BVC: MINEROS 1 Mineros Reports Second Quarter 2024 Financial and Operating Results
(all dollar amounts - other than per share amounts - are expressed in thousands of US dollars unless otherwise stated)
Medellin, Colombia – August 14, 2024 – Mineros S.A. (TSX:MSA, MINEROS:CB) (“Mineros” or the “Company”) today reported its financial and operating results for the three and six months ended June 30, 2024. For further information, please see the Company’s unaudited condensed interim financial statements and management’s discussion and analysis posted on Mineros’ website https://mineros.com.co/en/investors/financial-reports and filed under its Mineros’ profile on www.sedarplus.com.
Andrés Restrepo, President and Chief Executive Officer of Mineros, commented: “The second quarter was good from both a financial and an operational perspective. Our revenues, gross profit and Adjusted EBITDA were all higher in the second quarter due to the high price of gold. Cash Cost and all-in sustaining costs were at the higher end of guidance for our operations due to the weakening of the US dollar against the Colombian peso and stronger gold prices resulting in the mineral bought from our artisanal mining partners being more expensive. Our gold production from Companyowned mines was modestly behind expectations in Colombia and in line with expectations in Nicaragua. Because we processed more artisanal material in Nicaragua we stockpiled material coming from our Panama and Pioneer underground mines for processing in the third quarter of 2024. At this time we are maintaining our cost and production guidance but will be closely monitoring certain cost inputs and production at our Nechí operation in order to alleviate the bottlenecks experienced in the second quarter of 2024.”
On September 21, 2023, Mineros sold all of the outstanding share capital of Mineros’ subsidiary, Minas Argentinas S.A., which holds a 100% interest in the Gualcamayo Property in Argentina, to Eris LLC. Accordingly, the financial and operating results of the Company herein are presented for continuing operations comprising the Hemco Property and the Nechí Alluvial Property and omit the discontinued operations comprising the Gualcamayo Property. Certain results set out below have been restated to reflect only the continuing operations of the Company by removing amounts pertaining to the discontinued operations from previous totals. These restatements are reflected in the first and second quarter 2023 results in order to more appropriately compare the results from the second quarter of 2024 with the second quarter of 2023 and the first six months of 2024 with the first six months of 2023.
CORPORATE HIGHLIGHTS FOR THE THREE AND SIX JUNE 30, 2024
- Produced 105,444 ounces of gold, 65,641 ounces from our Nicaraguan operations, up 1% from the first six months of 2023 and 39,803 from our Colombian operations, down a modest 7% from the same period in 2023.
- Produced 466,745 ounces of silver in the first six months of 2024, up 63% from the same period in 2023.
- Paid $7,473 in dividends in April 2024.
- Projects financed with income tax payable by Mineros Aluvial S.A.S. BIC (“Mineros Aluvial”) and approved by the government:
| • Provided $5,006 for library collections for educational institutions in Bajo | |
| • | Cauca. |
| A pedestrian bridge will be constructed in the municipality of Caceres, | |
| Antioquia, in Bajo Cauca for $3,495. | |
| • Provided $2,014 for sports equipment for schools in Bajo Cauca. |
Dividends declared
On March 26, 2024, the General Shareholders Assembly approved the distribution of the Company’s profits by way of: (i) an annual ordinary dividend of $0.075 per share, payable quarterly, in four equal installments of $0.01875, and (ii) an extraordinary dividend of $0.025 per share, payable quarterly, in four equal installments of $0.00625, representing a total annual distribution of $0.10 per share, or approximately $29,974 in total for the year, calculated based on the number of shares issued and subscribed as at March 31, 2024. This represents a payout increase of 42.8% compared with last year’s dividend.
