RNC will host a call/webcast on May
15 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, May 15, 2019 /CNW/ - RNC Minerals
(TSX: RNX) ("RNC") announces its financial results and review of
activities for the year and quarter ended March 31, 2019. All amounts are expressed in
Canadian dollars, unless otherwise noted, and are based on the
unaudited condensed interim consolidated financial statements of
RNC for the three months ended March 31,
2019 and 2018.
Mark Selby, President and CEO,
commented, "2019 has begun strongly for RNC – the drilling campaign
at Beta Hunt has continued to deliver strong results in both
Western Flanks and A Zone, the recently announced exercise of the
option for the Higginsville operation provides a long-term
processing solution for Beta Hunt while expanding our footprint in
a prolific gold camp, and the Dumont feasibility study continues to
advance towards release later this quarter – well-timed given the
increasing market interest in nickel and its critical role in the
electric vehicle revolution. The financial performance in the first
quarter reflects the combination of the previously announced
planned temporary shutdown of mining activities at Beta Hunt, which
significantly reduced production during the quarter and our
investment in resource drilling which was running at full scale
during the quarter."
Highlights
Quarterly gold production: Gold mined production for
the first quarter totaled 3,716 ounces compared to 13,780 ounces in
the first quarter of 2018. Production was lower due to the planned
temporary ramp down of bulk mining during the first phase of the
ongoing 40,000 meter drilling program. The gold mined grade in the
first quarter was 3.36 g/t, 32% higher than in the first quarter of
2018.
Restart of gold and nickel production: Limited
restart of bulk gold mining is well underway at Beta Hunt. By the
end of April 2019, the restart had
already achieved a 40,000 ounce annualized run rate. Nickel
production has also resumed and will contribute cash flow going
forward.
Father's Day Vein: Development is now sufficiently
advanced to allow mining activities to begin underneath the
Father's Day Vein Discovery on 16 Level. This development will
target a 1,406 g/t intersection sitting just 7 metres below the
Father's Day Vein area.
Exceptional exploration results: Results from the 40,000
metre drill program that was initiated in the fourth quarter of
2018 have been positive. RNC is on track to complete a resource
update by the end of the second quarter of 2019 and will shift its
drilling focus from resource definition to a broader exploration
campaign to test the substantial exploration potential of each of
the four shears on the property. 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
- 16.8 g/t over 27.8 m, including
748 g/t over 0.53 m in hole
WFN-071
Financing: Subsequent to the end of the first
quarter, RNC closed a $12.0 million
bought deal financing to assist in funding exploration activities,
the proposed acquisition of the Higginsville Gold Operations
("HGO") from Westgold Resources Limited ("Westgold")
and general corporate purposes. Cash and cash equivalents including
specimens at March 31, 2019 was
$2.1 million.
HGO Acquisition – On May
13, RNC announced that it had exercised the
previously-announced (see RNC news release dated March 26, 2019) purchase option to acquire HGO
from Westgold. On closing, RNC will pay Westgold A$25 million in cash and A$21 million in RNC shares (satisfied by the
issuance of 49.8 million RNC shares), for total consideration of
A$50 million (including the
A$4 million deposit previously
satisfied in RNC shares). RNC expects to finance the cash component
of the purchase price with cash on hand and additional non-dilutive
capital. The acquisition is expected to close on or about
June 10, 2019.
Table 1: Summary of Full Year 2018 Financial Results
(in thousands of dollars except per share amounts)
For the three months
ended March 31
|
2019
|
2018
|
Revenue
|
$10,863
|
$21,425
|
Production and
toll-processing costs
|
8,259
|
20,636
|
Loss before income
taxes
|
(3,289)
|
(12,691)
|
Net loss
|
(3,289)
|
(12,549)
|
Basic and diluted
loss per share
|
(0.01)
|
(0.04)
|
Adjusted
EBITDA1
|
(1,866)
|
(2,137)
|
Adjusted EBITDA per
share1
|
(0.00)
|
(0.01)
|
Cash flow used in
operating activities
|
(5,518)
|
(4,049)
|
Cash investment in
property, plant and equipment
|
$(5,982)
|
$(275)
|
1.
|
Earnings before
interest, taxes, depreciation and amortization ("EBITDA") is a
non-IFRS measure: A definition and reconciliation of these measures
are included in the Non-IFRS Measures section of RNC's MD&A
dated May 14, 2019.
|
Operations / Projects
Table 2: Summary for the Three Months Ended March 31, 2019 and 2018 Operating Results
|
Three months
ended,
|
For the periods ended
March 31,
|
2019
|
2018
|
Gold (Beta Hunt
Mine)
|
|
|
Tonnes mined
(000s)
|
34
|
169
|
Gold mined, grade (g/t
gold)
|
3.36
|
2.54
|
Gold mined – coarse
gold / specimens (ounces)
|
69
|
381
|
Gold mined
(ounces)
|
3,647
|
13,399
|
Total gold mined
(ounces)
|
3,716
|
13,780
|
Recovery
(%)
|
94%
|
90%
|
Gold sales
(oz)
|
6,375
|
7,978
|
Average realized price
(US$/oz sold)
|
1,279
|
1,333
|
Development metres –
operating
|
331
|
960
|
Development metres –
capital
|
594
|
493
|
Mining cash cost
(US$/oz mined)1
|
$1,180
|
812
|
Cash operating costs
(US$/oz sold)1
|
$1,076
|
1,502
|
All-in sustaining cost
(AISC) (US$/oz sold) 1
|
$1,174
|
1,594
|
Nickel3
(Beta Hunt Mine)
|
|
|
Tonnes mined
(000s)
|
-
|
7.8
|
Nickel mined, grade
(%)
|
-
|
1.89
|
Nickel in concentrate
(kilo tonnes)
|
-
|
0.14
|
Average realized price
(US$ per pound)
|
|
6.68
|
Cash operating cost
(US$ per pound sold)
|
-
|
4.54
|
All-in sustaining cost
(AISC) (US$ per pound sold) 1
|
-
|
4.55
|
Copper2
(Reed Mine)
|
|
|
Copper in concentrate
(kilo tonnes)
|
-
|
93
|
Cash operating cost
(US$ per pound sold)
|
-
|
0.51
|
All-in sustaining cost
(AISC) (US$ per pound sold) 1
|
-
|
0.54
|
Adjusted
EBITDA1,4
|
$(1,866)
|
$(2,137)
|
Adjusted EBITDA per
share1
|
$(0.00)
|
$(0.01)
|
1.
