(expressed in United States dollars, unless otherwise noted) -
Luna Gold Corp. (TSX VENTURE:LGC)(BVLAC:LGC) ("Luna" or the "Company") today
announces its results for the three and nine months ended September 30, 2011.
The complete financial statements and management discussions and analysis are
available for review at www.lunagold.com and should be read in conjunction with
this news release.
OVERVIEW
Luna Gold Corp. (the "Company") is a publicly listed company on the TSX Venture
Exchange trading under the symbol "LGC". The Company is actively engaged in the
operation, exploration, acquisition and development of gold properties in
Brazil. The Company currently has one gold mining operation, one development
project and one large greenfield exploration project located in northeast
Brazil.
The Aurizona gold mining operation ("Aurizona") consists of an open pit mine and
gold process plant. Aurizona consists of the Piaba and Tatajuba deposits and
over 10 near mine exploration targets which are being actively explored by the
Company. It covers approximately 15,500 hectares of land and includes a mining
license and three exploration permits.
The Maranhao Greenfields exploration property ("Maranhao Greenfields") is
located next to Aurizona and consists of an extensive landholding of exploration
licenses totalling 190,000 hectares. This land holding is highly prospective due
to its location in the southern extension of the Guyana Shield and displays
strong geologic and structural similarities to major West African gold deposits.
The area contains over 100 artisanal gold workings that are being explored by
the Company.
The Cachoeira gold project ("Cachoeira") is a development gold project with a
National Instrument 43-101 compliant resource estimate in three gold deposits
consisting of quartz vein systems, hydrothermally altered host rocks and
stockworks within a north-south trending shear zone.
The Company's near term focus is to:
-- Significantly increase the size of the Aurizona mineral resource and
reserve; release an updated NI 43-101 resource and reserve estimate for
the Piaba gold deposit and drill certain near mine exploration targets;
-- Increase Aurizona gold production above current feasibility study levels
through plant optimization and plant expansion;
-- Complete a scoping study on the expansion options for the Aurizona mine;
-- Complete a structural analysis at Aurizona and assess possible deep
drill targets;
-- Continue the exploration programs at Maranhao Greenfields to define
drill targets for the 2012 exploration season; and
-- Complete a scoping study on the Cachoeira resource and advance the
project to a feasibility study.
The Company's longer term focus is to:
-- Increase Aurizona gold production to greater than 100,000 ounces per
annum;
-- Continue to invest in brownfield exploration activities to attempt to
increase the mineral resources and mineral reserves at Aurizona to
replace production and provide a longer mine life;
-- Develop Cachoeira as an organic growth pipeline project for the Company;
and
-- Identify new gold resources through the exploration of the 190,000
hectare Maranhao Greenfields property and business development programs.
HIGHLIGHTS
-- Record quarterly gold production of 13,473 ounces was achieved in Q3
with feasibility study rates achieved in August and September. Gold
production for the nine month period was 28,277 ounces;
-- Net income was $2.7 million in Q3 and the net loss of the nine month
period was $4.8 million;
-- Operating cash inflow before working capital was $2.4 million in Q3 and
operating cash outflow before working capital for the nine month period
was $3.9 million;
-- Q3 unit cash cost of production was $830 per ounce and for the nine
month period was $1,117 per ounce;
-- The Company successfully raised CA$42 million through a combination of a
marketed public offering and private placement in Q3;
-- Aurizona resource definition drilling continued with significant gold
intercepts:
-- Priority gold target defined at Maranhao Greenfields with major gold in
soil anomaly measuring 1.70 kilometre by 0.45 kilometre at a 50 ppb Au
cut-off with maximum values of 8.97 g/t Au with garimpeiro workings,
mineralized quartz vein sets and sulfidized felsic intrusives;
OUTLOOK
-- Aurizona gold production target for the 2011 year revised to between
42,000 and 44,000 ounces for the 2011 year at a targeted unit cash cost
of between $990 and $1,000 per ounce. The Q4 targeted unit cash cost(1)
is between $750 and $780 per ounce of production;
-- The Company remains on target to release an updated NI 43-101 compliant
resource on Aurizona in Q4 2011; and
-- Cachoeira and Aurizona Expansion scoping study to be completed and the
results released in Q2 2012.
For further information on the Company, reference should be made to its public
filings (including its most recently filed annual information form ("AIF"))
which are available on SEDAR at www.sedar.com. Information is also available on
the Company's website at www.lunagold.com. Information on risks associated with
investing in the Company's securities and technical and scientific information
under National Instrument 43-101 concerning the Company's material property,
including information about mineral resources and reserves, are contained in the
Company's most recently filed AIF. This Management's Discussion and Analysis
("MD&A") should be read in conjunction with the unaudited interim consolidated
financial statements for the three months ended March 31, 2011, six months ended
June 30, 2011and nine months ended September 30, 2011 and related notes thereto
which have been prepared in accordance with International Financial Reporting
Standards.
AURIZONA GOLD MINE - MARANHAO STATE, BRAZIL
The Aurizona gold mine is wholly-owned by the Company and is situated in the
municipality of Godofredo Viana in Maranhao State, Brazil, near the coast of the
Atlantic Ocean. Aurizona contains the Piaba and Tatajuba deposits and over 10
near mine exploration targets. The area is covered by a mining licence and three
exploration permits. The Tatajuba deposit is located within an exploration
permit which is in the application process to convert to a mine license.
Operating Data
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Three months ended Nine months ended
September 30 September 30
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(tabled amounts are expressed in
thousands of US dollars) 2011 2010 2011 2010
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Mined waste - tonnes 344,894 299,396 702,803 688,335
Mined ore - tonnes 419,243 371,931 644,229 995,889
Ratio of waste to ore 0.8 0.8 1.1 0.7
Ore Grade mined - g/t 1.18 1.13 1.30 1.13
Processed ore - tonnes 416,822 279,654 920,773 418,614
Average grade processed - g/t 1.28 0.90 1.25 0.90
Average recovery rate % 83% 59% 79% 46%
Gold produced (ounces) 13,473 4,774 28,277 5,991
Gold sold (ounces) 12,239 1,462 27,521 2,201
Total cash costs (per ounce) (1) $830 $2,073 $1,117 $2,230
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Mining production
In July 2011, the Company began managing its own mining activities with the
commencement of an interim rental mining fleet alongside the Company's own
purchased equipment. The Company is currently in process of acquiring a full
fleet of mining equipment to replace the interim rental fleet and deliveries are
expected to arrive between Q4 2011 and Q2 2012.
