Abbott Reports First-Quarter 2017 Results

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Abbott Reports First-Quarter 2017 Results

– FIRST-QUARTER GAAP EPS FROM CONTINUING OPERATIONS OF $0.22; ADJUSTED EPS FROM CONTINUING OPERATIONS OF $0.48, ABOVE PREVIOUS GUIDANCE RANGE OF $0.42 TO $0.44

– FIRST-QUARTER REPORTED SALES GROWTH OF 29.7 PERCENT; COMPARABLE OPERATIONAL SALES GROWTH OF 3.2 PERCENT

– FULL-YEAR 2017 EPS GUIDANCE RANGE FOR CONTINUING OPERATIONS REMAINS UNCHANGED

– COMPLETED ACQUISITION OF ST. JUDE MEDICAL, CREATING A PREMIER MEDICAL DEVICE LEADER

PR Newswire

ABBOTT PARK, Ill., April 19, 2017 /PRNewswire/ – Abbott (NYSE: ABT) today announced financial results for the first quarter ended March 31, 2017.

  • Reported diluted EPS from continuing operations under GAAP was $0.22 in the first quarter. Excluding specified items, adjusted diluted EPS from continuing operations was $0.48 in the first quarter, above the previous guidance range of $0.42 to $0.44.
  • First-quarter worldwide sales of $6.3 billion increased 29.7 percent on a reported basis and 3.2 percent on a comparable operational basis.
  • On Jan. 4, 2017, Abbott completed the acquisition of St. Jude Medical, establishing the company as a leader in the broad medical device arena and providing expanded opportunities for future growth.
  • In the first quarter, Abbott received FDA approval for MRI-conditional labeling for both the Assurity MRITM pacemaker and the TendrilTM MRI pacing lead. Abbott submitted for FDA approval of MRI-conditional labeling for its EllipseTM implantable cardioverter defibrillator (ICD) system.
  • In January, Abbott initiated the U.S. launch of its new Ensite PrecisionTM cardiac mapping system, which helps physicians more effectively treat patients experiencing arrhythmias in the heart, and initiated the international launch of its new AlinityTM diagnostics systems.
  • In February, Abbott released real-world data from more than 50,000 users of its sensor-based FreeStyle® Libre glucose monitoring system. The data showed that FreeStyle Libre use was associated with higher frequency of glucose testing and better diabetes outcomes, including improved control of glucose levels.

“Our first quarter results reflect a strong start to the year,” said Miles D. White, chairman and chief executive officer, Abbott. “The integration of St. Jude is going well and recently launched products are contributing to double-digit sales growth across several areas of our Medical Devices business.”

 

FIRST-QUARTER BUSINESS OVERVIEW


Note: Management believes that measuring sales growth rates on a comparable operational basis is an appropriate way for investors to best understand the underlying performance of the business.



Comparable operational


sales growth excludes the impact of exchange and for Total Abbott and Medical Devices, also includes prior year results for St. Jude Medical, which was acquired on Jan. 4, 2017, and excludes prior year and current year results for the Abbott Medical Optics (AMO) and St. Jude Medical vascular closure businesses, which were divested during the first quarter 2017. Comparable operational sales growth also reflects a reduction to St. Jude Medical

s historic sales related to administrative fees paid to conform to Abbott

s presentation, as further described in Form 8-K issued on April 18, 2017.

Following are sales by business segment and commentary for the first quarter:

Total Company
($ in millions)


% Change vs. 1Q16


Sales 1Q17


Reported


Comparable Operational


U.S.


Int’l


Total


U.S.


Int’l


Total


U.S.


Int’l


Total


Total *

2,324

4,011

6,335

51.8

19.6

29.7

3.9

2.8

3.2

Nutrition

730

912

1,642

1.6

(4.3)

(1.7)

1.6

(3.0)

(1.0)

Diagnostics

371

787

1,158

9.4

1.1

3.6

9.4

2.6

4.7

Established Pharmaceuticals

950

950

 n/a 

7.0

7.0

 n/a 

5.7

5.7

Medical Devices

1,136

1,259

2,395

144.0

72.2

100.2

3.6

5.4

4.5

n/a = Not Applicable.

* In 2017, Total Abbott sales from continuing operations include Other Sales of $190 million, including sales of $175 million from the AMO business, which was divested during the first quarter 2017. In 2016, the AMO business was reported as part of the Medical Devices group. Comparable operational growth rates above exclude results from the AMO business.

Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

First-quarter 2017 worldwide sales of $6.3 billion increased 29.7 percent on a reported basis. On a comparable operational basis, worldwide sales increased 3.2 percent. Refer to the final table for a reconciliation of comparable historical revenue.

 

Nutrition
($ in millions)        


% Change vs. 1Q16


Sales 1Q17


Reported


Comparable Operational


U.S.


Int’l


Total


U.S.


Int’l


Total


U.S.


Int’l


Total


Total

730

912

1,642

1.6

(4.3)

(1.7)

1.6

(3.0)

(1.0)

Pediatric

432

495

927

7.3

(12.2)

(4.1)

7.3

(10.8)

(3.3)

Adult

298

417

715

(5.6)

7.3

1.5

(5.6)

8.3

2.0

Worldwide Nutrition sales decreased 1.7 percent on a reported basis in the first quarter, including an unfavorable 0.7 percent effect of foreign exchange, and decreased 1.0 percent on an operational basis. 

Worldwide Pediatric Nutrition sales decreased 4.1 percent on a reported basis in the first quarter, including an unfavorable 0.8 percent effect of foreign exchange, and decreased 3.3 percent on an operational basis. In the U.S., above-market sales growth was led by continued uptake of several recently launched infant formula products. International sales declined 12.2 percent on a reported basis and 10.8 percent on an operational basis. As expected, challenging conditions in the Chinese infant formula market continued to impact international performance.

Worldwide Adult Nutrition sales increased 1.5 percent on a reported basis in the first quarter, including an unfavorable 0.5 percent effect of foreign exchange, and increased 2.0 percent on an operational basis. Strong performance in international Adult Nutrition, led by continued growth of Ensure® and Glucerna® in Latin America and other priority geographies, was partially offset by lower than expected performance in the U.S. 

 

Diagnostics
($ in millions)


% Change vs. 1Q16


Sales 1Q17


Reported


Comparable Operational


U.S.


Int’l


Total


U.S.


Int’l


Total


U.S.


Int’l


Total


Total

371

787

1,158

9.4

1.1

3.6

9.4

2.6

4.7

Core Laboratory

216

695

911

13.8

3.0

13.8

1.8

4.3

Molecular

45

67

112

(4.1)

10.0

3.9

(4.1)

10.0

3.9

Point of Care

110

25

135

7.3

8.3

7.5

7.3

8.7

7.5

Worldwide Diagnostics sales increased 3.6 percent on a reported basis in the first quarter, including an unfavorable 1.1 percent effect of foreign exchange, and increased 4.7 percent on an operational basis. Excluding the impact of Venezuelan operations, Diagnostics sales would have increased 5.3 percent on a reported basis and 6.4 percent on an operational basis in the first quarter. 

Core Laboratory Diagnostics sales increased 3.0 percent on a reported basis in the first quarter, including an unfavorable 1.3 percent effect of foreign exchange, and increased 4.3 percent on an operational basis. During the quarter, Abbott initiated the international launch of “Alinity s” for blood and plasma screening, “Alinity c” for clinical chemistry and “Alinity i” for immunoassay diagnostics. The new Alinity family of harmonized systems provides high quality results and is designed to be more efficient – running more tests in less space, generating test results faster and minimizing human errors. 

Molecular Diagnostics sales increased 3.9 percent on both a reported and operational basis in the first quarter. Continued strong growth in infectious disease testing, Abbott’s core area of focus in the molecular diagnostics market, was primarily offset by its planned scale down in other testing areas.

Point of Care Diagnostics sales increased 7.5 percent on both a reported and operational basis in the first quarter. Sales growth in the quarter was led by continued adoption of Abbott’s i-STAT® handheld system in the U.S. and strong growth internationally.

 

Established Pharmaceuticals
($ in millions)


% Change vs. 1Q16


Sales 1Q17


Reported


Comparable Operational


U.S.


