Suncor Energy: Guyana Goldfields Inc

Guyana Goldfields Inc - GUY.t flagship is the Aurora Gold Project in Guyana which achieved first gold production in August 2015. The Company has been operating in Guyana continuously since 1996.

The Company expects 2016 production of between 130-150k ozs at AISC around $ 661 per oz.

On March 10, 2016 the company released News

Guyana Goldfields Inc. Reports 2015 Year-End Results; Producing 35,901 oz of Gold of which 28,850 oz were Sold Generating $31M in Revenue and Earnings of $0.13 Per Share

2015 Report Highlights
Advancement of the Aurora Gold Project (“Aurora” or “the Project”)

Commercial production at the Project was declared January 1, 2016.
Gold sales for 2015 were made substantially in November and December. For the four-month pre-commercial production period ended December 31, 2015, the Project:

Produced (poured) 35,901 ounces of gold (within 2015 guidance range of 30,000 to 50,000 ounces).
Sold 28,850 ounces of gold at an average realized price of $1,079 per ounce, generating $31 million in gross pre-commercial production revenue.
Incurred operating costs (including royalties) of approximately $23 million over the four-month ramp up period, generating approximately $8 million in operating profit.
All of the above revenues and operating costs during the 2015 pre-commercial production period were capitalized to development costs.

Open pit operations at Rory’s Knoll mined 1,487,000 tonnes, of which 483,000 tonnes was ore and 1,004,000 tonnes was waste. Saprolite ore was the predominate ore that was mined in the quarter. Blasting commenced in November 2015 with fresh rock being encountered. The initial Rory’s Knoll open pit advanced to a depth of -25 metres at December 31, 2015.
Average tonnes processed were 4,271 tonnes per day (“tpd”) in the fourth quarter, with the month of December 2015 seeing seventeen days of over 5,000 tpd milled, including a record day of 6,196 tpd.
The average head grade during the fourth quarter was 3.32 grams per tonne of gold (“g/t Au”), with recoveries averaging 91.9%.
At December 31, 2015, included in development costs was approximately $10 million in gold inventory composed of the following:

Run-of mine stockpile of 66,000 tonnes of ore grading 2.63 g/t Au,
In-circuit inventory containing approximately 4,817 ounces of doré, and
Finished goods inventory of 7,328 ounces of doré available for refining.

The block model reconciliation at December 31, 2015 comparing survey volumes of actual tonnes mined versus the reserve model showed a positive variance of 27% more ounces of gold contained in the ore mined in 2015 than predicted by the ore reserve model. It is not determinable whether this positive reconciliation will continue in the future.
Final adjustments to Project construction and development costs during the fourth quarter brought overall total development costs to $282 million versus a development budget of $277 million (that included initial development costs of $249 million, and $28 million in financing costs, pre-operating costs and working capital investment).

Overview of Financial Results

The Tranche 1 facility of the Project Loan Facility of $160 million (see press release dated September 3, 2014) was fully advanced at September 30, 2015. At December 31, 2015, the Company made its first principal debt repayment of $4.34 million.
The Company did not need to draw on its Tranche 2 $25 million cost overrun facility to fund the construction of the Project. Consequently, the Tranche 2 facility expired on November 30, 2015.
As of December 31, 2015, the Company had a total of $27 million in overall funds available in restricted bank accounts for the Project. As the Company did not require their use, the $23 million residing in the Owner’s cost overrun bank account will be deposited into debt service and mine closure restricted bank accounts at project completion. The $4 million in the Project’s restricted completion bank account is expected to become available.
The extended commissioning and ramp up period in the fourth quarter of 2015 resulted in a consolidated working capital deficiency of approximately $47 million (excluding restricted cash). The Company expects that the working capital deficiency will be funded from the Project’s operating cash flows in 2016.
At December 31, 2015, the Company had a total of 26,400,000 litres of diesel forward contracts at an average rate of $0.44/litre, which will settle on a net basis, covering subsequent periods that end in the third and fourth quarters of 2017.
Net income for 2015 was $20.1 million (basic and diluted income per share of $0.13). This compares with a net loss of $12.8 million in the prior year ($0.09 basic and diluted loss per share). Net income for 2015 resulted from the recognition in the fourth quarter of approximately $28.9 million in deferred tax assets relating to tax losses available to the Project, and a corresponding income tax recovery.
For the fourth quarter ended December 31, 2015, net income was $25.3 million (basic and diluted income per share of $0.16). The recognition of the $28.9 million deferred tax asset in the fourth quarter this year increased earnings over the prior year’s quarter net loss of $1.7 million (basic and diluted loss per share of $0.01).

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