AuRico Gold (TSX: AUQ; NYSE: AUQ) has met second-quarter earnings expectations after adjusting for US$105 million in non-cash charges, mostly related to its El Chanate gold mine in Mexico.
AuRico — which operates two gold mines, including the Young-Davidson operation in northern Ontario — unveiled a second-quarter net loss of US$103.5 million, or US42¢ per share, due to several after-tax writedowns. The US$105-million impairment charges included US$80 million in goodwill at El Chanate after the company lowered the short- and long-term metal prices used in its life-of-mine plans; US$16.5 million for the retained interest royalty in the future life-of-mine free cash flows at the Stawell and Fosterville mines in Australia, which it sold to Crocodile Gold (TSX: CRK; US-OTC; CROCF) last May; and US$8.4 million in value adjustments for its stockpile inventories.
But after taking out the expected writedown and other one-time items the producer’s adjusted earnings were US$6.1 million, or US2¢ per share, which is relatively in line with expectations.
AuRico raked in US$58 million in revenue from 41,500 oz. gold sold at an averaged realized price of US$1,369 per oz. from its two operations. This excludes the 9,400 oz. pre-production sold from the underground mine at Young-Davidson.
Adjusted operating cash flow was US$19 million, or US8¢ per share, compared to nil per share in the year-earlier period.
During the quarter, the Young-Davidson mine produced 19,400 oz. from the open-pit and 9,800
pre-production oz. from the
underground at total cash costs of US$716 per oz. The El Chanate mine produced 18,800 oz. at total cash costs of US$602 per oz. This brings total quarterly output to 48,000 oz. at cash costs of US$655 per oz.
Scott Perry, the company’s president and CEO, said on a conference call that the second quarter marks the third straight period where AuRico saw higher production from both operations.
“More importantly, I think we are continuing to demonstrate an asset base that is well positioned for delivering on our commitments of reliable, sustainable and consistent results,” he added.
The open-pit mine at Young-Davidson reached commercial production last September, and now the underground portion is nearing commercial production.
Perry noted the mine’s underground mid-shaft crushing and hoisting system remains on schedule to begin commissioning in September, with commercial production expected at the end of the third quarter.
“This will be a key milestone for the operation,” Perry says, adding that the hoisting system would increase underground output while bringing down costs.
AuRico exited the quarter with US$210 million in cash and equivalents, and US$150 million in available credit facilities.
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