Int’l


Total


U.S.


Int’l


Total


U.S.


Int’l


Total


Total

950

950

 n/a 

7.0

7.0

 n/a 

5.7

5.7

Key Emerging Markets

730

730

 n/a 

15.2

15.2

 n/a 

12.5

12.5

Other

220

220

 n/a 

(13.4)

(13.4)

 n/a 

(11.3)

(11.3)

Established Pharmaceuticals sales increased 7.0 percent on a reported basis in the first quarter, including a favorable 1.3 percent effect of foreign exchange, and increased 5.7 percent on an operational basis. Excluding the impact of Venezuelan operations, which is included in Other, Established Pharmaceuticals sales would have increased 13.0 percent on a reported basis and 11.7 percent on an operational basis in the first quarter.

Key Emerging Markets include Brazil, Russia, India and China, along with several additional emerging countries that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these key geographies increased 15.2 percent on a reported basis and 12.5 percent on an operational basis in the first quarter. Abbott continues to achieve above-market growth in several key geographies driven by commercial initiatives and locally relevant portfolio expansion.

 

Medical Devices
($ in millions)


% Change vs. 1Q16


Sales 1Q17


Reported


Comparable Operational


U.S.


Int’l


Total


U.S.


Int’l


Total


U.S.


Int’l


Total


Total

1,136

1,259

2,395

144.0

72.2

100.2

3.6

5.4

4.5

Cardiovascular and Neuromodulation

1,061

1,042

2,103

267.5

163.0

207.0

3.3

1.4

2.4

Rhythm Management

260

251

511

 n/m 

 n/m 

 n/m 

(17.8)

(4.1)

(11.6)

Electrophysiology

145

171

316

 n/m 

 n/m 

 n/m 

10.1

11.6

10.9

Heart Failure

109

33

142

 n/m 

 n/m 

 n/m 

(10.1)

5.1

(6.9)

Vascular

304

399

703

20.7

14.2

16.9

6.1

(4.0)

0.1

Structural Heart

107

149

256

220.4

221.5

221.0

22.1

11.3

15.5

Neuromodulation

136

39

175

 n/m 

 n/m 

 n/m 

62.4

22.8

51.5

Diabetes Care

75

217

292

8.2

25.0

20.2

8.2

28.8

22.9

n/m = Percent change is not meaningful.

Worldwide Medical Devices sales increased 100.2 percent on a reported basis in the first quarter. On a comparable operational basis, sales increased 4.5 percent. Refer to the final table for a reconciliation of comparable historical revenue.

Worldwide sales of Cardiovascular and Neuromodulation products increased 207.0 percent on a reported basis in the first quarter. On a comparable operational basis, sales increased 2.4 percent. Sales growth in the quarter was led by double-digit growth in Electrophysiology, Structural Heart, and Neuromodulation. In Electrophysiology, Abbott initiated the U.S. launch of its Ensite Precision cardiac mapping system in the first quarter. Growth in Structural Heart was driven by continued double-digit growth of MitraClip®, Abbott’s market-leading device for the treatment of mitral regurgitation, and continued international uptake of Abbott’s PorticoTM device used in treating aortic valve disease and AmplatzerTM AmuletTM used to reduce the risk of stroke by preventing clotting in the left atrial appendage of the heart. In Neuromodulation, strong double-digit growth on a comparable basis was led by several recently launched products for the treatment of chronic pain and movement disorders. As expected, Rhythm Management sales in the U.S. were impacted by continued competitive dynamics in the MRI-conditional category of products. In the quarter, Abbott received FDA approval for MRI-conditional labeling for its Assurity MRI pacemaker and Tendril MRI pacing lead and submitted for FDA approval of MRI-conditional labeling for its Ellipse implantable cardioverter defibrillator (ICD) system, which includes the Tendril MRI pacing lead, and the DurataTM and OptisureTM defibrillation leads.

Worldwide Diabetes Care sales increased 20.2 percent on a reported basis in the first quarter, including an unfavorable 2.7 percent effect of foreign exchange, and increased 22.9 percent on an operational basis. Strong double-digit international sales growth was led by continued consumer uptake of FreeStyle Libre, Abbott’s revolutionary continuous glucose monitoring system. In February, at the Advanced Technologies and Treatments for Diabetes conference, Abbott presented real-world data from more than 50,000 Libre users in Europe. The data demonstrated that FreeStyle Libre users checked their glucose levels an average of 16.3 times per day, more than 3 times the minimum guidelines for traditional finger stick testing. The data also showed that a higher frequency of testing was associated with better diabetes outcomes, including improved glucose levels and a reduction in hypoglycemia.

 

ABBOTT’S FULL-YEAR EARNINGS-PER-SHARE GUIDANCE REMAINS UNCHANGED
Abbott continues to project earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $0.92 to $1.02, including amortization and integration expenses related to the acquisition of St. Jude Medical. Projected adjusted diluted earnings per share from continuing operations remains unchanged at $2.40 to $2.50 for the full year 2017.    

Abbott forecasts net specified items for the full year 2017 of approximately $1.48 per share. Specified items include acquisition-related expenses, intangible amortization expense, charges associated with cost reduction initiatives and other expenses, partially offset by a gain on the sale of the AMO business.

 

ABBOTT DECLARES 373RD QUARTERLY DIVIDEND
On Feb. 17, 2017, the board of directors of Abbott declared the company’s quarterly dividend of $0.265 per share. Abbott’s cash dividend is payable May 15, 2017, to shareholders of record at the close of business on April 14, 2017.

Abbott has increased its dividend payout for 45 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.

 

About Abbott:
Abbott is a global healthcare company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 94,000 people.

Visit Abbott at www.abbott.com and connect with us on Twitter at @AbbottNews.

Abbott will webcast its live first-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available later that day.

 


Private Securities Litigation Reform Act of 1995 —

A Caution Concerning Forward-Looking Statements

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott’s operations are discussed in Item 1A, “Risk Factors”  to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2016, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

First Quarter Ended March 31, 2017 and 2016

(in millions, except per share data)

(unaudited)


1Q17


1Q16


% Change

Net Sales

$6,335

$4,885

29.7

Cost of products sold, excluding amortization expense

3,044

2,140

42.2

Amortization of intangible assets

522

144

n/m

Research and development

547

379

44.5

Selling, general, and administrative

2,424

1,698

42.8

Total Operating Cost and Expenses

6,537

4,361

49.9

Operating earnings (loss)

(202)

524

n/m

Interest expense, net

204

25

n/m

Net foreign exchange (gain) loss

(16)

478

n/m

1)

Other (income) expense, net

(1,126)

19

n/m

2)

Earnings from Continuing Operations before taxes

736

2

n/m

Tax (benefit) expense on Earnings from Continuing Operations

350

(54)

n/m

3)

Earnings from Continuing Operations

386

56

n/m

Earnings from Discontinued Operations, net of taxes

33

244

(86.3)

Gain on Sale of Discontinued Operations, net of taxes

16

n/m

Net Earnings from Discontinued Operations, net of taxes

33

260

(87.1)

4)

Net Earnings

$419

$316

32.5

Net Earnings from Continuing Operations, excluding 

Specified Items, as described below

$843

$615

37.2

5)

Diluted Earnings per Common Share from:

Continuing Operations

$0.22

$0.04

n/m

Discontinued Operations

0.02

0.17

(88.2)

4)

Total

$0.24

$0.21

14.3

Diluted Earnings per Common Share from Continuing 

Operations, excluding Specified Items, as described below

$0.48

$0.41

17.1

5)

Average Number of Common Shares Outstanding

Plus Dilutive Common Stock Options 

1,735

1,484

NOTES:

See tables below for an explanation of certain non-GAAP financial information.

n/m = Percent change is not meaningful.

See footnotes below.

1)

2016 Net foreign exchange loss includes a loss of $477 million related to the revaluation of Abbott’s net monetary assets in Venezuela using the Dicom exchange rate, which is the Venezuelan government’s official floating exchange rate.

2)

2017 Other (income) expense, net includes a pretax gain of $1.151 billion from the sale of the AMO business.

3)

2017 Tax (benefit) expense on Earnings from Continuing Operations includes the tax associated with a $1.151 billion pretax gain on the sale of the AMO business.

