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Thursday, 21 March 2013
Timmins Gold posts strong finish to record-breaking year, with new technical report ahead
***Updated with comments from the company conference call this morning ***
Timmins Gold Corp. (TSE:TMM)(NYSE MKT:TGD) has reported fourth quarter results that show an increase in earnings, cash flows and revenues - a strong finish to a year that saw record sales and profit from operations as the company expanded its crushing circuit.
The precious metals producer, which funds its operations with cash flows hailing from its San Francisco mine in Sonora, Mexico, said earnings for the October to December period rose to $12 million, or 9 cents per share, from $11.5 million, or 8 cents per share, a year earlier.
Metal revenues increased to $40.6 million, from $35.5 million in the fourth quarter of 2011 as production and the average price of gold realized rose to $1,682 an ounce, from $1,621 an ounce.
Cash flows from operations, a key metric in the industry, climbed to $12.9 million from $11.5 million, with profit from operations rising to $16.0 million.
The quarter marked an end to a year full of records, with 2012 revenues hitting a record $156.2 million, compared to $90.8 million during the nine months that ended December 31, 2011.
The company compared the full year 2012 to the nine month period in 2011, due to a change in year-end in December 2011, it said. Earnings per share rose to 25 cents from 15 cents.
Profit from operations also hit a record $60.6 million, almost double the $36.6 million seen in the comparative period the previous year.
Cash flows were $46.9 million, up from $25.3 million.
"2012 was a strong year operationally as demonstrated by increased free cash flow, profit from operations, and earnings per share" said the company in a statement Wednesday, citing CEO Bruce Bragagnolo.
"The crushing expansion to 24,000 tpd was completed in Q4 2012 and we are now seeing the benefits of the increased crushing throughput in Q1 2013."
Timmins said that it produced a record 94,444 ounces of gold and sold a new high of 94,128 ounces of the yellow metal in 2012, compared to 55,487 and 56,777 ounces, respectively, during the nine months that ended December 2011.
It forecast sharply higher production for this year, of between 125,000 and 130,000 ounces of gold - which at the top of the range represents a 38 percent increase over 2012. The plan is to get production at up to 32,000 tonnes per day.
The company, which ended the year with $24.2 million in cash, also reported that cash costs were higher in 2012, at $743 an ounce on a by-product basis, compared to $591 an ounce during the nine month period in 2011 mainly due to global price increases in consumables, Timmins said.
It also noted the inclusion of $2.1 million in variable compensation paid in 2012, which was not seen in the comparable period of the previous year, and therefore boosted cash costs by $22 an ounce.
Cash costs for 2013 are targeted at $700 to $750 an ounce.
With regards to drilling last year, Bragagnolo said its program was successful in delineating new mineralized zones next to the San Francisco property, with the company drilling a total of over 100,000 metres - more than initially planned as the gold producer expanded the campaign based on results.
More than 77,700 metres were drilled next to the La Chicharra open pit gold mine, which is located 2 km west of the San Francisco pit.
On a conference call this morning, the chief emphasized that the rapid and expanded drilling last year completed a substantial part of the 200,000 metres originally planned for 2013, meaning it has less drilling to do going forward. For this year, Timmins has set aside $15 million for drilling, with up to around 120,000 metres to be drilled around the San Francisco pit.
Drilling will take place until the end of May, Bragagnolo said on the call, with an updated reserve and resource update, together with a new mine plan, to be released by the end of the summer. The drilling is aimed at moving inferred resources into the reserves category.