RNC will host a call/webcast on March 28 at 10:00 a.m.
(Eastern Time) to discuss 2018 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, March 28, 2019 /CNW/ - RNC Minerals (TSX: RNX)
("RNC") announces its financial results and review of activities
for the year and quarter ended December 31,
2018. All amounts are expressed in Canadian dollars, unless
otherwise noted, and are based on the audited consolidated
financial statements of RNC for the year ended December 31, 2018.
Mark Selby, President and CEO,
commented, "RNC generated more than $27
million Adjusted EBITDA in 2018, with $16 million of that coming in a record fourth
quarter. Beta Hunt AISC costs per ounce in the quarter declined to
US$698 reflecting increased sales of
coarse gold from our Father's Day Vein discovery - demonstrating
the mine's cash flow potential. Our 40,000 metre exploration
program to unlock Beta Hunt's exploration potential began during
the quarter, delivering both multiple high grade gold intersections
and thick gold mineralization intersections. Our Dumont feasibility
update is progressing well, and I look forward to its upcoming
release given the increasing market interest in nickel and its
critical role in the electric vehicle revolution."
Consolidated Fourth Quarter and Full Year 2018 and
Recent Highlights
Record annual gold production: Gold mined production for
the 2018 year totaled 73,801 ounces compared to 37,027 ounces in
2017, which was an annual gold mined production record for Beta
Hunt. Fourth quarter 2018 gold production of 15,341 mined gold
ounces represented a 21% increase versus fourth quarter of 2017.
High-grade specimen and coarse gold production led to a 195%
increase in mined grade for the quarter to 7.28 g/t, as compared to
2.47 g/t in fourth quarter of 2017. The gold mined grade for 2018
was 4.48 g/t, an increase of 106% over the mined grade of 2.17 g/t
for 2017.
Strong exploration results: Initial results from the
40,000 metre drill program that was initiated in the fourth quarter
of 2018 have been positive. Highlights from assays received to-date
include (all drill intervals quoted are true thicknesses):
- 1,017 g/t over 2.00 m, including
7,621 g/t over 0.27 m in hole
WFN-029
- 395.9 g/t over 4.75 m, including
2,210 g/t over 0.85 m in hole
WFN-063
- 468 g/t over 0.21 m in hole
AZ13-156
- 119 g/t over 6.40 m, including
1,406 g/t over 0.50 m in hole
AZ15-013
Stronger balance sheet: During the three months ended
December 31, 2018, RNC's working
capital deficit was reduced by $8.4
million, including a $4.6
million reduction in accounts payable and accrued
liabilities. The cash and cash equivalents balance, plus value of
gold specimens held for sale, as of December
31, 2018 was $5.2 million at
contained gold value (without premium which RNC expects to
realize).
Solid Adjusted EBITDA performance improvement: Adjusted
earnings before interest, tax, depreciation and amortization
(Adjusted EBITDA) improved to $15.9
million in the fourth quarter of 2018, a $17.5 million increase from the comparable
quarter of 2017, reflecting the impact of higher sales and revenue
and lower production costs. For the full year Adjusted EBITDA
improved to $27.3 million, compared
to $(0.4) million in 2017. A
definition and reconciliation of Adjusted EBITDA is included in the
Non-IFRS Measures section of RNC's MD&A dated March 27, 2019.
Improved production unit costs: All-in sustaining costs
(AISC) were US$698 per ounce sold for
the fourth quarter of 2018, a 56% improvement on the US$1,579 per ounce sold in the prior year
comparative period. 2018 fourth quarter cash operating costs were
US$459 per ounce sold, a 69%
improvement over 2017. Mining cash costs were reduced to
US$345 per ounce mined, 61% lower
than the fourth quarter of 2017.
