Galiano Gold Inc (GAU) 2020 Q3 法說會逐字稿

Hello, everyone, and welcome to Galiano Gold's Q3 2020 Results Videocast. Please refer to our financial statements and MD&A on our website or filed on SEDAR for further details.

So first, let's take a look at the Q3 results from the Asanko Gold Mine, which is managed and operated by Galiano. All information related to the Asanko Gold Mine is discussed here on a 100% basis.

Now the third quarter was a very important transitional quarter for the mine. After 4 years of sourcing ore primarily from the Nkran pit, the production mix underwent a planned change to lower-grade ore from the Esaase and Akwasiso pits following the completion of mining at Nkran Cut 2 at the end of Q2. The mine continued to deliver operational results in line with our plan, albeit at lower levels of production in the first half of the year. In Q3, the AGM produced 48,974 ounces of gold, with a processing plant continuing to perform very well during the period. 1.5 million tonnes of ore was processed at an average feed grade of 1.1 gram per tonne gold with gold recovery averaging 93%.

Our total gold production for the year-to-date is now 184,333 ounces, leaving us in a strong position to achieve our annual guidance of 225,000 to 245,000 ounces. With continued strong gold prices, revenue totaled $100.7 million during the period on gold sales of 53,975 ounces, with the realized gold price, a quarterly high of $1,861 per ounce.

Now turning to costs. The mine's cash operating costs were $1,150 per ounce, with all-in sustaining costs of $1,488 per ounce. This brings our year-to-date all-in sustaining costs to an average of $1,094 per ounce, at the high end of our annual guidance of between $1,000 and $1,100 an ounce.

Now in Q3, we expect to see increased costs as we made significant investments in developing and optimizing the Esaase and Akwasiso pits for sustainable ore production in Q4 and beyond. In addition, we've largely completed sustaining capital spending on the tailings storage facility raise and continued our main development capital project, the relocation of the Tetrem village. The mine generated cash flow from operations of $18.5 million. And as a result of the investment in nonsustaining capital and exploration expenditures, the mine realized negative free cash flow of $4.2 million.

Now corporately at Galiano Gold, our equity accounted net income was $3.2 million or $0.01 per share, with adjusted EBITDA for the quarter of $6.5 million. Now notably, the company's cash and receivables position remains strong, with $66.4 million as at September 30 with no debt.

Our exploration program continued to advance during the quarter. Early in Q3, we released the positive results from both Akwasiso and Abore that showed the extension of mineralization at both pits. Our near-term objective was to replace depletion, and both pits have the potential to be the additional sources of ore supplementing our Esaase pit in the latter part of this year and through 2021 and 2022.

During the quarter, we also completed an initial 33-hole, 4,000-meter drilling program at the Nkran pit to both confirm and improve confidence in the middle reserve estimate for the third phase of mining at Nkran as well as test the extent of mineralization below the proposed Cut 3 pit shell. The program indicated that the mineralized system is continuing at depth. In addition, a geotechnical drilling and engineering campaign was initiated, targeting the proposed new west wall location for Cut 3. Upon completion of the current drilling and geotechnical work, it is expected that the design of Cut 3 will be finalized and a definitive mine plan and capital cost estimate completed in early 2021.

Now on our highly prospective Miradani targets, we commenced an initial drill program to follow-up on the 2019 drill program at the northern tip of the 3-kilometer long mineralized trend. This program was designed to delineate and expand upon known mineralization and is virtually complete with results expected in November. A third phase of drilling is currently underway, infill drilling Miradani north to 40 meter by 40 meter spacing, allowing for potential mineral resources to be estimated. It's expected that exploration on the full 3-kilometer long trend will start in Q1 2021, with wide fences of step out drilling, spaced 400 meters to 500 meters apart, targeting continued extensions of Miradani north, a long trend to the Southwest.

For last quarter, we announced an expansion of our 2020 budget from $10 million to $20 million for exploration. And as at the end of Q3, we've spent $14.6 million.

Turning to our outlook for the year. We maintain our current guidance of production between 225,000 to 245,000 ounces for 2020, with all-in sustaining costs expected to slightly exceed our $1,000 to $1,100 per ounce guidance.

I'd just like to finish with an update on the Galiano management team. We were pleased this quarter to welcome Matt Badylak to our team as Executive Vice President and Chief Operating Officer, who's based in our head office here in Vancouver. With Matt on board, we've initiated the process to move our technical services function from Johannesburg to Vancouver. And by the end of this year, we expect to have a small group of professionals in our Vancouver location, working hard to create a sustainable business at Galiano with a current focus on optimizing our investment in the Asanko Gold Mine.

Now as 2020 comes to an end, I'd like to wish everyone a safe holiday season and look forward to our next videocast in early 2021, when I'll update you on our fourth quarter and year-end results. Thank you.