2. FORWARD LOOKING STATEMENTS
This presentation contains forward-looking statements and forward-looking information as defined under Canadian and U.S. securities laws. All statements,
other than statements of historical fact, are forward-looking statements. The words "expect", "believe", "anticipate", "will", "intend", "estimate", "forecast",
"budget" and similar expressions identify forward-looking statements. Forward-looking statements include information as to strategy, plans or future financial or
operating performance, such as the Company’s expansion plans, project timelines, production plans, projected cash flows or capital expenditures, cost
estimates, projected exploration results, reserve and resource estimates and other statements that express management’s expectations or estimates of future
performance.
Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are inherently
subject to significant uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the
forward-looking statements, including: uncertainty of production and cost estimates; fluctuations in the price of gold and foreign exchange rates; the uncertainty
of replacing depleted reserves; the risk that the Young-Davidson shaft will not perform as planned; the risk that mining operations do not meet expectations; the
risk that projects will not be developed accordingly to budgets or timelines, changes in laws in Canada, Mexico and other jurisdictions in which the Company
may carry on business; risks of obtaining necessary licenses, permits or approvals for operations or projects such as Kemess; disputes over title to properties;
the speculative nature of mineral exploration and development; risks related to aboriginal title claims; compliance risks with respect to current and future
environmental regulations; disruptions affecting operations; opportunities that may be pursued by the Company; employee relations; availability and costs of
mining inputs and labor; the ability to secure capital to execute business plans; volatility of the Company’s share price; continuation of the dividend and dividend
reinvestment plan; the effect of future financings; litigation; risk of loss due to sabotage and civil disturbances; the values of assets and liabilities based on
projected future cash flows; risks arising from derivative instruments or the absence of hedging; adequacy of internal control over financial reporting; changes in
credit rating; and the impact of inflation.
Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained
herein. Such statements are based on a number of assumptions which may prove to be incorrect, including assumptions about: business and economic
conditions; commodity prices and the price of key inputs such as labour, fuel and electricity; credit market conditions and conditions in financial markets
generally; revenue and cash flow estimates, production levels, development schedules and the associated costs; ability to procure equipment and supplies and
on a timely basis; the timing of the receipt of permits and other approvals for projects and operations; the ability to attract and retain skilled employees and
contractors for the operations; the accuracy of reserve and resource estimates; the impact of changes in currency exchange rates on costs and results; interest
rates; taxation; and ongoing relations with employees and business partners. The Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Cautionary Note to U.S. Investors Concerning Measured, Indicated and Inferred Resources
This presentation uses the terms "measured," "indicated" and "inferred” resources. We advise investors that while those terms are recognized and required by
Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred” resources” have a great amount of
uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be
upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies.
United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves.
United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.
2
4. Corporate Update
Total Gold Ounces Produced
►
>1.5MM man hours lost time incident free at both
operations
►
120,738
140,000
to
160,000
2013
Sixth quarter of company-wide production growth,
Q1 well positioned to be the seventh quarter
►
Young-Davidson Mine1
2014E
2013 Reserves and Resources reported
29,139
2012
►
►
Gold price assumption reduced to $1,250/oz
El Chanate Mine1
Fourth quarter dividend paid (Jan. 29)
71,145
71,864
2012
2013
67,092
►
Cost containment initiatives completed
►
70,000
to
80,000
Assessing a number of shareholder friendly, nondilutive liquidity financing options
2011
1.
2014E
Production figures include gold ounces only. Production at the Young-Davidson mine includes pre-production ounces, which include ounces produced prior to the declaration of
commercial production on September 1, 2012, and ounces produced from the underground mine prior to the declaration of commercial production on October 31, 2013.
