Avnel Reports First Quarter 2017 Financial Statements and MD&A
(Thomson Reuters ONE) -
ST. PETER PORT, Guernsey, May 11, 2017 (GLOBE NEWSWIRE) -- Avnel Gold Mining
Limited ("Avnel" or the "Company") (TSX:AVK) is reporting that it has filed its
unaudited Interim Consolidated Financial Statements and the related Management
Discussion & Analysis ("MD&A") for the three-month period ended March 31, 2017
on SEDAR.
First Quarter 2017 Highlights
* Announced Kalana Main Project optimisation
* Discussions ongoing with banks and financial institutions on financing the
Kalana Main Project
* In January and February 2017, 67,063,700 C$20c warrants were exercised for
aggregate proceeds of $10.2 million.
* Assay results from the Q4 2016 drill program at Kalanako were received.
Subsequent to March 31, 2017:
* The Company has issued a Request for Tender ("RFT) for contract mining to
experienced West African Mining Contractors
* The Company has invited additional experienced contractors to tender for the
construction of the Tailings Storage Facility ("TSF)
* The Company has invited Malian construction companies to tender for the
construction of the Technicians' camp and the Gendarmes' Camp
Outlook
In March 2016 a positive Feasibility Study for the Kalana Main Project was
completed and the related environmental and social impact assessment (the
"ESIA") and associated environmental and Social Management Plan (the "ESMP" have
been approved by the Malian authorities. The approval of the ESIA was the key
government approval required to advance the Kalana Main Project towards
construction as the Kalana Exploitation Permit was awarded to Avnel in 2003 with
an initial term of 30 years plus two ten year extensions. The Company continues
to advance the Kalana Main Project towards a construction decision through its
80% ownership in Société d'Exploitation des Mines d'Or de Kalana, S.A.
("SOMIKA").
In January 2017 the company announced the results of an Optimisation of the
Feasibility Study (see Kalana Main Project Optimisation below). The results
enhanced the financial parameters for the project and reduced the execution risk
for construction and operations. An engineering procurement and construction
(the "EPC") Contract for the construction of the gold plant and associated
infrastructure has been awarded to a Joint Venture of two international
engineering companies namely DRA Mineral Services and Group Five. The EPC
Contract has improved the construction period by 3 months and the fixed cost is
within the Feasibility Study capex. A Power Supply Contract has been negotiated
with an international power provider, subject to final documentation. The hybrid
power plant will utilise solar and fossil fuels, reducing annual fuel
consumption with financial and environmental benefits. The company issued a
request for tender to international contract mining companies for the mining of
the Kalana Main Project. Assuming positive results the project, financials will
be enhanced and the execution risk reduced.
The company advanced the resettlement action plan (the "RAP") of impacted
persons resulting from the future operation. Final urban planning approval for
the extension of Kalana Town is expected by Quarter 3, 2017 and this will allow
construction of new housing and public infrastructure to commence when funding
is available. The RAP Commission to oversee the process was established by the
Malian authorities and will implement the plan in consultation with all
stakeholders according to Malian legislation and IFC Performance Standards.
The Company is committed to construct and operate the Project in compliance with
Malian legislation, the Equator Principles and IFC Performance Standards.
Resources are being applied to the health, safety and environmental policies and
systems to meet this commitment.
Discussions are ongoing with banks and other financial institutions to provide
financing for the development of the Kalana Main Project. The Company
anticipates that the Kalana Main Project will be sufficiently advanced to
consider a construction decision in 2017, subject to the availability of
adequate financing on a timely basis.
With respect to operations at the small, Soviet-era, underground mine (the
"Kalana Mine"), gold production in the quarter to March 31, 2017 was 1,765
ounces. The Company continues to sustain operations to partially offset the cost
of providing underground access to facilitate due diligence activities necessary
to secure mine development financing. The continued operation of the underground
mine also helps to maintain socio-economic stability in the local community as
the workforce prepares to transition to activities related to the construction
and operation of the proposed Kalana Main Project. The Company intends to
sustain operations for as long as it is economically feasible and safe to do so,
without incurring any significant capital expenditures, until such a time as the
Company is able to commence construction of the Kalana Main Project.
