Asanko Gold Reports Q3 2019 Results November 07, 2019
(All dollar amounts are United States dollars unless otherwise stated)
VANCOUVER , Nov. 7, 2019 /CNW/ - Asanko Gold Inc. ("Asanko" or the "Company") (TSX, NYSE American: AKG) reports third quarter ("Q3") 2019 operating and financial results for the Asanko Gold Mine ("AGM"), located in Ghana , West Africa . The AGM is a 50:50 joint venture ("JV") with Gold Fields Ltd (JSE, NYSE: GFI), which is managed and operated by Asanko.
Q3 2019 Asanko Gold Mine Highlights (100% basis)
• Record proceeds of $91.0 million generated from gold sales of 63,009 ounces at an average realized price of $1,443 per ounce
• Record gold production of 62,440 ounces, on track to meet 2019 production guidance of 225,000 to 245,000 ounces
• All-in sustaining cost 1 ("AISC") of $1,179 /oz, with 2019 guidance of $1,040 – $1,060 /oz maintained as AISC are expected to drop in Q4 2019 with the completion of the Nkran Cut 2 pushback
• Generated adjusted EBITDA 1 of $25 .7 million, operating cash flows of $45.6 million and free cash flow 1 of $13.9 million
• Net income after tax of $5.1 million , before any impairment adjustments that may arise from the ongoing work associated with the AGM Life of Mine ("LOM") plan, which was announced on August 15, 2019
• Cash balance, receivables and gold on hand totalling $46.5 million
• Concluded a revolving credit facility in the amount of $30 million with Rand Merchant Bank
Q3 2019 Quarterly Highlights for Asanko Gold Inc.
• Net loss of $147.5 million primarily as a result of a $128.3 million impairment recognized by the Company on its equity investment in the AGM JV, as a result of the ongoing work associated with the AGM LOM plan
• Adjusted net income of $0.8 million
• Adjusted EBITDA of $9.4 million
• Cash balance of $13.6 million and $3.1 million in receivables
• Markus Felderer appointed as Senior Vice President, Corporate Development
"We are pleased to deliver another solid operating performance this quarter with record production and sales that resulted in the mine generating adjusted EBITDA of $ 25.7 million ," said Greg McCunn , Chief Executive Officer. "We have now completed the significant capital expenditure program which was undertaken with the Cut 2 pushback at Nkran. As a result, we expect to see substantially reduced AISC in Q4 and through 2020 which is expected to translate into free cash flow from the AGM generating a return on invested capital to the JV partners. With cash building and no debt, we believe that we are initiating a prudent capital allocation strategy, balancing the requirement for value-enhancing exploration with a potential return of capital to our shareholders."
"We have also taken the necessary steps to align our balance sheet with the most recent developments to the scope of the AGM Life of Mine plan which resulted in a non-cash impairment charge this quarter. The updated Life of Mine plan is still subject to completion, but remains on track to be completed and published along with an updated Mineral Resource and Reserve declaration during the first quarter of 2020."
Summary of Q3 2019 Asanko Gold Mine Operational and Financial Results
AGM (100% Basis before any impairment
adjustments)
Q3 2019 Q2 2019 Q3 2018
Waste mined ('000t) 6,372 7,808 9,084
Ore mined ('000t) 1,105 1,056 1,730
Strip ratio (W:O) 5.8 7.4 5.3
Average gold grade mined (g/t) 1.5 1.6 1.4
Mining costs ($/t mined) 4.48 4.36 3.63
Ore treated ('000t) 1,439 1,375 1,299
Gold feed grade (g/t) 1.4 1.5 1.6
Gold recovery (%) 94 93 94
Processing costs ($/t treated) 10.42 10.60 11.26
Gold production (oz) 62,440 62,067 61,599
Gold sales (oz) 63,009 66,337 65,267
Average realized gold price ($/oz) 1,443 1,290 1,198
Operating cash costs 1 ($/oz) 799 660 743
Total cash costs 1 ($/oz) 872 724 803
All-in sustaining costs 1 ($/oz) 1,179 1,180 971
All-in sustaining margin 1 ($/oz) 264 110 227
All-in sustaining margin 1 ($m) 16.6 7.3 14.8
Revenue ($m) 91.0 85.7 78.4
Income from mine operations ($m) 11.2 20.8 0.6
Net income (loss) after tax ($m) 5.1 13.6 (128.8)
Adjusted net income (loss) after tax 1 ($m) 5.1 13.6 (2.1)
EBITDA 1 31.8 35.2 (103.5)
Adjusted EBITDA 1 25.7 31.2 23.1
Cash provided by operating activities 45.6 20.5 21.2
Key Operational Highlights of the AGM (on a 100% basis)
• No lost time injuries ("LTI") were reported during the quarter, and the AGM has now achieved over 30 months and more than 15.7 million employee hours worked without an LTI. There were also no recordable injuries ("RI") reported during the quarter.
