed. It has also enhanced the strong potential for the continuity of deep mineralization in the central and north portions of the NOA deposit. In August, 2016, subsequent to year-end, a deep drilling program at the NOA deposit was announced, aiming to test the underground potential to 500 metres to increase the life of mine, in conjunction with the early-stage production plan.

The scientific and technical information in this news release has been reviewed and approved by Roger Stangler, BSc, MEng, MAusIMM, MAIG, a qualified person defined in accordance to National Policy 43-101, chief managing geologist of the company.

We seek Safe Harbor.

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