Nomad Royalty Company Reports Strong Inaugural Q2 Results
MONTREAL, Aug. 7, 2020 - "Nomad's inaugural quarterly results were very impressive, and the diversified portfolio showed its strength in minimizing volatility seeing minimal production curtailment, while maintaining exposure to rising commodity prices and generating strong cash flow," stated Vincent Metcalfe, CEO."We are experiencing increasing levels of activity, we are extremely excited to keep growing the Nomad portfolio and further diversifying through future acquisitions and investment opportunities," commented Joseph de la Plante, CIO
Basis of Presentation for Q2 and YTD 2020 Financials:
On May 27, 2020, Nomad completed its reverse take-over comprised of a vend-in transaction of Orion Fund II Portfolio and OMF Fund III (Mg) Ltd. with Orion Mine Finance and a vend in transaction of certain assets with Yamana Gold Inc. The basis for Nomad's financial statements is the continuation of Orion Fund II Portfolio, as the deemed acquirer of Nomad. The acquisition of OMF Fund III (Mg) Ltd. and the vend-in transaction with Yamana Gold Inc. have been accounted for as acquisition of assets. As per the vend-in agreements, Nomad had a right to all cash flow generated from the assets included in the vend-in agreements effective January 1, 2020.
As such, the Q2 and YTD 2020 financial information includes results for OMF Fund III (Mg) Ltd. (which holds the Bonikro gold stream) starting only from May 27, 2020 onwards. Orion paid $8.6 million to Nomad at the closing of the RTO Transaction. Of this amount, $5.5 million is reflected directly in the statement of income and comprehensive income of Nomad (related to Orion Fund II Portfolio), whereas $3.1 million is reflected in the statement of cash flows, investing activities as Cash acquired and relates to the cash operating margin generated for the revenues from the Bonikro gold stream (OMF Fund III (Mg)) from January 1 to May 27, 2020 (the "Bonikro Cash Adjustment").
Second Quarter Highlights:
- Gold ounces earned of 3,179 and 5,629 for the three and six months ended June 30, 2020 (2,450 and 4,900 for the three and six months ended June 30, 2019). Including the Bonikro Cash Adjustment, the gold ounces earned attributable(1) to Nomad amount to 4,136 and 8,262 for the three and six months ended June 30, 2020.
- Silver ounces earned of 56,254 and 100,217 for the three and six months ended June 30, 2020 (56,484 and 119,065 for the three and six months ended June 30, 2019).
- Revenues of $6.0 million and $12.4 million for the three and six months ended June 30, 2020, in addition to $3.1 million in cash received on closing of the RTO transaction as a results of the Bonikro Cash Adjustment ($4.3 million and $8.5 million for the three and six months ended June 30, 2019).
- Adjusted net income(1) of $2.3 million and $6.4 million for the three and six months ended June 30, 2020 ($3.0 million and $5.9 million for the three and six months ended June 30, 2019)
- Cash operating margin(1) of $5.8 million and $11.7 million for the three and six months ended June 30, 2020 ($4.1 million and $8.1 million for the three and six months ended June 30, 2019). Including the Bonikro Cash Adjustment, the cash operating margin(1) attributable to Nomad amounts to $7.0 million and $13.4 million for the three and six months ended June 30, 2020.
- Cash operating margin(1) of 96% and 94% for the three and six months ended June 30, 2020.
- $0.1 million in cash costs(1), or $32 per gold ounce sold(1) and $0.2 million in cash costs(1), or $3 per silver ounce sold(1) for the three months ended June 30, 2020.
- $12.2 million in cash at June 30, 2020.
Subsequent to Quarter-end Highlights:
- Listed on OTCQX under the ticker NSRXF.
- Entered into an agreement with a syndicate of banks for a $50 million revolving credit facility with the option to increase to $75 million.
