SOURCE: Brio Gold

Brio Gold

October 31, 2017 16:15 ET

Brio Gold Reports Third Quarter 2017 Financial Results

TORONTO, ON --(Marketwired - October 31, 2017) - BRIO GOLD INC. (TSX: BRIO) ("BRIO GOLD" or the "Company") announces its third quarter 2017 financial and operating results. All dollar figures are in U.S. dollars unless otherwise indicated. R$ = Brazilian Reais where noted.

Q3 2017 Financial and Operating Highlights

  • Production of 42,913 ounces of gold.
  • Total cost of sales of $1,160 per gold ounce sold.
  • Cash costs(1) of $876 per ounce of gold produced.
  • All-in sustaining costs (AISC)(1) of $1,228 per gold ounce produced.
  • Revenues of $54.1 million on the sale of 43,228 ounces of gold.
  • Mine operating earnings of $4.0 million.
  • Net loss of $10.0 million, or $0.09 per share.
  • Adjusted net loss(1) of $6.8 million, or $0.07 per share.
  • Adjusted EBITDA(1) of $9.7 million, or $0.08 per share
  • Cash flow from operating activities of $6.6 million, and $10.9 million before changes in working capital.
  • Secured $22 million in credit facilities with three major Brazilian banks
  • Implemented forward contract currency hedges for 2019 at an average fixed rate of R$3.40 to US$1.00 for R$120 million and at R$3.50 to US$1.00 for $120 million.
  • Hedged 30,000 ounces of gold over 15 months with zero cost collars with a put and call strike prices of $1,300 and $1,340 per ounce of gold, respectively.

(1) A non-GAAP financial measure. For a reconciliation of non-GAAP financial measures, please see the end of this press release.

 
Q3 2017 Summary Financial Results
   For the three months
ended September 30,
 For the nine months
ended September 30,
In thousands of U.S. Dollars  2017  2016  2017  2016
Revenues from mining operations  $54,126  $60,559  $166,478  $172,846
Mine operating earnings  $3,999  $7,550  $14,022  $32,304
Net (loss)/earnings  $(10,003)  $(15,534)  $(14,987)  $5,255
Adjusted (loss)/earnings(1)  $(6,752)  $(6,686)  $(7,819)  $(3,137)
Adjusted EBITDA(1)  $9,653  $13,032  $29,068  $45,301
Cash flow from operating activity  $6,570  $13,998  $326  $38,860
Cash flow from operating activities before changes in working capital  $10,902  $15,506  $30,616  $50,446
(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 $54.1 million in the third quarter of 2017 compared to $60.6 million for the comparable period in 2016 due to lower ounces sold.

Net loss in the third quarter of 2017 was $10.0 million or $0.09 per share, compared to a net loss of $15.5 million or $0.63 per share for the third quarter of 2016. The Company sold VAT tax credits in the quarter that resulted in a gain of $4.4 million, which is excluded from the calculation of adjusted earnings.

The adjusted loss in the third quarter of 2017 was $6.8 million compared to $6.7 million in the same period of 2016 as lower revenue was partially offset by lower depreciation expense.

The adjusted EBITDA in the third quarter of 2017 was $9.7 million compared to $13.0 million in the same period of 2016 due to the lower ounces sold, and higher costs of sales per ounce.

Cash flow from operating activities after changes in working capital for the third quarter of 2017 was an inflow of $6.6 million, compared to an inflow of $14.0 million in the same period of 2016 due to lower ounces sold, and a decline in working capital due to timing of gold shipments that is expected to reverse in the fourth quarter of 2017.

The Company has secured $22 million in credit facilities with three major Brazilian banks at an average interest rate of 4%. The Company plans to utilize these credit facilities for working capital purposes at its operations and is currently assessing other debt funding alternatives including increasing its current $75 million corporate credit facility and direct project financing for the completion of the Santa Luz Mine recommissioning project.

During the third quarter, the Company entered into gold price hedging arrangements in order to manage cash flow during the development phase of the Santa Luz mine. On September 20, 2017, the Company entered into a zero-cost collar contract, where gold puts were purchased and gold calls were sold with put and call strike prices of $1,300 and $1,340 per ounce, respectively, for 2,000 ounces per month. These purchases and sales will be made from October 2017 to December 2018, inclusive, totaling 30,000 ounces of gold.

