Q3 2022 Highlights
- Revenue of $28.0 million from the sale of 12,426 ounces of gold from the Company’s Beatons Creek gold project (the ” Beatons Creek Project “) in Q3 2022 at an average realized price 1 of $2,255 / A$2,528 / US$1,728 per ounce of gold, and revenue of $89.5 million from the sale of 38,168 ounces of gold in YTD 2022 at an average realized price 1 of $2,347 / A$2,588 / US$1,830 per ounce of gold
- Debt free, with cash and cash equivalents of $65.3 million as at September 30, 2022
- Aggregate investment portfolio balance of $20.6 million 2 , which includes Novo’s holdings in ASX-listed joint venture partners GBM Resources Limited and Kalamazoo Resources Limited, as well as holdings in unlisted companies include Elementum 3D, Inc. (” E3D “)
- Sale of remaining 6.75 million shares of New Found Gold Corp. (TSXV:NFG) completed on August 5, 2022 at $8.45 per share for gross proceeds of $57.0 million (” Tranche 2 “). Gross proceeds from the sale of Novo’s 15 million New Found shares were $125.9 million (” New Found Transaction “) 3
- Repayment of the Company’s senior secured US$40 million credit facility (” Credit Facility “) with Sprott Resource Lending Corp. (” Sprott “) on August 12, 2022 without prepayment penalties 4 , resulting in the Company being debt free
- Continuing focus on high-priority exploration targets, with exploration spend of $8.2 million in Q3 2022 and $23.6 million in YTD 2022
- Recognition of a non-cash impairment charge of $48.3 million in Q3 2022 against the Beatons Creek Project due to uncertainty regarding the timing of the receipt of the Fresh mining approvals and results of the updated Mineral Resource estimate which affect its current economic status 5
- Completion of the operational wind-down at the Beatons Creek Project and the Golden Eagle processing facility (” Golden Eagle Plant “) and transition to care and maintenance 5 , with mining of the Oxide mineral resource completed in August 2022 and processing completed in September 2022
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Financial Highlights
In thousands of CAD, | For the three months ended | For the nine months ended | |||||||
except where noted | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||
Gold sold | Oz Au | 12,426 | 18,753 | 38,168 | 36,209 | ||||
Average realized price 1 | $/oz | 2,255 | 2,295 | 2,347 | 2,278 | ||||
Average realized price 1 | AUD$/oz | 2,528 | 2,480 | 2,588 | 2,398 | ||||
Average realized price 1 | USD$/oz | 1,728 | 1,822 | 1,830 | 1,820 | ||||
Total revenue | $ | 27,987 | 42,964 | 89,547 | 82,386 | ||||
Cost of goods sold | $ | (32,261 | ) | (33,577 | ) | (112,161 | ) | (72,999 | ) |
General and exploration expenditure | $ | (11,378 | ) | (9,964 | ) | (34,319 | ) | (15,213 | ) |
Impairment of non-current assets | $ | (48,255 | ) | – | (48,255 | ) | – | ||
Other income, net | $ | 4,067 | 87,688 | 23,021 | 88,694 | ||||
Finance items | $ | (873 | ) | (2,777 | ) | (8,093 | ) | (13,940 | ) |
Income tax expense | $ | 1,602 | (7,884 | ) | (596 | ) | (7,884 | ) | |
Net loss for the period after tax | $ | (59,111 | ) | 76,450 | (90,856 | ) | 61,044 | ||
Basic and diluted loss per common share | $/share | (0.24 | ) | 0.31 | (0.37 | ) | 0.26 | ||
EBITDA 1 | $ | (52,049 | ) | 91,402 | (58,653 | ) | 93,789 | ||
Adjusted EBITDA 1 | $ | (7,861 | ) | 3,714 | (33,419 | ) | 5,095 | ||
Adjusted earnings 1 | $ | (16,525 | ) | (3,194 | ) | (65,026 | ) | (34,355 | ) |
Adjusted earnings per common share 1 | $/share | (0.07 | ) | (0.01 | ) | (0.26 | ) | (0.14 | ) |
Total cash costs 1 | $/oz | 2,224 | 1,558 | 2,288 | 1,710 | ||||
Total cash costs 1 | AUD$/oz | 2,494 | 1,683 | 2,522 | 1,800 | ||||
Total cash costs 1 | USD$/oz | 1,704 | 1,236 | 1,784 | 1,367 | ||||
AISC 1 | $/oz | 2,991 | 2,034 | 2,955 | 2,457 | ||||
AISC 1 | AUD$/oz | 3,353 | 2,198 | 3,257 | 2,587 | ||||
AISC 1 | USD$/oz | 2,292 | 1,615 | 2,303 | 1,963 |
Novo generated revenue of $28.0 million in Q3 2022 from the sale of 12,426 ounces of gold at an average realized price 1 of $2,255 / A$2,528 / US$1,728 per ounce of gold, and $89.5 million in YTD 2022 from the sale of 38,168 ounces of gold at an average realized price 1 of $2,347 / A$2,588 / US$1,830 per ounce of gold.
405,071 tonnes of mineralized material were processed through the Golden Eagle Plant in Q3 2022 equating to an annual processing rate of approximately 1.6 million tonnes per annum, and 1,198,283 tonnes of mineralized material were processed in YTD 2022 prior to completion of processing in September 2022.
