Q2 AND COMPANY UPDATE GREG HALL IIIII CEO & MANAGING DIRECTOR RUSSELL MIDDLETON IIIII CHIEF FINANCIAL OFFICER STEVE MCCLARE IIIII GENERAL MANAGER KANMANTOO 25 AUGUST 2014
CORPORATE SNAPSHOT – AS AT 31 JULY 2014 ASX listed: HGO Shares on issue: 1,181.7 million Share price: $0.077 (20/08/14) Market capitalisation: $91.0 million (20/08/14) Cash and cash equivalents $12.1 million Debt $25.2 million Net Debt $13.1 million Tax losses carried forward circa $69 million Franking Account Credit $21.3 million Planned one for eight share consolidation Note: HGO has recently moved from a 31 January to 31 December year end, so current references are Q1 Feb-Apr, Q2 May-Jul, Q3 Aug-Sep and Q4 Oct-Dec (CY14) . In 2015 Q1 and Q2 will be Jan-Mar and Apr-Jun. 2
TOP SHAREHOLDERS – 31 JULY 2014 SHAREHOLDER DISTRIBUTION Top Shareholders % of isc Perennial Value Management 12.5% Platinum Partners 8.4% Overseas Renaissance Smaller Companies 7.4% 18.8% Colonial First State - Growth Aust. Equities 5.5% Institutions Retail Freepoint Metals & Concentrates 4.7% 45.6% Aedos Advisers 4.3% Ariadne Australia 3.9% Australia 35.6% Dimensional Fund Advisors 3.8% JPMorgan Securities Australia 1.1% Republic Investment Management 0.7% Total 52.3% Source: Orient Capital 3
Q2 HIGHLIGHTS - SAFETY AND COMMUNITY Total Recordable Injury FR lowest since operations commenced at Kanmantoo Community meetings continued discussing Kanmantoo region dust impacts, mine life extension approval and local vehicle traffic issues Now greater than 80% of Hillgrove employees are from the local area or Adelaide Hills region 4
Q2 HIGHLIGHTS – COPPER PRODUCTION A record 5,884 tonnes of copper in concentrate produced for the quarter, tracking above the 20,500mt to guidance range for the year 22,500mt Copper 5
PRODUCTION OUTPUT FY13 FY14 APR-14 JUL-14 CY14 Period Total tonnes to JAN 13 to JAN 14 QTR QTR YTD Ore to ROM from Pit kt 2,221 2,633 812 680 1,492 mined down due Ore to long term stockpiles kt 849 262 283 421 705 to heavy rain Mined Waste kt 11,777 10,027 4,164 3,643 7,806 kt 14,847 12,922 5,259 Total Tonnes Mined 4,744 10,003 interruption To ROM from LT Stockpiles kt - 332 114 34 148 % 0.76 0.71 0.87 0.90 Mining Grade to ROM 0.93 Record quarter for Ore Milled kt 2,303 2,944 757 838 1,595 mined grade Milled Grade - Cu % 0.66 0.64 0.80 0.76 0.78 g/t 0.16 0.12 0.10 0.12 - Au 0.13 Continued - Ag g/t 2.96 2.86 2.83 2.50 2.65 % 89.9 90.7 92.1 92.0 Recovery - Cu 91.9 consistent copper % 54.7 52.9 52.0 49.7 - Au 47.9 recovery of 91.9% % 55.4 49.0 56.5 55.5 - Ag 54.5 Cu Concentrate Produced Dry mt 56,431 75,423 24,335 25,621 49,956 Higher mill % 24.4 22.8 22.8 22.9 Concentrate Grade - Cu 23.0 throughput and - Au g/t 3.6 2.5 1.7 2.0 1.8 performance - Ag g/t 67.0 54.8 49.7 44.5 47.0 achieved despite Contained Metal in t 13,744 17,184 5,554 5,884 11,438 Concentrate - Cu planned shuts for - Au oz 6,570 5,962 1,327 1,639 2,966 - Ag oz 121,656 132,854 38,864 36,647 75,511 maintenance Total Concentrate Sold Dry mt 56,526 74,051 24,425 26,284 50,709 6
IMPROVED MINING PRODUCTIVITY MAINTAINED Note: Chart includes total Bank Cubic Metres (BCM) and total ore tonnes (kt) mined. Total BCM mined of 1,535k is equivalent to 4,744kt. Heavy rain impacts despite scheduling for rain days – truck productivity maintained – three mining pits operating with two in primary ore 7
MINING OPERATIONS AND PRODUCTION Note: Rodda will include Emily Star; and Giant will include Giles, Lean and Valentine Nugent now in primary ore and Emily Star (below) in trans/oxide ore 8
ORE MILLED RECOVERY AND RUN TIME Mill throughput and reliability maintained, with planned maintenance shuts completed Mill throughput above nameplate capacity with 838kt of ore milled for the quarter Mined ore blended with additions of low grade ore to maintain high milling rate 9
Q2 HIGHLIGHTS – REVENUE AND COSTS Period FY13 FY14 APR-14 JUL-14 CY14 QTR QTR YTD US cents per lb to JAN 13 to JAN 14 Total Mining Cost 229 165 178 156 167 Deferred Mining 0 -14 50 -13 18 Prestrip -88 -33 -87 -10 -48 Ore Inventory Adjustment -49 -1 -30 -44 -37 Mining Costs – C1 basis 92 117 111 89 100 Processing Costs 97 72 47 52 50 Other Direct Cash Costs 23 22 16 19 18 Total Onsite Costs 212 211 174 160 168 Transport & Shipping 18 17 16 17 16 Treatment, Refining & Smelter Charges 36 41 42 41 42 Total Offsite Costs 54 58 58 58 58 Precious Metals Credits -46 -30 -21 -24 -23 Total Direct Operating Costs 220 239 211 194 203 (C1 Cash Costs) Royalties 5 4 4 4 4 D&A 96 74 71 74 78 TOTAL COSTS 321 317 286 276 281 Revenue of AUD46.9M at average realised copper price of AUD3.74/lb (USD3.47/lb) Reduced C1 unit costs for the quarter of USD1.94/lb (AUD2.07/lb) 10