Subsequent to the quarter end, the Company entered into forward currency contracts of R$120 million for 2019, at a fixed exchange rate that averages R$3.40 to US$1.00 and R$120 million at a fixed exchange rate that average R$3.50 to US$1.00. The Company already has currency hedging arrangements in place for 2017 and 2018. In 2017 and 2018, Brio Gold has R$672 million of forward rate contracts at a rate of R$3.55 to US$1.00 and R$672 million of zero-cost collars with average call and put strike prices of R$3.30 and R$3.90, respectively.

 
Q3 2017 Summary Operational Results
   For the three months ended September 30,  For the nine months ended September 30,
   2017  2016  Change  2017  2016  Change
Gold production (oz) (1)  42,913  46,076  (7)%  137,676  139,185  (1)%
Gold sales (oz) (1)  43,228  46,808  (8)%  135,534  140,403  (3)%
Average realized gold price(2)  $1,267  $1,309  (3)%  $1,242  $1,243  -%
Total cost of sales per gold ounce sold(1)  $1,160  $1,132  2%  $1,124  $1,001  12%
Cash cost per gold ounce produced (1,2)  $876  $813  8%  $858  $714  20%
Consolidated AISC per gold ounce produced (1,2)  $1,228  $1,157  6%  $1,119  $965  16%
Notes: 
 
(1)Operating statistics only include RDM from the date that it was acquired on April 29, 2016.
(2)A non-GAAP financial measure. For a reconciliation of non-GAAP measures see the end of this press release.
  

Production during the third quarter from the Company's three producing mines was 42,913 ounces of gold, 7% lower than the comparative quarter of 2016.

At the Pilar mine, third quarter production decreased 6% when compared to the same period in 2016. Gold feed grades were significantly lower as a result of a proportional increase in production from the lower grade Maria Lazara deposit and an increased percentage of ore development tonnage at the main Pilar Mine, which led to higher overall dilution. The Company ran the mill at its full design capacity in the quarter, which corresponds to an annual design rate of 1.4 million tonnes per year, or 26% greater throughput year over year. The Company is now confident that the plant can sustain this rate as Brio Gold, in the future, introduces low cost ore from the Tres Buracos open pit development project at Pilar. The Company now intends to return to a lower throughput rate by reducing development ore tonnage and Maria Lazara production, focusing on cost containment and grade. Although this is expected to impact production in the fourth quarter, ultimately cash flow should improve with reduced cost and improved margins. The Company now expects 2017 production for Pilar to be 78,000 to 83,000 ounces.

At Fazenda Brasileiro, third quarter production in 2017 was 8% lower than the same period last year primarily due to lower feed grades as a result of mine sequencing, partially offset by higher recoveries. Feed grade significantly improved month-over-month within the quarter. The Company expects grade to continue to show improvements in the fourth quarter with production forecasted to increase and provide the strongest quarter for Fazenda Brasileiro in 2017. To reflect actual production year to date, the Company expects production at Fazenda Brasileiro to be 60,000 to 65,000 ounces.

The RDM mine was put on care and maintenance for 51 days during the quarter due to a lack of water as a result of continued dry season conditions. At the end of October, the rainy season commenced and the Company is now in the process of re-starting the RDM mine. Consistent production is expected going forward at RDM with the water storage facility complete. The Company expects production for 2017 at RDM to be 45,000 to 50,000 ounces of gold. An ore stockpile was built up in the third quarter to provide process flexibility for when the mine resumes production

 
Breakdown by Mine
   For the three months
 
ended September 30,
 For the nine months 
ended September 30,
Gold production (oz)  2017  2016  Change  2017  2016  Change
 Pilar  19,045  20,237  (6)%  59,816  64,891  (8)%
 Fazenda Brasileiro  15,915  17,211  (8)%  44,879  52,608  (15)%
 RDM(1)  7,953  8,628  (8)%  32,981  21,686  52%
Total Production  42,913  46,076  (7)%  137,676  139,185  (1)%
                   
