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Aurizon reports record revenues and cash flow in second quarter 2009
PR Newswire
Aug 14, 2009
Shares Listed:
Toronto Stock Exchange - Ticker Symbol - ARZ
NYSE Amex: - Ticker Symbol - AZK
U.S. Registration: (File 001-31893)
The second quarter was highlighted by the following activities:
- Record revenues of $44.2 million.
- Record cash flow from operating activities of $22.5 million, up 19%
compared to same quarter of 2008.
- Earnings of $13.6 million, or $0.08 per share, and adjusted earnings
of $3.9 million, or $0.02 per share.
- Gold production of 39,874 ounces, in line with plan.
- Total cash costs of US$386 per ounce, 11% lower than same quarter of
2008.
- Equity financing in April 2009 realized net proceeds of
$47.3 million.
At
"With cash balances of
FINANCIAL RESULTS
Second Quarter 2009
Earnings of
Revenue from Casa Berardi operations increased to
Subsequent to
Operating costs in the second quarter of 2009 totalled
In the second quarter of 2009, lower gold option volatilities, a stronger Canadian dollar, the expiry of gold call options and foreign exchange contracts, partially mitigated by rising gold prices, resulted in a non-cash gain of
Administrative and general costs in the second quarter of 2009 were lower than the same period of 2008 at
Exploration and pre-feasibility expenditures of
Interest costs associated with the project debt facility dropped to
Income and resource taxes totalled
Foreign exchange losses totalling
Cash flow from operating activities increased 19% to
Capital expenditures totalled
In accordance with the terms of the project debt facility, restricted cash accounts are maintained for Casa Berardi's operations. These restricted cash balances increased by
Aggregate investing activities resulted in cash outflows of
A bought deal equity financing in
First Half 2009
Earnings for the six months ended
Cash flow from operating activities in the first half of 2009 totalled
Investing activities in the first half of 2009 totalled
Financing activities during the first half of 2009 resulted in a net cash inflow of
CASH RESOURCES AND LIQUIDITY
As at
Aurizon had working capital of
Long-term debt related to refundable government assistance totalled
CASA BERARDI
Casa Berardi produced 39,874 ounces of gold in the second quarter of 2009, and 42,042 ounces were sold at an average price
Operations
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2009 2008
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H1 Q2 Q1 Q4 Q3 Q2 Q1
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Operating
results
Tonnes
milled 337,913 170,429 167,484 169,291 161,358 160,054 163,694
Grade
- grams/
tonne 7.88 7.84 7.93 7.70 8.58 7.73 8.63
Mill
recoveries
- % 92.0% 92.8% 91.3% 91.5% 93.3% 92.7% 92.6%
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Gold
Production
- ounces 78,840 39,874 38,966 38,363 41,522 36,871 42,074
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Gold sold
- ounces 79,442 42,042 37,400 38,348 40,228 41,217 39,611
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Per ounce
data - US$
Average
realized
gold
price $893 $897 $888 $793 $845 $869 $877
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Total cash
costs(1) $382 $386 $379 $356 $405 $436 $422
Amortiza-
tion(2) 186 189 183 226 211 210 191
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Total
production
costs(3) $568 $575 $562 $582 $616 $646 $613
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Table footnotes:
(1) Operating costs net of by-product silver credits, divided by ounces
sold, and divided by the average Bank of Canada Cad$/US$ rate.
(2) Depreciation, depletion and accretion expenses divided by ounces
sold, and divided by the average Bank of Canada Cad$/US$ rate.
(3) Total cash costs plus depreciation, depletion and accretion expenses
per ounce of gold sold.
Ore throughput in the mill during the second quarter of 2009 increased to 170,429 tonnes from 160,054 tonnes in the same period of 2008 as a stable daily production rate of 1,870 tonnes per day was achieved. An average ore grade of 7.8 grams/tonne was achieved in the second quarter of 2009, in line with plan. Mill recoveries averaged 92.8% in the second quarter of 2009. This compares to ore grades of 7.7 grams/tonne and mill recoveries of 92.7% in the second quarter of 2008.
Since
Total cash costs, on the basis of gold sold, were
Casa Berardi Exploration
Exploration activities at Casa Berardi during the first half of 2009 have focused on the completion of an exploration drift at the 810 metre level, east of Zone 113 and south of the Casa Berardi fault. The drift provides drill access to test the depth extension of Zone 113 and to test the continuity and extension of Zones 118 to 122 and the 123-South Zone. Drilling in the vicinity of Zone 113 has confirmed the previous geological interpretation of the Zone and has extended the favourable gold trend 100 metres deeper to the 950 metre level.
