Aura Minerals (ORA.TSX), a gold mining company that recently purchased three producing gold mines from Yamana Gold (AUY), reported financial and operating results for the third quarter of 2009. The gold miner announced mine operating earnings of $0.1 million for the quarter, compared to a loss of $0.9 million in the third quarter of 2008. Aura Minerals reported a net loss of $7.2 million, or $0.05 per basic share, compared to a net loss of $14.1 million, or $0.12 per basic share, for the comparable period in 2008. The reduction in net loss from the third quarter 2008 was mainly the result of the company’s acquisition of the San Andres gold mine in August 2009, which positively impacted earnings, a $1.3 million reduction in stock-based compensation, and a $6.0 million reduction in exploration costs.
Cash used by operations in the quarter was $6.7 million, compared to $12.5 million for the same period in 2008. Less cash was used in the quarter compared to the same period in 2008 due to the positive contribution from San Andres, notwithstanding such results only being included since August 25th when the company closed the acquisition of the mine. The company stated that it anticipates that cash flow from operations will increase in the fourth quarter of 2009, being its first full quarter of operations from the San Andres gold mine. Aura Minerals finished the quarter on September 30 with current cash and cash equivalents of $46.8 million, and an additional $60.9 million in restricted cash reserved for the acquisition of the Sao Francisco Mine and the Sao Vicente Mine, expected to occur in the first quarter of 2010.
The gold miner produced 6,925 ounces of gold during the quarter, the first quarter of gold production for the company. Aura Minerals sold 7,175 ounces of gold from San Andres at an average realized gold price of $964 per ounce, for total sales of $6.9 million. In the same period in 2008 the company sold 1,188 dry metric tonnes of concentrate shipments, containing 607,700 pounds of copper, 164 ounces of gold and 7,644 ounces of silver from the Aranzazu Project, for total sales of $1.6 million. The Aranzazu copper-gold-silver mine remained in care and maintenance during the third quarter of 2009. Total cash costs per ounce of gold produced from August 26, the date at which the company began including data from San Andres, to the end of the third quarter, were $534, while there was no comparable cost data for the third quarter of 2008. Aura Minerals also announced 2009 gold production guidance of approximately 25,000 ounces of gold at total cash costs of below $500 per ounce of gold produced. The gold miner stated that all gold production in 2009 will come from its San Andres gold mine.
Patrick Downey, Aura Minerals’ President and CEO, commented that “we are very pleased to report our first production from the recently acquired San Andres Mine. Operational improvements have been our major focus at San Andres since we took over the operation in August, and we expect to see the results of those improvements beginning in the fourth quarter of 2009, with increased gold production and lower cash costs per ounce. In that regard, we have produced 6,983 ounces for the month of October which is the highest monthly production to date for 2009 at the San Andres Mine and we expect to meet or exceed the previous guidance of 18,000 ounces for the quarter. Further production increases are planned for 2010 based on completion of the new crusher-conveyor system and improvements to the overall heap leach operations. We anticipate completing the acquisition of the Sao Francisco Mine and Sao Vicente Mine in the first quarter of 2010, which along with our planned restart at the Aranzazu copper-gold-silver mine in the second quarter of 2010 will solidify our position as an emerging mid-tier gold producer. Looking ahead, we intend to maximize returns at all projects through cost management and operational efficiencies.”
Industry veteran and CEO Downey moved aggressively to build an intermediate-tier gold mining company, and the results are beginning to pay dividends. Aura purchased three gold mines from Yamana in a much lower gold price environment and his team is set to aggressively optimize these mines in 2010 and has guided to 220,000 ounces of gold production for next year. With the re-start at Aranzazu, Aura will further increase its revenue and free cash flow. Aura shareholders have been amply rewarded this year, as the share price has appreciated 313% thus far in 2009.
Aura Minerals is a Canadian based gold mining company that owns the Aranzazu copper-gold-silver mine in Zacatecas, Mexico and is also developing its advanced stage Serrote da Laje copper-gold-iron ore deposit at its wholly-owned Arapiraca project in the State of Alagoas, Brazil. The company also has extensive exploration land holdings in Brazil, including iron ore and nickel targets in the Carajas region, State of Para, Brazil. In August of 2009 Aura closed the acquisition of the San Andres gold mine in Honduras from Yamana Gold, and is expected in early 2010 to assume control of the Sao Francisco and Sao Vicente gold mines in Brazil, the other two mines purchased from Yamana, pursuant to its agreement and subject to regulatory approvals. In morning trading shares of ORA.TSX were down C$0.09 to C$3.21 while the gold price was down $3.57 to $1,114.07 per ounce.
