Aura Minerals Inc. (TSX: ORA) (B3: AURA33) (OTCQX:
ORAAF) (“
Aura” or the
“
Company”) announces that it has filed unaudited
consolidated financial statements and management discussion and
analysis (together, “Financial and Operational Results”) for the
period ended September 30, 2022 (“Q3 2022”), which also contains
the Annual Guidance Update (“2022 New Guidance”) and a new long
term production target (“2025 Production Target”). The full version
of the Financial and Operational Results can be viewed on the
Company’s website at www.auraminerals.com or on SEDAR at
www.sedar.com. All amounts are in U.S. dollars unless stated
otherwise.
Q3 2022 Highlights (Compared to Q3
2021):
- Consolidated
quarterly production of 58,175 gold equivalent ounces (“GEO1”) in
Q3 2022, an increase of 8% vs. Q2 2022 at constant metal prices;
consolidated production for the first nine months of 2022 was
174,861 GEO
- Aranzazu reached
313k tons milled in the quarter, a record high for a single
quarter
- EPP produced 48% in
Q3 2022 more than in the previous quarter; production is expected
to continue to increase from EPP in Q4 2022
- San Andres
production was below the Company’s expectations in Q3 2022 as
a result of lower productivity generated by the ramp up of a new
mine contractor and heavy rains, about 70% above the historical
average for this time of the year
- Despite higher
production in tons, lower copper prices in the quarter impacted
total GEO calculation for copper concentrate production, while
effective copper content increased 12% in comparison to same
quarter of 2021
- Aura’s revenues in
Q3 2022 were US$81.1 million, a decrease of 16% compared to the
same period of 2021 due to lower metal prices and non-recurring Q3
price adjustments on Aranzazu's offtake agreement of - US$ 10
million (“Aranzazu Q3 Offtake Price Adjustments”)
- Adjusted EBITDA in
Q3 2022 was US$16.7 million, negatively impacted by lower metal
prices and Aranzazu Q3 Offtake Price Adjustments
- During Q3 2022,
Aura invested US$ 81 million in the Company’s growth initiatives,
including the Big River acquisition, Almas development and
exploration, increasing its Net Debt in the quarter as already
expected
- Aura has also been
able to reasonably off set inflation pressures and annual cash
costs are now expected to be within the range of US$875 to US$899
per oz for 2022 full year, compared to the previous guidance of
US$803 to US$853 per oz; the primary reasons for the increase in
the expected cash cost are lower than expected production from San
Andres and lower copper prices, which negatively affected GEO
conversion from copper produced at the Aranzazu mine
- As expected,
production continues to ramp-up and management expects a stronger
Q4 2022 with 70,000 to 75,000 GEO; consolidated production was
approximately 22.6k GEO in September 2022 and approximately 23k GEO
in October 2022
- Full year 2022
production guidance has been revised to between 245,000 and 250,000
GEO, compared to 260,000 and 275,000 oz as expected previously. The
primary reasons for the decrease in the production guidance are
lower production than expected from San Andres and lower copper
prices, which had a negative impact of about 8k GEO relative to the
first projection issued by the Company to 2022.
- Construction at the
Almas project is proceeding on budget and on schedule; at the end
of October 2022, about 79% of the project was completed and over
92% of the budget on services and equipment had been negotiated.
Production is expected to begin by April 2023
- In October, Aura
announced the completion of a Feasibility Study of the Matupa
Project on its X1 deposit, which included a leveraged IRR of 50%2
and a payback period of 2.3 years2, not including potential upsides
with Serrinhas and other deposits
- In September, the
Company closed the acquisition of 80% of Big River (owner of
the Borborema project) which has about 1.9M Oz of M&I Resources
and 0.57 Oz in Inferred Resources.
- Aura is announcing
new long-term guidance to 2025, when it expects to produce more
than 450,0003 annualized GEO, representing an increase of more than
67% vs. its 2021 production. This increase will come from
optimizing production from assets currently in operations and
bringing three new mines online in the coming years (Almas, Matupá
and Borborema3).
