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Calibre Reports Second Quarter 2020 Financial and Operating Results

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Calibre Reports Second Quarter 2020 Financial and Operating Results

 

 

 

 

 

 

Calibre Mining Corp. (TSX: CXB) (OTCQX: CXBMF) announces financial and operational results for the three months ended June 30, 2020.  Full Condensed Interim Consolidated Financial Statements and the Management Discussion & Analysis can be found at www.sedar.com and the Company’s website, www.calibremining.com.  All figures are expressed in U.S. dollars.

 

On March 25, 2020, the Company initiated a temporary suspension of operations related to the global pandemic.  Following a 10-week suspension, the Company commenced a phased restart of operations around mid-June and returned to steady-state production levels during July 2020.

 

Q2 2020 OVERVIEW

 

  • Produced 6,010 ounces of gold and sold 9,426 ounces of gold
     
  • Reported a Net loss of $(5.4) million ($(0.02) per share)
     
  • Announced an expanded 2020 exploration drilling program
    • Near-mine drilling increased by 30%, from 47,000 meters to 60,000 meters; and
    • Added 20,000 meters of unbudgeted infill drilling designed to upgrade inferred resources to indicated resources.
       
  • Announced revised 2020 outlook incorporating 10-week shutdown in second quarter
    • Between 110,000 and 125,000 ounces of gold production; and
    • All-In Sustaining Costs1 (“AISC”) of between $1,070 and $1,100 per ounce
       
  • Strong start to the third quarter with ‘hub-and-spoke’ operations delivering 15,879 ounces in July

 

Russell Ball, CEO of Calibre stated: “After the second-quarter shutdown and recent restart of operations, the third quarter has started on a positive note.  We recently recommenced operations at our Jabali Underground mine and following the receipt of the permit for the development of Pavon Norte, development activities are now well underway.  Pavon Norte represents a high-grade ore source for the Libertad Complex, with first ore expected to be mined and processed by the end of the first quarter of 2021 utilizing our ‘hub-and-spoke’ operating philosophy.” 

 

CONSOLIDATED RESULTS SUMMARY – FOR THE THREE MONTHS ENDED JUNE 30, 2020

 

Financial Results

 

$’000 (except per share and per ounce amounts) Q2 2020 Q2 2019
Revenue $   15,910 $   – 
Cost of sales (including depreciation and amortization)     (10,117)     – 
Mine operating income     5,793     – 
Net (loss)     (5,412)     (469)
Net (loss) per share (basic and diluted)     (0.02)     (0.01)
Cash (utilized in) operating activities     (13,421)     (314)
CAPEX:  Mine development and PPE     3,522     – 
CAPEX:  Exploration     1,964     480 
Average realized gold price ($/ounce)(1)     1,688     – 
Total Cash Costs ($/ounce)(1)     955     – 
AISC ($/ounce)(1) $   1,426 $   – 

 

 

Operational Results

 

  Q2 2020 YTD 2020
Ore Mined (t)   191,347   778,931
Ore Milled (t)   197,082   721,182
Grade (g/t Au)   2.13   2.43
Recovery (%)   91.2   91.7
Gold Ounces Produced 6,010   48,095
Gold Ounces Sold 9,426 48,181

 

Q2 2020 OPERATIONS

 

The Limon and Libertad mines had limited operation during Q2 2020 as a result of the temporary suspension in April 2020 and the restart during June 2020.  The mines reached steady-state operations again in July 2020.

 

Limon

 

Total mine production consisted of 47,576 ore tonnes at an average grade of 3.68 g/t gold.  The majority of mine production came from the Limon Central Phase 2 open-pit (26,236 tonnes at an average grade of 3.38 g/t gold), the LC Phase 1 open-pit (9,282 tonnes at an average grade of 3.81 g/t gold), the Santa Pancha underground mine (9,768 tonnes at an average grades of 4.23 g/t gold), with the remaining tonnes mined from Veta Nueva underground. 

 

Limon produced 2,837 gold ounces driven by an average mill grade of 3.85 g/t gold and recovery of 90.4% from 50,805 tonnes of ore milled.  The in-circuit inventory during the quarter increased by 2,500 ounces.  As milling activities were ramping back to steady-state levels, mill feed was derived from low-grade ore stockpiles.

 

Total capital expenditures were $2.0 million, including $1.0 million of capitalized stripping of LC Phase 2, $0.5 million for the advancement of the Veta Nueva mine and $0.2 million of sustaining capital for the San Jose Tailings Storage Facility expansion.  In addition, the Company spent $0.5 million on exploration at Limon Norte and Panteon.

 

Libertad

 

The majority of Libertad’s production consisted of 34,499 tonnes of ore from the Jabali open-pit grading 3.06 g/t gold and 102,197 tonnes grading 0.85 g/t gold from “spent ore” stockpiles, which was utilized to restart operations at the mill.  Production included 7,074 tonnes of ore purchased from artisanal miners at Pavon with an average grade of 12.90 g/t gold. 

 

Calibre continued to execute its ‘hub-and-spoke’ approach during the second quarter with 18,912 tonnes of ore mined at Limon and processed at Libertad.  Libertad produced 3,173 ounces of gold from 146,277 tonnes of ore milled at an average grade of 1.54 g/t gold at an average recovery rate of 91.9%.  The in-circuit inventory during the quarter increased by 3,400 ounces.  ‘Spent ore’ stockpiles were utilized as mill feed to ramp-up to normal levels during the restart of operations in June 2020.

 

For the second quarter, capital expenditures totaled $1.5 million, including $0.2 million for advancement at Pavon and $0.9 million for the resettlement of households to enable the Jabali underground operation to recommence.  Exploration drilling of $0.9 million was incurred at Jabali, Tranca, and Rosario.

