Mr. Alan Hill reports
TERANGA GOLD CORPORATION: SEPTEMBER QUARTER REPORT
Teranga Gold Corp. is releasing its third quarter 2014 results. For a full explanation of financial, operating, exploration and development results, please see the interim condensed consolidated financial statements as at and for the period ended Sept. 30, 2014, and the associated management's discussion and analysis, on the company's website. All amounts are in thousands of U.S. dollars, unless otherwise stated.
Highlights:
-
Gold revenue for the three months ended Sept. 30, 2014, increased 12
per cent to $56.7-million, compared with the same prior-year period, gold
sales increased 18 per cent to 44,573 ounces of gold.
-
Gold production for the three months ended Sept. 30, 2014, increased
32 per cent to 48,598 ounces of gold, compared with the same prior-year
period.
- Total cash costs were $781 per ounce sold and all-in sustaining costs
were $954 per ounce sold for the three months ended Sept. 30,
2014.
-
Based on year-to-date production and the deferral at Sabodala of
approximately 10,300 ounces (87,000 tonnes at over 3.5 grams per tonne) into 2015,
the company is lowering its 2014 annual production guidance by about
5,000 ounces to approximately 215,000 ounces. Total cash costs are
now expected to average about $725 per ounce and all-in sustaining
costs are expected to average about $900 per ounce, both $25 per ounce
higher than the top end of the original guidance ranges.
-
The company expects a strong fourth quarter, with higher production of
about 75,000 ounces and lower costs, resulting from higher grades mined
at Sabodala and from higher production from Masato.
- Consolidated profit attributable to shareholders for the third quarter
of 2014 was $2.4-million (one cent per share), compared with a consolidated
loss of $400,000 (nil loss per share) in the same prior-year
period.
-
Mining of the Masato deposit commenced on schedule during the third
quarter of 2014, the first of the Oromin joint venture group (OJVG)
deposits to be mined.
- Infill drilling results from the Masato high-grade zone confirm
interpretation of the resource model and provide additional confidence
in the nature of high-grade mineralization.
- Technical analysis on mill optimization was completed during the
quarter, showing an expected increase of 5 to 10 per cent in throughput.
-
Preliminary heap leach test results during the quarter are in line with
company's initial expectations, with potential to contribute between 10
and 20 per cent of annual production.
- Cash balance at Sept. 30, 2014, was $28.0-million, including
restricted cash.
-
The company remains on track to retire the balance of the debt facility
outstanding by Dec. 31, 2014.
- Exploration programs are expected to ramp up in the fourth quarter after
the rainy season to follow up on encouraging results on both the mine
licence and regional land package.
-
Optimization of the 2015 mine plan is expected to result in an
improvement of $40-million to $60-million, compared with the technical report filed
in the first quarter of the year.
"We expect to finish the year on a strong note with higher fourth quarter production of about 75,000 ounces and lower costs allowing us to meet one of our key objectives which is to be debt free by year-end. The optimization of the 2015 mine plan completed during the quarter is expected to improve our 2015 cash flow by $40-million to $60-million, which should allow us to build up our cash balances," said Richard Young, president and chief executive officer. "Over all, operationally, things are running well and we are very pleased to have started mining Masato on schedule as having multiple pits will provide us with greater operating flexibility. We are also making very positive strides on our growth initiatives which we believe will add significant value."
