Crocodile Gold Corp.
(TSX:CRK)(TSX:CRK.DB)(TSX:CRK.WT)(OTCQX:CROCF)(FRANKFURT:XGC) ("Crocodile Gold"
or the "Company") is announcing its financial results for the three and six
months ended June 30, 2014. All figures are in U.S. dollars, unless stated
otherwise. Full Financial Statements and Management Discussion & Analysis
documents can be found at www.sedar.com and the Company's website,
www.crocgold.com.
Q2 2014 Financial Highlights (All figures in USD unless otherwise noted)
-- Crocodile Gold yielded $69.2 million in revenue from the sale of 53,612
ounces of gold and generated net income of $3.93 million or $0.01/share
for the quarter.
-- Crocodile Gold generated cash flow of $18.2 million or $0.04/share from
its three operating mines, an increase over Q2 2013, despite lower
average realized gold prices.
-- Crocodile Gold ended the quarter with a cash balance of $34.2 million
and working capital of $21.4 million.
-- Average operating cash costs per ounce(i) were $965 and all-in
sustaining cash costs per ounce(i) were $1,316 per ounce, both down
significantly from the previous year as the Company continues to focus
on cost reduction and productivity initiatives.
-- Gold production of 54,024 ounces was a 12% improvement over Q2 2013. The
Company has produced 107,607 ounces of gold in the first six months of
2014, well on track to meet the upper end of its annual guidance of
200,000 - 210,000 ounces.
2014 Q2 Financial Results
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Q2 2014 Q2 2013 YTD 2014 YTD 2013
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Revenue ($) 69,231,729 65,565,845 139,619,365 149,346,337
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Cost of operations,
including depletion
and depreciation ($) (61,103,354) (72,003,225) (124,193,323) (155,991,407)
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Mine operating income
(loss)($) 8,128,375 (6,437,380) 15,426,042 (6,645,070)
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Net income (loss)($) 3,934,331 (90,402,788) 608,594 (72,781,218)
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Net income (loss) per
share ($/share) 0.01 (0.22) 0.00 (0.18)
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Cash from operating
activities ($) 18,184,443 11,028,760 30,643,907 28,588,402
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Investment in mine
development, property,
plant and equipment
($) 16,978,369 20,749,766 33,811,057 39,934,319
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Gold ounces produced 54,024 48,261 107,607 97,183
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Gold ounces sold 53,612 46,610 108,347 96,330
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Average realized gold
price ($) 1,291 1,401 1,289 1,536
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Operating cash costs
per ounce sold ($)(i) 965 1,102 968 1,127
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All-in sustaining cash
costs per ounce sold
($)(i) 1,316 1,603 1,311 1,545
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(i) Refer to non-IFRS measures below
Commenting on the financial results, Rod Lamond, President and CEO, said:
"Crocodile Gold is continuing to demonstrate that it can be a profitable company
in light of the challenging market conditions. Our average operational cash
costs have decreased 12% to $965 per ounce compared to $1,102 per ounce in the
same period last year. This decrease can be attributed to the efforts at the
Cosmo Gold Mine, which continues to perform at consistent production levels
while successfully introducing a new mining contractor in the first quarter. As
well, cost containment and cash flow monitoring efforts continue at all of our
mine sites which have contributed to the positive financial results in the
second quarter of 2014." Mr. Lamond continued; "As we finish the first half of
2014, it is encouraging to see that the Company continues to have positive
operational cash flow while achieving its production targets, and is well on
track to meet the upper end of 2014 gold production guidance. Crocodile Gold
will continue to focus on its philosophy of implementing value-driven
investments for the remainder of the year with our primary focus on supporting
the Big Hill Enhanced Development Project at Stawell."
Second Quarter Financial Discussion
In Q2 2014, Crocodile Gold generated revenue of $69.2 million, up from Q2 2013
as a result of a 12% increase in gold production. Higher revenue from increased
production was offset by the decrease in the gold price, as the average realized
gold price sold dropped to $1,291 in Q2 2014 compared to $1,401 in the
corresponding period of 2013.
The costs of operations for Q2 2014 of $61.1 million were down significantly
from Q2 2013 largely due to decreased depletion and depreciation expense due to
the impact of the impairment charge from 2013 on book values. Cash operating
costs for Q2 2014 are consistent with Q2 2013 in absolute terms, the result of a
focus on productivity and cost reductions as the volume of tonnes mined and
milled have increased significantly from the previous year. The Company has
decreased operating cash costs per ounce by over 12% to $965 as a result of
sustainable production and cost savings at Cosmo, productivity gains at
Fosterville and better defined remnant mining at Stawell. As a result of higher
revenues, decreased depletion and depreciation and reduced operating cash costs
per ounce, mine operating income for Q2 2014 was $8.1 million, up significantly
from Q2 2013.
