(All dollar amounts are United
States dollars unless otherwise stated)
VANCOUVER, Feb. 13, 2020 /CNW/ - Asanko Gold Inc.
("Asanko" or the "Company") (TSX, NYSE American:
AKG) reports fourth quarter ("Q4") and full year ("FY")
2019 operating and financial results and provides 2020 guidance for
the Asanko Gold Mine ("AGM"), located in Ghana, West
Africa. The AGM is a 50:50 joint venture ("JV") with Gold
Fields Ltd (JSE, NYSE: GFI), which is managed and operated by
Asanko.
Q4 2019 Asanko Gold Mine Highlights (100% basis)
- Record quarterly gold production of 66,112 ounces at all-in
sustaining cost1 ("AISC") of $969/oz
- Gold sales of 66,095 ounces at an average realized price of
$1,465/oz, generating gold sales
proceeds of $96.8 million
- Strong cash flow generation with operating cash flow of
$45.4 million, and free cash
flow1 of $28.9 million
- Received the "Mining Company of the Year" award from the Ghana
Chamber of Mines for the second year in a row
FY 2019 Asanko Gold Mine Highlights (100% basis)
- Record proceeds of $342.4 million
generated from gold sales of 248,862 ounces at an average realized
price of $1,376 per ounce
- Record gold production of 251,044 ounces exceeding upper end of
guidance of 225,000 - 245,000 ounces
- AISC of $1,112/oz, 5% higher than
guidance of $1,040 - $1,060/oz
- Generated operating cash flow of $120.4
million and free cash flow of $44.0
million
- At December 31, 2019, the JV had
cash of $43.8 million ($3.0 million of which was restricted in favour of
a gold hedging counterparty and released on January 3, 2020), $9.1
million in gold receivables and $2.8
million in dore
Q4 and FY 2019 Highlights for Asanko Gold Inc.
- Repurchased 1,108,920 common shares for $1.0 million through a normal course issuer bid
("NCIB") that commenced on November 15,
2019
- Received the final of two $10.0
million payments from Gold Fields based on the achievement
of the agreed Esaase development milestone and an additional
$10.0 million distribution from the
JV
- At December 31, 2019, Asanko had
cash and receivables of $35.5
million
- Subsequent to year-end, on February 11,
2020, received another $15.0
million distribution from the JV
- Appointed Judith Mosely to the
Board of Directors as of January 1,
2020
- Q4 2019 net loss of $21.2 million
after taking a $20.2 million non-cash
fair value adjustment on preference shares
- Q4 2019 adjusted net income1 of $0.9 million and Adjusted EBITDA1 of
$12.6 million
- FY 2019 net loss of $167.9
million after taking into account an impairment charge of
$126.3 million and $40.1 million downward fair value adjustment on
JV preference shares
- FY 2019 adjusted net income of $2.5
million and Adjusted EBITDA of $36.0
million
2020 Guidance for the Asanko Gold Mine (100% basis)
- 225,000 to 245,000 ounces at AISC of $1,000 to $1,100/oz
- Development capital expenditure forecast to be $24 million, mainly attributable to the Tetrem
village relocation
- Exploration budget of $10
million
"2019 was a transitional year for the Asanko Gold Mine
as it shifted focus from investing in signficant capital projects
to generating positive free cash flow and began distributing
capital to the JV partners," said Greg
McCunn, Chief Executive Officer. "The mine achieved record
production of 251,044 ounces, exceeding our guidance expectations
for the year, while costs were slightly higher than expected as a
result of a higher-than-expected reliance on lower grade stockpile
feed during Q4. Importantly, the development plan for the life of
mine was agreed by the JV partners in August and the updated
Mineral Resource and Reserve estimates are expected to be issued by
the end of Q1.
"Looking to the year ahead, the Asanko Gold Mine is expecting
2020 to be very similar to 2019, targeting 225,000 to 245,000
ounces of gold production at AISC of $1,000 to $1,100/oz. We also expect to
continue to focus on exploration with a $10
million exploration program for the year. Our priority
targets are located close to existing
infrastructure."
