Golden Band Resources reports results for the quarter ended January 31, 2013
SASKATOON, SK, April 2, 2013 /CNW/ - Golden Band Resources Inc. (Golden Band or Company) (TSXV: GBN; OTCQX: GBRIF) today reported results for the quarter ended January 31, 2013. All dollar amounts presented are Canadian dollars, unless otherwise specified.
2013 Third Quarter Highlights
- Processed 31,813 tonnes ore at the Jolu mill with a recovery rate of 91.4% and 3,767 poured ounces.
- Gold sales were 3,882 ounces at an average gold price of $1,656 for revenue of $6,430,023.
- Production from Roy Lloyd underground operations totalled 13,246 tonnes of ore at an average grade of 6.59 g/t gold.
- Production from Komis open pit operations totalled 32,935 tonnes of ore at an average grade of 2.40 g/t gold.
For the quarter ended January 31, 2013 (Q3 2013), the Company had a net loss of $7.4 million on gold sales revenue of $6.4 million, from the sale of 3,882 gold ounces at an average realized gold price of $1,656 per ounce. For the quarter ended January 31, 2012 (Q3 2012), the Company had a net loss of $0.08 million, on gold sales revenue of $17.1 million, from sales of 9,969 gold ounces at an average realized gold price of $1,711 per ounce.
Cash costs per ounce of gold sold in Q3 2013 were $2,827, up from $988 per ounce of gold sold in Q3 2012, largely as a result of the lower grade ore from Roy Lloyd mine and Komis. The average mill head grade for Q3 2013 was 4.63 g/t gold compared to 10.98 g/t gold for the same period in the previous year. Non-cash cost of sales (depletion and depreciation) was $317 per ounce of gold sold in Q3 2013, which is lower than Q3 2012 of $592 per ounce due to the decrease in poured ounces. The capitalized costs of the Roy Lloyd mine and Jolu mill are being depreciated over the measured and indicated resources as currently delineated at a rate that is equal to produced ounces.
| Three Months Ended January 31st | Nine Months Ended January 31st | |||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | |
| Highlights | ||||||
| Revenue - CDN $ 000's | 6,430 | 17,053 | -62% | 31,790 | 52,692 | -40% |
| Cost of sales - CDN $ 000's | 12,206 | 15,748 | -22% | 43,465 | 46,700 | -7% |
| Gross margin - CDN $ 000's | -5,776 | 1,305 | -543% | -11,675 | 5,992 | -295% |
| Net (Loss) income from operations - CDN $ 000's | -6,838 | 89 | -7,783% | -15,482 | 1,478 | 1,147% |
| Net (loss) income - CDN $ 000's | -7,381 | -81 | -9,012% | -13,715 | -1,097 | -1,150% |
| Cash from operations - CDN $ 000's | 1,418 | 6,533 | 78% | 123 | 27,141 | 100% |
| Capital expenditures - CDN $ 000's | 3,055 | 5,479 | -44% | 12,504 | 15,351 | -19% |
| Average gold spot price -CDN $/oz | 1,682 | 1,685 | 0% | 1,661 | 1,634 | 2% |
| Average realized gold price - CDN$/oz | 1,656 | 1,711 | -3% | 1,611 | 1,649 | -2% |
| Gold sold - ounces | 3,882 | 9,969 | -61% | 19,731 | 31,950 | -38% |
| Cost of sales - CDN $/oz sold | 3,144 | 1,580 | 99% | 2,203 | 1,462 | 51% |
| Gold produced - ounces | 3,767 | 9,679 | -61% | 19,201 | 32,482 | -41% |
| Total cash cost - CDN $ 000's | 11,322 | 12,586 | -10% | 32,754 | 32,500 | 1% |
| Total cash cost - CDN $/oz produced | 3,006 | 1,300 | 131% | 1,706 | 1,001 | 70% |
| Total production cost - CDN $/oz produced | 3,334 | 2,008 | 66% | 2,072 | 1,574 | 32% |
| Tonnes mined | ||||||
| Roy Lloyd - underground (1) | 13,695 | 27,350 | -50% | 59,504 | 82,278(3) | -28% |
| Roy Lloyd North - open pit(1) | - | - | -% | 109,736 | - | 100% |
| Komis - open pit (2) | 438,911 | - | 100% | 582,236 | - | 100% |
| EP - open pit | - | 466,278 | -100% | - | 511,323(3) | -100% |
| Alimak/Jolu - open pit | - | - | -% | - | 206,035 | -100% |
| Total | 452,606 | 493,628 | -8% | 751,476 | 799,636(3) | -6% |
| Capital expenditures | ||||||
| Roy Lloyd - underground - CDN $ 000's | 944 | 2,785 | -66% | 2,765 | 6,918 | -60% |
| Komis - open pit - CDN $ 000's | 1,852 | 2,750 | -33% | 7,802 | 6,989 | 12% |
| Other - CDN $ 000's | 259 | -56 | 563% | 1,937 | 1,444 | 34% |
| Total | 3,055 | 5,479 | -44% | 12,504 | 15,351 | -19% |
| Three Months Ended January 31st | Nine Months Ended January 31st | |||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | |
| Jolu Mill | ||||||
| Milled tonnes | 31,813 | 30,382 | 5% | 98,805 | 91,905 | 8% |
| Average mill head grade - g/t | 4.63 | 10.98 | -58% | 6.53 | 11.03 | -41% |
| Recovery - % | 91.37% | 92.81% | -2% | 93.78% | 93.57% | 0% |
| Gold produced - ounces | 3,767 | 9,679 | -61% | 19,201 | 32,482 | -37% |
