TORONTO, Aug. 7, 2014 /CNW/ - AuRico Gold Inc. (TSX: AUQ) (NYSE: AUQ), ("AuRico" or the "Company") reports financial results for the three and
six months ended June 30, 2014. The Company will host a conference call
on Friday, August 8, 2014 beginning at 8:30 a.m. Eastern Time (details
below). (All amounts are in U.S. dollars, unless otherwise indicated.)
To view "Company Wide Quarterly Production Growth", please click: http://files.newswire.ca/975/ProductionGraph.pdf
Financial Highlights
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(in thousands, except per share amounts)
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Quarter Ended
June 30, 2014
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Quarter Ended
June 30, 2013
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Six MonthsEnded
June 30, 2014
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Six Months Ended
June 30, 2013
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Revenue from mining operations
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$75,530
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$57,660
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$146,483
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$122,545
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Adjusted net (loss) / earnings(1)
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($15,284)
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$6,122
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($22,892)
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$17,719
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Adjusted net (loss) / earnings per share, basic(1)
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($0.06)
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$0.02
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($0.09)
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$0.07
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Net loss
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($16,776)
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($103,491)
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($45,667)
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($85,217)
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Net loss per share, basic
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($0.07)
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($0.42)
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($0.18)
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($0.34)
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Adjusted operating cash flow(1)
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$12,258
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$18,691
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$25,727
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$38,813
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Adjusted operating cash flow, per share(1)
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$0.05
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$0.08
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$0.10
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$0.15
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(1) See the tables at the end of this press release for a reconciliation
of adjusted net earnings and adjusted operating cash flow and refer to
the discussion of Non-GAAP measures below.
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Operational Highlights
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Quarter ended June 30, 2014
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Quarter ended June 30, 2013
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Young-Davidson
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El Chanate
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Total
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Young-Davidson
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El Chanate
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Total
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Gold ounces produced
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40,166
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16,032
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56,198
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19,435
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18,751
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38,186
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Gold ounces produced, pre-commercial production(3)
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-
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-
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-
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9,817
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-
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9,817
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Total gold ounces produced
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40,166
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16,032
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56,198
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29,252
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18,751
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48,003
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Underground cash costs per ounce(1)(2)(4)
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$803
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-
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$803
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-
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-
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-
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Open pit cash costs per ounce(1)(2)(4)
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$974
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$618
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$800
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$716
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$602
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$655
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Total cash costs per ounce(2)(4)
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$871
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$618
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$801
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$716
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$602
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$655
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Six months ended June 30, 2014
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Six months ended June 30, 2013
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Young-Davidson
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El Chanate
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Total
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Young-Davidson
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El Chanate
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Total
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Gold ounces produced
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75,270
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35,142
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110,412
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39,987
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36,640
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76,627
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Gold ounces produced, pre-commercial production(3)
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-
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-
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-
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17,546
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-
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17,546
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Total gold ounces produced
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75,270
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35,142
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110,412
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57,533
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36,640
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94,173
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Underground cash costs per ounce(1)(2)(4)
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$805
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-
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$805
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-
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-
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-
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Open pit cash costs per ounce(1)(2)(4)
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$1,141
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$601
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$856
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$705
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$585
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$645
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Cash costs per ounce(2)(4)
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$935
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$601
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$834
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$705
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$585
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$645
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(1)
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Prior to commissioning the underground mine at Young-Davidson, cash
costs were calculated on ounces produced from the open pit only. All
underground costs were capitalized, and any revenue related to
underground ounces sold was credited against capital. Subsequent to the
declaration of commercial production in the underground mine on October
31, 2013, cash costs are calculated on ounces from both the open pit
and underground mines, and revenue related to the sale of underground
ounces is recognized in the Company's Statement of Operations as
revenue.
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(2)
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Cash costs are prior to inventory net realizable value adjustments,
where applicable. See the Non-GAAP Measures section on page 18 of the
Management's Discussion and Analysis for the three and six months ended
June 30, 2014.
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(3)
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Includes pre-production gold ounces from the Young-Davidson underground
mine prior to the declaration of commercial production on October 31,
2013.
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(4)
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For the three and six months ended June 30, 2014, cash costs per gold
ounce are calculated using gold ounces sold at the El Chanate and
Young-Davidson mines. For 2013, cash costs per gold ounce are
calculated using gold ounces sold at the El Chanate mine and gold
ounces produced at the Young-Davidson mine.
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2014 Guidance Confirmation and Update
The Company confirms its 2014 operational estimates and is revising its
capital investment estimates for the Young-Davidson mine.
