Galiano GOLD Reports Q1 2020 Results
(All dollar amounts are United States dollars unless otherwise stated)
GALIANO GOLD REPORTS Q1 2020 RESULTS
Vancouver, British Columbia, May 7, 2020 – Galiano Gold Inc. (“Galiano” or the “Company”) (TSX, NYSE
American: GAU) (formerly Asanko Gold Inc.) reports first quarter (“Q1”) 2020 operating and financial
results for the Asanko Gold Mine (“AGM”), located in Ghana, West Africa. The AGM is a 50:50 joint venture
(“JV”) with Gold Fields Ltd (JSE, NYSE: GFI), which is managed and operated by Galiano.
Q1 2020 Asanko Gold Mine Highlights (100% basis)
• Record quarterly gold production of 66,333 ounces at all-in sustaining cost1 (“AISC”) of $805/oz
• The AGM delivered its best financial performance since commercial production was announced in
April 2016.
• Gold sales of 67,820 ounces at an average realized price of $1,542/oz, generating record gold sales
proceeds of $104.6 million
• Strong cash flow generation with operating cash flow of $ 37.0 million, and free cash flow 1 of $27.0
million
• As at March 31, 2020, the JV had c ash of $55.6 million, $9.6 million in gold receivables and $ 0.5
million in gold on hand
• Revolving credit facility of $30 million drawn down as a proactive measure in response to current
economic uncertainty
• Filed 43-101 technical report with updated Mineral Resource and Mineral Reserve Estimate
• Precautionary measures in place in response to the COVID-19 global pandemic
Q1 2020 Quarterly Highlights for Galiano Gold Inc.
• Net income after tax of $21.8 million and Adjusted EBITDA1 of $21.9 million
• At March 31, 2020, Galiano had cash and receivables of $53.7 million
• Continued returning capital to shareholders through the normal course issuer bid (“NCIB”) program
with 2,431,409 common shares repurchased and cancelled for $2.0 million
• Appointed Paul N. Wright as Chairman of the Board of Directors as of May 5, 2020
• Appointed Judith Mosely to the Board of Directors as of January 1, 2020
• Appointed Todd Romaine as Executive Vice President, Sustainability as of May 1, 2020
• Appointed Paul Klipfel as Senior Vice President, Exploration as of April 20, 2020
“We delivered an exceptional quarter in the context of a very challenging global backdrop,” said Greg
McCunn, Chief Executive Officer. “With record production and gold sales proceeds we continued to execute
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on our strategy of generating free cash flow at th e Asanko Gold Mine and returning capital with
distributions to the joint venture partners totalling $45 million during the quarter.”
“During the quarter the team delivered on an important milestone with the completion of the life of mine
plan and the updated Mineral Resource and Mineral Reserve estimate for the Asanko Gold Mine providing
a baseline on which we are working to optimize. Included in the optimization is our cost initiative to drive
down our all-in sustaining costs by $100/oz. Another key focus area where we see potential to drive value
is within exploration and I am pleased to announce that Paul Klipfel has joined us as our newly appointed
Vice President, Exploration. The focus on exploration in the short-term is on replacing depletion and during
2020 we have a $10 million program underway with 4 drill rigs currently turning on-site. We expect to
have approximately 3 6,000 metres drilled by early August at near -mine targets which will form our
updated reserve and resource estimate for year -end. We expect to see a sustained exploration effort in
the medium term.
“During the quarter and subsequent to quarter-end we have also undertaken some changes to the board
with the addition of Judith Mosely and our newly appointed Chairman Paul Wright. We have also recently
appointed Todd Romaine as our EVP, Sustainability. With sustainability a key focus area, we are pleased
to enhance our capability across the Environmental, Social and Governance spheres. We also received
shareholder support at our Annual General and Special Meeting to change the Company’s name and
effective May 5, 2020 we began trading as Galiano Gold. This provides us a clear distinction between the
corporate level entity and the Asanko Gold Mine whilst maintaining our vision to create a sustainable
business capable of long-term value creation for all our stakeholders.”