IMPROVED MINING COSTS MAINTAINED Mining Expense per BCM Moved ($) 25.00 21.34 20.00 18.07 17.05 15.75 15.07 15.00 12.99 12.85 10.00 5.00 ‐ Jan 2013 Apr 2013 Jul 2013 Oct 2013 Jan 2014 Apr 2014 Jul 2014 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 CY14 Q2 CY14 Consistent reductions in mining unit costs over the last four quarters Drilled and blasted stocks reduced - will need some re-build coming quarter 11
LOWER PROCESSING COSTS MAINTAINED Continued low processing unit costs achieved due to optimisation work and a focus on saving initiatives New suspended screening unit installed and other maintenance improvements ongoing Re-grind capacity utilisation increased giving improvement in concentrate grade 12
STRONG HEDGE BOOK FOR NEAR TERM REVENUE CERTAINTY Strong hedge book provides certainty for A$/mt A$/lb cash flows and revenue A$4.54 during debt repayment periods A$4.08 An additional 1,487t of copper hedged at A$3.63 AUD7,642/t (AUD3.47/lb) from Aug to Nov during A$3.18 firmer Cu pricing – again for revenue protection A$2.72 with upcoming debt repayments Overall average hedge price of A$7,900/t or A$3.58/lb to March 2016 13
GUIDANCE TO DECEMBER 2014 – MAINTAINED Adjusted below for the new 11 month year; Hillgrove maintains its guidance levels, based on current performance and planned operational improvements Guidance For CY14 2,850kt to 3,000kt Ore mined 2,900kt to 3,000kt Ore processed 0.76% to 0.81% Copper Ore grade processed 91.5% to 92.5% Copper recovery 20,500t to 22,500t copper contained in concentrates Copper produced 6,000oz to 7,800oz gold contained in concentrates Gold produced USD2.00 to USD2.20 per lb at 0.90 exchange rate C1 Costs Forecast Capex For CY14 AUD4.8M Tailings Storage Facility AUD2.8M – increased with additional studies Controlled Potential Sulphidisation AUD1.0M Dust mitigation AUD2.3M Other sustaining capital 14
DEBT REDUCTION Hillgrove made further significant reductions to its debt balance during the quarter Total debt reduced from AUD33.4M to AUD25.2M at 31 July 2014 A Gold Loan repayment of AUD2.2M (1,328oz) was made in addition to the repayment of AUD6.0M Senior Debt principal repayment The Gold Loan will be fully repaid by end of Q3 reducing debt to approx. AUD23.5M 15
CONTINUOUS IMPROVEMENT INITIATIVES New screen installation providing crushing efficiency and maintenance improvements Controlled Potential Sulphidisation (CPS) for oxide treatment – benchmarking trip, independent review of design and plan underway, project execution plan completed – being prepared for Board approval Successful geotech shear pin trial for bench integrity and rock fall safety TSF northern section finished which completes all underfloor drainage Potential flash floatation unit trial for further recovery improvements 16
STRATEGIC FOCUS The strategic focus is on further improvements in performance of the Kanmantoo Mine, expansion of the Kanmantoo region Resource through exploration, realisation of value from the Indonesian assets and creation of value for shareholders Achieve CY14 budget targets and implementation of operational improvements Achieve current two year life extension PEPR approval - completed Continued payment of debt facilities from operational cashflow Evaluate future capital management alternatives to enable return of value to shareholders Evaluate resource extension potential at Kanmantoo beyond current target life Options for extraction of value from Indonesian exploration assets through joint venture or external investment 17
SUMMARY Revenue for the quarter was AUD46.9M at an average realised price for copper of AUD3.74/lb (USD3.47/lb) Record quarterly production with YTD production exceeding the upper end of guidance Production guidance revised for CY14 to 20,500t – 22,500t Cu in concentrate Low costs maintained and strong positive operating cash generation in CY14, with copper price certainty as a result of strong copper hedge book Consistent mining production and ore processing reliability with ongoing optimisation, productivity and process control improvements Achieved 2 year life extension approval allowing 75% greater ore to be processed Change of financial year end to 31 December and one for eight share consolidation planned 18
Recommend
More recommend
