RNC will host a call/webcast on November 6, 2019 at 10:00
a.m. (Eastern Time) to discuss the third quarter 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, Nov. 6, 2019 /CNW/ - RNC Minerals (TSX: RNX)
("RNC") announces its financial results and review of activities
for the three and nine months ended September 30, 2019 and 2018. All amounts are
expressed in Canadian dollars, unless otherwise noted, and are
based on the unaudited condensed interim consolidated financial
statements of RNC as at September 30,
2019. For additional information please refer to RNC's
MD&A and Financial Statements for the three and nine months
ended September 30, 2019.
Third Quarter of 2019 Highlights
- Third quarter 2019 consolidated gold production of 24,216 oz
and AISC2 of US$1,183/oz
- Announced second half 2019 production and cost guidance of
42,000 – 49,000 ozs at AISC of US$1,150 – US$1,250
per oz
- Third quarter 2019 was the first full quarter of processing
material at RNC's 100% owned Higginsville Mill achieving a 35%
reduction in milling costs (now A$29/t vs. prior $45/t while toll-milling)
- Generated adjusted earnings2 and adjusted
EBITDA2 of $8.0 million
and $9.1 million,
respectively
- Strong quarter-end cash balance of $24.8 million and positive working capital of
$12.2 million
- New management appointments to strengthen gold-focused
team
- Additional high grade coarse gold discoveries announced at
Beta Hunt of 1,750 oz (see RNC news release dated September 24, 2019) and 3,200 oz (see RNC news
release dated October 17,
2019)
- Strong exploration results reported outside of Baloo open
pit 8.7 g/t Au over 3 meters from 63 meters downhole in drill hole
BLOR003 (see RNC news release dated October
15, 2019)
- Reported increased resource at Beta Hunt: 395% increase in
the global measured and indicated resource to 944 koz (10,104 kt @
2.9 g/t Au) and 195% increase in the inferred resource to 406 koz
(4,109 kt @ 3.1 g/t Au) at a low discovery cost of A$7.30 per oz
- Maiden Proven and Probable gold reserve at Beta Hunt on
track to be delivered in 4Q19
Paul Huet, Chairman and CEO,
commented, "We are extremely pleased to announce the results of a
transformational third quarter at RNC. With the completion of the
Higginsville mine and mill acquisition, the third quarter of 2019
reflects the first time that RNC has processed gold ounces at its
wholly owned milling facility at Higginsville.
In a very short time, RNC has evolved from a single mine
producer subject to high-cost toll milling to a company with two
producing mines feeding a low-cost centralized mill. The results
returned during the first 90 days following the acquisition of our
mill are just the beginning of continued productivity and cost
improvements underway across all of our operations. Furthermore, we
now have over 1,800km2 of underexplored land at
Higginsville in the Kalgoorlie district and a list of priority
targets at Beta Hunt. With our significantly strengthened balance
sheet and quarter-end cash balance of $24.8
million, RNC is now a completely transformed company. I am
very excited about our future.
Lastly, I would like to personally thank our staff and employees
in Australia, who have worked
tirelessly to ensure a smooth integration of our Higginsville Mine
and Mill. I look forward to reporting the strong results of their
efforts over the coming quarters."
Table 1: Operational results for the periods ended
September 30, 2019 and 2018
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
2019
|
2018
|
2019
|
2018
|
Gold (Beta Hunt
Mine)
|
|
|
|
|
Tonnes mined
(000s)
|
133
|
146
|
300
|
447
|
Tonnes milled
(000s)
|
210
|
199
|
342
|
422
|
Gold milled, grade
(g/t Au)
|
2.93
|
3.92
|
3.07
|
3.34
|
Gold production
(ounces)1
|
18,460
|
23,872
|
31,352
|
42,623
|
Cash operating costs
(USD $/oz produced)2
|
1,032
|
955
|
1,150
|
1,157
|
All-in sustaining cost
(AISC) (USD $/oz sold)2
|
1,252
|
1,009
|
1,257
|
1,193
|
Gold (HGO
Mine)4
|
|
|
|
|
Tonnes mined
(000s)
|
73
|
-
|
73
|
-
|
Tonnes milled
(000s)
|
86
|
-
|
93
|
-
|
Gold milled grade (g/t
Au)
|
2.34
|
-
|
2.27
|
-
|
Gold production
(ounces)
|
5,756
|
-
|
6,051
|
-
|
Cash operating costs
(USD $/oz produced)2
|
638
|
-
|
990
|
-
|
All-in sustaining cost
(AISC) (USD $/oz sold)2
|
971
|
-
|
1,333
|
-
|
Gold (HGO
Processing)4
|
|
|
|
|
Tonnes milled
(000s)
|
296
|
-
|
348
|
-
|
Recoveries
3
|
92%
|
-
|
92%
|
-
|
Gold Operations
(Consolidated)4
|
|
|
|
|
Tonnes mined
(000s)
|
206
|
146
|
373
|
447
|
Tonnes milled
(000s)
|
296
|
199
|
435
|
422
|
Gold milled, grade
(g/t Au)
|
2.76
|
3.92
|
2.90
|
3.34
|
Gold milled
(ounces)
|
26,219
|
25,129
|
40,469
|
45,344
|
Gold production
(ounces)
|
24,216
|
23,872
|
37,403
|
42,623
|
Gold sold
(ounces)
|
22,010
|
23,805
|
36,867
|
43,291
|
Average realized price
(USD $/oz sold)
|
1,339
|
1,205
|
1,308
|
1,252
|
Cash operating costs
(USD $/oz produced)2
|
938
|
955
|
1,123
|
1,157
|
All-in sustaining cost
(AISC) (USD $/oz sold)2
|
1,183
|
1,009
|
1,268
|
1,193
|
Adjusted
EBITDA1,4
|
9,134
|
8,751
|
4,924
|
11,382
|
Adjusted EBITDA per
share1,4
|
0.02
|
0.02
|
0.01
|
0.03
|
|
|
1.
