Galiano Gold Inc

TSX:GAU

Earnings Call Transcript 2021-Q1

[Gregory John McCunn, CEO, President & Director]

Hello, everyone, and welcome to Galiano Gold's Q1 2021 Results Videocast. Please refer to our financial statements and MD&A on our website or filed on SEDAR for further details. Q1 2021 has been an exciting quarter at Galiano with the Asanko Gold Mine off to a solid start to the year and Galiano taking its first steps in diversifying its activity beyond the Asanko Gold Mine. Earlier this quarter, Galiano began exploration work on our 100% owned Asumura property, located on the Western boundary of the Sefwi greenstone belt in Ghana. The property is located in a highly prospective region, approximately 65 kilometers southwest and along strike from Newmont's Ahafo operations.The project covers over 247 square kilometers on 3 exploration concessions. Currently, we have soil sampling and geological mapping underway, and we expect to develop a drill program for execution later this year. Also in Q1, we completed the acquisition of an early stage exploration project in Mali from a subsidiary of Barrick Gold. The Mali exploration concessions cover over 167 square kilometers and are located on the Senegal Mali Shear Zone, which hosts some world-class gold deposits, such as Loulo, Fekola and Sadiola. For 2021, we're planning a modest program of geophysical surveys and soil sampling to prepare for a potential drilling program in 2022.Now both of these opportunities represent small but meaningful steps for Galiano to begin to grow our business beyond our cornerstone operating mine, the Asanko Gold Mine. So now let's take a look at the Q1 2021 results from the Asanko Gold Mine, which is our 50-50 joint venture with Gold Fields managed and operated by Galiano. All information related to the Asanko Gold Mine is discussed here on a 100% basis. The mine had a good first quarter with about 60,000 ounces of gold produced, in line with our annual production guidance of 225,000 to 245,000 ounces. Mining operations continued to source ore from the Esaase and Akwasiso pits during Q1. Now towards the end of March, the second phase of ore mining at Akwasiso was completed and a pushback of the pit commenced for developing Cut 3. During Q2, limited ore will be available from the Akwasiso pit and mill feed will be sourced from both the Esaase pit and/or stockpiles. This is expected to result in lower production and higher costs for Q2, but in line with our 2021 business plan.During the first quarter, the processing plant continued to perform well, milling 1.4 million tonnes of ore at an average grade of 1.4 gram per tonne and an average gold recovery of 95%. With continued strong gold prices, gold revenue from the mine totaled $110.6 million during the quarter. Now turning to costs. The mine's all-in sustaining costs in Q1 were $1,158 an ounce, in line with our guidance of $1,100 to $1,300 per ounce. Q1 2021 was another strong quarter for cash generation at the Asanko Gold Mine. The mine generated cash flow from operations of $35 million and after capital and exploration expenditures, the free cash flow was $20.5 million. This enabled the distribution to the JV partners of $10 million during the quarter with $5 million to Galiano. As a result, at the Galiano corporate level, our balance sheet remains strong, with cash and receivables of $65 million as at March 31 with no debt. Galiano's equity accounting of its interest in the joint venture resulted in net income after tax of $13 million or $0.06 per share for the quarter, and our Q1 adjusted EBITDA was $15.8 million.Looking forward to the rest of 2021, we are reaffirming production guidance for the Asanko Gold Mine of between 225,000 and 245,000 ounces, with all-in sustaining costs expected to be between $1,100 and $1,300 per ounce. As I previously indicated, production is expected to be lower with higher costs in Q2 as we have a heavy waste stripping quarter planned. Once the Cut 3 pushback is completed at Akwasiso, we expect costs and production levels for H2 2021 to be in line with our annual guidance. Well, we continue to advance drilling and resource modeling work on all of the open pit deposits of the Asanko Gold Mine, ahead of our June 30, 2021, reserve and resource cut off date. And we expect to publish an updated reserve and resources for the AGM in Q3, including a maiden resource at Miradani North.In closing, I'd like to remind all of our shareholders to vote in our upcoming virtual AGM meeting to be held on June 11. You can download proxy materials for the meeting from our website at galianogold.com. So thank you for watching today, and I look forward to our next videocast in August, when I'll update you on our second quarter 2021 results.