Alio Gold (TSX: ALO; NYSE: ALO) reported higher production costs and lower metal revenues in 2018’s second quarter compared to the same quarter in 2017, largely due to complications at its San Francisco and Florida Canyon gold mines.
Alio metal revenues fell to $26.2 million compared to $27.1 million in the same quarter of the previous year. Meanwhile, production costs rose to $20.7 million compared to $16.1 million in the same quarter of the previous year. All-in sustaining costs per oz. rose from $954 to $1,314, and cash flow from operations fell from a $2.7 million gain to an $8.2 million loss.
The San Francisco mine produced 14,466 oz. gold and 7,661 oz. silver, down from 22,011 oz. gold and 10,332 oz. silver in 2017’s second quarter. As a result, the company said it will not meet its 2018 production guidance of 90,000 oz. gold to 100,000 oz. gold.
Alio attributes the underperformance to a 0.46 gram gold crusher feed grade compared to a planned 0.59 gram gold feed grade. It says increased blasting may have caused the diluted gold grade.
In May 2018, the company updated its resource model and ore control model. It says crusher feed in June and July 2018 more closely correlated with the new model’s grade predictions, and it aims to table an updated technical report on the mine by the end of the year. In the meantime, Alio says it will focus on mining more profitable ounces.
Florida Canyon continues to ramp up after Alio restarted it last year. The company says increased cyanide consumption caused higher costs at the mine.
Shares of Alio are currently trading at $1.57 with a 52-week range of $1.52 to $6.05. The company has a $145 million market capitalization.