Brigus Gold Reports $11.4 Million in Cash Flow from Operations in Q2 2010
Brigus Gold Corp. ('Brigus Gold? or the 'Company?) (TSX: BRD) (NYSE
Amex: BRD) generated net cash flow from operations of $11.4 million and
operating income of $4.6 million for the second quarter of 2010 ('Q2
2010?), as the Black Fox Mine and Mill continue to benefit from
operating improvements and efficiencies.
During Q2 2010, Brigus Gold sold 18,430 ounces of gold at total cash
costs of $448 per ounce. This is a 14% increase in sales and a 29%
decrease in costs per ounce compared to the first quarter of 2010 ('Q1
2010?). (All dollars in this news release are in U.S. dollars unless
otherwise noted.)
Q2 2010 and to date highlights include:
Gold production of 18,028 ounces at an average throughput ore grade of
3.4 grams of gold per tonne, both improved by 27% over Q1 2010;
Black Fox underground development commenced in Q2 2010 with ore
production expected to begin in August of 2010;
Corporate rebranding with the launch of the Brigus Gold name following
completion of the merger of Apollo Gold Corporation and Linear Gold
Corp. on June 25, 2010 (the 'Merger?);
Total project debt was reduced by $18 million from $60 million to $42
million in Q2 2010; for the year-to-date, the project debt was reduced
by $28 million from $70 million to $42 million;
Cash and restricted cash balances at June 30, 2010 of $22.2 million;
Completion of a private placement of 10 million flow-through common
shares at Cdn$1.40 per share on July 29, 2010 for aggregate gross
proceeds of Cdn$14 million. Proceeds will fund exploration and
development activities at the Black Fox Complex.
Commenting on the results, Wade K. Dawe, Chairman, Chief Executive
Officer and President of Brigus Gold, said, 'These positive second
quarter 2010 results are a direct result of improvements and progress at
the Black Fox Mine. For the remainder of the year, we expect to see
continued quarter-over-quarter increases in gold production and ore
grades, and this will have a positive impact on our operating and
financial results during the second half of 2010.?
Total cash costs improved during Q2 2010 to $448 per ounce of gold
compared with $631 per ounce in Q1 2010 primarily as a result of the
higher ore grade processed. Q2 2010 total production costs, which
include depreciation and accretion for accrued site closure costs, were
$676 per ounce, compared to $861 in Q1 2010.
In Q2 2010, gold sales were 18,430 ounces, including 3,872 ounces of
gold (21%) sold into the spot market at an average gold price of $1,237
per ounce. During the second quarter of 2009, only 5,043 ounces were
sold as the Black Fox Mine commenced production in May 2009.
Financial Overview
For Q2 2010, the Company reported a net loss of $19.7 million, primarily
due to the impact of non-cash losses on derivative and financial
instruments, which more than offset the Company′s $4.6 million of
operating income. The quarter′s results include a non-cash, unrealized
loss of $23.9 million on derivative instruments related mainly to the
change in fair value of the outstanding gold forward sales contracts.
Although Brigus Gold is a Canadian company, it currently files reports
with the U.S. Securities and Exchange Commission ('SEC?) in accordance
with the requirements applicable to a U.S. domestic reporting company.
In order to simplify its reporting requirements in the U.S. while
maintaining the availability of information to U.S. shareholders and
investors, the Company will file its reports and other filings under the
Securities Exchange Act of 1934, as amended, and the Securities Act of
1933, as amended, in accordance with the requirements of SEC applicable
to foreign private issuers. As a result, going forward, the Company will
no longer file Annual Reports on Form 10-K, Quarterly Reports on For
10-Q or Current Reports on Form 8-K in the U.S. Instead, the Company
will file its future annual reports on Form 20-F or Form 40-F and its
future quarterly and current reports on Form 6-K. There will be no
change to the filings for the Company in Canada.
Capital Expenditures and Underground Development Update
Capital expenditures for Q2 2010 were $6.6 million. During Q2 2010,
significant infrastructure upgrades related to the commencement of
development of the underground mine at Black Fox were completed,
including the administration and technical offices, change house, and
sample preparation and core logging facilities. Work has commenced to
construct a maintenance shop on surface. For the underground mine, work
to establish ventilation, power and compressed air is in progress.
Underground development is progressing, with 410 metres ('m?) of advance
completed to date.
In advance of underground development and mining, rehabilitation of the
existing ramp and excavation of a 4.5 m diameter ventilation raise were
recently completed. Initial mining of ore will be carried out by
contractors during development, with the first ore expected in August
2010. The Company plans to mine underground ore using its own equipment
and employees as development advances and new equipment arrives.
Underground production rates are expected to increase gradually to a
steady rate of production of 800 tonnes per day ('tpd?) in March 2011.
At that steady rate of production, underground mined ore with expected
higher grade (+7 grams of gold per tonne average) will account for 40%
of the Black Fox Mill design throughput rate. The remainder of
throughput will be from open pit ore.
At the Black Fox open pit mine, Phase 2 overburden removal began
recently in preparation for Phase 2 production in late 2010. Stripping
has been progressing on schedule and is expected to be completed mid
2011.