• Record gold production of 62,440 and 184,932 ounces during the three and nine months ended September 30, 2019 , on track to meet 2019 production guidance of 225,000-245,000 ounces.
• Ore mined during Q3 2019 totaled 1.11 million tonnes ("Mt"), including 0.62Mt of ore from the Esaase pit, at an average mined grade of 1.5 g/t and a total strip ratio of 5.8:1. The decrease in strip ratio from Q2 2019 was due to a reduction in waste mining at Nkran as the Cut 2 pushback neared completion in Q3 2019.
• The processing plant delivered another record quarterly milling performance of 1.44Mt, at an average plant feed grade of 1.4 g/t.
JV Financial Performance
• The AGM incurred operating cash costs per ounce 1 of $799 and total cash costs per ounce 1 of $872 for the quarter. Relative to Q2 2019, total cash costs per ounce increased by 20% in Q3 2019 as a result of the impact of lower gold sales volumes in Q3 2019, which had the effect of increasing cash production cost on a per-unit basis. Total cash costs per ounce 1 was also impacted by a decrease in the amount of stripping costs that was deferred (due to the Cut 2 pushback at Nkran nearing completion during the quarter) and thus more operational waste mining costs were included in total cash costs per ounce 1 . Additionally, in Q3 2019, the AGM recognized a $4.7 million adjustment to the carrying value of stockpile inventory in order to reflect the net realizable value of stockpiled ore, of which $1.9 million was recorded in production costs ( $30 /oz increase); whereas, in Q2 2019, the AGM recognized a $0.6 million reversal of previously recorded net realizable value adjustments on its stockpile inventory ( $9 /oz decrease).
• AISC 1 for Q3 2019 were $1,179 per ounce, although higher than 2019 annual cost guidance of $1,040 - $1,060 per ounce, AISC 1 for the quarter correlates closely with the plan for Q3 2019. It is expected that there will be a substantial reduction in AISC in Q4 2019 as capitalized stripping will be completed early in the quarter. The Company reaffirms the 2019 cost guidance for the AGM.
• Q3 2019 gold sales of 63,009 ounces generated a record $91.0 million of gold sales proceeds at an average realized gold price of $1,443 per ounce, an increase of $12.8 million from Q3 2018. Revenue for Q3 2019 amounted to $91.2 million and includes by-product sales of $0.2 million .
• Total cost of sales (including depreciation and depletion and royalties) amounted to $79.9 million in Q3 2019, an increase of $2.1 million from Q3 2018. The increase in cost of sales was primarily due to higher operating cash costs per ounce, partially offset by a decrease in gold ounces sold. It also included $0.6 million higher royalties expense due to record quarterly revenues.
• The AGM's net income after tax for the quarter amounted to $5.1 million , compared to a net loss after tax of $128.8 million in Q3 2018, driven by income from operations of $6.6 million for the quarter, compared to a net loss from operations of $2.2 million in Q3 2018. The net loss for Q3 2018 was further impacted by the recognition of a fair value adjustment associated with the JV Transaction. The improvement in operating earnings was due to an increase in the realized gold price, partly offset by higher production cost and increased exploration activity.
• The AGM reported adjusted EBITDA of $25.7 million for the three months ended September 30, 2019 .
