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Metals mining and exploration company, Austral Gold Limited (ASX:AGD) is involved in the production of gold and silver from its Guanaco and Amancaya mines in Chile and the Casposo mine in Argentina.
Recently, Austral Gold Limited provided an update on its mining operation. As per the update, in 2018 the total production from Guanaco/Amancaya mines was 61,271 gold equivalent ounces.
The total production from Guanaco/Amancaya mines in 2018 was in line with the production guidance of 62k gold equivalent ounces. Additionally, for FY19, it is expecting to produce in the range of 71k -75k gold equivalent ounces, signifying ~20 percent higher than 2018 production.
From the Casposo mine (70% Interest), the company produced 26,836 gold equivalent oz in 2018. The 2018 production was in pursuant to the revised production guidance of 26k gold equivalent oz. The revised guidance was provided in the September 2018 quarterly activity report.
Due to the challenging macroeconomic environment and operational performance of the Casposo Mine, the Management conducted a comprehensive review of the Mine and on the basis of that, the Company has implemented cost-saving initiatives and reduced its workforce in order to produce 12k-16k gold equivalent ounces from the Casposo Mine in the first half of 2019.
The company had acquired 70 percent interest in Casposo gold-silver project in Argentina from Troy Resources Limited. Recently, the company requested Troy to extend the closing date for the exercise of Option 3 of the Casposo Sale Agreement which was signed in 2016 for the 70 percent interest of the Project. After the request, Troy Resources has extended the closing date from 15 January 2019 to 31 March 2019.
This Option 3 was a part of the original Sale Agreement which was signed between Troy Resources Limited and Austral Gold in March 2016. Through Option 3, Austral is going to acquire an additional 10 percent of the project. The remaining 20 percent interest of the Casposo gold-silver project is also subject to 2 options of 10 percent which are exercisable in January 2020 and January 2021.
As per the Sale Agreement which was signed in 2016, Austral was having options to acquire the remaining 30% as follows:
- 10% for US$1,500,000 in 3 years.
- 10% for US$2,500,000 in 4 years.
- 10% for US$3,000,000 in 5 years.
For the six months ended 30 June 2018, the company earned sales revenue of US$66.733 Mn (6-month period ended 31 December 2017: US$48.86 Mn). The increase in the sales revenue was mainly due to higher gold equivalent ounces sold and higher realized sales prices. Further, the company reported EBITDA of US$2.924 Mn and EBITDA margin of 4.4 percent for the six months ended 30 June 2018.
In the past six months, the share price of Austral decreased by 23.91 percent as on 29 January 2019. AGDâs shares traded at $0.070 with the market capitalization of circa $37.39 million as on 30 January 2019.
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