Karora will host a call/webcast on
May 12, 2022 at 10:00 a.m. (Eastern Time) to discuss the first
quarter 2022 results. North American callers please dial:
1-888-220-8474, international callers please dial: (+1)
647-484-0475. For the webcast of this event click
[here] (replay access information
below).
TORONTO, May 12, 2022 /CNW/ - Karora Resources Inc. (TSX:
KRR) (OTCQX: KRRGF) ("Karora" or the "Corporation") is pleased
to announce its financial results and review of activities for the
three months ended March 31, 2022.
All amounts are expressed in Canadian dollars, unless otherwise
noted. For additional information please refer to Karora's
Management's Discussion & Analysis ("MD&A") and unaudited
condensed interim financial statements for the three months ended
March 31, 2022 and 2021.
Highlights
- First quarter 2022 consolidated gold production of 27,489
ounces was in line with the mine plan and budget despite a number
of temporary challenging COVID-19 related conditions, including
lower labour availability, higher absenteeism due to isolation
requirements and supply chain constraints. Karora remains on track
to deliver on full year consolidated 2022 gold production guidance
of 110,000 to 135,000 ounces (assumes no significant interruption
to operations as a result of the COVID-19 virus and improved
operating conditions in the second half of 2022).
- First quarter 2022 consolidated all-in-sustaining-costs
("AISC")1 of US$1,396 per
ounce sold is a 33% increase compared to first quarter 2021 AISC of
US$1,049 per ounce sold (34% increase
compared to fourth quarter 2021 AISC of US$1,042 per ounce sold).
- First quarter AISC was negatively impacted by a number of cost
pressures, many of which are expected to be temporary in nature
including those caused by material COVID-19 related labour and
supply shortages in Western
Australia which carried both direct and indirect costs.
During the quarter, labour availability reached a low of
approximately 60%, prompting the need for additional contract
labour. As a result of labour shortages, additional higher cost
stockpile were processed at Higginsville. Absenteeism is expected
to improve during the second quarter.
- First quarter 2022 costs were also negatively impacted by the
use of third party toll milling for approximately 15% of production
during the first quarter to help offset the impact of Covid-19
related absenteeism at the Higginsville Mill, which added
approximately US$50 per ounce to
AISC. In total, costs were negatively impacted by approximately
US$300 per ounce due to direct and
indirect COVID related events. As with mining operations,
absenteeism has improved during the second quarter. Full-year 2022
cost guidance remains unchanged at a range of US$950 to $1,050
per ounce sold.
- Net loss of $3.7 million, or
$0.02 per share, for the first
quarter of 2022 was down $9.3 million
compared to first quarter 2021 net earnings of $5.6 million, or $0.04 per share. The first quarter net loss was
largely due to third-party toll milling, higher operating costs in
part due to more ounces from HGO which have a higher cost per
ounce, and a number of temporary challenging COVID-19 related
conditions, including lower labour availability, higher
absenteeism, and supply chain constraints.
- Adjusted earnings1 of $1.1
million, or $0.01 per share
for the first quarter of 2022, down $7.0
million compared to first quarter 2021 adjusted net earnings
of $8.1 million, or $0.06 per share.
- Adjusted EBITDA1 was $12.2
million or $0.08 per share for
the first quarter of 2022, down $9.0
million from $21.2 million in
the first quarter of 2021, largely due to higher costs (including
transitory costs related to COVID) and non-cash adjustments related
to share-based payments, derivatives and foreign exchange related
to intercompany loans.
- Cash flow from operating activities of $12.2 million, or $0.08 per share, a 35%, decrease compared to
$18.7 million for the first quarter
of 2021.
- Karora's cash position remained strong at $78.1 million as at March
31, 2022, after planned capital deployment to prepare new
mining areas at Higginsville, accelerated exploration programs and
planned growth plan expenditures.
- Karora released an updated Nickel Resource at Beta Hunt. The
Measured and Indicated Mineral Resource estimate, dated
January 31, 2022, increased 22% to
19,600 nickel tonnes and Inferred Mineral Resource increased by 52%
to 13,200 nickel tonnes ounces compared to the September 30, 2020 estimate.
- Karora published its inaugural Environmental Social and
Governance (ESG) report in April
2022, which is available for download on Karora's website.
The report was highlighted by Karora's achievement of becoming one
of the first junior gold producers to achieve carbon neutrality in
2021 for Scope 1 and 2 at its own operations following the purchase
and retirement of verified carbon offset credits.
- In March 2022, Karora was added
to the NYSE Arca Gold Miners Index (GDMNTR), which is tracked by
the VanEck Vectors Gold Miners EFT (GDX).
- Solid progress on key gold production growth plan
initiatives:
-
- Beta Hunt second decline portal box cut approximately 75%
complete and decline development from underground has advanced
approximately 300 metres.
- Critical path items on schedule for the Higginsville Mill
expansion from 1.6 Mtpa to 2.5 Mtpa are on schedule, including
advanced engineering design and the awarding of the contract for
the SAG mill.