- Acquisition of a 1% net smelter return royalty on the Troilus gold project located in Québec, Canada for a cash consideration of $1.9 million (CAD $2.5 million) and by the issuance of 5,769,231 units of the Company.
| (1) Refer to the non-IFRS measures section of this press release |
Q2 2020 :
| By Category | Total Attributable ounces earned(1) | Ounces earned | Ounces earned | Ounces sold | Revenues ($000) |
| Gold | 4,136 | 957 | 3,179 | 3,015 | 5,185 |
| Silver | 56,254 | - | 56,254 | 56,254 | 853 |
| Total GEOs | 4,655 | 957 | 3,698 | 3,534 | 6,038 |
H1 2020 :
| By Category | Total Attributable ounces earned(1) | Ounces earned | Ounces earned | Ounces sold | Revenues ($000) |
| Gold | 8,262 | 2,633 | 5,629 | 5,465 | 9,147 |
| Silver | 100,217 | - | 100,217 | 184,200 | 3,267 |
| Total GEOs | 9,251 | 2,633 | 6,618 | 7,350 | 12,414 |
| (1) | Attributable to Nomad, inclusive of the Bonikro Cash Adjustment |
| (2) | Reported in the statement of cash flows, investing activities as Cash acquired for $3.1 million, reflecting revenues, net of cash cost of $400 per ounce |
Q2 2020 :
| Attributable GEOs earned(1)(2) | Attributable GEOs sold(1)(2) | Revenues ($000) | Cash costs(2) | Bonikro Cash Adjustment ($000) | Cash operating margin(2) | |
| Premier Gold | 2,450 | 2,450 | 4,332 | - | - | 4,332 |
| Bonikro Gold | 1,686 | 1,522 | 853 | 97 | 1,233 | 1,989 |
| Mercedes and South Arturo Silver | 147 | 147 | 242 | 48 | - | 194 |
| Woodlawn | 372 | 372 | 611 | 122 | - | 489 |
| Total | 4,655 | 4,491 | 6,038 | 267 | 1,233 | 7,004 |
H1 2020 :
| Attributable GEOs earned(1) (2) | Attributable GEOs sold(1) (2) | Revenues ($000) | Cash costs(2) | Cash acquired ($000) | Cash operating margin(2) and cash acquired ($000) | |
| Premier Gold | 4,900 | 4,900 | 8,294 | - | - | 8,294 |
| Bonikro Gold | 3,362 | 3,197 | 853 | 97 | 3,149 | 3,905 |
| Mercedes and South Arturo Silver | 400 | 1,297 | 2,300 | 416 | - | 1,884 |
| Woodlawn | 589 | 589 | 967 | 192 | - | 775 |
| Total | 9,251 | 9,983 | 12,414 | 705 | 3,149 | 14,858 |
| (1) | Attributable to Nomad |
| (2) | Refer to the non-IFRS measures section of this press release |
For the second quarter revenue was sourced 100% from gold and silver. The portfolio's objective is to maintain a focus on precious metals (primarily gold and silver) with a target of no more than 10% in revenue from other commodities. Geographically, revenue was sourced 85% from the Americas, 7% from Africa and 8% from Australia.
Corporate Update:
- Completed reverse take-over transaction: On May 27, 2020, Nomad completed its reverse take-over comprised of two related vend-in transactions as well as a concurrent private placement of subscription.
- Trading on TSX: On May 29, 2020, Nomad graduated from the TSX Venture and began trading on the Toronto Stock Exchange under the ticker NSR.
- Trading on OTCQX: On July 13, 2020, Nomad qualified and started to trade on the OTCQX® Best Market under the ticker NSRXF.
- Secured Credit Facility: On July 15, 2020, Nomad entered into an agreement with a syndicate of banks for a $50 million revolving credit facility with the option to increase to $75 million.
- Troilus Royalty Interest: On July 31, 2020, Nomad closed the acquisition of a 1% NSR on the Troilus Gold project located in the Frotêt-Evans Greenstone Belt in the Province of Quebec for a cash consideration of $1.9 million and by the issuance of 5,769,231 units.
Asset Update:
- Blyvoor gold stream: In response to COVID-19, the operator of Blyvoor gold stream implemented strict health and safety measures. During the second quarter ended June 30, 2020, following the receipt of the key blasting permit, Blyvoor gold mine commenced day and night shift development blasting and also initiated commissioning of its gold plant. The operator is forecasting to produce its first ore in the fourth quarter of 2020.
- Bonikro gold stream: Operations at the Bonikro mine have not been interrupted to date by the COVID-19 pandemic.
