Austral Gold Amended Q1 2018 Report
MEDIA RELEASE
Austral Gold Limited 09 May 2018
Austral Gold Amended Q1 2018 Report
Sydney, Australia-Austral Gold Limited (‘the Company’) (ASX: AGD; TSX-V: AGLD) is providing an amended Quarterly Activity Report for March 2018 originally lodged on 30 April 2018.
The Company advises of typographical errors on pages 1,3,4 and 14 of its March 2018 Quarterly Activity Report in relation to the Cash Cost and All-in Sustaining Cost at its Guanaco/Amancaya and Casposo mines. The disclosure of these costs has been corrected as follows:
Page 1-the average selling prices across all operations at US$1,324 per ounce of gold
Page 3 and 14-C1 Cash Cost (US$/AuEq oz)** at Casposo Mine (100% basis) 1,427
Page 4-Cash Cost (US$/AuEq oz)** at Guanaco/Amancaya Mines 990; Casposo Mine (100% basis) 1,427
Page 4-All-in Sustaining Cost (US$/AuEq oz)# at Guanaco/Amancaya Mines 1,120; Casposo Mine (100% basis) 1,903
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
On behalf of Austral Gold Limited:
Andrew Bursill
Company Secretary
For additional information please contact:
Jose Bordogna
Chief Financial Officer Austral Gold Limited [email protected] +54 (11) 4323 7558
Andrew Bursill
Company Secretary Austral Gold Limited [email protected] +61 (2) 9299 9690
Austral Gold Limited ABN 30 075 860 472 ASX: AGD TSXV: AGLD Suite 2, Level 10, 70 Phillip St, Sydney NSW 2000 | T +61 2 9180 7233 | F +61 2 9251 7455 | [email protected] | www.australgold.com.au
MARCH 2018
Quarterly Activity Report
KEY HIGHLIGHTS
- Quarterly production (100% of the Casposo, Guanaco and Amancaya mines) was 14,258 gold ounces and 486,591 silver ounces (20,367 gold equivalent ounces) or 13,462 gold ounces and 370,583 silver ounces (18,122 gold equivalent ounces) net to Austral*.
- The combined production target for calendar year 2018 remains on target at 92,000 AuEq oz net to Austral* or 105,000 AuEq oz (100% basis).
- Quarterly operating cash cost (C1) and all-in-sustaining cost (AISC) across all operations were US$1,151 and US$1,409 per gold equivalent ounce respectively with average selling prices at US$1,324 per ounce of gold and US$16.8 per ounce of silver.
- Sales proceeds for the quarter were US$30.2m of which the Guanaco/Amancaya mine contributed US$17.4m and the Casposo mine US$12.8m.
1 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
Guanaco and Amancaya Mines Production
- Quarterly production was 11,606 gold ounces and 99,865 silver ounces (12,852 gold equivalent ounces) compared to the December quarter where production was 11,370 gold ounces and 73,440 silver ounces (or 12,329 gold equivalent ounces).
- Underground operations at Amancaya started during the March quarter in parallel with the exploitation of the open pit.
- Production at the Guanaco mine was affected by unexpected higher copper grades in the ore, and the Amancaya mine faced some short term production issues with grade dilution due to narrow vein mining. Both cases were solved and grades control procedures have improved.
Casposo Mine Production
- Quarterly production was 2,652 gold ounces and 386,726 silver ounces (100% basis) (7,515 gold equivalent ounces). Austral Gold’s share of production was 1,856 gold ounces and 270,708 silver ounces (5,261 gold equivalent ounces (70% basis). (December quarter production was 5,544 gold ounces and 517,125 silver ounces (100% basis) (12,292 gold equivalent ounces).
- Production at the Casposo mine decreased from the prior quarter mainly due to lower head grades due to blending ore from the underground mine with low-grade ore stocks fed to the mill to compensate for the deficit of ore extraction from the mine. To improve production at the Casposo mine, the Company plans to use additional mining equipment in the following quarter.
