TORONTO, April 7, 2016 /CNW/ - Roxgold Inc. ("Roxgold" or
"the Company") (TSX.V: ROG) today reported its financial results
for the year ended December 31, 2015,
including development highlights from its Yaramoko project.
For complete details of the audited Consolidated Financial
Statements and associated Management's Discussion and Analysis
please refer to the Company's filings on SEDAR (www.sedar.com) or
the Company's website (www.roxgold.com).
1. 2015 HIGHLIGHTS
As at December 31, 2015, and for
the year then ended, the Company:
- Advanced construction at the Yaramoko project to approximately
63% as at December 31, 2015;
- Received the Mining Decree and approved Mining Convention, for
the Yaramoko project, under the 2003 Burkina Faso Mining Code;
Selected the DRA / Group Five Joint Venture ("JV") as the
Engineering, Procurement and Construction ("EPC") contractor for
the Yaramoko project under a lump sum agreement totalling
US$34 million;
- Continued construction progress at the Yaramoko project with
approximately US$57 million spent as
of December 31, 2015, of the overall
US$110.8 million cost estimate, and
on track for first gold pour in the second quarter of 2016;
- Closed a project finance facility totalling US$75 million (the "Credit Facility") with BNP
Paribas and Société Générale Corporate and Investment Banking, and
subsequently drew a total of US$51
million from the Credit Facility during 2015;Received a
US$5 million ($6.3 million) equity investment from African
Underground Mining Services ("AUMS");
- Closed an $18.4 million
investment by the International Finance Corporation ("IFC");
- Completed the 55 Zone infill drilling program which supported
the feasibility resource model and corroborated the high grade and
continuous nature of the 55 Zone; and
- Discovered a new mineralized domain at Bagassi South and
extension of the QV1 mineralization.
2. DEVELOPMENT ACTIVITIES
A. Construction Progress
The development of the Yaramoko project (the "Project") advanced
considerably during the year, with bulk earthworks and the
accommodation camp complete, and overall construction 63% complete
as at December 31, 2015. Construction
of the processing facility remains on schedule in accordance with
the lump sum fixed price EPC contract. Mine development is well
advanced and continues to make good progress ahead of start-up. The
Project remains within its capital cost estimate and is expected to
produce gold in Q2 2016.
As of December 31, 2015, the
Company had spent approximately US$57
million and remains on target to complete the Project within
the planned capital cost estimate of US$110.8 million.
Camp Construction and Bulk Earthworks
Construction of the 216 person accommodation camp was completed
and occupied in October 2015.
The bulk earthworks scope is completed. The lining of the
tailing storage facility was finalized in December 2015.
Mine Development
On July 6, 2015, the Company
mobilized its underground mining contractor, AUMS, to the Yaramoko
project. The mining services contract entered into with AUMS (the
"Mining Contract") has an initial term of four years and includes
the provision of a mining fleet and skilled labour force. As
previously announced, Roxgold also has the option (the "Mining
Contract Option") to settle up to US$10
million ($13.8 million) in
payments under the Mining Contract in the form of the Company's
common shares (the "Payment Shares"). If Roxgold elects to pay for
mining services invoices with shares, the subscription price for
each Payment Share will be based on a 5% discount to the volume
weighted average price of Roxgold shares on the TSX Venture
Exchange for the five trading days following the date of the
particular invoice.
For more information please refer to the Company's July 6, 2015 and March 8,
2016 press releases available on SEDAR at www.sedar.com.
Since mobilization, AUMS has been advancing development at a
rate in line with the projected plan. As of December 31, 2015, the underground mine
development totalled approximately 870 metres and three level
accesses (5270, 5253, and 5236) had been developed. Multiple
headings are now available to the contractor and advance rates are
expected to continue meeting the plan. Ground conditions are
largely as expected and water inflow, to date, has been negligible.
Construction of the surface mine infrastructure, including
workshops, offices and the back-up power station remains on
schedule.
Processing Plant
As of the end of 2015, the processing plant was approximately
73% complete.