During the first six months of the year the Young-Davidson mine has
continued to exceed expectations through a diligent focus on driving
further productivity gains throughout the operation as well as
accelerating capital investment initiatives that position the mine for
long-term success. This increased capital investment has supported
higher than expected productivity throughout the operation as follows:
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Underground development rates have exceeded planned levels to date and
support the increasing underground productivity levels that position
the mine to meet, or potentially exceed, the year-end target of 4,000
tonnes per day.
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The sustainable run-rate of the mill facility has been increased from
7,000 tonnes per day to the current 8,000 tonnes per day through the
addition of two leach tanks and a pebble recycle conveyor system with
no negative impact on recoveries. The increased mill capacity will
support the growing underground ore feed as well as the early treatment
of the open pit stockpile that is expected to favourably augment the
mine's free cash flow profile going forward.
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Sinking of the historical MCM shaft is currently three months ahead of
schedule, which is expected to advance the timing to complete the final
leg of the Northgate production shaft to its ultimate depth and provide
earlier access to the lower mine.
As a result of the increased capital investment, the Company has
increased its 2014 capital investment estimates at the Young-Davidson
mine from $110 million to approximately $135 million to potentially
accelerate the ramp-up of Young-Davidson. Notwithstanding the increase
in Young-Davidson's capital investment, the Company continues to be
confident that in the current gold price environment this world class
asset will achieve free cash flow by the end of the year.
Young-Davidson Highlights
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At the end of the quarter, the Young-Davidson mine reported 465 days of
lost time incident free operations.
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Record production of 40,166 gold ounces was reported in the quarter,
representing an increase of 5,062 ounces, or 14%, over the prior
quarter. The operation is expected to deliver additional
period-over-period production increases going forward as the
underground mine ramps-up to targeted levels.
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Underground cash costs for the quarter were $803 per gold ounce and are
expected to decline throughout the year, corresponding with planned
quarter-over-quarter increases in underground productivity. Total cash
costs for the quarter, which include the open pit mine and open pit
stockpile, were $871 per gold ounce.
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During the quarter, underground mine productivity exceeded planned
levels and averaged approximately 3,595 tonnes per day. With
underground productivity currently at more than 90% of the year-end
target, the operation is firmly positioned to achieve the year-end
target of 4,000 tonnes per day and an ultimate productivity level
target of 8,000 tonnes per day at the end of 2016.
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For the second full quarter of underground commercial production, unit
mining costs were in-line with expectations at approximately $45 per
tonne. Corresponding with the planned quarter-over-quarter increases in
underground productivity, unit costs are expected to decrease steadily
throughout the year to a year-end underground unit mining cost target
of approximately $40 per tonne.
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During the quarter, the operation was able to fully utilize excess
paste-fill capacity to accelerate the filling of additional mined out
stopes to potentially accelerate the planned underground ramp-up
schedule through earlier access to secondary stopes. The capacity of
the paste-fill plant is expected to fully support the underground
ramp-up to 8,000 tonnes per day at the end of 2016.
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During the quarter, underground development advance continued to exceed
planned levels with approximately 3,545 metres completed, at an average
of 39 metres per day. The Company will continue to focus on advancing
underground development to best position the mine for sustainable,
period-over-period productivity increases in 2014 and beyond.
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During the quarter, the mill facility exceeded targeted levels and
averaged 8,230 tonnes per day, at planned recoveries of 88%. The higher
throughput level during the quarter suggests a sustainable mill
processing run rate of 8,000 tonnes per day going forward that is
expected to provide considerable flexibility as the underground mine
continues to ramp up to its ultimate target of 8,000 tonnes per day.
The short life open pit mine was fully depleted in early June as
planned. As a result, open pit mining activities have ceased and mining
costs of approximately $3 million per month have been eliminated.
Currently, approximately 3.2 million tonnes of open pit ore, at an
average grade of approximately 0.80 grams per tonne, is stockpiled
ahead of the mill facility for future processing. The open pit
stockpile will supplement underground ore feed to the mill processing
facility as the underground mine ramps up to targeted levels. As the
related mining costs associated with the stockpile were expended in
prior periods, processing of these ore tonnes is expected to favourably
augment the mine's free cash flow profile going forward.
El Chanate Highlights
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At the end of the quarter, the El Chanate mine achieved 479 days of lost
time incident free operations.
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During the quarter the open pit mined an average of 93,808 tonnes per
day.
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Production in the quarter reflected sequencing of lower grade mining
areas. Operations are expected to increasingly shift to higher grade
mining areas during the second half of the year.
