Akg q1 2017 financial results presentation final
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Transcript of Akg q1 2017 financial results presentation final
This presentation has been prepared by Asanko Gold Inc. (the “Company”) solelyfor informational purposes. This presentation is the sole responsibility of theCompany. Information contained herein does not purport to be complete and issubject to certain qualifications and assumptions and should not be relied uponfor the purposes of making an investment in the securities or entering into anytransaction. The information and opinions contained in this presentation areprovided as at the date of this presentation and are subject to change withoutnotice and, in furnishing the presentation, the Company does not undertake oragree to any obligation to provide recipients with access to any additionalinformation or to update or correct the presentation.No securities commission or similar regulatory authority has passed on the meritsof any securities referred to in the presentation, nor has it passed on or reviewedthe presentation.Cautionary note to United States investors - the information contained in thepresentation uses terms that comply with reporting standards in Canada andcertain estimates are made in accordance with National Instrument 43-101–Standards for Disclosure for Mineral Projects (“NI 43-101”). The presentation usesthe terms “other resources”, “measured”, “indicated” and “inferred” resources.United States investors are advised that, while such terms are recognized andrequired by Canadian securities laws, the SEC does not recognize them. UnderUnited States standards, mineralization may not be classified as “ore” or a“reserve” unless the determination has been made that the mineralization couldbe economically and legally produced or extracted at the time the reservedetermination is made. United States investors are cautioned not to assume thatall or any part of measured or indicated resources will ever be converted intoreserves. Further, “inferred resources” have a great amount of uncertainty as totheir existence and as to whether they can be mined legally or economically. Itcannot be assumed that all or any part of the “inferred resources” will ever beupgraded to a higher category. Therefore, United States investors are alsocautioned not to assume that all or any part of the inferred resources exist, orthat they can be mined legally or economically.Under Canadian rules, estimates of “inferred resources” may not form the basis offeasibility or pre-feasibility studies except in limited cases. Disclosure of“contained ounces” is permitted disclosure under Canadian regulations; however,the United States Securities Exchange Commission (“SEC”) normally only permitsissuers to report mineralization that does not constitute “reserves” as in placetonnage and grade without reference to unit measures.
Accordingly, information concerning descriptions of mineralization, mineralresources and mineral reserves contained in the presentation, may not becomparable to information made public by United States companies subject to thereporting and disclosure requirements of the SEC.Some of the statements contained in this presentation may contain “forward-lookingstatements”. All statements in this presentation, other than statements of historicalfacts, that address estimated mineral resource and reserve quantities, grades andcontained metal, and the timing of further exploration and development of theCompany’s projects, are forward-looking statements. There can be no assurance thatthe plans, intentions or expectations upon which these forward-looking statementsand information are based will occur. “Forward-looking statements” and “forward-looking information” are subject to a variety of risks, uncertainties and assumptions,including those that are discussed in the Company’s Annual Information Form. Someof the factors which could affect future results and could cause results to differmaterially from those expressed in the forward looking statements and informationcontained herein include: market prices, exploitation and exploration successes,continued availability of capital and financing and general economic, market,business or governmental conditions. Forward looking statements and informationare based on the beliefs, estimates and opinions of management at the date thestatements are made and are subject to change without notice. The Companydisclaims any intention to update or revise any forward-looking statements whetheras a result of new information, future events, or otherwise except as required byapplicable law. The Company also cautions potential investors that mineral resourcesthat are not material reserves do not have demonstrated economic viability.For a more comprehensive discussion of the risks faced by the Company, and whichmay cause the actual financial results, performance or achievements of theCompany to be materially different from the Company’s estimated future results,performance or achievements expressed or implied by forward-looking informationor forward-looking statements, please refer to the Company’s latest AnnualInformation Form, filed with Canadian securities regulatory authorities atwww.sedar.com, and filed under Form 40-F with the SEC at www.sec.gov/edgar. Therisks described in the Annual Information Form (filed and viewable onwww.sedar.com and www.sec.gov/edgar, and available upon request from theCompany) are hereby incorporated by reference into this presentation.
