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Galiano Gold earns $12.6-million (U.S.) in Q2

2022-08-11 20:41 ET - News Release

Mr. Matt Badylak reports


Galiano Gold Inc. has released its second quarter (Q2) operating and financial results for the company and the Asanko gold mine (AGM), located in Ghana, West Africa. The AGM is a 50:50 joint venture (JV) with Gold Fields Ltd., which is managed and operated by Galiano. All financial information contained in this news release is unaudited and reported in U.S. dollars.

Asanko gold mine -- key metrics (100-per-cent basis):

  • Production and revised guidance: Gold production was 50,010 ounces during the quarter. Year-to-date production was 92,353 ounces. Full-year gold production guidance has been revised from 100,000 to 120,000 ounces to 140,000 to 160,000 ounces.
  • Milling performance: The company achieved milling throughput of 1.4 million tonnes of ore at a grade of 1.3 grams per tonne (g/t) and metallurgical recovery averaging 84 per cent during the quarter, a significant improvement in recoveries quarter on quarter.
  • Cost performance and cash flow: Total cash costs per ounce were $1,218 and AISC (all-in sustaining costs) was $1,431 per ounce (oz) during the quarter, resulting in positive cash flows from operations of $34.3-million and free cash flow of $25.3-million.
  • Financial performance: The company reported gold revenue of $84.7-million generated from 46,236 gold ounces sold at an average realized price of $1,832 per ounce, and reported net income after tax of $15.8-million during the quarter and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $21.1-million.
  • Focus on exploration: Deep directional drilling continued at the Nkran deposit, aimed at defining the continuity and extension of mineralization below the limits of observed mineral resources. The results of this program will be used to evaluate the underground potential of Nkran. Resource definition drilling continued at Nkran Cut 3 and Miradani to support an updated mineral resource model, while exploration drilling also continued at Greater Midras South.
  • Culture of safety: The company had strong safety performance, with no lost-time injuries (LTI) and one total recordable injury (TRI) recorded during the quarter, resulting in 12-month rolling LTI and TRI frequency rates of 0.11 and 0.33 per million employee hours worked, respectively. At June 30, 2022, the AGM had achieved 8.2 million employee hours worked without an LTI.
  • Improving liquidity: The company had $70.3-million in cash, $8.2-million in gold on hand, $1.4-million in gold sales receivables and no debt as of June 30, 2022.
  • Work force optimization: The company continued the process of rationalizing the work force of the AGM. Management expects to realize near-term and sustainable cost savings and a more streamlined and efficient operation over the remaining life of mine as a result of the rationalization.

Galiano Gold highlights:

  • Stable balance sheet: The company had cash and cash equivalents of $53.0-million and $5.2-million in receivables as at June 30, 2022, while remaining debt free.
  • Earnings: It reported a net income of $12.6-million or six cents per common share during the quarter.
  • Board changes: Marcel De Groot and Shawn Wallace did not stand for re-election at the company's annual general meeting, and Greg Martin, former chief financial officer of SSR Mining Inc., was elected to the board of directors effective June 2, 2022.

"We are pleased with the strong gold production for the quarter, which, in combination with higher all-in sustaining margins, served to significantly improve the cash balance at the AGM. Higher production for the quarter was driven by improved metallurgical recoveries, the Akwasiso pit delivering more tonnes and higher grade than planned, and stockpile material performing better than expected," said Matt Badylak, president and chief executive officer. "As a result of robust year-to-date production and improved confidence in metallurgical recoveries, we are revising 2022 gold production guidance for the AGM to 140,000 to 160,000 ounces. We continue to advance the metallurgical testwork at Esaase, with third party results scheduled for delivery by late Q3 2022, and anticipate providing an update to the AGM's mineral resources and reserves with a new life-of-mine plan scheduled for Q1 2023."

