Guyana Goldfields Inc. Releases Second Quarter 2018 Production Results; Full Second Quarter Results Released on July 30, 2018

TORONTO, July 16, 2018 /CNW/ - Guyana Goldfields Inc. (TSX: GUY) (or "The Company") announces that gold production from mining operations at its Aurora Gold Mine totalled approximately 28,250 ounces poured (31,300 ounces recovered) for the second quarter ended June 30, 2018. The Company sold 31,700 ounces of gold at an average realized gold price of US$1,300 per ounce, generating gross second quarter revenues of US$41.2 million.

Full second quarter 2018 operational and financial results will be released after-market on Monday, July 30, 2018. A conference call will be held the following morning on Tuesday, July 31, 2018 at 10:00 am ET to discuss the results and details of the call can be found at the end of this release. All amounts are expressed in U.S. dollars unless otherwise stated.

In the second quarter ended June 30, 2018, the mill processed a new record average of 7,100 tonnes per day ("tpd") of ore at an average head grade of approximately 1.65 grams per tonne gold with gold recoveries averaging of 91.4% for the quarter (June recovery 93%).

During the second quarter, ten new fixed-frame 40-tonne haulage trucks arrived at site and were commissioned late in the quarter while an additional five trucks were commissioned after quarter end. The Company also signed an open pit contract mining agreement with STRACON GyM International S.A.C. ("STRACON"), see press release dated May 29, 2018.  The additional capacity will assist the Company to meet the upcoming three-and-a-half year peak in waste mining requirements to meet its targeted mining rate of 75,000 tpd to accommodate the open pit production profile in years 2019 and beyond. 

Scott A. Caldwell, President & CEO, states, "Due to the late arrival of our 100%-owned expanded haulage fleet to site and the later than planned mobilization of the contractor, the second quarter mining fell behind by approximately 2.5 million tonnes (or approximately 500kt high grade ore) causing us to feed the mill with low grade stockpiles. The equipment and contractors are now on site and production during the second half of 2018 will increase however this will not be able to make up the shortfall in production by year end and therefore we are revising guidance. We are adjusting our 2018 annual production and cost guidance to 175,000-185,000 ounces of gold (from 190,000-210,000 ounces) and all-in sustaining cost¹ to $945 - $995 per ounce (from $830 - $880 per ounce). On a positive note, the mill is performing exceedingly well following the completion of the first phase of the mill expansion with both throughput and recoveries above budgeted levels. Our production guidance was and remains weighted towards the second half of the year which is dictated by mine sequencing and incorporating a higher throughput capacity with the completion of the mill expansion."

Mill Expansion

The second phase of the mill expansion progressed in line with schedule during the second quarter with engineering currently 90% complete and construction approximately 20% underway. Solid progress was also made on the procurement of all long lead time items. Based on the highly encouraging results from trials supplementing mill feed with pre-crushed ore, as well as the higher than expected increase in recoveries from the Phase 1 expansion, the scope of the second phase of the mill expansion has been reduced to include only the addition of a pre-crushing circuit. The original scope envisaged the addition of the pre-crush circuit along with a 1,000 tpd ball mill from a previously purchased modular processing plant. The removal of the ball mill from the scope is expected to reduce the capital cost of the second phase of the expansion from approximately $6 million to $4 million. Despite this reduced scope, the Company still expects that the second phase of the mill expansion will allow the processing of 7,500 tpd of hard rock ore with increased recoveries of 1-2%, as originally envisaged. Completion of the second phase of the mill expansion remains on schedule for completion by the end of the fourth quarter of 2018 and is currently tracking in-line with budget.

Underground Mining Development

The Company has initiated the bidding process for the underground development contract, with initial underground development targeted to commence in the fourth quarter of 2018. During the second quarter, the Company hosted a site visit with potential underground contract miners as well as issued a request for proposal to all interested parties for the pre-production underground development work. The Company has also initiated the movement of the previously purchased underground mining equipment to Guyana.

Revised 2018 Guidance

Production and cost guidance have been revised, as shown below, due to the late arrival of the expanded haulage fleet and the later than planned mobilization of the contractor in the second quarter which has deferred access to higher grade ore to the fourth quarter of the year. With the recent expansion of the Company's mining fleet along with the commencement of open pit contract mining, the Company is well positioned to meet budgeted stripping requirements for the remainder of the year. Grade and gold production was and remains weighed towards the second half of the year due to mine sequencing and incorporating a higher throughput capacity with the completion of the phase 1 mill expansion.