As at December 31, 2015, plant
civil construction was essentially complete and ahead of schedule
and paved the way for subsequent disciplines (including structural
steel, mechanical, platework, piping, electrical and
instrumentation) to advance across the site.
During the fourth quarter of 2015, the carbon-in-leach ("CIL")
tanks had been erected and structural steel began to arrive on site
and was being pre-assembled. The Semi Autogenous Grinding ("SAG")
mill was assembled and lifted onto its pedestals.
The JV completed all necessary procurement and all outstanding
items were released for shipment. These include structural steel,
the balance of mechanical equipment, electrical and instrumentation
materials, all of which arrived on site early 2016 and are in the
process of being assembled and/or installed.
Operational Readiness
The Company's management team continued to advance preparations
for the operational phase. The recruitment of all department heads,
senior technical and senior operational personnel is complete. The
Company is continuing its recruitment and training of local staff
for the remaining positions.
Preparation of procedures and systems for production, grade
control, reconciliation, and systems development continued through
the end of 2015 and into early 2016 in advance of the Project
becoming fully operational.
B. Permitting
During the year ended December 31,
2015, the Company received all of the required government
approvals for the operation of the Yaramoko project. The mining
decree, granted on February 2, 2015,
and the mining convention for the Project, signed on July 13, 2015, were both issued in accordance
with the 2003 Burkina Faso Mining Code and as such the Project is
subject to a corporate tax rate of 17.5% in Burkina Faso
C. Compensation
Process
In March 2015, the Company
completed the compensation process for affected landholders on the
Yaramoko property. The compensation process for impacted
landholders relating to the 90 kV power line, which is expected to
supply the Project with electrical power, was also completed at the
same time.
D. Updated Capital Costs
During the year, the Company updated its pre-production capital
cost estimate for the Yaramoko project to US$110.8 million, an increase of approximately 4%
from the amount in the Technical Report published in April 2014, resulting primarily from scope
changes. The changes include the adoption of a plastic liner for
the Project's tailings storage facility, which was a new
requirement outlined by Burkina
Faso's environmental permitting authority.
In addition, the SAG mill and associated equipment were upsized
to facilitate a future expansion of the processing plant's capacity
and the backup (diesel) power station capacity was also increased,
which will provide the Yaramoko project with full standby
capability in support of the power line, which will be connected to
the grid.
3. FINANCING ACTIVITIES
A. Project Finance
On June 9, 2015, the Company
signed a credit agreement with BNP Paribas and Société Générale
Corporate & Investment Banking, for a total of US$75 million in order to fund the development of
the Yaramoko project.
The Credit Facility has a six-year term and advances under the
Credit Facility will bear interest at a rate of LIBOR plus 4.75%
pre-completion and 4.25% post completion, respectively. A
US$15 million cost overrun account,
as required by the Credit Facility, has been funded through the
proceeds of an equity financing completed in November 2014.
In July 2015, the Company
completed the execution of a hedging program (the "Hedging
Program") in connection with the above mentioned Credit Facility.
The Hedging Program totals forward sales of 65,000 ounces at an
average price of US$1,052 per ounce,
which are to be settled on a monthly basis from January 2017 to March 2021. The execution
of the Hedging Program was a key condition precedent associated
with the Credit Facility.
During the fourth quarter of 2015, the Company completed two
drawdowns from the Credit Facility totalling approximately
US$51 million ($69 million). As at December 31, 2015, the availability of the
remaining approximately US$24 million
of the Credit Facility for drawdown is primarily subject to a
funding ratio of Yaramoko project costs funded by the Company as
compared to project costs funded by the Credit Facility as of the
date of each subsequent drawdown. The Company has continued to
maintain this requisite funding ratio.
B. Private Placements
On July 20, 2015, the Company
closed a US$5 million ($6.3 million) private placement to AUMS in
connection with its mobilization. The private placement consisted
of the issuance of 8,979,286 Roxgold common shares (the
"Subscription Shares") at a price of $0.70 per share, for gross proceeds of
approximately $6,284,000.
