Building Canada’s Next Gold Mining District

TMAC Announces Q4 2019 Financial Results and Provides Corporate Updates

05/12/2020

TORONTO--(BUSINESS WIRE)-- TMAC Resources Inc. (TSX:TMR) (“TMAC” or the “Company”) reports its financial results for the fourth quarter and full year 2019. All amounts are in Canadian dollars unless otherwise indicated.

Jason Neal, President and Chief Executive Officer of TMAC, stated, “During the fourth quarter TMAC generated revenues of $48.0 million from sales of 24,650 ounces of gold at a cash cost of US$1,172 per ounce and an all-in sustaining cost of US$1,700 per ounce. These costs were higher than the previous quarter due to significantly lower production and sales volumes. TMAC recorded a non-cash impairment adjustment of $620.6 million, which does not affect our cash balances, liquidity or operating cash flows. The fair value used for the impairment adjustment is consistent with the value implicit in the Shandong Gold Mining transaction announced on May 8, 2020. We are, therefore, reporting a net loss of $5.46 per share on a basic and fully diluted basis. Without the impairment, we recorded a loss of 7 cents per share in the fourth quarter and a profit of 8 cents per share for the full year 2019. Even though our quarterly production had been lower, we were able to realize higher gold sales per ounce at a historically high average gold price of US$1,481 per ounce sold.”

Jason Neal added, “In the fourth quarter the processing plant processed 132,100 tonnes of ore with an average grade of 7.1 grams per tonne at a rate of 1,440 tonnes per day. Gold recovery was 82% for the quarter and had increased to 85% for the month of December.”

FOURTH QUARTER 2019 FINANCIAL HIGHLIGHTS

  • Gold production and sales
 

24,650 ounces produced; 24,650 ounces sold

  • Gross revenues
 

$48.0 million

  • Average realized gold price
 

$1,947 per ounce (US$ 1,481 per ounce)

  • Cash Costs (1)
 

US$1,172 per ounce of gold sold

  • Cost of sales (2)
 

US$1,635 per ounce of gold sold

  • All-in Sustaining Costs (“AISC”) (1)
 

US$1,700 per ounce of gold sold

  • Adjusted EBITDA (1)
 

$6.7 million

  • Profit (Loss)
 

($628.4) million

  • Profit (Loss) per share
 

($5.46) per share on a basic and fully diluted basis

  • Adjusted Profit (Loss) (1)
 

($7.8) million

  • Adjusted Profit (Loss) per share (1)
 

($0.07) per share on a basic and fully diluted basis

  • Cash flow from operations
 

$3.8 million before working capital changes

($2.3) million after working capital changes

 
  • Sustaining capex (1)
 

$13.4 million

  • Expansion capex (1)
 

$6.8 million

  • Cash on hand
 

$50.1 million at December 31, 2019, including:

$20.7 million of unrestricted cash

$29.4 million of restricted cash

 
  • Principal repayments
 

$nil

  • Debt principal balance
 

$152.0 million (US$117.0 million)

(1)

 

Refer to the “Non- IFRS Measures” section in the associated MD&A for a description and calculation of these measures.

(2)

 

Includes depreciation.

The Company performed an impairment test and recorded a non-cash impairment charge of $674.6 million as at December 31, 2019. It includes the write-off of goodwill of $80.6 million and the write-down of Property, Plant and Equipment of $594.0 million, partially offset by a $54.0 million deferred tax adjustment for a net adjustment of $620.6 million. The carrying value of the Hope Bay assets, after impairment, was $415.0 million as at year end 2019. The fair value used for the impairment adjustment is consistent with the value implicit in the Shandong Gold Mining transaction announced on May 8, 2020.

FOURTH QUARTER 2019 PRODUCTION HIGHLIGHTS

  • Production of 24,650 ounces of gold in the fourth quarter and 139,510 ounces of gold for full year 2019.
  • Mine production during the fourth quarter of 2019 was 1,560 tonnes per day at an average grade of 7.0 grams per tonne (“g/t”) and 1,440 tonnes per day at an average grade of 9.3 g/t for full year 2019. This includes production of 29,100 tonnes at 5.0 g/t from surface mining the crown pillar at Madrid North Naartok East in Q4 2019. Underground production without this material was 1,240 tonnes per day at a grade of 7.6 g/t for Q4 2019 and 1,360 tonnes per day at a grade of 9.6 g/t for full year 2019.
  • The Plant achieved throughput of 1,440 tonnes per day at an average feed grade of 7.1 g/t and an average recovery of 82% in the fourth quarter 2019.

Please refer to TMAC’s news release that summarizes the fourth quarter 2019 operating results, issued on January 20, 2020 titled TMAC Announces Q4 2019 Operating Results.