REVIEW OF FINANCIAL RESULTS
(in thousands of U.S. dollars, except per-share amounts)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Revenue $ 56,711 $ 50,564 $184,035 $239,625
Profit (loss) attributable to
shareholders of Teranga 2,422 (442) (5,639) 51,737
Per share $ 0.01 $ (0.00) $ (0.02) $ 0.20
Operating cash flow 13,822 16,692 18,332 61,170
Capital expenditures 5,252 17,165 14,808 65,331
Free cash flow 8,570 (473) 3,524 (4,161)
Cash and cash equivalents
(including bullion receivables
and restricted cash) 28,025 36,156 28,025 36,156
Net cash (debt) 6,726 (40,283) 6,726 (40,283)
Total assets 709,423 617,495 709,423 617,495
Total non-current liabilities 127,102 69,333 127,102 69,333
REVIEW OF OPERATING RESULTS
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Ore mined (000 t) 1,272 537 3,508 2,548
Waste mined, operating (000 t) 4,201 3,321 15,585 8,518
Waste mined, capitalized (000 t) 524 4,853 1,479 14,645
Total mined (000 t) 5,997 8,711 20,572 25,711
Grade mined (g/t) 1.71 1.08 1.58 1.63
Ounces mined (oz) 69,805 18,721 178,858 133,378
Strip ratio (waste/ore) 3.7 15.2 4.9 9.1
Ore milled (000 t) 903 887 2,613 2,292
Head grade (g/t) 1.89 1.41 1.87 2.28
Recovery rate (%) 88.5 91.6 89.4 92.0
Gold produced (oz) 48,598 36,874 140,545 154,836
Gold sold (oz) 44,573 37,665 142,625 161,845
Average realized price ($/oz) 1,269 1,339 1,286 1,245
Total cash cost (including royalties)
($/oz sold) 781 748 760 621
All-in sustaining costs ($/oz sold) 954 1,289 934 1,086
Mining ($/t mined) 3.12 2.48 2.93 2.57
Milling ($/t milled) 15.96 17.56 18.39 20.97
G&A ($/t milled) 4.46 4.60 4.74 5.59
Three months ended Sept. 30, 2014
Masato Sabodala Total
Ore mined (000 t) 215 1,057 1,272
Waste mined (000 t) 603 4,122 4,725
Total mined (000 t) 818 5,179 5,997
Grade mined (g/t) 1.18 1.81 1.71
Ounces mined (oz) 8,142 61,663 69,805
REVIEW OF COST OF SALES
(in thousands of U.S. dollars)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Mine production costs, gross $ 37,230 $ 39,265 $121,287 $127,197
Capitalized deferred stripping (1,749) (13,327) (4,710) (41,820)
--------- --------- --------- ---------
35,481 25,938 116,577 85,377
Depreciation and amortization,
deferred stripping assets 6,915 1,966 19,385 5,780
Depreciation and amortization,
property, plant and equipment, and
mine development expenditures 9,310 11,596 28,617 45,420
Royalties 2,789 2,507 8,692 11,865
Rehabilitation - 4 - 6
Inventory movements (3,346) (2,247) (16,343) 3,393
Inventory movements, non-cash (2,805) (2,393) (4,486) (5,863)
--------- --------- --------- ---------
Total cost of sales before writedown
to net realizable value 48,344 37,371 152,442 145,978
(Reversal) writedown to net
realizable value (250) - 8,861 -
(Reversal) writedown to net
realizable value, depreciation (121) - 4,191 -
--------- --------- --------- ---------
(371) - 13,052 -
--------- --------- --------- ---------
Total cost of sales $ 47,973 $ 37,371 $165,494 $145,978
========= ========= ========= =========
Operational highlights:
-
Gold production for the quarter was higher than the same prior-year
quarter but weaker than expected. The company experienced about a 5,000-ounce discrepancy between predicted gold production based on the daily
production report assays, and reconciled gold poured and gold in circuit
production at quarter-end. Management is investigating the source of the
discrepancy. Based on an initial assessment, it would appear that there
is a bias in the assays by the independent lab on site that began in the
third quarter and further investigation is under way. In addition,
management is reviewing the impact that processing Masato material may
have had on moisture content and gold in circuit, which independently or
in combination could account for this discrepancy.
- Total cash costs per ounce for the quarter, excluding the reversal of
non-cash inventory writedowns to net realized value (NRV), were
marginally higher than the same prior-year quarter, mainly due to lower
capitalized deferred stripping, partly offset by higher gold production.
-
All-in sustaining costs for the quarter, excluding the reversal of non-cash inventory writedowns to NRV, were 26 per cent lower than the same
prior-year quarter due to lower capital expenditures in the current-year
period.
-
Total tonnes mined for the quarter were 31 per cent lower compared with the
same prior-year quarter as mining activities were mainly focused on the
lower benches of phase 3 of the Sabodala pit, which has an overall
reduced stripping ratio. During the current quarter, mining began on
schedule at Masato, the first of the OJVG deposits to be developed, with
over 800,000 tonnes mined.
- Steps taken to improve grade control in the quarter included hiring a
new mine manager, additional leadership in the production geology
department, improved blast hole sampling and statistical controls,
increased reverse circulation (RC) infill drilling and reducing to five-metre benches when necessary. As a result of these steps taken, mine
performance significantly improved, compared with the second quarter.
