TORONTO, March 23, 2023 /CNW/ - Karora Resources Inc. (TSX: KRR) ("Karora" or the "Company") today announced unaudited financial and operating results for the fourth quarter ("Q4 2022") and full-year ("2022") 2022. All dollar amounts are in Canadian dollars, unless otherwise noted.
Paul Andre Huet, Chairman and CEO, commented: "I am very pleased with Karora's performance in 2022, including our solid results during the fourth quarter. For the year, we achieved record production driven by strong growth in mined tonnes at Beta Hunt and increased processing capacity. During the fourth quarter, we generated record revenue and gold sales as well as our best net earnings performance of the year. I am also proud of the way our team managed external factors in 2022 such as disruptions caused by record COVID-19 cases in Western Australia early in the year, sector-wide inflationary pressures and volatile commodity markets. Our unit costs showed marked improvement in the second half of 2022, which positioned us to achieve our guidance for AISC of US$1,100 – US$1,200 per ounce sold.
We have refreshed our 2023 and 2024 production, cost and capex guidance to tighten up ranges and reflect the reality of inflationary cost pressures since we originally provided the guidance in mid-2021 alongside our original growth plan announcement. Since then, we have materially de-risked our growth plan with the addition of the 1.0 Mtpa Lakewood Mill in 3Q22 as well as the completion of the second decline at Beta Hunt ahead of schedule earlier this year. With these two critical components of our plan delivered, we remain on the path to ramp up production over 2023 and 2024 to deliver gold production growth into a range of 170,000 to 195,000 ounces at AISC of US$1,050 – US$1,200 per ounce sold by 2024.
During 2022, we significantly advanced plans to grow our nickel business, with the release of our Nickel PEA outlining the potential to grow low-cost nickel production that delivers attractive returns, increased price leverage and higher nickel by-product credits to further improve our gold unit costs. We expect to ramp up nickel production meaningfully during 2H24 and 2025 once our development of the 50C/Gamma Zone is in place – enabled by the increased ventilation capacity to be installed during 2023.
Exploration was another key area of success, with drilling at Beta Hunt resulting in new discoveries, major extensions of mineralization and, as recently announced, significant growth in gold Mineral Reserves and both gold and nickel Mineral Resources.
We are also very proud to have achieved Scope 1 and 2 carbon neutrality for the second straight year in 2022. In 2021, we were one of the first gold producers globally to become carbon neutral and, as we execute our growth plan, we will continue to work diligently to further reduce emissions with the goal of ultimately achieving a net zero mining future."
Karora will host a call/webcast on March 23, 2023 at 10:00 a.m. (Eastern Time) to discuss the unaudited fourth quarter and full year 2022 results. North American callers please dial: 1-888-204-4368, international callers please dial: (+1) 647-794-4605. For the webcast of this event click [here] (replay access information below).
The Company's audited financial statements and management's discussion and analysis will be will be filed on SEDAR at www.sedar.com and posted to the Company's website at www.karoraresources.com on Tuesday, March 28, 2023.
SUMMARY OF PERFORMANCE
Q4 2022
Full-Year 2022
1. | Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures section of this news release for the three and twelve months ended December 31, 2022. |
2. | Earnings before interest, taxes, depreciation and amortization ("EBITDA"). |
2022 Growth Highlights
Other Corporate Highlights
COVID-19 Protocols
In response to the global COVID-19 pandemic, Karora's protocols and contingency plans have helped mitigate impacts of the pandemic but did not eliminate them. Karora's ongoing response to the COVID-19 pandemic continues to prioritize the safety of its workforce and host communities. The Australian government officially brought Australia's emergency response to COVID to an end on October 14, 2022 by removing the COVID-19 mandatory isolation requirements and the majority of rules for wearing face masks.
