VANCOUVER, British Columbia, March 15, 2018 (GLOBE NEWSWIRE) -- Asanko Gold Inc. (“Asanko” or the “Company”) (TSX:AKG) (NYSE American:AKG) reports its fourth quarter (“Q4”) and full year (“FY”) 2017 operating and financial results, as well as 2018 guidance and updated outlook. The Company released its production and revenue results for Q4 2017 on January 18, 2018. All amounts are in US dollars unless otherwise stated. Management will host a conference call and webcast today at 9am Eastern Time, further details below.
FY 2017 Highlights:
Financial
Operating
Corporate
2018 Guidance
5-Year Outlook (2019 – 2023)
Commenting on the Company’s performance, Peter Breese, President and CEO, said, “2017 was a challenging year and we learned some important lessons from the operational issues we faced. The introduction of the new resource models at Nkran and Akwasiso together with a number of new mining and processing systems during H2 2017 are producing the desired results. I believe we now have the foundations in place going forward to deliver quarter-on-quarter against our plan.
Looking ahead to 2018, this will be a year of investment to give us future mining flexibility as we accelerate the larger pushback of the Nkran pit during a period in which we have low capital expenditure, in order to ensure higher ore yields, lower costs, and consequently solid cash generation during our next growth phase. 2018 will have relatively high all-in sustaining costs, especially in the first half of the year. However, we expect to start reaping the benefits of the larger Nkran Cut 2 pushback in the second half of 2018 and into 2019 and beyond.
The optimized mine plan, associated with the execution of P5M, successfully delivers a robust average production profile of 253,000oz/yr at competitive AISC3 of $860/oz over the five-year period from 2019 to 2023. This increase in ounces and lowering of costs, over our previous forecast, will generate substantial cash flow during our project build and debt servicing periods. At current gold prices, it provides a robust AISC margin of approximately $450/oz and positions us at the mid point of the second quartile on the industry cost curve.
On the corporate side, in anticipation of developing Esaase and constructing the overland conveyor, which we plan to commence in 2019, we have signed an indicative term sheet and are finalizing definitive agreements with Red Kite to extend the first principal repayment, subject to certain fees, terms and conditions, by up to three years beyond July 1, 2019. We anticipate execution of these agreements in Q2 2018.”
This news release should be read in conjunction with Asanko’s Management Discussion and Analysis and the Consolidated Annual Financial Statements for the year ended December 31, 2017, which are available at www.asanko.com and filed on SEDAR. |
Key Operating and Financial Highlights
Asanko Gold Mine
Q4 2017 | Q3 2017 | Q2 2017 | Q1 2017 | ||||||
Waste Mined (‘000t) | 10,692 | 7,339 | 6,457 | 5,620 | |||||
Ore Mined (‘000t) | 802 | 1,181 | 1,049 | 1,017 | |||||
Strip Ratio (W:O) | 13.3:1 | 6.2:1 | 6.2:1 | 5.5:1 | |||||
Mining Cost ($/t mined) | 2.82 | 3.35 | 3.22 | 3.89 | |||||
Ore Treated (‘000t) | 1,087 | 862 | 887 | 908 | |||||
Gold Feed Grade (g/t) | 1.5 | 1.9 | 1.7 | 2.1 | |||||
Gold Recovery (%) | 94 | 94 | 94 | 95 | |||||
Processing Cost ($/t treated) | 12.91 | 12.94 | 12.80 | 13.36 | |||||
Gold Production (oz) | 51,550 | 49,293 | 46,017 | 58,187 | |||||
Gold Sales (oz) | 49,561 | 50,241 | 48,461 | 57,812 | |||||
Average Realised Gold Price ($/oz) | 1,264 | 1,265 | 1,238 | 1,199 | |||||
Operating Cash Costs2 ($/oz) | 586 | 485 | 572 | 578 | |||||
Total Cash Costs2 ($/oz) | 649 | 549 | 634 | 638 | |||||
