Aurizon doesn’t budge on positive 2011 financials

Last year was a good year for the company, says George Paspalas, the president and chief executive of Aurizon Mines (ARZ-T, ARK-X), which has been mining the Casa Berardi gold project in Quebec since 2006.

The company reported record revenues, cash flow, profits and production for 2011, however its share price dipped to a new 52-low of $4.35 before closing March 15 at $4.43.

Production from the company’s sole producing asset, Casa Berardi, came under 164,000 oz. gold at total cash costs of US$537 per oz. This generated $260 million in revenue, $43.9 million in profits, and $121.3 million in operating cash flow.

“We had a great year in 2011. We are established in a very good mining jurisdiction. The Casa Berardi [operation] is consistently delivering good results,” Paspalas told investors and analysts on a conference call.

For 2012, the mine is expected to produce around 155,000 oz. to 160,000 oz. gold. Cash costs are estimated to be slightly higher at US$600 per oz., due to the mining of smaller stopes and the rising costs in stope preparation. Gold grade is also expected to be 6% lower averaging 7.5 grams for the year, compared to last year’s grade of 8 grams gold.

Aurizon ended last year with a clean $213 million in cash, which the debt-free junior plans to use to fund its 2012 exploration and developmental opportunities.

It has a $9.4-million exploration program for the year at Casa Berardi alone, consisting of 88,000 metres to test multiple targets. On average three rigs will test the extensions and depth of several zones, and seven rigs will focus underground on definition drilling.

The company is also developing infrastructure underground to improve the mine’s design capacity, and has started deepening the mine shaft.

Casa Berardi is expected to keep running until 2020.

At its development-stage gold property, Joanna, a feasibility study should be completed by June on the Hosco deposit. The study will include last June’s updated reserves of 2.24 million oz. gold from 54.1 million tonnes grading 1.29 grams gold.

However, Paspalas notes the study’s projected capital and operating costs should be significantly higher than estimated in the December 2009 prefeasibility. Explaining that the project has gotten bigger, he says the resource model is almost 31% higher compared to the prefeasibility. Aurizon has also selected to use an autoclave recovery process and handle the ore on site which will add to the costs, but in turn lower the project risk.

The company has started a $3.6-million exploration project near the project’s Heva deposit, which contains a measured and indicated resource of 270,000 oz. from 4.4 million tonnes grading 1.9 grams gold per tonne.

Joanna is located along the Cadillac Break, 20 km east of Rouyn-Noranda.

Before the feasibility study is out, the company anticipates releasing resource updates in April for its two most advanced gold exploration projects, Marban and Fayolle.

Fayolle sits 10 km north of Joanna in the Destor-Porcupine fault. About 7,000 metres of drilling is planned for the year at Fayolle to test down dip and lateral extensions.

At Marban, Aurizon is working on a second phase of drilling, consisting of 34,000 metres. Marban hosts three past producing mines, and is located in the Malartic gold camp in Quebec’s Abitibi region.

The company can earn a 65% interest in both properties.

Paspalas says the company is seeking to complement its organic growth profile with an acquisition of an operating gold asset or one that is near production. Not saying when that transaction will happen, Paspalas notes the company is open to acquiring a project from within Canada or elsewhere to help it become an intermediate gold producer with more than one source of gold ounces and cash flow.