Mineros S.A. press release
Mineros Reports Fourth Quarter of 2022 Financial and Operational Results, Announces 2023 Guidance and Provides Update on Gualcamayo Property
TSX - Toronto Stock Exchange · Gold · Silver · Zinc · Colombia
Canada NewsWire
(all amounts expressed in thousands of U.S. dollars unless otherwise stated)
MEDELLIN, COLOMBIA , Feb. 20, 2023 /CNW/ - Mineros S.A. (TSX: MSA) (CB: MINEROS) (" Mineros " or the " Company ") today reported its financial and operational results for the three months and year ended December 31, 2022. For further information, please see the Company's condensed consolidated financial statements and management's discussion and analysis filed under Mineros' SEDAR profile on www.sedar.com .
[](https://mma.prnewswire.com/media/2005503/Mineros_S_AMineros_Reports_Fourth_Quarter_of_2022_Financial_an.html)
Andrés Restrepo, President and CEO of Mineros, commented, "I am pleased to report that the Company has had another strong quarter with respect to operational results, exceeding the higher end of the production guidance range. In the fourth quarter of 2022, Mineros produced 72,568 ounces of gold, an 11% increase from the same quarter in 2021. Along with increased production, the Company has seen reductions in both the all-in sustaining cost per ounce of gold sold and the cash cost per ounce of gold sold compared to the same period in 2021. Net profit for the year was mainly lower as a result of the $36,542 impairment of the Gualcamayo Property."
FINANCIAL AND OPERATING HIGHLIGHTS FOR THE FOURTH QUARTER 2022
Gold Production
72,568 ounces of gold produced. An 11% increase in gold production compared to the same period in 2021 (Q4/21: 65,133 ounces of gold produced).
Cash Cost 1 and All-in Sustaining Cost ("AISC") 1
Cash Cost per ounce of gold sold 1 of US$1,073 (Q4/21: US$1,227 ), representing a 13% decrease relative to the same period in 2021. AISC per ounce of gold sold 1 of US$1,359 (Q4/21: US$1,463 ), representing a 7% decrease in the AISC per ounce of gold sold relative to the same period in 2021.
| | | 1 Cash Cost, AISC, Adjusted EBITDA, net free cash flow 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, ROCE and Net Debt to Adjusted EBITDA ratio 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. | | |
Dividend Payment
$4,862 in dividends paid. An increase of 21% in dividends paid compared to the same period in 2021 (Q4/21: $4,014 ).
Revenue
Revenue of $131,192 . An increase of 7% compared to the same period in 2021 (Q4/21: $122,218 ).
Profitability
Gross profit increased by 44% to $38,294 compared to the same period in 2021 (Q4/21: $26,612 ). Net profit for the period down 281% to $(19,994) ( US$(0.07) /share) compared to the same period in 2021 (Q4/21: $11,060 ( US$0.04 /share)), explained by the impairment of the Gualcamayo Property ($36,542) .
Net Debt to Adjusted EBITDA ratio 2
Net Debt to Adjusted EBITDA ratio 2 of (0.02)x as at December 31, 2022 . The Company has continued to have a low Net Debt to Adjusted EBITDA ratio, even with a 70% increase compared to (0.05)x as at December 31, 2021 .
| | | 2 Cash Cost, AISC, Adjusted EBITDA, net free cash flow 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, ROCE and Net Debt to Adjusted EBITDA ratio 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 FOR THE YEAR ENDED DECEMBER 31, 2022
Gold Production
287,152 ounces of gold produced. A 10% increase in gold production compared to the same period in 2021 (FY/21: 261,767 ounces of gold produced). Production was 2,152 ounces of gold above the upper limit of 2022 guidance.
Cash Cost and AISC
Cash Cost per ounce of gold sold of $1,124 (FY/21: $1,178 ), representing a 5% decrease in the Cash Cost per ounce of gold sold relative to 2021. AISC per ounce of gold sold of $1,365 (FY/21: $1,492 ), representing a 9% decrease in the AISC per ounce of gold sold relative to 2021. Cash Cost and AISC per ounce of gold were within the range of 2022 cost guidance.
