i-80 Gold Corp. press release
i-80 Gold Reports Q3 2024 Operating Results and New Development Plan
TSX - Toronto Stock Exchange · Gold · Silver · United States
Canada NewsWire
RENO, Nevada , Nov. 12, 2024 /CNW/ - i-80 GOLD CORP. (TSX: IAU) (NYSE American: IAUX) ("i-80 Gold", or the "Company") reports its operating and financial results for the three and nine months ended September 30 , 2024. i-80 Gold's _unaudited condensed consolidated interim financial statements _("Financial Statements"), as well as i-80's Management's Discussion and Analysis of Operations and Financial Condition ("MD&A") for the three and nine months ended September 30, 2024 , are available on the Company's website at www.i80gold.com , on SEDAR+ at www.sedarplus.ca , and on EDGAR at www.sec.gov . Unless otherwise stated, all amounts referred to herein are in U.S. dollars (C$ represents Canadian dollars).
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"The quality of the asset base, location and strength of the team made the decision to join i-80 Gold an easy one. We are all very excited by the prospect of developing i-80 Gold into a Nevada focused mid-tier gold producer by the early 2030's. The new development plan envisions us ramping up, permitting and building five gold mines through the balance of the decade. The team is well advanced on finding financing solutions to fund our new development plan," Richard Young , President and Chief Executive Officer of i-80 Gold.
STRATEGIC OVERVIEW
The Company underwent a leadership change during the third quarter, which prompted a review of the strategic direction of the Company. As a result, the Company adopted a new development plan which presents Management's view of the most effective strategy to generate free cash flow while progressing earlier stage projects to provide a pipeline of growth in the medium and long-term. Management is now focused on permitting and development of five gold deposits through the balance of the decade. Consistent with the focus of i-80 Gold since inception, this plan includes the development of the three underground mines, but also includes accelerating permitting and development of the two large oxide open pit deposits, Granite Creek and Mineral Point. Collectively, these five assets have the potential to create a mid-tier gold producer. The Company has initiated a recapitalization plan of its balance sheet to support the new development plan.
The Lone Tree Autoclave remains the centralized refractory ore processing facility in the new development plan and Management intends to continue its work towards completion of the refurbishment feasibility study next year. Following completion of the study, a series of trade-off scenarios will be considered comparing full autoclave refurbishment or alternate toll milling and ore purchase agreements options that could potentially be available.
Further, Management believes that a base metal focused joint venture at the Ruby Hill project does not fit the new development plan, see "Ruby Hill Base Metal JV" section below for more information. Overall, given the Company's balance sheet constraints and additional capital required for the new development plan all higher risk projects with low certainty of economic viability have been deferred until the balance sheet is in a stronger position and the Board approves allocating risk capital to these projects.
The Lone Tree open pit project has a variety of financial, technical, environmental and social issues to be worked through. It is expected that the project will likely remain deferred for another decade. Management believes new technologies and other solutions may become available in the future to allow the Company to unlock the value of this large open pit project.
RECAPITALIZATION PLAN
The Company envisages a two-step recapitalization process which will include demonstrating a viable path to generating free cash flow, and rescheduling and/or refinancing the existing debt obligations. Phase one of this plan will include finding a solution for short-term commitments including deferral of the upcoming gold and silver deliveries scheduled for late December and early January. Phase two of the recapitalization plan involves working with our current partners as well as seeking new debt providers to restructure our existing debt and provide sufficient capital to execute on the Company's new development plan with repayment terms that align with the Company's ability to service that debt. Management has initiated work on this, including discussions with existing and potential new partners, and aims to complete this process in the first quarter of 2025.
The Company's ability to continue to operate and execute its new development plan and fulfill its commitments as they come due is dependent upon its success in restructuring its current debt obligations and obtaining additional financing. While Management has been successful in raising additional funds in the past, there can be no assurance that it will be able to do so in the future. Given the Company's working capital deficit, current operating losses and Management's expectation of future losses until it has fully executed its new development plan, the inability of the Company to arrange appropriate financing in a timely manner could result in the carrying value of the Company's assets being subject to material adjustment. These conditions indicate the existence of material uncertainties which cast significant doubt as to the Company's ability to continue as a going concern.
