Earnings call transcript: Aurizon Gold Q1 2025 shows strong performance

Aurizon Gold Corporation reported a robust Q1 2025, with revenue reaching $83 million and net earnings of $16 million. Earnings per share stood at $0.30, supported by strong gold sales and efficient operations. According to InvestingPro analysis, the company appears undervalued at current levels, with a P/E ratio of just 5.21. The company is on track with its expansion projects, aiming to boost production capacity significantly by the end of 2026.

Key Takeaways

• Aurizon Gold reported Q1 revenue of $83 million, driven by gold sales of 28,943 ounces.
• The company’s average realized gold price was $2,851 per ounce.
• Expansion projects are progressing well, with Stage One Hard Rock Expansion set for commissioning in Q4 2025.
• Aurizon achieved zero Lost Time Injuries, marking 20 million work hours injury-free.
• The company maintains a strong liquidity position with $131 million available.

Company Performance

Aurizon Gold’s Q1 2025 performance showcased its operational strength, with a notable increase in plant throughput by 11% compared to Q1 2024. The company maintained a solid strip ratio of 1.9 and mined 6.1 million tonnes. Financial health metrics from InvestingPro show impressive gross margins of 48.39% and a strong return on equity of 27%. With a focus on safety, Aurizon has achieved 20 million work hours without any Lost Time Injuries.

Financial Highlights

• Revenue: $83 million
• Gold sales: 28,943 ounces
• Average realized gold price: $2,851 per ounce
• Earnings from mine operations: $38.6 million
• Net earnings: $16 million
• Earnings per share: $0.30
• Free cash flow: $3.7 million
• Available liquidity: $131 million

Outlook & Guidance

Aurizon Gold remains optimistic about its future, with 2025 production guidance set at 115,000-130,000 ounces. The combined output from Hardrock and Oxide operations is expected to reach 170,000-180,000 ounces by the end of 2025. Analysts share this optimism, with InvestingPro data showing a bullish consensus recommendation of 1.25 (where 1 is Strong Buy). The Stage Two expansion is anticipated to further increase production capacity to 220,000-250,000 ounces annually by Q4 2026. The company’s stock has already shown strong momentum, with a 67.19% year-to-date return.

Executive Commentary

CEO Patrick Dani highlighted the significance of 2025 as a transition year for Aurizon Gold, stating, "We don’t see any critical schedule issues going forward from here on in." Dani also emphasized the positive reception of the company’s initiatives by local communities.

Risks and Challenges

• Market volatility in gold prices could impact revenue and profitability.
• Potential delays in expansion projects could affect future production targets.
• Rising operational costs may pressure margins.
• Exploration outcomes may not meet expectations, affecting future resource estimates.
• Geopolitical instability in West Africa could pose operational risks.

Aurizon Gold’s Q1 2025 results reflect its strong operational capabilities and strategic focus on expansion, positioning it well for future growth despite potential challenges. For deeper insights into Aurizon Gold’s valuation, financial health, and growth prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro, along with 7 additional ProTips and over 30 financial metrics.

Full transcript - Orezone Gold Corp (ORE) Q1 2025:

Alex, Conference Operator: you for standing by. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aurizon Gold Corporation Q1 twenty twenty five Results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. I would now like to turn the call over to Mr. Patrick Dani, President and CEO. Please go ahead.

Patrick Dani, President and CEO, Aurizon Gold Corporation: Thank you, operator, and thank you everyone, and welcome to the Aurizon Q1 webcast and conference call. With me today, have Peter Tam, Executive Vice President and CFO. We have the standard forward looking statements. Please acquaint yourselves with these. So Q1 was a very solid first quarter and really sets us on a firm footing for a very important transition year for Aurizon.

Our gold production for the quarter was 28,688 ounces, which leaves us on track to achieve our 2025 guidance of 115,000 to 130,000 ounces a year, which as we stated will be slightly weighted towards Q4 of this year. Gold sales were 28,943 ounces at an average realized price of $2,851 per ounce, giving us revenue of $83,000,000 for the quarter. Our all in sustaining costs were $14.15 dollars per ounce sold, which again leaves us on track to achieve our 2025 guidance of between $1,400 to $1,500 per ounce AISC. We’re in a very strong and solid financial position. Our cash is $102,000,000 We have senior undrawn debt of $28,900,000 available and gives us a total available liquidity of $130,900,000 Our Hard Rock expansion is tracking on schedule on budget for the commissioning of this stage one in Q4 of twenty twenty five.

