q2 2017 operating & financial results...q2 2017 operating & financial results conference...
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Q22017OPERATING&FINANCIALRESULTSConferenceCall&WebcastPresentation- 3rd August2017
This presentation has been prepared by Asanko Gold Inc. (the “Company”) solelyfor informational purposes. This presentation is the sole responsibility of theCompany. Information contained herein does not purport to be complete and issubject to certain qualifications and assumptions and should not be relied uponfor the purposes of making an investment in the securities or entering into anytransaction. The information and opinions contained in this presentation areprovided as at the date of this presentation and are subject to change withoutnotice and, in furnishing the presentation, the Company does not undertake oragree to any obligation to provide recipients with access to any additionalinformation or to update or correct the presentation.No securities commission or similar regulatory authority has passed on the meritsof any securities referred to in the presentation, nor has it passed on or reviewedthe presentation.Cautionary note to United States investors - the information contained in thepresentation uses terms that comply with reporting standards in Canada andcertain estimates are made in accordance with National Instrument 43-101–Standards for Disclosure for Mineral Projects (“NI 43-101”). The presentation usesthe terms “other resources”, “measured”, “indicated” and “inferred” resources.United States investors are advised that, while such terms are recognized andrequired by Canadian securities laws, the SEC does not recognize them. UnderUnited States standards, mineralization may not be classified as “ore” or a“reserve” unless the determination has been made that the mineralization couldbe economically and legally produced or extracted at the time the reservedetermination is made. United States investors are cautioned not to assume thatall or any part of measured or indicated resources will ever be converted intoreserves. Further, “inferred resources” have a great amount of uncertainty as totheir existence and as to whether they can be mined legally or economically. Itcannot be assumed that all or any part of the “inferred resources” will ever beupgraded to a higher category. Therefore, United States investors are alsocautioned not to assume that all or any part of the inferred resources exist, orthat they can be mined legally or economically.Under Canadian rules, estimates of “inferred resources” may not form the basis offeasibility or pre-feasibility studies except in limited cases. Disclosure of“contained ounces” is permitted disclosure under Canadian regulations; however,the United States Securities Exchange Commission (“SEC”) normally only permitsissuers to report mineralization that does not constitute “reserves” as in placetonnage and grade without reference to unit measures.
Accordingly, information concerning descriptions of mineralization, mineralresources and mineral reserves contained in the presentation, may not becomparable to information made public by United States companies subject to thereporting and disclosure requirements of the SEC.Some of the statements contained in this presentation may contain “forward-lookingstatements”. All statements in this presentation, other than statements of historicalfacts, that address estimated mineral resource and reserve quantities, grades andcontained metal, and the timing of further exploration and development of theCompany’s projects, are forward-looking statements. There can be no assurance thatthe plans, intentions or expectations upon which these forward-looking statementsand information are based will occur. “Forward-looking statements” and “forward-looking information” are subject to a variety of risks, uncertainties and assumptions,including those that are discussed in the Company’s Annual Information Form. Someof the factors which could affect future results and could cause results to differmaterially from those expressed in the forward looking statements and informationcontained herein include: market prices, exploitation and exploration successes,continued availability of capital and financing and general economic, market,business or governmental conditions. Forward looking statements and informationare based on the beliefs, estimates and opinions of management at the date thestatements are made and are subject to change without notice. The Companydisclaims any intention to update or revise any forward-looking statements whetheras a result of new information, future events, or otherwise except as required byapplicable law. The Company also cautions potential investors that mineral resourcesthat are not material reserves do not have demonstrated economic viability.For a more comprehensive discussion of the risks faced by the Company, and whichmay cause the actual financial results, performance or achievements of theCompany to be materially different from the Company’s estimated future results,performance or achievements expressed or implied by forward-looking informationor forward-looking statements, please refer to the Company’s latest AnnualInformation Form, filed with Canadian securities regulatory authorities atwww.sedar.com, and filed under Form 40-F with the SEC at www.sec.gov/edgar. Therisks described in the Annual Information Form (filed and viewable onwww.sedar.com and www.sec.gov/edgar, and available upon request from theCompany) are hereby incorporated by reference into this presentation.
