Amarillo Provides Business Update and Announces Third Quarter 2018 Financial Results
- Completed the repayment in early Q3 2018 of the USD $8.5M gold linked credit facility
- Settled CAD $1.2M of payables by issuing shares in early Q3 2018
- Repaid related party loan of $1.6M
- Completed more than 5K meters of the planned 10K meters drill program on the flagship Mara Rosa gold deposit
- Assay results on 19 holes from this drill program confirm good ore body thickness and grade continuity and are expected to contribute significantly towards the conversion from Inferred to Indicated resources
- Filed an updated Pre-feasibility Study* in accordance with NI 43-101 on the Mara Rosa gold deposit with highlights as follows:
- After tax internal rate of return (IRR) of 51% at US$1,300/oz gold (Au)
- After tax net present value (NPV5%) of US$244 million at US$1,300/oz Au and a USD/BRL exchange rate of 3.60 (US$198M at US$1,200/oz)
- After tax project payback of 2.6 years at US$1,300/oz Au
- Average annual gold production 144,000 oz over first 4 years
- Average life of mine (LOM) production 123,000 oz per year over 8 years, and total production of 985,000 ounces after 91% recovery
- LOM cash operating cost of US$545/oz Au, and all-in sustaining cost (AISC**) of US$655/oz Au
- Upfront capital expenditure of US$123M
- Updated Proven and Probable Reserves of 1,087,000 oz - 23.8 million tonnes (Mt) @ 1.42 g/t Au
- Proven 513,000 oz – 9.6 Mt @ 1.65 g/t Au, and
- Probable 574,000 oz -14.2 Mt @ 1.26 g/t Au
Notes:
* PFS filed on SEDAR on September 13, 2018 and then on November 21, 2018 to incorporate the results of site visit by SRK
**AISC: Total cash operating cost + Royalties + Transportation & Refining + Sustaining Capital + Closure + Corporate G&A
TORONTO, Nov. 23, 2018 - Amarillo Gold Corp. (“Amarillo” or the “Company”) (TSX.V:AGC; OTCQB:AGCBF) today announces its financial results for the third quarter (“Q3”) ended September 30, 2018. This press release should be read in conjunction with the Company’s condensed interim consolidated financial statements and Management’s Discussion & Analysis (“MD&A”) for the three and nine months ended September 30, 2018, available on the Company’s website at www.amarillogold.com and under the Company’s name on SEDAR at www.sedar.com. All monetary amounts are expressed in Canadian dollars unless otherwise specified.
Mike Mutchler, CEO of Amarillo commented "Q3 was a very productive quarter for the Company as we restructured our balance sheet by repaying the gold loan and settling other debts through a share issuance. Our 10,000 meter infill drilling program is confirming the geology and resources at Mara Rosa, and we have expanded our program to include an additional 3,000 meters of step out drilling south of the current resource. We expect to complete a resource update on Mara Rosa early in the new year and we are on track to initiate a Feasibility Study and Basic Engineering in preparation for our application for the License to Install (LI) permit mid-year."
FINANCIAL RESULTS
| Operating Expenses and Net Loss – Three and Nine Months 2018 and 2017 | |||||||
| Three Months ended September 30 | Nine Months ended September 30 | ||||||
| 2018 | 2017 | 2018 | 2017 | ||||
| ($) | ($) | ($) | ($) | ||||
| Management and consulting fees | 319,858 | 36,142 | 839,858 | 452,643 | |||
| General and administrative | 161,314 | 87,567 | 367,442 | 259,367 | |||
| Stock-based compensation | 397,825 | - | 1,273,389 | 751,063 | |||
| Professional fees | 273,999 | 53,946 | 583,275 | 190,527 | |||
| Other expenses | 56,388 | 49,511 | 279,283 | 151,832 | |||
| Write-off of accounts payable | - | - | (138,816 | ) | - | ||
| Subtotal before other items | 1,209,384 | 227,166 | 3,204,431 | 1,805,432 | |||
| Accretion on gold linked loan | - | 326,611 | 713,271 | 962,036 | |||
| Foreign exchange (gain)/loss | 96,229 | (654 | ) | 486,323 | 33,340 | ||
| (Gain)/loss on FV of derivatives | - | 328,294 | (284,152 | ) | 1,002,654 | ||
| Loss before tax | 1,305,613 | 881,417 | 4,119,873 | 3,803,462 | |||
| Deferred tax expense | 115,000 | - | 345,000 | - | |||
| Net Loss | 1,420,613 | 881,417 | 4,464,873 | 3,803,462 | |||
The Company’s Q3 2018 loss for the first time excluded non-cash items related to the gold linked loan consisting of accretion, mark to market adjustments for gold price fluctuation and foreign exchange as this loan was extinguished in early Q3 2018. The 2018 loss include non-cash stock compensation expense; non-cash deferred tax expense; and non-cash items related to the gold linked loan which aggregate to $512,825 for Q3 2018 (Q3 2017: $654,251) and $2,188,831 for YTD 2018 (YTD 2017: $2,749,093).
