VANCOUVER, BC, Aug. 31, 2020 /CNW/ - Elemental Royalties
Corp. ("Elemental" or "the Company") (TSX-V: ELE) is
pleased to announce its operating and financial results for the
second quarter ended June 30,
2020.
For complete details please refer to the Financial Statements
and associated Management Discussion and Analysis for the quarter
ended June 30, 2020, available on
SEDAR (www.sedar.com) or the Company's website
(www.elementalroyalties.com).
Q2 2020 Financial Overview
- Gross revenue of US$1.29 million,
2020 year to date US$2.51
million
- Cash and cash equivalents balance of US$1.24 million plus royalty receivables of
US$1.51 million
Table 1: Royalty
Revenue (US$ million)
|
|
Q2/2020
|
Q1/2020
|
Δ
|
Q2/2019
|
Δ
|
Wahgnion
|
0.77
|
0.47
|
65%
|
-
|
>100%
|
Amancaya
|
0.35
|
0.60
|
(42%)
|
0.54
|
(35%)
|
Kwale
|
0.17
|
0.14
|
17%
|
0.17
|
(2%)
|
Mercedes
1
|
-
|
-
|
-
|
-
|
-
|
Mt
Pleasant
|
-
|
0.01
|
(100%)
|
0.00
|
(100%)
|
Total
|
1.29
|
1.22
|
5%
|
0.71
|
81%
|
|
|
|
|
|
|
1. Royalty
revenue due to Elemental after hurdle, being the earlier of: (a)
the date on which 450,000 ounces
|
of gold equivalent
have been produced after July 28, 2016 and (b) the sixth
anniversary of that date (July 28, 2022)
|
"We are thrilled to report Elemental's highest quarterly
revenue ever, fuelled by a significant increase in production at
Wahgnion coinciding with record gold prices." commented
Frederick Bell, CEO. "With the
closing of the $24 million financing
in July, increased 2020 production guidance at Wahgnion, and
operations returning to normal at Amancaya, the outlook for the
remainder of 2020 and beyond remains strong."
Highlights:
- As announced on August 6, Teranga
has increased Wahgnion's 2020 production guidance to between
150,000 – 165,000 ounces, a 15% – 18% increase from earlier
guidance of 130,000 – 140,000 ounces, providing higher than
expected royalty revenues
- Production at Amancaya was disrupted by a 24 day miners' strike
and precautionary measures due to COVID-19. Austral Gold has
maintained 2020 Guidance of 55,000 – 60,000 ounces
- Kwale mineral sands operations performed as expected, with good
pricing and customer support
- Mercedes has lowered short term production rates to improve
efficiencies. Throughput is expected to increase back towards
nameplate over time, aligning with Elemental's royalty paying from
July 2022 following a time
hurdle
- Subsequent to the quarter end, completion of $24 million financing and commencement of trading
on the TSX Venture Exchange ("TSX-V") of the Company's shares under
the symbol "ELE"
Asset Updates
Wahgnion
- The demonstrated outperformance of the newly commissioned
Wahgnion Gold Mine in Burkina Faso
during its first year of operation has resulted in a material
increase in forecast production through to at least 2025
- Operationally, Teranga have reported excellent initial
performance, being able to consistently deliver and process 25%
more tonnes than planned, while also delivering the planned grade
and recovery performance predicted by planning
- Teranga have rescheduled the Life of Mine production to
materially bring revenue forward, and increase gold deliveries by
15% over the first six years of production to an average of 150,000
ounces per annum
- This schedule inevitably reduces the Reserve life as currently
defined, but Teranga have committed to a multiyear exploration
program, highlighting the high quality, district scale potential of
the 933km2 exploration area targeting more than a dozen
high priority greenstone gold targets
Amancaya
- Austral Gold have maintained 2020 production guidance for their
Chilean operations in spite of disruptions which resulted in a
temporary reduction in total quarterly production to 9.2kOz Au
equivalent,
- Elemental's gross royalty revenue of US$0.35 million was less affected, with nearly
all production from Amancaya, strong grade performance and stronger
gold prices.