Table 1: Summary of Full Year 2018 Financial Results
(in thousands of dollars except per share amounts)
For the years ended
December 31
|
2018
|
2017
|
Revenue
|
$128,770
|
$73,076
|
Production and
toll-processing costs
|
82,742
|
62,412
|
Loss before income
taxes
|
(7,911)
|
(97,195)
|
Net loss
|
(8,396)
|
(91,061)
|
Basic and diluted
loss per share
|
(0.02)
|
(0.31)
|
Adjusted
EBITDA1
|
27,328
|
(351)
|
Adjusted EBITDA per
share1
|
0.07
|
(0.00)
|
Cash flow used in
operating activities
|
(8,311)
|
(2,059)
|
Cash investment in
property, plant and equipment
|
(10,464)
|
(31,361)
|
1.
|
Non-IFRS: A
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of RNC's MD&A dated March 27,
2019.
|
Operations / Projects
Table 2: Summary of Fourth Quarter and Full Year 2018
Operating Results
|
|
|
|
Three months
ended,
|
Year
ended,
|
For the periods ended
December 31,
|
2018
|
2017
|
2018
|
2017
|
Gold (Beta Hunt
Mine)
|
|
|
|
|
Tonnes mined
(000s)
|
65
|
160
|
512
|
531
|
Gold mined, grade (g/t
gold)
|
7.28
|
2.47
|
4.48
|
2.17
|
Gold mined
(ounces)
|
15,341
|
12,722
|
73,801
|
37,027
|
Recovery
(%)
|
95%
|
90%
|
93%
|
91%
|
Gold sold
(oz)
|
19,512
|
12,896
|
62,806
|
33,578
|
Average realized price
(US$/oz sold) 1
|
1,156
|
1,284
|
1,222
|
1,267
|
Mining cash cost
(US$/oz mined)
|
345
|
882
|
488
|
1,008
|
Cash operating costs
(US$/oz sold)1
|
459
|
1,476
|
938
|
1,554
|
All-in sustaining cost
(AISC) (US$/oz sold) 1
|
698
|
1,579
|
1,049
|
1,641
|
Nickel3
(Beta Hunt Mine)
|
|
|
|
|
Tonnes mined
(000s)
|
-
|
8.6
|
16.1
|
33.8
|
Nickel mined, grade
(%)
|
-
|
2.64
|
2.31
|
2.73
|
Nickel in concentrate
(000s of tonnes)
|
-
|
0.16
|
0.32
|
0.80
|
Average realized price
(US$ per pound)
|
-
|
4.03
|
7.68
|
3.97
|
Cash operating cost
(US$ per pound sold)
|
-
|
$1.90
|
$4.29
|
$2.98
|
All-in sustaining cost
(AISC) (US$ per pound sold) 1
|
-
|
$1.94
|
$4.33
|
$3.27
|
Copper2
(Reed Mine)
|
|
|
|
|
Copper in concentrate
(kilo tonnes)
|
-
|
1.21
|
3.1
|
3.47
|
Cash operating cost
(US$ per pound sold)
|
-
|
$1.97
|
$0.58
|
$1.75
|
All-in sustaining cost
(AISC) (US$ per pound sold) 1
|
-
|
$1.98
|
$0.60
|
$1.79
|
Adjusted
EBITDA1
|
$15,946
|
$(1,524)
|
$27,328
|
$(351)
|
Adjusted EBITDA per
share1
|
$0.04
|
$(0.00)
|
$0.07
|
$(0.00)
|
1.
|
Non-IFRS: A
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of RNC's MD&A dated March 27,
2019.
|
2.
|
RNC's share of
production from the Reed Mine, which ceased commercial production
in July 2018 and is currently undergoing closure.
|
3.
|
Nickel was not mined
during the second half of 2018.
|
Highlights of RNC's financial position are as follows (in
millions of dollars):
|
|
|
As at
|
December 31,
2018
|
December 31,
2017
|
Cash and cash
equivalents
|
1.3
|
24.4
|
Working capital
deficit1
|
(19.0)
|
(29.0)
|
Property, plant and
equipment
|
24.5
|
23.5
|
Mineral property
interests
|
-
|
49.0
|
Total
assets
|
58.0
|
109.0
|
Total
liabilities
|
31.9
|
98.1
|
Shareholder's
equity
|
26.1
|
10.9
|
1
|
Working capital
deficit is a measure of current assets (including cash
and
cash equivalents)
less current liabilities.
|
Operations / Projects
Beta Hunt Mine
On September 9, 2018, the
Corporation announced a significant new high-grade gold discovery
(Father's Day Vein) at the Beta Hunt Mine.
RNC announced on September 24,
2018 that a new exploration drive on 14 level at Beta Hunt
intercepted and recovered large amounts of visible coarse gold,
providing further proof of concept that the structures containing
the Father's Day Vein discovery extend 200 metres (25 meters up dip
and 180 meters along-strike) above the Father's Day Vein discovery.
