Crocodile Gold Reports Third Quarter Revenue of $78.7 Million on the Sale of 47,121 Ounces of Gold
Company Generates Strong Quarterly Operating Cash Flows of $32.5M on a 32% Increase in Quarterly Gold ProductionTORONTO, ONTARIO -- (Marketwire) -- 11/14/12 -- Crocodile Gold Corp. (TSX: CRK) (OTCQX: CROCF) (FRANKFURT: XGC) ("Crocodile Gold" or the "Company") is releasing its financial and operating results for the three months ended September 30, 2012. All figures are in U.S. dollars, unless stated otherwise.
Q3 - 2012 Financial Highlights
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Q3 2012 Q2 2012 Q1 2012 9 Months
Ending Sept. 30
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Revenue $78,721,463 $ 56,861,530 $ 18,577,177 $ 154,160,170
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Mine operating
earnings (loss) $ 7,028,408 $ 5,949,787 $ (5,771,042) $ 7,207,153
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Ounces Sold 47,121 35,665 10,900 93,686
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Average Sale Price $ 1,664 $ 1,591 $ 1,698 $ 1,651
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Cash Cost Per Ounce $ 1,176 $ 1,167 $ 2,028 $ 1,457
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Cash Flow from
(used) Operations $32,511,747 $ 4,853,865 $(17,868,866) $ 19,496,746
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Financial Discussion
Crocodile Gold has posted revenues of $78,721,463 on third quarter gold sales of 47,121 ounces, a sequential increase of 32% over the second quarter reflecting the realization of the integration of the Fosterville and Stawell Gold Mines and a strong gold price environment.
The mine operating earnings in the third quarter were $7,028,408 compared to $5,949,787 for the three months ended June 30, 2012, an increase of 18%. The cash cost per ounce of gold sold in the third quarter was $1,176 per ounce compared to $1,167 per ounce in the second quarter (refer to non-GAAP measures below). Operating costs continue to be in line with internal forecasts
Net loss for the quarter ended September 30 was $55,998,228 or $0.14 per share, compared to a net loss of $7,225,054 or $0.02 per share for the quarter ended June 30, 2012. The Company's net loss for the quarter was impacted by significant non-cash charges including a loss from the revaluation of derivative liabilities of $49,938,647 and a loss from the change in fair value of contingent consideration of $4,335,178, both as a result of the significantly higher gold price forward curve at quarter-end compared to June 30, 2012. The Company notes that if these liabilities are eventually realized at the quarter-end forward prices there would also be a significant positive impact on the operating cash flows of the Company.
Commenting on these results, Chantal Lavoie, President and CEO of the Company said, "The third quarter physical and financial results demonstrate our continued growth since the beginning of the year as we concentrate our efforts on better quality ore sources in the Northern Territory (Cosmo Mine) and realize the full benefit of our new assets at Fosterville and Stawell during the quarter."
Cash Flow
Cash generated from operations for the quarter-ended September 30, 2012 was $32,511,747, up significantly from $4,853,865 in the previous quarter. The increase in cash from operations was driven by a robust and increasing gold price combined with higher gold sales as Crocodile Gold begins to realize the full benefit of its new assets and a strong gold price.
Cash used for investing activities for the three months ended September 30 was $33,718,239, of which $30,649,460 was related to underground development and resource definition. Purchases of plant and equipment in the third quarter were $2,579,950 and related mainly to mobile equipment and general plant work at Fosterville and Stawell.
Cash flows used in financing activities in the three months ended September 30, 2012 related mainly to the repayment of equipment loans and the settlement of gold swap contracts with Credit Suisse in the amount of $1,920,380.