4
5. Sixth Quarter of Record Gold Production
Young-Davidson
Sixth Consecutive Quarter of Record Gold Production
El Chanate
46,170
50,000
48,003
48,903
49,526
Q2 13
Q3 13
Q4 13
Gold Ounces Produced
41,145
40,000
37,213
30,000
20,000
10,000
0
Q3 12
Q4 12
Q1 13
Q1 14E
2013 Operational Results
First Quarter
March 31/13
Gold Ounces Produced3
Total Cash Costs per oz.1,2
All-in Sustaining Costs per oz.2
1.
2.
3.
Second Quarter
June 30/13
Third Quarter
Sept. 30/13
Fourth Quarter
Dec. 31/13
Year-End
Dec. 31/13
46,170
48,003
48,903
49,526
192,602
$635
$655
$628
$771
$676
$1,090
$1,189
$1,210
$1,232
$1,181
Prior to commissioning the underground mine at Young-Davidson, cash costs were calculated on ounces produced from the open pit only. All underground costs were capitalized, and any revenue related to underground ounces sold
was credited against capital. Subsequent to the declaration of commercial production in the underground mine, cash costs are calculated on ounces produced from both the open pit and underground mines, and revenue related to the
sale of underground ounces is recognized in the Company's Statement of Operations as revenue.
Cash costs, prior to inventory net realizable value adjustments. See the Non-GAAP Measures section on page 23 of the Management’s Discussion and Analysis for the year ended December 31, 2013.
Includes pre-production gold ounces from the Young-Davidson underground mine prior to the declaration of commercial production on October 31, 2013.
5
6. Young-Davidson Update
Mid-shaft loading project commissioned
►
Q4 underground productivity of approx. 2,600tpd
►
Productivity ramp-up from 2,500tpd to 4,000tpd at year-end
(target of 8,000tpd at end of 2016)
Paste Backfill Plant Commissioned
►
First paste pour in January 2014
In-line underground unit mining costs
►
$39/t in November and December, 2013
►
$45/t in Q1/14 with inclusion of paste fill, decreasing throughout
the year with increased productivity
Underground Mine Development Advance
►
75% of 2014 mine plan is laterally accessed
Lower mine vertical development underway
►
Will provide access to 20 years of strategic mine life
Mill facility permit increased to 10,000tpd
6
7. El Chanate Exploration Potential
Significant potential to extend mine life
Hole ID
CHCI-760
CHCI-761
CHCI-766
CHCI-821
Rono(6)
Length (m)
18.0
42.0
51.0
7.5
19.5
Grade Au g/t
0.88
0.50
0.33
0.74
0.93
Hole ID
CHCI-775
CHCI-776
CHCI-799
CHCI-836
Chanate Deeps(6)
Length (m)
54.0
48.0
6.0
24.0
Grade Au g/t
2.56
2.90
7.60
2.70
NW Extension(6)
Hole ID
CHCI-769
CHCI-800
Length (m)
37.5
28.5
Grade Au g/t
0.94
0.67
Hole ID
CHCI-815
CHCI-817
CHCI-818
CHCI-829
Loma Prieta(6)
Length (m)
19.5
9.0
9.0
6.0
Grade Au g/t
0.78
1.37
0.58
1.18
Fieldwork initiated on the additional 15-20kms of land acquired northwest and southeast along trend
7
8. Reserve Highlights
Gold price assumption at operations reduced to $1,250 per ounce
►
Improves quality of reserve base for low-cost, long-life ounces
Proven and Probable gold reserves of 6.5 million gold ounces
►
Primarily impacted by depletion from the El Chanate and Young-Davidson open pits
►
Young-Davidson open pit fully depleted in Q2 2014
Young-Davidson underground reserves increased by 1% to 3.6 million gold ounces
►
Underground grades of 2.81 g/t is consistent with 2012
►
Significant conversion of underground Inferred Resources to M&I Resources
El Chanate reserves decreased by 15% to 1.0 million gold ounces
►
Reduction primarily related to production depletion
►
Reserve grades increased by 5% to 0.70 g/t
8
10. Continuing Operations Highlights(1)
Quarter Ended
(in thousands, except ounces , per share amounts and average realized price)
Revenue from mining operations
Quarter Ended
Dec. 31, 2013
Dec. 31, 2012
$50,782
$63,119
Total gold ounces sold (excluding pre-production ounces)
39,855
36,137
Total gold ounces produced (excluding pre-production ounces)
46,017
34,018
$17,508
$30,426
$0.07
$0.11
$(106,412)
$(135,142)
$(0.43)
$(0.48)
$(5,484)
$13,052
Adjusted net (loss) / earnings per share, basic(3)
$(0.02)
$0.05
Average realized price per ounce
$1,257
$1,720
Adjusted operating cash flow(2)
Adjusted operating cash flow per share, basic(2)
Net loss
Net loss per share, basic
Adjusted net (loss) / earnings(3)
1.