- South Arturo silver stream: El Nino mine production exceeded expectations during the second quarter. A new NI 43-101 report was commissioned for South Arturo. The JV partners are assessing additional development opportunities including the Phase 1 and Phase 3 open pit projects and the potential for an on-site heap leach. The JV partners expect to complete the updated technical report during the third quarter with the goal of providing a long-term view of the opportunity provided by this project.
- Mercedes silver stream: In response to the COVID-19 pandemic and following the Mexican federal government decree on March 30, 2020, Mercedes was placed on care and maintenance. The decree was lifted at the end of May and, upon certification of compliance to protocols intended to minimize the risk of COVID-19 presence and transmission on site, limited ore and waste development as well as delineation and exploration drilling were restarted. Ore was stockpiled in June and processing resumed in early July. During the shutdown, a plan was developed to re- start operations with a strategy limiting mining and development activities to the Lupita (including Lupita Extension) and Diluvio zones. This realignment recognizes the need to optimize Mercedes' production to its current reserve base rather than its processing capacity. The new plan will focus on enhancing underground operating efficiencies and supervision in order to minimize dilution and improve ore quality. According to the operator, ongoing exploration and delineation drill programs are expected to enable mill throughput toward nameplate capacity over time.
- RDM NSR royalty: Equinox Gold temporarily suspended mining activities in response to COVID-19 at RDM from March 23 to April 2, 2020. The mine has been operating normally since April 3, 2020 and the temporary suspension did not have a material impact on production. Equinox Gold has budgeted a total capital spend of $22 million at RDM during 2020. Sustaining capital of $5 million relates primarily to the scheduled tailings facility raise. Expansion capital of $17 million relates almost entirely to open-pit expansion and capitalized stripping. The permit required to commence a pit expansion was expected in Q2 2020, which will provide access to higher grade ore for the remainder of the year.
- Gualcamayo NSR royalty: In response to the COVID-19 pandemic and following the restrictions from the Argentina Government, mining operations were stopped between March 20 and April 3, keeping activities on the leaching processes and processing plant. On April 3, mining was added to essential activities and the Gualcamayo operations were normalized.
- Woodlawn silver stream: In response to the COVID-19 pandemic and following the restrictions imposed by the Australian Federal and State Governments on March 24, 2020, Woodlawn mine was placed on care and maintenance and has yet to resume operations. Prior to the shutdown, Woodland mine shipped a total of 5,368 dry metric tonnes ("dmt") of zinc concentrate and 1,796 dmt of copper concentrate.
- Troilus NSR royalty: On July 28, Troilus Gold Corp. reported a new mineral resource estimate of 4.96 million indicated gold equivalent ("AuEq") ounces and 3.15 million inferred AuEq ounces.
On June 30, 2020 there were 511,249,454 common shares of Nomad outstanding. Non-IFRS Measures:
Nomad has included certain performance measures in this press release that do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") including gold equivalent ounces, gold ounces and gold equivalent ounces earned and sold attributable to Nomad, adjusted net income, cash operating margin, cash operating margin attributable to Nomad, cash costs, cash costs per gold ounce sold and cash costs per silver ounce sold.
In addition to the non-IFRS performance measures described below, Nomad's royalty and stream revenues are converted to gold equivalent ounces ("GEOs") by dividing the gold royalty and stream revenues for a specific period by the average realized gold price per ounce for the same respective period. Silver earned from royalty and stream agreements are converted to gold equivalent ounces by multiplying the silver ounces by the average silver price for the period and dividing by the average gold price for the period.
Adjusted net income and adjusted net income per share are calculated by removing the effects of the non-cash cost of sales related to the gold prepay loan, the listing expenses and the income tax recovery resulting from the RTO Transaction, the non-cash change in fair value of the conversion option for the Deferred Payment to Yamana Gold and the non- cash change in fair value of gold prepay loan. The Company believes that, in addition to measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company's performance.
Cash operating margin is calculated by subtracting the average cash cost of gold and silver on a per ounce basis from the average realized selling price of gold and silver on a per ounce basis. The Company presents cash operating margin as management and certain investors use this information to evaluate the Company's performance in comparison to other streaming and royalty companies who present results on a similar basis as well as to evaluate the Company's ability to generate cash flow.