Processed material had an average head grade of 1.03 g/t Au with average recovery of 90.74% resulting in 13,137 ounces of gold produced in Q3 2022, and an average head grade of 1.07 g/t Au with average recovery of 91.98% resulting in 39,125 ounces of gold produced 6 in YTD 2022.
The Company generated a net loss of $(59.1) million or $(0.24) per share in Q3 2022 and a net loss of $(90.9) million or $(0.37) per share in YTD 2022.
Adjusted losses 1 were $(16.5) million or $(0.07) per share in Q3 2022 and $(65.0) million or $(0.26) per share in YTD 2022. Adjustments to net losses for the period include non-operational income, non-cash foreign exchange gains, non-cash gains resulting from the movement in the fair value of certain marketable securities, and the impairment loss incurred in Q3 2022.
The Company recognized a non-cash impairment expense of $48.3 million related to the Company’s Beatons Creek Project in Q3 2022 due to uncertainty regarding the timing of the receipt of the Fresh mining approvals and results of the updated Mineral Resource estimate on the Beatons Creek Project which affect its current economic status 5 . The carrying value of the assets which comprise the Beatons Creek Project cash generating unit have now been written down to their recoverable value.
The Company is committed to aggressively advancing its highly prospective exploration portfolio and devoted
$23.6 million to such efforts in YTD 2022.
Financial Position
In thousands of CAD, | September 30, 2022 | December 31, 2021 | December 31, 2020 | January 31, 2020 |
except where noted | $’000 | $’000 | $’000 | $’000 |
Cash | 65,153 | 32,345 | 40,494 | 28,703 |
Short-term investments | 147 | 108 | 195 | 88 |
Working capital 1 | 46,448 | 3,925 | 14,071 | 26,051 |
Marketable securities | 20,569 | 156,209 | 18,770 | 14,457 |
Available liquidity 1 | 71,741 | 102,868 | 59,623 | 42,501 |
Total assets | 267,041 | 462,682 | 456,408 | 158,049 |
Current liabilities excluding current portion of financial liabilities | 19,492 | 19,805 | 12,083 | 1,082 |
Non-current liabilities excluding non-current portion of financial liabilities | 37,032 | 36,342 | 28,615 | – |
Financial liabilities (current and non-current) | 16,458 | 75,608 | 86,271 | 8,565 |
Total liabilities | 72,982 | 148,420 | 126,969 | 9,647 |
Shareholders’ equity | 194,059 | 314,262 | 329,439 | 148,402 |
The Company held cash and cash equivalents of $65.3 million as at September 30, 2022, with a working capital 1 balance of $46.4 million. Subsequent to completion of the New Found Transaction, the Company completed repayment of the Credit Facility totaling US$40.1 million on August 12, 2022 4 to become debt free. No prepayment penalties applied to the Credit Facility repayment, and all residual security interests have been discharged.
Tax payable of $6.1 million represents the estimated capital gains tax payable in Canada on the New Found Transaction after application of Novo’s available Canadian tax losses through June 30, 2022. The Company will determine its aggregate capital gains tax liability through December 31, 2022 in early 2023 and intends to apply available tax losses in order to decrease any amount payable. Deferred tax liabilities represent the Company’s estimate of capital gains tax payable on the fair value of the Company’s remaining marketable securities.
Non-IFRS Measures
Certain non-IFRS measures have been included in this news release. The Company believes that these measures, in addition to measures prepared in accordance with International Financial Reporting Standards (” IFRS “), provide readers with an improved ability to evaluate its underlying performance and to compare it to information reported by other companies. The non-IFRS 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 IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures presented by other companies. References to notes in the below tables are references to notes in the Financial Statements.
Average Realized Price
The Company uses the average realized price per ounce of gold sold to better understand the gold price and, once applicable, cash margin realized throughout a period.
Average realized price is calculated as revenue from contracts with customers plus treatment and refinery charges included in dore revenue less silver revenue divided by gold ounces sold.
The following table reconciles this non-IFRS measure to the most directly comparable IFRS measure disclosed in the Financial Statements and MD&A.
In thousands of CAD, | For the three months ended | For the nine months ended | ||||||||||||
except where noted | September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||||||
Revenue from contracts with customers | $ | 27,987 | 42,964 | 89,547 | 82,386 | |||||||||
Treatment and refining charges | $ | 69 | 155 | 173 | 253 | |||||||||
Less: Silver revenue ( Note 16 ) | $ | (34 | ) | (74 | ) | (131 | ) | (163 | ) | |||||
Gold revenue | $ | 28,022 | 43,045 | 89,589 | 82,476 | |||||||||
Gold sold | oz | 12,426 | 18,753 | 38,168 | 36,209 | |||||||||
Average realized price | $/oz | 2,255 | 2,295 | 2,347 | 2,278 | |||||||||
Foreign exchange rate | CAD:AUD | 1.1210 | 1.0805 | 1.1024 | 1.0529 | |||||||||
Average realized price | AUD$/oz | 2,528 | 2,480 | 2,588 | 2,398 | |||||||||
Foreign exchange rate | CAD:USD | 0.7662 | 0.7937 | 0.7795 | 0.7992 | |||||||||
Average realized price | USD$/oz | 1,728 | 1,822 | 1,830 | 1,820 |
Total Cash Costs
The Company reports total cash costs on a per gold ounce sold basis. In addition to measures prepared in accordance with IFRS, such as revenue, the Company believes this information can be used to…
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