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Galiano Gold reports Q3 2020 results - PR Newswire

Friday, 6 November 2020

VANCOUVER, BC, Nov. 6, 2020 /PRNewswire/ - Galiano Gold Inc. ("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU) (formerly Asanko Gold Inc.) reports third quarter ("Q3") 2020 operating and financial results for the Asanko Gold Mine ("AGM"), located in Ghana, West Africa. The AGM is a 50:50 joint venture ("JV") with Gold Fields Ltd (JSE,NYSE: GFI), which is managed and operated by Galiano. 

Q3 2020 Asanko Gold Mine Highlights (100% basis)

Q3 2020 Quarterly Highlights for Galiano Gold Inc.

"Coming into the second half of 2020 with very strong production and all-in sustaining cost performance, we expected production to decrease and unit costs to increase in the second half as the mine shifted to a lower grade production mix after the depletion of Nkran Cut 2 late in Q2," said Greg McCunn, Chief Executive Officer. "For the balance of 2020, ore will be sourced from the Esaase and Akwasiso pits, augmented with run of mine stockpiles. This quarter was an investment quarter where the Esaase and Akwasiso pits were developed and optimised for sustainable ore production in Q4 and beyond which put pressure on all-in sustaining costs. With the continued strong gold price environment, the mine generated cash from operations in excess of $18 million allowing it to fund pit development as well as its ongoing exploration programs.

"The focus on exploration in Q3 was delineating and expanding upon known mineralization at the highly prospective Miradani targets and to confirm and improve confidence in the Mineral Reserve Estimate for the third phase of mining at Nkran and to test the extent of mineralization below the proposed Cut 3 pit shell."

Asanko Gold Mine - Summary of Q3 2020 Operational and Financial Results (100%)

AGM (100% basis before any impairment adjustments) Q3 2020 Q2 2020 Q3 2019
Ore mined ('000t) 958 1,361 1,105
Waste mined ('000t) 11,321 8,128 6,372
Total mined ('000t) 12,279 9,489 7,477
Strip ratio (W:O) 11.8 6.0 5.8
Average gold grade mined (g/t) 1.4 1.4 1.5
Mining cost ($/t mined) 3.13 3.59 4.48
Ore milled ('000t) 1,467 1,638 1,439
Average mill head grade (g/t) 1.1 1.4 1.4
Average recovery rate (%) 93 94 94
Processing cost ($/t treated) 10.80 9.77 10.42
Gold production (oz) 48,974 69,026 62,440
Gold sales (oz) 53,975 61,357 63,009
Average realized gold price ($/oz) 1,861 1,651 1,443
Operating cash costs1 ($/oz) 1,150 725 799
Total cash costs1 ($/oz) 1,244 807 872
All-in sustaining costs1 ($/oz) 1,488 1,067 1,179
All-in sustaining margin1 ($/oz) 373 584 264
All-in sustaining margin1 () 20.1 35.8 16.6
Revenue () 100.7 101.5 91.2
Income from mine operations () 17.4 35.9 11.2
Cash provided by operating activities 18.5 48.8 45.6

Galiano Gold Inc. – Summary Q3 2020 Financial Results

Consolidated Q3 2020 Q2 2020 Q3 2019
Net income (loss) for the period () 3.2 14.7 (147.5)
Net income (loss) per share $0.01 $0.07 $(0.65)
Adjusted EBITDA1 () 6.5 18.5 9.4

2020 Outlook

In 2020, the AGM is on track to deliver on its guidance with gold production of approximately 245,000 ounces and AISC1 of approximately $1,150 per ounce which slightly exceeds the upper end of the AISC1 guidance of $1,000 to $1,100/oz as a result of increased cost pressures (as discussed below).

AISC1 includes budgeted sustaining capital expenditures of $11.0 million (spend to date: $11.5 million), primarily for a planned tailings storage facility lift of $7.0 million (spend to date $9.5 million). Year-to-date AISC1 performance remained in line with the Company's guidance range, however, certain cost factors continue to put pressure on the JV's cost performance. Current cost pressures include higher royalty expense associated with higher realized gold prices (approximately $30 incremental per ounce), higher sustaining capital expenditures associated with design changes to the raise of the tailings dam as well as additional costs associated with the JV's COVID-19 mitigation measures.