2016 Tax (benefit) expense on Earnings from Continuing Operations includes the impact of a net tax benefit of approximately $140 million as a result of the resolution of various tax positions from prior years, partially offset by the unfavorable impact of non-deductible foreign exchange losses related to Venezuela.

4)

2017 Earnings and Diluted Earnings per Common Share from Discontinued Operations, net of taxes reflect the impact of a net tax benefit of $33 million as a result of the resolution of various tax positions from prior years.

2016 Earnings and Diluted Earnings per Common Share from Discontinued Operations, net of taxes reflect the impact of a net tax benefit of $247 million as a result of the resolution of various tax positions from prior years.

5)

2017 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $457 million, or $0.26 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions, partially offset by a gain on the sale of the AMO business.

2016 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $559 million, or $0.37 per share, for intangible amortization expense, the foreign exchange loss related to Venezuela, and other expenses primarily associated with cost reduction initiatives and acquisitions, partially offset by the favorable impact of a net tax benefit as a result of the resolution of various tax positions from prior years.

 

NON-GAAP RECONCILIATION OF FINANCIAL INFORMATION FROM CONTINUING OPERATIONS

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

First Quarter Ended March 31, 2017 and 2016

(in millions, except per share data) 

(unaudited)


1Q17


As
Reported
(GAAP) 


Specified
Items


As
Adjusted


% to
Sales

Intangible Amortization


$522

$(522)



Gross Margin


2,769

984


$3,753

59.2%

R&D


547

(40)


507

8.0%

SG&A


2,424

(367)


2,057

32.5%

Interest expense, net


204

(17)


187

Other (income) expense, net


(1,126)

1,134


8

Earnings from Continuing Operations before taxes 


736

274


1,010

Taxes on Earnings from Continuing Operations


350

(183)


167

Net Earnings from Continuing Operations


386

457


843

Diluted Earnings per Share from Continuing Operations


$0.22

$0.26


$0.48

Specified items reflect intangible amortization expense of $522 million and other expenses of $903 million, primarily associated with acquisitions, including approximately $390 million of inventory step-up amortization related to St. Jude Medical, charges related to restructuring actions and other expenses, partially offset by a gain of $1.151 billion from the sale of the AMO business.


1Q16


As
Reported
(GAAP)


Specified
Items


As
Adjusted 


% to
Sales

Intangible Amortization


$144

$(144)



Gross Margin


2,601

172


$2,773

56.8%

R&D


379

(45)


334

6.8%

SG&A


1,698

(43)


1,655

33.9%

Interest expense, net


25

(12)


13

Net foreign exchange (gain) loss


478

(477)


1

Other (income) expense, net


19

(4)


15

Earnings from Continuing Operations before taxes


2

753


755

Taxes on Earnings from Continuing Operations


(54)

194


140

Net Earnings from Continuing Operations


56

559


615

Diluted Earnings per Share from Continuing Operations


$0.04

$0.37


$0.41

Specified items reflect intangible amortization expense of $144 million, the impact of the foreign exchange loss in Venezuela of $477 million, and other expenses of $132 million, primarily associated with cost reduction initiatives and acquisitions, partially offset by a net tax benefit of approximately $140 million as a result of the resolution of various tax positions from prior years.

 

RECONCILIATION OF TAX RATE FOR CONTINUING OPERATIONS
A reconciliation of the first-quarter tax rates for continuing operations for 2017 and 2016 is shown below:


1Q17

($ in millions)


Pre-Tax
Income


Taxes on
Earnings


Tax
Rate


As reported (GAAP)


$736


$350


47.6%

1)

Specified items

274

(183)


Excluding specified items


$1,010


$167


16.5%


1Q16

($ in millions)


Pre-Tax
Income


Taxes on
Earnings


Tax
Rate


As reported (GAAP)


$2


$(54)


n/m

2)

Specified items

753

194


Excluding specified items


$755


$140


18.6%

1)

Reported tax rate on a GAAP basis for 2017 includes the impact of taxes associated with a $1.151 billion pretax gain on the sale of the AMO business.

2)

Reported tax rate on a GAAP basis for 2016 includes the impact of a net tax benefit of approximately $140 million as a result of the resolution of various tax positions from prior years, partially offset by the unfavorable impact of non-deductible foreign exchange losses related to Venezuela.

 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Comparable Historical Revenue

First Quarter Ended March 31, 2017 and 2016

($ in millions) (unaudited)


1Q17


1Q16


% Change vs. 1Q16


Abbott
Reported


Divested
Businessesa)


Comparable
Revenue


Abbott
Reported


Acquired
St. Jude
Businessb)


AMO


Comparable
Revenue


Comparable


Reported


Reported


Operationalc)


Total Company


6,335


(187)


6,148


4,885


1,373


(269)


5,989


29.7


2.6


3.2

U.S.

2,324

(84)

2,240

1,531

733

(108)

2,156

51.8

3.9

3.9

Int’l

4,011

(103)

3,908

3,354

640

(161)

3,833

19.6

2.0

2.8


Total Medical Devices


2,395


(12)


2,383


1,197


1,373


(269)


2,301


100.2


3.6


4.5

U.S.

1,136

(6)

1,130

466

733

(108)

1,091

144.0

3.6

3.6

Int’l

1,259

(6)

1,253

731

640

(161)

1,210

72.2

3.6

5.4


Cardiovascular and Neuromodulation


2,103


(12)


2,091


685


1,373




2,058


207.0


1.6


2.4

U.S.

1,061

(6)

1,055

289

733

1,022

267.5

3.3

3.3

Int’l

1,042

(6)

1,036

396

640

1,036

163.0

1.4


Rhythm Management


511




511




582




582


 n/m 


(12.2)


(11.6)

U.S.

260

260

317

317

 n/m 

(17.8)

(17.8)

Int’l

251

251

265

265

 n/m 

(5.5)

(4.1)


Electrophysiology


316




316


4


281




285


 n/m 


10.7


10.9

U.S.

145

145

4

128

132

 n/m 

10.1

10.1

Int’l

171

171

153

153

 n/m 

11.1

11.6


Heart Failure


142




142




154




154


 n/m 


(7.4)


(6.9)

U.S.

109

109

121

121

 n/m 

(10.1)

(10.1)

Int’l

33

33

33

33

 n/m 

2.7

5.1


Vascular


703


(12)


691


601


96




697


16.9


(0.8)


0.1

U.S.

304

(6)

298

252

29

281

20.7

6.1

6.1

Int’l

399

(6)

393

349

67

416

14.2

(5.5)

(4.0)


Structural Heart


256




256


80


144




224


221.0


14.2


15.5

U.S.

107

107

33

54

87

220.4

22.1

22.1

Int’l

149

149

47

90

137

221.5

9.1

11.3


Neuromodulation


175




175




116




116


 n/m 


51.0


51.5

U.S.

136

136

84

84

 n/m 

62.4

62.4

Int’l

39

39

32

32

 n/m 

21.2

22.8

a)

Reflects sales related to the AMO and St. Jude Medical vascular closure businesses prior to divesting in the first quarter 2017.

b)

Reflects reported actuals for St. Jude Medical, excluding results from the vascular closure business, as well as a reduction to St. Jude Medical sales related to the reclassification of fees paid to group purchasing organizations from the Selling, general, and administrative line.

c)

In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/abbott-reports-first-quarter-2017-results-300441726.html

SOURCE Abbott

Roxgold Reports First Quarter 2017 Operating Results and 2016 Financial Results

Roxgold Reports First Quarter 2017 Operating Results and 2016 Financial Results

Canada NewsWire

TORONTO, April 18, 2017 /CNW/ – Roxgold Inc. (“Roxgold” or the “Company”) (TSX: ROXG) is pleased to announce its production results for the first quarter of 2017 along with the 2016 year-end financial results.

An Investor Day will be held by the Company, tomorrow, April 19, 2017 at 9:00AM ET which will be available via a webcast in the Events section of the corporate website.

