Mr. Darren Hall reports
CALIBRE REPORTS STRONG THIRD QUARTER AND YEAR-TO-DATE 2021 RESULTS, ON TRACK TO ACHIEVE UPPER END OF 2021 PRODUCTION GUIDANCE, ADVANCING ACQUISITION OF FIORE GOLD CREATING A DIVERSIFIED, AMERICAS-FOCUSED, GROWING MID-TIER GOLD PRODUCER
Calibre Mining Corp. has released its financial and operational results for the three and nine months ended Sept. 30, 2021. The interim consolidated financial statements and management discussion and analysis can be obtained from SEDAR and the company's website. All figures are expressed in U.S. dollars.
Q3 2021 milestones and highlights:
Gold production of 44,579 ounces;
- Gold sales of 44,471 ounces generating $79.2-million in revenue at an average realized price of $1,781 per ounce;
Net income of $15.0-million with basic net income per share of four cents;
- Cash on hand of $72.9 million at Sept. 30, 2021, an increase of $6.6-million from Q2 2021;
- Consolidated total cash costs and all-in sustaining costs (AISC) of $980 and $1,097 per ounce, respectively;
Cash generated from operating activities of $28.3-million;
- 843 tonnes per day of ore delivered from the Pavon Norte mine to the Libertad mill, a 53-per-cent increase over Q2 2021 and averaging 1,077 tonnes per day in the month of September, exceeding the company's target rate of 1,000 tonnes per day three months earlier than expected;
- Advanced the high-grade Eastern Borosi project (EBP), including:
- Reporting the highest-grade intercepts to date;
- Completing infill drilling and initiating resource expansion and discovery drilling;
- Completing environmental baseline studies concurrently with community engagement targeting a permittable product ready for submission in early Q1 2022 for open-pit and underground operations.
- Multirig exploration drill programs active across 100-per-cent-owned mine sites and satellite opportunities;
- Multiple new mineral exploration concessions granted during the quarter;
- Significant progress on the company's World Gold Council responsible mining principles self-assessment.
Fiore Gold acquisition announcement highlights:
- Creates a diversified, Americas-focused, growing mid-tier gold producer with targeted annual gold production of approximately 245,000 ounces and AISC of $1,020 per ounce, which will include Nevada gold production of 50,000 ounces per year from the Pan gold mine;
Combined entities will be supported by a mineral resource base of 4.4 million ounces (measured and indicated) and an additional 3.1 million ounces of inferred resources;
Growth will be driven by near-term development of the federally permitted and fully financed Gold Rock project in Nevada, the EBP in Nicaragua, and multiple near-mine, high-impact exploration targets to support mineral reserve and mine life expansion.
Year-to-date (YTD) 2021 milestones and highlights:
- Gold production: 133,537 ounces; on track to deliver at the high-end of 2021 guidance (170,000 to 180,000 ounces), with the fourth quarter anticipated to be the strongest yet, including some of the highest-grade ore of the year from the Limon Central mine;
- Gold sales of 134,035 ounces generating $240.0-million in revenue, at an average realized price of $1,791 per ounce;
Generated $83.2-million in cash from operating activities;
- Net income of $43.6-million, with basic net income per share of 13 cents;
Consolidated total cash costs and AISC of $1,008 and $1,135 per ounce, respectively;
- Significant operational and exploration developments, including:
- Update of company reserves as at Dec. 31, 2020, which included a significant increase in reserves to 864,000 ounces;
- Positive Pavon gold mine prefeasibility study demonstrating strong exploration potential;
- Exploration results announced throughout YTD 2021, including expanded details on Calibre's 2021 exploration plans.
Darren Hall, MAusIMM, president and chief executive officer of Calibre, stated: "The Calibre team delivered another solid quarter of production, demonstrating the quality and reliability of our assets as we continue to deliver strong operating cash flows by executing on our hub-and-spoke operating strategy. The ramp-up at Pavon Norte exceeded expectations by achieving haulage rates of 1,000 tonnes per day from Pavon Norte to the Libertad mill, three months ahead of schedule. In addition, we recently commenced a multirig exploration drill program at Pavon Central, where we see excellent potential to expand resources and make discoveries along this emerging district.
"Exciting progress continues at the Eastern Borosi project, our next Mining Spoke, with drilling returning some of the best near-surface intercepts to date, including 25.07 g/t gold over 9.7 metres. With technical and environmental studies ongoing and resource expansion and discovery drilling programs well under way, we anticipate we can grow current deposits both on strike and downdip of known zones while testing new veins as we commence permitting in Q1 2022.
"Additionally, with multirig exploration drill programs active across all our mine sites and satellite opportunities, plus the approval of new mineral exploration concessions granted during the quarter, we remain committed to reinvesting into our business through mine development and exploration to increase resource confidence, expand our growth potential up from the current 865,000 ounces of reserves at 4.49 g/t gold and responsibly deliver on our commitments.
