RNC will host a call/webcast on August 10 at 10:00 a.m.
(Eastern Time) to discuss Q2 2017 results. North American
callers please dial: 1-888-231-8191, international callers
please dial: (+1) 647-427-7450. For the webcast of
this event click [here] (replay access information
below).
TORONTO, Aug. 10, 2017 /CNW/ - RNC Minerals (TSX: RNX)
("RNC") announces its review of activities and financial results
for the quarter ended June 30, 2017.
All amounts are expressed in Canadian dollars, unless otherwise
noted, and are based on the unaudited financial statements for the
quarter ended June 30, 2017.
Mark Selby, President and CEO,
commented, "Performance at Beta Hunt rebounded significantly during
the second quarter due to strong improvement in production mining,
mine development and an ongoing focus on improving grades as ounces
mined increased by 50% to 8,281 and mining rates accelerated to
1,800 tonnes per day by June – a 59% improvement versus the first
quarter. Gold grade mined improved by 24% during the quarter
to 2.09 g/t compared to the first quarter. Production in June was
over 3,900 ounces of gold translating into an annualized rate of
47,000 ounces. With the ramp-up in production and improvement
in grades, mining cash costs declined by $US850 per ounce - from $US 1,669 in the first quarter to $819 per ounce in June 2017. We expect
costs to continue to improve as production ramps up through the
remainder of 2017."
to US$1,211/oz in the second
quarter of 2017 compared to first quarter 2017 costs of
US$1,669/oz."
Q2 2017 and Recent Highlights
- Gold material mined at Beta Hunt during the second quarter was
1,351 tonnes per day, up 27% compared to the first quarter of 2017
and pre-commercial gold production was 8,281 ounces in the second
quarter of 2017, up 50% compared to the first quarter of 2017. Gold
sales were 5,891 ounces a decrease of 4% compared to 6,132 ounces
sold in the first quarter of 2017.
- For the second quarter of 2017, gold mining cash cost per ounce
declined by 27% to US$1,211 per ounce
from US$1,669 per ounce in the first
quarter. On a cost per ounce sold basis, gold cash costs, net of
by-product credits were US$1,739 per
ounce sold, and all-in sustaining costs net of by-product credits
were US$1,786 per ounce sold, higher
than the first quarter of 2017 by 6%. As production volumes ramp up
and grades improve through the year, costs are expected to decline
towards target levels. Reference is made to the Non-IFRS Measures
section of RNC's MD&A for the period ended June 30, 2017.
- Reed Mine second quarter 2017 copper contained in concentrate
production was 3.1 million pounds (1.14 kt) (30% basis). Cash costs
were US$1.58 per pound sold and
all-in sustaining costs were US$1.66
per pound sold. RNC's share of gold in concentrate production for
the second quarter of 2017 from the Reed Mine was 293 ounces.
Reference is made to the Non-IFRS Measures section of RNC's
MD&A for the period ended June 30,
2017.
- Combined operating loss from Beta Hunt and Reed Mine was a
breakeven for the three months ended June
30, 2017. Until June 30, 2017
Beta Hunt gold cost of sales, net of gold revenue, were capitalized
to property, plant and equipment.
- On June 20, 2017, RNC announced
commercial production was achieved at the Beta Hunt Mine by
producing at least 3,500 contained ounces of gold over a one month
period (equivalent to an annualized production rate of 42,000
ounces). Gold sales and related costs will be reflected in earnings
effective July 1, 2017.
- RNC had net earnings of $4.9
million ($0.02 per share) for
the three months ended June 30, 2017,
compared to a net loss of $5.0
million ($0.03 per share) for
the same period in 2016 primarily as a result of the positive
deferred tax impact of $4.9 million
associated with the second quarter disposition of the Dumont
Property.