2 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
A summary of key operational parameters for the March 2018 and 2017 and December 2017 reporting periods is set out in the following table for comparative purposes:
| Guanaco/ | Casposo Mine | Net to | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Amancaya Mines | (100% basis) | Austral Gold* | |||||||
| Operations | Mar | Dec | Mar | Mar | Dec | Mar | Mar | Dec | Mar |
| Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | |
| 2018 | 2017 | 2017 | 2018 | 2017 | 2017 | 2018 | 2017 | 2017 | |
| Processed (t) | 60,573 | 101,908 | 145,456 | 51,107 | 59,942 | 48,602 | 96,348 | 143,867 | 170,243 |
| Gold produced | 12,308 | ||||||||
| 11,606 | 11,370 | 10,299 | 2,652 | 5,544 | 3,487 | 13,462 | 15,251 | ||
| (oz) | |||||||||
| Silver produced | |||||||||
| 99,865 | 73,440 | 12,711 | 386,726 | 517,125 | 288,327 | 370,573 | 435,428 | 180,390 | |
| (oz) | |||||||||
| Gold-Equivalent | 14,914 | ||||||||
| 12,852 | 12,329 | 10,482 | 7,515 | 12,292 | 7,652 | 18,113 | 20,933 | ||
| (oz) *** | |||||||||
| C1 Cash Cost | |||||||||
| (US$/AuEq | 990 | 1,160 | 924 | 1,427 | 918 | 1,058 | 1,151 | 1,039 | 990 |
| oz) ** | |||||||||
| All-in Sustaining | |||||||||
| Cost (US$/Au | 1,120 | 1,384 | 1,066 | 1,903 | 1,145 | 1,353 | 1,409 | 1,264 | 1,187 |
| oz) # | |||||||||
| Realised gold | |||||||||
| price (US$/Au | 1,322 | 1,277 | 1,254 | 1,329 | 1,282 | 1,214 | 1,324 | 1,280 | 1,329 |
| oz) | |||||||||
| Realised silver | |||||||||
| price (US$/Ag | 17 | 17 | 18 | 17 | 17 | 17 | 17 | 17 | 17 |
| oz) |
- Austral Gold owned 70% of Casposo since March 2017; 51% since March 2016
** The cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A)
# The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation *** AuEq ratio is calculated at 80:1 Ag:Au for March Quarter 2018; 77:1 Ag:Au for December Quarter 2017; 70:1 Ag:Au for March Quarter 2017
3 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
Actual Q1 2018 and Forecasted Calendar 2018 Production:
Total combined production for Q1 2018 was 20,367 gold equivalent ounces (100% basis) or 18,113 (net to Austral Gold*) with an average C1 and AISC of US$1,151/oz and US$1,409/oz per ounce of gold equivalent respectively.
The table below provides the forecast production figures for calendar year 2018 and Q1 2018 actual results for the 3-month period ended 31 March 2018. Production costs were higher than forecasted, however the Company expects to meet its forecast by year-end. We will keep shareholders informed of any changes to the production plan for calendar year 2018.
