TORONTO, Feb. 3, 2016 /PRNewswire/ - AuRico Metals
Inc. (TSX: AMI), ("AuRico" or the "Company") today reported its
financial results for the quarter and year ended December 31, 2015. For complete details of
the Financial Statements and associated Management's Discussion and
Analysis for the year ended December 31,
2015, please see the Company's filings on SEDAR
(www.sedar.com) or the Company's website (www.auricometals.ca). All
amounts are in US dollars unless otherwise indicated.
Annual Highlights
- Earned royalty revenues of $3.0
million since inception on July 2,
2015;
- Completed the acquisition of Mineral Streams, which is
anticipated to add approximately CAD $1.0
million per year in royalty income;
- On January 15, 2016, shareholders
confirmed the Company's shareholders' rights plan;
- Negotiated terms for an acquisition credit facility with
Macquarie Group for up to $15.0
million to support potential royalty acquisitions. The
credit facility is expected to be finalized in February 2016;
- Completed a private placement with Alamos for total proceeds of
$4.2 million;
- Completed its 2015 exploration program at Kemess East, with
27,719 metres drilled. Highlights included the intersection of 772
metres of 0.465 grams per tonne ("g/t") gold and 0.365% copper
(further results below);
- Continued permitting efforts at Kemess Underground with the
completion of the Environmental Application ("EA") and submission
of the EA to local First Nations in early January, and planned
submission to the BC Environmental Assessment Office by the end of
February 2016;
- Continued to advance the updated Kemess Underground Feasibility
Study which is expected to be released in March 2016 along with an updated resource
estimate for Kemess East;
- Reported $8.4 million in cash and
$6.9 million in working capital,
excluding inventories, as at December 31,
2015. In January 2016, an
outstanding Harmonized Sales Tax (HST) receivable of $1.3 million was received;
- Expect to be free cash flow positive in 2017 following the
completion of this year's investments in Kemess and through ongoing
cost cutting measures being pursued.
Commenting on the results, Chris
Richter, President and CEO stated, "Since becoming an
independent company on July
2nd last year, AuRico Metals has made significant
progress in growing its royalty business and advancing our wholly
owned Kemess Gold-Copper project in British Columbia. The acquisition of Mineral
Streams added two more cash flowing royalties in Canada to our portfolio. At Kemess we
completed a significant exploration program in 2015 and with the
completion of our Environmental Assessment application we've
significantly advanced the de-risking of this asset. We look
forward to building on these efforts in 2016 as we look to create
value both on the royalty and the development side of the
business."
Operations Update
Royalties
Subsequent to its effective date of July
2, 2015, the Company recognized revenue of $0.6 million and $1.3
million from the Young-Davidson 1.5% NSR royalty in the three months
and year ended December 31,
2015. During Q4 2015, Young-Davidson produced 44,694 gold ounces, and
averaged a record underground mining rate of 5,900 tonnes per
day. Total production in 2015 was 160,358 gold ounces at
Young-Davidson. Alamos has provided gold production guidance
at Young-Davidson of 170,000 to 180,000 ounces of gold
in 2016 (please refer to the press release dated January 15, 2016 available at www.sedar.com, and
on Alamos' website at www.alamosgold.com).
The Company recognized revenue of $0.7
million and $2.7 million from
the Fosterville 2% NSR royalty in
the three months and year ended December
31, 2015. In Q4 2015 Fosterville produced 31,519 gold
ounces as higher grade discoveries continue to sustain increased
levels of production. During 2015, Fosterville produced 123,095 ounces which was
a second consecutive year of record production at the mine.
Newmarket has provided gold
production guidance of 110,000 to 120,000 ounces at Fosterville in 2016 (please refer to the press
release dated January 18, 2016
available at www.sedar.com, and on Newmarket's website at
www.newmarketgoldinc.com).
The Company's 1% NSR royalty on the Stawell mine in Victoria, Australia, commenced on January 1, 2016 in accordance with the NSR
agreement. Newmarket has
provided gold production guidance of 35,000 ounces at Stawell in
2016 (please refer to the press release dated January 18, 2016 available at www.sedar.com, and
on Newmarket's website at
www.newmarketgoldinc.com).
On September 18, 2015, the Company
closed the acquisition of Mineral Streams, a private company owning
a 0.25% NSR on the Williams Mine at Barrick Gold Corporation's
("Barrick") Hemlo complex, a 0.5%
NSR on Wesdome Gold Mine Ltd's Eagle River Mine, and a 1.5% NSR on
Barrick's David Bell property, which
also forms part of the Hemlo
complex. The transaction closed on September 18, 2015 and the Company acquired all
of the outstanding common shares of Mineral Streams by issuing
4,753,951 common shares and making a cash payment of CAD
$3.4 million (USD $2.6 million). These royalties contributed
$0.3 million in revenue for the
period between September 18, 2015 and
December 31, 2015.
