Mr. Mike Mutchler reports
AMARILLO PROVIDES BUSINESS UPDATE AND ANNOUNCES THIRD QUARTER 2018 FINANCIAL RESULTS
Amarillo Gold Corp. has released its financial results for the third quarter ended Sept. 30, 2018. This press release should be read in conjunction with the company's condensed interim consolidated financial statements and management's discussion and analysis for the three and nine months ended Sept. 30, 2018, which are available at the company's website and under the company's profile on SEDAR.
Highlights:
Completed the repayment in early Q3 2018 of the $8.5-million (U.S.) gold-linked credit facility; Settled $1.2-million of payables by issuing shares in early Q3 2018; Repaid a related party loan of $1.6-million; Completed more than 5,000 metres of the planned 10,000-metre drill program on the flagship Mara Rosa gold deposit; Assay results on 19 holes from this drill program confirm good orebody thickness and grade continuity, and are expected to contribute significantly toward the conversion from inferred to indicated resources;Filed an updated prefeasibility study in accordance with National Instrment 43-101 on the Mara Rosa gold deposit, with highlights as follows:After-tax internal rate of return (IRR) of 51 per cent at $1,300 (U.S.) per ounce gold;After-tax net present value (NPV 5 per cent) of $244-million (U.S.) at $1,300 (U.S.) per ounce gold and a U.S. dollar/Brazilian real exchange rate of 3.6 ($198-million (U.S.) at $1,200 (U.S.) per ounce);After-tax project payback of 2.6 years at $1,300 (U.S.) per ounce Au;Average annual gold production of 144,000 ounces over first four years;Average life of mine (LOM) production of 123,000 ounces per year over eights years and total production of 985,000 ounces after 91-per-cent recovery;LOM cash operating cost of $545 (U.S.) per ounce Au and all-in sustaining cost (AISC) of $655 (U.S.) per ounce Au;Upfront capital expenditure of $123-million (U.S.);Updated proven and probable reserves of 1,087,000 ounces -- 23.8 million tonnes of 1.42 grams per tonne Au; Proven reserves of 513,000 ounces -- 9.6 million tonnes of 1.65 grams per tonne Au;Probable reserves of 574,000 ounces -- 14.2 million tonnes of 1.26 grams per tonne Au.
Mike Mutchler, chief executive officer of Amarillo Gold, commented: "Q3 was a very productive quarter for the company, as we restructured our balance sheet by repaying the gold loan and settling other debts through a share issuance. Our 10,000-metre infill drilling program is confirming the geology and resources at Mara Rosa, and we have expanded our program to include an additional 3,000 metres of stepout drilling south of the current resource. We expect to complete a resource update on Mara Rosa early in the new year, and we are on track to initiate a feasibility study and basic engineering in preparation for our application for the licence to install (LI) permit mid-year."
Financial results
OPERATING EXPENSES AND NET (LOSS) -- THREE AND NINE MONTHS 2018 AND 2017Three months ended Sept. 30, Nine months ended Sept. 30,2018201720182017Management and consulting fees$319,858$ 36,142$839,858$452,643General and administrative 161,31487,567 367,442 259,367Stock-based compensation 397,825 - 1,273,389 751,063Professional fees273,99953,946 583,275 190,527Other expenses56,38849,511 279,283 151,832Write-off of accounts payable- -(138,816)-Subtotal before other items1,209,384 227,166 3,204,431 1,805,432Accretion on gold-linked loan- 326,611 713,271 962,036Foreign exchange gain (loss) (96,229)654(486,323)(33,340) Gain (loss) on FV of derivatives -(328,294)284,152(1,002,654)(Loss) before tax (1,305,613) (881,417) (4,119,873) (3,803,462)Deferred tax expense 115,000 - 345,000 -Net (loss)(1,420,613) (881,417) (4,464,873) (3,803,462)
The company's Q3 2018 loss for the first time excluded non-cash items related to the gold-linked loan, consisting of accretion, mark-to-market adjustments for gold price fluctuation and foreign exchange, as this loan was extinguished in early Q3 2018. The 2018 loss included non-cash stock compensation expense, non-cash deferred tax expense and non-cash items related to the gold-linked loan, which aggregate to $512,825 for Q3 2018 (Q3 2017 -- $654,251) and $2,188,831 for year to date 2018 (YTD 2017 -- $2,749,093).
About Amarillo Gold Corp.
Amarillo Gold is developing an open-pit gold resource at its Mara Rosa project in the mining-friendly jurisdiction of Goias state in Brazil.
Mr. Mutchler is a qualified person under NI 43-101 guidelines. He has reviewed and approved the scientific and technical disclosure relating to the 2018 prefeasibility study in this section of the news release.
We seek Safe Harbor.
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