Vancouver, British Columbia – FIORE GOLD LTD. (TSXV: F) (OTCQB: FIOGF) (“Fiore” or the “Company”) is pleased to announce that its financial statements and management’s discussion and analysis for the financial year ended September 30, 2018 (“FY2018”) have been filed with the securities regulatory authorities and are available at www.sedar.com and on the Company’s website at www.fioregold.com.
Fiore had multiple successes in its first full year of operation and is pleased to report the following key highlights:
2018 Annual Consolidated Operational and Financial Information
•Gold production of 34,297 ounces and gold sales of 34,688 ounces
•Recorded annual revenues of $44.38 million and mine operating income of $12.77 million
•Full-year mined ore production averaging 14,228 tons per day (“tpd”), ahead of planned rate of 14,000 tpd
•All-in sustaining costs (“AISC”)1 per ounce sold of $1,063 and cash costs per ounce sold of $820
•Generated Pan stand-alone operating cash flow $10.40 million and consolidated operating cash flow of $4.43 million
•Maintained a strong balance sheet with no debt and working capital of $18.12 million as of September 30, 2018
•83,690 man-hours worked in FY2018, achieving our goal of zero reportable incidents, zero reportable accidents, and zero lost-time injuries. As of September 30, the operation was at 865 consecutive days of attaining this Triple-Zero achievement.
•Our operations team at Pan was selected to receive the Small Mine Safety Award from the Nevada Mining Association for the third consecutive year, 2015, 2016 and 2017
•The United States Bureau of Land Management (“BLM”) has issued the Record of Decision for the Company’s 100%-owned Gold Rock project, located approximately 8 km southeast of our Pan Mine. This completes the federal permitting process required for the construction of a mine on the Gold Rock property.
1 AISC are presented as defined by the WGC less corporate general and administrative expenses and corporate share-based compensation expenses. Please refer to Non-IFRS Financial measures in the Management’s Discussion and Analysis for the years ended September 30, 2017 and 2018. Corporate general and administrative expenses and corporate share-based compensation expenses are $154 per ounce for the full year 2018.
Q4 2018 Consolidated Operational and Financial Information
•Gold production of 8,993 ounces and gold sales of 8,964 ounces
•Recorded revenues of $10.83 million and mine operating income of $2.51 million
•Mined ore production at 13,186 tpd
•AISC2 per ounce sold of $893 and cash costs per ounce sold of $825
•Generated Pan stand-alone operating cash flow $1.53 million and consolidated operating cash flow use of $0.25 million
2 AISC are presented as defined by the WGC less corporate general and administrative expenses and corporate share-based compensation expenses. Please refer to Non-IFRS Financial note at end of news release. Corporate general and administrative expenses and corporate share-based compensation expenses are $147 per ounce sold for Q4 2018.
Organic Growth Highlights
•The drilling program targeting resource and reserve growth at Pan resulted in almost complete replacement of Measured and Indicated (“M+I”) resources mined in the 19 months since declaring commercial production, and a significant growth in Inferred resources even after allowing for mining depletion.
•Completion of an eight-hole exploration drilling program at Gold Rock to test areas of potential mineralization along strike from the current historical resource commenced during Q4 2018 and concluded during early Q1 of FY2019, with the identification of the mineralized lithology, structure and alteration as well as gold mineralization several kilometers north of the existing resource area.
Tim Warman, Chief Executive Officer of Fiore, commented: “With a first full year of successful operations behind it and a strong resource update, Pan is set up well to be a foundational asset for Fiore. The operational ramp-up occurred smoothly while maintaining our strong safety and environmental record, a true testament to the operating team. With the BLM issuing the Record of Decision on our Gold Rock project, the stage is also set for the next leg to our growth story in Nevada. Our next steps include extending the Pan mine life with a life of mine update in calendar Q1 2019, optimizing Pan operations with the addition of a crusher, as well as building on the resource base at Gold Rock. We look forward to progressing these key initiatives while maintaining our balance sheet strength”.
Gold production of 34,297 ounces was near the lower end of the guidance range of 35,000 to 40,000 ounces as ore tons mined and related grade largely tracked in line with expectations. All-in sustaining costs for 2018 were $1,063 per ounce sold, trending downward throughout the year with Q4 2018 all-in sustaining costs $893 per gold ounce sold. During this period of growth, Pan maintained its strong safety record achieving our goal of zero reportable incidents, zero reportable accidents, and zero lost-time injuries through fiscal 2018. Importantly, the Pan Mine generated $10.40 million of operating cash flow in its ramp-up year, even with the final quarter being impacted by a relatively low average realized gold price of $1,208 per ounce. Consolidated Fiore operating cash flow, net of corporate and other costs, was $4.43 million. In the year, Fiore prioritized its cash to key investments in expanding Pan’s leach pad capacity, exploration projects at both Pan and Gold Rock, as well as on-going funding of its reclamation liability. At September 30, 2018, Fiore had $6.17 million of cash, zero debt, and $18.12 million in working capital.
