SOURCE: Brio Gold

Brio Gold

March 13, 2018 20:02 ET

Brio Gold Reports Fourth Quarter and Full Year 2017 Financial Results

TORONTO, ON--(Marketwired - March 13, 2018) - BRIO GOLD INC. (TSX: BRIO) ("BRIO GOLD" or the "Company") announces its fourth quarter and full year 2017 financial and operating results. All dollar figures are in U.S. dollars unless otherwise indicated.

  
Q4 and Full Year 2017 Summary Financial Results 
   For the three months
ended December 31
  For the twelve months
ended December 31,
 
In thousands of U.S. Dollars  2017   2016   2017   2016  
Revenues from mining operations  $51,413   $59,510   $217,891   $232,356  
Mine operating (loss)/earnings  $8,587   $(122,379 ) $28,250   $(90,074 )
Net loss  $(8,870 ) $(22,115 ) $(21,000 ) $(16,859 )
Adjusted loss (1)  $(4,552 ) $(28,897 ) $(9,514 ) $(17,925 )
Adjusted EBITDA(1)  $3,719   $8,622   $30,556   $67,379  
Cash flow from operating activity  $10,406   $31,225   $11,732   $70,086  
Cash flow from operating activities before changes in working capital  $10,956   $20,024   $41,572   $70,470  
                 
(1) A non-GAAP financial measure. For a reconciliation of non-GAAP measures, please see the end of this press release.
 

Revenues from mining operations were $217.9 million on the sale of 176,069 ounces for the year ended December 31, 2017, compared to $232.4 million on the sale of 192,524 ounces for the comparable period in 2016.

Net loss in 2017 was $21.0 million or $0.18 per share, compared to a net loss of $16.9 million or $0.37 per share for 2016.

The Adjusted Loss in 2017 was $9.5 million, compared to a loss of $17.9 million for the same period of 2016 as the decrease in revenues from mining operations was offset by lower depletion, depreciation and amortization expense. See the end of this press release for a reconciliation of net loss to Adjusted Loss.

Cash flow from operating activities after changes in working capital for 2017 was an inflow of $11.7 million, compared to an inflow of $70.1 million in 2016 due to reduced cash flow from operating activities and a $29.8 million increase in working capital, largely due to a build up of ore stockpile at the RDM Mine and a reduction in trade accounts payable. Cash flow from operating activities before changes in working capital for 2017 was an inflow of $41.6 million, lower compared to an inflow of $70.5 million in 2016 due to higher per unit costs, and higher general and administrative expenses due to one-time costs associated with the transition of Brio Gold becoming a stand alone public company.

 
Full Year 2017 Summary Operational Results
   For the three months ended December 31,  For the twelve months ended December 31,
Consolidated Operating Statistics  2017  2016  Change  2017  2016  Change
Gold production (oz.) (1)  40,350  50,477  (20)%  178,025  189,662  (6)%
Gold sales (oz.)  40,455  50,093  (19)%  176,069  192,524  (9)%
Average realized gold price per ounce sold(2)  $1,286  $1,199  7%  $1,250  $1,219  3%
Cost of sales including depletion, depreciation and amortization per gold ounce sold  $1,059  $1,421  (9)%  $1,076  $1,099  (2)%
Cash cost per gold ounce produced(2)  $806  $832  (3)%  $846  $746  13%
All-in sustaining costs per ounce of gold produced(2)  $1,150  $1,106  4%  $1,126  $985  14%
Notes:  
   
(1) Operating statistics only include RDM from the date that it was acquired on April 29, 2016.
(2) A non-GAAP financial measure. Please see the end of the press release for a reconciliation.
   

Production during the year of 2017 from the Company's three producing mines was lower than the comparative year of 2016 by 6% due to lower production at the Fazenda Brasileiro Mine and the Pilar Mine, partially offset by higher production at the RDM Mine.

At the Fazenda Brasileiro Mine, the annual production in 2017 was 60,978 ounces of gold, 14% lower than the same period last year primarily due to lower feed grades from mine sequencing. The grade in the fourth quarter improved significantly over the previous quarter and the Company expects grade to continue to show improvements in 2018. For 2018, the Company expects production at the Fazenda Brasileiro Mine to be 65,000 to 75,000 ounces of gold.