Asanko Gold Mine – Summary of FY 2019 and Q4 2019 Operational
and Financial Results (100% basis)
|
Three months
ended
December 31
|
Year
ended December
31
|
Asanko Gold Mine
(100% Basis)
|
2019
|
2018
|
2019
|
2018
|
Ore mined
('000t)
|
1,405
|
1,370
|
5,071
|
4,898
|
Waste mined
('000t)
|
4,956
|
8,370
|
25,719
|
39,244
|
Total mined
('000t)
|
6,361
|
9,740
|
30,790
|
44,142
|
Strip ratio
(W:O)
|
3.5
|
6.1
|
5.1
|
8.0
|
Average gold grade
mined (g/t)
|
1.6
|
1.5
|
1.5
|
1.4
|
Mining cost ($/t
mined)
|
4.86
|
4.13
|
4.52
|
3.62
|
Ore milled
('000t)
|
1,460
|
1,238
|
5,498
|
5,180
|
Average mill head
grade (g/t)
|
1.5
|
1.6
|
1.5
|
1.5
|
Average recovery rate
(%)
|
94
|
95
|
94
|
94
|
Processing cost ($/t
treated)
|
10.83
|
12.39
|
10.91
|
11.16
|
Gold production
(oz)
|
66,112
|
59,823
|
251,044
|
223,152
|
Gold sales
(oz)
|
66,095
|
61,821
|
248,862
|
227,772
|
Average realized gold
price ($/oz)
|
1,465
|
1,215
|
1,376
|
1,247
|
Operating cash
costs1 ($/oz)
|
790
|
811
|
776
|
688
|
Total cash
costs1 ($/oz)
|
863
|
872
|
845
|
750
|
All-in sustaining
costs1 ($/oz)
|
969
|
1,072
|
1,112
|
1,072
|
All-in sustaining
margin1 ($/oz)
|
496
|
143
|
264
|
175
|
All-in sustaining
margin1 ($m)
|
32.8
|
8.8
|
65.7
|
39.9
|
Revenue
($m)
|
97.1
|
74.2
|
341.0
|
283.9
|
Income (loss) from
operations ($m)
|
5.4
|
(4.0)
|
16.5
|
23.1
|
Cash provided by
operating activities ($m)
|
45.4
|
12.9
|
120.4
|
72.5
|
- There was one lost time injury ("LTI") and total recordable
injury ("TRI") reported during the quarter and during the FY,
resulting in a LTI frequency rate and a TRI frequency rate of 0.16
per million employee hours worked, respectively for the FY.
- Produced 66,112 and 251,044 ounces of gold in Q4 2019 and FY
2019, respectively, exceeding the upper-end of 2019 production
guidance of 225,000-245,000 ounces.
- During Q4 2019, the AGM sold 66,095 ounces of gold at an
average realized gold price of $1,465/oz for record total gold sales proceeds of
$96.8 million, an increase of
$21.7 million from Q4 2018. The
increase in sales proceeds quarter-on-quarter was a function of
higher sales volumes and higher averaged realized gold prices in Q4
2019.
- The AGM incurred operating cash costs per ounce1,
total cash costs per ounce1 and AISC of $790, $863 and
$969/oz, respectively, in Q4
2019.
- Total cost of sales (including depreciation and depletion and
royalties) amounted to $88.0 million
in Q4 2019, an increase of $12.9
million from Q4 2018. The increase in cost of sales was
primarily due to an increase in gold ounces sold and higher
depreciation expense related to depletion expense on previously
capitalized deferred stripping costs on Cut 2 at Nkran, as well as
the carrying value of Esaase mineral interests being added to the
depreciable cost base of producing mineral properties during the
current year.
- Strong cash flow generation with operating cash flow of
$45.4 million, and free cash flow of
$28.9 million. This compares to
$12.9 million of operating cash flow
and negative $8.6 million of free
cash flow during Q4 2018. The improvement in free cash flow was
mainly from the increase in income from operations, a favorable
change in non-cash working capital and strategic initiatives to
reduce capital expenditure.
- AISC for the FY 2019 was $1,112/oz, which was 5% above the expected
guidance range of $1,040 -
$1,060/oz as a result of higher than
expected processing of lower grade ore tonnes from stockpiles and
the Esaase pits, following an upper bench slippage in the western
wall of the Nkran pit during Q4 2019.