- On July 7, 2017, RNC announced
its True North Nickel ("TNN") subsidiary arranged approximately
$6.4 million in financing to fund the
2017 exploration programs at its Qiqavik property in northern
Québec and the Jones-Keystone/Loflin and Landrum-Faulkner
properties located in the Carolina Gold Belt. RNC also confirmed
its intention to transfer its 68% interest in TNN's exploration
assets to Focused Capital Corp. ("Focused") through an amalgamation
(the "Amalgamation") to be implemented under an amalgamation
agreement to be entered into by Focused and TNN. Following the
Amalgamation, which is expected to be completed in September 2017, the resulting issuer will hold
all of TNN's assets and will be renamed Orford Mining Corporation
("Orford") and trade under the symbol "ORM".
Q2 2017 Results and Outlook
The following is a summary of Q2 2017 Production from Beta Hunt
Mine:
Beta Hunt Gold and
Nickel Operation
|
Q2
2017
|
Q1
2017
|
Q2
2016
|
Q1
20167
|
Gold tonnes mined
(000s)
|
123
|
102
|
95.4
|
66.2
|
Gold mined grade
(g/t)1
|
2.09
|
1.69
|
2.54
|
2.41
|
Gold tonnes milled
(000s)
|
98.1
|
114.3
|
80.4
|
43.1
|
Gold mill grade
(g/t)1
|
2.07
|
1.62
|
2.23
|
2.65
|
Gold mined
(ounces)1,2
|
8,281
|
5,535
|
7,599
|
5,636
|
Gold sales
(ounces)
|
5,891
|
6,132
|
5,402
|
3,416
|
Nickel tonnes mined
(000s)
|
10.1
|
6.8
|
19.1
|
29.4
|
Nickel tonnes milled
(000s)
|
9.6
|
6.8
|
19.2
|
29.7
|
Nickel mill grade,
nickel (%)
|
2.84
|
2.51
|
2.34
|
3.04
|
Nickel in concentrate
tonnes (000s)
|
0.24
|
0.15
|
0.42
|
0.80
|
Beta Hunt Gold and
Nickel Operation8
|
Q2
2017
|
Q1
2017
|
Gold mining cash
cost per ounce (US$ per ounce mined)
|
$1,211
|
$1,669
|
Gold all-in
sustaining cost, net of by-product credits (US$ per ounce
sold)4,5,6
|
$1,786
|
$1,685
|
Gold C1 cash
operating cost, net of by-product credits (US$ per ounce
sold)4,5,6
|
$1,739
|
$1,647
|
Nickel C1 cash
operating cost (US$ per lb. sold)5
|
$4.15
|
$2.97
|
Nickel C1 cash
operating cost (US$ per tonne sold)5
|
$9,150
|
$6,541
|
Nickel all-in
sustaining cost (AISC) (US$ per lb. sold)5
|
$4.15
|
$3.00
|
Nickel all-in
sustaining cost (AISC) (US$ per tonne sold)5
|
$9,150
|
$6,618
|
1.
|
The difference in
gold sales ounces and gold mined ounces is due to timing
differences in receipt of gold sales depending on completion date
of tolling campaigns.
|
2.
|
As of June 30, 2017,
80 kt of gold mineralization from Q2 2017 production remained on
the ROM pad for tolling in the subsequent quarter, compared to 55
kt of gold as of March 31, 2017
|
3.
|
Gold cash cost per
recoverable ounce mined for the month of June 2017 was US$819
per ounce mined
at a recovery of 91%
|
4.
|
Gold operations in
the second quarter of 2017 were in the ramp up stage towards
commercial production and operating and sustaining costs per ounce
are not comparable to other companies.
|
5.
|
All-in sustaining
cost, net of by-product credits, cash operating cost, net of
by-product credits, cash operating cost, cash operating cost per
tonne, all-in sustaining cost, and all-in sustaining cost per tonne
are not recognized measures under IFRS. Such non-IFRS financial
measures do not have any standardized meaning prescribed by IFRS
and are therefore unlikely to be comparable to similar measures
presented by other issuers. Management uses these measures
internally. The use of these measures enables management to better
assess performance trends. Management understands that a number of
investors, and others who follow RNC's performance, assess
performance in this way. Management believes that these measures
better reflect RNC's performance and are better indications of its
expected performance in future periods. This data is intended to
provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
|
6.