- Consolidated Measured and Indicated Gold Mineral Resource
estimate dated January 31, 2022,
increased by 8% to 2.71 million ounces, compared to the September
the 30, 2020 estimate. The updated Consolidated Inferred Gold
Mineral Resource increased 43% to 1.21 million ounces compared to
the prior estimate.
- Gold mineralization in the Fletcher Shear Zone, the third major
Beta Hunt Shear Zone, has been extended to over 500 metres along
strike and 150 metres in vertical extent and remains open along
strike and at depth (see Karora news release dated January 24, 2022).
- Gamma Block gold mineralization, proximal to the 50C nickel
discovery, confirmed over a 200 metre strike length with new
resulting including 7.6 g/t over 8.4 metres and 3.4 g/t over 33.6
metres (see Karora news release dated January 24, 2022).
- Drilling at the high grade 50C nickel discovery which is part
of the Gamma Block Nickel Mineral Resource (see Karora news release
dated May 11, 2022) has confirmed
significant nickel mineralization over 800 metres in strike with
potential to extend a further 1.9 kilometres to 2.6 kilometres of
strike.
Paul Andre Huet, Chairman &
CEO, commented: "As anticipated when we adjusted our 2022 guidance
in February, the first quarter of 2022 was significantly impacted
by what in our view are temporary COVID-19 related cost and labour
pressures. These pressures have been particularly severe in
Western Australia where the entire
mining industry has seen regional costs rise and domestic supply
chains tighten further compounding global inflationary pressures.
While we are confident in our previously revised 2022 guidance, we
are not immune to these pressures and reiterate our previous
expectation of a stronger second half of the year.
Following the state border reopening after 697 days of closure,
Western Australia has experienced
its first state-wide wave of COVID-19 infections. As a result,
state-mandated isolation has driven significant worker absenteeism
across all businesses, with Karora seeing up to 40% of its
workforce unavailable at its operations during the first quarter.
This has had a material impact on costs and was a driving factor in
our move to adjust guidance earlier this year. Overall we saw over
US$300 per ounce in additional costs
during the quarter as a result of direct and indirect costs
associated with COVID-19.
Providing further colour, AISC costs were US$354 per ounce higher during the first quarter
compared to the prior quarter largely due to these COVID-19 related
factors. Direct costs included COVID-19 testing, increased
retention and recruitment expenses and additional contract mining
labour. As a result of miner absenteeism, we also processed higher
cost stockpiles at Higginsville outside of our planned ore sources
which led to higher costs. Lastly, we processed 15% of our
production through a third-party toll-milling facility which helped
maintain gold production levels towards our 2022 targets, but
increased our AISC by approximately US$50 per ounce sold. Combined, these and other
factors represent temporary AISC increases of over US$300 per ounce sold.
Despite these tremendous challenges, I am extremely proud of our
team for delivering a solid first quarter gold production result of
27,489 ounces which was in line with our budgeted ounce production
plan. If there is one thing that has resonated through our business
over the last two years, it's been delivery in the face of
adversity. I would like to thank our operational teams for
delivering our ounce targets despite unprecedented understaffing
across the business.
Moving forward, as previously started we continue to expect
significantly lower AISC costs for the second half of 2022 and our
full-year production and cost guidance remains unchanged at between
110,000 to 135,000 ounces at AISC of US$950 to US$1,050
per ounce sold.
With regards to our projects, Karora ended the first quarter
with a strong cash balance of $78.1
million, after deploying capital as planned into our growth
plan capital and preparing new mining areas at Higginsville. We
continue to be well positioned to deliver our fully funded organic
growth plan to increase production to between 185,000 and 205,000
ounces by 2024.
Our recently updated nickel Mineral Resource estimate for Beta
Hunt substantially increased the Measured and Indicated Resource by
22% to 19,600 nickel tonnes and increased our Inferred Resource
estimate by 52% to 13,200 nickel tonnes. The updated Mineral
Resource is expected to support materially higher nickel production
in future compared to our 2022 guidance of between 450 to 550
payable nickel tonnes. The most exciting part of our nickel story
is the discovery of the 50C nickel trough in the Gamma Block which
has now been delineated over a strike length of 800 metres with the
potential to extend another 1.9 kilometers for a total strike
length of up to 2.6 kilometres.
We are also very pleased to announce that Meri VerIi is being
appointed to the Karora Board of Directors effective May 16, 2022. She will also stand for election as
a Director at the upcoming annual and special meeting of
shareholders to be held on June 16,
2022. Meri is an experienced senior finance executive with
an extensive background in financial management and reporting,
financial and operational recovery, mergers and acquisitions, risk
management and strategy development. Meri has held several senior
management roles in the gold mining sector, including most recently
as Senior Vice President for Business Operation Management Systems
and previously as Senior Vice President Finance and Treasury at
Kirkland Lake Gold, Chief Financial Officer of McEwen Mining Inc.
and Vice President, Finance at Lake Shore Gold from 2007 to 2016.
Meri will assume the position of Chair of Karora's Audit
Committee.
Wendy Kei, current Director and
Audit Committee Chair, is retiring from the Board effective
May 16, 2022. On behalf of the Board,
I would like to thank Wendy for her significant contributions to
Karora since becoming a Director and Audit Committee Chair in 2018.
