Brigus Gold Reports First Quarter Financial Results
Halifax, Nova Scotia; June 14, 2011� Brigus Gold Corp. (�Brigus� or the �Company�) (TSX and NYSE Amex: BRD) reported net income of $2.8 million for the quarter ended March 31, 2011 (�Q1 2011�). The Company sold 10,003 ounces of gold at total cash costs of $1,097 per ounce from its wholly owned Black Fox Mine (�Black Fox�) in the Timmins Mining District. Production and costs were temporarily impacted by construction of infrastructure for the underground mining operations, which was completed at the end of March 2011.
During Q1 2011, the open pit operations at Black Fox completed the mining of ore from the Phase 1 open pit and commenced pre-stripping for the Phase 2 open pit. The Phase 2 open pit began producing ore in late March 2011 and underground production continues to ramp up.
(All dollar amounts in this news release are in U.S. dollars unless otherwise noted.)
Among the highlights for Q1 2011 and to the date of this release, the Company:
- Produced 8,772 ounces and sold 10,003 ounces of gold at an average realized price of $1,356 per ounce in Q1 2011.
- Strengthened its balance sheet by repaying the remaining balance of $22.0 million on the Black Fox Project Facility.
- Raised $50.0 million from the issuance of senior unsecured convertible debentures.
- Completed construction of the new ramp from the 235 metre level to the surface and the new ventilation-service raise related to the underground mine in March 2011.
- Defined an initial strike length of 250 metres at the Company�s new 147 Zone discovery, which remains open in three directions.
- Signed a letter of intent with Cangold Limited for the sale of up to 75% of the Company�s interest in the Ixhuatan property in Mexico.
- Signed a letter of intent with Everton Resources Inc. for the sale of the Company�s remaining interest in its Dominican Republic properties.
Commenting on the results, Wade K. Dawe, Chairman, Chief Executive Officer and President of Brigus, said, �Our efforts over the last several months have positioned Brigus for sustainable growth with expected quarter over quarter increases in gold production for the rest of 2011. We also expect to add resources from continued drilling at the recently discovered 147 Zone and Contact Zone within the Black Fox Complex. In addition, we are pursuing further growth and efficiency opportunities at Black Fox through a phased increase in mill throughput. The results of a conceptual engineering study on the Black Fox mill will be reported later this month."
Operational Highlights
Black Fox Production and Sales Highlights
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During Q1 2011, Black Fox open pit mining operations completed the transition from Phase 1 to Phase 2, however production from Phase 2 of the open pit was delayed due to construction activity related to the underground mine development.
The completion of the underground ventilation and service raise in March 2011 facilitated the commencement of ore production from Phase 2 of the open pit. In March 2011, Brigus mined 9,119 tonnes of ore, at a grade of 5.72 gpt, and 536,972 tonnes of waste from Phase 2. In addition, Phase 2 alluvial overburden removal was completed which totalled 171,260 tonnes. Removal of Phase 3 overburden is scheduled to begin in late 2012. The Company capitalized all open pit mining costs in the first quarter 2011 except for costs associated with ore production.
During March 2011, the underground mining rate averaged 180 tonnes per day (�tpd�), which increased to 300 tpd in April and May 2011. Production was primarily related to underground development ore. Production rates are expected to increase in June as stope production begins, along with increased levels of development advance. The underground production rate is expected to reach 800 tpd of ore by July 2011. Mining of underground ore will be performed by the Company using its own equipment and employees.
During Q1 2011, Black Fox completed 1,290 metres of development in waste rock, primarily in the new access ramp, as well as 45 metres of ore development. During the quarter, a total of 8,816 tonnes of ore, at an average gold grade of 3.37 grams per tonne (�gpt�) were mined from development headings. Development continued during the second quarter of 2011 to advance the east and west ramps and to provide additional ore access.
A new scope of work for underground development was tendered in March 2011. The new scope requires the contractor to complete approximately 300 metres of ramp and drift development per month over a 12 month period. Redpath Mining was the successful bidder and commenced work during the first week of May 2011.
