Luna Gold Corp.

Luna Gold Corp.

November 13, 2012 07:00 ET

Luna Gold Corp. Announces Results for the Third Quarter of 2012

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 13, 2012) - Luna Gold Corp. (TSX:LGC)(OTCQX:LGCUF)(LMA:LGC) ("Luna" or the "Company") today announced its operational and financial results for the three-month period ended September 30, 2012 ("third quarter of 2012").


Company Developments

  • Aurizona Gold Mine ("Aurizona") Phase I expansion project approved to increase target annual gold production to 125,000 ounces in 2014
  • Agreement reached with Sandstorm Gold Ltd. ("Sandstorm") whereby Sandstorm will contribute 17% of the required Aurizona Phase I expansion project capital expenditures, up to a maximum of $10.0 million
  • Drill programs completed with positive results at Aurizona's Piaba deposit and Boa Esperança, Ferradura, and Conceição near mine targets
  • Commencement of a six to eight hole diamond drill program at the Touro target in Luna Greenfields
  • Piaba deep drill program completed and extension of mineralization intersected to below 600 metres vertical depth
  • Cachoeira Gold Project sold to Brazil Resources Inc. for a gain of approximately $7.3 million
  • The Company graduated to the main boards of both the Toronto Stock Exchange and the Lima Stock Exchange
  • Bill Lindqvist appointed as a Director and Mark Halpin appointed as Vice President Corporate Development of the Company

Operational and Financial Results

  • Record gold production of 19,391 ounces in the quarter and approximately 52,723 ounces in the year to date
  • Average unit cash cost of production of $749 per ounce for the quarter and $763 per ounce for the year to date
  • Gross profit at the Aurizona Gold Mine of $6.9 million for the quarter and $22.7 million for the year to date
  • Operating cash inflow before working capital movements of $5.0 million for the quarter and $15.2 million for the year to date
  • Net income of $3.5 million for the quarter and $10.8 million for the year to date
  • Earnings per share of $0.03 for the quarter and $0.10 for the year to date


Aurizona Project Development

In October, the Company announced an update to the gold production guidance for the full year of 2012, increasing the full year target from 60,000 ounces to between 68,000 and 70,000 ounces. This production upgrade was the result of the increase in plant operating availability, improved blend control, and plant debottlenecking, which allowed for more ore throughput in the mill than originally planned. The Company expects the average unit cash cost of production for 2012 to be between $750 and $760 per ounce. Cash costs could rise slightly in the fourth quarter of 2012, as compared to the third quarter of 2012, due to drought conditions being experienced at Aurizona and the resulting purchase of additional water resources required to maintain production. With the exception of these additional water purchases, the average unit cash cost of production remains on target as originally planned at $750 per ounce.

During the third quarter 2012, the Company announced that its Board of Directors had approved a planned Phase 1 expansion program at Aurizona to increase that facility's annual production capacity to a targeted 125,000 ounces of gold.

The cost of the expansion is estimated at $43.2 million of capital expenditures as well as a $6.5 million contingency, for a total cost estimate of $49.7 million. The Phase 1 expansion is now targeted at an annual gold production rate of 100,000 ounces in 2013 and 125,000 ounces in subsequent years, which is an increase over the previous guidance of 100,000 ounces per year. The expansion is targeting low capital cost improvements to the existing Aurizona Mine process plant with minimal impact to the plant's established footprint or current operations, while further expansion studies are being completed. This expansion project is expected to reach completion in Q4 2013. In Q1 2013, the Company is targeting to publicly release a reserve update National Instrument ("NI") 43-101 technical report for Aurizona.

Luna is currently negotiating an EPCM contract with an international engineering company that has proven capabilities globally and in Brazil. Aurizona's increased capacity will be facilitated with the commissioning of an intense leach reactor, a carbon regeneration kiln, and four electrowinning cells in the first half of 2013, and the remainder of the equipment in the second half of 2013.

The Company cautions that both the potential increased production target for both the expansion program and the Phase 1 expansion's associated costs are estimates, and that there is currently insufficient work to support these statements with a NI 43-101 compliant technical report. Permitting approval to construct the Phase 1 expansion is expected in December 2012.

The Brazilian refiner that the Company contracts to refine its gold shut down for maintenance in late September 2012, which delayed gold shipments to October and resulted in an increased quantity of finished gold inventory at period end. Third quarter of 2012 finished goods inventory has now been sold into the market, and revenue will be recognized during the fourth quarter of 2012.


The third quarter of 2012 Aurizona exploration activities were focused on the completion of the infill drill program at the three near mine targets, Boa Esperança, Ferradura, and Conceição. Eight new drill holes were also completed at the Piaba deposit. A total of 87 diamond and reverse circulation drill holes consisting of 7,478 metres were drilled. These results are being incorporated into an updated Aurizona resource, which the Company expects to release during the first quarter of 2013.