RESULTS OF OPERATIONS (Unaudited)
Table 1. Results of Operations
Three months ended, | Twelve months ended, | ||||
Dec. 31 2022 | Dec. 31 2021 | Sept. 30, | Dec. 31 | Dec. 31 | |
Gold Operations (Consolidated) | |||||
Tonnes milled (000s) | 522 | 367 | 547 | 1,925 | 1,441 |
Recoveries | 94 % | 94 % | 94 % | 94 % | 94 % |
Gold milled, grade (g/t Au) | 2.37 | 2.53 | 2.33 | 2.30 | 2.60 |
Gold produced (ounces) | 37,309 | 27,925 | 38,437 | 133,887 | 112,814 |
Gold sold (ounces) | 39,900 | 28,734 | 35,513 | 132,098 | 113,628 |
Average exchange rate (CAD/USD) | 0.74 | 0.79 | 0.77 | 0.77 | 0.80 |
Average realized price (US $/oz sold) | $1,737 | $1,802 | $1,717 | $1,793 | $1,792 |
Cash operating costs (US $/oz sold)1 | $1,031 | $961 | $991 | $1,099 | $917 |
All-in sustaining cost (AISC) (US $/oz sold)1 | $1,100 | $1,042 | $1,069 | $1,171 | $1,012 |
Gold (Beta Hunt Mine) | |||||
Tonnes milled (000s) | 250 | 206 | 306 | 1,084 | 884 |
Gold milled, grade (g/t Au) | 2.76 | 2.61 | 2.36 | 2.40 | 2.95 |
Gold produced (ounces) | 20,870 | 16,120 | 21,977 | 79,125 | 78,476 |
Gold sold (ounces) | 22,342 | 16,372 | 20,767 | 78,377 | 78,810 |
Cash operating cost (US $/oz sold)1 | $987 | $944 | $953 | $1,044 | $840 |
Gold (HGO Mine) | |||||
Tonnes milled (000s) | 273 | 161 | 241 | 841 | 557 |
Gold milled grade (g/t Au) | 2.01 | 2.43 | 2.29 | 2.18 | 2.05 |
Gold produced (ounces) | 16,439 | 11,805 | 16,460 | 54,763 | 34,338 |
Gold sold (ounces) | 17,560 | 12,362 | 14,746 | 53,721 | 34,818 |
Cash operating cost (US $/oz sold)1 | $1,088 | $984 | $1,043 | $1,179 | $1,092 |
1. | Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures section of this news release for the three and twelve months ended December 31, 2022 |
Consolidated Operations
Consolidated gold production in the fourth quarter of 2022 totalled 37,309 ounces, a 34% increase from the fourth quarter of 2021 and compared to record quarterly production of 38,437 ounces the previous quarter. The increase from the fourth quarter of 2021 resulted from a 42% increase in tonnes milled, which more than offset a reduction in the average grade.
Full-year 2022 production was a record 133,887 ounces, a 19% improvement from 2021 and in line with the top end of the Company's 2022 production guidance. The increase in production from 2021 reflected significantly higher tonnes processed as the Company utilised increased milling capacity following the acquisition of Lakewood Mill, which more than offset a reduction in the average grade due mainly to the transition to a lower-grade production profile at Beta Hunt as well as the impact of utilising increased mill capacity to process material from low-grade stockpiles. These stockpiles were processed to generate additional positive cashflow for the Company while expansion of the Beta Hunt mine to 2.0 Mtpa progressed.
Cash operating costs1 per ounce sold for the fourth quarter of 2022 averaged US$1,031 per ounce sold compared to US$961 for the same period in 2021 and US$991 the previous quarter. The increase from the fourth quarter of 2021 was driven by higher inputs costs and the impact of a lower average grade. AISC1 per ounce sold in the fourth quarter of 2022 averaged US$1,100 versus US$1,042 in the fourth quarter of 2021 and US$1,069 the previous quarter, with the increases mainly reflecting higher cash operating costs.
Cash operating costs1 per ounce sold for the year 2022 averaged US$1,099 compared to US$917 in 2021, with the increase reflecting higher input costs, disruptions caused by COVID-19 restrictions in the first half of the year as well as the impact of a lower average grade compared to the prior year. AISC1 per ounce sold in 2022 averaged US$1,171 versus US$1,012 in 2021 as higher cash operating costs1 per ounce sold more than offset the impact of lower sustaining capital expenditures.
Beta Hunt
During the fourth quarter of 2022, Beta Hunt mined 252,500 tonnes at an average grade of 2.84 g/t containing 23,100 ounces of gold. Mine production during the fourth quarter of 2022 increased 13% from 223,000 tonnes mined in the fourth quarter of 2021 at an average grade of 2.48 g/t and compared to 313,000 tonnes the previous quarter at an average grade of 2.40 g/t. The majority of the scheduled mined tonnes during the fourth quarter came from the A Zone and central section of Western Flanks with the 14% increase in grade compared to the previous quarter mainly reflecting mining in the high-grade ore from the A Zone 17 Level.
Gold production from Beta Hunt in the fourth quarter of 2022 totalled 20,871 ounces based on milling 250,000 tonnes at an average grade of 2.76 g/t.
Beta Hunt mined 5,755 tonnes of nickel ore at an estimated nickel grade of 2.01% during the fourth quarter of 2022. Nickel production was sourced from remnant nickel resources or extensions to previously mined stopes.