- For the FY 2019, the JV generated $120.4
million in operating cash flow and free cash flow of
$44.0 million.
- As at December 31, 2019, the JV
had cash of $43.8 million
($3.0 million of which was restricted
in favour of a gold hedging counterparty and released on
January 3, 2020), $9.1 million in gold receivables and $2.8 million in dore. The JV's $30.0 million revolving line of credit remained
undrawn at year-end.
Asanko Gold Inc. – Summary of FY 2019 and Q4 2019 Financial
Results
|
|
Three months
ended
December 31
|
Year
ended
December 31
|
Asanko Gold Inc.
(consolidated)
|
|
2019
|
2018
|
2019
|
2018
|
Net loss attributable
to common
shareholders
($m)
|
|
(21.2)
|
(0.9)
|
(167.9)
|
(141.4)
|
Net loss per share
attributable to common
shareholders
|
|
($0.09)
|
($0.00)
|
($0.74)
|
($0.64)
|
Adjusted net income
(loss) attributable to
common
shareholders1 ($m)
|
|
0.9
|
(0.9)
|
2.5
|
1.9
|
Adjusted net income
(loss) per share
attributable
to common shareholders1
|
|
$0.00
|
($0.00)
|
$0.01
|
$0.01
|
Adjusted
EBITDA1 ($m)
|
|
12.6
|
6.1
|
36.0
|
79.0
|
- The Company reported a net loss attributable to common
shareholders of $21.2 million in Q4
2019 compared to a net loss of $0.9
million in Q4 2018. The increase in net loss was due to a
$20.2 million downward fair value
adjustment on the Company's preferred share investment in the
JV.
- Reported adjusted net income of $0.9
million in Q4 2019 compared to an adjusted net loss of
$0.9 million in Q4 2018. The
improvement in adjusted net income was primarily driven by the
increase in the AGM's operating earnings (before impairment).
- Reported Adjusted EBITDA of $12.6
million for Q4 2019 compared to $6.1
million in Q4 2018. The increase in Adjusted EBITDA was
primarily a result of the increase in the AGM's mine operating
earnings in Q4 2019.
- For FY 2019, the Company reported a net loss attributable to
common shareholders of $167.9 million
compared to a net loss attributable to common shareholders of
$141.4 million in 2018.
- Reported Adjusted EBITDA of $36.0
million for FY 2019 compared to $79.0
million in 2018. The decrease in Adjusted EBITDA was
primarily a result of the fact that 2018 included 100% of the
operating results of the Asanko Gold Mine for the seven months
prior to the JV Transaction.
2020 Guidance
The Asanko Gold Mine JV announces 2020 production guidance of
225,000 to 245,000 ounces at AISC of $1,000 to $1,100/oz
(AISC includes sustaining capital of $11
million, primarily for the tailings storage facility lift of
$7 million), based on a $1,300/oz gold price.
The mine plan for 2020 will source ore primarily from Cut 2 at
Nkran, and Esaase, while the development of the Akwasiso pit is
also expected to recommence and contribute approximately 30% of the
planned ore tonnes for the year. These ore sources will be
augmented where necessary with run-of-mine stockpile material.
Development capital is forecast at $24
million, primarily for the Tetrem village relocation. In
addition, $10 million is budgeted for
exploration, mainly around the highly prospective Tontokrom –
Miradani – Fromenda mineralized trend.
This news release
should be read in conjunction with Asanko's Management Discussion
and Analysis and the Consolidated Annual Financial Statements for
the years ended December 31, 2019 and 2018, which are available at
www.asanko.com and filed on SEDAR.
|
Notes:
1 Non-GAAP
Performance Measures
The Company has included certain
non-GAAP performance measures in this press release. 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. Refer to the Non-GAAP Measures section of Asanko's
Management Discussion and Analysis for an explanation of these
measures and reconciliations to the Company's reported financial
results in accordance with IFRS.
- 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 per ounce of gold sold. Total cash costs include production
royalties of 5%.
- All-in Sustaining Costs Per Gold Ounce
The Company
has adopted the reporting of 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 per ounce of gold sold.