Dividend Payment
$22,990 in dividends paid. An increase of 30% in dividends paid compared to 2021 (FY/21: $17,670 ).
Revenue
Revenue of $529,001 . An increase of 7% compared to 2021 (FY/21: $496,247 ).
Financial and Operating Highlights.
(All numbers in $000's unless otherwise noted)
| | Three Months Ended December 31, | Change | Year ended December 31, | Change | | | | | | 2022 | 2021 | $ | % | 2022 | 2021 | $ | % | | | Financial | | | | | | | | | | Revenue | 131,192 | 122,218 | 8,974 | 7 % | 529,001 | 496,247 | 32,754 | 7 % | | Gross Profit | 38,294 | 26,612 | 11,682 | 44 % | 141,100 | 124,963 | 16,137 | 13 % | | Net Profit For The Year | (19,994) | 11,060 | (31,054) | (281) % | 4,487 | 43,387 | (38,900) | (90 %) | | Basic and diluted earnings per share | $(0.07) | $0.04 | $(0.10) | (281) % | $0.01 | $0.16 | $(0.15) | (91 %) | | Adjusted EBITDA (1) | 45,987 | 35,449 | 10,538 | 30 % | 176,969 | 154,703 | 22,266 | 14 % | | Net cash flows generated by operating activities | 36,602 | 19,643 | 16,959 | 86 % | 82,607 | 87,340 | (4,733) | (5 %) | | Net free cash flow (1) | 20,006 | 8,332 | 11,674 | 140 % | 22,213 | 17,046 | 5,167 | 30 % | | ROCE (1) | 26 % | 24 % | 2 % | 9 % | 26 % | 24 % | 3 % | 11 % | | Net Debt to Adjusted EBITDA ratio (1) | (0.02)x | (0.05)x | 0.04x | (70 %) | (0.02)x | (0.05)x | 0.04x | (70 %) | | Dividends paid | (4,862) | (4,014) | 848 | 21 % | (22,990) | (17,670) | 5,320 | 30 % | | | | | | | | | | | | Operating | | | | | | | | | | Average realized price per ounce of gold sold ($/oz) | 1,780 | 1,802 | (22) | (1 %) | 1,802 | 1,803 | (1) | 0 % | | Total Gold Produced (oz) | 72,568 | 65,133 | 7,435 | 11 % | 287,152 | 261,767 | 25,385 | 10 % | | Gold sold (oz) | 72,257 | 64,969 | 7,288 | 11 % | 287,686 | 265,806 | 21,880 | 8 % | | Silver sold (oz) | 93,528 | 108,959 | (15,431) | (14 %) | 379,392 | 400,562 | (21,170) | (5) % | | Cash Cost per ounce of gold sold ($/oz) 1 | $1,073 | $1,227 | $(154) | (13 %) | $1,124 | $1,178 | $(54) | (5 %) | | AISC per ounce of gold sold ($/oz) 1 | $1,359 | $1,463 | $(104) | (7 %) | $1,365 | $1,492 | $(127) | (9 %) |
| 1. | Average realized price per ounce of gold sold, Adjusted EBITDA, and net free cash flow are Non-IFRS financial measures, and ROCE and Net Debt to Adjusted EBITDA ratio are Non-IFRS ratios, with no standardized meaning under IFRS, and therefore may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations to the most directly comparable IFRS measures, see Non-IFRS And Other Financial Measures in this press release. | | | |
Operational Highlights by Material Property.
