LONDON (Alliance News) - Patagonia Gold PLC Friday said its expects to ramp-up production in the second-half as it reported a narrowed pretax loss and increased revenue, but admitted further financing will be needed to progress its operations.
The company reported a pretax loss of USD4.9 million for the six months ended June 30, narrowed from a USD8.8 million loss in the first-half of 2013. due to increasing revenue and reducing administrative and exploration expenses.
Patagonia reported revenue of USD15.6 million in the first-half. The company reported its maiden revenue in the second-half of 2013 of USD10.2 million.
"During the first half of 2014, we have consolidated Patagonia Gold as a gold producer and our cash flow has improved accordingly. We look forward to continue increasing our production during the remainder of 2014," said Chairman Carlos Miguens.
The company's growth strategy aims to develop a number of projects located in the province of Santa Cruz in the southern Patagonia region of Argentina. It brought its Lomada mine into full production last year.
For the first eight months of 2014 the Lomada project sold a total of 16,088 ounces of gold and 298 ounces of silver for USD20.8 million, at an average all in cash cost of USD812 per ounce.
Full-year production guidance has been forecast down from 31,000 ounces to 26,900 ounces due to lower than expected production for the months of April, May and June caused by import restrictions and delays with new mining machinery and spare parts, said Patagonia.
Exploration on the Lomada block is planned to recommence in the fourth-quarter, aimed at replenishing depleted resources from production and extending the mine life, it said.
The Cap-Oeste site, its flagship project is undergoing a pre-feasibility study with the final definitive round of metallurgical testwork due to start in fourth-quarter.
It is calculating an updated resource model, cashflow model and new mine design at its COSE project, based on treating the mined product in house or selling locally and not the previously preferred option of direct shipping for smelting offshore, it said. The study is scheduled to be completed by November 2014.
Exploration of the La Manchuria block is scheduled to recommence in the third-quarter of 2014.
Follow-up drilling will commence at its El Tranquilo project in late 2014 following its shallow rig drilling in the second-quarter of 2014, once an approved geophysical survey is completed over the most prospective areas.
Patagonia has long term debt of USD3.7 million and continues to raise further equity as needed to carry out its exploration and development plans, said the company.
The expansion of the Lomada project and continuing studies on the Cap Oeste and COSE projects will require additional capital financing, it added.
"The group and company are evaluating additional strategies and corresponding financing requirements for 2014 and beyond and are confident in their ability to secure additional funding," said Patagonia.
The continued volatility in equity and debt markets coupled with the current gold price does cause uncertainty and casts doubt on the company's ability to continue as a going concern, it added.
It reported a cash balance of USD372,000 as at June 30.
"Our successful development of the Lomada project, together with our highly experienced exploration and management team, bodes well for the future development of our highly prospective projects," said Miguens.
Patagonia's shares were down 2.6% to 7.55 pence per share Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2014 Alliance News Limited. All Rights Reserved.