The Company's balance sheet remains strong with a cash balance of $62.7 million versus a debt balance of $50.0 million as at the quarter end. 

Exploration Update

Brownfields exploration in the quarter focused on drilling high grade/underground targets beneath the known satellite deposits of East Walcott and Mad Kiss at the Aurora Mine. Assays results are imminent for these targets. Remodeling of the geology, assisted by mapping in the open pits, suggests the presence of coherent higher-grade shoots.

Second Quarter 2018 Earnings Conference Call

A conference call will be held on Tuesday, July 31, 2018 at 10:00 am ET to discuss second quarter 2018 operational and financial results.

A webcast will be available on the Company's website for 90 days following the call or through the following link:
https://event.on24.com/wcc/r/1794263/C971239EB2C0E5ED5265B96F94B36A02

Conference Call Details:
Date: Tuesday, July 31, 2018
Time: 10:00am EST
Conference ID: 12269346
Dial-In Numbers:
North America Toll-Free: 888-390-0605
International: 416-764-8609

A recorded playback of the call will be available until August 7, 2018 by dialing: 1-888 390 0541 or 416-764-8677 and entering the call back passcode 269346.

Non-IFRS¹ Performance Measures

The Company has included certain non-IFRS performance measures in this MD&A.  These measures are not defined under IFRS and should not be considered in isolation.  The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company.  The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS.  These measures are not necessarily standard and therefore may not be comparable to other issuers. 

The Company has applied the World Gold Council's June 2013 published guidance in reporting cash costs and all-in sustaining costs to its mining operations.  Adoption of cash costs and all-in sustaining cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures presented by other issuers.  The Company believes that the cash costs and all-in sustaining cost measures complement existing measures reported by the Company.

Total cash costs per ounce

Total cash costs are a common financial performance measure in the gold mining industry but with no standard meaning under IFRS.  The Company reports total cash costs on a sales basis.  The Company believes that, in addition to conventional measures prepared in accordance with IFRS, such as sales, certain investors use this information to evaluate the Company's performance and ability to generate operating earnings and cash flow from its mining operations.  Management uses this metric as an important tool to monitor operating cost performance.

Total cash costs include production and royalty costs.  Production costs include mining, processing, refining and transportation, and site administration, and in total are then divided by gold ounces sold to arrive at total cash costs per gold ounce sold. This measure also includes other mine related costs incurred such as mine standby costs and any current inventory write downs. Production costs are exclusive of depreciation.  Other companies may calculate these measures differently.

All-in sustaining cost per ounce

"All-in sustaining cost per ounce" is also a non-IFRS performance measure.  The Company believes this measure more fully defines the total costs associated with producing gold; however, this performance measure has no standardized meaning.  Accordingly, there may be some variation in the method of computation of "all-in sustaining cost per ounce" as determined by the Company compared with other mining companies.  In this context, the Company calculates all-in sustaining cost as the sum of total cash costs (as described above), share-based compensation, corporate general and administrative expense, exploration and evaluation expenditures that are sustaining in nature (defined as brownfields exploration on the Company's Mining Licence), reclamation cost accretion, sustaining capital including deferred stripping (defined in further detail below), and realized gains and losses on diesel derivative contracts, all divided by the gold ounces sold to arrive at a per ounce figure.

Sustaining capital expenditures are expenditures that do not increase annual gold ounce production at a mine site and excludes expenditures at the Company's development projects as well as expenditures that are deemed expansionary in nature.

About Guyana Goldfields Inc.:

Guyana Goldfields Inc. is a Canadian based mid-tier gold producer primarily focused on the exploration, development and operation of gold deposits in Guyana, South America.

Forwarding-Looking Information

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the estimation of mineral resources. Often, but not always, forward-looking statements can be identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are based on various assumptions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the receipt of applicable regulatory approvals, the timing of the advance of the funds pursuant to the project loan facility to fund the development and construction of the Aurora Gold Project (the "Facility"), fulfilling all conditions precedent to the advance of funds pursuant to the Facility, general business, economic, competitive, political and social uncertainties; the actual results of exploration activities; changes in project parameters as plans continue to be refined; accidents, labour disputes and other risks of the mining industry; political instability; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Risk Factors" in GGI's annual information form. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

SOURCE Guyana Goldfields Inc.