Midland Exploration Inc. press release
GALIANO GOLD REPORTS Q2 PRODUCTION AND FINANCIAL RESULTS AND A 45% INCREASE TO ABORE MINERAL RESERVE ESTIMATE
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VANCOUVER, BC , Aug. 8, 2024 /CNW/ - Galiano Gold Inc. ("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU) is pleased to report its second quarter ("Q2") 2024 production and financial results, as well as a significant increase to the Abore deposit Mineral Reserve estimate (effective June 30, 2024 ). Galiano owns a 90% interest in the Asanko Gold Mine ("AGM") located on the Asankrangwa Gold Belt in the Republic of Ghana , West Africa .
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All financial information contained in this news release is unaudited and reported in United States dollars.
During Q2, the Company produced 26,437 gold ounces at all-in sustaining costs 1 ("AISC") of $1,759 per gold ounce sold ("/oz") and generated $9.2 million of operating cash flows from the AGM. The Company remains debt free with $123.0 million in cash, and the strong operating cash flows are supporting the ramp-up of the AGM as the Company executes its return to hard rock mining operations.
45% increase in Mineral Reserves at Abore to 485,000 ounces
The Company is pleased to report that following a successful infill drilling campaign in 2023 and early 2024, the Proven and Probable Mineral Reserves at the Abore deposit have increased to 11.8 million tonnes ("Mt") at a grade of 1.28 grams per tonne ("g/t") gold, representing an increase of 151,000 ounces (45%) to 485,000 ounces, effective June 30, 2024 , when compared to the report titled "NI 43-101 Technical Report and Feasibility Study for the Asanko Gold Mine, Ashanti Region, Ghana " with an effective date of December 31, 2022 ("2023 Technical Report").
These results, in addition to infill and step out drilling results at other deposits, will be used to update a consolidated AGM Mineral Reserve estimate and an optimized life of mine plan in the fourth quarter of 2024.
Asanko Gold Mine Q2 highlights (100% basis):
Subsequent to closing of the transaction with Gold Fields Ltd., the operational and financial results of the AGM have been consolidated into the Company from March 4, 2024 onwards. To enable a comprehensive understanding of the operational performance at the mine asset level, the following highlights for the AGM are presented on a 100% basis for the entire six months ended June 30, 2024 .
Safety: There were no lost-time injuries ("LTI"), nor total recordable injuries ("TRI"), recorded during Q2. The 12–month rolling LTI and TRI frequency rates as of June 30, 2024 were 0.15 and 0.60 per million employee hours worked, respectively. Production performance: Gold production of 26,437 ounces during Q2 and 56,823 ounces year-to-date. Gold production during Q2 was impacted by challenging ground conditions in the upper portion of the Abore pit and heavy seasonal rainfall in Ghana , which impacted fresh ore delivery to the mill such that a greater proportion of lower grade stockpiles were processed than originally planned. Lower throughput resulting from harder material processed also affected production levels. Milling performance: Achieved mill throughput of 1.3 Mt of ore at a grade of 0.7 g/t during Q2, with metallurgical recovery averaging 82%. Mill throughput during Q2 was 9% lower than the first quarter of 2024 due to processing harder ore both mined from Abore and stockpiled material that was previously mined from Nkran. Engineering and early earthworks for the installation of a permanent secondary crusher continued during the quarter and is expected to be completed in the first half of 2025. This circuit upgrade will maintain plant throughout at 5.8 Mtpa when treating harder ore. Cost performance: Total cash costs 1 of $1,271 /oz and AISC of $1,759 /oz for the three months ended June 30, 2024 . Year-to-date AISC 1 of $1,777 /oz. Revised 2024 guidance: Due to the slower than expected ramp-up in mining, coupled with temporary lower mill throughput, the Company is revising full year production guidance from between 140,000 to 160,000 ounces to between 120,000 and 130,000 ounces. Operating costs are estimated to be in line with previous expectations, however AISC 1 guidance per gold ounce sold for 2024 is being revised from between $1,600 /oz to $1,750 /oz to between $1,975 /oz and $2,075 /oz. This increase is due to lower expected gold production coupled with investments in additional stripping at Abore. Cash flow generation: Generated positive cash flow from operations of $9.2 million , with Free Cash Flow 1 negative at $4.5 million during Q2 due to investments in waste stripping at the Abore deposit. Financial performance: Gold revenue of $63.8 million generated from 27,830 gold ounces sold at an average realized price of $2,292 /oz during Q2. Net income of $13.9 million and Adjusted EBITDA 1 of $19.3 million during Q2.
