Brigus Gold Reports First Quarter Financial Results
Brigus Gold Corp. ('Brigus? or the 'Company?) (TSX and NYSE Amex: BRD)
reported net income of $2.8 million for the quarter ended March 31, 2011
('Q1 2011?). The Company sold 10,003 ounces of gold at total cash costs
of $1,097 per ounce from its wholly owned Black Fox Mine ('Black Fox?)
in the Timmins Mining District. Production and costs were temporarily
impacted by construction of infrastructure for the underground mining
operations, which was completed at the end of March 2011.
During Q1 2011, the open pit operations at Black Fox completed the
mining of ore from the Phase 1 open pit and commenced pre-stripping for
the Phase 2 open pit. The Phase 2 open pit began producing ore in late
March 2011 and underground production continues to ramp up.
(All dollar amounts in this news release are in U.S. dollars unless
otherwise noted.)
Among the highlights for Q1 2011 and to the date of this release, the
Company:
Produced 8,772 ounces and sold 10,003 ounces of gold at an average
realized price of $1,356 per ounce in Q1 2011.
Strengthened its balance sheet by repaying the remaining balance of
$22.0 million on the Black Fox Project Facility.
Raised $50.0 million from the issuance of senior unsecured convertible
debentures.
Completed construction of the new ramp from the 235 metre level to the
surface and the new ventilation-service raise related to the
underground mine in March 2011.
Defined an initial strike length of 250 metres at the Company′s new
147 Zone discovery, which remains open in three directions.
Signed a letter of intent with Cangold Limited for the sale of up to
75% of the Company′s interest in the Ixhuatan property in Mexico.
Signed a letter of intent with Everton Resources Inc. for the sale of
the Company′s remaining interest in its Dominican Republic properties.
Commenting on the results, Wade K. Dawe, Chairman, Chief Executive
Officer and President of Brigus, said, 'Our efforts over the last
several months have positioned Brigus for sustainable growth with
expected quarter over quarter increases in gold production for the rest
of 2011. We also expect to add resources from continued drilling at the
recently discovered 147 Zone and Contact Zone within the Black Fox
Complex. In addition, we are pursuing further growth and efficiency
opportunities at Black Fox through a phased increase in mill throughput.
The results of a conceptual engineering study on the Black Fox mill will
be reported later this month.'
Operational Highlights
Black Fox Production and Sales Highlights | ||||
| Q1 2011 | Q1 2010 | |||
Total open pit ore tonnes mined | 29,809 | 190,088 | ||
Total open pit tonnes mined | 1,716,367 | 2,060,761 | ||
Total underground ore tonnes mined | 8,816 | - | ||
Tonnes milled | 179,229 | 177,880 | ||
Tonnes per day milled | 1,991 | 1,978 | ||
Head grade of ore (gpt) | 1.67 | 2.68 | ||
Recovery(%) | 91% | 93% | ||
| Gold produced (oz) | 8,772 | 14,253 | ||
| Gold sold (oz) | 10,003 | 15,796 | ||
During Q1 2011, Black Fox open pit mining operations completed the
transition from Phase 1 to Phase 2, however production from Phase 2 of
the open pit was delayed due to construction activity related to the
underground mine development.
The completion of the underground ventilation and service raise in March
2011 facilitated the commencement of ore production from Phase 2 of the
open pit. In March 2011, Brigus mined 9,119 tonnes of ore, at a grade of
5.72 gpt, and 536,972 tonnes of waste from Phase 2. In addition, Phase 2
alluvial overburden removal was completed which totalled 171,260 tonnes.
Removal of Phase 3 overburden is scheduled to begin in late 2012. The
Company capitalized all open pit mining costs in the first quarter 2011
except for costs associated with ore production.
During March 2011, the underground mining rate averaged 180 tonnes per
day ('tpd?), which increased to 300 tpd in April and May 2011.
Production was primarily related to underground development ore.
Production rates are expected to increase in June as stope production
begins, along with increased levels of development advance. The
underground production rate is expected to reach 800 tpd of ore by July
2011. Mining of underground ore will be performed by the Company using
its own equipment and employees.