Q3 - 2012 Operational Highlights
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9 Months
Q1 Ending
Q3 2013 Q2 2012(i) 2012(i) Sept. 30
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May 5 April 1
- Jun 30 - May 4
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Northern Territory
Ore Milled (Tonnes) 99,135 105,102 116,471 371,439 692,147
Average Grade (g/t Au) 2.51 1.89 1.14 0.99 1.63
Recovery 92% 89% 93% 92% 92%
Gold Produced (Ounces) 7,356 5,639 3,975 10,932 27,902
Gold Sold (Ounces) 8,182 7,200 1,750 10,900 28,032
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Fosterville Gold Mine
Ore Milled (Tonnes) 183,854 126,913 75,872 192,094 578,733
Average Grade (g/t Au) 4.68 4.47 3.75 3.79 4.17
Recovery 83% 82% 83% 76% 81%
Gold Produced (Ounces) 22,857 14,920 7,626 18,387 63,790
Gold Sold (Ounces) 24,158 14,357 8,012 19,403 65,930
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Stawell Gold Mine
Ore Milled (Tonnes) 225,666 122,570 70,230 213,066 631,532
Average Grade (g/t Au) 2.54 3.51 2.8 2.91 2.94
Recovery (%) 85% 87% 83% 85% 85%
Gold Produced (Ounces) 15,750 11,947 5,279 16,957 49,933
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Gold Sold (Ounces) 14,781 12,358 5,357 18,853 51,349
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(i) Crocodile Gold acquired, and accounted for, the Fosterville and Stawell
gold mines with effect from May 5, 2012. Information presented prior to this
date is for comparative purposes only.
Operational Discussion
At the Cosmo Mine, development and production ramp-up continued with an average of 671 meters of development per month during the quarter and 97,359 tonnes produced from the underground, up from 57,070 tonnes in the previous quarter with the majority of the ore coming from lower grade development workings. Production stoping was initiated in September with the first transverse stope successfully extracted. The Union Reef's mill processed 99,135 tonnes of ore during the quarter with an average grade of 2.67g/t Au, with ore sourced from the Cosmo underground and from available low-grade stockpiles. Recoveries continue to be consistent at 91.8%.
Fosterville Gold Mine (FGM) continued development and production from the Harrier and Phoenix ore zones. Production for the quarter was 176,035 tonnes at a grade of 4.70 g/t, which was supplemented by ore from a small satellite open pit. Third quarter gold production totalled 22,857 ounces, up slightly from 22,546 in the previous quarter. Mill throughput was 183,854 tonnes compared to 202,785 in the previous quarter, however, feed grade had improved from 4.20 g/t Au to 4.68 g/t Au. Mill recovery was 82.5% and continued to demonstrate improvement over the last two quarters.
Stawell Gold Mine (SGM) continued with its transition plan that will see underground activities being completed in 2013. Ore mined for the third quarter was 201,789 tonnes at 2.81 g/t Au compared to 179,034 tonnes at 3.46 g/t Au in the second quarter. While production in tonnes was strong, ore mined grade was down due to a delay in accessing stopes in the higher-grade GG6 area. Mill throughput of 225,666 tonnes exceeded the amount processed in the second quarter as a result of strong mill utilization and circuit modifications, which have allowed supplementary low grade stockpile oxide feed to be milled at a higher rate than previously achievable. Recovery for the quarter was 85.3%, lower than expected due to the delay in accessing high-grade ore, however, in line with site expectations based on the mill feed blend.
Financial Position
As of September 30, 2012, the Company had a net working capital deficiency of ($24,839,259), which includes a cash balance of $20,383,957. This compares to net working capital of $9,509,683 as at June 30, 2012 which included cash of $24,924,898.
The current working capital deficiency is impacted by an increased valuation of the current derivative liability to $18,547,852 as a result of the higher gold price forward curve at quarter-end. However, this increased gold price environment is not reflected in current assets, such as in inventory, which is carried at cost and therefore does not reflect the eventual increased value realized through the sale of gold. The Company believes that macroeconomic factors will continue to support a strong gold price in the near to mid-term, enabling the Company to continue to generate strong cash flow from operations.
Outlook
With the acquisition of the Fosterville and Stawell Gold Mines on May 4, 2012, Crocodile Gold has seen a significant increase in its gold production, accompanied by its continued progress developing the Cosmo underground mine in the Northern Territory. The Company also has a good pipeline of advanced development projects and a prospective exploration land position.
As part of the acquisition, the Company has integrated and streamlined various processes across its operations, including financial and management reporting and corporate governance and Occupational Health/Safety & Environment policies.
