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Galiano Gold reports Q3 2021 results - PR Newswire
Thursday, 11 November 2021
(All dollar amounts are United States dollars unless otherwise stated)
VANCOUVER, BC, Nov. 10, 2021 /PRNewswire/ - Galiano Gold Inc. ("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU) reports third quarter ("Q3") operating and financial results including results from 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. All financial information contained in this release is unaudited and reported in US$.
Q3 2021 Asanko Gold Mine Key Metrics (100% basis):
- Production performance: Gold production of 49,543 ounces during the quarter. Year-to-date production of 159,963 ounces. Full year gold production has been revised from 225,000-245,000 ounces to 215,000-220,000 ounces due to lower mined grades at Esaase and the resulting impact on plant recovery.
- Financial performance: Reported gold revenue of $85.2 million generated from 48,435 gold ounces sold at an average realized price of $1,758/oz, net income after tax of $7.7 million and Adjusted EBITDA1 of $16.6 million during the quarter.
- Cost performance: Total cash costs per ounce1 of $1,273 and all-in sustaining costs1 ("AISC") of $1,598/oz during the quarter. Year-to-date AISC1 of $1,397/oz, in line with revised cost guidance (as of Q2 2021) of $1,350-$1,450/oz.
- Milling performance: The processing plant achieved a quarterly milling performance of 1.5 million tonnes ("Mt") at an average plant feed grade of 1.1g/t with metallurgical recovery of 90%.
- Akwasiso development: Stripping activities at Akwasiso, impacted by inclement weather, advanced during the quarter and are expected to be completed Q4 2021.
- Culture of safety: There was one lost-time injury ("LTI") and one total recordable injury ("TRI") reported during the quarter, resulting in 12-month rolling LTI and TRI frequency rates of 0.20 and 0.41 per million employee hours worked, respectively.
- Stable liquidity: $53.0 million in cash, $5.6 million in gold sales receivables and $4.7 million in gold on hand as of September 30, 2021, and no debt.
Q3 2021 Galiano Gold Highlights:
- Stable balance sheet: Cash on hand of $55.8 million and $6.1 million in receivables as at September 30, 2021, while remaining debt-free.
- Earnings delivery: Generated net income after tax of $4.1 million or $0.02 per share during the quarter and Adjusted EBITDA1 of $6.2 million.
- Addition to Board of Directors: Appointed Ms. Dawn Moss to the Board of Directors as a Non-Executive Director effective September 15, 2021.
"Although an increased proportion of Akwasiso contributed to mill feed for the quarter relative to Q2, grades at Esaase remained below expectations resulting in lower production in Q3. We expect these lower grades to persist through Q4 and as a result we have revised production guidance for the year to 215,000-220,000 ounces," said Matt Badylak, President and Chief Executive Officer. "Despite lower than plan production, the AGM continues to generate cash. Free cash flow for the quarter and year to date was $11.9 million and $29.5 million, respectively. We are progressing the work on our updated Reserves, Resources and associated life of mine plan in collaboration with our JV partner which we expect to publish in Q1 2022 with an effective date of December 31, 2021"
Asanko Gold Mine - Summary of Q3 2021 Operational and Financial Results (100% basis)
| Asanko Gold Mine (100% basis) ||Q3 2021 || Q2 2021 ||Q1 2021 ||Q4 2020 ||Q3 2020 |
|Ore mined ('000t) ||1,464 ||1,333 ||1,841 ||1,964 ||958 |
|Waste mined ('000t) ||10,017 ||9,073 ||9,552 ||11,773 ||11,321 |
|Total mined ('000t) ||11,481 ||10,406 ||11,393 ||13,737 ||12,279 |
|Strip ratio (W:O) ||6.8 ||6.8 ||5.2 ||6.0 ||11.8 |
|Average gold grade mined (g/t) ||1.3 ||1.2 ||1.3 ||1.4 ||1.4 |
|Mining cost ($/t mined) ||3.28 ||3.03 ||3.31 ||3.20 ||3.13 |
|Ore transportation from Esaase ('000 t) ||1,272 ||1,261 ||870 ||622 ||581 |
|Ore transportation cost ($/t trucked) ||5.88 ||6.20 ||6.48 ||7.15 ||7.59 |
|Ore milled ('000t) ||1,542 ||1,475 ||1,444 ||1,438 ||1,467 |
|Average mill head grade (g/t) ||1.1 ||1.1 ||1.4 ||1.5 ||1.1 |
|Average recovery rate (%) ||90 ||94 ||95 ||95 ||93 |
|Processing cost ($/t treated) ||9.68 ||9.87 ||10.31 ||10.46 ||10.80 |
|Gold production (oz) ||49,543 ||50,421 ||59,999 ||65,571 ||48,974 |
|Gold sales (oz) ||48,435 ||53,348 ||62,925 ||60,655 ||53,975 |
|Average realized gold price ($/oz) ||1,758 ||1,782 ||1,757 ||1,828 ||1,861 |
|Operating cash costs1 ($/oz) ||1,185 ||1,147 ||901 ||801 ||1,150 |
|Total cash costs1 ($/oz) ||1,273 ||1,236 ||989 ||892 ||1,244 |
|All-in sustaining costs1 ($/oz) ||1,598 ||1,497 ||1,158 ||1,179 ||1,488 |
|All-in sustaining margin1 ($/oz) ||160 ||285 ||599 ||649 ||373 |
|All-in sustaining margin1 () ||7.8 ||15.2 ||37.7 ||39.4 ||20.1 |
|Revenue () ||85.3 ||95.2 ||110.8 ||111.1 ||100.7 |
|Income from mine operations () ||13.0 ||18.1 ||35.9 ||46.3 ||17.4 |
|Cash provided by operating activities () ||26.5 ||10.8 ||35.4 ||48.0 ||18.5 |
|Free cash flow1 () ||11.9 ||(2.9) ||20.5 ||21.5 ||(4.2) |
|1 ||See "Non-IFRS Performance Measures" |
- There was one LTI and one TRI reported during the quarter at the AGM. The AGM's LTI and TRI frequency rates for the nine months ended September 30, 2021 were both 0.14 per million employee hours worked, while the 12-month rolling LTI and TRI frequency rates are 0.20 and 0.41 per million employee hours worked, respectively.
