TORONTO, April 27, 2016 /PRNewswire/ - AuRico
Metals Inc. (TSX: AMI),("AuRico" or the "Company") today
reported its financial results for the quarter ended March 31, 2016. For complete details of the
Financial Statements and associated Management's Discussion and
Analysis for the quarter ended March 31,
2016, please see the Company's filings on SEDAR
(www.sedar.com) or the Company's website (www.auricometals.ca). All
amounts are in US dollars unless otherwise indicated.
Recent Highlights
- During Q1 2016, recognized royalty revenue of $1.7 million, comprised of $0.7 million from the Young-Davidson royalty, $0.7
million from the Fosterville royalty and $0.3 million from the Hemlo, Eagle
River and Stawell royalties. The Company re-confirms its
2016 royalty revenue guidance of $6.6
million to $7.1 million;
- During Q1 2016, Newmarket
announced that the reserves associated with the Company's
Fosterville royalty increased by
34%, after depletion, and total Measured & Indicated resources
increased by 5% as at December 31,
2015;
- On March 31, 2016, finalized an
acquisition credit facility with Macquarie Group for up to
$15.0 million to support potential
royalty acquisitions;
- On March 23, 2016, announced an
updated Kemess Underground feasibility study which confirmed the
potential for the development of a large, low-cost panel caving
operation;
- On March 23, 2016, announced an
updated Kemess East mineral resource which included a high grade
core estimated to contain Indicated Resources of 19.2 million
tonnes grading 0.47% copper and 0.72 gold grams per tonne as well
as Inferred Resources of 31.7 million tonnes grading 0.45% copper
and 0.63 gold grams per tonne;
- On March 4, 2016, the Company
submitted its EA application for the Kemess Underground project. On
April 25, 2016, the Company announced
that the EA application had been screened and formally
accepted;
- Reported $7.2 million in cash and
$5.8 million in working capital,
excluding inventories, as at March 31,
2016; and
- On April 14, 2016, completed a
$1.6 million (C$2.0 million) CDE ("Canadian Development
Expenses") flow-through financing with the issuance of 2.5 million
shares at C$0.80 per share. Proceeds
are to be spent on eligible expenditures at the Company's Kemess
Underground project during the remainder of 2016.
Commenting on the results, Chris
Richter, President and CEO stated, "Developments in the
first quarter demonstrate the deep and growing value of AuRico
Metals. All of the assets underlying our five producing royalties
have seen their reserves increase and we expect to see growing
production from this portfolio over the course of the year. Having
secured a $15M acquisition line of
credit, we continue our efforts to identify quality opportunities
to grow our royalty portfolio." Chris continued, "Kemess is a
stand-out development opportunity and during the quarter we were
excited to release the results of a positive Feasibility Study
update outlining the potential to produce 238,000 gold equivalent
ounces per year at all-in sustaining costs of $682 per ounce over the first five years of
commercial production. Further potential exists at Kemess East and
as part of the resource update we released during the quarter we
were pleased to highlight the identification of a high grade core
to the deposit – which remains open in several directions. Earlier
this week we announced that the EA application for Kemess
Underground had been formally accepted for review and we look
forward to advancing permitting efforts this year."
Operations Update
Royalties
From inception of the Company until March
31, 2016, the Company recognized $4.7
million in royalty revenue while the net asset values of its
royalties continue to increase due to expected mine life
extensions. During Q1 2016, the Company recognized revenues
from the following royalties:
- Young-Davidson 1.5% NSR royalty - $0.7 million;
- Fosterville 2% NSR royalty -
$0.7 million;
- Hemlo 0.25% NSR royalty -
$0.1 million;
- Eagle River 0.5% NSR royalty -
$0.1 million; and
- Stawell 1% NSR royalty - $0.1
million.
During the first quarter of 2016, all of the operators of the
Company's royalty assets, with the exception of the non-producing
Big Hill project at Stawell, announced increases in reserves after
mining depletion. This demonstrates the quality of the
Company's royalty portfolio, as the mine lives underlying these
royalties continue to extend.
During Q1 2016, the Company recognized revenue of $0.7 million from the Young-Davidson 1.5% NSR royalty. Alamos has
provided gold production guidance at Young-Davidson of 170,000 to 180,000 ounces of gold
in 2016. Young-Davidson continues to replace reserves, as
total reserves increased by 74,000 ounces, net of depletion, to
3.84 million ounces at December 31,
2015. This marks the fifth consecutive year of reserve
replacement at Young-Davidson (please refer to press releases dated
January 15, 2016 and March 24, 2016 available at www.sedar.com, and on
Alamos' website at www.alamosgold.com).