(All numbers in ounces unless otherwise noted)
| | Three Months Ended December 31, | Change | | Year ended December 31, | Change | | | | | | | 2022 | 2021 | ounces | % | | 2022 | 2021 | ounces | % | | | | | | | | | | | | | Nechí Alluvial Property (Colombia) | 24,986 | 15,524 | 9,462 | 61 % | | 92,385 | 73,129 | 19,256 | 26 % | | | | | | | | | | | | | Hemco Property | 9,828 | 5,885 | 3,943 | 67 % | | 40,677 | 30,917 | 9,760 | 32 % | | Artisanal Mining | 23,783 | 26,316 | (2,533) | (10 %) | | 91,843 | 96,234 | (4,391) | (5 %) | | Nicaragua | 33,611 | 32,201 | 1,410 | 4 % | | 132,520 | 127,151 | 5,369 | 4 % | | Gualcamayo Property (Argentina) | 13,971 | 17,408 | (3,437) | (20) % | | 62,247 | 61,487 | 760 | 1 % | | Total Gold Produced (oz) | 72,568 | 65,133 | 7,435 | 11 % | | 287,152 | 261,767 | 25,385 | 10 % | | Total Silver Produced (oz) | 93,528 | 108,959 | (15,431) | (14 %) | | 379,392 | 400,562 | (21,170) | (5) % |
Annual production of 92,385 ounces of gold from the Nechí Alluvial Property in Colombia was slightly above 2022 guidance and 26% above 2021 production. The increase in production in 2022 relative to the previous year is a result of higher operational efficiencies, the receipt of environmental permits that were delayed in 2021, and additional gold production from our artisanal mining formalization program.
In Nicaragua , total combined annual production of 132,520 ounces of gold also exceeded our 2022 guidance and was 4% higher than 2021 annual production. Gold production from the Panama and Pioneer mines increased significantly after the resolution of supply chain constraints during 2021.
Annual production of 62,247 ounces of gold from the Gualcamayo Property in Argentina was near the midpoint of guidance and 1% higher than in 2021.
CORPORATE HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2022
Impairment of asset at the Gualcamayo Property
The Company recorded an impairment charge on non-current assets of $36,542 (2021: $13,586 ) in respect of the Gualcamayo Mine. The Company performed a review for indicators of impairment at each of the cash generating units ("CGUs") and evaluated key assumptions such as significant reviews to the mining plan including current estimates of recoverable mineral reserves and resources, recent operating results, future expected production based on the reserves and appropriate discount rates, which led to an indicator for impairment of the Gualcamayo Mine. This impairment charge does not affect the cash position of the Company.
Luna Roja Deposit initial Mineral Resource estimate
On July 7, 2022 , the Company announced an initial Mineral Resource estimate for the Luna Roja Deposit, which included 1.164 million tonnes of Indicated Mineral Resources averaging 2.46 grams of gold per tonne ("g/t Au"), for approximately 92,000 ounces of gold and 0.504 million tonnes of Inferred Mineral Resources averaging 2.31 g/t Au, for approximately 37,000 ounces of gold. The initial Mineral Resource estimate assumes both open pit and underground mining and extends from surface to a depth of 200 metres. See the Company's July 7, 2022 press release entitled, "Mineros Announces Initial Mineral Resource Estimate for the Luna Roja Deposit, Nicaragua ".
Overturning of Floating Beneficiation Plant at Nechí Alluvial Property
On May 28, 2022 , a storm with unusually heavy rains and strong winds hit the area where the Nechí Alluvial Property is located and overturned the Llanuras Plant, a floating beneficiation plant connected to the Llanuras suction dredge. Immediately following the accident, the Company's emergency protocols were activated, which included a rescue operation followed by a coordinated search and subsequent recovery operation. Investigations into this incident by the relevant Colombian authorities are mostly in their final stage but the Company has not yet received the final results of these investigations. Investigations by independent investigators hired by the Company have concluded without any material findings and the Company has made some incremental adjustments to continue enhancing security at its operations.
Notwithstanding that the Company was not able to recover or repair the Llanuras Plant and an impairment was recognized for $4,822 as of December 31, 2022 , the Company has been able to adjust its production plan to compensate for the lost production resulting from the incident.
Appointment of Vice President, Nicaragua
On July 11, 2022 , Mineros announced the appointment of Mr. Luis Villa as Vice President, Nicaragua , effective as of October 1, 2022 . Mr. Villa has been with the Company and its subsidiaries for 16 years, most recently in the position of Manager of Projects and Supply Chain for Mineros Alluvial S.A.S. BIC . Mr. Villa succeeds Mr. Carlos Mario Gomez , who retired effective September 30, 2022 , following 14 years of service with the Company.