At the Pilar Mine, lower overall grade was a result of increased production from the lower grade Maria Lazara deposit. During the fourth quarter, the company started restructuring the operation, which included halting development at Maria Lazara. The Company is now mining out the developed reserves at Maria Lazara and will be focusing production going forward on the higher grade HG1 and HG2 zones at the main Pilar mine as well as the development of the Tres Buracos open pit. The Maria Lazara mine currently has one year of developed reserves that will be mined out in 2018 and the satellite operation will then be put on care and maintenance. Pilar is expected to produce 65,000 to 75,000 ounces of gold in 2018.

The RDM Mine was put on care and maintenance for close to 5 months in 2017 due to a lack of water. The new water dam/reservoir is operating well, as the region's rainy season allowed adequate water reserves to build up. The operation has been running continuously since December 1st and the company expects that to continue into the foreseeable future. Consistent production at low cost is expected going forward, with Brio Gold forecasting a full year of production at RDM in 2018 with guidance set at 75,000 to 85,000 ounces of gold.

Overall cash costs and all-in sustaining costs per gold ounce for the year were higher than the comparative period of 2016 due to lower overall gold feed grades causing increased costs per ounce as the fixed component of production costs was allocated over fewer ounces. In addition, operating costs increased due to the strengthening of the Brazilian real against the U.S. dollar. Cost of sales including depletion, depreciation and amortization per gold ounce were lower than the comparative period of 2016 due to lower depletion, depreciation, and amortization.

Break down by Mine 
   For the three months ended December 31,   For the twelve months ended December 31,  
   2017  2016  Change   2017  2016  Change  
Gold production (oz.)(1)                         
 Pilar Mine   14,115   22,170  (36 )%  73,931   87,061  (15 )%
 Fazenda Brasileiro Mine   16,100   18,279  (12 )%  60,978   70,887  (14 )%
 RDM Mine   10,135   10,028  1 %  43,116   31,714  36 %
Total gold production   40,350   50,477  (20 )%  178,025   189,662  (6 )%
Gold sales (oz.)(1)                         
 Pilar Mine   15,041   21,837  (31 )%  73,753   86,126  (14 )%
 Fazenda Brasileiro Mine   16,345   19,110  (14 )%  59,631   73,517  (19 )%
 RDM Mine   9,069   9,146  (1 )%  42,685   32,881  30 %
Total gold sales   40,455   50,093  (19 )%  176,069   192,524  (9 )%
Cost of sales including depletion, depreciation and amortization per gold oz sold (1)                         
 Pilar Mine  $1,393  $1,687  (17 )% $1,220  $1,195  2 %
 Fazenda Brasileiro Mine   978   1,074  (9 )%  974   949  3 %
 RDM Mine   628   1,494  (58 )%  971   1,183  (18 )%
Cost of sales including depletion, depreciation and amortization per gold oz sold  $1,059  $1,421  (9 )% $1,076  $1,099  (2 )%
Cash cost per gold ounce produced(1,2)                         
 Pilar Mine  $983  $872  13 % $852  $742  15 %
 Fazenda Brasileiro Mine   821   753  9 %  862   689  25 %
 RDM Mine   536   888  (40 )%  814   881  (8 )%
Total cash cost per gold ounce produced  $806  $832  (3 )% $846  $746  13 %
All-in sustaining costs per ounce of gold produced(1,2)                         
 Pilar Mine  $1,186  $1,150  3 % $1,064  $951  12 %
 Fazenda Brasileiro Mine   973   1,018  (4 )%  1,033   918  13 %
 RDM Mine   879   1,006  (13 )%  989   1,001  (1 )%
Total mine all-in sustaining costs per ounce of gold produced  $1,024  $1,074  (5 )% $1,035  $947  9 %
Consolidated all-in sustaining costs per ounce of gold produced  $1,150  $1,106  4 % $1,126  $985  14 %
Notes:  
   
(1) Operating statistics only include RDM from the date that it was acquired on April 29, 2016.
(2) A non-GAAP financial measure. See "Management's Discussion and Analysis - Non-GAAP Financial Measures" or the end of this press release for a reconciliation of cost of sales including depletion, depreciation and amortization to cash costs consolidated and on a per mine basis, and reconciliation of cost of sales including depletion, depreciation and amortization to all-in sustaining costs consolidated and on a per mine basis.
   