Average cash cost of gold and silver on a per ounce basis is calculated by dividing the total cost of sales, less depletion and non-cash costs of sales related to the gold prepay loan, by the ounces sold. In addition to measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company's performance and ability to generate cash flow in comparison with other streaming and royalty companies in the precious metals mining industry who present similar measures of performance.
The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate these non-IFRS measures differently.
Refer to the Non-IFRS and Other Measures section the Company's Management Discussion and Analysis for the three and six month periods ended June 30, 2020.
ABOUT NOMAD
Nomad Royalty Company Ltd. is a gold & silver royalty company that purchases rights to a percentage of the gold or silver produced from a mine, for the life of the mine. Nomad owns a portfolio of 10 royalty, stream, and gold loan assets, of which 5 are on currently producing mines. Nomad plans to grow and diversify its low-cost production profile through the acquisition of additional producing and near-term producing gold & silver streams and royalties. For more information please visit: www.nomadroyalty.com.
Nomad Royalty Company Ltd.
500-1275 ave. des Canadiens-de-Montréal
Montréal (Québec) H3B 0G4
nomadroyalty.com
Forward-looking statements
Certain statements contained in this press release may be deemed "forward-looking statements". All statements in this release, other than statements of historical fact, that address events or developments that Nomad expects to occur, are forward looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential", "scheduled" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur including, without limitation, the satisfaction of all conditions precedent for the closing of the Royalty Purchase. Although Nomad 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 may differ materially from those in forward looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include, the impossibility to satisfy the conditions precedent for closing the Royalty Purchase, the impossibility to acquire royalties, streams and to fund precious metal streams, gold prices, Nomad's royalty and stream interests, access to skilled consultants, results of mining operations, exploration and development activities for properties with respect to which Nomad holds a royalty or stream, uninsured risks, regulatory changes, defects in title, availability of personnel, materials and equipment, timeliness of government or court approvals, actual performance of facilities, equipment and processes relative to specifications and expectations, unanticipated environmental impacts on operations, market prices, continued availability of capital and financing and general economic, market or business conditions. Nomad cautions that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on the forward looking statements contained herein should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Nomad believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release. Nomad undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.
| Nomad Royalty Company Ltd. (formerly Guerrero Ventures Inc.) | ||
| Consolidated balance sheets (unaudited) | ||
| (tabular amounts expressed in thousands of United States dollars) | ||
| June 30, 2020 | December 31, 2019 | |
| $ | $ | |
| Assets | ||
| Current assets | ||
| Cash | 12,239 | - |
| Amounts receivable | 56 | 140 |
| Gold prepay loan | 6,767 | 6,842 |
| Other assets | 714 | 300 |
| Total current assets | 19,776 | 7,282 |
| Non-current assets | ||
| Gold prepay loan | 10,405 | - |
| Royalty and stream interests | 159,277 | 68,973 |
| Deferred income taxes | 35,258 | - |
| Total non-current assets | 204,940 | 68,973 |
| Total assets | 224,716 | 76,255 |
| Liabilities | ||
| Current liabilities | ||
| Accounts payable and accrued liabilities | 1,236 | 375 |
| Total current liabilities | 1,236 | 375 |
| Non-current liabilities | ||
| Deferred payment liability – host contract | 8,736 | - |
| Deferred payment liability – Conversion option | 6,304 | - |
| Total non-current liabilities | 15,040 | - |