During March 2016, AUMS entered into
an escrow agreement with Roxgold for an eight month period for the
8,979,286 shares on the basis that Roxgold does not utilize the
Mining Contract Option during the escrow period.
For more information please refer to the Company's March 8, 2016 press releases available on SEDAR
at www.sedar.com.
On September 9, 2015, Roxgold
closed an $18.4 million non-brokered
private placement to IFC. IFC's investment consists of 25,783,352
units (the "Units") at a price of $0.7136 per Unit, for gross proceeds of
$18.4 million. Each Unit consists of
one common share and one-half of one common share purchase warrant.
Each full warrant will be exercisable for one additional common
share of the Company, at a conversion price equal to $0.90 per share. The warrants expire September 9, 2017.
With the balance of funds remaining from the Credit Facility of
US$24 million, the funds from the
private placements to AUMS and IFC, respectively, and a further
US$10 million available from AUMS, if
necessary, in exchange for pre-production underground mining
services (which has since been replaced by proceeds from the
$23 million bought deal financing
closed on March 8, 2016), it is
anticipated Roxgold is fully funded to complete the Yaramoko
project and to successfully put it into commercial production.
4. EXPLORATION ACTIVITIES
The Yaramoko permit covers approximately 196 km2 in
the Province of Balé in southwestern Burkina Faso.
A. 55 Zone
The Company commenced an infill diamond drilling program on the
55 Zone at the Yaramoko project in late March 2015. The
program was designed to tighten the drill spacing from 25 metre to
12.5 metre centres in areas in which the mine's first year of
production is scheduled.
The program was completed in October
2015, and totalled 75 holes for a total of approximately
6,900 metres of diamond drilling, to depths of up to 150
metres. The continuity and the high grade nature of the
results continue to support the feasibility resource model with
intersections consistent with the Company's expectations. Overall,
the infill drilling program highlighted places within the model
where, with greater resolution in the data and geological context,
the Company believes that localized improvements to the model may
be realized.
A small number of historical voids, created by artisanal miners,
were intersected in drilling in localized areas down to a maximum
depth of 50 metres. Infill drilling below these voids did not
encounter the continuation of these voids and they appear to be
limited laterally along strike as well. The voids are believed to
be sub-vertically excavated tunnels from surface and are not
expected to have any significant impact on mining activities.
Roxgold now has full custody and control over the surface at its 55
Zone.
For more information on the 55 Zone infill drilling program,
please refer to the Company's press releases dated April 14,
May 19 and October 8, 2015, respectively, available on SEDAR
at www.sedar.com.
In addition, to the infill program, the Company also completed
two geotechnical drill holes related to the placement of
ventilation raises on the 55 Zone totalling 100 metres.
B. Bagassi South
Roxgold discovered a new mineralized domain, the QV1 extension,
at Bagassi South during the second quarter of 2015. At Bagassi
South, approximately 6,200 metres of drilling was completed in 27
holes during the year ended December 31,
2015. Exploration at QV1 was successful in further
delineating the QV1 Extension, a broader, high grade domain along
plunge from the initial QV1 target to the south of the regional
cross cutting dyke. Mineralization at QV1 remains open along
plunge. Highlights from the QV1 extension and the mineralization
intersected south of the dyke include:
- 23.6 grams per tonne ("gpt") gold over 10.9 metres ("m") and a
second interval of 8.2 gpt gold over 6.0 m in diamond drill hole
("DDH") YRM-15-DD-BGS-083;
- 14.51 gpt gold over 6.05 m in DDH YRM-15-DD-BGS-095;
- 13.7 gpt gold over 7.2 m including 13.7 gpt over 1.5 m and 40.3
over 1.5 m in DDH YRM-15-DD-BGS-090; and
- 11.0 gpt gold over 7.5 m including 33.7 gpt over 0.8 m and 19.4
gpt over 1.7 m in DDH YRM-15-DD-BGS-089.
