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TheStreet Open House

AuRico Reports Third Quarter Financial Results And Updates On Young-Davidson

Stock quotes in this article: AUQ

TORONTO, November 13, 2012 /PRNewswire/ --

AuRico Gold Inc. (TSX: AUQ) (NYSE: AUQ), ("AuRico" or "the Company") reports financial results for the three and nine months ended September 30, 2012 and provides an update on the Young- Davidson mine. All amounts are in U.S. dollars. The Company will host a conference call on Tuesday, November 13, 2012 beginning at 10:00 a.m. Eastern Time.

Third Quarter Financial Highlights

For the third quarter, the Company reported the following results, inclusive of discontinued operations unless otherwise noted:

  • Revenues of $77.1 million.
  • Adjusted net earnings (1) of $29.5 million, or $0.10 per share.
  • Consolidated production of 51,103 gold ounces (2) and 478,497 silver ounces, or 59,727 gold equivalent ounces (2) using the actual gold equivalency ratio of 56:1 realized in the quarter.
  • Consolidated cash costs of $625 per gold equivalent ounce (realized) (1), prior to the reversal of a net realizable value adjustment on the Ocampo ore-in-process heap leach inventory. Inclusive of the reversal, cash costs were $553 per gold equivalent ounce (realized) (1).
  • Operating cash flow (before changes in working capital) of $40.6 million, or $0.14 per share.
  • Cash costs from continuing operations of $504 per gold ounce (3).
  • Average realized margin from continuing operations of $1,169 per ounce, or 70%.
    (1) See the table at the end of this press release for a reconciliation of
        adjusted net earnings and refer to the discussion of Non-GAAP measures
        below.
    (2) Includes 7,922 pre-commercial production gold ounces produced at
        Young-Davidson.
    (3) Continuing operations include the Young-Davidson and El Chanate mine
        operations.

"During the quarter we announced the sale of the Ocampo mine, which is expected to close in mid-December. Following the completion of the transaction,  the Company will focus on delivering reliable, stable and consistent performance from our two remaining low-cost, long-life, core assets located in Canada and Mexico, which will underpin our commitment to shareholder friendly initiatives. Our expanding production base, strong cash position and growing free cash flow profile should provide a platform for shareholder value creation," said Scott Perry, Chief Executive Officer. He continued, "Our production growth profile is primarily driven by the recently commissioned Young- Davidson mine, which reported solid production and cash cost results in its first month of commercial production. In the latter part of October, the first two underground stopes in the Upper Boundary Zone came into production and as a result, we expect strong production performance at the Young- Davidson mine due to the contribution of this higher grade underground ore during the fourth quarter."

Third Quarter Highlights

 
                                                         Nine Months      Nine Months
                      Quarter Ended    Quarter Ended        Ended            Ended
                        Sept. 30,        Sept. 30,        Sept. 30,        Sept. 30,
                         2012(1)          2011(1)          2012(1)          2011(1)
    Revenue from
    mining
    operations           $77,063          $112,087         $368,051         $295,304
    Average realized
    gold price per
    ounce                 $1,664            $1,704           $1,666           $1,552
    Average realized
    silver price per
    ounce                 $29.87            $38.15           $30.95           $36.37
    Earnings from
    operations           $16,967           $52,793          $80,113         $120,154
    Net earnings
    from continuing
    operations           $43,018           $20,626          $36,199           $6,268
    Net (loss) /
    earnings from
    discontinued
    operations           ($7,781)          $41,988          $22,475          $92,655
    Total net
    earnings             $35,237           $62,614          $58,674          $98,923
    Net earnings per
    share from
    continuing
    operations,
    basic                  $0.15             $0.12            $0.13            $0.04
    Net (loss) /
    earnings per
    share from
    discontinued
    operations,
    basic                 ($0.03)            $0.24            $0.08            $0.58
    Total net
    earnings per
    share, basic           $0.12             $0.36            $0.21            $0.62
    Adjusted net
    earnings(2)          $29,491           $34,767         $111,152          $91,416
    Adjusted net
    earnings per
    share(2)               $0.10             $0.20            $0.39            $0.57
    Total operating
    cash flow             $6,170           $51,713          $85,531         $139,747
    Total net free
    cash flow          ($103,433)          $12,251        ($343,056)         $38,280
 
    (1) The information in this table includes the results of both continuing and
        discontinued operations, except where indicated.
    (2) See the table at the end of this press release for a reconciliation of
        adjusted net earnings and refer to the discussion of Non-GAAP measures below.

Operational Results - Continuing Operations

 
                                       Quarter ended
                                         Sept 30/12
                              El Chanate Young-Davidson  Total
    Gold oz. produced           19,388       9,903      29,291
    Gold oz. sold               19,121       3,999      23,120
    Pre-commercial production
    gold oz. produced(1)             -       7,922       7,922
    Pre-commercial production
    gold oz. sold(1)                 -       8,701       8,701
    Total cash costs per gold
    oz.(2)(3)(4)                  $434        $639        $504
    Margins per gold oz.        $1,221      $1,117      $1,169

TABLE CONTINUED...

