Pasinex Reports First Quarter 2019 Results and Debt Repayment Agreement with Joint Venture Partner
May 28 2019 - 7:00PM
Pasinex Resources Limited (CSE: PSE) (FSE: PNX) (The “Company” or
“Pasinex”) today reported financial results for the first quarter
of 2019. As expected, production from Horzum AS was lower than the
prior year and combined with lower realized zinc prices in 2019,
consolidated net income was lower than 2018. Adjusted consolidated
net income for the first quarter of 2019 was $0.5 million.
Consolidated loss for the year was $0.2 million reflecting the
impact of a $0.5 million impairment on the zinc material used and
owing from Akmetal (joint venture partner) to Horzum
AS.
Highlights –Q1 2019 and
2018
(Canadian dollars) |
|
First Quarter |
|
|
|
2019 |
|
|
2018 |
|
Pasinex financial results: |
|
|
Consolidated net income (loss) |
$ |
(214,850) |
|
$ |
726,021 |
|
Adjusted consolidated net income(1) |
$ |
455,225 |
|
$ |
2,412,621 |
|
Equity gain from Horzum AS |
$ |
250,055 |
|
$ |
2,984,186 |
|
Adjusted equity gain from Horzum AS(1) |
$ |
920,130 |
|
$ |
2,984,186 |
|
Dividend received from Horzum AS |
$ |
250,055 |
|
$ |
383,593 |
|
Basic net income (loss) per share |
|
$ - |
|
|
$ 0.01 |
|
|
|
|
Horzum AS operational data (100% basis): |
|
|
Zinc produced (wet) tonnes |
|
6,787 |
|
|
13,037 |
|
Zinc sold (wet) tonnes |
|
7,659 |
|
|
12,721 |
|
Zinc grade |
|
30% |
|
|
35% |
|
Gross margin(1) |
|
59% |
|
|
75% |
|
C$ cost per tonne mined(1) |
|
$ 257 |
|
|
$ 190 |
|
US$ cash cost per pound of zinc produced(1) |
|
$ 0.31 |
|
|
$ 0.18 |
|
(1) Refer to Note 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve Williams, CEO of Pasinex commented,
“Horzum AS produced as expected and managed its costs diligently so
that a strong 59% margin was achieved in the quarter. Drilling
continues at Pinargozu to find a parallel oxide system to improve
the production estimates for the year. Studies are on-going to
determine the appropriate measures to mitigate the excess water at
depth so that development can continue to access the higher grade
sulphide material.
In May, we entered into a legal debt repayment
agreement with Akmetal. The agreement requires that a minimum
repayment of the debt owing to Horzum As is made on a monthly basis
and it strengthens certain control provisions within the joint
venture agreement. We will adamantly make certain that Akmetal is
maximizing the debt repayments owing to Horzum AS to provide
sufficient cash flows to Pasinex.”
Pasinex Highlights
- Pasinex’s adjusted consolidated net
income for the first quarter of 2019 was $0.5 million, which
included a $0.9 million adjusted equity gain from Horzum AS.
- The adjusted equity gain decreased
period over period largely due to lower sales volumes at lower
realized zinc sales prices (see Horzum AS Highlights below).
- Q1 2019 adjusted consolidated net
income excludes an impairment on a receivable owing from the joint
venture partner (Akmetal) to Horzum AS recorded in equity
loss.
- A $0.5 million impairment charge on
the receivable from Akmetal was included in equity loss from Horzum
AS. The full amount of the receivable owing from Akmetal to Horzum
AS was written down to zero in 2018 to reflect significantly
increased credit risk. In the first quarter of 2019, Akmetal used
approximately 4,000 tonnes of zinc oxide at a cost of approximately
$1 million (100% basis). This amount was recorded as a receivable
from Akmetal and then written down to zero (see further details
below).
- On May 10, 2019, Pasinex entered
into a legally binding debt repayment agreement (“Debt Agreement”)
with Akmetal and Horzum AS. The debt repayments will be made by
means of Akmetal’s delivery of all sulphide zinc and some oxide
zinc material from its wholly owned Horzum mine. Horzum AS will
sell the material and proceeds from the sale will be used to repay
the debts owing. Akmetal will guarantee a minimum of 300 tonnes of
zinc material per month. In addition, a portion of proceeds from
sale of certain other of Akmetal assets will also be used to repay
the debts owing. The Debt Agreement provides a legal mechanism for
Horzum AS to receive payment of the debts owing but it still does
not demonstrate credit worthiness from Akmetal and as a result the
receivable remains written down to zero. The Company will continue
to vigorously pursue receipt of funds from Akmetal and re‑assess
the expected credit losses on a regular basis. Any recovery of the
receivable will be recorded in the equity gain from Horzum AS.
