Galiano Gold has realized a total revenue of US$95.2 million in the second quarter of 2021, generated from the operation of its Asanko Gold Mine, a 50:50 joint venture with Gold Fields Ltd.
The revenue generated came from 53,348 gold ounces sold at an average realized price of US$1,782/oz (including US$0.2 million of by-product silver revenue). Albeit, this represents a decrease of US$6.3 million from Q2 2020.
Likewise, the decrease in revenue on a quarter-on-quarter basis was a function of a 13 per cent reduction in sales volumes, partly offset by an 8 per cent increase in realized gold prices in Q2 2021. Also, net income after tax recorded at the end of the quarter was US$12.7 million and an adjusted EBITDA of US$19.3 million. Income from mine operations for Q2 2021 totaled US$18.1 million compared to US$35.9 million in Q2 2020.
Furthermore, gold produced during the quarter was 50,421 ounces with a year-to-date production totaling 110,420 ounces.
Commenting on the company’s performance in the quarter, Matt Badylak, President and Chief Executive Officer indicated:
“It was a challenging quarter for the Asanko Gold Mine, although production was on plan, all-in sustaining costs were higher than budget due to lower plant feed grades.
“Looking towards the second half of the year, we are revising the AGM’s annual AISC1 guidance upwards to reflect production at the lower end of guidance, an increase in Esaase ore transportation costs and higher fiscal levies.
“Cash flow from operations remain positive at current gold prices, and Galiano’s balance sheet remains strong. Long term we remain focused on exploration and further development at the AGM and expect to publish our updated Reserves and Resources in late 2021.”
Matt Badylak, President and Chief Executive Officer
Cost of Sales in Q2 2021
According to the company’s financials, sales cost (including depreciation and depletion and royalties) amounted to US$77.2 million in Q2 2021 representing an increase of US$11.5 million from Q2 2020. The increase in cost of sales was primarily due to higher cash costs per ounce.
Additionally, the Asanko Gold Mine incurred operating cash costs per ounce of US$1,147, total cash costs per ounce of US$1,236 and all-in sustaining cost (AISC) of US$1,497 per ounce in Q2 2021. Overall cash costs went up in Q2 2021 relative to Q2 2020 primarily due to lower gold sales volumes in Q2 2021.
Essentially, the report notes that such low gold sales had the effect of increasing fixed production costs on a per unit basis (US$161/oz increase) as well as higher ore transportation costs associated with trucking ore from Esaase (the sole source of mined ore during the quarter).
Furthermore, total cash costs in Q2 2020 benefitted from gains on the termination of a mining contractor services lease agreement which was recorded as a credit to production costs.
With regards to cash flows, the Asanko Gold Mine generated US$10.8 million of cash flows from operating activities and free cash flow of negative US$2.9 million during Q2 2021. Based on the report, this compares to US$48.8 million of cash flows from operating activities and US$22.6 million of free cash flow during Q2 2020.
The company revised its 2021 outlook thus, projecting gold production at the lower end of guidance of 225,000 to 245,000 ounces. Also, AISC guidance is revised to US$1,450/oz from US$1,350.
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