Over all, high-grade ounces mined during the quarter were greater than the
reserve model predicted, however, the average grade of this ore mined,
which was modelled at approximately 3.5 g/t, was about 2.8 g/t and
impacted production for the quarter.
-
Mining for the balance of the year is taking place in the high-grade
areas of the Sabodala pit and the upper benches of Masato. Access to the
lowest benches of phase 3 Sabodala which were originally scheduled for
mining during the fourth quarter has been deferred into 2015, due to
bench access constraints. In total, approximately 10,300 high-grade
ounces (87,000 tonnes at over 3.5 g/t) originally part of the 2014 mine
plan are now expected to be mined and processed during first quarter
2015. As a result of this deferral, gold production will be impacted by
about an approximately net 8,000 ounces for the year as this high-grade
material is displaced by low-grade feed to the mill.
- Total tonnes mined are expected to increase in the fourth quarter to
over nine million tonnes, with approximately two-thirds mined from Masato
and the remainder from Sabodala. The change in the mine plan at Masato
is due to better grade and tonnage than originally expected, combined
with fewer ore tonnes mined at Sabodala, due to the access constraints
anticipated on the lower benches of phase 3. Over all for the year, total
material moved is expected to increase from 26 million tonnes to almost
30 million tonnes.
- Total mining costs for the quarter were 13 per cent lower than the same
prior-year quarter, due to decreased material movement and lower costs
for light fuel oil (LFO) from lower market fuel prices. However, unit
mining costs for the quarter were 26 per cent higher due to fewer tonnes
mined. The higher unit costs in 2014 are due to the fact mining is
mainly concentrated on the lower benches of phase 3 of the Sabodala pit,
with limited space resulting in lower productivity.
- Ore tonnes milled for the quarter were marginally higher than the same
prior-year quarter due to the introduction of softer oxide ore from
Masato in the second half of September. Ore tonnes milled are expected
to increase in the fourth quarter to over one million tonnes, mainly as a
result of blending the softer, finer oxide ore from Masato with harder
Sabodala ore to achieve higher mill throughput. No major downtime is
scheduled for the balance of the year.
- Processed grade for the quarter was 34 per cent higher than the same
prior-year quarter, mainly due to higher ore grades mined, but was lower
than planned as described earlier. The reported grade mined may also be
understated if the reported gold in circuit is understated. As mentioned
earlier, a review is under way.
- Total processing costs were 7 per cent lower than the same prior-year
quarter and unit processing costs for the quarter were 9 per cent lower
than the same prior-year quarter, mainly due to lower maintenance
activities in the current quarter.
- Total mine site general and administrative costs for the quarter were 3
per cent lower than the prior-year quarter and unit costs were 3 per cent
lower than the prior-year quarter, mainly due to lower insurance costs
and higher throughput.
Financial highlights:
-
Gold revenue for the quarter was 12 per cent higher than the same prior-year quarter. The increase in gold revenue was due to an 18-per-cent increase in
gold sales volume, partially offset by a 5-per-cent decrease in realized gold
prices during the quarter.
-
During the quarter, the company recorded profit attributable to
shareholders of $2.4-million (one cent per share), compared with a loss
attributable to shareholders of $400,000 (nil loss per share) in
the same prior-year period. The increase in profit and earnings per
share over the prior-year quarter was primarily due to higher revenues
in the current year quarter.
- During the three months ended Sept. 30, 2014, the company recorded a
$400,000 reversal of a portion of the non-cash writedown on long-term, low-grade ore stockpile inventory that had been previously recorded
during the second quarter of 2014. Higher grades mined during the third
quarter resulted in a decrease in the per-ounce cost of inventory
(including applicable overhead, depreciation and amortization). Higher
or lower per-ounce inventory costs have a greater impact on low-grade
stockpile values because of the higher future processing costs required
to produce an ounce of gold.
- The non-cash writedown recorded during the second quarter 2014
represent the portion of historic costs that would not be recoverable
based on the company's long-term forecasts of future processing and
overhead costs at a gold price of $1,300 per ounce. Fluctuations in the
mine plan result in wide fluctuations in the per-ounce cost of the company's long-term ore stockpiles. During periods where lower grades are mined, per-ounce costs rise, while during those periods when higher grades are
mined, per-ounce costs fall. As mining takes place in areas of Sabodala
and Masato containing higher grades, a portion, if not all, of these
non-cash write-offs are expected to reverse, including a portion during
the fourth quarter. Conversely, should long-term gold prices decline or
future costs rise, there is a potential for further NRV adjustments.
