Aurizon Mines Ltd. (AZK)
Q2 2010 Earnings Call
August 12, 2010 11:00 am ET
David Hall - President & CEO
Julie Stokke - Corporate Secretary
Martin Bergeron - VP, Operations
Rodger Walsh - VP, Corporate Development
Ian Walton - EVP and CFO
Cosmos Chiu - CIBC
Catherine Gignac - NCP
Wayne Atwell - Casimir Capital
Brian Christie - Desjardins Securities
Paul Burchell - Dundee Securities
Michael Starke - Edison Investment Research
Indi Gopinathan - Scotia Capital
Greetings and welcome to the Aurizon Second Quarter 2010 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions)
As a reminder, this conference is being recorded. It is now my pleasure to introduce your host David Hall, Chief Executive Officer for Aurizon Mines. Thank you Mr. Hall, you may begin.
Thank you operator and good morning everyone and welcome to Aurizon's second quarter conference call. With me in Vancouver today I have Ian Walton our CFO; Martin Bergeron our VP Operations; Roger Walsh, VP Corporate Development; Julie Stokke Corporate Secretary; and Chris McLean our Controller. And before we begin the presentation it is now available on our website, I'll ask Julie to read the forward-looking statement language.
Thank you, David. Some of the information that will be discussed on this call may be forward-looking in nature, including information regarding the company's strategic plans, anticipated production and other estimates or forecast related to the company's future operation.
All such information expresses as of the date of this presentation, the company's plans, expectations and belief, and is based on assumptions that the company believes are reasonable. However, by its very nature, forward-looking information is subject to risks and uncertainties and on that basis there could be no assurance that such information will prove to be accurate, or that expectations will be achieved, and except as required under applicable securities legislation the company does not intend and does not assume any obligations to update these forward-looking statements.
For description of the assumptions on which forward-looking information discussed on this call is based and of the applicable risks and uncertainties related to that information, we direct you to management's discussion and analysis for the period under discussion, and to our most recent annual information form, both of which are available on SEDAR and on the companies website.
Please also refer to the forward-looking statements, cautionary statement to US investors regarding mineral resources, and notes to investors included in the slide presentation for this conference call and webcast, which presentation is also available on the company's website.
Thank you, Julie. So, I am going to refer to the slide presentation that is available on our website and go through that briefly and then we'll open it up for questions.
So in summary, I think it was a very active and positive quarter for the company. If we look at the highlights for the second quarter, strong quarter in terms of operations and financial results, gold production of 38,527 ounces, cash flow from operations of $16.5 million, earnings of $5.3 million or $0.03 per share. We ended the quarter with working capital of $122 million, including the $124 million in cash and of course we have no debt.
During the quarter, we were successful in increasing the measure of indicated resources at Joanna, and particularly the Hosco deposit at Joanna by 35%. We had very encouraging drill results from the hosted surface drilling that we were doing at Casa Berardi in the area of the Principal zones. And we added to our exploration portfolio by auctioning three very good exploration properties in Quebec.
So moving on to the next slide, let's look at our production. Our production is on line with our forecast of producing 145,000 to 155,000 ounces in 2010. As we have indicated previously, we are in a sequence in the mine where the grade is a little bit lower than the average reserve grade, somewhere around 7 grams per ton. Reserve grade for underground is about 7.928 grams per ton.
So we did indicate that our production this year would be around about 150,000 ounces a year. But, as we get out of this lower grade sequence at the end of this year move forward and to 2011, 2012 our production should go up to about 170,000 ounces annually, going forward.
In terms of cash cost, they where down 6% from the number we had in the first quarter this year to US$504 an ounce. That came from processing about 183,000 tons at an average grade of 7.2 grams per ton. Until I think in terms of this quarter, we were a little ahead, maybe a little better of our plan, but we still maintained our forecast for the year of 145,000 to 155, 000 ounces.
Throughput from the mine increased to an average of 2,005 tons per day that's up from 1,870 tons a day in the similar quarter of last year, and up from about 1,900 tons a day in the first quarter of 2010. So, production for the quarter 38,500 ounces that gives us production for the half of about 73,700 ounces.
Moving on to the next slide, that it was a strong quarter financially, you can see our revenues increased about 27% going from close to $40 million to a little over $50 million. That came from both sales of 39,964 ounces at an average price of $1082 per ounce, 60% of the sales in the quarter were delivered into our call option at an average price of about 9 or 7 per ounce.