AuRico Gold Reports Increased Production Profile, Record Operating Cash Flow and Record Net Free Cash Flow for the Second Quarter
TORONTO, July 12, 2011 /CNW/ --
Ocampo Realized Production up 44%, Cash Costs Down by 26% vs. Q2 2010;
Reducing Ocampo Cash Cost Guidance for 2011
TORONTO, July 12, 2011 /CNW/ - AuRico Gold Inc. (TSX:AUQ) (NYSE: AUQ), ('AuRico' or 'the Company') is pleased to announce preliminary results
that include a significant increase in production as well as record
operating cash flow and net free cash flow for the second quarter.
During the quarter, the Ocampo mine produced 19% more gold equivalent
ounces (realized) as compared to Q1 2011 at cash costs of $340 per
realized gold equivalent ounce, resulting in a record margin of 77% or
$1,171 per gold equivalent ounce. The Company's consolidated production
for the quarter was augmented by solid production from the El Chanate
mine that was acquired effective April 8, 2011.
The Company also announces that based on the continued success in
reducing costs at Ocampo during the first six months of the year, the
2011 cash cost outlook previously reported for Ocampo has been
decreased to $400-$430 per gold equivalent ounce from $425-$455 at a
gold to silver ratio of 55:1.
Second Quarter Highlights
On a consolidated basis, the Company reported:
-- Increased quarter-end cash balance by 54% to $102 million as
compared to a cash balance of $66 million immediately following
the completion of the Capital Gold acquisition, effective April
8, 2011.
-- Record revenues of $113 million, a 98% increase over 2010.
-- Record operating cash flow of $55 million, a 251% increase over
2010.
-- Record net free cash flow of $21 million, a 263% increase over
2010.
-- Strong production of 43,652 gold ounces and 1.2 million silver
ounces, or 66,120 gold equivalent ounces using the Company's
long-term gold equivalency ratio of 55:1 and 75,022 using the
actual gold equivalency ratio of 39:1 realized during the
quarter, representing an increase of 53% over the same period
in 2010.
-- Strong consolidated cash cost performance of $433 per gold
equivalent ounce using the Company's long-term gold equivalency
ratio of 55:1. Using the actual gold equivalency ratio of 39:1
realized in the quarter, cash costs were $381, with margins of
$1,128 per gold equivalent ounce (75%), representing a decrease
of 26% over the same period in 2010.
On an asset basis, the Company reported:
-- Effective cost containment initiatives: Cash costs at Ocampo of
$399 per gold equivalent ounce using the Company's long-term
gold equivalency ratio of 55:1. Using the actual gold
equivalency ratio of 39:1 realized in the quarter, cash costs
were $340, with margins of $1,171 per gold equivalent ounce
(77%), the highest ever in the history of Ocampo.
-- Reduced cash cost guidance at Ocampo: Continued productivity
improvements and effective cost containment initiatives at
Ocampo have resulted in a $25 per ounce (6%) decrease in the
Company's 2011 cash cost outlook for Ocampo to $400-430 per
gold equivalent ounce using the Company's long-term gold
equivalency ratio of 55:1.
-- Increased productivity at El Chanate: Upon completing the
acquisition of Capital Gold, the Company immediately deployed
additional mining equipment to increase material movement rates
at El Chanate, which in June was 79% more than the 2010
average. Optimization of the crushing and stacking operation
has allowed the facility to recently increase placement rates
by almost 30% from 14,000 to approximately 18,000 tonnes per
day. The higher stacking rate is expected to positively impact
production and cash costs in the latter part of Q3.
-- Production resumes at El Cubo: On July 11 processing at the Los
Torres mill resumed. In June, mining rates averaged 1,108
tonnes per day, significantly ahead of planned rates. As of
July 10, the ore stockpiled ahead of the mill for processing
exceeded 75,000 tonnes.
-- Success from the 2011 exploration program: Positive results
were reported during the quarter from the Ocampo district and
the El Chanate mine exploration programs.
'We are very encouraged that second quarter results have continued to
build on the positive results reported over the past five quarters.
During the quarter, the Company benefited from the higher productivity
at Ocampo and a reduction in cash costs, as well as from the initial
production contribution from the recently acquired El Chanate mine. As
a result, we have delivered one of our strongest production quarters at
cash costs well below industry average, and reported record operating
and net free cash flows,' stated René Marion, President and Chief
Executive Officer. 'We begin the second half of the year with over $102
million in cash on-hand and three wholly-owned Mexican mines in
production that will contribute to a growing and diversified production
profile going forward. AuRico is one of the fastest growing mid-tier
precious metal producers in the industry with a solid track record of
not only containing operating costs, but reducing them during a period
of high inflationary pressures and providing investors with exceptional
leverage to strong gold and silver prices.'
