VANCOUVER, BC, Nov. 17, 2020 /CNW/ - Elemental Royalties Corp.
("Elemental" or "the Company") (TSXV: ELE) (OTCQX:
ELEMF) is pleased to announce its operating and financial results
for the third quarter ended September 30,
2020.
For complete details please refer to the Financial Statements
and associated Management's Discussion and Analysis for the quarter
ended September 30, 2020, available
on SEDAR (www.sedar.com) or the Company's website
(www.elementalroyalties.com).
Q3 2020 Financial Overview
- Revenue of US$1.15 million, 74%
increase on Q3 2019 and 2020 year to date revenue of US$3.66 million, 107% increase to equivalent 2019
period
- Adjusted EBITDA1 of US$0.82
million, 2020 year to date US$2.51
million
- Net loss of US$1.22 million,
inclusive of US$1.08 million in
listing expenses
- Cash and cash equivalents balance of US$8.76 million as of September 30, 2020, plus royalty receivables of
US$2.06 million
"Royalty revenue in 2020 has been a record to-date and
continued excellent performance from Wahgnion is supporting this
moving forwards" commented Frederick
Bell, CEO. "With our three largest royalties all
maintaining production guidance for the remainder of 2020, we
expect 2020 to be Elemental's best year yet. This cash generation,
alongside our ability to use equity and debt, provides Elemental
with the ability to complete accretive acquisitions that were
previously out of reach."
Highlights:
- Wahgnion plant continues to operate significantly above design,
with 42 thousand ounces ("koz") of gold ("Au") sold in the period.
Teranga Gold Corporation ("Teranga") (TSX: TGZ) has reaffirmed 2020
guidance of 150-160koz Au and has published a Life of Mine plan
with average production of 146koz Au from 2021-2025.
- Production at Amancaya returned to expected levels of 15.8koz
gold equivalent following COVID-19 disruptions in the June quarter.
Additional royalty revenue is expected to be received in future
quarters due to gold inventories growing from 1koz Au to 8koz
Au.
- Kwale mineral sands operations had a strong quarter, with
strong customer demand supporting prices.
- Mercedes underwent a phased restart following a two-month
COVID-19 shutdown. The results of ongoing operational improvements
and increased productivity align with the Company's royalty paying
from July 28, 2022.
- On July 30, 2020, the Company
began trading on the TSX Venture Exchange under the symbol "ELE"
following a brokered subscription receipt financing of C$24 million by Elemental Royalties Limited and
completion of the reverse take-over transaction of Fengro
Industries Corp.
- Subsequent to the quarter end, the Company's common shares
commenced trading on the OTCQX under the symbol "ELEMF".
Asset Updates
Wahgnion
- In August 2020 Teranga announced
an increase to Wahgnion's 2020 production guidance to between
150,000 – 165,000 ounces, a 15% – 18% improvement on earlier
guidance.
- Teranga also updated the Life of Mine plan, increasing annual
expected ore production by 25% with annual gold production expected
to average 149,000 ounces to 2025.
- As of September 30, 2020,
Wahgnion completed its fourth full quarter of production with
record ore production of 1.1Mt for the quarter compared to the
revised Mine Plan of 3Mtpa.
Gold production of 40.6koz in the quarter totalled 135.1koz for the
nine months to September 30,
2020.
- Teranga recognises the impact the increased production rate
will have on mine life, and have instituted a multi-year drilling
and exploration program with the goal of extending the mine life to
15 years at three existing deposit areas and more than a dozen
exploration targets.
- Subsequent to quarter end, Teranga announced it was entering
into a business combination agreement with Endeavour Mining
Corporation (TSX: EDV). The combined entity is expected to be a
top-10 senior gold producer.
Amancaya
- The operation has been progressing well with the vast majority
of production coming from Amancaya, maintaining guidance for 2020
of 55 to 60koz of gold equivalent production, in spite of
significant disruptions during the second quarter of 2020 due to
the COVID-19 pandemic and a now-resolved strike related to the
three yearly mining contract negotiation.
- While combined production of 15.2koz for the quarter was on
track to meet guidance, gold sales were only 7.7koz, meaning that
subsequent quarters will benefit from additional sales of gold
drawing down on this inventory.
- A recent exploration review has been completed and a drill
program has commenced to test ore continuity and extensions to
Amancaya's main Central Vein, with results expected in Q4
2020.
Kwale
- Operations ran smoothly at Kwale, dispatching more than 85
thousand tonnes ("kt") of ilmenite and rutile, and 7.8kt of
zircon
- Mined tonnage was lower than previous quarters due to a planned
eight-day stoppage, however fiscal year 2021 (June year end)
production guidance has been maintained at 70-80kt Rutile,
270-300kt Ilmenite, and 23-27kt Zircon
Mercedes
- The Mercedes Mine (Mexico) was
placed on care and maintenance following a decree from the Mexican
Federal Government which took effect on March 30, 2020 and which listed gold mining as a
non-essential service.
- The Mercedes Mine restarted its operations, following a decree
from the Mexican Health Ministry on May 13,
2020 that amended the March 30,
2020 decree to include (effective June 1, 2020) mining as an essential service.
Operations at the Mercedes Mine restarted in July following a
two-month suspension. Operations with reduced staffing focused on
higher grades and improved efficiency are currently concentrating
on the promising, fast-evolving Diluvio / Lupita / San Martin system while also implementing
continued exploration, underground development and mill maintenance
programs with the intention of returning to full production in due
course. The delays and reduced production now mean that the start
of royalty payments to Elemental are likely to be payable from
July 28, 2022, rather than the 400koz
production hurdle.