During Q4 2020 the mine expects to source ore primarily from the lower grade Esaase and Akwasiso pits as the AGM's primary fresh ore source. These ore sources will be augmented where necessary with run-of-mine stockpile material.

Development capital is forecast at $24.0 million (spend to date: $21.0 million), primarily for the Tetrem village relocation. In addition, $17.1 million was budgeted for exploration (spend to date: $14.6 million), mainly around the Miradani mineralized trend.

Guidance YTD (Actual) FY 2020 (Guidance) FY 2020 (Forecast)
Gold Production (oz) 184,333 225,000 – 245,000 ~245,000
AISC1 ($/oz) 1,094 1,000 – 1,100 ~1,150

Management Changes

During the quarter, Mr. Matt Badylak was appointed Executive Vice President and Chief Operating Officer.  Mr. Badylak is based in the Company's head office in Vancouver. Following the appointment of Mr. Badylak, the Company initiated a process whereby the majority of the Company's technical services will be systematically migrated from the Company's Johannesburg office to Vancouver. As part of this process, the Company appointed Mr. Eric Chen as Vice President Mineral Resources and Ms. Victoria Bleppony as Vice President Mining. Once this migration is complete, the role of Senior Vice President, Technical Services is expected to be made redundant.

COVID-19 Update

The JV continues to operate in all material respects with strict hygiene, deep cleaning, restriction of personnel movement, ongoing monitoring and physical distancing protocols in place in accordance with the Ghanaian Ministry of Health Guidelines. The AGM has established additional protocols and procedures to manage any confirmed cases of COVID-19, including contact tracing, isolating affected persons, rapid testing and isolation of affected persons. The AGM recently procured a polymerase chain reaction testing machine capable of processing up to 40 samples per day which is in the process of being certified by the Ghana health authorities, additionally, on-site accommodations have been modified to isolate infected and suspected to be infected individuals limiting on-site cross contamination and expediting return to work timelines. As a result, though there have been several confirmed cases of COVID-19 among the operational personnel at the AGM (mostly asymptomatic), to date the AGM's operations have been able to continue uninterrupted in all material respects with all confirmed cases cleared and those employees resuming normal duties after completing a two-week regulatory isolation. The Company's offices in Vancouver and Accra are observing local regulations and open with restrictions and protocols in place. The Company's Johannesburg office remains closed, and staff are working remotely. The AGM has continued to build its supply chain and has stockpiled key reagents, consumables, critical spares and diesel supply. The AGM's primary refiner, based in South Africa, continues to receive shipments and refine gold doré from the AGM.

1 Non-GAAP Performance Measures

The Company has included certain non-GAAP performance measures in this press release. These non-GAAP performance measures do not have any standardized meaning. 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 GAAP. Refer to the Non-GAAP Measures section of Galiano's Management Discussion and Analysis for an explanation of these measures and reconciliations to the Company's reported financial results in accordance with IFRS.

  • Operating Cash Costs per ounce and Total Cash Costs per ounce
    Operating cash costs are reflective of the cost of production, adjusted for share-based payments and by-product revenue per ounce of gold sold. Total cash costs include production royalties of 5%. Excluded from operating cash costs are one-time severance charges.
  • All-in Sustaining Costs Per Gold Ounce
    The Company has adopted the reporting of "all-in sustaining costs per gold ounce" ("AISC") as per the World Gold Council's guidance. AISC include total cash costs, corporate overhead expenses, sustaining capital expenditure, capitalized stripping costs and reclamation cost accretion per ounce of gold sold.
  • 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 (loss) 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 JV. Other companies and JV partners 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 JV'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 JV adjusted for cash flows associated with sustaining and non-sustaining capital expenditures and payments made to mining contractors for leases capitalized under IFRS 16.

About Galiano Gold Inc.

Galiano is focused on creating a sustainable business capable of long-term value creation for its stakeholders through exploration and disciplined deployment of its financial resources. The company currently operates and manages the Asanko Gold Mine, located in Ghana, West Africa which is jointly owned with Gold Fields Ltd.  The Company is strongly committed to the highest standards for environmental management, social responsibility, and health and safety for its employees and neighbouring communities. For more information, please visit www.galianogold.com.


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