We wish Wendy all the best in her future endeavors."
1. Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this news release and Karora's
MD&A dated May 11, 2022.
|
COVID-19 Protocols
In response to the global COVID-19 pandemic, Karora's protocols
and contingency plans have helped mitigate impacts of the pandemic,
but not eliminate them. Karora's ongoing response to the COVID-19
pandemic continues to prioritize the safety of its workforce and
host communities.
Results of Operations
Table 1 - Highlights of operational results for the periods
ended September 30, 2021 and
2020
|
Three months
ended,
|
For the periods ended
March 31,
|
2022
|
2021
|
Gold Operations
(Consolidated)
|
|
|
Tonnes milled (000s)
|
394
|
371
|
Recoveries
|
94%
|
93%
|
Gold milled, grade (g/t Au)
|
2.31
|
2.16
|
Gold produced (ounces)
|
27,489
|
24,694
|
Gold sold (ounces)
|
26,286
|
25,547
|
Average exchange rate (USD/CAD)
|
1.2662
|
1.2660
|
Average realized price (US $/ounce sold)
|
$1,905
|
$1,762
|
Cash operating costs (US $/oz sold)1
|
$1,310
|
$952
|
All-in sustaining cost (AISC) (US $/oz
sold)1
|
$1,396
|
$1,049
|
Gold (Beta Hunt
Mine)
|
|
|
Tonnes milled (000s)
|
233
|
233
|
Gold milled, grade (g/t Au)
|
2.42
|
2.63
|
Gold produced (ounces)
|
17,109
|
18,261
|
Gold sold (ounces)
|
16,128
|
18,754
|
Cash operating cost (US $/oz sold)1
|
$1,137
|
$899
|
Gold (HGO
Mine)
|
|
|
Tonnes milled (000s)
|
161
|
138
|
Gold milled grade (g/t Au)
|
2.12
|
1.57
|
Gold produced (ounces)
|
10,380
|
6,433
|
Gold sold (ounces)
|
10,158
|
6,793
|
Cash operating cost (US $/oz sold)1
|
$1,586
|
$1,100
|
1. Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this news release and Karora's
MD&A dated May 11, 2022.
|
Consolidated Operations
For the first quarter of 2022, Karora's gold operations milled
394,000 tonnes of material at an average grade of 2.31 g/t to
produce 27,489 ounces of gold. Tonnes milled were 7% higher than
the fourth quarter of 2021. During the quarter there were a number
of temporary factors which increased AISC costs by over
US$300 per ounce sold during the
first quarter. These factors included increased direct and indirect
costs associated with COVID-19 including significant
absenteeism,COVID-19 related personnel retention and recruitment
costs, processing approximately 15% of production through a
third-party mill facility, and a temporary change in the ratio of
lower cost Beta Hunt and higher cost HGO material processed during
the quarter as a result of lower miner availability.
Beta Hunt Mine Operations
Production for the first quarter of 2022 was 233,000 tonnes
milled at a grade of 2.42 g/t, a 13% increase and 7% decrease,
respectively, compared to the fourth quarter of 2021.
Nickel production remains limited to remnant nickel resources
south of the Alpha Island Fault. Beta Hunt mined 5,243 nickel
tonnes at an estimated nickel grade of 2.13% during the first
quarter of 2022.
Higginsville ("HGO") Mine Operations
HGO material milled for the first quarter of 2022 was 161,000
tonnes, flat compared to the fourth quarter of 2021, while the
grade was 2.12 g/t, a 13% decrease compared to the prior quarter.
The Spargos Gold Mine was the largest contributor to HGO production
during the first quarter with 58,154 tonnes mined for 5,431 ounces.
The balance of production for the first quarter was from the Hidden
Secret and Baloo open pits, with a limited contribution of ore from
the Two Boys and Aquarius underground operations.
During the quarter an additional amount of higher cost
Higginsville stockpiles were milled at Higginsville as a result of
lower miner availability due to COVID-19, contributing to higher
overall costs during the quarter. The Corporation expects these
additional costs to be transitory.
Cash Operating Costs and AISC1
For the first quarter of 2022 consolidated cash operating
costs1 and AISC1 were US$1,310 and US$1,396 per ounce sold, increases of 38% and
33%, respectively compared to the first quarter of 2021. The cost
performance for the first quarter was impacted by several factors,
including temporary COVID-19 related labour and supply chain
pressures as previously outlined.
Financial Highlights
Table 4 - Highlights of First Quarter
(in thousands of
dollars except per share amounts)
|
Three months
ended
|
For the periods ended
March 31,
|
2022
|
2021
|
Revenue
|
$65,272
|
$59,284
|
Production and
processing costs
|
42,436
|
29,301
|
Earnings (loss) before
income taxes1
|
(2,319)
|
12,785
|
Net earnings
(loss)
|
(3,709)
|
5,624
|
Net earnings (loss) per
share - basic
|
(0.02)
|
0.04
|
Net earnings (loss) per
share - diluted
|
(0.02)
|
0.04
|
Adjusted
EBITDA1,2
|
12,203
|
21,210
|
Adjusted EBITDA per
share - basic1,2
|
0.08
|
0.15
|
Adjusted
earnings1
|
1,120
|
8,087
|
Adjusted earnings per
share – basic1
|
0.01
|
0.06
|
Cash flow provided by
operating activities
|
12,150
|
18,658
|
Cash investment in
property, plant and equipment and mineral property
interests
|
(24,784)
|
(18,193)
|
1. Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this news release and Karora's
MD&A dated May 11, 2022.