About Brio Gold

Brio Gold is an established Canadian mining company with significant gold producing, development and exploration stage properties in Brazil. Brio Gold's portfolio includes three operating gold mines and a fully-permitted, fully-constructed mine that was on care and maintenance and currently is in development to be re-started at the end of 2018. Brio Gold is expected to produce 205,000 to 235,000 ounces of gold in 2018 and at full run-rate is expected to produce approximately 400,000 ounces of gold annually in 2019.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release contains or incorporates by reference "forward-looking statements" and "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to information with respect to the Company's strategy, plans or future financial or operating performance, the outcome of the legal matters involving the damages assessments and any related enforcement proceedings. Forward-looking statements are characterized by words such as "plan," "expect", "budget", "target", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the Company's expectations in connection with the production and exploration, development and expansion plans at the Company's projects discussed herein being met, the impact of proposed optimizations at the Company's projects, the impact of the proposed new mining law in Brazil, and the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices (such as gold and silver), currency exchange rates (such as the Brazilian real versus the United States dollar), the impact of inflation, possible variations in ore grade or recovery rates, changes in the Company's hedging program, changes in accounting policies, changes in mineral resources and mineral reserves, risks related to asset disposition, risks related to metal purchase agreements, risks related to acquisitions, changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, permitting timelines, government regulation and the risk of government expropriation or nationalization of mining operations, risks related to relying on local advisors and consultants in foreign jurisdictions, environmental risks, unanticipated reclamation expenses, risks relating to joint venture operations, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending and outstanding litigation and labour disputes, risks related to enforcing legal rights in foreign jurisdictions, as well as those risk factors discussed or referred to herein. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company's expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company's plans and objectives and may not be appropriate for other purposes.

Non-GAAP Financial Measures

The Company has included certain non-GAAP financial measures including cash costs per ounce of gold produced, all-in sustaining costs per ounce of gold produced, adjusted earnings (loss), and adjusted EBITDA to supplement its consolidated financial statements, which are presented in accordance with IFRS.

The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Cash Costs

The Company uses the non-GAAP financial measure "cash costs" on a per ounce of gold produced basis because it believes this measure provides investors and analysts with useful information about the Company's underlying cash costs of operations and is a relevant metric used to understand the Company's operating profitability, and ability to generate cash flow. Cash costs figures are calculated based on the standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard remains the generally accepted standard of reporting cash costs of production in North America. Adoption of the standard is voluntary and the cost measures presented herein may not be comparable to other similarly titled measures of other companies.

Cash costs include mine site operating costs such as mining, processing, administration, production taxes and royalties, which are not based on sales or taxable income calculations, but are exclusive of amortization, reclamation, capital, development, and exploration costs. Cash costs per ounce of gold produced are calculated on a weighted average basis.

The term "cash costs" has no standard meaning and therefore, the Company's definitions are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and is not necessarily indicative of operating costs, operating profit or cash flows presented under IFRS.

All-in Sustaining Costs

The Company uses the non-GAAP financial measure "all-in sustaining costs", also referred to as "AISC", on a per ounce of gold produced basis because it believes this measure provides investors with useful information about the Company's underlying cash costs of operations, after deducting certain non-discretionary items such as sustaining capital expenditures, exploration expenses and certain general and administrative costs and is a relevant metric used to understand the Company's ability to generate cash flow. All-in sustaining costs are based on cash costs, including cost components of mine sustaining capital expenditures and exploration and evaluation expense. All-in sustaining costs for a mine do not include capital expenditures attributable to projects or mine expansions, exploration and evaluation costs attributable to growth projects, corporate general and administrative expenses, stock-based compensation, income tax payments, financing costs and dividend payments. Consequently, this measure is not representative of all of the Company's cash expenditures. In addition, the calculation of all-in sustaining costs does not include depletion, depreciation and amortization expense as it does not reflect the impact of expenditures incurred in prior periods. The term "all-in sustaining costs" has no standard meaning and therefore, the Company's definitions are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and is not necessarily indicative of operating costs, operating profit or cash flows presented under IFRS.