For the remainder of 2009,
Underground exploration will continue from the exploration drift at the 810 metre level of the West mine, to test the depth extension of Zone 113 and the continuity and extension of Zones 118 and 123-South.
In addition, an underground and surface drill program has recently commenced to explore along the west extension of the Lower Inter Zone, along the Principal Zone and along the dip extension of the East Mine with the objective of delineating mineral resources. Nine drill rigs are currently active at Casa Berardi.
At the Casa Berardi East Mine, the Company has decided to defer mining by open pit, the crown pillar until closer to the end of the mine life and focus on the opportunity to re-commence underground operations. The technical assessment study on mining the upper portion of the Principal Zones by open pit is in progress and is expected to be completed in the fourth quarter of 2009. The study will be completed in accordance with the Company's global development principles supporting technical, economic, environmental and social considerations.
OTHER PROPERTIES
Joanna Gold Property
Exploration activities in the first half of 2009 resulted in the discovery of two new mineralized trends which were identified north and south of the main Heva-Hosco gold bearing trend at Joanna. Both discoveries remain open on strike and down dip. Work also included the testing of a deep exploration target 400 to 700 metres down-plunge from the Hosco mineral resource contour. Results obtained from the program indicate the grade and thickness of the Hosco mineralization continue. No gold enrichment was encountered.
At Joanna, a pre-feasibility study is currently in progress on the Hosco block, incorporating the new measured and indicated resource estimate of approximately 1.27 million ounces, together with the results of the ongoing metallurgical tests. The pre-feasibility study will be completed in accordance with the Company's global development principles supporting technical, economic, environmental and social considerations. It is anticipated that the study will be completed in the fourth quarter, 2009.
Kipawa Gold/Uranium Property
Exploration activity at
OUTLOOK
Based upon the first half results and the 2009 mine plan, Casa Berardi remains on target to produce between 150,000 to 155,000 ounces of gold. The recent strength of the Canadian dollar has resulted in revised total cash costs of
Sustaining capital costs at Casa Berardi for the remainder of 2009 are estimated to total
The Company is in a strong financial position at
With the stability of operations at Casa Berardi providing significant cash flow and a strong balance sheet, the Company continues to actively pursue opportunities to enhance its growth profile.
NON-GAAP MEASURES
a) Calculation of Adjusted Earnings
Adjusted earnings are calculated by removing the gains and losses,
net of income tax, resulting from the mark-to-market revaluation of
the Company's gold and foreign currency price protection contracts
and defense recovery costs, as detailed on the table below. Adjusted
earnings do not constitute a measure recognized by generally accepted
accounting principles (GAAP) in Canada or the United States, and do
not have a standardized meaning defined by GAAP. The Company
discloses this measure, which is based on its financial statements,
to assist in the understanding of the Company's operating results and
financial position.
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2nd 2nd 1st 1st
Quarter Quarter Half Half
2009 2008 2009 2008
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(in thousands of Canadian
dollars, except per
share amounts)
Earnings as reported $13,585 $5,643 $18,633 $1,867
Add (deduct) the after-tax
effect of:
Unrealized (gain) loss on
derivative instruments (9,723) (1,352) (9,305) 6,635
Recovery of defense costs - (3,220) - (3,220)
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Adjusted earnings $3,862 $1,071 $9,328 $5,282
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Adjusted earnings per share $0.02 $0.01 $0.06 $0.04
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b) Total Cash Costs per Gold Ounce
Aurizon has included a non-GAAP performance measure of total cash
costs per ounce of gold in this report. Aurizon reports total cash
costs on a sales basis. In the gold mining industry, this is a common
performance measure, but does not have any standardized meaning, and
is a non-GAAP measure. The Company believes that, in addition to
conventional measures, prepared in accordance with GAAP, certain
investors use this information to evaluate the Company's performance
and ability to generate cash flow. Accordingly, it is intended to
provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with GAAP. Total cash costs per gold ounce are derived
from amounts included in the statements of earnings and include mine
site operating costs such as mining, processing and administration,
but exclude amortization, reclamation costs, financing costs and
capital development costs. These costs are reduced by silver
by-product sales and then divided by gold ounces sold and the average
Bank of Canada Cad$/US$ exchange rate to arrive at the total cash
operating costs per ounce.