Exploration Overview
To date in 2010, the Company has completed 25 holes using two surface
core drill rigs at the Company′s 17-square-kilometre property package,
which is contiguous with and along strike of the Black Fox deposit,
located on the renowned Destor-Porcupine Fault Zone. Assays are pending
with results from this ongoing drill program to be announced at regular
intervals moving forward. The Company plans on adding a third surface
rig in September 2010.
Early in the fourth quarter of 2010, the Company expects to begin
advancing the 235 m level underground drift at Black Fox to the
southeast. With the extension of the 235-m level drift, a fourth drill
rig will be added to target resource additions from underground
platforms.
Other Business & Board of Directors Update
Brigus Gold and Everton Resources Inc. recently amended the joint
venture option agreements related to the three exploration projects in
the Dominican Republic. Brigus Gold and Everton hold 50-50% interests in
the Ampliacion Pueblo Viejo ('APV?) and Loma El Mate projects, which are
managed by Everton and are contiguous with Barrick′s and Goldcorp′s
Pueblo Viejo gold project. Under the amended agreements, Everton has the
right to earn an additional 20% interest in each of the projects by
investing an additional $2.5 million in exploration at APV and $1
million in Loma El Mate. Everton was also granted a one-year extension,
until April 10, 2011, to incur exploration expenditures of $450,000 to
earn its initial 50% interest on the Loma Hueca property.
At the first meeting of Brigus Gold′s Board of Directors on August 5,
2011, the Board appointed Daniel F. Gallivan, an attorney with Cox &
Palmer in Halifax, Nova Scotia, as Corporate Secretary of the Company
and ratified Mr. Dawe as chairman and Charles E. Stott as the
independent lead director. The Board also established and elected the
following committees:
Audit Committee
David W. Peat, committee chairman
Derrick Gill
Marvin K. Kaiser
Health, Safety & Environment Committee
Mr. Stott, committee chairman
Michael Gross
Mr. Kaiser
Nominations & Compensation Committee
Mr. Gross, committee chairman
Mr. Gill
Mr. Stott
Outlook
As described in the news release of July 14, 2010, total gold production
for 2010 is forecast at 85,000 ounces at total cash costs of between
$500 and $550 per ounce. Gold production is expected to increase through
the remainder of 2010 to approximately 24,000 ounces in Q3 2010 and
28,500 ounces in Q4 2010, of which estimated initial underground ore
production in 2010 is approximately 7,000 ounces.
The Qualified Person who reviewed the above technical information
related to the Black Fox Mine and Mill is Chief Operating Officer and
Vice President Rick Allan.
About Brigus Gold
Brigus Gold is a growing gold producer committed to maximizing
shareholder value through a strategy of efficient production, targeted
exploration and select acquisitions. The company operates the wholly
owned Black Fox Mine in the Timmins gold district of Ontario, Canada.
The Black Fox Complex encompasses the Black Fox Mine and Mill, and
adjoining Grey Fox-Pike River property, all in the Township of Black
River-Matheson, Ontario, Canada. Brigus Gold is also advancing the
Goldfields Project located near Uranium City, Saskatchewan, Canada,
which hosts the Box and Athona gold deposits. In Mexico, Brigus Gold
holds a 100 percent interest in the Ixhuatan Property located in the
state of Chiapas, and the Huizopa Joint Venture, an 80 percent interest
in an early stage, gold-silver exploration joint venture located in the
State of Chihuahua. In the Dominican Republic, Brigus Gold and Everton
Resources have a joint venture for the APV and Loma El Mate gold
exploration projects.
Non-GAAP Financial Measures
The term 'total cash cost? is a non-GAAP financial measure and is used
on a per ounce of gold basis. Total cash cost is equivalent to direct
operating cost as found on the Consolidated Statements of Operations and
includes by-product credits for payable silver production. We have
included total cash cost information to provide investors with
information about the cost structure of our mining operations. This
information differs from measures of performance determined in
accordance with GAAP in the United States and Canada and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP. This measure is not necessarily
indicative of operating profit or cash flow from operations as
determined under GAAP and may not be comparable to similarly titled
measures of other companies.
Cautionary and Forward-Looking Statements
U.S. investors are cautioned that mineral deposits on adjacent
properties are not indicative of mineral deposits on the Company′s own
or joint venture properties. This news release includes 'Forward-Looking
Statements? within the meaning of section 21E of the United States
Securities Exchange Act of 1934, as amended. All statements regarding
estimated gold production, production from and development of the
underground mine, improvements to operational efficiency, total cash
costs, operating improvements, the timing of the completion of the
maintenance facility and other construction, the form of the Company′s
future securities filings, announcement of drilling results and
exploration activities and the timing of the future reporting of
financial results are estimates that involve various risks and
uncertainties. There can be no assurance that such statements will prove
to be accurate and actual results and future events could differ
materially from those anticipated in such statements. Important factors
that could cause actual results to differ materially from these
forward-looking statements include: unexpected lower ore grades,
additional operational, geotechnical and processing problems at the
Black Fox Mine and mill, further toll milling, unexpected changes in
business and economic conditions, political or economic instability,
significant decreases in gold prices, difficulties or delays in
permitting at Black Fox, changes in our shareholder base, changes in
interest and currency rates, local and community impacts and issues,
labour accidents, environmental risks and other factors disclosed under
the heading 'Risk Factors? in Brigus Gold′s and its predecessor
companies′ most recent annual report on Form 10-K filed with the United
States Securities and Exchange Commission and elsewhere in Apollo′s
documents filed from time to time with the Toronto Stock Exchange, The
NYSE Amex, The United States Securities and Exchange Commission and
other regulatory authorities. All forward-looking statements included in
this news release are based on information available to the Company on
the date hereof. The Company assumes no obligation to update any
forward-looking statements, except as required by applicable securities
laws.