| _ | | 1 Refer to Non-IFRS Performance Measures |
Galiano Q2 Highlights:
Robust liquidity: The Company ended the quarter with $123.0 million in cash and cash equivalents and no debt. Earnings: Net income of $8.8 million or $0.03 per common share during Q2, which included the consolidation of the AGM's financial results for the three months ended June 30, 2024 . Adjusted net income 1 for Q2 was $7.3 million or $0.03 per common share. Senior management appointment: Appointed Michael Cardinaels as Executive Vice President and Chief Operating Officer ("COO"), effective September 3, 2024 . The appointment of Mr. Cardinaels as the new Executive Vice President and COO is part of the Company's commitment to operational improvements and its overarching strategy to drive growth at the AGM. Mr. Cardinaels brings over two decades of mining sector experience across various commodities, most recently with Perseus Mining Ltd.
"The second quarter of 2024 marked significant progress in advancing mining operations at the Abore deposit, while the Company remained fully funded by operating cash flow," said Matt Badylak , Galiano's President and Chief Executive Officer. "In addition, the 45% increase in Abore's Mineral Reserves highlights the value that we are beginning to realize beyond the 2023 Technical Report, as well as the prospectivity of our tenements. Although 2024 production and costs have been impacted by a slower than expected ramp-up, the growth in Mineral Reserves and resulting investments in stripping during the second quarter will enhance the optimized life of mine plan, resulting in a larger, longer-term net benefit for the Company and its stakeholders.
As we continue to generate positive cash flows from operations and maintain a robust balance sheet, Galiano remains uniquely positioned to execute on its strategy to become a leading mid-tier gold producer.
I am also pleased to be welcoming Michael Cardinaels to the position of Chief Operating Officer at Galiano. Michael has over 20 years of industry experience including significant exposure to mining complex orogenic deposits on the African continent. His technical expertise, energy and enthusiasm will be valued as we continue ramping up production at the AGM."
Asanko Gold Mine – Summary of quarterly operational and financial highlights (100% basis)
Operating and financial results are on a 100% basis for all periods presented to enable comparability with prior quarters.
| Asanko Gold Mine (100% basis) | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | | Mining | | | | | | | Ore mined ('000t) | 467 | 265 | 22 | - | - | | Waste mined ('000t) | 7,427 | 4,877 | 3,415 | - | - | | Total mined ('000t) | 7,894 | 5,142 | 3,437 | - | - | | Strip ratio (W:O) | 15.9 | 18.4 | 155.2 | - | - | | Average gold grade mined (g/t) | 1.0 | 0.9 | 0.7 | - | - | | Mining cost ($/t mined) | 2.98 | 3.63 | 4.30 | - | - | | Ore tonnes trucked ('000 t) | 503 | 566 | 657 | 695 | 729 | | Ore transportation cost ($/t trucked) | 5.71 | 6.79 | 6.54 | 6.63 | 5.88 | | Processing | | | | | | | Ore milled ('000t) | 1,336 | 1,467 | 1,486 | 1,573 | 1,457 | | Average mill head grade (g/t) | 0.7 | 0.8 | 0.8 | 0.8 | 0.8 | | Average recovery rate (%) | 82 | 83 | 84 | 87 | 85 | | Processing cost ($/t milled) | 11.18 | 10.55 | 9.94 | 9.69 | 11.01 | | G&A cost ($/t milled) | 5.13 | 4.74 | 5.55 | 4.16 | 4.68 | | Gold produced (oz) | 26,437 | 30,386 | 31,947 | 35,779 | 33,673 | | Financials, costs and cash flow | | | | | | | Revenue ($m) | 64.0 | 65.6 | 59.5 | 67.8 | 64.1 | | Gold sold (oz) | 27,830 | 31,840 | 30,555 | 35,522 | 32,912 | | Average realized gold price ($/oz) | 2,292 | 2,056 | 1,942 | 1,902 | 1,944 | | Total cash costs 1 ($/oz) | 1,271 | 1,180 | 1,352 | 1,056 | 1,127 | | All-in sustaining costs 1 ($/oz) | 1,759 | 1,793 | 2,065 | 1,445 | 1,374 | | All-in sustaining margin 1 ($/oz) | 533 | 263 | (123) | 457 | 570 | | All-in sustaining margin 1 ($m) | 14.8 | 8.4 | (3.8) | 16.2 | 18.8 | | Income from mine operations ($m) | 23.1 | 23.5 | 8.7 | 23.7 | 24.4 | | Adjusted net income 1 ($m) | 13.9 | 23.5 | 3.7 | 21.3 | 24.4 | | Cash provided by operating activities ($m) | 9.2 | 26.1 | 24.1 | 39.7 | 18.0 | | Free cash flow 1 ($m) | (4.5) | 5.8 | 2.3 | 24.0 | 10.1 |
