Alio Gold Inc (TSX:ALO) (NYSE AMERICAN:ALO) (“Alio
Gold” or the “Company”), announces 2018 production and cost
guidance for the San Francisco Mine in Sonora, Mexico.
Highlights
- Forecast gold production to increase to between 90,000 and
100,000 ounces
- All-in sustaining costs1,3 (“AISC”) between $1,000 and $1,100
per ounce
- Total capital and mine site exploration spending between $2.5
and $3.0 million
“After a turn-around year in 2017, we are
expecting the San Francisco Mine to return to consistent gold
production at 90,000 to 100,000 ounces this year compared to 83,558
ounces in 2017,” said Greg McCunn, Chief Executive Officer. “In
2017 we undertook a significant waste stripping campaign to open up
the main pit. As a result, we now have increased mining
flexibility and the ability to deliver consistent ore feed to the
leach pads.
"Additionally, we have implemented a dual
cut-off strategy in the mining operations. The strategy
involves trucking lower grade run-of-mine ore to old heap leach
pads while higher cut off grade material will be fed to the
crusher. Subsequently, the waste stripping expansionary capital
contemplated in the revitalization plan will now be included within
AISC. During 2018 we will continue to focus on cost efficiencies to
drive down our costs and improve overall productivity."
The mine’s 2018 total capital expenditure,
including mine site exploration drilling, is expected to be between
$2.5 and $3.0 million primarily for the expansion of the heap leach
pad phase 6B.
The company expects to release its 2017 audited
financial results including an update on the revitalization plan at
San Francisco and the Ana Paula project on February 21, 2018.
Management will hold a conference call that day at 11:00am
EST. Conference call details are available on the Company’s
website at www.aliogold.com
About Alio Gold
Alio Gold is a growth oriented gold mining
company, focused on exploration, development and production in
Mexico. Its principal assets include its 100%-owned and
operating San Francisco Mine in Sonora, Mexico and its 100%-owned
development stage Ana Paula Project in Guerrero, Mexico. Located
within the highly prospective Guerrero Gold Belt on 56,000 hectares
of underexplored land the Ana Paula Project is a high-grade, high
margin project currently in the definitive feasibility stage. An
underground decline to provide access for an exploration drill
program has been initiated targeting the continuation of the
high-grade gold mineralization below the proposed pit which has the
potential to significantly enhance the robust economics of the
project. The Company also has a portfolio of other exploration
properties, all of which are located in Mexico.
Footnotes:
1) Non-GAAP Measure: All-in sustaining cost per gold ounce
The Company has adopted an all-in sustaining cost per ounce on a
by-product basis performance measure which is calculated based on
the guidance note issued by the World Gold Council. Management uses
this information as an additional measure to evaluate the Company’s
performance and ability to generate cash.
All-in sustaining costs on a by-product basis
include total production cash costs, corporate and administrative
expenses, sustaining capital expenditures and accretion for site
reclamation and closure costs. These reclamation and closure costs
represent the gradual unwinding of the discounted liability to
rehabilitate the area around the Mine at the end of the mine life.
The Company believes this measure to be representative of the total
costs associated with producing gold; however, this performance
measure has no standardized meaning. As such, there are likely to
be differences in the method of computation when compared to
similar measures presented by other issuers.
2) Non-GAAP Measure: Cash cost per gold ounce and cash cost per
gold ounce on a by-product basis
Cash cost per gold ounce and cash cost per gold
ounce on a by-product basis are non-GAAP performance measures that
management uses to assess the Company’s performance and its
expected future performance. The Company has included the non-GAAP
performance measures of cash cost per gold ounce and cash cost per
gold ounce on a by-product basis throughout this document. In the
gold mining industry, these are common performance measures but
they do not have any standardized meaning. As such, they are
unlikely to be comparable to similar measures presented by other
issuers.
Management believes that, in addition to
conventional measures prepared in accordance with GAAP, certain
investors use this information to evaluate the Company’s
performance and ability to generate cash flow. Accordingly,
presentation of these measures is to provide additional information
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
The cash cost per gold ounce is calculated by
dividing the operating production costs by the total number of gold
ounces sold. The cash cost per gold ounce on a by-product basis is
calculated by deducting the by-product silver credits per gold
ounce sold from the cash cost per gold ounce.