-
Cash flow provided by operations was $13.8-million for the quarter,
compared with cash flow provided by operations of $16.7-million in the
same prior-year quarter. The decrease in operating cash flow, compared with
the prior-year quarter, was primarily due the impact of delivering a
portion of current-period production to Franco-Nevada at 20 per cent of
gold spot prices, partially offset by higher revenues.
- The decrease in capital expenditures for the quarter was mainly due to
lower capitalized deferred stripping in the current quarter.
- The company's cash balance at Sept. 30, 2014, was $28.0-million,
including restricted cash. Cash and cash equivalents were similar to the
balance reported at June 30, 2014, as cash flow provided by operations
of $13.8-million was offset by debt and interest repayments totalling
$8.9-million, and capital expenditures of $5.3-million.
- For the year to date, the company has made a total of $44.2-million in
one-time payments. This includes $24.6-million in debt repayments, $3.1-million in payments to the Republic of Senegal and one-time payments
related to the acquisition of the OJVG, including $9.0-million for
transaction, legal and office closure costs, and $7.5-million to acquire
Badr's share of the OJVG. For the balance of the year, the company
expects to make a further $20.0-million in one-time payments, including
about $18.0-million in debt repayments and about $2.0-million in
payments to the Republic of Senegal. In total, the company will have
made approximately $65.0-million in one-time payments during 2014.
Approximately $15.0-million in one-time payments to the Republic of
Senegal are now expected to be paid in 2015. The one-time payments
described herein, exclude $30.0-million in debt retired in the first
quarter as part of the Franco-Nevada transaction.
Outlook for 2014:
-
Based on the deferral of Sabodala high-grade ounces into 2015 and year-to-date production, the company is lowering its 2014 annual production
guidance to approximately 215,000 ounces, from the company's previous
guidance update when it guided to the bottom end of its original
guidance range of 220,000 to 240,000 ounces. The lower production
forecast is a result of a deferral of mining approximately 10,300 ounces
(87,000 tonnes at over 3.5 g/t) at Sabodala into 2015, due to access
constraints, as well as the negative mill reconciliation of
approximately 5,000 ounces during the third quarter. This is partly
offset by higher expected tonnage and ore grades mined at Masato, as
well as, higher overall throughput in the mill. Over and above normal
operating risks, the primary risk to not achieving this revised
production target is lower ore grades in the highest-grade material to
be mined at Sabodala and Masato. Over the final two months of the year,
more than half of the planned mill feed is expected to be greater than three g/t.
- Total exploration and evaluation expenditures for the Sabodala and OJVG
mine licences, as well as the regional land package (including
capitalized reserve development), are now expected to total approximately
$10.0-million for 2014. During the second quarter, the company indicated
that expenditures may increase to $12.0-million, for additional
drilling, to expedite the conversion of resources to reserves on the
mine licences. This additional drilling is expected to take place in the
fourth quarter, however, as a result of cost reductions on exploration
overhead, the company now expects total exploration expenditures to fall back in
line with the original budget for the year.
- Administrative and corporate social responsibility (CSR) expenses are
expected to be $15.0-million to $16.0-million, in line with guidance. These
include corporate office costs, Dakar and regional office costs, and CSR
costs, but exclude corporate depreciation, transaction costs and other
non-recurring costs.
- Capitalized expenditures, including sustaining mine site expenditures,
project development expenditures for growth initiatives, capitalized
deferred stripping, reserve development expenditures and payments to the
Republic of Senegal, are now expected to be approximately $20.0-million.
A change in the accounting treatment for the advanced royalty payment to
the Republic of Senegal results in the reclassification of approximately
$10.0-million of capital expenditures to prepayment of operating
expenditures.
- As a result of the revised production guidance and changes to the mine
plan that result in an additional 16-per-cent increase in material
movement and a 4-per-cent increase in throughput increasing cash cost
guidance to approximately $725 per ounce, $25 per ounce higher than the
top end of the company's original guidance. The company expects all-in
sustaining costs of about $900 per ounce, $25 per ounce higher than the
top end of the original guidance range of $800 to $875 per ounce.
