Guyana Goldfields reports higher earnings for first quarter compared to last year
Canadian-owned Guyana Goldfields Inc (GGI) says it has produced over 28,000 ounces of gold for the first quarter of 2020 with a net earnings of over US$2 million compared to an equivalent loss for the first quarter of 2019, a gain which was driven by higher gold prices.
This information formed part of the company’s financial results for the first quarter ended March 31 which was filed yesterday in Toronto according to a GGI release yesterday. The company also provided corporate updates, including updates on its temporary care and maintenance plan and on its proposed arrangement transaction with Silvercorp Metals Inc.
First Quarter Highlights
First quarter gold production of 28,100 ounces and 24,200 ounces of gold sold from open pit at a cash cost (before royalty) of US$1,084 per ounce of gold sold. Cost of sales was US$1,376 per ounce and all-in sustaining costs were US$1,352 per ounce.
Mining rates averaged 21,200 tonnes per day (tpd) during the first quarter, representing a 62% decrease in mining rates compared to a mining rate of 56,000 tpd in the first quarter of 2019.
First quarter mill performance of 6,300 tpd which is lower than the 7,200 tpd in the comparable period in 2019 and a direct consequence of the lower throughput from mainly hard rock ore being milled during the first quarter of 2020.
Net earnings for the quarter were US$2.3 million, as compared to a loss of US$2.3 million in the first quarter of 2019 driven by higher margins from higher gold prices, partly offset by higher cost of sales per ounce.
Cash and cash equivalents of US$15.5 million as at March 31, was US$6.6 million lower than the US$22.1 million reported at December 31, 2019. A lower amount of cash was generated from operations than in the first quarter of 2019 as a result of lower gold sales, an increase in metals inventory due to delays in gold sales as a result of air travel cargo delays resulting from Covid-19 related travel restrictions and a concerted effort to reduce payables.
Operational Update
GGI temporarily suspended all underground development due to Covid-19 travel restrictions as announced on March 18. Taking into consideration the funding gap and the ongoing circumstances related to Covid-19, the company had announced on May 7 that the next phase of mine development, including both the open pit and underground, would not proceed as originally planned. This it says will result in in a period of care and maintenance at its site once Rory’s Knoll Phase 4 is completed and satellite ore and low-grade stockpiles are depleted in the second quarter of 2020. The company also expects to be able to keep the mill operational up to mid-June, with production estimated to total approximately 45,000 to 50,000 ounces in the first half of 2020. This it informs, is higher than its previously estimated production for the first half of the year of 35,000 to 45,000 ounces.
Thereafter, GGI says that the mine will go into a period of care and maintenance for one to two quarters. The site is expected to be in full care and maintenance by the end of the second quarter and a
full-time security presence will be maintained at site, along with adequate crews to maintain the site, including environmental monitoring and compliance. Infrastructure such as camp, water supply, power supply and other systems will remain operational at a reduced level.
Covid-19 update
In response to the global Covid-19 pandemic GGI says it has instituted a number of safeguards in order to continue to operate in a safe manner. These include amongst others, a reduced number of employees at the site so as to accommodate single room occupancy in the camp, social distancing practices, temperature checks at check-in for flights to site including voluntary time off when employees have any symptoms associated with the virus, limited passengers on flights in and out of site and wearing of personal protective equipment on flights and situations where social distancing is not feasible.
However, open pit mining and plant operations continue largely unaffected at this time as it plans to utilise the aforementioned additional safeguards put in place to maintain employee health and safety. Gold sales will continue to occur in the normal course, albeit through amended supply chains and timing due to restricted flights in and out of Guyana.
Alan Pangbourne, GGI President and Chief Executive Officer (CEO) in his comments thanked all of the employees for their hard work and dedication during these challenging times. “The cooperation and diligence of the employees in Guyana in adhering to the Covid-19 measures, have allowed us to continue operating as we prepare for the upcoming period of temporary care and maintenance.”
The CEO further stated, “I thank the Guyanese Government for their support that allowed us to develop the Aurora Gold Mine and their continued cooperation that will lead to the first significant modern underground mine in Guyana. What we have been able to achieve at a remote site in Region Seven is commendable and the transition to underground mining will be a great opportunity for the Aurora mine and for Guyana.”
The company has scheduled an annual and special shareholder meeting for June 29, 2020 at which time shareholders will be asked to vote on the planned Silvercorp acquisition of GGI. Shareholders can expect full details of the transaction in the management information circular that is expected to be mailed to them in early June.
The company advised that for the sake of clarity, persons desirous of perusing yesterday’s release should do so conjunction with its March 31, unaudited condensed consolidated financial statements and accompanying Management’s Discussion and Analysis. These documents are available on its website at www.guygold.com.