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FORWARDLOOKINGINFORMATION
• Quarterlyproductionof46,017oz
• Cut2oftheNkranpushbackcontinued
• ReconciliationofNkranMRE&gradecontrolmodelswithin2%duringlast3months
• P5Mvolumetricupgradestoincreaseplantthroughputto5Mtpacompletedaheadofscheduleandwithinbudget
• Akwasiso miningcommenced– yieldingloweroxidesthanexpected
• Guidancerevised:
• Production:205,000– 225,000oz(Previous:230,000– 240,000oz)
• AISC:US$920– US$960/oz (Previous:US$880– US$920/oz)
• Goldsalesof48,461ozataveragerealizedpriceUS$1,238/oz forUS$60mingoldrevenue
• AISCdecreasedby3%Q-QtoUS$930/oz
• ~US$34minoperatingcashflow
• PositiveNetIncomeofUS$1.2morUS$0.00/share– inlinewithconsensusofUS$(0.01/share)1
• US$59.1mincashandimmediatelyconvertibleworkingcapital
• DFSpublished,confirmingrobustexpansionprojectsandstrongcashgeneratingcapability
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Q22017HIGHLIGHTS
Industry-leadingsafetyrecordmaintained:
Ø Nolosttimeinjuries(“LTI”)reportedforthequarter
Ø Rolling12monthLTIFRof0.20
HEALTH &SAFETY
QuarterlyGoldProductionandSalesOunces
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q3'16 Q4'16 Q1'17 Q2'17
GoldProduced GoldSold GoldProductionDesign
1– BasedonquarterlyEPSestimatesfrom7outof9analystscoveringAsanko,reportsfromJune5toJuly26,2017
357
337
439
468
300
320
340
360
380
400
420
440
460
480
Q3'16 Q4'16 Q1'17 Q2'17
-
200
400
600
800
1,000
1,200
1,400
Q3'16 Q4'16 Q1'17 Q2'17
Oremined Oremilled Milldesign
• Oreminingbroadlyinlinewithmillingrates,averaging350,00tpm⎼ Averageminedgradeof1.5g/tduetominingoflowgradecentral
sandstones
⎼ Lowergradesinlinewithpreviousguidance
⎼ StripratioinlinewithLoM ratioof6.0:1,includeswesternwallpushbackandcommencementofminingoperationsatAkwasiso
• Nkran cut2pushbackstarted,commencingwithwesternwallsequence
– Westwallslumpareamaterial(1.1Mt)movedperSRKrecommendations
– Requireddesignelevationreachedonwesternwall
– Wasteminingrelocatedtosoutheastsectionforremainderof2017
• PitdevelopmentatAkwasiso commenced
– Levelsofpreviouslydisturbedmaterialdeeperthanoriginallyexpected
– Feweroxidetonnesavailableforprocessing
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Q2MININGPERFORMANCE
AGMKeyMiningStatistics Units Q22017
Q12017
Q42016
Q32016
Totaltonnes mined ‘000t 7,506 6,637 7,231 7,332Wastetonnes mined ‘000t 6,457 5,620 5,931 6,003Oretonnes mined ‘000t 1,049 1,017 1,300 1,326Stripratio W:O 6.2:1 5.5:1 4.6:1 4.5:1Gold GradeMined g/t 1.5 1.8 2.0 1.9Mining cost $/t 3.22 3.89 3.88 3.88
MiningandMillingTonnes,thousands
CashminingcostperouncedeliveredtocrusherUS$perounce
CostIncrease:• ΔGrade=US$76/oz ↑• ΔStripratio=US$45/oz ↑• ΔCostpertonne=US$92/oz ↓• NetimpactofUS$29/oz ↑
MillDesign=750Kt
• Phase1:NkranResourceReconciliation
– NewCSAResourcemodel&reconciliationmethodologyimplementedbetweenFebruary– May2017
– Phase1designedtoconfirmaccuracyofupdatedMRE