Reconciliation of cost of sales including depletion, depreciation and amortization to cash costs and all-in sustaining costs, consolidated and per mine

(Based on Consolidated Financial Statements unless otherwise noted)

    
   For the three months ended December 31, 2017  
             
(In thousands of U.S. dollars, except per share and per ounce amounts)  Consolidated   Pilar Mine   Fazenda
Brasileiro
Mine
  RDM Mine  
Cost of sales including depletion, depreciation and amortization  42,826   20,957   15,981   5,697  
Depletion, depreciation and amortization  (8,133 ) (4,769 ) (1,776 ) (1,397 )
Adjustments:                 
Inventory movement and adjustments(1)  (2,171 ) (2,313 ) (987 ) 1,132  
Cash costs(2)  32,522   13,875   13,218   5,432  
General and administrative expenses attributable to all-in sustaining costs  6,393   106   73   251  
Stock based compensation  (1,381 ) -   -   -  
Sustaining capital expenditures  8,869   2,759   2,374   3,226  
All-in sustaining costs(2)  46,403   16,740   15,665   8,909  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,059   1,393   978   628  
Cash cost per gold ounce produced(2)  806   983   821   536  
All-in sustaining costs per ounce produced(2)  1,150   1,186   973   879  
                  
Gold ounces produced during the period (oz.)  40,350   14,115   16,100   10,135  
Gold ounces sold during the period (oz.)  40,455   15,041   16,345   9,069  
             
             
    
    
   For the three months ended December 31, 2016  
    
(In thousands of U.S. dollars, except per share and per ounce amounts)  Consolidated   Pilar Mine   Fazenda
Brasileiro
Mine
  RDM Mine  
Cost of sales including depletion, depreciation and amortization   71,169    36,843    20,530    13,660  
Depletion, depreciation and amortization   (26,275 )  (17,919 )  (5,870 )  (2,477 )
Adjustments:                     
Inventory movement and adjustments(1)   (2,897 )  408    (896 )  (2,278 )
Cash costs(2)   41,997    19,332    13,764    8,905  
General and administrative expenses attributable to all-in sustaining costs   3,232    90    115    144  
Stock based compensation   (1,742 )  -    -    -  
Sustaining capital expenditures   12,341    6,074    4,729    1,039  
All-in sustaining costs(2)   55,828    25,496    18,608    10,088  
                      
Cost of sales including depletion, depreciation and amortization per gold ounce sold  $1,421   $1,687   $1,074   $1,494  
Cash cost per gold ounce produced(2)  $832   $872   $753   $888  
All-in sustaining costs per ounce produced(2)  $1,106   $1,150   $1,018   $1,006  
                      
Gold ounces produced during the period (oz.)   50,477    22,170    18,279    10,028  
Gold ounces sold during the period (oz.)   50,092    21,837    19,110    9,146  
                 
                 
    
    
   For the twelve months ended December 31, 2017  
                  
(In thousands of U.S. dollars, except per share and per ounce amounts)  Consolidated   Pilar Mine   Fazenda
Brasileiro
Mine
  RDM Mine  
Cost of sales including depletion, depreciation and amortization  189,641   89,955   58,069   41,428  
Depletion, depreciation and amortization  (37,840 ) (24,979 ) (6,728 ) (5,942 )
Adjustments:                 
Inventory movement and adjustments(1)  (1,192 ) (1,987 ) 1,222   (390 )
Cash costs(2)  150,609   62,989   52,563   35,096  
General and administrative expenses attributable to all-in sustaining costs  23,434   927   742   709  
Stock based compensation  (7,012 ) -   -   -  
Sustaining capital expenditures  33,425   14,747   9,685   6,837  
All-in sustaining costs(2)  200,456   78,663   62,990   42,642  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,076   1,220   974   971  
Cash cost per gold ounce produced(2)  846   852   862   814  
All-in sustaining costs per ounce produced(2)  1,126   1,064   1,033   989  
                  
Gold ounces produced during the period (oz.)  178,025   73,931   60,978   43,116  
Gold ounces sold during the period (oz.)  176,069   73,753   59,631   42,685  
             
             
    
    
   For the twelve months ended December 31, 2016  
    
(In thousands of U.S. dollars, except per share and per ounce amounts)  Consolidated   Pilar Mine   Fazenda
Brasileiro
Mine
  RDM Mine  
Cost of sales including depletion, depreciation and amortization  211,554   102,910   69,754   38,890  
Depletion, depreciation and amortization  (66,818 ) (43,573 ) (18,702 ) (4,543 )
Adjustments:                 
Inventory movement and adjustments(1)  (3,248 ) 5,262   (2,211 ) (6,406 )
Cash costs(2)  141,488   64,599   48,841   27,941  
General and administrative expenses attributable to all-in sustaining costs  13,262   264   253   65  
Stock based compensation  (6,968 ) -   -   -  
Sustaining capital expenditures  39,035   17,932   15,980   3,740  
All-in sustaining costs(2)  186,817   82,795   65,074   31,746  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,099   689   694   1,045  
Cash cost per gold ounce produced(2)  746   742   689   881  
All-in sustaining costs per ounce produced(2)  985   951   918   1,001  
                  
Gold ounces produced during the period (oz.)  189,662   87,061   70,887   31,714  
Gold ounces sold during the period (oz.)  192,524   86,126   73,517   32,881  
             
             
Notes:  
   
(1) Inventory movement and adjustment represent the difference between the costs of production (which are based on ounces produced) and the cost of sales (which is based on ounces sold). The timing difference between the units sold and the costs of those units requires an adjustment to reflect the nature of the underlying metric.
(2) A non-GAAP financial measure.

