Mineros S.A. press release
Mineros Reports Third Quarter 2022 Financial and Operational Results
TSX - Toronto Stock Exchange · Gold · Silver · Zinc · Colombia
Canada NewsWire
(all amounts expressed in U.S. dollars unless otherwise stated)
MEDELLIN, Colombia , Nov. 14, 2022 /CNW/ - Mineros S.A. (TSX: MSA) (CB: MINEROS) (" Mineros " or the " Company ") today reported its financial and operational results for the three and nine months ended September 30, 2022 . For further information please see the Company's condensed interim consolidated financial statements and management's discussion and analysis filed under Mineros' profile on www.sedar.com .
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Andrés Restrepo, President and CEO of Mineros, commented, "The Company has had another strong quarter with respect to operational and financial results and remains on-track to achieve its annual guidance. Yet, net profits were affected by an impairment of assets related to the beneficiation plant that overturned on May 28 and severance provisions in Argentina . In the third quarter of 2022, Mineros produced 74,513 ounces of gold, a 17% 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. The Company has a long track record and continues paying a strong quarterly dividend with a very attractive yield."
FINANCIAL AND OPERATING HIGHLIGHTS FOR THE THIRD QUARTER 2022
Gold Production
74,513 ounces of gold produced. A 17% increase in gold production compared to the same period in 2021 (Q3/21: 63,758 ounces of gold produced). A steady increase in gold production over the last five quarters.
Cash Cost 1 and All-in Sustaining Cost ("AISC") 1
Cash Cost per ounce of gold sold 1 of $1,120 (Q3/21: $1,235 ), representing a 9% decrease relative to the same period in 2021. AISC per ounce of gold sold 1 of $1,338 (Q3/21: $1,476 ), representing a 9% 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
$5.7 million in dividends paid. An increase of 40% in dividends paid compared to the same period in 2021 (Q3/21: $4.0 million ).
Revenue
Revenue of $135.9 million . An increase of 13% compared to the same period in 2021 (Q3/21: $120.2 million ).
Profitability
Net profit for the period down 68% to $2.6 million ( $0.01 /share) compared to the same period in 2021 (Q3/21: $8.1 million ( $0.03 /share)). Gross profit up 27% to $32.4 million compared to the same period in 2021 (Q3/21: $25.4 million ).
Net Debt to Adjusted EBIDTA ratio 2
Net Debt to Adjusted EBIDTA ratio 2 of 0.10x as at September 30, 2022 . The Company has continued to have a low Net Debt to Adjusted EBITDA ratio, with a 53% decrease compared to 0.22x as at September 30, 2021 , following repayment of project acquisition loans.
| _ | | | 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 NINE MONTHS ENDED SEPTEMBER 30, 2022
Gold Production
214,584 ounces of gold produced. A 9% increase in gold production compared to the same period in 2021 (nine months ended September 30/21: 196,634 ounces of gold produced). On-track to achieve 2022 production guidance.
Cash Cost and AISC
Cash Cost per ounce of gold sold of $1,140 (nine months ended September 30/21: $1,162 ), representing a 2% decrease in the Cash Cost per ounce of gold sold relative to the same period in 2021. AISC per ounce of gold sold of $1,367 (nine months ended September 30/21: $1,502 ), representing a 9% decrease in the AISC per ounce of gold sold relative to the same period in 2021. On-track to achieve 2022 cost guidance.
Dividend Payment
$18.1 million in dividends paid. An increase of 33% in dividends paid compared to the same period in 2021 (nine months ended September 30/21: $13.7 million .
Revenue
Revenue of $397.8 million . An increase of 6% compared to the same period of 2021 (nine months ended September 30/21: $374.0 million ).
Table 1. Financial and Operating Highlights.