For full-year 2022, Beta Hunt mined a record 1,081,500 tonnes at an average grade of 2.45 g/t with ore mainly drawn from Western Flanks and the A Zone in line with the mine plan for the year. Gold production in 2022 totalled 79,125 ounces compared to 78,476 ounces in 2021 as the favourable impact of higher tonnes milled was offset by a slight reduction in the average grade consistent with the 2022 mine plan.
Cash operating costs1 per ounce sold at Beta Hunt averaged US$987 in the fourth quarter of 2022 compared to US$944 in the fourth quarter of 2021 and US$953 the previous quarter as higher input costs more than offset the favourable impact of an increase in the average grade and a stronger US dollar compared to the Canadian dollar. Cash operating costs1 for full-year 2022 averaged US$1,044 versus US$840 in 2021, with the increase largely due to higher processing volumes, increased input costs, business disruptions early in the year due to COVID-19 and the impact of a lower average grade.
Higginsville Mining Operations ("HGO")
During the fourth quarter of 2022, HGO mined 106,000 tonnes at an average grade of 3.34 g/t, which compared to 317,000 tonnes mined in the fourth quarter of 2021 at an average grade of 1.66 g/t and 171,000 tonnes the previous quarter at an average grade of 3.05 g/t. The reduction in tonnes mined from both prior periods largely reflected the completion of mining from the Spargos open pit early in the fourth quarter of 2022 and ramp up of new underground mining areas, primarily Aquarius and Two Boys. Mine production from Aquarius totalled 51,230 tonnes at an average grade of 3.33 g/t during the fourth quarter, representing 48% of total mine production during the quarter. An additional 46,050 tonnes at an average grade 3.16 g/t were mined from Spargos during the first half of the quarter.
During the fourth quarter of 2021, Hidden Secret was the primary ore source for mining and processing, accounting for close to 60% of total tonnes mined, with initial mine production and development material from the Spargos open pit accounting for most of the remaining production for the quarter. Mine production from Hidden Secret was completed in the first quarter consistent with the mine plan, with an extensional drilling program being completed over the balance of the year.
Production at HGO in the fourth quarter of 2022 totalled 16,438 ounces based on milling 272,600 tonnes at an average grade of 2.01 g/t.
For the full-year 2022, a total of 469,800 tonnes were mined at an average grade of 3.09 g/t, with the Spargos open pit accounting for approximately two-thirds of total mined tonnes (at an average grade of 3.25 g/t). Gold production at HGO totalled 54,763 ounces (841,200 milled tonnes at an average grade of 2.18 g/t), 59% higher than the previous year. Increased tonnes mined and milled during 2022 reflected the ramp up of the Spargos open pit operation and the commencement of stope production at Aquarius, the combined contribution from which far exceeded the reduction in tonnes from the completion of mining at Hidden Secret in the first quarter of 2022. The average grade of 2.18 g/t compared to an average grade of 2.05 g/t in 2021.
Cash operating costs1 per ounce sold at HGO averaged US$1,088 in the fourth quarter of 2022 versus US$984 for the same period in 2021 and US$1,043 the previous quarter with the increase from the fourth quarter of 2021 largely reflecting increased input costs, the impact of mine sequencing to higher-cost areas and a lower average grade. For the full-year 2022, cash operating costs1 per ounce sold averaged US$1,179 compared to US$1,092 in 2021 with higher input costs and disruptions caused by COVID-19 restrictions early in the year largely accounting for the year-over-year increase.
Processing Operations
A total of 377,800 tonnes were milled at the Higginsville mill during the fourth quarter of 2022 (with 33% of mill feed coming from Beta Hunt and 67% from HGO) at an average grade of 2.53 g/t. Recovered gold was 28,836 ounces. For full-year 2022, 1,503,100 tonnes were processed (48% from Beta Hunt and 52% from HGO) at an average grade of 2.46 g/t for a total of 111,944 recovered ounces.
Throughput at the Lakewood Mill during the fourth quarter of 2022 totalled 144,400 tonnes (87% from Beta Hunt and 13% from HGO) at an average grade of 1.93 g/t. Recovered gold during the quarter totalled 8,473 ounces. During 2022, following the acquisition of Lakewood Mill in July, a total of 422,200 tonnes were processed (84% from Beta Hunt and 16% from HGO) at an average grade of 1.72 g/t for 21,943 recovered ounces.
1. | Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures section of this news release for the three and twelve months ended December 31, 2022. |
FINANCIAL REVIEW (Unaudited)
Table 2. Financial Overview
(in thousands of dollars except per share amounts) | Three Months Ended | Year Ended | |||
For the periods ended December 31, | 2022 | 2021 | 2022 | 2021 | |
Revenue | $96,835 | $66,972 | $317,042 | $264,186 | |
Production and processing costs | 54,306 | 32,514 | 179,265 | 121,893 | |
Earnings before income taxes | 9,804 | 9,523 | 16,650 | 46,064 | |
Net earnings | 9,560 | 6,112 | 9,901 | 27,467 | |
Net earnings per share basic | 0.06 | 0.04 | 0.06 | 0.18 | |
Net earnings per share diluted | 0.06 | 0.04 | 0.06 | 0.18 | |
Adjusted EBITDA 1 | 29,196 | 25,048 | 91,511 | 104,280 | |
Adjusted EBITDA per share - basic 1 | 0.17 | 0.16 | 0.56 | 0.70 | |
Adjusted earnings 1 | 8,699 | 12,042 | 21,121 | 48,639 | |
Adjusted earnings per share - basic 1 | 0.05 | 0.08 | 0.13 | 0.33 | |
Cash flow provided by operating activities | 36,538 | 33,515 | 88,224 | 106,460 | |
Cash investment in property, plant and | (21,454) | (25,791) | (171,144) | (92,016) |
1. | Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures of this news release for the three and twelve months ended December 31, 2022. |
For the three months ended December 31, 2022, the Company generated revenue of $96.8 million, a $29.9 million or 45% increase from the fourth quarter of 2021. Of total revenue in the fourth quarter of 2022, $93.7 million was gold revenue, which compared to $65.6 million in the fourth quarter a year earlier. Contributing to the increase in gold revenue was a $25.5 million favourable impact from a 39% increase in gold sales, to 39,900 ounces. Rate factors contributed an additional $2.6 million to revenue growth as a $3.3 million reduction due to a lower US dollar average realized gold price was more than offset by the impact of a significantly stronger US dollar compared to the Canadian dollar. Beta Hunt contributed $52.5 million of total revenue in the fourth quarter of 2022, with HGO contributing $41.2 million. During the comparable period in 2021, Beta Hunt contributed $37.5 million of total revenue, with the remaining $28.1 million coming from HGO.
For the year ended December 31, 2022, the Company generated revenue of $317.0 million, $52.9 million or 20% higher than revenue of $264.2 million in 2021. Of total revenue in 2022, $309.4 million ($256.5 million in 2021) represented revenue from gold sales, with the remainder mainly related to the sale of nickel mined at Beta Hunt. A 16% increase in gold sales, to 132,098 ounces, was the key driver of growth in gold revenue year over year, having a $41.7 million favourable impact, with rate factors contributing an additional $11.2 million of revenue growth, almost all of which resulted from a stronger US dollar in 2022 versus 2021. Of the $317.0 million of revenue in 2022, Beta Hunt accounted for $190.6 million, with HGO contributing $148.3 million.
Net earnings for the three months ended December 31, 2022 totalled $9.6 million ($0.06 per basic share), a 56% increase from $6.1 million ($0.04 per basic share) for the three months ended December 31, 2021. The change in net earnings compared to the final quarter of 2021 reflected significantly higher revenue and the favourable impact of a foreign exchange gain, partially offset by increased production and processing costs and deprecation and amortization expense.
Net earnings for the twelve months ended December 31, 2022, was $9.9 million ($0.06 per basic share) compared to net earnings of $27.5 million ($0.18 per basic share) for the comparable period in 2021 as the favourable impact of higher revenue was more than offset by increased production and processing costs and higher depreciation and amortisation and general and administrative expenses.
Adjusted earnings for the three months ended December 31, 2022 totalled $8.7 million versus $12.0 million in the fourth quarter of 2021. The difference between net earnings and adjusted earnings in the fourth quarter of 2022 resulted form the exclusion from adjusted earnings of after-tax amounts related to the $8.7 million foreign exchange gain, as well as $4.5 million of non-cash share-based payments and a $3.1 million loss of derivatives. Adjusted earnings in the fourth quarter of 2021 excluded the after-tax impact of $4.0 million of non-cash share-based payments, a $2.6 million loss on derivative as well as an unrealized loss on the revaluation of marketable securities of $0.6 million and a $0.4 million foreign exchange gain.
For the year ended December 31, 2022, adjusted earnings totalled $21.1 million compared to $48.6 million in 2021. Excluded from adjusted earnings in 2022 were the after-tax impact of $7.6 million of non-cash share-based payments, a $4.4 million loss on derivatives, a $2.3 million foreign exchange gain, a $2.0 million unrealized loss on the revaluation of marketable securities and $1.2 million of costs related to sustainability initiatives. The difference between net earnings and adjusted earnings in 2021 mainly reflected the after-tax impact of an $11.0 million foreign exchange loss, $8.3 million of non-cash share-based payments and a $3.9 million loss on derivatives.