- Adjusted net income (loss) attributable to common
shareholders
The Company has included the non-GAAP
performance measures of adjusted net income (loss) attributable to
common shareholders and adjusted net income (loss) per common
share. Neither adjusted net income (loss) nor adjusted net
income (loss) per share have any standardized meaning and are
therefore unlikely to be comparable to other measures presented by
other issuers. Adjusted net income (loss) excludes certain non-cash
items from net income or net loss to provide a measure which helps
the Company and investors to evaluate the results of the underlying
core operations of the Company and its ability to generate cash
flows and is an important indicator of the strength of our
operations and the performance of our core business.
- Adjusted EBITDA
EBITDA provides an indication of the
Company's continuing capacity to generate income from operations
before taking into account the Company's financing decisions and
costs of amortizing capital assets. Accordingly, EBITDA comprises
net income (loss) excluding interest expense, interest income,
amortization and depletion, and income taxes. Adjusted EBITDA
adjusts EBITDA to exclude non-recurring items and to include the
Company's interest in the adjusted EBITDA of the JV. Other
companies and JV partners may calculate EBITDA and Adjusted EBITDA
differently.
- Free cash flow
The Company believes that in addition
to conventional measures prepared in accordance with IFRS, the
Company and certain investors and analysts use free cash flow to
evaluate the JV's performance with respect to its operating cash
flow capacity to meet non-discretionary outflows of cash. The
presentation of free cash flow is not meant to be a substitute for
the cash flow information presented in accordance with IFRS, but
rather should be evaluated in conjunction with such IFRS measures.
Free cash flow is calculated as cash flows from operating
activities of the JV adjusted for cash flows associated with
sustaining and non-sustaining capital expenditures and payments
made to mining contractors for leases capitalized under IFRS
16.
Qualified Person Statement
The technical contents in
this news release have been approved by Mike Begg, Pr.Sci.Nat., Senior Vice President
Technical Services of Asanko Gold Inc., who is a "Qualified Person"
as defined by Canadian National Instrument 43-101 (Standards of
Mineral Disclosure).
About Asanko Gold Inc.
Asanko is focused on building a
low-cost, mid-tier gold mining company through organic production
growth, exploration and disciplined deployment of its financial
resources. The company currently operates and manages the Asanko
Gold Mine, located in Ghana,
West Africa which is jointly owned
with Gold Fields Ltd. The Company is strongly committed to
the highest standards for environmental management, social
responsibility, and health and safety for its employees and
neighbouring communities. For more information, please
visit www.asanko.com.
Forward-Looking and other Cautionary
Information
Certain statements and information contained
in this news release constitute "forward-looking statements" within
the meaning of applicable U.S. securities laws and "forward-looking
information" within the meaning of applicable Canadian securities
laws, which we refer to collectively as "forward-looking
statements". Forward-looking statements are statements and
information regarding possible events, conditions or results of
operations that are based upon assumptions about future conditions
and courses of action. All statements and information other than
statements of historical fact may be forward looking statements. In
some cases, forward-looking statements can be identified by the use
of words such as "seek", "expect", "anticipate", "budget", "plan",
"estimate", "continue", "forecast", "intend", "believe", "predict",
"potential", "target", "may", "could", "would", "might", "will" and
similar words or phrases (including negative variations) suggesting
future outcomes or statements regarding an outlook.
