Aura Minerals Announces Third Quarter 2012 Financial and Operating Results and Corporate Office Relocation in 2013
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/13/12 -- Aura Minerals Inc. ("Aura Minerals" or the "Company")(TSX: ORA) announces financial and operating results for the third quarter of 2012.
This release does not constitute management's discussion and analysis ("MD&A") as contemplated by applicable securities laws and should be read in conjunction with the MD&A and the Company's unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2012, which are available on SEDAR at www.sedar.com and on the Company's website.
Summarized Results:
-- Operating cash flow of $10.2 million for the third quarter of 2012 and
$6.5 million for the 9 months ended September 30, 2012;
-- Gold ounce ("oz") production in the third quarter of 2012 was 43,059 oz,
consistent with previous guidance and 2% lower compared to the third
quarter of 2011;
-- Copper production at Aranzazu for the third quarter of 2012 and 2011 was
2,450,800 pounds and 2,276,800 pounds, respectively, an increase of 8%,
but below previous 2012 guidance. On-site average cash cost per pound of
payable copper produced, net of gold and silver credits and including
off-take penalties is $4.48 for the third quarter of 2012 compared to
$2.53 for the third quarter of 2011;
-- Revenue in the third quarter of 2012 of $72.8 million, a decrease of 9%
over the third quarter of 2011;
-- Gross margin of $4.5 million for the third quarter of 2012, compared to
a gross margin of $12.0 million for the third quarter of 2011; Loss of
$16.9 million or $0.07 per share for the third quarter of 2012 compared
to a loss of $37.3 million or $0.16 per share for the third quarter of
2011; and
-- Completed the definitive feasibility study and advanced execution of the
Serrote Project.
Mr. Jim Bannantine, the Company's President and CEO stated, "We remain committed to our growth strategy of realizing the value of our existing assists and our third quarter results are a very good indication that the Company is moving in the right direction. The Company's operating cash flow during the quarter was approximately $10.2 million and is positive year-to-date.
"During the third quarter we announced the results of the positive feasibility study on the Serrote project and we are now well into the development phase. The level of interest expressed from potential lenders, strategic partners and stakeholders demonstrates the commercial viability of the project and the benefits that it will bring to the region. Our relationship with the adjacent communities is very positive and we are confident that we can continue to work together for land purchases and resettlement of communities. We have started work on the project debt and equity financing, a geotechnical drill program, awarded the engineering, and will be advancing with early procurement in the coming months.
"The expansion plan at Aranzazu is moving forward and we have initiated the permitting process. We continue to experience high arsenic levels at Aranzazu the effect of which we are mitigating through a number of activities, including blending and the optimization of multiple off-take contracts. We have also experienced intermittent high concentrations of zinc at certain levels in the open pit that have affected copper recovery when encountered. This has required increased blending from the underground, thus reducing throughput at those times. Despite these short term anomalies in the concentrate at Aranzazu, we are encouraged with the long term prospects of being able to effectively treat the arsenic and increase the tonnage to 4,000 tonnes per day ("tpd"). A completed pilot test has demonstrated exceptional reduction of the arsenic level in the concentrate which results we would expect to be mirrored with the fluid bed roaster. We have entered into an agreement for basic and detailed engineering for the expansion and expect to commence further engineering and procurement for the roaster in December.
"We are very pleased to announce that Rory Taylor has been appointed the Company's permanent Chief Financial Officer and look forward to his continued contributions to the Company.
"Finally, we are taking this opportunity to announce that Aura has made the decision to relocate its corporate office to Toronto, effective February 1, 2013. This will enable the Company to better support its operations at less distance and in closer time zones."
Production and Cash Costs
The Company's production and cash costs for the three and nine months ended September 30, 2012 are summarized in the table below:
For the three For the nine
months ended months ended
September 30, 2012 September 30, 2012
Oz Cash Oz Cash
Produced Costs Produced Costs
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San Andres 16,298 $ 863 47,815 $ 959
Sao Francisco 19,814 1,116 50,989 1,707
Sao Vicente 6,947 2,038 24,203 1,702
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Total / Average 43,059 $ 1,169 123,007 $ 1,415
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Gold production at San Andres in the third quarter 2012 increased 20% over the comparable period because of a higher percentage of oxide ore mined during the quarter resulting in better recoveries. Recoveries were also positively affected by increased cyanide dosage and improved crushing controls.
