TMAC Reports Operating and Financial Results for Third Quarter of 2017
TMAC Resources Inc. (TSX: TMR) (“TMAC” or the “Company”) is filing its Third Quarter 2017 Financial Statements and Management’s Discussion & Analysis for the period ended September 30, 2017. The documents may be found on the Company’s website at www.tmacresources.com or, once filed, on SEDAR at www.sedar.com. Please read this news release in conjunction with these documents.
Dr. Catharine Farrow, Chief Executive Officer of TMAC, stated, “We are pleased to have closed the public offering of shares for aggregate gross proceeds of $21.6 million concurrent with closing our private placement with RCF and Newmont for aggregate gross proceeds of $31.4 million, including the exercise of the underwriters’ over-allotment option, for a total of $53 million. We appreciate the support of our shareholders, old and new, as we navigate the ramp up of the plant to consistent plant operation at or near design throughput and recovery levels.”
Dr. Farrow went on to say, “TMAC continues to systematically work through the plant to achieve design recoveries and throughputs and all work remains on track from our update provided October 16, 2017. We are resolving the three previously identified issues: the installation of a dewatering cone to reduce excess water in the concentrate treatment plant, replacement of resin and changes to resin handling, and a design change to the distributor head for the cyclones that feed the flotation cells. A shipment of replacement resin will be introduced to the resin columns shortly, the dewatering cone has been installed and a new cyclone distributor head is being fabricated and is expected to arrive at site late this month. Our mining operations have performed as expected and the ore stockpile at the end of the quarter was 82,700 tonnes with an average grade of 16.6 g/t gold, including a portion of the stockpile grading more than 20 g/t gold. We are also pleased with the integrity of the Doris deposit as it relates to grade, continuity, hardness and geometallurgy. We reconfirm that the characteristics of the Doris ore have been in line with expectations and are not the cause of any complications in the plant recoveries.”
THIRD QUARTER 2017 HIGHLIGHTS
- Financial results:
- Net loss totalled $10.9 million, or $0.13 per share on a basic and fully diluted basis
- 13,760 ounces of gold were sold in the three months ended September 30, 2017 for proceeds of $22.1 million (US$17.7 million)
- Realized an average price for gold sold of $1,606 (US$1,288) per ounce during the three months ended September 30, 2017
- Cash costs and All-in Sustaining Costs (“AISC”) per ounce of gold sold were $1,831 (US$1,424) and $2,764 (US$2,188), respectively, in the three months ended September 30, 2017
- Cash and cash equivalents were $17.3 million and restricted cash was $43.9 million at September 30, 2017
- Finance:
- Entered into an Amended and Restated Credit Agreement for total borrowings of US$160 million with repayment terms to be over a five-year period
- Completed the 2017 Equity Financing for aggregate gross proceeds of $53.0 million
- Management team strengthened:
- Gil Lawson joined the TMAC executive team as Chief Operating Officer effective August 31, 2017 and Dan Gagnon joined the Hope Bay management team as General Manager on October 8, 2017
- Operations:
- Plant ramp up continues to be slower than anticipated
- 59,800 tonnes of ore were processed in the Plant
- The Plant achieved average recoveries of 62% in the third quarter
- 13,920 ounces of gold were produced
- Underground operations continued to perform well
- 37,800 tonnes of ore were mined at an estimated grade of 12.7 grams per tonne (“g/t”) containing 15,400 ounces of gold
- Ore stockpiles at September 30, 2017 were estimated to contain 82,700 tonnes of ore at an average grade of 16.6 g/t, or 44,000 ounces of contained gold
- Development of the ramp to Doris Connector started and the BTD zone ramp development for future stope access and diamond drill platforms continued
- Plant ramp up continues to be slower than anticipated
- Production guidance for 2017:
- Sell 50,000 to 60,000 ounces of gold