|
Excluding in each
case typical inventory adjustments of C$2,989 million as June 30,
2017.
|
7.
|
In the quarter ended
March 31, 2016 the Beta Hunt Mine was 66% owned during the fifteen
day period commencing March 16, 2016. The table is a summary
of the Q1 Production from the Beta Hunt Mine reported on a 100%
basis.
|
8.
|
Reference is made to
the Non-IFRS Measures section of RNC's MD&A for the period
ended June 30, 2017.
|
The second quarter of 2017 continued to be a period of
transition for the Beta Hunt Mine as it ramped up gold production
and prepared for commencement of commercial production which was
achieved at the end of the second quarter of 2017. Until the end of
the second quarter of 2017, Beta Hunt gold cost of sales, net of
gold revenue, are capitalized to property, plant and equipment.
Beginning July 1, 2017, following the
declaration of commercial production, gold cost of sales, net of
gold revenue will no longer be capitalized to property, plant and
equipment. As previously disclosed, the Beta Hunt production
ramp-up was slower than expected due to temporary equipment
availability issues and lower grades than expected from the initial
portion of first Western Flanks mining stope resulting in lower
than planned grades and lower than planned gold production in the
first quarter of 2017. Since the end of the first quarter, there
has been significant ongoing improvement in development rates, mine
output and grade and quarter-over-quarter improvements are expected
to continue for the remainder of 2017. Cost per ounces sold
increased slightly in Q2 relative to Q1 as the majority of ounces
processed and sold were mined during a period of low production
during Q1 and early Q2. The sharp decline in cost per recoverable
ounce mined reflect the improved throughput and grade achieved as
the second quarter progressed.
Cautionary Statement: The decision by SLM to produce
at the Beta Hunt Mine was not based on a feasibility study of
mineral reserves, demonstrating economic and technical viability,
and, as a result, there may be an increased uncertainty of
achieving any particular level of recovery of minerals or the cost
of such recovery, including increased risks associated with
developing a commercially mineable deposit. Historically, such
projects have a much higher risk of economic and technical failure.
There is no guarantee that anticipated production costs will be
achieved. Failure to achieve the anticipated production costs would
have a material adverse impact on SLM's cash flow and future
profitability. It is further cautioned that the PEA is preliminary
in nature. No mining feasibility study has been completed on Beta
Hunt. Mineral resources are not mineral reserves and do not have
demonstrated economic viability. There is no certainty that the PEA
will be realized.
Beta Hunt Mine Guidance
Guidance for 2017 gold
production remains at 50-60,000 ounces expected at an
all-in-sustaining-cost of US$1,100-1,200 per ounce. During 2017, it is
expected that costs will continue to decrease as production levels
rise.
Reed Mine
RNC's acquisition of 100% of VMS Ventures,
whose main asset is a 30% interest in the Reed Mine, closed on
April 27, 2016.
Reed Mine Q2 2017 Production
For the three
months ending June 30, 2017, VMS's
30% share of metal contained in concentrate production from the
Reed Mine was 1.41 kt of copper and 293 oz of gold. Guidance for
the full year remains unchanged.