Average cash cost per oz of gold produced at San Andres in the third quarter of 2012 were 8% lower than the third quarter of 2011. The decreased cash costs per oz of gold produced(1) are a result of higher production resulting from higher oz produced.
Gold production at Sao Francisco in the third quarter of 2012 was 6% higher than the third quarter of 2011 primarily due to the higher plant feed. Successful tailings retreatment has also added gold at a lower cash cost.
Average cash cost per oz of gold produced at Sao Francisco in the third quarter of 2012 was 14% lower than the third quarter of 2011. The decreased average cash cost per oz of gold produced(1) is primarily a result of higher gold production. Most of the third quarter production was focused on the pit base from the central area to the south. This not only exposes higher grade ore in the ore body, but more importantly creates a high capacity sump for the rainy season that will allow mining of the pit base from the central area back to the north. Exposing the higher grades in the base of the pit confirms the model predictions of increased grade in the south and allows the mine to optimise the short term model reliability.
During the three months ended September 30, 2012, 41% less gold oz were produced at Sao Vicente compared to the three months ended September 30, 2011 due to lower grade processed and the unexpected failure of the primary crusher during the quarter which resulted in 20 days of downtime. The primary crusher has been replaced by a rented crusher with capacity equal to or greater than the original which will be fully repaired and operating by the first quarter of 2013.
The average cash cost per oz of gold produced at Sao Vicente in the third quarter of 2012 was 61% higher than the average cash cost in the third quarter of 2011. The increase in the average cash cost per oz produced over the comparable period in 2011 is due to the lower grade processed and low production resulting from the crusher failure. The current mine plan calls for consistent grades for the balance of 2012, and a decreasing waste-to-ore ratio. This is expected to result in lower costs, particularly in the fourth quarter.
Aranzazu continued its ramp up to designed production levels with an 8% increase in the copper concentrate produced compared to the third quarter of 2011.
Average cash costs per payable pound of copper produced for the third quarter of 2012 increased 77% compared to the third quarter of 2011. Average cash costs increased from the second quarter of 2012 of $2.92 per payable pound of copper due to low production volumes and excess penalties and charges related to elevated arsenic levels. The impact on the current quarter's average cash costs of arsenic related charges and penalties is estimated to be $1.14 per payable pound of copper against the second quarter of 2012 of $0.72 per payable pound of copper. The arsenic related charges and penalties realized in the third quarter of 2012 were primarily reflective of one-off terms for concentrate off-take placed in the quarter with a specific non-recurring customer. The Company expects the arsenic related charges and penalties for the fourth quarter of 2012 to return to second quarter 2012 levels as more favourable terms have been finalized with two customers.
Revenues and Cost of Goods Sold
Revenues for the three months ended September 30, 2012 decreased by 9% compared to the three months ended September 30, 2011. The decrease in revenues resulted from an 11% decrease in gold sales, partially offset by a 3% increase in copper concentrate sales.
The decrease in gold sales is attributable to an 8% decrease in gold oz sold during the quarter and a 2% decrease in the realized average gold price per oz.
The increase in copper concentrate sales is attributable to a 37% increase in dry metric tonnes ("DMT") sold, partially offset by a 25% decrease in realized revenue per DMT of copper concentrate. Total revenues for the three months ended September 30, 2012 at Aranzazu related to the shipment of 5,486 DMT of copper concentrate compared to 4,000 DMT of copper concentrate for the three months ended September 30, 2011. Total concentrate shipment revenues for the third quarter of 2012 were $1,685 per DMT compared to $2,233 per DMT for the third quarter of 2011 due to arsenic penalties and charges. The Company recorded an average price of $7,890 per tonne ($3.58 per pound) of copper, $1,660 per oz of gold and $31.46 per oz of silver, excluding the impact of price adjustments during the quarter. The third quarter 2012 revenues reflect additional charges and penalties for the arsenic content within the concentrate sold.