During the quarter, the Company mined approximately 764,000 tonnes of material,
of which, approximately 419,000 tonnes was ore at an average head grade of 1.18
grams per tonne. This represented an increase of 14% of total material mined
versus the comparative quarter of 2010. The nine month period mining production
in the current year was 20% lower than the prior year. These variances were due
to the demobilization of the mining contractor on site earlier in the year,
which resulted in lower production for the year to date due to the downtime in
mining activities. However, Q3's mining production was higher than the
comparative quarter of 2010 due to an increase in production efficiencies under
the Company's own management.
Waste stripping has remained lower than planned due to the need to feed ore to
the mill and the changeover from contractor mining to owner-operator mining.
Mining activities are increasing as the new mining fleet is being mobilized in
conjunction with the rental fleet. This will result in an increase in the run of
mine stockpile for the upcoming wet season, continue ore feed to maintain
production levels and increase waste removal to access future ore.
Mill Processing
Production in Q3 and the current year to date were significantly higher than the
comparative periods of 2010 as the plant was commissioned in early 2010 and
first gold production was achieved in Q2 2010. Subsequent to the completion of
the strategic plant upgrades and improvements in the prior quarter, the Company
had record production of 13,473 ounces of gold in Q3. Feasibility targeted
monthly production was achieved in August and September with gold production of
5,018 ounces and 5,075 ounces, respectively.
Ore throughput significantly improved this quarter due to the plant
improvements. The hopper, apron feeder, SAG and pumps were all upgraded and
maintenance planning and execution was improved in the current quarter,
resulting in a significant decrease in plant downtime.
The following chart displays the monthly gold production subsequent to the plant
shutdown and capital upgrades:
http://media3.marketwire.com/docs/lgc-1110-fig-1.pdf
Recoveries are continuing to improve by minimizing carbon breakdown and loss to
tails through optimizing grind and particle size classification fed to the
carbon-in-leach ("CIL") circuit. Additional recovery improvements will be
achieved with the installation of a carbon regeneration kiln, which is expected
in the first half of 2012.
Q3 gold production met the requirements of the Completion Guarantee in the
agreement with Sandstorm Gold exceeding the three month production minimum
whereby the Company was required to produce 12,500 ounces of gold in a three
month period before April 2012.
October 2011's monthly production was approximately 5,100 ounces of gold.
Cash Costs (1)
The unit cash cost of production for 2011 remained higher than target primarily
due to low production and higher than planned employee and maintenance costs.
Over 60% of operating costs are fixed through employee related costs. Employee
costs were higher than planned due to high inflationary costs in Brazil and the
competition for employee talent in the mining industry. The Company recruited
and replaced a number of key employee positions during Q2 and Q3 that were key
to the contribution of the production increases. Maintenance costs were higher
than planned due to the plant shutdown and upgrades in Q2 and ongoing plant
upgrades in Q3 to improve operating efficiencies. In addition, diesel
consumption for the power generators was higher than planned due to the
insufficient power supply from CEMAR, state utility company, which is targeted
for completion in August 2012. Q3 unit cash cost of production was approximately
$830 per ounce, which was lower than previous quarters due to the increase in
gold production.
Cash cost in general were lower than the comparative 2010 periods because the
operations were in its operational ramp up stage in 2010.
AURIZONA EXPLORATION
The Company's exploration team completed the 40,000 metre resource drill program
and remains on target to deliver the resource upgrade in Q4 2011. SRK Denver has
been retained to prepare the updated Aurizona resource and preliminary reserve
estimate in conjunction with the Company. The NI 43-101 report will be delivered
in Q1 2012. The Company's exploration strategy of surface exploration techniques
combined with magnetic geophysical surveys continues to be very successful in
defining the principal mineralized shear zones which host the near mine targets.
Diamond Drilling
The Company currently is currently demobilizing 6 drill rigs from the project.
Two remaining drill rigs will commence drilling at the Boa Esperanca target in
November. Assays from 72 Piaba holes totalling 19,490 metres have been received
and samples from 43 additional holes are currently at the assay lab. Of
particular significance is the recent definition of new eastern and western
strike extensions to the Piaba orebody which will have a positive impact on the
Q4 resource update. Geological modeling is well advanced and in house specific
gravity data is being acquired to support the resource update. On completion of
the Piaba drill program, certain rigs will be demobilized and the remaining rigs
will focus on drilling the Boa Esperanca near mine exploration target. Recent
significant diamond drill intercepts (not true widths) from the ongoing program
are listed below:
-- 68.00 metres @ 2.46 g/t Au including 11.00 metres @ 6.02 g/t Au and 3.00
metres @ 5.04 g/t Au;
-- 50.00 metres @ 3.87 g/t Au including 7.00 metres @ 8.47 g/t Au and 1.00
metres @ 53.30 g/t Au;
-- 13.00 metres @ 33.63 g/t Au including 4.00 metres @ 104.83 g/t Au;
-- 13.50 metres @ 3.15 g/t Au including 3.00 metres @ 8.12 g/t Au;
-- 4.00 metres @ 9.46 g/t Au including 0.50 metres @ 59.10 g/t Au; and
-- 36.00 metres @ 1.54 g/t Au including 1.00 metres @ 4.99 g/t Au and 1.00
metres @ 17.75 g/t Au.
Auger and Shallow Reverse Circulation (RC) Drilling
Exploration teams completed a significant number of shallow auger and RC drill
holes targeting eastern and western extensions to the Piaba deposit in the
quarter. 403 auger holes were completed totalling 3,109 metres and 73 RC holes
were completed totalling 1,083 metres. These holes were drilled to a maximum
depth of 15 metres on a 50 by 10 metre section spacing. The holes were planned
to define new near surface zones of mineralization beyond the eastern and
western boundaries of the current resource model prior to the siting of diamond
holes in these areas. This low cost program has been highly successful in the
definition of new surface mineralization at Piaba from sections 1800W to 2000W
and from sections 700E to 1300E. The total strike length of the Piaba deposit is
now 3.30 kilometres. Diamond drill holes are currently being completed to test
for fresh rock mineralization underneath these surface anomalies. These auger
and RC data will also be utilized in the Q4 resource update.
A shallow auger drill program (1,365 metres in 141 holes) was also completed at
the Tatajuba gold deposit. This follows a review of the 2008 Tatajuba resource
estimate which identified a lack of near surface drill data. The samples are
currently at the assay laboratory, though preliminary results confirm that the
orebody is outcropping along the deposit strike and these holes should have a
positive effect on future Tatajuba resource estimates.
A shallow auger drill program was also completed over the Pirocaua SE
gold-in-soil anomaly with overall negative results. This data will be
interpreted in conjunction with the ground magnetic data currently being
acquired at Aurizona. Pirocaua SE could represent a transported (i.e. not in
situ) gold-in-soil anomaly downslope from the main Piaba orebody.
