TORONTO, Aug. 17, 2016 /CNW/ - Roxgold Inc. ("Roxgold" or
"the Company") (TSX.V: ROG) today reported its financial results
for the three and six month ended June 30,
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 June 30,
2016, and thereafter, the Company:
- Poured first gold and carried out plant practical completion
and processing performance tests in May
2016, one month ahead of schedule;
- Completed construction of the Yaramoko project under-budget for
capital expenditures totalling approximately US$107 million, 3% below the capital cost
estimate totalling US$110.8
million;
- Mined 37,176 tonnes of ore at an average grade of 12.99 grams
per tonne ("gpt");
- Produced a total of 14,482 ounces of gold;
- Completed a maiden mineral resource estimate for the QV1 target
at Bagassi South;
- Drew down remaining US$23 million
of available funds from its Credit Facility;
- Received US$9 million from the
early exercise of all outstanding warrants, held by International
Finance Corporation ("IFC");
- Received the "Prix Responsabilité Sociale des Entreprises
minières 2016" or 2016 Corporate Social Responsibility ("CSR")
Award of Mining Companies by Redevabilité in Burkina Faso; and
- Commenced stoping activities at the Yaramoko project in
July 2016
2. DEVELOPMENT ACTIVITIES
Construction of the Yaramoko project (the "Project") was
effectively completed during the second quarter of 2016, with the
exception of the installation of the high voltage ("HV") power
line. The grid power offtake agreement was recently signed
with Sonabel, the national electricity provider in Burkina Faso. Additionally, progress on the HV
power line included completion of bulk earthworks for the
substation, setting the foundation for the transmission line
towers, and the commencement of tower assembly.
During the three month period ended June
30, 2016, the Company poured first gold and completed the
plant practical completion and processing performance tests
confirming nameplate throughput and recovery assumptions in
May 2016, over a month ahead of
schedule. As of June 30, 2016, in the
underground operation, four sublevels were fully developed to the
eastern end of the resource and the operations team was shifting
its focus on preparation for stoping activities, which commenced in
July 2016.
As the majority of Project activities were completed during the
second quarter of 2016, with the exception of the HV power line
which is based on lump-sum contracts, the final Project capital
cost estimate is forecasted to be approximately US$107 million, which is approximately 3% below
the Company's earlier Project cost estimate of US$110.8 million. (For more information on the
capital cost estimate, please refer to the Company's press release
dated April 7, 2015, available on
SEDAR at www.sedar.com).
For the six-month period ended June 30,
2016, the underground mine had produced 54,745 tonnes of
pre-production ore at 14.77 gpt containing 25,993 ounces of
gold.
A total of 14,482 ounces of gold were produced during the second
quarter from 40,339 tonnes of ore milled at the processing facility
at a mill feed grade of 13.4 gpt. The process plant operated at an
average mill operating time of 95.8% and achieved an average
throughput rate of 32 tonnes per hour or 761 tonne per day ("tpd"),
which was above nameplate capacity of 750 tpd. Average gold
recoveries were 97.5%, which was above design rate of 96.9%. A
total of 8,250 ounces of gold were sold during the second quarter
of 2016 at an average price of US$1,266 per ounce of gold for total
pre-commercial production revenue of US$10,444,000 ($13,884,000). Subsequent to June 30, 2016, the Company sold 6,234 ounces of
gold that were produced prior to June 30,
2016, for proceeds of US$8,302,000 ($10,723,000).
3. FINANCING ACTIVITIES
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.
During the second quarter of 2016, the Company completed two
additional drawdowns for approximately US$15
million ($21 million) from the
US$75 million Credit Facility signed
with BNP Paribas and Société Générale Corporate & Investment
Banking. As at June 30, 2016, the
Credit Facility was fully drawn down and the Company has not had to
utilize funds from its equity-funded US$15
million cost overrun facility during development of the
Project.
4. EXPLORATION ACTIVITIES
The Yaramoko permit covers approximately 196 km2 in
the Province of Balé in southwestern Burkina Faso.
For the three months ended June 30,
2016
A. 55 Zone
During the second quarter of 2016, the Company executed a 45
hole, 9,957 metre drilling program targeting the upper 430 metres
of the 55 Zone. The drilling focused on depths from approximately
100 metres vertically to approximately 430 metres vertically. The
program is expected to increase drilling resolution around areas
where existing and current life of mine plan infrastructure is
planned.
The Company expects to be releasing drill results during the
third quarter of 2016, for this program, which was concluded in
July 2016.
B. Bagassi South
On April 27, 2016, the Company
announced the results of a maiden mineral resource estimate for the
QV1 target at Bagassi South (table 1). 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 footwall
("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 60 g/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.
The 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 (figure 2).
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
During the second quarter of 2016, exploration activities
commenced on the Houko permit. Exploration included field mapping
and grab sampling of significant outcrops. A new artisanal working
was discovered where miners targeting a sub-cropping quartz vein
had recently began to excavate a shaft. In addition, a shear zone
outcropping to a width of over 15m with an exposed strike length of
over 1.5km was discovered in the far southwest of the Houko permit.
This is thought to be the continuation of the mineralised Boni
Shear Zone from the Yaramoko permit.
For more information on the acquisition of the Houko permit,
please refer to the Company's press release dated March 21, 2016, available on SEDAR at
www.sedar.com.
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 Birimian 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 west 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.
For the six months ended June 30,
2016
A. 55 Zone
During the six month period ending June
30, 2016, the Company executed the aforementioned 45 hole,
9,957 metre advanced definition and expansion drilling program
targeting the upper 430 metres of the 55 Zone.