For the For the
three three For the nine For the nine
months ended months ended months ended months ended
September 30, September 30, September 30, September 30,
2012 2011 2012 2011
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San Andres, (oz) 13,500 12,758 40,058 50,067
Sao Francisco, (oz) 18,631 18,691 51,760 38,403
Sao Vicente, (oz) 7,368 11,410 26,748 31,262
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Total ounces sold 39,499 42,859 118,566 119,732
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Realized average
gold price per
ounce ("oz") $ 1,643 $ 1,683 $ 1,626 $ 1,534
Gold sales revenues
(in '000's) net of
local sales taxes $ 63,576 $ 71,205 $ 188,976 $ 181,679
Copper concentrate
sales (in '000's) $ 9,242 $ 8,932 $ 32,032 $ 21,011
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Total net sales (in
'000's) $ 72,818 $ 80,137 $ 221,008 $ 202,690
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The average realized prices per oz for the quarters ended September, 2012 and 2011 in the above table compare to the average market prices (London PM Fix) of $1,652 and $1,702, respectively.
Copper concentrate sales are from the shipment of 5,486 DMT and 4,000 DMT of copper concentrate for the quarters ended September 30, 2012 and 2011, respectively. Copper concentrate revenues for the three months ended September 30, 2012 and 2011 are comprised as follows:
For the three For the three
months ended months ended
September 30, September 30,
2012 2011
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Copper revenue, net of treatment and refining
charges $ 5,258 $ 6,511
Gold by-product revenue 3,337 2,549
Silver by-product revenue 1,162 888
Price adjustments recorded (515) (1,016)
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Total revenue $ 9,242 $ 8,932
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For the three months ended September 30, 2012, total cost of goods sold from San Andres were $13,915,000 or $1,031 per oz compared to $14,820,000 or $1,162 per oz for the three months ended September 30, 2011. For the third quarters of 2012 and 2011, cash operating costs were $898 per oz and $939 per oz, respectively, while non-cash depletion and amortization charges were $133 per oz and $223 per oz, respectively.
Total cost of goods sold from the Brazilian Mines for the three months ended September 30, 2012 and 2011 were $42,762,000 or $1,645 per oz and $42,751,000 or $1,420 per oz, respectively. For the third quarters of 2012 and 2011, cash operating costs were $1,336 per oz and $1,216 per oz, respectively, while non -cash depletion and amortization charges were $309 per oz and $204 per oz, respectively. The third quarter results included a write-down of $10,555,000 or $406 per oz to present production inventory at net realizable value.
Total cost of goods sold from Aranzazu for the three months ended September 30, 2012 and 2011 were $11,641,000 or $2,122 per DMT and $10,549,000 or $2,637 per DMT, respectively. For the third quarters 2012 and 2011, cash operating costs were $1,972 per DMT and $1,898 per DMT, respectively, while non-cash depletion and amortization charges were $150 per DMT and $739 per DMT, respectively. The third quarter results included a write-down of $1,167,000 or $213 per DMT to present production inventory at net realizable value.
Additional Highlights
In February 2012, the Company took steps to reduce general and administrative costs in Canada and Brazil. Salaries, wages and benefits have decreased 35% due to reorganizations at the Company's corporate offices. Share-based payment expense has decreased 82% as a result of the increase in forfeitures during the quarter.
On May 10, 2012, the Company entered into an amended credit facility (the "Amended Credit Facility") pursuant to which a second bank was added as a lender to the Company. Under the Amended Credit Facility, the maturity was extended from June 30, 2013 to June 30, 2014. The revolving credit available to the Company has been increased from $25,000,000 to $45,000,000, but will be reduced by $3,750,000 per quarter from June 30, 2013 to March 31, 2014. All other terms and conditions remain unchanged from the original Credit Facility, except for the interest margin which has increased from 2.75% over LIBOR to 3.25% over LIBOR, the arrangement fee which has increased to 1.75% from 1.5%, and the standby fee on undrawn funds which has increased from 1.0% to 1.5% per annum. Pursuant to the terms of the Amended Credit Facility, the Company is required to maintain a total debt/EBITDA ratio of not more than one to one for each reporting period. The Company was in violation of this financial covenant at September 30, 2012 and a waiver has been received from the Company's lenders.