Soil Surveys
Soil assay and geochemical data have been received for all soil samples
collected in the unexplored western portion of the Aurizona area (LDW Grid) that
was designed to target the discovery of new gold mineralization within
extensions to the west-southwest trending structures that host the gold
mineralization in the Aurizona area. Several cohesive gold-in-soil anomalies
have been defined in this area associated with magnetic lineaments. Follow-up
work on these targets will be determined at year end.
Trenching
Assay data were received for trench samples from the Ferradura and Conceicao
near mine targets which will be reported in due course.
Ground Magnetic Geophysical Surveys
Ground magnetic surveying focused at Aurizona during the quarter and surveys
were completed at the Micote, Pirocaua, Sao Lourenco and Barriguda gold targets.
All these targets are located to the east of the Piaba deposit within the
Aurizona mine licence area. The survey data will assist in vectoring into the
main mineralized structures in this area.
Permitting
The process of converting the Tatajuba exploration licence, which hosts the
Tatajuba deposit, to a mining license advanced during the quarter with the
preparation of the mine application documentation due for submittal to the
National Department of Mineral Production in Brazil in November.
CACHOEIRA GOLD PROJECT
The Cachoeira Gold Project is located in northern Brazil in the Gurupi
Greenstone Belt, approximately 220 kilometres southeast of the Para State
capital of Belem and about 270 kilometres northwest of the port city of Sao
Luis, Maranhao State. Cachoeira comprises one contiguous block consisting of two
mining and three exploration licenses covering approximately 4,742 hectares.
In October 2007, the Company announced that it had finalized an option agreement
whereby it could earn a 100% interest in the property from a consortium of
vendors. According to the terms of the agreement the Company can earn its
interest by making a one-time cash payment and by incurring work expenditures of
at least BRL 9.5 million over a 50 month period. As at the date of this MD&A,
the Company had achieved this commitment. The Company's interest in the property
is subject to a 4.0% net profits royalty with a provision for a partial buy-out
of this royalty.
The major asset associated with Cachoeira is a series of shear zone hosted gold
deposits consisting of quartz veins, stockworks and wall rock alteration. Three
deposits, Tucano, Arara and Coruja, have been defined to date within the
north-south trending Cachoeira Shear Zone. In December 2010, the Company
released a maiden NI 43-101 compliant mineral resource estimate at Cachoeira and
filed the technical report on February 7th, 2011 on SEDAR.
Recent work at Cachoeira has included:
-- Positive site visit by DNPM officials ahead of an official review to
extend the date for the Company to commence mine construction, currently
set for April 2012;
-- Gazetting of new Cachoeira exploration licence which increases the
project size from 3,826 hectares to 4,742 hectares;
-- Finalization of the Cachoeira census and resettlement plan; and
-- Community awareness programs in the municipal schools.
Cachoeira Regional
The Company completed an auger drill program at the Arara North target and
samples are at the assay laboratory.
MARANHAO GREENFIELDS EXPLORATION PROPERTY - MARANHAO STATE, BRAZIL
The Maranhao Greenfields exploration property is located to the southwest and
southeast of Aurizona and contains multiple shear zones and over 100 historic
artisanal gold workings (garimpos). It consists of over 190,000 hectares of
contiguous exploration licenses and is located within the Sao Luis Craton,
southeast of the Guiana shield, which hosts several major gold deposits
including Rosebel and Las Cristinas. Geologic reconstruction of the South
American and African continents places the Sao Luis Craton in close proximity to
the Birimian Gold Belt of West Africa. Strong geologic and structural
similarities exist between the Sao Luis Craton, the Guiana shield and the West
African Craton. The area is characterized by low relief and an extensive
sedimentary cover sequence with deep weathering profiles. Historic exploration
in the district was limited to soil and rock sampling, auger drilling,
geophysical surveys and some shallow reconnaissance drill holes.
The Company currently has exploration teams working four targets simultaneously
in the Maranhao Greenfields project area.
Two new Maranhao Greenfields exploration licences were gazetted in the quarter
bringing the total landholding to 190,000 hectares.
Advanced Areal Gold Target
All exploration data (geochemical, geophysical and geological) were received and
interpreted for Areal that have identified this as a highly prospective
large-scale gold target which can be summarized as:
-- Major gold in soil anomaly measuring 1.70 kilometre by 0.45 kilometre at
a 50 ppb Au cut-off with maximum values of 8.97 g/t Au associated with
garimpeiro workings, mineralized quartz vein sets and sulfurized felsic
intrusives
-- Gold anomaly is associated with elevated Bi and Mo values and is hosted
within a major NW trending shear corridor with well-defined footwall
mafic volcanics - prospective structural corridor
-- Reconnaissance rock grab and channel sampling program returned gold
values up to 1.60 g/t Au
An auger drill program was designed to test the Areal gold anomaly on a 200
metre by 20 metre grid. This program commenced in September and is 50% complete
with 1,200 metres finalized in 187 holes. A topographic survey was also
completed.
Nova Vida Grid Extension
The Nova Vida east extension soil sampling program was completed and samples are
at the assay laboratory. Geologic mapping was also conducted. Nova Vida is a
large low-grade gold-in-soil anomaly associated with recent and
paleo-conglomerates and several alluvial gold garimpos. It will be reported when
the field programs are completed.
JST Grid
Assay data for soil samples from the JST Grid have been received and have
defined three discrete gold-in-soil anomalies centered on old garimpo pits. The
JST targets are located in the far southwest of the Maranhao Greenfields project
area and are significant in that they extend surface gold mineralization in the
project area to the extreme southwestern limit of the Company's claim
boundaries. Geologic mapping and ground geophysical surveys will be conducted at
JST and the targets will be reported on finalization of these programs.
PC, CPB, PJP, BML Grids
Work continued at these targets in the quarter and assay data are being uploaded
to the databases. The results from these programs will be reported before year
end. The Company is aggressively exploring its extensive and prospective
landholding at Maranhao Greenfields to deliver drill targets on 100% owned
mineral rights in 2012.