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Asanko Gold Mine - Summary of Q1 2020 Operational and Financial Results (100%)
AGM (100% Basis before any
impairment adjustments)
Q1 2020 Q4 2019 Q1 2019
Ore mined (‘000t) 1,911 1,405 1,505
Waste mined (‘000t) 7,051 4,956 6,584
Total mined (‘000t) 8,962 6,361 8,089
Strip ratio (W:O) 3.7 3.5 4.4
Average gold grade mined (g/t) 1.6 1.6 1.4
Mining cost2 ($/t mined) 3.89 4.86 4.48
Ore milled (‘000t) 1,400 1,460 1,224
Average mill head grade (g/t) 1.6 1.5 1.6
Average recovery rate (%) 94 94 93
Processing cost ($/t treated) 11.13 10.83 11.93
Gold production (oz) 66,333 66,112 60,425
Gold sales (oz) 67,820 66,095 53,421
Average realized gold price ($/oz) 1,542 1,465 1,292
Operating cash costs1 ($/oz) 599 790 878
Total cash costs1 ($/oz) 676 863 943
All-in sustaining costs1 ($/oz) 805 969 1,123
All-in sustaining margin1 ($/oz) 737 496 169
All-in sustaining margin1 ($m) 50.0 32.8 9.0
Revenue ($m) 104.8 97.1 67.0
Income (loss) from mine operations ($m) 48.4 9.1 (11.9)
Cash provided by operating activities 37.0 45.4 8.8
2 For the three months ended March 31, 2019, mining cost per tonne excluded a provision for a one-time contract termination
fee.
• During the quarter, the Company aligned its health and safety reporting standards with those of the
International Council on Mining & Metals (“ICMM”). During Q1, there was one lost time injury (“LTI”)
and four total recordable injuries (“TRI”) reported resulting in an LTI frequency rate (“LTIFR”) of 0.51
per million employee hours worked and a TRI frequency rate (“TRIFR”) of 2.02 per million employee
hours worked.
• Record gold production of 66,333 ounces during the three months ended March 31, 2020
• During Q1 2020, the AGM sold 67,820 ounces of gold at an average realized gold price of $1,542/oz.
Revenues totalled $104.8 million, an increase of $37.8 million from Q 1 2019. The increase in sales
proceeds was a function of higher sales volumes and higher averaged realized gold prices in Q1 2020.
• The AGM incurred operating cash costs per ounce 1, total cash costs per ounce 1 and AISC of $599,
$676 and $805/oz, respectively, in Q1 2020. The reduction in total ca sh costs per ounce and AISC
from Q1 2019 was primarily due to the impact of higher gold sales volumes which had the effect of
decreasing fixed costs on a per unit basis , a reduction in ore transportation costs associated with
trucking ore from Esaase to the process plant and a $41/oz decrease in deferred stripping costs.
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• Total cost of sales (including depreciation and depletion and royalties) amounted to $56.4 million in
Q1 2020, a decrease of $22.5 million from Q1 2019. The decrease in cost of sales was primarily due
to a reduction in depreciation and depletion expense following the impairment recorded in Q4 2019
which had the effect of lowering the mineral properties, plant and equipment (“MPP&E”) depreciable
asset cost base. In addition, operating cash costs decreased as a result of a reduction in NRV
adjustments to stockpiles. Cost of sales for Q1 2019 also included an accrual for a one -time mining
contractor services agreement termination fee. These factors were partly offset by an increase in
gold ounces sold in Q1 2020 compared to Q1 2019.
• Strong cash flow generation with operating cash flow of $37.0 million ($56.5 million before working
capital adjustments), and free cash flow of $27.0 million. This compares to $8.8 million of operating
cash flow and negative $5.2 million of free cash flow during Q1 2019. The improvement in free cash
flow was mainly from the increase in income from operations partly offset by an unfavorable change
in non-cash working capital.