3) Assumptions used to forecast AISC and cash costs for 2018
include: $1,250 per ounce for gold, $18 per ounce for silver and
the Canadian dollar and Mexican peso at $1.30 and 18.00
respectively to the US dollar.
Cautionary Note Regarding
Forward-Looking StatementsCertain statements and
information contained in this news release constitute
“forward-looking statements” within the meaning of applicable U.S.
securities laws and “forward-looking information” within the
meaning of applicable Canadian securities laws, which we refer to
collectively as “forward-looking statements”. Forward-looking
statements are statements and information regarding possible
events, conditions or results of operations that are based upon
assumptions about future economic conditions and courses of action.
All statements and information other than statements of historical
fact may be forward-looking statements. In some cases,
forward-looking statements can be identified by the use of words
such as “seek”, “expect”, “anticipate”, “budget”, “plan”,
“estimate”, “continue”, “forecast”, “intend”, “believe”, “predict”,
“potential”, “target”, “may”, “could”, “would”, “might”, “will” and
similar words or phrases (including negative variations) suggesting
future outcomes or statements regarding an outlook.
Forward-looking statements in news release
herein by reference include, but are not limited to statements and
information regarding: the Company's future mining activities,
including mining capacity, recovery, cash costs, production and
mine life; the Company's reserves and resources estimates; the
Company’s exploration and development plans, including anticipated
costs and timing thereof; the Company’s plans for growth through
exploration activities, acquisitions or otherwise; and expectations
regarding future maintenance and capital expenditures, working
capital requirements, the availability of financing and future
effective tax rates. Such forward-looking statements are based on a
number of material factors and assumptions, including, but not
limited to: that contracted parties provide goods or services in a
timely manner, that no unusual geological or technical problems
occur, that plant and equipment function as anticipated and that
there is no material adverse change in the price of gold, costs
associated with production or recovery. Forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause actual results, performance or achievements, or
industry results, to differ materially from those anticipated in
such forward-looking statements. The Company believes the
expectations reflected in such forward-looking statements are
reasonable, but no assurance can be given that these expectations
will prove to be correct and you are cautioned not to place undue
reliance on forward-looking statements contained herein.
Some of the risks and other factors which could
cause actual results to differ materially from those expressed in
the forward-looking statements contained in this news release
herein by reference include, but are not limited to: risks and
uncertainties relating to the interpretation of drill results, the
geology, grade and continuity of mineral deposits and conclusions
of economic evaluations; results of initial feasibility,
pre-feasibility and feasibility studies, and the possibility that
future exploration, development or mining results will not be
consistent with the Company’s expectations; risks relating to
possible variations in reserves, resources, grade, planned mining
dilution and ore loss, or recovery rates and changes in project
parameters as plans continue to be refined; mining and development
risks, including risks related to accidents, equipment breakdowns,
labour disputes (including work stoppages and strikes) or other
unanticipated difficulties with or interruptions in exploration and
development; the potential for delays in exploration or development
activities or the completion of feasibility studies; risks related
to the inherent uncertainty of production and cost estimates and
the potential for unexpected costs and expenses; risks related to
commodity price and foreign exchange rate fluctuations; the
uncertainty of profitability based upon the cyclical nature of the
industry in which the Company operates; risks related to failure to
obtain adequate financing on a timely basis and on acceptable terms
or delays in obtaining governmental or local community approvals or
in the completion of development or construction activities; risks
related to environmental regulation and liability; political and
regulatory risks associated with mining and exploration; risks
related to the uncertain global economic environment; and other
factors contained in the section entitled “Risks and Uncertainties”
per above.
Although the Company has attempted to identify
important factors that could cause actual results or events to
differ materially from those described in the forward-looking
statements, you are cautioned that this list is not exhaustive and
there may be other factors that the Company has not identified.
Furthermore, the Company undertakes no obligation to update or
revise any forward-looking statements included in, or incorporated
by reference in, this news release if these beliefs, estimates and
opinions or other circumstances should change, except as otherwise
required by applicable law.
For further information, please
contact:
Lynette GouldVice President, Investor
Relations604-638-8976lynette.gould@aliogold.com
Neither the TSX nor its Regulation Services
Provider (as that term is defined in the policies of the TSX) nor
the New York Stock Exchange MKT accepts responsibility for the
adequacy or accuracy of this news release.
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