The directors recognise the continuing requirement for short term funding,
working capital purposes, and in the longer term to build the proposed open pit
mine operations of the Company which are dependent upon its ability to raise
adequate financing. The directors believe that the required financing will be
raised and in conjunction with management are actively pursuing various
financing options with the major shareholders and are engaged in ongoing
discussions with banks, financial institutions and other mining companies
regarding proposals for financing. While these discussions are ongoing, it
cannot be guaranteed that such financing will be available on a timely basis or
on acceptable terms.
Kalana Main Project Update
In preparation for the approval to commence construction of the Kalana Main
Project, a number of activities have progressed during the first quarter 2017:
1. EPOCH Resources (Pty.) Ltd., a specialist tailings storage consultant, was
appointed in June 2016 to commence the final design for the TSF (Tailings
Storage Facility), SWCD (Storm Water Control Dam) and WRD (Waste Rock
Dump). In 2015/2016 EPOCH completed a Feasibility Study design and cost
estimate. EPOCH completed the detailed design for this work package,
including detailed engineering drawings, a revised bill of quantities,
construction specifications and complete tender document. The tender
package was put out to tender in November 2016 with award of the contract
expected to be in 2017. In March the tender was re-issued to additional
experienced earthworks contractors. Tenders are expected in Q2 2017
2. As part of the optimisation process, Avnel is in advanced discussions with
KPS to provide an "over the fence" power supply based on a hybrid plant
utilizing fossil fuel and solar energy sources. The power provider will fund
the project capital and charge the company a rate per KwH. If implemented
the capital cost in the Feasibility Study will be significantly reduced. For
the first 5 years operating cost per kWh will be impacted by the recovery of
capital investment. The project predicts that 20% of the power requirements
will be generated from the solar plant, leading to significant cost
reductions and lower environmental impact. Project risk is reduced by the
power provider being contracted for the operation and maintenance of the
power plant, plus the risk of any higher fossil fuel prices. During the
quarter discussions were held between Avnel, KPS and DRA to establish
detailed power draw schedules over the project. KPS completed a supply
design and provided a commercial proposal to Avnel. This proposal was used
in the OFS. Subsequently a draft Power Supply Agreement has been negotiated
and awaits approval once project financing is in place.
3. SOMIKA has appointed ABS Africa, a South African Environmental Consultant,
to assist in the drafting of the action plans required to comply with the
ESIA and IFC Performance standards. ABS Africa prepared the ESIA, which was
completed in Q1 2016 and approved by the Malian authorities. During Q1 2017
an Environmental Manual has been completed to guide the implementation of
the ESMP.
4. ESDCO, a leading Malian environmental consultancy, has been appointed to
provide external consultant expertise for the implementation of the approved
RAP in line with Malian legislation and IFC Performance Standards. The RAP
will be implemented by a steering commission (the "Commission") headed by
the Préfet of Yanfolila. The Commission members include local government
administration officials, representatives of Technical Agencies
(environment/forestry/land usage, health and education), the Mayor of the
Commune, village chiefs, associations representing youth/women/disadvantaged
individuals/hunters, artisanal miners, transport companies. Recently an
Association has been formed to represent the interests of impacted persons
and has been formally recognised and will participate in the Commission.
ESDCO completed the RAP and socio-economic study as part of the ESIA. ESDCO
has a major role to play as an independent expert within the Commission. The
Commission formally commenced in December 2016 after the local government
elections in Mali in November. During Q1 2017 the Commission met on several
occasions with local population to establish the RAP process and the
Grievance Mechanism Plan. ESDCO has re-affirmed through interviews with all
Impacted Persons the individual assets that will be impacted and the
compensation procedures. Compensation can be in cash or alternative
accommodation.