Forward-looking statements in this news release include, but
are not limited to: statements in respect of AGM's generation of
free cash flow and statements in respect of the future strength of
Asanko's balance sheet. Such forward-looking statements are based
on a number of material factors and assumptions, including, but not
limited to: the accuracy of reserve and resource, grade, mine life,
cash cost, net present value, internal rate of return and
production and processing estimates and other assumptions,
projections and estimates made in the technical reports for the AGM
or in respect of AGM; the successful completion of development and
exploration projects, planned expansions or other projects within
the timelines anticipated and at anticipated production levels;
that mineral resources can be developed as planned; that the
Company's relationship with joint venture partners will continue to
be positive and beneficial to the Company; interest and exchange
rates; that required financing and permits will be obtained;
general economic conditions; that labour disputes or disruptions,
flooding, ground instability, geotechnical failure, fire, failure
of plant, equipment or processes to operate are as anticipated and
other risks of the mining industry will not be encountered; that
contracted parties provide goods or services in a timely manner;
that there is no material adverse change in the price of gold or
other metals; competitive conditions in the mining industry; title
to mineral properties; costs; taxes; the retention of the Company's
key personnel; and changes in laws, rules and regulations
applicable to Asanko.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements to differ materially from those
anticipated in such forward-looking statements. The Company
believes the expectations reflected in such forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and you are cautioned not to
place undue reliance on forward-looking statements contained
herein. Some of the risks and other factors which could cause
actual results to differ materially from those expressed in the
forward-looking statements contained in this news release, include,
but are not limited to: mineral reserve and resource
estimates may change and may prove to be inaccurate; life of mine
estimates are based on a number of factors and assumptions and may
prove to be incorrect; AGM has a limited operating history and is
subject to risks associated with establishing new mining
operations; sustained increases in costs, or decreases in the
availability, of commodities consumed or otherwise used by the
Company may adversely affect the Company; actual production, costs,
returns and other economic and financial performance may vary from
the Company's estimates in response to a variety of factors, many
of which are not within the Company's control; adverse geotechnical
and geological conditions (including geotechnical failures) may
result in operating delays and lower throughput or recovery,
closures or damage to mine infrastructure; the ability of the
Company to treat the number of tonnes planned, recover valuable
materials, remove deleterious materials and process ore,
concentrate and tailings as planned is dependent on a number of
factors and assumptions which may not be present or occur as
expected; the Company's operations may encounter delays in or
losses of production due to equipment delays or the availability of
equipment; the Company's operations are subject to continuously
evolving legislation, compliance with which may be difficult,
uneconomic or require significant expenditures; the Company may be
unsuccessful in attracting and retaining key personnel; labour
disruptions could adversely affect the Company's operations; the
Company's business is subject to risks associated with operating in
a foreign country; risks related to the Company's use of
contractors; the hazards and risks normally encountered in the
exploration, development and production of gold; the Company's
operations are subject to environmental hazards and compliance with
applicable environmental laws and regulations; the Company's
operations and workforce are exposed to health and safety risks;
unexpected costs and delays related to, or the failure of the
Company to obtain, necessary permits could impede the Company's
operations; the Company's title to exploration, development and
mining interests can be uncertain and may be contested; the
Company's properties may be subject to claims by various community
stakeholders; risks related to limited access to infrastructure and
water; the Company's exploration programs may not successfully
expand its current mineral reserves or replace them with new
reserves; the Company's common shares may experience price and
trading volume volatility; the Company's revenues are dependent on
the market prices for gold, which have experienced significant
recent fluctuations; the Company may not be able to secure
additional financing when needed or on acceptable terms; Company
shareholders may be subject to future dilution; risks related to
changes in interest rates and foreign currency exchange rates;
changes to taxation laws applicable to the Company may affect the
Company's profitability and ability to repatriate funds; the
Company's primary asset is held through a joint venture, which
exposes the Company to risks inherent to joint ventures, including
disagreements with joint venture partners and similar risks; risks
related to the Company's internal controls over financial reporting
and compliance with applicable accounting regulations and
securities laws; the carrying value of the Company's assets may
change and these assets may be subject to impairment charges; the
Company may be liable for uninsured or partially insured losses;
the Company may be subject to litigation; the Company may be
unsuccessful in identifying targets for acquisition or completing
suitable corporate transactions, and any such transactions may not
be beneficial to the Company or its shareholders; the Company must
compete with other mining companies and individuals for mining
interests; and risks related to information systems security
threats.
Although the Company has attempted to identify important
factors that could cause actual results or events to differ
materially from those described in the forward-looking statements,
you are cautioned that this list is not exhaustive and there may be
other factors that the Company has not identified. Furthermore, the
Company undertakes no obligation to update or revise any
forward-looking statements included in, or incorporated by
reference in, this news release if these beliefs, estimates and
opinions or other circumstances should change, except as otherwise
required by applicable law.
Neither Toronto Stock Exchange nor the Investment Industry
Regulatory Organization of Canada
accepts responsibility for the adequacy or accuracy of this
release.
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SOURCE Asanko Gold Inc.