ABOUT AMARILLO
Amarillo is developing an open pit gold resource at its Mara Rosa Project in the mining friendly jurisdiction of Goias State in Brazil. The Mara Rosa Project, also known as the Posse deposit, was awarded its main (LP) permit which provides the social and environment permission to mine. Amarillo is progressing toward obtaining an installation permit (LI). Based on the NI 43-101 Pre-Feasibility Study 2018 (PFS 2018) update filed on SEDAR on November 21, 2018, the Mara Rosa Project contains estimated 513,000 ounces of gold in the Proven category from 9.6 Mt at 1.65 g/t Au, and 574,000 ounces gold in the Probable category from 14.2 Mt at 1.26 g/t Au, for total estimated Reserves of 1,087,000 ounces from 23.8 Mt at 1.42 g/t Au. In addition to the Mara Rosa Project, Amarillo has an advanced exploration project with excellent grades at Lavras do Sul, Brazil. A Mineral Resource Estimate Study (NI 43-101 technical report) for Lavras do Sul was filed on SEDAR on October 4, 2010. The Lavras do Sul Project is an advanced exploration stage property (190 sq. km.) comprising of more than 22 prospects centered on historic gold workings. The initial resource estimate at the Butia prospect reported 215,000 ounces of gold in the Indicated category from 6.4 Mt at 1.05 g/t Au, and 308,000 ounces of gold in the Inferred category from 12.9 Mt at 0.74 g/t Au using a 0.3 g/t cut-off grade. Both projects have excellent nearby infrastructure.
Mike Mutchler, President and Chief Executive Officer of the Company, is a Qualified Person as defined by NI 43-101 guidelines, and has reviewed and approved the scientific and technical disclosure relating to the PFS 2018 in this section of the news release.
| For further information, please contact: | ||
| Mike Mutchler President & CEO 416-294-0736 mike.mutchler@amarillogold.com | or | Karen Mate External Communications 416-230-6454 karen.mate@amarillogold.com |
| 32 Richmond St. East Suite 201 Toronto, ON Canada, M5C 1P1 | ||
Website: www.amarillogold.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
FORWARD LOOKING STATEMENTS:
This news release contains Forward Looking Statements regarding the Company’s current expectations regarding future events, including with respect to the Company’s business, operations and condition, and management’s objectives, strategies, beliefs and intentions. Various factors may prevent or delay our plans, including but not limited to, the trading price of the Common Shares, the ability of the Company to obtain approvals from the TSX-V in respect of the transactions contemplated hereby, contractor availability and performance, weather, access, mineral prices, and success and failure of the exploration and development carried out at various stages of the program. Permission from the Government and community is also required to proceed with future mining production. Readers should review the Company’s ongoing quarterly and annual filings, as well as any other additional documentation comprising the Company’s public disclosure record, for additional information on risks and uncertainties relating to these forward-looking statements. Readers should also review the risk factors applicable to junior mining exploration companies generally to better understand the variety of risks that can affect the Company. The Company undertakes no obligation to update publicly or otherwise revise any Forward Looking Statements whether as a result of new information or future events or otherwise, except as me be required by law.