Northern Territory Operations
At the Cosmo Mine, underground drilling continues and results to date have confirmed that the ore zones in the upper part of the ore body are wider than expected in several locations. Plans are in place to add a third underground drill in the fourth quarter to further delineate the ore body for mid and long term planning. Third quarter increased development rates have essentially reached steady state requirements and are expected to be maintained throughout the fourth quarter. A detailed assessment of the changes in stope geometry for the upper portion of the ore body was done and will result in a slower than expected production ramp-up. The assessment, performed by a third party technical firm, is fully supported by the Company and aims to maximize the future potential of the mine. The Company now expects Cosmo to reach commercial production by the end of the first quarter of 2013. The Company still expects to produce 40,000 to 45,000 ounces of gold in 2012 from its Northern Territory operations.
Key capital infrastructure work to be completed in 2012 includes:
- the extension of the main ventilation system on the western part of the Cosmo ore body;
- the extension of the main decline down to the 785 metre level;
- the establishment of seven new levels and sublevels; and
- additional ventilation capacity, with the drilling of two ventilation shafts to the surface and the installation of two large capacity ventilation fans.
On September 25, 2012 the Company was granted in-principle approval for the redevelopment of the International Mine open pit in the Northern Territory. In October, the amended Mine Management Plans were submitted while drilling was initiated to capture additional technical information required to finalize the operational plan. In November, the Company plans to issue requests for tenders for the open pit mining activities with a final project decision expected to be taken early in 2013. All Northern Territory ore production is processed at the Union Reefs Mill, which has a capacity of 2.4 million tonnes per year.
Fosterville Operations
Production levels from underground mining at Fosterville are expected to remain relatively stable compared to recent quarters. The proportion of ore to be sourced from the Harrier ore body is expected to increase in the coming months as this area matures in terms of development. Ore production from the O'Dwyers South Pit commenced in July 2012 and will contribute to the overall production profile for approximately five months.
Crocodile Gold expects to produce 56,000 to 61,000 attributable ounces of gold from the Fosterville Gold Mine in 2012. Including production prior to the May 4 acquisition date, Fosterville is still expected to produce 82,000 to 87,000 ounces of gold in 2012.
Stawell Operations
The Company has completed a detailed review of Stawell's operations and continues with its transition plan which will see underground mining activities being completed by the end of 2013.
Crocodile Gold expects to produce 47,000 to 52,000 attributable ounces of gold from the Stawell Gold Mine in 2012. Including production prior to the May 2012 acquisition date, Stawell is still expected to produce 69,000 to 74,000 ounces of gold in 2012.
Exploration
Exploration expense for the three months ended September 30, 2012 was $1,597,744 compared to $294,541 in the previous quarter ended June 30. Furthermore, exploration on properties with an established mineral resource and a development plan of $1,207,080 were capitalized during the three months ended September 30, 2012 compared to $2,481,928 in the prior quarter.
In August 2012, the Company announced positive results from Fosterville's exploration program where drilling has identified potentially significant gold mineralization over a 60-metre length down dip from the existing Phoenix ore body mineral resource block that is associated with the same fault structure that has been previously drilled a further 100 metres to the south where it appears to be strongly mineralized.
Highlights of the drilling include:
Phoenix Ore Body drill intercepts on section 6500N:
- 23.36 g/t Au over 5.70m in hole UDE084
- 6.21 g/t Au over 6.10m in hole UDE084A
Other previous Phoenix Ore Body drill intercepts in the area:
- 17.56g/t Au over 3.7m in hole SPD514E (6500N)
- 6.54 g/t Au over 7.0m in hole UDE041 (6750N)
- 5.86 g/t Au over 7.6m in hole UDE040 (6750N)
The current Phoenix ore body drill intercepts collectively outline a 250 metre strike length with significant down-plunge exploration potential. The ore body is along strike from the nearby Phoenix ore body mineral resources and is relatively close to the Phoenix ore body underground mineral reserve and existing development. The Company has made plans to perform resource modeling of the current Phoenix ore body drill results ahead of underground mining studies.
In the Northern Territory, the Exploration Group worked on a review of various properties and are preparing drill programs for 2013. Revised resource and reserve calculations for a number of deposits have been initiated with a plan to produce updated estimates by the end of Q1, 2013.
At Union Reefs, compilation of the 2012 drilling program results was completed and is being incorporated into a revised resource estimate. Desktop study update work was initiated and is scheduled for completion in Q4 with recommendations for the next phase of work for the project.
At Maud Creek, a revised resource estimate is being calculated and desktop study work updated. A recommendation on the next phase of the project is expected in Q4.