(All numbers in $000's unless otherwise noted)
| | Three Months Ended September 30, | Change | | Nine Months Ended September 30, | Change | | | | | | 2022 | 2021 | $ | % | | 2022 | 2021 | $ | % | | | Financial | | | | | | | | | | | Revenues | 135,873 | 120,188 | 15,685 | 13 % | | 397,809 | 374,029 | 23,780 | 6 % | | Cost of sales | (103,511) | (94,769) | (8,742) | 9 % | | (295,003) | (275,678) | (19,325) | 7 % | | Gross profit | 32,362 | 25,419 | 6,943 | 27 % | | 102,806 | 98,351 | 4,455 | 5 % | | Net Profit for the period | 2,610 | 8,150 | (5,540) | (68 %) | | 24,481 | 32,327 | (7,846) | (24 %) | | Basic and diluted earnings per share ($) | 0.01 | 0.03 | (0.02) | (67 %) | | 0.08 | 0.12 | (0.04) | (33 %) | | Adjusted EBITDA (1) | 43,126 | 32,359 | 10,767 | 33 % | | 130,983 | 119,254 | 11,729 | 10 % | | Net cash flows generated by operating activities | 22,849 | 35,066 | (12,217) | (35 %) | | 46,005 | 67,697 | (21,692) | (32 %) | | Net Free Cash Flows (1) | 7,752 | 23,727 | (15,975) | (67 %) | | 2,207 | 8,714 | (6,507) | (75 %) | | ROCE (1) | 23 % | 27 % | (4 %) | (13 %) | | 23 % | 27 % | (4 %) | (13 %) | | Net Debt / Adjusted EBITDA (1) | 0.10X | 0.22X | (0.11X) | (53 %) | | 0.10X | 0.22X | (0.11X) | (53 %) | | Dividends Paid | 5,655 | 4,035 | 1,620 | 40 % | | 18,128 | 13,656 | 4,472 | 33 % | | | | | | | | | | | | | Operating | | | | | | | | | | | Average Realized Gold Price (oz) | 1,722 | 1,778 | (56) | (3 %) | | 1,810 | 1,804 | 6 | 0 % | | Gold Produced (oz) | 74,513 | 63,758 | 10,755 | 17 % | | 214,584 | 196,634 | 17,950 | 9 % | | Gold Sold (oz) | 77,745 | 65,319 | 12,426 | 19 % | | 215,429 | 200,837 | 14,592 | 7 % | | Silver Sold (oz) | 90,862 | 115,057 | (24,195) | (21 %) | | 285,863 | 291,603 | (5,740) | (2 %) | | Cash Cost per ounce of gold sold (USD/oz) | 1,120 | 1,235 | (115) | (9 %) | | 1,140 | 1,162 | (22) | (2 %) | | AISC per ounce of gold sold (USD/oz) | 1,338 | 1,476 | (138) | (9 %) | | 1,367 | 1,502 | (135) | (9 %) |
| (1) | The definition and reconciliation of these non-IFRS financial measures and ratios is included in the section on Non-IFRS and Other Financial Measures in this news release. |
Table 2. Operational Highlights by Material Property.
(All numbers in ounces unless otherwise noted)
| | Three Months Ended September 30, | Change | | Nine Months Ended September 30, | Change | | | | | | 2022 | 2021 | ounces | % | | 2022 | 2021 | ounces | % | | | | | | | | | | | | | | Nechí Alluvial Property (Colombia) | 24,720 | 17,085 | 7,635 | 45 % | | 67,399 | 57,605 | 9,794 | 17 % | | | | | | | | | | | | | Hemco Property | 10,918 | 9,949 | 969 | 10 % | | 30,849 | 25,032 | 5,817 | 23 % | | Artisanal Mining | 21,292 | 22,579 | (1,287) | (6 %) | | 68,060 | 69,918 | (1,858) | (3 %) | | Nicaragua | 32,210 | 32,528 | (318) | (1 %) | | 98,909 | 94,950 | 3,959 | 4 % | | Gualcamayo Property (Argentina) | 17,583 | 14,145 | 3,438 | 24 % | | 48,276 | 44,079 | 4,197 | 10 % | | Total Gold Produced (oz) | 74,513 | 63,758 | 10,755 | 17 % | | 214,584 | 196,634 | 17,950 | 9 % | | Total Silver Produced (oz) | 90,862 | 115,057 | (24,195) | (21 %) | | 285,863 | 291,603 | (5,740) | (2 %) |
CORPORATE HIGHLIGHTS FOR THE THIRD QUARTER 2022
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 Nechi 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 actions. These operations are now complete and accident investigations by both the relevant Colombian authorities and independent investigators hired by the Company are underway.
After a thorough review, as of September 30, 2022 , management had not found a way to recover, repair or perform any type of rescue or maneuver to refloat the Llanuras Plant, resulting in the recognition by the Company of a $4.8 million impairment of asset. Mineros has filed a claim with its insurers in respect of the damage to the Llanuras Plant. The Company has adjusted its production plan to compensate for the loss of the Llanuras Plant, and accordingly does not expect any negative impact on its ability to meet its 2022 production or cost guidance for the Nechí Alluvial Property.