During Q1 2011, Black Fox completed 1,290 metres of development in waste
rock, primarily in the new access ramp, as well as 45 metres of ore
development. During the quarter, a total of 8,816 tonnes of ore, at an
average gold grade of 3.37 grams per tonne ('gpt?) were mined from
development headings. Development continued during the second quarter of
2011 to advance the east and west ramps and to provide additional ore
access.
A new scope of work for underground development was tendered in March
2011. The new scope requires the contractor to complete approximately
300 metres of ramp and drift development per month over a 12 month
period. Redpath Mining was the successful bidder and commenced work
during the first week of May 2011.
During Q1 2011, total cash cost per ounce of gold sold was $1,097
compared to $631 for the same period in 2010. Higher total cash cost per
ounce in Q1 2011 was the result of processing stockpiles of low grade
ores through the mill at an average grade of 1.67 gpt compared to a
grade of 2.68 gpt for the same period in 2010 ('Q1 2010?). The cost per
tonne mined in Q1 2011 was Cdn $3.58 compared to Cdn $2.48 in Q1 2010.
During Q1 2011, 1.7 million tonnes were mined compared to 2.1 million
tonnes in the Q1 2010. The higher cost per tonne mined in 2011 is a
result of the higher costs, unplanned repair and maintenance charges
associated with some of the open pit mining equipment as well as a
reduced number of tonnes mined as a result of work areas restricted by
the location of the old underground infrastructure. Milling cost per
tonne improved in Q1 2011 to Cdn$12.73 from Cdn$14.57 per tonne in Q1
2010.
Financial Overview
At March 31, 2011 the Company had cash of $29.1 million compared to cash
of $6.4 million at December 31, 2010. The increase in cash since
December 31, 2010 relates to operating cash inflows of $2.8 million and
financing cash inflows of $32.3 million, partially offset by investing
cash outflows of $11.9 million and a foreign exchange effect of $0.5
million, after repayment of the remaining balance of $22.0 million on
the Black Fox Project Facility.
Gold sold during the quarter ended March 31, 2011 was 10,003 ounces at
an average realized gold price of $1,356. This includes 754 ounces
delivered against the gold stream agreement with Sandstorm Resources
Ltd. ('Sandstorm?) for cash proceeds of $500 per ounce. This compares to
sales of 15,796 ounces in the first quarter of 2010, all of which were
delivered into the hedge forward contracts at an average realized gold
price of $876 per ounce.
In Q1 2011 the Company recorded net income of $2.8 million compared to a
net loss of $1.8 million in Q1 2010. Income generated in the first
quarter of 2011 was due in large part to a gain on the fair value
adjustment related to equity-linked financial instruments (warrants with
Canadian dollar exercise prices) of $6.5 million compared to a gain of
$2.0 million in the first quarter of 2010.
Corporate administrative expenses were $3.1 million for the three months
ended March 31, 2011 compared to $2.0 million the same period in 2010.
Brigus plans to reduce General and administrative expenses as it closes
its Denver office, which is expected in the second half of 2011 as the
Company continues to transition all corporate functions to its executive
offices in Halifax.
Commencing with Q1 2011, the Company is reporting its financial results
in accordance with International Financial Reporting Standards ('IFRS?).
The Company has adopted an accounting policy allowed under IFRS to
capitalize costs incurred in exploration and evaluation of mineral
properties. In addition, the Company′s accounting policy under IFRS is
to capitalize stripping costs during the production phase incurred to
access ore that will be mined in future periods as these activities will
provide a future economic benefit. Capitalized stripping costs are
amortized/depleted using the units-of-production method of depreciation
over the reserves that directly benefit from the specific stripping
activity.
Capital Expenditures
Capital expenditures incurred in the first quarter of 2011 totaled $13.9
million and included $5.9 million for underground development, $6.5
million for stripping Phase 2 of the open pit and $1.5 million for
underground and open pit mine equipment.
Exploration Overview
Exploration expenditures, including drilling and maintaining exploration
properties, totaled $2.5 million for the first quarter of 2011 compared
to $nil for the same period of 2010. $1.9 million of this expenditure
related to the Black Fox Complex and $0.6 million related to Goldfields.