As a result of these improvements, compared to Q2 2013, the Company posted net
income of $3.93 million in the second quarter of 2014 or $0.01 per share
compared to a net loss of $90.4 million or $0.22 per share in the prior year.
Net income in Q2 2013 was impacted by a significant impairment charge of $151.6
million due to the drop in the gold price which was partially offset by the gain
on the close-out of the gold swap agreements. Net income for the six months
ended June 30, 2014 was $0.6 million or $0.00 per share, which included a loss
of $4.6 million on the revaluation of the contingent payments liability as a
result of the change in the expected timing cash flows resulting from the
dispute resolution process with AuRico Gold Inc. ("AuRico") which ended in Q1
2014. It also included higher care and maintenance costs associated with the
reclamation and processing of a low-grade stockpile in the Northern Territory.
Crocodile Gold generated cash flows from operations in Q2 2014 of $18.2 million
compared to $11.0 million in the prior year due to a 15% increase in ounces sold
and working capital adjustments relating to a decrease in accounts payables and
accruals at June 30, 2013. The Company invested $13.6 million into sustainable
mine development and resource definition at Fosterville and Cosmo, which
specifically included key investments at Fosterville in ventilation and the
tailings facility which will support mine production into the future. The
Company also invested $1.12 million to progress the permitting of the Big Hill
Project, a key growth project in 2014. A further $2.2 million was spent on
property, plant and equipment, with each site continuing to optimize its current
equipment fleet and fixed assets. The Company also made a payment of $2.5
million (C$2.69 million) during the quarter to AuRico under the net free cash
flow sharing arrangement between the two parties as part of the Company's
acquisition of Fosterville and Stawell.
All-in sustaining cash costs were $1,316/oz in Q2 2014, down significantly from
$1,603/oz in Q2 2013 and up slightly from the first quarter of 2014. All-in
sustaining costs in the first half of 2014 include significant investments for
ventilation and tailings facility upgrades at Fosterville, which will sustain
the operation into future years, while the Q2 2013 costs reflect the then
continuing ramp-up at Cosmo and the impact of the transition at Stawell to
smaller scale underground mining. Cosmo in particular demonstrated a significant
decrease in all-in sustaining cash costs per ounce, however this is expected to
increase slightly in the second half of 2014 as the Company invests in
ventilation upgrades and increased exploration drilling to maintain
sustainability into the future. The Company continues to be focused on cost
reduction initiatives across all its operations and departments.
Financial Position
Crocodile Gold continues to be in a strong position to react to the changing
gold price environment through consistent production and value-driven
investments. The Company ended the period with a cash balance of $34.2 million
and working capital of $21.4 million with a reduced debt profile as a full
settlement of the credit facility was completed in Q1 2014. Crocodile Gold made
its first payment to AuRico Gold, however, based on current gold price and
operating plans, no further payments are expected for the remainder of this
year.
Operational Discussion
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Q2 2014 Q2 2013 YTD 2014 YTD 2013
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Northern Territory
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Ore Milled (Tonnes) 213,815 175,708 444,630 327,836
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Average Grade (g/t Au) 3.69 3.50 3.23 3.32
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Recovery (%) 86.3 89.5 86.0 88.2
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Gold Produced (Ounces) 21,845 17,706 39,686 30,875
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Gold Sold (Ounces) 21,977 17,484 41,393 29,793
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Fosterville
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Ore Milled (Tonnes) 202,927 197,769 423,306 387,795
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Average Grade (g/t Au) 3.95 4.32 4.14 4.52
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Recovery (%) 85.7 85.5 84.9 83.5
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Gold Produced (Ounces) 22,198 23,470 47,984 47,026
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Gold Sold (Ounces) 21,509 23,236 47,318 47,506
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Stawell
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Ore Milled (Tonnes) 234,363 238,344 461,990 451,476
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Average Grade (g/t Au) 1.69 1.20 1.70 1.61
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Recovery (%) 78.8 76.5 79.1 82.9
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Gold Produced (Ounces) 9,981 7,085 19,937 19,313
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Gold Sold (Ounces) 10,126 5,890 19,636 19,031
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Consolidated Gold Produced
(Ounces) 54,024 48,261 107,607 97,214
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Consolidated Gold Sold (Ounces) 53,612 46,610 108,347 96,330
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Crocodile Gold produced 54,024 ounces of gold from its three operating mines in
Q2 2014, a 12% increase over the corresponding period of 2013. The year over
year increase reflects consistent production from the Fosterville Gold Mine and
increased sustainable production from the Cosmo Gold Mine compared to 2013, when
commercial production had only been declared on March 1. Cosmo's production has
more than offset reduced ounces from the Stawell Gold Mine which had begun to
wind down its underground operations in the first quarter of 2013.