|
Non-IFRS: the
definition and reconciliation of these measures are included in the
Non-IFRS Measures section of this MD&A.
|
2.
|
RNC's share of
production from the Reed Mine ceased commercial production in July
2018.
|
3.
|
No economic quantity
of nickel was mined during the first quarter of 2019.
|
4.
|
Earnings before
interest, taxes, depreciation and amortization
("EBITDA")
|
Highlights of RNC's financial position are as follows (in
millions of dollars):
|
|
|
As at
|
March 31,
2018
|
December 31,
2018
|
Cash and cash
equivalents
|
$0.8
|
$1.3
|
Working capital
deficit1
|
(14.2)
|
(19.0)
|
Property, plant and
equipment
|
31.3
|
24.5
|
Total
assets
|
67.7
|
58.0
|
Total
liabilities
|
30.9
|
31.9
|
Shareholder's
equity
|
$36.7
|
$26.1
|
1
|
Working capital
deficit is a measure of current assets (including cash and cash
equivalents) less current liabilities.
|
Operations / Projects
Beta Hunt Mine
The Corporation announced a significant high-grade gold
discovery (Father's Day Vein) at the Beta Hunt Mine in the third
quarter of 2018.
Following the Father's Day Vein discovery, the Corporation
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. A resource update is
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 four gold shears with gold
intersections across a 4 km strike length which remains open at
depth and along strike adjacent to the existing 5 km ramp
network.
In order to deliver the first phase of the exploration plan, the
Corporation temporarily ramped down bulk production mining in
November 2018 to allow RNC to
adequately drill off the main shear zone resources and complete an
updated resource estimate.
Late in the first quarter of 2019, the Corporation announced 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. The Corporation has also restarted nickel mining at Beta Hunt
which will contribute to cash flow.
Exploration drilling planned for later in 2019 will target
parallel shears and the southern side of the Alpha Island Fault
where the majority of the previous nickel mining had been
undertaken.
On January 22, 2019, February 25, 2019 and May
2, 2019, the Corporation 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
- 16.8 g/t over 27.8 m, including
748 g/t over 0.53 m in hole
WFN-071
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.
Drilling to the north of the Western Flanks zone has shown that
the thick relatively continuous mineralization extends at least
150 m beyond the current resource
model and remains open both along strike and at depth (see figure
2). Drill holes like WFN-049 and WFN-040 (results below) that occur
at the northernmost edge of Western Flanks drilling have extended
the thick mineralized system over 150
m beyond the edge of the current resource and illustrate the
potential for significant additions to the resource.
- WFN-049 – 3.04 g/t over 16.42 m (including 17.8 g/t over 0.93 m) and 2.5 g/t over 16.42 m (including 3.6 g/t over 5.74 m and 6.7 g/t over 2.54 m);
- WFN-040 – 4.7 g/t over 17.06
m (including 29.6 g/t over 0.54
m and 21.0 g/t over 0.78 m)
and 4.5 g/t over 11.00 m (including
10.7 g/t over 2.34 m).
The latest drill results at A Zone are from drill holes designed
to increase the confidence in the shear-hosted resource at depth
and to the south as well as expand the resource in these
directions.
Dumont Nickel-Cobalt Project
Dumont remains one of the world's premier battery metal
projects. Dumont contains 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 markets and the EV market in
the coming decade.
RNC has a 28% interest in Dumont and manages the project on
behalf of the Dumont JV.
The results of the updated feasibility study are expected to be
announced in the second quarter of 2019.
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. Planning is currently under
way for the 2019 exploration season at Orford's Qiqavik gold property in Northern Quebec. On May
9, 2019, Orford announced
that Alamos Gold Inc. has agreed to become a strategic investor in
Orford through a non-brokered
private placement. Upon completion of the private placement, it is
anticipated that Alamos will initially own a total of 14.8 million
common shares of Orford, or 19.3% of its issued and outstanding
common shares. The private placement is anticipated to close on or
before May 22, 2019 and is subject to
receipt of applicable regulatory approvals, including approval of
the TSX Venture Exchange.
Financial Results
For the three months ended March 31,
2019, revenues decreased by $10.6
million, or 49.3%, of which $6.3
million was due to the decommissioning of the Reed Mine
during the third quarter of 2018 and the planned shutdown of mining
activities at Beta Hunt which resulted in an overall decrease in
gold and nickel production which contributed to decreased revenue
of $4.3 million. Operating loss for
the three months ended March 31, 2019
improved by $5.1 million compared to
the same three month period 2018. The primarily difference is due
to an increase in gold operating income of $6.8 million at the Beta Hunt mine. Partially
offsetting this increase was a decline in Reed Mine of $2.2 million as discussed above.
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 May 15, 2019, and can be accessed as follows:
North American callers please dial: 1-855-859-2056; Pass Code:
3682948
Local and international callers please dial: 416-849-0833; Pass
Code: 3682948
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
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 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