The Company recognized revenue of $0.7
million from the Fosterville 2% NSR royalty in the three months
ended March 31, 2016. In Q1
2016, Fosterville announced
another record quarter, producing 33,138 ounces at a mill grade of
7.34 grams per tonne gold. Newmarket has provided gold production
guidance of 110,000 to 120,000 ounces at Fosterville in 2016. Fosterville
reserves increased 34% to 244,000 ounces, after depletion, and
measured and indicated resources increased 5% to 2.12 million
ounces of gold at December 31,
2015. Contributing to the increase in reserves was a 25%
increase in reserve grade, driven by the addition of the recent
Eagle Fault discovery (please refer to the press releases dated
January 18, 2016, March 21, 2016 and April
12, 2016, available at www.sedar.com, and on Newmarket's website at
www.newmarketgoldinc.com).
The Company's 1% NSR royalty on the Stawell mine in Victoria, Australia, commenced on January 1, 2016 in accordance with the NSR
agreement. The Company recognized revenue of $0.1 million from this royalty in Q1 2016, based
on 8,579 ounces of production during the quarter.
Newmarket has provided gold
production guidance of 35,000 ounces at Stawell in 2016 (please
refer to the press releases dated January
18, 2016 and April 12, 2016
available at www.sedar.com, and on Newmarket's website at
www.newmarketgoldinc.com).
During Q1 2016, the Company recognized revenue of $0.1 million from its 0.25% royalty on the
Williams mine at Hemlo. During the quarter, Barrick announced
a 12% increase in reserves at Hemlo from 820,000 ounces at the end of 2014
to 917,000 at the end of 2015, after mining depletion.
Barrick also announced 2016 production guidance of 200,000 to
220,000 ounces at Hemlo, of which
the Company expects 70-80% of this production to occur on its
royalty lands. Approximately $8.0
million in exploration expenditures will be spent at
Hemlo in 2016 (please refer to the
press release dated February 17, 2016
available at www.sedar.com, and on Barrick's website at
www.barrick.com).
The Company recognized revenue of $0.1
million from its 0.5% NSR royalty on the Eagle River
underground mine during the three months ended March 31, 2016. During the quarter, Wesdome
announced a 13% increase in mineral reserves at the Eagle River
mine to 300,000 ounces, after mining depletion, and a 112% increase
in inferred mineral resources to 170,000 ounces. Wesdome has
also announced plans to spend C$4.5
million on a 40,000 metre exploration program at
Eagle River to better understand
the potential of the recently discovered 300 and 7 parallel
zones.
During the quarter, the Company finalized an acquisition credit
facility with Macquarie Group for up to $15.0 million to support potential royalty
acquisitions. The Company will remain selective in its
evaluation of royalty growth opportunities.
Kemess Underground
The Company has completed the Kemess Underground EA application
and provided it to both the BC EAO and its First Nations
partners. On April 25, 2016,
the Company announced that the EA application had been screened and
formally accepted for detailed review by the BC EAO. The
Company is making revisions and reformatting the EA application to
integrate the clarifications and additional information provided by
the Company during the screening period. The EAO will
initiate the 180 day review period once the revised application has
been submitted, which is anticipated to occur in early May.
During the review period the Company will respond to comments and
questions as directed by the BC EAO and these will be incorporated
into the final Application. Towards the end of the 180 day
review period, the BC EAO will conclude their assessment and submit
their report to both the provincial and federal ministers for their
respective decisions. These decisions must be announced
within 45 days of receipt of such reports and are expected in Q4
2016.
Kemess East
The Company currently has planned a $1.7
million drill campaign for 2016 focused on expanding the
high grade core of this deposit, and converting Inferred resources
to Indicated resources.
Near-Term Corporate Objectives
The Company's objectives over the next several months
include:
- Evaluate potential royalty acquisition opportunities that are
accretive to the Company's cash flow profile;
- Filing of an updated NI 43-101 technical report, containing
both the Kemess Underground Feasibility Study and the updated
Kemess East Mineral Resource Estimate (early May);
- Progress EA review and permitting efforts at Kemess
Underground; and
- Continue advancement of efforts to reduce care and maintenance
costs at the Kemess site to targeted levels by Q4 2016.
Outlook
AuRico Metals expects to be free cash flow positive in 2017
following the completion of this year's capital and exploration
programs as well as the cost cutting measures being pursued at
Kemess.
About AuRico Metals
AuRico Metals is a mining royalty and development company whose
producing gold royalty assets include a 1.5% NSR royalty on the
Young-Davidson Gold Mine, a 0.25% NSR royalty on the Williams Mine
at Hemlo, and a 0.5% NSR royalty
on the Eagle River Mine – all located in Ontario, Canada. AuRico Metals also has a 2%
NSR royalty on the Fosterville Mine and a 1% NSR royalty on the
Stawell Mine, located in Victoria,
Australia. Aside from its diversified royalty portfolio,
AuRico owns (100%) the advanced Kemess Gold-Copper Project in
British Columbia,
Canada. AuRico Metals' head office is located in Toronto, Ontario, Canada.