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FORWARDLOOKINGINFORMATION
• Recordproductionof58,187oz- Inlinewithguidanceof230,000-240,000oz
• Goldsalesof57,812ozataveragerealizedpriceUS$1,199/oz
• PositiveNetIncomeofUS$7.8morUS$0.04/share
• Recordgoldrecoveryof95%- significantlyhigherthandesigndespitehighervolumes
• TailingsDamliftcommencedquarteraheadofplanduetoprocessingplantoperating~20%abovedesignfor2successivequarters
• SuccessfulinfilldrillingatAkwasiso:
• IndicatedResourcesup79%to322,500oz
• ProbableReservesup62%to214,500oz
• 26%highergrades
• PermitsreceivedforEsaase andoverlandconveyor
• UpdatedGlobalResource&ReserveStatementpublished(foryearendDec2016)
• 2nd Independentexpert– CSAGlobalcompilednewNkran&DynamiteHillresources– agreedwithEsaase
• GlobalReservesdecreasedby2%to4.8Moz,confirmingrobustLOMplan
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Q12017HIGHLIGHTS
Industry-leadingsafetyrecordmaintained:
ØOnelosttimeinjury(“LTI”)reportedduringthequarter
Ø Rolling12monthLTIFRof0.21
HEALTH &SAFETY
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q2'16 Q3'16 Q4'16 Q1'17
Goldproduced Goldproductiondesign
QuarterlyGoldProduction
49%
6% 2%
• Oremininginlinewithmillingrates,averaging339,096tpmataverageminedgradeof1.8g/t
• Pertonneminingcostsinlinewithpreviousquarters.NewResourcemodelintroducedduringquarter=>lowergrades&higherstripratio
• Singlepitriskmitigationmeasuresinplace– SSR,dualramps&1.6Mtstrategicstockpileonsurface
• 2.7Mtorecontaining~166,000ozalreadypre-developed@Nkranwithoutanyfurtherstripping– whichwearedoingat+/-2milliontpm
• TogetherwithDynamiteHill(135,000oz)&Akwasiso(214,000oz)=>norisktoorefeedorincreasedproductionprofileuntilEsaasestartsin2019
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Q1MININGPERFORMANCE
KeyMiningStatistics Units Q12017
Q42016
Q32016
Q22016
Totaltonnes mined ‘000t 6,637 7,231 7,332 7,059
Wastetonnes mined ‘000t 5,620 5,931 6,003 5,816
Oretonnes mined ‘000t 1,017 1,300 1,326 1,243
Stripratio W:O 5.5:1 4.6:1 4.5:1 4.7:1
Gold GradeMined g/t 1.8 2.0 1.9 1.5
Mining cost $/t 3.89 3.88 3.88 3.74
MiningandMillingTonnes,thousands
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200
400
600
800
1,000
1,200
1,400
Q2'16 Q3'16 Q4'16 Q1'17
Oremilled Oremined Milldesign
452
357336
439
300
350
400
450
500
550
Q2'16 Q3'16 Q4'16 Q1'17
CashminingcostperouncedeliveredtocrusherUS$perounce
CostIncrease:• ΔGrade=US$44/oz• ΔStripratio=US$65/oz• CombinedimpactofUS$109/oz
MillDesign=750Kt
• Secondsuccessivequarteroperatingat20%abovedesigncapacity
• Record908,463tprocessedwithfeedgradeof2.05g/t
• Marchsetnewrecordwith315,000t(3.7Mtannualized)milled
• Record58,187ozproduced– inlinewith2017guidance
• Goldrecoveryof95%- 2.5%abovedesign– continuingtoexceedexpectationsdespitemateriallyhighervolumesprocessed
• >55%freegoldrecoveryviaKnelsonconcentratorskeytorecoveryimprovementsvsdesignof45%
• Pertonne processingcostsinlinewithplan
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Q1PROCESSINGPERFORMANCE
KeyProductionStatistics Units Q1
2017Q42016
Q32016
Q22016
Ore milled ‘000t 908 901 852 702
Gold feed grade g/t 2.0 2.1 2.1 1.7
Gold recovery % 95 94 94 92
Gold produced oz 58,187 57,178 53,986 36,337
Processing cost $/t 13.36 12.80 13.25 13.79
CashprocessingcostperouncedeliveredtocrusherUS$perounce
258
195185
208
175185195205215225235245255265275
Q2'16 Q3'16 Q4'16 Q1'17
92%94%
94%95%
-
0.5
1.0
1.5
2.0
2.5
-
200
400
600
800
1,000
Q2'16 Q3'16 Q4'16 Q1'17
Oremilled Milldesign
Goldfeedgrade Recovery
MillPerformanceUS$perounce,%’sdenoterecoveries