 
                                     Nine months ended
                                        Sept. 30/12
                              El Chanate  Young-Davidson  Total
    Gold oz. produced           56,363       9,903       66,266
    Gold oz. sold               54,286       3,999       58,285
    Pre-commercial production
    gold oz. produced(1)             -      19,872       19,872
    Pre-commercial production
    gold oz. sold(1)                 -      13,910       13,910
    Total cash costs per gold
    oz.(2)(3)(4)                  $425        $639         $458
    Margins per gold oz.        $1,240      $1,117       $1,213
    (1) Pre-commercial production ounces produced and sold at Young-Davidson are
        excluded from consolidated ounces produced and sold, as these ounces are
        credited against capitalized project costs.
    (2) Cash costs for the El Chanate mine and Young-Davidson mine are calculated
        on a per gold ounce basis, using by-product revenues as a cost credit. Refer
        to the discussion of Non-GAAP measures below.
    (3) Gold ounces used to calculate cash costs include ounces sold at the El
        Chanate mine and ounces produced at the Young-Davidson mine for the three and
        nine months ended September 30, 2012.
    (4) The Young-Davidson mine declared commercial production on September 1,
        2012 and therefore, cash costs are calculated on post-commercial production
        ounces only (9,903 ounces). Pre-commercial production ounces produced are 
        excluded from the calculation of cash costs as they are credited against 
        capitalized project costs.

Young-Davidson Update (October)

  • On September 1, 2012, the Young- Davidson mine achieved commercial production.
  • During October, the Young- Davidson mine produced 9,177 gold ounces.
  • Production from the initial two stopes in the Upper Boundary Zone began in the latter part of October.  During the fourth quarter the Company has targeted mining 90,000 tonnes at grades in excess of 3.0 grams per tonne gold, including the 12,000 tonnes mined in October at grades averaging 4.0 grams per tonne gold.
  • Mill feed grades are continuing to increase, through a combination of higher grade open pit ore and the initial production contribution from the underground.
  • The mill facility continued to operate at target levels during October.
  • Raise boring of the second leg (450 metres) of the Northgate shaft is progressing well and is expected to be completed in early 2013. Structural work for the new headframe will be completed before year end, with mechanical installations completed in Q1 2013. Construction of the mid-shaft crushing and loading infrastructure is on schedule for commissioning by mid-year 2013.

Corporate Highlights

  • On October 9, 2012, the Company entered into a definitive agreement with Minera Frisco, S.A.B. de C.V. (" Minera Frisco"), pursuant to which Minera Frisco will acquire the Company's Ocampo mine and the Venus and Los Jarros exploration properties located in Chihuahua, Mexico, as well as a 50% interest in the Orion advanced development project located in Nayarit, Mexico, for total consideration of $750 million in cash. The transaction is expected to close in December 2012.
  • On October 5, 2012, the Company reached an agreement to settle the class action claim filed by Ed J. McKenna, subject to approval of the court and the right of the Company to terminate the agreement under certain circumstances.
  • During October 2012, the Company sold its entire equity interest in Endeavour Silver Corp. and Crocodile Gold Corporation on a block trade basis for gross proceeds of $104.6 million.

Adjusted Net Earnings

 
                                     Young-    El      Corporate &   Continuing
                                    Davidson  Chanate    Other       Operations   Ocampo
    Net earnings / (loss)           2,740     16,590     23,688        43,018    (27,282)
    Adjustments: 
        Unrealized foreign
        exchange loss                   -          -      7,952         7,952      1,948
        Fair value adjustment on
        option component of
        convertible senior notes        -          -    (14,416)      (14,416)         -
        Unrealized gain on
        investments                     -          -    (20,251)      (20,251)         -
        Other unrealized gains
        and non-recurring
        expenses                        -          -     (1,598)       (1,598)         -
        Disposition-related costs       -          -          -             -      3,507
        Reversal of NRV
        adjustment on Ocampo
        heap leach                      -          -          -             -     (6,074)
        Ocampo outside tax
        basis adjustment                -          -          -             -     39,168
        Gain on disposition of El
        Cubo and GyC                    -          -          -             -          -
        Tax impact of
        adjustments                     -          -      2,323         2,323        333
    Adjusted net earnings           2,740     16,590     (2,302)       17,028     11,600
    Earnings per share                                                 $ 0.06

TABLE CONTINUED…

 
                                               Discontinued
                                     El Cubo   Operations      Consolidated
    Net earnings / (loss)           19,501       (7,781)           35,237
    Adjustments:
        Unrealized foreign
        exchange loss                  242        2,190            10,142
        Fair value adjustment on
        option component of
        convertible senior notes         -            -           (14,416)
        Unrealized gain on
        investments                      -            -           (20,251)
        Other unrealized gains
        and non-recurring
        expenses                         -            -            (1,598)
        Disposition-related costs    1,820        5,327             5,327
        Reversal of NRV
        adjustment on Ocampo
        heap leach                       -       (6,074)           (6,074)
        Ocampo outside tax
        basis adjustment                 -       39,168            39,168
        Gain on disposition of El
        Cubo and GyC               (24,062)     (24,062)          (24,062)
        Tax impact of
        adjustments                  3,362        3,695             6,018
    Adjusted net earnings              863       12,463            29,491
    Earnings per share                           $ 0.04            $ 0.10

Non-GAAP Measures

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