Cautionary Statement
This press release contains forward-looking statements and
forward-looking information as defined under Canadian and U.S.
securities laws. All statements, other than statements of
historical fact, are, or may be deemed to be, forward-looking
statements. The words "expect", "believe", "anticipate", "will",
"intend", "estimate", "forecast", "budget" and similar expressions
identify forward-looking statements. Forward-looking statements
include statements related to the Company's outlook and key
deliverables on Kemess over the next year. These statements
are based on a number of factors and assumptions that, while
considered reasonable by management at the time of making such
statements, are inherently subject to significant business,
economic and competitive uncertainties and contingencies.
Known and unknown factors could cause actual results to differ
materially from those projected in the forward-looking
statements. Such forward-looking statements and the factors
and assumptions underlying them in this document include, but are
not limited to:
- Royalty revenue guidance may be impacted by the performance of
the Young-Davidson, Fosterville, Stawell, Hemlo and Eagle
River mines. Management has based its revenue assumptions on
the latest guidance provided by the operators of these assets, but
there is uncertainty as to whether operators will achieve stated
production guidance. Royalty revenue is also based on an assumed
gold price of $1,150 per ounce. The
Company's gold price assumption may be inaccurate; every
$50 change in gold price assumption
impacts after-tax revenue by $0.3
million.
- General and administrative expense guidance may be impacted by
changes in foreign exchange rates, employee relations, litigation,
and business opportunities that may be pursued by the
Company.
- Care and maintenance expense guidance may be impacted by
changes in foreign exchange rates, progress made on the EA and
permitting efforts, results of the updated feasibility study,
availability of financing, employee relations, electricity rates in
British Columbia, weather in the
region surrounding the Kemess site, equipment reliability, quality
of service received by vendors and consultants, and the price of
consumables.
- Kemess underground capital expenditures are at the Company's
discretion and will be impacted by changes in foreign exchange
rates, the number of comments or questions raised by First Nations
partners, working group members, and the general public during the
EA review period, additional studies required in order to address
concerns raised and the results of those studies, the results of
the Company's updated feasibility study, optimization efforts by
management, and credit market conditions and conditions in
financial markets generally.
- The estimates, models and assumptions contained in the
Feasibility Study, which may be impacted by changes in commodity
prices and the exchange rate between the Canadian dollar and US
dollar from assumed levels, estimated future production and cost of
sales forecasts meeting expectations, estimated labour and
materials costs being consistent with the Company's expectations,
the accuracy of current mineral reserve and mineral resource
estimates as contemplated by the Feasibility Study, the viability
of Kemess Underground including, but not limited to, permitting,
development and expansion being consistent with the Company's
current expectations, access to capital markets, including but not
limited to identifying financing options and securing partial
project financing for the Kemess Underground project, being
consistent with the Company's current expectations.
- The estimates, models and assumptions contained in the Kemess
East Mineral Resource estimate, which may be impacted by changes in
commodity prices and the exchange rate between the Canadian dollar
and US dollar from assumed levels, the accuracy of current mineral
resource estimates, as contemplated by the Mineral Resource
estimate, and metallurgical recoveries being consistent with the
Company's current expectations.
The Company has made forward-looking statements relating to
corporate objectives and key deliverables over the next 12 months,
including permitting and the EA, the Company's ability to fund
forecasted cash shortfalls, the Company's ability to create value
for shareholders, sufficiency of working capital for future
commitments and other statements that express management's
expectations or estimates of future performance.
Actual results and developments are likely to differ, and may
differ materially, from those expressed or implied by the
forward-looking statements contained herein. Such statements are
based on a number of assumptions which may prove to be incorrect,
including assumptions about: business and economic conditions;
commodity prices and the price of key inputs such as labour, fuel
and electricity; credit market conditions and conditions in
financial markets generally; development schedules and the
associated costs; ability to procure equipment and supplies and on
a timely basis; the timing and ability to obtain permits and other
approvals for projects and operations including provincial and
federal approval of the environmental application; the ability to
attract and retain skilled employees and contractors for the
operations; the accuracy of reserve and resource estimates; the
impact of changes in currency exchange rates on costs and results;
interest rates; taxation; and ongoing relations with employees and
business partners. The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Readers are cautioned that forward-looking statements are not
guarantees of future performance. All of the forward-looking
statements made in this press release are qualified by these
cautionary statements. The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Other information
The technical information disclosed in this press release
relating to the Kemess Underground project, Kemess East Mineral
Resource and the Company's Young-Davidson and Fosterville NSR royalties has
been approved by Mr. John
Fitzgerald, an officer of the Company, who is a qualified
person within the meaning of National Instrument 43-101.
SOURCE AuRico Metals