• As at September 30, 2019 , the JV had unaudited cash of $36.6 million on hand ( $3.0 million of which was restricted and held as collateral in respect of gold collar hedges), $7.0 million in receivables from gold sales and $2.9 million in gold on hand (with a market value of $3.1 million ).
Asanko Gold Reports Q3 2019 Results
?November 07, 2019
(All dollar amounts are United States dollars unless otherwise stated)
VANCOUVER , Nov. 7, 2019 /CNW/ - Asanko Gold Inc. ("Asanko" or the "Company") (TSX, NYSE American: AKG) reports third quarter ("Q3") 2019 operating and financial results for the Asanko Gold Mine ("AGM"), located in Ghana , West Africa . The AGM is a 50:50 joint venture ("JV") with Gold Fields Ltd (JSE, NYSE: GFI), which is managed and operated by Asanko.
Q3 2019 Asanko Gold Mine Highlights (100% basis)
• Record proceeds of $91.0 million generated from gold sales of 63,009 ounces at an average realized price of $1,443 per ounce
• Record gold production of 62,440 ounces, on track to meet 2019 production guidance of 225,000 to 245,000 ounces
• All-in sustaining cost 1 ("AISC") of $1,179 /oz, with 2019 guidance of $1,040 – $1,060 /oz maintained as AISC are expected to drop in Q4 2019 with the completion of the Nkran Cut 2 pushback
• Generated adjusted EBITDA 1 of $25 .7 million, operating cash flows of $45.6 million and free cash flow 1 of $13.9 million
• Net income after tax of $5.1 million , before any impairment adjustments that may arise from the ongoing work associated with the AGM Life of Mine ("LOM") plan, which was announced on August 15, 2019
• Cash balance, receivables and gold on hand totalling $46.5 million
• Concluded a revolving credit facility in the amount of $30 million with Rand Merchant Bank
Q3 2019 Quarterly Highlights for Asanko Gold Inc.
• Net loss of $147.5 million primarily as a result of a $128.3 million impairment recognized by the Company on its equity investment in the AGM JV, as a result of the ongoing work associated with the AGM LOM plan
• Adjusted net income of $0.8 million
• Adjusted EBITDA of $9.4 million
• Cash balance of $13.6 million and $3.1 million in receivables
• Markus Felderer appointed as Senior Vice President, Corporate Development
"We are pleased to deliver another solid operating performance this quarter with record production and sales that resulted in the mine generating adjusted EBITDA of $ 25.7 million ," said Greg McCunn , Chief Executive Officer. "We have now completed the significant capital expenditure program which was undertaken with the Cut 2 pushback at Nkran. As a result, we expect to see substantially reduced AISC in Q4 and through 2020 which is expected to translate into free cash flow from the AGM generating a return on invested capital to the JV partners. With cash building and no debt, we believe that we are initiating a prudent capital allocation strategy, balancing the requirement for value-enhancing exploration with a potential return of capital to our shareholders."
"We have also taken the necessary steps to align our balance sheet with the most recent developments to the scope of the AGM Life of Mine plan which resulted in a non-cash impairment charge this quarter. The updated Life of Mine plan is still subject to completion, but remains on track to be completed and published along with an updated Mineral Resource and Reserve declaration during the first quarter of 2020."
Summary of Q3 2019 Asanko Gold Mine Operational and Financial Results
AGM (100% Basis before any impairment
adjustments)
Q3 2019
Q2 2019
Q3 2018
Waste mined ('000t)
6,372
7,808
9,084
Ore mined ('000t)
1,105
1,056
1,730
Strip ratio (W:O)
5.8
7.4
5.3
Average gold grade mined (g/t)
1.5
1.6
1.4
Mining costs ($/t mined)
4.48
4.36
3.63
Ore treated ('000t)
1,439
1,375
1,299
Gold feed grade (g/t)
1.4
1.5
1.6
Gold recovery (%)
94
93
94
Processing costs ($/t treated)
10.42
10.60
11.26
Gold production (oz)
62,440
62,067
61,599
Gold sales (oz)
63,009
66,337
65,267
Average realized gold price ($/oz)
1,443
1,290
1,198
Operating cash costs 1 ($/oz)
799
660
743
Total cash costs 1 ($/oz)
872
724
803
All-in sustaining costs 1 ($/oz)
1,179
1,180
971
All-in sustaining margin 1 ($/oz)
264
110
227
All-in sustaining margin 1 ($m)
16.6
7.3
14.8
Revenue ($m)
91.0
85.7
78.4
Income from mine operations ($m)
11.2
20.8
0.6
Net income (loss) after tax ($m)
5.1
13.6
(128.8)
Adjusted net income (loss) after tax 1 ($m)
5.1
13.6
(2.1)
EBITDA 1
31.8
35.2
(103.5)
Adjusted EBITDA 1
25.7
31.2
23.1
Cash provided by operating activities
45.6
20.5
21.2
Key Operational Highlights of the AGM (on a 100% basis)
• No lost time injuries ("LTI") were reported during the quarter, and the AGM has now achieved over 30 months and more than 15.7 million employee hours worked without an LTI. There were also no recordable injuries ("RI") reported during the quarter.