Quarterly trailing cost of sales including depletion, depreciation and amortization to cash costs consolidated and per mine

(Based on Consolidated Interim Financial Statements unless otherwise noted)

             
Brio Gold Consolidated                 
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q4-17   Q3-17   Q2-17   Q1-17  
Cost of sales including depletion, depreciation and amortization  42,826   48,972   46,871   50,972  
Depletion, depreciation and amortization  (8,133 ) (9,287 ) (9,766 ) (10,654 )
Adjustments:                 
Inventory movement and adjustments(1)  (2,171 ) (2,093 ) 883   2,237  
Cash costs(2)  32,522   37,592   37,988   42,555  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,059   1,133   1,098   1,027  
Cash cost per gold ounce produced(2)  806   876   859   842  
                  
Gold ounces produced during the period (oz.)  40,350   42,913   44,223   50,540  
Gold ounces sold during the period (oz.)  40,455   43,228   42,691   49,615  
             
             
             
             
Brio Gold Consolidated                 
(In thousands of U.S. dollars, except per share and per ounce amounts)
 Q4-16   Q3-16   Q2-16   Q1-16  
Cost of sales including depletion, depreciation and amortization  71,169   53,009   54,265   33,111  
Depletion, depreciation and amortization  (26,275 ) (13,936 ) (15,752 ) (10,855 )
Adjustments:                 
Inventory movement and adjustments(1)  (2,897 ) (1,614 ) (226 ) 1,483  
Cash costs(2)  41,997   37,459   38,287   23,739  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,421   1,085   1,037   803  
Cash cost per gold ounce produced(2)  832   813   726   588  
                  
Gold ounces produced during the period (oz.)  50,477   46,075   52,737   40,372  
Gold ounces sold during the period (oz.)  50,092   48,837   52,351   41,243  
             
             
             
             
Pilar Mine                 
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q4-17   Q3-17   Q2-17   Q1-17  
Cost of sales including depletion, depreciation and amortization  20,957   22,915   23,276   22,804  
Depletion, depreciation and amortization  (4,769 ) (6,435 ) (6,854 ) (6,921 )
Adjustments:                 
Inventory movement and adjustments(1)  (2,313 ) (387 ) 436   258  
Cash costs(2)  13,875   16,093   16,858   16,141  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,393   1,242   1,176   1,114  
Cash cost per gold ounce produced(2)  983   845   831   788  
                  
Gold ounces produced during the period (oz.)  14,115   19,045   20,287   20,484  
Gold ounces sold during the period (oz.)  15,041   18,444   19,793   20,465  
Pilar Mine                 
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q4-16   Q3-16   Q2-16   Q1-16  
Cost of sales including depletion, depreciation and amortization  36,843   23,787   22,554   19,726  
Depletion, depreciation and amortization  (17,919 ) (9,295 ) (8,782 ) (7,577 )
Adjustments:                 
Inventory movement and adjustments(1)  408   1,515   1,713   1,856  
Cash costs(2)  19,332   16,007   15,485   14,005  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,687   1,152   1,023   914  
Cash cost per gold ounce produced(2)  872   791   679   641  
                  
Gold ounces produced during the period (oz.)  22,170   20,237   22,806   21,848  
Gold ounces sold during the period (oz.)  21,837   20,656   22,047   21,586  
                  
             
              
              
Fazenda Brasileiro Mine                  
(In thousands of U.S. dollars, except per share and per ounce amounts)   Q4-17   Q3-17   Q2-17   Q1-17  
Cost of sales including depletion, depreciation and amortization   15,981   17,596   12,990   11,502  
Depletion, depreciation and amortization   (1,776 ) (1,756 ) (1,555 ) (1,641 )
Adjustments:                  
Inventory movement and adjustments(1)   (987 ) (832 ) 1,135   1,932  
Cash costs(2)   13,218   15,008   12,570   11,793  
                   