• Working capital investments during the qua rter included investments in strategic supply chain
interventions with respect to the ongoing COVID -19 pandemic bolstering supplies of key reagents,
critical spares and diesel.
• As at March 31, 2020, the JV had cash of $55.6 million (including the funds from the fully drawn $30.0
million revolving line of credit), $9.6 million in receivables from gold sales and $0.5 million in gold on
hand.
Galiano Gold Inc. – Summary Q1 2020 Financial Results
Consolidated Q1 2020 Q4 2019 Q1 2019
Net income (loss) ($m) 21.8 (21.2) (5.3)
Net income (loss) per share $0.10 ($0.09) ($0.02)
Adjusted net income (loss)1 ($m) 21.8 0.9 (5.3)
Adjusted net income (loss) per share1 $0.10 $0.00 ($0.02)
Adjusted EBITDA1 ($m) 21.9 12.6 1.2
• The Company reported net income after tax of $21.8 million in Q1 2020 compared to a net loss of
$5.3 million in Q1 2019. The improvement in earnings during Q1 2020 was predominantly the result
of an increase in the Company’s 45% interest in the net earnings of the JV which totaled $20.5 million
for the quarter.
• The Company continued to return capital to shareholders through its normal course issuer bid
(“NCIB”) program. During Q1 2020, the Company repurchased and cancelled a total of 2,431,409
common shares und er the NCIB program for $2.0 million (average acquisition price of $0.83 per
share).
• During the quarter, the Company received the $22.5 million in distributions from the JV. These
payments were recorded as redemptions of the previously recognized preference shares.
• As at March 31, 2020, the Company had cash on hand of $50.6 million and $3.1 million in receivables
for a gross liquidity position of $53.7 million and no debt.
• Adjusted EBITDA1 for Q1 2020 amounted to $21.9 million, compared to $1.2 million in Q1 2019. The
increase in Adjusted EBITDA1 was primarily a result of the increase in the AGM’s net earnings.
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• Cash used in operating activities in Q1 2020 was $0.8 million, compared to cash used in operating
activities of $1.6 million in Q1 2019. The decrease in cash used in operations was partly due cash
inflows associated with working capital changes during Q1 2020, along with a reduction in cash
general and administrative expenses.
2020 Outlook
The Asanko Gold Mine is on track to meet 2020 guidance of 225,000 – 245,000 ounces at AISC of $1,000
– $1,100/oz. It is expected that AISC will increase in Q2 and Q3 2020 as construction of the next lift on
the Tailings Storage Facility is completed.
Guidance Q1 2020 (Actual) FY 2020 (Forecast)
Gold Production (oz) 66,333 225,000 – 245,000
AISC ($/oz) 805 1,000 – 1,100
Appointment of Todd Romaine as Executive Vice President, Sustainability
The Company is pleased to announce that Todd Romaine has been appointed Executive Vice President of
Sustainability. Todd has over 20 years’ experience in the environmental, social and community aspects of the
extractive sector as well as public and aboriginal governments. Most recently he worked as the Chief
Sustainability Officer for Danakali Limited, an Australian junior potash mining compa ny that is developing a
200-year Sulphate of Potash deposit in Eritrea. Prior to this role, Todd was the Vice President, Corporate Social
Responsibility & Government Relations at Nevsun Resources Ltd, a Canadian mid -tier mining company and
played a central role developing leading edge CSR initiatives to establish social license and responsible
operations in challenging jurisdictions. Previously, he worked in senior management roles at Enbridge Pipelines
Inc., Inuvialuit Regional Corporation and the Governme nt of Nunavut. Todd holds designations with the
Canadian Institute of Planners, International Right of Way Association and has a Master’s of International
Relations, a Master’s of Leadership, a Bachelor of Science in Environmental Planning, and a Bachelor of Arts in
Environmental Studies.
Appointment of Paul Klipfel as Senior Vice President, Exploration
The Company is pleased to announce that Paul Klipfel has been appointed Vice President in Exploration.