2. Earnings before interest, taxes, depreciation, and amortization
("EBITDA").
|
Revenue for the first quarter of 2022 was $65.3 million, a 10% increase over the comparable
period in 2021. The increase in revenue in 2022 was the result of a
higher gold ounces sold (3% increase) and a higher realized gold
price (8% increase).
The net loss for the first quarter of 2022 was $3.7 million, or $0.02 per share, compared to net earnings of
$5.6 million, or $0.04 per share, for the comparable period in
2021, a decrease of $9.3 million. The
decrease was partially due to increases in production and
processing costs, general and administrative costs and depreciation
and amortization. In particular, first quarter 2022 net earnings
were negatively impacted by 1) a $5.8
million, or $0.04 per share.
adjustment for non-cash share based payments; 2) an unrealized
non-cash foreign exchange gain of $3.0
million, or $0.02 per share
primarily related to intercompany loans which are subject to
valuation changes due to quarter over quarter currency
fluctuations, and 3) a non-cash derivatives loss of $1.1 million, or $0.01 per share.
Adjusted net earnings1 for the first quarter of 2022
were $1.1 million, or $0.01 per share, a $7.0
million decrease compared to the same period in 2021,
primarily due to higher costs.
Adjusted EBITDA1 for the first quarter of 2022
was $12.2 million, or $0.08 per share, compared to $21.2 million, or $0.15 per share, in the first quarter of
2021.
Table 5 - Highlights of Karora's Financial Position
(in thousands of dollars):
For the period
ended
|
March 31,
2022
|
December 31,
2021
|
Cash and cash
equivalents
Working
capital*
PP&E &
MPI
Total assets
Total
liabilities
Shareholders'
equity
|
78,100
53,806
315,074
441,899
187,482
254,417
|
91,005
64,447
300,680
436,333
184,968
251,365
|
*Working capital
is a measure of current assets (including cash and cash
equivalents) less current liabilities.
|
Karora's cash position decreased to $78.1
million as at March 31, 2022,
a decrease of $12.9 million compared
to December 31, 2021, reflecting
planned capital deployment to prepare new mining areas at
Higginsville, accelerated exploration programs and growth plan
expenditures. Karora had a working capital surplus of $53.8 million as of March
31, 2022.
For a complete discussion of financial results, refer to
Karora's MD&A and unaudited condensed interim financial
statements for the three months ended March
31, 2022 and 2021.
Outlook
Karora is maintaining its previously announced full year
consolidated 2022 production guidance of between 110,000 - 135,000
ounces of gold at an AISC1 range of US$950 to US$1,050
per ounce.
On June 28, 2021 the Corporation
announced three-year production guidance as part of a multi-year
growth plan that is expected to see gold production increase from
99,249 ounces in 2020 to a range of 185,000 – 205,000 ounces in
2024 at an AISC1 of US$885
– US$985 per ounce sold. On
February 7, 2022 the Corporation
announced production guidance for 2022 is between 110,000 to
135,000 ounces of gold at an AISC1 of US$950 to US$1,050
per ounce sold and a payable nickel production guidance of 450 to
550 tonnes, which will be treated as a by-product credit in
AISC1.
Table 3 – Consolidated Multi-Year Guidance to 2024
Production &
Costs
|
|
|
2022
|
2023
|
|
2024
|
Gold
Production
|
Koz
|
|
110 - 135
|
150 – 170
|
|
185 - 205
|
All-in sustaining
costs
|
US$/oz
|
|
950 - 1,050
|
890 – 990
|
|
885 - 985
|
Capital
Investments
|
|
Sustaining
Capital
|
A$ (M)
|
|
9 - 15
|
11 - 16
|
|
18 - 23
|
Growth
Capital
|
A$ (M)
|
|
52 - 65
|
47 - 57
|
|
30 - 40
|
Exploration &
Resource Development
|
A$ (M)
|
|
21 - 24
|
22 - 25
|
|
20 - 23
|
|
|
|
|
|
|
|
|
(1) 2022 guidance was
updated on February 7, 2022 (see Karora news release dated February
7, 2022). 2023 and 2024 guidance was announced in January 2021 (see
Karora news release dated January 19, 2021), is unchanged. This
production guidance through 2024 is based on the 2020 year-end
Mineral Reserves and Mineral Resources announced on December 16,
2020.
(2) The Capital Investment amounts listed above, which the
Corporation expects to fund with cash on hand and cashflow from
operations, includes the capital required during the applicable
periods to expand the capacity of the Higginsville mill to 2.5
Mtpa. See below for further detail regarding this expansion.