Ocampo Key Highlights
-- Best ever net free cash flow performance at $28 million
-- Lowest ever realized cash costs at $340 per gold equivalent
ounce
-- Best ever margins at 77% or $1,171 per gold equivalent ounce
-- Underground productivity of 1,893 tonnes per day
-- Record underground development of 7,520 metres
-- Open pit mining rate of 110,532 tonnes per day
-- Picacho push-back near completion, currently mining mill-grade
ore
-- Estrella and Conico push-backs to commence in Q3
-- Mill productivity of 3,183 tonnes per day at the Ocampo mill
processing facility
-- Mill optimization initiatives have increased recoveries to 97%
for gold and 88% for silver
-- Heap leach tonnes increasing to target levels 10,000 tonnes per
day by the end of Q3
-- Successful exploration program continues to discover new high
grade ores in this prospective mining district
El Chanate Key Highlights
-- Material moved from the open pit and stockpiles increased to
67,320 tonnes per day in June, a 79% increase over 2010 average
of 37,625 tonnes per day
-- Optimization of the crushing and stacking operation has allowed
the facility to recently increase placement rates from a
nominal 14,000 to approximately 18,000 tonnes per day for an
increase approaching 30%. The enhanced stacking rate is
expected to impact production and costs in the latter part of
Q3
-- 681,744 tonnes of Run of Mine (ROM) ore moved to the heap leach
pad and placed under irrigation in Q2
-- 6.2 million tonnes of stacked heap leach ore are now under full
irrigation
-- All crushed and stacked ore is now agglomerated
-- 12 pieces of new contractor and owner equipment deployed during
the quarter
-- Exploration program launched with significant results returning
composite grades substantially higher than reserve grades
El Cubo Highlights
-- Processing resumed at Las Torres Mill on July 11
-- Mining rate averaged 1,108 tonnes per day in June,
significantly ahead of planned rates
-- Over 75,000 tonnes of ore stockpiled ahead of the mill for
processing as of July 10
-- Development toward the Dolores - Capulin discovery commenced
May 1
-- Longhole stope drilling commenced in June and capacity will be
further increased with the mid July delivery of the first of
two new drill rigs purchased. Longhole stoping conversion is
expected to lead to greater productivity, lower dilution and
decreased costs as demonstrated Ocampo.
-- Exploration program to resume in Q3, with immediate follow-up
drilling on the Dolores - Capulin discovery
Operational Results
___________________________________________________________________________
|Three | | | | |
|Months | | | | |
|Ended June| | | | |
|30 | | | | |
|(in | Ocampo |El Chanate | El Cubo | Consolidated |
|thousands,| | | | |
|except | | | | |
|ounces and| | | | |
|total cash| | | | |
|costs) | | | | |
|__________|___________________|___________|____________|___________________|
| | | | 2011(| | | | | |
| | 2011| 2010| (1))|2010|2011| 2010| 2011| 2010|
|__________|_________|_________|______|____|____|_______|_________|_________|
|Gold | 28,781| 24,963|14,871| -| -| 4,268| 43,652| 29,231|
|Production| | | | | | | | |
|__________|_________|_________|______|____|____|_______|_________|_________|
|Silver |1,210,798|1,066,998|24,912| -| -|213,203|1,235,710|1,280,201|
|Production| | | | | | | | |
|__________|_________|_________|______|____|____|_______|_________|_________|
|Gold eq. | 59,517| 41,362|15,505| -| -| 7,593| 75,022| 48,955|
|Production| | | | | | | | |
|(realized)| | | | | | | | |
|__________|_________|_________|______|____|____|_______|_________|_________|
|Gold eq. | 50,796| 44,363|15,324| -| -| 8,143| 66,120| 52,506|
|Production| | | | | | | | |
|(55:1)( | | | | | | | | |
|(3)) | | | | | | | | |
|__________|_________|_________|______|____|____|_______|_________|_________|
|Cash Costs| $340| $458| $484| -| -| $840| $381| $520|
|((2)) | | | | | | | | |
|(realized)| | | | | | | | |
|__________|_________|_________|______|____|____|_______|_________|_________|
|Cash Costs| $399| $426| $484| -| -| $781| $433| $484|
|((2)) | | | | | | | | |
|(55:1)( | | | | | | | | |
|(3)) | | | | | | | | |
|__________|_________|_________|______|____|____|_______|_________|_________|
(1) Represents results subsequent to the acquisition of the El Chanate mine
on April 8, 2011.
