Mineros S.A. press release
Mineros Reports Second 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 , Aug. 3, 2023 /CNW/ - Mineros S.A. (TSX: MSA) (MINEROS:CB) (" Mineros " or the " Company ") today reported its financial and operational results for the three and six months ended June 30, 2023 . For further information, please see the Company's unaudited condensed interim financial statements and management's discussion and analysis ("MD&A") filed under Mineros' profile on www.sedar.com .
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Andrés Restrepo, President and CEO of Mineros, commented, "We have had positive results in the second quarter of 2023, mainly due to managing our costs and administrative expenses, that offset a 6% decrease in gold production. During the second quarter of 2023 we continued our exploration campaign at the Porvenir Project in Nicaragua , where the metallurgical drilling campaign is expected to be completed by the third quarter of 2023 and we hope to share additional information in this regard soon."
FINANCIAL AND OPERATING HIGHLIGHTS FOR THE SECOND QUARTER 2023
Gold Production
69,254 ounces of gold produced. A 6% decrease in gold production compared to the same period in 2022 (Q2/22: 74,062 ounces of gold produced).
Cost of Sales, Cash Cost 1 and All-in Sustaining Cost ("AISC") 1
Cost of sales of $99,801 , similar to the same period in 2022 (Q2/22: $99,487 ). Cash Cost per ounce of gold sold 2 of $1,207 (Q2/22: $1,131 ), a 7% increase relative to the same period in 2022. AISC per ounce of gold sold1 of $1,388 (Q2/22: $1,388 ), similar to the AISC per ounce of gold sold during the same period in 2022.
Dividend Payment
$5,213 in dividends paid. A decrease of 34% in dividends paid compared to the same period in 2022 (Q2/22: $7,875 ), explained by an extraordinary dividend of $0.01 per share paid in April of 2022.
| | | 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 (stated in dollars), 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. | | 2 Stated in dollars |
Revenue
Revenue of $138,826 . Revenue increased by 1% compared to the same period in 2022 (Q2/22: $137,286 ).
Profitability
Gross profit up by 3% to $39,025 compared to the same period in 2022 (Q2/22: $37,799 ). Net profit for the period up 10% to $12,552 ( $0.04 /share) compared to the same period in 2022 (Q2/22: $11,399 or $0.04 /share).
Net Debt to Adjusted EBITDA ratio 3
Net Debt to Adjusted EBITDA ratio 2 of (0.02)x as at June 30, 2023 . The Company continues to have a low Net Debt to Adjusted EBITDA ratio, with a 119% decrease compared to 0.11x as at June 30, 2022 .
FINANCIAL AND OPERATING HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2023
Gold Production
129,502 ounces of gold produced. An 8% decrease in gold production compared to the same period in 2022 (six months ended June 30, 2022 : 140,071 ounces of gold produced).
Cost of Sales, Cash Cost and All-in Sustaining Cost ("AISC") 1
Cost of sales of $185,621 , a 3% decrease when compared to the same period in 2022 (six months ended June 30, 2022 : $191,492 ) Cash Cost per ounce of gold sold of $1,183 (six months ended June 30, 2022 : $1,152 ), a 3% increase relative to the same period in 2022, explained by the 8% decrease in gold production. AISC per ounce of gold sold 1 of $1,398 (six months ended June 30, 2022 : $1,383 ), similar to the AISC per ounce of gold sold during the same period in 2022.
Dividend Payment
$10,050 in dividends paid. A 19% decrease in dividends paid compared to the same period in 2022 (six months ended June 30, 2022 : 12,473), explained by an extraordinary dividend of $0.01 per share paid in April of 2022.
| | | 3 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. |
Revenue
Revenue of $256,916 . Revenue decreased by 2% when compared to the same period in 2022 (six months ended June 30, 2022 : $261,936 ).
Profitability
Gross profit increased by 1% to $71,295 compared to the same period in 2022 (six months ended June 30, 2022 : 70,444). Net profit for the period up 28% to $27,956 ( $0.09 /share) compared to the same period in 2022 (Q2/22: $21,871 or $0.07 /share).