SUMMARY OF OPERATING RESULTS
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Three months ended Nine months ended
September 30 September 30
----------------------------------------------------------------------------
(tabled amounts are expressed in
thousands of US dollars) 2011 2010 2011 2010
----------------------------------------------------------------------------
Gold sales (ounces) 12,239 1,462 27,521 2,201
----------------------------------------------------------------------------
Revenue 15,910.5 1,620.3 35,447.3 2,449.8
Operating expense (9,009.2) (5,576.2) (28,728.8) (7,969.6)
Depreciation and amortization (2,012.9) (303.8) (4,118.5) (350.7)
----------------------------------------------------------------------------
4,888.4 (4,259.7) 2,600.0 (5,870.5)
General & administration (2) (2,370.5) (1,367.6) (5,610.6) (3,423.7)
Exploration expense 263.2 (1,334.5) (3,371.9) (2,123.4)
Financing (cost) income, net (1,979.1) (327.4) (2,959.2) (375.2)
Unrealized gains (losses) from
derivative liability (73.8) 472.7 2,291.8 (48.2)
Foreign exchange and other 1,994.2 30.4 2,269.5 384.5
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Net income (loss) 2,722.4 (6,786.1) (4,780.4) (11,456.5)
----------------------------------------------------------------------------
Basic/Diluted Income (loss) per
share 0.01 (0.02) (0.01) (0.03)
----------------------------------------------------------------------------
2. General and administration ("G&A") consists of general and
administrative expenses, professional fees and stock based compensation
charges.
Revenue increased over the comparative periods of 2010 due to the increase in
gold production and the increase in the price of gold. The Company's average
realized price of gold received was $1,590 for Q3 and $1,490 for the nine month
period, excluding gold sales to Sandstorm and delivery of gold to RMB. The
Company also achieved net positive operating profit for Q3 and the nine month
period of 2011, which was driven by the lower unit cash cost of production and
the increase in the price of gold.
G&A expense was significantly higher than comparative periods due to stock based
compensation expense related to the hiring of new management. Excluding stock
based compensation, the G&A was higher than comparative periods due to increases
in marketing and investor relations related costs.
The Company spent approximately $8.3 million in exploration related costs in Q3
of which, $7.1 million was on the Aurizona resource definition (capitalized in
mineral properties for accounting purpose), $0.9 million at Cachoeira and $0.3
million at Maranhao Greenfields. The Company reclassed $1.2 million of
exploration expense to mineral properties in Q3 as management revised its
estimate of allocation of overhead between Maranhao Greenfields and Aurizona.
This allocation in the current quarter resulted in an exploration cost recovery
and an increase in the Aurizona mineral property asset. For the nine month
period, the Company spent approximately $15.6 million in exploration of which,
$12.2 million was capitalized as mineral property on the Aurizona resource
definition, $2.4 million at Cachoiera and $1.0 million at Maranhao Greenfields.
The increase in overall exploration expenditure in 2011 compared to 2010 is due
to the Company focusing most of its resources on mine development and production
in 2010 resulting in lower amounts spent on exploration activities.
Net financing cost was higher due to the non-cash $0.8 million accreted interest
(for accounting purpose) from the settlement of RMB financing and $0.8 million
of interest and penalties from accounts payable due to late payments from cash
conservation efforts in the prior quarters.
Unrealized gains (losses) from derivative liability were due revaluation of the
foreign exchange and interest rate foreign exchange contracts and warrants
liability related to the transition to IFRS, whereby the warrants outstanding
were reclassified as a derivative liability on the balance sheet and subject to
mark-to-market adjustments through the profit and loss statement.
Foreign exchange gain was unrealized and the result of currency movements and
the US dollar on its WestLB revolving credit facility, accounts payable and
funds held in foreign currencies.
Operating results - 2 year historic trend
----------------------------------------------------------------------------
(tabled amounts are
expressed in thousands of
US dollars) (3) Q3 11 Q2 11 Q1 11
----------------------------------------------------------------------------
Revenue 15,910.5 9,179.4 10,357.4
Operating expense (9,009.2) (10,990.7) (8,728.9)
Depreciation and
amortization (2,012.9) (1,203.5) (902.1)
----------------------------------------------------------------------------
4,888.4 (3,014.8) 726.4
General &
administration(4) (2,370.5) (2,178.1) (1,062.0)
Exploration expense 263.2 (2,236.4) (1,398.7)
Financing (cost) income,
net (1,979.1) (624.5) (355.6)
Unrealized gains (losses)
from derivative liability (73.8) 737.3 1,628.3
Foreign exchange and other 1,994.2 (375.1) 650.4
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Net income (loss) 2,722.4 (7,691.6) 188.8
----------------------------------------------------------------------------
Basic/Diluted Income
(loss) per share 0.01 (0.02) 0.00
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(tabled amounts are
expressed in thousands of
US dollars) (3) Q4 10 Q3 10 Q2 10 Q1 10 Q4 09
----------------------------------------------------------------------------
Revenue 13,656.7 1,620.3 829.5 - -
Operating expense (13,922.3) (5,576.2) (2,393.4) - -
Depreciation and
amortization (1,783.0) (303.8) (46.9) - -
----------------------------------------------------------------------------
(2,048.6) (4,259.7) (1,610.8) - -
General &
administration(4) (1,320.7) (1,367.6) (1,037.0) (1,019.1) (813.4)
Exploration expense (665.4) (1,334.5) (725.7) (63.2) (576.1)
Financing (cost) income,
net (491.2) (327.4) (78.6) 30.8 977.4
Unrealized gains (losses)
from derivative liability (899.0) 472.7 (520.9) - -
Foreign exchange and other 519.1 30.4 349.5 4.6 (891.2)
----------------------------------------------------------------------------
Net income (loss) (4,905.8) (6.786.1) (3,623.5) (1,046.9) (1,303.3)
----------------------------------------------------------------------------
Basic/Diluted Income
(loss) per share (0.01) (0.02) (0.01) (0.00) (0.00)
----------------------------------------------------------------------------
3. The quarterly comparatives from 2009 are presented under Canadian GAAP.
IFRS transition began on January 1, 2010.
4. General and administration consists of general and administrative
expenses, professional fees and stock based compensation charges.
Revenue's began in Q2 2010 with the Company's first ounce of gold produced and
increased up to Q4 2010 due to higher production output and rising gold prices.
However, production decreased in Q1 2011 and Q2 2011 due to the planned shutdown
and plant upgrade and was re-commissioned resulting in production increases from
Q2 to Q3 in 2011. Operating expenses followed the same trend as gold sales with
movements in quarterly operating expense directly related to the number of
ounces of gold sold within that period. In addition, operating expenses on a
unit cash cost basis were directly impacted by the number of ounces produced in
each quarter, resulting in lower unit cash cost related to increases in
production. General and administration expense remained consistent quarter on
quarter since production began in Q2 2010, except for Q2 2011 and Q3 2011, which
was impacted by an increase in stock based compensation expense related to the
hiring of new management and increases in marketing and investor relations
related costs.
Exploration expense was related to the Cachoeira and Maranhao Greenfield
exploration programs which began in Q2 2010. Variances between quarters were due
to the timing of executing the planned exploration programs and the weather.