At SGM, following the decision to ramp down underground mining activities in 2013, the Company reviewed potential for development of known deposit extension on the existing mining lease. A decision to carry out additional work at Stawell is expected in Q4.
About Crocodile Gold
Crocodile Gold is a Canadian company with operating gold mines in the Northern Territory of Australia and in the State of Victoria with a land package of over 3,900 square kilometres. Crocodile Gold is currently mining at the Fosterville and Stawell mines in the State of Victoria. In the Northern Territory, the Company continues to develop its Cosmo underground mine and is continuing with the permitting processes for the International open pit mine. The Northern Territory ore production is processed at the Union Reefs Mill, which has a capacity of 2.4 million tonnes per year.
At its Northern Territory properties, the Company has 3.175 million ounces of NI 43-101 reported Measured and Indicated mineral resources (51.85 million tonnes at an average grade of 1.9 g/t gold) and 2.14 million ounces of Inferred mineral resources (36.35 million tonnes at an average grade of 1.8 g/t gold); see the NI 43-101 compliant technical report entitled "Report on the Mineral Resources and Mineral Reserves of the Northern Territory Gold and Base Metals Properties for Crocodile Gold Corp." by Fleur Muller, Mark Edwards and Heath Gerritsen dated April 4, 2011, filed under Crocodile Gold's profile on SEDAR. These resources are inclusive of mineral reserves. At the State of Victoria properties, the Company has an additional 1.216 million ounces of NI 43-101 reported Measured and Indicated mineral resources (15.26 million tonnes at an average grade of 2.48 g/t gold) and 0.622 million ounces of Inferred mineral resources (6.00 million tonnes at an average grade of 3.22 g/t gold). These are exclusive of mineral reserves, which total 0.472 million ounces (3.38 million tonnes at an average grade of 4.34 g/t gold).
Crocodile Gold has an extensive exploration program in place in the Northern Territory and is exploring on several key properties on its expansive land package. With production commencing at the Cosmo Mine, Crocodile Gold's main exploration focus is at the Union Reefs and Maud Creek project areas. In the State of Victoria, the Company has exploration programs in place designed to expand the resource base of each mine property. For additional information, please visit our website www.crocgold.com. Follow us on Twitter (@crocgold_crk) or Facebook (www.facebook.com/CrocodileGoldCorp).
Qualified Person
Bill Nielsen, P. Geo, Vice President, Exploration of Crocodile Gold is a "qualified person" as such term is defined in National Instrument 43-101 and has reviewed and approved the technical information and data included in this press release.
Cautionary Notes
Non-GAAP Measures
Crocodile Gold believes that investors use certain indicators to assess gold mining companies. The indicators are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with International Financial Reporting Standards.
"Cash cost per ounce" is a non-GAAP performance measure that could provide an indication of the mining and processing efficiency and effectiveness at the operations. It is determined by dividing the operating expenses, excluding stock-based compensation allocated to operating expenses and net of silver revenue, by the number of ounces of gold sold. There are variations in the method of computation of "cash cost per ounce" as determined by the Company compared with other mining companies. The following is a reconciliation of the cash cost per ounce of gold sold, to the reported operating expenses for the three months ended September 30, June 30 and March 31, 2012:
Sept 30 June 30 March 31
Operating expenses per consolidated
statement of operations and
comprehensive income (loss) 55,557,277 41,720,288 22,405,959
By-product silver sales credit (126,723) (105,871) (64,137)
Non-cash stock option expense charged
to operating expenses - - (240,861)
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Operating cash costs 55,430,554 41,614,417 22,100,961
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Divided by ounces of gold sold 47,121 35,665 10,900
Cash cost per ounce ($ per ounce) 1,176 1,167 2,028
Forward-Looking Information
Certain information set forth in this press release contains "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements, which include the Company's expectations for future performance based on current drill results and past production, expected gold prices, and mineral resource estimates, and are based on Crocodile Gold's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Crocodile Gold's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: liabilities inherent in mine development and production; geological, mining and processing technical problems; Crocodile Gold's inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and mineral processing operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of mineral products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the ability to secure adequate financing and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Crocodile Gold undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
Contacts:
Crocodile Gold Corp.
Rob Hopkins, Manager, Investor Relations
416-861-5899
info@crocgold.com
www.crocgold.com