“Roxgold has delivered strong operating and financial metrics over the course of 2016 and the first quarter of 2017,” commented John Dorward, Roxgold President and CEO. “Looking to the future, Roxgold is well positioned financially to pursue organic growth at our key Bagassi South development project as well as deliver on an extensive regional exploration program over the balance of this year and beyond.”

Highlights:

For the three month period ended March 31, 2017, the Company:

  • Achieved two million hours with no lost time injuries;
  • Produced 35,594 ounces and sold 34,930 ounces for the quarter;
  • Connected to the Burkina Faso high voltage grid on February 1, 2017 with 99% availability; and
  • Held cash as at March 31, 2017 of approximately $53 million subsequent to a total of $18.5 million of debt principal repayments.

For the 12-month period ended December 31, 2016, the Company:

  • Achieved 1,800,000 hours free of lost time injuries (“LTI”) in December
  • Completed construction of the Yaramoko gold mine 1.5 months ahead of schedule and approximately 3% below the capital cost estimate;
  • Sold 77,115 ounces of gold totalling revenues of $98,010,000 since first gold pour in May 2016;
  • Incurred a cash operating cost5 of $375 per ounce produced for a total cash cost6 of $431 per ounce sold and an all-in sustaining cost8 of $705 per ounce sold, including additional investment to advance underground development ahead of the initial mine plan;
  • Generated cash flow from mining operations4 totalling $59,106,000 for cash flow per share4 of $0.16 (C$0.21/share);
  • Mined 183,707 tonnes of ore for the period March 1 to December 31, 2016 (133,601 for the seven month period ended December 31, 2016);
  • Closed a C$23 million bought deal financing;
  • Received $9 million from the early exercise of all outstanding warrants, held by International Finance Corporation (“IFC”);
  • Declared commercial production on October 1, 2016;
  • Received the “Prix Responsabilité Sociale des Entreprises minières 2016” or “2016 CSR Award of Mining Companies” by Redevabilité in Burkina Faso.

1.   
Operating highlights for the three-month period ended March 31, 2017

During the three-month period ended March 31, 2017, the Yaramoko gold mine continued to operate in line with expectations. Operations are now in their third full quarter and exhibiting good adherence to plan. During the period, the Yaramoko gold mine achieved a significant milestone in reaching two million hours worked without a Lost Time Injury. Roxgold feels that this is indicative of the maturity and stability that has been established at the Yaramoko gold mine in the year since commencing operations.

In the period, the Yaramoko gold mine produced 35,594 ounces and sold 34,930 ounces of gold. This was in line with expectations of a relatively strong first quarter.

The mine produced 69,237 tonnes of ore at 14.74 g/t Au with 1,740 metres of development completed. With two stoping areas operating at quarter end, the mine remains well established to continue to deliver consistent production. The plant processed 63,955 tonnes at an average head grade of 17.16 g/t Au. Plant availability was 94% and overall recovery was 99.2% during the quarter.

During the period, the Yaramoko gold mine was connected to the Burkina Faso High Voltage (“HV”) national power grid. Connection took place as scheduled on February 1, 2017, and has subsequently enjoyed grid availabilities of 99%. The HV supply is utilised across the property and will be a significant driver in reducing operating costs at the Yaramoko gold mine. Roxgold is very pleased with the proactive partnership it enjoys with the national power provider, SONABEL, and thanks them for their ongoing support.

2.   
2016 goals and achievements

In 2016, the Company’s main operational focus was to pour gold during the second quarter and achieve commercial production during the year.  To pursue organic growth, the Company also expected to complete a maiden Mineral Resource for the Bagassi South deposit and to provide an updated 55 Zone Mineral Resource based on the completion of additional drilling.

Roxgold exceeded its first objective as the construction of the Yaramoko gold mine was effectively completed during the second quarter of 2016, with the exception of the installation of the HV power line. The final Yaramoko gold mine capital cost totalled $107 million, which is 3% below the Company’s capital cost estimate for the project of $110.8 million. The HV line was completed in early February 2017 and is currently providing power to the processing and underground facilities as expected.

The Company met its second objective when it transitioned from developer to producer by declaring commercial production as of October 1, 2016. During the four month pre-commercial production period and the three months of operations since declaring commercial production, the Company produced 77,157 ounces of gold at an average mill feed of 15.5 gpt. Since the first gold pour, the Company generated cash flow from mining operations4 totalling $59,106,000 contributing to the cash on hand position of $68,902,000 as at December 31, 2016.

The Company’s organic growth objectives were also achieved during the year. In April 2016, the Company announced the completion of a maiden resource for the QV1 and QV’ structures at Bagassi South located 1.8 kilometres south of the 55 Zone.   The results of the 55 Zone deep drilling program completed during the fourth quarter of 2016, which intersected 20.1 gpt over 23.8 metres at a vertical depth of 960 metres, support the Mineral Resource update included under the Reserves and Resources section of the Company’s Management Discussion and Analysis (“MD&A”) for the year ended December 31, 2016.

Unfortunately, one lost time injury was recorded during the period.  Since this occurrence, there have been 1,800,000 LTI free hours worked to December 31, 2016 and 2,000,000 LTI free hours were surpassed in early 2017.

3.   
2016 performance

The Company considers that pre-commercial production operations at the Yaramoko gold mine commenced in June 2016 as the construction of the processing plant and associated infrastructure was completed, the contractual performance test associated with the engineering, procurement, and construction (“EPC”) lump sum contract with the DRA/Group Five Joint Venture was passed and a first gold shipment was exported and refined. Ramp-up of pre-commercial production continued during the third quarter ended September 30, 2016 leading to the declaration of commercial production on October 1, 2016. 


Pre-commercial
production Four
months ended
September 30,
20161


Commercial
production Three
months ended
December 31,
2016


TOTAL



seven months
ended




December 31,
2016


Operating Data

Ore mined (tonnes)

61,040

72,561


133,601

Ore processed (tonnes)

82,590

61,265


143,855

Head grade (g/t)

16.4

15.45


16.0

Recovery (%)

98.4

98.9


98.5

Gold ounces produced2

45,390

29,688


75,078

Gold ounces sold

42,844

34,271


77,115


Financial Data (in thousands of dollars)

Revenues – Gold sales3

56,625

41,385


98,010

Mining operating expenses

14,728

14,127


28,855

Government royalties

2,730

1,685


4,415

Depreciation and depletion

4,080


4,080

Net loss attributable to shareholders

N/A

N/A


(2,511)

Basic and diluted earnings per share

N/A

N/A


(0.01)

Cash flow from mining operations4

35,936

23,170


59,106

Per share4

0.10

0.06


0.16

Cash on hand end of period

60,552

68,902


68,902

Total assets

198,885

217,670


217,670


Statistics (in dollars)

Average realized selling price (per ounce)

1,322

1,208


1,271

Cash operating cost (per ounce produced)

350

414


375

Cash operating cost (per tonne processed)5

192

201


196

Total cash cost (per ounce sold)

408

461


431

Sustaining capital cost (per ounce sold) 7

259

203


234

All-in sustaining cost (per ounce sold)8

707

702


705

 

A. 
Operational performance

During the year ended December 31, 2016, 183,707 tonnes of ore were extracted from the underground mine including the extraction of nine stoping panels. Mining extraction was considered effective, with clean hanging wall contacts observed.

During the reporting period, a full gold reconciliation for the project-to-date at the 55 Zone was completed. Overall, the reconciliation comparing actual results to the Technical Report model shows global accuracy. The reconciled gold contained in ore mined to date is within 3.6% of the Technical Report model prediction of the contained gold in those corresponding areas mined to date due to higher grades encountered.

As of December 31, 2016, in the underground operation, six sublevels were fully developed throughout the eastern, central and western extents of the resource with 6,739 metres of development completed during 2016.  The Company took advantage of higher than planned productivity rates from the underground mining contractor to conduct additional mine development. As a result, the Company is significantly ahead of the initial mine plan and is, as such, benefiting from additional flexibility.

The processing facility ran with an average operating time of 93.3% and excellent metallurgical performance. Accordingly, in 2016, 162,480 tonnes of ore were processed for an average throughput of 664 tonnes per day (143,855 for the seven month period ended December 31, 2016). The 2016 average recovery to date has been 98.6% and the gravity circuit contribution to the overall recovery was 58.5%.