As of June 14, 2011, the Company had five drills working at the new 147
Zone discovery in the southern portion of the Black Fox Complex, located
four kilometres from the Black Fox Mine.
From January 1 to June 14, 2011, a total of 83 surface drill holes for
32,187 metres have been completed on the Black Fox Complex. During Q1
2011, positive drill results have defined the 147 Zone along an initial
250-metre strike length, which is open to the north, east and at depth.
Drilling is continuing.
2011 Outlook
The Company is projecting 2011 production of between 73,000 and 80,000
ounces of gold at a total cash cost of $575 - $625 per ounce. Brigus
projects increasing gold production quarter over quarter during 2011
with higher-grade underground ore augmenting open pit ore for a total
throughput of 2,000 tpd at the Black Fox Mill.
Black Fox is expected to produce between 16,500 and 18,000 ounces of
gold in the second quarter of 2011 and to reach a steady state annual
production level of 104,000 ounces in the third quarter of 2011.
Total capital expenditures in 2011 are estimated at $37.0 million,
mainly for underground development and underground mining equipment at
Black Fox. Exploration expenditures for surface drilling are estimated
at $11.0 million for 2011.
At the Goldfields Project in Saskatchewan, the Company expects to
complete an updated National Instrument ('NI?) 43-101 technical report
during the second half of 2011.
About Brigus
Brigus 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
Complex 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 Matheson, Ontario,
Canada. Brigus is also advancing its Goldfields Project located near
Uranium City, Saskatchewan, Canada, which hosts the Box and Athona gold
deposits. In Mexico, Brigus has a letter of intent to sell 75% of its
Ixhuatan silver-gold projected located in the state of Chiapas. In the
Dominican Republic, Brigus has a letter of intent to sell its remaining
interests in three mineral exploration projects.
Cautionary Note to U.S. Investors Concerning Estimates of Mineral
Resources
This news release uses the term mineral 'resources?. The Company advises
U.S. investors that while these terms are defined in and required by
Canadian regulations, these terms are not defined terms under the U.S.
Securities and Exchange Commission ('SEC?) Industry Guide 7 and are
generally not permitted to be used in reports and registration
statements filed with the SEC. The SEC generally only permits issuers to
report mineralization that does not constitute SEC Industry Guide 7
compliant 'reserves? as in-place tonnage and grade without reference to
unit measures. U.S. investors are cautioned not to assume that any
part or all of mineral deposits in these categories will ever be
converted into reserves.
Cautionary and Forward-Looking Statements
Statements contained in this news release which are not historical facts
are forward-looking statements that involve risk, uncertainties and
other factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements. All
statements regarding the ability of the Company to achieve its
production, total cash costs, steady state annual production and mining
rate estimates; to achieve ramping up the Black Fox underground mine to
reach commercial production by the end of the second quarter of 2011;
estimated average gold grades for the open pit and underground
operations; the timing of the removal of Phase 3 overburden; exploration
and capital programs for 2011, including the estimated expenditures;
expansion of the Black Fox Mill capacity; increase in gold production;
exploration drill results and resource additions; completion of an
engineering study for the Black Fox Mill; plans to reduce expenses and
close the Denver office; and the Company′s ability to deliver gold
pursuant to the gold stream agreement, are forward-looking statements
and estimates that involve various risks and uncertainties. This
forward-looking statements include, or may be based upon, estimates,
forecasts, and statements as to management's expectations with respect
to, among other things, the outcome of legal proceedings, the issue of
permits, the size and quality of the company's mineral resources,
progress in development of mineral properties, future production and
sales volumes, capital and mine production costs, demand and market
outlook for metals, future metal prices and treatment and refining
charges, and the financial results of the Company.
