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RNC Announces Strong Fourth Quarter Results Including Gold Production of 26,874 oz, Adjusted Earnings(2) of $14 million, 2H19 AISC(1),(2) Guidance Beat and No Change to 2020 guidance

Press Release

TORONTO, March 26, 2020 – RNC Minerals (TSX: RNX) (“RNC”) announces its financial results and review of activities for the years ended December 31, 2019 and 2018. All amounts are expressed in Canadian dollars, unless otherwise noted. For additional information please refer to RNC’s Management’s Discussion & Analysis (“MD&A”) and audited consolidated financial statements for the years ended December 31, 2019 and 2018.

Highlights

  • Gold Production Exceeded 2H19 Guidance: For the fourth quarter of 2019 production totalled 26,874 ounces. The second half of 2019 totalled 51,090 ounces, exceeding second half 2019 guidance of 42,000 to 49,000 ounces
  • 2H19 All-in-sustaining-costs (AISC)1 Beats 2H19 Guidance: 2H19 AISC1 of US$1,144 per oz. was below the guided range of US$1,150$1,250 per oz
  • Consolidated 2020 Guidance reiterated: Production of 90,000-95,000 oz expected with AISC1 of US$1,050$1,200 per oz. RNC is targeting AISC1 of ~US$1,000 per oz by the end of 2020. This assumes no significant interruption in operations as a result of the COVID-19 virus.
  • Adjusted earnings1 of $13.7 million for the fourth quarter of 2019 and $15.9 million for full year 2019
  • Adjusted EPS2 was $0.02 and $0.03 for 4Q19 and 2019, respectively. Adjusted EBITDA1 was $14.4 million for 4Q19 and $18.3 million for 2019
  • Ongoing Cost Reductions: Consolidated AISC1 was US$1,131, for the fourth quarter of 2019, an improvement of 4% over the third quarter of 2019 and 12% compared to the first half of 2019
  • Strengthened Cash Position and Balance Sheet: RNC ended 2019 with a strong cash position of $34.7 million, net of a $3 million debt repayment, and working capital of $26.5 million
  • Growing HGO Open Pit Pipeline: Recent drilling has driven mine life extensions of the Baloo and Fairplay North open pits
  • Continued improvement at Higginsville mill: average availability up to 97% from 93% during the prior quarter
  • Restructured Royalty at HGO: Unlocks significant production potential and lower costs, as previously announced on December 19, 2019
  • HGO Exploration Success:  Recent drilling combined with a review of historical  exploration database continues to identify a number of areas at HGO for further exploration, including the Aquarius Project (formerly Corona Project), a newly interpreted 5km structure north of Trident as well as potential open pit expansions to both the Mousehollow and Hidden Secret projects, as previously announced on January 23, January 29 and February 27, 2020
  • Maiden Beta Hunt Gold Mineral Reserve: On February 6, 2020, RNC filed the Technical Report for the maiden Gold Mineral Reserve at Beta Hunt of 306,000 ounces (3.4 Mt at an average grade of 2.8 g/t)
  • Updated Dumont Feasibility Study: On May 30, 2019, RNC, announced the positive results of an updated feasibility study for the Dumont Nickel-Cobalt Project (US$920 million NPV8%)
  • Management Appointments: As part of the next phase of RNC’s growth, a number of management changes and additions were made during 2019 and early 2020, with the objective of maximizing the value of each of the assets within the Corporation’s portfolio and advancing RNC’s corporate strategy

1.

Non-IFRS: the definition and reconciliation of these measures are included in Table 4 of this news release.

2.

Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures section of RNC’s MD&A dated March 25, 2020.

Paul Huet, Chairman and CEO, commented, “2019 was a year of transformation for RNC Minerals. With the acquisition of the Higginsville mine and mill in June, our company has matured into a growing, profitable gold producer with two operations feeding a centralized mill. Our fourth quarter results continue to build upon the success of the previous quarter despite the challenges associated with the bushfires in Australia in late 2019. I would like to take this opportunity to personally commend our personnel in Australia for an outstanding job, which ensured that despite these challenges our mill remained in operation with ample feed from our mines and stockpiles. These efforts were reflected in our results, driving both a beat to production guidance and finishing 2H19 with AISC of US$1,144 per ounce, below our guided range of US$1,150$1,250 per ounce.

With respect to current operations, we are now mining from three sources: Baloo, Fairplay North and Beta Hunt, with opportunities for expansion at all three mines. As we work through our open pit optimizations at Higginsville, we look forward to announcing an updated LOM plan for Higginsville later this year. With operations performing well YTD 2020, we remain on track to meet our previously reported 2020 guidance of 90,000-95,000 ounces and AISC1 guidance of US$1,050US$1,200 per ounce.

I would also like to highlight our early 2020 exploration success. The renegotiation of the Morgan Stanley royalty in December unlocked our 1,800 km2 land package surrounding the mill and, as we announced during January and February, we are seeing outstanding results from the drilling bit and our review of the large historical HGO database. I am extremely excited to see what this year has in store with our large exploration program at Higginsville; the first of its kind in many years.

Lastly, and certainly not least, we have experienced significant impact in global financial markets both on our share price and that of our peers as a result of the ongoing global COVID-19 crisis. I remind our shareholders and stakeholders that we have taken careful steps at our operations to prepare for potential disruptions, and we remain in constant contact with the local, state and federal health authorities. As always, our top priority remains the health and safety of our workforce and stakeholders.