Net financing costs were directly related to the interest expense on the
outstanding loan balance and interest income on the cash balance of the Company.
Unrealized derivative gains and losses quarter on quarter was mainly driven by
the volatility in the Company's share price and its relation to the outstanding
warrants.
Foreign exchange movements each quarter are related to changes in the USD:BRL
exchange rate in relation to the Company's working capital accounts in Brazil
and its WestLB revolving credit facility which is denominated in BRL.
LIQUIDITY AND CAPITAL RESOURCES
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
----------------------------------------------------------------------------
(tabled amounts are expressed in
thousands of US dollars) 2011 2010 2011 2010
----------------------------------------------------------------------------
Cash flows from operating
activities
Before working capital 2,404.4 (6,346.3) (3,894.2) (9,731.5)
After working capital 672.1 (14,514.1) (2,767.8) (20,871.2)
Cash flows from financing
activities 50,957.3 (75.7) 53,378.8 44,031.8
Cash flows from investing
activities (10,480.1) (4,297.7) (20,023.3) (28,491.5)
Effect of exchange rates on cash (207.4) 30.9 66.1 332.6
Net cash flows 41,149.3 (18,887.5) 30,587.7 (5,330.9)
Cash balance 41,357.4 7,567.2 41,357.4 7,567.2
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At September 30, 2011, the Company had cash and cash equivalents of $41.4
million and finished gold bullion inventory of approximately 3,800 ounces.
The Company achieved its first positive operating cash inflow before working
capital on record and positive cash inflow after working capital movements. This
was the direct result of the net income realized for the quarter. Cash outflow
from operations for the nine month period in 2011 was due to the net loss for
the period. The variance against the comparative periods of 2010 was due to the
change in net income (loss) between the periods.
Cash inflow from financing activities in Q3 included $30.0 million from the
WestLB debt facility which was partially used to repay the remaining $10.0
million outstanding on the RMB debt facility, $4.9 million of the prepaid gold
facility and the balance was used for capital upgrades. The Company also closed
an equity financing for net proceeds of approximately $36.0 million. Cash inflow
for the nine months ended in 2011 also include $5.5 million received on a
prepaid gold facility and an additional $3.3 million paid on the RMB debt
facility. The prior year's cash inflow was from the drawdown of the RMB debt
facility and the 2010 equity issuance.
Cash outflow from investing activities in Q3 consisted of $7.8 million on
payments to further define the Aurizona resource and $2.7 million on capital
items at the Aurizona plant. The nine month period consisted of $12.2 million on
payments related to the Aurizona resource definition and $7.8 million on capital
items at Aurizona, which included the plant upgrades.
As at September 30, 2011, the Company had the following contractual obligations
outstanding:
----------------------------------------------------------------------------
(tabled amounts
are expressed in Less
thousands of US than 1 - 2 2 - 3 3 - 4 4 - 5 There-
dollars) Total 1 year years years years years after
----------------------------------------------------------------------------
Long term debt 33,536.7 6,279.3 5,379.3 6,079.3 14,491.8 1,307.0 -
Accounts payables 8,108.2 8,108.2 - - - - -
Asset retirement
obligation 5,895.1 - - - - - 5,895.1
----------------------------------------------------------------------------
Senior secured credit facility with WestLB AG ("WestLB")
In July 2011, the Company closed a senior secured credit facility with WestLB.
This facility is comprised of a $20.0 million senior secured term loan (the
"Term Loan") and a 15.6 million BRL senior secured revolving loan (the
"Revolving Facility"). The Term Loan also has a cash sweep provision, which has
no material impact to the Company's cash position or financial statements as at
September 30, 2011. The purpose of the Facility was to refinance the Company's
existing debt with RMB Resources and to fund additional capital expenditures and
working capital needs at the Aurizona gold mine.
The Term Loan is a 5 year loan with semi-annual instalments commencing on July
1, 2012 and bears interest at LIBOR plus 3.625%. The Revolving Facility is
denominated in Brazilian Reais, matures on July 1, 2014 and bears interest at
CDI plus 3.25%. Any outstanding commitments under the Revolving Facility shall
be repaid in full on the final maturity date.
The Company has provided security on the facility in the form of a first fixed
floating charge over the Aurizona operation, a first mortgage over the shares of
Mineracao Aurizona S.A. ("MASA") and of the rights, title and licenses
associated with the operation and a general security agreement by the Company in
favour of WestLB AG.
The Company shall maintain a debt service coverage ratio ("DSCR") to be greater
than 1.35, a loan life coverage ratio ("LLCR") to be less than 1.35 and a
reserve tail ratio ("RTR") to be greater than 30% over the life of the loan.
Aurizona Project Debt Facility
In December 2009, the Company entered into a senior secured, project debt
facility (the "RMB Facility") in the amount of up to $15.0 million with RMB
Resources Inc. ("RMB") to assist in the completion of the Aurizona processing
plant. The RMB Facility was comprised of two tranches in the amount of $7.5
million each that bore interest at LIBOR plus 7.5% and was to be fully repaid by
December 31, 2012.
As at September 30, this RMB Facility was repaid in full with the proceeds from
the West LB Term Loan.
RMB $5.5 million prepaid gold agreement
On May 25, 2011, the Company entered into a $5.5 million prepaid gold agreement
with RMB. In exchange for the upfront cash received by the Company, the Company
was required to deliver a total of 3,880 ounces of gold to RMB. As at September
30, the Company had fulfilled this obligation.
Commitment from Acquisition of Aurizona Goldfields Corporation
In January 2007, the Company acquired the Aurizona property from Brascan Brasil
("Brascan") and Eldorado Gold Corporation ("Eldorado") in exchange for a series
of staged payments (the "Purchase Agreement"), some of which were conditional
upon the project reaching commercial production, as defined in the Purchase
Agreement. The Company has repaid all outstanding amounts in relation to this
agreement but remained liable for payments of $1.0 million payable to each party
on the first, second and third anniversary of the commencement of commercial
production of Aurizona. As defined under the terms of the Purchase Agreement,
the Company achieved commercial production on December 2, 2010 resulting in the
first payment becoming due and payable on December 2, 2011.
In July 2011, the Company entered into an agreement with Brascan and Eldorado to
amend the outstanding debt of $6.0 million of the Company to Brascan and
Eldorado. The Company issued promissory notes in the aggregate amount of $3.0
million to each of Eldorado and Brascan in connection with the Purchase
Agreement. In satisfaction of the aforementioned promissory notes, Brascan and
Eldorado will each receive $1.5 million in cash on or before December 2, 2011,
and has received 2,417,949 common shares of the Company.