5. An ESIA was prepared for the 5.5 km public road diversion around the new
mine infrastructure and the relocated power line. This will replace the
existing public road to Kalana Town. The ESIA was submitted in April 2017
and approval is expected in Q2 2017.
6. The site for the relocation of impacted persons was identified by the
community in Q1 2016. During Q3 2016 SOMIKA completed a geotechnical survey
of the site and the results were provided to ESDCO urban development
specialists and the administration authorities. The Mayor has submitted a
letter to the Governor of Sikasso providing a request to allow development
of an urban area south of Kalana Town for the RAP. The urbanisation plan
will be completed in Q2 2017.
7. ESDCO completed the architectural design and location for the relocated
Technician Camp and Gendarmes Camp/offices that are within the exclusion
zone. The necessary authorisation for the location and construction has been
approved by the relevant authorities. Request for tender has been issued and
tenders are expected in Q2 2017
8. The company has continued negotiating the EPC contract with DRA/Group 5 and
final documentation is being reviewed by legal advisors. Due to the delay in
project start the EPC price will have to be reviewed taking into
consideration potential inflation and exchange rate changes.
Kalanako Deposit
Located less than 3 km northeast of the Kalana Main Project and the milling
facilities proposed in the OFS and the Feasibility Study, the Kalanako prospect
is an old area of traditional mining activity. Several mineralised trends have
been established from RC and diamond drilling at Kalanako, resulting in a single
northwest-southeast corridor of 1,500 meters by 250 meters. These mineralised
zones are typically less than 10-20 meters wide and appear to be steeply dipping
to the East, often contain high-grade intercepts near surface (i.e. in the
weathered zone).
The depth of saprolite and saprock is between 70 m and 130 m, much deeper than
that observed at the Kalana deposit. Diamond drilling at Kalanako intersected
numerous high strain zones, packets of densely laminated quartz veins or vein
stockwork with sulphides and locally highly altered and mineralised felsic
intrusive rocks. Mineralisation is associated with these felsic intrusive rocks
or quartz stockwork that occur along northwest-southeast striking shear zones,
parallel or less than 10° in azimuth from the main IP boundary between a low and
a high IP gradient domain.
The March 2015 MRE for the Kalanako deposit was based upon information from 46
diamond drill holes and 232 RC drillholes. Historical drill-hole intersection
were independently summarised and press-released in October 2016. A maiden
Inferred In Situ Mineral Resource for Kalanako has been reported, which is
summarised in the subsection titled "Mineral Resource Estimates".
An infill drilling programme of 8,635 meters has been successfully achieved in
December 2016, on time and on budget and with an excellent productivity and
safety record (no Lost Time Injury). This programme was focused on Kalanako's
saprolite and saprock weathered domains, a depth considerably deeper than
observed at Kalana Main (drillhole depth of 50-175 meters). A large part of the
Kalanako prospect remains undrilled. The drilled portion of Kalanako is located
at the central part of a 5 km long geophysical structure defined as a contact
between low and high IP gradient domains. Kalanako is open on strike. Some large
collapses above old artisanal underground developments in the north and more
modern artisanal pits in the south, highlights the continuity of the
mineralisation along the main northwest-southeast structure. Future drilling
campaigns would target extensions along strike following our low-risk infill
programme.