- During the first
nine months of 2022, the Company returned approximately US$19
million in cash to its shareholders through dividends and share and
BDR buybacks; during the last 12 months the yield is 7.8%4
- On September 15,
the Company announced that, for the second year in a row, it was
ranked number one on the TSX30™ 2022 on the Toronto Stock Exchange
(“TSX”)
- On October 20, the
Company qualified to trade on the OTC Markets Group (ticker:
ORAAF), providing U.S. investors with greater accessibility to
trading Aura’s common shares
Rodrigo Barbosa, President and CEO of Aura,
commented: “We continued to increase production at our mines in Q3
and expect to continue on this path in Q4. Lower copper prices and
weaker-than-expected production at San Andres pushed our 2022
production guidance to a lower range. Despite the short-term
challenges in San Andres, we are moving forward with our growth
pipeline: construction of Almas is on time and on budget, we
recently released the Feasibility Study of the Matupá project and
closed the acquisition of 80% of Big River Gold Limited. Now, we
not only aim to produce over 400,000 GEO annualized by 2024 but to
reach over 450,000 GEO annualized by 2025, all of it while paying
dividends and under the highest ESG standards which we call Aura
360.”
Operational And Financial Overview (US$
thousand)
|
For the three months ended
September 30, 2022 |
For the three months ended September 30, 2021 |
For the nine months ended
September 30, 2022 |
For the nine months ended September 30, 2021 |
Total Production1 (GEO) |
58,175 |
|
61,588 |
|
174,861 |
|
191,389 |
|
Sales2 (GEO) |
57,963 |
|
63,669 |
|
179,138 |
|
201,786 |
|
Net Revenue |
81,189 |
|
97,060 |
|
286,849 |
|
310,158 |
|
Adjusted EBITDA |
16,661 |
|
39,144 |
|
97,195 |
|
134,096 |
|
Cash costs per GEO sold |
971 |
|
825 |
|
924 |
|
799 |
|
Ending Cash balance |
120,916 |
|
165,059 |
|
120,916 |
|
165,059 |
|
Net Debt |
80,723 |
|
(7,695 |
) |
80,723 |
|
(7,695 |
) |
Recurring Capex |
(12,060 |
) |
(17,262 |
) |
(21,567 |
) |
(37,321 |
) |
|
|
|
|
|
|
|
|
|
1 Considers
capitalized production |
|
|
|
|
2 Does not
consider capitalized production |
|
|
|
|
|
|
|
|
|
Guidance Update
2022 Guidance:
The Company’s updated gold equivalent production, cash operating
cost per gold equivalent ounce produced and Capex guidance for 2022
is detailed below.
ProductionThe table below details the Company’s
updated GEO production guidance for 2022 by business unit:
|
|
Production ('000 GEO) 2022 |
|
|
|
Updated |
Previous |
|
|
Aranzazu |
109 - 110 |
115 - 120 |
|
|
EPP Mines |
69 - 71 |
70 - 75 |
|
|
San Andrés |
67 - 69 |
75 - 80 |
|
|
Total |
245 - 250 |
260 - 275 |
|
|
|
|
|
|
Factors that contributed to the change in the Company’s guidance
include:
- Assumption for
average Copper market prices for the year decreased, which
negatively affects the Gold Equivalent Ounces calculation. The new
price assumption is based on the market consensus, with a forecast
of US$ 3.60 per pound for Q4 2022, and actual prices for first nine
months of the year.
- If we consider
previous price assumptions for Copper and Gold prices, Aranzazu,
and Aura as a whole, would be expected to produce an additional ~
8,000 GEO during 2022
- A reduction on
production guidance from San Andres Mines due to
lower-than-expected results from Q2 and Q3 2022, as a result of
lower recovery metallurgical rates from a greater amount of sulfide
material fed to the plant, from a oxide-sulfide transition area in
the mine. Reduction was also affected by lower-than-expected
production on Q3 2022, due to high rainfall levels in the quarter
(about 70% above the historical rains in the last 20 years for the
period) which, combined with a period of contractor transition,
reduced ore moving capacity in the mine and reduced ore fed to the
plant.