Financial and Operating Highlights.
| | Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | | | | | | 2023 | 2022 | $ | % | 2023 | 2022 | # | % | | | Financial | | | | | | | | | | Revenue | 138,826 | 137,286 | 1,540 | 1 % | 256,916 | 261,936 | (5,020) | (2) % | | Cost of sales | (99,801) | (99,487) | 314 | 0 % | (185,621) | (191,492) | (5,871) | (3) % | | Gross Profit | 39,025 | 37,799 | 1,226 | 3 % | 71,295 | 70,444 | 851 | 1 % | | Net Profit For The Period | 12,552 | 11,399 | 1,153 | 10 % | 27,956 | 21,871 | 6,085 | 28 % | | Basic and diluted earnings per share | $0.04 | $0.04 | $0.00 | 10 % | $0.09 | $0.07 | $0.02 | 28 % | | Adjusted EBITDA 1 | 47,965 | 46,710 | 1,255 | 3 % | 88,568 | 87,857 | 711 | 1 % | | Net cash flows generated by operating activities | 30,154 | 17,853 | 12,301 | 69 % | 32,652 | 23,156 | 9,496 | 41 % | | Net free cash flow 1 | 17,116 | 234 | 16,882 | 7215 % | 4,441 | (5,545) | 9,986 | (180) % | | ROCE 1 | 28 % | 22 % | 6 % | 29 % | 28 % | 22 % | 6 % | 29 % | | Net Debt to Adjusted EBITDA ratio 1 | (0.02)x | 0.11x | (0.13x) | (119 %) | (0.02)x | 0.11x | (0.13x) | (119 %) | | Dividends paid | 5,213 | 7,875 | (2,662) | (34) % | 10,050 | 12,473 | (2,423) | (19) % | | | | | | | | | | | | Operating | | | | | | | | | | Average realized price per ounce of gold sold ($/oz) | 1,948 | 1,837 | 111 | 6 % | 1,918 | 1,859 | 59 | 3 % | | Total Gold Produced (oz) | 69,254 | 74,062 | (4,808) | (6) % | 129,502 | 140,071 | (10,569) | (8) % | | Gold sold (oz) | 68,570 | 73,147 | (4,577) | (6) % | 129,263 | 137,684 | (8,421) | (6) % | | Silver sold (oz) | 152,027 | 93,528 | 58,499 | 63 % | 286,696 | 195,001 | 91,695 | 47 % | | Cash Cost per ounce of gold sold ($/oz) 1 | $1,207 | $1,131 | $76 | 7 % | $1,183 | $1,152 | $31 | 3 % | | AISC per ounce of gold sold ($/oz) 1 | $1,388 | $1,388 | $— | 0 % | $1,398 | $1,383 | $16 | 1 % |
| 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 news release. |
Operational Highlights by Material Property.
(All numbers in ounces unless otherwise noted)
| | Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | | | | | | | 2023 | 2022 | ounces | % | 2023 | 2022 | ounces | % | | | | | | | | | | | | Nechí Alluvial Property (Colombia) | 24,648 | 23,394 | 1,254 | 5 % | 42,636 | 42,679 | (43) | — % | | | | | | | | | | | | Hemco Property | 7,517 | 10,808 | (3,291) | (30) % | 17,738 | 19,931 | (2,193) | (11) % | | Artisanal Mining | 24,699 | 23,330 | 1,369 | 6 % | 47,099 | 46,768 | 331 | 1 % | | Nicaragua | 32,216 | 34,138 | (1,922) | (6) % | 64,837 | 66,699 | (1,862) | (3) % | | Gualcamayo Property (Argentina) | 12,390 | 16,530 | (4,140) | (25) % | 22,029 | 30,693 | (8,664) | (28) % | | Total Gold Produced | 69,254 | 74,062 | (4,808) | (6) % | 129,502 | 140,071 | (10,569) | (8) % | | Total Silver Produced | 152,027 | 93,528 | 58,499 | 63 % | 286,696 | 195,001 | 91,695 | 47 % |
For the three months ended June 30, 2023 , gold production was down 6%, with 69,254 ounces of gold produced, compared to 74,062 ounces in the second quarter of 2022, summarized in the table above. The decrease in production relative to the comparative quarter in 2022 is a result of lower production achieved at the Hemco Property due to unscheduled maintenance stoppages at the milling area and lower production at the Gualcamayo Mine as it nears the end of its life of mine.