Cost of sales including depletion, depreciation and amortization per gold ounce sold   978   1,056   1,017   831  
Cash cost per gold ounce produced(2)   821   943   892   793  
                   
Gold ounces produced during the period (oz.)   16,100   15,915   14,092   14,872  
Gold ounces sold during the period (oz.)   16,345   16,658   12,776   13,849  
              
              
             
             
Fazenda Brasileiro Mine                 
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q4-16   Q3-16   Q2-16   Q1-16  
Cost of sales including depletion, depreciation and amortization  20,530   17,072   17,784   14,368  
Depletion, depreciation and amortization  (5,870 ) (3,792 ) (5,484 ) (3,556 )
Adjustments:                 
Inventory movement and adjustments(1)  (896 ) (355 ) (50 ) (883 )
Cash costs(2)  13,764   12,925   12,250   9,929  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,074   998   1,008   731  
Cash cost per gold ounce produced(2)  753   751   726   536  
                  
Gold ounces produced during the period (oz.)  18,279   17,211   16,873   18,524  
Gold ounces sold during the period (oz.)  19,110   17,100   17,650   19,657  
                  
             
                      
                      
RDM Mine                             
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q4-17   Q3-17   Q2-17   Q1-17   Q4-16   Q3-16   Q2-16  
Cost of sales including depletion, depreciation and amortization  5,697   8,461   10,605   16,666   13,660   12,150   13,080  
Depletion, depreciation and amortization  (1,397 ) (1,096 ) (1,357 ) (2,093 ) (2,477 ) (849 ) (1,217 )
Adjustments:                             
Inventory movement and adjustments(1)  1,132   (883 ) (694 ) 64   (2,278 ) (2,794 ) (1,325 )
Cash costs(2)  5,432   6,482   8,554   14,637   8,905   8,507   10,538  
                              
Cost of sales including depletion, depreciation and amortization per gold ounce sold  628   1,041   1,048   1,089   1,494   1,096   1,034  
Cash cost per gold ounce produced(2)  536   815   869   964   888   986   807  
                              
Gold ounces produced during the period (oz.)  10,135   7,953   9,844   15,184   10,028   8,628   13,058  
Gold ounces sold during the period (oz.)  9,069   8,126   10,122   15,301   9,146   11,081   12,654  
Notes:  
   
(1) Inventory movement and adjustment represent the difference between the costs of production (which are based on ounces produced) and the cost of sales (which is based on ounces sold). The timing difference between the units sold and the costs of those units requires an adjustment to reflect the nature of the underlying metric.  
(2) A non-GAAP financial measure. 
(3) RDM was acquired during Q2 2016, therefore Q1 2016 is not applicable.
   

Adjusted EBITDA

The Company uses the non-GAAP financial measure "Adjusted EBITDA" because it believes it provides investors with useful information to evaluate its performance and understand its ability to service and/or incur indebtedness.

The Company defines Adjusted EBITDA as net loss, before income tax recovery (expense), depletion, depreciation and amortization, impairment and reversals of mining properties, interest expense, share-based compensation, and non-recurring provisions and other adjustments.

The term "Adjusted EBITDA" has no standard meaning and therefore, the Company's definitions are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and is not necessarily indicative of operating costs, operating profit or cash flows presented under IFRS.

Reconciliation of Net Loss to Adjusted EBITDA

(Based on Consolidated Financial Statements unless otherwise noted)

   For the three months ended December 31,   For the twelve months ended December 31,  
(In thousands of U.S. dollars)  2017   2016   2017   2016  
Net loss   (8,870 )  (28,511 )  (21,000 )  (16,859 )
Adjustments:                     
Income tax expense/(recovery)   (944 )  (8,221 )  (3,618 )  (23,279 )
Depletion, depreciation and amortization   8,133    26,324    37,840    66,818  
Foreign exchange (gain)/loss   (2,864 )  2,051    (306 )  9,239  
Impairment of mineral properties   -    14,659    -    14,659  
Bank, financing fees, interest expense and other   1,160    601    4,807    2,797  
Loss/(gain) on sale of assets   1,001    (680 )  (3,375 )  6  
Provision on indirect tax credits   4,353    1,520    4,908    6,972  
Stock based compensation   1,380    1,742    7,012    6,968  
Legal provisions   1,258    157    2,848    1,078  
Unrealized (gain)/loss on hedge contracts   (888 )  (1,020 )  1,440    (1,020 )
Adjusted EBITDA  $3,719   $8,622   $30,556   $67,379  
                      