Based on the foregoing, 77,157 ounces of gold were poured during the twelve-month period ended December 31, 2016.

B.  
Health and safety performance

Health and Safety is a fundamental value for Roxgold and is a constant priority at the Yaramoko gold mine. The team at the Yaramoko gold mine exhibit their commitment to safety daily through their activities with toolbox meetings, departmental reviews and frequent task safety analyses.

With the project being put into production in 2016, the Company’s Operational Health and Safety Management systems have been effectively implemented and are now operating smoothly with a continuous improvement and review program in place.

With steady state operations now in place, the focus has been on establishing a strong reporting culture that encourages proactive identification of risk and therefore swift rectification of hazards and sub-par operating practices. Similarly, to support the development of the workforce, training has been a focus in 2016. Health and Safety courses for all employees, Emergency Response Training and emergency preparedness training have been modules delivered while external audits of our business partners have also been completed.

These values and actions resulted in a solid safety performance observed in 2016. During the year ended December 31, 2016, the Lost Time Injury Frequency Rate observed was 0.09 (LTI’s per 200,000 hours worked). To date in 2017, the rate is 0.00 and, in February 2017, the Company achieved the significant milestone of 2,000,000 hours LTI free. In addition, malaria prevention, a strong focus for the Company in 2016, has resulted in a reduction of 50% in malaria incidence rates as compared to 2015.

C.  
Financial performance

Based on the Company’s accounting policy (refer to note 2 of the Financial Statements), commercial production was declared on October 1, 2016 as the Yaramoko gold mine had reached the intended levels of operating capacity as of September 30, 2016. Accordingly, pre-commercial production revenue totalling $56,625,000 has been offset against capitalized mine operating costs, totalling $14,728,000, and other capitalized costs, including previously capitalized development costs, on the statement of financial position. 

During the four-month pre-commercial production period ended September 30, 2016, a total of 42,844 ounces of gold were sold resulting in pre-commercial production revenues of $56.6 million (at an average realized gold price of $1,322 per ounce sold). This amount was recorded to Mineral properties under development within property, plant and equipment (“PP&E”).  From the declaration of commercial production on October 1, 2016 to December 31, 2016, 34,271 ounces of gold were sold at an average realized gold price of $1,208 per ounce for gold sales revenue totalling $41.4 million. Accordingly, the Yaramoko gold mine generated $98 million of pre-commercial and operational revenue during the seven months in which it was it was in operation during 2016.

Mine operating expenses represent mining, processing, and mine site-related general and administrative expenses. Cash operating cost1 per tonne processed totalled $196 per tonne, which is slightly higher than the $182 per tonne processed cost included in the Technical Report for the first year of commercial production.  The higher cost per tonne processed is mainly due to higher operational costs typically associated with a ramp-up period and as a result of higher energy costs as the high voltage (“HV”) power line was put in operation solely during the first quarter of 2017. The cash operating cost5 per ounce produced totaled $375 per ounce, for the seven-month period ended December 31, 2016 compared to the life-of-mine cash operating cost5 per ounce produced of $402 per ounce included in the Technical Report. The lower cash operating cost5 per ounce is the result of higher grade and lower reagent consumption, offset by higher energy costs when compared to the Technical Report’s assumptions.

In Burkina Faso, all gold shipments with gold spot prices lower or equal to $1,000 per ounce are subject to a royalty rate of 3% while a 4% rate is applied to all shipments with gold spot prices between $1,000 and $1,300 per ounce, and a 5% royalty rate is applied to all shipments with a gold spot price greater than $1,300 per ounce. During the seven-month period ended December 31, 2016, the Company was subject to a royalty rate of 4% and 5%, which was calculated using the market value of gold ounces sold at the time of shipment.

The depreciation expenses relate solely to the three-months of commercial production as the depreciation expenses during the pre-commercial production period were capitalized within other development costs.

During the year ended December 31, 2016, Roxgold developed six sublevels and invested $18.1 million in underground mine development since the Yaramoko gold mine commenced pre-commercial production operations, representing a sustaining capital cost2 per ounce sold of $234 per ounce compared to the life-of-mine average cost of $101 per ounce included in the Technical Report. It was expected that there would be a higher sustaining capital cost7 per ounce as the Technical Report anticipated that the underground mine development would be completed in the first 48 months of the 8-year mine life and then decrease thereafter. Accordingly, the average sustaining capital cost2 per ounce sold for the first four years was estimated to be $176 per ounce sold. Another factor influencing the sustaining capital cost2 per ounce is the underground development progress to the end of the third quarter of 2016 representing 113% of the anticipated mine development for the same period. The investment in the additional metres of development was made to provide for greater operational flexibility and resilience as well as the opportunity to benefit from the high availabilities of the mill.

Based on the foregoing, the Company generated cash flow from operations4 totalling $59,106,000 from the first gold pour until December 31, 2016, at an all-in sustaining cost8 of $705 per ounce sold for the same period.

4.   
Corporate social responsibilities activities (“CSR”)

A.   
2016
highlights

Roxgold has developed a participative approach to its community investment programs in the communities surrounding the Yaramoko gold mine. Key areas of activity have included infrastructure development and capacity building with local education and healthcare a prime focus, along with socio-economic development to enhance local procurement and employment opportunities.

A number of projects were initiated over the course of 2016, all of which originated from the local community, with a particular emphasis on education, water supply, women’s entrepreneurship, assistance for the physically disabled and health. Specific undertakings included:

  • Solar electrification of three health centers in the district;
  • Solar electrification of three schools;
  • Public road upgrades;
  • Rehabilitation of 20 boreholes for community water access;
  • Training and equipment for a women’s leather working enterprise;
  • Animal husbandry training and assistance for local women’s groups; and
  • Support for a new soap production enterprise.

These projects are estimated to have directly and indirectly impacted approximately 10,000 people.

In addition, during 2016, the Company hosted a workshop led by IFC, one of Roxgold’s largest shareholders, on local procurement which was attended by Roxgold’s senior staff and a number of suppliers and contractors.

On August 17, 2016, the Company was awarded the “Prix Responsabilité Sociale des Entreprises minières 2016” or “2016 CSR Award of Mining Companies” by Redevabilité in Burkina Faso. This civil society group is comprised of multiple groups, including:

  • The Africa Youth Network (RAJ)
  • The Centre for Research and Intervention in Gender and Development (CRIGED)
  • The Centre for Citizens’ Monitoring and Analysis of Public Policy (CDCAP)
  • Partners of the Economic and Social Justice Program NGO DIAKONIA.

B.   
2017 CSR program

The CSR focus for Roxgold in the upcoming year will continually maximize the creation of local opportunities for benefit-sharing and involvement in the Project, especially through employment and procurement within the immediate Project area.

In collaboration with local stakeholders and a micro-credit institution, the Company also intends to foster small and medium enterprise development and improvement, with the expectation of stimulating the local economy and enhancing local procurement opportunities for community suppliers.

In addition, the Company will continue its participative approach to project generation with the local communities and is actively working through the 2017 list of community initiated programs.

5.   
Events subsequent to December 31, 2016

In early January 2017, the Yaramoko gold mine was deemed to have successfully passed the lenders’ completion test, which encompasses a number of key performance and financial metrics including reserve grade reconciliation, plant throughput, metal recoveries and operating costs. As a result of passing the completion test, the $15 million cost overrun facility required under the $75 million credit facility (the “Initial Facility”) has been released.

In addition, the Company made an early repayment of $15 million under the Initial Facility of $75 million and amended its Initial Facility to a $60 million credit facility (the “Amended Facility”), amortizing on a quarterly basis, maturing in June 2021 at an interest rate of LIBOR plus 3.75% which represents a reduction of 1.00% from the current prevailing rate. The Amended Facility is no longer subject to a semi-annual mandatory cash sweep and reduces restrictions on the timing and usage of cash flow generated from the Yaramoko gold mine. The first $15 million tranche of the Amended Facility has also been arranged as a revolving credit facility to provide further financial flexibility.

