New Pacific Metals Corp. (“New Pacific” or the
“Company”) today announced its unaudited condensed consolidated
interim financial results for the three months ended September 30,
2017.
This earnings release should be read in
conjunction with the Company's Management Discussion &
Analysis, Financial Statements and Notes to Financial Statements
for the corresponding period, which have been posted on SEDAR at
www.sedar.com and are also available on the Company's website at
www.newpacificmetals.com. All figures are expressed in
Canadian Dollars (CAD) unless otherwise stated.
Q1 FISCAL 2018 HIGHLIGHTS
- Successfully completed the Alcira acquisition to acquire the
Silver Sand Property in Bolivia for a total cash consideration of
US$45,000,000, the transaction closed on July 20, 2017; and
- Raised US$35,817,000 through two private placements which
closed on July 17 and July 28, 2017, respectively to partially fund
the Alcira acquisition.
FINANCIALS
For the three months ended September 30, 2017,
net loss attributable to equity holders was $1,551,099 or $0.01 per
share compared to net income of $3,528,268 or $0.05 per share for
the three months ended September 30, 2016.
Major items impacting financial performance in
Q1 Fiscal 2018 are as follow:
Loss from
investments for the three months ended September 30, 2017
was $576,944 (three months ended September 30, 2017 – income of $
3,682,428). Within the loss from investments, $768,457 was from
loss on the Company’s equity investments offset by gain of $182,644
from fair value change and interest earned on bonds.
Operating expenses for the
three months ended September 30, 2017 were $507,450 (three months
ended September 30, 2016 - $253,360). The increase in
operating expenses was a result of the Company’s increased
activities in refocusing on mining, acquiring and operating mining
properties in Bolivia. Items included in operating expenses
are as follow:
(i) Consulting fees for the
three months ended September 30, 2017 were $2,925 (three months
ended September 30, 2016 - $nil).
(ii) Filing and listing fees
for the three months ended September 30, 2017 were $39,408 (three
months ended September 30, 2016 - $8,841). The filling fees
include the base fee and variable fee based on the market
capitalization paid to TSX Venture. The increase of filing
fees in the current period was related to TSX Venture’s approval of
the Company’s private placement financing and change of
business.
(iii) Investor relations
expense for the three months ended September 30, 2017 was
$35,781 (three months ended September 30, 2016 - $4,618). The
Company engaged in more mining conferences and roadshows in the
current period since it changed its business back to mining.
(iv) Professional fees for the
three months ended September 30, 2017 were $52,713 (three months
ended September 30, 2016 - $19,834). The increase in professional
fees was a result of additional legal and accounting services
related to the Alcira acquisition.
(v) Salaries and benefits
expense for the three months ended September 30, 2017 was
$205,206 (three months ended September 30, 2016 - $112,291).
The increase in salaries in the current period was due to increased
operating activities resulted in more chargeable hours for existing
employees and the creation of a few new positions.
(vi) Office and administration
expense for the three months ended September 30, 2017 was
$98,797 (three months ended September 30, 2016 - $75,048). The
increase in office and administration expenses was a result of the
overall increased activity levels of the Company.
(vii) Share-based compensation
for the three months ended September 30, 2017 was $65,795 (three
months ended September 30, 2016 - $22,912).
Foreign exchange loss for the
three months ended September 30, 2017 was $469,304 (three months
ended September 30, 2016 - foreign exchange gain of $149,066). The
Company holds a large portion of cash and cash equivalents and
bonds in US dollars while the Company’s functional currency is
Canadian dollar, the fluctuation in exchange rates between the US
dollar and Canadian dollar will impact the financial results of the
Company. During the three months ended September 30, 2017,
the US dollar depreciated by 3.8% against Canadian dollar (from
1.2977 to 1.2480) while in the prior year the US dollar appreciated
by 0.8% against Canadian dollar (from 1.3009 to
1.3117).
ALCIRA ACQUISITION
On July 20, 2017, the Company has closed its
previously announced acquisition of 100% interest in Empresa Minera
Alcira S.A. (“Alcira”), a private Bolivian incorporated mining
company from its three shareholders (the “Vendors”) pursuant to the
terms of a share purchase agreement (the “Agreement”) dated March
28, 2017. Alcira has seven silver-polymetallic mineral
properties or ATEs (Temporary Special Authorization) in
Bolivia. The most significant property is the Silver Sand
Property (the “Property”), located in the Potosi Department, which
has been subjected to some small-scale, historic mining and was
drilled during the period 2012 through 2015 by Alcira. The
other six are early-stage exploration projects, which have either
been subject to limited small-scale mining or historical
drilling.
