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Avion Gold Announces Fourth Quarter Earnings of US$0.05 Per Share and Cashflow of US$0.08 Per Share
Cash Costs Reduced to $443 Per Ounce Produced in Fourth Quarter 2010
Mar. 21, 2011 (Marketwire Canada) --
TORONTO, ONTARIO -- Avion Gold Corporation (TSX:AVR)(OTCQX:AVGCF) ("Avion" or the "Company") today announces its financial results for the fourth quarter and year ended December 31, 2010. All amounts are in United States dollars unless otherwise indicated.
Avion will host a conference call at 10:30 AM (EST) on Tuesday, March 22, 2011 to discuss the results. To participate in the call please dial:
International: + 1 416 340 9432
Toll Free: 877 440 9795
Toronto Area: 416 340 9432
Complete audited financial statements and related Management's Discussion and Analysis will be available under the Company's profile on www.sedar.com at 7:00 a.m. EST on March 22, 2011.
Fourth Quarter Highlights:
* The Company had earnings of $18.6 million, or $0.05 per share, and cash flow from operations before working capital adjustments of $26.1 million.
* The Company sold 27,908 ounces of gold at an average realized price of $1,370 per ounce, which was 10% higher than the average realized price of $1,234 for the previous quarter.
* Gold revenue was $38.2 million compared to $14.2 million for the comparable quarter of 2009.
* The Company produced 26,090 ounces of gold at a cash cost per ounce of $443 and total cash costs produced of $520. Cash costs per ounce continued to decline from the previous quarter as the Company achieved additional operating efficiencies.
* The Company expended $19.4 million on extensive underground development work and on exploration activities.
* The Company announced that it had increased the grade of measured and indicated resources at the Tabakoto Deposit by 72%.
* During the fourth quarter, the Company graduated to the TSX.
Full Year 2010 Highlights
* During 2010, the Company achieved record earnings of $31.5 million, or $0.09 per share compared to $2.6 million or $0.01 per share for the prior year.
* Gold revenue for the year 2010 was $115.3 million compared to $33.6 million for the prior year. The Company fully benefited from the higher gold prices as it is un-hedged.
* During 2010, the Company produced 87,631 ounces of gold at a cash cost per ounce of $574 and total cash cost of $657. The Company achieved cash costs of less than $500 per ounce produced for the last two quarters of the year.
* In 2010, the Company generated operating cash flow before working capital adjustments of $55.7 million compared to $9.3 million in 2009.
* The Company completed 2010 with cash and cash equivalents of $38.6 million.
Commenting on the fourth quarter and 2010 results, Avion's Chief Financial Officer, Mr. Greg Duras stated: "Record quarterly and year-end financial results were achieved by the Company generating significant operating cash flow, putting the Company in a strong financial position to sustain its extensive capital programs, including underground development, plant expansion and an aggressive exploration program."
The Company is forecasting 2011 production at 100,000 ounces of gold and its plans to increase to a run rate of 200,000 ounces per year in 2012 are well advanced. Avion's strong results in 2010 have allowed this plan to be put into action. Since production re-started in February 2009, the Company has managed to achieve significant cost reductions quarter over quarter while building a very strong management team at the mine site. To achieve this goal, Avion is currently focussed on underground development at Tabakoto, contracting Genivar to lead the mill plant expansion, ordering a SAG mill, and constructing most of the site infrastructure needed to support the plan. This has required a significant amount of capital, but because of the significant cash flow in 2010 the Company has been able to complete significant milestones without taking on debt or going to the equity market since April 2010. In 2011, these projects and plans will be further advanced. Underground development ore is being mined, and ore is being mined from several open pit deposits. Activities during 2011 will set the stage for 2012 and achieving the goal of a run rate of 200,000 ounces per year.
Financial Discussion: three months ended December 31, 2010
The Company reported net income of $18,623,126 ($0.05 per share, basic and $0.05 per share, diluted) for the three months ended December 31, 2010, compared to net income of $3,974,977 ($0.02 per share, basic and diluted) for the three months ended December 31, 2009. Other comprehensive income for Q4-2010 amounted to $4,204,330 (Q4-2009: $7,124,277), which represents the foreign exchange difference determined using the current rate method to translate the financial statements to US$.
