Financial Results

Anaconda sold 4,526 ounces of gold during the first quarter of 2018, generating gold revenue of $7.6 million based on an average realized gold price of C$1,677 . The Company is well on track to meet its 2018 production guidance of 18,000 ounces at operating cash costs of C$1,100 per ounce.

Operating expenses for the three months ended March 31, 2018 were $4,074,347 , compared to $4,810,528 in the three months ended February 28, 2017 . The decrease in operating costs was the result of lower mining costs as the operation moved 8% less material during the quarter, as well as a large inventory adjustment recorded for the three months ended February 28, 2017 due to a decrease in stockpiles. The operating cash costs per ounce sold in the first three months of fiscal 2018 were $900 (US$712) , a 33% reduction compared to the comparative period operating cash costs of $1,337 per ounce (US$962) , and below the Company's operating cash cost guidance of C$1,100 as a result of better than expected grades in the bottom of the Pine Cove Pit.

Depletion and depreciation expense for the first three months of fiscal 2018 was $1,437,006 , a decrease from $1,946,999 during the comparative period. The lower depletion and depreciation was the result of lower depletion of stripping costs for the Pine Cove Pit, where mining was completed in Q1 2018.

Mine operating income for the three months ended March 31, 2018 was $2,085,247 , compared to a mine operating loss of $1,114,116 in the corresponding period of 2017, due to significantly higher revenue and lower mining costs.

Corporate administration expenditures were $1,094,354 for the first three months of fiscal 2018, up from $627,726 for the comparative period. The high comparative expenditures reflect the expanded senior management team and greater market presence after the acquisition of Goldboro , and the timing of certain corporate costs as a result of the change in year-end to December 31 .

Share-based compensation was $150,473 during Q1 2018, compared to $22,630 in the three months ended February 28, 2017 , reflecting the stock options granted during the quarter, as well as the impact of the share consolidation on the fair value of the options as determined by the Black-Scholes option pricing model.

The deferred premium on flow-through shares was a recovery of $156,872 , reflecting a proportion of the total deferred premium based on qualifying exploration expenditures spent during the three months ended March 31, 2018 , as a percentage of the total exploration expenditures to be made under the flow-through financing that was completed on October 31, 2017 . The remaining deferred flow-through premium liability of $96,663 is expected to be amortized into comprehensive income in Q2 2018 as the remaining qualifying exploration expenditures are incurred.

Net comprehensive income for the three months ended March 31, 2018 , was $149,218 , or $0.00 per share, compared to a net comprehensive loss of $940,032 , or $0.02 per share. The improvement compared to the three months ended February 28, 2017 was the result of higher mine operating income, which was partially offset by higher corporate administration expenditures, as well as other income from the sale of waste rock as aggregate product in the comparative period. The Company also recorded a current income tax expense of $473,000 relating to provincial mining tax and a deferred income tax expense of $262,000 during the three months ended March 31, 2018 (three months ended February 28, 2017 – $nil and recovery of $463,000 , respectively).

Financial Position and Cash Flow Analysis

As at March 31, 2018 , the Company continued to maintain a robust working capital position of $6,578,210 , which included cash and cash equivalents of $2,787,147 . In addition, the Company maintains a $1,000,000 revolving credit facility as well as a $500,000 revolving equipment lease line of credit with the Royal Bank of Canada . As at March 31, 2018 , the Company had not drawn against the revolving credit facility.

During the three months ended March 31, 2018 , Anaconda generated cash flow from operations of $991,805 . Revenue less operating expenses from the Point Rousse Project in the first quarter were $3,522,253 , corporate administration costs were $1,094,354 , and there was a net reduction in operating cash flows of $1,348,977 from changes in working capital. Trade and other receivables increased by $772,888 due to an increase in the Company's HST recoverable balance, and prepaid expenses and deposits increased by $345,334 , predominantly due to transaction costs related to the takeover bid of Maritime Resources Corp.

During the first quarter of 2018, the Company continued to invest in its key growth projects in Newfoundland and Nova Scotia . The Company spent $1,535,364 on exploration and evaluation assets (adjusted for amounts included in trade payables and accruals at March 31, 2018 ), which includes $984,645 on the continued advancement of the Goldboro Project and $412,077 on the Argyle Resource at Point Rousse. The Company also invested $563,973 into the property, mill and equipment at the Point Rousse Project, with capital investment focused on development activity at Stog'er Tight.