Total Cost of Sales ($ per oz sold)                  
 Pilar  $1,212  $1,152  5%  $1,123  $1,023  10%
 Fazenda Brasileiro  $1,152  $998  15%  $1,161  $901  29%
 RDM(1)  $1,046  $1,342  (22)%  $1,078  $1,189  (9)%
Total Cost of Sales per gold oz sold  $1,160  $1,132  2%  $1,124  $1,001  12%
                   
Cash Costs ($ per oz produced)                  
 Pilar  $845  $791  7%  $820  $698  17%
 Fazenda Brasileiro  $943  $751  26%  $877  $667  31%
 RDM(1)  $815  $986  (17)%  $900  $878  3%
Total Cash Costs  $876  $813  8%  $858  $714  20%
             
AISC ($ per oz produced)                  
 Pilar  1,085  1,067  2%  1,035  884  17%
 Fazenda Brasileiro  1,158  1,039  11%  1,055  883  19%
 RDM(1)  1,241  1,174  6%  1,022  999  2%
Total Mine AISC ($ per oz produced)  1,141  1,077  6%  1,038  897  16%
Total Consolidated AISC ($ per oz produced)  1,228  1,157  6%  1,119  965  16%
Notes:
 
(1)Operating statistics only include RDM from the date that it was acquired on April 29, 2016.
  

Third Quarter 2017 Financial Results Conference Call and Webcast

Brio Gold will hold a conference call and webcast on November 1, 2017 at 10:00 am ET.

Third Quarter 2017 Conference Call:
Toll Free (North America): 1-844-543-5236
International: 1-703-318-2218
Webcast: www.briogoldinc.com

Conference Call REPLAY:
Toll Free (North America): 1-855-859-2056
Toronto Local and International: 1-404-537-3406
Conference ID: 94463369

The conference call replay will be available from 1:00 p.m. ET on November 1, 2017 until 12:00 p.m. ET on November 8, 2017.

About Brio Gold

Brio Gold is a 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 produced approximately 190,000 ounces of gold in 2016 and at full run-rate expects annual production to be approximately 400,000 ounces of gold.

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, Brio Gold corporate general and administrative expenses, Yamana general and administrative expenses allocated to Brio Gold or 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 Condensed Consolidated Interim Financial Statements unless otherwise noted)

    
   For the three months ended September 30, 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  50,127   22,348   19,196   8,497  
Depletion, depreciation and amortization  (10,442 ) (5,868 ) (3,356 ) (1,132 )
Adjustments:                 
Inventory movement and adjustments(1)  (2,093 ) (387 ) (832 ) (883 )
Cash costs(2)  37,592   16,093   15,008   6,482  
General and administrative expenses attributable to all-in sustaining costs  5,470   99   86   103  
Stock based compensation  (1,888 ) -   -   -  
Sustaining capital expenditures  11,523   4,472   3,336   3,285  
All-in sustaining costs(2)  52,697   20,664   18,430   9,870  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,160   1,212   1,152   1,046  
Cash cost per gold ounce produced(2)  876   845   943   815  
All-in sustaining costs per ounce produced(2)  1,228   1,085   1,158   1,241  
                  
Gold ounces produced during the period (oz.)  42,913   19,045   15,915   7,953  
Gold ounces sold during the period (oz.)  43,228   18,444   16,658   8,126  
   
   For the three months ended September 30, 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   53,009    23,787    17,072    12,150  
Depletion, depreciation and amortization   (13,936 )  (9,295 )  (3,792 )  (849 )
Adjustments:                     
Inventory movement and adjustments(1)   (1,613 )  1,515    (355 )  (2,794 )
Cash costs(2)   37,460    16,007    12,925    8,507  
General and administrative expenses attributable to all-in sustaining costs   5,509    26    44    30  
Stock based compensation   (1,742 )  -    -    -  
Sustaining capital expenditures   12,065    5,560    4,913    1,592  
All-in sustaining costs(2)   53,292    21,593    17,882    10,129  
                      
Cost of sales including depletion, depreciation and amortization per gold ounce sold  $1,132   $1,152   $998   $1,342  
Cash cost per gold ounce produced(2)  $813   $791   $751   $986  
All-in sustaining costs per ounce produced(2)  $1,157   $1,067   $1,039   $1,174  
                      