On January 19, 2017, the Company granted senior management and executives’ incentive stock options to purchase up to an aggregate of 2,062,500 common shares, exercisable on or before January 19, 2022 at an exercise price of $1.50. The Company also granted 646,667 Restricted Share Units to employees and 825,000 Performance Share Units to senior management and executives, all of which are subject to certain vesting conditions.


1

The Company considers that pre-commercial production operations at the Yaramoko gold mine commenced in June 2016 as the construction of the processing plant and associated was completed.  


2

First gold pour was on May 16, 2016, during commission of the processing plant, which resulted in production of 2,079 ounces in May 2016, which are not presented in the table above. 


3

During the four month pre-commercial production period, gold sales and mine operating profit (excluding depreciation) were recognized as a reduction of Property, Plant and Equipment as commercial production had not yet been declared.


4

Cash flow from mining operations and cash flow per share are non-IFRS financial performance measures with no standard definition under IFRS. See the “Non-IFRS financial performance measures” note of the Company’s MD&A, available on SEDAR at www.sedar.com.


5

Cash operating cost is a non-IFRS measure with no standard definition under IFRS and is calculated using ounces produced and tonnes processed. See the “Non-IFRS financial performance measures” note of the Company’s MD&A.


6

Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mine operating expenses and the government royalties per ounce sold. See the “Non-IFRS financial performance measures” note of the Company’s MD&A.


7

Sustaining capital cost per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the investment in underground development per ounce sold. See the “Non-IFRS financial performance measures” note of the Company’s MD&A.


8

All-in sustaining cost is a non-IFRS financial performance measure with no standard definition under IFRS.  See the “Non-IFRS financial performance measures” note of the Company’s MD&A.

 

Qualified Persons

Paul Criddle, FAUSIMM, Chief Operating Officer for Roxgold Inc., a Qualified Person within the meaning of National Instrument 43-101, has verified and approved the technical disclosure contained in this press release.

About Roxgold

Roxgold is a gold mining company with its key asset, the high grade Yaramoko Gold Mine, located in the Houndé greenstone region of Burkina Faso, West Africa. Roxgold trades on the TSX under the symbol ROXG and as part of the Nasdaq International Designation program with the symbol OTC: ROGFF.

These statements are based on information currently available to the Company and the Company provides no assurance that actual results will meet management’s expectations. In certain cases, forward-looking information may be identified by such terms as “anticipates”, “believes”, “could”, “estimates”, “expects”, “may”, “shall”, “will”, or “would”. Forward-looking information contained in this news release is based on certain factors and assumptions regarding, among other things, the estimation of mineral resources and mineral reserves, the realization of resource estimates and reserve estimates, gold metal prices, the timing and amount of future exploration and development expenditures, the estimation of initial and sustaining capital requirements, the estimation of labour and operating costs, the availability of necessary financing and materials to continue to explore and develop the Yaramoko Gold Project in the short and long-term, the progress of exploration and development activities, the receipt of necessary regulatory approvals, including the approval of the TSX Venture Exchange for the balance of the AUMS Mining Contract Option, and assumptions with respect to currency fluctuations, environmental risks, title disputes or claims, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include: changes in market conditions, unsuccessful exploration results, changes in the price of gold, unanticipated changes in key management personnel and general economic conditions. Mining exploration and development is an inherently risky business. Accordingly, actual events may differ materially from those projected in the forward-looking statements. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company’s forward-looking statements. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.


NON-IFRS PERFORMANCE MEASURES

The Company provides some non-IFRS measures as supplementary information that management believes may be useful to investors to explain the Company’s financial results. Please refer to note 19 “Non-IFRS financial performance measures” of the Company’s MD&A dated April 18, 2017, available on SEDAR at

www.sedar.com

for reconciliation of these measures.   

SOURCE Roxgold Inc.

View original content: http://www.newswire.ca/en/releases/archive/April2017/18/c7609.html

Roxgold Reports First Quarter 2017 Operating Results and 2016 Financial Results

Roxgold Reports First Quarter 2017 Operating Results and 2016 Financial Results

PR Newswire

TORONTO, April 18, 2017 /PRNewswire/ – Roxgold Inc. (“Roxgold” or the “Company”) (TSX: ROXG) is pleased to announce its production results for the first quarter of 2017 along with the 2016 year-end financial results.

An Investor Day will be held by the Company, tomorrow, April 19, 2017 at 9:00AM ET which will be available via a webcast in the Events section of the corporate website.

“Roxgold has delivered strong operating and financial metrics over the course of 2016 and the first quarter of 2017,” commented John Dorward, Roxgold President and CEO. “Looking to the future, Roxgold is well positioned financially to pursue organic growth at our key Bagassi South development project as well as deliver on an extensive regional exploration program over the balance of this year and beyond.”

Highlights:

For the three month period ended March 31, 2017, the Company:

  • Achieved two million hours with no lost time injuries;
  • Produced 35,594 ounces and sold 34,930 ounces for the quarter;
  • Connected to the Burkina Faso high voltage grid on February 1, 2017 with 99% availability; and
  • Held cash as at March 31, 2017 of approximately $53 million subsequent to a total of $18.5 million of debt principal repayments.

For the 12-month period ended December 31, 2016, the Company:

  • Achieved 1,800,000 hours free of lost time injuries (“LTI”) in December
  • Completed construction of the Yaramoko gold mine 1.5 months ahead of schedule and approximately 3% below the capital cost estimate;
  • Sold 77,115 ounces of gold totalling revenues of $98,010,000 since first gold pour in May 2016;
  • Incurred a cash operating cost5 of $375 per ounce produced for a total cash cost6 of $431 per ounce sold and an all-in sustaining cost8 of $705 per ounce sold, including additional investment to advance underground development ahead of the initial mine plan;
  • Generated cash flow from mining operations4 totalling $59,106,000 for cash flow per share4 of $0.16 (C$0.21/share);
  • Mined 183,707 tonnes of ore for the period March 1 to December 31, 2016 (133,601 for the seven month period ended December 31, 2016);
  • Closed a C$23 million bought deal financing;
  • Received $9 million from the early exercise of all outstanding warrants, held by International Finance Corporation (“IFC”);
  • Declared commercial production on October 1, 2016;
  • Received the “Prix Responsabilité Sociale des Entreprises minières 2016” or “2016 CSR Award of Mining Companies” by Redevabilité in Burkina Faso.

1.   
Operating highlights for the three-month period ended March 31, 2017

During the three-month period ended March 31, 2017, the Yaramoko gold mine continued to operate in line with expectations. Operations are now in their third full quarter and exhibiting good adherence to plan. During the period, the Yaramoko gold mine achieved a significant milestone in reaching two million hours worked without a Lost Time Injury. Roxgold feels that this is indicative of the maturity and stability that has been established at the Yaramoko gold mine in the year since commencing operations.

In the period, the Yaramoko gold mine produced 35,594 ounces and sold 34,930 ounces of gold. This was in line with expectations of a relatively strong first quarter.

The mine produced 69,237 tonnes of ore at 14.74 g/t Au with 1,740 metres of development completed. With two stoping areas operating at quarter end, the mine remains well established to continue to deliver consistent production. The plant processed 63,955 tonnes at an average head grade of 17.16 g/t Au. Plant availability was 94% and overall recovery was 99.2% during the quarter.

During the period, the Yaramoko gold mine was connected to the Burkina Faso High Voltage (“HV”) national power grid. Connection took place as scheduled on February 1, 2017, and has subsequently enjoyed grid availabilities of 99%. The HV supply is utilised across the property and will be a significant driver in reducing operating costs at the Yaramoko gold mine. Roxgold is very pleased with the proactive partnership it enjoys with the national power provider, SONABEL, and thanks them for their ongoing support.

2.   
2016 goals and achievements

In 2016, the Company’s main operational focus was to pour gold during the second quarter and achieve commercial production during the year.  To pursue organic growth, the Company also expected to complete a maiden Mineral Resource for the Bagassi South deposit and to provide an updated 55 Zone Mineral Resource based on the completion of additional drilling.

Roxgold exceeded its first objective as the construction of the Yaramoko gold mine was effectively completed during the second quarter of 2016, with the exception of the installation of the HV power line. The final Yaramoko gold mine capital cost totalled $107 million, which is 3% below the Company’s capital cost estimate for the project of $110.8 million. The HV line was completed in early February 2017 and is currently providing power to the processing and underground facilities as expected.