During Q1 2011, total cash cost per ounce of gold sold was $1,097 compared to $631 for the same period in 2010. Higher total cash cost per ounce in Q1 2011 was the result of processing stockpiles of low grade ores through the mill at an average grade of 1.67 gpt compared to a grade of 2.68 gpt for the same period in 2010 (�Q1 2010�). The cost per tonne mined in Q1 2011 was Cdn $3.58 compared to Cdn $2.48 in Q1 2010. During Q1 2011, 1.7 million tonnes were mined compared to 2.1 million tonnes in the Q1 2010. The higher cost per tonne mined in 2011 is a result of the higher costs, unplanned repair and maintenance charges associated with some of the open pit mining equipment as well as a reduced number of tonnes mined as a result of work areas restricted by the location of the old underground infrastructure. Milling cost per tonne improved in Q1 2011 to Cdn$12.73 from Cdn$14.57 per tonne in Q1 2010.
Financial Overview
At March 31, 2011 the Company had cash of $29.1 million compared to cash of $6.4 million at December 31, 2010. The increase in cash since December 31, 2010 relates to operating cash inflows of $2.8 million and financing cash inflows of $32.3 million, partially offset by investing cash outflows of $11.9 million and a foreign exchange effect of $0.5 million, after repayment of the remaining balance of $22.0 million on the Black Fox Project Facility.
Gold sold during the quarter ended March 31, 2011 was 10,003 ounces at an average realized gold price of $1,356. This includes 754 ounces delivered against the gold stream agreement with Sandstorm Resources Ltd. (�Sandstorm�) for cash proceeds of $500 per ounce. This compares to sales of 15,796 ounces in the first quarter of 2010, all of which were delivered into the hedge forward contracts at an average realized gold price of $876 per ounce.
In Q1 2011 the Company recorded net income of $2.8 million compared to a net loss of $1.8 million in Q1 2010. Income generated in the first quarter of 2011 was due in large part to a gain on the fair value adjustment related to equity-linked financial instruments (warrants with Canadian dollar exercise prices) of $6.5 million compared to a gain of $2.0 million in the first quarter of 2010.
Corporate administrative expenses were $3.1 million for the three months ended March 31, 2011 compared to $2.0 million the same period in 2010. Brigus plans to reduce General and administrative expenses as it closes its Denver office, which is expected in the second half of 2011 as the Company continues to transition all corporate functions to its executive offices in Halifax.
Commencing with Q1 2011, the Company is reporting its financial results in accordance with International Financial Reporting Standards (�IFRS�). The Company has adopted an accounting policy allowed under IFRS to capitalize costs incurred in exploration and evaluation of mineral properties. In addition, the Company�s accounting policy under IFRS is to capitalize stripping costs during the production phase incurred to access ore that will be mined in future periods as these activities will provide a future economic benefit. Capitalized stripping costs are amortized/depleted using the units-of-production method of depreciation over the reserves that directly benefit from the specific stripping activity.
Capital Expenditures
Capital expenditures incurred in the first quarter of 2011 totaled $13.9 million and included $5.9 million for underground development, $6.5 million for stripping Phase 2 of the open pit and $1.5 million for underground and open pit mine equipment.
Exploration Overview
Exploration expenditures, including drilling and maintaining exploration properties, totaled $2.5 million for the first quarter of 2011 compared to $nil for the same period of 2010. $1.9 million of this expenditure related to the Black Fox Complex and $0.6 million related to Goldfields. As of June 14, 2011, the Company had five drills working at the new 147 Zone discovery in the southern portion of the Black Fox Complex, located four kilometres from the Black Fox Mine.
From January 1 to June 14, 2011, a total of 83 surface drill holes for 32,187 metres have been completed on the Black Fox Complex. During Q1 2011, positive drill results have defined the 147 Zone along an initial 250-metre strike length, which is open to the north, east and at depth. Drilling is continuing.