FINAME Equipment Purchase Financing ("FINAME")
In February 2011, the Company entered into debt financing in the amount of 4.0
million Brazilian Reais ("BRL") to purchase mining equipment through the FINAME
financing program, which is administered through the Brazilian Development Bank
("BNDES"). Interest is calculated at 5.5% per annum and the FINAME is repayable
in equal monthly instalments beginning September 15, 2011 and ending February
15, 2016.
Derivative Contracts
Subsequent to quarter end, the Company entered into the following derivative
contracts as required under the terms of the WestLB Facility:
BRL / USD Forward Contracts
The Company sells US dollars and buys Brazilian Real as follows:
----------------------------------------------------------------------------
Expiry Date Notional Amount (USD) BRL / USD Price
----------------------------------------------------------------------------
December 16, 2013 $ 6,000.0 1.86725
June 16, 2014 $ 6,000.0 1.92986
December 15, 2014 $ 6,000.0 1.99265
June 15, 2015 $ 6,000.0 2.04843
December 15, 2015 $ 6,000.0 2.11206
June 15, 2016 $ 6,000.0 2.16633
----------------------------------------------------------------------------
Floating to Fixed Interest Rate Swap Contracts
The Company pays a fixed annual interest rate of 1.495% and receives 6 month US
Libor rate as follows:
----------------------------------------------------------------------------
Start Date End Date Notional Amount (USD)
----------------------------------------------------------------------------
January 25, 2012 July 25, 2012 $ 20,000.0
July 25, 2012 January 25, 2013 $ 12,304.0
January 25, 2013 July 25, 2013 $ 12,304.0
July 25, 2013 January 27, 2014 $ 4,235.7
January 27, 2014 July 25, 2014 $ 4,235.7
----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Shareholders' equity increased over the prior year due to the Company's equity
financing activities during the period, which was partially offset by an
increase in the deficit.
In Q3, the Company closed a marketed public offering and concurrent private
placement of units of the Company for total gross proceeds of approximately
CA$39.4 million and subsequent to the quarter end, an additional CA$2.6 million
was received on the exercise of the over-allotment option. Each unit consisted
of one common share of the Company plus one half common share purchase warrant
at a price of CA$0.52 per unit. The Company intends to use the proceeds as
follows:
-- Aurizona expansion scoping study / pre-feasibility / feasibility study;
-- Aurizona resource definition expansion;
-- Aurizona plant expansion;
-- Maranhao Greenfield discovery exploration;
-- Cachoeira social impact study;
-- Reduction of debt;
-- Corporate development; and
-- General corporate purposes and working capital.
Each full warrant is exercisable to acquire one common share of the Company at a
price of CA$0.70 for a period of 24 months from the closing of the offering,
which was September 30, 2011.
As at the date of this report the Company had 522,550,895 shares outstanding,
26,140,000 share purchase options and 47,459,503 common share warrants
outstanding.
The following is a summary of stock options outstanding as at the date of this
report:
----------------------------------------------------------------------------
Number of shares
('000s) Vested ('000s) Price per share CA$ Expiry Date
----------------------------------------------------------------------------
100 100 0.50 14-Mar-12
205 205 0.85 8-Aug-12
210 210 1.23 16-Jan-13
165 165 1.05 2-May-13
250 250 0.90 20-Jun-13
700 700 0.90 19-Sep-13
5,100 5,100 0.42 24-Jul-14
750 750 0.37 29-Jul-14
100 100 0.55 4-Jan-15
810 540 0.63 5-Jul-15
5,000 1,500 0.58 24-Sep-15
6,325 900 0.65 12-Apr-16
2,850 - 0.55 18-May-16
2,600 - 0.59 9-Aug-16
975 - 0.46 14-Oct-16
----------------------------------------------------------------------------
26,140 10,520
----------------------------------------------------------------------------
The following is a summary of warrants outstanding as at the date of this report:
----------------------------------------------------------------------------
Number of warrants ('000s) Price per share CA$ Expiry Date
----------------------------------------------------------------------------
6,859 1.00 20-Jun-12
----------------------------------------------------------------------------
40,600 0.70 29-Sep-13
----------------------------------------------------------------------------
47,459
----------------------------------------------------------------------------
OUTLOOK AND STRATEGY
Aurizona Gold Mine
The Company's 2011 full year production target is estimated between 42,000 and
44,000 ounces of gold, up from the Q2 estimate of 40,000 ounces of gold. Cash
costs for Q4 are targeted between $750 and $780 per ounce of gold produced with
an estimated cash cost for the 2011 year between $990 and $1,000 per ounce of
production. The increase is targeted cash costs for 2011 is due to higher
employment costs, power and a planned increase in waste stripping.
The Aurizona NI 43-101 resource upgrade remains on target for release in early
December of 2011.
Cachoeira Gold Property
The Company has extended its target to complete the Cachoeira scoping study (the
"Scoping Study") to Q2 2012 that will deliver the path forward to developing
Cachoeira into a mining project feasibility study. This has been delayed to
allow management to focus on the Aurizona resource upgrade and production
planning and completion of Cachoeira census study.
Maranhao Greenfields Property
The Company continues to aggressively explore the extensive Maranhao Greenfields
property to discover new gold deposits and will maintain exploration crews
working four targets simultaneously throughout 2011. Regional scale exploration
is underway designed to generate large gold-in-soil anomalies consistent with
the Aurizona mineralization style. Through these programs the Company intends to
define between six and nine new target areas, several of which will be brought
to drill ready stage in 2012.