The future Canadian record dates and Canadian/Colombian payment dates for the ordinary and extraordinary dividends are set out in the table directly below:
| Amount per share | |||
| Record Date | Payment Date | ($) | (COP$) |
| Ordinary Dividend | October 9, 2024 | October 17, 2024 | 0.01875 | 74.1 |
| January 9, 2025 | January 16, 2025 | 0.01875 | 74.1 | |
| Extraordinary Dividend | October 9, 2024 | October 17, 2024 | 0.00625 | 24.7 |
| January 9, 2025 | January 16, 2025 | 0.00625 | 24.7 |
FINANCIAL AND OPERATING HIGHLIGHTS FOR THE SECOND QUARTER OF 2024
The following table summarizes quarterly financial highlights for the three and six months ended June 30, 2024 and 2023.
| Three Months | Change | Six Months | |||||
|---|---|---|---|---|---|---|---|
| Ended | Ended | Change | |||||
| June 30, | June 30, | ||||||
| 2024 | 2023 | 2024 | 2023 | ||||
| ($) | ($)2 | ($) | (%) | ($) | ($)2 | ($) | % |
Revenue 133,384 116,623 16,761 14% 247,532 215,492 32,040 15% (91,991) (75,596) (16,395) 22% (172,669) (143,567 29,102 20% Cost of sales )
Gross Profit 41,393 41,027 366 1% 74,863 71,925 2,938 4% Profit for the period from continuing 18,076 21,695 (3,619) (17)% 34,850 38,446 (3,596) (9%) operations Loss for the period from
- (9,143) 9,143 (100)% — (10,490) 10,490 (100)%
discontinued operations Net Profit for the period 18,076 12,552 5,524 44% 34,850 27,956 6,894 25% Basic and diluted earnings per share from continuing operations 0.060 0.072 (0.012) (17)% 0.12 0.13 (0.01) (9%) ($/share)
Basic and diluted earnings per share from continuing and 0.060 0.042 0.018 44% 0.12 0.09 0.02 25% discontinued operations ($/share)
Average realized price per ounce 2,327 1,966 361 18% 2,200 1,926 273 14% of gold sold ($/oz) 1 Average realized price per ounce of gold sold from continuing 2,327 1,964 363 18% 2,200 1,923 277 14% operations ($/oz)1 Average realized price per ounce of gold sold from discontinued — 1,973 (1,973) (100%) — 1,943 (1,943) (100)% operations ($/oz) 1 Adjusted EBITDA1 49,647 47,649 1,998 4% 90,301 85,403 4,898 6% Cash Cost per ounce of gold sold 1,304 1,044 261 25% 1,240 1,040 200 19% from continuing operations ($/oz) 1 AISC per ounce of gold sold from 1,514 1,225 289 24% 1,472 1,238 234 19% continuing operations ($/oz) 1 Net cash flows generated by 7,115 30,154 (23,039) (76%) 17,220 32,652 (15,432) (47%) operating activities
| Net free cash flow1 | (6,818) | 21,762 (28,580) (131%) | (8,715) | 11,530 (20,245) (176%) | ||||
| ROCE1 | 31% | 27% | 4% | 15% | 31% | 27% | 4% | 15% |
| Net Debt1 | 1,898 | (3,820) | 5,718 | (150%) | 1,898 | (3,820) | 5,718 | (150%) |
| Dividends paid | 7,473 | 5,213 | 2,260 | 43% | 12,712 | 10,050 | 2,662 | 26% |
1.Average realized price per ounce of gold sold, average realized price per ounce of gold sold from continuing operations, average realized price per ounce of gold sold from discontinued operations, Adjusted EBITDA, Cash Cost per ounce of gold sold from continuing operations, all-in sustaining costs (“AISC”) per ounce of gold sold from continuing operations, net free cash flow and Net Debt are non-IFRS financial measures, and return on cash employed (“ROCE”) is a non-IFRS ratio, with no standardized meaning under IFRS, and therefore may not be comparable to similar measures presented by other issuers. For further information and detailed reconciliations to the most directly comparable IFRS measures, see Non-IFRS and Other Financial Measures in this news release.