– May– Julyreconciliationconfirmsclosecorrelationtowithin2%betweenMRE&gradecontrolmodel
– ExercisevalidatesrecentlyupdatedMREandbasisofLoM plan
• Phase2:NkranReserveReconciliation
– Designedtoreconcileactualminingpracticestoreservemodel
• Blastmovementtechnologyusedtoidentifyorelossesanddilution
• Blastmovementresultinginhigherthanplanneddilutionandorelosses
• Technologyenablesadjustmentstodigplanstooptimizegoldextraction
• Detailedimplementationoftechnologyunderway
• Programwilltakesometimeembed
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NKRANMRE PHASEDRECONCILIATIONPROCESS
Exampleoforelossesanddilutionasaconsequenceofblastmovement
195185
208
236
150
160
170
180
190
200
210
220
230
240
250
Q3'16 Q4'16 Q1'17 Q2'17
• 94%recoveryand887,000tprocessedatfeedgradeof1.7g/t
• 46,017ozproducedduringQ2(104,204ozYTD)
• CostPertonneofprocessingimprovedQ-Q
• P5Mvolumetricupgradestoincreaseplantthroughputto5Mtpacompletedaheadofscheduleandwithinbudget
⎼ LowerquarterlyprocessingvolumeduetoplantdowntimeforP5Mupgradetie-ins
⎼ Plantsuccessfullyrunat625tonnesperhour(5mtpaequivalent)oncampaignbasis,commissioningtocontinuethroughQ32017
• P5MrecoveryupgradesdueinQ42017⎼ IntensiveLeachReactorandKnelson Concentratorexpectedtobefully
installedandcommissionedinQ4
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Q2PROCESSINGPERFORMANCE
KeyProductionStatistics Units Q2
2017Q12017
Q42016
Q32016
Ore milled ‘000t 887 908 901 852
Gold feed grade g/t 1.7 2.0 2.1 2.1
Gold recovery % 94 95 94 94
Gold produced oz 46,017 58,187 57,178 53,986
Processing cost $/t 12.80 13.36 12.80 13.25
CashprocessingcostperouncedeliveredtocrusherUS$perounce
MillPerformanceUS$perounce,%denoterecoveries
CostIncrease:• ΔGrade=US$39/oz ↑• ΔProcessingcost/t=US$9/oz ↓• CombinedimpactofUS$30/oz ↑
g/t
94% 94% 95% 94%
-
0.5
1.0
1.5
2.0
2.5
-100200300400500600700800900
1,000
Q3'16 Q4'16 Q1'17 Q2'17
Oremilled Milldesign Goldfeedgrade
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Q2COSTPERFORMANCE
• Positiveunitoperatingcostperformanceforthequarterdespitelowergoldproduction,lowergradesminedandprocessed
• Miningunitcostslowerduetooxideminingofwastepushback
• AISCUS$930/oz,adecreaseof3%Q-Q
• MarginincreasedtoUS$308/oz inQ2vsUS$243/oz inQ12017
US$perounce Q22017 Q12017 Q42016 Q32016
Operatingcashcosts 572 578 524 544
Royalties 62 60 60 65
Totalcashcosts 634 638 584 609
Corporatecosts 61 39 96 31
Sustainingcapex 21 65 27 25
Deferredstripping 211 211 184 240Reclamationcostaccretion 3 3 1 1
AISC 930 956 893 906
GoldProduction&AISCOunces US$perounce
Costbuild-upUS$perounce
906 893956 930
-
200
400
600
800
1,000
1,200
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q3'16 Q4'16 Q1'17 Q2'17
-
200
400
600
800
1,000
1,200
Q3'16 Q4'16 Q1'17 Q2'17
TotalCashCosts Corporate
Sustainingcapex Deferredstripping
Reclamationcostaccretion
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INCOMESTATEMENT
(US$,thousandsexcept fordollarpershareamountsand%)