All-in Sustaining Costs3 ($/oz) | 1,171 | 975 | 930 | 956 | |||||
All-in Sustaining Margin ($/oz) 1 | 93 | 290 | 308 | 243 | |||||
Gross Gold Revenue ($m) | 62.8 | 63.7 | 60.2 | 69.5 | |||||
Production Costs, including Royalties ($m) | 32.5 | 28.0 | 31.3 | 37.7 | |||||
Income from Mine Operations ($m) | 15.1 | 17.9 | 14.5 | 15.1 | |||||
Net income (loss) attributable to common shareholders ($m) | (7.1 | ) | 4.7 | 0.7 | 7.8 | ||||
Net income (loss) per share attributable to common shareholders | (0.03 | ) | $0.02 | $0.00 | $0.04 | ||||
Cash provided by operating activities ($m) | 34.4 | 40.7 | 33.7 | 14.4 | |||||
Cash provided by operating activities before working capital ($m) | 26.2 | 31.7 | 26.7 | 28.8 | |||||
Cash provided by operating activities per common share1 | $0.17 | $0.21 | $0.17 | $0.07 | |||||
Q4 2017 Operating Results
Q4 2017 Financial Performance
Q4 2017 Liquidity and Capital Resources
2018 Guidance
In 2018, the AGM is targeting 200,000 – 220,000 ounces of gold at AISC3 of $1,050 – $1,150/oz. During the year, ore will be sourced from Nkran, Akwasiso, Dynamite Hill, Nkran Extension and surface stockpiles.
The implementation of the larger optimized Nkran Cut 2 pushback will continue throughout 2018. The design change to the Nkran pit, as part of the P5M optimization, delivers a significantly reduced strip ratio, increased ore yields and higher grades to the process facility over the period of capital spend on the construction of the overland conveyor and opening up Esaase as well as the subsequent debt principal repayment timeframe.
Production will be lower and AISC3 is expected to be higher in H1 2018 due to the larger volume of waste stripping at the Nkran Cut 2 pushback, consequently lower ore yields will result in lower blended ore grades being delivered to the process facility. Approximately $370/oz of AISC3 for H1 2018 will be stripping costs.
Steady state levels of higher grade ore production from Nkran will resume in H2 2018 and the waste stripping portion of the Cut 2 pushback will reduce, with stripping costs decreasing to approximately $280/oz of AISC3 for H2 2018. The overall feed grade improvement and increase in gold production will also contribute to a lowering of AISC3.
Growth capital for the year is expected to be approximately $8.5 million, $3.0 million for the recovery upgrades to the plant, which will be done in Q1 2018, $1.5 million for the upgraded mill motors, to be installed in Q2 2018, and $4.0 million for the secondary crusher, which is expected to be fully commissioned in Q3 2018. Sustaining capital expenditure for 2018 is expected to be approximately $4.0 million.
2018 Guidance | H1 2018 | H2 2018 | FY 2018 |
Gold Production (oz) | 90,000 – 100,000 | 110,000 – 120,000 | 200,000 – 220,000 |
AISC3 ($/oz) | 1,200 – 1,300 | 950 – 1,050 | 1,050 – 1,150 |
Notes: Based on $1,250/oz gold price | |||
5-Year Outlook (2019 – 2023)
The optimized mine planning exercise associated with P5M has successfully reduced the overall strip ratio and improved AISC3 over a 19-year life of mine. Over the next five years, during the period of high capital expenditure and debt repayment, average annual production is expected to be 253,000 ounces at AISC3 of $860/oz, an increase in gold production and an improvement in AISC3 of $147/oz versus the previous P5M forecast of 243,000 ounces at AISC3 of $1,007/oz.
This has been achieved using current mine operating data and optimizing the multi-pit schedule to generate the best cash generation profile to deliver a competitive AISC3 over the life of mine and specifically during the periods of capital spend on the overland conveyor, opening up the Esaase deposit and the debt principal repayment.