2.
3.
Continuing operations include the Young-Davidson and El Chanate mine operations.
See the table on slide 18 for a reconciliation of adjusted operating cash flow and refer to the discussion of Non-GAAP measures in the Company’s 2013 Financial Results Press
Release.
See the table on slide 15 and 17 for a reconciliation of adjusted net earnings and refer to the discussion of Non-GAAP measures in the Company’s 2013 Financial Results Press
Release.
10
11. Continuing Operations Highlights(1)
Year ended
(in thousands, except ounces, per share amounts and average realized price)
Revenue from mining operations
Year ended
Dec. 31, 2013
Dec. 31, 2012
$227,631
$163,622
Total gold ounces sold (excluding pre-production ounces)
160,913
94,422
Total gold ounces produced (excluding pre-production ounces)
161,100
100,284
Adjusted operating cash flow(2)
$78,079
$37,142
$0.31
$0.13
$(176,770)
$(99,779)
Net loss per share, basic
$(0.71)
$(0.35)
Adjusted net earnings(3)
$13,052
$16,903
$0.05
$0.06
$1,395
$1,690
Adjusted operating cash flow per share, basic(2)
Net loss
Adjusted net earnings per share, basic(3)
Average realized price per ounce
1.
2.
3.
Continuing operations include the Young-Davidson and El Chanate mine operations.
See the table on slide 18 for a reconciliation of adjusted operating cash flow and refer to the discussion of Non-GAAP measures in the Company’s 2013 Financial Results Press
Release.
See the table on slide 15 and 17 for a reconciliation of adjusted net earnings and refer to the discussion of Non-GAAP measures in the Company’s 2013 Financial Results Press
Release.
11
12. Continuing Operations Highlights(1)
YoungDavidson
El Chanate
Q4 2013
Q4 2012(2)
Gold ounces produced
29,597
16,420
46,017
34,018
Pre-production gold ounces produced
3,509
-
3,509
7,127
Total gold ounces produced
33,106
16,420
49,526
41,145
Gold ounces sold
24,831
15,024
39,855
36,137
Pre-production gold ounces sold
3,416
-
3,416
3,595
Total gold ounces sold
28,247
15,024
43,271
39,732
$850
$615
$771
$650
$31,420
$19,362
$50,782
$63,119
(in thousands, except ounces and total cash costs)
Cash costs per ounce, before NRV(3),(4),(5)
Revenue from mining operations
1.
2.
3.
4.
5.
Continuing operations include the Young-Davidson and El Chanate mine operations.
Certain comparative information has been restated as a result of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, which was applied prospectively
to production stripping costs incurred on or after January 1, 2012. For further details, refer to the Critical Accounting Estimates, Policies and Changes section on page 30 in the
Company’s Management’s Discussion & Analysis or note 3(a) to the Company's consolidated financial statements for the year ended December 31, 2013.
Cash costs for the El Chanate mine and Young-Davidson mine are calculated on a per gold ounce basis, using by-product revenues as a cost credit.
Gold ounces used to calculate cash costs include ounces sold at the El Chanate mine and ounces produced at the Young-Davidson mine.