- Total depreciation and amortization for the year is expected to be
between $285 and $315 per ounce sold in line with guidance, comprising
$125 to $140 per ounce sold related to depreciation on Sabodala plant,
equipment and mine development assets, $40 to $45 per ounce sold related
to assets acquired with the OJVG, and $120 to $130 per ounce sold for
depreciation of deferred stripping assets. At the end of 2014, the
balance of the deferred stripping asset related to Sabodala is expected
to be approximately $32.0-million, which will be amortized over the
mining of phase 4 of the Sabodala pit.
Business and project development
2015 mine plan
During the quarter, the company's technical team completed optimization
work to improve on the 2015 mine plan included in the company's
technical report filed in the first quarter of this year. The goal is to
increase the amount of free cash flow generated next year by reducing
the amount of material moved at Masato, which in turn frees up required
mobile equipment for the operation of Gora, thereby reducing 2015
capital expenditures. Over all, an improvement in the range of $40-million to $60-million is targeted, as compared with the previous plan, including the
benefit of the deferral of ore containing approximately 10,300 ounces
(over 3.5 g/t) from the Sabodala mine plan that was originally scheduled
to be mined in 2014.
Mill enhancements:
-
The average hourly mill throughput rate when the crusher is in operation
is approximately 430 tonnes per operating hour or 3.5 million
tonnes per year. However, the mill has experienced periods of
sustained operation where the mill throughput has exceeded 480 tonnes per operating hour.
These situations have typically occurred when both the primary and
secondary crushed ore stockpile levels were full. Analysis of plant data
shows that there is a correlation between the crusher downtime and mill
throughput, which in turn is directly related to the inventory level of
the crushed stockpiles.
- The study to quantify and optimize the relationship between an increase
in crusher availability to the SAG and ball mill system (SABC), as well
as other design enhancements within the crushing and grinding system
was completed during the third quarter, and supported the company's
initial expectations. A related study to install a second crushing
system was also completed in the third quarter.
-
The overall mill throughput increases will be accomplished by
adjustments to the design of the SAG, ball mills and crusher systems
that collectively will provide for an integrated increase in total plant
throughput by 5 to 10 per cent.
- These upgrades are expected to be operational over a span of
approximately 18 months, with continual improvements earlier from the
sustaining capital initiatives. Using scoping and prefeasibility study
level (PFS) engineering cost estimate level of accuracy, the total
estimated capital cost for all the initiatives is expected to range
from $12.0-million to $15.0-million, with an IRR of 30 to 60 per cent.
Heap leach project:
-
The LOM plan shows a significant amount of both oxide and sulphide low-grade reserves that are mined during the operating period but not
processed until the end of the mine life. Significant potential also
exists along an eight-kilometre mineralized structural trend covering both the
Sabodala and OJVG mine leases, which could add to the known reserves with
near-surface, oxidized ore.
- The potential benefit to extracting value from this ore earlier by
feeding it through a heap leach process is being evaluated. The program
is spilt into two phases, phase 1 tests the oxide material and phase 2
is to test the fresh material.
-
The company is encouraged by the results of the phase 1 program to date.
Preliminary results to date have indicated key variables (recovery
rates, agglomeration and cyanide consumption of the oxide ore zones) are
in line with the company's initial expectations.
- The hard transition oxide ore (representing approximately 40 per cent)
is being tested at a top size of 12.5-millimetre crush with eight kilograms per tonne of cement
addition that passed percolation tests representing a lift height to 16
metres. Preliminary results from the column leach tests indicate
recovery of 80 per cent and 0.6 kg/t cyanide consumption after 53 days.
- The soft transition ore (representing approximately 50 per cent) has
variable characteristics throughout the deposits and will require
further optimization as the engineering progresses to the next stage.
These samples are currently being tested at 25-millimetre, top-size crush, with a
range of eight to 20 kg/t cement that passed percolation tests representing a
lift height from eight to 16 metres. Preliminary results from the column tests
indicate gold recovery ranging from 70 to 80 per cent and 0.4 to 0.6 kg/t
cyanide consumption after 53 days.
- Additional testwork is continuing for the saprolite ore (representing
approximately 10 per cent).
- A bulk sample comprising some of the nine million tonnes of low-grade fresh ROM
stockpile will be prepared for testwork in the fourth quarter and into
2015.
-
The company is targeting production from heap leach commencing in 2017,
with the quantities and scale of operation to be defined upon the
completion of phase 2, and completion of drilling of potential low-grade
heap leach material on the combined mine licences. At this point, the
company anticipates that heap leach could account for 10 to 20 per cent
of annual production once it is fully operational.
