Brigus Gold Corp. (“Brigus” or the “Company”)(NYSE Amex: BRD; TSX: BRD) announces results for the fourth quarter (“Q4-11”) and year ended December 31, 2011.
This press release should be read in conjunction with the Company’s consolidated financial statements for the years ended December 31, 2011 and December 31, 2010 and associated Management’s Discussion and Analysis (“MD&A”), which are available from the Company's website, www.brigusgold.com and on SEDAR (www.sedar.com). All dollar amounts are expressed in US dollars unless otherwise specified. All financial results are presented in accordance with International Financial Reporting Standards (“IFRS”).
Key milestones achieved during the year include commencement of commercial production in both the Phase 2 open pit and underground mine and the discovery of a new resource at the Company’s Black Fox Complex near Timmins, Ontario.
2011 and Fourth Quarter Financial Highlights
- Gold sales in 2011 totalled 57,001 ounces at an average realized price of $1,533 per ounce. During Q4-11, total gold sales were 14,702 ounces of gold at an average realized price of $1,599 per ounce.
- Cash flow from operations was $19.1 million for 2011 and $9.2 million for Q4-11.
- Recognized net income of $15.8 million and earnings per share of $0.08 for 2011 and recognized net income of $2.2 million and earnings per share of $0.01 for Q4-11.
- Completed an $8.2 million flow-through share financing to fund ongoing Canadian exploration and development activities in December 2011 and raised $50.0 million from the issuance of senior unsecured convertible debentures in March 2011.
- Cash costs per ounce were $958 for the year ended December 31, 2011 and $1,066 for Q4-11.
- Capital expenditures for 2011 were $53.7 million and were $14.5 million in Q4-11. Capital expenditures include underground development, open pit capital stripping, mill expansion and mine equipment.
- Exploration and development expenditures totalled $14.0 million for 2011, including $11.0 million related to the Black Fox Complex and $3.0 million related to the Goldfields Project. During Q4-11, exploration and development expenditures totalled $3.4 million, including $3.2 million related to the Black Fox Complex and $0.2 million related to the Goldfields Project.
CONSOLIDATED FINANCIAL RESULTS
($ thousands, except per share and ounces)
For the three months ended
For the years ended
|Revenue from the sale of gold||$||21,107||$||22,467||$||71,855||$||85,935|
|Direct operating costs||$||14,843||$||11,424||$||45,922||$||37,422|
|Operating (loss) income||$||(369||)||$||4,261||$||(4,010||)||$||17,394|
|Net income (loss)||$||2,168||$||(29,058||)||$||15,769||$||(55,530||)|
|Basic earnings (loss) per share||$||0.01||$||(0.25||)||$||0.08||$||(0.48||)|
|Cash flows from operations||$||9,159||$||(1,320||)||$||19,090||$||16,630|
|Gold sales in ounces||14,702||16,431||57,001||69,922|
|Total cash cost per ounce of gold sold (1)||$||1,066||$||588||$||958||$||518|
(1) Total cash cost per ounce gold of sold is a non-GAAP measure and is not necessarily comparable to similar titled measures of other companies due to potential inconsistencies in the method of calculation. Refer to the table under the section “Reconciliation of Cash Costs per Ounce” for a calculation of cash costs per ounce of gold.
2011 and Fourth Quarter Operational Highlights
- Produced 55,756 ounces of gold in 2011 and 14,457 in Q4-11.
- Processed 725,541 tonnes of ore at an average grade of 2.54 grams of gold per tonne and an average recovery of 94.2% in 2011 and 175,150 tonnes of ore at an average grade of 2.66 grams of gold per tonne and an average recovery of 97% in Q4-11.
- Mill throughput averaged 1,988 tonnes per day (“tpd”) in 2011 and 1,904 tpd in Q4-11. The mill performed well with low downtime and high recoveries throughout the year.
- Phase 2 of the open pit mine reached commercial production in April 2011 and is operating according to plan.
- Reported results from an independent Technical Report on 100% owned Goldfields development project. The pre-feasibility study indicates a Net Present Value of $144.3 million at a 5% discount rate with an internal rate of return of 19.6% based on a gold price of $1,250 per ounce.
- Released an initial NI 43-101 compliant, independent mineral resource estimate for the 147 and Contact zones on the Black Fox Complex resulting in more than a 50% increase in Black Fox Complex Resources.
- Signed a definitive option agreement providing Cangold Ltd. with the option to acquire a 75% interest in the Ixhuatán Gold Project.
- Achieved underground commercial production in October 2011 with production continuing to ramp up through 2012.
- Commenced Phase 1 of the Black Fox Mill optimization, which is expected to increase processing capacity by 5-10%, to up to 2,200 tpd, by mid-2012.