The Company has negotiated terms with Macquarie Group to put in
place an acquisition credit facility for up to $15.0 million to support potential royalty
acquisitions. Final documentation continues and is expected
to be finalized in February 2016. The Company will remain
very selective in its evaluation of royalty growth
opportunities.
Kemess Underground
The Company has completed the Kemess Underground EA and provided
it to its First Nation partners. The Company will submit the
EA to the British Columbia Environmental Assessment Office by the
end of February 2016. Once submitted, the EA will undergo a
30 day screening process, in order to ascertain whether the EA
complies with certain information requirements. If the EA is
compliant, a 180 day review period is initiated, during which time
comments are received, addressed and incorporated into the final
assessment report. It is then delivered to both the
provincial and federal ministers for their respective
decisions. These decisions must be announced within 45 days
and are expected in Q4 2016.
The updated Feasibility Study is well advanced and the Company
continues to target a release in March
2016.
Kemess East
The Company is in the process of updating the Kemess East
resource estimate by incorporating the assays from the 2015
exploration program outlined below. The updated Kemess East
resource will be published as part of the Kemess Underground
Feasibility Study update, which is anticipated to be released in
March 2016.
During 2015, the Company completed the exploration program at
the Kemess East project, which included 27,719 metres of diamond
drilling. The program included drilling 12 drill holes within
the Kemess East deposit, 3 drill holes in the Kemess Offset target
and 9 drill holes on other targets. The Kemess East results
further expanded the higher grade core mineralized zone so that it
is approximately 300 metres east-to-west and north-to-south at a
similar elevation to the previously reported mineral
resource. The deposit remains open to the east towards the
Kemess East Offset fault, to the south towards the post mineral
sovereign intrusion and to the north.
Highlights from these results include:
- Hole KH-15-01, which intersected 305 metres of 0.625 g/t gold
and 0.433% copper;
- Including 166 metres of 0.831 g/t gold and 0.492% copper;
- Hole KH-15-02, which intersected 301 metres of 0.466 g/t gold
and 0.394% copper;
- Including 184 metres of 0.619 g/t gold and 0.463% copper;
- Hole KH-15-23, which intersected 458 metres of 0.640 g/t gold
and 0.437% copper;
- Including 361 metres of 0.749 g/t gold and 0.478% copper;
- Including 167 metres of 1.022 g/t gold and 0.574% copper;
- Hole KH-15-27, which intersected 590 metres of 0.516 g/t gold
and 0.366% copper;
- Including 476 metres of 0.615 g/t gold and 0.431% copper;
- Including 325 metres of 0.743 g/t gold and 0.492% copper;
- Hole KH-15-30, which intersected 772 metres of 0.465 g/t gold
and 0.365% copper;
- Including 615 metres of 0.569 g/t gold and 0.429% copper;
and
- Including 224 metres of 0.773 g/t gold and 0.508% copper.
The drill results have both increased the confidence in the
maiden Kemess East resource and raised expectations for a potential
increase in resources.
The Kemess Offset target is directly east of the Kemess
Underground deposit and shows similar geological characteristics as
Kemess Underground.
Further information about the 2015 exploration program,
including drill results, are included in the Company's press
releases dated November 3, 2015 and
August 18, 2015, which are available
on SEDAR at www.sedar.com and on the Company's website at
www.auricometals.ca.
Near-Term Corporate Objectives
The Company's objectives over the next several months
include:
- Evaluate potential royalty acquisition opportunities that are
accretive to the Company's cash flow profile;
- Submit the Kemess Underground EA (Q1 2016);
- Release an updated Kemess Underground Feasibility Study (Q1
2016); and
- Release an updated Kemess East resource (Q1 2016).
2016 Outlook
AuRico Metals' goal is to deliver sustained value creation for
the Company's many stakeholders. Given the two segments of the
business, we will look to create shareholder value both through
accretive royalty acquisitions and by advancing the Kemess
Underground project through a number of activities in 2016 which we
believe will increase the value of the asset.
The Company is providing the following outlook for 2016,
assuming a 0.75 CAD to USD exchange
rate:
- Total royalty revenue of $6.6 to $7.1
million, or $5.7 to $6.1
million after deducting applicable withholding taxes, and
assuming a gold price of $1,150 per
ounce;
- For every $50 change in the gold
price assumption, revenue is impacted by $0.3 million;
- Estimate has been based on most recent public production
guidance for operations underlying each royalty.
- Total general and administrative expense of $2.5 million;
- Total care and maintenance costs of around $4.5 million;
- The Company is progressing a stringent review of care and
maintenance costs at Kemess in an effort to further reduce these
costs. The Company is targeting a reduction of care and
maintenance expenses to an annualized level of $3.0 million or lower by the end of 2016.
- Total Kemess Underground project expenditures of between
$1.5 million and $2.5 million;
- Expenditures are related to the Kemess Underground feasibility
study update, Kemess East resource update, the EA process,
permitting, and First Nations activities. Certain Kemess
Underground project expenditures are success based.
- Total Kemess East exploration expenditures of $1.7 million.
