Signal Gold Announces Q3 2022 Financial Results

Rhea-AI Summary

Signal Gold reported strong Q3 2022 results, achieving gold sales of 5,615 ounces, a 118% increase year-over-year, generating revenue of $12.7 million at an average realized gold price of C$2,258 (US$1,729) per ounce. Production rose to 4,990 ounces, up 125% from Q3 2021, though down 8% from Q2 2022 due to scheduled maintenance. The company plans to wind down Point Rousse after Argyle mining, projected at 20,000-21,000 ounces for 2022. However, a net loss of $1.17 million was reported, consistent with prior year losses. As of September 30, 2022, Signal Gold held $12.2 million in cash and debts of $11 million.

Positive

• Gold sales of 5,615 ounces, up 118% year-over-year.
• Revenue of $12.7 million, a 117% increase compared to Q3 2021.
• Gold production of 4,990 ounces, 125% increase from Q3 2021.
• Operating cash costs expected to decrease to approximately $1,500 per ounce for the full year.

Negative

• Net loss of $1.17 million in Q3 2022 compared to a net loss of $1.08 million in Q3 2021.
• Operating cash costs per ounce sold increased by 10% from Q2 2022.

TORONTO, ON / ACCESSWIRE / November 1, 2022 / Signal Gold Inc. ("Signal Gold" or the "Company") (TSX:SGNL)(OTCQX:SGNLF) is pleased to report its financial and operating results for the three and nine months ended September 30,2022 ("Q3 2022"). The consolidated financial statements and management discussion and analysis documents can be found at www.sedar.com and the Company's website, www.signalgold.com. All dollar amounts are in Canadian dollars unless otherwise noted.

"As previously announced, the Company has decided not to proceed with the development of Stog'er Tight at this time and will be winding down the Point Rousse operation after the completion of mining at Argyle. Point Rousse is now expected to produce between 20,000 to 21,000 ounces of gold in 2022 and expects the processing of Argyle ore to continue into early 2023 before transitioning to care and maintenance. In Q3 2022, the operation produced 4,990 ounces of gold and sold 5,615 ounces to generate metal revenue of $12.7 million. Based on the remaining forecast for Argyle, the Company has a financial plan which will ensure a proper severance and retention plan for impacted employees and allow for the discharge of all trade payables and equipment leases, while it continues with ongoing progressive rehabilitation of the site."

~Kevin Bullock, President and Chief Executive Officer, Signal Gold Inc.

Highlights for the Period Ended September 30, 2022

• Signal Gold sold 5,615 ounces of gold in the third quarter of 2022, a 118% increase from the third quarter of 2021, generating metal revenue of $12.7 million at an average realized gold price* of $2,258 (US$1,729) per ounce sold.
• Point Rousse produced 4,990 ounces of gold in the third quarter of 2022, an increase of 2,772 ounces or 125% from the third quarter of 2021 due to the higher-grade profile of Argyle mill feed. Production decreased 8% from Q2 2022 due to scheduled mill maintenance in September for a mill liner change.
• Mine operations moved 92,729 tonnes of ore during the third quarter from Argyle, a 25% increase from the second quarter of 2022 when the mine's ability to drill and blast was impeded in April from the impact of water management issues in the first half of the year. Point Rousse maintained an ore stockpile of approximately 19,600 tonnes as of September 30, 2022.
• The Pine Cove Mill processed 92,617 tonnes during the third quarter of 2022. The mill achieved a strong average recovery rate of 88.7% driven by the higher-grade Argyle mill feed in the third quarter, with mill availability reflecting the scheduled maintenance downtime.
• Operating cash costs per ounce sold* at the Point Rousse operation in Q3 2022 were $1,447 (US$1,108), reflecting a 10% increase from Q2 2022 due to lower mining productivity resulting in higher costs during the quarter. Based on the year-to-date operating cash costs of $1,694, operating cash costs per ounce sold* for the full year are now expected to be approximately $1,500 per ounce of gold sold (US$1,155) (based on an approximate annual exchange rate of 0.77).
• All-in sustaining cash costs per ounce sold*, including corporate administration and sustaining capital expenditures, were $1,796 (US$1,375) for Q3 2022.
• Net loss for the three months ended September 30, 2022 was $1,168,037, or $0.01 per share, compared to $1,078,899, or $0.01 per share, for the three months ended September 30, 2021.
• On August 2, 2022, the Company received the Environmental Assessment Approval for the Goldboro Gold Project from the Nova Scotia Minister of Environment and Climate Change, subject to the terms and conditions outlined in the Approval, marking a significant milestone in the regulatory approval process.
• As of September 30, 2022, the Company had a cash balance of $12.2 million and an undrawn revolving credit facility of $3.0 million.

