Midtier Gold Producer Reports Q2 Results and Updates Guidance

Source: Streetwise Reports   08/16/2018

The figures provided incorporate the three Brazilian mines the company acquired earlier this year.

Leagold Mining Corp. (LMC:TSX.V; LMCNF:OTCQX) announced Q2/18 financial and operating results for its four producing mines: Los Filos in Mexico and Riacho dos Machados (RDM), Fazenda Brasileiro and Pilar de Goias, all in Brazil.

The numbers represent a full quarter of operations for Los Filos but only 38 days of operations (May 24 to June 30, 2018) for the trio of Brazilian assets.

Leagold’s Q2/18 revenue was $86.9 million, and $10.1 million of it came from mine operations. As of June 30, 2018, the company had $69.4 million in cash and cash equivalents.

Consolidated gold production during Q2/18 was 64,517 ounces at an all-in sustaining cost (AISC) of $950 per ounce of gold sold; Leagold sold 66,982 oz during Q2/18.

Specifically, at Los Filos, Q2/18 gold production was 43,541 oz, 15% less than that in Q1/18, at an AISC of $967/oz. The decrease was due to fewer gold ounces being placed on the heap-leach pads in Q1/18 and the time lag in leaching recovery, along with underground grades being lower than expected, by 2–2.5 grams per ton.

However, gold production at Los Filos, and therefore cash flow, in H2/18 should improve because more gold was placed on the heap-leach pads in Q2/18 than in Q1/18. Also, Leagold has commissioned an agglomerator, and high-grade material is being processed separately. “The Los Filos processing plan now schedules a significant increase in the uncrushed, nonagglomerated material placed on the pads,” said CEO Neil Woodyer in a news release.

At RDM, Q2/18 gold production totaled 7,889 oz at an AISC of $818/oz. Grades averaged 1.27 g/t, and recoveries were 82%. Currently, Leagold is working to connect RDM to the national power grid, which is anticipated sometime in Q4/18.

At Fazenda, gold production totaled 7,460 oz at an AISC of $891/oz. Grades averaged 1.93 g/t, and recoveries were 92%. Newly acquired equipment slated for delivery in H2/18 should improve mining efficiencies there, the company indicated.

At Pilar, gold production totaled 5,627 oz at an AISC of $1,060/oz. Grades averaged 1.32 g/ton, and recoveries were 94%. Because an area of lower grades adversely affected production, Leagold adjusted the mining sequence to first target areas of higher grades.

“We are now focused on using our experienced operations team to identify and implement short- and long-term optimizations at each of the mines,” Woodyear noted. “We are also reorienting each of the mines in Brazil into individual profit centers. Some of these changes will take time to deliver results.”

Leagold revised its FY18 guidance to incorporate its recent acquisitions. It is now 325–350 Koz of gold production at an AISC of $940–975/oz.

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( Companies Mentioned: LMC:TSX.V; LMCNF:OTCQX, )