• Record gold production of 62,440 and 184,932 ounces during the three and nine months ended September 30, 2019 , on track to meet 2019 production guidance of 225,000-245,000 ounces.
• Ore mined during Q3 2019 totaled 1.11 million tonnes ("Mt"), including 0.62Mt of ore from the Esaase pit, at an average mined grade of 1.5 g/t and a total strip ratio of 5.8:1. The decrease in strip ratio from Q2 2019 was due to a reduction in waste mining at Nkran as the Cut 2 pushback neared completion in Q3 2019.
• The processing plant delivered another record quarterly milling performance of 1.44Mt, at an average plant feed grade of 1.4 g/t.
JV Financial Performance
• The AGM incurred operating cash costs per ounce 1 of $799 and total cash costs per ounce 1 of $872 for the quarter. Relative to Q2 2019, total cash costs per ounce increased by 20% in Q3 2019 as a result of the impact of lower gold sales volumes in Q3 2019, which had the effect of increasing cash production cost on a per-unit basis. Total cash costs per ounce 1 was also impacted by a decrease in the amount of stripping costs that was deferred (due to the Cut 2 pushback at Nkran nearing completion during the quarter) and thus more operational waste mining costs were included in total cash costs per ounce 1 . Additionally, in Q3 2019, the AGM recognized a $4.7 million adjustment to the carrying value of stockpile inventory in order to reflect the net realizable value of stockpiled ore, of which $1.9 million was recorded in production costs ( $30 /oz increase); whereas, in Q2 2019, the AGM recognized a $0.6 million reversal of previously recorded net realizable value adjustments on its stockpile inventory ( $9 /oz decrease).
• AISC 1 for Q3 2019 were $1,179 per ounce, although higher than 2019 annual cost guidance of $1,040 - $1,060 per ounce, AISC 1 for the quarter correlates closely with the plan for Q3 2019. It is expected that there will be a substantial reduction in AISC in Q4 2019 as capitalized stripping will be completed early in the quarter. The Company reaffirms the 2019 cost guidance for the AGM.
• Q3 2019 gold sales of 63,009 ounces generated a record $91.0 million of gold sales proceeds at an average realized gold price of $1,443 per ounce, an increase of $12.8 million from Q3 2018. Revenue for Q3 2019 amounted to $91.2 million and includes by-product sales of $0.2 million .
• Total cost of sales (including depreciation and depletion and royalties) amounted to $79.9 million in Q3 2019, an increase of $2.1 million from Q3 2018. The increase in cost of sales was primarily due to higher operating cash costs per ounce, partially offset by a decrease in gold ounces sold. It also included $0.6 million higher royalties expense due to record quarterly revenues.
• The AGM's net income after tax for the quarter amounted to $5.1 million , compared to a net loss after tax of $128.8 million in Q3 2018, driven by income from operations of $6.6 million for the quarter, compared to a net loss from operations of $2.2 million in Q3 2018. The net loss for Q3 2018 was further impacted by the recognition of a fair value adjustment associated with the JV Transaction. The improvement in operating earnings was due to an increase in the realized gold price, partly offset by higher production cost and increased exploration activity.
• The AGM reported adjusted EBITDA of $25.7 million for the three months ended September 30, 2019 .