2.The Gualcamayo Property was sold in September of 2023 and, accordingly, certain amounts have been restated to reflect the continuing operations of the Company by removing amounts pertaining to the discontinued operations. This restatement is reflected in the first six months of 2023 in order to more appropriately compare the results period over period.
- Revenue increased by 14%: Revenue totaled $133,384 during the second quarter of 2024, compared with $116,623 in the second quarter of 2023, with sales of gold of $124,976 at an average realized price per ounce of gold sold from continuing operations of $2,327, during the second quarter of 2024 compared with sales of gold of $111,708 at an average realized price per ounce of gold sold from continuing operations of $1,964 in the second quarter of 2023. The increase in revenue in the second quarter of 2024 is mainly explained by an 18% increase in average realized price per ounce of gold sold from continuing operations and a 83% increase in sales of silver of $2,973, offset by a 6% decrease in ounces of gold sold;
- Cost of sales increased by 22% to $91,991 during the second quarter of 2024, compared with $75,596 in the second quarter of 2023. This increase was primarily due to: (i) the higher price of gold increasing the costs to purchase material from artisanal miners of $7,825; (ii) greater depreciation and amortization relating to our operations of $1,753; (iii) the 13% devaluation of the US dollar against the Colombian peso and higher prices across the Company’s operations, created increased maintenance and materials cost of $2,266, and service and labour costs of $2,002 and $1,067 respectively;
- Gross Profit from continuing operations increased by 1% to $41,393 in the second quarter of 2024, compared with $41,027 in the second quarter of 2023, mainly due to higher revenue as explained above;
- Profit for the period from continuing operations down 17%, to $18,076 or $0.06 per share during the second quarter of 2024 compared with $21,695 or $0.07 per share during the second quarter of 2023. The decrease in profit was due mainly to higher costs to purchase material from artisanal miners, modestly fewer ounces of gold sold and higher costs due to the strong Colombian
peso. Profit for the period was also impacted by higher foreign exchange differences of $2,607 and higher taxes of $7,731;
- Adjusted EBITDA1 up 4%: Adjusted EBITDA was $49,647 during the second quarter of 2024 compared with $47,649 during the second quarter of 2023, mainly explained by higher revenue;
- Net cash flows generated by operating activities were down 76%, totaling $7,115 in the second quarter of 2024, compared with $30,154 in the second quarter of 2023, The Company’s net free cash flow was negative $6,818 for the three months ended June 30, 2024 , down from $21,762 in the same period of 2023, due to the timing issues of the payment of income tax $20,361 in Colombia;
| • | ||
|---|---|---|
| were $7,473, compared with $5,213 in the same period of 2023 | , explained by | |
| the extraordinary dividend approved at the ordinary meeting of the General | ||
| Shareholders’ Assembly in March 2024; |
- Cash Cost & AISC: Cash Cost per ounce of gold sold from continuing operations in the second quarter of 2024 was $1,304 and AISC per ounce of gold sold from continuing operations was $1,514, compared with Cash Cost per ounce of gold sold from continuing operations of $1,044 and AISC per ounce of gold sold from continuing operations of $1,225 for the second quarter of 2023. The 25% increase in Cash Cost per ounce of gold sold from continuing operations is mainly explained by the 22% increase in cost of sales, due to higher gold prices and the effects of the COP:US$ exchange rate, along with the 6% decrease in ounces of gold sold. The increase in AISC per ounce of gold sold from continuing operations is explained by the increase in the Cash Costs per ounce of gold sold from continuing operations, along with a 12% increase in sustaining capital expenditures.1
1 For information regarding the composition of sustaining capital expenditures, see Non-IFRS and Other Financial Measures – All-In Sustaining Costs in this news release.
- Capital investments2 up 46% to $16,662: during the second quarter of 2024 capital investments of $16,662 were made into existing mines, and exploration & growth projects, compared with $11,439 in the second quarter of 2023; the increase is explained by higher investments at the Hemco Property.
