Mineros S.A. press release
Mineros Reports Fourth Quarter 2023 Financial and Operational Results
TSX - Toronto Stock Exchange · Gold · Silver · Zinc · Colombia
Canada NewsWire
(all dollar amounts - other than per share amounts - are expressed in thousands of U.S. dollars unless otherwise stated)
MEDELLIN, Colombia , Feb. 15, 2024 /CNW/ - Mineros S.A. (TSX: MSA) (MINEROS: CB) (" Mineros " or the " Company ") today reported its financial and operational results for the three months and year ended December 31, 2023 . For further information, please see the Company's audited consolidated financial statements and management's discussion and analysis filed under its Mineros' profile on www.sedarplus.com .
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Andrés Restrepo, President and CEO of Mineros, commented: "We had a strong operational fourth quarter and demonstrated resilience throughout the year. We were able to meet our 2023 production guidance, overcoming the disruptions we had in March at our Nechí Alluvial Property and in July at our Hemco Property. Additionally, even though the Colombian peso appreciated by approximately 20% against the US Dollar in 2023, we were able to meet our 2023 cost guidance helped by implementing effective cost cutting measures during the year. As we move forward, the Company will continue to focus on being a reliable and profitable operator."
FINANCIAL AND OPERATING HIGHLIGHTS FOR THE FOURTH QUARTER 2023
Gold Production
62,039 ounces of gold produced. A 6% increase in gold production compared to the same period in 2022 (Q4/22: 58,597 ounces of gold produced), explained by higher average gold grade at the Nechí Alluvial Property.
Cost of Sales, Cash Cost 1 and All-in Sustaining Cost ("AISC") 1 from continuing operations
Cost of sales of $82,663 , a 17% increase when compared to the same period in 2022 (Q4/22: $70,677 ). Cash Cost per ounce of gold sold of $1,051 (Q4/22: $993 ), a 6% increase relative to the same period in 2022. AISC per ounce of gold sold of $1,316 (Q4/22: $1,228 ), a 7% increase relative to the AISC per ounce of gold sold during the same period in 2022.
Dividend Payment
$5,228 in dividends paid. An 8% increase in dividends paid compared to the same period in 2022 (Q4/22: $4,862 ).
Revenue
Revenue of $130,427 . Revenue increased by 24% compared to the same period in 2022 (Q4/22: $105,059 ).
Profitability
Gross profit from continuing operations increased by 39% to $47,764 compared to the same period in 2022 (Q4/22: $34,382 ). Net profit for the period from continuing operations up 26% to $22,808 ( $0.08 /share) compared to the same period in 2022 (Q4/22: $18,136 or $0.06 /share). Loss for the period from discontinued operations up (97)% to $1,043 compared to the same period in 2022 (Q4/22: $38,130 ).
Net Debt 2
Net Debt of $(24,316) as at December 31, 2023 , mainly explained by lower loans and other borrowing and a higher cash and cash equivalents balance. The Company continues to have low Net Debt levels, with a 239% decrease compared to $17,517 as at December 31, 2022 .
FINANCIAL AND OPERATING HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2023
Gold Production
219,708 ounces of gold produced. A 2% decrease in gold production compared to the same period in 2022 (Year ended December 31, 2022 : 224,905 ounces of gold produced).
Cost of Sales, Cash Cost and AISC 1
Cost of sales of $301,888 , a 7% increase when compared to the same period in 2022 (Year ended December 31, 2022 : $282,918 ) Cash Cost per ounce of gold sold of $1,090 (Year ended December 31, 2022 : $1,022 ), a 7% increase relative to the same period in 2022, mainly explained by the increase in cost of sales. AISC per ounce of gold sold 1 of $1,299 (Year ended December 31, 2022 : $1,219 ), a 7% increase relative to the AISC per ounce of gold sold during the same period in 2022.
Dividend Payment
$20,519 in dividends paid. An 11% decrease in dividends paid compared to the same period in 2022 (Year ended December 31, 2022 : $22,990 ), explained by an extraordinary dividend of $0.01 per share paid in April of 2022.