Selected Financial Information
(In thousands of U.S. dollars except per share
amounts) Three months ended March 31
-------------------------------------------------------------------------------
2017 2016
-------------------------------------------------------------------------------
Total revenue 2,400 3,251
Total expenses 3,806 3,811
Other expense (2,142 ) (185 )
Net loss (3,548 ) (745 )
Net loss from continuing operations
attributable to owners of the parent (3,066 ) (419 )
Net loss per share attributable to owners of
the parent $ (0.008 ) $ (0.001 )
Basic weighted average shares outstanding 366,424,570 304,330,124
December
Balance Sheet March 31 2017 31, 2016
Working capital surplus ( excluding derivative
financial instruments) 12,927 4,492
Total Assets 32,549 24,815
Total non-current provisions ( excluding
derivative financial instruments) 3,707 3,653
Shareholders' Equity 44,567 34,494
-------------------------------------------------------------------------------
Results of Operations, Three Months Ended March 31, 2017
Metal revenues decreased to $2,400,000 in the quarter to March 31, 2017 from
$3,251,000 in the quarter to March 31, 2016. The decrease in revenue is a result
of a 27% decrease in ounces sold from 2,696 ounces in the quarter to March
31, 2016 relative to 1,956 ounces in quarter to March 31, 2017, that was partly
offset by a 2% increase in the realised average sales price of gold from $1,203
per ounce in the quarter to March 31, 2016 to $1,224 per ounce in the quarter to
March 31, 2017.
Total expenses remained at $3,800,000 in the quarter to March 31, 2017 compared
to $3,811,000 in the quarter to March 31, 2016. Operating costs per ounce of
gold sold for the quarter to March 31, 2017 increased from $832 per ounce to
$1,311 per ounce resulting from reduced production.
Avnel recorded a net loss of $3,548,000 ($0.008 attributable loss per share) for
the quarter ended March 31, 2017 compared to a net loss of $745,000 ($0.001
attributable loss per share) in the quarter to March 31, 2016. Included in the
quarter to March 31, 2017 is a loss on the fair value of derivative financial
instruments of $2,012,000, compared to a loss of $175,000 in the quarter to
March 31, 2016. The fair value accounting gains reported have no cash effect on
the Company.
As compared to the balance sheet as at December 31, 2016, Avnel's cash and cash
equivalents as at March 31, 2017 increased by $7,055,000 from $3,720,000 to
$10,775,000 arising from cash proceeds from the exercise of warrants of
$10,205,000, offset by cash used in operations of $2,721,000 and cash used in
investing activities of $456,000.
There was a working capital surplus of $12,927,000 as at March 31, 2017 compared
to a working capital surplus of $8,336,000 as at December 31, 2016. Total assets
increased from $24,815,000 as at December 31, 2016 to $32,549,000 at March
31, 2017. Total provisions increased from $3,653,000 as at December 31, 2016 to
$3,707,000 at March 31, 2017. Total stockholders' equity increased to
$44,567,000 as at March 31, 2017 from $34,494,000 as at December 31, 2016.
ABOUT AVNEL GOLD
Avnel Gold is a TSX-listed gold mining, exploration and development company with
operations in south-western Mali in West Africa. The Company's strategic
objective is to develop the Kalana Main Project into an open-pit mining
operation through its 80% ownership in SOMIKA. A secondary objective of the
Company is to explore the remainder of the 387 km(2) Kalana Exploitation Permit
to discover new mineral deposits.
For further information, please contact:
Howard Miller Ian McDonald
Chairman and CEO Vice-President, Corporate Development
Phone: +44 207 589 9082 Phone: +1 647 407 2515
UK Mobile: +44 7768 696129 Email: imcdonald(at)avnelgold.com
Canadian Mobile: +1 416 726 8174
Email: howard(at)hbmiller.co.uk www.avnelgold.com
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained in this news release.
CAUTIONARY STATEMENTS
Forward-Looking Statements
This news release includes certain "forward-looking statements". All statements,
other than statements of historical fact, included in this release, including
the future plans and objectives of Avnel Gold, are forward-looking statements
that involve various risks and uncertainties. There can be no assurance that
forward-looking statements will prove to be accurate and actual results and
future events could differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ materially from
Avnel Gold's expectations include, among others, risks related to international
operations, the actual results of current exploration activities, conclusions of
economic evaluations and changes in project parameters as plans continue to be
refined as well as future prices of gold and silver, as well as those factors
discussed in the section entitled "Risk Factors" in Avnel Gold's most recently
completed Annual Information Form, which is available on SEDAR (www.sedar.com).