Financial Highlights for six months ended June 30, 2024
- Revenue increased by 15%: revenue totaled $247,532 during the six months ended June 30, 2024, compared with $215,492 in the six months ended June 30, 2023, with sales of gold of $231,938 at an average realized price per ounce of gold sold from continuing operations of $2,200 in the six months ended June 30, 2024, compared with sales of gold of $206,668 at an average realized price per ounce of gold sold from continuing operations of $1,923 in the six months ended June 30, 2023;
- Cost of sales increased by 20%, to $172,669 in the six months ended June 30, 2024, compared with $143,567 in the six months ended June 30, 2023; The increase in costs is primarily due to higher cost of purchasing artisanal material of $12,794 due to higher gold prices, higher labour costs of $3,818, higher services of $3,806 and higher taxes and royalties of $237;
- Gross Profit from continuing operations increased by 4%, amounting to $74,863 in the six months ended June 30, 2024, compared with $71,925 in the six months ended June 30, 2023; mainly due to an 15% increase in revenue, which was partially offset by a 20% increase in cost of sales as explained above;
- Profit for the period from continuing operations was down by 9% to $34,850 or $0.12 per share during the six months ended June 30, 2024 compared with $38,446 or $0.13 per share during the six months ended June 30, 2023; the decrease in profit is mainly explained by the modest increase in gross profit offset by an increase in costs. Profit was positively impacted by higher foreign exchange differences of $4,763. Profits were also impacted by
2 Capital investments refers to additions to exploration, property, plant and equipment, and intangibles (which includes asset retirement obligation amounts and leases) for the Nechí Alluvial Property, the Hemco Property, and the La Pepa Project segments. It excludes additions to property, plant and equipment, exploration or intangibles of Mineros and other segments. For additional information as additions to exploration, property, plant and equipment, and intangibles, see Note 7 of our unaudited condensed interim financial statements for the three months and six months ended June 30, 2024.
lower other income of $2,598 due to the receipt of an insurance payment of $4,889 related to the overturning of the Llanuras Plant in the first quarter of 2023, higher deferred taxes of $8,653 and lower current taxes of $813;
- Adjusted EBITDA up 6%: Adjusted EBITDA was $90,301 during the six months ended June 30, 2024 compared with $85,403 during the six months ended June 30, 2023 due to a 15% increase in revenue, offset by a 20% increase in cost of sales and a 10% increase in administrative expenses;
- Loss for the period from discontinued operations decreased by 100%, to $0 during the six months ended June 30, 2024, compared with a loss of $10,490 during the six months ended June 30, 2023, due to the sale of the Gualcamayo Property;
- ROCE was 31% as at June 30, 2024 compared with ROCE of 27% as at June 30, 2023; the increase is mainly explained by 9% higher Adjusted EBITDA for the last 12 months, along with a 6% decrease in average capital employed, mainly explained by lower gold inventories after the sale of the Gualcamayo Property, fewer exploration and evaluation projects and lower value attributable to property, plant and equipment;
- Net Debt was $1,898 as at June 30, 2024, compared with $(3,820) as at June 30, 2023; explained by 74% lower cash and cash equivalents, along with 50% lower loans and other borrowings;
- Dividends Paid up 26%: Dividends paid of $12,712 during the six months ended June 30, 2024, compared with $10,050 in the same period of 2023, explained by an extraordinary annual dividend approved at the ordinary meeting of the General Shareholders’ Assembly in March 2024;
- Net cash flows generated by operating activities were down 47% totaling $17,220 in the six months ended June 30, 2024, compared with $32,652 in the same period of 2023. The Company’s net free cash flow was negative for the six months ended June 30, 2024 and totaled $8,715, down from $11,530 in the same period of 2023, due to timing issues of the payment of income tax of $22,517 in Colombia. While the sale of the Gualcamayo Property resulted in lower receipts from the sale of goods, commissions and other revenue, and
various hedging instruments of $23,762, in total these decreases were more than offset by the reduction in payments to suppliers and employees, and social security agencies, among others, which totaled $30,802;
- Capital investments up 17% to $31,025: during the six months ended June 30, 2024 capital investments of $31,025 were made into existing mines, and exploration & growth projects, compared with $26,421 in the six months ended June 30, 2023. This increase is explained in part by higher exploration capital expenditures of $867 and no capital expenditures related to the Gualcamayo Property which were $7,687 in the comparative period, offset with an increase of $11,430 at the Hemco Property.