| Guanaco/ | Casposo Mine | |||||
|---|---|---|---|---|---|---|
| Net to Austral Gold* | ||||||
| Amancaya Mines | (100% basis) | |||||
| Operations | ||||||
| Q1 | Calendar | Q1 | Calendar | Q1 | Calendar | |
| 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | |
| Actual | Forecasted | Actual | Forecasted | Actual | Forecasted | |
| Gold produced (oz) | 11,606 | 54,000 | 2,652 | 24,000 | 13,462 | 71,000 |
| Silver produced (oz) | 99,865 | 520,000 | 386,726 | 1,400,000 | 370,573 | 1,520,000 |
| Gold-Equivalent (oz) *** | 12,852 | 62,000 | 7,515 | 43,000 | 14,914 | 92,000 |
| C1 Cash Cost | ||||||
| 990 | 600-700 | 1,427 | 800-900 | 1,151 | 700-800 | |
| (US$/AuEq oz) ** | ||||||
| All-in Sustaining Cost | ||||||
| (US$/Au oz) # | 1,120 | 850-950 | 1,903 | 1,050-1,150 | 1,409 | 900-1,050 |
| Sustaining Capital | ||||||
| 1,462 | 13,500 | 2,657 | 13,500 | 4,119 | 26,500 | |
| ($000’s) | ||||||
| Realised gold price | ||||||
| 1,322 | 1,250 | 1,329 | 1,250 | 1,324 | 1,250 | |
| (US$/Au oz) | ||||||
| Realised silver price | ||||||
| (US$/Ag oz) | 17 | 17 | 17 | 17 | 17 | 17 |
- Austral Gold owned 70% of Casposo since March 2017; 51% since March 2016
** The cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A)
# The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation *** AuEq ratio is calculated at 80:1 Ag:Au for March Quarter 2018; 77:1 Ag:Au for December Quarter 2017; 70:1 Ag:Au for March Quarter 2017
4 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
Exploration
- Exploration in Chile is focused on drilling the extensions of the Dumbo open pit mineralised structures at the Guanaco mine, and the upper parts of the Amancaya mine to support those portions of the model evaluated mainly with Reverse Circulation drill holes. A complementary DDH drill program of twelve holes was completed on the Nueva vein, approximately 5km north of the Amancaya open pit operation, with four areas of gold mineralisation encountered, confirming a structure 2.8km in strike length.
- Exploration in Argentina is focused on testing the extensions of the Inca and Aztec veins at the Casposo mine, with underground drilling (nine holes), and the extension of the Mercado vein with two drill holes. Drilling operations moved to the Julieta brownfield target to complete the program before winter. Three holes were completed in Q1 2018.
Financial
- Cash on hand at 31 March 2018 was US$3.3m.
- Total consolidated debt at 31 March 2018 was US$~25m (of which ~US$16m is short- term debt by way of financial leases, revolving export facilities and a credit facility). Net debt repayments during the quarter totalled US$0.2m.
5 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
Guanaco/Amancaya Antofagasta, Chile
Casposo San Juan Province, Argentina
Pingüino, Santa Cruz Province, Argentina
Guanaco & Amancaya mines Casposo mine Pingüino project Antofagasta, Chile San Juan, Argentina Santa Cruz, Argentina
100% 100%
Austral Gold Limited (‘the Company’ or ‘Austral’) and its subsidiaries (‘the Group’) is a growing precious metals mining and exploration company building a portfolio of assets in South America.
The Group produces gold and silver from the Guanaco and Amancaya Mines in Chile (100% interest) and the Casposo Mine in San Juan, Argentina (70% interest). The Group also holds an attractive portfolio of exploration projects including the Pingüino project in Santa Cruz, Argentina (100% interest) and the recently acquired San Guillermo and Reprado projects near Amancaya (100% interest). With an experienced and highly regarded major shareholder, Austral Gold is strengthening its asset base by investing in more precious metals projects in Chile and Argentina with near-term development potential.
6 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
CHILE
Guanaco and Amancaya Mines Background
The Guanaco and Amancaya mines remain the Company’s flagship mine complex. Guanaco is located approximately 220km south-east of Antofagasta in Northern Chile at an elevation of 2,700m and 45km from the Pan American Highway. Guanaco is embedded in the Paleocene/Eocene belt, a geological feature which runs north/south through the centre of the Antofagasta region, Chile.
Gold mineralisation at Guanaco is controlled by pervasively silicified, sub-vertical east/northeastwest/southwest trending zones with related hydrothermal breccias. Silicification grades outward into advanced argillic alteration and further into zones with argillic and propylitic alteration. The alteration pattern and the mineralogical composition of the Guanaco mineralisation have led to the classification as a high-sulphidation epithermal deposit.
In July 2014, the Company acquired the Amancaya Project (‘Amancaya’) from Yamana Gold Inc which is located approximately 60km south-west of the Guanaco mine. Amancaya is a low sulphidation epithermal gold-silver deposit consisting of eight mining exploration concessions covering 1,755 hectares (and a further 1,390 hectares of second layer mining claims).