Revenue
Revenue of $447,290 . Revenue increased by 8% when compared to the same period in 2022 (Year ended December 31, 2022 : $414,937 ).
Profitability
Gross profit from continuing operations increased by10% , to $145,402 compared to the same period in 2022 (Year ended December 31, 2022 : $132,019 ). Net profit for the period from continuing operations up by 33% to $74,538 ( $0.25 /share) compared to the same period in 2022 (Year ended December 31, 2022 : $56,097 or $0.19 /share). Loss for the period from discontinued operations up by 11%, to $57,324 compared to the same period in 2022 (Year ended December 31, 2022 : $51,610 ).
| _ | | 1 Cash Cost, AISC, Adjusted EBITDA, net free cash flow, Net Debt and average price realized per ounce of gold sold are non-IFRS financial measures, and Cash Cost per ounce of gold sold, AISC per ounce of gold sold and ROCE are non-IFRS ratios, with no standardized meaning under IFRS, and therefore they may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release. | | 2 Cash Cost, AISC, Adjusted EBITDA, net free cash flow, Net Debt and average price realized per ounce of gold sold are non-IFRS financial measures, and Cash Cost per ounce of gold sold, AISC per ounce of gold sold and ROCE are non-IFRS ratios, with no standardized meaning under IFRS, and therefore they may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release. |
Financial and Operating Highlights.
| | Three Months Ended December 31, | Change | Year ended December 31, | Change | | | | | | 2023 | 2022 | $ | % | 2023 | 2022 | # | % | | | Financial | | | | | | | | | | Revenue | 130,427 | 105,059 | 25,368 | 24 % | 447,290 | 414,937 | 32,353 | 8 % | | Cost of sales | (82,663) | (70,677) | 11,986 | 17 % | (301,888) | (282,918) | 18,970 | 7 % | | Gross Profit | 47,764 | 34,382 | 13,382 | 39 % | 145,402 | 132,019 | 13,383 | 10 % | | Profit for the period from continuing operations | 22,808 | 18,136 | 4,672 | 26 % | 74,538 | 56,097 | 18,441 | 33 % | | Basic and diluted earnings per share from continuing operations | $0.08 | $0.06 | $0.02 | 26 % | $0.25 | $0.19 | $0.06 | 33 % | | Loss for the year from discontinued operations | (1,043) | (38,130) | 37,087 | (97) % | (57,324) | (51,610) | (5,714) | 11 % | | Basic and diluted earnings per share from continuing and discontinued operations | $0.07 | $(0.07) | $0.14 | (209) % | $0.06 | $0.01 | $0.04 | 284 % | | Adjusted EBITDA 1 | 53,364 | 40,117 | 13,247 | 33 % | 172,146 | 156,156 | 15,990 | 10 % | | Net cash flows generated by operating activities | 52,932 | 36,602 | 16,330 | 45 % | 89,908 | 82,607 | 7,301 | 9 % | | Net free cash flow 1 | 36,761 | 32,210 | 4,551 | 14 % | 49,202 | 35,611 | 13,591 | 38 % | | ROCE 1 | 30 % | 25 % | 5 % | 21 % | 30 % | 25 % | 5 % | 21 % | | Net Debt 1 | (24,316) | 17,517 | (41,833) | (239) % | (24,316) | 17,517 | (41,833) | (239) % | | Dividends paid | 5,228 | 4,862 | 366 | 8 % | 20,519 | 22,990 | (2,471) | (11) % | | | | | | | | | | | | Operating | | | | | | | | | | Average realized price per ounce of gold sold from continuing operations ($/oz) 1 | 1,975 | 1,751 | 224 | 13 % | 1,937 | 1,800 | 137 | 8 % | | Total Gold Produced from continuing operations (oz) | 62,039 | 58,597 | 3,442 | 6 % | 219,708 | 224,905 | (5,197) | (2) % | | Silver sold (oz) from continuing operations | 198,427 | 88,591 | 109,836 | 124 % | 614,756 | 358,046 | 256,710 | 72 % | | Cash Cost per ounce of gold sold from continuing operations ($/oz) 1 2 | $1,051 | $993 | $58 | 6 % | $1,090 | $1,022 | $68 | 7 % | | AISC per ounce of gold sold from continuing operations ($/oz) 1 2 | $1,316 | $1,228 | $88 | 7 % | $1,299 | $1,219 | $79 | 7 % |
| 1. | Cash Cost, AISC, Adjusted EBITDA, net free cash flow, Net Debt and average realized price per ounce of gold sold, are non-IFRS financial measures, and Cash Cost per ounce of gold sold, AISC per ounce of gold sold and ROCE are non-IFRS ratios, with no standardized meaning under IFRS, and therefore they may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release. | | 2. | In Q4 of 2023, the Company restated AISC and Cash Cost to capture cash outflows related to asset retirement obligations and environmental and rehabilitation costs. For further information and detailed reconciliations of non-IFRS financial measures to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release. |
Operational Highlights by Material Property.