* Refer to Non-IFRS Measures Section below. Non-IFRS financial measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements and may not be comparable to similar financial measures disclosed by other issuers.

Consolidated Results Summary

Consolidated Results Summary

Financial Results		Three months ended September 30, 2022				Three months ended September 30, 2021				Nine months ended September 30, 2022				Nine months ended September 30, 2021
Revenue ($)			12,687,652			5,855,453				30,370,352					20,155,365
Cost of operations, including depletion and depreciation ($)			11,636,510			6,245,043				29,255,556					23,123,227
Mine operating income (loss) ($)			1,051,142			(389,590)				1,114,796					(2,967,862)
Net loss ($)			(1,168,037)			(1,078,899)				(5,048,563)					(5,778,000)
Net loss per share ($/share) - basic and diluted			(0.01)			(0.01)				(0.03)					(0.03)
Cash generated from (used in) operating activities ($)			3,885,127			251,303				(44,395)					(1,030,618)
Capital investment in property, mill and equipment ($)			313,097			3,125,994				3,025,233					5,431,463
Capital investment in exploration and evaluation assets ($)			2,160,711			2,227,982				9,491,612					9,195,864
Average realized gold price per ounce*		US$1,729				US$1,779				US$1,792				US$1,812
Operating cash costs per ounce sold*		US$1,108				US$1,656				US$1,320				US$1,828
All-in sustaining cash costs per ounce sold*		US$1,375				US$3,158				US$1,816				US$2,799
							September 30, 2022					December 31, 2021
Working capital (deficit) (*)							(325,104)					1,397,113
Total assets ($)							101,713,519					95,551,004
Non-current liabilities ($)							9,473,988					8,235,993

*Refer to Non-IFRS Measures section below.

Operational Results		Three months ended September 30, 2022				Three months ended September 30, 2021				Nine months ended September 30, 2022				Nine months ended September 30, 2021
Ore mined (t)			92,729				18,047				235,987				106,762
Waste mined (t)			533,351				802,087				1,640,665				1,934,794
Strip ratio			5.8				44.4				7.0				18.1
Ore milled (t)			92,617				118,988				296,671				328,551
Grade (g/t Au)			1.89				0.67				1.57				0.88
Recovery (%)			88.7				86.2				88.2				85.9
Gold ounces produced			4,990				2,218				13,236				7,959
Gold ounces sold			5,615				2,574				13,204				8,849

Review of the Three Months Ended September 30, 2022

Operational Overview

The Point Rousse operation produced 4,990 ounces of gold in Q3 2022, representing an 8% decrease over the second quarter of 2022 and a 125% increase compared to the third quarter of 2021. The decrease from the second quarter of 2022 reflects scheduled mill maintenance during September for a mill liner change, and the change over the comparative period of 2021 reflects the higher-grade profile of mill throughput from Argyle. During Q3 2022, the mine operations moved 92,729 tonnes of ore, an increase of 25% from the prior quarter when the mining operation was impacted by elevated ammonia levels in water in the Argyle Pit, with normal mining operations commencing in May. The Company achieved a reduced stripping ratio of 5.8 waste tonnes to ore tonnes in the third quarter of 2022, reflective of development work performed during the first half of 2022.