Table 3. Highlights of Financial Position
December | December | December | |
(in thousands of dollars) | 2022 | 2021 | 2020 |
Cash and cash equivalents | $68,786 | $91,005 | $79,695 |
Working capital 1 | 38,020 | 64,447 | 56,835 |
Property, plant and equipment and mineral property interests | 426,962 | 300,680 | 239,044 |
Total assets | 557,112 | 436,333 | 350,099 |
Current liabilities excluding current portion of financial liabilities 2 | 73,597 | 64,570 | 48,295 |
Non-current liabilities excluding non-current portion of financial | 86,222 | 78,762 | 55,650 |
Financial liabilities (current and non-current) 2 | 48,650 | 41,636 | 38,950 |
Total liabilities | 208,469 | 184,968 | 142,895 |
Shareholders' equity | 348,643 | 251,365 | 207,204 |
1. | Working capital is calculated as current assets (including cash and cash equivalents) less current liabilities. |
2. | Financial liabilities include long-term debt and lease obligations. |
Karora's cash position increased 23% to $68.8 million as at December 31, 2022 compared to $56.1 million at September 30, 2022. Cash at the end of 2022 compared to cash of $91.0 million as at December 31, 2021, with the reduction mainly reflecting significant capital investment during the year in support of the Company's growth plan, including $64.2 million of cash consideration paid for the Lakewood Mill acquisition.
OUTLOOK
The outlook and financial targets only relate to the 2023 to 2024 period. This outlook includes forward-looking information about the Company's operations and financial expectations and is based on management's expectations and outlook as of the date of this new release. This outlook, including expected results and targets, is subject to various risks, uncertainties and assumptions, which may impact future performance and our achievement of the results and targets discussed in this section. The Company may update the outlook depending on changes in metal prices and other factors.
On March 23, 2023, the Company announced a tightening of the ranges for its previously announced production guidance for 2023 and 2024. The minor adjustment (<5%) to the upper end of the 2024 guided production ounce range is primarily due to a shift in production startup of the Spargos underground operations to mid-2024, vs. mid-2023 in prior guidance. The shift was driven by a reallocation of capital priorities to accelerate the nickel project at Beta Hunt, resulting in deferral of a portion of Spargos ounces into 2025.
AISC cost guidance and capital expenditure guidance was also updated to adjust for extensive sector-wide cost inflationary pressures, planned mine development, equipment additions, processing plant upgrades, tailings storage expansions and other growth related expenditures. The prior guidance for 2023 and 2024 was provided on June 28, 2021 with the new guidance more reflective of the currently elevated global cost environment.
Table 4. Two-Year Guidance (2023 – 2024)
2023 | 2024 | ||
Gold Production | Koz | 145 – 160 | 170 - 195 |
All-in sustaining costs | US$/oz | 1,100 – 1,250 | 1,050 – 1,200 |
Sustaining Capital | A$ (M) | 10 – 15 | 15 – 20 |
Growth Capital | A$ (M) | 57 – 68 | 63 - 73 |
Exploration & Resource | A$ (M) | 18 - 22 | 20 - 25 |
Payable Nickel | Ni | 450 – 550 | 600 – 800 |
(1) | 2023 and 2024 guidance was announced in June 2021 (see Karora news release June 28, 2021), and updated on March 23, 2023. This production guidance through 2024 is based on the September 2022 Mineral Reserves and Mineral Resources announced on February 13, 2023. |
(2) | The Company expects to fund the capital investment amounts listed above with cash on hand and cashflow from operations. |
(3) | The material assumptions associated with the expansion of Beta Hunt mining production rate to 2.0 Mtpa during 2024 include the addition of a second ramp decline system driven parallel to the ore body, ventilation and other infrastructure that is required to support these areas, and an expanded trucking fleet. |
(4) | The Company's guidance assumes targeted mining rates and costs, availability of personnel, contractors, equipment and supplies, the receipt on a timely basis of required permits and licenses, cash availability for capital investments from cash balances, cash flow from operations, or from a third-party debt financing source on terms acceptable to the Company, no significant events which impact operations, such as COVID-19, nickel price of US$22,000 per tonne, as well as an A$ to US$ exchange rate of 0.70 in 2023 and 2024 and A$ to C$ exchange rate of 0.90. Assumptions used for the purposes of guidance may prove to be incorrect and actual results may differ from those anticipated. See below "Cautionary Statement Concerning Forward-Looking Statements". |
(5) | Exploration expenditures include capital expenditures related to infill drilling for Mineral Resource conversion, capital expenditures for extension drilling outside of existing Mineral Resources and expensed exploration. Exploration expenditures also includes capital expenditures for the development of exploration drifts. |
(6) | Capital expenditures exclude capitalized depreciation. |
(7) | AISC guidance includes Australian general and administrative costs and excludes share-based payment expense. |
(8) | See "Non-IFRS Measures" set out at the end of this news release and Karora's MD&A for the three and twelve months ended December 31, 2022. |
CONFERENCE CALL / WEBCAST
Karora will be hosting a conference call and webcast today, March 23, 2023, beginning at 10:00 a.m. (Eastern time). The accompanying presentation can be found on Karora's website, www.karoraresources.com.