Gold ounces produced during the period (oz.)   46,076    20,237    17,211    8,628  
Gold ounces sold during the period (oz.)   46,808    20,656    17,100    9,052  
   
   For the nine months ended September 30, 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  152,456   65,936   50,272   36,162  
Depletion, depreciation and amortization  (35,348 ) (17,150 ) (13,136 ) (4,976 )
Adjustments:                 
Inventory movement and adjustments(1)  1,018   263   2,223   (1,503 )
Cash costs(2)  118,126   49,049   39,359   29,683  
General and administrative expenses attributable to all-in sustaining costs  17,041   873   677   413  
Stock based compensation  (5,632 ) -   -   -  
Sustaining capital expenditures  24,524   11,988   7,311   3,611  
All-in sustaining costs(2)  152,820   61,910   47,347   33,707  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,124   1,123   1,161   1,078  
Cash cost per gold ounce produced(2)  858   820   877   900  
All-in sustaining costs per ounce produced(2)  1,119   1,035   1,055   1,022  
                  
Gold ounces produced during the period (oz.)  137,676   59,816   44,879   32,981  
Gold ounces sold during the period (oz.)  135,534   58,702   43,283   33,549  
   
   For the nine months ended September 30, 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  140,542   65,737   48,998   25,807  
Depletion, depreciation and amortization  (40,494 ) (25,605 ) (12,822 ) (2,067 )
Adjustments:                 
Inventory movement and adjustments(1)  (670 ) 5,162   (1,086 ) (4,700 )
Cash costs(2)  99,378   45,294   35,090   19,040  
General and administrative expenses attributable to all-in sustaining costs  16,426   560   214   34  
Stock based compensation  (5,226 ) -   -   -  
Sustaining capital expenditures  23,755   11,501   11,150   2,580  
All-in sustaining costs(2)  134,333   57,355   46,454   21,654  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,001   1,023   901   1,189  
Cash cost per gold ounce produced(2)  714   698   667   878  
All-in sustaining costs per ounce produced(2)  965   884   883   999  
                  
Gold ounces produced during the period (oz.)  139,185   64,891   52,608   21,686  
Gold ounces sold during the period (oz.)  140,403   64,289   54,408   21,706  
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 Condensed Consolidated Interim Financial Statements unless otherwise noted)

         
Brio Gold Consolidated            
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q3-17  Q2-17  Q1-17  Q4-16
Cost of sales including depletion, depreciation and amortization  50,127   48,646   53,684   71,169  
Depletion, depreciation and amortization  (10,442 ) (11,541 ) (13,366 ) (26,275 )
Adjustments:                 
Inventory movement and adjustments(1)  (2,093 ) 877   2,254   (2,897 )
Cash costs(2)  37,592   37,982   42,572   41,997  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,160   1,139   1,082   1,421  
Cash cost per gold ounce produced(2)  876   859   842   832  
                  
Gold ounces produced during the period (oz.)  42,913   44,223   50,540   50,477  
Gold ounces sold during the period (oz.)  43,228   42,691   49,615   50,092  
         
Brio Gold Consolidated            
(In thousands of U.S. dollars, except per share and per ounce amounts)
 Q3-16  Q2-16  Q1-16  Q4-15
Cost of sales including depletion, depreciation and amortization  53,009   54,265   33,111   39,812  
Depletion, depreciation and amortization  (13,936 ) (15,752 ) (10,855 ) (14,076 )
Adjustments:                 
Inventory movement and adjustments(1)  (1,614 ) (226 ) 1,382   (1,850 )
Cash costs(2)  37,459   38,287   23,638   23,886  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,132   1,037   803   1,016  
Cash cost per gold ounce produced(2)  813   726   590   610  
                  
Gold ounces produced during the period (oz.)  46,076   52,737   40,372   39,279  
Gold ounces sold during the period (oz.)  46,808   52,351   41,243   39,194  
         
Pilar Mine            
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q3-17  Q2-17  Q1-17  Q4-16
Cost of sales including depletion, depreciation and amortization  22,348   22,635   20,953   36,843  
Depletion, depreciation and amortization  (5,868 ) (6,213 ) (5,070 ) (17,919 )
Adjustments:                 
Inventory movement and adjustments(1)  (387 ) 436   258   408  
Cash costs(2)  16,093   16,858   16,141   19,332  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,212   1,144   1,024   1,687  
Cash cost per gold ounce produced(2)  845   831   788   872  
                  