5-Year Outlook | 2019 | 2020 | 2021 | 2022 | 2023 |
Gold Production (oz) | 255,000 | 280,000 | 220,000 | 265,000 | 245,000 |
AISC3 ($/oz) | 950 | 810 | 905 | 775 | 880 |
Notes: Based on US$1,250/oz gold and construction of the overland conveyor in 2019 | |||||
Notes:
1 Non-GAAP Performance Measures
The Company has included certain non-GAAP performance measures in this press release, including working capital, operating cash costs, total cash costs, all-in sustaining costs per ounce of gold produced, all-in sustaining margin and operating cash flow per common share. These non-GAAP performance measures do not have any standardized meaning. Accordingly, these performance measures are 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.
2 Operating Cash Costs per ounce and Total Cash Costs per ounce
Operating cash costs are reflective of the cost of production, adjusted for share-based payments and by-product revenue for each ounce of gold sold. Total cash costs include production royalties of 5%.
3 All-in Sustaining Costs Per Gold Ounce
The Company has adopted the reporting of “all-in sustaining costs per gold ounce” (“AISC”) as per the World Gold Council’s guidance. AISC include total cash costs, corporate overhead expenses, sustaining capital expenditure, capitalized stripping costs and reclamation cost accretion for each ounce of gold sold.
Q4 and FY 2017 Operating and Financial Results Conference Call & Webcast Details Management will host a conference call and webcast at 9am ET on Thursday, March 15, 2018: Conference Call: US/Canada Toll Free: (800) 954 0621 UK Toll Free: 0800 496 1447 International: +1 (212) 231 2938 Webcast: Please click on the link: https://cc.callinfo.com/r/1cb9r3i9b3y77&eom Replay: A recorded playback will be available approximately two hours after the call until April 15, 2018: US/Canada Toll Free: 800 558 5253 International: +1 416 626 4100 Passcode: 21885541 |
Qualified Persons
Frederik Fourie, Asanko Senior Mining Engineer (Pr.Eng.) is the Asanko Qualified Person, as defined by Canadian National Instrument 43-101 (Standards of Mineral Disclosure), who has approved the preparation of the technical contents of this news release.
About Asanko Gold Inc.
Asanko’s vision is to become a mid-tier gold mining company that maximizes value for all its stakeholders. The Company’s flagship project is the multi-million ounce Asanko Gold Mine located in Ghana, West Africa.
Asanko is managed by highly skilled and successful technical, operational and financial professionals. The Company is strongly committed to the highest standards for environmental management, social responsibility, and health and safety for its employees and neighbouring communities.
Forward-Looking and other Cautionary Information
This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address estimated resource quantities, grades and contained metals, possible future mining, exploration and development activities, are forward-looking statements. Although the Company believes the forward-looking statements are based on reasonable assumptions, such statements should not be in any way construed as guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices for metals, the conclusions of detailed feasibility and technical analyses, the timely renewal of key permits, lower than expected grades and quantities of resources, mining rates and recovery rates and the lack of availability of necessary capital, which may not be available to the Company on terms acceptable to it or at all. The Company is subject to the specific risks inherent in the mining business as well as general economic and business conditions. For more information on the Company, Investors should review the Company's Annual Form 40-F filing with the United States Securities Commission and its home jurisdiction filings that are available at www.sedar.com.
Neither Toronto Stock Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note to US Investors Regarding Mineral Reporting Standards:
Asanko has prepared its disclosure in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of US securities laws. Terms relating to mineral resources in this press release are defined in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources and Mineral Reserves. The Securities and Exchange Commission (the “SEC”) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. Asanko uses certain terms, such as, “measured mineral resources”, “indicated mineral resources”, “inferred mineral resources” and “probable mineral reserves”, that the SEC does not recognize (these terms may be used in this press release and are included in the public filings of Asanko which have been filed with securities commissions or similar authorities in Canada).
Enquiries: For further information please visit: www.asanko.com, email: info@asanko.com or contact: Alex Buck - Manager, Investor and Media Relations Toll-Free (N.America): 1-855-246-7341 Telephone: +44-7932-740-452 Email: alex.buck@asanko.com Rob Slater – Executive, Corporate Development and Strategy Telephone: +27-11-467-2758 Email: rob.slater@asanko.com