AuRico lifts royalty revenue guidance, expands Kemess exploration

VANCOUVER (miningweekly.com) – Emboldened by anticipated production improvements at key partner properties, TSX-listed gold royalty firm and project developer AuRico Metals has increased its expected full-year royalty revenue guidance by 14%.

The Toronto-headquartered miner now expects royalty revenues to total between $7.7-million to $8.1-million, up from its original guidance of $6.6-million to $7.1-million.

AuRico pointed to Newmarket Gold’s July 29 announcement that it had increased guidance at its Fosterville gold mine, located in Victoria, Australia, to between 130 000 oz and 140 000 oz for 2016, up from previous guidance of 110 000 oz to 120 000 oz, and a July 27 announcement by Barrick Gold that it had increased guidance at Hemlo, in Ontario, to between 215 000 oz to 230 000 oz for 2016, up from previous guidance of 200 000 oz to 220 000 oz.

During the second quarter ended June 30, AuRico recognised royalty revenue of $2-million, comprising $900 000 from the Fosterville royalty, $800 000 from the Young-Davidson royalty, and $300 000 from the Hemlo, Eagle River and Stawell royalties.

"We are pleased to report a fourth consecutive quarter of higher royalty revenue and to be increasing our annual royalty revenue guidance,” president and CEO Chris Richter stated.

The company has expanded its Kemess East exploration programme to $4.4-million this year, with a focus on further expanding and boosting confidence in the previously announced resource.  The increased programme would be funded by ‘Canadian Exploration Expenses’ flow-through financings for $2.7-million completed following the end of the quarter.

“At Kemess we are advancing through the EA review process and are keen to accelerate permitting efforts over the remainder of the year.  We are particularly excited about our expanded exploration programme at Kemess East and look forward to the results from three drills currently in operation,” Richter added.

On August 2, AuRico announced a C$10-million bought deal equity financing whereby the company would issue ten-million common shares at C$1 a share. The company has granted the underwriters an over-allotment option to buy up to a further 1.5-million common shares under the same terms. 

In connection with the proposed financing, Alamos Gold has exercised its participation right. AuRico will issue up to a further 1.27-million common shares through a private placement at C$1 a share.

AuRico’s TSX-listed stock on Monday rose nearly 4% to C$1.07 apiece, despite the gold price trending mainly sideways over the past 30 days at around $1 335/oz on Monday.