 

CONSOLIDATED Q2 2020 FINANCIAL REVIEW

 

Mining Operations

 

The Company sold 9,426 ounces of gold at an average realized price of $1,688 per ounce for revenue of $15.9 million.  The majority of the ounces sold were in April 2020 as the Company was in the process of suspending operations and reducing in-circuit inventories.  There was only a small amount of gold poured in June 2020 as the Company started its phased resumption of operations and replenished in-circuit inventory levels.

 

Total cost of sales included production costs of $8.1 million, royalties and production taxes of $0.9 million, refinery and transportation of $0.1 million and depreciation of $1.1 million.  The significant reduction in overall cost of sales reflects the Company’s 10-week suspension of operations.  During June 2020, the majority of mining and production costs incurred during the restart were accumulated in ore stockpile and in-circuit inventory, as there was minimal production during the second half of June. 

 

Mine operating income was $5.8 million with $2.8 million from Limon and $3.0 million from Libertad. 

 

Total Cash Costs(1) were $955 per ounce and AISC(1) were $1,426 per ounce.  The higher per ounce costs for the second quarter reflects the fixed-cost nature of the business during a time when there was limited production and sales of gold, negatively impacting costs on a per-unit basis. 

 

Expenses and Net Income

 

G&A totaled $1.7 million compared to $0.5 million in the second quarter of 2019.  The increase is the result of additions to and enhancements of the senior management team required for the transition from exploration to gold producer.  The decrease in G&A expenses from Q1 2020 ($2.4 million) reflects the decrease in overall activity resulting from the temporary suspension.

 

Share-based compensation was $1.5 million compared to $0.1 million for the second quarter of 2019.  The increase is primarily related to the granting of options and RSUs in the fourth quarter of 2019 in connection with the acquisition of the assets from B2Gold.

 

The Company incurred $7.1 million in care and maintenance expenditures (Q2 2019: $Nil) to maintain the operations in a state of readiness during the temporary suspension.  The costs include the costs of retaining employees, security/monitoring costs and contractor standby costs.

 

Current and deferred income tax expense was $2.0 million during the second quarter.  Current and deferred tax expense includes Alternative Minimum Taxes and Ad Valorem Taxes paid by the Company.

 

As a result of the above, the Net (loss) per share (both basic and diluted) was $(0.02) for the second quarter (Q2 2019: $(0.01)).

 

OUTLOOK

 

Calibre’s asset base includes multiple ore sources, 2.7 million tonnes per annum of installed mill capacity from two processing facilities, reliable in-country infrastructure and favorable transportation costs.  The Company will continue to optimize its consolidated mine and process plans as we progress our ‘hub-and-spoke’ approach to maximizing value from our integrated asset base and allow us to quickly translate exploration success into production and cash flow with almost no process-related capital or permitting required.

 

On June 24, 2020, the Company announced its revised 2020 production and cost outlook following the temporary suspension of operations:

 

 

  Limon Libertad Consolidated Original 2020 Outlook
Gold Production (ounces)  55,000 – 62,500  55,000 – 62,500  110,000 – 125,000  140,000 – 150,000
Total Cash Costs ($/oz)(1)  $800 – $840  $950 – $990  $880 – $920  $840 – $890
AISC ($/oz)(1)  $980 – $1,020  $1,050 – $1,090  $1,070 – $1,100  $1,020 – $1,060
Growth Capital ($ millions)  $19 – $20  $8 – $9  $27 – $29  $24 – $28
Exploration ($ millions)  $5 – $6  $9 – $10  $14 – $16  $12 – $14
G&A ($ millions)  N/A  N/A  $7 – $8  $6 – $7

 

Following a 10-week suspension of operations, Calibre now expects 2020 gold production of between 110,000 and 125,000 ounces at Total Cash Costs(1) of between $880 and $920, and AISC(1) of between $1,070 and $1,100 an ounce, respectively.   The $40 increase in AISC(1) guidance (or 4%) resulted from the unbudgeted increase in the Company’s exploration and infill drilling programs. The higher AISC(1) was also due to the lower gold sales during the period due to the temporary suspension of operations.

 

The Company has resumed exploration drilling with an expanded 60,000 meter program (increased from 47,000 meters).  In addition, an unbudgeted 20,000 meter infill drilling program is underway, targeting a significant upgrade in inferred resources to indicated resources for inclusion in the Company’s end of year 2020 Mineral Reserve and Resource estimate. 

 

Subsequent to June 30, 2020, the Company received the key environmental permit from the Ministry of Environment and Natural Resources for the development of Pavon Norte.  The approval of Pavon Norte marks a significant milestone in the Company’s efforts to increase production and extend the life of the Libertad Complex by processing ores mined from satellite deposits, in line with the Company’s ‘hub-and-spoke’ operating philosophy.  With road construction to the project currently underway, Calibre is well-positioned to commence open-pit ore production from Pavon Norte before the end of the first quarter of 2021.

 

Qualified Person

 

Darren Hall, MAusIMM, SVP & Chief Operating Officer of Calibre Mining Corp. is a “qualified person” as set out under NI 43-101 has reviewed and approved the scientific and technical information in this news release. 

About Calibre Mining Corp.

 

Calibre Mining is a Canadian-listed gold mining and exploration company with two 100%-owned operating gold mines in Nicaragua. The Company is focused on sustainable operating performance and a disciplined approach to growth.  Since the acquisition of the Limon, Libertad gold mines and Pavon Gold Project, Calibre has proceeded to integrate its operations into a ‘hub-and-spoke’ operating philosophy whereby the Company can take advantage of reliable infrastructure, favorable transportation costs, and multiple high-grade ore sources that can be processed at either Limon or Libertad, which have a combined 2.7 million tonnes of annual mill throughput capacity.

 

Posted August 10, 2020

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