Paul has 40 years of exploration experience in a wide variety of geologic settings and deposit types. Most of
his work for the past 13 years has been in Ghana and other countries of West Africa. He was an original mapper
on the Esaase project for Keegan Resou rces and has been a consultant to many companies over the past 17
years in West Africa, North and South America, Australia, and Asia. He also served as President for Abzu Gold
and as Chief Geologist / COO for Ashanti Gold. Dr. Klipfel holds a Ph.D. in Ec onomic Geology from Colorado
School of Mines and M.S. degrees in Mineral Economics from Colorado School of Mines and Geology from
University of Idaho.
COVID-19 Update
The JV has taken precautionary measures in response to the COVID -19 global pandemic to p rotect the
health and safety of its employees and the operating and financial well -being of the AGM. There are no
known or presumptive cases of COVID -19 with employees of Galiano or at the AGM . The Company’s
offices in Vancouver , Johannesburg and Accra are observing local regulations. The AGM continues to
operate with strict hygiene, monitoring and social distancing protocols in place in accordance with the
Ghanaian Ministry of Health guidelines. The AGM has continued to build its supply chai n and now holds
eight to nine months of key reagents, consumables and critical spares and three months of diesel supply.
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The AGM's primary refiner based in South Africa continues to receive shipments and refine gold doré from
the AGM.
This news release should be read in conjunction with Galiano’s Management’s Discussion and Analysis
and the Condensed Consolidated Interim Financial Statements for the three months ended
March 31, 2020 and 2019, which are available at www.galianogold.com and filed on SEDAR.
Notes:
1 Non-GAAP Performance Measures
The Company has included certain non -GAAP performance measures in this press release. These non -GAAP
performance measures do not have any standardized meaning. Accordingly, these performance measures are
intended to provide additional information and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with GAAP. Refer to the Non -GAAP Measures section of Galiano’s
Management Discussion and Analysis for an explanation of these measures and reconciliation s to the Company’s
reported financial results in accordance with IFRS.
• Operating Cash Costs per ounce and Total Cash Costs per ounce
Operating cash costs are reflective of the cost of production, adjusted for share-based payments and by-product
revenue per ounce of gold sold. Total cash costs include production royalties of 5%.
• All-in Sustaining Costs Per Gold Ounce
The Company has adopted the reporting of “all-in sustaining costs per gold ounce” (“AISC”) as per the World Gold
Council’s guidance. AISC include total cash costs, corporate overhead expenses, sustaining capital expenditure,
capitalized stripping costs and reclamation cost accretion per ounce of gold sold.
• Adjusted net income attributable to common shareholders
The Company has included the non-GAAP performance measures of adjusted net income (loss) attributable to
common shareholders and adjusted net income (loss) per common share. Neither adjusted net income nor
adjusted net income per share have any standardized meaning and are therefore unlikely to be comparable to
other measures presented by other issuers. Adjusted net income excludes certain non -cash items from net
income or net loss to provide a measure which helps the Company and investors to evaluate the results of the
underlying core operations of the Company and its ability to generate cash flows and is an important indicator
of the strength of our operations and the performance of our core business.
• Adjusted EBITDA
EBITDA provides an indication of the Company’s continuing capacity to generate income from operations before
taking into account the Company’s financing decisions and costs of amortizing capital assets. Accordingly, EBITDA
comprises net income (loss) excluding interest expense, interest income, amortization and depletion, and income
taxes. Adjusted EBITDA adjusts EBITDA to exclude non -recurring items and to include the Company’s interest in
the adjusted EBITDA of the JV. Other companies and JV partners may calculate EBITDA and Adjusted EBITDA
differently.