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Cash costs for the quarter were $618 per ounce, in-line with guidance
levels.
"The Company has reported the eighth consecutive quarter of production
growth underpinned by another record quarter from the Young-Davidson
mine where the operation continues to exceed expectations, and with
Young-Davidson establishing higher productivity levels
quarter-over-quarter we are gaining increasing confidence in the
potential of this asset. Underpinned by our strong financial position,
we are able to leverage that potential and have increased capital
investment to potentially accelerate the ramp-up to peak productivity
levels." stated
Scott Perry
, President and Chief Executive Officer. He
continued, "The Company continues to take a longer term view to position our
operations for sustainable growth and shareholder value creation that
will drive long term success. As we begin the third quarter the Company
is very well positioned to deliver the ninth consecutive quarter of
production growth and we are increasingly confident that in the current
gold price environment the Young-Davidson mine will be generating
positive free cash flow by the end of the year."
Adjusted Net Earnings Reconciliation
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(in thousands, except per share metrics)
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Quarter Ended
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Quarter Ended
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June 30, 2014
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June 30, 2013
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Net loss
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($16,776)
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($103,491)
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Adjustments:
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Deferred income tax (recovery) / expense related to foreign exchange
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(11,309)
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11,852
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Foreign exchange loss / (gain)
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7,583
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(8,741)
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Unrealized and realized (gain) / loss on investments
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(779)
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204
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Loss on retained interest royalty
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4,815
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-
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Net realizable value adjustments on inventory
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-
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12,245
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Impairment charges
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-
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98,688
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Unrealized loss on derivatives
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-
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793
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Gain on option component of convertible notes
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-
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(4,106)
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Unrealized loss on contingent consideration
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-
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4,060
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Other (including tax effect of adjustments)
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1,182
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(5,382)
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Adjusted net (loss) / earnings
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($15,284)
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$6,122
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Adjusted net (loss) / earnings, per share
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($0.06)
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$0.02
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(in thousands, except per share metrics)
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Six Months Ended
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Six Months Ended
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June 30, 2014
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June 30, 2013
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Net loss
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($45,667)
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($85,217)
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Adjustments:
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Deferred income tax expense related to foreign exchange
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1,347
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12,553
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Foreign exchange gain
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1,635
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(9,677)
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Gain on option component of convertible notes
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(413)
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(10,975)
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Unrealized and realized (gain) / loss on investments
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(6,589)
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316
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Loss on retained interest royalty
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4,815
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-
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Loss on convertible notes tender offer
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15,645
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-
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Corporate restructuring costs
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2,716
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-
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Net realizable value adjustments on inventory
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-
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12,245
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|
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Impairment charges
|
-
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98,688
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Unrealized loss on contingent consideration
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-
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6,849
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Unrealized gain on derivatives
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-
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(1,882)
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Other (including tax effect of adjustments)
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3,619
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(5,181)
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Adjusted net (loss) / earnings
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($22,892)
|
$17,719
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Adjusted net (loss) / earnings, per share
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($0.09)
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$0.07
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Adjusted Operating Cash Flow Reconciliation
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|
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(in thousands, except per share metrics)
|
Quarter Ended
|
Quarter Ended
|
|
June 30, 2014
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June 30, 2013
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Operating cash flow
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$4,649
|
$13,875
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Add back: Non-cash change in operating working capital
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7,609
|
4,816
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Adjusted operating cash flow
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$12,258
|
$18,691
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Adjusted operating cash flow, per share
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$0.05
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$0.08
|
|
|
|
|
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(in thousands, except per share metrics)
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Six Months Ended
|
Six Months Ended
|
|
June 30, 2014
|
June 30, 2013
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|
Operating cash flow
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$29,140
|
$26,974
|
|
Add back: Non-cash change in operating working capital
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(3,413)
|
11,839
|
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Adjusted operating cash flow
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$25,727
|
$38,813
|
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Adjusted operating cash flow, per share
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$0.10
|
$0.15
|
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization
("Adjusted EBITDA")
|
|
|
|
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(in thousands)
|
Quarter Ended
|
Quarter Ended
|
|
June 30, 2014
|
June 30, 2013
|
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EBITDA
|
$14,908
|
($80,483)
|
|
Add back:
|
|
|
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Exploration
|
20
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17
|
|
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Non-cash items identified in supplemental cash flow note, excluding
amortization and depletion, and deferred income tax expense / recovery
|
5,546
|
102,217
|
|
Adjusted EBITDA
|
$20,474
|
$21,751
|
|
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(in thousands)
|
Six Months Ended
|
Six Months Ended
|
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June 30, 2014
|
June 30, 2013
|
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EBITDA
|
$21,387
|
($45,602)
|
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Add back:
|
|
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Exploration
|
28
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19
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|
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Non-cash items identified in supplemental cash flow note, excluding
amortization and depletion, and deferred income tax expense / recovery
|
14,746
|
97,382
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|
Adjusted EBITDA
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$36,161
|
$51,799
|
Non-GAAP Measures
The Company uses the measures adjusted net earnings, cash costs per
ounce, adjusted operating cash flow, EBITDA and Adjusted EBITDA in this
press release, which do not have a standardized meaning prescribed by
International Financial Reporting Standards ("IFRS" or "GAAP"). They
are, therefore, considered to be non-GAAP measures and may not be
comparable to similar measures presented by other companies. The
non-GAAP measures cash costs per ounce and EBITDA are reconciled to the
Company's financial statements beginning on page 18 of the Company's
Management's Discussion and Analysis for the three and six months ended
June 30, 2014.