(2) Cash costs for the Ocampo mine and on a consolidated basis are
calculated on a per gold equivalent ounce basis. Cash costs for the El
Chanate mine are calculated on a per gold ounce basis, using silver
revenues as a by-product cost credit.
(3) Using the Company's long-term gold equivalency ratio.
About AuRico Gold
AuRico Gold is a leading intermediate Canadian gold and silver producer
with a diversified portfolio of high quality mines and projects in
Mexico. The Company's three wholly-owned operating properties include
the Ocampo mine in Chihuahua State, the El Chanate mine in Sonora State
and the El Cubo mine in Guanajuato State. Its strong pipeline of
development and exploration stage projects include the Guadalupe y
Calvo advanced development property in Chihuahua State and the Orion
advanced development property in Nayarit State, along with six
exploration properties throughout Mexico. AuRico's head office is
located in Toronto, Ontario, Canada.
Cautionary Statement
Cautionary Note to US Investors - The United States Securities and
Exchange Commission permits US mining companies, in their filings with
the SEC, to disclose only those mineral deposits that a company can
economically and legally extract or produce. This press release uses
certain terms, such as 'measured', 'indicated' and 'inferred'
'resources', that the SEC guidelines strictly prohibit US registered
companies from including in their filings with the SEC. US Investors
are urged to consider closely the disclosure in AuRico Gold's Annual
Report on Form 40-F, which may be secured from AuRico Gold, or from the
SEC's website at http://www.sec.gov/edgar.shtml.
No stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein.
Certain statements included herein, including information as to the
future financial or operating performance of the Company, its
subsidiaries and its projects, constitute forward-looking statements.
The words ''believe'', ''expect'', ''anticipate'', ''target'',
''continue'', ''estimate'', ''may'', and similar expressions identify
forward-looking statements. Forward-looking statements include, among
other things, statements regarding the grades of additional underground
and surface drilling programs at El Chanate, the ability to delineate
additional measured and indicated resources or reserves as a result,
the suitability of targets for future open pit mining at El Chanate,
anticipated future financial and operational performance, the future
price of gold and silver, the timing of re-commissioning and
re-commencement of production at El Cubo, the de-risking of operations,
future exploration results of its exploration and development program
at El Chanate and the success of the Company's exploration approach,
the Company's ability to delineate additional resources and reserves as
a result of such program, and the company's ability to mine such
targets by mid-2011, statements regarding its financial exposure to
litigation, targets, estimates and assumptions in respect of gold and
silver production and prices, operating costs, results and capital
expenditures, mineral reserves and mineral resources and anticipated
grades, recovery rates, future financial or operating performance,
margins, operating and exploration expenditures, costs and timing of
completion of the Ocampo expansion program and improvements to the heap
leach pad, costs and timing of the development and commencement of
production of new deposits, costs and timing of construction, costs and
timing of future exploration and reclamation expenses including,
anticipated 2011 results, operating performance projections for 2011,
our ability to fully fund our business model internally, 2011 gold and
silver production and the cash and operating costs associated
therewith, the ability to achieve productivity and operational
efficiencies, and the timing of each thereof. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are
inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. The operating and
financial performance of the Company will be affected by changes in
the actual gold equivalency ratio realized in 2011. Many factors could
cause the Company's actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or on
behalf of, the Company. Such factors include, among others, known and
unknown uncertainties and risks relating to additional funding
requirements, reserve and resource estimates, commodity prices, hedging
activities, exploration, development and operating risks, illegal
miners, political and foreign risk, uninsurable risks, competition,
limited mining operations, production risks, environmental regulation
and liability, government regulation, currency fluctuations, recent
losses and write-downs, restrictions in the Company's loan facility,
dependence on key employees, possible variations of ore grade or
recovery rates, failure of plant, equipment or process to operate as
anticipated, accidents and labour disputes. Investors are cautioned
that forward-looking statements are not guarantees of future
performance and, accordingly, investors are cautioned not to put undue
reliance on forward-looking statements due to the inherent uncertainty
therein.
###
Image with caption: 'El Chanate Mine (CNW Group/AuRico Gold Inc.)'. Image available at: http://photos.newswire.ca/images/download/20110711_C4746_PHOTO_EN_01.jpg
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please visit the AuRico Gold website at http://www.auricogold.com or contact:
| René Marion President & Chief Executive Officer AuRico Gold Inc. 1-647-260-8880 | Anne Day Director of Investor Relations AuRico Gold Inc. 1-647-260-8880 |
please visit the AuRico Gold website at http://www.auricogold.com or contact:
| René Marion President & Chief Executive Officer AuRico Gold Inc. 1-647-260-8880 | Anne Day Director of Investor Relations AuRico Gold Inc. 1-647-260-8880 |