Realized Production up 44%, Cash Costs Down by 26% vs. Q2 2010; Reducing Ocampo Cash Cost Guidance for 2011
Toronto: July 12, 2011: AuRico Gold Inc. (TSX:AUQ) (NYSE: AUQ),
(“AuRico” or “the Company”) is pleased to announce preliminary results that include a significant increase in production as well as record operating cash flow and net free cash flow for the second quarter. During the quarter, the Ocampo mine produced 19% more gold equivalent ounces (realized) as compared to Q1 2011 at cash costs of $340 per realized gold equivalent ounce, resulting in a record margin of 77% or $1,171 per gold equivalent ounce. The Company¡¯s consolidated production for the quarter was augmented by solid production from the El Chanate mine that was acquired effective April 8, 2011.The Company also announces that based on the continued success in reducing costs at Ocampo during the first six months of the year, the 2011 cash cost outlook previously reported for Ocampo has been decreased to $400-$430 per gold equivalent ounce from $425-$455 at a gold to silver ratio of 55:1.
Second Quarter Highlights
On a consolidated basis, the Company reported:
Increased quarter-end cash balance by 54%
to $102 million as compared to a cash balance of $66 million immediately following the completion of the Capital Gold acquisition, effective April 8, 2011.Record revenues
of $113 million, a 98% increase over 2010.Record operating cash flow
of $55 million, a 251% increase over 2010.Record net free cash flow
of $21 million, a 263% increase over 2010.Strong production
of 43,652 gold ounces and 1.2 million silver ounces, or 66,120 gold equivalent ounces using the Company¡¯s long-term gold equivalency ratio of 55:1 and 75,022 using the actual gold equivalency ratio of 39:1 realized during the quarter, representing an increase of 53% over the same period in 2010.Strong consolidated cash cost performance
of $433 per gold equivalent ounce using the Company¡¯s long-term gold equivalency ratio of 55:1. Using the actual gold equivalency ratio of 39:1 realized in the quarter, cash costs were $381, with margins of $1,128 per gold equivalent ounce (75%), representing a decrease of 26% over the same period in 2010.On an asset basis, the Company reported:
Effective cost containment initiatives
: Cash costs at Ocampo of $399 per gold equivalent ounce using the Company¡¯s long-term gold equivalency ratio of 55:1. Using the actual gold equivalency ratio of 39:1 realized in the quarter, cash costs were $340, with margins of $1,171 per gold equivalent ounce (77%), the highest ever in the history of Ocampo.Reduced cash cost guidance at Ocampo:
Continued productivity improvements and effective cost containment initiatives at Ocampo have resulted in a $25 per ounce (6%) decrease in the Company¡¯s 2011 cash cost outlook for Ocampo to $400-430 per gold equivalent ounce using the Company¡¯s long-term gold equivalency ratio of 55:1.Increased productivity at El Chanate:
Upon completing the acquisition of Capital Gold, the Company immediately deployed additional mining equipment to increase material movement rates at El Chanate, which in June was 79% more than the 2010 average. Optimization of the¡¡
crushing and stacking operation has allowed the facility to recently increase placement rates by almost 30% from 14,000 to approximately 18,000 tonnes per day. The higher stacking rate is expected to positively impact production and cash costs in the latter part of Q3.
Production resumes at El Cubo
: On July 11 processing at the Los Torres mill resumed. In June, mining rates averaged 1,108 tonnes per day, significantly ahead of planned rates. As of July 10, the ore stockpiled ahead of the mill for processing exceeded 75,000 tonnes.Success from the 2011 exploration program:
Positive results were reported during the quarter from the Ocampo district and the El Chanate mine exploration programs.“We are very encouraged that second quarter results have continued to build on the positive results reported over the past five quarters. During the quarter, the Company benefited from the higher productivity at Ocampo and a reduction in cash costs, as well as from the initial production contribution from the recently acquired El Chanate mine. As a result, we have delivered one of our strongest production quarters at cash costs well below industry average, and reported record operating and net free cash flows,” stated Ren¨¦ Marion, President and Chief Executive Officer. “We begin the second half of the year with over $102 million in cash on-hand and three wholly-owned Mexican mines in production that will contribute to a growing and diversified production profile going forward. AuRico is one of the fastest growing mid-tier precious metal producers in the industry with a solid track record of not only containing operating costs, but reducing them during a period of high inflationary pressures and providing investors with exceptional leverage to strong gold and silver prices.”
Ocampo Key Highlights
Best ever net free cash flow performance at $28 million
Lowest ever realized cash costs at $340 per gold equivalent ounce
Best ever margins at 77% or $1,171 per gold equivalent ounce
Underground productivity of 1,893 tonnes per day
Record underground development of 7,520 metres
Open pit mining rate of 110,532 tonnes per day
Picacho push-back near completion, currently mining mill-grade ore
Estrella and Conico push-backs to commence in Q3
Mill productivity of 3,183 tonnes per day at the Ocampo mill processing facility
Mill optimization initiatives have increased recoveries to 97% for gold and 88% for silver
Heap leach tonnes increasing to target levels 10,000 tonnes per day by the end of Q3
Successful exploration program continues to discover new high grade ores in this prospective mining district
El Chanate Key Highlights
Material moved from the open pit and stockpiles increased to 67,320 tonnes per day in June, a 79% increase over 2010 average of 37,625 tonnes per day
Optimization of the crushing and stacking operation has allowed the facility to recently increase placement rates from a nominal 14,000 to approximately 18,000 tonnes per day for an increase approaching 30%. The enhanced stacking rate is expected to impact production and costs in the latter part of Q3
681,744 tonnes of Run of Mine (ROM) ore moved to the heap leach pad and placed under irrigation in Q2
6.2 million tonnes of stacked heap leach ore are now under full irrigation
All crushed and stacked ore is now agglomerated
12 pieces of new contractor and owner equipment deployed during the quarter
Exploration program launched with significant results returning composite grades substantially higher than reserve grades
El Cubo Highlights
Processing resumed at Las Torres Mill on July 11
Mining rate averaged 1,108 tonnes per day in June, significantly ahead of planned rates
Over 75,000 tonnes of ore stockpiled ahead of the mill for processing as of July 10
Development toward the Dolores ¨C Capulin discovery commenced May 1
Longhole stope drilling commenced in June and capacity will be further increased with the mid July delivery of the first of two new drill rigs purchased. Longhole stoping conversion is expected to lead to greater productivity, lower dilution and decreased costs as demonstrated Ocampo.
Exploration program to resume in Q3, with immediate follow-up drilling on the Dolores ¨C Capulin discovery
Operational Results Three Months Ended June 30(in thousands, except ounces and total cash costs) | Ocampo | El Chanate | El Cubo | Consolidated | |||||||||||||||
2011 | 2010 | 2011 (1) | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Gold Production | 28,781 | 24,963 | 14,871 | – | – | 4,268 | 43,652 | 29,231 | |||||||||||
Silver Production | 1,210,798 | 1,066,998 | 24,912 | – | – | 213,203 | 1,235,710 | 1,280,201 | |||||||||||
Gold eq. Production (realized) | 59,517 | 41,362 | 15,505 | – | – | 7,593 | 75,022 | 48,955 | |||||||||||
Gold eq. Production (55:1) (3) | 50,796 | 44,363 | 15,324 | – | – | 8,143 | 66,120 | 52,506 | |||||||||||
Cash Costs (2) (realized) | $340 | $458 | $484 | – | – | $840 | $381 | $520 | |||||||||||
Cash Costs (2) (55:1)(3) | $399 | $426 | $484 | – | – | $781 | $433 | $484 | |||||||||||
