Karora Resources posts record net earnings for 2020, beats annual all-in-sustaining-cost guidance

Karora Resources Inc (TSE:KRR) (OTCMKTS:KRRGF) (FRA:5RN1), the western Australia-focused gold miner, has reported 2020 full-year results showing a very strong performance last year, with record net earnings and continuing reductions in operating costs.

For the year to end-December, 2020, Karora posted net earnings of C$88.1 million (M), up from a loss of C$6.9M for 2019 on revenue of C$239.1M, up from C$128M the year before.

Across the group, Karora’s all-in-sustaining costs (AISC) for 2020 came in at US$1,026 per ounce, which beat the company’s annual guidance of between US$1,050 and US$1,200 per ounce, and was 11% lower than in 2019.

READ: Karora Resources wraps up drilling at Spargos Reward gold project, delineates near surface high-grade gold mineralization

Karora CEO Paul Andre Huet noted that the fourth quarter of 2020 had also been “exceptional” with net earnings of C$42.9M (C$10.4M in 4Q, 2019) and an AISC of US$912 per ounce sold, an improvement of US$132 per ounce over the prior quarter and a record since the group’s acquisition of the key Higginsville mill asset in mid-2019.

“Since the acquisition, we have demonstrated a strong commitment to achieving cost reduction targets and have now delivered six consecutive quarters of AISC cost reductions, including by beating our target of achieving AISC US$1,000 per ounce by the end of 2020,” he told investors in the results statement.

Gold production from the Beta Hunt and Higginsville mines in Western Australia last year came in at 99,249 ounces (2019: 64,277 ounces), which beat the top end of guidance of between 90,000 and 95,000 ounces. Gold sales for 2020 totaled 98,656 ounces (2019: 65,225 ounces).

The company ended the year with a record C$79.6 million in cash (2019: C$34.6m) and said it is well placed to carry out its growth plans.

2021 guidance strong

For 2021, Karora said it expects more growth and its output guidance for the year is for between 105,000 and 115,000 ounces, representing an around 20% increase on 2020.

“It is important to note that targeted 2021 production increases are weighted to the second half of the year,” commented Huet. “We expect gold grades will increase over the course of the year as we begin to mine higher grades at Higginsville Central and after the anticipated start-up of mining at the high grade Spargos open pit project in the second quarter,” he added.

The company also said plans were “well underway” to expand production capacity at the Higginsville mill this year by around 15%, or 550 tonnes per day (tpd), to 1.6 million tonnes per annum.

Among the highlights of 2020, the company completed its purchase of the Spargos high-grade open-pit gold project in Western Australia, which is expected to begin generating positive cash flow in the second half of this year.

In December 2020, it also unveiled a 334% increase in its proven and probable (2P) reserves to 1.33 million ounces and a 167% increase in consolidated measured and indicated (M&I) gold resources to 2.52 million ounces for its Beta Hunt and Higginsville operations in Western Australia. Those estimates did not include the Spargos Reward project, for which a resource and reserve will be completed in the first half of 2021, to include the new high grade zone.

“Deployment of capital into earth works at Spargos in preparation for mining by mid-year is proceeding as planned, as are our other initiatives in preparation for our planned Phase I mill expansion. We are excited about our outlook beyond 2021 and we expect to announce our multi-year growth plan and guidance to the market during the second quarter,” Huet concluded.

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Story by ProactiveInvestors