(3) The material assumptions associated with the expansion of Beta
Hunt mining production rate to 2.0 Mtpa in 2024 include the
addition of a second ramp decline system driven parallel to the ore
body, ventilation and other infrastructure that is required to
support these areas, and an expanded trucking fleet. The Capital
Investment amounts listed above, which the Corporation expects to
fund with cash on hand and cashflow from operations, include the
capital required during the applicable periods to fund this
production expansion. See below for further detail regarding this
expansion.
(4) The Corporation's guidance assumes targeted mining rates and
costs, availability of personnel, contractors, equipment and
supplies, the receipt on a timely basis of required permits and
licenses, cash availability for capital investments from cash
balances, cash flow from operations, or from a third-party debt
financing source on terms acceptable to the Corporation, no
significant events which impact operations, such as COVID-19,
nickel price of US$16,000 per tonne, as well as an A$ to US$
exchange rate of 0.78 and A$ to C$ exchange rate of 0.91.
Assumptions used for the purposes of guidance may prove to be
incorrect and actual results may differ from those anticipated. See
below "Cautionary Statement Concerning Forward-Looking
Statements".
(5) Exploration expenditures include capital expenditures related
to infill drilling for Mineral Resource conversion, capital
expenditures for extension drilling outside of existing Mineral
Resources and expensed exploration. Exploration expenditures also
includes capital expenditures for the development of exploration
drifts.
(6) Capital expenditures exclude capitalized depreciation.
(7) AISC guidance includes general and administrative costs and
excludes share-based payment expense.
(8) See "Non-IFRS Measures" set out at the end of this news release
and Karora's MD&A dated for the period ended March 31,
2022.
|
The growth plan will be driven by an expansion of Beta Hunt
underground mine production to 2.0 Mtpa by 2024, from 0.8 Mtpa
recorded in 2020. Increased production from Beta Hunt will be
complemented by ore from HGO Central and Spargos. The increased
tonnage is expected to be processed by the Higginsville mill, which
is expected to be expanded to a capacity of 2.5 Mtpa by 2024.
Advanced internal study work and detailed engineering is
progressing ahead of a formal construction decision by the
Company.
Further details on the growth plan can be found in Karora's news
release dated June 28, 2021, and the
third quarter MD&A.
Updated 2022 Resource Estimate
The continued expansion of the Beta Hunt Mineral Resource is an
important component of our growth plan to increase production to
our guided range of 185,000-205,000 ounces annually by 2024.
In April 2022, the Corporation
announced an updated gold Mineral Resource estimate that was
highlighted by the addition of the maiden Mineral Resource for
the Larkin Zone which demonstrated a rapid progression from the
initial discovery of the zone announced in September 2020 (see Karora news release dated
September 10, 2020) to the
development of the first Larkin Mineral Resource of 119,000 ounces
in the M&I category and a further 162,000 ounces in the
Inferred category.
As at January 31, 2022, Beta Hunt
gold Measured and Indicated Mineral Resources totaled 13.21 million
tonnes grading 2.6 g/t for 1,124,000 ounces, an increase of 69,000
ounces, or 7% compared to the 2020 Measured and Indicated Mineral
Resource estimate. As at January 31,
2022, Beta Hunt's Inferred Mineral Resources totaled 9.43
million tonnes grading 2.6 g/t for 786,000 ounces, an increase of
249,000 ounces, or 46%, compared to the 2020 Inferred Mineral
Resource estimate. The Beta Hunt Mineral Resource estimate is net
of mine production depletion of 1.16 million tonnes grading 2.9 g/t
for 108,000 ounces over the period October
1, 2020 to January 31,
2022.
On May 11, 2022, the Corporation
announced an updated Nickel Mineral Resource estimate for the Beta
Hunt Mine that increased Measured and Indicated Mineral Resources
by 22% to 19,600 nickel tonnes and Inferred Mineral Resource by 52%
to 13,200 nickel tonnes compared to the prior Mineral Resource
estimate dated September 30, 2020. As
at January 31, 2022, the Beta Hunt
Measured and Indicated Mineral Resource totalled 692,000 tonnes
grading 2.8% for 19,600 nickel tonnes and the Inferred Mineral
Resource totalled 492,000 tonnes grading 2.7% for 13,200 nickel
tonnes. Please see Karora New Release dated May 11, 2022 for further details.
Exploration and Resource Definition Drilling
Beta Hunt Mine
At Beta Hunt, 5,884 metres of drilling was completed during the
first quarter. Gold exploration and resource definition drilling
was focused on extending A Zone strike to the north, identifying
potential down-dip extensions and infill drilling at Western
Flanks. Nickel exploration targeted extensions to the 25C nickel
trough in the Beta Block.
During the first quarter the Corporation announced exploration
drilling at the Fletcher Zone materially extended the strike length
of gold mineralization to over 500 metres and up to 150 metres in
vertical extent, with strike potential of up to 2 kilometres and
remaining open at depth.