|
Inclusive of coarse
gold of 1,233oz in Q3 2019 (6,206 oz: Q3 2018) and 1,935oz YTD 2019
(8,596oz: YTD 2018)
|
2.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
on-IFRS Measures section of RNC's MD&A dated November 6, 2019.
See Table 1: for full Summary of Third Quarter Financial
Results.
|
3.
|
Excludes third party
tolling. No third party material was processed in the third quarter
of 2019.
|
4.
|
In respect of HGO,
for the period from acquisition being June 10, 2019 to September
30, 2019.
|
Table 2: Highlights of RNC's financial position (in
millions of dollars):
|
|
|
As at
|
September 30,
2019
|
December 31,
2018
|
Cash and cash
equivalents
|
$24.8
|
$1.3
|
Working capital
surplus (deficit)1
|
12.2
|
(19.0)
|
Property, plant and
equipment
|
77.8
|
24.5
|
Total
assets
|
166.2
|
58.0
|
Total
liabilities
|
86.7
|
31.9
|
Shareholders'
equity
|
$79.5
|
$26.1
|
|
|
|
1
|
Working capital
surplus (deficit) is a measure of current assets (including cash
and cash equivalents) less current liabilities.
|
Consolidated Results of Operations
Consolidated gold production for the third quarter of 2019
totalled 24,216 ounces. Production during the third quarter of 2019
reflects mining of the Beta Hunt deposit coupled with production
from the Baloo open pit at Higginsville Gold Operations ("HGO") and
a small amount of stockpile material.
Third quarter consolidated all-in-sustaining costs were
US$1,183 per oz, benefitting
significantly from the integration of the lower cost Higginsville
mill compared to prior toll-milling arrangements. A material
reduction of 35% in milling costs from AUD $45/t to AUD $29/t
was realized as a result of the transition to owner-operated
milling. In addition to these significant cost reductions, the
Company has eliminated its exposure to variable toll milling rates
and reduced toll mill availability in the Kambalda region given the
recent increase in gold mining activity with the rise in gold
prices. Over the coming quarters, RNC expects additional
operational synergies will be generated by the integration of Beta
Hunt and HGO, driving continued milling cost reductions.
Beta Hunt
Gold production at Beta Hunt was 18,460 ounces during the
quarter. Milled grades at Beta Hunt in the third quarter of 2019
were 2.93 g/t Au, lower than in the third quarter of 2018 due to
production from the high-grade Father's Day Vein during that 2018
period.
Stope production at Beta Hunt continues to perform well and is
meeting forecast levels, with the next stage of the production
ramp-up program currently at the detailed mine planning stage.
Management expects that production rates reached during the third
quarter to remain at a consistent 40,000 tonnes to 45,000 tonnes
per month for the remainder of the year.
RNC has also restarted mining of remnant but profitable nickel
resources on a small scale at Beta Hunt, capitalizing on the
underground infrastructure already in place. Going forward,
management is evaluating accounting for nickel mined at Beta Hunt
as a by-product credit to gold production costs. Processing of
remnant mining nickel ore is conducted off-site by a
third-party.
The 39,377 meter resource drill program completed in the first
half of 2019 at Beta Hunt identified a number of areas showing
significant widths of mineralization in Western Flanks compared to
prior mining. Once these areas are added into the mine plan, they
are expected to provide greater production flexibility resulting in
higher productivity and lower cost per tonne mined.
The release of a maiden Proven and Probable Reserve at Beta Hunt
is on track for release in the fourth quarter of 2019. This work
will look to incorporate many of the identified bulk mining
opportunities at Western Flanks.