BRIGUS GOLD CORP. | ||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
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June 30,
| December 31,
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| ASSETS | ||||||||||||||
CURRENT | ||||||||||||||
Cash | $ | 4,728 | $ | ? | ||||||||||
Restricted cash | 17,524 | 6,731 | ||||||||||||
Accounts receivable and other | 1,453 | 1,690 | ||||||||||||
Prepaids | 1,317 | 394 | ||||||||||||
Derivative instruments | ? | 1,961 | ||||||||||||
Inventories | 5,283 | 8,189 | ||||||||||||
Total current assets | 30,305 | 18,965 | ||||||||||||
Derivative instruments | ? | 4,844 | ||||||||||||
Inventories, long-term | 4,538 | ? | ||||||||||||
Long-term investments | 4,476 | 1,036 | ||||||||||||
Property, plant and equipment | 174,783 | 116,171 | ||||||||||||
Investment in Montana Tunnels joint venture | ? | 3,440 | ||||||||||||
Restricted certificates of deposit | 14,650 | 14,805 | ||||||||||||
TOTAL ASSETS | $ | 228,752 | $ | 159,261 | ||||||||||
LIABILITIES | ||||||||||||||
CURRENT | ||||||||||||||
Bank indebtedness | $ | ? | $ | 328 | ||||||||||
Accounts payable | 7,902 | 6,789 | ||||||||||||
Accrued liabilities | 3,833 | 2,129 | ||||||||||||
Derivative instruments | 19,370 | 12,571 | ||||||||||||
Current portion of long-term debt | 27,152 | 34,860 | ||||||||||||
Total current liabilities | 58,257 | 56,677 | ||||||||||||
Accrued long-term liabilities | 1,877 | 483 | ||||||||||||
Derivative instruments | 39,988 | 31,654 | ||||||||||||
Long-term debt | 32,018 | 48,909 | ||||||||||||
Equity-linked financial instruments | 21,002 | 27,318 | ||||||||||||
Accrued site closure costs | 5,620 | 5,345 | ||||||||||||
Future income tax liabilities | 9,946 | 1,304 | ||||||||||||
TOTAL LIABILITIES | 168,708 | 171,690 | ||||||||||||
Commitments and Contingencies | ||||||||||||||
BRIGUS GOLD CORP. | ||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | ||||||||||||||||||||||||||||||||
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| Three months ended | Six months ended | |||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||||||
Revenue from sale of minerals | $ | 22,163 | $ | 4,709 | $ | 39,789 | $ | 4,709 | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||
Direct operating costs | 8,274 | 2,034 | 18,258 | 2,034 | ||||||||||||||||||||||||||||
Depreciation and amortization | 4,029 | 1,023 | 7,490 | 1,033 | ||||||||||||||||||||||||||||
Accretion expense ? accrued site closure costs | 177 | 69 | 352 | 69 | ||||||||||||||||||||||||||||
General and administrative expenses | 3,681 | 1,096 | 5,630 | 2,028 | ||||||||||||||||||||||||||||
Exploration and business development | 1,426 | 302 | 1,697 | 529 | ||||||||||||||||||||||||||||
17,587 | 4,524 | 33,427 | 5,693 | |||||||||||||||||||||||||||||
Operating income (loss) | 4,576 | 185 | 6,362 | (984 | ) | |||||||||||||||||||||||||||
Other income (expenses) | ||||||||||||||||||||||||||||||||
Interest income | 59 | 38 | 113 | 78 | ||||||||||||||||||||||||||||
Interest expense | (2,679 | ) | (1,319 | ) | (6,021 | ) | (2,149 | ) | ||||||||||||||||||||||||
Debt transaction costs | ? | (10 | ) | ? | (1,249 | ) | ||||||||||||||||||||||||||
Loss on modification of debentures | ? | ? | (513 | ) | (1,969 | ) | ||||||||||||||||||||||||||
Linear acquisition costs | (2,636 | ) | ? | (3,213 | ) | ? | ||||||||||||||||||||||||||
Fair value change on equity-linked financial instruments | 1,881 | (8,829 | ) | 11,894 | (13,582 | ) | ||||||||||||||||||||||||||
Realized gain (loss) on derivative instruments | 3,582 | (492 | ) | 239 | (124 | ) | ||||||||||||||||||||||||||
Unrealized (loss) gain on derivative instruments | (23,919 | ) | ||||||||||||||||||||||||||||||