TORONTO,
May 12, 2016 /CNW/ - Roxgold
Inc. (" Roxgold" or " the Company") (TSX.V: ROG) today reported its
financial results for the three months ended March 31, 2016, including development highlights
from its Yaramoko project in Burkina
Faso, West Africa.
For complete details of the unaudited Condensed
Interim 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. HIGHLIGHTS
For the three-month period ended March
31, 2016, and thereafter, the Company:
- Advanced construction at the Yaramoko project to approximately
84% as at March 31, 2016;
- Developed the underground mine ahead of schedule and crushed
first ore at the end of the quarter;
- Continued construction progress at the Yaramoko project with
approximately US$78 million spent as
of March 31, 2016, of the overall
US$110.8 million cost estimate, and
on track for first gold pour in the second quarter of 2016;
- Carried out hiring, training and other operational readiness
activities;
- Closed a bought deal equity financing totalling $23 million in March
2016;
- Acquired the Houko permit, adjacent to the Yaramoko permit,
extending the Company's Hounde land position to 226km2;
Continued to intersect mineralization at the QV1 target at Bagassi
South, located 1.8 kilometres south of the 55 Zone;
- Completed a maiden mineral resource estimate for the QV1 target
at Bagassi South; and
- Commenced an advanced definition and expansion drilling program
at the 55 Zone
2. DEVELOPMENT
ACTIVITIES
The development of the Yaramoko project (the
"Project") continued to advance considerably during the first
quarter of 2016 with overall construction 84% complete as at
March 31, 2016. Performance in the
underground mine continued to exceed expectations with development
rates in waste and ore above plan. Commissioning activities
commenced in the processing plant and construction of the
processing facility remains on schedule in accordance with the lump
sum fixed price engineering, procurement and construction ("EPC")
contract. The Project remains within its capital cost estimate and
is expected to produce gold before the end of the second quarter of
2016.
As of March 31,
2016, the Company had spent approximately US$78 million and remains on target to complete
the Project within the planned capital cost estimate of
US$110.8 million.
Mine Development
Underground development continues to advance
well, with the underground contractor, African Underground Mining
Services ("AUMS"), delivering above plan development rates in ore
and waste during the quarter.
The ramp has advanced 610 metres from the portal
and opened up four levels (5270, 5253, 5236 and 5219), which are
developing in ore. This progress has contributed to a Run-of-Mine
("ROM") pad inventory of over 23,000 tonnes in advance of the
commencement of ore processing at the plant. The Company is
encouraged by what has been observed in the ore drives with the
orebody profile and thickness consistent with that of the block
model. Initial face sampling of the crosscuts indicates that ore
grades are also consistent with the block model.
The eastern ventilation shaft was completed with
the raise borer breaking through surface soon after the first
quarter. The first fan was assembled and installed in April 2016. The second (western) ventilation
shaft raise bore is expected to be completed early in the third
quarter of 2016.
The construction of the back-up diesel fired
power station was completed and commissioned in February 2016 and is now reticulating 11kV power
across the Project. Negotiations for a grid power offtake agreement
are well advanced with Sonabel, the national electricity provider.
Construction of the surface mine infrastructure, including
workshops and offices were all completed during the quarter. All
other required mine infrastructure is complete.
Processing Plant
As of the end of March
2016, the processing plant was approximately 90%
complete.
In late March 2016,
the plant crushed the first ore, essentially commencing production
commissioning on the Project.
All materials and equipment required for the
completion of construction and commissioning are on site and, in
most cases, installed. Plant civil and concrete works are
complete and all structural steel has been erected. The focus
is planned to be on completion of piping installation across the
processing facility as well as continuing with the installation of
electrical and instrumentation cabling and equipment.
Several key packages, including the SAG mill,
crushing circuit, thickener, reclaim apron feeder, and compressed
air system have been commissioned and signed off by the respective
vendors' representatives on site and are ready for ore
commissioning.
The workshop, warehouse and reagents storage
sheds are complete and are being fitted with equipment and are
receiving stock. The office, processing plant mess and security
buildings are complete and will be occupied in April.
The Project remains on schedule to pour first
gold during the second quarter of 2016.
Operational Readiness
Roxgold's full operations team is in place and
the focus remains on the development of training systems and
start-up procedures. Reconciliation and reporting models,
incorporating geology, mining and processing disciplines are also
now in place with ore being delivered to the ROM pad.
3. FINANCING
ACTIVITIES
A.
Project Finance
On June 9, 2015,
the Company signed a credit agreement (the "Credit Facility") 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.
