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
----------------------------------------------------------------
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
----------------------------------------------------------------
Total / Average 43,059 $ 1,169 123,007 $ 1,415
----------------------------------------------------------------
----------------------------------------------------------------
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
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
Total ounces sold 39,499 42,859 118,566 119,732
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
Total net sales (in
'000's) $ 72,818 $ 80,137 $ 221,008 $ 202,690
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
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)
----------------------------------------------------------------------------
Total revenue $ 9,242 $ 8,932
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
$1,300 to $1,400 165,000 - 176,000 oz
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
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