Interim Consolidated Statements of Income (Loss) and Comprehensive Income
(Loss)
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
Three months ended Nine months ended
Note September 30 September 30
------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Revenue
Gold sales 10 $ 15,910.5 $ 1,620.3 $ 35,447.3 $ 2,449.8
----------------------------------------------------------------------------
15,910.5 1,620.3 35,447.3 2,449.8
----------------------------------------------------------------------------
Operating expenses
Cost of goods sold (9,009.2) (5,576.2) (28,728.8) (7,969.6)
Depletion and
amortization (2,012.9) (303.8) (4,118.5) (350.7)
----------------------------------------------------------------------------
4,888.4 (4,259.7) 2,600.0 (5,870.5)
----------------------------------------------------------------------------
Other (expenses)
income, net
Exploration 263.2 (1,334.5) (3,371.9) (2,123.4)
General and
administrative 11 (1,321.1) (939.0) (3,090.7) (1,994.5)
Gain (loss) on
derivative
liability 12 (73.8) 472.7 2,291.8 (48.2)
Foreign exchange
gain 3,336.2 43.4 3,604.3 397.5
Stock-based
compensation 8 (1,049.4) (428.6) (2,519.9) (1,429.2)
Finance income 20.5 147.9 144.8 292.9
Finance cost (1,999.6) (475.3) (3,104.0) (668.1)
Other expenses (1,342.0) (13.0) (1,334.8) (13.0)
----------------------------------------------------------------------------
Net income (loss) and
comprehensive income
(loss) for the period $ 2,722.4 $ (6,786.1) $ (4,780.4) $(11,456.5)
----------------------------------------------------------------------------
Income (Loss) per
common share
Basic 0.01 (0.02) (0.01) (0.03)
Diluted 0.01 (0.02) (0.01) (0.03)
Weighted average
shares outstanding
(000's)
Basic 441,343 409,955 437,855 376,148
Diluted 442,801 409,955 437,855 376,148
----------------------------------------------------------------------------
Total shares issued
and outstanding
(000's) 517,523 418,504 517,523 418,504
----------------------------------------------------------------------------
Interim Consolidated Statements of Financial Position
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
September 30, December 31, January 1,
Note 2011 2010 2010
----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 41,357.4 $ 10,703.6 $ 12,565.5
Accounts receivable and
prepaid expenses 5,549.2 3,647.9 743.7
Inventory 3 9,046.4 6,325.5 393.6
Investments - - 2,942.9
----------------------------------------------------------------------------
55,953.0 20,677.0 16,645.7
Property, plant and
equipment 4 95,388.8 88,166.0 54,867.6
Other assets 1,316.2 1,089.5 408.1
----------------------------------------------------------------------------
Total assets $152,658.0 $109,932.5 $ 71,921.4
----------------------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 8,108.2 $ 3,524.2 $ 5,364.6
Current portion of
derivative liability 12 16.2 1,605.8 -
Current portion of debt
instruments 5 6,013.0 8,118.3 301.6
Current portion of other
liabilities 6 755.5 1,748.2 1,787.2
----------------------------------------------------------------------------
14,892.9 14,996.5 7,453.4
Debt instruments 5 25,848.2 9,383.2 4,989.2
Derivative liability 12 3,709.4 1,019.2 -
Other liabilities 6 9,715.4 19,917.9 20,308.8
Asset retirement obligation 2,153.6 2,370.9 2,108.5
----------------------------------------------------------------------------
Total liabilities 56,319.5 47,687.7 34,859.9
----------------------------------------------------------------------------
Shareholders' equity
Share capital 146,107.4 107,233.3 65,687.7
Deficit (49,768.9) (44,988.5) (28,626.2)
----------------------------------------------------------------------------
Total shareholders' equity 96,338.5 62,244.8 37,061.5
----------------------------------------------------------------------------
Total liabilities and
shareholders' equity $152,658.0 $109,932.5 $ 71,921.4
----------------------------------------------------------------------------
Interim Consolidated Statements of Changes in Shareholders' Equity and
Deficit
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
Attributable to equity holders of the Company
----------------------------------------------------------------------------
Shares Share Contributed
Note ('000) capital surplus Deficit Total
----------------------------------------------------------------------------
Balance at
January 1,
2010 358,837 $ 60,063.2 $ 5,624.5 $(28,626.2) $ 37,061.5
Net loss for
the period - - - (11,456.5) (11,456.5)
Escrow shares
returned to
treasury and
cancelled (214) (35.7) 35.7 - -
Stock options
exercised 951 608.8 (231.9) - 376.9
Stock-based
compensation
charges - - 1,571.8 - 1,571.8
Issue of
share
capital, net 58,930 27,689.3 - - 27,689.3
----------------------------------------------------------------------------
Balance at
September
30, 2010 418,504 $ 88,325.6 $ 7,000.1 $(40,082.7) $ 55,243.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance at
January 1,
2010 358,837 $ 60,063.2 $ 5,624.5 $(28,626.2) $ 37,061.5
Net loss for
the year - - - (16,362.3) (16,362.3)
Escrow shares
returned to
treasury and
cancelled (214) (35.7) 35.7 - -
Stock options
exercised 3,267 1,183.2 (405.6) - 777.6
Stock-based
compensation
charges - - 1,952.9 - 1,952.9
Issue of
share
capital, net 72,649 38,701.6 113.6 - 38,815.2
----------------------------------------------------------------------------
Balance at
December 31,
2010 434,539 $ 99,912.3 $ 7,321.1 $(44,988.5) $ 62,244.9
----------------------------------------------------------------------------
Net loss for
the period - - - (4,780.4) (4,780.4)
Stock options
exercised 8 2,475 1,583.6 (596.3) - 987.3
Stock-based
compensation
charges 8 - - 2,519.9 - 2,519.9
Issue of
share
capital, net 7(a) 80,509 35,366.8 - - 35,366.8
----------------------------------------------------------------------------
Balance at
September
30, 2011 517,523 $136,862.7 $ 9,244.7 $(49,768.9) $ 96,338.5
----------------------------------------------------------------------------
Interim Consolidated Statements of Changes in Shareholders' Equity and
Deficit
(expressed in thousands of U.S. dollars, except where indicated)
----------------------------------------------------------------------------
Three months ended Nine months ended
Note September 30 September 30
----------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Cash flows from
operating
activities
Net income (loss)
for the period $ 2,722.4 $ (6,786.1) $ (4,780.4) $ (11,456.5)
Items not
affecting cash
Depletion and
amortization 2,027.3 303.8 4,161.6 359.2
Recognition of
other
liabilities (2,248.2) (38.5) (2,711.2) (74.5)
Unrealized
foreign
exchange
(gains) losses (3,319.6) (60.8) (3,508.0) (392.4)
Unrealized
(gains) losses
from warrant
liability 73.8 (472.7) (2,291.8) 48.2
Stock-based
compensation
charges 8 1,049.4 428.6 2,519.9 1,429.2
Accretion of
asset
retirement
obligation 63.1 47.6 198.1 139.5
Accretion of
interest 889.5 226.7 1,370.9 226.7
Other 1,146.7 5.1 1,146.7 (10.9)
----------------------------------------------------------------------------
2,404.4 (6,346.3) (3,894.2) (9,731.5)
Change in non-cash
operating working
capital
Increase in
accounts
receivable and
prepaid expense 166.1 (496.5) (1,901.3) (564.8)
Increase in
inventory (861.1) (5,160.7) (2,077.6) (8,734.5)
(Increase)
decrease in
accounts payable
and accruals (1,037.3) (2,510.6) 5,105.3 (1,840.4)
----------------------------------------------------------------------------
672.1 (14,514.1) (2,767.8) (20,871.2)
----------------------------------------------------------------------------
Cash flows from
financing
activities
Proceeds from
prepaid gold
agreement 6(a) - - 5,500.0 13,868.8
Payment for
settlement of
prepaid gold
agreement (3,862.7) (3,862.7)
Proceeds from debt
5(d) 30,000.0 - 30,000.0 -
Payment of debt
financing fees (1,034.6) - (1,712.7) -
Repayment to
principal of debt
financing (10,000.0) - (13,333.3) -
Proceeds from
issuance of
special warrants,
net - (269.2) - 29,786.0
Proceeds on
issuance of
common shares 35,854.6 193.5 36,787.5 377.0
----------------------------------------------------------------------------
50,957.3 (75.7) 53,378.8 44,031.8
----------------------------------------------------------------------------
Cash flows from
investing
activities
Proceeds from
disposal of
investments - - - 2,964.2
Payment for
mineral
properties (7,812.9) (608.4) (12,207.2) (1,085.6)
Payments for
property, plant
and equipment (2,667.2) (2,603.7) (7,816.1) (30,370.1)
----------------------------------------------------------------------------
(10,480.1) (4,297.7) (20,023.3) (28,491.5)
----------------------------------------------------------------------------
Effect of exchange
rate changes on
cash (207.4) 30.9 66.1 332.6
Increase
(decrease) in
cash and cash
equivalents 41,149.3 (18,887.5) 30,587.7 (5,330.9)
Cash and cash
equivalents -
beginning of
period 415.5 26,423.8 10,703.6 12,565.5
----------------------------------------------------------------------------
Cash and cash
equivalents - end
of period $ 41,357.4 $ 7,567.2 $ 41,357.4 $ 7,567.2
----------------------------------------------------------------------------
On behalf of the Board of Directors
LUNA GOLD CORP.
