Guyana Goldfields third quarter gold output down sharply
-full-year production expected to be below estimate
Guyana Goldfields Inc’s (GGI) output from its Aurora, Region Seven mine in the third quarter this year of 22,100 ounces was sharply down from the second quarter figure of 37,300 ounces.
According to figures released yesterday by GGI, total production for the year so far is 96,000 ounces and full-year output is expected to be below estimate.
Senior management will host a conference call today on the results.
Gold sales for the third quarter were 23,500 ounces at a total cash cost (before royalty) of US$1,372 per ounce of gold. The company acknowledged that gold sales were very low for the third quarter. In the second quarter 38,300 ounces of gold were sold. Cost of sales in the third quarter (including royalty and depreciation) were US$1,864 per ounce and allin sustaining costs (“AISC”) were US$1,882 per ounce
GGI, a Canadian mining company, said that cash and cash equivalents were US$24.8 million as at September 30, 2019 with cash utilized in ongoing waste development during a quarter of low ore release and consequential low gold sales. It said that cash and cash flow from operations is expected to sufficiently fund the necessary planning work, accelerated stripping and underground mine development for the remainder of this year and next year subject to the impact of the ongoing review of the life of mine plan.
GGI said that its mining rate averaged 51,500 tonnes per day, an 11% decline compared to the previous quarter due to pit room constraints caused by smaller benches and reduced working faces, heavy rainfall and a work stoppage.
The company noted that it experienced a three-day work stoppage at its Aurora Mine after a part of the workforce blocked delivery of ore to the mill resulting in approximately 22,500 tonnes not being processed
Quarterly mill performance of 6,900 tonnes per day was a 12% drop from the second quarter as a result of management reducing the throughput rates to maximize recoveries.
The company’s underground exploration decline construction was advanced to 394 metres.
The company said it also received a Trade Union Certificate of Recognition from the Trade Union Recognition and Certification Board in Guyana identifying The National Mine Works Union as the representative union for employees below the supervisory level at Aurora.
GGI said that management initiated a comprehensive mine, production and cost savings plan review to make the necessary changes and improvements to up productivity and profitability. The result of the review is expected to be delivered in the first quarter of next year though some cost improvements are expected to be realized almost immediately.
GGI said that the Aurora mine continued excellent safety performance with 2.8 million person hours without a lost time injury
It quoted its Interim CEO, Allen Palmiere, as stating, “With the changes in corporate and site management oversight coupled with ongoing challenges in achieving the optimized sequence of mining and waste development in the open pit, we have commenced a thorough review of the Aurora life of mine plan in the third quarter. We have embarked on a comprehensive mine, production and cost savings review plan to make the necessary changes and improvements to increase productivity and profitability. Since assuming the Interim CEO role on July 31, 2019, I’ve taken a hands-on, first principles approach to reviewing all operations, identifying the
challenges and opportunities, and we are in the process of reviewing the overall mine plan. Our reviews have confirmed that we have a sound asset, including geological resources and a robust processing facility, however, the mine plan requires further review in order to maximize the value of Aurora”.
He added that in recent weeks, changes have been made to the operating team.
Palmiere said that Roscoe Postle Associates Inc (RPA) has been appointed to assist in the review of the mine plan.
“Part of this review includes assessing the cost savings initiatives which were underway as a result of the implementation of the management optimization plan announced earlier this year. The timing of cost savings implementation may be impacted by the outcomes of the life of mine review and detailed mine planning underway. Management does not expect the review to materially change the total reserves to be mined over the previously published RPA Report. The detailed review and mine planning work underway may see a change in the sequence of open pit development and ore release, timing of access to Rory’s Knoll underground and mining methods”, Palmiere added.
He also said “The new senior management and site operating management team have a proven ability to optimize operations and are advancing the review focusing on operational execution to support a sustainable and profitable production profile based on practical sequencing of ore release. Fourth quarter gold production is expected to improve over the third quarter as mining moves back into the primary ore zone within Rory’s Knoll, however, full year production is expected to be below previously released guidance. Prior guidance does not reflect current operating realities experienced in the mine sequence and operational constraints mentioned above. As such, full year unit costs are expected to be in line with the third quarter year to date actual costs. Management does not consider it appropriate to provide updated guidance ranges or any forward projections until the review is completed. The Company will release the full details of this review once completed, which is expected in the first quarter of 2020, however some cost improvements are expected to begin to be realized almost immediately.”