Karora Resources Inc (TSE:KRR) (OTCMKTS:KRRGF) (FRA:5RN1) posted strong third-quarter results on Thursday morning that saw the miner deliver revenue of US$59.4 million, thanks to record low all-in-sustaining costs (AISC) at its Higginsville gold operation in Western Australia.
The Toronto-based company produced a total of 24,717 gold ounces from Higginsville and Beta Hunt during the three-month period to end September 2020, with AISC coming in at US$1,044 – lower than the firm’s annual guidance of between US$1,050 to US$1,200.
Karora also delivered a profit of US$34.9 million or $0.24 per share, up from the US$9.8 million it posted in 2Q 2020 and a sharp swing from the US$1.4 million loss in the comparable period a year ago. The earnings include an impairment reversal of $36.1 million and net earnings include an after-tax impairment reversal of $25.3 million, according to a statement.
READ: Karora Resources plans open pit for Aquarius Higginsville project, reveals fourth quarter drilling aims
Adjusted EBITDA hit a record US$23 million, up 47% sequentially and by $21.4 million from the corresponding year-ago period.
During the quarter, the group revealed new high-grade gold discoveries at Beta Hunt, along with the first new nickel discovery in 13 years. After seeing success at the drill bit, Karora also boosted its exploration budget to A$15 million to support a 50,000-metre campaign throughout its 4Q.
Karora ended 3Q with a record cash balance of over US$67 million.
CEO Paul Andre Huet hailed the miner’s cash generation abilities and cost control.
“We continued to deliver operationally robust gold production and continued our trend of reducing costs, despite challenges associated with COVID-19 and the impact of a stronger Australian dollar during the quarter, which negatively affected our US dollar cost reporting,” Huet said in a statement.
“Our record adjusted EBITDA of over $23 million demonstrates our cash-generating power now that we have full exposure to market gold prices and significantly reduced royalties across our properties in a strong gold price environment. We have established a strong track record over the last five quarters with our consistent production results and declining costs since we acquired the Higginsville mine and mill in 2019.”
Organic growth opportunities
Huet added that the firm expects to provide an updated resource and reserve estimate for its Australian operations that will incorporate its 2020 drilling and reflect improved economics of the deposits after it reduced existing royalties across the portfolio.
“I believe we are well-positioned for a very exciting fourth quarter,” the CEO said. “We have built a solid platform from which we are well-positioned to grow the business to the next level as we prioritize our numerous organic growth opportunities."
Karora is maintaining its consolidated production and cost guidance of 90,000 to 95,000 ounces of gold and hopes to hit AISC of around US$1,000 per ounce sold by the end of 2020.
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