In addition to production guidance for 2022, management’s
targets for production for 2024-2025 across its business units are
presented below. Management maintains the previous annualized
production target of more than 400,000 GEO by the year ending
December 31, 2024, and has added a production target of more than
450,000 annualized GEO for the year ending December 31, 2025:
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/77fb9a3a-8145-481d-a608-5f3efb91cfd7
1) Considering 80% of the ounces to be produced by the Borborema
projectNotes: 2022 figures are based on current technical reports
for the Company’ s projects, except as otherwise noted. Please
refer to the heading “Technical Information”. Figures for 2024 and
2025 are based on management’s expectations based on a variety of
factors, including preliminary, high-level studies for each of the
assets. These targets are management’ s objectives only and are
subject to certain risks and assumptions. See “Forward-Looking
Information”. Includes ounces capitalized from EPP projects and
Gold Road in 2020 and 2021.
Cash costs
The table below shows the Company’s updated cash operating costs
per GEO sold guidance for 2022 by Business Unit:
|
|
Cash Cost per GEO (US$
thousand)2022 |
|
|
|
Updated |
Previous |
|
|
Aranzazu |
672 - 696 |
645 - 690 |
|
|
EPP Mines |
963 - 987 |
955 - 992 |
|
|
San Andrés |
1,115 - 1,139 |
910 - 980 |
|
|
Total |
875 - 899 |
803 - 853 |
|
- In Aranzazu,
despite lower copper market prices, the Company has been able to
manage lower costs levels to partially offset price reductions. If
we consider previous Copper and Gold prices assumptions for GEO
calculation, the updated cash cost guidance range would be between
$629 and $653 per GEO, below previous guidance.
- EPP is keeping
the previous guidance despite stronger FX (BRL / USD) than
previously projected
- At San Andres,
the increase in cash cost per GEO was directly related to
production decreases in Q2 and Q3 2022. The hiring of a new mine
contractor, which started in July 2022, is expected to reduce
nominal unit costs per ton moved compared to previous quarters and
is expected to increase productivity at the mine.
Capex:
The table below shows the breakdown of estimated capital
expenditures by type of investment, and a comparison to the
previous guidance:
|
|
Capex (US$ million) 2022 |
|
|
|
Updated |
Previous |
|
|
New projects + Expansion |
66 - 68 |
55 - 61 |
|
|
Exploration |
8 - 9 |
12 - 14 |
|
|
Sustaining |
32 - 33 |
33 - 36 |
|
|
|
106 - 110 |
100 - 111 |
|
- New projects +
Expansion is expected to increase mainly due to an acquisition of
Mineral Rights for US$ 6.6 million by Mineração Apoena, which was
completed during Q3 2022. The Company expects such acquisition will
contribute to the increase in EPP’s LOM in the near future.
- Sustaining Capex
was reduced to partially compensate for higher Expansion Capex
- Aura believes
its properties have strong geological potential and management’ s
objective is to expand LOM across its business units. Total
expenditures in exploration in 2022 are now estimated to be between
US$ 23 million and US$ 25 million, within the range of the previous
(US$ 23 million to US$ 27 million); of which:
- US$8 MM to US$9
MM in capital expenditures (included in the table above) in areas
where the Company has proven and probable mineral reserves;
and,
- US$15 MM to
US$16 MM in exploration expenses, not capitalized, in areas where
the Company does not yet have proven or probable mineral reserves
(not included in the table above).
Key Factors
The Company’s future profitability, operating
cash flows, and financial position will be closely related to the
prevailing prices of gold and copper. Key factors influencing the
price of gold and copper include, but are not limited to, the
supply of and demand for gold and copper, the relative strength of
currencies (particularly the United States dollar), and
macroeconomic factors such as current and future expectations for
inflation and interest rates. Management believes that the
short-to-medium term economic environment is likely to remain
relatively supportive for commodity prices but with continued
volatility.
To decrease risks associated with commodity
prices and currency volatility, the Company will continue to
evaluate and implement available protection programs. For
additional information on this, please refer to the AIF.
Other key factors influencing profitability and
operating cash flows are production levels (impacted by grades, ore
quantities, process recoveries, labor, country stability, plant,
and equipment availabilities), production and processing costs
(impacted by production levels, prices, and usage of key
consumables, labor, inflation, and exchange rates), among other
factors.
