Quarterly Report
to 30 September 2016
Highlights
Operations
*AISC has been calculated in accordance with the World Gold Council's Guidance Note on Non-GAAP metrics released 27 June 2013.
Operations
Tucano Gold Mine (100%)
|
Production Summary
|
Unit
|
Sep 16 Quarter
|
Sep 15 Quarter
|
%
|
9M16
|
9M15
|
%
|
|
Total Waste Moved
|
tonnes
|
3,786,457
|
4,848,714
|
-21.9%
|
13,158,838
|
11,800,277
|
11.5%
|
|
Gold Ore Mined
|
tonnes
|
803,869
|
878,444
|
-8.5%
|
2,004,909
|
1,877,690
|
6.8%
|
|
Gold Ore Milled
|
tonnes
|
864,119
|
873,788
|
-1.1%
|
2,722,765
|
2,662,141
|
2.3%
|
|
Head Grade
|
g/t
|
1.91
|
1.19
|
60.3%
|
1.34
|
1.08
|
24.2%
|
|
Plant Recovery
|
%
|
88.4%
|
89.5%
|
-1.2%
|
88.2%
|
89.4%
|
-1.3%
|
|
Total Gold Recovered
|
ounces
|
46,855
|
29,920
|
56.6%
|
103,497
|
82,316
|
25.7%
|
|
Total Gold Sold
|
ounces
|
39,607
|
29,383
|
34.8%
|
99,910
|
83,369
|
19.8%
|
|
Cash Costs and All-In Sustaining Costs
|
Unit
|
Sep 2016
Quarter
|
Sep 2015
Quarter
|
%
|
9M16
|
9M15
|
%
|
|
On-Site Production Costs
|
US$/ounce
|
646
|
838
|
725
|
845
|
|
On-Site G&A Costs
|
US$/ounce
|
39
|
40
|
44
|
55
|
|
Cash Costs
|
US$/ounce
|
685
|
878
|
-22%
|
769
|
900
|
-15%
|
|
Royalties
|
US$/ounce
|
24
|
21
|
23
|
26
|
|
On-Site Corporate Costs
|
US$/ounce
|
13
|
13
|
14
|
17
|
|
Exploration Costs (Sustaining)
|
US$/ounce
|
23
|
7
|
32
|
6
|
|
Capitalised Stripping Costs (Sustaining)
|
US$/ounce
|
42
|
113
|
91
|
103
|
|
Capital Expenditure (Sustaining)
|
US$/ounce
|
10
|
1
|
10
|
1
|
|
All-In Sustaining Costs*
|
US$/ounce
|
797
|
1,033
|
-23%
|
939
|
1,053
|
-11%
|
* AISC has been calculated in accordance with the World Gold Council's Guidance Note on Non-GAAP metrics released 27 June 2013 and in accordance with this Guidance Note, gold ounces sold are used as the denominator in the cost per ounce calculations. Production costs are inclusive of the effects of ore stockpile and GIC inventory movements.
Production
Gold recovered in the September 2016 quarter totalled 46,855 ounces, an increase of 57% over the September 2015 quarter. Gold production for the first nine months of 2016 was 103,497 ounces, an increase of 26% over the same period last year.
The Company expects full year production from Tucano to be in the range of the CY2016 guidance of 145,000 to 160,000 ounces.
Costs
Substantial completion of planned cutbacks during the quarter has resulted in access to higher grade ores, significantly increased gold sales and lowered AISC reported per ounce. Additionally, a reduction in material movement has resulted in reduced mining costs during the quarter and lower AISC.
Higher exploration costs continue as the Company progresses with its US$7 million 2016 exploration plan to replenish reserves, deliver near-mine resource extensions and advance early stage targets. As the Company has announced to date, the exploration plan continues to yield significant results.
Despite falling AISC in the September quarter, USD reported costs continue to be negatively impacted by the stronger Brazilian Real against the USD, which has appreciated by approximately 20% this year. For the year to 30 September 2016, this has resulted in an increase in reported AISC of approximately
$100 per ounce. Pleasingly, costs denominated in Brazilian Real have remained in line with budget.
As a result of the strength of the Brazilian Real, the Company has revised full year AISC guidance from US$715 to 815 per ounce to US$830 to US$930 per ounce.
Mining
In the September quarter, 803,869 tonnes of ore were mined. Total material movement was 4,612,285 tonnes, a decrease of 19% over the September 2015 quarter. The decrease on total moved tonnes was due to: lower performance of the mining fleet; alteration of the pit design of AB2 resulting in a narrow pit to operate with the Cat 777 (one-way ramp); delays in drilling and blasting cycles at AB2 and required grade control drilling limiting mining at AB1 for a period of 15 days.