For the six months ended June 30, 2023 , gold production was down 8%, with 129,502 ounces of gold were produced during the six months ended June 30, 2023 , compared to 140,071 ounces in the same period of 2022. The lower production relative to the comparative period in 2022 is as a result of lower production from the underground mine at the Hemco Property due to unscheduled maintenance stoppages at the milling area during the second quarter and a decrease in production at the Gualcamayo Mine.
CORPORATE HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
New collective agreement in Colombia
On June 8, 2023 , Mineros signed 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 terminated and, where applicable, settled all outstanding obligations under all of its agreements with Royal Road Minerals Limited ("Royal Road").
Mineros and Royal Road have 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, located on the Hemco Property in Nicaragua , and the Guintar-Niverengo-Margaritas ("GNM") Exploration Target, located in the Anzá Province, Colombia .
Royal Road has relinquished its 50% joint venture interest in the 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 in 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 have also annulled a cooperation agreement relating to Mineros' Gualcamayo Project in Argentina .
Subsequent events
Temporary suspension of the main processing plant at the Hemco Property in Nicaragua and Review of 2023 Guidance
On July 31, 2023 , Mineros determined to temporarily suspend operations at its main processing plant, which processes 89% of the material and disposal of tailings at its Hemco Property in Nicaragua . The suspension is precautionary in nature and is designed to allow for the swift completion of the expansion of its detoxification capacity at the tailings facility prior to hurricane season in Nicaragua . This work had been planned for earlier in 2023 but had been delayed by post-pandemic equipment supply constraints. Given the shutdown, the Company has taken this opportunity to perform certain plant maintenance work which was originally scheduled for later this year. During the suspension period, which is estimated to last for approximately 20 days, industrial and artisanal mining activities will continue and the Vesmisa and La Curva plants will also continue to operate. This precautionary suspension is expected to reduce the Hemco Property's output by approximately 5,000 to 10,000 ounces of gold for the month of August. Mineros is currently reviewing its mining plan for the Hemco Property for the second half of 2023 with a view to minimizing the impact, if any, on our production guidance for 2023.
In light of the recent temporary suspension of operations at the main facility at the Hemco Property, the Company's 2023 guidance is currently under review. Mineros will keep the market informed of further developments.
GROWTH AND EXPLORATION PROJECT UPDATES
Porvenir Project, Nicaragua : A total of 4,957 metres of diamond drilling in 36 holes was completed in the second quarter of 2023, achieving 85% of the program, with the objective of providing material for metallurgical test work. The metallurgical drilling campaign is expected to be completed by the third quarter of 2023.
Luna Roja Deposit, Nicaragua : In the second quarter of 2023, the Company has been working to update the geological model for the Luna Roja Deposit and is continuing to interpret the results of its 2022 drilling campaign.
CONFERENCE CALL AND WEBCAST DETAILS
The Company will host a conference call on Friday, August 4, 2023 , at 9:00 am EST ( 8:00 am COT) to discuss the results. The conference call will be in Spanish with simultaneous translation in English.
A live webcast of the conference all will be available at: https://app.webinar.net/almDxXWGv8W
Live webcast requires previous registration, and interested parties are advised to access the webcast approximately ten minutes prior to the start of the call. The webcast will be archived on the Company's website at www.mineros.com.co for approximately 30 days following the call.
Participants may also dial in (charges may apply):
| US: | +1 720-527-5937 | | Colombia | +57 601-485-0334 | | Pin for English: | 10178681# | | Pin for Spanish: | 87924011# |
The list of all local and international dial in numbers can be found at the end of this document or at https://fccdl.in/i/webcastatmedios .
ABOUT MINEROS S.A.
Mineros is a gold mining company headquartered in Medellin, Colombia . The Company has a diversified asset base, with mines in Colombia , Nicaragua and Argentina and a pipeline of development and exploration projects throughout the region.