Also at Beta Hunt, nickel exploration results from the 50C
nickel trough have extended the known strike length to over 200
metres and up to 120 metres in width. The new results include
drilling along strike of the 50C discovery and the parallel 10C
nickel trough. The new 50C nickel discovery is located 140 metres
from existing mine development. Nickel mineralization remains open
to the southeast beyond the 10C trough and newly defined 50C
trough. The potential for more extensive strike lengths exist and
is supported by a historic drill intersection of 11.4% Ni over 9.5
metres which is located approximately 1 kilometre southeast of our
current drilling. An updated nickel Mineral Resource incorporating
the 50C discovery and 10C upgrade planned for completion in the
second quarter of 2022.
Higginsville Operations
At Higginsville, 12,660 metres of drilling was completed during
the first quarter, which was primarily focused on resource
development. Resource definition focused on infilling and extending
near-mill resources within the Higginsville Central area. At
Higginsville Greater, drilling was targeted at upgrading the deeper
section of the Spargos deposit to further assess underground
potential.
Conference Call / Webcast
Karora will be hosting a conference call and webcast today
beginning at 10:00 a.m. (Eastern
time). A copy of the accompanying presentation can be found
on Karora's website at www.karoraresources.com.
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-220-8474
Local and international callers please dial: 647-484-0475
A live webcast of the call will be available through Cision's
website at:
Webcast
Link (https://produceredition.webcasts.com/starthere.jsp?ei=1544859&tp_key=0dc6b249ea)
A recording of the conference call will be available for replay
through the webcast link, or for a one-week period beginning at
approximately 1:00 p.m. (Eastern
Time) on May 19, 2022, through
the following dial in numbers:
North American callers please dial: 1-888-203-1112; Pass Code:
8417498
Local and international callers please dial: 647-436-0148; Pass
Code: 8417498
Non-IFRS Measures
This news release refers to cash operating cost, cash operating
cost per ounce, all-in sustaining cost, EBITDA, adjusted EBITDA and
adjusted EBITDA per share, adjusted earnings, adjusted earnings per
share and working capital which are not recognized measures under
IFRS. Such non-IFRS financial measures do not have any standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other issuers.
Management uses these measures internally. The use of these
measures enables management to better assess performance trends.
Management understands that a number of investors and others who
follow the Corporation's performance assess performance in this
way. Management believes that these measures better reflect the
Corporation's performance and are better indications of its
expected performance in future periods. This data is 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.
In November 2018, the World Gold
Council ("WGC") published its guidelines for reporting all-in
sustaining costs and all-in costs. The WGC is a market development
organization for the gold industry and is an association whose
membership comprises leading gold mining companies. Although the
WGC is not a mining industry regulatory organization, it worked
closely with its member companies to develop these non-IFRS
measures. Adoption of the all-in sustaining cost and all-in cost
metrics is voluntary and not necessarily standard, and therefore,
these measures presented by the Corporation may not be comparable
to similar measures presented by other issuers.
The following tables reconcile these non-IFRS measures to the
most directly comparable IFRS measures:
Mining Operations
Cash Operating and All-in Sustaining Costs
The Corporation uses these measures internally to evaluate the
underlying operating performance of the Australian Operations.
Management believes that providing cash operating cost data allows
the reader the ability to better evaluate the results of the
underlying operations.
Consolidated Mining Operations
|
Three months
ended,
|
For the periods ended
March 31,
|
2022
|
2021
|
Production and
processing costs
|
$48,109
|
$36,077
|
Royalty expense:
Government of Western Australia
|
1,597
|
1,388
|
Royalty expense:
Other
|
2,036
|
2,367
|
By-product
credits
|
(2,453)
|
(2,256)
|
Adjustment
1
|
(5,673)
|
(6,776)
|
Operating costs
(C$)
|
$43,616
|
$30,800
|
General and
administrative expense – Australia 2,3
|
2,232
|
1,121
|
Sustaining capital
expenditures
|
611
|
2,008
|
All-in sustaining costs
(C$)
|
$46,459
|
$33,929
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.79
|
Operating costs
(US$)
|
$34,447
|
$24,329
|
All-in sustaining