Adjusted net earnings is comprised of net earnings, adjusted for
specific items. While the adjustments to net earnings in this measure
include items that are recurring, adjusted net earnings is a useful
measure as the unrealized gains / losses on foreign exchange, fair
value adjustments on contingent consideration and derivatives,
unrealized and realized gains and loss on investments, corporate
restructuring costs, and other non-recurring items do not reflect the
underlying operating performance of the Company's core mining business
in the periods presented and are not necessarily indicative of future
operating results.
Adjusted operating cash flow excludes the change in non-cash operating
working capital, which includes changes in receivables, inventories,
prepaid assets, and payables. Management uses adjusted operating cash
flow as a measure internally to evaluate the underlying operating cash
flow performance of the Company as a whole for the reporting periods
presented, and to assist with the planning and forecasting of future
operating cash flow.
Adjusted EBITDA represents EBITDA, adjusted for exploration expense and
other non-cash items included in earnings. While the adjustments to net
earnings in this measure includes items that are recurring, adjusted
EBITDA a valuable indicator of the Company's ability to generate
liquidity by producing operating cash flow to fund working capital
needs, service debt obligations, and fund capital expenditures.
Financial Statements and Management's Discussion and Analysis
The financial statements and related Management's Discussion and
Analysis can be found on the Company's website at www.auricogold.com or under the Company's profile on www.sedar.com and with the Securities and Exchange Commission at www.sec.gov/edgar.shtml ("Edgar").
Q2 2014 Dividend Declared
Commencing in 2014, the quarterly dividend is linked to operating cash
flow ("OCF"), whereby the Company pays out 20% of the OCF generated in
the preceding quarter, divided by the Company's outstanding common
shares at the time the dividend is approved. On August 7, 2014, the
Board of Directors declared the Company's quarterly dividend payment of
$0.00375 per share for the second quarter ended June 30, 2014, payable
on September 2, 2014 to shareholders of record at the close of business
on August 18, 2014. Further information on the Company's dividend
reinvestment plan (DRIP) is available through the following link: www.auricogold.com/DRIP.
Second Quarter Webcast and Conference Call
A webcast and conference call will be held on Friday, August 8, 2014 starting at 8:30 a.m. Eastern Time. Senior management will be on the call to discuss the results.
Conference Call Access
-
International & Toronto: 1-647-427-7450
-
Canada & U.S. Toll Free: 1-888-231-8191
Please ask to be placed into the AuRico Gold 2014 Second Quarter Results
Conference Call.
Conference Call Live Webcast
The conference call will be broadcast live on the internet via webcast.
To access the webcast, please follow this link: http://www.newswire.ca/en/webcast/detail/1379487/1530049.
Archive Call Access
If you are unable to attend the conference call, a replay will be
available until midnight, August 15, 2014 by dialing the appropriate
number below:
-
International & Toronto: 1-416-849-0833 Passcode: #67392874
-
Canada & U.S. Toll Free: 1-855-859-2056 Passcode: #67392874
Archive Webcast
The webcast will be archived for 90 days. To access the archived
webcast, visit the Company's website at www.auricogold.com or follow this link: http://www.newswire.ca/en/webcast/detail/1379487/1530049.