c) Unit Mining Costs per Tonne
Unit mining costs per tonne is a non-GAAP measure and may not be
comparable to data prepared by other gold producers. The Company
believes that this generally accepted industry measure is a realistic
indication of operating performance and is useful in allowing year
over year comparisons. Unit mining costs per tonne is calculated by
adjusting operating costs as shown in the Statements of Earnings and
Comprehensive Income for inventory adjustments and then dividing by
the tonnes of ore processed through the mill.
d) Operating Profit Margins per Ounce
Operating profit margins per ounce are a non-GAAP measure, and are
calculated by subtracting the total cash costs per ounce from the
average realized gold price. For the quarter ended June 30, 2009, the
average realized gold price was US$897 less total cash costs of
US $386 for a operating profit margin of US$511 per ounce, compared
to an average realized gold price of US$869 less total cash costs of
US$436 for a operating profit margin of US$433 per ounce for the
second quarter of 2008.
Outstanding Share Data
As of August 10, 2009, Aurizon had 158,825,232 common shares issued and
outstanding. In addition, 7,652,475 incentive stock options, representing 4.8%
of outstanding share capital, are outstanding and exercisable into common
shares at an average price of $3.63 per share.
Common Shares
(TSX - ARZ & NYSE Amex - AZK)
--------------------------------------------
June 30, December 31,
2009 2008
--------------------------------------------
Issued 158,787,732 148,068,298
Fully-diluted 166,477,707 156,586,548
Weighted average 153,605,599 147,707,642
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--------------------------------------------
Qualified Person and Quality Control
Information of a scientific or technical nature was prepared under the supervision of
Conference Call
Aurizon management will host a conference call and live webcast for analysts and investors on
The call is being webcast and can be accessed at Aurizon's website at www.aurizon.com or enter the following URL into your web browser: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2732180. Those who wish to listen to a recording of the conference call at a later time may do so by calling 416-640-1917 or 1-877-289-8525 (Passcode 21310490 followed by number sign). This playback version of the call will be available until
Forward Looking Statements and Information
This report contains "forward-looking statements" and "forward-looking information" within the meaning of applicable securities regulations in
The forward-looking information contained in this report is based on certain assumptions that the Company believes are reasonable, including the exchange rates of the U.S. and Canadian currency in 2009, that the current price of and demand for gold will be sustained or will improve, the supply of gold will remain stable, that the current mill recovery rates at the Company's Casa Berardi Mine will continue, that the Company's current mine plan can be achieved, that the general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed on reasonable terms and that the Company will not experience any material accident, labor dispute, or failure of plant or equipment.
However, forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, the risk that actual results of exploration activities will be different than anticipated, that cost of labour, equipment or materials will increase more than expected, that the future price of gold will decline, that the Canadian dollar will strengthen against the U.S. dollar, that mineral reserves or mineral resources are not as estimated, that actual costs or actual results of reclamation activities are greater than expected; that changes in project parameters as plans continue to be refined may result in increased costs, of lower rates of production than expected, of unexpected variations in ore reserves, grade or recover rates, of failure of plant, equipment or processes to operate as anticipated, of accidents, labour disputes and other risks generally associated with mining, unanticipated delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors and other risks more fully described in Aurizon's Annual Information Form filed with the securities commission of all of the provinces and territories of
Aurizon is a gold producer with a growth strategy focused on developing its existing projects in the Abitibi region of north-western
Aurizon Mines Ltd.
Balance Sheets (unaudited) - as at
June 30 December 31
(in thousands of Canadian Dollars) 2009 2008
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$ $
ASSETS
CURRENT
Cash and cash equivalents 88,467 34,337
Restricted cash 30,207 21,225
Accounts receivable and prepaid expenses 3,943 4,419
Refundable tax credits and mining duties 5,301 5,301
Derivative instrument assets 7 412
Inventories 10,505 10,145
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138,430 75,839
Derivative instrument assets 12 1,420
Other assets 1,896 1,553
Property, plant & equipment 56,509 54,761
Mineral properties 125,701 124,378
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TOTAL ASSETS 322,548 257,951
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities 19,689 15,067
Derivative instrument liabilities 10,014 13,727
Current portion of long-term debt 21,577 21,663
Current provincial mining taxes payable 3,067 1,302
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54,347 51,759
Derivative instrument liabilities 2,431 13,474
Long-term debt 708 9,430
Asset retirement obligations 21,322 20,905
Future income tax liabilities 28,054 17,442
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TOTAL LIABILITIES 106,862 113,010
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SHAREHOLDERS' EQUITY
Share Capital 246,530 194,647
Contributed Surplus 872 872
Stock based compensation 9,242 9,013
Deficit (40,958) (59,591)
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TOTAL SHAREHOLDERS' EQUITY 215,686 144,941
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 322,548 257,951
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Aurizon Mines Ltd.
