Q Financial Results

Transcription

1 LEAGOLD MINING IS BUILDING A NEW MID-TIER GOLD PRODUCER FOCUSED ON LATIN AMERICA Q Financial Results November TSX: LMC OTCQX: LMCNF

2 Disclaimer This presentation contains "forward-looking statements" and forward looking information (as defined under applicable securities laws), including but not limited to, statements with respect to Leagold's plans and operating performance, including in respect of growth potential of the Los Filos Mine, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, future financing sources, and the success of exploration activities. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "expects", "expected", "budgeted", "forecasts" and "anticipates". Forward-looking statements and information, while based on management's best estimates and assumptions, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks including receipt of all necessary approvals, risks related to the successful integration of acquisitions; risks related to international operations; risks related to general economic conditions and credit availability, actual results of current exploration activities, unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates, increases in market prices of mining consumables, possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities, changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in countries in which Leagold operates. Although Leagold has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The forward-looking statements and forward looking information are made as of the date hereof and Leagold disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward looking statements or forward looking information contained herein to reflect future results. Accordingly, readers should not place undue reliance on forward-looking statements and information. Please refer to Leagold's most recent filings under its profile at for further information respecting the risks affecting Leagold and its business. The TSX Exchange has neither approved nor disapproved the contents of this presentation. Neither the TSX Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this presentation. All of the individual comparables presented herein are speculative and have inherent risks that are associated with each comparable company. Investment decisions should not be based solely on the comparables provided in this presentation due to the inherent risks associated with each such company. The historic information presented with respect to each comparable company is not indicative of future performance of results. If any of the comparables herein contain a misrepresentation, an investor does not have a remedy under applicable securities legislation. Information about comparable companies was obtained from public sources.the comparables were selected based on their status as gold producers, with some companies with operations within Latin America. Cash costs, AISC, Mine EBITDA, and EBITDA margin are non-gaap financial performance measures with no standard meaning under IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. The authors of the NI Technical Report and Preliminary Economic Assessment, Los Filos Gold Mine, Guerrero State, Mexico (the Technical Report ), William A. Glover, P.Eng., Allan L. Schappert, CPG, and Dawn H. Garcia, PG, CPG of Stantec Consulting International LLC. ( Stantec ) and Alfred S. Hayden, P.Eng. of EHA Engineering Ltd., are each a qualified person as defined in NI and independent of the Company, and have prepared or supervised the preparation of the technical information upon which excerpts included in this presentation are based. The Preliminary Economic Assessment for the Bermejal Underground Expansion Project (The Bermejal Underground PEA or PEA ) is a conceptual study of the potential viability of Mineral Resources of the Bermejal Underground project. The PEA is not a Prefeasibility Study or Feasibility Study, as the economics and technical viability of the Bermejal Underground project have not been demonstrated at this time. The PEA is preliminary in nature, and is based on inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Gilles Arseneau, Ph.D., P. Geo., Associate Consultant with SRK, is an independent Qualified Person as defined by NI , is responsible for the updated Bermejal Underground mineral resource estimate as reported in this presentation. Doug Reddy, P.Geo, Leagold s Senior Vice President Technical Services, is a Qualified Person under NI , and has reviewed and approved the technical contents of this presentation on behalf of Leagold. All amounts in US$ unless otherwise stated. 2

3 Q Highlights Initial benefits of operational enhancement programs implemented during Q2 and Q3 are starting to be realized During Q3 2017: Gold production of 47,766 oz, 9% higher than Q2 AISC of $993/oz, in line with Q2 AISC margin of $13.6M Invested $9.1M in key optimizations and growth projects, including: $1.6M in the conveyors $0.6M in the agglomerator $6.4M for the Bermejal Underground Anticipate continued improvements in Q4 and into 2018 as the two optimization projects become operational New organizational structure, with distinct operations and projects teams, implemented Peter Burger - GM, Los Filos Mine Graham Parsons - Director, Projects Leagold corporate team now focused and working diligently on continuing our Build and Buy acquisition and growth strategy in Latin America Bermejal Underground portal development underway 3