costs (US$)
|
$36,693
|
$26,800
|
Operating costs
(A$)
|
$47,534
|
$31,487
|
All-in sustaining
costs (A$)
|
$50,632
|
$34,686
|
Ounces of gold
sold
|
26,286
|
25,547
|
Cash operating costs
per ounce sold (US$)
|
$1,310
|
$952
|
All-in sustaining
cost per ounce sold (US$)
|
$1,396
|
$1,049
|
Cash operating costs
per ounce sold (A$)
|
$1,808
|
$1,233
|
All-in sustaining
cost per ounce sold (A$)
|
$1,926
|
$1,358
|
1. Negative adjustment
for intercompany tolling transactions
2. G&A costs were reduced with R&D and Due Diligence
costs
3. G&A: share-based payments were excluded in calculating
AISC
|
Beta Hunt Mine
|
Three months
ended,
|
For the periods ended
March 31,
|
2022
|
2021
|
Production and
processing costs
|
$22,739
|
$20,470
|
Royalty expense:
Government of Western Australia
|
1,008
|
1,021
|
Royalty expense:
Other
|
1,890
|
2,083
|
By-product
credits
|
(2,421)
|
(2,234)
|
Operating costs
($)
|
$23,216
|
$21,340
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.79
|
Operating costs
(US$)
|
$18,336
|
$16,856
|
Operating costs
(A$)
|
$25,302
|
$21,815
|
Ounces of gold
sold
|
16,128
|
18,754
|
Cash operating costs
per ounce sold (US$)
|
$1,137
|
$899
|
Cash operating costs
per ounce sold (A$)
|
$1,569
|
$1,163
|
|
|
|
|
|
|
Higginsville Mine
|
Three months
ended,
|
For the periods ended
March 31,
|
2022
|
2021
|
Production and
processing costs
|
$25,370
|
$15,607
|
Royalty expense:
Government of Western Australia
|
589
|
367
|
Royalty expense:
Other
|
146
|
284
|
By-product
credits
|
(32)
|
(22)
|
Adjustment1
|
(5,673)
|
(6,776)
|
Operating costs
($)
|
$20,400
|
$9,460
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.79
|
Operating cost (US$)
|
$16,111
|
$7,473
|
Operating cost (A$)
|
$22,232
|
$9,671
|
Ounces of gold
sold
|
10,158
|
6,793
|
Cash operating costs per ounce sold
(US$)
|
$1,586
|
$1,100
|
Cash operating costs per ounce sold
(A$)
|
$2,188
|
$1,424
|
1. Negative adjustment
for intercompany tolling transactions
|
Quarterly Consolidated Mining Operations
For the three months
ended,
|
Mar 31, 2022
|
Dec 31, 2021
|
Sep 30, 2021
|
Jun 30, 2021
|
Mar 31, 2021
|
Production and
processing costs
|
$48,109
|
$38,855
|
$36,149
|
$35,860
|
$36,077
|
Royalty expense:
Government of Western Australia
|
1,597
|
1,780
|
1,679
|
1,700
|
1,388
|
Royalty expense:
Other
|
2,036
|
1,876
|
2,972
|
2,656
|
2,367
|
By-product
credits
|
(2,453)
|
(1,357)
|
(2,821)
|
(1,294)
|
(2,256)
|
Adjustment1
|
(5,673)
|
(6,341)
|
(5,641)
|
(6,290)
|
(6,776)
|
Operating costs
($)
|
$43,616
|
$34,813
|
$32,338
|
$32,632
|
$30,800
|
General and
administration expense – Australia3
|
2,232
|
2,503
|
1,916
|
2,762
|
1,121
|
Sustaining capital
expenditures
|
611
|
422
|
994
|
1,791
|
2,008
|
All-in sustaining costs
($)
|
$46,459
|
$37,738
|
$35,248
|
$37,185
|
$33,929
|
Average exchange rate
(C$1 – US$1)
|
0.79
|
0.79
|
0.79
|
0.81
|
0.79
|
Operating costs
(US$)
|
$34,447
|
$27,623
|
$25,665
|
$26,569
|
$24,329
|
All-in sustaining
costs (US$)
|
$36,693
|
$29,944
|
$27,975
|
$30,276
|
$26,800
|
Operating costs
(A$)
|
$47,534
|
$37,910
|
$34,941
|
$34,502
|
$31,487
|
All-in sustaining
costs (A$)
|
$50,632
|
$41,096
|
$38,085
|
$39,316
|
$34,686
|
Ounces of gold
sold
|
26,286
|
28,734
|
28,935
|
30,412
|
25,547
|
Cash operating costs
per ounce sold (US$)
|
$1,310
|
$961
|
$887
|
$874
|
$952
|
All-in sustaining
cost per ounce sold (US$)
|
$1,396
|
$1,042
|
$967
|
$996
|
$1,049
|
Cash operating costs
per ounce sold (A$)2
|
$1,808
|
$1,319
|
$1,208
|
$1,134
|
$1,233
|
All-in sustaining
cost per ounce sold (A$)2
|
$1,926
|
$1,430
|
$1,316
|
$1,293
|
$1,358
|
1. Negative adjustment
for intercompany tolling transactions.
2. Quarterly costs in functional currency.
3. G&A: share-based payments were excluded in calculating
AISC
|
Adjusted EBITDA and Adjusted Earnings
Management believes that adjusted EBITDA and adjusted earnings
are valuable indicators of the Corporation's ability to generate
operating cash flows to fund working capital needs, service debt
obligations, and fund exploration and evaluation, and capital
expenditures. Adjusted EBITDA and adjusted earnings exclude the
impact of certain items and therefore is not necessarily indicative
of operating profit or cash flows from operating activities as
determined under IFRS. Other companies may calculate adjusted
EBITDA and adjusted earnings differently.
Adjusted EBITDA is a non-IFRS measure, which excludes the
following from comprehensive earnings (loss); income tax expense
(recovery); interest expense and other finance-related costs;
depreciation and amortization; non-cash other expenses, net;
non-cash impairment charges and reversals; non-cash portion of
share-based payments; acquisition costs; derivatives and foreign
exchange loss; sustainability initiatives.