During the quarter, we also had zero LTIs, over 1,400,000 worked during the quarter. And we actually achieved twenty million hours of work for LTI free. Sadly and unfortunately, we had a fatality in May at the stage one construction site, which is still under investigation.

: I’ll now hand it over to Peter. Thanks, Patrick.

Peter Tam, Executive Vice President and CFO, Aurizon Gold Corporation: So for financial and operating highlights, Q1 marked another successful quarter of positive financial results with gold production and cost performance in line with our expectations, while revenue benefited from a favorable gold price and unhedged sales. Earnings from mine operations were 38,600,000 Net earnings after minority interest were $16,000,000 and earnings per share attributable to Aurizon shareholders were $03 per share on basic and diluted basis. Importantly, free cash flow was $3,700,000 as strong operating cash flow balanced the higher capital expenditures on the Hard Rock expansion construction. Our balance sheet further improved in the quarter with available liquidity at March 31, increasing to $131,000,000 as stated earlier, with $102,000,000 of cash on hand and $29,000,000 remaining undrawn on our Phase two term loan with Coors Bank. The company is well positioned financially to complete its major growth projects for 2025.

Patrick Dani, President and CEO, Aurizon Gold Corporation: Next slide.

Peter Tam, Executive Vice President and CFO, Aurizon Gold Corporation: The tonnes mined exceeded $6,100,000 for Q1 twenty twenty five at a strip ratio of 1.9. Higher material movement in the current quarter was due to dry season mining conditions and a greater proportion of tonnes mined from the Sika pits, which have a shorter than average haul profile with mining currently concentrated on the soft oxide material on the upper benches. Furthermore, mining volumes are still benefiting from the higher availability of the new mining equipment placed into service by the mining contractor in the fourth quarter of twenty twenty four. Plant throughput was at a respectable 1,500,000 tonnes, which was 11% higher than the comparable quarter in 2024. In Q1 twenty twenty four, plant operating hours were impacted by the commissioning of grid power to site and from more frequent power interruptions experienced in March.

In addition, since July 2024, the plant has successfully operated at a higher hourly plant throughput by increasing mill power draw and reducing the leach residence time. In terms of unit costs, unit mining costs for Q1 twenty twenty five was lower than when compared to Q1 twenty twenty four as mining costs were aided by less drill and blast, shorter than average hauls, and a favorable XOS exchange rate as mining contractor rates are based on the local currency. Unit processing costs benefited from the availability of lower cost grid power for the full three months of Q1 twenty twenty five versus only a partial quarter in Q1 twenty twenty four.

Patrick Dani, President and CEO, Aurizon Gold Corporation: I’ll hand that

Peter Tam, Executive Vice President and CFO, Aurizon Gold Corporation: back to you Patrick.

Patrick Dani, President and CEO, Aurizon Gold Corporation: Thank you, Peter. So overall 2025, we get off to a very solid start. Our 2025 guidance of production of 115,000 to 130,000 ounces, we achieved 28,688 for the quarter. So it leaves us well on track for our gold production guidance. Our all in sustaining costs as we stated of between $1,400 to $1,500 in Q1 was right bang in there.

Sustaining capital, we have a guidance of 9,000,000 to $10,000,000 of which we spent $3,200,000 in Q1, slightly front end loaded in Q1 with the tailings during the dry season, tailings expansions. Our growth capital of 44,000,000 to $51 which is really focused on the permanent backup diesel power plant, a tailings footprint expansion and resettlement action plan. We spent $7,700,000 It again would be essentially loaded in the second half of the year. And we’ve still some photographs of that later on in the presentation. And as I stated, stage one hard rock capital expansion, we spent $19,000,000 We’ve now spent $34,000,000 of the total budget of 90,000,000 to 95 So our guidance for 2025, we’re well within that.

We expect to achieve that around 75,000,000 to $80,000,000 target for 2025 and be up and running in Q4. So 2025 is really a significant transition year. We’ve been operating the oxide mill for over two and a half years now very successfully. We’re now ramping into the construction of the Stage 1 Hard Rock, which with 2,500,000 tons per annum. Construction is well underway commissioning in Q4.