Operational Highlights by Material Property
(All numbers in ounces unless otherwise noted)
| Three Months | Six Months Ended | ||||||
|---|---|---|---|---|---|---|---|
| Change | Change | ||||||
| Ended June 30, | June 30, | ||||||
| 2024 | 2023 | ounces | % | 2024 | 2023 | ounces | % |
Nechí Alluvial Property 20,591 24,648 (4,057) (16)% 39,803 42,636 (2,833) (7)% (Colombia)
| Hemco Property | 7,357 | 7,517 | (160) | (2)% | 15,539 | 17,738 | (2,199) | (12)% |
| Artisanal Mining | 25,755 | 24,699 | 1,056 | 4% | 50,102 | 47,099 | 3,003 | 6% |
| Nicaragua | 33,112 | 32,216 | 896 | 2.8% | 65,641 | 64,837 | 804 | 1% |
Total Gold Produced from 53,703 56,864 (3,161) (6)% 105,444 107,473 (2,029) (2)% Continuing Operations
Gualcamayo Property
- 12,390 (12,390) (100)% — 22,029 (22,029) (100)%
(Argentina)
Total Gold Produced from
- 12,390 (12,390) (100)% — 22,029 (22,029) (100)%
Discontinued Operations Total Gold Produced 53,703 69,254 (15,551) (22)% 105,444 129,502 (24,058) (19)% Total Silver Produced 224,096 152,027 72,069 47% 466,745 286,696 180,049 63%
- Gold production decreased by 6%: Excluding the results of the discontinued operations at the Gualcamayo Property (disposed of in 2023), 53,703 ounces of gold were produced during the second quarter of 2024, compared with 56,864
| ounces in the second quarter of 2023. | The decrease in production is mainly a | |
|---|---|---|
| result of 16% lower than expected production at the Nechí Alluvial Property, | ||
| explained by lower volumes and lower grades | . |
| • Exploration and Evaluation Expenditures: for the three months ended June | |
| 30, 2024, the Company incurred $2,643 in exploration and evaluation (“E&E”) | |
| expenditures, an increase of 38% compared with the second quarter of 2023. |
The increase is mainly explained by higher exploration expenditures which were capitalized in the Hemco Property, related to the Porvenir Project. The increase in exploration expenses is mainly due to higher regional exploration in the Hemco Property. The following table summarizes E&E expenditures for the current and comparative periods.
| Three Months Ended June 30, | Change | ||
|---|---|---|---|
| 2024 | 2023 | $ | % |
| E&E expenditures capitalized1, 3 | 1,407 | 639 | 768 | 120% |
| E&E expenditures expensed2 | 1,236 | 1,271 | (35) | (3)% |
| Total | 2,643 | 1,910 | 733 | 38% |
1. Capitalized E&E expenditures are reflected in E&E projects in the consolidated statements of financial position.
2. Figures in the table reflect expenditures capitalized from continuing operations. E&E expenditures capitalized from discontinued operations are nil.
3. Expensed E&E expenditures are reported in the consolidated statement of profit or loss for the respective period under “Exploration expenses”.