CostIncrease:• ΔGrade=US$19/oz• ΔProcessingcost/t=US$9/oz• CombinedimpactofUS$28/oz
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Q1COSTPERFORMANCE
• Operatingcashcostsimpactedby:
• ~1,600ozofin-circuitinventoryinQ416beingreleasedinQ1
• Fullmillre-line&maintenancecostsbroughtforward
• Tailingsdamliftbroughtforwardduetoplantoperatingabovedesigncapacityfor2quarters
• AISC- excludingtailingsliftsustainingcapex– ofUS$922/oz(upperendof2017annualizedguidanceisUS$920/oz)
• CostsexpectedtobelowerinH2withoxideminingcommencinginMayandincreasedmillthroughputsto~360,000tpmfromJuly
US$perounce Q12017 Q42016 Q32016 Q22016
Operatingcashcosts 578 524 544 785
Royalties 60 60 65 61
Totalcashcosts 638 584 609 846
Corporatecosts 39 96 31 48
Sustainingcapex 65 27 25 38
Deferredstripping 211 184 240 346Reclamationcostaccretion 3 1 1 1
AISC 956 893 906 1,280
GoldProduction&AISCOunces US$perounce
1,280
906 893 956
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200
400
600
800
1,000
1,200
1,400
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q2'16 Q3'16 Q4'16 Q1'17
GoldProduced AISC
-
200
400
600
800
1,000
1,200
1,400
Q2'16 Q3'16 Q4'16 Q1'17
Totalcashcosts CorporatecostsSustainingcapex DeferredstrippingReclamationcostaccretion
Costbuild-upUS$perounce
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INCOMESTATEMENT
(US$,thousandsexcept fordollarpershareamountsand%)
Q12017
Q42016
Q32016
Q22016
Revenue, netofroyalties 66,054 66,789 67,694 41,156
Totalcostofsales (50,929) (53,367) (47,456) (40,823)
Grossprofit 15,125 13,422 20,508 333
Grossprofit% 25% 20% 30% 1%
Writeoffof deferredstrippingasset 0 (7,123) 0 0
Incomefrommineoperations 15,125 6,299 20,508 333
Exploration andevaluationexpenditures (186) (383) (188) (226)
Generalandadministrativeexpenses (2,800) (5,683) (1,785) (1,677)
Income(loss)beforetaxes 12,139 233 18,535 (1,570)
Otherincome (expenses) (4,430) (6,604) (3,113) (5,337)
Incometaxrecovery(expense) 103 (2,106) (3,766) (5,620)
Netincome(loss)fortheperiod 7,812 (8,477) 11,656 (12,527)
Basicanddilutedincome(loss)per share $0.04 ($0.04) $0.06 ($0.06)
EBITDA1 24,835 17,620 32,251 7,408
StrongStartto2017- ReturntoPositiveEarnings
• PriceofgoldunchangedfromQ4atUS$1,199/oz
• Goldsalesof57,812oz
• Grossmarginsabove20%inlastthreequarters
• PositiveearningspershareUS$0.04
• Otherincome(expenses)– InterestonRedKiteDebt
1EBITDAiscalculatedasIncome(Loss)beforeincometaxesadjustedforgains/lossesinforeignexchange,gains/lossesinderivativesandfordepreciationanddepletion.
$(0.04)
$0.04
Q4'16 Q1'17
EarningspershareUS$
8
STRONGCASHFLOWFROMOPERATIONS
(US$,thousands) Q12017 Q42016 Q3 2016 Q22016
Cash BalanceStart 59,675 57,556 34,470 67,809
OperatingActivities:
Operatingcashflowbeforeworkingcapitalchanges 28,761 23,994 36,139 11,606
Cashprovidedbyoperatingactivity 14,382 23,353 33,122 18,072
InvestingActivities:
Expenditure onMineralPropertiesandPPE
Phase1capital (4,222) (1,780) (17,699) (40,975)
Growth (5,872) (2,428) 0 0
Sustainingcapital (3,731) (2,960) (1,378) (1,342)
Wastestripping (12,225) (10,785) (13,029) (12,135)
Sub-Total (26,050) (17,953) (32,106) (54,452)
VATrefundrelatedtodevelopment 0 0 20,307 5,672
OtherInvestingActivities 76 12 128 90
Total InvestingActivities (25,974) (17,941) (11,671) (48,690)
Financing Activity 212 (2,929) 1,776 (2,806)
ForeignExchangeImpact (89) (364) (141) 85
CashBalance Close 48,206 59,675 57,556 34,470
• OperationsgeneratedapproximatelyUS$14.4m(US$28.8mbeforeworkingcapitalmovements)
• Quickturnnon-cashworkingcapitalitems(2daysonaccountsreceivableand7-10daysonbullion)
• Subsequenttoquarterend:
– CashforgoldsalesofUS$10.6mreceived4April– VATchequereceivedforUS$12m
• CarriedVATbalanceforQ22017onwardsexpectedtobeapproximatelyUS$15m
OperatingcashflowbeforeworkingcapitalchangesUS$,thousands
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Q2'16 Q3'16 Q4'16 Q1'17
• Alllong-leaditemsordered,constructionstartedinApril
• OntrackforcommissioninginQ42017,aquarteraheadofschedule- somevolumetricincreasesreadyinQ32017
• Oresources:Nkran&DynamiteHillin2017andthenAkwasisocomingonlineinQ12018
• Bushclearingoftheroutehascommenced&alreadynearly50%complete
• Terracingearthworkscontractorselected&commencinginJune
• ConstructionofconveyoritselfstartsinQ32017
FULLYFUNDEDGROWTHPROJECTSADVANCING
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ConstructionofEsaase ConveyorProject5Million
ExpansionDFS&UpdatedLifeofMinePlanduetobepublishedinQ22017
P5MConstructionWorks BushClearingConveyorRoute
• Q1productionof58,187oztracking2017guidanceof230,000–240,000oz
– Q2willseelowerproductionduetoProject5Milliontie-ins
• Q1costsmarginallyexceededannualguidanceofAISCUS$880–US$920/oz whenimpactofearlytailingsliftconsidered
• ExpectH2coststobelowerthanH1dueto:
– MiningDynamiteHillinQ3- atsurfacesofteroxideorewilllowermining&processingcosts
– Nkranminingpredominantlyinoxidesforwastecutback
– Project5Millionincreasesproduction- spreadsoutexistingoverheadsacrossmoreounces
• Project5MillionandEsaase +conveyor=>fullyfunded
– HavebudgetedtospendUS$72min2017
– ContinuetoexpectcarryforwardliquidityofUS$49-US$62m
– AbletofundbalanceofconveyorcapexofUS$63min2018
10
2017GUIDANCEONTRACK
2017Guidance– SourcesandUsesofLiquidityUS$m,assumesUS$1,200/oz realizedgoldprice
66
15
27
45
13
11
0
20
40
60
80
100
120
140
160
Sources Uses
Cash AISCMargin
VATRecovery Project5M- Plant
Project5M- Conveyor GrowthExploration
InterestonRKDebt LiquidityCarriedForward
64- 77
49- 62
Non-GAAPPerformanceMeasures
• TheCompanyhasincludedcertainnon-GAAPperformancemeasuresinthispressrelease,includingadjustednetincome(loss),adjustednetincome(loss)pershare,operatingcashcosts,totalcashcostsandall-insustainingcostsperounceofgoldsold.Thesenon-GAAPperformancemeasuresdonothaveanystandardizedmeaning.Accordingly,theseperformancemeasuresareintendedtoprovideadditionalinformationandshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithGAAP.
• OperatingCashCostsperounceandTotalCashCostsperounce
Operatingcashcostsarereflectiveofthecostofproduction,adjustedforshare-basedpayments,by-productrevenueandnon-cashinventorymovementsforeachounceofgoldsold.Totalcashcostsincludeproductionroyaltiesof5%.
• All-inSustainingCostsPerGoldOunce
TheCompanyhasadoptedthereportingof“all-insustainingcostspergoldounce”(“AISC”)aspertheWorldGoldCouncil’sguidance.AISCincludetotalcashcosts,corporateoverheadexpenses,sustainingcapitalexpenditure,capitalizedstrippingcostsandreclamationcostaccretionforeachounceofgoldsold.
• EarningsbeforeTaxes,Interest,Depreciation,DepletionandAmortization(“EBITDA”)
TheCompanyhasprovidedthereportingof“earningsbeforetaxes,interest,depreciation,depletionandamortization”(“EBITDA”)foradditionalinformation.EBTIDAwascalculatedastheincomeorlossbeforetaxesadjustedforgainsorlossesassociatedwithforeignexchange,gainsorlossesassociatedwithderivativesanddepreciationanddepletion.
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NOTES
AlexBuckInvestorRelations
N.AmericanToll-Free:18552467341Telephone:+44-7932-740-452Email:[email protected]
RyanWalchuckCorp.Dev.&InvestorRelations
N.AmericanToll-Free:18552467341Telephone:+1-778-729-0614Email:[email protected]
CONTACT US
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