The Pine Cove Mill processed 92,617 tonnes during Q3 2022 and achieved a strong average recovery rate of 88.7%, consistent with the second quarter of 2022. The strong recovery corresponds with the average mill grade of 1.89 g/t, as mill throughput was exclusively from the Argyle Mine, which helped offset the impact of the downtime due to scheduled mill maintenance.

Financial Results

Signal Gold sold 5,615 ounces of gold during the third quarter of 2022 to generate metal revenue of $12.7 million at an average realized gold price* of $2,258 (US$1,729) per ounce, representing a 117% increase in metal revenue compared to the third quarter of 2021 due to higher production and gold sales.

Operating expenses for the three months ended September 30, 2022 were $7,691,089 compared to $5,402,512 in the three months ended September 30, 2021. Operating expenses for the third quarter of 2022 included mining costs of $4,371,298 which were 128% higher than the comparative period, primarily due significantly lower tonnes mined combined with the impact of the high capitalization of deferred stripping from the development of the Argyle Open Pit in Q3 2021. Processing costs of $2,730,692 in the most recent quarter were relatively consistent with the comparative period of 2021 despite scheduled maintenance resulting in 22% less tonnes milled in the third quarter of 2022. Point Rousse was milling lower grade stockpiles in the third quarter of 2021 while it was focused on development of the Argyle pit. Operating expenses and depletion and depreciation in Q3 2022 were also impacted by a write down to metal inventory of $1,311,000 to net realizable value, of which $923,721 was recorded through operating expenses and $387,279 was recorded through depletion and depreciation. Operating cash costs per ounce sold* in the third quarter of 2022 were $1,447 (US$1,108) and are expected to continue to decrease into the fourth quarter as Point Rousse winds down operations after the completion of mining from Argyle.

The royalty expense for the third quarter of 2022 was $441,809 compared to $53,434 in the third quarter of 2021, reflecting the 3% net smelter return royalty that applies to Argyle. Depletion and depreciation for the three months ended September 30, 2022 was $3,503,612, a significant increase from $1,444,037 in the third quarter of 2021 reflecting comparatively higher production in 2022 and the reduced mineral reserve at Argyle, which results in a lower denominator for depletion and depreciation on a units-of-production basis relative to the denominator used in the comparative period.

Mine operating income for the three months ended September 30, 2022 was $1,051,142, compared to the mine operating loss of $389,590 in the corresponding period of 2021. The improvement from the prior year reflects increased gold production and sales resulting from higher mining activity.

Corporate administration costs were $1,110,793 in the third quarter of 2022 compared to $905,089 in the third quarter of 2021, reflecting increased legal costs, salary adjustments and severance expenses, and increased marketing activities compared to 2021 when the pandemic largely eliminated all marketing-related travel.

Finance expense for Q3 2022 was $482,733 compared to $32,641 in the comparative quarter of 2021, reflecting the impact of finance charges related to the Auramet senior secured loan facility and related promissory note which was entered into in May of 2022.

Other expenses for Q3 2022 were $180,561 compared to other income of $138,973 in the comparative quarter of 2021. The decrease from the prior period reflects a foreign exchange loss of $407,414, which was partially offset by the unrealized derivative gain of $188,107. The foreign exchange loss is primarily related to the revaluation of the Auramet secured loan facility and related promissory note, whereas the derivative gain is related to the valuation of call options granted as part of the promissory note, which are recorded as a derivative liability.

In Q3 2022, the Company recorded a recovery of $41,153 as a deferred premium on flow-through shares, representing the proportion of the remaining qualifying exploration expenditures that were spent from the May 2021 flow-through financing in the third quarter of 2022. The flow-through financing from June 2022 remains unused.