Cosmo Gold Mine
Following from the successful transition to a new mining contractor at the end
of the first quarter of 2014, the Cosmo Gold Mine posted strong physical results
in the second quarter resulting in gold production of 21,845 ounces. Recovery
rates at the mill have continued to improve over the course of Q2 with June's
recoveries exceeding 92%. Mill grade increased in Q2 as the processing of lower
grade oxide stockpiles for reclamation purposes was completed in Q1. As a result
of sustainable production levels and cost savings achieved through new contracts
for mining and diamond drilling, Cosmo has seen its all-in sustaining cash costs
per ounce decrease by 30% since 2013 and over 20% from Q1 2014. Q3 2014 costs
are expected to increase slightly from the Q2 2014 costs as the Company invests
in ventilation upgrades and exploration drilling and resource definition, which
will support mine production into the future.
Fosterville Gold Mine
The Fosterville Gold Mine continues to achieve consistent ore production, mining
201,459 tonnes at an average grade of 4.09 g/t Au in Q2 2014. Grade is down 9%
compared to Q2 2013 as a result of dilution challenges and model variations.
Grade is expected to improve as mining fronts move into the higher grade Lower
Phoenix area and mine design changes reduce dilution. Mine development continued
at an average advance rate of 630 metres per month, particularly focused on
advancing the Phoenix Decline to access more productive, higher-grade levels of
the Lower Phoenix lens.
Stawell Gold Mine
Stawell continues to invest limited exploration expenditures in order to
maintain the viability of the operations while also looking for additional zones
of mineralization in the upper levels of the mine to sustain underground
operations into future quarters. In Q2 2014, Stawell contributed 9,981 ounces of
gold production, a strong increase over Q3 2013 as remnant mining activities are
now much better defined than was the case on completion of the main production
fronts at depth at Q1 2013.
Crocodile Gold continues to progress the Big Hill Project at Stawell as a key
growth project for 2014. On June 6, 2014, the Company released a positive
Feasibility Study prepared in accordance with NI 43-101 which defined a reserve
for the project and robust project economics. The Feasibility Study followed the
release of the Environmental Effects Statement (EES) for the Big Hill Project in
March, which will form the basis for the Ministerial assessment of the Project
expected later in 2014. The EES was made available for public review and
comment, covering such areas as air quality, noise monitoring, surface and
groundwater assessments, flora and fauna studies, and environmental
rehabilitation. In July 2014, the Project entered into formal Panel Hearings
with government department representatives; with the hearings having now been
completed, the Panel will report its recommendations to the Minister sometime
late Q3 or early Q4, 2014.
About Crocodile Gold
Crocodile Gold is a Canadian gold mining and exploration company with three
operating mines in Australia, in the State of Victoria and the Northern
Territory. The Company has a combined land package in excess of 4,000 sq. km.
The objective of Crocodile Gold is to continue production from its three
operating mines, Cosmo, Fosterville, and Stawell, while also exploring and
developing the Company's resources to ensure sustainable production in the
future.
For additional information, please visit our website www.crocgold.com or follow
us on Twitter @crocgold_crk or on Facebook at CrocodileGoldCorp.
Qualified Person
F. W. Nielsen, P.Geo, Technical Consultant to Crocodile Gold is a "qualified
person" as such term is defined in National Instrument 43-101 and has reviewed
and approved the technical information and data included in this press release.
Cautionary Notes
Non-IFRS Measures
The Company believes that, in addition to conventional measures prepared in
accordance with International Financial Reporting Standards ("IFRS"), certain
investors use non-IFRS information to evaluate the Company's performance and
ability to generate cash flow. Accordingly, the following measurements are
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with IFRS.
Operating Cash Costs per ounce of Gold - The Company calculates operating cash
costs per ounce by deducting silver sales revenue as a by-product from operating
expenses per the consolidated statement of operations, then dividing by the gold
ounces sold during the applicable period. Operating expenses include mine site
operating costs such as mining, processing and administration as well as
royalties, however excludes depletion and depreciation, share-based payments and
rehabilitation costs.
All-In Sustaining Costs per Ounce of Gold - Effective December 31, 2013, the
Company has adopted an all-in sustaining cost ("AISC") performance measure that
reflects all of the expenditures that are required to produce an ounce of gold
from current operations. While there is no standardized meaning of the measure
across the industry, the Company's definition conforms to the AISC definition as
set out by the World Gold Council in its guidance dated June 27, 2013. The World
Gold Council is a non-regulatory, non-profit organization established in 1987
whose members include global senior mining companies. The Company believes that
this measure will be useful to external users in assessing operating performance
and the ability to generate free cash flow from current operations.