(All numbers in ounces unless otherwise noted)
| | Three Months Ended September 30, | Change | Nine Months EndedSeptember 30, | Change | | | | | | | 2023 | 2022 | ounces | % | 2023 | 2022 | # | % | | | | | | | | | | | | Nechí Alluvial Property (Colombia) | 27,920 | 24,986 | 2,934 | 12 % | 93,757 | 92,385 | 1,372 | 1 % | | | | | | | | | | | | Hemco Property | 9,480 | 9,828 | (348) | (4) % | 32,732 | 40,677 | (7,945) | (20) % | | Artisanal Mining | 24,639 | 23,783 | 856 | 4 % | 93,219 | 91,843 | 1,376 | 1 % | | Nicaragua | 34,119 | 33,611 | 508 | 2 % | 125,951 | 132,520 | (6,569) | (5) % | | Total Gold Produced (oz) from Continuing Operations | 62,039 | 58,597 | 3,442 | 6 % | 219,708 | 224,905 | (5,197) | (2) % | | Gualcamayo Property (Argentina) | — | 13,971 | (13,971) | (100) % | 31,061 | 62,247 | (31,186) | (50) % | | Total Gold Produced (oz) from Discontinued Operations | — | 13,971 | (13,971) | (100) % | 31,061 | 62,247 | (31,186) | (50) % | | Total Gold Produced (oz) | 62,039 | 72,568 | (10,529) | (15) % | 250,769 | 287,152 | (36,383) | (13) % | | Total Silver Produced (oz) | 198,427 | 93,528 | 104,899 | 112 % | 623,976 | 379,392 | 244,584 | 64 % |
For the three months ended December 31, 2023 , gold production from continuing operations increased by 6%, with 62,039 ounces of gold produced, compared to 58,597 ounces in the fourth quarter of 2022, summarized in the table above. The increase in production relative to the comparative quarter in 2022 is explained mainly by higher average gold grade at the Nechí Alluvial Property in Colombia .
For the year ended December 31, 2023 , gold production from continuing operations was down 2%, with 219,708 ounces of gold produced during the year ended December 31, 2023 , compared to 224,905 ounces in the same period of 2022. The lower production relative to the comparative period in 2022 is explained mainly by a two-week suspension of operations at the Hemco Property in Nicaragua during the third quarter.
CORPORATE HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2023
Disposition of Minas Argentinas S.A.
On September 8, 2023 , Mineros announced that it had signed a share purchase and sale agreement with Eris LLC to sell all of the outstanding shares of Mineros' subsidiary, Minas Argentinas S.A. ("MASA"). MASA holds a 100% interest in the Gualcamayo Property in Argentina , (the "Gualcamayo Property"). The transaction was completed on September 21, 2023 . The disposed business, MASA (including its main asset, the Gualcamayo Property), has been presented as a discontinued operation in the financial statements for the year ending December 31, 2023 .