- Mine 150,000 to 180,000 tonnes of ore
- Process 215,000 to 225,000 tonnes of ore
- Boston and Doris drilling:
- Encouraging drilling results obtained at Boston and Doris BTD
- Other developments:
- Installed 45-person of the 100-person camp delivered to Hope Bay on the 2017 sealift
- Safely and successfully completed the 2017 sealift with the delivery of bulk supplies, spare parts, diesel fuel and the second crushing and grinding circuit (“Python”)
- The Nunavut Water Board (“NWB”), in consultation with the Nunavut Impact Review Board (“NIRB”), issued a new Type B Water Licence for Boston in July 2017
Table 1: Summary of operating & financial highlights for the periods ended September 30, 2017
| Description | Units | Three months | Nine months | ||||
| Mining: | |||||||
| Ore mined | tonnes | 37,800 | 97,200 | ||||
| Waste mined | tonnes | 55,700 | 197,000 | ||||
| Total mined | tonnes | 93,500 | 294,200 | ||||
| Average grade | g/t | 12.7 | 12.6 | ||||
| Contained ounces | ounces | 15,400 | 39,500 | ||||
| Development | metres | 810 | 4,037 | ||||
| Processing: | |||||||
| Ore processed | tonnes | 59,800 | 139,300 | ||||
| Grade | g/t | 11.7 | 12.0 | ||||
| Contained gold | ounces | 22,570 | 53,960 | ||||
| Recovery | % | 62% | 64% | ||||
| Gold produced | ounces | 13,920 | 34,410 | ||||
| Gold sold | ounces | 13,760 | 29,640 | ||||
| Stockpile: | |||||||
| Ore on surface | tonnes | 82,700 | 82,700 | ||||
| Average grade | g/t | 16.6 | 16.6 | ||||
| Contained gold | ounces | 44,000 | 44,000 | ||||
| P&L summary(1): | |||||||
| Revenue | $millions | 22.1 | 28.2 | ||||
| Cost of sales(2) | $millions | 28.8 | 34.5 | ||||
| Profit (loss) from mining operations | $millions | (6.7) | (6.3) | ||||
| General and administrative | $millions | 3.8 | 10.6 | ||||
| Financing costs, net | $millions | (9.9) | (11.4) | ||||
| Foreign exchange gain (loss) | $millions | 6.0 | 11.6 | ||||
| Net profit (loss) | $millions | (10.9) | (12.8) | ||||
| Per share | $ | (0.13) | (0.15) | ||||
| Cost of sales(2) | $/oz | 2,093 | 1,970 | ||||
| Cash cost(3)(4) | $US/oz | 1,424 | 1,348 | ||||
| AISC(3)(4) | $US/oz | 2,188 | 2,102 |
| Description | Units | Three months | Nine months | ||||
| USD results | |||||||
| Ounces sold | oz | 13,760 | 17,510 | ||||
| Revenue | $USmillions | 17.7 | 22.4 | ||||
| Average realized sales price(3) | $US/oz | 1,288 | 1,268 | ||||
| Average spot price of gold – London | $US/oz | 1,278 | 1,251 | ||||
| Cost of sales(2) | $USmillions | 22.5 | 26.8 | ||||
| Cost of sales(2)(5) | $US/oz | 1,632 | 1,528 | ||||
| CAD results | |||||||
| Ounces sold | Oz | 13,760 | 17,510 | ||||
| Average exchange rate | CAD/USD | 1.25 | 1.31 | ||||
| Revenue | $millions | 22.1 | 28.2 | ||||
| Average realized sales price(3) | $/oz | 1,606 | 1,643 | ||||
| Average spot price of gold – London | $/oz | 1,601 | 1,635 | ||||
| Cost of sales(2) | $millions | 28.8 | 34.5 | ||||
| Cost of sales(2) | $/oz | 2,093 | 1,970 | ||||
| CAPEX Summary: | |||||||
| Sustaining | $millions | 8.9 | 11.5 | ||||
| Expansion(6) | $millions | 7.4 | 50.8 | ||||
| Exploration and evaluation | $millions | 4.6 | 9.2 |
(1) The nine months ended September 30, 2017 only covers the period from June 1, 2017 onwards for many items including revenue, cost of sales, cash cost, AISC and ounces sold
(2) Includes depreciation and a net realizable value (“NRV”) write-down of $1.5 million in the three and nine months ended September 30, 2017
(3) Refer to non-IFRS measures below
(4) Cash cost and AISC refers to results after achieving commercial production
(5) Translated using exchange rates at the time of incurring the expenditure
(6) Expansion includes pre-commercial production costs and associated gold sale proceeds
CONFERENCE CALL AND WEBCAST
Senior management will host a conference call on Friday, November 10, 2017 at 10:00 am (ET).
Webcast access:
A live audio webcast of the conference call will be available at http://services.choruscall.ca/links/tmacresources20171110.html. An archive of the webcast will be available on the Company’s website.
Telephone access:
Please call the numbers below five to ten minutes prior to the scheduled start of the call.