The Company met its second objective when it transitioned from developer to producer by declaring commercial production as of October 1, 2016. During the four month pre-commercial production period and the three months of operations since declaring commercial production, the Company produced 77,157 ounces of gold at an average mill feed of 15.5 gpt. Since the first gold pour, the Company generated cash flow from mining operations4 totalling $59,106,000 contributing to the cash on hand position of $68,902,000 as at December 31, 2016.

The Company’s organic growth objectives were also achieved during the year. In April 2016, the Company announced the completion of a maiden resource for the QV1 and QV’ structures at Bagassi South located 1.8 kilometres south of the 55 Zone.   The results of the 55 Zone deep drilling program completed during the fourth quarter of 2016, which intersected 20.1 gpt over 23.8 metres at a vertical depth of 960 metres, support the Mineral Resource update included under the Reserves and Resources section of the Company’s Management Discussion and Analysis (“MD&A”) for the year ended December 31, 2016.

Unfortunately, one lost time injury was recorded during the period.  Since this occurrence, there have been 1,800,000 LTI free hours worked to December 31, 2016 and 2,000,000 LTI free hours were surpassed in early 2017.

3.   
2016 performance

The Company considers that pre-commercial production operations at the Yaramoko gold mine commenced in June 2016 as the construction of the processing plant and associated infrastructure was completed, the contractual performance test associated with the engineering, procurement, and construction (“EPC”) lump sum contract with the DRA/Group Five Joint Venture was passed and a first gold shipment was exported and refined. Ramp-up of pre-commercial production continued during the third quarter ended September 30, 2016 leading to the declaration of commercial production on October 1, 2016. 


Pre-commercial
production Four
months ended
September 30,
20161


Commercial
production Three
months ended
December 31,
2016


TOTAL



seven months
ended




December 31,
2016


Operating Data

Ore mined (tonnes)

61,040

72,561


133,601

Ore processed (tonnes)

82,590

61,265


143,855

Head grade (g/t)

16.4

15.45


16.0

Recovery (%)

98.4

98.9


98.5

Gold ounces produced2

45,390

29,688


75,078

Gold ounces sold

42,844

34,271


77,115


Financial Data (in thousands of dollars)

Revenues – Gold sales3

56,625

41,385


98,010

Mining operating expenses

14,728

14,127


28,855

Government royalties

2,730

1,685


4,415

Depreciation and depletion

4,080


4,080

Net loss attributable to shareholders

N/A

N/A


(2,511)

Basic and diluted earnings per share

N/A

N/A


(0.01)

Cash flow from mining operations4

35,936

23,170


59,106

Per share4

0.10

0.06


0.16

Cash on hand end of period

60,552

68,902


68,902

Total assets

198,885

217,670


217,670


Statistics (in dollars)

Average realized selling price (per ounce)

1,322

1,208


1,271

Cash operating cost (per ounce produced)

350

414


375

Cash operating cost (per tonne processed)5

192

201


196

Total cash cost (per ounce sold)

408

461


431

Sustaining capital cost (per ounce sold) 7

259

203


234

All-in sustaining cost (per ounce sold)8

707

702


705

 

A. 
Operational performance

During the year ended December 31, 2016, 183,707 tonnes of ore were extracted from the underground mine including the extraction of nine stoping panels. Mining extraction was considered effective, with clean hanging wall contacts observed.

During the reporting period, a full gold reconciliation for the project-to-date at the 55 Zone was completed. Overall, the reconciliation comparing actual results to the Technical Report model shows global accuracy. The reconciled gold contained in ore mined to date is within 3.6% of the Technical Report model prediction of the contained gold in those corresponding areas mined to date due to higher grades encountered.

As of December 31, 2016, in the underground operation, six sublevels were fully developed throughout the eastern, central and western extents of the resource with 6,739 metres of development completed during 2016.  The Company took advantage of higher than planned productivity rates from the underground mining contractor to conduct additional mine development. As a result, the Company is significantly ahead of the initial mine plan and is, as such, benefiting from additional flexibility.

The processing facility ran with an average operating time of 93.3% and excellent metallurgical performance. Accordingly, in 2016, 162,480 tonnes of ore were processed for an average throughput of 664 tonnes per day (143,855 for the seven month period ended December 31, 2016). The 2016 average recovery to date has been 98.6% and the gravity circuit contribution to the overall recovery was 58.5%.

Based on the foregoing, 77,157 ounces of gold were poured during the twelve-month period ended December 31, 2016.

B.  
Health and safety performance

Health and Safety is a fundamental value for Roxgold and is a constant priority at the Yaramoko gold mine. The team at the Yaramoko gold mine exhibit their commitment to safety daily through their activities with toolbox meetings, departmental reviews and frequent task safety analyses.

With the project being put into production in 2016, the Company’s Operational Health and Safety Management systems have been effectively implemented and are now operating smoothly with a continuous improvement and review program in place.

With steady state operations now in place, the focus has been on establishing a strong reporting culture that encourages proactive identification of risk and therefore swift rectification of hazards and sub-par operating practices. Similarly, to support the development of the workforce, training has been a focus in 2016. Health and Safety courses for all employees, Emergency Response Training and emergency preparedness training have been modules delivered while external audits of our business partners have also been completed.

These values and actions resulted in a solid safety performance observed in 2016. During the year ended December 31, 2016, the Lost Time Injury Frequency Rate observed was 0.09 (LTI’s per 200,000 hours worked). To date in 2017, the rate is 0.00 and, in February 2017, the Company achieved the significant milestone of 2,000,000 hours LTI free. In addition, malaria prevention, a strong focus for the Company in 2016, has resulted in a reduction of 50% in malaria incidence rates as compared to 2015.

C.  
Financial performance

Based on the Company’s accounting policy (refer to note 2 of the Financial Statements), commercial production was declared on October 1, 2016 as the Yaramoko gold mine had reached the intended levels of operating capacity as of September 30, 2016. Accordingly, pre-commercial production revenue totalling $56,625,000 has been offset against capitalized mine operating costs, totalling $14,728,000, and other capitalized costs, including previously capitalized development costs, on the statement of financial position. 

During the four-month pre-commercial production period ended September 30, 2016, a total of 42,844 ounces of gold were sold resulting in pre-commercial production revenues of $56.6 million (at an average realized gold price of $1,322 per ounce sold). This amount was recorded to Mineral properties under development within property, plant and equipment (“PP&E”).  From the declaration of commercial production on October 1, 2016 to December 31, 2016, 34,271 ounces of gold were sold at an average realized gold price of $1,208 per ounce for gold sales revenue totalling $41.4 million. Accordingly, the Yaramoko gold mine generated $98 million of pre-commercial and operational revenue during the seven months in which it was it was in operation during 2016.

Mine operating expenses represent mining, processing, and mine site-related general and administrative expenses. Cash operating cost1 per tonne processed totalled $196 per tonne, which is slightly higher than the $182 per tonne processed cost included in the Technical Report for the first year of commercial production.  The higher cost per tonne processed is mainly due to higher operational costs typically associated with a ramp-up period and as a result of higher energy costs as the high voltage (“HV”) power line was put in operation solely during the first quarter of 2017. The cash operating cost5 per ounce produced totaled $375 per ounce, for the seven-month period ended December 31, 2016 compared to the life-of-mine cash operating cost5 per ounce produced of $402 per ounce included in the Technical Report. The lower cash operating cost5 per ounce is the result of higher grade and lower reagent consumption, offset by higher energy costs when compared to the Technical Report’s assumptions.

In Burkina Faso, all gold shipments with gold spot prices lower or equal to $1,000 per ounce are subject to a royalty rate of 3% while a 4% rate is applied to all shipments with gold spot prices between $1,000 and $1,300 per ounce, and a 5% royalty rate is applied to all shipments with a gold spot price greater than $1,300 per ounce. During the seven-month period ended December 31, 2016, the Company was subject to a royalty rate of 4% and 5%, which was calculated using the market value of gold ounces sold at the time of shipment.