Temporary suspension of the main processing plant at the Hemco Property in Nicaragua
On July 31, 2023 , Mineros suspended operations at the Hemco Plant, its main processing plant at the Hemco Property for two weeks. The Hemco Plant processes 89% of the material and disposal of tailings at the Hemco Property. The suspension was precautionary in nature, to allow for the swift completion of tailings detoxification capacity enhancements at the San José Tailings Dam, the primary tailings processing facility at the Hemco Property, prior to hurricane season in Nicaragua . Mineros resumed full operations at the Hemco Property on August 15, 2023 after making significant enhancements to its tailings detoxification capacity.
New collective agreement in Colombia
On June 8, 2023 , Mineros announced the signature of a collective agreement for operations at the Nechí Alluvial Property in Colombia , covering a two year period, starting May 1, 2023 .
Termination of strategic alliance with Royal Road Minerals Limited
Effective May 29, 2023 , Mineros announced that it terminated and, where applicable, settled all outstanding obligations under all of its agreements with Royal Road Minerals Limited ("Royal Road").
Mineros and Royal Road terminated their strategic alliance agreements for exploration of their respective properties in Nicaragua and Colombia , and related joint ventures in respect of the Caribe Exploration Target, and the Guintar-Niverengo-Margaritas ("GNM") Exploration Target, located in the Anzá Province, Colombia .
Royal Road relinquished its 50% joint venture interest in Caribe Exploration Target to Mineros' subsidiary Hemco Nicaragua S.A. ("Hemco"), which now owns 100% of the Caribe Exploration Target. The 1.25% net smelter returns royalty applicable to the two concessions that host the Luna Roja Deposit, which was granted to Royal Road on May 2021 in connection with Mineros' acquisition of Royal Road's 50% joint venture interest in those concessions, was terminated, and provisions under the related asset purchase agreement in respect of exploration expenditures to be incurred at the Hemco Property have been released. Mineros has also relinquished its 50% joint venture interest in the GNM Exploration Target to Royal Road. Mineros and Royal Road also annulled a cooperation agreement relating to Mineros' Gualcamayo Property in Argentina .
Positive Prefeasibility Study Results for the Porvenir Project - Hemco Property, Nicaragua
On March 16, 2023 , the Company announced a new technical report on the Hemco Property, which included positive prefeasibility study ("PFS") results for its Porvenir Project updated Mineral Resource and Mineral Reserve estimates for other deposits, significantly increasing the mine life of the Hemco Property Mineral Reserves from five to thirteen years. Highlights of the PFS results included:
Mineral Resource and Mineral Reserve estimates for the Porvenir Project, effective December 31, 2022 . 270 kt of proven mineral reserves averaging 2.70 g/t Au, 13.6 g/t Ag and 3.14% Zn, containing 23 koz Au, 118 koz Ag, and 19 Mlb Zn; 5,524 kt of probable mineral reserves averaging 3.09 g/t Au, 10.2 g/t Ag and 2.96% Zn, containing 549 koz Au, 1,804 koz Ag, and 360 Mlb Zn;
Porvenir Project base case economics include an after-tax net present value (using a 10% discount rate) of approximately $42 million , an after-tax internal rate of return ("IRR") of approximately 16% and a payback period of approximately 4 years from start of production in 2027, assuming $1,500 /oz Au, $19.00 /oz Ag, and $1.27 /lb Zn;
The Porvenir Project will add average annual production over its nine-year mine life of 56,700 oz Au per year, along with 112,300 oz Ag per year and 38.5 Mlb Zn per year to the Hemco Property;
After-tax net present value (using a 5% discount rate) of $160 million at $1,650 /oz Au, $20.90 /oz Ag, and $1.40 /lb Zn; increasing to $216 million at $1,800 /oz Au, $22.80 /oz Ag, and $1.52 /lb Zn; and
IRR of 21% and after-tax payback period of 3.5-years from start of production at $1,650 /oz Au, $20.90 /oz Ag, and $1.40 /lb Zn.