Statements of Earnings and Comprehensive Income (unaudited)
Three months ended Six months ended
(in thousands, except per share June 30 June 30
amounts, of Canadian Dollars) 2009 2008 2009 2008
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$ $ $ $
REVENUE
Mining operations 44,224 36,299 85,790 71,433
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EXPENSES
Operating 19,085 18,120 36,752 34,989
Depreciation, depletion and
accretion 9,281 8,661 17,793 16,211
Administrative and general 2,622 3,313 5,415 5,828
Exploration costs 738 2,906 1,970 5,231
Unrealized derivative (gains)
losses (13,876) (1,680) (12,943) 8,242
Interest on long-term debt 131 618 383 1,765
Foreign exchange loss (gain) 1,118 62 2,814 (1,098)
Capital taxes 195 (99) 398 126
Other income (137) (4,552) (454) (5,302)
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19,157 27,349 52,128 65,992
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Earnings for the period before
income taxes 25,067 8,950 33,662 5,441
Current provincial mining taxes (3,250) (497) (4,417) (497)
Future income tax expense
relating to provincial mining
taxes (729) (1,181) (1,151) (1,942)
Future income tax expense (7,503) (1,629) (9,461) (1,135)
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Earnings and comprehensive income
for the period 13,585 5,643 18,633 1,867
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Earnings per share - basic and
diluted 0.08 0.04 0.12 0.01
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Weighted average number of
common shares outstanding
(thousands) 158,716 147,712 153,606 147,412
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Aurizon Mines Ltd.
Statements of Deficit (unaudited)
Three months ended Six months ended
(in thousands of June 30 June 30
Canadian Dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
$ $ $ $
Deficit - Beginning of period
as previously reported (54,543) (68,288) (59,591) (69,006)
Retrospective adoption of new
accounting standard - - - 4,494
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Deficit - as adjusted (54,543) (68,288) (59,591) (64,512)
Earnings for the period 13,585 5,643 18,633 1,867
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Deficit - end of period (40,958) (62,645) (40,958) (62,645)
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Aurizon Mines Ltd.
Statements of Cash Flow (unaudited)
Three months ended Six months ended
(in thousands of June 30 June 30
Canadian Dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
$ $ $ $
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Earnings for the period 13,585 5,643 18,633 1,867
Adjustments for non-cash
items:
Depreciation, depletion,
and accretion 9,281 8,661 17,793 16,211
Refundable tax credits (129) (533) (343) (915)
Loss (gain) on sale of
property, plant and equipment - - 34 (11)
Stock based compensation 641 1,532 1,565 1,893
Unrealized non-hedge
derivative (gains) losses (13,876) (1,680) (12,943) 8,242
Future income tax expense
relating to mining duties 729 1,181 1,151 1,942
Future income tax expense 7,503 1,629 9,461 1,135
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17,734 16,433 35,351 30,364
Decrease in non-cash working
capital items 4,803 2,526 6,922 4,161
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22,537 18,959 42,273 34,525
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CASH USED IN INVESTING
ACTIVITIES
Property, plant and equipment (4,198) (1,740) (7,723) (3,287)
Mineral properties (5,937) (4,718) (12,919) (7,110)
Restricted cash funding (3,969) (15,169) (8,982) (4,142)
Refundable tax credits - - - (534)
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(14,104) (21,627) (29,624) (15,073)
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CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
Issuance of shares, net
of costs 48,086 1,406 50,348 2,332
Long-term debt (639) (349) (8,867) (26,881)
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47,447 1,057 41,481 (24,549)
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INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 55,880 (1,611) 54,130 (5,097)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 32,587 21,350 34,337 24,836
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CASH AND CASH EQUIVALENTS -
END OF PERIOD 88,467 19,739 88,467 19,739
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SOURCE Aurizon Mines Ltd.
Copyright (2009) PR Newswire. All Rights Reserved.
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