During Q4-2010, the Company sold 27,908 ounces of gold and generated $38,249,405 in gold sales revenue. In Q4-2009, 13,376 ounces of gold was sold generating $14,176,875 in gold sales revenue. Mining and processing expenses were $14,913,311 (Q4-2009: $7,877,637), which includes $2,132,132 (Q4-2009: $216,792) in amortized deferred stripping costs, and the Company recorded amortization and depletion of $1,133,988 (Q4-2009: $1,796,049). The Company is amortizing deferred property, plant and equipment related to the Tabakoto and Segala on a unit of production basis from the current mine plan. The Company was subject to an aggregate NSR of 7% on metal sales during a portion of the quarter. In November 2010, the Company bought out a 1% royalty for $2,000,000. This amount has been deferred and will be amortized over the life of mine. Royalties expense totaled $2,019,134 (Q4-2009: $1,072,801) for the ounces of gold sold during Q4-2010 up until the buy-out.
During Q4-2010, the Company incurred a non-cash accretion expense of $113,750 related to the Company's asset retirement obligations acquired through the acquisition of the Mali projects (Q4-2009: $30,812).
The Company recognized an unrealized gain of $379,252 during Q4-2010 (Q4-2009: an unrealized gain of $1,289,046) related to their held-for-trading investments based on the fair market value of these investments as at December 31, 2010.
The Company also incurred a foreign exchange translation loss of $34,610 during the Q4-2010 compared to a gain of $961,447 during Q4-2009.
Financial Discussion: twelve months ended December 31, 2010
The Company reported net income of $31,457,426 ($0.09 per share, basic and diluted) for the twelve months ended December 31, 2010 compared to $2,597,185 ($0.01 per share, basic and diluted) for the thirteen months ended December 31, 2009. Other comprehensive income for the twelve month period in 2010 amounted to $6,397,036 (2009: $6,474,716), which represents the foreign exchange difference determined using the current rate method to translate the financial statements to United States dollars.
During the twelve months ended December 31, 2010, the Company sold 92,630 ounces of gold and generated $115,306,132 in gold sales revenue. The Company commenced commercial production in May 2009, and in the thirteen months ended December 31, 2009, 34,347 ounces of gold was sold generating $33,647,850 in gold sales revenue. Mining and processing expenses were $53,486,908 (2009: $21,295,256), which includes $2,876,703 (2009: $493,240) in amortized deferred stripping costs, and the Company recorded amortization and depletion of $7,759,959 (2009: $3,344,403). The Company is amortizing deferred property, plant and equipment related to the Mali projects on a unit of production basis from the current mine plan. During Q4-2010, the Company revised its estimate of the life of mine to approximately twelve years based on an increase in number of ounces that are estimated from the mine to approximately 2,400,000 ounces. The Company was subject to an aggregate NSR of 7% on metal sales during the period. In November 2010, the Company bought out a 1% royalty for $2,000,000. This amount has been deferred and will be amortized over the life of the mine. Royalties expense totaled $7,273,258 (2009: $2,864,842) for the ounces of gold sold during 2010.
Corporate and administrative expenses for the twelve months ended December 31, 2010 totaled $4,092,667, compared to $3,525,052 for the thirteen months ended December 31, 2009. The significant increase includes higher legal and audit costs, higher promotional costs and higher filing costs resulting from the Company's listings on both the US over-the-counter market OTCQX International as well as the TSX. The Company continues to share office space and other resources with companies that have common directors and officers.
During the twelve months ended December 31, 2010, the Company incurred a non-cash accretion expense of $455,000 related to the Company's asset retirement obligations acquired through the acquisition of the Mali projects (2009: $398,875). As well, the Company incurred an interest expense accruing on the Government of Mali loans during 2010. During 2009, the Company incurred interest expense on short term loans payable to Aberdeen International Inc.
The Company recognized an unrealized loss of $910,319 during 2010 (2009: an unrealized gain of $1,248,066) related to their held-for-trading investments based on the fair market value of these investments as at December 31, 2010.
The Company also incurred a foreign exchange translation loss of $3,244,411 during the twelve months ended December 31, 2010 compared to a gain of $668,621 during the ten months ended December 31, 2009.
About Avion Gold Corporation
Avion is a Canadian-based gold mining company focused in West Africa that holds 80% of the Tabakoto and Ségala gold projects in Mali. Gold production commenced at these projects in 2009 with just over 51,000 ounces produced. 2010 production was 87,630 ounces of gold. Production sustainability will continue to be supported and enhanced by an aggressive 2011 drill program over an approximately 500 km² exploration package that both surrounds and is near to the Company's existing mine infrastructure. The current mineral resources estimate for the Tabakoto project demonstrates several sources of excellent grade open pit and good grade underground mineral resources thus providing significant flexibility for Avion's future mining plans. Additionally, the 1,670 km² Houndé exploration property in Burkina Faso has returned promising results. These properties will be subject to a preliminary US$ 10 million dollar, approximate 60,000 metre, drill-focused, exploration program in 2011. Avion continues to progress towards its medium term goal of 200,000 ounces of gold per year and a longer term goal of organic growth through development of its exploration properties. The Company is developing an underground mine at the Tabakoto deposit, and is preparing to mine underground at the Ségala deposit. Avion has a highly skilled management team, with a focus on growth and consolidation within West Africa.