A NI 43-101 technical report on the Hemco Property, entitled "Technical Report on the Hemco Property, Región Autónoma de la Costa Caribe Norte, Nicaragua Report for NI 43-101" dated March 24, 2023 , with an effective date of December 31, 2022 , prepared by Sean Horan , P.Geo., Varun Bhundhoo, ing., R. Dennis Bergen , P.Eng. and Brenna J.Y. Scholey , P.Eng., all of SLR Consulting ( Canada ) Ltd., and Gerd Wiatzka , P.Eng. of Arcadis Canada Inc., was filed on SEDAR+ on March 31, 2023 and is available on the Company's SEDAR+ profile at www.sedarplus.com . Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Temporary Suspension of Operations at the Nechí Alluvial Property in Colombia due to Protests
On March 10, 2023 , the Company announced a temporary suspension of operations at its Nechí Alluvial Property due to protests by groups of informal miners not associated with the Company against measures taken by the national government of Colombia . On March 23, 2023 , the Company announced the resumption of all temporarily suspended operations.
Subsequent events
Profit Distribution Proposal to the General Shareholders Assembly for the year ended December 31, 2023
On February 15, 2023 , the Company announced the board of directors' (the "Board") proposal regarding profit distribution, which will be voted on at the General Shareholders Assembly,taking place on March 26, 2024 (the "Meeting").
At the Meeting, shareholders will be asked to consider and approve, with or without variation, the distribution of the Company's profits by way of dividend proposed by the Board, as set out below:
| Profit Distribution Proposal Fiscal year ended December 31, 2023 | | | | | ($) | (COP$) 4 | | Profit for the year | 15,441,821 | 61,023,949,313 | | Minus : Transfer of profits for the year to new projects reserve | 15,441,821 | 61,023,949,313 | | Plus : Release from non-taxable reserves from previous years for payment of non-taxable dividends | 26,976,366 | 106,606,882,786 | | Available for distribution to shareholders: | 26,976,366 | 106,606,882,786 | | | | | | The following distribution is proposed: | | | | Payment of untaxed dividend | 26,976,366 | 106,606,882,786 |
| Notes : | | | 1. | Payment of each dividend installment will be made for all outstanding shares on the applicable payment date to all registered shareholders within a specified ex dividend period. | | 2. | Dividend payments do not include interest payments. | | 3. | Dividend payments will be converted to Colombian pesos, based on the Representative Market Rate (Tasa Representativa del Mercado – TRM) on each payment date. | | 4. | U.S. dollar amounts will be converted to Colombian pesos for informational purposes, based on the average monthly Representative Market Rate (Tasa Representativa del Mercado – TRM) published by the Colombian Superintendence of Finance for the year ended December 31, 2023 of $1.00 = approximately COP$3,951.86. |
Based on the foregoing proposal, a shareholder would be entitled to receive payment of an ordinary dividend in respect of each common share held equal to four installments of $0.01875 ( $0.075 in total), and an extraordinary dividend in respect of each common share held equal to four installments of $0.00375 ( $0.015 in total), for a total quarterly dividend of $0.0225 ( $0.090 total); payable quarterly on April 18 , July 18 , and October 17, 2024 , and January 16, 2025 .
The Board believes that the proposed profit distribution is in the best interest of the shareholders and will be voted on at the Meeting.
GROWTH AND EXPLORATION PROJECT UPDATES
The two key growth and exploration projects the Company is advancing are the Porvenir Project and the Luna Roja Deposit, both located at the Hemco Property.
Porvenir Project, Nicaragua : Mineros finished the 2023 drill campaign achieving approximately 100% of its original plan, totaling 11,088 metres of diamond drilling in 60 holes. The analysis of the metallurgical campaign is ongoing, and the Company expects to receive analytical results, metallurgical test outcomes and also complete the update of the geometallurgical model in the first half of 2024.
The infill drilling campaign is confirming Mineros' view that mineralization extends below the current resource estimate and that mineralization remains open at depth.