• As at September 30, 2019 , the JV had unaudited cash of $36.6 million on hand ( $3.0 million of which was restricted and held as collateral in respect of gold collar hedges), $7.0 million in receivables from gold sales and $2.9 million in gold on hand (with a market value of $3.1 million ).
Asanko Gold Inc. – Summary Q3 2019 Financial Results
Consolidated
Q3 2019
Q2 2019
Q3 2018
Net income (loss) attributable to
common shareholders ($m)
(147.5)
6.1
(0.3)
Net income (loss) per share attributable to common shareholders
( $0.65 )
$0.03
( $0.00 )
Adjusted EBITDA 1 ($m)
9.4
12.4
13.3
• The Company reported a net loss of $147.5 million in Q3 2019 compared to a net loss attributable to common shareholders of $0.3 million in Q3 2018. The increase in net loss for Q3 2019 was predominantly the result of a $128.3 million impairment recognized on the Company's equity investment in the AGM JV. The impairment was based on management's estimate of the recoverable amount of the AGM, based on the latest available information from the ongoing work associated with the AGM LOM plan which indicates that the target mine life and production is expected to result in the extraction of materially less than the total previously estimated reserves, and that the overall resource base for the AGM may be reduced considerably (the JV has not yet finalized the AGM LOM plan and the life of mine cash flow projections used in the impairment assessment are not based on a National Instrument 43-101 technical report and are not currently supported by the associated detailed engineering). Additionally, the Company recognized a $20.0 million downward fair value adjustment on its redeemable preference shares as a result of a change in the estimated timing of the cash flows expected to be distributed by JV (there was no change to the face value of the preferred shares). These factors were partly offset by improved financial performance of the AGM.
• Adjusted net income for Q3 2019 amounted to $0 .8 million ( $0.00 earnings per share) compared to an adjusted net loss of $1.6 million ( $0.01 loss per share) in Q3 2018. The improvement in adjusted net income was due to the Company's 45% interest in the adjusted net income of the AGM which improved from an adjusted net loss of $2.1 million in Q3 2018 to adjusted net income of $5.1 million in Q3 2019. In addition, the Company earned $0.8 million more in net service fees as operator of the AGM.
• Cash used in operating activities in Q3 2019 was $3.5 million , compared to cash provided by operating activities of $2.9 million in Q3 2018. The cash flow results for Q3 2018 still included one month of the operating cash flow results of the AGM, which was deconsolidated effective July 31, 2018 , whereas 2019 result do not include the operating results of the AGM.
• Adjusted EBITDA 1 for Q3 2019 amounted to $9.4 million , compared to $13.3 million in Q3 2018. The decrease in adjusted EBITDA was primarily a result of the reduction in the Company's interest in the AGM from 100% to 45%, as well as higher general and administrative costs during associated with the restructuring of the executive management team. These factors were partially offset by the increase in the AGM's mine operating earnings.
• Held $13.6 million in cash and $3.1 million in receivables as of September 30, 2019 . On August 29, 2019 , the Company received $10.0 million from Gold Fields based on the achievement of the agreed Esaase development milestone. The $10.0 million payment was recorded as a partial redemption of the previously recognized $20.0 million preference shares. The remaining $10.0 million is expected to be received during the fourth quarter of 2019.
2019 Outlook
The Asanko Gold Mine is on track to meet 2019 guidance of 225,000 – 245,000 ounces at AISC of $1,040 – $1,060 /oz.
Guidance
Q3 2019 (Actual) YTD 2019 (Actual) FY 2019 (Forecast)
Gold Production (oz) 62,440 184,932 225,000 – 245,000
AISC ($/oz) 1,179 1,163 1,040 – 1,060
Further to the agreed development philosophy for the Asanko Gold Mine , which is to focus on near term free cash flow generation and minimize capital investments, the JV partners are working on an updated Mineral Reserve Estimate, which is expected to be published in Q1 2020. The updated Mineral Reserve Estimate will not be based on any major development capital investments such as further processing plant expansions or Esaase ore transportation infrastructure in the near term.
Asanko Gold Inc. – Summary Q3 2019 Financial Results
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