Important factors that could cause actual results to differ materially
from these forward-looking statements include environmental risks and
other factors disclosed under the heading 'Risk Factors? in Brigus′ most
recent Annual Information Form and Management Discussion and Analysis
filed under the Company′s name at www.sedar.com
and annual report on Form 40-F filed with the United States Securities
and Exchange Commission at www.sec.gov
as well as elsewhere in Brigus′ documents filed from time to time with
the Toronto Stock Exchange, the NYSE Amex Equities, 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 INTERIM
STATEMENTS OF FINANCIAL POSITION
(Unaudited)
| March 31, | December 31, | January 1, | ||||||||||
| 2011 | 2010 | 2010 | ||||||||||
| (In thousands of U.S. Dollars) | ||||||||||||
| ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash | $ | 29,081 | $ | 6,425 | $ | - | ||||||
Restricted cash | 9,607 | 16,379 | 6,731 | |||||||||
Accounts receivable and other | 2,070 | 3,379 | 1,690 | |||||||||
Prepaids | 510 | 828 | 394 | |||||||||
Derivative instruments | - | - | 1,961 | |||||||||
Inventories | 5,374 | 9,763 | 8,802 | |||||||||
Investments | 3,440 | 3,440 | - | |||||||||
Total current assets | 50,082 | 40,214 | 19,578 | |||||||||
Derivative instruments | - | - | 4,844 | |||||||||
Inventories, long-term | 2,909 | 3,338 | - | |||||||||
Long-term investments | 1,042 | 1,036 | 1,036 | |||||||||
Property, plant and equipment | 258,532 | 241,412 | 147,963 | |||||||||
Equity accounted joint venture | - | - | 3,440 | |||||||||
Restricted certificates of deposit | 20,297 | 18,028 | 14,805 | |||||||||
Total assets | $ | 332,862 | $ | 304,028 | $ | 191,666 | ||||||
| LIABILITIES | ||||||||||||
Current liabilities | ||||||||||||
Bank indebtedness | $ | - | $ | - | $ | 328 | ||||||
Accounts payable | 13,268 | 15,752 | 6,789 | |||||||||
Accrued liabilities | 5,733 | 5,334 | 2,129 | |||||||||
Derivative instruments | - | - | 12,571 | |||||||||
Deferred revenue | 6,998 | 6,180 | - | |||||||||
Current portion of long-term debt | 9,013 | 29,525 | 34,860 | |||||||||
Total current liabilities | 35,012 | 56,791 | 56,677 | |||||||||
Accrued long-term liabilities | 2,296 | 3,901 | 1,352 | |||||||||
Derivative instruments | 15,660 | - | 31,654 | |||||||||
Deferred revenue | 48,871 | 50,120 | - | |||||||||
Long-term debt | 47,433 | 15,879 | 48,909 | |||||||||
Equity-linked financial instruments | 10,997 | 17,503 | 2,909 | |||||||||
Accrued site closure costs | 6,615 | 5,307 | 5,345 | |||||||||
Deferred tax liability | 9,179 | 10,320 | - | |||||||||
Total liabilities | 176,063 | 159,821 | 146,846 | |||||||||
| SHAREHOLDERS′ EQUITY | ||||||||||||
Common stock | 358,915 | 349,725 | 202,769 | |||||||||
Additional paid-in capital | 49,742 | 49,115 | 45,555 | |||||||||
Warrants | 13,733 | 13,733 | 11,579 | |||||||||
Accumulated deficit | (265,591 | ) | (268,366 | ) | (215,083 | ) | ||||||
Total shareholders′ equity | 156,799 | 144,207 | 44,820 | |||||||||
Total liabilities and shareholders′ equity | $ | 332,862 | $ | 304,028 | $ | 191,666 | ||||||
BRIGUS GOLD CORP.