- 52.3 gpt gold over 6.1 m including 137.0 gpt gold over 0.8 m
and 199.0 gpt gold over 1.0 m in DDH YRM-15-RD-BGS-099
- 21.0 gpt gold over 6.7 m including 46.3 gpt gold over 0.7 m and
183.0 gpt gold over 0.6 m in DDH YRM-15-RD-BGS-104A
Follow-up drilling on this target over the reporting period has
seen the plunge length of the newly defined QV1 extension grow by
approximately 330 metres, bringing the total strike length to 800
metres. Drilling southeast of the dyke, has been successful in
discovering the continuation of the QV1 mineralization to the south
of the dyke and growing additional plunge length there. Drilling
along the main plunge of mineralization towards the end of 2015
continued to intersect high grade gold mineralization along the
plunge line. Drilling in the first quarter of 2016 is planned to
further define this plunge line as well as test up dip and down dip
continuity of mineralization.
For more information on drilling at Bagassi south and QV1,
please refer to the Company's press releases dated May 5, May 19,
August 11, 2015 and January 14, 2016, respectively, available on
SEDAR at www.sedar.com.
5. EVENTS SUBSEQUENT TO DECEMBER 31, 2015
A. Extension of the QV1 and QV Prime zone
and completion of initial Metallurgy Testwork Program
On January 14, 2016, the Company
announced the results of an 11 hole 3,000 m DD and reverse
circulation ("RC") drill program that was designed to test for
mineralization to the south of the Bagassi dyke as well as evaluate
the up-dip potential and infill gaps in the drilling to the north
of the dyke. Holes were drilled with an RC pre-collar to
approximately 10 m above their intended target depth and were
subsequently competed with a diamond tail. Of this program,
approximately 640 m of DD and 1,730 m of RC were drilled at QV1. At
QV', 155 m of Diamond and 470 m of RC were completed. Highlights of
this program include:
- 52.3 gpt gold over 6.1 m including 137.0 gpt gold over 0.8 m
and 199.0 gpt gold over 1.0 m in DDH YRM-15-RD-BGS-099
- 21.0 gpt gold over 6.7 m including 46.3 gpt gold over 0.7 m and
183.0 gpt gold over 0.6 m in DDH YRM-15-RD-BGS-104A
Additionally, a preliminary metallurgical test work program was
conducted on approximately 30kg of sample material from the QV1
target at Bagassi South. Sample material was selected from drill
core taken from previous drilling at QV1 and included four
composite samples and two variability samples. These samples were
selected from intervals along the strike length of the QV1 area and
are representative of all mineralization types encountered at QV1
to date.
Metallurgical test work observations include:
- High rates of total gold extraction between 96% and 99%
(overall recovery);
- High rates of gravity recovery between 70% and 90%;
- Excellent whole ore (no gravity) leach kinetics, with majority
of gold leached in 12 hours;
- Moderate hardness of ore; and
- Low reagent consumption (cyanide and lime).
B. Additional results from drilling program at
QV1 target
On March 15, 2016, the Company
announced the results of an additional 2,360 m DD program, which
was successful in further defining the high grade QV1
mineralization within the already defined envelope and provides for
a maiden resource estimate.
- 56.0 gpt gold over 7.8 m including 127.0 gpt gold over 3.3 m in
DDH YRM-16-DD-BGS-109;
- 8.6 gpt gold over 17.9 m including 70.1 gpt gold over 1.6 m in
DDH YRM-16-DD-BGS-113; and
- 11.8 gpt gold over 8.8 m including 70.6 gpt gold over 1.4 m in
DDH YRM-16-DD-BGS-107
C. Financing update
On March 4, 2016, the Company
completed its third drawdown from the Credit Facility of
approximately US$8 million
($11 million).
On March 8, 2016, the Company
closed its previously announced bought deal financing (the
"Financing") of 25 million common shares of Roxgold (the "Shares")
and the related over-allotment option of 3.75 million Shares at a
purchase price of $0.80 per Share,
for aggregate gross proceeds in the amount of $23 million.
