Premier Gold sees revenue increase in Q4

The South Arturo gold mine on the Carlin Trend, Elko County, Nevada, a joint venture between Premier Gold Mines and Barrick Gold. Source: Premier Gold Mines Ltd.

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Premier Gold Mines Ltd. [PG-TSX; PIRGF-OTC] on Thursday March 5 released its operating results for the quarter and year ended December 31, 2019.

Highlights include an increase in fourth quarter revenue to $28.9 million from $19.9 million in the year earlier quarter. The increase is the result of a higher realized gold price and as well as a jump in the number of ounces sold.

Premier Gold is a gold producer as well as an exploration and development company with a focus on properties in Canada, the United States and Mexico. Premier is aiming to emerge as a low-cost, mid-tier gold producer via its two Mexican gold mines, South Arturo and Mercedes, and through future mine development opportunities at Hardrock and McCoy-Cove in Nevada.

Premier recently said a challenging year at its Mercedes Mine in Sonora, Mexico, prevented the company from achieving its production targets in 2019.

After producing 67,427 ounces of gold and 192,829 ounces of silver in 2019, which was below guidance of between 75,000 and 85,000 gold ounces, the company is currently working on initiatives to ensure increased and more reliable production for 2020 and beyond.

Mercedes is a 2,000 tonne-per-day underground gold-silver mine located in Sonora State, northern Mexico, about 250 km northeast of Hermosillo. As of December 31, 2019, proven and probable gold reserves stood at 395,000 ounces at a grade of 3.63 g/t.

The project also hosts proven and probable silver reserves of 2.72 million ounces grading 25.05 g/t silver. In 2019, Mercedes produced 59,901 ounces of gold and 191,306 ounces of silver.

The company has said commercial production was declared more than three months ahead of schedule at South Arturo’s El Nino Mine. Ore tons mined during the fourth quarter were considerably above plan the company said.

“The fourth quarter was the first full quarter of production at South Arturo following the successful construction of the El Nino underground mine,” said Premier Gold President and CEO Ewan Downie. “Its addition is expected to contribute positively to Premier’s 2020 operating results,” he said.

The company reported total revenue of $93.7 million in 2019, down from $113.9 million in 2018. It said the reduction in revenue is the result of lower sales from both South Arturo and Mercedes mines. “This was anticipated as the company transitioned from Phase 2 production to El Nino underground at South Arturo,” the company said.

In keeping with its longer-term objective of increased annual production over the next several years, the company invested $24.1 million in exploration and pre-development initiatives during 2019. When factored with the reduction in mine operating income, this investment contributed to a net loss of $20 million.

The company closed the year with cash and cash equivalents of $58.4 million.

Premier Gold shares were unchanged at $1.40 on Thursday. The shares are trading in a 52-week range of $1.20 and $2.55.

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