Adjusted Earnings or Loss

The Company uses the non-GAAP financial measure "Adjusted earnings or loss" because it believes this measure provides useful information to investors to evaluate the Company's performance by excluding certain cash and non-cash charges. The presentation of Adjusted earnings or loss is not meant to be a substitute for net earnings or loss or net earnings or loss per share presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Adjusted earnings or loss is calculated as net earnings excluding (a) stock based compensation, (b) unrealized foreign exchange (gains) losses related to revaluation of deferred income tax asset and liability on non-monetary items, (c) unrealized foreign exchange (gains) losses related to other items, (d) impairment losses and reversals, (e) deferred income tax expense (recovery) on the translation of foreign currency inter corporate debt, (f) periodic tax adjustments to historical deferred income tax balances relating to changes in enacted tax rates and (g) non-cash provisions and any other non-recurring adjustments. Non-recurring adjustments from unusual events or circumstances are reviewed from time to time based on materiality and the nature of the event or circumstance. Earnings adjustments for the comparative period reflect continuing operations.

The terms "Adjusted earnings or loss" has no standardized meaning prescribed by IFRS and therefore the Company's definitions are unlikely to be comparable to similar measures presented by other companies.

For more information, see the Consolidated Financial Statements and the related notes.

Reconciliation of Net Loss to Adjusted Earnings or Loss

(Based on Consolidated Financial Statements unless otherwise noted)

   For the three months ended December 31,   For the twelve months ended December 31,  
(In thousands of U.S. dollars)  2017   2016   2017   2016  
Net loss  $(8,870 ) $(28,511 ) $(21,000 ) $(16,859 )
Adjustments:                     
Net impairment of mineral properties   -    14,659    -    14,659  
Foreign exchange (gain)/loss   (2,864 )  2,051    (306 )  9,239  
Unrealized (gain)/loss on hedge contracts   (888 )  (1,020 )  1,440    (1,020 )
Provisions on indirect tax credits   4,353    1,520    4,908    6,972  
Loss/(gain) on sale of assets   1,001    (680 )  (3,375 )  6  
Reorganization costs   846    2,902    846    6,608  
Business transaction costs   -    -    848    3,706  
Stock based compensation   1,380    1,742    7,012    6,968  
Tax effect on unrealized foreign exchange on non-monetary assets   3,422    (3,185 )  (1,427 )  (31,346 )
Tax impact of adjustments   (1,427 )  (15,905 )  (1,308 )  (20,836 )
Other   (1,505 )  (2,470 )  2,848    3,978  
Adjusted loss  $(4,552 ) $(28,897 ) $(9,514 ) $(17,925 )
                 

Realized Price

The Company uses the non-GAAP financial measure "realized price" on a per ounce of gold sold basis because it believes this measure provides investors and analysts with a more accurate measure with which to compare to market gold prices and to assess the Company's gold sales performance. Management believes that this measure provides a more accurate reflection of past performance and is a better indicator of expected performance in future periods. Realized price excludes the impact of the mining royalty on revenue from mining operations. The term "realized price" has no standard meaning and therefore, the Company's definitions are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS and is not necessarily indicative of revenue from mining operations, operating profit or cash flows presented under IFRS.

Reconciliation of Revenue from Mining Operations to Realized Price per Gold Ounce Sold

(Based on Consolidated Financial Statements unless otherwise noted)

   For the three months ended December 31,  For the twelve months ended December 31,
(In thousands of U.S. dollars, except price per ounce in dollars and ounces sold)  2017  2016  2017  2016
Revenue from mining operations  $51,413  $59,510  $217,891  $232,356
Brazilian mining royalty (CFEM)   621   575   2,273   2,305
Revenue from mining operations excluding CFEM   52,034   60,085   220,164   234,661
Gold ounces sold during the period (oz.)   40,455   50,093   176,069   192,524
                 
Realized price per gold ounce sold ($/oz.)  $1,286  $1,199  $1,250  $1,219
             

BRIO GOLD INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands of United States Dollars)  2017   2016  
Revenues from mining operations  $217,891   $232,356  
Cost of sales excluding depletion, depreciation and amortization 17)   (151,801 )  (144,736 )
Gross margin excluding depletion, depreciation and amortization   66,090    87,620  
Depletion, depreciation and amortization   (37,840 )  (66,818 )
Impairment of operating mineral properties   -    (110,876 )
Mine operating income/(loss)   28,250    (90,074 )
            