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-204-4368
Local and international callers please dial: 647-794-4605
A live webcast of the call will be available through Cision's website at: https://app.webinar.net/98VakoD16Lg
A recording of the conference call will be available for replay through the webcast link, or for a one-week period beginning at approximately 1:00 p.m. (Eastern Time) on March 23, 2023, through the following dial in numbers:
North American callers please dial: 1-888-203-1112; Pass Code: 9611891
Local and international callers please dial: 647-436-0148; Pass Code: 9611891
Non-IFRS Measures
This news release refers to cash operating cost, cash operating cost per ounce, all-in sustaining cost, EBITDA, adjusted EBITDA and adjusted EBITDA per share, adjusted earnings, adjusted earnings per share and working capital which are not recognized measures under IFRS. Such non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. Management uses these measures internally. The use of these measures enables management to better assess performance trends. Management understands that a number of investors and others who follow the Corporation's performance assess performance in this way. Management believes that these measures better reflect the Corporation's performance and are better indications of its expected performance in future periods. This data 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 IFRS.
In November 2018, the World Gold Council ("WGC") published its guidelines for reporting all-in sustaining costs and all-in costs. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-IFRS measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Corporation may not be comparable to similar measures presented by other issuers.
The following tables reconcile these non-IFRS measures to the most directly comparable IFRS measures:
MINING OPERATIONS (Unaudited)
Cash Operating and All-in Sustaining Costs
The Company uses these measures internally to evaluate the underlying operating performance of the Australian Operations. Management believes that providing cash operating cost data allows the reader the ability to better evaluate the results of the underlying operations.
CONSOLIDATED
Three months ended, | Twelve months ended, | |||
For the periods ended December 31, | 20225 | 20215 | 20225 | 20215 |
Production and processing costs | $57,819 | $38,855 | $201,112 | $146,941 |
Royalty expense | 5,039 | 3,656 | 17,987 | 16,418 |
By-product credits | (3,095) | (1,359) | (7,313) | (7,725) |
Adjustment 1 | (3,883) | (6,341) | (22,492) | (25,048) |
Operating costs (C$)2 | $55,880 | $34,811 | $189,294 | $130,586 |
General and administrative expense – Australia 3,4 | 3,133 | 2,503 | 9,738 | 8,302 |
Sustaining capital expenditures | 600 | 422 | 2,804 | 5,215 |
All-in sustaining costs (C$) | $59,613 | $37,737 | 201,836 | $144,103 |
Average exchange rate (C$1 – US$1) | 0.74 | 0.79 | 0.77 | 0.80 |
Operating costs (US$) | $41,155 | $27,621 | 145,139 | $104,189 |
All-in sustaining costs (US$) | $43,905 | $29,943 | 154,742 | $114,998 |
Operating costs (A$) | $62,632 | $37,910 | 209,782 | $138,844 |
All-in sustaining costs (A$) | $66,816 | $41,096 | 223,697 | $153,186 |
Ounces of gold sold | 39,900 | 28,734 | 132,098 | 113,628 |
Cash operating costs per ounce sold (US$) | $1,031 | $961 | $1,099 | $917 |
All-in sustaining cost per ounce sold (US$) | $1,100 | $1,042 | $1,171 | $1,012 |
Cash operating costs per ounce sold (A$) | $1,570 | $1,319 | $1,588 | $1,222 |
All-in sustaining cost per ounce sold (A$) | $1,675 | $1,430 | $1,693 | $1,348 |
1. | Negative adjustment for intercompany tolling transactions. |
2. | Operating costs for the three months and twelve months ended December 31, 2022 exclude $0.4 million and $0.6 million, respectively, of third-party tolling costs at the Lakewood Mill. |
3. | G&A costs were reduced with R&D and Due Diligence costs. |
4. | G&A: share-based payments were excluded in calculating AISC. |
5. | Numbers may not add to totals due to rounding. |
BETA HUNT
Three months ended, | Twelve months ended, | |||
For the periods ended December 31, | 20221 | 20211 | 20221 | 20211 |
Production and processing costs | $29,562 | $18,027 | $99,586 | $76,660 |
Royalty expense | 3,445 | 2,777 | 14,240 | 13,882 |