Asanko gold mine -- Q2 2022 operational and financial results (100-per-cent basis)

The AGM produced 50,010 ounces of gold during the quarter, as the processing plant achieved milling throughput of 1.4 million tonnes of ore processed at a grade of 1.3 g/t with metallurgical recovery averaging 84 per cent. During Q2 2022, significant work took place to optimize the plant performance of the AGM. This included revising the mill feed blend regime, increasing the mass pull in the gravity circuit, and adjusting operating parameters and reagent additions in the carbon-in-leach circuit, which assisted in the higher recoveries achieved during the period.

The company sold 46,236 ounces of gold in Q2 2022 at an average realized gold price of $1,832 per oz for total revenue of $84.9-million (including $200,000 of byproduct silver revenue), a decrease of $10.3-million from Q2 2021. The decrease in revenue quarter on quarter was a function of a 13-per-cent reduction in sales volumes, partly offset by a 3-per-cent increase in realized gold prices relative to Q2 2021.

Total cost of sales (including depreciation and depletion and royalties) amounted to $68.6-million in Q2 2022, a decrease of $8.5-million from Q2 2021. The decrease in cost of sales was primarily due to gold ounces sold being 13 per cent fewer and a $2.8-million positive net realizable value (NRV) adjustment on stockpile inventory in Q2 2022.

Total cash costs per ounce were $1,218 in Q2 2022, compared with $1,236 in Q2 2021. Although gold sales volumes decreased by 13 per cent in Q2 2022, total cash costs per ounce were largely unchanged from Q2 2021 as a result of lower mining costs resulting from the winding down of operations at Esaase and a positive $2.8-million NRV adjustment on stockpile inventory as mentioned above. These factors were partly offset by general inflationary pressures on fuel and consumables. Total cash costs per ounce for Q2 2022 include approximately $391 per oz of historical costs associated with stockpiled ore.

Income from mine operations for Q2 2022 totalled $16.2-million, compared with income from mine operations of $18.1-million in Q2 2021. The reduction in income from mine operations was due to a $10.3-million decrease in revenue, partly offset by an $8.5-million decrease in cost of sales (as described above).

The AGM generated $34.3-million of cash flows from operating activities during Q2 2022, compared with $10.8-million of cash flows from operating activities during Q2 2021. The increase in cash flows from operations was primarily due to improved AISC margins, a $17.5-million decrease in working capital requirements and lower labour costs resulting from the restructuring of the work force of the AGM.

Galiano Gold -- Q2 2022 financial results

The company reported a net income after tax of $12.6-million in Q2 2022, compared with a net income after tax of $5.0-million in Q2 2021. The increase in earnings during Q2 2022 was due to a $13.2-million positive fair value adjustment on the company's preferred share investment in the JV and a $1.8-million reduction in corporate general and administrative (G&A) expenses resulting from a lower head count. These factors were partly offset by a $5.7-million reduction in the company's share of the JV's net earnings from Q2 2021.

Cash generated by operating activities in Q2 2022 was $2.6-million, compared with cash used in operating activities of $3.1-million in Q2 2021. The increase in cash generated from operations during Q2 2022 was primarily due to a $4.8-million collection of the company's JV service fee receivable and lower G&A costs as mentioned above.

As at June 30, 2022, the company held cash and cash equivalents of $53.0-million and $5.2-million in receivables for a gross liquidity position of $58.2-million and no debt.

This news release should be read in conjunction with Galiano's management's discussion and analysis and the unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2022, and June 30, 2021, which are available on the company's website and on SEDAR.

About Galiano Gold Inc.

Galiano Gold's vision is to build a sustainable business capable of long-term value creation for its stakeholders through a combination of exploration, accretive M&A (merger and acquisition) activities and the disciplined deployment of its financial resources. The company currently operates and manages the Asanko gold mine, located in Ghana, West Africa, which is jointly owned with Gold Fields. The company is strongly committed to the highest standards for environmental management, social responsibility, and health and safety for its employees and neighbouring communities.

We seek Safe Harbor.

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