- The AGM produced 49,543 ounces of gold during the quarter, as the processing plant achieved milling throughput of 1.5Mt of ore processed at a grade of 1.1g/t and metallurgical recovery averaging 90%.
- Sold 48,435 ounces of gold in Q3 2021 at an average realized gold price of $1,758/oz for total revenue of $85.3 million (including $0.1 million of by-product silver revenue), a decrease of $15.4 million from Q3 2020. The decrease in revenue quarter-on-quarter was a function of a 10% reduction in sales volumes and a 6% decrease in realized gold prices in Q3 2021.
- Total cost of sales (including depreciation and depletion and royalties) amounted to $72.3 million in Q3 2021, a decrease of $11.0 million from Q3 2020. The decrease in cost of sales was primarily due to fewer gold ounces sold and a reduction in net realizable value ("NRV") adjustments on stockpile inventory.
- The AGM incurred operating cash costs per ounce1 of $1,185, total cash costs per ounce1 of $1,273 and AISC1 of $1,598 per ounce in Q3 2021. Total cash costs were higher relative to Q3 2020 primarily due to lower gold sales volumes in Q3 2021 which had the effect of increasing fixed production costs on a per unit basis and higher ore transportation costs which was muted by the fact that during the comparative period an NRV adjustment of $5.9 million was recognized against production costs.
- Income from mine operations for Q3 2021 totaled $13.0 million compared to $17.4 million in Q3 2020. The reduction in income from mine operations was due to a $15.4 million decrease in revenues, partly offset by an $11.0 million decrease in cost of sales (as described above).
- The AGM generated $26.5 million of cash flows from operating activities (after considering favorable working capital changes of $7.6 million) and free cash flow1 of $11.9 million during Q3 2021. This compares to $18.5 million of cash flows from operating activities (after considering unfavorable working capital changes of $9.9 million) and negative $4.2 million of free cash flow1 during Q3 2020. The increase in free cash flow1 was primarily due to favourable movements in working capital in Q3 2021.
- Reported Adjusted EBITDA1 of $16.6 million in Q3 2021 compared to $24.3 million in Q3 2020. The decrease in Adjusted EBITDA1 was primarily due to lower mine operating income in Q3 2021.
- As at September 30, 2021, the JV held cash and cash equivalents of $53.0 million, $5.6 million in receivables from gold sales and $4.7 million in gold on hand. The AGM remains debt free with $30.0 million available on its revolving credit facility.
Revised 2021 Outlook
For 2021, the AGM's full year gold production has been revised from 225,000 to 245,000 ounces to 215,000 to 220,000 ounces due to lower mined grades at Esaase and the resulting impact on plant recovery. Full year cost guidance remains unchanged with AISC1 guidance of $1,350 to $1,450/oz (as revised in Q2 2021).
Galiano Gold Inc. – Summary Q3 2021 Financial Results
|Galiano Gold Inc. (consolidated) ||Q3 2021 ||Q2 2021 ||Q1 2021 ||Q4 2020 ||Q3 2020 |
|Net income after tax () ||4.1 ||5.0 ||13.0 ||17.7 ||3.2 |
|Net income after tax per share ||0.02 ||0.02 ||0.06 ||0.08 ||0.01 |
|Adjusted EBITDA1 () ||6.2 ||6.1 ||15.8 ||20.4 ||6.5 |
- The Company reported net income after tax of $4.1 million in Q3 2021 compared to net income after tax of $3.2 million in Q3 2020. The increase in earnings during Q3 2021 was predominantly due to lower general and administrative ("G&A") expenses partially offset by a lower share of net earnings related to the JV.
- Adjusted EBITDA1 for Q3 2021 amounted to $6.2 million, compared to $6.5 million in Q3 2020. The decrease in Adjusted EBITDA1 was primarily a result of an increase in the AGM's total cash costs1.
- Cash used in operating activities in Q3 2021 was $2.8 million, compared to $3.0 million in Q3 2020. The decrease in cash used in operations was primarily due to lower corporate G&A costs in Q3 2021, partly offset by an increase in receivables related to the Company's JV service fee.
- As at September 30, 2021, the Company had cash on hand of $55.8 million and $6.1 million in receivables for a gross liquidity position of $61.9 million and no debt.
This news release should be read in conjunction with Galiano's Management's Discussion and Analysis and the Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2021 and 2020, which are available at www.galianogold.com and filed on SEDAR.
1 Non-IFRS Performance Measures
The Company has included certain non-IFRS performance measures in this press release. These non-IFRS 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 IFRS. Refer to the Non-IFRS Measures section of Galiano's Management Discussion and Analysis for an explanation of these measures and reconciliations to the Company's and the JV'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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