LONDON (Alliance News) - Goldbridges Global Resources PLC late Friday said the transition to an underground operation at its main mine caused lower production and higher costs in 2015, causing the miner's pretax loss to widen significantly in the year.
The miner focused on its main Sekisovskoye gold mine in East Kazakhstan said its pretax loss swelled to USD11.8 million in 2015 from the USD985,000 loss reported the year before following a steep fall in revenue and higher costs.
Revenue dropped to USD24.1 million in the year, allowing the company to generate a USD4.3 million gross profit in 2015, a considerably weaker performance when compared to the USD35.2 million generated in revenue in 2014 when it made a gross profit of USD7.2 million.
Adding to the loss was a rise in administrative costs to USD9.8 million from USD8.2 million. The amount of impairments that were reversed in 2015 also fell to only USD674,000 compared to USD2.2 million a year earlier.
However, those were partly absorbed by the absence of a USD1.2 million impairment booked in 2014 and by the absence of USD702,000 paid in listing expenses in 2014.
Goldbridges revised its approach to the proposed underground mine at the already-producing Sekisovskoye gold mine which led to the capital expenditure it needs to build the underground mine being lowered. The "external funding requirement" to expand the mine currently sits at USD20.0 to USD30.0 million, of which USD10.0 million has been secured since the start of this year.
Goldbridges said it is pursuing the remaining funds it needs for the development.
Looking at the current operations at Sekisovskoye, the amount of gold poured in 2015 dropped almost 53% to 15,534 ounces from 32,994 ounces as operations at the existing open pit operation winds down as the company transitions to the underground development.
Although Goldbridges is suffering short term pain from the current move, Goldbridges Chief Executive Aidar Assaubayev said the development would "secure the long term future" of the company and will lead to production beginning to increase again in the second half of this year.
Demonstrating the need to move to the underground element from the open pit was the gold grade in the year, falling to 1.12 grammes of gold per tonne of ore from the 1.81 grammes of gold per tonne of ore recorded in 2014. The decline in grade was also caused by the low-grade stockpiled ore being used to maximise throughput during the ongoing transition.
Following the trend, recovery rates were also considerably lower in the year at 76.04% compared to the 83.3% reported in 2014, but Goldbridges said this is expected to return to over 80.0% once the improvements to the plant are completed.
Unsurprisingly, that caused its cash cost to rise to USD837 per ounce from USD834 per ounce and that was exacerbated by a lower gold price in the year of USD1,151 per ounce compared to USD1,258 per ounce the year before.
Goldbridges shares closed up 1.2% to 1.65 pence per share on Friday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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