Production from the combined Hardrock and oxide exiting 2025 will be 170,000 to 180,000 ounces a year. We had originally intended to build a Stage two hard rock in 2028 coming online in 2029, but with the strong gold prices and our strong financial position etcetera, We will now look to start that in 2025 being constructed in 2026 and being up and running in Q4 of twenty twenty six. We expect a full announcement on that later in Q2 or early Q3. That would bring our production to two and twenty thousand to 250,000 ounces with extremely robust cash flows and all in sustaining costs going forward and would leave us with one of the largest single asset mining companies in West Africa after stage two completion. And again, I’ll walk you through that a little bit more detail in the presentation.

So stage one, well in hand, fully financed as Peter said, budgeted CapEx of $19.95 dollars total. We expect to easily achieve that. We’re ahead of schedule and on budget. Engineering remains ahead of schedule. We keep pushing that.

Our equipment and material procurement is now complete. The Jaw Crusher mill foundations are well advanced. The mill is on-site. The mill installation is expected to commence in early June. We will mobilize the mill contractor in late May, installation contractor.

The CIL tank installation is progressing with three tanks now fully complete and the other two well in hand. TSF expansion well in hand. Photographs will tell the story. You can see the oxide plant in the background with the stage one in the foreground. Photograph two is the largest pour we have on the facility, which is the jaw crusher and wing walls of the dump pocket.

We’ll be complete that late May, early June. The tanks all concrete complete, three fully erected, two well in hand. We start erecting structural steel work on top of that in June. The ball mill foundations are almost complete and we expect to start erecting the mill, which is on-site in June. All of the major steel work is either at the port or on the boat.

A lot of the equipment is starting to come to site now. We don’t see any critical schedule issues going forward from here on in. It’s really steady as she goes to get it up and running by Q4 of this year. The wrap BB2 construction progress as you can see well in hand. I just want to say that all of our construction management scheduling, cost control, etcetera is done by our team for this, for the tailings, for the stage one and stage two will be done by our team.

We have full control of all of this. We don’t put it out to consultants or contractors and we really know how to execute on this. We’ve built over 3,700 buildings including houses, churches, mosques, clinics, schools, convention centers, etcetera. We’re very proud of this. It’s extremely well received by the local communities and this is going extremely well at BBQ as you can see from these photographs.

So stage two, originally we had this design for a 5,000,000 ton per annum, but with optimization based on what we’ve learned on what we’re doing, etcetera. It will actually be a 5,500,000 ton per annum throughput rate. Production two and twenty thousand to 250,000 ounces per year on average. So what does it take? It’s four additional CIL tanks, which are exactly the same size, diameter, height as the existing ones we’re building, same top of tank steel work, same agitators, etcetera.

A ball mill, which we’ve now identified with our consultants and we will likely place an order for that early in Q3. So that’s already identified for the project. A thickener on a water tank with some obviously some pumps, etcetera. An oxygen plant, which we will buy, purchase this quarter. We have already got that funds in hand to do that.

We don’t necessarily need it for stage one, but it’s a long lead item and we will use it in stage one. But it really gets us ahead of the game for stage two and some gold room expansion with an elution column and acid wash column and some electro winning sales small sort of equipment items. We’re well in hand with the estimate on that. I expect to present something to the Board by the May. I expect no surprises something in the region of $95,000,000 We’ve gone through the schedule with our team on-site with like a podium team, with the equipment vendors.

So providing we get the go ahead in early Q3, we would have that up and running in Q4 of twenty twenty to 2026. So very exciting for us. We’re really ready to go on this. The front end, which is the jaw crusher, all that front end is already designed for the full throughput. So it’s really getting those pieces of equipment ordered and getting the design and the construction going, so we can keep the contractors on-site and really ramp up this construction in 2026.

So, Q1, a very solid start to the year in terms of production and cost and progress on the plant. Sets us up for our transformational year in 2025. The Hard Rock expansion will be up and running by the end of the year in stage one. As you know, we are advancing ASX secondary listing that should be up on the goal by mid-twenty twenty five. Increase our trading liquidity.

We already see that in the stock. We’re trading much better in terms of the amount of shares we trade, etcetera, and our share price since we’ve been advancing that. We did a recent financing to accelerate stage two and now approximately 14% of our issued is now done in Australian hands and trading very well. A renewed focus on exploration, we’ve had some new team down there. We’ve had some bottlenecks with assays etcetera, but I’m very excited what we’re seeing.

We expect to issue some results on that very soon. We’ve now identified some new targets, which we’ll be excited to reveal to the market. So that was on the goal. We expect to ramp that up as we get our team in place of new exploration management down there. He’s been working on streamlining the processes, etcetera.