Asanko Gold Mine – Financial and operational highlights for the three and six months ended June 30, 2024 and 2023 (100% basis)
The following tables present excerpts of the operating and financial results of the AGM on a 100% basis for the three and six months ended June 30, 2024 and 2023, so performance can be compared with the comparative period in the prior quarter.
| | Three months ended June 30, | Six months ended June 30, | | | | (All amounts in 000's of US dollars, unless otherwise stated) | 2024 | 2023 | 2024 | 2023 | | Asanko Gold Mine (100% basis) | | | | | | Financial results | | | | | | Revenue | 63,963 | 64,066 | 129,565 | 129,259 | | Income from mine operations | 23,071 | 24,406 | 46,567 | 49,063 | | Net income | 13,945 | 24,378 | 28,402 | 44,992 | | Adjusted EBITDA 1 | 19,279 | 25,541 | 40,792 | 48,404 | | | | | | | | Cash generated from operating activities | 9,231 | 17,979 | 35,336 | 36,922 | | Free cash flow 1 | (4,509) | 10,113 | 1,304 | 22,072 | | AISC margin ($ per gold ounce sold) 1 | 533 | 570 | 389 | 577 | | Operating results | | | | | | Gold produced (ounces) | 26,437 | 33,673 | 56,823 | 66,351 | | Gold sold (ounces) | 27,830 | 32,912 | 59,670 | 68,086 | | Average realized gold price ($/oz) | 2,292 | 1,944 | 2,166 | 1,896 | | | | | | | | Total cash costs ($ per gold ounce sold) 1 | 1,271 | 1,127 | 1,222 | 1,104 | | AISC ($ per gold ounce sold) 1 | 1,759 | 1,374 | 1,777 | 1,319 |
The AGM produced 26,437 ounces of gold during Q2 2024, as the processing plant achieved milling throughput of 1.3 Mt of ore at a grade of 0.7 g/t with metallurgical recovery averaging 82%. Mill feed for the quarter was sourced primarily from existing stockpiled ore with a blend of mined Abore material. Milling rates during Q2 were impacted by harder ore from Abore and Nkran stockpiles. The Company is in the process of installing a permanent secondary crushing circuit, which is anticipated to maintain plant throughput when treating harder ore at design capacity of 5.8 Mtpa once completed in the first half of 2025. Sold 27,830 ounces of gold in Q2 2024 at an average realized gold price of $2,292 /oz for total revenue of $64.0 million (including $0.2 million of by-product silver revenue), in line with Q2 2023 revenue. Revenue was flat quarter-on-quarter as an 18% increase in realized gold prices relative to Q2 2023 was largely offset by a 15% reduction in sales volumes. Income from mine operations for Q2 2024 totaled $23.1 million , comparable with $24.4 million in Q2 2023. Reported Adjusted EBITDA 1 of $19.3 million in Q2 2024 compared to $25.5 million in Q2 2023. The decrease in Adjusted EBITDA 1 was driven by the decrease in income from mine operations, higher payments made to mining contractors and a $2.9 million realized loss on gold hedging instruments. Total cash costs 1 in Q2 2024 amounted to $1,271 /oz compared to $1,127 /oz in Q2 2023. The increase in total cash costs 1 was primarily driven by lower gold sales volumes, which decreased by 15% in Q2 2024 and had the effect of increasing fixed costs on a per ounce basis. Additionally, operational waste stripping costs at Abore contributed to the higher total cash costs 1 in Q2 2024. AISC 1 for Q2 2024 was $1,759 /oz compared to $1,374 /oz in the comparative period. AISC 1 was higher in the current quarter predominately due to the increase in total cash costs per ounce 1 described above, 15% fewer gold ounces sold and higher capitalized stripping costs at Abore. Additionally, payments to mining services contractors were $146 /oz higher in Q2 2024. The AGM generated $9.2 million of cash flow from operating activities and free cash flow 1 of negative $4.5 million during Q2 2024. This compares to $18.0 million of cash flow from operating activities and free cash flow 1 of $10.1 million during Q2 2023. The decrease in free cash flow 1 was primarily due to investments in waste stripping at the expanded Abore deposit, partly offset by higher realized gold prices during Q2 2024.