RUBY HILL BASE METAL JOINT VENTURE
In November 2023 , i-80 Gold entered into a non-binding Letter of Intent with a third party (see press release dated November 7, 2023 ), to consider a joint venture agreement for Ruby Hill with a focus on base metal exploration and development. In addition to deposits with base metal potential (Blackjack, Hilltop and FAD), the joint venture discussion included all gold and silver deposits within the Ruby Hill property, including Mineral Point.
Upon careful assessment of the joint venture terms and economics, considering the potential value of the existing gold resources in a rising gold price environment and taking into account the limited understanding of the base metal potential, i-80 Gold's Board and Management have elected to no longer proceed with joint venture discussions. It is noteworthy that the period of exclusivity with the counterparty has expired.
i-80 Gold is electing to prioritize more advanced staged gold and silver projects with established resources and technical studies. As such exploration and development work on base metal targets have been deferred to focus on projects with the fastest timeline to cash flow generation.
ORGANIZATIONAL CHANGES
Since i-80 Gold's inception, the Company's focus has been on asset acquisition and exploration. As the company evolves into a developer and producer the organizational structure and skill set of its employees needs to evolve to meet the new development plan in order to become a mid-tier gold producer of approximately 400,000 to 500,000 ounces of gold per year by the early 2030's.
The three most significant changes facing i-80 Gold are i) increased emphasis on technical skills to ramp up, permit and construct five projects through the balance of the decade; ii) the requirement to restructure and re-capitalize the balance sheet in a manner that aligns to the new development plan; and iii) the additional legal and reporting requirements of becoming a US domestic issuer.
In order to meet i-80 Gold's growing and changing demands, the Company has promoted four senior technical personnel and hired three new senior positions. Management believes these organizational changes, including the promotions and new hires, add the necessary experience and bench strength to further de-risk the execution of the development plan. The cost of these changes is expected to be offset by lower third-party consultant costs.
On the operations front, the promotion of four senior technical personnel is a reflection of the importance of these four individuals in reducing our execution risk as we ramp up our activities to permit and construct five mines through the balance of the decade.
On the legal front, the hiring of David Savarie as our new Senior VP General Counsel will bring in-house industry specific legal expertise that will improve our approach to and compliance with our governance and contractual commitments while also lowering our third-party legal costs. Further, this addition will immediately reduce the burden on existing management to manage the legal process in an increasingly complex environment while adding additional strength as we execute on our new development plan.
On the finance front, the Company has added two new senior financial roles, Katerina Deluca as VP of Treasury in charge of treasury and financing and Curtis Turner as VP of Strategic Planning. Mr. Turner is transitioning from VP Finance to this new role. These new positions are required to meet the increased workload associated with the balance sheet restructuring and debt reporting as well as enabling the new development plan to be executed. The VP Finance function will be managed by an incoming hire, Cindy Tseo .
The final new officer joining the team is Leily Omoumi , our new VP Corporate Development and Strategy who will also be in charge of investor relations. This position replaces the outgoing Executive Vice President, Business Development, Matt Gollat who was instrumental in the formation of i-80 Gold since its inception in 2021. Mr. Gollat has agreed to remain as an advisor in the transition to focus on the new development plan. The Company would like to thank Mr. Gollat for his contribution to the Company. The new VP Corporate Development will execute the new vision of the organization playing a key role in developing and maintaining the Company life-of-mine model as well as understanding the value of i-80 Gold and conveying that message to the market. Joining Ms. Omoumi is Jim Mackay , Director of Corporate Development and Investor Relations.