We finished the year with an extremely strong balance sheet, nearly C$35 million in cash. We have continued to build stockpiles in front of the mill, just as we did ahead of the Australian bushfires last year. Once again, I would like to thank our personnel on site for their tireless efforts in preparing our operations during this period. I remain confident that with all our collective efforts we will get through this and all stakeholders can regain confidence once the global situation begins to improve and normalize.

Most importantly, I wish good health to all.”

COVID-19 Preparedness

As announced in RNC’s news release dated March 18, 2020, the Corporation has implemented strict control measures at its operations in response to the COVID-19 pandemic. A task force at RNC’s Australian operations has been established to ensure the operating sites remain as prepared and responsive to this evolving situation as possible.  RNC is carefully monitoring the advice of local health authorities and has informed site personnel of the precautions that need to be taken with respect to travel to and from site, along with isolation periods should anyone exhibit symptoms consistent with COVID-19. RNC has also proactively employed a full-time nurse specifically to monitor the status of people entering and leaving site. Additionally, RNC has also sealed off both operations from any outside visitors not critical to business operations.

In order to minimize potential disruptions to supply chains, RNC is building additional critical supplies beyond normal levels. As part of our ability to manage the fallout from the December bushfires, ROM stockpiles are now growing steadily from three sources: Baloo, Beta Hunt and Fairplay North.

RNC will continue to monitor this fluid situation, with our top priority being the health and safety of its employees and stakeholders.

Table 1 – Highlights of operational results for the periods ended December 31, 2019 and 2018

Three months ended,

              Year ended,

For the periods ended December 31,

2019

2018

2019

2018

Gold Operations (Consolidated)1,2

Tonnes milled (000s)

321

71

755

493

Recoveries

90%

95%

91%

93%

Gold milled, grade (g/t Au)

2.60

9.42

2.65

4.22

Gold produced (ounces)

26,874

20,495

64,277

62,233

Gold sold (ounces)

28,359

19,512

65,225

62,806

Average realized price (USD $/oz sold)

1,451

1,324

1,368

1,261

Cash operating costs (USD $/oz sold)3

929

445

1,004

924

All-in sustaining cost (AISC) (USD $/oz sold)3

1,131

685

1,155

1,037

Gold (Beta Hunt Mine)1,2

Tonnes milled (000s)

133

71

475

493

Gold milled, grade (g/t Au)

3.81

9.42

3.11

4.22

Gold produced(ounces)1

16,290

20,495

47,642

62,233

Gold sold (ounces)

17,561

19,512

48,716

62,806

Cash operating cost (USD $/oz sold)3

773

445

958

924

Gold (HGO Mine)1

Tonnes milled (000s)

188

280

Gold milled grade (g/t Au)

1.75

1.85

Gold produced (ounces)

10,584

16,635

Gold sold (ounces)

10,798

16,509

Cash operating cost (USD $/oz sold)3

1,182

1,136

1.

In respect of HGO, for the period from acquisition being June 10, 2019 to December 31, 2019

2.

Includes third-party tolling, no third-party material was processed in the third and fourth quarters of 2019.

3.

Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures section of RNC’s MD&A dated March 25, 2020.

Consolidated Results of Operations

The fourth quarter 2019 consolidated gold production of 26,874 ounces was 6,379 ounces higher than the corresponding quarter in 2018 (20,495 ounces). Production during the fourth quarter of 2019 consisted of Beta Hunt underground, Baloo open pit and a small amount of stockpile material. The milled grade was 2.60 grams per tonne of gold (“g/t Au”), compared to 9.42 grams per tonne the fourth quarter of 2018. The higher grade in 2018 was the result of high-grade Father’s Day Vein specimen gold production.

Consolidated AISC1 was US$1,131 per ounce for the fourth quarter of 2019, an improvement of 4% over the third quarter of 2019 and 12% over the first half of 2019. The 2H19 AISC of US$1,144 per ounce came in below 2H19 guidance of US$1,150$1,250 per ounce. This continued reduction in AISC was achieved despite the increased capital outlays arising as a result of the Australian bushfires, a major rebuild of an underground mining truck at Beta Hunt and pre-stripping capital costs associated with the ramp up of the Fairplay North open pit at Higginsville.

AISC1 costs were higher by US$446 per ounce sold compared to US$685 per ounce in the fourth quarter of 2018 which included sales from coarse gold production from the Father’s Day Vein discovery.

1.

Non-IFRS: the definition and reconciliation of these measures are included in the Non-IFRS Measures section of RNC’s MD&A dated March 25, 2020.

Cash operating costs were US$929 per ounce sold on a consolidated basis for the fourth quarter of 2019, US$103 per ounce or 10% lower than in the third quarter of 2019.

With the HGO mill fed at 100% capacity, fourth quarter results from the combined Beta Hunt and Higginsville mines showed significant improvement over third quarter results,. This was despite significant challenges during December due to the Australian bushfires, which impacted the supply chain to the region. With critical supplies and tonnes stockpiled in front of the mill, processing operations were able to continue unabated.

Read More: http://www.rncminerals.com/2020-03-26-RNC-Announces-Strong-Fourth-Quarter-Results-Including-Gold-Production-of-26-874-oz-Adjusted-Earnings-2-of-14-million-2H19-AISC-1-2-Guidance-Beat-and-No-Change-to-2020-guidance

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