- The production disruptions were due to COVID pandemic staffing
restrictions at site, and 24 days lost due to strike action
associated with the renegotiation of the three year mining
contract. However management indicate that they will still be able
to achieve production at the lower end of their earlier 2020
Guidance of 55,000 – 60,000 ounces of gold equivalent, indicating
expected total production in excess of 28,000 ounces for
H2/2020
- With the limitations in place, production has virtually all
been sourced from the higher grade Amancaya mine in the Royalty
Area
- Exploration has also been limited to mapping, reinterpretation
and drill planning, with work in the Royalty Area looking to extend
the Amancaya Resource blocks along strike to the north as well as
designing a Resource to Reserve conversion infill drilling program,
and working to progress the next best drilled prospect,
Veta Julia, to the south west of the
mine.
Kwale
- Strong royalty revenue from Kwale this quarter of US$0.17 million gross, was in the upper end of
Base's guidance for all products for their financial year
- As Base Resources (ASX: BSE) Base has lowered forecast
production for FY2021 (June year end), with both fewer tonnes,
partly due to a scheduled relocation of mining plant, and slightly
lower grades; resulting in about a 20% drop in forecast ilmenite
and zircon production
- Rutile, the most economically important product and has been
delivering a consistent positive reconciliation in the South Dune,
is only forecast to reduce production volumes by approximately
5%
- Market expectations appear strong in spite of expected demand
weaknesses, due to a mix of already contracted sales, stronger than
expected demand in some segments and production disruptions
elsewhere
- Exploration work is planned, but there is limited potential for
significant additional tonnages beyond the defined Resource within
the royalty area.
Mercedes
- Mercedes has begun a phased restart to operation after a two
month government-mandated shutdown due to COVID19, with the plan to
manage the site workforce by limiting production to the higher
grade Diluvio / Lupita complex and targeting 1.2ktpd of
production
- Ongoing exploration and delineation drill programs are expected
to enable mill throughput to increase toward nameplate capacity
over time
- The Diluvio / Lupita complex has generated exploration success,
Reserve and Resource increases and good production, as the
geological potential becomes better understood
- The start of royalty payments will now almost certainly be
initiated by the expiry of a time hurdle in July 2022, rather than the 450,000 ounce
production hurdle
Mount Pleasant
- Production at Mt Pleasant,
part of Zijin's larger Paddington Operations, has been intermittent
with small production from stockpiles and pillar recovery at the
Homestead underground mine, while exploration and mine planning
takes place on the Tuart and Racetrack orebodies
- During Q2 there was no reported production on the royalty
area
- Zijin's announcement in their 2019 Annual Report of plans for a
A$550M, 3.3Mtpa low grade /
refractory heap leach project is likely to include the Racetrack
Resource in our royalty area, but details of timing and ore source
sequencing have not yet been announced, or probably determined; and
site management have been advising us of a small underground
operation being assessed on the Tuart orebody
Corporate Updates
- Subsequent to the end of the second quarter, on July 28, 2020, the Company announced the closing
of its previously announced business combination resulting in the
reverse takeover ("RTO") of Fengro Industries Corp.
- In connection with the RTO, Elemental completed a brokered
subscription receipts financing for gross proceeds of approximately
$24 million
- On July 30, 2020, Elemental
announced the commencement of trading of the Company's shares on
the TSX-V under the symbol "ELE"
- Elemental joined Discovery Group, an alliance of public
companies focused on the advancement of mineral exploration and
mining projects with a proven track record of generating
shareholder value through responsible, sustainable, and innovative
development
About Elemental:
Elemental is a gold focused royalty company with a portfolio of
five royalties over producing assets spanning Burkina Faso, Chile, Mexico, Kenya
and Western Australia. The portfolio is heavily weighted
towards precious metals and producing royalties, providing a
diversified foundation of revenue from the outset, while minimising
shareholder dilution.
Qualified Person:
Richard Evans, FAusIMM, is Senior
Vice President Technical for Elemental, and a qualified person
under National Instrument 43-101 – Standards of Disclosure for
Mineral Projects, has reviewed and approved the scientific and
technical disclosure contained in this press release.
On behalf of Elemental Royalties Corp.
Frederick Bell
CEO and
Director
Elemental Royalties Corp. is a proud member of Discovery
Group. For more information please visit: discoverygroup.ca
or contact 604-653-9464.