By-product credits | (3,059) | (1,320) | (7,198) | (7,630) |
Operating costs ($) | $29,948 | $19,484 | $106,62 | $82,912 |
Average exchange rate (C$1 – US$1) | 0.74 | 0.79 | 0.77 | 0.79 |
Operating costs (US$) | $22,057 | $15,460 | $81,819 | $66,176 |
Operating costs (A$) | $33,566 | $21,218 | $11 | $87,9 |
Ounces of gold sold | 22,342 | 16,372 | 78,377 | 78,810 |
Cash operating costs per ounce sold (US$) | $987 | $944 | $1,044 | $840 |
Cash operating costs per ounce sold (A$) | $1,502 | $1,296 | $1,507 | $1,117 |
1. | Numbers may not add to totals due to rounding. |
HGO
Three months ended, | Twelve months ended, | |||
For the periods ended September 30, | 20222,3 | 20212,3 | 20222,3 | 20212,3 |
Production and processing costs | $28,257 | $20,828 | $101,526 | $70,281 |
Royalty expense | 1,594 | 879 | 3,747 | 2,536 |
By-product credits | (36) | (37) | (115) | (98) |
Adjustment1 | (3,883) | (6,341) | (22,49) | (25,048) |
Operating costs ($)2 | $25,932 | $15,328 | $82,666 | $47,671 |
Average exchange rate (C$1 – US$1) | 0.74 | 0.79 | 0.77 | 0.80 |
Operating cost (US$) | $19,099 | $12,162 | $63,320 | $38,010 |
Operating cost (A$) | $29,065 | $16,692 | $91,640 | $50,847 |
Ounces of gold sold | 17,558 | 12,362 | 53,721 | 34,818 |
Cash operating costs per ounce sold (US$)
| $1,088 | $984 | $1,179 | $1,092 |
Cash operating costs per ounce sold (A$)
| $1,655 | $1,350 | $1,706 | $1,460 |
1. | Negative adjustment for intercompany tolling transactions. |
2. | Operating costs for the three months and twelve months ended December 31, 2022 exclude $0.4 million and $0.6 million, respectively, of third-party tolling costs at the Lakewood Mill. |
3. | Numbers may not add due to rounding. |
Adjusted EBITDA and Adjusted Earnings
Management believes that adjusted EBITDA and adjusted earnings are valuable indicators of the Company's ability to generate operating cash flows to fund working capital needs, service debt obligations, and fund exploration and evaluation, and capital expenditures. Adjusted EBITDA and adjusted earnings exclude the impact of certain items and therefore is not necessarily indicative of operating profit or cash flows from operating activities as determined under IFRS. Other companies may calculate adjusted EBITDA and adjusted earnings differently.
Adjusted EBITDA is a non-IFRS measure, which excludes the following from comprehensive earnings (loss); income tax expense (recovery); interest expense and other finance-related costs; depreciation and amortization; non-cash other expenses, net; non-cash impairment charges and reversals; non-cash portion of share-based payments; acquisition costs; derivatives and foreign exchange loss; sustainability initiatives.
(in thousands of dollars except per share amounts) | Three Months Ended | Year Ended | ||
For the periods ended December 31, | 2022 | 2021 | 2022 | 2021 |
Net earnings for the period - as reported | $9,560 | $6,112 | $9,901 | $27,467 |
Finance expense, net | 1,761 | 871 | 5,533 | 4,021 |
Income tax expense | 244 | 3,411 | 6,749 | 18,597 |
Depreciation and amortization | 18,169 | 7,860 | 55,585 | 29,250 |
EBITDA | 29,734 | 18,254 | 77,768 | 79,335 |
Adjustments: | ||||
Non-cash share-based payments 1 | 4,497 | 3,952 | 7,647 | 8,258 |
Unrealized loss (gain) on revaluation of marketable |
(6) |
545 |
2,032 |
902 |
Other expense , net 2 | 573 | 100 | 772 | 223 |
Loss on derivatives 2 | 3,073 | 2,644 | 4,405 | 3,921 |
Foreign exchange loss (gain) 3 | (8,675) | (447) | (2,294) | 11,028 |
Sustainability initiatives 4 | - | - | 1,181 | 613 |
Adjusted EBITDA | $29,196 | $25,048 | $91,511 | $104,280 |
Weighted average number of common shares - basic | 173,372,371 | 153,245,430 | 164,437,670 | 148,698,289 |
Adjusted EBITDA per share - basic | $0.17 | $0.16 | $0.56 | $0.70 |
1. | Non-operating items which do not impact cash flow. |
2. | Non-operating in nature which does not impact cash flows. |
3. | Primarily related to intercompany loans for which the loss is unrealized. |
4. | Primarily related to non-operating environmental initiatives. |
Adjusted earnings is a non-IFRS measure, which excludes the following from comprehensive earnings (loss): non-cash portion of share-based payments; revaluation of marketable securities; derivatives and foreign exchange loss; tax effects of adjustments; sustainability initiatives.