2011 Outlook
The Company is projecting 2011 production of between 73,000 and 80,000 ounces of gold at a total cash cost of $575 - $625 per ounce. Brigus projects increasing gold production quarter over quarter during 2011 with higher-grade underground ore augmenting open pit ore for a total throughput of 2,000 tpd at the Black Fox Mill.
Black Fox is expected to produce between 16,500 and 18,000 ounces of gold in the second quarter of 2011 and to reach a steady state annual production level of 104,000 ounces in the third quarter of 2011.
Total capital expenditures in 2011 are estimated at $37.0 million, mainly for underground development and underground mining equipment at Black Fox. Exploration expenditures for surface drilling are estimated at $11.0 million for 2011.
At the Goldfields Project in Saskatchewan, the Company expects to complete an updated National Instrument (�NI�) 43-101 technical report during the second half of 2011.
About Brigus
Brigus is a growing gold producer committed to maximizing shareholder value through a strategy of efficient production, targeted exploration and select acquisitions. The Company operates the wholly owned Black Fox Complex in the Timmins gold district of Ontario, Canada. The Black Fox Complex encompasses the Black Fox Mine and Mill, and adjoining Grey Fox-Pike River property, all in the Township of Matheson, Ontario, Canada. Brigus is also advancing its Goldfields Project located near Uranium City, Saskatchewan, Canada, which hosts the Box and Athona gold deposits. In Mexico, Brigus has a letter of intent to sell 75% of its Ixhuatan silver-gold projected located in the state of Chiapas. In the Dominican Republic, Brigus has a letter of intent to sell its remaining interests in three mineral exploration projects.
Contact Information:
Jennifer Nicholson, Vice President of Investor Relations
Phone: 902-422-1421
E-mail: ir@brigusgold.com
Toll Free: 1-866-785-0456
Website: www.brigusgold.com
Cautionary Note to U.S. Investors Concerning Estimates of Mineral Resources
This news release uses the term mineral �resources�. The Company advises U.S. investors that while these terms are defined in and required by Canadian regulations, these terms are not defined terms under the U.S. Securities and Exchange Commission (�SEC�) Industry Guide 7 and are generally not permitted to be used in reports and registration statements filed with the SEC. The SEC generally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant �reserves� as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
Cautionary and Forward-Looking Statements
Statements contained in this news release which are not historical facts are forward-looking statements that involve risk, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All statements regarding the ability of the Company to achieve its production, total cash costs, steady state annual production and mining rate estimates; to achieve ramping up the Black Fox underground mine to reach commercial production by the end of the second quarter of 2011; estimated average gold grades for the open pit and underground operations; the timing of the removal of Phase 3 overburden; exploration and capital programs for 2011, including the estimated expenditures; expansion of the Black Fox Mill capacity; increase in gold production; exploration drill results and resource additions; completion of an engineering study for the Black Fox Mill; plans to reduce expenses and close the Denver office; and the Company�s ability to deliver gold pursuant to the gold stream agreement, are forward-looking statements and estimates that involve various risks and uncertainties. This forward-looking statements include, or may be based upon, estimates, forecasts, and statements as to management's expectations with respect to, among other things, the outcome of legal proceedings, the issue of permits, the size and quality of the company's mineral resources, progress in development of mineral properties, future production and sales volumes, capital and mine production costs, demand and market outlook for metals, future metal prices and treatment and refining charges, and the financial results of the Company.
Important factors that could cause actual results to differ materially from these forward-looking statements include environmental risks and other factors disclosed under the heading �Risk Factors� in Brigus� most recent Annual Information Form and Management Discussion and Analysis filed under the Company�s name at www.sedar.comand annual report on Form 40-F filed with the United States Securities and Exchange Commission at www.sec.govas well as elsewhere in Brigus� documents filed from time to time with the Toronto Stock Exchange, the NYSE Amex Equities, the United States Securities and Exchange Commission and other regulatory authorities. All forward-looking statements included in this news release are based on information available to the Company on the date hereof. The Company assumes no obligation to update any forward-looking statements, except as required by applicable securities laws.
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