4 Los Filos Q Operations Review Operational improvements are starting to be realized, with further progress expected in Q4 and into 2018 as the agglomerator and overland conveyor projects are completed and become operational Unit Q Q Mining Physicals Tonnes mined - Open Pit 000s 6,696 7,602 Tonnes of ore mined OP 000s 1,956 2,091 Avg gold grade mined OP (g/t) Tonnes of ore mined UG 000s Gold production increased compared to Q2 due to: Increased ore production from open pit and underground Initial impact of heap leach process improvements implemented during Q2 and Q3 Q3 average recovery rates impacted by greater proportion of ROM material placed on leach pad compared to Q2 Recovery rate for high-grade underground tonnes estimated at 80% during Q3 Avg gold grade mined UG (g/t) Tonnes of ore processed 000s 1,986 2,134 Recovery rate 2 % 80% 70% Gold produced oz 43,980 47,766 Unit Cost Analysis Mining cost OP $/t mined Mining cost UG $/t ore Processing costs $/t placed Site G&A costs $/t placed For the period from April 8 June 30 2 Based on total gold ounces produced in the period 4

5 Q AISC Margin Leagold generated Q AISC margin of $13.6M at AISC of $993/oz Q Revenue to AISC Margin Waterfall $60.6M $10.6M $10.2M AISC Margin $13.6M $20.8M AISC $993/oz $3.7M ($4.9M) $3.6M $0.4M $2.6M $13.6M Gold Revenue OP Mining Costs UG Mining Costs Processing Costs Site G&A Costs Q /t mined 99.8/t ore 10.9/t placed 2.1/t placed Inventory Adjustments Land Access Payments Royalties Sustaining Capital All-in Cost Sustaining Margin Q /t mined 104.3/t ore 9.8/t placed 1.7/t placed % Improvement 4% -4% 11% 18% 1 AISC/oz sold excludes the impact of $1.6 million in non-recurring transition costs and includes the impact of a $0.5 million reclassification of Q operating costs to nonsustaining capital related to the Bermejal Underground expansion project. In addition, sustaining capital includes the impact of a $0.3 million reclassification of Q sustaining capital to non-sustaining capital related to the Bermejal Underground expansion project 5

6 Los Filos is Self Managing All Los Filos operational decisions are taken by site management All services provided by Goldcorp during the transition period have been transferred to the mine During Q2 and Q3, Los Filos completed its transition period with Goldcorp and is now self-managing Goldcorp transition services costs were $1.8M in Q2 and $0.4M in Q3 No transition support costs for Q4 and beyond Los Filos now has an independent accounting system that allows the GM and department heads to create and manage custom cost reports to focus on site KPIs In October and November 2017, $96M of VAT refunds have been received by Leagold $90M of VAT refunds were allocated to Goldcorp for pre-acquisition balances (remaining balance: $13.3M) $6M of VAT refunds for Leagold s May and June submissions 6

7 Q Growth Capital Investments Leagold invested $9.1M in growth-related investments during Q3 2017, mainly related to the agglomerator, overland conveyors, and the Bermejal Underground Expansion Q3/17 Growth Capital Investments Committed Growth Capital Investments Agglomerator $0.6M Bermejal UG (Drilling) $2.0M $3.6M $2.0M Bermejal UG $6.4M Conveyors $1.6M Bermejal UG (Ramp and Other) $2.8M $8.2M Agglomerator $0.6M$0.7M Total: $27M Other $0.6M Conveyors $1.6M $3.4M Q2/17: $3.5M Q3/17: $9.1M Remaining: $14.4M Other $1.5M $0.6M Q2 Q3 Remaining Agglomerator: Main agglomeration drum successfully transferred to final location, work continues on erecting the housing and installing ancillary equipment. Commissioning scheduled to begin in Q Conveyors: Detailed design finished, most of civil earthworks is complete, and manufacturing is underway. Scheduled to be fully operational in Q Bermejal Underground: Predominately related to ongoing drilling program and infrastructure development 7

8 Bermejal Underground Resource Estimate Update The 94% increase in Measured and Indicated resources to 1.97 Moz underscores the magnitude of the oxide mineralization of the Bermejal Underground deposit, using drilling data to August 31, 2017 Bermejal Underground Mineral Resource Estimate 1,2,3 (SRK, August 31, 2017) Classification Tonnes (kt) Au Grade (gpt) Au Contained (koz) Ag Grade (gpt) Ag Contained (koz) Measured Indicated 9, , ,768 Total, Measured & Indicated 9, , ,072 Total, Inferred 4, , M 0.68M +94% 1.97M 1.01M Dec 31, 2016 PEA Aug 31, 2017 Update M&I resources Inferred resources Section View Facing East of the Bermejal Underground Mineral Resource Estimate The updated estimate includes an additional 62 drill holes (16 drilled in 2016 and 46 from the 2017 drill program) Remaining holes planned for the 2017 drill program are mostly infill and will focus on upgrading additional Inferred resources to Indicated classification These remaining drill holes will be incorporated into an updated resource estimate at year end 1 Effective date is August 31, Mineral Resources are reported using a cut-off grade of 3.0 gpt and do not include recovery or dilution factors. 3 Tonnages are rounded to the nearest 1 kt, grades are rounded to two decimal places; rounding, as required by reporting guidelines, may result in apparent summation differences. 8

