During the fourth quarter of 2014 and subsequent to the year-end, the Company completed an updated metallurgical sampling and analysis program as part of an expansion study for the Masbate Mine along with an updated life-of-mine plan based on 2014 year end reserve and resource estimates. The updated metallurgical study has resulted in 3% lower projected life of mine recoveries due to a number of factors including an increase, at depth, in the amount of sulphide ore type that has lower projected recoveries and the mining out over the course of 2013 and 2014 of predominantly oxide ore, which has the highest recoveries.
The lower projected recoveries, lower long-term gold price assumption of $1,300 per ounce (as compared to a spot gold price of $1,676 per ounce at the CGA acquisition date) and a decision not to proceed with Masbate Mill expansion at this time impacted the current value of the Masbate Mine. As a result, the Company recorded a net impairment charge of $305.2 million (pre-tax $436.0 million less $130.8 million deferred tax recovery) at year end 2014 (See “Critical Accounting Estimates”).
For the fourth quarter of 2014, the Company generated a net loss of $356.8 million ($(0.39) per share) compared to net income of $26.2 million ($0.04 per share) in the comparable period of 2013. Adjusted net (loss) income (refer to “Non-IFRS Measures”) was $(8.4) million ($(0.01) per share) compared to $0.6 million ($0.00 per share) in the fourth quarter of 2013. Adjusted net loss in the fourth quarter of 2014 primarily excluded the non-cash impairment of Masbate long-lived assets of $436.0 million, deferred income tax recovery of $109.6 million, write-off of mineral property of $21.1 million and a non-cash mark-to-market gain of $21.0 million relating to the overall change in fair value of the Company’s convertible senior subordinated notes.
UPDATE: Your humble scribe is asked what that last "It's as if..." comment means by regular reader (and occasional mailer) EJ, what with the share price lower than two years ago. The hack is to consider that back when bTO took over Masbate (1q13) the equity or book value (i.e. assets minus liabilities) was $1.545Bn. Today it's $1.525Bn, so roughly the same. What's different is that today's BTO has 917.6m shares out, when back then the count was 646.1m. More shares of the company + company worth same net amount = lower share price.
But if it makes you feel any better we can at least consider that the board and directors are still getting paid fat salaries. Y'see, feeling better already aren't you?
UPDATE 2: Friday morning, the NR arrives (whistling 'Happy' by