Reed Mine Q2 2017 Operating Review (100% basis)
|
Q2
2017
|
Q1
2017
|
Q4
2016
|
Q3
2016
|
Q2
2016
|
Q1
2016
|
Ore (tonnes
hoisted)
|
121,115
|
119,534
|
104,719
|
112,929
|
114,452
|
111,461
|
Ore (tonnes
milled)
|
123,988
|
108,139
|
123,596
|
119,795
|
111,002
|
94,997
|
Copper (%)
|
4.12
|
2.96
|
2.90
|
3.59
|
4.87
|
4.38
|
Zinc (%)
|
0.41
|
0.67
|
0.63
|
0.59
|
0.45
|
0.82
|
Gold (g/t)
|
0.47
|
0.44
|
0.44
|
0.42
|
0.60
|
0.54
|
Silver
(g/t)
|
6.19
|
5.64
|
5.76
|
6.61
|
7.47
|
7.21
|
Reed Mine Q2 2017 Production and Costs (30% basis)
|
Q2
2017
|
Q1
2017
|
Copper contained in
concentrate (kilo tonnes)
|
1.41
|
0.85
|
Gold contained in
concentrate (ounces)
|
293
|
283
|
Copper cash operating
cost per pound sold 1
|
1.58
|
$2.06
|
Copper all-in
sustaining cost per pound sold 1
|
1.66
|
$2.10
|
1.
|
Cash operating cost
per pound, and all-in sustaining cost per pound, are not recognized
measures under IFRS. Such non-IFRS financial measures do not have
any standardized meaning prescribed by IFRS and are therefore
unlikely to be comparable to similar measures presented by other
issuers. Management uses these measures internally. The use of
these measures enables management to better assess performance
trends. Management understands that a number of investors, and
others who follow RNC's performance, assess performance in this
way. Management believes that these measures better reflect RNC's
performance and are better indications of its expected performance
in future periods. This data is intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS.
|
Reed Mine 2017 Guidance
In 2017, RNC expects its 30%
share of production from the Reed Mine to be 4-5 kt of copper and
0.8-1.1 koz of gold. Hudbay Minerals (the operator) has not
provided guidance for the Reed Mine. The above guidance is RNC
management's estimate of our expected 30% share of 2017
production.
Dumont Nickel Project
RNC continues to explore all
financing and partnership opportunities to allow Dumont to advance
to construction when market conditions permit. RNC announced in
April 2017 that it had closed a
transaction under which Waterton has acquired 50% of RNC's interest
in Dumont for US$22.5 million
(CDN$30 million). RNC and Waterton
each have injected US$17.5 million
(CDN$23 million) into a newly
established joint venture vehicle owned 50/50 by RNC and Waterton
that owns 100% of Dumont and has $US 35
million in cash and cash commitments to continue to advance
Dumont and pursue other nickel opportunities. US$5 million of this amount will be allocated to
Dumont-related carrying costs and other expenses to be incurred
over the next four years (expected to include the cost of an
updated feasibility study).
TNN
RNC's 68% owned subsidiary TNN has commenced the
2017 field program at its high grade gold Qiqavik project in
northern Quebec. The program will
include a minimum of 2,500 metres of a diamond drilling campaign to
follow up on two separate high grade surface gold discoveries at
the Esperance and Aurora zones. The discoveries were made during
the 2016 program in which multiple grab samples returned assay
results ranging from 5 g/t up to 189 g/t gold and up to 10% copper
over 1.6km and 400m strike lengths, respectively (see RNC news
release dated December 13, 2016). As
described above, RNC recently announced that it had agreed to spin
out TNN, including the two U.S. gold properties that are the
subject of a recently-announced option agreement with Carolina Gold
Resources, into a separately listed public entity.
RNC will continue to investigate acquisition opportunities of
highly prospective assets, preferably cash-producing, to grow the
business in base and platinum group metals. RNC will focus on
jurisdictions where it believes the risk is manageable. RNC
believes it can successfully implement its corporate strategy
because of its unique strengths, depth of management experience and
well-developed relationships in the minerals industry.
Financial Results
RNC's net earnings totalled
$5.0 million for the three months
ended June 30, 2017 (with basic and
diluted loss per share of $0.02).