On March 4, 2016,
the Company completed its third drawdown of approximately
US$8 million ($11 million) from the US$75 million Credit Facility signed with BNP
Paribas and Société Générale Corporate & Investment Banking. As
at March 31, 2016, the availability
of the remaining approximately US$16
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.
Equity Financing
During March 2016,
AUMS entered into an escrow agreement with Roxgold for an eight
month period for 8,979,286 shares, which it purchased from the
Company through a private placement in 2015, 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 March 8, 2016,
the Company closed a bought deal financing (the "Financing") of
28,750,000 common shares of Roxgold (the "Shares"), which includes
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 are planned
to 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. For more information please refer to
the Company's March 8, 2016 press
releases available on SEDAR at www.sedar.com.
4. EXPLORATION
ACTIVITIES
The Yaramoko permit covers approximately 196
km2 in the Province of Balé in southwestern Burkina Faso.
For the three months ended March 31, 2016
A. 55
Zone
During the first quarter of 2016, the Company
finalized a plan to execute an advanced definition and expansion
drilling program targeting the upper 430 metres of the 55 Zone. The
Company intends to commence this 11,000 metre drilling program in
the second quarter of 2016 with the expectation of adding
additional ounces to the 55 Zone around where existing, current
life of mine plan infrastructure is planned. This drilling will
focus on depths from around 100 metres vertically to approximately
430 metres vertically. When available, the Company expects to be
releasing drill results for this program, which commenced in
April 2016, during the second and
third quarters of 2016.
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.
B.
Bagassi South
During the three months ended March 31, 2016, the Company obtained further
drilling results from the QV1 target area in Bagassi South. The
results were part of an infill and definition program that were
planned and executed to provide data that could potentially support
a maiden resource estimate at QV1 scheduled for the second quarter
of 2016. These results were released to the public in press
releases dated January 14, 2016
March 15 and April 27, 2016. Highlights from this program
include:
- 52.3 grams per tonne ("gpt") gold over 6.1 metres ("m")
including 137.0 gpt gold over 0.8 m and 199.0 gpt gold over 1.0 m
in diamond drill hole ("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;
- 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.
This program was successful in further
delineating mineralization along the QV1 structure down to a depth
of approximately 300 metres vertically in hole 104A where
mineralization remains open along plunge.
Drilling on this target over the last year has
seen the plunge length of the newly defined QV1 extension grow to
approximately 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 has further defined this plunge. The Company
used this last drill data in conjunction with existing data to
complete a maiden resource estimate at QV1 which was released on
April 27, 2016. Please refer to the
Company's press release dated April 27,
2016, available on SEDAR at www.sedar.com.
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,
respectively, and January 14 and
March 15, 2016, respectively,
available on SEDAR at www.sedar.com.
C. Houko
Permit
On March 18, 2016,
the Company was granted the Houko permit, which lies adjacent to
the Yaramoko permit and will expire on March
18, 2019. The Houko permit was acquired for €54,000
($80,000) upon transfer of the
permit. In addition, a once off payment of €36,000 ($53,000), along with €1.13 ($1.67) per ounce of gold is payable upon the
announcement of a maiden resource on the Houko Permit.
The Houko permit lies to the south of the western
arm of the Yaramoko permit and adjacent to the western border of
the Yaramoko permit. The underlying geology of the Houko permit
represents the contact between the Boni Shear Zone and the Birimain
volcanic and intrusive suites, which Roxgold has been exploring on
the adjacent Yaramoko permit. Roxgold defined an eight kilometre
long geochemical trend along the Boni shear, in 2013, to the north
of the Houko permit and this geochemical anomalism is thought to
persist south along this trend. The permit is mainly overlain by
loosely consolidated surficial material and laterite, making it an
ideal target for mineralization under this cover.
5. EVENTS
SUBSEQUENT TO MARCH 31, 2016
A. Maiden
mineral resource statement for QV1 target
On April 27, 2016,
the Company announced the results of a maiden mineral resource
estimate for the QV1 target at Bagassi South. The resource estimate
was undertaken by SRK Consulting (Canada) Inc. ("SRK") of Toronto and is based on 114 core boreholes
totalling approximately 27,000 metres of drilling and has been
prepared in accordance with National Instrument 43-101 ("43-101")
Standards of disclosure for Mineral Projects. Highlights
include:
- Inferred mineral resource estimated at 563,000 tonnes at 12.14
g/t AU gold ("g/t Au") for 220,000 ounces of gold at a cut-off
grade of 5.0 g/t Au;
- QV1 structure remains open down plunge; and
- Further exploration potential at QV Prime ("QV'") and foot wall
("FW") zone.