Abore Mineral Reserve Estimate as of June 30, 2024
| | Proven | Probable | Proven + Probable | | | | | | | | | Tonnes | Grade | Au Contained | Tonnes | Grade | Au Contained | Tonnes | Grade | Au Contained | | Deposit | (Mt) | (g/t) | (koz) | (Mt) | (g/t) | (koz) | (Mt) | (g/t) | (koz) | | Abore | - | - | - | 11.8 | 1.28 | 485 | 11.8 | 1.28 | 485 |
Notes on Abore Mineral Reserve Estimate:
Mr. Richard Miller , P.Eng., Vice President Technical Services for Galiano Gold Inc., is the Qualified Person responsible for the Abore Mineral Reserve statement. Refer to the Company's news release dated April 16, 2024 for Abore's Mineral Resource Estimate as of March 31, 2024 . Abore Mineral Reserves are reported assuming a gold price of US$1,650 /oz Au. Abore Mineral Reserves are reported at 0.50 g/t Au cut-off. The overall strip ratio (the amount of waste mined for each tonne of ore) is 7.2:1. Processing recovery is 0.10 g/t tails grade and capped at 94.0%. The average mining dilution is calculated to be 6.9%. A 6.8% ore loss has been applied to the Mineral Reserve estimate. The Mineral Reserve is stated as diluted dry metric tonnes. All other Mineral Reserves of the AGM remain as previously stated, except stockpiles which have been restated for depletion. The increase to the Abore Mineral Reserve estimate is not considered a material change to Galiano.
Galiano Gold Inc. – Financial highlights for the three and six months ended June 30, 2024 and 2023
| | Three months ended June 30, | Six months ended June 30, | | | | (All amounts in 000's of US dollars, unless otherwise stated) | 2024 | 2023 | 2024 | 2023 | | Galiano Gold Inc. | | | | | | Revenue | 63,963 | - | 95,658 | - | | Income from mine operations | 25,132 | - | 29,778 | - | | Net income | 8,831 | 11,961 | 4,072 | 20,454 | | Net income per share attributable to common shareholders 1 | 0.03 | 0.05 | 0.02 | 0.09 | | Adjusted net income 1 | 7,264 | 11,961 | 13,757 | 20,454 | | Adjusted net income per share attributable to common shareholders 1 | 0.03 | 0.05 | 0.06 | 0.09 | | Adjusted EBITDA 1 | 17,598 | 9,634 | 21,105 | 16,374 | | | | | | | | Cash and cash equivalents | 123,039 | 55,503 | 123,039 | 55,503 | | Cash generated from (used in) operating activities | 4,463 | (1,377) | 17,491 | (1,920) |
The Company consolidated the financial results of the AGM commencing on March 4, 2024 . As revenue and income from mine operations for the three and six months ended June 30, 2024 relate to the financial results of the AGM, refer to the discussion above on the AGM's financial results for the quarter. The Company reported net income of $8.8 million in Q2 2024 compared to net income of $12.0 million in Q2 2023. The decrease in net earnings during Q2 2024 was due to a $2.1 million increase in share-based compensation expense resulting from an increase in the fair value of cash–settled long–term incentive plan awards linked to the Company's share price, and $1.4 million in accretion expense and fair value adjustments on the deferred and contingent consideration payable to Gold Fields associated with the Company's acquisition of Gold Fields' 45% interest in the AGM. Adjusted EBITDA 1 for Q2 2024 amounted to $17.6 million , compared to $9.6 million in Q2 2023. The increase in Adjusted EBITDA 1 was due to consolidating the financial results of the AGM from March 4, 2024 onwards; whereas, in the prior quarter the Company only recognized its 45% share of the AGM's Adjusted EBITDA 1 . Cash generated from operating activities in Q2 2024 was $4.5 million , compared to cash used in operating activities of $1.4 million in Q2 2023. The increase in cash generated from operating activities in Q2 2024 was driven by the consolidation of the AGM's cash flows effective March 4, 2024 . As of June 30, 2024 , the Company had cash and cash equivalents of $123.0 million and no debt.