John Blake, President and CEO
Forward Looking Statements
This MD&A includes certain statements that constitute "forward-looking
statements", and "forward-looking information" within the meaning of applicable
securities laws ("forward-looking statements" and "forward-looking information"
are collectively referred to as "forward-looking statements", unless otherwise
stated). These statements appear in a number of places in this MD&A and include
statements regarding our intent, or the beliefs or current expectations of our
officers and directors. Such forward-looking statements involve known and
unknown risks and uncertainties that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. When
used in this MD&A, words such as "believe", "anticipate", "estimate", "project",
"intend", "expect", "may", "will", "plan", "should", "would", "contemplate",
"possible", "attempts", "seeks" and similar expressions are intended to identify
these forward-looking statements. Forward-looking statements may relate to the
Company's future outlook and anticipated events or results and may include
statements regarding the Aurizona property and other development projects of the
Company's future financial position, business strategy, budgets, litigation,
projected costs, financial results, taxes, plans and objectives. We have based
these forward-looking statements largely on our current expectations and
projections about future events and financial trends affecting the financial
condition of our business. These forward-looking statements were derived
utilizing numerous assumptions regarding expected growth, results of operations,
performance and business prospects and opportunities that could cause our actual
results to differ materially from those in the forward-looking statements. While
the Company considers these assumptions to be reasonable, based on information
currently available, they may prove to be incorrect. Accordingly, you are
cautioned not to put undue reliance on these forward-looking statements.
Forward-looking statements should not be read as a guarantee of future
performance or results. To the extent any forward-looking statements constitute
future-oriented financial information or financial outlooks, as those terms are
defined under applicable Canadian securities laws, such statements are being
provided to describe the current anticipated potential of the Company and
readers are cautioned that these statements may not be appropriate for any other
purpose, including investment decisions.
Forward-looking statements are based on information available at the time those
statements are made and/or management's good faith belief as of that time with
respect to future events, and are subject to risks and uncertainties that could
cause actual performance or results to differ materially from those expressed in
or suggested by the forward-looking statements. These statements are based on a
number of assumptions, including, but not limited to, assumptions regarding
general business and economic conditions, interest rates, the supply and demand
for, deliveries of, and the level and volatility of prices of gold and other
primary metals and minerals as well as oil, and related products, the timing of
the receipt of regulatory and governmental approvals of our producing and
development projects and other operations, our costs of production and
production and productivity levels, as well as those of our competitors, power
prices, continuing availability of water and power resources for our operations,
market competition, the accuracy of our reserve estimates (including with
respect to size, grade and recoverability) and the geological, operational and
price assumptions on which these are based, conditions in financial markets, the
future financial performance of the company, our ability to attract and retain
skilled staff, our ability to procure equipment and operating supplies, positive
results from the studies on our producing and development projects, our gold and
other product inventories, our ability to secure adequate transportation for our
products, our ability to obtain permits for our operations and expansions, and
our ongoing relations with our employees and business partners. The foregoing
list of assumptions is not exhaustive. Events or circumstances could cause
actual results to vary materially.
Factors that may cause actual results to vary materially include, but are not
limited to, changes in commodity and power prices, changes in interest and
currency exchange rates, acts of foreign governments, inaccurate geological and
metallurgical assumptions (including with respect to the size, grade and
recoverability of mineral reserves and resources), unanticipated operational
difficulties (including failure of plant, equipment or processes to operate in
accordance with specifications or expectations, cost escalation, unavailability
of materials and equipment, government action or delays in the receipt of
government approvals, industrial disturbances or other job action, adverse
weather conditions and unanticipated events related to health, safety and
environmental matters), union labour disputes, political risk, social unrest,
failure of customers or counterparties to perform their contractual obligations,
changes in our credit ratings and changes or further deterioration in general
economic conditions.
Forward-looking statements speak only as of the date those statements are made.
Except as required by applicable law, we assume no obligation to update or to
publicly announce the results of any change to any forward-looking statement
contained or incorporated by reference herein to reflect actual results, future
events or developments, changes in assumptions or changes in other factors
affecting the forward-looking statements. If we update any one or more
forward-looking statements, no inference should be drawn that we will make
additional updates with respect to those or other forward-looking statements.
You should not place undue importance on forward-looking statements and should
not rely upon these statements as of any other date. All forward-looking
statements contained in this MD&A are expressly qualified in their entirety by
this cautionary statement.
Other Technical Information
Peter Mah, P.Eng., Certified Mining Engineer, the Company's Vice President
Operations is the Qualified Person as defined under National Instrument 43-101
responsible for the scientific and technical work on the development programs
and has reviewed and approved the corresponding technical disclosure throughout
this MD&A. Titus Haggan Ph.D., EurGeol Certified Professional Geologist #746,
the Company's Vice President of Exploration, is the Qualified Person as defined
under National Instrument 43-101 responsible for the scientific and technical
work on the exploration programs and has reviewed and approved the corresponding
technical disclosure throughout this MD&A.
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