Mining during the quarter was predominantly from Tap AB1, Tap AB2, Urucum Central North, Urucum South, Tap D Sul and Duckhead. The good performance at those pits in producing ounces mined helped reduce the impact of the remodelling of the pit design of Tap AB2. The Duckhead cut back was completed in September delivering gold production in line with the plan.
Preparation for the 2017 wet season has commenced.
Processing
During the September quarter, the CIL plant throughput was 864,119 tonnes and the process plant recovery for the period was 88.4%, both slightly lower than the September 2015 quarter. However, the mill feed grade was 1.91 g/t gold, recording a 60% improvement when compared to the same period last year.
In July, there was a failure of the internal ring of the pinion shaft bearing on the Sag Mill which caused a six-day unplanned shutdown. Other than the failure, the processing plant has continued to operate well and the expected increase in feed grade has been realised.
Total high grade and low grade gold ore stockpile ounces at the end of September 2016 decreased by 3% to 4.13 million tonnes @ 0.68 g/t for 90,000 ounces, whilst marginal stockpiles of 1.5 million tonnes
@ 0.43 g/t for 21,000 ounces remained static. Sulphide ore stockpiles increased significantly at the end of the quarter largely offsetting the depletion of the Spent Ore stockpile used to supplement oxide mill feed.
Corporate & Finance
Gold Sales
Gold sales for the September quarter totalled 39,607 ounces at an average cash price received of US$1,315.11 per ounce.
Cash & Bullion
Cash and bullion as at 30 September 2016 was A$44.6 million (as at 30 June 2016 was A$30.9 million) (bullion valued at AUD/USD = 0.76 and US$1,316 per ounce).
Debt
During the quarter, the Company made net debt repayments of US$0.5 million which included the quarterly scheduled payment of US$5 million to Santander - Itaú. Other working capital facilities were utilised as the Company managed its Brazilian Real exposure.
The Company expects to further reduce its bank and third party debt in the December quarter.
Capital and Exploration Expenditure
Non-sustaining capital expenditure for the September quarter was $2.9 million, which was largely associated with deforestation and construction of the long term tailings storage facilities.
Non-sustaining exploration expenditure for the September quarter was $1.5 million and included exploration expenditure during the quarter at Tucano and Tropicana East.
Tucano to Transition to Grid Power
In August, the Company, with the support of the Government of Amapa State, signed a Deed of Undertaking with Amapa Electricity Company, and has commenced required refurbishments improvements to the existing 110km 69 KV power line which terminates at the Tucano gold mine. Once the improvements are complete, Tucano is aiming to increase its grid power supply from the current 1MW to initially 5MW around the end of 2016 and ultimately to a minimum of 12MW. The reduction of reliance on diesel generated power will have an immediate and material effect on operating costs at Tucano.
Appointments of Dr Nicole Adshead-Bell and Mr Graham Donahue
At the end of September, the Company announced the appointments of Dr Nicole Adshead-Bell and Mr Graham Donahue. Dr Adshead-Bell was appointed as a Non-Executive Director. She is a geologist with over 20 years of capital markets and natural resource sector experience. Mr. Graham Donahue was appointed to the newly created role of Head of Corporate Development, based in Toronto, Canada. Mr Donahue brings over 20 years of global financial markets experience to Beadell.
Exploration
Brazil
In the September quarter, a total of 31,268 m of drilling, comprising 19,575 m of grade control reverse circulation (RC) drilling and 9,334 m of exploration / resource delineation RC drilling, was completed. A total of 2,359 m of diamond drilling was also completed.
Exploration focussed on the highly prospective Tap AB1 & 2 Trough lodes where ongoing drilling continues to expand and improve the resource and reserve potential below the Tap AB open pit. By the end of the quarter, two diamond drill rigs and one RC rig were drilling extensions to the lodes.
Encouraging early stage drill results have also been reported from 700-900m south of Tap AB open pit along the same contact as the Tap AB Trough Lode, at the new Torres target.
New zones of gold mineralisation were discovered at Gold Nose, 1 km southeast of Duckhead and at Woodpecker, 500 m west of Duckhead. Deeper drilling below the Duckhead open pit has interested significant fresh rock gold mineralisation indicating underground potential.
Figure 1. Tucano Near Mine plan location plan