At Amancaya, open-pit mining operations began during the first half of 2017. The Amancaya ore is being trucked to the new plant at Guanaco for processing. The development of the decline to access underground reserves commenced in late 2017.
San Guillermo and Reprado Properties On 14 November 2017, Austral Gold completed its purchase of a 100% interest in the San Guillermo and Reprado gold-silver projects, located in the emerging Amancaya precious metals district of northern Chile, from Revelo Resources Corp. (TSX- V:RVL) for consideration of ten million Austral Gold ordinary shares. Revelo has retained Net Smelter Return (NSR) Royalties on future metals production of 1% and 0.5% at Reprado and San Guillermo, respectively.
The San Guillermo property consists of concessions totalling 12,175 hectares that surround the company’s high-grade gold and silver Amancaya operation, which Austral began mining via open pit operations in 2017. The Reprado Project consists of concessions totalling 3,960 hectares situated approximately 20km north of the Company’s Amancaya operation. Historical drilling undertaken by Teck Resources Ltd intersected gold in low sulphidation quartz veins trending essentially east-west.
New plant and technical report on combined resources
Construction of a new agitation leaching plant at Guanaco mine site was completed in August 2017 with commissioning phase completed by November 2017. The Company released the results of an independent resource and reserve estimate in accordance with the CIM Definitions 2014 in National Instrument (“NI”) 43-101 and Joint Ore Reserves Committee Code, 2012 (JORC 2012) on 8 June 2017 (see company profile on www.sedar.com and www.asx.com.au release). Highlights from the estimate confirms the high-grade nature of the Amancaya project are as follows:
7 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
Amancaya:
A total Indicated resource of 804,690 tonnes at 9.64 g/t gold and 80.7 g/t silver for 277,352 Gold Equivalent (“AuEq”) ounces, including a maiden probable reserve of 948,053 tonnes grading 6.77 g/t gold and 63.2 g/t silver for 232,074 AuEq ounces which includes a maiden open pit probable reserve of 254,596 tonnes grading 7.56 g/t gold and 119.5 g/t silver for 74,993 AuEq ounces; and Total Inferred resource of 959,554 tonnes at 6.79 g/t gold and 36.1 g/t Ag for 220,000 AuEq ounces.
Guanaco:
A Measured and Indicated resource of 2,193,000 tonnes grading 2.9 g/t gold and 13.0 g/t silver for 217,000 AuEq ounces, including; Total reserves of 489,635 tonnes grading 2.99 g/t gold and 3.6 g/t silver for 47,907 AuEq ounces, including Proven reserves of 189,613 tonnes grading 3.41 g/t gold and 4.1 g/t silver for 21,106 AuEq ounces and Probable reserves of 300,022 tonnes grading 2.73 g/t gold and 3.4 g/t silver for 26,801 AuEq ounces. Inferred resource: 1,200,000 tonnes grading 2.6 g/t gold and 12.9 g/t silver for 110,000 AuEq ounces.
Production
During the 3-month period ended March 2018, total production at Guanaco/Amancaya was 11,606 Au oz and 99,865 Ag oz (or 12,852 AuEq oz) compared to 10,482 AuEq oz during same period of the previous year. The increase in production occurred due to the construction of the new agitation leaching plant at Guanaco during the latter part of 2017.
The operating cash cost (C1) at Guanaco/Amancaya for the 3-month period ended 31 March 2018 and 2017 was US$990/AuEq oz and the all-in sustaining cost (AISC) was US$1,120/AuEq oz compared to US$924/AuEq oz and US$1,066/AuEq during the same period of the prior year. C1 and AISC are forecasted to decrease over the balance of 2018 as we expect to increase throughput at the new agitation leaching. C1 and AISC are forecasted for calendar year 2018 to be US$600-700/oz and US$850-950/oz respectively.
8 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
Mining
During the March 2018 quarter, mining continued at the Guanaco underground operations with a total of 23,785 tonnes mined while 17,610 tonnes were mined at the Amancaya open pit and 9,564 from the Amancaya underground operations.