Gold ounces produced during the period (oz.)  19,045   20,287   20,484   22,170  
Gold ounces sold during the period (oz.)  18,444   19,793   20,465   21,837  
         
Pilar Mine            
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q3-16  Q2-16  Q1-16  Q4-15
Cost of sales including depletion, depreciation and amortization  23,787   22,554   19,726   19,237  
Depletion, depreciation and amortization  (9,295 ) (8,782 ) (7,577 ) (5,682 )
Adjustments:                 
Inventory movement and adjustments(1)  1,515   1,713   1,626   (374 )
Cash costs(2)  16,007   15,485   13,775   13,181  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,152   1,023   914   851  
Cash cost per gold ounce produced(2)  791   679   641   618  
                  
Gold ounces produced during the period (oz.)  20,237   22,806   21,848   21,326  
Gold ounces sold during the period (oz.)  20,656   22,047   21,586   22,617  
         
Fazenda Brasileiro Mine            
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q3-17  Q2-17  Q1-17  Q4-16
Cost of sales including depletion, depreciation and amortization  19,196   14,624   16,452   20,530  
Depletion, depreciation and amortization  (3,356 ) (3,189 ) (6,591 ) (5,870 )
Adjustments:                 
Inventory movement and adjustments(1)  (832 ) 1,135   1,932   (896 )
Cash costs(2)  15,008   12,570   11,793   13,764  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,152   1,145   1,188   1,074  
Cash cost per gold ounce produced(2)  943   892   793   753  
                  
Gold ounces produced during the period (oz.)  15,915   14,092   14,872   18,279  
Gold ounces sold during the period (oz.)  16,658   12,776   13,849   19,110  
         
Fazenda Brasileiro Mine            
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q3-16  Q2-16  Q1-16  Q4-15
Cost of sales including depletion, depreciation and amortization  17,072   17,784   14,368   20,054  
Depletion, depreciation and amortization  (3,792 ) (5,484 ) (3,556 ) (8,394 )
Adjustments:                 
Inventory movement and adjustments(1)  (355 ) (50 ) (910 ) (914 )
Cash costs(2)  12,925   12,250   9,902   10,746  
                  
Cost of sales including depletion, depreciation and amortization per gold ounce sold  998   1,008   731   1,210  
Cash cost per gold ounce produced(2)  751   726   536   599  
                  
Gold ounces produced during the period (oz.)  17,211   16,873   18,524   17,953  
Gold ounces sold during the period (oz.)  17,100   17,650   19,657   16,577  
             
RDM, Brazil                  
(In thousands of U.S. dollars, except per share and per ounce amounts)  Q3-17  Q2-17  Q1-17  Q4-16  Q3-16  Q2-16
Cost of sales including depletion, depreciation and amortization  8,497   11,387   16,278   13,660   12,150   13,080  
Depletion, depreciation and amortization  (1,132 ) (2,139 ) (1,705 ) (2,477 ) (849 ) (1,217 )
Adjustments:                         
Inventory movement and adjustments(1)  (883 ) (694 ) 64   (2,278 ) (2,794 ) (1,334 )
Cash costs(2)  6,482   8,554   14,637   8,905   8,507   10,529  
                          
Cost of sales including depletion, depreciation and amortization per gold ounce sold  1,046   1,125   1,064   1,494   1,342   1,079  
Cash cost per gold ounce produced(2)  815   869   964   888   986   807  
                          
Gold ounces produced during the period (oz.)  7,953   9,844   15,184   10,028   8,628   13,058  
Gold ounces sold during the period (oz.)  8,126   10,122   15,301   9,146   9,052   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 Q4 2015 and Q1 2016 are 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 Condensed Consolidated Interim Financial Statements unless otherwise noted)

     
   For the three months ended September 30,  For the nine months ended September 30,
(In thousands of U.S. dollars)  2017  2016  2017  2016
Net (loss)/earnings   (10,003 )  (15,534 )  (14,987 )  5,255  
Adjustments:                     
Income tax expense/(recovery)   1,229    7,064    (5,458 )  (15,058 )
Depletion, depreciation and amortization   10,442    13,936    35,348    40,494  
Foreign exchange loss   2,563    4,171    2,558    7,188  
Bank, financing fees, interest expense and other   1,734    1,653    3,647    2,196  
Stock based compensation   1,888    1,742    5,632    5,226  
Unrealized loss on foreign exchange hedges   1,800    -    2,328    -  
Adjusted EBITDA  $9,653   $13,032   $29,068   $45,301  
                      

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 Condensed Consolidated Interim Financial Statements and the related notes.