9 Bermejal Underground Expansion Update The drill results at Bermejal Underground have exceeded management s expectations and supports our development plan to expand Los Filos gold production rate Development of an exploration portal and ramp commenced on September 25. To date, the ramp has advanced 75 metres The portal area of the ramp is now concreted and other preparation works are advancing Drill result highlights during Q include*: 15.5 g/t over 27.0 metres 17.4 g/t over 13.3 metres 8.0 g/t over 20.3 metres 16.8 g/t over 8.6 metres The Bermejal Underground drilling program is now 84% complete with 47,035 metres drilled Mineral reserves anticipated to be reported in Q1 2018, with an updated site wide technical report by Q Access to first Bermejal Underground test mining area in H Completion of ramp to high-grade sub-sill portion of Bermejal Underground year end 2018 Plan View Map of Bermejal Area Showing Ramp Design and Bermejal Underground Resource *All capped grades and true widths 9

10 Focusing on the Next Acquisition With the new organizational structure at the mine, Leagold s corporate team is focused on continuing the Buy and Build strategy in Latin America Buy and Build Strategy Acquire operating gold mines and projects nearing construction Target medium-sized dislocated mines or seniors non-core assets Buy assets with upside from optimization and de-risking of: Current operations Development projects Exploration Optimize assets in portfolio to provide strong growth profile Target assets with existing or near-term cash flow Improve quality of portfolio as we progress Implement clear decision making with conservative financial management Cost control, cash flow generation, and conservative balance sheet Flat organizational structure with clear authority levels Tightly controlled corporate G&A Mines to run as individual profit centres 10

11 Conclusion With the new organizational structure at the mine, Leagold s corporate team is focused on continuing the Buy and Build strategy in Latin America Benefits from the operational and cost improvement programs starting to be realized, with further improvements expected in Q4 and beyond Bermejal Underground mine development opportunity progressing well and provides significant upside, extends mine life, and brings production to 350,000 oz/yr Latin America provides attractive prospects for the next transaction. Our experience and approach allows us to capitalize on these opportunities 11

12 Appendix 12

13 Appendix - Q Free Cash Flow and Cash Reconciliation Leagold generated $13.6M of AISC margin during Q and ended the quarter with a cash balance of $52.9M US$000 3 Months ended Sept 30, 2017 Gold revenue 60,602 Less: Mine-level AISC (46,953) AISC margin 13,649 Overland conveyors (1,611) Agglomerator (556) Bermejal Underground expansion project (6,367) Other (593) AISC margin after investment capex 4,522 Operating working capital changes (excluding VAT), net (1,665) Increase in VAT receivable (6,928) Taxes paid (218) Share issue costs (908) Transaction costs (124) Non-recurring expenses 1 (1,562) Interest paid on loan facility and promissory note (3,277) Corporate and administration (1,535) FX gain on cash and cash equivalents, Other (812) Cash outflow for the period (12,507) Opening cash balance 65,364 Closing cash balance 52,857 1 Includes $1.6M in non-recurring transition costs, including impact of a $0.5M reclassification of Q2/17 operating costs to non-sustaining capital related to Bermejal UG expansion project.. In addition, sustaining capital includes the impact of a $0.3 million reclassification of Q sustaining capital to non-sustaining capital related to the Bermejal Underground expansion project 13

14 Appendix - Q Adjusted Earnings Leagold generated adjusted net earnings of $5.2M, or $0.03 per share Adjusted Net Earnings Per Share (in US$000 except shares and per share amounts) 3 Months Ended Sept 30, 2017 Net earnings 317 Adjustments for Non-Cash and One-time items: Transaction and Non-recurring costs 1 1,686 Share based payments 485 Foreign exchange loss 319 Change in fair value of warrants derivative 872 Current income tax expenses 285 Deferred income tax expense 1,231 Adjusted net earnings 5,195 Weighted avg shares outstanding (basic) 149,471,734 Weighted avg shares outstanding (diluted) 150,217,863 Adjusted net earnings per share (basic and diluted) $ Includes $1.6M in non-recurring transition costs related to the Los Filos acquisition 14