The Young-Davidson open pit mine declared commercial production on September 1, 2012 and the Young-Davidson underground mine declared commercial production on October
31, 2013. Pre-production ounces produced and sold are excluded from the calculation of cash costs as they are credited against capitalized project costs.
12
13. Continuing Operations Highlights(1)
YoungDavidson
El Chanate
Year ended
Dec. 31/13
Year ended
Dec. 31/12(2)
Gold ounces produced
89,236
71,864
161,100
100,284
Pre-production gold ounces produced
31,502
-
31,502
26,999
Total gold ounces produced
120,738
71,864
192,602
127,283
Gold ounces sold
88,878
72,035
160,913
94,422
Pre-production gold ounces sold
31,839
-
31,839
17,505
Total gold ounces sold
120,717
72,035
192,752
111,927
$744
$592
$676
$536
$124,439
$103,192
$227,631
$163,222
(in thousands, except ounces and total cash costs)
Cash costs per ounce, before NRV(3),(4),(5)
Revenue from mining operations
1.
2.
3.
4.
5.
Continuing operations include the Young-Davidson and El Chanate mine operations.
Certain comparative information has been restated as a result of the adoption of IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine, which was applied prospectively to
production stripping costs incurred on or after January 1, 2012. For further details, refer to the Critical Accounting Estimates, Policies and Changes section on page 30 in the Company’s
Management’s Discussion & Analysis or note 3(a) to the Company's consolidated financial statements for the year ended December 31, 2013.
Cash costs for the El Chanate mine and Young-Davidson mine are calculated on a per gold ounce basis, using by-product revenues as a cost credit.
Gold ounces used to calculate cash costs include ounces sold at the El Chanate mine and ounces produced at the Young-Davidson mine.
The Young-Davidson open pit mine declared commercial production on September 1, 2012 and the Young-Davidson underground mine declared commercial production on October 31,
2013. Pre-production ounces produced and sold are excluded from the calculation of cash costs as they are credited against capitalized project costs.
13
14. Capital Expenditures
Young-Davidson
El Chanate
Corporate
Year ended
Dec. 31/13
Site infrastructure
$112,518
$9,481
-
$121,999
Underground development
$99,472
-
-
$99,472
Capital stripping
$18,543
$27,398
-
$45,941
$(45,464)
-
-
$(45,464)
$185,069
$36,879
-
$221,948
Capitalized borrowing costs
$6,231
$2,177
-
$8,408
Exploration
$3,930
$5,027
$10,109
$19,066
$195,230
$44,083
$10,109
$249,422
(in thousands)
Pre-production revenue credits
Total capital expenditures
14
15. Adjusted Net Earnings Reconciliation
Quarter Ended
(in thousands, except per share metrics)
Net loss from continuing operations
Adjustments:
Deferred income tax expense related to foreign exchange
Foreign exchange gain
Net realizable value adjustments on inventory
Impairment charges
(Gain) / loss on option component of convertible notes
Unrealized losses on investments
Unrealized loss on derivatives
Equity in loss / (earnings) of jointly-controlled entity
Unrealized loss on contingent consideration
Gain on disposition of 50% interest in Orion
Impact of new Mexican mining tax
Other (including tax effect of adjustments)
Adjusted net (loss) / earnings from continuing operations
Adjusted net (loss) / earnings from continuing operations, per share
Net loss from discontinued operations
Adjustments:
Unrealized foreign exchange gain
Loss on disposition of Australian operations
Net realizable value adjustment on Ocampo HL inventory
Impairment of Australian Operations
Disposition-related costs
Loss on disposition of El Cubo and GyC
Ocampo outside tax basis adjustment
Gain on disposition of Ocampo
Tax impact
Adjusted net earnings from discontinued operations