Neither the TSX Venture Exchange Inc. nor its Regulation
Service Provider (as that term is defined in the policies of the
TSX Venture Exchange Inc.) accepts responsibility for the adequacy
or accuracy of this press release.
Forward-Looking Statements
This press release contains certain "forward looking
statements" and certain "forward-looking information" as defined
under applicable Canadian and U.S. securities laws. Forward-looking
statements and information can generally be identified by the use
of forward-looking terminology such as "may", "will", "should",
"expect", "intend", "estimate", "anticipate", "believe",
"continue", "plans" or similar terminology. The forward-looking
information contained herein is provided for the purpose of
assisting readers in understanding management's current
expectations and plans relating to the future. Readers are
cautioned that such information may not be appropriate for other
purposes. Forward-looking statements and information include, but
are not limited to, statements with respect to the Company's
financial guidance, outlook, proposed plans for acquiring
additional royalty and similar interests and the potential of such
interests to provide returns and the completion of mine expansion
under construction phases at the mines or properties that the
Company holds an interest in. Forward-looking statements and
information are based on forecasts of future results, estimates of
amounts not yet determinable and assumptions that, while believed
by management to be reasonable, are inherently subject to
significant business, economic and competitive uncertainties and
contingencies. Forward-looking information is subject to known and
unknown risks, uncertainties and other factors that may cause the
actual actions, events or results to be materially different from
those expressed or implied by such forward-looking information,
including but not limited to: the impact of general business and
economic conditions; the absence of control over mining operations
from which Elemental will receive royalty payments and risks
related to those mining operations, including risks related to
international operations, government and environmental regulation,
delays in mine construction and operations, actual results of
mining and current exploration activities, conclusions of economic
evaluations and changes in project parameters as plans continue to
be refined; accidents, equipment breakdowns, title matters, labor
disputes or other unanticipated difficulties or interruptions in
operations; problems inherent to the marketability of gold and
other metals; the inherent uncertainty of production and cost
estimates and the potential for unexpected costs and expenses;
industry conditions, including fluctuations in the price of the
primary commodities mined at such operations, fluctuations in
foreign exchange rates and fluctuations in interest rates;
government entities interpreting existing tax legislation or
enacting new tax legislation in a way which adversely affects
Elemental; stock market volatility; regulatory restrictions;
liability, competition, loss of key employees , other related risks
and uncertainties. Elemental undertakes no obligation to update
forward-looking information except as required by applicable law.
Such forward-looking information represents management's best
judgment based on information currently available. No
forward-looking statement can be guaranteed and actual future
results may vary materially. Accordingly, readers are advised not
to place undue reliance on forward-looking statements or
information.
Cautionary Note to U.S. Persons Concerning Estimates of
Reserves and Measured, Indicated and Inferred Resources
Information contained or referenced in this press release or
in the documents referenced herein concerning the properties,
technical information and operations of Elemental has been prepared
in accordance with requirements and standards under Canadian
securities laws, which differ from the requirements of US
securities laws. The terms "mineral resource", "measured mineral
resource", "indicated mineral resource", "inferred mineral
resource" "mineral reserve", "probable mineral reserve," and
"proven mineral reserve" used in this press release or in the
documents incorporated by reference herein are mining terms as
defined in accordance with NI 43-101 under guidelines set out in
the Definition Standards for Mineral Resources and Mineral Reserves
adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum Council on May 10, 2014. While such terms are
recognized and required by Canadian securities laws, they are not
recognized by SEC standards and normally are not permitted to be
used in reports filed with the SEC. Investors are cautioned not to
assume that all or any part of the disclosed mineral resource
estimates will ever be confirmed or converted into reserves that
meet the definitions used by the SEC. Disclosure of contained
ounces are or may be permitted disclosure under regulations
applicable to Elemental; however, the SEC normally only permits
issuers to report mineralization that does not constitute
"reserves" by SEC standards as in-place tonnage and grade without
reference to unit of production measures. Accordingly, certain
information contained in this press release or in the documents
incorporated by reference herein concerning descriptions of
mineralization and mineral resources under these standards may not
be comparable to similar information made public by US companies
subject to reporting and disclosure requirements of the
SEC.
SOURCE Elemental Royalties Corp.