Higginsville
Gold production at Higginsville was 5,756 ounces during the
quarter. The ramp up of mining operations at Higginsville is
proceeding well, with initial feed to the plant occurring in
August. On October 15, 2019, RNC
announced that the Baloo Stage 1 pit is expected to supply the HGO
plant with approximately 30,000 tonnes per month into the first
quarter of 2020. To date, the Baloo material that has been
processed at the HGO mill has delivered strong grades ranging
between 1.8 g/t Au to 2.8 g/t Au. Baloo Stage 2 is in the
permitting process. A further extension to the Baloo pit is being
evaluated as noted in the exploration section below.
In addition to Baloo, a second open pit is fully permitted and
available for immediate mining as part of the next phase of the
pipeline of open pits at Higginsville.
Additional High-Grade Coarse Gold Recovered at Beta
Hunt
As previously announced, an estimated 4,950 ounces of coarse
gold was recovered in September and October
2019. The coarse gold was recovered while slashing out the
drift walls in preparation for stoping activities and is
incremental to planned stope production. Material from these coarse
gold discoveries is fed through the mill at a measured rate in
order to optimize recoveries.
Strengthened Balance Sheet
During the third quarter of 2019, RNC closed an oversubscribed
bought deal financing, issuing 46,156,000 units of the Corporation
at a price of $0.40 per common share
for gross proceeds of $18.5 million.
Each unit consisted of one common share of RNC and one-half of one
common share purchase warrant. The warrants are listed on the
Toronto Stock Exchange under the symbol RNX.WT.
Management Appointments
As part of the next phase of RNC's growth, a number of
management changes and additions were made during, and subsequent
to, the third quarter with the objective of maximizing the value of
each of the assets within the Corporation's portfolio and advancing
RNC's corporate strategy.
- Mr. Paul Andre Huet was
appointed Chief Executive Officer ("CEO") and remains
Chairman
- Mr. Graeme Sloan was appointed
Managing Director, Australian Operations
- Ms. Johnna Muinonen was
appointed President, Dumont
Nickel
- Mr. Alger St-Jean was appointed Executive Vice President,
Exploration and Resource Development, Dumont Nickel
- Mr. Oliver Turner joined the
Corporation as Senior Vice President of Corporate Development and
Investor Relations.
Second Half 2019 Guidance Reiterated and Notice on Guidance
Standards Moving Forward
Production and cost guidance for RNC's Australian operations
(Beta Hunt and HGO) for the six-month period ending December 31, 2019, remains unchanged at 42,000 to
49,000 ounces of gold at an average all-in-sustaining-cost
("AISC") of US$1,150 to
US$1,250 per ounce. RNC is well
positioned to achieve its six-month production and cost guidance.
Reference is made to the Non-IFRS Measure section of the
MD&A.
Since acquiring HGO in June, the Corporation has provided
additional disclosure with respect to monthly production reports.
As of January 1, 2020, in accordance
with established industry standards, RNC will be transitioning to
quarterly reporting of production and cost metrics. In 2020, in
accordance with established industry standards, RNC will also
provide annual production and cost guidance.
Exploration - Beta Hunt
Exploration drilling from underground positions within the Beta
Hunt mine was completed in September
2019, with all targeted shear zones remaining open along
strike and down plunge. A total of six holes were completed
totaling 2,190 meters. Drilling targeted three shear zones –
Fletcher (one hole), Western Flanks north (four holes) and East
Alpha (one hole). Drilling was designed to test conceptual targets,
and to investigate the potential for extension of the Western
Flanks Mineral Resource to the north.
Drilling to date has been successful in extending Western Flanks
mineralization a further 200 meters north of previous drilling as
well as confirming the Fletcher Shear as the third major
mineralized gold system at Beta Hunt. Going forward, exploration at
Beta Hunt will continue to focus on the identification of gold and
nickel drill targets based on a review of historic (and current)
drill holes, supported by an improved understanding of the
mineralization and geological controls generated by the 2019
resource definition drill program.
For further information on the exploration results described
above, see RNC news release dated September
16, 2019.
Exploration - Higginsville
At Baloo, drilling north of a major fault (Buldania Fault)
has identified additional gold mineralization that could extend the
pit life further. Exploration drilling during the quarter comprised
of five Reverse Circulation drill holes north of the Buldania Fault
previously thought to truncate the main Baloo mineralization.
Strong mineralization was intersected including 8.7 g/t Au over 3
meters from 63 meters downhole in drill hole BLOR003. Further
drilling is planned to determine the full extent of this
mineralization.
As has proven successful at Beta Hunt, RNC is undertaking a
systematic review of the entire historical HGO resource inventory.
The review is showing promising results, with a number of areas
close to existing workings having potential to provide short term
mill feed with minimal drilling and set up costs.
For further information on the exploration results described
above, see RNC news release dated October
15, 2019.
