Building Canada’s Next Gold Mining District

TMAC Reports Operating and Financial Results for Third Quarter of 2017

11/09/2017

TORONTO--(BUSINESS WIRE)-- 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
  • 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
ended
September 30,
2017

 

Nine months
ended
September
30, 2017

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
ended
September 30,
2017

 

Nine months
ended
September
30, 2017

 
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
PM Fix

$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
PM Fix

$/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
September
30, 2017

 

As at
December
31, 2016

  $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
months
ended
September
30, 2017

 

Three
months
ended
September
30, 2016

 

Nine
months
ended
September
30, 2017

 

Nine
months
ended
September
30, 2016

  $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
(loss) for the period

 

(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
number of shares (millions)

Basic and diluted 84.0 82.2 83.9 79.5


CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
(Expressed in Canadian dollars)

 

Three
months
ended
September
30, 2017

 

Three
months
ended
September
30, 2016

 

Nine
months
ended
September
30, 2017

 

Nine
months
ended
September
30, 2016

  $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
capital:

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
equivalents

0.1 0.1 - (1.4)

Net increase (decrease) in cash and cash equivalents for
the period

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

Source: TMAC Resources Inc.

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

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