Non-GAAP Measures
In this press release, the Company has included
Adjusted EBITDA, cash operating costs per gold equivalent ounce
sold and net debt which are non-GAAP measures. These non-GAAP
measures do not have any standardized meaning within IFRS and
therefore may not be comparable to similar measures presented by
other companies. The Company believes that these measures provide
investors with additional information which is useful in evaluating
the Company’s performance and should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS. The below tables provide a reconciliation of
the non-GAAP measures presented:
Reconciliation from Income for the Quarter for EBITDA
and Adjusted EBITDA:
|
For the three months ended
September 30, 2022 |
For the three months ended September 30, 2021 |
For the nine months ended
September 30, 2022 |
For the nine months ended September 30, 2021 |
Profit (loss) from continued operation |
70 |
|
11,190 |
43,934 |
|
61,882 |
|
Income tax (expense)
recovery |
2,099 |
|
8,240 |
23,084 |
|
25,369 |
|
Deferred income tax (expense)
recovery |
2,822 |
|
6,117 |
(262 |
) |
16,147 |
|
Finance costs |
5,912 |
|
5,065 |
5,626 |
|
6,447 |
|
Other gains (losses) |
(3,330 |
) |
33 |
(2,255 |
) |
(1,098 |
) |
Depreciation |
9,088 |
|
8,499 |
27,068 |
|
25,349 |
|
EBITDA |
16,661 |
|
39,144 |
97,195 |
|
134,096 |
|
Impairment |
- |
|
- |
- |
|
- |
|
ARO Change |
- |
|
- |
- |
|
- |
|
Adjusted EBITDA |
16,661 |
|
39,144 |
97,195 |
|
134,096 |
|
|
|
|
|
|
|
|
|
Reconciliation from the consolidated financial
statements to cash operating costs per gold equivalent ounce
sold:
|
For the three months ended
September 30, 2022 |
For the three months ended September 30, 2021 |
For the nine months ended
September 30, 2022 |
For the nine months ended September 30, 2021 |
Cost of goods sold |
(65,361 |
) |
(59,421 |
) |
(192,335 |
) |
(178,588 |
) |
Depreciation |
9,061 |
|
8,337 |
|
26,753 |
|
24,820 |
|
COGS w/o
Depreciation |
(56,300 |
) |
(51,084 |
) |
(165,582 |
) |
(153,768 |
) |
Gold
Equivalent Ounces sold(2) |
57,963 |
|
61,715 |
|
179,138 |
|
191,794 |
|
Cash costs per gold
equivalent ounce sold |
971 |
|
825 |
|
924 |
|
799 |
|
|
|
|
|
|
(1) Considers exclusively
finished product |
|
|
|
|
(2) Do not considers
pre-commercial production and sale, capitalized |
|
|
|
(3) Do not consider Gold Road,
due to reclassification |
|
|
|
|
|
|
|
|
|
Reconciliation Net Debt:
|
|
September 30, 2022 |
December 31,2021 |
|
|
|
Short Term Loans |
84,045 |
|
58,169 |
|
|
|
Long-Term
Loans |
123,731 |
|
99,862 |
|
|
|
Plus / (Less): Derivative
Financial Instrument |
(5,537 |
) |
2,779 |
|
|
|
Less: Cash and Cash
Equivalents |
(120,916 |
) |
(161,490 |
) |
|
|
Less: Restricted Cash |
(600 |
) |
(944 |
) |
|
|
Net Debt |
80,723 |
|
(1,624 |
) |
|
|
|
|
|
|
|
|
Qualified Person
Farshid Ghazanfari, P.Geo., Geology and Mineral Resources
Director for Aura Minerals Inc. has reviewed and confirmed the
scientific and technical information contained within this news
release and serves as the Qualified Person as defined in National
Instrument 43-101.
About Aura 360° Mining
Aura is focused on mining in complete terms –
thinking holistically about how its business impacts and benefits
every one of our stakeholders: our company, our shareholders, our
employees, and the countries and communities we serve. We call this
360° Mining.
