AVGCF-In a release on May 16, Avion noted first quarter highlights:
-The Company had a net loss of $6.2 million or $0.01 per share, for the quarter as compared to net income of $12.6 million or $0.03 per share for the comparable quarter last year. The loss in earnings is primarily related to: The change in fair value of the call options of $6.4 million, higher operating costs as Avion transitions to underground mining; depletion and depreciation charges of $5.1 million and foreign exchange losses of $3.0 million.
-The Company achieved revenue of $33.0 million for the quarter compared to revenues of $31.8 million for the comparable quarter last year, representing a 4 percent increase.
-Avion produced 26,256 ounce of gold during the quarter after final refinery adjustments at a cash cost of per ounce produced of $898. Please see "Non-GAAP Measures" below. Mining and processing costs were $19.0 million compared to $13.0 million for the comparable quarter last year.
-Production mining at the Tabakoto underground deposit commenced in February. During the first quarter of 2012 approximately 86,000 tonnes of ore was mined from stopes and development headings at an average estimated grade of 5.40 g/t Au.
-During the quarter the Company sold 19,460 ounces of gold at an average realized price of $1,694 per ounce. The build-up of gold inventories at March 31 included gold readily available for shipment and refining of 6,188 ounces. These ounces were sold in April and will benefit the operating profit in the 2nd quarter of 2012.
-The Company generated operating cash flow before working capital adjustments of $4.2 million compared to $15.4 million for the same quarter last year. Net working capital adjustments of $17.3 million contributed to decreased operating cash flows during this quarter versus the same quarter last year.
-The Company completed the quarter having $41.2 million in cash and cash equivalents including working capital of $19.2 million.
-The Company sold call options raising $25 million in February.
Capital Expansion Programs
Expansion plans continued at Tabakoto during the quarter, consisting of the following activities:
-Construction of the haul road from the Dioulafoundou deposit to the Djambaye II deposit was essentially completed.
-The underground portal at the Segala deposit encountered a 2m wide fault zone which halted advance. A shotcrete machine has been purchased and has been set up and to spray concrete onto the tunnel walls to reinforce the workings. It is anticipated that is will take until the end of May before normal advance resumes.
-Construction work to double the Tabakoto plant capacity from 2,000 to 4,000 tonnes per day was progressing well until a military coup occurred on March 21. The plant expansion was on budget and schedule and approximately 80 percent completed on a cost spend basis. The Company reported in early May that it had suspended the mill expansion program due to the effects of the military coup.
Financial Discussion: three months ended March 31,
Avion produced 26,256 ounces of gold during Q1-2012, which is a 30 percent increase compared to the 20,272 ounces produced in Q1-2011. The Tabakoto plant processed 225,729 tonnes of ore at an average grade of 4.02 g/t Au and the average mill recovery for Q1-2012 was 90.2 percent. This compares to Q1-2011 production of 180,800 tonnes of ore at an average grade of 3.64 g/t Au and an average mill recovery of 96.2 percent.
The Company reported a net loss of $6,189,551 ($0.01 per share, basic and diluted) for the three months ended March 31, compared to net income of $12,564,705 ($0.03 per share, basic and diluted) for the three months ended March 31, 2011.
During Q1-2012, the Company sold 19,460 ounces of gold and generated $32,965,385 in gold sales revenue. In Q1-2011, 22,583 ounces of gold was sold generating $31,489,868 in gold sales revenue. Mining and processing costs were $19,048,663 (Q1-2011: $13,017,240), and the Company recorded depletion and depreciation of $5,055,950 (Q1-2011: $1,560,056). The Company is amortizing deferred property, plant and equipment related to the Mali projects on a unit of production basis from the current mine plan. The Company was subject to a 6 percent royalty on metal sales during Q1-2012. Royalties expense totaled $1,977,310 (Q1-2011: $1,473,593) for the ounces of gold sold during Q1-2012. Gold inventories on hand included 6,188 of ounces readily available for shipment and refining at March 31st. These ounces were sold in the first few weeks of April and the sale of these ounces will be reflected in the 2nd quarter results.
The Company realized a cash cost per ounce produced of $898 per ounce for Q1-2012 compared to $462 for Q1-2011. Please see "Non-IFRS Measures" below.
Corporate and administrative expenses totaled $2,309,666 for the quarter ended March 31, compared to $1,067,176 for Q1-2011. The Company incurred higher professional costs during the quarter primarily higher audit costs and costs associated with financing efforts. Consulting and management costs were also higher in Q1-2012 compared to Q1-2011.
Non-cash share-based compensation expense for Q1-2012 was $1,255,264 (Q1-2011: $3,479,773) related to the estimated fair value of stock options that were granted and vested during Q1-2012. A total of 1,700,000 stock options were granted during Q1-2012 compared to 4,455,000 during Q1-2011. Share-based compensation was estimated using the Black-Scholes option pricing model as at the date of grant.
Other gains and losses included a foreign exchange loss of $2,984,000 during Q1-2012 compared to a gain of $1,477,495 during Q1-2011. The Company carried large liabilities denominated in FCFA during Q1-2012 as a result of the loan with Banque Atlantique as well as large accounts payables balances. The FCFA strengthen during the quarter, resulting in a foreign exchange loss.
The Company recorded an unrealized loss on the change in fair value of derivative liabilities of $6,430,979 during Q1-2012 (Q1-2011: $nil). This was in relation to the gold call options sold during the quarter.