| This news release should be read in conjunction with Galiano's Management's Discussion and Analysis and the Unaudited Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2024 and 2023, which are available at www.galianogold.com and filed on SEDAR+. |
1 Non-IFRS Performance Measures The Company has included certain non-IFRS performance measures in this news release. These non-IFRS performance measures do not have any standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Accordingly, these performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Refer to the Non-IFRS Measures section of Galiano's Management's Discussion and Analysis for an explanation of these measures and reconciliations to the Company's and the AGM's reported financial results in accordance with IFRS.
Total Cash Costs per Gold Ounce Management of the Company uses total cash costs per gold ounce sold to monitor the operating performance of the AGM. Total cash costs include the cost of production, adjusted for share-based compensation expense, by-product revenue and production royalties per ounce of gold sold. All-in Sustaining Costs per Gold Ounce and All-in Sustaining Margin The Company has adopted the reporting of "AISC per gold ounce sold" as per the World Gold Council's guidance. AISC include total cash costs, AGM general and administrative expenses, sustaining capital expenditure, sustaining capitalized stripping costs, reclamation cost accretion and lease payments made to and interest expense on the AGM's mining and service lease agreements per ounce of gold sold. All-in sustaining margin is calculated by taking the average realized gold price for a period less that period's AISC. EBITDA and Adjusted EBITDA EBITDA provides an indication of the Company's continuing capacity to generate income from operations before taking into account the Company's financing decisions and costs of amortizing capital assets. Accordingly, EBITDA comprises net income excluding interest expense, interest income, amortization and depletion, and income taxes. Adjusted EBITDA adjusts EBITDA to exclude non-recurring items and to include the Company's interest in the Adjusted EBITDA of the AGM joint venture for the period from January 1, 2024 to March 3, 2024 . Other companies may calculate EBITDA and Adjusted EBITDA differently. Free cash flow The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use free cash flow to evaluate the AGM's performance with respect to its operating cash flow capacity to meet non-discretionary outflows of cash. The presentation of free cash flow is not meant to be a substitute for the cash flow information presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Free cash flow is calculated as cash flows from operating activities of the AGM adjusted for cash flows associated with sustaining and non-sustaining capital expenditures and payments made to mining and service contractors for leases capitalized under IFRS 16. Adjusted net income and adjusted net income per common share The Company has included the non-IFRS performance measures of adjusted net income and adjusted net income per common share. Neither adjusted net income nor adjusted net income per share have any standardized meaning and are therefore unlikely to be comparable to other measures presented by other issuers. Adjusted net income excludes certain non-cash items or non-recurring items from net income or net loss to provide a measure which helps the Company and investors to evaluate the results of the underlying core operations of the Company or the AGM and its ability to generate cash flows and is an important indicator of the strength of the Company's or the AGM's operations and performance of its core business.