"For the balance of the year, with $73-million in cash, unhedged and no debt, we are in a strong position to continue to generate significant free cash flow while self-funding growth, exploration and mine development investment.
"The transaction with Fiore Gold builds on our focus and commitment to create value for our shareholders, bringing a diversified asset base and immediate production, and strong growth and exploration upside in Nevada, the top mining jurisdiction in the world. I look forward to closing this transaction, advancing progress on Gold Rock, and accelerating exploration drilling on both Pan and Gold Rock, as both present very attractive discovery and resource building upside."
The attached table provides a summary of Calibre's operational and financial results for Q3 2021 and YTD 2021. For a more fulsome discussion and analysis, please refer to the company's unaudited consolidated financial statements for the three and nine months ended Sept. 30, 2021, and the related management discussion and analysis, available on the company's website and filed on SEDAR.
Open-pit and underground mining operations
During Q3 2021, most of the open-pit production came from Limon Central (LC) phase 2 totalling 193,789 ore tonnes at an average grade of 3.33 g/t, with material from Pavon Norte in the amount of 63,154 tonnes at a grade of 3.14 g/t, 176,343 tonnes at a grade of 1.35 g/t of previously processed spent ore and 4,678 tonnes at 11.59 grams per tonne (g/t) from artisanal small miners. By comparison, during Q3 2020, open-pit mining consisted of 122,174 ore tonnes averaging 5.50 from LC phases 1 and 2 combined, 111,913 ore tonnes at 3.87 g/t from the previously mined Jabali Antena, 185,997 tonnes grading 0.76 g/t of spent ore, and 10,079 tonnes of ore purchased from artisanal small miners grading 21.75 g/t.
For the remainder of 2021, the company continues open-pit mining at LC phase 2, where favourable mine sequencing is expected to generate some of the highest-grade ore of the year from the Limon Central mine. At Libertad, Calibre delivered an average of 843 tonnes per day (tpd) of ore from the Pavon Norte mine during Q3 2021, a 53-per-cent improvement from Q2 2021, and the company continues to focus on achieving a target goal of 1,000 tpd, which was accomplished in the month of September, 2021, three months ahead of schedule. While spent ore provides Calibre with additional opportunities for low-cost blending feed, the increase of available higher-grade ore from Pavon and the underground mining operations (discussed below) is expected to result in a reduction of lower-grade spent ore contribution to the Libertad mill feed in Q4 2021.
Underground ore mined during Q3 2021 was 100,700 tonnes at a grade of 4.78 g/t, compared with 36,424 ore tonnes mined in Q3 2020 at a grade of 3.75 g/t. Q3 2021 ore production was 55,840 tonnes at a grade of 3.91 g/t from Jabali underground, 14,074 tonnes at a grade of 3.26 g/t from Santa Pancha, 6,914 tonnes at a grade of 3.66 g/t from Veta Nueva and 23,872 tonnes at a grade of 7.76 g/t from Panteon South. During Q3 2020, the company mined a combined total of 33,776 tonnes from Santa Pancha and Veta Nueva, and 2,648 tonnes from the Jabali underground mine combining to deliver an average grade of 3.75 g/t.
Jabali underground production continues to improve due to increased technical experience and new underground equipment arriving in the second half of 2021. The increased productivity at Jabali underground offset the reduced ore production from Veta Nueva, where poor grade reconciliations and high dilution due to hangingwall weaknesses hampered output in Q3 2021. A block model and reconciliation review continues at Veta Nueva and a series of grade control holes are being proposed for Q4 2021 to redefine the orebody on the lower levels. A reduction of yield from Veta Nueva is expected to be offset by increased tonnes from Panteon South and Jabali underground for Q4 2021.
Processing at Limon
During Q3 2021, the Limon mill produced 15,649 ounces of gold driven by an average mill grade of 4.73 g/t gold and recovery of 90.3 per cent from 120,724 tonnes of ore milled. An increase in hours spent on mill maintenance and an unscheduled power outage resulted in reduced tonnes milled in Q3 2021 (compared with Q3 2020). In 2020, mill maintenance was performed in Q2 2020 during the temporary suspension of operations. The company benefited from stronger mined grades from LC phases 1 and 2 in Q3 2020, resulting in an average mill grade of 5.73 g/t in Q3 2020, compared with 4.73 g/t in Q3 2021. Of note, the company's mill grade increased by 16.5 per cent from Q2 2021 (4.06 g/t), largely due to improvements to mined grade from Limon Central. As a result of the mine sequencing at Limon Central, the company continues to expect higher mill grade feed will be available in Q4 2021 when compared with Q3 2021. Recoveries were consistent across all periods presented.