Restatement of Prior Period Financial Information

As part of the preparation of the audited consolidated financial statements for the year ended May 31, 2017 , the Company undertook a comprehensive review of the capitalization and units-of-production depletion calculations for its production stripping asset and property, mill infrastructure and equipment and deferred taxes and discovered that certain errors had been made. As a result, the Company amended the treatment of these balance sheet items resulting in a restatement of prior periods. 

The amounts of each adjustment and a reconciliation between the previously published consolidated statement of comprehensive loss for the three months ended February 28, 2017 , have been presented in Note 4 of the condensed interim consolidated financial statements.

ABOUT ANACONDA

Anaconda Mining is a TSX-listed gold mining, development, and exploration company, focused in the prospective Atlantic Canadian jurisdictions of Newfoundland and Nova Scotia . The Company operates the Point Rousse Project located in the Baie Verte Mining District in Newfoundland , comprised of the Pine Cove open pit mine, the Stog'er Tight Mine, the Argyle Mineral Resource, the fully-permitted Pine Cove Mill and tailings facility, and approximately 5,800 hectares of prospective gold-bearing property. Anaconda is also developing the Goldboro Gold Project in Nova Scotia , a high-grade Mineral Resource, with the potential to leverage existing infrastructure at the Company's Point Rousse Project.

The Company also has a pipeline of organic growth opportunities, including the Great Northern Project on the Northern Peninsula of Newfoundland and the Tilt Cove Property on the Baie Verte Peninsula , also in Newfoundland .

FORWARD-LOOKING STATEMENTS

This news release contains "forward-looking information" within the meaning of applicable Canadian and United States securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Anaconda to be materially different from those expressed or implied by such forward-looking information, including risks associated with the exploration, development and mining such as economic factors as they effect exploration, future commodity prices, changes in foreign exchange and interest rates, actual results of current production, development and exploration activities, government regulation, political or economic developments, environmental risks, permitting timelines, capital expenditures, operating or technical difficulties in connection with development activities, employee relations, the speculative nature of gold exploration and development, including the risks of diminishing quantities of grades of resources, contests over title to properties, and changes in project parameters as plans continue to be refined as well as those risk factors discussed in Anaconda's annual information form for the seven months ended December 31, 2017 , available on www.sedar.com.  Although Anaconda has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Anaconda does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

NON-IFRS MEASURES

Anaconda has included certain non-IFRS performance measures as detailed below. In the gold mining industry, these are common performance measures but may not be comparable to similar measures presented by other issuers. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is 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.

Operating Cash Costs per Ounce of Gold – Anaconda calculates operating cash costs per ounce by dividing operating expenses per the consolidated statement of operations, net of silver sales by-product revenue, by the gold ounces sold during the applicable period. Operating expenses include mine site operating costs such as mining, processing and administration as well as royalties, however excludes depletion and depreciation and rehabilitation costs.

All-In Sustaining Costs per Ounce of Gold – Anaconda has adopted an all-in sustaining cost performance measure that reflects all of the expenditures that are required to produce an ounce of gold from current operations. While there is no standardized meaning of the measure across the industry, the Company's definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance dated June 27, 2013 . The World Gold Council is a non-regulatory, non-profit organization established in 1987 whose members include global senior mining companies. The Company believes that this measure will be useful to external users in assessing operating performance and the ability to generate free cash flow from current operations.

The Company defines all-in sustaining costs as the sum of operating cash costs (per above), sustaining capital (capital required to maintain current operations at existing levels), corporate administration costs, sustaining exploration, and rehabilitation accretion and amortization related to current operations. All-in sustaining costs excludes capital expenditures for significant improvements at existing operations deemed to be expansionary in nature, exploration and evaluation related to growth projects, financing costs, debt repayments, and taxes. Canadian and US dollars are noted for realized gold price, operating cash costs per ounce of gold and all-in sustaining costs per ounce of gold. Both currencies are considered relevant and the Company uses the average foreign exchange rate for the period.

Average Realized Gold Price per Ounce Sold – In the gold mining industry, average realized gold price per ounce sold is a common performance measure that does not have any standardized meaning. The most directly comparable measure prepared in accordance with IFRS is gold revenue. The measure is intended to assist readers in evaluating the revenue received in a period from each ounce of gold sold.

Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") - EBITDA is earnings before finance expense, deferred income tax expense and depletion and depreciation.

Point Rousse Project EBITDA is EBITDA before corporate administration and other expenses (income).

Working Capital – Working capital is a common measure of near-term liquidity and is calculated by deducting current liabilities from current assets.

SOURCE Anaconda Mining Inc.

View original content: http://www.newswire.ca/en/releases/archive/May2018/03/c4275.html