Reconciliation of Net Loss to Adjusted Earnings or Loss

(Based on Condensed Consolidated Interim Financial Statements unless otherwise noted)

     
   For the three months ended
September 30,
 For the nine months ended
September 30,
(In thousands of U.S. dollars)  2017  2016  2017  2016
Net earnings  $(10,003 ) $(15,534 ) $(14,987 ) $5,256  
Adjustments:                     
Foreign exchange loss   2,563    4,171    2,558    7,188  
Unrealized loss on foreign exchange hedges   1,800    -    2,328    -  
Provisions on indirect tax credits   1,672    1,117    555    5,452  
(Gain)/loss on sale of indirect tax credits   (4,365 )  890    (4,376 )  657  
Business transaction costs   -    618    848    4,481  
Stock based compensation   1,888    1,742    5,632    5,226  
Non-cash tax effect on unrealized foreign exchange losses/(gains)   (1,587 )  1,120    (4,849 )  (28,161 )
Tax impact of adjustments   37    (1,441 )  119    (4,931 )
Other   1,243    631    4,353    1,695  
Adjusted (loss)/earnings  $(6,752 ) $(6,686 ) $(7,819 ) $(3,137 )
                 

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 Condensed Consolidated Interim Financial Statements unless otherwise noted)

     
 
(In thousands of U.S. dollars, except price per ounce in dollars and ounces sold)
 For the three months ended
September 30,
 For the nine months ended
September 30,
 2017  2016  2017  2016
Revenue from mining operations  $54,126  $60,559  $166,478  $172,846
Brazilian mining royalty (CFEM)   535   604   1,652   1,730
Revenue from mining operations excluding CFEM   54,661   61,163   168,130   174,576
Gold ounces sold during the period (oz.)   43,228   46,808   135,534   140,403
                 
Realized price per gold ounce sold ($/oz.)  $1,264  $1,307  $1,241  $1,243
 
BRIO GOLD INC.
 
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME
 
   For the three months ended
September 30,
 For the nine months ended
September 30,
(In thousands of United States Dollars, except share and per share amounts), (unaudited)  2017  2016  2017  2016
Revenue from mining operations  $54,126   $60,559   $166,478   $172,846  
Cost of sales excluding depletion, depreciation and amortization   (39,685 )  (39,073 )  (117,108 )  (100,048 )
Gross margin excluding depletion, depreciation and amortization   14,441    21,486    49,370    72,798  
Depletion, depreciation and amortization   (10,442 )  (13,936 )  (35,348 )  (40,494 )
Mine operating earnings   3,999    7,550    14,022    32,304  
                      
Expenses                     
General and administrative   (5,470 )  (5,509 )  (17,041 )  (16,426 )
Other operating expense   (53 )  (3,859 )  (4,651 )  (14,123 )
Operating (loss)/earnings   (1,524 )  (1,818 )  (7,670 )  1,755  
Foreign exchange loss   (2,563 )  (4,171 )  (2,558 )  (7,188 )
Unrealized foreign exchange hedges loss   (1,800 )  -    (2,328 )  -  
Finance expense   (2,887 )  (2,481 )  (7,889 )  (4,370 )
Loss before income taxes   (8,774 )  (8,470 )  (20,445 )  (9,803 )
Income tax (expense)/recovery   (1,229 )  (7,064 )  5,458    15,058  
Net (loss)/earnings   (10,003 )  (15,534 )  (14,987 )  5,255  
                      
Other comprehensive (loss)/income                     
Items that may be reclassified subsequently to profit or loss:                
                 
 Change in fair value of hedging instruments, net of tax   9,894    -    12,753    -  
Total comprehensive (loss)/income  $(109 ) $(15,534 ) $(2,234 ) $5,255  
                      
Net (loss)/earnings per share                     
 Net (loss)/earnings per share (basic)  $(0.09 ) $(0.63 ) $(0.13 ) $0.22  
 Net (loss)/earnings per share (diluted)  $(0.09 ) $(0.63 ) $(0.13 ) $0.21  
Weighted average number of shares outstanding                
 Basic   112,527,429    24,467,689    112,527,429    23,824,918  
 Diluted   112,527,429    24,467,689    112,527,429    25,341,058  
 
BRIO GOLD INC.
 