| (1) Roy Lloyd includes only operating waste and ore tonnes (2) Komis open pit activity has been capitalized as part of commissioning until December 2012 (3) Q2 2012 comparatives inadvertently showed annual total instead of six months ended. Numbers reported above have been corrected. |
The Company poured 3,767 gold ounces in Q3 2013 compared to 9,679 gold ounces in Q3 2012. The reduction in gold production was a result of lower grade ore from Roy Lloyd mine as scheduled, and dilution due to challenges faced with shrink stoping. The delay in getting Komis mine into production also impacted gold poured in Q3 2013 as a higher percentage of mill feed was sourced from near-surface ore, which has a lower grade than ore at depth.
The Company processed 31,813 tonnes of ore at the Jolu mill with a mill head grade of 4.63 g/t gold in Q3 2013, compared 30,382 tonnes at an average head grade of 10.98 g/t gold in Q3 2012.
Total cash cost per ounce produced was $3,006 in Q3 2013 compared to total cash cost per ounce produced of $1,300 in Q3 2012 (total cash cost per ounce produced is a non-GAAP measure and is discussed under 'Non-GAAP Measures" in this news release). The increase in total cash per ounce poured is attributable to the lower production and lower mine grades from Roy Lloyd, Komis, and Roy Lloyd North stockpiles. At Roy Lloyd total mine operating costs decreased by 17% over last quarter due to shrink stope mining methods in certain areas of the mine. Komis open pit started with the first blast in October 2012 but did not reach constant production levels until December 2012. From December 1, 2012 the costs are classified as operating costs. The grade and volumes never reached design expectations, therefore management initiated a temporary halt of production until a review is completed.
Cash from operations was $1.4 million for Q3 2013 reflecting lower production and sales compared to Q3 2012, as well as an average realized gold price of $1,656 per ounce compared to $1,711 per ounce in Q3 2012.
Capital expenditures for the Q3 2013 were $3.1 million with $916,000 spent on mine development and $28,000 on resource delineation drilling below the 1175 level at the Roy Lloyd mine. There was approximately $1.9 million spent on pre-stripping in Q3 2013 at Komis as commissioning of the mine continued. In addition, approximately $259,000 was spent on resource properties, upgrading of the tailings management facilities at the Jolu mill and mine, mill and equipment purchases.
Nine months ended January 31, 2013
Revenue for the nine months ended January 31, 2013 was $31.8 million on sales of 19,731 gold ounces at an average realized price of $1,611 per ounce compared to $52.7 million on sales of 31,950 gold ounces at an average realized price of $1,649 per ounce for the nine month ended January 31, 2012.
Gold production for the nine months ended January 31, 2013 was 19,201 ounces compared to 32,482 ounces for the nine months ended January 31, 2012. Production for the nine months was impacted by the transition to the shrink stoping method of mining at Roy Lloyd mine and the delay getting Komis into production.
Total cash cost per ounce produced for the nine months ended January 31, 2013 was $1,706 per ounce. This was higher than expected and reflects the lower grades mined.
Other expenses for the nine months ended January 31, 2013 were $3.8 million, down from $4.5 million for the nine months ended January 31, 2012. This was mainly due to minimal exploration programs and decrease in share-based compensation expense.
The Company incurred a net loss of $13.7 million in the nine months ended January 31, 2013 compared to a net loss of $1.1 million in the nine months ended January 31, 2012. This included a loss from operations of $15.5 million in the nine months ended January 31, 2013, attributable to production issues at the Roy Lloyd mine.
For the nine months ended January 31, 2013, capital expenditures were $12.5 million. Approximately $2.8 million of that was spent at Roy Lloyd mine on development and resource delineation. That program included both surface and underground drilling to delineate additional ounces below the 1175 level. At Komis, $7.8 million was expended on stripping costs of the open pit, which was capitalized during the commissioning phase. In addition, $1.9 million was expended on the tailings management facilities, other capital resource property projects and mine, mill and equipment.