Net comprehensive loss for the three months ended September 30, 2022, was $1,168,037, or $0.01 per share, compared to a net comprehensive loss $1,078,899, or $0.01 per share, for the three months ended September 30, 2021. The improvement was the result of higher gold sales and resulting metal revenue, partially offset by higher operating expenses and depletion and depreciation in the third quarter of 2022.

* Refer to Non-IFRS Measures Section below.

Financial Position and Cash Flow Analysis

As of September 30, 2022, the Company had cash and cash equivalents of $12,188,696 and a working capital deficit* of $325,104. The current portion of loans includes the US$8,000,000 Promissory Note with Auramet. The Note is due on May 5, 2023 and the Company may repay the Note from time to time, in minimum incremental amounts of US$1,000,000, either in whole or in part, subject to any accrued interest. Interest accrues on the unpaid principal amount at the rate of 8% per annum plus the greater of (i) 90 Day US$ SOFR (Secured Overnight Financing Rate), and (ii) 1.00% per annum payable quarterly in arrears.

The Company generated $3,885,127 in operating cash flows during the three months ended September 30, 2022, after accounting for corporate administration costs of $1,110,793. The Point Rousse Project generated EBITDA* of $4,542,586, based on gold sales of 5,615 ounces at an average gold price of C$2,258 per ounce sold* and operating cash costs of C$1,447 per ounce sold*. Operating cash flows were also impacted by changes in working capital, namely the decrease in accounts payable and a decrease in unearned revenue.

The Company continued to invest in its key growth projects in Q3 2022, spending $2,160,711 on exploration and evaluation assets (adjusted for amounts included in trade payables and accruals as of September 30, 2022), with $1,855,553 relating to the advancement of the Goldboro Gold Project.

Financing activities during the third quarter of 2022 included $164,720 for the ongoing repayment of loans and lease obligations. Net cash flow provided from financing activities in the comparative period of 2021 included proceeds of $1,524,000 from the exercise of warrants.

* Refer to Non-IFRS Measures Section below.

Non-IFRS Measures

Signal Gold has included in this press release certain non-IFRS performance measures as detailed below. In the gold mining industry, these are common performance measures but may not be comparable to similar measures presented by other issuers. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Operating Cash Costs per Ounce of Gold - Signal Gold calculates operating cash costs per ounce by dividing operating expenses per the consolidated statement of operations, net of silver sales by-product revenue, by the gold ounces sold during the applicable period. Operating expenses include mine site operating costs such as mining, processing and administration as well as royalties, however, excludes depletion and depreciation and rehabilitation costs.

All-In Sustaining Costs per Ounce of Gold - Signal Gold has adopted an all-in sustaining cost performance measure that reflects all of the expenditures that are required to produce an ounce of gold from current operations. While there is no standardized meaning of the measure across the industry, the Company's definition conforms to the all-in sustaining cost definition as set out by the World Gold Council in its guidance issued in November 2018. The World Gold Council is a non-regulatory, non-profit organization established in 1987 whose members include global senior mining companies. The Company believes that this measure will be useful to external users in assessing operating performance and the ability to generate free cash flow from current operations.

The Company defines all-in sustaining costs as the sum of operating cash costs (per above), sustaining capital (capital required to maintain current operations at existing levels), corporate administration costs, sustaining exploration, and rehabilitation accretion and amortization related to current operations. All-in sustaining costs excludes capital expenditures for significant improvements at existing operations deemed to be expansionary in nature, exploration and evaluation related to growth projects, financing costs, debt repayments, and taxes. Canadian and US dollars are noted for realized gold price, operating cash costs per ounce of gold and all-in sustaining costs per ounce of gold. Both currencies are considered relevant and the Company uses the average foreign exchange rate for the period.