The ability of Avion to increase production to 200,000 ounces of gold per year has not been the subject of a feasibility study and there is no certainty that the proposed expansion will be economically viable.
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, without limitation, statements regarding the impact of the financial results on the Company, development potential and timetable of the Mali projects; the future price of gold; the estimation of mineral resources; conclusions of economic evaluation (including scoping studies); the realization of mineral resource estimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of current exploration activities; foreign operations risks; other risks inherent in the mining industry and other risks described in the annual information form of the Company, which is available under the profile of the Company on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
Cautionary Non-GAAP Statements
Avion believes that investors use certain indicators to assess gold mining companies. The indicators are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP. "Cash flow from operating activities before changes in non-cash working capital" is a non-GAAP performance measure which could provide an indication of the Company's ability to generate cash flows from operations, and is calculated by adding back the change in non-cash working capital to "Cash provided by (used for) operating activities" as presented on the Company's consolidated statements of cash flows. "Cash flow per share" is calculated by dividing "Cash provided by (used for) operating activities" and adding back the change in non-cash working capital by the fully diluted number of shares outstanding for the period. "Cash cost per ounce produced" is a non-GAAP performance measure which could provide an indication of the mining and processing efficiency and effectiveness at the mine. It is determined by dividing the relevant mining and processing costs excluding royalties by the ounces produced in the period. There may be some variation in the method of computation of "cash cost per ounce produced" as determined by the Company compared with other mining companies. In this context, "ounces produced" includes in-process and dore inventory along with ounces of gold sold in the period. "Cash costs per ounce produced" may vary from one period to another due to operating efficiencies, waste to ore ratios, grade of ore processed and gold recovery rates in the period.
The following table provides a reconciliation of mining and processing costs per the financial statements and cash operating for the purposes of calculating cash costs per ounce produced and total cash costs produced.
ended Twelve months
December 31, 2010 December 31, 2010
Mining and processing expenses 14,913,311 53,486,908
By-product silver sales credit (2,600 ) (239,551 )
Inventory movements and adjustments (3,353,718 ) (2,913,580 )
Cash operating costs 11,556,993 50,333,777
Divided by ounces of gold produced 26,090 87,631
Cash cost per ounce produced 443 574
Royalties 2,019,134 7,273,258
Total cash cost per ounce produced 520 657
Operating cashflow 26,055,680 55,671,651
(before working capital adjustments)
Operating cashflow per ounce produced 999 635
Avion Gold Corporation
Manager, Investor Relations
die Cahscosts sind schon eine Überraschung für sich!
mal ne int. einschätzung eines SH- users DAZU..........
Running the Numbers Based on New Production Costs
Forecasted cash costs are 450-480$/oz next year.....I think this was a slip up by managment when one of the analysts asked what the cost break down was/quarter and they refered directly to their budgetary spread sheet instead of the conservative presentation literature.
So lets see what we get. This is of course back of the envelope and I am negating, G &A, bonuses, and royalties...oh yeah...taxes which we might have to start paying soon
100,000 (conservatively) * (1400$/oz gold- 480$/oz cost to produce) = 92 million profit
with 430million shares fully diluted that gives us an EPS of .21$/share or a Current PE of less than 8.
Lets double the production, for 2012, double the EPS (they stated today there will be no need for furhter dilution of shares) and we get a future PE of 4.
Easy 20% return. Quite possible to get a 400% return at these levels by the time we go to 200,000 oz production.
for every 100$ gold goes up at another .021 earnings (100,000 oz produced) or .042 (earnings 200,000 produced)...which should corolate to .20 to .70$/share upside...depending on your valuation model (10x earnings or 16x earnings, CEPS or FEPS)
Lets how she runs this week....volume has been great today.
sehe leider nix davon innerhalb des SH- beitrags
bei 200k Unzen entsprechend.......
auf dem weg zur ´verdopplung´des kurses sahen wir heute nebst nem spürbaren
vol- anstieg auch ne schöne endrally, die uns mit TH ausm heutigen handel
gehen lies..........mit folg. LASTS........
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