Although Avnel Gold has attempted to identify important factors that could cause
actual results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can be no
assurance that such statements will prove to be accurate as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements.
Technical Information
Except where indicated, the disclosure contained or incorporated into this news
release of an economic, scientific or technical nature, has been summarised or
extracted from the National Instrument 43-101 - Standards of Disclosure for
Mineral Projects ("NI 43-101") compliant technical report titled "NI43-101
Technical Report on Kalana Main Project", dated effective 1 April 2016 (the
"Kalana Technical Report"), prepared by Snowden Mining Industry Consultants
(Pty) Ltd. ("Snowden"), Denny Jones Ltd ("Denny Jones"), DRA Projects SA (Pty)
Ltd ("DRA") and Epoch Resources (Pty) Ltd ("Epoch Resources"). The Kalana
Technical Report was prepared under the supervision of Mr. Allan Earl (Executive
Consultant - Mining Engineering of Snowden), Mr. Ivor Jones (Executive
Consultant - Applied Geosciences of Denny Jones), Mr. Glenn Bezuidenhout
(Principal Process Engineer of DRA), Mr. Sybrand van der Spuy (Civil Engineer of
DRA), Mr. Guy Wiid (Principal Consultant - Tailings and Waste Rock Facilities of
Epoch Resources), and Mr. Stephanus (Fanie) Coetzee (Principal Consultant -
Environmental and Social of Epoch Resources), all of whom are independent
"Qualified Persons" as such term is defined in NI 43-101. Readers should consult
the Kalana Technical Report to obtain further particulars regarding the Kalana
Project, which contains the Kalana Main Project, the Kalana Mine, plus a number
of mineral exploration prospects. The Company filed the Kalana Technical Report
in support of the Feasibility Study and the ESIA on SEDAR on May 6, 2016.
Non-IFRS Measures
Avnel's interim consolidated financial statements have been prepared in
accordance with IFRS as issued by the International Accounting Standards Board
("IASB") and the accounting policies adopted in accordance with IFRS. Management
uses both IFRS and non-IFRS measures to monitor and assess the operating
performance of the Company's operations. Management uses certain non-IFRS
performance measures to provide additional information, as the Company believes
that certain investors use these measures to assess gold mining companies. These
non-IFRS performance measures should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with IFRS. Non-
IFRS performance measures do not have standardised definition under IFRS and
therefore may not be comparable to similar measures presented by other
organizations:
"Cost per Tonne Milled" is calculated by dividing the relevant mining and
processing costs and total costs by the tonnes of ore processed in the period.
Management uses this measure as a possible indication of the mining and
processing efficiency of the mine.
"Cash Operating Cost" is calculated as reported production costs, which includes
costs such as mining, processing, administration, non-site costs (transport and
refining of metals, and community and environmental), less royalties paid. These
costs are then divided by the number of ounces produced to arrive at "Cash
Operating Cost per Ounce Produced" and are divided by the number of ounces sold
to arrive at "Cash Operating Cost per Ounce Sold", after taking into account
certain inventory movements. These terms are commonly used by gold mining
companies to assess the level of gross margin available to the company,
typically by subtracting Cash Operating per Ounce Sold from the average per
ounce price realised during the period. These terms are also often used as an
indication of a mining company's ability to generate cash flow from operations.
"On-site All-in Sustaining Cost" is defined in the PEA by Snowden as mine site
cash operating costs, which includes costs such as mining, processing,
administration, but excludes non-site costs (transport and refining of metals
and royalties), plus sustaining capital costs, which includes community,
environmental, and closure costs. These costs are then divided by the number of
ounces of expected production to arrive at "On-site All-in Sustaining Cost per
Ounce".
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Avnel Gold Mining Limited via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 11.05.2017 - 22:05 Uhr
Sprache: Deutsch
News-ID 542078
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contact information:
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