Following this announcement, technical teams at Beta Hunt applied
the model for these high-grade coarse gold structures to historical
drilling and mapping, and identified a number of targets for
follow-up with the potential to continue to extend this
discovery.
The gold specimen stones from the discovery area are expected to
attract substantial premiums above the value of the gold contained
in the stones.
On November 28, 2018, the Company
announced that it initiated a 40,000 metre drill program at Beta
Hunt. The objective of this program is to upgrade and expand the
gold resource at Beta Hunt and delineate the Father's Day Vein
style high grade gold mineralization. Three drills are currently
operating underground. The first phase of the drilling campaign is
expected to be completed by April
2019 with a resource update anticipated at the end of the
second quarter of 2019.
Underground development will also be completed to provide access
to the newly discovered sediment layers, support current and future
exploration programs, and facilitate production of coarse gold
using smaller scale mining methods. Beta Hunt's gold resource
potential is underpinned by multiple gold shears with gold
intersections across a 4 km strike length which remains open in
multiple directions adjacent to the existing 5 km ramp network.
In order to deliver the first phase of the exploration plan, RNC
temporarily ramped down bulk production mining in November 2018 to allow it to adequately drill off
the main shear zone resources and complete an updated resource
estimate. The drilling program has sufficiently advanced to allow
for commencement of a limited restart of bulk mining in areas with
mine development already in place. The timing for a full ramp-up
decision has remained the same and will be based on completion of
the resource update expected by the end of the second quarter of
2019.
A review of the drilling completed in 2017 identified a sediment
layer intersected in close proximity to the much larger Western
Flanks shear. A total of four holes from 2017 drilling have
intersected the sediment layer. RNC's current interpretation
indicates a strike length of 230 metres that remains open in all
directions. Drilling completed as part of the current program has
intersected coarse gold in association with sediment beyond the
northern extent of the Western Flanks resource (see results from
WFN-029 and WFN-063 below).
The first phase of exploration, focused initially on the north
side of Beta Hunt's Alpha Island Fault, represents only a portion
of the high grade potential of the project.
Exploration drilling planned for later in 2019 will target the
southern side of the Alpha Island Fault where the majority of the
previous nickel mining was undertaken.
On January 22, 2019 and
February 25, 2019, the Company
reported drilling updates. Results from drilling completed have
provided further confirmation of the potential for the areas of
intersection between the mineralized shears and property-wide
Lunnon sediment layer for further high grade coarse gold
discoveries. High grade intersections from the 40,000 metre drill
program reported to date include (all drill intervals quoted are
true thicknesses):
- 1,017 g/t over 2.00 m, including
7,621 g/t over 0.27 m in hole
WFN-029
- 395.9 g/t over 4.75 m, including
2,210 g/t over 0.85 m in hole
WFN-063,
- 468 g/t over 0.21 m in hole
AZ13-156
- 119 g/t over 6.40 m, including
1,406 g/t over 0.50 m in hole
AZ15-013
Additionally, thick drill intersections in the Western
Flanks (including: 3.07g/t over 39.13 metres (including 5.24 g/t
over 7.05 metres and 4.49 g/t over 10.09 metres) in hole WFN-065,
3.13 g/t over 16.86 metres (including 11.66 g/t over 2.67 metres)
and 3.03 g/t over 18.89 metres (including 4.75 g/t over 4.61
metres) in hole WFN-058, and 4.17 g/t over 19.14 metres (including
8.92 g/t over 3.58 metres) and 4.63 g/t over 7.61 metres in hole
WFN-045) illustrate the nature of the Western Flanks as a thick,
variably mineralized shear zone. These intersections all lie to the
north of and outside of the existing Western Flanks resource and
provide strong potential for significant additions to the
resource.
Dumont Nickel-Cobalt Project
Dumont remains one of the world's premier battery metals
projects containing the world's largest undeveloped reserves of
nickel and second largest undeveloped reserves of cobalt. As one of
the only large-scale fully permitted, shovel-ready nickel-cobalt
projects globally, Dumont is ideally positioned to deliver the
nickel and cobalt required to meet the massive demand growth
expected from both the stainless steel market and the electric
vehicle market in the coming decade.