OPERATIONAL AND FINANCIAL OVERVIEW
Third Quarter 2024
Third quarter loss per share was $0.10 per share, a decrease from $0.01 loss per share in the comparative prior year period. Third quarter cash used in operating activities was $19.0 million , an increase in cash used from the prior year period due to lower mine operating income partially offset by lower exploration, evaluation and pre-development expense. September 30, 2024 cash balance is $21.8 million , a decrease of $26.0 million from the end of the second quarter due to cash used in operations and cash used for capital expenditures. During the third quarter the Company began an at-the-market equity program ("ATM program") to raise equity. In total 11.5 million shares were issued for gross proceeds of $13.1 million . Third quarter revenue totaled $11.5 million compared to $13.2 million in the comparative prior year period due to lower volumes sold partially offset by higher gold price. Third quarter gold sales totaled 3,063 ounces at an average realized gold price 1 of $2,422 per ounce, resulting in revenue of $7.4 million , compared to gold sales of 4,585 ounces at an average realized gold price 1 of $1,895 per ounce, resulting in revenue of $8.7 million in the third quarter of 2023 Third quarter mineralized material sales totaled 14,696 tons for revenue of $4.1 million , compared to mineralized material sales totaling 16,059 tons for revenue of $4.5 million in the comparative prior year period. Cost of sales increased by $3.2 million over the prior year quarter primarily due to an inventory impairment recognized. The Company published its second annual sustainability report which can be found on the Company's website. The Company adopted a new development plan to ramp up, permit and construct five gold mines over the balance of the decade to create a mid-tier gold producer, capable of producing approximately 400,000 to 500,000 ounces of gold annually. The Company is working to reschedule current debt obligations and to provide the additional capital required to execute the new development plan. Management changes were also made to strengthen the management team to execute on the new development plan.
Year to Date ("YTD") 2024
YTD loss per share was $0.26 per share, a decrease from $0.13 loss per share in the comparative prior year period. YTD cash used in operating was $61.9 million , an increase from prior year period primarily due to lower production from the Company's mines, partially offset by higher average realized gold prices. YTD revenue totaled $27.1 million compared to $29.1 million in the comparative prior year period. YTD gold sales totaled 7,186 ounces at an average realized gold price 1 of $2,290 per ounce, resulting in revenue of $16.5 million , compared to gold sales of 11,262 ounces at an average realized gold price 1 of $1,924 per ounce, resulting in revenue of $21.7 million in the comparative prior year period of 2023. YTD mineralized material sales totaled 29,041 tons for revenue of $10.6 million , compared to mineralized material sales totaled 22,710 tons for revenue of $7.3 million in the comparative prior year period. Approximately 80,000 feet (core and RC) drilled with multiple positive results to expand mineralization further at the Ruby Hill mine, the Granite Creek mine and the McCoy-Cove project.
| | Three months ended September 30, | Nine months ended September 30, | | | | (in thousands of USD) | 2024 | 2023 | 2024 | 2023 | | | | | | | | Revenue | 11,509 | 13,215 | 27,107 | 29,073 | | Cost of sales | (15,449) | (12,244) | (42,346) | (30,975) | | Depletion, depreciation and amortization | (552) | (1,444) | (1,003) | (5,589) | | Mine operating loss | (4,492) | (473) | (16,242) | (7,491) | | | | | | | | Expenses | | | | | | Exploration, evaluation and pre-development | 6,019 | 10,014 | 13,867 | 30,088 | | General and administrative | 4,554 | 4,136 | 15,139 | 13,724 | | Property maintenance | 2,549 | 2,763 | 7,818 | 7,992 | | Share-based payments | 794 | 244 | 1,935 | 2,455 | | Loss before the following | (18,408) | (17,630) | (55,001) | (61,750) | | | | | | | | Other (expense) income | (10,331) | 21,488 | (7,097) | 43,150 | | Finance expense | (9,322) | (8,133) | (28,508) | (22,698) | | Loss before income taxes | (38,061) | (4,275) | (90,606) | (41,298) | | | | | | | | Deferred tax recovery | — | 76 | — | 8,020 | | Loss and comprehensive loss for the period | (38,061) | (4,199) | (90,606) | (33,278) |
Granite Creek