Toronto local or international 1 (416) 915-3239
Toll-Free (North America) 1 (800) 319-4610
ABOUT TMAC RESOURCES
TMAC holds a 100% interest in the Hope Bay Project located in Nunavut, Canada. TMAC is an emerging gold producer with the Doris Mine pouring first gold in the first quarter of 2017 and Madrid and Boston expected to commence production in 2020 and 2022, respectively. The Company has a board of directors with depth of experience and market credibility and an exploration and development team with an extensive track record of developing high grade, profitable underground mines. TMAC’s shares trade on the Toronto Stock Exchange under the trading symbol TMR.
FORWARD-LOOKING INFORMATION
This release contains "forward-looking information” within the meaning of applicable securities laws that is intended to be covered by the safe harbours created by those laws. “Forward-looking information” includes statements that use forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “believe”, “continue”, “potential” or the negative thereof or other variations thereof or comparable terminology. Such forward-looking information includes, without limitation, bringing the timing for bringing Madrid and Boston into production and the rate of ramp up at Doris throughout 2017.
Forward-looking information is not a guarantee of future performance and management bases forward-looking statements on a number of estimates and assumptions at the date the statements are made. Furthermore, such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors, which may cause the actual plans, intentions, activities, results, performance or achievements of the Company to be materially different from any plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking information. See “Risk Factors” in the Company’s Annual Information Form dated February 23, 2017 filed on SEDAR at www.sedar.com for a discussion of these risks.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited)
(Expressed in Canadian dollars)
|
| As at | As at | ||
| $millions | $millions | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 17.3 | 62.5 | ||
| Amounts receivable | 2.8 | 7.3 | ||
| Inventories | 107.7 | 77.7 | ||
| Prepaid expenses | 1.4 | 0.8 | ||
| 129.2 | 148.3 | |||
| Non-current assets | ||||
| Property, plant and equipment | 884.5 | 801.4 | ||
| Goodwill | 80.6 | 80.6 | ||
| Restricted cash | 43.9 | 44.5 | ||
| Other assets | - | 15.0 | ||
| 1,009.0 | 941.5 | |||
| Total assets | 1,138.2 | 1,089.8 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | 43.8 | 26.8 | ||
| Debt Facility | 2.8 | 46.1 | ||
| Gold Call Options | 3.6 | 2.9 | ||
| Other liabilities | 4.0 | 0.8 | ||
| 54.2 | 76.6 | |||
| Non-current liabilities | ||||
| Debt Facility | 189.6 | 115.3 | ||
| Provision for environmental rehabilitation | 24.9 | 24.9 | ||
| Deferred tax liabilities | 63.0 | 67.9 | ||
| Other liabilities | 3.0 | - | ||
| 280.5 | 208.1 | |||
| Total liabilities | 334.7 | 284.7 | ||
| Equity | ||||
| Share capital | 834.1 | 830.2 | ||
| Warrants | 6.7 | 1.2 | ||
| Contributed surplus | 10.7 | 8.9 | ||
| Accumulated deficit | (48.0) | (35.2) | ||
| 803.5 | 805.1 | |||
| Total equity and liabilities | 1,138.2 | 1,089.8 |
CONDENSED STATEMENT OF PROFIT OR LOSS
(Unaudited)
(Expressed in Canadian dollars)
| Three | Three | Nine | Nine | |||||
| $millions | $millions | $millions | $millions | |||||
| Revenue | ||||||||
| Metal sales | 22.1 | - | 28.2 | - | ||||
| Cost of sales | ||||||||
| Production costs | 24.7 | - | 29.8 | - | ||||
| Royalties & selling expenses | 0.5 | - | 0.8 | - | ||||
| Depreciation | 3.6 | - | 3.9 | - | ||||
| 28.8 | - | 34.5 | - | |||||
| Profit (loss) from mining operations | (6.7) | - | (6.3) | - | ||||
| General and administrative | ||||||||
| Salaries and wages | 2.1 | 1.6 | 5.7 | 4.4 | ||||