GROWTH AND EXPLORATION PROJECT UPDATES
The two key growth and exploration projects the Company is advancing are the Porvenir Project and the Luna Roja Deposit, both located at the Hemco Property.
| Porvenir Project, Nicaragua: | The Porvenir Project is a pre-development-stage |
| project located 10.5 km southwest of the existing Hemco Property facilities. | |
| Mineralization consists of a volcanic hosted gold-zinc-silver deposit with epithermal | |
| quartz veins of intermediate sulphidation. |
Mineros updated the mineral resource model by incorporating all drilling data collected from the 2023 drilling campaign. The completed model is under review by SLR Consulting (Canada) Ltd., with ongoing updates to the geometallurgical assumptions.
| The updates to the geometallurgical assumptions together with th | e analysis of the |
| 2023 metallurgical testwork is underway, and the Company expects to receive the | |
| results in order to update the geometallurgical model in the second half of 2024. |
In light of commodity market conditions management is proceeding logically and methodically to upgrade mineral resources and mineral reserves, and refine potential approaches to development described in the prefeasibility study completed on the Porvenir Project in 2023, with a view to maximizing the value of the asset and the projected returns. Accordingly, the Company has delayed preparation of the prefeasibility study optimization to 2025.
Luna Roja Deposit, Nicaragua: The Luna Roja Deposit is a skarn gold system, located 24 km southeast from the existing Hemco facilities. The Company is focusing on expanding the current Mineral Resources and identifying new targets surrounding the main deposit.
Mineros anticipates finalizing technical work and analysis supporting an updated Mineral Resource estimate for the Luna Roja Deposit by the end of 2024 for publication in early 2025. The Company plans to select samples for metallurgical testing at the Hemco lab once the model is completed, which is expected in the fourth quarter of 2024.
The Company also plans to conduct fieldwork focused on geophysical anomalies starting in the fourth quarter of 2024.
OUTLOOK
The following section of this news release represents forward-looking information, and readers are cautioned that actual results may vary. We refer readers to the risks and assumptions contained in Section 14 – Cautionary Notes and Additional Information - Cautionary Statement on Forward-Looking Information in the Company’s MD&A for the interim financial period ended June 30, 2024.
Gold production guidance
The following table presents the Company's gold production guidance for 2024 and actual production for the six months ended June 30, 2024. The production guidance includes production from the Company’s Nechí Alluvial and Hemco Properties and from artisanal mining.
| Actual (oz) | Guidance (oz) |
|---|---|
| Six months ended | 2024 |
| June 30, 2024 |
| Colombia (Nechí Alluvial) | 39,803 | 86,000 - 96,000 |
| Nicaragua (Hemco) | 15,539 | 33,000 - 35,000 |
| Total Company Mines | 55,342 | 118,500 - 131,000 |
| Nicaragua (Artisanal) | 50,102 | 90,000 - 98,000 |
| Total gold production (ounces) | 105,444 | 209,000 - 229,000 |
Given the operating results for the six months ended June 30, 2024, the Company maintains its production guidance for 2024.
Cost outlook
The following table outlines the Company’s Cash Cost per ounce of gold sold and AISC per ounce of gold sold for the three months ended June 30, 2024, and cost guidance 2024. The cost guidance includes the Nechi Alluvial Property and the Hemco Property (the “Material Properties”) and production from artisanal mining.
| Actual Cash Cost | Cash Cost | Actual AISC | AISC Guidance | |
|---|---|---|---|---|
| ($/oz) | Guidance ($/oz) | ($/oz) | ($/oz) | |
| Country (principal mine) | ||||
| 30 June 2024 | 2024 | 30 June 2024 | 2024 | |
| Colombia (Nechí Alluvial) | 1,226 | $1,090 - $1,190 | 1,434 | $1,280 - $1,390 |
| Nicaragua (Hemco) | 1,362 | $1,240 - $1,320 | 1,528 | $1,450 - $1,520 |
| Consolidated | 1,240 | $1,180 - $1,270 | 1,472 | $1,430 - $1,530 |
Cash Cost per ounce of gold sold and AISC per ounce of gold sold outlooks were prepared assuming an average selling price of gold of $1,980/oz and inflation of 10% in Colombia and 6% in Nicaragua. Cash Cost per ounce of gold sold has been trending at the high end of the guidance and given the strength of the Colombian peso and the strength of the gold price and its impact on our costs in Nicaragua we are monitoring this metric closely. We maintain our guidance at this time.