Premier Gold Mines Ltd., a gold-producer and exploration and development company, reported $27.3 million in revenue during the third quarter, compared to $50.0 million during the third quarter of 2017.
The reduction in revenue and operating income, when compared to the same period last year, is a result of decreased production from South Arturo, where mining of the Phase 2 pit was completed in 2017, and adjustments to stope designs in a new mining zone at Mercedes.
The redesign at Mercedes resulted in a development-intensive first half of the year and increased unit operating costs so far in 2018. With adjustments complete, production at Mercedes will be favorably weighted to the second half of 2018.
A total of 20,100 ounces of gold and 89,512 ounces of silver was produced during Q3 2018, compared to 26,677 ounces of gold and 85,431 ounces of silver during Q3 2017.
In keeping with its longer-term objective of increased annual production over the next several years, the company invested $5.2 million in exploration and pre-development initiatives. This expense when factored with the reduction in mine operating income during the period contributed to the net loss of $1.8 million.
Capital expenditures during the quarter totaled $8.5 million, which includes the construction of two new mining projects that have been initiated at South Arturo.
The company closed the quarter with cash and cash equivalents of $56.4 million and inventory of 2,555 ounces of gold and 19,988 ounces of silver.
The South Arturo Mine in Nevada, a joint venture operated by Barrick Gold Corp., continued to overperform during the quarter. Processing of stockpiled ore from the Phase 2 open pit during the third quarter contributed to gold production in excess of initial 2018 guidance with a total of 20,403 ounces delivered to Premier year-to-date.
Construction at two new mining centers at South Arturo has commenced with stripping of the Phase 1 open pit and development of the El Nino underground mine.
South Arturo produced a total of 2,635 ounces of gold during the third quarter compared to 8,113 ounces during the corresponding period last year. This was expected, as the source of Phase 2 production transitioned to lower grade stockpiled ore.
Processing of lower grade Phase 2 ore is expected to continue on a limited basis for the remainder of the year. El Nino underground development and Phase 1 open pit stripping continue to ramp up in anticipation of production in 2019.
Capital expenditures of $2.8 million were mainly related to stripping for the Phase 1 open pit, along with exploration at El Nino. Both portals are now collared at El Nino and stripping of the Phase 1 pit has proceeded to several benches utilizing a fully-autonomous trucking fleet. Stockpiling of potential heap leach material has started.
Drilling in 2018 will continue to focus on near-pit delineation, underground expansion, and testing of additional prospective target areas.
Cove and McCoy-Cove
During the quarter, 5,167 meters were drilled at the joint-venture, concentrating on the top two priority target areas of Lake Side and Windy Point with a focus on vectoring towards the most favorable geologic controls. The drilling was split between the Windy point and Lake side east extension areas, both with encouraging results.
The company also operates in Mexico and has an exploration project in Canada.