Canadian bullion junior Harte Gold on Thursday lowered its production guidance and hiked its cost estimates for 2021, stating that quarterly growth would occur at a lower rate than what was previously planned for the year.
The company, which operates the Sugar Zone mine, in Ontario, has deferred achieving steady-state ore mine production at 800 t/d from the first quarter to the fourth quarter.
Harte Gold lowered its guidance by 10 000 oz to between 50 000 oz and 55 000 oz, at an all-in sustaining cost of $1 800/oz to $2 200/oz, compared with its previous target range of $1 400/oz to $1 550/oz.
Achieving an 800 t/d production rate, representing about 5 200 oz a month, would provide a launching platform for an expansion to 1 200 t/d by 2023.
Based on the updated outlook and with cash on hand at the end of March of C$21.1-million, Harte Gold said that it would require additional funding within the next few months.
"Although we have continued to make good progress over the past three quarters, we also continue to face challenges that are preventing us from achieving our previous targets and stated guidance," said president and CEO Frazer Bourchier.
"Data tracking mechanisms that I implemented in late 2020, and continued to enhance in the first quarter of 2021, began to reveal more recently our critical constraints. I believe these challenges can be overcome and I know we have a team committed to doing so. What I see as the exceptional long-term value potential of the Sugar Zone mine and the vast exploration potential of the surrounding property remains intact. Ultimately, however, I believe this value may only be unlocked in the context of a stronger balance sheet."
The miner noted that it would not generate sufficient cash from operations to fully fund its planned investment activities and debt service obligations, including $3.3-million principal repayment to BNP due at the end of next month, owing to the reduced cash flow based on its guidance for 2021.
As such, Harte Gold would initiate a strategic process to explore and evaluate alternatives to ensure financial liquidity and to fund accelerated life-of-mine capital. This would include the restructuring of its long-term debt and reviewing other potential strategic alternatives, it said in a statement.
"There can be no assurance that the strategic review will result in any transaction or that the company will be able to continue as a going concern," the gold producer cautioned.