About AuRico Gold
AuRico Gold is a leading Canadian gold producer with mines and projects
in North America that have solid production growth and exploration
potential. The Company is focused on its core operations including the
Young-Davidson gold mine in northern Ontario and the El Chanate mine in
Sonora State, Mexico. AuRico's project pipeline also includes
development opportunities in Canada and Mexico. AuRico's head office is
located in Toronto, Ontario, Canada.:
Cautionary Statement
This press release contains certain information that constitutes
"forward-looking information" and "forward-looking statements" as
defined under Canadian and U.S. securities laws. All statements in this
press release, other than statements of historical fact, are
forward-looking statements. The words "expect", "believe",
"anticipate", "contemplate", "may", "could", "will", "intend",
"estimate", "forecast", "target", "budget", "schedule" and similar
expressions identify forward-looking statements. Forward-looking
statements in this press release include, without limitation, those
under the headings "2014 Guidance Confirmation and Update", "Young-Davidson Highlights" and "El Chanate Highlights" which include, without limitation, statements with respect to our
expectations on underground productivity levels, underground unit
mining cost, underground development, mill facility processing rate,
cash flow, cash costs, capital investment and timing to completion on
the final leg of the Northgate production shaft, information as to our
strategy, plans and future financial and operating performance, such as
our expansion plans, project timelines, production plans, projected
cash flows or capital expenditures, cost estimates, mining or milling
methods, projected exploration results, resource and reserve estimates
and other statements that express our expectations or estimates of
future performance.
Forward-looking statements are necessarily based upon a number of
factors and assumptions that, while considered reasonable by management
at the time of making such statements, are inherently subject to
significant business, economic and competitive uncertainties and
contingencies. Known and unknown factors could cause actual results to
differ materially from those projected in the forward-looking
statements. Such factors and assumptions underlying the forward-looking
statements in this press release include, but are not limited to:
changes to current estimates of mineral reserves and resources;
fluctuations in the price of gold; changes in foreign exchange rates
(particularly the Canadian dollar, Mexican peso and U.S. dollar); the
impact of inflation; changes in our credit rating; any decision to
declare a quarterly dividend; employee relations; litigation;
disruptions affecting operations; availability of and increased costs
associated with mining inputs and labor; development delays at the
Young-Davidson mine; operating or technical difficulties in connection
with mining or development activities; inherent risks associated with
mining and mineral processing; the risk that the Young-Davidson and El
Chanate mines may not perform as planned; uncertainty with the
Company's ability to secure capital to execute its business plans; the
speculative nature of mineral exploration and development, including
the risks of obtaining necessary licenses and permits, including the
necessary licenses, permits, authorizations and/or approvals from the
appropriate regulatory authorities for the Kemess Underground project;
contests over title to properties; changes in national and local
government legislation in Canada, Mexico and other jurisdictions in
which the Company does or may carry on business in the future; risk of
loss due to sabotage and civil disturbances; the impact of global
liquidity and credit availability and the values of assets and
liabilities based on projected future cash flows; risks arising from
holding derivative instruments; business opportunities that may be
pursued by the Company, as well as those factors discussed under "Risk
Factors" in the Company's most recent Annual Information Form.
Actual results and developments are likely to differ, and may differ
materially, from those expressed or implied by the forward-looking
statements contained in this press release. Such statements are based
on a number of assumptions which may prove to be incorrect, including,
but not limited to, the assumptions set forth in our most recent Form
40-F/Annual Information Form. Readers are cautioned that
forward-looking statements are not guarantees of future performance.
All of the forward-looking statements made in this press release are
qualified by these cautionary statements. Specific reference is made to
the most recent Form 40-F/Annual Information Form on file with the SEC
and Canadian provincial securities regulatory authorities for a
discussion of some of the factors underlying forward-looking
statements.
There can be no assurance that forward-looking statements or information
will prove to be accurate, accordingly, investors should not place
undue reliance on the forward-looking statements or information
contained herein. The Company disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required by
applicable law.
Cautionary Note to U.S. Investors Concerning Measured, Indicated and
Inferred Resources
This press release uses the terms "measured", "indicated" and "inferred"
resources. We advise investors that while those terms are recognized
and required by Canadian regulations, the United States Securities and
Exchange Commission does not recognize them. "Inferred resources" have
a great amount of uncertainty as to their existence and as to their
economic and legal feasibility. It cannot be assumed that all or any
part of an inferred resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral resources
may not form the basis of feasibility or other economic studies. United
States investors are cautioned not to assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. United States investors are also cautioned not to
assume that all or any part of an inferred mineral resource exists, or
is economically or legally mineable.
SOURCE AuRico Gold Inc.
PDF available at: http://stream1.newswire.ca/media/2014/08/07/20140807_C9679_DOC_EN_42368.pdf