The net proceeds from the Financing will be used (i) to replace
the US$10 million Mining Contract
Option provided by AUMS as discussed earlier, (ii) for
regional exploration, and (iii) for general corporate purposes.
SELECTED FINANCIAL DATA
The following table and contained data is derived from the
Company's audited Consolidated Financial Statements for the years
ended December 31, 2015 and 2014,
respectively, prepared in accordance with IFRS. All amounts are
expressed in Canadian dollars, unless otherwise stated.
|
|
Year End
December 31,
2015
|
Year End
December 31,
2014
|
|
|
|
|
Cost of
operations
|
|
|
|
|
General and
administrative expenses
|
|
3,278,000
|
4,328,000
|
|
Exploration and
evaluation expenses
|
|
2,766,000
|
15,186,000
|
|
Share-based
payments
|
|
2,262,000
|
1,802,000
|
|
Depreciation
|
|
865,000
|
676,000
|
|
|
|
|
Operating loss for
the period
|
|
9,171,000
|
21,992,000
|
|
|
|
|
Other expenses
(income)
|
|
|
|
Interest
income
|
|
(75,000)
|
(242,000)
|
Standby
fees
|
|
762,000
|
-
|
Change in fair value
of derivative
instruments
|
|
2,634,000
|
-
|
Foreign exchange
gain
|
|
(4,839,000)
|
(728,000)
|
Indirect
tax
|
|
182,000
|
180,000
|
|
|
|
|
|
|
(1,336,000)
|
(790,000)
|
|
|
|
|
Loss before income
taxes
|
|
(7,835,000)
|
(21,202,000)
|
|
|
|
|
Deferred Income
tax expense (income)
|
|
-
|
-
|
|
|
|
|
Net loss for the
period
|
|
(7,835,000)
|
(21,202,000)
|
|
|
|
|
|
Loss per share
(basic and diluted)
|
|
(0.03)
|
(0.09)
|
|
|
|
|
|
2015 vs 2014
General and administrative expenses decreased compared to the
same period in 2014. The net decrease is mainly due to several
non-recurring consulting expenditures incurred in 2014, as part of
the Company's corporate reorganization and taxation planning, among
other initiatives, in preparation for the Project and related
Credit Facility. Additionally, 2015 costs relating to the Credit
Facility were capitalized whereas during the same period in 2014
not all of these costs were capitalized as the Company had not
received a commitment letter for the Credit Facility until the
third quarter of 2014.
Excluding non-recurring expenditures, general and administrative
expenses are comparable year-over-year.
The drilling and geological work costs for the year ended
December 31, 2015 reflect the
drilling campaigns completed at Bagassi South, where 6,200 metres
of drilling was completed in 27 holes, resulting in the Company
discovering the continuation of the QV1 Extension. The 2014
costs for the same period reflect the diamond drill holes on
targets on the Bagassi South area where the Company advanced the
QV1 structure, growing its strike length, and where two other
mineralized structures were discovered. These costs also included
reverse circulation drilling completed at Haho and work completed
on the Boni Shear and 109 Zones, respectively.
The economic evaluations expense incurred in 2014 relates to the
preparation for the development of the Yaramoko project, which
includes the completion of the Technical Report that the Company
released on April 22, 2014 as well as
costs associated with the provisional submission of the
Environmental and Social Impact Assessment made in March 2014.
Pre-construction costs of $1,272,000 within E&E expenses for the year
ended December 31, 2014 related to
expenditures to maintain the critical path of development at the
Yaramoko project. These costs consisted primarily of work on the
detailed engineering design of the Project. In 2015, additional
pre-construction and construction costs were recognized under
mineral properties under development within Property, Plant and
Equipment ("PP&E") once management determined that the
technical feasibility and commercial viability of the Yaramoko
project had been established during the third quarter of 2014.