CONDENSED CONSOLIDATED INTERIM
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three months ended March 31, | ||||||||
2011 | 2010 | |||||||
(US dollars in thousands, except per share amounts) | ||||||||
Revenue from sale of gold | $ | 13,583 | $ | 17,626 | ||||
Operating expenses | ||||||||
Direct operating costs | 10,985 | 9,984 | ||||||
Depreciation and amortization | 2,635 | 3,825 | ||||||
Corporate administration | 3,100 | 2,039 | ||||||
16,720 | 15,848 | |||||||
(Loss) income from operations | (3,137 | ) | 1,778 | |||||
Other income (expenses) | ||||||||
Interest income | 83 | 54 | ||||||
Finance costs | (2,744 | ) | (3,517 | ) | ||||
Loss on modification of debentures | - | (513 | ) | |||||
Acquisition related costs | - | (577 | ) | |||||
Fair value change on equity-linked financial instruments | 6,506 | 1,980 | ||||||
Gain (loss) on derivative instruments | 1,210 | (1,362 | ) | |||||
Foreign exchange (loss) gain and other | (288 | ) | 222 | |||||
4,767 | (3,713 | ) | ||||||
Income (loss) before income taxes and equity loss in joint venture | 1,630 | (1,935 | ) | |||||
Income taxes | 1,145 | 869 | ||||||
Equity loss in joint venture | - | (701 | ) | |||||
Net income (loss) and comprehensive income (loss) for the period | 2,775 | (1,767 | ) | |||||
Earnings (loss) per share | ||||||||
Basic | $ | 0.02 | $ | (0.03 | ) | |||
Diluted | $ | 0.01 | $ | (0.03 | ) | |||
Weighted-average number of shares outstanding | ||||||||
(in thousands) | ||||||||
Basic | 184,902 | 69,115 | ||||||
Diluted | 194,739 | 78,164 | ||||||
BRIGUS GOLD CORP.
CONDENSED CONSOLIDATED INTERIM
STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| (In thousands of U.S. dollars) | ||||||||
| Operating Activities | ||||||||
Net income (loss) for the period | $ | 2,775 | $ | (1,767 | ) | |||
Items not affecting cash: | ||||||||
Depreciation and amortization | 2,635 | 3,825 | ||||||
Stock-based compensation | 627 | 238 | ||||||
Shares and warrants issued for services and payments of interest | - | 599 | ||||||
Accretion expense - accrued site closure costs | 202 | 175 | ||||||
Accretion expense - amortization of debt discount | 1,263 | 1,583 | ||||||
Accretion expense - convertible debentures | 123 | 215 | ||||||
Interest paid on convertible debentures | - | (772 | ) | |||||
Net change in value of derivative instruments | (1,210 | ) | (1,981 | ) | ||||
Net change in value of equity-linked financial instruments | (6,506 | ) | (1,980 | ) | ||||
Deferred income taxes | (1,145 | ) | (869 | ) | ||||
Equity investment in joint venture | - | 589 | ||||||
Other | 63 | 178 | ||||||
Net change in non-cash operating working capital items | 3,937 | (1,231 | ) | |||||
| Net cash provided by (used in) operating activities | 2,764 | (1,198 | ) | |||||
| Investing Activities | ||||||||
Property, plant and equipment expenditures | (13,933 | ) | (1,243 | ) | ||||
Exploration and evaluation expenditures | (2,470 | ) | - | |||||
Restricted cash, certificates of deposit, and other long-term assets | 4,497 | (11,292 | ) | |||||
| Net cash used in investing activities | (11,906 | ) | (12,535 | ) | ||||
| Financing Activities | ||||||||
Proceeds on issuance of convertible debentures | 47,585 | - | ||||||
Proceeds on issuance of other shares and warrants | - | 24,497 | ||||||
Proceeds from exercise of warrants and options | 6,887 | 2,145 | ||||||
Repayments of debt | (23,807 | ) | (10,973 | ) | ||||
Increase in deferred financing fees | 1,613 | - | ||||||
| Net cash provided by financing activities | 32,278 | 15,669 | ||||||
| Effect of exchange rate changes on cash | (480 | ) | (5 | ) | ||||
| Net increase in cash | 22,656 | 1,931 | ||||||
| Cash, beginning of period | 6,425 | - | ||||||
| Cash, end of period | $ | 29,081 | $ | 1,931 | ||||
| Supplemental cash flow information | ||||||||
Interest paid | $ | 730 | $ | 2,674 | ||||
Income taxes paid | $ | - | $ | - | ||||
Brigus Gold Corp.
Jennifer Nicholson, 902-422-1421
Vice
President of Investor Relations
ir@brigusgold.com
Toll-Free:
1-866-785-0456
www.brigusgold.com