The Company defines AISC as the sum of operating cash costs (per above),
sustaining capital (capital required to maintain current operations at existing
levels), capital lease repayments, corporate general and administrative
expenses, in-mine exploration expenses and rehabilitation accretion and
amortization related to current operations. AISC excludes capital expenditure
related to projects to mine expansion, exploration and evaluation related to
growth projects, rehabilitation accretion and amortization not related to
current operations, financing costs, debt repayments, share-based compensation
not related to operations, and taxes.
The operating cash costs per ounce and all-in sustaining costs per ounce are
reconciled to the consolidated statement of operations as follows:
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Q2 2014 Q2 2013 YTD 2014 YTD 2013
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Operating expense per the
consolidated statement
of operations, including
royalties 51,821,752 51,446,261 105,046,126 108,813,709
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By-product silver sales
credit (91,998) (82,832) (171,358) (209,268)
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Operating cash costs 51,729,754 51,363,429 104,874,768 108,604,441
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Sustaining mine
development (1) 13,610,514 18,208,113 27,616,352 28,824,374
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Sustaining capital
expenditures, including
capital lease payments 3,323,711 2,499,195 6,281,278 5,558,455
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General and
administration costs 1,187,625 1,721,177 2,162,300 3,647,886
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Rehabilitation -
accretion and
amortization (operating
sites) 394,440 705,523 661,438 1,253,498
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In-mine exploration
expense 297,047 222,014 493,310 935,871
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All-in sustaining cash
costs 70,543,091 74,719,451 142,089,446 148,824,525
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Gold ounces sold 53,612 46,611 108,347 96,331
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Operating cash costs per
ounce 965 1,102 968 1,127
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All-in sustaining cash
costs per ounce 1,316 1,603 1,311 1,545
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(1) Sustaining mine development are defined as those expenditures which do not
increase annual gold production at a mine operation and exclude expenditures for
growth projects and mine development to commercial production. Total sustaining
capital for the three and six months ending June 30, 2014 and 2013 is calculated
as follows:
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Expenditure on mine
development per the
statement of cash flows 14,777,079 19,723,520 29,758,705 37,580,765
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Less: Cosmo development
before commercial
production - - - (6,353,689)
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Less: Big Hill Project
development costs (1,166,565) (1,515,407) (2,142,353) (2,402,702)
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13,610,514 18,208,113 27,616,352 28,824,374
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Forward-Looking Information
Certain information set forth in this press release contains "forward-looking
statements", and "forward-looking information under applicable securities laws.
Except for statements of historical fact, certain information contained herein
constitutes forward-looking statements, which include the Company's expectations
for future performance based on current drill results and past production,
expected gold prices, and mineral resource estimates, and are based on Crocodile
Gold's current internal expectations, estimates, projections, assumptions and
beliefs, which may prove to be incorrect. Some of the forward-looking statements
may be identified by words such as "expects", "anticipates", "believes",
"projects", "plans", and similar expressions. These statements are not
guarantees of future performance and undue reliance should not be placed on
them. Such forward-looking statements necessarily involve known and unknown
risks and uncertainties, which may cause Crocodile Gold's actual performance and
financial results in future periods to differ materially from any projections of
future performance or results expressed or implied by such forward-looking
statements. These risks and uncertainties include, but are not limited to:
liabilities inherent in mine development and production; geological, mining and
processing technical problems; Crocodile Gold's inability to obtain required
mine licences, mine permits and regulatory approvals required in connection with
mining and mineral processing operations; competition for, among other things,
capital, acquisitions of reserves, undeveloped lands and skilled personnel;
incorrect assessments of the value of acquisitions; changes in commodity prices
and exchange rates; currency and interest rate fluctuations; various events that
could disrupt operations and/or the transportation of mineral products,
including labour stoppages and severe weather conditions; the demand for and
availability of rail, port and other transportation services; the ability to
secure adequate financing and management's ability to anticipate and manage the
foregoing factors and risks. There can be no assurance that forward-looking
statements will prove to be accurate, and actual results and future events could
differ materially from those anticipated in such statements. Crocodile Gold
undertakes no obligation to update forward-looking statements if circumstances
or management's estimates or opinions should change except as required by
applicable securities laws. The reader is cautioned not to place undue reliance
on forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Crocodile Gold Corp.
Rob Hopkins
Manager, Investor Relations
416-861-5899
info@crocgold.com
www.crocgold.com