RNC is focused on completing an updated feasibility
study. RNC announced in September
2018 that Ausenco Engineering Canada Inc. was awarded the
contract for a feasibility study update for Dumont. The results of
the updated feasibility study are expected to be announced in the
second quarter of 2019.
Reed Mine Production
For the year ended December 31,
2018, RNC's share of metal contained in concentrate
production from the Reed Mine was 3.1 kt of copper. The all-in
sustaining cost improved to US$0.60
per pound of copper sold, compared to US$1.79 in the prior year period. Costs improved
in 2018 compared to the prior year primarily due to the effect of
RNC electing not to fund its share of mining and general and
administration costs.
The Reed Mine ceased mining operations and completed processing
of stockpiled material in the third quarter of 2018.
Orford Mining Corporation
RNC holds a 33% equity interest in Orford Mining Corporation.
Orford owns all of the assets of
RNC's former subsidiary, True North Nickel, including the Qiqavik
Gold and West Raglan Nickel projects in Northern Quebec.
The Qiqavik Project hosts several new high-grade gold
discoveries along a mineralized trend in excess of 40 km. On
October 16, 2018 Orford announced
completion the 2018 summer exploration program on the Qiqavik
property. The Qiqavik program included 8 drill holes totaling
1,211m. The highlight of the 2018
drilling program results was the discovery at the Interlake Area of
a thick sequence of gold mineralized quartz-carbonate veining
associated with sulphidic metasediments which was intersected in
three diamond drill holes. This is the first time that thicknesses
of up to 24.6m of gold-bearing
mineralization within a structural complex zone has been
intersected on the property. The Interlake area has generated
additional potential high-grade gold targets for 2019. Note that
drill intervals reported for the Qiqavik Project are down-hole core
lengths as true thicknesses cannot be determined with available
information.
Financial Results
For the year ended December 31,
2018, revenue increased by $55.7
million, or 76%, which was primarily due to increased gold
revenues from the Beta Hunt Gold Mine of $66.9 million. Partially offsetting higher gold
revenue was a $9.9 million decrease
in copper revenue from the Reed Mine which ceased operations during
the third quarter of 2018. Operating earnings for the year improved
by $90.8 million primarily due to the
2017 impairment charges of $59.4
million. In addition, excluding its 2017 impairment charge
of $1.9 million, the Reed Mine
reported higher operating earnings of $12.4
million. Excluding the impact of impairments, the Beta
Hunt Mine also contributed with higher operating earnings of
$26.3 million during the year.
Excluding 2017 impairment charges, the combined increase in
operating earnings from Beta Hunt and Reed Mine of $38.7 million was partially offset by a
$6.2 million increase in share-based
payments expense which was largely attributable to marked-to-market
adjustments related to a higher market price for RNC's common
shares on December 31, 2018 relative
to the beginning of the year.
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: http://cnw.en.mediaroom.com/events
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 March 28, 2019, and can be accessed as
follows:
North American callers please dial: 1-855-859-2056; Pass Code:
7993267
Local and international callers please dial: 416-849-0833; Pass
Code: 7993267
About RNC Minerals
RNC has a 100% interest in the producing Beta Hunt gold mine
located in Western Australia where
a significant high grade gold discovery - "Father's Day Vein" - was
recently made. RNC is currently completing a 40,000 metre drill
program, the results of which will be incorporated into an updated
NI 43-101 compliant Mineral Resource Estimate and mine plan
targeted for Q2 2019. Beta Hunt gold resource potential is
underpinned by multiple gold shears with gold intersections across
a 4km strike length which remain open in multiple directions
adjacent to an existing 5km ramp network. RNC also has a 28%
interest in a nickel joint venture that owns the Dumont
Nickel-Cobalt Project located in the Abitibi region of Quebec which contains the second largest
nickel reserve and eighth largest cobalt reserve in the world. RNC
owns a 33% interest in Orford Mining Corporation, a mineral
explorer focused on highly prospective and underexplored areas of
Northern Quebec. RNC has a strong
management team and Board with over 100 years of mining experience.
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 Mine and Dumont
Nickel – Cobalt Project.
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; results of exploration programs; accidents,
labour disputes and other risks of the mining industry; political
instability, terrorism, insurrection or war; or delays in obtaining
governmental approvals, projected cash operating 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