Processing at Libertad
During Q3 2021, the Libertad mill produced 28,930 ounces of gold by processing 376,783 tonnes of ore at an average grade of 2.71 g/t. Compared with Q3 2020, Libertad processed a similar number of tonnes of ore (less than 1-per-cent difference) at considerably higher grade (28.4 per cent higher) at consistent recovery levels. During Q3 2021 (when compared with Q3 2020), the company benefited from the availability of higher-grade ore from a number of sources, including more tonnes received from Limon at higher average grades, the introduction of ore from Pavon Norte and the Jabali underground mines (which were not available in Q3 2020), and utilization of higher-grade ore from artisanal miners (none was used in Q3 2020).
The increase of ore grade is a direct result of the implementation and success of the hub-and-spoke strategy to deliver higher-grade ore to Libertad from several different sources throughout Nicaragua. Ore deliveries to Libertad from Limon increased significantly over the past year, with 282,483 tonnes of ore delivered YTD 2021 at an average grade of 2.92 g/t, compared with 119,725 tonnes at an average grade of 2.75 g/t for YTD 2020.
Consolidated Q3 2021 financial review
During Q3 2021, the company sold 44,471 ounces of gold, at an average realized price of $1,781 per ounce, for revenue of $79.2-million. This compares with Q3 2020 revenue of $85.8-million from the sale of 44,842 ounces at an average realized price of $1,913 per ounce. The $6.6-million decrease in revenue is the result of $700,000 related to lower ounces sold and $5.9-million from lower realized gold prices than the prior comparable period.
Total cost of sales for Q3 2021 was $52.5-million, which included production costs of $40.3-million, royalties and production taxes of $3.0-million, refinery and transportation of $200,000, and depreciation of $8.9-million. Total production costs were $40.3-million in Q3 2021, compared with $31.8-million in Q3 2020, from higher mining costs from Panteon Sur and Veta Nueva achieving commercial production in 2021, and the ramp-up from the restart of Jabali underground, and lower silver credits from the completion of mining in Jabali Antena at the end of 2020.
The decrease in gross revenue, mostly due to a lower average realized gold price (Q3 2021 -- $1,781 per ounce; Q3 2020 -- $1,913 per ounce), resulted in income from mine operations for Q3 2021 of $26.7-million in comparison with income from mine operations in Q3 2020 of $45.9-million.
Total cash costs for Q3 2021 were $980 per ounce and AISC was $1,097 per ounce. For Q3 2020, total cash costs were $786 and AISC was $963 per ounce. The higher total cash costs and AISC in Q3 2021 relate to lower-grade ore mined from Limon Central in 2021, resulting from mine sequencing and higher mining costs.
The company's basic net income per share for Q3 2021 was four cents, compared with 10 cents per share for Q3 2020.
As a result of the advancement at the EBP, on Aug. 4, 2021, Calibre updated its 2021 guidance to reflect the greater investment in the company's business and to advance the company's next mining spokes.
The company's production guidance remains on track to meet the higher end of guidance and expects to be within the upper range of AISC. As announced on Aug. 4, 2021, growth capital and exploration guidance were increased to reflect some inflationary cost tension, but largely due to the increased spend at EBP and additional land acquisitions, anticipated to lead to additional future production and cash flow growth. The company continues to maintain this guidance from Aug. 4, 2021.
Q3 2021 financial results conference call details
The third quarter 2021 financial results will be released after the market close on Nov. 3, 2021, and management will be hosting a conference call to discuss the results and outlook in more detail.
Date: Thursday, Nov. 4, 2021
Time: 10 a.m. EDT
Dial-in: 1-866-221-1882 or 1-470-495-9179 (international)
Webcast: A webcast will be available.
Conference ID No.: 3985203
The live webcast can be accessed on the company's website in the events and media section under the investors tab. The live audio webcast will be archived and made available for replay at the company's website. Presentation slides, which will accompany the conference call, will be made available in the investors section of the Calibre website under presentations, prior to the conference call.
Mr. Hall, a qualified person, as set out under National Instrument 43-101, has reviewed and approved the scientific and technical information in this news release.
About Calibre Mining Corp.
Calibre Mining is a Canadian-listed gold mining and exploration company with two 100--per-cent-owned operating gold mines in Nicaragua. The company is focused on sustainable operating performance and a disciplined approach to growth. Since the acquisition of the Limon, Libertad gold mines and Pavon gold project, Calibre has proceeded to integrate its operations into a hub-and-spoke operating philosophy, whereby the company can take advantage of reliable infrastructure, favourable transportation costs, and multiple high-grade ore sources that can be processed at either Limon or Libertad, which have a combined 2.7 million tonnes of annual mill throughput capacity.
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