| Share-based payments | 0.9 | 0.7 | 2.5 | 2.1 | ||||
| Other corporate | 0.8 | 0.6 | 2.4 | 1.9 | ||||
| Profit (loss) before the following | (10.5) | (2.9) | (16.9) | (8.4) | ||||
| Finance income | 0.2 | 0.3 | 0.6 | 0.6 | ||||
| Finance expense | (10.1) | (0.2) | (12.0) | (0.6) | ||||
| Foreign exchange (loss) gain | 6.0 | (0.7) | 11.6 | 2.6 | ||||
| Fair value adjustments | (0.2) | 0.1 | (0.7) | (2.2) | ||||
| Other (expenses) income | (0.1) | - | (0.1) | (0.1) | ||||
| Profit (loss) before income taxes | (14.7) | (3.4) | (17.5) | (8.1) | ||||
| Current income tax (expense) recovery | (0.6) | - | (1.1) | - | ||||
| Deferred income tax (expense) recovery | 4.4 | 0.6 | 5.8 | 2.1 | ||||
| Profit (loss) and comprehensive profit
| (10.9) | (2.8) | (12.8) | (6.0) | ||||
| Profit (loss) per share | ||||||||
| Basic and diluted | ($0.13) | ($0.03) | ($0.15) | ($0.08) | ||||
| Weighted average | ||||||||
| Basic and diluted | 84.0 | 82.2 | 83.9 | 79.5 |
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(Expressed in Canadian dollars)
| Three | Three | Nine | Nine | ||||||
| $millions | $millions | $millions | $millions | ||||||
| Profit (loss) for the period | (10.9) | (2.8) | (12.8) | (6.0) | |||||
| Operating activities | |||||||||
| Adjusted for: | |||||||||
| Share-based payments | 0.9 | 0.7 | 2.5 | 2.1 | |||||
| Depreciation | 3.6 | - | 3.9 | - | |||||
| Finance income | (0.2) | (0.3) | (0.6) | (0.6) | |||||
| Finance expense | 10.1 | 0.2 | 12.0 | 0.6 | |||||
| Unrealized foreign exchange loss (gain) | (6.0) | 0.7 | (11.6) | (2.6) | |||||
| Fair value loss (gain) | 0.2 | (0.1) | 0.7 | 2.2 | |||||
| Current income tax expense (recovery) | 0.6 | - | 1.1 | - | |||||
| Deferred income tax expense (recovery) | (4.4) | (0.6) | (5.8) | (2.1) | |||||
| Increase (decrease) in non-cash operating working | |||||||||
| Amounts receivable | (1.5) | (2.8) | 4.9 | (1.2) | |||||
| Inventory | (20.4) | (38.8) | (23.7) | (38.8) | |||||
| Prepaid expenses | 11.4 | 7.1 | (0.9) | (0.1) | |||||
| Accounts payable | 7.3 | - | 9.5 | - | |||||
| Operating cash flows before interest and tax | (9.3) | (36.7) | (20.8) | (46.5) | |||||
| Cash tax paid | (0.3) | - | (0.5) | - | |||||
| Cash interest paid | - | - | - | (0.1) | |||||
| Cash flows from (used in) operating activities | (9.6) | (36.7) | (21.3) | (46.6) | |||||
| Investing activities | |||||||||
| Additions to property, plant and equipment | (18.7) | (30.6) | (57.8) | (98.3) | |||||
| Interest received | 0.1 | 0.2 | 0.3 | 0.5 | |||||
| Debt facility restricted cash reclassification | 10.0 | - | 10.0 | - | |||||
| Restricted cash | (1.9) | - | (9.4) | (10.5) | |||||
| Cash flows from (used in) investing activities | (10.5) | (30.4) | (56.9) | (108.3) | |||||
| Financing activities | |||||||||
| Debt Facility drawdowns, net of transaction costs | 30.4 | 65.3 | 30.4 | 134.9 | |||||
| Flow-through financing, net of issue costs | - | - | - | 8.9 | |||||
| Warrants exercised | - | - | 2.6 | 3.9 | |||||
| Bought Deal Financing, net of issue costs | - | 56.5 | - | 56.5 | |||||
| Cash flows from (used in) financing activities | 30.4 | 121.8 | 33.0 | 204.2 | |||||
| Effects of exchange rate changes on cash and cash | 0.1 | 0.1 | - | (1.4) | |||||
| Net increase (decrease) in cash and cash equivalents for | 10.4 | 54.8 | (45.2) | 47.9 | |||||
| Cash and cash equivalents at the beginning of the period | 6.9 | 37.2 | 62.5 | 44.1 | |||||
| Cash and cash equivalents at the end of the period | 17.3 | 92.0 | 17.3 | 92.0 |
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Contact
TMAC Resources Inc.
Catharine Farrow, 416-628-0216
Chief Executive Officer
or
Ann Wilkinson, 416-628-0216
Vice President, Investor Relations
www.tmacresources.com
or
Renmark Financial Communications Inc.
Daniel Gordon, (416) 644-2020 or (514) 939-3989
dgordon@renmarkfinancial.com
www.renmarkfinancial.com