Outlook and Strategy
Aura Minerals' future profitability, operating cash flows and financial position will be closely related to th e prevailing prices of gold and copper. Key factors influencing the price of gold and copper include the supply of and demand for these commodities, the relative strength of currencies (particularly the U.S. dollar) and macroeconomic factors such as current and future expectations for inflation and interest rates. Management believes that the short-to-medium term economic environment is likely to remain supportive for both gold and copper prices but continued volatility for both.
Other key factors influencing profitability and operating cash flows are production levels (impacted by grades, ore quantities, labour, plant and equipment availabilities, and process recoveries) and production and processing costs (impacted by production levels, prices and usage of key consumables, labour, inflation, and exchange rates).
Aura Minerals' full year 2012 gold production and operating cash cost guidance per mine is as follows:
Gold Mines - Production Estimates
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San Andres $900 - $1,000 61,000 - 65,000 oz
Sao Francisco $1,500 - $1,600 73,000 - 78,000 oz
Sao Vicente $1,550 - $1,650 31,000 - 33,000 oz
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$1,300 to $1,400 165,000 - 176,000 oz
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The Company reaffirms its guidance for the San Andres and Sao Francisco gold mines and the overall gold production estimate as previously provided. Production guidance for Sao Vicente has been adjusted downwards. Production is expected to improve in the final quarter as the replacement crusher is now fully operational and higher grade areas of the pit are being mined. Corresponding to the production revision, cash cost estimates have been revised.
Copper production for 2012 of 10,500,000 to 11,000,000 pounds of payable copper has been adjusted downward from previous guidance. Cash cost guidance has been adjusted upwards to between $3.10 and $3.40 per pound of payable copper as a result of the lower production estimate and continuing high charges and penalties relating to the elevated arsenic levels. The Company continues to work on reducing the cash cost impact of arsenic charges through blending and optimizing against our new off-take contracts.
The Company expects operating cash flow to further improve in the fourth quarter of 2012. The Company is currently reviewing its mine plans as part of the annual budgeting process. These are expected to be completed in the fourth quarter of 2012 and the Company will update its future projections accordingly.
Total capital expenditure guidance for the remainder of 2012 is $10 million, with $4 million relating to growth and sustaining projects, $2 million relating to the continued development at Aranzazu and $4 million related to initial land spending on the Serrote Project. Exploration expenses are forecast to be approximately $1 million for the balance of 2012, with costs relating to resource definition and expansion drilling at San Andres.
Conference Call
Aura Minerals' management will host a conference call and audio webcast for analysts and investors on Wednesday, November 14, 2012 at 8:30 a.m. (Eastern Time) to review the third quarter 2012 results. Participants may access the call by dialing 416-340-2216 or the toll-free access at 1-866-226-1792. Participants are encouraged to call in 10 minutes prior to the scheduled start time to avoid delays.
The call is being webcast and can be accessed at Aura Minerals' website at www.auraminerals.com. Those who wish to listen to a recording of the conference call at a later time may do so by dialing 905-694-9451 or 1- 800-408-3053 (Passcode 8366060#). The conference call replay will be available from 2 p.m. eastern time on November 15, 2012, until 11:59 p.m. Eastern Time on November 28, 2012.
Non-GAAP Measures
This news release includes certain non-GAAP performance measures, in particular, the average cash cost of gold per oz, average cash cost per payable pound of copper and operating cash flow which are non-GAAP performance measures. These non-GAAP measures do not have any standardized meaning within IFRS and therefore may not be comparable to similar measures presented by other companies. The Company believes that these measures provide investors with additional information which is useful in evaluating the Company's performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Average cash costs per oz of gold or per payable pound of copper are presented as they represent an industry standard method of comparing certain costs on a per unit basis. Total cash costs of gold produced include on - site mining, processing and administration costs, off-site refining and royalty charges, reduced by silver by- product credits, but exclude amortization, reclamation, and exploration costs, as well as capital expenditures. Total cash costs of gold produced are divided by oz produced to arrive at per oz cash costs. Similarly, total cash costs of copper produced include the above costs, and are net of gold and silver by-products, but include offsite treatment and refining charges. Total cash costs of copper produced are divided by payable pounds of copper produced to arrive at per payable pound cash costs.