B. Bagassi South
During the first two months of 2016, a nine hole, 2,261 metre
infill and definition drill program was executed targeting the QV1
mineralisation. The results from this program 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 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.
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.
The drill program also provided additional data that supported
the maiden resource estimate that was released to the public on the
April 27, 2016 (table 1).
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.
5. EVENTS SUBSEQUENT TO JUNE 30, 2016
A. Financing Activities
On July 14, 2016, IFC exercised
the 12.9 million warrants issued to them on September 9, 2015, exercisable for one additional
common share of the Company, at a conversion price equal to
C$0.90 per share, fourteen months
prior to the warrants' expiry date of September 9, 2017. This represented approximately
US$9 million of total proceeds for
the Company.
B. Corporate Social
Responsibility Activities
On August 17, 2016, the Company
announced it was awarded the "Prix Responsabilité Sociale des
Entreprises minières 2016" or "2016 CSR Award of Mining Companies"
by Redevabilité in Burkina Faso.
This civil society group is comprised of multiple groups,
including:
- The Africa Youth Network (RAJ)
- The Centre for Research and Intervention in Gender and
Development (CRIGED)
- The Centre for Citizens' Monitoring and Analysis of Public
Policy (CDCAP)
- Partners of the Economic and Social Justice Program NGO
DIAKONIA.
SELECTED FINANCIAL
DATA
|
|
Three-month
period ended
June 30, 2016 $
|
Three-month
period ended
June 30,
2015 $
|
Six-month
period ended
June 30,
2016 $
|
Six-month
period ended
June 30,
2015 $
|
|
|
(as
adjusted)
|
|
(as
adjusted)
|
Cost of
operations
|
|
|
|
|
|
General and
administrative expenses
|
1,181,000
|
949,000
|
2,200,000
|
1,755,000
|
|
Exploration and
evaluation expenses
|
2,273,000
|
1,305,000
|
3,171,000
|
1,557,000
|
|
Share-based
payments
|
582,000
|
269,000
|
1,159,000
|
820,000
|
|
Depreciation
|
168,000
|
60,000
|
372,000
|
128,000
|
|
|
|
|
|
Operating loss for
the period
|
4,204,000
|
2,583,000
|
6,902,000
|
4,260,000
|
|
|
|
|
|
Other expenses
(income)
|
|
|
|
|
Interest
income
|
(10,000)
|
(14,000)
|
(13,000)
|
(63,000)
|
Standby
fees
|
75,000
|
-
|
188,000
|
-
|
Change in fair value
of derivative
instruments
|
6,962,000
|
-
|
19,783,000
|
-
|
Unrealized foreign
exchange loss/(gain)
|
316,000
|
260,000
|
2,922,000
|
(1,951,000)
|
Indirect
tax
|
41,000
|
44,000
|
81,000
|
93,000
|
|
|
|
|
|
Loss before income
taxes
|
(11,588,000)
|
(2,873,000)
|
(29,863,000)
|
(2,339,000)
|
|
|
|
|
|
Deferred Income tax
(expense)/income
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net loss for the
period
|
(11,588,000)
|
(2,873,000)
|
(29,863,000)
|
(2,339,000)
|
|
|
|
|
|
Loss per share
(basic and diluted)
|
(0.03)
|
(0.01)
|
(0.09)
|
(0.01)
|
Second Quarter of 2016 vs. Second Quarter of
2015
General and administrative expenses for the three-month period
ended June 30, 2016 increased
compared to the same period in 2015. The net increase is primarily
due to additional travel to support the final stages of the Project
and its transition from development to the pre-commercial
production phase. There was an increase in consulting expenses
during the period due to the hiring of external consultants to
assist the Company in achieving and documenting environmental
social management tools. The Company does not expect this to be a
recurring expense.
Expenses for drilling and geological work for the three-month
period ended June 30, 2016 increased
when compared to the same period in 2015. The increase is primarily
a result of the 9,957 metre advanced definition and expansion
drilling program at the 55 Zone that commenced in April 2016 as compared to a program executed in
the second quarter of 2015 representing 3,028 metres of drilling at
Bagassi South.
Other expenses during the three-month period ended June 30, 2016 increased compared to the same
period in 2015. The increase was solely due to the change in the
fair value of the gold forward sale contracts, which were entered
into in July 2015 as a condition
precedent to be able to access funds available through the Credit
Facility. During the period, the increase in the market gold price
relative to the sale price in the forward sale contracts resulted
in an increase to the liability relating to the forward sale
contracts.
As a result, the Company's net loss for the three-month period
ended June 30, 2016, totalled
$11,588,000 compared to net loss of
$2,873,000 for the three-month period
ended June 30, 2015. Consequently,
the Company recorded a loss per share of $0.03 and loss per share of $0.01 per share for the three-month periods ended
June 30, 2016 and 2015,
respectively.
Qualified Persons
Paul Criddle, FAUSIMM, Chief
Operating Officer for Roxgold Inc., a Qualified Person within the
meaning of National Instrument 43-101, has verified and approved
the technical disclosure contained in this MD&A.
Yan Bourassa, P.Geo, VP Geology
for Roxgold Inc., a Qualified Person within the meaning of National
Instrument 43-101, has verified and approved the technical
disclosure contained in this MD&A.
About Roxgold
Roxgold is a gold mining company with its key asset, the high
grade Yaramoko Gold Mine, located in the Houndé greenstone region
of Burkina Faso, West Africa. The Company expects to reach
commercial production in Q3 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.