- At March 31, 2019 the Company’s
cash balance was $0.2 million with $0.7 million in current
payables, excluding shareholder loans payable. The Company relies
on dividends from Horzum AS to fund its spending. The 2019
production forecast for Pinargozu is approximately 19,000 tonnes
(half of 2018 production), but in combination with the sale of
inventory on hand at January 1, 2019 and the replenishment of
inventory used by Akmetal there should be adequate cash flow to
fund operations at Horzum AS as well as fund non-discretionary
spending at Pasinex for the next twelve months. Drilling will
continue through 2019 at Pinargozu to find a parallel oxide system
in an effort to increase 2019 production.
- In May 2019 the Company received an
additional $100,000 from a shareholder to pay for certain overdue
administration costs.
Horzum AS Highlights (described
on a 100% basis)
The decrease in adjusted equity gain from Horzum
AS is a result of the following operational and financial
highlights:
- In 2019, Horzum AS produced 6,787
tonnes (wet weight) of direct shipping material with an average
grade of 30% zinc. Mine production was down from 2018 production of
13,037 tonnes reflecting difficulties in gaining access to the
available ore.
- Sales volumes are down between
periods, at 7,659 tonnes in Q1 2019 and 12,721 tonnes in Q1 2018,
consistent with the lower production.
- Gross sales decreased to $4.3
million in Q1 2019 from $9.5 million in Q1 2018; a result of lower
zinc sulphide sales volumes and lower LME zinc prices in 2019.
- Total costs per tonne mined in Q1
2019 were $257 per tonne or US$0.31 per pound of zinc produced.
This compares to $190 per tonne mined in Q1 2018 or US$0.18 per
pound of zinc produced. Although the unit costs are higher than the
prior year due to the decreased production, the costs are very
competitive as confirmed by a strong gross margin of 59% in the
first quarter.
Note 1Please note that all
dollar amounts in this news release are expressed in Canadian
dollars unless otherwise indicated. Refer also to the year-end 2019
Management’s Discussion and Analysis (MD&A) and Audited
Financial Statements found on SEDAR.com for more information. This
news release includes non-GAAP measures, including adjusted equity
gain from Horzum AS, adjusted consolidated net income, gross
margin, cost per tonne mined and US$ cash cost per pound of zinc
produced. A reconciliation of these non-GAAP measures to the GAAP
financial statements is included in the MD&A.
About Pasinex
Pasinex Resources Limited is a Toronto-based
mining company which owns 50% of the producing Pinargozu high grade
zinc mine and, under a Direct Shipping Program, sells to zinc
smelters / refiners from its mine site in Turkey. The Company also
holds an option to acquire 80% of the Spur high-grade zinc
exploration project in Nevada. Pasinex has a strong technical
management team with many years of experience in mineral
exploration and mining project development. The mission of Pasinex
is to build a mid-tier zinc company based on its mining and
exploration projects in Turkey and Nevada.
Visit our web site at: www.pasinex.com
On Behalf of the Board of
DirectorsPASINEX RESOURCES LIMITED
“Steve Williams”
Steve
Williams
Evan White President/CEO
Manager of Corporate
Communications Phone: +1 416.861.9659
Phone: +1 416.906.3498Email: info@pasinex.com
Email: evan.white@pasinex.com
The CSE does not accept responsibility for the adequacy or
accuracy of this news release.
This news release includes forward-looking
statements that are subject to risks and uncertainties.
Forward-looking statements involve known and unknown risks,
uncertainties, and other factors that could cause the actual
results of the Company to be materially different from the
historical results or from any future results expressed or implied
by such forward-looking statements.
All statements within, other than statements of
historical fact, are to be considered forward looking. Although
Pasinex believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are
not guarantees of future performance and actual results or
developments may differ materially from those in forward-looking
statements. Factors that could cause actual results to differ
materially from those in forward-looking statements include market
prices, continued availability of capital and financing,
exploration results, and general economic, market or business
conditions. There can be no assurances that such statements will
prove accurate and, therefore, readers are advised to rely on their
own evaluation of such uncertainties. We do not assume any
obligation to update any forward-looking statements.
Pioneer Southwest Energy Partners L.P. Pioneer Southwest Energy Partners Lp (NYSE:PSE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Pioneer Southwest Energy Partners L.P. Pioneer Southwest Energy Partners Lp (NYSE:PSE)
Historical Stock Chart
From Sep 2023 to Sep 2024