Gora development:
-
The high-grade Gora deposit will be operated as a satellite deposit to
the Sabodala mine requiring limited local infrastructure and
development. Ore will be hauled to the Sabodala processing plant by a
dedicated fleet of trucks and processed on a priority basis, displacing
lower-grade feed as required.
-
The environmental approval for the Gora project, the final phase of the
permitting process, has been validated by the technical committee
charged with its review. The environmental assessment report is now in
the public communication phase, which the company expects to be completed during
the fourth quarter.
- Anticipating a successful conclusion to the public communication phase
of the Gora environmental process, management expects the permit process
to be completed in the fourth quarter of 2014. However, construction
permits required to initiate construction for the access road are
expected to be granted shortly. Planning and engineering for the access
road are continuing. Selection of contractors is expected within the next
few weeks, with mobilization and initiation of construction by late
2014.
OJVG mine licence reserve development:
-
The OJVG mine licence covers 213 square kilometres. As the company has integrated the OJVG
geological database into a combined LOM plan, a number of areas have
been revealed as potential sources for reserve additions within the
mining lease. These targets have been selected based on potential for
discovery and inclusion into open-pit reserves.
Masato:
-
Development of the Masato deposit is complete and mining commenced on
schedule during the quarter.
- An advanced exploration program began at Masato during the second
quarter and continued into the current quarter to, among other
objectives, test the continuity of portions of the high-grade subdomains, which were removed from the Masato reserve base after the
acquisition of the OJVG earlier this year.
-
The overall program consisted of drilling and trenching to confirm
interpretation of domains and high-grade subdomains, infill gaps and
upgrading inferred resources, determining optimal RC grade control drill
spacing and obtaining additional geotechnical data for pit slope
analysis. Over all, the program confirms the company's interpretation of the
resource model and provides additional confidence in the continuity of
high-grade mineralization within the deposit.
- All drill hole assay data for the 2014 Masato exploration program,
including drill hole locations and a location map, will be available on
the company's website.
- The company is in the process of updating the Masato resources and
reserves, expected in the fourth quarter. The updated results
will incorporate the results of the exploration program this year,
including interpreting the infill drill results from the high-grade subdomains, compared with the previously interpreted high-grade subdomains.
Golouma:
-
Infill drilling commenced during the quarter for potential conversion of
inferred resources and to evaluate the mineralization potential of
structural features along strike and to the northwest of the existing
reserves. Seven diamond drill holes were completed before the annual
rainy season impeded access. The remainder of the 25-hole program is
expected to be completed in the fourth quarter, as well as follow-up on
near-surface mineralization encountered in several of the seven holes
completed in the quarter.
Masato Northeast:
-
Detailed mapping and trenching programs were initiated on the Masato
Northeast prospect, which is situated one kilometre northeast along strike of the
Masato deposit. The prospect overlies a 2.5-kilometre-long structural splay of
the main Masato structural trend. Grab samples collected along the
structure have yielded gold values of 5.7 g/t gold (Au), 16.1 g/t Au and 25.2
g/t Au. A diamond drilling program to test these trench results is
expected to commence in the fourth quarter.
Kerekounda:
-
Both RC drilling and diamond drill hole (DDH) drilling are planned to determine
the extent of mineralization further along strike of the existing
reserves. This program is expected to commence in fourth quarter.
Niakafiri SE and Maki Medina:
-
Both RC drilling and DDH drilling are planned for potential conversion of inferred
resources, geotechnical holes for pit wall determination and exploratory
holes to the north toward the Niakafiri deposit to evaluate the
extension along strike. Pending results of the heap leach testwork,
additional drilling to determine near-surface oxide resources may also
be evaluated. Due to the positive results for the heap leach testwork,
work in these areas is expected to commence in the fourth quarter of 2014,
but may be deferred into 2015, to coincide with drilling near Sabodala
village on the Niakafiri reserves.
Regional exploration
-
The company currently has nine exploration permits encompassing
approximately 1,055 square kilometres of land surrounding the Sabodala and OJVG mine
licences (246-square-kilometre exploitation permits).
Ninienko:
-
An extensive mapping and trenching program, over 1,500 metres, was
conducted during second and third quarter of 2014, at the Ninienko prospect
and is continuing. This work outlined a 500-metre-plus-wide zone with gold
mineralization occurring in flat-lying, near-surface (zero- to two-metre) quartz
vein and felsic breccia units developed over a strike length of 1,500
metres.