Aura is a mid-tier gold and copper production
company focused on the development and operation of gold and base
metal projects in the Americas. The Company’s producing assets
include the San Andres gold mine in Honduras, the Ernesto/Pau-a
-Pique gold mine in Brazil and the Aranzazu copper-gold-silver mine
in Mexico. In addition, the Company has four additional gold
projects in Brazil: Almas, under construction; Borborema and
Matupá, in development, and São Francisco, in care &
maintenance, and one gold project in Colombia, Tolda Fria.
For further information, please visit Aura’s website at
www.auraminerals.com or contact:
Rodrigo BarbosaPresident &
CEO305-239-9332
Forward-Looking Information
This press release contains “forward-looking
information” and “forward-looking statements”, as defined in
applicable securities laws (collectively, “forward-looking
statements”) which may include, but is not limited to, statements
with respect to the activities, events or developments that the
Company expects or anticipates will or may occur in the future,
including, without limitation, production levels (including on a
GEO basis), cash costs across its operations and the effects of a
new contractor for mine operations at San Andres, and the ability
of the Company to achieve its short-term and longer-term outlook.
Often, but not always, forward-looking statements can be identified
by the use of words and phrases such as “plans,” “expects,” “is
expected,” “budget,” “scheduled,” “estimates,” “forecasts,”
“intends,” “anticipates,” or “believes” or variations (including
negative variations) of such words and phrases, or state that
certain actions, events or results “may,” “could,” “would,” “might”
or “will” be taken, occur or be achieved.
Known and unknown risks, uncertainties and other
factors, many of which are beyond the Company’s ability to predict,
or control could cause actual results to differ materially from
those contained in the forward-looking statements. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. Specific reference is
made to the most recent Annual Information Form on file with
certain Canadian provincial securities regulatory authorities for a
discussion of some of the factors underlying forward-looking
statements, which include, without limitation, the ability of the
Company to achieve its short-term and longer-term outlook and the
anticipated timing and results thereof, the ability to lower costs
and increase production, the ability of the Company to successfully
achieve business objectives, copper and gold or certain other
commodity price volatility, changes in debt and equity markets, the
uncertainties involved in interpreting geological data, increases
in costs, environmental compliance and changes in environmental
legislation and regulation, interest rate and exchange rate
fluctuations, general economic conditions and other risks involved
in the mineral exploration and development industry. Readers are
cautioned that the foregoing list of factors is not exhaustive of
the factors that may affect the forward-looking statements.
All forward-looking statements herein are
qualified by this cautionary statement. Accordingly, readers should
not place undue reliance on forward-looking statements. The Company
undertakes no obligation to update publicly or otherwise revise any
forward-looking statements whether as a result of new information
or future events or otherwise, except as may be required by law. If
the Company does update one or more forward-looking statements, no
inference should be drawn that it will make additional updates with
respect to those or other forward-looking statements.
Financial Outlooks and Future-Oriented Financial
Information
To the extent any forward-looking statements in
this press release constitute “financial outlooks” within the
meaning of applicable Canadian securities legislation, such
information is being provided as certain estimated financial
metrics and the reader is cautioned that this information may not
be appropriate for any other purpose and the reader should not
place undue reliance on such financial outlooks. Financial
outlooks, as with forward-looking statements generally, are,
without limitation, based on the assumptions and subject to various
risks as set out herein. The Company’s actual financial position
and results of operations may differ materially from management’s
current expectations and, as a result, may differ materially from
values provided in this press release.
1 Gold equivalent ounces, or GEO, is calculated
by converting the production of silver and copper into gold using a
ratio of the prices of these metals to that of gold. The prices
used to determine the gold equivalent ounces are based on the
weighted average price of silver and copper realized from sales at
the Aranzazu Complex during the relevant period.2 Based on weighted
average consensus gold prices for the projected period of US$1,664
per ounce and debt/equity ratio of 50%. See the news release titled
“Aura Minerals Completes Feasibility Study for the Matupá Gold
Project” and dated October 5, 2022, which is available under the
Company’s SEDAR profile.3 Considering 80% of the ounces to be
produced by the Borborema project.4 Including stock buybacks.
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