UPDATE ON MINING

Mining in the fourth quarter was primarily in the Doris North BTD Extension and Doris Connector longhole stopes. The rehabilitation in the Doris BTD East Limb high-grade area was completed in the fourth quarter and the mining of the zone was completed in the first quarter of 2020. A total of 2,080 metres were developed during the fourth quarter of 2019. Surface mining of the Madrid North Naartok East crown pillar continued and produced 29,100 tonnes of ore, containing 4,700 ounces of gold at an average grade of 5.0 g/t. Initial blending of the ore from Madrid crown pillar with Doris ore commenced in the fourth quarter and continued into the first quarter of 2020.

On March 6, 2020 in the news release titled TMAC Announces Credit Agreement Amendment and Provides Update on Operations, the Company disclosed that it had encountered groundwater in the Doris Central zone, which lead to the suspension of development in this zone. The water has only impacted development in the Doris Central zone, while other areas of the Doris mine remain unaffected. TMAC has implemented a grouting program to mitigate the impact of water inflow and a vast majority of the mine has been dewatered. Grouting and dewatering have continued while Doris is placed under reduced operations due to COVID-19 pandemic measures implemented by the Company. The Company is currently re-evaluating several mine sequencing opportunities to potentially mitigate the production delay in Doris Central.

UPDATE ON PLANT THROUGHPUT AND RECOVERIES

The average recovery rate achieved in the fourth quarter was 82%. Feed grade averaged 5.5 g/t in October and November and increased to 11.3 g/t in December as feed from Doris BTD East Limb commenced in December after completing rehabilitation work. Overall recovery was 80% in October and November due to the low feed grade; however, it increased to 85% in December. The Company expects to continue seeing good results from the scavenger columns commissioned in the fourth quarter, targeting gold from the concentrate treatment plant solution tail. Gold recoveries are expected to increase when higher grade material is processed. The resin material used in the scavenger columns was sent offsite for processing and recovery, with the first shipment having been made in February 2020.

UPDATE ON EXPLORATION

The 2019 exploration activities comprised 17,764 metres of surface and underground diamond drilling, supporting both short-term production and longer-term definition and expansion of resources at Doris, Madrid North, and Boston, as well as significant regional exploration drilling. Please refer to TMAC’s news release that summarizes the fourth quarter 2019 drill results, issued on February 5, 2020 titled TMAC Fourth Quarter Drilling Results Include High-Grade Gold at Boston and Regionally.

UPDATE ON STRATEGIC PROCESS

On May 8, 2020 TMAC announced the completion of the strategic review process initiated in January 2020. The Company has entered into a definitive agreement with Shandong Gold Mining Co. Ltd. (SH:600547; SEHK:1787) (“SD GOLD”), pursuant to which SD GOLD has agreed to acquire all of the outstanding shares of TMAC. For more information, please refer to the news release titled “TMAC to be Acquired by SD GOLD”.

UPDATE ON COVID-19 RESPONSE AND 2020 OUTLOOK

In the news release issued on March 30, 2020 titled “TMAC Announces Initiatives in Response to COVID-19” TMAC announced a number of initiatives to manage the COVID-19 pandemic. Management continues to monitor and evaluate the progression of the COVID-19 pandemic and its potential effects on its operations, liquidity and workforce at Hope Bay. The Company expects to continue to operate the processing plant through July with material from its stockpiles and limited mine production from developed stopes at Doris. There are significant uncertainties with respect to future developments and impact on the Company related to the COVID-19 pandemic. As a result of these uncertainties, TMAC is not in a position to issue 2020 guidance.

TEMPORARY REGULATORY FILING RELIEF

In light of the impact of the COVID-19 pandemic on market participants, the Canadian securities regulators announced temporary blanket relief in March 2020, which provides a 45-day extension to the filing deadlines for certain periodic filings required to be made on or before June 1, 2020. The Company intends to rely on this blanket relief and expects to file its financial statements and management’s discussion and analysis for the quarter ended March 31, 2020 on or before June 29, 2020. Management and other insiders of the Company are subject to the Company’s Insider Trading Policy which reflects the principles in section 9 of National Policy 11-207. The Company also confirms that all material business developments as at the date of this news release have been disclosed in news releases.

This news release should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis for the three and twelve months ended December 31, 2019 filed on SEDAR at www.sedar.com and on the Company’s website at www.tmacresources.com.