The board of directors and management of Mineros have extensive experience in mining, corporate development, finance and sustainability. Mineros has a long track record of maximizing shareholder value and delivering solid annual dividends. For almost 50 years Mineros has operated with a focus on safety and sustainability at all its operations.
Mineros' common shares are listed on the Toronto Stock Exchange under the symbol "MSA", and on the Colombia Stock Exchange under the symbol "MINEROS".
The Company has been granted an exemption from the individual voting and majority voting requirements applicable to listed issuers under Toronto Stock Exchange policies, on grounds that compliance with such requirements would constitute a breach of Colombian laws and regulations which require the directors to be elected on the basis of a slate of nominees proposed for election pursuant to an electoral quotient system. For further information, please see the Company's most recent annual information form filed on SEDAR at www.sedar.com .
QUALIFIED PERSON
The scientific and technical information contained in this news release has been reviewed and approved by Luis Fernando Ferreira de Oliveira , MAusIMM CP (Geo), Mineral Resources and Reserves Manager for Mineros S.A., who is a qualified person within the meaning of NI 43-101.
FORWARD-LOOKING STATEMENTS
This news release contains "forward looking information" within the meaning of applicable Canadian securities laws. Forward looking information includes statements that use forward looking terminology such as "may", "could", "would", "will", "should", "intend", "target", "plan", "expect", "budget", "estimate", "forecast", "schedule", "anticipate", "believe", "continue", "potential", "view" or the negative or grammatical variation thereof or other variations thereof or comparable terminology. Such forward looking information includes, without limitation, statements with respect to the Company's outlook for 2023; the suspension of operations at the main plant at the Hemco Property, and potential impacts on the Company's 2023 guidance; estimates for future mineral production and sales; the Company's expectations, strategies and plans for the Material Properties; plans in respect of the wind-down of its open pit and underground oxide gold mining operations at the Gualcamayo Property; the Company's planned exploration, development and production activities; completion of the drilling program; statements regarding the projected exploration and development of the Company's projects; adding or upgrading Mineral Resources and developing new mineral deposits; estimates of future capital and operating costs; the costs and timing of future exploration and development; the timing, receipt and maintenance of necessary approvals, licenses and permits form applicable governments, regulators or third parties; estimates for future prices of gold and other minerals; future financial or operating performance and condition of the Company and its business, operations and properties, including, without limitation, expectations regarding liquidity, capital structure, competitive position and payment of dividends; expectations regarding future currency exchange rates; and any other statement that may predict, forecast, indicate or imply future plans, intentions, levels of activity, results, performance or achievements.
Forward looking information is based upon estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this news release including, without limitation, assumptions about: favourable equity and debt capital markets; the ability to raise any necessary additional capital on reasonable terms to advance the production, development and exploration of the Company's properties and assets; future prices of gold and other metal prices; the timing and results of exploration and drilling programs, and technical and economic studies; the accuracy of any Mineral Reserve and Mineral Resource estimates; the geology of the Material Properties being as described in the applicable technical reports; production costs; the accuracy of budgeted exploration and development costs and expenditures; the timing and complexity of the work required to complete the expansion of the detoxification capacity at the Hemco Property's main processing plant; availability of skilled labour and equipment required to complete the capacity expansion; the orderly wind-down of its open pit and underground oxide gold mining operations at the Gualcamayo Property; the price of other commodities such as fuel; future currency exchange rates and interest rates; operating conditions being favourable such that the Company is able to operate in a safe, efficient and effective manner; political and regulatory stability; the receipt of governmental, regulatory and third party approvals, licenses and permits on favourable terms; obtaining required renewals for existing approvals, licenses and permits on favourable terms; requirements under applicable laws; sustained labour stability; stability in financial and capital goods markets; inflation rates; availability of labour and equipment; positive relations with local groups, including artisanal mining cooperatives in Nicaragua , and the Company's ability to meet its obligations under its agreements with such groups; and satisfying the terms and conditions of the Company's current loan arrangements. While the Company considers these assumptions to be reasonable, the assumptions are inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and uncertainties, contingencies and other factors that could cause actual actions, events, conditions, results, performance or achievements to be materially different from those projected in the forward looking information. Many assumptions are based on factors and events that are not within the control of the Company and there is no assurance they will prove to be correct.