Mr. Greg Gibson reports
SAN GOLD REPORTS 2014 ANNUAL AND FOURTH QUARTER RESULTS
San Gold Corp. has released its 2014 annual and fourth quarter financial and operating results.
The company made significant progress in 2014 toward optimizing its Rice Lake operations, eliminating significant inefficiencies and implementing a revised 1,000-ton-per-day mine plan under the leadership of a renewed management team.
Substantial definition drilling was carried out during the year within the higher grade 710-711 zones, and development is now nearly complete in these zones, ahead of mining operations. The 710-711 zones are expected to contribute approximately 60 per cent of the mine's future mill feed.
As of the date of this report, the company continues to operate under creditor protection while pursuing its sales and investor solicitation process (SISP) pursuant to its filing of a notice of intent to make a proposal under Part III, Division I, of the Bankruptcy and Insolvency Act (Canada). The SISP provides the company with a means of restructuring the company's finances to a level more appropriate to the optimal run rate established for the Rice Lake gold deposit over the past year. Development has been suspended and mining operations curtailed until the completion of the SISP, when the company will have a clearer understanding of the financial resources available to the Rice Lake mine as it prepares its operational plans for the second half of 2015.
The company recognized a non-cash impairment charge of $71.8-million in the third quarter of 2014 and of $8.4-million in the fourth quarter. These charges are in addition to the non-cash impairment of $83.1-million recognized in 2013. The reduced carrying value of the company's assets reflects lower gold prices and difficult market conditions within the sector.
Loss from operations was $9.1-million in the fourth quarter of 2014 and $90.6-million for the year. Excluding the non-cash impairment charges, operating loss was $700,000 during the fourth quarter and $10.4-million for the year.
Total and comprehensive loss was $16.4-million in the fourth quarter of 2014 and $109.2-million for the year. Excluding the non-cash impairment charges, total and comprehensive loss was $8-million during the fourth quarter and $29-million for the year.
"Turning around the Rice Lake mine required considerable effort and expense in 2014, and we've now addressed the most critical issues. Our job over the next few months is to demonstrate the value of the deposit to potential investors so that we can complete the creditor protection process in anticipation of finally commencing profitable operations at this property," said Greg Gibson, San Gold's president and chief executive officer.
Full-year financial and operating summary
- Produced 41,890 ounces of gold;
- Mill throughput of 1,070 tons per day;
- Recognized revenue of $59-million on gold sales of 42,149 ounces of gold at a realized price of $1,400 per ounce;
- Recognized operating loss of $10.4-million and net loss of $29-million for the year before non-cash impairment charges of $71.8-million and $8.4-million recognized at the end of the third and fourth quarters of 2014, respectively. Including the non-cash impairment, the operating loss was $90.6-million and the net loss was $109.2-million for the year;
- Generated cash flow from operations of $10.4-million. Before changes to non-cash working capital, the company used $9.4-million;
- Cash and cash equivalents balance of $500,000 as at Dec. 31, 2013;
- Completed approximately 65,600 metres of underground definition diamond drilling focused on the higher-grade 710-711 zones;
- Initiated a turnaround process in March to establish improved operational efficiencies;
- Closed debt financing for gross proceeds of $26.3-million (U.S.);
- Filed a notice of intent to make a proposal on Dec. 22, 2014, the first stage of a creditor protection process that permits the company to pursue a restructuring of its financial affairs through a formal proposal.
Fourth quarter financial and operating summary
- Quarterly production of 8,407 ounces of gold;
- Mill throughput of 849 tons per day;
- Recognized revenue of $11.3-million on gold sales of 8,341 ounces at a realized price of $1,359 per ounce;
- Recognized operating loss of $700,000 and net loss of $8-million;
- Generated cash flow from operations of $8.3-million. Before changes to non-cash working capital, the company used $1-million;
- Recognized a non-cash impairment charge of $8.4-million on the company's mining claims and options.
Subsequent events
- Approved to list on the TSX Venture Exchange. Shares and debentures resumed trading March 24, 2015;
- Closed debt financing for gross proceeds of $5.4-million (U.S.);
- Obtained an order granting an extension to April 27 for the company's proposal trustee to file a proposal to creditors;
- Suspended mine development activities pending completion of SISP;
- Announced on March 25, 2015, that the company will not be financing the $2-million interest payment due March 31 in respect of its subordinated unsecured convertible debentures currently traded on the TSX Venture Exchange.
CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS
Year ended Dec. 31,
2014 2013
Revenue $ 59,026,472 $ 106,264,073
Operations 69,415,111 106,384,190
Impairment charge 80,200,025 83,100,000
(Loss) from operations (90,588,664) (83,220,117)
Exploration 361,858 16,407,573
General and administrative 9,038,173 11,343,016
(Loss) before other income and expenses 99,988,695 110,970,706
Other income and expenses
Finance income -- net 215,615 (271,014)
Finance costs (11,570,375) (5,498,679)
Equity (loss) of associate (317,550) -
Change in fair value of derivative in convertible debentures 3,783,519 -
Foreign exchange (loss) (1,302,617) (42,303)
(Loss) before income tax 109,180,103 116,782,702
Income tax recovery on flow-through shares - 5,455,981
Net (loss) and comprehensive (loss) for the period $ 109,180,103 $ 111,326,721
Net (loss) per common share
Basic $ (0.29) $ (0.32)
Diluted $ (0.29) $ (0.32)
PRODUCTION SUMMARY AND STATISTICS
YTD YTD
2014 2013
Ore milled (tons) 390,564 641,710
Head grade (g/tonne Au) 4.03 4.32
Contained gold (ounces) 44,196 80,828
Ounces of gold produced 41,890 75,218
Ore mined (tons) 388,946 629,311
Ore milled per day (tons) 1,070 1,758
Ore mined per day (tons) 1,066 1,724
Mill recovery (%) 95% 93%
QUARTERLY PRODUCTION SUMMARY AND STATISTICS
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
2014 2014 2014 2014 2013 2013 2013 2013
Ore milled (tons) 78,117 76,649 115,802 119,996 148,042 175,311 162,344 156,013
Head grade (g/tonne Au) 3.77 4.63 4.18 3.67 3.78 4.24 5.05 4.15
Contained gold (ounces) 8,763 10,488 12,115 12,830 16,308 21,672 23,964 18,884
Ounces of gold produced 8,407 10,025 11,375 12,083 15,118 20,220 22,526 17,354
Ore mined (tons) 79,663 73,397 112,018 123,868 144,165 167,937 173,350 143,859
Ore milled per day (tons) 849 833 1,273 1,333 1,609 1,906 1,784 1,733
Ore mined per day (tons) 866 798 1,231 1,376 1,567 1,825 1,905 1,598
Mill recovery (%) 96% 96% 94% 94% 93% 93% 94% 92%
Note: Final refinery settlements, or the effects of rounding, may have resulted in increases or
decreases to reported gold production.
We seek Safe Harbor.
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