The operating cash costs per ounce and all-in sustaining costs per ounce are reconciled to the condensed interim consolidated statement of comprehensive loss as follows:

		Three months ended September 30, 2022				Three months ended September 30, 2021				Nine months ended September 30, 2022				Nine months ended September 30, 2021
Operating expenses per the consolidated statement of comprehensive income, including royalties			8,132,898				5,455,946				22,382,082				20,336,172
By-product silver sales credit			(8,425	)			(5,947	)			(18,663	)			(17,972	)
By-product aggregates sales credit			-				(78,874	)			-				(78,874	)
Operating cash costs ($)			8,124,473				5,371,125				22,363,419				20,239,326
Sustaining expenditures - property, mill and equipment			313,097				3,125,994				3,025,233				5,431,463
Sustaining expenditures - exploration and evaluation			286,515				647,470				1,032,787				1,984,079
Corporate administration costs			1,110,793				905,089				3,682,429				2,697,820
Share-based compensation			224,889				188,094				573,436				616,878
Rehabilitation - accretion and amortization (operating)			27,487				4,913				82,461				11,486
All-in sustaining cash costs ("AISC") ($)			10,087,254				10,242,685				30,759,765				30,981,052
Gold ounces sold			5,615				2,574				13,204				8,849
Operating cash costs per ounce sold ($ / ounce)			1,447				2,087				1,694				2,287
AISC per ounce sold ($ / ounce)			1,796				3,979				2,330				3,501
Average US Dollar exchange rate during period			0.7656				0.7937				0.7794				0.7994
Operating cash costs per ounce sold (US$ / ounce)			1,108				1,656				1,320				1,828
AISC per ounce sold (US$ / ounce)			1,375				3,158				1,816				2,799

Average Realized Gold Price per Ounce Sold - In the gold mining industry, average realized gold price per ounce sold is a common performance measure that does not have any standardized meaning. The most directly comparable measure prepared in accordance with IFRS is gold revenue. The measure is intended to assist readers in evaluating the revenue received in a period from each ounce of gold sold.

Average realized gold price per ounce sold is reconciled to the condensed interim consolidated statements of comprehensive loss as follows:

		Three months ended September 30, 2022				Three months ended September 30, 2021				Nine months ended September 30, 2022				Nine months ended September 30, 2021
Gold revenue ($)			12,679,227				5,770,632				30,351,689				20,058,519
Gold ounces sold			5,615				2,574				13,204				8,849
Average realized gold price per ounce sold ($)			2,258				2,242				2,299				2,267
Average US Dollar exchange rate during period			0.7656				0.7937				0.7794				0.7994
Average realized gold price per ounce sold (US$)			1,729				1,779				1,792				1,812

Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") - EBITDA is earnings before transaction costs, finance expense, current and deferred income tax expense and depletion and depreciation.

Point Rousse Project EBITDA is EBITDA before corporate administration, share-based compensation, deferred premium on flow-through shares, and all other expenses and other income.

The EBITDA and Point Rousse Project EBITDA amounts are reconciled to the condensed interim consolidated statements of comprehensive loss as follows:

		Three months ended September 30, 2022				Three months ended September 30, 2021				Nine months ended September 30, 2022				Nine months ended September 30 , 2021
Net income (loss), per the consolidated statement of comprehensive income (loss)			(1,168,037	)			(1,078,899	)			(5,048,563	)			(5,778,000	)
Adjustments:
Finance expense			482,733				32,641				1,146,142				116,447
Current income tax expense			-				-				-				30,345
Deferred income tax expense (recovery)			212,000				617,000				1,029,000				365,000
Depletion and depreciation			3,503,612				789,097				6,873,474				2,787,055
EBITDA			3,030,308				359,839				4,000,053				(2,479,153	)
Corporate administration			1,110,793				905,089				3,682,429				2,697,820
Gain on revaluation of investments			-				(1,020,432	)			(326,973	)			(1,020,432	)
Share of loss from equity accounted investments			8,203				105,890				59,880				344,017
Stock-based compensation			224,889				188,094				573,436				616,878
Deferred premium on flow-through shares			(41,153	)			(147,701	)			(385,672	)			(381,415	)
Other income			209,546				(2,594	)			348,318				(19,074	)
Point Rousse Project EBITDA			4,542,586				388,185				7,951,471				(241,359	)

Working Capital - Working capital is a common measure of near-term liquidity and is calculated by deducting current liabilities from current assets.