2018 Guidance Review
The following table compares FY2018 guidance with actual results for FY2018:
Ore Mined (‘000t) 4,750 – 5,250 5,193
Waste Mined (‘000t) 7,250 – 7,750 6,293
Total Mined (‘000t) 12,000 – 13,000 11,486
Ore Grade Mined (oz/t) 0.014 – 0.017 0.014
Strip Ratio waste/ore 1.47 – 1.53 1.21
Gold Ounces Produced (oz) 35,000 – 40,000 34,297
Gold Ounces Sold (Payable) (oz) 35,000 – 40,000 34,688
Total Cash Costs per Ounce1 $/oz sold 742 820
Total Costs of Sales Per Ounce1 $/oz sold 826 911
All-in Sustaining Costs1, 2 $/oz sold 912 1,063
Mine, Processing and Site G&A Costs $ millions 32.9 33.0
Royalties and Treatment/Refining Costs $ millions 2.0 1.8
Capital Expenditures $ millions 5.5 6.7
1 This is a non-IFRS performance measure. Please refer to Non-IFRS Financial Measures note at end of news release.
2 AISC are presented as defined by the WGC less corporate general and administrative expenses and corporate share-based compensation expenses. Presentation has been adjusted during the fiscal year to remove non-sustaining exploration expense to better reflect sustaining costs which do not include expenditures related to sites that are not producing. To align to the presentation of AISC less corporate general and administrative costs, corporate share-based compensation expense has also been adjusted. The adjustment has been made for all periods presented and provides a reader with better information. Please refer to Non-IFRS Performance measures in the Management’s Discussion and Analysis for the years ended September 30, 2017 and 2018. The below table is a reconciliation from prior presentation of 2018 AISC guidance to reflect the removal of non-sustaining exploration expense and corporate shared-based compensation. Corporate general and administrative expenses and corporate share-based compensation expenses are $154 per ounce for the full year 2018.
2018 2018 Q4 2018
All-in Sustaining Costs per Ounce Reconciliation Guidance Actual Actual
AISC per Ounce as Previously Presented $/oz $ 957 $ 1,143 $ 998
Non-Sustaining Exploration $/oz (35) (56) (95)
Corporate Share-Based Compensation $/oz (10) (24) (10)
AISC per Ounce as Currently Presented $/oz $ 912 $ 1,063 $ 893
Ore mined during FY 2018 averaged 14,228 ore tpd, which was on the higher end of the guidance range for FY2018, while waste mining fell short of FY2018 guidance. We utilize a third-party contractor, Ledcor CMI, Inc. (“Ledcor”) for our mining operations at the Pan Mine. Ledcor experienced challenges attracting and retaining qualified mechanics and equipment operators in a particularly competitive Nevada labor market, resulting in below target availability and utilization for key mining equipment. We continue to work with Ledcor to increase equipment and operator availability, while at the same time working on a new Life of Mine (“LOM”) mine plan and schedule that will incorporate the recently updated Pan Mine resource estimates. We have seen some improvement in equipment availability and utilization subsequent to FY2018, with a resulting improvement in waste stripping tonnage thus far during fiscal year 2019.
Gold ounces produced and sold during FY2018 fell just short of the lower end of the guidance range. Ore grade mined being on the lower end of the guidance range at 0.014 ounces per ore ton and the rate at which gold has come off the leach pad has been slightly slower than originally anticipated.
Mine, processing and site G&A costs were in line with guidance, however the gold production and gold sales being short of the guidance range resulted in our total cash costs per ounce, total costs of sales per ounce and AISC being higher than guidance.
A drilling program aimed at extending the mine life at Pan encompassed 28,790 feet (over 8,800 m) of developmental and exploration drilling during the year. An updated resource estimate released subsequent to FY2018 (refer to news release dated December 3rd, 2018) showed almost complete replacement of M+I resources mined in the 19 months since declaring commercial production (which averaged approximately 12,500 ore tons mined per day), and a significant growth in Inferred resources even after allowing for mining depletion. Work on a new mineable reserve LOM plan and schedule is currently underway on the updated resource estimate. The updated mine plan, which is expected in calendar Q1 2019, will focus on exploiting the updated resources to extend the current mine life while attempting to reduce the strip ratio, particularly in the latter half of FY2019.
With respect to crushing options at Pan, we have completed our operating and financial evaluation and have concluded the mine will strongly benefit from the addition of a single-stage crushing and agglomeration circuit. We are currently developing specifications and an operating plan, as well as working on securing funding for the capital project. We expect to have details of the crusher addition finalized in calendar Q1 2019.
Looking forward, we expect to complete our updated reserve and LOM plan during calendar Q1 2019. This updated plan will incorporate the updated resource issued on December 3rd, 2018. Once the updated reserve is complete, along with the final details and timing on the crushing circuit, we will issue guidance for 2019.
see & read more on