| Total liabilities | 16,276 | 375 |
| Equity | ||
| Common shares | 200,479 | - |
| Net parent investment | - | 75,880 |
| Contributed surplus | 2,125 | - |
| Retained earnings | 5,836 | - |
| Total equity | 208,440 | 75,880 |
| Total liabilities and equity | 224,716 | 76,255 |
| Nomad Royalty Company Ltd. (formerly Guerrero Ventures Inc.) | ||||
| Consolidated statements of income and comprehensive income (unaudited) | ||||
| (tabular amounts expressed in thousands of United States dollars, except per share amounts) | ||||
| Three months ended | Six months ended | |||
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |
| $ | $ | $ | $ | |
| Revenue | ||||
| Gold and silver sales | 5,611 | 4,290 | 11,987 | 8,489 |
| Other stream revenue | 427 | - | 427 | - |
| Total revenue | 6,038 | 4,290 | 12,414 | 8,489 |
| Cost of sales | ||||
| Purchased cost of gold and silver | 4,599 | 3,620 | 8,979 | 6,988 |
| Depletion of royalty and stream interests | 1,224 | 721 | 2,478 | 1,492 |
| Total cost of sales | 5,823 | 4,341 | 11,457 | 8,480 |
| Gross profit (loss) | 215 | (51) | 957 | 9 |
| Other operating expenses | ||||
| General and administrative expenses | 653 | 606 | 1,262 | 1,225 |
| Share-based compensation | 1,344 | - | 1,344 | - |
| Listing expenses | 23,492 | - | 23,492 | - |
| Total other operating expenses | 25,489 | 606 | 26,098 | 1,225 |
| Operating loss | (25,274) | (657) | (25,141) | (1,216) |
| Other income (expenses) | ||||
| Change in fair value of conversion option | (4,984) | - | (4,984) | - |
| Change in fair value of gold prepay loan | 2,652 | 784 | 3,575 | 1,339 |
| Finance costs | (84) | - | (84) | - |
| Foreign exchange loss | (156) | - | (156) | - |
| Total other income (expenses) | (2,572) | 784 | (1,649) | 1,339 |
| Income (loss) before income taxes | (27,846) | 127 | (26,790) | 123 |
| Income tax recovery | 35,111 | - | 35,111 | - |
| Net income and comprehensive income | 7,265 | 127 | 8,321 | 123 |
| Earning per share (basic and diluted) | 0.02 | 0.00 | 0.02 | 0.00 |
| Nomad Royalty Company Ltd. (formerly Guerrero Ventures Inc.) | ||||
| Consolidated statements of cash flows (unaudited) | ||||
| (tabular amounts expressed in thousands of United States dollars) | ||||
| Three months ended | Six months ended | |||
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |
| $ | $ | $ | $ | |
| Operating activities | ||||
| Net income for the period | 7,265 | 127 | 8,321 | 123 |
| Adjustments for: | ||||
| Cost of sales related to gold prepay loan | 4,332 | 3,452 | 8,274 | 6,626 |
| Depletion of royalty and stream interests | 1,224 | 721 | 2,478 | 1,492 |
| Share-based compensation | 1,344 | - | 1,344 | - |
| Listing expense | 22,390 | - | 22,390 | - |
| Change in fair value of conversion option | 4,984 | - | 4,984 | - |
| Change in fair value of gold prepay loan | (2,652) | (784) | (3,575) | (1,339) |
| Deferred income tax recovery | (35,111) | - | (35,111) | - |
| Finance costs | 56 | - | 56 | - |
| Interest received | 303 | 230 | 612 | 504 |
| Changes in other assets and liabilities | 678 | (1,303) | 604 | (1,553) |
| Cash provided by operating activities | 4,813 | 2,443 | 10,377 | 5,853 |
| Investing activities | ||||
| Cash acquired | 3,149 | - | 3,149 | - |
| Acquisition of gold prepay loan | - | - | (15,500) | (10,000) |
| Acquisition of royalty and stream interests | (10,000) | (18,500) | (10,000) | (18,500) |
| Cash used in investing activities | (6,851) | (18,500) | (22,351) | (28,500) |
| Financing activities | ||||
| Proceeds on issuance of common shares | 9,652 | - | 9,652 | - |
| Share issue expenses | (614) | - | (614) | - |
| Net parent investment | 547 | 16,057 | 15,175 | 22,647 |
| Net cash provided by financing activities | 9,585 | 16,057 | 24,213 | 22,647 |
| Net increase in cash | 7,547 | - | 12,239 | - |
| Cash at beginning of period | 4,692 | - | - | - |
| Cash at end of period | 12,239 | - | 12,239 | - |
(in U.S. dollars unless otherwise noted)
SOURCE Nomad Royalty Company Ltd.
Contact
about Nomad Royalty Company, please visit our website at www.nomadroyalty.com or email us: Vincent Metcalfe, CEO, vmetcalfe@nomadroyalty.com; Joseph de la Plante, CIO, jdelaplante@nomadroyalty.com