The depreciation expenses relate solely to the three-months of commercial production as the depreciation expenses during the pre-commercial production period were capitalized within other development costs.

During the year ended December 31, 2016, Roxgold developed six sublevels and invested $18.1 million in underground mine development since the Yaramoko gold mine commenced pre-commercial production operations, representing a sustaining capital cost2 per ounce sold of $234 per ounce compared to the life-of-mine average cost of $101 per ounce included in the Technical Report. It was expected that there would be a higher sustaining capital cost7 per ounce as the Technical Report anticipated that the underground mine development would be completed in the first 48 months of the 8-year mine life and then decrease thereafter. Accordingly, the average sustaining capital cost2 per ounce sold for the first four years was estimated to be $176 per ounce sold. Another factor influencing the sustaining capital cost2 per ounce is the underground development progress to the end of the third quarter of 2016 representing 113% of the anticipated mine development for the same period. The investment in the additional metres of development was made to provide for greater operational flexibility and resilience as well as the opportunity to benefit from the high availabilities of the mill.

Based on the foregoing, the Company generated cash flow from operations4 totalling $59,106,000 from the first gold pour until December 31, 2016, at an all-in sustaining cost8 of $705 per ounce sold for the same period.

4.   
Corporate social responsibilities activities (“CSR”)

A.   
2016
highlights

Roxgold has developed a participative approach to its community investment programs in the communities surrounding the Yaramoko gold mine. Key areas of activity have included infrastructure development and capacity building with local education and healthcare a prime focus, along with socio-economic development to enhance local procurement and employment opportunities.

A number of projects were initiated over the course of 2016, all of which originated from the local community, with a particular emphasis on education, water supply, women’s entrepreneurship, assistance for the physically disabled and health. Specific undertakings included:

  • Solar electrification of three health centers in the district;
  • Solar electrification of three schools;
  • Public road upgrades;
  • Rehabilitation of 20 boreholes for community water access;
  • Training and equipment for a women’s leather working enterprise;
  • Animal husbandry training and assistance for local women’s groups; and
  • Support for a new soap production enterprise.

These projects are estimated to have directly and indirectly impacted approximately 10,000 people.

In addition, during 2016, the Company hosted a workshop led by IFC, one of Roxgold’s largest shareholders, on local procurement which was attended by Roxgold’s senior staff and a number of suppliers and contractors.

On August 17, 2016, the Company was awarded the “Prix Responsabilité Sociale des Entreprises minières 2016” or “2016 CSR Award of Mining Companies” by Redevabilité in Burkina Faso. This civil society group is comprised of multiple groups, including:

  • The Africa Youth Network (RAJ)
  • The Centre for Research and Intervention in Gender and Development (CRIGED)
  • The Centre for Citizens’ Monitoring and Analysis of Public Policy (CDCAP)
  • Partners of the Economic and Social Justice Program NGO DIAKONIA.

B.   
2017 CSR program

The CSR focus for Roxgold in the upcoming year will continually maximize the creation of local opportunities for benefit-sharing and involvement in the Project, especially through employment and procurement within the immediate Project area.

In collaboration with local stakeholders and a micro-credit institution, the Company also intends to foster small and medium enterprise development and improvement, with the expectation of stimulating the local economy and enhancing local procurement opportunities for community suppliers.

In addition, the Company will continue its participative approach to project generation with the local communities and is actively working through the 2017 list of community initiated programs.

5.   
Events subsequent to December 31, 2016

In early January 2017, the Yaramoko gold mine was deemed to have successfully passed the lenders’ completion test, which encompasses a number of key performance and financial metrics including reserve grade reconciliation, plant throughput, metal recoveries and operating costs. As a result of passing the completion test, the $15 million cost overrun facility required under the $75 million credit facility (the “Initial Facility”) has been released.

In addition, the Company made an early repayment of $15 million under the Initial Facility of $75 million and amended its Initial Facility to a $60 million credit facility (the “Amended Facility”), amortizing on a quarterly basis, maturing in June 2021 at an interest rate of LIBOR plus 3.75% which represents a reduction of 1.00% from the current prevailing rate. The Amended Facility is no longer subject to a semi-annual mandatory cash sweep and reduces restrictions on the timing and usage of cash flow generated from the Yaramoko gold mine. The first $15 million tranche of the Amended Facility has also been arranged as a revolving credit facility to provide further financial flexibility.

On January 19, 2017, the Company granted senior management and executives’ incentive stock options to purchase up to an aggregate of 2,062,500 common shares, exercisable on or before January 19, 2022 at an exercise price of $1.50. The Company also granted 646,667 Restricted Share Units to employees and 825,000 Performance Share Units to senior management and executives, all of which are subject to certain vesting conditions.


1

The Company considers that pre-commercial production operations at the Yaramoko gold mine commenced in June 2016 as the construction of the processing plant and associated was completed.  


2

First gold pour was on May 16, 2016, during commission of the processing plant, which resulted in production of 2,079 ounces in May 2016, which are not presented in the table above. 


3

During the four month pre-commercial production period, gold sales and mine operating profit (excluding depreciation) were recognized as a reduction of Property, Plant and Equipment as commercial production had not yet been declared.


4

Cash flow from mining operations and cash flow per share are non-IFRS financial performance measures with no standard definition under IFRS. See the “Non-IFRS financial performance measures” note of the Company’s MD&A, available on SEDAR at www.sedar.com.


5

Cash operating cost is a non-IFRS measure with no standard definition under IFRS and is calculated using ounces produced and tonnes processed. See the “Non-IFRS financial performance measures” note of the Company’s MD&A.


6

Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mine operating expenses and the government royalties per ounce sold. See the “Non-IFRS financial performance measures” note of the Company’s MD&A.


7

Sustaining capital cost per ounce sold is a non-IFRS financial performance measure with no standard definition under IFRS and represents the investment in underground development per ounce sold. See the “Non-IFRS financial performance measures” note of the Company’s MD&A.


8

All-in sustaining cost is a non-IFRS financial performance measure with no standard definition under IFRS.  See the “Non-IFRS financial performance measures” note of the Company’s MD&A.

 

Qualified Persons

Paul Criddle, FAUSIMM, Chief Operating Officer for Roxgold Inc., a Qualified Person within the meaning of National Instrument 43-101, has verified and approved the technical disclosure contained in this press release.

About Roxgold

Roxgold is a gold mining company with its key asset, the high grade Yaramoko Gold Mine, located in the Houndé greenstone region of Burkina Faso, West Africa. Roxgold trades on the TSX under the symbol ROXG and as part of the Nasdaq International Designation program with the symbol OTC: ROGFF.

These statements are based on information currently available to the Company and the Company provides no assurance that actual results will meet management’s expectations. In certain cases, forward-looking information may be identified by such terms as “anticipates”, “believes”, “could”, “estimates”, “expects”, “may”, “shall”, “will”, or “would”. Forward-looking information contained in this news release is based on certain factors and assumptions regarding, among other things, the estimation of mineral resources and mineral reserves, the realization of resource estimates and reserve estimates, gold metal prices, the timing and amount of future exploration and development expenditures, the estimation of initial and sustaining capital requirements, the estimation of labour and operating costs, the availability of necessary financing and materials to continue to explore and develop the Yaramoko Gold Project in the short and long-term, the progress of exploration and development activities, the receipt of necessary regulatory approvals, including the approval of the TSX Venture Exchange for the balance of the AUMS Mining Contract Option, and assumptions with respect to currency fluctuations, environmental risks, title disputes or claims, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include: changes in market conditions, unsuccessful exploration results, changes in the price of gold, unanticipated changes in key management personnel and general economic conditions. Mining exploration and development is an inherently risky business. Accordingly, actual events may differ materially from those projected in the forward-looking statements. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company’s forward-looking statements. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.


NON-IFRS PERFORMANCE MEASURES

The Company provides some non-IFRS measures as supplementary information that management believes may be useful to investors to explain the Company’s financial results. Please refer to note 19 “Non-IFRS financial performance measures” of the Company’s MD&A dated April 18, 2017, available on SEDAR at

www.sedar.com

for reconciliation of these measures.   

SOURCE Roxgold Inc.