RESULTS OF OPERATIONS
For the three months ended
For the year ended
|Average realized gold price – including Sandstorm||$||1,599||$||980||$||1,533||$||981|
|Average realized gold price – excluding Sandstorm||$||1,668||-||$||1,589||-|
|Open pit ore tonnes mined||137,271||118,334||433,267||792,482|
|Open pit operating waste tonnes mined||1,426,653||1,025,728||4,849,506||5,561,932|
|Open pit capital stripping tonnes mined||1,072,924||-||4,644,079||-|
|Open pit overburden tonnes mined||-||1,433,994||293,680||3,199,435|
|Total open pit tonnes mined||2,636,848||2,578,056||10,220,532||9,553,849|
|Total underground ore tonnes mined||64,216||-||170,899||-|
|Total tonnes mined||2,701,064||2,578,056||10,391,431||9,553,849|
|Tonnes milled per day||1,904||1,997||1,988||1,968|
|Head grade of ore (gpt)||2.66||2.53||2.54||3.17|
|Gold ounces produced||14,457||13,722||55,756||67,499|
|Total cash costs ($/ounce):||$||1,066||$||671||$||958||$||518|
|Average gold price ($/ounce):||$||1,687||$||1,229||$||1,573||$||1,225|
“2011 was a challenging year as we ramped up production from Black Fox’s Phase 2 open pit and initiated production from the underground mine,” said Wade Dawe, President and CEO of Brigus.” “While open pit operations performed in accordance with our plan, we had to address a number of issues related to the development and ramp up of the underground mine. We made operational changes in December and January to address shortcomings at the mine and as a result we are now seeing consistent increases in gold production and much higher grades from the underground. With grades from the underground now meeting expectations and daily production tonnage building, gold production rates are increasing and we look forward to a solid year ahead in 2012.”
Brigus is on track to hit first quarter guidance and is forecasting full year gold production of 77,000 to 85,000 ounces for 2012 as previously released:
Beginning in late 2011, Brigus implemented significant changes to personnel, equipment and mining processes resulting in material improvements for the Company most notably in the underground operation. In the first 75 days of 2012, Brigus delivered average grades of 5.96 grams per tonne (“gpt”) compared to 2.99 gpt in Q4-11.
High-grade tonnage from the underground continues to steadily increase and averaged over 400 tonnes per day (tpd) in the first half of March. Brigus expects to reach 800 tpd in the third quarter of 2012 by adding 10 mining stopes to the 20 stopes that are now in place. The additional stopes will provide greater flexibility and enable Brigus to actively mine 10-12 stopes at all times.
Cash costs are targeted at $775 - $825 per ounce for the year, declining to approximately $700 per ounce at steady state production levels of 104,000 ounces per year in 2013.
Planning is underway to develop the 147 and Contact zones located on the southeast portion of the Black Fox Complex. The initial resource estimate for these zones, announced in December 2011, added more than 50 percent to the gold resource at the Black Fox Complex. Brigus plans to expand the resource and convert Inferred ounces to Indicated ounces through systematic in‐fill drilling. An updated resource estimate will be released later in the year. Initial engineering studies have also been initiated and will be continued through 2012 to determine project economics as well as development and production timelines.
To date, the Company has explored approximately 25 percent of the Black Fox Complex. Significant upside potential remains on the property, which covers an area of approximately 18 square kilometres within the Timmins Mining District of Ontario.
FOURTH QUARTER WEBCAST AND CONFERENCE CALL
A webcast and conference call will be held today, Thursday, March 29, at 12 noon Atlantic time (11:00 a.m. Eastern time).
To attend by webcast http://www.investorcalendar.com/IC/CEPage.asp?ID=167747.
To attend by phone, dial toll free 1-877-407-8133 (international 201-689-8040) at least 10 minutes prior to the start of the call. No pass code is required.
About Brigus Gold
Brigus is a growing gold producer committed to maximizing shareholder value through a strategy of efficient production, targeted exploration and select acquisitions. The Company operates the wholly owned Black Fox Mine and Mill in the Timmins Gold District of Ontario, Canada. The Black Fox Complex encompasses the Black Fox Mine and adjoining properties in the Township of Black River-Matheson, Ontario, Canada. Brigus is also advancing the Goldfields Project located near Uranium City, Saskatchewan, Canada, which hosts the Box and Athona gold deposits. In Mexico, Brigus has granted Cangold Limited the option to acquire a 75% interest in the Company’s Ixhuatan Project located in the state of Chiapas. In the Dominican Republic, Brigus has signed an agreement to sell its remaining interests in three mineral exploration projects.
Cautionary Note to U.S. Investors Concerning Estimates of Mineral Resources
This news release uses the term mineral “resources”. The Company advises U.S. investors that while these terms are defined in and required by Canadian regulations, these terms are not defined terms under the U.S. Securities and Exchange Commission (“SEC”) Industry Guide 7 and are generally not permitted to be used in reports and registration statements filed with the SEC. The SEC generally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
Cautionary and Forward-Looking Statements
Statements contained in this news release, which are not historical facts, are forward-looking statements that involve risk, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All statements regarding the ability of the Company to achieve its production, total cash costs, steady state annual production and mining rate estimates; estimated average gold grades for the open pit and underground operations; increase in gold production; increase in profitability; exploration drill results and resource additions, are forward-looking statements and estimates that involve various risks and uncertainties. This forward-looking statements include, or may be based upon, estimates, forecasts, and statements as to management's expectations with respect to, among other things, the outcome of legal proceedings, the issue of permits, the size and quality of the Company's mineral resources, progress in development of mineral properties, future production and sales volumes, capital and mine production costs, demand and market outlook for metals, future metal prices and treatment and refining charges, and the financial results of the Company.
Important factors that could cause actual results to differ materially from these forward-looking statements include environmental risks and other factors disclosed under the heading “Risk Factors” in Brigus’ most recent Annual Information Form and Management Discussion and Analysis filed under the Company’s name at www.sedar.com and annual report on Form 40-F filed with the United States Securities and Exchange Commission at www.sec.gov as well as elsewhere in Brigus’ documents filed from time to time with the Toronto Stock Exchange, the NYSE Amex Equities, the United States Securities and Exchange Commission and other regulatory authorities. All forward-looking statements included in this news release are based on information available to the Company on the date hereof. The Company assumes no obligation to update any forward-looking statements, except as required by applicable securities laws.