For the nine months ended January 31, 2013, the Company produced cash from operations of $0.1 million, mainly due to lower production and grade, compared to cash provided by operations for the nine months ended January 31, 2012 of $27.1 million. For the nine months ended January 31, 2013, the Company received loan proceeds of $18.0 million, repaid a loan in the amount of $5.5 million and made investments in mine, mill and equipment and exploration and development assets of $12.6 million, compared to a repayment of a loan of $8.7 million and investments in mine, mill and equipment and exploration and development assets of $15.3 million for the nine months ended January 31, 2012.
On April 30, 2012, the Company had an accumulated working capital deficit of $15.0 million and in early August 2012, entered into a $20 million term debt facility agreement, with $12.5 million drawn to January 31, 2013. Principal repayments of $1.7 million per month commence in August, 2013. (See note 9 to the financial statements as well as the news release dated August 3, 2012 for loan terms).
Subsequent to January 31, 2013, the term debt facility was re-assigned to Procon Resources Inc. (See news release dated February 26, 2013). Also subsequent to January 31, 2013, as a part of the restructuring process, a new chief executive officer, a new chief financial officer and new directors were appointed to the Board of Directors (see news releases dated February 22, 2013 and March 5 & 14, 2013). The new Board is in the process of reviewing alternatives to put the Company's operations back into a profitable position.
2013 Fiscal Year Outlook
Golden Band's annual gold production is now forecast to be approximately 22,000 ounces.
Roy Lloyd mine will continue with a combination of long hole and shrink stope mining methods and the daily production target is 150 tonnes per day at a grade averaging just under 10.0 g/t gold.
As announced in the news release dated February 26, 2013, the Komis open pit mine has been temporarily suspended, and the mine plan and resources are being reviewed by a third party geologic consultant.
As announced in the news release dated March 27, 2013 the Jolu Mill has been temporarily shut down for upgrades and modifications until sufficient stockpiles are built to sustain a 550 tonne per day feed.
For the remainder of the 2013 fiscal year, capital will be spent on improving the road to the Golden Heart deposit which will facilitate the development of the open pit for mining which is anticipated to commence mid 2013.
For exploration for the 2013 fiscal year, the Company and its joint venture partner, Masuparia Gold Corporation, will be participating in a bulk sample of the Greywacke deposit. The bulk sample is expected to be approximately 6,000 - 8,000 tonnes which will be processed at the Jolu mill.
Mr. Paul Saxton, P. Eng., the Company's Chief Executive Officer and a "Qualified Person" under National Instrument 43-101, reviewed and approved the scientific and technical information contained in this news release.
Non-GAAP Measures
Total cash cost per ounce produced is a non-GAAP performance measure used to better assess the Company's performance for the current period and its expected performance in the future. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this measure to evaluate the Company's performance and cash generating capabilities.
Total cash cost per ounce produced is calculated by dividing total cash costs by gold ounces produced for the relevant period. Total production cost per ounce produced includes total cash cost plus depreciation, depletion and amortization divided by gold ounces produced for the relevant period.
About Golden Band
Golden Band Resources is a gold producer operating in the La Ronge gold belt in northern Saskatchewan and is listed on the TSX Venture Exchange in Canada under the symbol GBN and traded in the United States on the OTCQX under the symbol GBRIF. The Company has two producing mines, Roy Lloyd and Komis. Commercial production was declared on April 1, 2011. On February 26, 2013, the Company announced a temporary halt of mining at the Komis deposit to free up equipment and personnel for the construction of road access to the Golden Heart deposit. Operations at the Company's Roy Lloyd mine continue and Jolu Mill operations will be suspended until mill capacity can be improved. The Company has been actively exploring the La Ronge Gold Belt since 1994 and has assembled a land package of 870 km2, including 13 known gold deposits and four former producing mines, being Jolu, Decade, Star Lake and Komis. The Company plans to undertake aggressive drill programs throughout the La Ronge Gold Project with the goal of significantly expanding the existing NI 43-101 gold resources that have been identified to date.
On behalf of the Board of Directors of Golden Band Resources Inc.,
"Paul Saxton"
Paul Saxton, Chairman and CEO
Caution Regarding Forward-Looking Information and Statements
This news release includes certain forward-looking statements or information. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the restructuring of Komis and other operations, estimates of production, costs of production, the sufficiency and availability of capital and financing and other future plans, objectives or expectations of Golden Band Resources Inc. (Company) are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's plans or expectations include risks relating to the actual results of current exploration activities, fluctuating gold prices, possibility of equipment breakdowns and delays, cost overruns, availability of capital and financing, general economic, market or business conditions, regulatory changes, timeliness of government or regulatory approvals and other risks detailed herein and from time to time in the filings made by the Company.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Golden Band Resources Inc.
Investor Relations:
Raju Wani: 403 240 0555
Tony Perri: 604 682 6852
Email: [email protected]
www.goldenbandresources.com
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