Asanko Gold Inc. [stock_market_widget type="inline" template="generic" color="default" assets="AKG.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has announced record revenues of $96.8 million from gold sales at its JV in Ghana during Q4. This was generated from the sale of 66,095 ounces at an average realized price of $1,465 per ounce.
The strong Q4 performance drove the venture to record revenues of $342.2 million during 2019 from the sale of 248,862 ounces, at an average realized price of $1,376 per ounce.
Asanko Gold Mine, a 50/50 JV with Gold Fields Ltd. [stock_market_widget type="inline" template="generic" color="default" assets="GFI" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"], produced 66,112 ounces of gold in Q4 and 251,044 ounces for the full year. That saw the mine exceed the upper end of previous guidance, which was between 225,000 to 245,000 ounces.
Looking at costs, the Asanko Gold Mine operated at preliminary AISC of $969/oz for Q4. That is below the yearly average of $1,112/oz, which is 5% above guidance. This suggests the operators are improving efficiencies as they scale production, driving down unit costs.
After a period of investment earlier in 2019, the company is now entering a cash harvesting period at an ideal time.
While they note some concerns of bench slippage in the Nkran pit, they see no material impact on 2020 production. They also have an updated LOM plan expected in Q1, which should serve as a solid catalyst for the company.
Management Proud of Results
Asanko chief executive Greg McCunn said 2019 was a “pivotal year” for the Asanko Gold Mine, which is fully managed by Asanko. The first half of the year was all about significant capital investment, and it then delivered free cash flow towards the end of the 12-month period.
“The processing plant continued to operate very well, with record production from 5.5 million tonnes processed in 2019, resulting in the AGM exceeding its production guidance for the year with 251,044 ounces produced,” said McCunn.
However, all-in sustaining costs will only be around 5% above the upper end of guidance as costs were negatively affected by processing lower grade stockpiles. The firm expects to provide full financial and operational results before the market opens on Feb. 13, 2020.
McCunn said the company’s financial position was strengthened significantly during the second half of 2019. Its cash and receivables balance now stands at more than $35.5 million as of Dec. 31, 2019, up from $8.5 million a year ago, and it has no debt.
Last month, Asanko further strengthened its balance sheet by receiving the final $10 million payment from JV partner Gold Fields. That payment completed the receipt of $185 million in gross proceeds associated with the joint venture agreement.
Distribution in Q4 amounted to $20 million, split evenly between Asanko and Gold Fields.
Earlier this month, William Smart resigned from Asanko’s board of directors following a four-year stint, while chairman Colin Steyn announced he would not seek re-election at the firm’s AGM, which is scheduled for Apr. 30, 2020.