The Company's level of expenditures on Kemess expected for 2016
is a significant reduction over amounts spent in the last half of
2015. Certain 2016 expenditures are discretionary and can be
curtailed if warranted by market conditions. AuRico Metals
expects to be free cash flow positive in 2017 following the
completion of this year's capital and exploration programs as well
as the cost cutting measures being pursued at Kemess.
About AuRico Metals
AuRico Metals is a mining royalty and development company whose
producing gold royalty assets include a 1.5% NSR royalty on the
Young-Davidson Gold Mine, a 0.25% NSR royalty on the Williams Mine
at Hemlo, and a 0.5% NSR royalty
on the Eagle River Mine – all located in Ontario, Canada. AuRico Metals also has a 2%
NSR royalty on the Fosterville Mine and a 1% NSR royalty on the
Stawell Mine, located in Victoria,
Australia. Aside from its diversified royalty portfolio,
AuRico owns (100%) the advanced Kemess Gold-Copper Project in
British Columbia,
Canada. AuRico Metals' head office is located in Toronto, Ontario, Canada.
Cautionary Statement
This press release contains forward-looking statements and
forward-looking information as defined under Canadian and U.S.
securities laws. All statements, other than statements of
historical fact, are, or may be deemed to be, forward-looking
statements. The words "expect", "believe", "anticipate", "will",
"intend", "estimate", "forecast", "budget" and similar expressions
identify forward-looking statements. Forward-looking statements
include statements related to the Company's outlook and key
deliverables on Kemess over the next 12 months. These
statements are based on a number of factors and assumptions that,
while considered reasonable by management at the time of making
such statements, are inherently subject to significant business,
economic and competitive uncertainties and contingencies.
Known and unknown factors could cause actual results to differ
materially from those projected in the forward-looking
statements. Such forward-looking statements and the factors
and assumptions underlying them in this document include, but are
not limited to:
- Royalty revenue guidance may be impacted by the performance of
the Young-Davidson, Fosterville, Stawell, Hemlo and Eagle
River mines. Management has based its revenue
assumptions on the latest guidance provided by the operators of
these assets, but there is uncertainty as to whether operators will
achieve stated production guidance. Royalty revenue is also
based on an assumed gold price of $1,150 per ounce. The Company's gold price
assumption may be inaccurate; every $50 change in gold price assumption impacts
revenue by $0.3 million.
- General and administrative expense guidance may be impacted by
changes in foreign exchange rates, employee relations, litigation,
and business opportunities that may be pursued by the Company.
- Care and maintenance expense guidance may be impacted by
changes in foreign exchange rates, progress made on the EA and
permitting efforts, results of the updated feasibility study,
availability of financing, employee relations, electricity rates in
British Columbia, weather in the
region surrounding the Kemess site, equipment reliability, quality
of service received by vendors and consultants, and the price of
consumables.
- Kemess underground capital expenditures are at the Company's
discretion and will be impacted by changes in foreign exchange
rates, the number of comments or questions raised by First Nations
partners or the British Columbia Environmental Assessment Office
during the EA review period, additional studies required in order
to address concerns raised and the results of those studies, the
results of the Company's updated feasibility study, optimization
efforts by management, and credit market conditions and conditions
in financial markets generally.
The Company has made forward-looking statements relating to
corporate objectives and key deliverables over the next 12 months,
including permitting and the EA, release of an updated Kemess
Underground Feasibility Study, release of an updated Kemess East
resource, the Company's ability to fund forecasted cash shortfalls,
the Company's ability to create value for shareholders, sufficiency
of working capital for future commitments and other statements that
express management's expectations or estimates of future
performance.
Actual results and developments are likely to differ, and may
differ materially, from those expressed or implied by the
forward-looking statements contained herein. Such statements are
based on a number of assumptions which may prove to be incorrect,
including assumptions about: business and economic conditions;
commodity prices and the price of key inputs such as labour, fuel
and electricity; credit market conditions and conditions in
financial markets generally; development schedules and the
associated costs; ability to procure equipment and supplies and on
a timely basis; the timing and ability to obtain permits and other
approvals for projects and operations including provincial and
federal approval of the environmental application; the ability to
attract and retain skilled employees and contractors for the
operations; the accuracy of reserve and resource estimates; the
impact of changes in currency exchange rates on costs and results;
interest rates; taxation; and ongoing relations with employees and
business partners. The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Readers are cautioned that forward-looking statements are not
guarantees of future performance. All of the forward-looking
statements made in this press release are qualified by these
cautionary statements. The Company disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Other information
The technical information about the Company's Kemess Underground
project contained in this press release has been prepared under the
supervision of Mr. John Fitzgerald,
an officer of the Company, who is a qualified person within the
meaning of National Instrument 43-101. The technical
information about the Company's exploration activities has been
prepared under the supervision of Mr. Chris
Rockingham, an officer of the Company, who is a qualified
person within the meaning of National Instrument 43-101.
SOURCE AuRico Metals