(in thousands of
dollars except per share amounts)
|
|
|
For the three months
ended March 31,
|
2022
|
2021
|
Net earnings (loss) for
the period - as reported
|
$(3,709)
|
$5,624
|
Finance expense,
net
|
1,045
|
1,081
|
Income tax
expense
|
1,556
|
4,712
|
Depreciation and
amortization
|
8,754
|
7,283
|
EBITDA
|
7,646
|
18,700
|
Adjustments:
|
|
|
Non-cash share-based
payments 1
|
5,768
|
1,142
|
Unrealized loss (gain)
on revaluation of marketable securities 2
|
646
|
(360)
|
Other expense (income),
net 2
|
(21)
|
15
|
Loss (gain) on
derivatives 2
|
1,115
|
(2,860)
|
Foreign exchange loss
(gain) 3
|
(2,951)
|
4,573
|
Adjusted
EBITDA
|
$12,203
|
$21,210
|
Weighted average number
of common shares - basic
|
154,440,916
|
146,254,253
|
Adjusted EBITDA per
share - basic
|
$0.08
|
$0.15
|
1. Primarily
non-recurring items which do not impact cash flow.
2. Non-operating in nature which does not impact cash flows.
3. Primarily related to intercompany loans for which the loss is
unrealized.
|
Adjusted earnings is a non-IFRS measure, which excludes the
following from comprehensive earnings (loss): non-cash portion of
share-based payments; revaluation of marketable securities;
derivatives and foreign exchange loss; tax effects of adjustments;
sustainability initiatives.
(in thousands of
dollars except per share amounts)
|
Year ended
|
For the three months
ended March 31,
|
2022
|
2021
|
Net earnings (loss) for
the period - as reported
|
$(3,709)
|
$5,624
|
Non-cash share-based
payments 1
|
5,768
|
1,142
|
Unrealized loss (gain)
on revaluation of marketable securities 2
|
646
|
(360)
|
Loss (gain) on
derivatives 2
|
1,115
|
(2,860)
|
Foreign exchange loss
(gain) 3
|
(2,951)
|
4,573
|
Tax impact of the above
adjusting items
|
251
|
(32)
|
Adjusted
earnings
|
$1,120
|
$8,087
|
Weighted average number
of common shares - basic
|
154,440,916
|
146,254,253
|
Adjusted earnings per
share - basic
|
$0.01
|
$0.06
|
1. Primarily
non-recurring items which do not impact cash flow.
2. Non-operating in nature which does not impact cash flows.
3. Primarily related to intercompany loans for which the loss is
unrealized.
|
Working Capital
Working capital is calculated as current assets (including cash
and cash equivalents) less current liabilities.
(in thousands of
dollars)
|
Mar,31,2022
|
Dec 31, 2021
|
Dec 31, 2020
|
Current
assets
|
$126,601
|
$135,426
|
$109,857
|
less: Current
liabilities
|
72,795
|
70,979
|
53,022
|
Working
Capital
|
$53,806
|
$64,447
|
$56,835
|
Compliance Statement (JORC 2012 and NI 43-101)
The disclosure of scientific and technical information contained
in this news release has been reviewed and approved by Stephen
Devlin, FAusIMM, Group Geologist, Karora Resources Inc., a
Qualified Person for the purposes of NI 43-101.
About Karora Resources
Karora is focused on doubling gold production to 200,000 ounces
by 2024 compared to 2020 and reducing costs at its integrated Beta
Hunt Gold Mine and Higginsville Gold Operations ("HGO") in
Western Australia. The
Higginsville treatment facility is a low-cost 1.6 Mtpa processing
plant, expanding to a planned 2.5 Mtpa by 2024, which is fed at
capacity from Karora's underground Beta Hunt mine and Higginsville
mines. At Beta Hunt, a robust gold Mineral Resource and Reserve is
hosted in multiple gold shears, with gold intersections along a 4
km strike length remaining open in multiple directions. HGO has a
substantial gold Mineral Resource and Reserve and prospective land
package totaling approximately 1,900 square kilometers. The Company
also owns the high grade Spargos Reward project which is
anticipated to begin mining in 2021. Karora has a strong Board and
management team focused on delivering shareholder value and
responsible mining, as demonstrated by Karora's commitment to
reducing emissions across its operations. Karora's common shares
trade on the TSX under the symbol KRR and also trade on the OTCQX
market under the symbol KRRGF.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains "forward-looking information"
including without limitation statements relating to the liquidity
and capital resources of Karora, production guidance and the
potential of the Beta Hunt Mine, Higginsville Gold Operation, the
Aquarius Project and the Spargos Gold Project, the commencement of
mining at the Spargos Gold Project and the completion of the
resource estimate.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Karora to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; results of exploration programs; accidents,
labour disputes and other risks of the mining industry; political
instability, terrorism, insurrection or war; or delays in obtaining
governmental approvals, projected cash operating costs, failure to
obtain regulatory or shareholder approvals. For a more detailed
discussion of such risks and other factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, refer to Karora 's filings with
Canadian securities regulators, including the most recent Annual
Information Form, available on SEDAR at www.sedar.com.
Although Karora has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this news release and Karora disclaims any obligation to update
any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable securities laws.
SOURCE Karora Resources Inc.