Q22017
Q12017
Q42016
Q32016
Revenue, netofroyalties 57,182 66,054 66,789 67,694
Totalcostofsales (42,726) (50,929) (53,367) (47,456)
Grossprofit 14,456 15,125 13,422 20,508
Grossprofit% 25% 25% 20% 30%
Writeoffof deferredstrippingasset 0 0 (7,123) 0
Incomefrommineoperations 14,456 15,125 6,299 20,508
Exploration andevaluationexpenditures (80) (186) (383) (188)
Generalandadministrativeexpenses (3,388) (2,800) (5,683) (1,785)
Income(loss)beforetaxes 10,988 12,139 233 18,535
Otherincome (expenses) (4,300) (4,430) (6,604) (3,113)
Incometaxrecovery(expense) (5,479) 103 (2,106) (3,766)
Netincome(loss)fortheperiod 1,209 7,812 (8,477) 11,656
Basicanddilutedincome(loss)per share $0.00 $0.04 ($0.04) $0.06
EBITDA1 25,276 28,479 21,466 36,818
PositiveEarningsfortwoconsecutivequarters
• Goldsalesof48,461oz(Q1:57,812oz)
• GoldpricerealizedincreasedslightlytoUS$1,238/oz(Q1:$1,199/oz)
• AverageEBITDAofUS$28mforpastfourquarters
• Q2EBITDAofUS$25.3m
• Cashtaxesarezero.EPSbeforenon-cashincometaxesisUS$0.03/share
• EPSYTDofUS$0.04/share
1EBITDAiscalculatedasIncome(Loss)fromoperationsadjustedforgains/lossesinforeignexchange,gains/lossesinderivativesandfordepreciationanddepletion.
QuarterlyEBITDAUS$,thousands
36,818
21,466
28,47925,276
Q3'16 Q4'16 Q1'17 Q2'17
Trailingfourquarteraverage~US$28m
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CASHFLOWFROMOPERATIONS(US$,thousands) Q22017 Q12017 Q42016 Q3 2016
Cash BalanceStart 48,206 59,675 57,556 34,470
OperatingActivities:
Operatingcashflowbeforeworkingcapitalchanges 26,681 28,761 23,994 36,139
Cashprovidedbyoperatingactivity 33,745 14,382 23,353 33,122
InvestingActivities:
Expenditure onMineralPropertiesandPPE
Growth (11,729) (10,094) (4,208) (17,699)
Sustainingcapital (997) (3,731) (2,960) (1,378)
Wastestripping (10,987) (12,225) (10,785) (13,029)
Sub-Total (23,713) (26,050) (17,953) (32,106)
VATrefundrelatedtodevelopment 0 0 0 20,307
OtherInvestingActivities 105 76 12 128
Total InvestingActivities (23,608) (25,974) (17,941) (11,671)
Financing Activity (3,660) 212 (2,929) 1,776
ForeignExchangeImpact 235 (89) (364) (141)
CashBalance Close 54,918 48,206 59,675 57,556
Increase(Decrease) 6,712 (11,469) 2,119 23,806
Operationscontinuetogeneratepositivec/flows
• Operationsgenerated~US$34m,US$27mbeforeworkingcapitalmovements
• Trailing4quarteraverageofUS$29minoperatingcashflowb/f WC(US$26mafterWC)
• Minetomoneycycleimprovedto5to10days(previously10to14)
• NetVATinflowof~US$5mafterrefundof~US$12mcollectedinquarter,inlinewithexpectations
CashflowfromoperationsbeforeworkingcapitalchangesUS$,thousands
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Q3'16 Q4'16 Q1'17 Q2'17
Trailingfourquarteraverage~US$29m
• 2017productionguidancerevisedto205,000to225,000oz,anaveragedecreaseof9%
– YTDproduction:104,204oz
• 2017AISCguidancerevisedtoUS$920/oz toUS$960/oz,anaverageincreaseof5%
– YTDAISC:US$945/oz
• Guidancereviseddueto:
– DeeperlevelsofartisanalworkingsatAkwasiso resultinginlessoxideorebeingavailabletobeprocessed
– OrelossanddilutionmetricsatNkran identifiedviauseofblastmovementtechnology(‘BMT”)
• CompanyfocusforH2:
– EmbeddingofBMTprocessacrossallminingoperations
– Continueimplementationofreconciliationprocessthroughoutmine-to-metalvaluechain
– Focusonoperationalefficiencies,costsandcashoptimization
– GrowthcapitalspendingofUS$23m- H22017
• P5MCapex- US$15m
• Conveyorearthworks&othercapital– US$8m
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2017GUIDANCEUPDATE
IllustrativeAISCMargin OriginalGuidance
RevisedGuidance
Low High Low High
GoldPrice $/oz 1,200 1,200 1,250 1,250
AISC $/oz 920 880 960 920
AISCMarginperOunce $/oz 280 320 290 330
OuncesProduced kozs 230 240 205 225
TotalAISCMargin US$m 64 77 59 74
Changeinguidance US$m 5 3
Changeinguidance % 8 4
CommentsonIllustrativeAISCmarginimpacts
• Illustratively,AISCmarginperouncehasbeenreducedby~3%forboththehighandlowendofguidance
• DecreaseinAISCmarginoffsetbyimprovedexpectationsongoldpricetoUS$1,250/oz
• Illustratively,thisisadownwardrevisionofAISCmarginofbetweenUS$3m- US$5m
APPENDIX
Non-GAAPPerformanceMeasures
• TheCompanyhasincludedcertainnon-GAAPperformancemeasuresinthispressrelease,includingadjustednetincome(loss),adjustednetincome(loss)pershare,operatingcashcosts,totalcashcostsandall-insustainingcostsperounceofgoldsold.Thesenon-GAAPperformancemeasuresdonothaveanystandardizedmeaning.Accordingly,theseperformancemeasuresareintendedtoprovideadditionalinformationandshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancepreparedinaccordancewithGAAP.
• OperatingCashCostsperounceandTotalCashCostsperounce
Operatingcashcostsarereflectiveofthecostofproduction,adjustedforshare-basedpayments,by-productrevenueandnon-cashinventorymovementsforeachounceofgoldsold.Totalcashcostsincludeproductionroyaltiesof5%.
• All-inSustainingCostsPerGoldOunce
TheCompanyhasadoptedthereportingof“all-insustainingcostspergoldounce”(“AISC”)aspertheWorldGoldCouncil’sguidance.AISCincludetotalcashcosts,corporateoverheadexpenses,sustainingcapitalexpenditure,capitalizedstrippingcostsandreclamationcostaccretionforeachounceofgoldsold.
• EarningsbeforeTaxes,Interest,Depreciation,DepletionandAmortization(“EBITDA”)
TheCompanyhasprovidedthereportingof“earningsbeforetaxes,interest,depreciation,depletionandamortization”(“EBITDA”)foradditionalinformation.EBTIDAwascalculatedastheincomeorlossbeforetaxesadjustedforgainsorlossesassociatedwithforeignexchange,gainsorlossesassociatedwithderivativesanddepreciationanddepletion.
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NOTES
AlexBuckInvestorRelations
N.AmericanToll-Free:18552467341Telephone:+44-7932-740-452Email:[email protected]
RyanWalchuckCorp.Dev.&InvestorRelations
N.AmericanToll-Free:18552467341Telephone:+1-778-729-0614Email:[email protected]
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