Owners' costs included within E&E expenses are solely
related to general and administrative costs incurred to support
geology work performed on zones outside of the 55 Zone. The
significant decrease in owners' costs relates to the decrease in
exploration activities during 2015 as compared to 2014.
The net increase of share-based payment costs of $460,000 is mainly due to higher stock option
expenses and higher deferred unit costs in 2015. Additional
stock option expenses totalling $170,000 were incurred during the year ended
December 31, 2015 as a result of a
higher volume of options granted, compared to the same period in
2014, as the Company continued to build the team required to
operate the Yaramoko project. Deferred share unit costs increased
by $108,000 as a result of a change
in the Company's directorship in June
2015 combined with a higher valuation of cash-settled
deferred stock units with the increase in the Company's share
price.
The other expenses during the year ended December 31, 2015 are mainly due to the change in
the fair value of the gold forward sale contracts which was offset
by a foreign exchange gain in relation to the Company and its
subsidiaries' cash on hand held in currencies other than their
functional currencies during the period. The forward sale contracts
were entered into as a condition precedent to be able to access
funds available through the Credit Facility. Standby fees incurred
on unused funds from the Credit Facility also contributed to other
expenses.
As a result, the Company's net loss for the year ended
December 31, 2015 totalled
$7,835,000 compared to a net loss of
$21,202,000 for the year ended
December 31, 2014. Based on the
net loss for the years reported, the Company's loss per share was
$0.03 and $0.09 per share for the fiscal years ended
December 2015 and 2014,
respectively.
QUALIFIED PERSONS
Ben Pullinger, P.Geo, VP of
Exploration for Roxgold Inc., and Paul
Criddle, FAUSIMM, Chief Operating Officer for Roxgold Inc.,
are Qualified Persons within the meaning of National Instrument
43-101, have verified and approved the technical data disclosed in
the press releases included herein by reference. This includes the
sampling, analytical and test data underlying the information.
About Roxgold
Roxgold is a gold exploration and development company with its
key asset, the high grade Yaramoko Gold Project, located in the
Houndé greenstone region of Burkina
Faso, West Africa. The
Company is currently in construction and expects to be producing
gold by Q2 2016. Roxgold trades on the TSX Venture Exchange under
the symbol ROG and as part of the Nasdaq International Designation
program with the symbol OTC: ROGFF.
"Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release."
These statements are based on information currently available
to the Company and the Company provides no assurance that actual
results will meet management's expectations. In certain cases,
forward-looking information may be identified by such terms as
"anticipates", "believes", "could", "estimates", "expects", "may",
"shall", "will", or "would". Forward-looking information contained
in this news release is based on certain factors and assumptions
regarding, among other things, the estimation of mineral resources
and mineral reserves, the realization of resource estimates and
reserve estimates, gold metal prices, the timing and amount of
future exploration and development expenditures, the estimation of
initial and sustaining capital requirements, the estimation of
labour and operating costs, the availability of necessary financing
and materials to continue to explore and develop the Yaramoko Gold
Project in the short and long-term, the progress of exploration and
development activities, the receipt of necessary regulatory
approvals, including the approval of the TSX Venture Exchange for
the balance of the AUMS Mining Contract Option, and
assumptions with respect to currency fluctuations, environmental
risks, title disputes or claims, and other similar matters. While
the Company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be
incorrect.
Although the Company believes the expectations expressed in
such forward-looking statements are based on reasonable
assumptions, such statements are not 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: changes in market conditions,
unsuccessful exploration results, changes in the price of gold,
unanticipated changes in key management personnel and general
economic conditions. Mining exploration and development is an
inherently risky business. Accordingly, actual events may differ
materially from those projected in the forward-looking statements.
This list is not exhaustive of the factors that may affect any of
the Company's forward-looking statements. These and other factors
should be considered carefully and readers should not place undue
reliance on the Company's forward-looking statements. The Company
does not undertake to update any forward-looking statement that may
be made from time to time by the Company or on its behalf, except
in accordance with applicable securities laws.
SOURCE Roxgold Inc.