• Free cash flow
The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company
and certain investors and analysts use free cash flow to evaluate the JV’s performance with respect to its
operating cash flow capacity to meet non -discretionary outflows of cash. The presentation of free cash flow is
not meant to be a substitute for the cash flow information presented in accordance with IFRS, but rather should
be evaluated in conjunction with such IFRS measures. Free cash flow is calc ulated as cash flows from operating
activities of the JV adjusted for cash flows associated with sustaining and non-sustaining capital expenditures and
payments made to mining contractors for leases capitalized under IFRS 16.
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Enquiries:
Lynette Gould
SVP Investor Relations
Toll-Free (N. America): 1-855-246-7341
Telephone: 1-778-729-0608
Email: [email protected]
About Galiano Gold Inc.
Galiano is focused on creating a sustainable business capable of long -term value creation for its
stakeholders through organic production growth, exploration and disciplined deployment of its financial
resources. The company currently operates and manages the Asanko Gold Mine, located in Ghana, West
Africa which is jointly owned with Gold Fields Ltd. The Company is strongly committed to the highest
standards for environmental management, social responsibility, and health and safety for its employees
and neighbouring communities. For more information, please visit www.galianogold.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements and information contained in this news release constitute “forward -looking statements” within
the meaning of applicable U.S. securities laws and “forward -looking information” within the meaning of applicable
Canadian securities laws, which we refer to collectively as “forward -looking statements”. Forward -looking
statements are statements and information regarding possible events, conditions or results of opera tions that are
based upon assumptions about future conditions and courses of action. All statements and information other than
statements of historical fact may be forward looking statements. In some cases, forward -looking statements can be
identified by t he use of words such as “seek”, “expect”, “anticipate”, “budget”, “plan”, “estimate”, “continue”,
“forecast”, “intend”, “believe”, “predict”, “potential”, “target”, “may”, “could”, “would”, “might”, “will” and similar
words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook.
Forward-looking statements in this news release include, but are not limited to: estimates regarding the AGM’s
consumption of key reagents, consumables, critical spares and diesel fuel; the ability of the AGM to maintain current
inventory levels; expected gold production; cost estimates; and the expected date of the announcement of
preliminary production and cost data; and statements with respect to the Company’s share buy -back program. Such
forward-looking statements are based on a number of material factors and assumptions, including, but not limited
to: the ability of the AGM to continue to operate during the COVID -19 pandemic; that gold production and other
activities will not be curtailed as a result of the COVID -19 pandemic; that the AGM will be able to continue to ship
doré from the AGM site to be refined; that the doré produced by the AGM will continue to be able to be refined at
similar rates and costs to the AGM, or a t all; that the other current or potential future effects of the COVID -19
pandemic on the Company’s business, operations and financial position, including restrictions on the movement of
persons (and in particular, the AGM’s workforce), restrictions on bus iness activities, including access to the AGM,
restrictions on the transport of goods, trade restrictions, increases in the cost of necessary inputs, reductions in the
availability of necessary inputs and productivity and operational constraints, will not impact its 2020 production and
cost guidance; that the Company’s and the AGM’s responses to the COVID-19 pandemic will be effective in continuing
its operations in the ordinary course; the accuracy of the estimates and assumptions underlying the Mineral Resource
and Mineral Reserve estimates, including future gold prices, cut-off grades and production and processing estimates;
the successful completion of development and exploration projects, planned expansions or other projects within the
timelines anticipated and at anticipated production levels; that mineral resources can be developed as planned; that
the Company’s relationship with joint venture partners will continue to be positive and beneficial to the Company;
interest and exchange rates; that required financing and permits will be obtained; general economic conditions; that
labour disputes or disruptions, flooding, ground instability, geotechnical failure, fire, failure of plant, equipment or
processes to operate are as anticipated and other risks of the mining industry will not be encountered; that contracted
parties provide goods or services in a timely manner; that there is no material adverse change in the price of gold or
other metals; competitive conditions in the mining industry; title to miner al properties; costs; taxes; the retention of
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the Company’s key personnel; and changes in laws, rules and regulations applicable to Galiano.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause
actual results, performance or achievements to differ materially from those anticipated in such forward -looking
statements. The Company believes the expectations reflected in such forward -looking statements are reasonable,
but no assurance can be given that thes e expectations will prove to be correct and you are cautioned not to place
undue reliance on forward -looking statements contained herein. Some of the risks and other factors which could
cause actual results to differ materially from those expressed in the forward-looking statements contained in this
news release, include, but are not limited to: the Company’s and/or the AGM’s operations may be curtailed or halted
entirely as a result of the COVID -19 pandemic, whether as a result of governmental or regulator y law or
pronouncement, or otherwise; that the dor é produced at the AGM may not be able to be refined at expected levels,
on expected terms or at all; that the Company and/or the AGM will experience increased operating costs as a result
of the COVID -19 pandemic; that the AGM may not be able to source necessary inputs on commercially reasonable
terms, or at all; the Company’s and the AGM’s responses to the COVID -19 pandemic may not be successful in
continuing its operations in the ordinary course; mineral reserve and resource estimates may change and may prove
to be inaccurate; life of mine estimates are based on a number of factors and assumptions and may prove to be
incorrect; AGM has a limited operating history and is subject to risks associated with estab lishing new mining
operations; sustained increases in costs, or decreases in the availability, of commodities consumed or otherwise used
by the Company may adversely affect the Company; actual production, costs, returns and other economic and
financial performance may vary from the Company’s estimates in response to a variety of factors, many of which are
not within the Company’s control; adverse geotechnical and geological conditions (including geotechnical failures)
may result in operating delays and lowe r throughput or recovery, closures or damage to mine infrastructure; the
ability of the Company to treat the number of tonnes planned, recover valuable materials, remove deleterious
materials and process ore, concentrate and tailings as planned is dependent on a number of factors and assumptions
which may not be present or occur as expected; the Company’s operations may encounter delays in or losses of
production due to equipment delays or the availability of equipment; the Company’s operations are subject to
continuously evolving legislation, compliance with which may be difficult, uneconomic or require significant
expenditures; the Company may be unsuccessful in attracting and retaining key personnel; labour disruptions could
adversely affect the Company’s operations; the Company’s business is subject to risks associated with operating in a
foreign country; risks related to the Company’s use of contractors; the hazards and risks normally encountered in the
exploration, development and production of gold; th e Company’s operations are subject to environmental hazards
and compliance with applicable environmental laws and regulations; the Company’s operations and workforce are
exposed to health and safety risks; unexpected costs and delays related to, or the fai lure of the Company to obtain,
necessary permits could impede the Company’s operations; the Company’s title to exploration, development and
mining interests can be uncertain and may be contested; the Company’s properties may be subject to claims by
various community stakeholders; risks related to limited access to infrastructure and water; the Company’s
exploration programs may not successfully expand its current mineral reserves or replace them with new reserves;
the Company’s common shares may experience price and trading volume volatility; the Company’s revenues are
dependent on the market prices for gold, which have experienced significant recent fluctuations; the Company may
not be able to secure additional financing when needed or on acceptable terms; Company shareholders may be
subject to future dilution; risks related to changes in interest rates and foreign currency exchange rates; changes to
taxation laws applicable to the Company may affect the Company’s profitability and ability to repatriate fund s; the
Company’s primary asset is held through a joint venture, which exposes the Company to risks inherent to joint
ventures, including disagreements with joint venture partners and similar risks; risks related to the Company’s
internal controls over financial reporting and compliance with applicable accounting regulations and securities laws;
the carrying value of the Company’s assets may change and these assets may be subject to impairment charges; the
Company may be liable for uninsured or partially ins ured losses; the Company may be subject to litigation; the
Company may be unsuccessful in identifying targets for acquisition or completing suitable corporate transactions,
and any such transactions may not be beneficial to the Company or its shareholders; the Company must compete
with other mining companies and individuals for mining interests; and risks related to information systems security
threats.
Although the Company has attempted to identify important factors that could cause actual results or events to differ