Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
TSX and AIM listed West African gold producer Avesoro Resources (TSX: ASO) on Thursday announced the release of its financial and operational results for the quarter and nine months ended September 30, 2019.
Gold production for Q3 2019 totalled 22,678 oz, a decrease of 34% on the previous quarter, as a result of production interruptions at the New Liberty and Youga gold mines, located in Liberia and Burkina Faso, respectively.
For the full year, the company still expects to produce between 140,000 and 145,000 oz of gold from its two gold mines
Operational issues and lower production at both its African gold mines negatively impacted Avesoro’s financial performance during the quarter, pushing the miner to a loss before interest, taxes, depreciation and amortization of $4.7 million, compared to earnings of $2.1 million in the same period last year. Revenues declined to $31.2 million based on the sale of 21,246 ounces at an average realized gold price of $1,464/oz.
However, majority shareholder Murathan Gunal noted in a statement that he would continue to provide financial support, as the company requires, for continued operation as the effects of the transition to contractor mining and other cost saving initiatives settle down.
For the full year, the company still expects to produce between 140,000 and 145,000 oz of gold from its two gold mines.
At Youga, additional mining and auxiliary equipment brought by the mining contractor arrived in October and was expected to improve mining productivity during the last quarter of this year. However, the company said gold production and unit cost performance would continue to be impacted by low-grade ore from the Zergore pit.
At New Liberty, the mine experienced a pit wall and ramp failure on the north side of the Kinjor-east pit in October. Mining operations continue at the Marvoe and Kinjor-south pits, but ore production will be reduced and unit cost underperformance is expected in Q4 2019.
Avesoro will continue to work on the New Liberty underground definitive feasibility study, and start of underground development remains on track for the first half of 2020.