Appointment of Vice President, Business Development and Strategy
On August 26, 2022 , Mineros announced the appointment of Ms. Ana María Ríos as Vice President, Business Development and Strategy, effective as of October 1, 2022 . Ms. Ríos has 17 years of professional experience, of which the last 14 have been at Mineros, most recently as Corporate Finance Manager, where she played a strategic role in Mineros' listing on the Toronto Stock Exchange and initial public offering in Canada and in the concurrent public offering in Colombia in November 2021 . Ms. Ríos succeeded Eduardo Flores Zelaya .
Workforce reduction in Argentina
On September 9, 2022 , Mineros announced that over the next six months, the Company would start downsizing its operations at its Gualcamayo Property, reducing its workforce in Argentina by up to 30%, as a result of the natural depletion of the deposit. The Company incurred costs of $3.0 million in connection with the workforce reduction, which did not impact its ability to meet its previously-disclosed 2022 production and cost guidance for the Gualcamayo Property.
OFAC Sanctions Imposed on General Directorate of Mines of Nicaragua
On October 24, 2022 , the United States Department of the Treasury's Office of Foreign Assets Controls ("OFAC") imposed economic sanctions on General Directorate of Mines of Nicaragua ("DGM"), a subordinate office within the Nicaraguan Ministry of Energy and Mines, pursuant to Executive Order ("EO") 13851 of the U.S. President. As such, all properties and interests in property of the DGM are now blocked, and all transactions by U.S. persons or transiting the U.S. that involves blocked property are prohibited. All property or interest in property of any entity that is owned, directly or indirectly, 50% or more by the DGM are also blocked. Concurrently, the U.S. President also issued EO 14088 (together with EO 13851, the "Nicaragua Sanctions Measures"), which authorizes the U.S. government to promptly apply further sanctions to various sectors of the Nicaraguan economy such as the gold sector. As of the date of this press release, OFAC has designated the state-run gold mining company Empressa Nicaraguense de Minas (ENIMINAS), the Nicaraguan National Police Force, the DGM and various officials of the Government of Nicaragua under the Nicaragua Sanctions Measures.
The Company remains committed to complying with applicable legal and regulatory requirements, including sanctions, and is evaluating the actual and potential impacts of the U.S. sanctions on its current and planned business and operations in coordination with its advisors. As at the date of this press release, U.S. sanctions measures adopted on October 24, 2022 have not resulted in any material impacts on its operations in Nicaragua , and the Company is continuing to evaluate their potential impact on its commercial relationships.
Election Not To Exercise Second Option at La Pepa Project
On October 25, 2022 , the Company determined not to exercise its second option under the agreement executed on December 14, 2018 , and effective as of July 2, 2019 , between the Company, Yamana Gold Inc., and their respective affiliates to earn an additional 31% interest in the La Pepa Project. As a result, the Company holds a 20% interest in the La Pepa Project and has ceased to be the operator of the project. Plans for further exploration of the La Pepa Project moving forward remain subject to discussion and have not been finalized at this time.
GROWTH AND EXPLORATION PROJECT UPDATES
The Company's exploration and growth is focused on the replacement and expansion of Mineral Resources and Mineral Reserves by completing further work at or near our operating mines, at our growth projects and at early-stage exploration targets on our under-explored property interests. We are achieving our goals through systematic exploration programs, which include surface mapping and sampling, geochemical data collection surveys, geophysical surveys and drilling.
A core component of the business strategy of the Company is to explore new targets and develop existing deposits at or near the operating mines or on third party properties that have been optioned by Mineros, with the objective of increasing Mineral Resources and Mineral Reserves and advancing promising deposits towards development.
Three key growth and exploration projects the Company is advancing are:
| a. | The Porvenir Project at the Hemco Property in Nicaragua; | | b. | The Luna Roja Deposit, forming part of the Hemco Property in Nicaragua; and | | c. | The Deep Carbonates Project at the Gualcamayo Property in Argentina. | | | |
Through two strategic alliance agreements, the Company is collaborating with Royal Road to actively explore (i) in Nicaragua , subject to an alliance agreement between Hemco Nicaragua S.A., a direct subsidiary of Mineros and Royal Road (the "Royal Road Nicaragua Alliance Agreement"), and (ii) in Colombia , subject to an alliance agreement between the Company, Royal Road, and its Colombian affiliate (the "Royal Road Colombia Alliance Agreement") and Royal Road's GNM Exploration Target.