Financial results
Table 3: Summary of Third Quarter Financial Results
(in thousands of dollars except per share amounts)
|
Three months
ended,
|
Nine months
ended,
|
For the periods ended
September 30,
|
2019
|
2018
|
2019
|
2018
|
Revenue
|
$43,092
|
$43,397
|
$71,204
|
$96,694
|
Production and
processing costs
|
26,670
|
29,060
|
51,049
|
73,305
|
Loss before income
taxes
|
(434)
|
(7,364)
|
(19,796)
|
(20,673)
|
Net loss
|
(255)
|
(7,510)
|
(19,721)
|
(21,190)
|
Basic and diluted
loss per share
|
(0.00)
|
(0.02)
|
(0.04)
|
(0.06)
|
Adjusted
EBITDA1
|
9,134
|
8,751
|
4,924
|
11,382
|
Adjusted EBITDA per
share1
|
0.02
|
0.02
|
0.01
|
0.03
|
Adjusted
Earnings1
|
8,001
|
6.902
|
3,226
|
5,.305
|
Adjusted Earnings per
share1
|
0.01
|
0.02
|
0.01
|
0.01
|
Cash flow provided by
(used in) operating activities
|
2,071
|
3,368
|
(9,777)
|
(9,592)
|
Cash investment in
property, plant and equipment
|
(2,409)
|
(291)
|
(11,261)
|
(605)
|
1.
|
Earnings before
interest, taxes, depreciation and amortization ("EBITDA") and
adjusted earnings are non-IFRS measures. A definition and
reconciliation of these measures is included in the Non-IFRS
Measures section of RNC's MD&A dated November 6,
2019.
|
Financial Results
RNC reported a strong and much improved financial performance in
the third quarter. Further improvements in financial performance
are expected during the fourth quarter as the corporation continues
to integrate the HGO mill and advance its various cost cutting
initiatives, including improved procurement terms along with
royalty and G&A reductions.
For the three months ended September 30,
2019, revenues were $43.1
million, cash flow provided by operating activities was
$2.1 million and adjusted earnings
were $8.0 million (adjusted earnings
is a non-IFRS measure and a definition and reconciliation of these
measures is included in the Non-IFRS Measures section of RNC's
MD&A dated November 6, 2019).
RNC ended the third quarter with a very strong cash balance of
$24.8 million and a working capital
surplus of $12.2 million.
For additional information please refer to RNC's MD&A and
Financial Statements for the three and nine months ended
September 30, 2019.
Conference Call / Webcast
RNC will be hosting a conference call and webcast today
beginning at 10:00 a.m. (Eastern
time). A copy of the accompanying presentation can be found
on RNC's website at www.rncminerals.com.
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 November 6, 2019, and can be accessed as
follows:
North American callers please dial: 1-855-859-2056; Pass Code:
7829328
Local and international callers please dial: 416-849-0833; Pass
Code: 7829328
About RNC Minerals
RNC is currently focused on the integration of its Beta Hunt
Gold Mine with its recently acquired Higginsville Gold Operation
("HGO") in Western Australia. The
robust Beta Hunt gold mineral resource is underpinned by multiple
gold shears with gold intersections along a 4 km strike length
which remains open in multiple directions. The gold mineral
resource is adjacent to an existing 5 km ramp network. RNC has a
100% interest in HGO, which is comprised of a low cost 1.4 Mtpa
gold mill and a substantial portfolio of gold tenements. In
addition, RNC has a 28% interest in a nickel joint venture that
owns the Dumont Nickel-Cobalt Project located in the Abitibi region
of Quebec. Dumont contains the
second largest nickel reserve and ninth largest cobalt reserve in
the world. RNC also owns a 24% interest in Orford Mining
Corporation, a mineral explorer focused on highly prospective and
underexplored areas of Northern
Quebec. RNC has a strong Board and management team focused
on delivering shareholder value. 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 Regarding the Beta Hunt Mine and
Higginsville
The decision 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, which include 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. Readers are cautioned
that there is increased uncertainty and higher risk of economic and
technical failure associated with such production decisions. An
updated mineral resource estimate is summarized in the "Technical
Report on The Beta Hunt Mine, Kambalda, Western Australia" dated September 17, 2019. It is further cautioned that
mineral resources are not mineral reserves and do not have
demonstrated economic viability. A production decision at the
Higginsville gold operations was made by previous operators of the
mine, prior to the completion of the acquisition of the
Higginsville gold operations by RNC and RNC made a decision to
continue production subsequent to the acquisition. This decision by
RNC to continue production and, to the knowledge of RNC, the prior
production decision were 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, which include 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 the Corporation's cash flow and
future profitability. Readers are cautioned that there is increased
uncertainty and higher risk of economic and technical failure
associated with such production decisions.
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, Higginsville Gold Operation 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