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
 
(In thousands of United States Dollars)  As at
September 30, 2017
(unaudited)
 As at
December 31, 2016
Assets      
Current assets:      
Cash  $9,698   $7,014  
Trade and other receivables   8,587    154  
Inventories   39,675    29,620  
Derivative related assets   14,926    1,328  
Other current assets   17,027    12,777  
    89,913    50,893  
Non-current assets:           
Property, plant and equipment   495,566    481,746  
Non-current derivative related assets   1,540    -  
Deferred tax assets   10,125    6,167  
Other non-current assets   9,695    2,893  
Total assets  $606,839   $541,699  
            
Liabilities           
Current liabilities:           
Trade and other payables  $45,945   $56,066  
Income taxes payable   6,165    2,998  
Short-term debt   1,503    -  
Other financial liabilities   1,892    1,414  
Other provisions and liabilities   3,964    5,243  
    59,469    65,721  
Non-current liabilities:           
Long-term debt   60,166    -  
Decommissioning, restoration and similar liabilities   41,315    36,871  
Deferred income tax liabilities   10,816    11,413  
Other non-current provisions and liabilities   8,882    4,902  
Total liabilities   180,648    118,907  
            
Equity           
Share capital   427,858    427,858  
Reserves   89,062    70,675  
Deficit   (90,729 )  (75,741 )
Total equity   426,191    422,792  
Total equity and liabilities  $606,839   $541,699  
 
BRIO GOLD INC.
 
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
 
   For the three months ended
September 30,
 For the nine months ended
September 30,
(In thousands of United States Dollars), (unaudited)  2017  2016  2017  2016
Operating activities            
Loss before income tax expense  $(8,774 ) $(8,470 ) $(20,445 ) $(9,803 )
Adjustments to reconcile loss before income taxes to operating cash flows:                     
 Depletion, depreciation and amortization   10,442    13,936    35,348    40,494  
 Foreign exchange loss   2,563    4,171    2,558    7,188  
 Unrealized foreign exchange hedges loss   1,800    -    2,328    -  
 Finance expense   2,887    2,481    7,889    4,370  
 Other non-cash operating expenses (Note 17b)   2,242    4,380    4,225    12,256  
 Decommissioning, restoration and similar liabilities paid   (258 )  (790 )  (1,199 )  (1,441 )
 Income taxes paid   -    (202 )  (88 )  (2,618 )
Cash flows from operating activities before net change in working capital  $10,902   $15,506   $30,616   $50,446  
Net change in working capital   (4,332 )  (1,508 )  (30,290 )  (11,586 )
Cash flows from operating activities  $6,570   $13,998   $326   $38,860  
Investing activities                     
Property, plant and equipment expenditures   (21,370 )  (16,224 )  (55,915 )  (40,350 )
Acquisition of Mineração Riacho dos Machados Ltda   -    -    -    (50,225 )
Cash flows used in investing activities  $(21,370 ) $(16,224 ) $(55,915 ) $(90,575 )
Financing activities                     
Proceeds from debt  $14,003   $-   $64,003   $-  
Related party financing   -    -    -    51,361  
Cost of debt   (293 )  -    (3,442 )  -  
Interest and other finance expenses paid   (836 )  -    (1,643 )  -  
Cash flows from financing activities  $12,874   $-   $58,918   $51,361  
Effect of foreign exchange on cash   112    162    (645 )  919  
(Decrease)/increase in cash  $(1,814 ) $(2,064 ) $2,684   $565  
Cash, beginning of period  $11,512   $6,595   $7,014   $3,966  
Cash, end of period  $9,698   $4,531   $9,698   $4,531  
                      

Contact Information

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