As at December 31, 2022 , exploration activities under the Royal Road Colombia Alliance Agreement were temporarily suspended.
Porvenir Project, Nicaragua : Ongoing studies are being completed to assess processing and mining scenarios for the Porvenir Project. The Company will complete its pre-feasibility study in the first quarter of 2023. A 6,000 metre diamond drilling campaign is planned for 2023 with the objective of providing material for metallurgical test work.
Luna Roja Deposit, Nicaragua : During 2022, Mineros completed 96% of the planned drilling campaign, totaling 2,883 metres of diamond drilling in 20 holes. For 2023, the Company has planned a 5,000 metre diamond drill campaign, where 2,500 metres will be focused on expanding the main deposit and 2,500 metres will be directed to evaluate unexplored areas near the deposit.
Deep Carbonates Project, Argentina : During 2022, the Company concluded 92% of the original drilling plan, as a consequence of general difficulties with deep drilling, totaling 4,908 metres of diamond drilling in 10 holes (111 metres of diamond drilling in 1 hole in the fourth quarter of 2022). This drilling program was focused on expanding the current Mineral Resources at the Rodado deposit. The Company is expecting to update the current DCP Mineral Resources as at December 31, 2022 , but is not planning additional drilling at DCP for 2023.
2023 GUIDANCE
The Company announces 2023 production guidance of 264,000 - 292,000 ounces of gold, an increase of between 0% and 3% from 2022 production as set out in the following table.
2023 Production and Cost Guidance
| | | Actual | Guidance | | | | | | | 2022 | 2022 | 2023 | Change | | | Colombia (Nechí Alluvial Property) | | | | | | | | Gold production | oz | 92,385 | 82,000 - 92,000 | 84,000 - 94,000 | 2,000 - 2,000 | 2% - 3% | | Cash Cost per ounce of gold sold | $/oz | 944 | 910 - 1,010 | 1,010 - 1,110 | 100 - 100 | 10% - 11% | | AISC per ounce of gold sold | $/oz | 1,059 | 1,100 -1,200 | 1,170 - 1,280 | 70 - 80 | 6% - 7% | | Nicaragua (Hemco Property & Artisanal) | | | | | | | | Hemco Property production | oz | 40,677 | 34,000 - 37,000 | 35,000 - 37,800 | 800 - 1,000 | 2% - 3% | | Artisanal production | oz | 91,843 | 87,000 - 90,000 | 90,000 - 97,200 | 3,000 - 7,200 | 3% - 8% | | Total gold production | oz | 132,520 | 121,000 - 128,000 | 125,000 - 135,000 | 4,000 - 7,000 | 3% - 5% | | Cash Cost per ounce of gold sold | $/oz | 1,161 | 1,080 - 1,180 | 1,170 - 1,250 | 70 - 90 | 6% - 8% | | AISC per ounce of gold sold | $/oz | 1,323 | 1,210 - 1,310 | 1,350 - 1,430 | 120 - 140 | 9% - 12% | | Argentina (Gualcamayo Property) | | | | | | | | Gold production | oz | 62,247 | 59,000 - 66,000 | 55,000 - 63,000 | (3,000 - 4,000) | (5% - 7%) | | Cash Cost per ounce of gold sold | $/oz | 1,444 | 1,450 - 1,550 | 1,530 - 1,630 | 80 - 80 | 5% - 6% | | AISC per ounce of gold sold | $/oz | 1,843 | 1,890 - 1,990 | 1,840 - 1,940 | 50 - 50 | 2% - 3% | | Consolidated | | | | | | | | Gold production | oz | 287,152 | 262,000 - 285,000 | 264,000 - 292,000 | 2,000 - 7,000 | 1% - 3% | | Cash Cost per ounce of gold sold | $/oz | 1,124 | 1,090 - 1,180 | 1,160 - 1,250 | 70 - 70 | 6% - 6% | | AISC per ounce of gold sold | $/oz | 1,365 | 1,350 - 1,450 | 1,400 - 1,490 | 50 - 50 | 3% - 4% |