This compares with a net loss of $5.8
million (with basic and diluted earnings per share of
$0.03) for the three months ended
June 30, 2016. The positive variance
of $10.8 million primarily relates to
a non-cash deferred tax recovery of $4.9
million as a result of the sale of Dumont property to the
Magneto Magneto Investments Limited Partnership ("Magneto
JV"). Excluding the impact of taxes, the loss for Q2
2017 of $0.9 million was $4.0 million lower than the second quarter of
2016. The decrease was primarily due to decreases of general and
administrative expense and other expenses of $3.8 and $3.0
million, respectively, which was partially offset by a
reduction in profits from mining activities of $2.9 million.
Highlights of RNC's financial position are as follows (in
millions of dollars):
|
|
|
|
June 30,
2017
|
December 31,
2016
|
Cash
position1
Working capital
deficit2
Mineral property
interests
Total
assets
Shareholder's
equity
|
$24.5
$(10.7)
$46.0
$163.3
$89.1
|
$4.8
$(26.2)
$72.9
$159.3
$87.9
|
1
|
Includes Cash and
Cash equivalents.
|
2
|
Working capital
deficit is a measure of current assets less current
liabilities
|
RNC's ability to operate as a going concern is dependent on its
ability to raise financing. While management has been successful in
securing financing in the past, there can be no assurance that
adequate or sufficient funding will be available in the future, or
available under terms acceptable to RNC.
Conference Call / Webcast
RNC will be hosting a
conference call and webcast today beginning at 10:00 a.m. (Eastern time).
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-231-8191
Local and international callers please dial: 647-427-7450
A live webcast of the call will be available through Cision's
website at: www.newswire.ca/en/webcast/index.cgi
A recording of the conference call will be available for replay
for a one week period beginning at approximately 1:00 p.m. (Eastern Time) on August 10, 2017, and can be accessed as
follows:
North American callers please dial: 1-855-859-2056; Pass Code:
68825235
Local and international callers please dial: 416-849-0833; Pass
Code: 68825235
About RNC Minerals
RNC is a multi-asset mineral
resource company with a portfolio of gold and base metal production
and exploration properties. RNC's principal assets are the
producing Beta Hunt gold and nickel mine in Western Australia, a 50% interest in a nickel
joint venture with Waterton that holds the Dumont Nickel Project in
the Abitibi region of Quebec, and
a 30% stake in the producing Reed Mine in the Flin Flon-Snow
Lake region of Manitoba,
Canada. RNC also owns a majority interest in the West Raglan
and Qiqavik projects in Northern
Quebec. RNC has a strong management team and Board with over
100 years of mining experience at Inco and Falconbridge. RNC's common shares trade on the
TSX under the symbol RNX. RNC shares also trade on the OTCQX market
under the symbol RNKLF.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains "forward-looking information"
including without limitation statements relating to the liquidity
and capital resources of RNC, production guidance and the potential
of the Beta Hunt and Reed mines as well as the and the potential of
the Dumont development project and Qiqavik, West Raglan,
Jones-Keystone Loflin and Landrum-Faulkner exploration
properties.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of RNC to be materially different from
any future results, performance or achievements expressed or
implied by the forward-looking statements. Factors that could
affect the outcome include, among others: future prices and the
supply of metals; the results of drilling; inability to raise the
money necessary to incur the expenditures required to retain and
advance the properties; environmental liabilities (known and
unknown); general business, economic, competitive, political and
social uncertainties; accidents, labour disputes and other risks of
the mining industry; political instability, terrorism, insurrection
or war; or delays in obtaining governmental approvals, projected
cash costs, failure to obtain regulatory or shareholder approvals.
For a more detailed discussion of such risks and other factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements, refer to
RNC's filings with Canadian securities regulators, including the
most recent Annual Information Form, available on SEDAR at
www.sedar.com.
Although RNC has attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events or results to differ from
those anticipated, estimated or intended. Forward-looking
statements contained herein are made as of the date of this news
release and RNC disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or results or otherwise, except as required by
applicable securities laws.
SOURCE RNC Minerals