Operating cash flow is the term the Company uses to describe the cash that is generated from operations excluding depletion and amortization, stock based compensation, impairment charges and the effect of changes in working capital.
About Aura Minerals Inc.
Aura Minerals is a Canadian mid-tier gold and copper production company focused on the exploration, development and operation of gold and base metal projects in the Americas. The Company's producing assets include the San Andres gold mine in Honduras, the Sao Francisco and Sao Vicente gold mines in Brazil and the copper-gold-silver Aranzazu mine in Mexico. The Company's core development asset is the copper-gold- iron Serrote da Laje project in Brazil. The Company also has the Inaja Greenstone Belt project currently optioned to Vale.
National Instrument 43-101 Compliance
Unless otherwise indicated, Aura Minerals has prepared the technical information in this press release ("Technical Information") based on information contained in the technical reports and news releases (collectively the "Disclosure Documents") available under the Company's profile on SEDAR at www.sedar.com. Each Disclosure Document was prepared by or under the supervision of a qualified person (a "Qualified Person") as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). Readers are encouraged to review the full text of the Disclosure Documents which qualifies the Technical Information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Disclosure Documents are each intended to be read as a whole, and sections should not be read or relied upon out of context. The Technical Information is subject to the assumptions and qualifications contained in the Disclosure Documents. The disclosure of Technical Information in this MD&A has been reviewed and approved by Bruce Butcher, P. Eng., Vice President, Technical Services.
Cautionary Note
This news release contains certain "forward-looking information" and "forward-looking statements", as defined in applicable securities laws (collectively, "forward-looking statements"). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements relate to future events or future performance and reflect the Company's current estimates, predictions, expectations or beliefs regarding future events and include, without limitation, statements with respect to: the amount of mineral reserves and mineral resources; the amount of future production over any period; the amount of waste tonnes mined; the amount of mining and haulage costs; cash costs; operating costs; strip ratios and mining rates; expected grades and ounces of metals and minerals; expected processing recoveries; expected time frames; prices of metals and minerals; mine life; and gold hedge programs. Often, but not always, forward-looking statements may be identified by the use of words such as "expects", "anticipates", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions.
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 and competitive uncertainties and contingencies. Forward-looking statements in this news release and related MD&A are based upon, without limitation, the following estimates and assumptions: the presence of and continuity of metals at the Company's Mines at modeled grades; the capacities of various machinery and equipment; the availability of personnel, machinery and equipment at estimated prices; exchange rates; metals and minerals sales prices; appropriate discount rates; tax rates and royalty rates applicable to the mining operations; cash costs; anticipated mining losses and dilution; metals recovery rates, reasonable contingency requirements; and receipt of regulatory approvals on acceptable terms.
Known and unknown risks, uncertainties and other factors, many of which are beyond the Company's ability to predict or control could cause actual results to differ materially from those contained in the forward-looking statements. Specific reference is made to the most recent Annual Information Form on file with certain Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward - looking statements, which include, without limitation, gold and copper or certain other commodity price volatility, changes in debt and equity markets, the uncertainties involved in interpreting geological data, increases in costs, environmental compliance and changes in environmental legislation and regulation, interest rate and exchange rate fluctuations, general economic conditions and other risks involved in the mineral exploration and development industry. Readers are cautioned that the foregoing list of factors is not exhaustive of the factors that may affect the forward-looking statements.
All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward- looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.
Contacts:
Aura Minerals Inc.
Jim Bannantine
President and Chief Executive Officer
(604) 669-4777
(604) 696-0212 (FAX)
info@auraminerals.com
www.auraminerals.com