SUMMARY OF FINANCIAL RESULTS

 

 

 

 

Three months ended

 

Year ended

 

Units

 

December

 

December

 

December

 

December

 

   

31, 2019

 

31, 2018

 

31, 2019

 

31, 2018

P&L Summary:

         

Revenue

 

ounces

 

24,650

 

 

31,380

 

 

139,160

 

 

108,820

 

Revenue

 

$millions

 

48.0

 

 

51.4

 

 

254.8

 

 

178.0

 

Cost of sales(1)

 

$millions

 

53.1

 

 

44.3

 

 

212.6

 

 

172.2

 

Impairment of Property, Plant and Equipment and Goodwill

 

$millions

 

674.6

 

 

-

 

 

674.6

 

 

-

 

Profit (loss) from mining operations

 

$millions

 

(679.7

)

 

7.1

 

 

(632.4

)

 

5.8

 

General and administration

 

$millions

 

3.5

 

 

4.4

 

 

17.2

 

 

17.4

 

Net finance expense

 

$millions

 

5.4

 

 

5.1

 

 

19.7

 

 

20.1

 

Foreign exchange gain (loss)

 

$millions

 

3.3

 

 

(8.9

)

 

8.1

 

 

(15.3

)

Profit (loss)

 

$millions

 

(628.4

)

 

(13.5

)

 

(611.6

)

 

(42.1

)

Per share

 

$/share

 

(5.46

)

 

(0.12

)

 

(5.38

)

 

(0.43

)

Adjusted profit (loss)(2)

 

$millions

 

(7.8

)

 

(13.5

)

 

9.0

 

 

(42.1

)

Per share

 

$/share

 

(0.07

)

 

(0.12

)

 

0.08

 

 

(0.43

)

EBITDA(2)

 

$millions

 

(664.8

)

 

5.7

 

 

(571.6

)

 

22.8

 

Adjusted EBITDA(2)

 

$millions

 

6.7

 

 

15.7

 

 

92.1

 

 

37.7

 

 

 

 

 

 

 

 

 

 

 

 

Unit Costs:

         

Cost of sales(1)

 

$/oz

 

2,154

 

 

1,412

 

 

1,528

 

 

1,582

 

Cost of sales(3)

 

US$/oz

 

1,635

 

 

1,068

 

 

1,150

 

 

1,219

 

Cash Costs(3)

 

US$/oz

 

1,172

 

 

752

 

 

788

 

 

868

 

Sustaining capex(4)

 

US$/oz

 

414

 

 

252

 

 

301

 

 

296

 

Other sustaining costs(4)

 

US$/oz

 

114

 

 

108

 

 

97

 

 

127

 

AISC(2)(3)(4)

 

US$/oz

 

1,700

 

 

1,112

 

 

1,186

 

 

1,291

 

           

Cash Flow Summary:

         

Cash from operating activities before working capital changes

 

$millions

 

3.8

 

 

11.9

 

 

79.0

 

 

24.2

 

Cash from operating activities

 

$millions

 

(2.3

)

 

(10.0

)

 

64.9

 

 

21.6

 

Cash used in investing activities

 

$millions

 

(25.7

)

 

(23.1

)

 

(85.2

)

 

(84.6

)

Cash from financing activities

 

$millions

 

1.0

 

 

43.6

 

 

16.6

 

 

45.1

 

Net increase/(decrease) in cash

 

$millions

 

(26.7

)

 

11.2

 

 

(4.1

)

 

(17.2

)

Cash at end of period

 

$millions

 

20.7

 

 

24.8

 

 

20.7

 

 

24.8

 

 

 

 

 

 

 

 

 

 

 

 

USD Results:

         

Average exchange rate

 

CAD/USD

 

1.32

 

 

1.32

 

 

1.33

 

 

1.30

 

Revenue

 

US$millions

 

36.5

 

 

38.7

 

 

192.2

 

 

136.8

 

Average realized sales price

 

US$/oz

 

1,481

 

 

1,233

 

 

1,381

 

 

1,257

 

Average spot price of gold – London PM Fix

 

US$/oz

 

1,481

 

 

1,226

 

 

1,393

 

 

1,268

 

           

CAPEX Summary:

         

Sustaining(4)

 

$millions

 

13.4

 

 

10.3

 

 

55.6

 

 

41.8

 

Expansion(4)

 

$millions

 

6.8

 

 

8.9

 

 

41.7

 

 

45.1

 

Exploration and evaluation

 

$millions

 

5.7

 

 

4.1

 

 

22.8

 

 

14.6

 

(1)

 

Includes depreciation.

(2)

 

Refer to the definitions of EBITDA, Adjusted EBITDA, Adjusted Profit (loss), Cash Costs, AISC, sustaining capex and expansion capex in the “Non-IFRS Measures” section in the associated MD&A for a description and calculation of these measures.

(3)

 

Translated using exchange rates at the time of incurring the expenditure.

(4)

 

AISC is calculated using the updated guidance from the World Gold Council, issued in November 2018, and certain projects, previously classified as sustaining capital, have been reclassified as expansion capital in the comparable periods.