(In $)		September 30, 2022				December 31, 2021
Cash and cash equivalents			12,188,696				10,121,724
Inventory			6,750,469				5,641,435
Other current assets			764,590				2,080,035
Current assets			19,703,755				17,843,194
Trade and other payables			8,543,310				9,528,294
Current portion of loans			11,077,081				1,363,383
Unearned revenue			-				5,000,000
Other current liabilities			408,468				554,404
Current liabilities			20,028,859				16,446,081
Working capital (deficit)			(325,104	)			1,397,113

ABOUT SIGNAL GOLD

Signal Gold is a TSX and OTCQX-listed gold mining, development, and exploration company, focused in the top-tier Canadian mining jurisdictions of Newfoundland and Nova Scotia. The Company is advancing the Goldboro Gold Project in Nova Scotia, a significant growth project subject to a positive Feasibility Study with Probable Mineral Reserves of 1.15 million ounces of gold (15.80 million tonnes at 2.26 g/t gold), Measured and Indicated Mineral Resources inclusive of Mineral Reserves of 2.58 million ounces (21.6 million tonnes at 3.72 g/t gold) and additional Inferred Mineral Resources of 0.48 million ounces (3.18 million tonnes at 4.73 g/t gold) (Please see the ‘NI43-101 Technical Report and Feasibility Study for the Goldboro Gold Project, Eastern Goldfields District, Nova Scotia' on January 11, 2022 for further details). Signal Gold also operates mining and milling operations in the prolific Baie Verte Mining District of Newfoundland which includes the fully permitted Pine Cove Mill, tailings facility and deep-water port, as well as ~15,000 hectares of highly prospective mineral property, including those adjacent to the past producing, high-grade Nugget Pond Mine at its Tilt Cove Gold Project.

FORWARD-LOOKING STATEMENTS

This news release contains "forward-looking information" within the meaning of applicable Canadian and United States securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Signal Gold to be materially different from those expressed or implied by such forward-looking information, including risks associated with the exploration, development and mining such as economic factors as they effect exploration, future commodity prices, changes in foreign exchange and interest rates, actual results of current production, development and exploration activities, government regulation, political or economic developments, environmental risks, permitting timelines, capital expenditures, operating or technical difficulties in connection with development activities, employee relations, the speculative nature of gold exploration and development, including the risks of diminishing quantities of grades of resources, contests over title to properties, and changes in project parameters as plans continue to be refined as well as those risk factors discussed in Signal Gold's annual information form for the year ended December 31, 2021, available on www.sedar.com. Although Signal Gold has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Signal Gold does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

FOR ADDITIONAL INFORMATION CONTACT:

Signal Gold Inc. Kevin Bullock President and CEO (647) 388-1842 kbullock@signalgold.com

Reseau ProMarket Inc. Dany Cenac Robert Investor Relations (514) 722-2276 x456 Dany.Cenac-Robert@ReseauProMarket.com

SOURCE: Signal Gold Inc.

View source version on accesswire.com:
https://www.accesswire.com/723220/Signal-Gold-Announces-Q3-2022-Financial-Results

FAQ

What were Signal Gold's gold sales for Q3 2022?

Signal Gold sold 5,615 ounces of gold in Q3 2022.

How much revenue did Signal Gold generate in Q3 2022?

Signal Gold generated $12.7 million in revenue during Q3 2022.

What is the projected gold production for Signal Gold in 2022?

The projected gold production for Signal Gold in 2022 is between 20,000 to 21,000 ounces.

What was Signal Gold's net loss for Q3 2022?

Signal Gold reported a net loss of $1.17 million for Q3 2022.

What were the operating cash costs per ounce sold for Q3 2022?

The operating cash costs per ounce sold in Q3 2022 were $1,447.