- An isopach plan of the mineralized quartz vein and felsic breccia
systems is in progress, and will be used to develop a plan for DDH and a
possible RC drill program. Due to the limitation of surface trenching
and mapping used to develop the flat-lying mineralized zone at surface,
additional trenching and mapping will also be undertaken in prospective
zones near to the area to expand on the currently defined zone and to
further develop an understanding of the source of mineralization zones
for potential drill targets at depth. A detailed geochemical soil
sampling program has been planned for the fourth quarter which will
follow up and test co-incident gold-molybdenum-copper and potassium
anomalies identified by earlier regional termite mound sampling
programs. A diamond drill program will commence once this work has been
completed, likely to be scheduled for early 2015.
Soreto:
-
Following up on a small five-DDH program at the Soreto prospect in 2013, a
program totalling 15 diamond drill holes for 2014 was completed during the quarter. These
were located along two fence lines placed 150 metres on either side of
the 2013 fence that intersected gold values, including three metres at 2.1
g/t, seven metres at 1.38 g/t and one metre at 12.2 g/t. At least three
continuous shear zones were intercepted along strike. These featured
shallow dipping (25 to 35 degrees) altered shear zones with felsic dike,
sheared and brecciated silicified metasediments containing quartz-carbonate veins with disseminated pyrite and visible gold in places. The
shear zones coincide with the major north-northeast regional shear structure with an
associated six-kilometre-long geochemical soil anomaly and, when projected to
surface, align with the surface workings from artisanal mining.
Gora Northeast Extension and Zone ABC:
- Trenching and mapping programs are being planned for the fourth quarter
to investigate potentially gold mineralized extensions of the Gora gold
deposit into the Zone ABC prospect, which has significant gold soil
anomalies co-incident with regional structural trends.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of U.S. dollars, except per-share amounts)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Revenue $ 56,711 $ 50,564 $ 184,035 $ 239,625
Cost of sales (47,973) (37,371) (165,494) (145,978)
---------- ---------- ---------- ----------
Gross profit 8,738 13,193 18,541 93,647
---------- ---------- ---------- ----------
Exploration and evaluation
expenditures (672) (849) (2,399) (4,362)
Administration expenses (3,190) (3,839) (11,217) (11,526)
Share-based compensation (325) (394) (986) (677)
Finance costs (2,640) (3,441) (7,404) (8,998)
Gains on gold hedge contracts - - - 5,308
Gains on oil hedge contracts - - - 31
Net foreign exchange gains (losses) 1,342 (300) 1,342 (784)
Gain (loss) on available for sale
financial asset - 452 - (4,003)
Share of income from equity investment
in OJVG - 41 - 41
Other income (expense) 36 (4,792) (1,997) (8,474)
---------- ---------- ---------- ----------
(5,449) (13,122) (22,661) (33,444)
---------- ---------- ---------- ----------
Net profit (loss) 3,289 71 (4,120) 60,203
---------- ---------- ---------- ----------
Profit (loss) attributable to
Shareholders 2,422 (442) (5,639) 51,737
Non-controlling interests 867 513 1,519 8,466
---------- ---------- ---------- ----------
Net profit (loss) for the period 3,289 71 (4,120) 60,203
Other comprehensive income (loss)
Items that may be reclassified
subsequently to profit (loss) for
the period
Change in fair value of available
for sale financial asset, net of
tax (1) - 3 (6,418)
Reclassification to income (loss),
net of tax - - - 962
---------- ---------- ---------- ----------
Other comprehensive (loss) income
for the period (1) - 3 (5,456)
---------- ---------- ---------- ----------
Total comprehensive income (loss)
for the period 3,288 71 (4,117) 54,747
---------- ---------- ---------- ----------
Total comprehensive income (loss)
attributable to
Shareholders 2,421 (442) (5,636) 46,281
Non-controlling interests 867 513 1,519 8,466
---------- ---------- ---------- ----------
Total comprehensive income (loss)
for the period $ 3,288 $ 71 $ (4,117) $ 54,747
========== ========== ========== ==========
Earnings (loss) per share from
operations attributable to the
shareholders of the company during
the period
Basic earnings (loss) per share $ 0.01 $ (0.00) $ (0.02) $ 0.20
Diluted earnings (loss) per share $ 0.01 $ (0.00) $ (0.02) $ 0.20
We seek Safe Harbor.
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