The technical team continues to evaluate opportunities to extend the life of mine of the Guanaco deposit since the current reserves are expected to be depleted during 2018.
| Guanaco/Amancaya | ||||
|---|---|---|---|---|
| Operations | March | December | March | |
| Quarter | Quarter | Quarter | ||
| 2018 | 2017 | 2017 | ||
| Processed (t) | 60,573 | 101,908 | 145,456 | |
| Average Plant Grade (g/t Au) | 3.9 | 3.6 | 3.5 | |
| Average Plant Grade (g/t Ag) | 73.5 | 43.4 | 7.6 | |
| Gold produced (oz) | 11,606 | 11,370 | 10,299 | |
| Silver produced (oz) | 99,865 | 73,440 | 12,711 | |
| Gold-Equivalent (oz) | 12,852 | 12,329 | 10,482 | |
| C1 Cash Cost (US$/AuEq oz) | 990 | 1,160 | 924 | |
| All-in Sustaining Cost (US$/Au oz) | 1,120 | 1,384 | 1,066 | |
| Realised gold price (US$/Au oz) | 1,322 | 1,277 | 1,254 | |
| Realised silver price (US$/Ag oz) | 16.5 | 17 | 18 |
During the March 2018 quarter, underground operations started at Amancaya after finalising the construction of the portal and decline in previous quarter.
Safety
During the quarter there was one lost-time accidents (LTA) and two nil-lost-time accident (NLTA) were reported involving Guanaco employees and third-party contractors. Safety and environmental protection are core values of the Company. The implementation of best practice safety standards along with a sound risk management program are key priorities for Austral Gold.
Guanaco Mine Exploration
Drilling to test extensions of known mineralised structures at Dumbo open pit continued during Q1 2018. The target was divided in four, the west northern part (Dumbo Oeste Norte, DWN), the west southern part (Dumbo Oeste Sur, DWS), the east northern part (Dumbo Este Norte, DEN), and the east southern part (Dumbo Este Sur, DES).
9 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
A total of 3,224.15m were completed in the program testing DWS (Beatriz and the Chilena structures), and DEN (Dumbo Norte structures) targets.
Exploration drilling on the extensions of Dumbo mineralised structures have identified the continuity of many high-grade gold structures at DWS (Chilena), and DEN.
In addition, a new structure was added to the DWN group of mineralization, the Dumbo Norte Norte 3 (DDN-3).
10 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018
Best intercepts* from results to date include:
Chilena Norte 1 (CHN-1):
| • 3.70m @ 1.18 g/t Au; | 1.47% Cu | (DDH-1131) |
| • 1.99m @ 2.25 g/t Au | 0.15% Cu | (DDH-1133) |
| • 0.81m @ 2.73 g/t Au | 0.22% Cu | (DDH-1135) |
Chilena (CHI):
| • 3.66m @ 2.69 g/t Au; | 0.01% Cu | (DDH-1131) |
| • 1.41m @ 2.40 g/t Au; | 0.01% Cu | (DDH-1140) |
| • 1.22m @ 1.84 g/t Au; | 0.01% Cu | (DDH-1143) |
| • 3.12m @ 15.33 g/t Au; | 0.01% Cu | (DDH-1145) |
Chilena Sur 1 (CHI-S1):
| • 0.88m @ 5.53 g/t Au; | 0.02% Cu | (DDH-1131) |
| • 1.84m @ 2.47 g/t Au; | 0.01% Cu | (DDH-1131) |
| • 0.99m @ 3.72 g/t Au; | 0.45% Cu | (DDH-1133) |
Beatriz (BEA):
- 1.34m @ 2.59 g/t Au; 0.00% Cu (DDH-1136)
Dumbo Este Norte (DEN):
- 2.34m @ 2.12 g/t Au; 0.16% Cu (DDH-1137)
• 3.18m @ 3.62 g/t Au; 0.05% Cu (DDH-1146)
- 1.80m @ 1.21 g/t Au; 0.25% Cu (DDH-1146)
- Interval length is representative of true width as most holes are sub-horizontal and perpendicular to structure.
11 AUSTRAL GOLD QUARTERLY REPORT — MARCH 2018