TABLE 1 - MAIDEN MINERAL RESOURCE STATEMENT,
QV1 GOLD DEPOSIT, YARAMOKO PROJECT
SRK Consulting
(Canada) Inc., April 22, 2016
|
Inferred Mineral
Resources
|
Domain
|
Category
|
Quantity
(t)
|
Grade
Au
(g/t)*
|
Contained
Metal
Au
(oz)
|
QV1
|
Inferred
|
474,000
|
13.13
|
200,000
|
FW
|
Inferred
|
40,000
|
7.49
|
10,000
|
QV'
|
Inferred
|
49,000
|
6.40
|
10,000
|
Total
|
Inferred
|
563,000
|
12.14
|
220,000
|
*Mineral resources are not
mineral reserves and have not demonstrated economic viability. All
figures have been rounded to reflect the relative accuracy of the
estimates. Underground mineral resources are reported at a cut-off
grade of 5.0 gpt gold assuming: metal price of US$1,200 per ounce of gold, mining cost of
US$90 per tonne, G&A cost of
US$7.20 per tonne, processing cost of
US$20.70 tonne, process recovery of
96 percent. For reporting, a capping value of 60g/t AU was selected
for the QV1 structure.
For more information on the QV1 mineral resource
estimate, please refer to the Company's press release dated
April 27, 2016, available on SEDAR at
www.sedar.com.
B.
Financing update
On April 27, 2016,
the Company completed its fourth drawdown from the Credit Facility
of approximately US$8 million
($11 million).
SELECTED FINANCIAL DATA
|
|
For the three
month period
ended March
31, 2016
|
For the three
month period
ended March
31, 2015
|
|
|
|
|
Cost of
operations
|
|
|
|
|
General and
administrative expenses
|
|
1,019,000
|
806,000
|
|
Exploration and
evaluation expenses
|
|
898,000
|
252,000
|
|
Share-based
payments
|
|
577,000
|
551,000
|
|
Depreciation
|
|
204,000
|
68,000
|
|
|
|
|
Operating loss for
the period
|
|
2,698,000
|
1,677,000
|
|
|
|
|
Other expenses
(income)
|
|
|
|
Interest
income
|
|
(3,000)
|
(49,000)
|
Standby
fees
|
|
113,000
|
-
|
Change in fair value
of derivative
instruments
|
|
12,821,000
|
-
|
Unrealized foreign
exchange loss(gain)
|
|
2,606,000
|
(2,211,000)
|
Indirect
tax
|
|
40,000
|
49,000
|
|
|
|
|
(Loss)/income
before income taxes
|
|
(18,275,000)
|
534,000
|
|
|
|
|
Deferred Income tax
(expense)/income
|
|
-
|
-
|
|
|
|
|
Net (loss)/income
for the period
|
|
(18,275,000)
|
534,000
|
|
|
|
|
|
(Loss)/income per
share (basic and diluted)
|
|
(0.06)
|
0.01
|
Q1 2016 vs Q1 2015
General and administrative expenses increased
compared to the corresponding period in 2016. The net increase is
mainly due to additional travel to the Project required to support
the transition from development to the production phase as well as
for investor awareness. Additionally, there were a number of
non-routine transactions completed in 2015, which required external
consultations during 2016. Furthermore, external consultants have
been hired to assist the Company in achieving and documenting its
best in class environmental and social management tools.
Expenses for drilling and geological work for the
three-month period ended March 31,
2016 reflect the drilling campaign at the QV1 target at
Bagassi South. The results from this program were announced during
the first quarter of 2015 and contributed to the maiden resource
estimate announced in April 2016. The
low drilling expenditures in the corresponding period of 2015
reflects the timing of when the drilling campaign commenced in
2015.
The year-over-year increase in Owners' costs
included within E&E expenses for the first quarter of 2016
reflects the increased exploration activity during the first
quarter as compared to the same period in 2015.
The other expenses during the three-month period
ended March 31, 2016 are mainly due
to the change in the fair value of the gold forward sale contracts.
The forward sale contracts were entered into in July 2015 as a condition precedent to be able to
access funds available through the Credit Facility. As the sale
price of the forward sale contracts was significantly lower than
the actual price of gold at March 31,
2016, it resulted in an increase to the liability relating
to the forward sale contracts. Additionally, the Company incurred a
foreign exchange loss as the majority of the Company's cash was
held in US dollars during the quarter and the US dollar weakened
during the same period. 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
three-month period ended March 31,
2016 totalled $18,287,000
compared to net income of $534,000
for the three-month period ended March 31,
2015. Consequently, the Company recorded a loss per share of
$0.06 and income per share of
$0.01 per share for the three-month
periods ended March 31, 2016 and
2015, 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 in 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.