But we expect to ramp up our exploration, have a lot of results throughout the year. So the thesis is really holding together for us in terms of the size of the project and the targets that we see in the project. So expect to see some results here in the coming weeks. So that’s it. I’ll hand it back to the operator for questions.

Alex, Conference Operator: Thank you. We’ll now begin the question and answer simply press star one again. If you are called upon to ask your question and are listening by a loudspeaker and or device, please pick up your handset and ensure that your phone is not on mute with asking your question. Your first question comes from the line of John Walton Skroff with Private Investor. Please go ahead.

: Patrick, on the mining and process cost significantly better, do you anticipate to keep that level going forward?

Patrick Dani, President and CEO, Aurizon Gold Corporation: I would expect that the processing costs, yes. So the mining costs goes up and down with strip ratio obviously and depth within the pit and the type of rock we’re mining. So when we’re in the softer oxides, we use less drill and blast or sometimes zero drill and blast. And obviously you’re mining from near surface. And as you go from the various pits, you’ve got different haul distances.

So that goes up and down, but generally I would expect it would be probably around 3 something a ton depending on the ratio.

Peter Tam, Executive Vice President and CFO, Aurizon Gold Corporation: John, just on Q1, I would say it’s abnormally low. We’re under $3 a ton. That isn’t going to be the case every quarter. So as Patrick pointed out, some of the factors that led to the low unit mining costs. Also, as I stated in my prepared remarks, we did have a favorable local currency exchange rate that has sort of reversed course now in April and into May here.

So I would say next quarter, I would expect unit mining costs to be more normalized to what we saw maybe closer to what we had in 2024.

: So regarding the Australian listing, has all the paperwork been submitted and you’re just waiting for them to process it?

Patrick Dani, President and CEO, Aurizon Gold Corporation: Well, don’t think all the paperwork being submitted, but maybe I’ll hand it over to I’ve got my EVP, Ryan Goodman here, he will really answer that. He’s been on the forefront of that. Ryan?

Ryan Goodman, Executive Vice President, Aurizon Gold Corporation: Yeah, John. Substantially all the paperwork is done and we’re just going through the processes right now. It’s a bit of a time consuming process, but we don’t anticipate any hiccups along the way. It’s just due process at

Patrick Dani, President and CEO, Aurizon Gold Corporation: this time. Yeah, our jorg’s done, our finances are in, all of the various other pits. So it is in through the sausage machine, would say, of the ASX.

: Right. So one more question, I know years ago, I asked you, Patrick, whether you considered hedging the gold and given that it’s quite volatile, is there any consideration to that?

Patrick Dani, President and CEO, Aurizon Gold Corporation: No. I’ve never hedge an ounce in my career. I’m not a gold bug per se, but really if you’re an investor in gold, we’re not we’ve got all the money we need for expansions. We’re in very, very good financial shape. Sometimes you might hedge gold.

I’ve never done it, but when you don’t believe in your capital cost and you want to protect certain things, I think we’ve been extremely good in terms of our capital cost and our schedule. I think our record and our record goes back right back in into the naughties about building mines. This team has been with me for a long time. I like to see as a gold investor that you’re unhedged and you’re up there. We did take some puts in the year.

So we bought some puts at quite good value just to protect the downside at some point, but we leave the upside

: Thank you very much.

Patrick Dani, President and CEO, Aurizon Gold Corporation: You’re welcome. Thanks,

Alex, Conference Operator: Since there are no questions asked, that concludes our Q and A session. I will now turn the conference back over to Mr. Patrick Downey, President and CEO for closing remarks.

Patrick Dani, President and CEO, Aurizon Gold Corporation: Thank you very much. As I just reiterate, Q1 very solid quarter for us in terms of production and cost and progress on the projects, both Stage one and Stage two. We’ve done a lot of work on Stage two in terms of getting the capital cost estimate, the equipment, etcetera, well in line to make a decision late Q2, early Q3, very much looking forward to that. Exploration, as I said, we’ve just been working through a few bugs with some of the third party labs etcetera, but that’s now sort of worked through. So I expect that we’ll see have a lot of exploration results going forward in the year and a very exciting year for us going to be starting up Stage one in Q4, getting it ramped up by the end of the year.

So yes, very, very exciting year for Aurizon going into 2025, ’20 ’20 ’6.

Alex, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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