SUMMARY OF OPERATING RESULTS

 

 

 

 

Three months ended

 

Year ended

   

December

 

December

 

December

 

December

 

Units

 

31, 2019

 

31, 2018

 

31, 2019

 

31, 2018

Mining:

         

Ore(1)

 

tonnes

 

137,400

 

200,400

 

482,400

 

444,200

 

Average grade

 

g/t

 

7.2

 

7.6

 

9.9

 

8.4

 

Contained gold

 

ounces

 

32,000

 

48,700

 

153,100

 

119,800

 

           

Incremental Ore(2)

 

tonnes

 

5,800

 

12,000

 

43,600

 

31,600

 

Average grade

 

g/t

 

2.7

 

4.9

 

3.3

 

3.8

 

Contained gold

 

ounces

 

500

 

1,900

 

4,600

 

3,900

 

           

Total ore

 

tonnes

 

143,200

 

212,400

 

526,000

 

475,800

 

Average grade

 

g/t

 

7.0

 

7.4

 

9.3

 

8.1

 

Contained gold

 

ounces

 

32,500

 

50,600

 

157,700

 

123,700

 

Mining rate

 

tpd

 

1,560

 

2,310

 

1,440

 

1,300

 

           

Waste

 

tonnes

 

387,000

 

298,700

 

756,100

 

499,100

 

           

Total tonnes

 

tonnes

 

530,200

 

511,100

 

1,282,100

 

974,900

 

Development

 

metres

 

2,080

 

1,620

 

7,720

 

6,470

 

           

Processing:

         

Processing rate

 

tpd

 

1,440

 

1,800

 

1,620

 

1,280

 

Ore processed

 

tonnes

 

132,100

 

164,900

 

593,000

 

464,200

 

Average grade

 

g/t

 

7.1

 

7.8

 

9.0

 

9.4

 

Contained gold

 

ounces

 

30,050

 

41,480

 

170,910

 

140,520

 

Recovery

 

%

 

82

 

82

 

82

 

79

 

Gold produced

 

ounces

 

24,650

 

34,080

 

139,510

 

110,970

 

Gold in process change

 

ounces

 

360

 

1,330

 

2,370

 

(80

)

Gold poured

 

ounces

 

24,290

 

32,750

 

137,140

 

111,050

 

Gold sold

 

ounces

 

24,650

 

31,380

 

139,160

 

108,820

 

           

Stockpiles:

         

Primary stockpile:

         

Ore on surface(1)

 

tonnes

 

25,400

 

68,600

 

25,400

 

68,600

 

Average grade

 

g/t

 

5.9

 

6.7

 

5.9

 

6.7

 

Contained gold

 

ounces

 

4,800

 

14,700

 

4,800

 

14,700

 

           

Secondary stockpile:

         

Ore on surface(2)

 

tonnes

 

73,500

 

52,200

 

73,500

 

52,200

 

Average grade

 

g/t

 

3.5

 

3.7

 

3.5

 

3.7

 

Contained gold

 

ounces

 

8,300

 

6,200

 

8,300

 

6,200

 

(1)

 

Includes ore from mining that is above the mining cut-off grade of 4.0 g/t.

(2)

 

Includes material from sill development that is below the mining cut-off grade of 4.0 g/t.

ABOUT TMAC RESOURCES INC.

TMAC operates the Hope Bay property located in Nunavut, Canada. The property and operations are remote but not isolated, serviced by both a port and airstrip. Hope Bay is an 80 km by 20 km Archean greenstone belt that has been explored by BHP, Miramar, Newmont and TMAC over a period spanning more than 30 years. In that time, more than $1.5 billion of expenditures have been spent in exploration and evaluation, surface infrastructure, and mine and process plant development. TMAC began producing gold in early 2017 from Doris, its first mine at Hope Bay, and processed gold at the Doris processing plant which originally had nameplate capacity of 1,000 tpd and expanded to 2,000 tpd midway through 2018. There is potential to grow TMAC’s established deposits considerably at depth, and then grow resources further through the prioritized exploration of the more than 90 other identified regional targets. TMAC is now permitted to produce from both Madrid and Boston.

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 or comparable terminology.

“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 expressed or implied. See “Risk Factors” in the Company’s Annual Information Form dated May 12, 2020 filed on SEDAR at www.sedar.com for a discussion of these risks.

TMAC Resources Inc.
Jason Neal
President and Chief Executive Officer
647-480-3111

Lisa Wilkinson
Vice President, Investor Relations and Strategic Development
647-480-3110
Lisa.Wilkinson@tmacresources.com
www.tmacresources.com

Source: TMAC Resources Inc.

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