The Company acquired Alcira for total cash
consideration of US$45,000,000. During the three months ended
September 30, 2017, total payments of US$36,250,000 were paid to
the Vendors. Combined with the previous payment of
US$3,750,000 made on April 6, 2017, total payments made to the
Vendors as of September 30, 2017 were US$40,000,000.
According to the agreement, the remaining balance of US$5,000,000
is to be paid to the Vendors once the Company has received certain
specified permits and licenses from the authorities of Bolivia
necessary for mining and milling operations, or once Alcira has
commenced commercial production. This amount was accrued
under contingent payment of property acquisition as at September
30, 2017.
The transaction is entered into based on normal
market conditions at the amount agreed on by the parties. The
transaction did not meet the criterial of a business combination
since Alcira lacks the necessary inputs, process, and outputs of
being a business; therefore it has been accounted for as an
acquisition of assets by the Company. The purchase
consideration was allocated to the assets acquired based on their
fair values at the date of the acquisition net of any associated
liabilities. The only material asset acquired was the mineral
property interest of the Silver Sand Property.
To facilitate the funding of its acquisition of
Alcira, the Company successfully completed two private placements
during the period.
On July 17, 2017, the Company closed a private
placement to issue a total of 43,521,250 common shares at a price
of US$0.80 per share for gross proceeds of
US$34,817,000.
On July 28, 2017, the Company closed another
private placement to issue a total of 1,250,000 common shares at a
price of US$0.80 per share for gross proceeds of US$1,000,000.
SILVER SAND PROPERTY
The Company started the preparation works for
the planned exploration program immediately after the acquisition
of the Silver Sand Property. For the three months ended
September 30, 2017, total expenditures of $387,748 were capitalized
under the property. These expenditures were mainly related to
the site and camp preparation, maintaining a regional office in La
Paz, and building a competent management team and workforce for the
property.
Subsequent to the period end in October 2017,
the Company successfully received necessary permits from the
relevant Bolivian government authorities and immediately started
commencing a 30,000 metres exploration drilling program on the
property.
ABOUT NEW PACIFIC
New Pacific Metals Corp. is a Canadian
exploration and development company which owns the Silver Sand
Project, in the Potosi Department of Bolivia, the Tagish Lake Gold
Project in Yukon, Canada and the RZY Project in Qinghai Province,
China. Silvercorp Metals Inc. (TSX:SVM) (NYSE American:SVM),
the largest primary silver producer in China, is the major
shareholder.
For further information, contact:
New Pacific Metals Corp.,Investor
RelationsPhone: (604) 633-1368Fax: (604)
669-9387info@newpacificmetals.com www.newpacificmetals.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
INFORMATION
Certain of the statements and information in
this press release constitute “forward-looking information” within
the meaning of applicable Canadian provincial securities laws. Any
statements or information that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as “expects”, “is
expected”, “anticipates”, “believes”, “plans”, “projects”,
“estimates”, “assumes”, “intends”, “strategies”, “targets”,
“goals”, “forecasts”, “objectives”, “budgets”, “schedules”,
“potential” or variations thereof or stating that certain actions,
events or results “may”, “could”, “would”, “might” or “will” be
taken, occur or be achieved, or the negative of any of these terms
and similar expressions) are not statements of historical fact and
may be forward-looking statements or information.
Forward-looking statements or information are
subject to a variety of known and unknown risks, uncertainties and
other factors that could cause actual events or results to differ
from those reflected in the forward-looking statements or
information, including, without limitation, risks relating to:
fluctuating equity prices, bond prices, commodity prices;
calculation of resources, reserves and mineralization, foreign
exchange risks, interest rate risk, foreign investment risk loss of
key personnel; conflicts of interest; dependence on management and
others.
This list is not exhaustive of the factors that
may affect any of the Company’s forward-looking statements or
information. Forward-looking statements or information are
statements about the future and are inherently uncertain, and
actual achievements of the Company or other future events or
conditions may differ materially from those reflected in the
forward-looking statements or information due to a variety of
risks, uncertainties and other factors, including, without
limitation, those referred to in the Company’s Annual Information
Form for the year ended June 30, 2017 under the heading “Risk
Factors”. Although the Company has attempted to identify important
factors that could cause actual results to differ materially, there
may be other factors that cause results not to be as anticipated,
estimated, described or intended. Accordingly, readers should not
place undue reliance on forward-looking statements or
information.
The Company’s forward-looking statements and
information are based on the assumptions, beliefs, expectations and
opinions of management as of the date of this press release, and
other than as required by applicable securities laws, the Company
does not assume any obligation to update forward-looking statements
and information if circumstances or management’s assumptions,
beliefs, expectations or opinions should change, or changes in any
other events affecting such statements or information. For the
reasons set forth above, investors should not place undue reliance
on forward-looking statements and information.