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 seventeen years of professional experience, of which the last fourteen 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 (the "Canadian IPO") and in the concurrent public offering in Colombia in November 2021 (the "Concurrent Colombian Public Offering"). Ms. Ríos succeeds Eduardo Flores Zelaya .
Workforce reduction in Argentina
On September 9, 2022 , Mineros announced that over the next six months, it will downsize 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 expects to incur costs of between $3.0 million and $5.0 million in connection with the workforce reduction, but does not expect such costs to impact its ability to meet its previously-disclosed 2022 production and cost guidance for the Gualcamayo Property. As of September 30, 2022 , a severance provision in the amount of $3.0 million was reported in connection with the downsizing of operations at the Gualcamayo Property.
Subsequent Events
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, OFAC issued General License No. 4, authorizing transactions ordinarily incident and necessary to wind down any transaction involving the DGM through November 23, 2022 .
Also on October 24, 2022 , 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. Although EO 14088 specifically mentions the gold sector, as at the date of this document, no entity or person, other than the DGM and one official of the Government of Nicaragua , has been designated by OFAC 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 document, 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. ("Yamana"), and their respective affiliates (the "La Pepa Option Agreement") 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 PROJECT UPDATES
Porvenir Project, Nicaragua : Ongoing studies are being completed to assess processing and mining scenarios for the Porvenir Project. The Company is on track of complete a pre-feasibility study in the fourth quarter of 2022.
Luna Roja Deposit, Nicaragua: Mineral Resources for the Luna Roja Deposit are planned to be updated as at December 31, 2022 . The 3,000-metre diamond drill campaign started in October and is planned to be completed by December 2022 .
Gualcamayo Property Expansion, Argentina: In the third quarter of 2022 a total of 19,856 metres in 111 holes were drilled, 2,856 metres over the original drilling plan. The Company decided to cover broader areas of production with the same drilling budget by drilling more meters of Reverse Circulation, re-balancing its original drilling plan. The drilling campaign is progressing despite laboratory delays as a result of recent increased global demand for assay services.
Mineros reviewed its original greenfield exploration program on account of limited availability of drilling equipment in Argentina and there is no further drilling planned in this area in 2022.
Deep Carbonates Project, Argentina : Mineros reviewed its original 7,750 meter drilling plan as a consequence of general difficulties with deep drilling and limited availability of drilling equipment in the region. The Company plans to complete a total of 5,300 meters of diamond drilling focused on expanding the current mineral resources at the Rodado deposit. Metallurgical test work to support advancement of the Deep Carbonates Project is underway. The Company is still evaluating the test work to make a determination as to whether it will move forward with a preliminary economic assessment ("PEA") in respect of the Deep Carbonates Project.
La Pepa Project, Chile : The Company is focused on developing and expanding the Cavancha deposit and greenfield exploration is focused on new discoveries on the property with different styles of mineralization related to veins around the main Cavancha deposit.
CONFERENCE CALL AND WEBCAST DETAILS
The Company will host a conference call on Wednesday November 16, 2022 , at 9:00 am ET ( 8:00 am COT) to discuss the results. The conference call will be in Spanish with simultaneous translation in English.
Participant conference call dial in:
| Canada Toll Free: | 1 (866) 455-3403 | | US Toll Free: | 1 (888) 374-5140 | | Pin for English: | 79518832# | | Pin for Spanish: | 30314745# |
The list of all local and international dial in numbers can be found at the end of this document. A live webcast of the conference all will be available at: https://onlinexperiences.com/Launch/QReg/ShowUUID=40919513-9F98-4281-8900-5868250DB119&LangLocaleID=1034
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.
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 Jorge Aceituno , a Registered Member of the Chilean Mining Commission and the Planning Manager, Resources and Reserves for Mineros and a qualified person within the meaning of National Instrument 43-101 – _Standards of Disclosure for Mineral Projects _("NI 43-101").
FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking information" within the meaning of applicable 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 2022; timing, completion and results of a pre-feasibility study on the Porvenir Project; timing for the completion of a PEA on the La Pepa Project; mineral reserve and mineral resource estimates; the Company's planned exploration, development and production activities; statements regarding the projected exploration and development of the Company's growth projects, including the Porvenir Project, Deep Carbonates Project, and the La Pepa Project; timing, completion and results of mineral resource estimates and mining studies; estimates of future capital and operating costs; future financial or operating performance and condition of the Company and its business, operations and properties; 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.