Adjusted net earnings from discontinued operations, per share
Adjusted net loss
Adjusted net loss, per share
Quarter Ended
Decem ber 31, 2013
Decem ber 31, 2012
($106,412)
$
$
($135,142)
19,781
(3,732)
37,196
59,886
(772)
2,533
483
4,917
(19,364)
($5,484)
(0.02)
629
(2,298)
127,000
6,186
17,778
210
(83)
3,569
(6,620)
2,276
$13,505
0.05
-
$108,977
-
(391)
7,778
6,796
2,277
(39,168)
(150,793)
80,101
$15,577
$0.06
($5,484)
($0.02)
$29,082
$0.10
15
17. 2014 Operational Guidance
►
Gold production increase of up to 25%, with continued annual growth over next 3 years
►
Operating costs are anticipated to decrease significantly as annual production increases
►
Up to 40% decrease in capital investment, with additional decreases going forward
2014 Operational Guidance Highlights
250
Growing Production
$250
Declining Capital Investments
$1,300
225
All-in Sustaining Costs
$1,200
200
175
US$ per ounce
$1,100
US$ (000’s)
Production Oz. (000’s)
$200
$150
$100
150
$1,000
$900
$50
125
$800
100
$700
$0
2013
2014E
2013
2014E
2013
2014E
17
18. Positioned For Value Creation
Politically-friendly jurisdiction
High quality asset base
Organic year over year production growth
Lower end of industry cost curve
Long mine life
Strong balance sheet
Pure gold leverage
Capital return to shareholders
18
20. Adjusted Net Earnings Reconciliation
Year Ended
Net loss from continuing operations
Adjustments:
Deferred income tax expense / (recovery) related to foreign exchange
Foreign exchange (gain) / loss
Net realizable value adjustments on inventory
Impairment charges
Gain on option component of convertible notes
Unrealized loss on investments
Unrealized gain on derivatives
Equity in loss / (earnings) of jointly-controlled entity
Unrealized loss / (gain) on contingent consideration
Gain on disposition of 50% interest in Orion
Impact of new Mexican mining tax
Other (including tax effect of adjustments)
Adjusted net earnings from continuing operations
Adjusted net earnings from continuing operations, per share
Net earnings from discontinued operations
Adjustments:
Unrealized foreign exchange loss
Loss on disposition of Australian operations
Net realizable value adjustment on Ocampo HL inventory
Impairment of Australian Operations
Disposition-related costs
Gain on disposition of El Cubo and GyC
Ocampo outside tax basis adjustment
Gain on disposition of Ocampo
Tax impact
Adjusted net earnings from discontinued operations
Adjusted net earnings from discontinued operations, per share
Adjusted net earnings
Adjusted net earnings, per share
Year Ended
Decem ber 31, 2013
Decem ber 31, 2012
($176,770)
($99,779)
24,999
(10,927)
42,069
158,574
(15,622)
(2,183)
2,533
7,395
4,917
(21,933)
$13,052
$0.05
(15,785)
10,663
127,000
(4,046)
146
(1,713)
(83)
(1,568)
(6,620)
8,688
$16,903
0.06
-
$131,052
-
9,080
1,736
16,070
22,857
12,123
(21,785)
(150,793)
83,005
$103,345
$0.37
$13,052
$0.05
$120,248
$0.43
20
21. Adj. Operating Cash Flow Reconciliation
Quarter Ended
(in thousands, except per share metrics)
Operating cash flow from continuing operations
Add back: Non-cash change in operating working capital
Operating cash flow (before changes in working
capital) from continuing operations
Operating cash flow (before changes in working
capital) from continuing operations, per share
Quarter Ended
Decem ber 31, 2013
Decem ber 31, 2012
$11,954
5,554
$17,508
$
($7,813)
38,239
$30,426
0.07
$
0.11
Year Ended
(in thousands, except per share metrics)
Operating cash flow from continuing operations
Add back: Non-cash change in operating working capital
Operating cash flow (before changes in working
capital) from continuing operations
Operating cash flow (before changes in working
capital) from continuing operations, per share
Year Ended
Decem ber 31, 2013
Decem ber 31, 2012
$63,266
14,813
$78,079
$
0.31 $
($7,231)
$44,373
$37,142
0.13
21