(in thousands of dollars except per share amounts) | Three Months Ended | Year Ended | ||
For the periods ended December 31, | 2022 | 2021 | 2022 | 2021 |
Net earnings for the period - as reported | $9,560 | $6,112 | $9,901 | $27,467 |
Non-cash share-based payments 1 | 4,497 | 3,952 | 7,647 | 8,258 |
Unrealized loss (gain) on revaluation of marketable |
(6) |
545 |
2,032 |
902 |
Loss on derivatives 2 | 3,073 | 2,644 | 4,405 | 3,921 |
Foreign exchange loss (gain) 3 | (8,675) | (447) | (2,294) | 11,028 |
Sustainability initiatives 4 | - | - | 1,181 | 613 |
Tax impact of the above adjusting items | 250 | (764) | (1,751) | (3,550) |
Adjusted earnings | $8,699 | $12,042 | $21,121 | $48,639 |
Weighted average number of common shares - basic | 173,372,371 | 153,245,430 | 164,437,670 | 148,698,289 |
Adjusted earnings per share - basic | $0.05 | $0.08 | $0.13 | $0.33 |
1. | Primarily non-operating items which do not impact cash flow. |
2. | Non-operating in nature which does not impact cash flows. |
3. | Primarily related to intercompany loans for which the loss is unrealized. |
4. | Primarily related to non-operating environmental initiatives. |
Working Capital
Working capital is calculated as current assets (including cash and cash equivalents) less current liabilities.
December 31, | December 31, | December 31, | ||
(in thousands of dollars) | 2022 | 2021 | 2020 | |
Current assets | $115,857 | $135,426 | $109,857 | |
Less: Current liabilities | 77,837 | 70,979 | 53,022 | |
Working Capital | $38,020 | $64,447 | $56,835 |
Compliance Statement (JORC 2012 and NI 43-101)
The technical and scientific information contained in this news release has been reviewed and approved by Steve Devlin, Group Geologist, Karora Resources Inc., and a qualified person for the purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
About Karora Resources
Karora is focused on increasing gold production to a targeted range of 170,000-195,000 ounces by 2024 at its integrated Beta Hunt Gold Mine and Higginsville Gold Operations ("HGO") in Western Australia. The Higginsville treatment facility is a low-cost 1.6 Mtpa processing plant, which is fed at capacity from Karora's underground Beta Hunt mine and Higginsville mines. In July 2022, Karora acquired the 1.0 Mtpa Lakewood Mill in Western Australia. At Beta Hunt, a robust gold Mineral Resource and Reserve are hosted in multiple gold shears, with gold intersections along a 4 km strike length remaining open in multiple directions. HGO has a substantial gold Mineral Resource and Reserve and prospective land package totaling approximately 1,900 square kilometers. The Company also owns the high-grade Spargos Reward project, which came into production in 2021. Karora has a strong Board and management team focused on delivering shareholder value and responsible mining, as demonstrated by Karora's commitment to reducing emissions across its operations. Karora's common shares trade on the TSX under the symbol KRR and also trade on the OTCQX market under the symbol KRRGF.
Cautionary Statement Concerning Forward-Looking Statements
This news release contains "forward-looking information" including without limitation statements relating to the liquidity and capital resources of Karora, production guidance, full year consolidated 2023 and 2024 production guidance and the potential of the Beta Hunt Mine, Higginsville Gold Operation, the Aquarius Project, the Spargos Gold Project, the Lakewood Mill, and the completion of the second Beta Hunt decline system.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Karora to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could affect the outcome include, among others: future prices and the supply of metals; the results of drilling; inability to raise the money necessary to incur the expenditures required to retain and advance the properties; environmental liabilities (known and unknown); general business, economic, competitive, political and social uncertainties; results of exploration programs; accidents, labour disputes and other risks of the mining industry; political instability, terrorism, insurrection or war; or delays in obtaining governmental approvals, projected cash operating costs, failure to obtain regulatory or shareholder approvals. For a more detailed discussion of such risks and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, refer to Karora 's filings with Canadian securities regulators, including the most recent Annual Information Form, available on SEDAR at www.sedar.com.
Although Karora has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and Karora disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.
SOURCE Karora Resources Inc.
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