| | | Three months ended September 30, | Nine months ended September 30, | | | | Operational Statistics | | 2024 | 2023 | 2024 | 2023 | | Oxide mineralized material mined | tons | 18,846 | 13,294 | 45,658 | 29,738 | | Sulfide mineralized material mined | tons | 11,917 | 9,709 | 21,153 | 20,817 | | Total oxide and sulfide mineralized material mined | tons | 30,763 | 23,003 | 66,811 | 50,555 | | Material mined grade | g/tonne | 8.38 | 8.34 | 7.74 | 8.87 | | Material mined grade | oz/ton | 0.24 | 0.24 | 0.23 | 0.26 | | Low-grade mineralized material mined 1 | tons | 22,488 | 12,800 | 47,186 | 30,110 | | Low-grade mineralized material grade 1 | g/tonne | 2.92 | 3.18 | 3.00 | 3.02 | | Low-grade mineralized material grade 1 | oz/ton | 0.09 | 0.09 | 0.09 | 0.09 | | Waste mined | tons | 35,916 | 24,753 | 108,404 | 106,830 | | Processed mineralized material 2 | tons | 38,000 | — | 43,183 | 11,084 | | Oxide mineralized material sold | tons | 14,696 | 16,059 | 29,041 | 22,710 | | Sulfide mineralized material sold | tons | — | — | 5,183 | — | | Total mineralized material sold | tons | 14,696 | 16,059 | 34,224 | 22,710 | | Ounces of gold sold | oz | 315 | 900 | 315 | 1,344 | | Underground mine development (capital development) | ft | 807 | 888 | 3,071 | 3,194 | | Exploration drilling | ft | 4,923 | 16,144 | 23,413 | 20,944 | | | | | | | | | Financial Statistics | | 2024 | 2023 | 2024 | 2023 | | Mining cost (total mineralized material and waste) | $/ton | 134 | 124 | 129 | 103 | | Processing cost (processed mineralized material) | $/ton | 20 | N/A | 34 | 151 | | Site general and administrative ("G&A") (total mineralized material mined 3 ) | $/ton | 29 | 18 | 30 | 26 | | Royalties | $000s | 358 | 259 | 1,913 | 475 | | Capital expenditure 4 | $000s | 5,949 | 4,636 | 21,233 | 13,711 | | Exploration spending | $000s | 1,651 | 1,777 | 4,072 | 2,184 |
| 1 Low-grade mineralized material extracted as part of the mining process that is below cut-off grade but incrementally economic. | | 2 Processed mineralized material consists of toll treated material and material placed under leach. | | 3 Total mineralized material mined consists of sulfide, oxide, and low-grade mineralized material. | | 4 Capital expenditure based on accrual basis. |
Mining rates and gold production for the quarter and nine months of 2024 were lower than planned due to an increase in ground water ingress into underground working areas, which negatively impacted productivity and development advancement rates. To address the higher water rates, the mine is adding additional pumping capacity, deepening an existing de-watering well and reworking the de-watering system to allow for additional flow capacity in the water treatment facility. Management expects that production and costs will continue to be negatively impacted until these measures are completed, which is expected to occur by the end of the third quarter of 2025.
The Company continues to encounter elevated oxide mineralized material. A significant portion of this mineralized material that was lower grade was deemed suitable for processing via heap leach at the Lone Tree heap leach facility. This material is stockpiled and subsequently transported to Lone Tree for leaching. During the quarter, this material was placed on the leach pad but not placed under leach until late in the quarter and recovery of ounces will take place after the quarter end. This is in part responsible for the lack of ounce production even though the mineralized material mined increased significantly period over period. In addition, during the three months ended, no sulfide mineralized material was processed under the toll milling agreement. As of September 30, 2024 , all of the remaining sulfide mineralized material under the toll milling agreement has been delivered to NGM and the Company anticipates that the sulfide mineralized material will be processed in the fourth quarter.
Subsequent to the quarter end, on October 14, 2024 , the toll milling agreement with NGM expired. The terms of the agreement provide for a good faith renegotiation or extension of the agreement as long as certain conditions are met. The Company is currently engaged with NGM to establish an extension or updated agreement for processing of the i80 refractory material. If the Company is unable to obtain an extension of the Autoclave Toll Milling Agreement in a timely manner (or at all), the Company will be required to seek other arrangements for the processing of refractory material from its Granite Creek mine. For the year 2024, the Company anticipates that approximately 25% of the ounces produced from Granite Creek fall under the Toll Milling Agreement and the Company does not anticipate that percentage will increase materially over the next 12 months.
Capital expenditures for the three and nine months focused mainly on underground development and de-watering. The increased capital period over period is related increased footage as noted in the table above. Furthermore, the water treatment plant contributed to $0.5 million in capital spending for the 9 month period.
During the third quarter, Management began a process to update the technical report and has begun the permitting process for the Granite Creek open pit heap leach project. An updated study is expected in 2025. Permitting is expected to take approximately three years and construction a further 18 months. Management is currently considering construction of heap leach pads instead of heap leach and CIL plants as indicated in the last technical report (2021). Further studies are expected to determine the superior economic route.