Expenses           
General and administrative   (23,434 )  (13,262 )
Impairment reversal of non-operating mineral properties   -    96,217  
Other operating expenses   (17,709 )  (18,500 )
Operating loss   (12,893 )  (25,619 )
Foreign exchange gain/(loss)   306    (9,239 )
Unrealized (loss)/gain on hedge contracts   (1,440 )  1,020  
Finance expense   (10,591 )  (6,300 )
Loss before income taxes   (24,618 )  (40,138 )
Income tax recovery   3,618    23,279  
Net loss   (21,000 )  (16,859 )
            
Other comprehensive income (loss)           
Items that may be reclassified subsequently to profit or loss:           
 Change in fair value of hedging instruments, net of tax   3,993    308  
Total comprehensive loss   (17,007 )  (16,551 )
            
Net loss per share (basic and diluted)   (0.18 )  (0.37 )
Weighted average number of shares outstanding (basic and diluted)   114,540,672    45,878,479  

The accompanying notes are an integral part of the consolidated financial statements.

BRIO GOLD INC.

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31,

(In thousands of United States Dollars)  2017   2016  
Assets           
Current assets:           
Cash  $19,281   $7,014  
Trade and other receivables   4,398    154  
Inventories   40,560    29,620  
Derivative assets   5,969    1,328  
Other current assets   13,584    12,777  
    83,792    50,893  
Non-current assets:           
Property, plant and equipment   514,103    481,746  
Non-current derivative assets   778    -  
Deferred tax assets   7,447    6,167  
Other non-current assets   5,835    2,893  
Total assets  $611,955   $541,699  
            
Liabilities           
Current liabilities:           
Trade and other payables  $50,925   $56,066  
Income taxes payable   3,433    2,998  
Short-term debt   13,663    -  
Other financial liabilities   3,631    1,414  
Other provisions and liabilities   2,465    5,243  
    74,117    65,721  
Non-current liabilities:           
Long-term debt   72,600    -  
Decommissioning, restoration and similar liabilities   36,884    36,871  
Deferred tax liabilities   5,588    11,413  
Derivative liabilities   1,315    -  
Other non-current provisions and liabilities   9,997    4,902  
Total liabilities   200,501    118,907  
            
Equity           
Share capital   440,975    427,858  
Reserves   67,220    70,675  
Deficit   (96,741 )  (75,741 )
Total equity   411,454    422,792  
Total equity and liabilities  $611,955   $541,699  

The accompanying notes are an integral part of the consolidated financial statements.

BRIO GOLD INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands of United States Dollars)  2017   2016  
Operating activities           
Loss before income tax expense  $(24,618 ) $(40,138 )
Adjustments to reconcile loss before income taxes to net operating cash flows:           
 Depletion, depreciation and amortization   37,840    66,818  
 Foreign exchange (gain)/loss   (306 )  9,239  
 Unrealized loss/(gain) on hedge contracts   1,440    (1,020 )
 Finance expense   10,591    6,300  
 Net impairment of mineral properties   -    14,659  
 Other non-cash operating expenses   18,121    19,667  
 Decommissioning, restoration and similar liabilities paid   (1,408 )  (2,128 )
 Income taxes paid   (88 )  (2,927 )
Cash flows from operating activities before net change in working capital   41,572    70,470  
Net change in working capital   (29,840 )  (384 )
Cash flows from operating activities   11,732    70,086  
Investing activities           
Acquisition of Mineração Riacho dos Machados Ltda   -    (51,362 )
Property, plant and equipment expenditures   (80,449 )  (67,981 )
Cash flows used in investing activities   (80,449 )  (119,343 )
Financing activities           
Proceeds from debt   90,163    -  
Repayment of debt   (1,500 )  -  
Related party financing   -    51,361  
Cost of debt   (3,361 )  -  
Interest and other finance expenses paid   (3,213 )  -  
Cash flows from financing activities   82,089    51,361  
Effect of foreign exchange on cash   (1,105 )  944  
Increase in cash   12,267    3,048  
Cash, beginning of year   7,014    3,966  
Cash, end of year  $19,281   $7,014  

The accompanying notes are an integral part of the consolidated financial statements.

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Letitia Wong
    Vice President, Corporate Development
    Telephone: +1 (416) 860-6310
    Email: info@briogoldinc.com