During the third quarter of 2012, the Company commenced an initial six to eight diamond drill hole program at the Touro target. The Company will also continue its exploration programs at Luna Greenfields that include soil sampling, ground geophysical surveys, structural mapping, auger drilling, and trenching. The Company expects to announce these drill results during the first quarter of 2013.


"Luna's third quarter of 2012 provides evidence of not only our current success, but also our promising future," stated John Blake, Luna's President and CEO. "At the beginning of 2012, we outlined a challenging annual production target of 60,000 ounces. We have nearly achieved that target after just three quarters, and I am confident that we will deliver upon our revised annual goal of 68,000 to 70,000 ounces. Aurizona is cashflow positive, allowing Luna to return value to shareholders through both the Phase 1 expansion and drilling in the Luna Greenfields."

"While Luna's production results have exceeded expectations, we are only just beginning to realize our considerable potential. Aurizona's Phase 1 expansion will more than double that mine's production capacity, and we look forward to releasing an updated resource estimate for that property. We have also begun diamond drilling at Luna Greenfields, our largest property, and will soon deliver the results of that initiative."

Mr. Blake concluded, "Our goal is to establish Luna as a mid-tier gold producer. Our progress at both Aurizona and Greenfields gives me great confidence that this goal is well within our reach."

For the full version of Luna's third quarter of 2012 Financial Statements and Management's Discussion and Analysis, please visit

On behalf of the Board of Directors


John Blake - President and CEO

Forward Looking Statements

This press release includes certain statements that constitute "forward-looking statements", and "forward-looking information" within the meaning of applicable securities laws ("forward-looking statements" and "forward-looking information" are collectively referred to as "forward-looking statements", unless otherwise stated). These statements appear in a number of places in this press release and include statements regarding our intent, or the beliefs or current expectations of our officers and directors. Such forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, words such as "believe", "anticipate", "estimate", "project", "intend", "expect", "may", "will", "plan", "should", "would", "contemplate", "possible", "attempts", "seeks", "goals", "targets" and similar expressions are intended to identify these forward-looking statements. Forward-looking statements may relate to the Company's future outlook and anticipated events or results and may include statements regarding the Aurizona property (including amount of production, cost of production, future potential) and other development projects of the Company, the Company's future financial position, business strategy, budgets, litigation, projected costs, financial results, taxes, plans and objectives. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements were derived utilizing numerous assumptions regarding expected growth, results of operations, performance and business prospects and opportunities, general business and economic conditions, interest rates, the supply and demand for, deliveries of, and the level and volatility of prices of gold and related products, the timing of the receipt of regulatory and governmental approvals of our projects and other operations, our costs of production and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our resource and reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the Company, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our projects, our gold inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations and expansions, and our ongoing relations with our employees and business partners that could cause our actual results to differ materially from those in the forward-looking statements. While the Company considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Accordingly, you are cautioned not to put undue reliance on these forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results. To the extent any forward-looking statements constitute future-oriented financial information or financial outlooks, as those terms are defined under applicable Canadian securities laws, such statements are being provided to describe the current anticipated potential of the Company and readers are cautioned that these statements may not be appropriate for any other purpose, including investment decisions.

Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially include, but are not limited to, changes in gold prices, changes in interest and currency exchange rates, acts of foreign governments, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, adverse weather conditions and unanticipated events related to health, safety and environmental matters), labour disputes, political risk, social unrest, failure of counterparties to perform their contractual obligations, changes in our credit ratings and changes or further deterioration in general economic conditions, uncertainties with respect to operating in Brazil, including political unrest, theft, uncertainties with respect to the rule of law, corruption and uncertain court systems and other risks discussed elsewhere in this press release and our latest AIF filed on SEDAR at

Forward-looking statements speak only as of the date those statements are made. Except as required by applicable law, we assume no obligation to update or to publicly announce the results of any change to any forward-looking statement contained or incorporated by reference herein to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements. If we update any one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. You should not place undue importance on forward-looking statements and should not rely upon these statements as of any other date. All forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement.

Other Technical Information

Peter Mah, P.Eng., Certified Mining Engineer, the Company's Vice President Operations is the Qualified Person as defined under National Instrument 43-101 responsible for the scientific and technical work on the development programs and has reviewed and approved the corresponding technical disclosure throughout this press release. Titus Haggan Ph.D., EurGeol Certified Professional Geologist #746, the Company's Vice President of Exploration, is the Qualified Person as defined under National Instrument 43-101 responsible for the scientific and technical work on the exploration programs and has reviewed and approved the corresponding technical disclosure throughout this press release.

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