Aurizon Mines Ltd TSX:ARZ announced financial results for the fourth quarter and year ending December 31, 2011. Year-end highlights include
Net profit of $43.9 million or $0.27 per share, up 155% from 2010
Revenue of $260 million, up 45% from 2010
Cash flow of $121.3 million, up 138% from 2010
Cash balance of $213 million
Gold production of 163,845 ounces
Cash cost of US$537 per ounce
Fourth quarter highlights include
Net profit of $21.8 million or $0.13 per share
Revenue of $85.7 million
Cash flow of $49 million
Gold production of 45,995 ounces
Cash cost of US$498 per ounce
Aurizon has 11 properties, all in Quebec. They include the Casa Berardi Gold Mine and the advanced-stage Joanna Gold Project.
Speaking to ResourceClips.com, President/CEO George Paspalas addressed a number of issues, starting with the company’s dip in share price. “If you look at some of the headlines, they’re saying things like ‘Record Year but 2012’s No Good.’ The year 2012 is slightly lower in terms of production because the grade’s a bit lower. But it’s only off a little from a record high. I’m surprised at the stock, where it is and the way it’s trending today. But it is what it is. All we can do is go out and keep hitting good results. I believe that at the end of the day that’s what counts. You just have to ride through these periods.
All we can do is go out and keep hitting good results. I believe that at the end of the day that’s what counts—George Paspalas
“We’ll complete the Joanna feasibility study in the second quarter. We’re doing exploration on the property as well, between the Heva and Hosco sectors, and that’ll continue. We’ll probably start to release drill-hole data before the feasibility is complete. With the feasibility out, if there’s a go-ahead, the first step would be to go into permitting. That’s a one-and-a-half to two-year process. To fast-track the project you’d start to buy equipment in advance. Then you’ve probably got another 18 months’ construction, so you’re looking at a three-year window between the feasibility study finishing and getting the thing operating and gold coming off of it,” he explains.
“Recruiting new employees is, I believe, one of the biggest issues facing the industry globally,” he adds. “A lot of development and operational plans hinge on the human resource, not the resource in the ground. There’s a lot of very experienced people coming up to retirement. There’s a gap where people didn’t go into the industry when metal prices were depressed in the mid- and late-1990s. That’s the age group from about 35 or 40 years to about 50 years. The industry was depressed, and the dot-com boom was on, so people wanted to get into the sexy stuff. So there aren’t a lot of people in that age group working as engineers, geologists and other technical fields. Then the miners, the process people and maintenance people have a lot of choice among a lot of operations. So there’s lots of turnover. I think it’s one of the biggest issues in the industry.”
The solution? “Well you should do it anyway, but you have to treat your people well. At Casa Berardi, our loyalty factor is quite high, particularly in the technical and management fields. And that adds a lot of value. Most of the guys who built Casa and got it running are still with us. If you want to do it again, they’re there. You don’t have to go out on the street and get unknown quantities. You have to remunerate people competitively. But you also have to look at more than just money. You have to look at all-in compensation, things like rotational cycles at work and working conditions,” he argues.
“One of the nice things about Joanna is that it’s right next to Rouyn-Noranda, which has a big complement of experienced mining people. You can drive to work and drive home every night. That really attracts people.”
As for Aurizon’s future, Paspalas says, “In five years it would be nice to have two or three operating mines. By achieving that we would have de-risked from having just the one facility. We love Casa. We’re totally relying on it for cash flow. But if we could de-risk by building one or two more operating mines, that would be even better. We’d also like to have another project in feasibility around that time. We’d like to keep moving projects up, or cutting them off and bringing new ones into our exploration pipeline. So in five years I’d like to see multiple producing mines, but I don’t really foresee a fixed number of ounces. I’d like to see them mirror the quality of Casa Berardi. We’d like to see cash costs like we’re seeing at Casa now.”
Turning to the price of gold, he says, “I’m pretty bullish because I think there’s lots of uncertainty in the world. There’s fundamental issues with major economies. There’s a bit of volatility with gold’s price now, but I think in the middle or long term gold will perform strongly. I don’t think it’s going to be a $3,000 number, but I think it’ll be plus or minus the $2,000 mark.”
Paspalas concludes, “We’ve consistently delivered on performance at Casa Berardi. A mine in a good jurisdiction that’s got a margin of over $1,000 an ounce is a bloody good asset. Joanna has huge exploration potential. Even though we’re doing the feasibility study, they’re still drilling and hopefully will find more and more ounces there. They could turn out to be higher grades. I think Joanna has permutations and combinations that will make it quite exciting. We want to grow to multiple producing mines, either organically or through good acquisitions.”
or Ian S. Walton
Executive VP/Chief Financial Officer
by Greg Klein