Mount Pleasant
- Production at Mt Pleasant,
part of Zijin's larger Paddington Operations, has been intermittent
with small production from stockpiles and pillar recovery at the
Homestead underground mine, while exploration and mine planning
takes place on the Tuart and Racetrack orebodies.
- During the third quarter of 2020 there was no reported
production on the royalty area.
- Zijin's announcement in their 2019 Annual Report of plans for a
A$550M, 3.3Mt per annum low grade /
refractory heap leach project is likely to include the Racetrack
Resource in Elemental's royalty area, but details of timing and ore
source sequencing have not yet been announced, and site management
have advised Elemental of a small underground operation being
assessed on the Tuart orebody
Panton
- On October 13, Panoramic
Resources (ASX: PAN) had entered into an agreement to sell the
Panton PGM Project and associated tenements to Dubai 2020 Limited or its nominee.
Corporate Updates
- The Company listed on the TSX Venture Exchange on July 30, 2020 following the completion of a
reverse take-over transaction of Fengro Industries Corp by
Elemental Royalties Limited.
- In connection with the reverse take-over, Elemental Royalties
Limited completed a brokered subscription receipts financing for
gross proceeds of approximately C$24
million.
- On August 7, 2020, Elemental
repaid $8,499,999 of a Credit
Agreement with Sprott Private Resource Lending. The principal
balance remaining is $1, to maintain
credit agreements for a potential future financing facility.
- Subsequent to the quarter end, the Company's shares began
trading on the OTXQX market, as a means of enhancing Elemental's
visibility to prospective U.S. investors. OTCQX is a trading
platform designed for established, investor-focused U.S. and
international companies, and is the premier tier of the U.S. OTC
market operated by OTC Markets Group Inc. (OTCQX: OTCM).
About Elemental:
Elemental is a gold focused royalty company with a portfolio of
five royalties over producing assets spanning Burkina Faso, Chile, Mexico, Kenya
and Western Australia. The portfolio is heavily weighted
towards precious metals and producing royalties, providing a
diversified foundation of revenue from the outset, while minimising
shareholder dilution.
Qualified Person:
Richard Evans, FAusIMM, is Senior
Vice President Technical for Elemental, and a qualified person
under National Instrument 43-101 – Standards of Disclosure for
Mineral Projects ("NI 43-101"), has reviewed and approved the
scientific and technical disclosure contained in this press
release.
Note 1: NON-IFRS MEASURES:
The Company has included a performance measure which is non-IFRS
and 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. This non-IFRS
measure does not have any standard meaning under IFRS and other
companies may calculate measures differently.
Adjusted EBITDA excludes the effects of certain other
income/expenses and unusual non-recurring items. Adjusted EBITDA is
comprised of earnings before interest, taxes, depletion, share
based compensation, and the non-cash portion of the listing
expense. Management believes that this is a useful measure of
the Company's performance because it adjusts for items which may
not relate to underlying operating performance of the Company
and/or are not necessarily indicative of future operating
results.
On behalf of Elemental Royalties Corp.
Frederick Bell
CEO and
Director
Elemental Royalties Corp. is a proud member of Discovery
Group. For more information please visit: discoverygroup.ca or
contact 604-653-9464.
Neither the TSX Venture Exchange Inc. nor its Regulation
Service Provider (as that term is defined in the policies of the
TSX Venture Exchange Inc.) accepts responsibility for the adequacy
or accuracy of this press release.
Forward-Looking Statements
This press release contains certain "forward looking
statements" and certain "forward-looking information" as defined
under applicable Canadian and U.S. securities laws. Forward-looking
statements and information can generally be identified by the use
of forward-looking terminology such as "may", "will", "should",
"expect", "intend", "estimate", "anticipate", "believe",
"continue", "plans" or similar terminology. The forward-looking
information contained herein is provided for the purpose of
assisting readers in understanding management's current
expectations and plans relating to the future. Readers are
cautioned that such information may not be appropriate for other
purposes. Forward-looking statements and information include, but
are not limited to, statements with respect to the Company's
financial guidance, outlook, the completion of mine expansion under
construction phases, and the results of exploration and timing
thereof, at the mines or properties that the Company holds an
interest in, future royalty payments relating to the
Wahgnion Project, the Amancaya Project, and the Mercedes Project;
the timing for Elemental to receive royalty payments relating to
the Mercedes Project. Forward-looking statements and information
are based on forecasts of future results, estimates of amounts not
yet determinable and assumptions that, while believed by management
to be reasonable, are inherently subject to significant business,
economic and competitive uncertainties and contingencies.
Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual actions,
events or results to be materially different from those expressed
or implied by such forward-looking information, including but not
limited to: the impact of general business and economic conditions;
the absence of control over mining operations from which Elemental
will receive royalty payments and risks related to those mining
operations, including risks related to international operations,
government and environmental regulation, delays in mine
construction and operations, actual results of mining and current
exploration activities, conclusions of economic evaluations and
changes in project parameters as plans continue to be refined;
accidents, equipment breakdowns, title matters, labor disputes or
other unanticipated difficulties or interruptions in operations;
problems inherent to the marketability of gold and other metals;
the inherent uncertainty of production and cost estimates and the
potential for unexpected costs and expenses; risks related to
global pandemics, including the COVID-19 pandemic; industry
conditions, including fluctuations in the price of the primary
commodities mined at such operations, fluctuations in foreign
exchange rates and fluctuations in interest rates; government
entities interpreting existing tax legislation or enacting new tax
legislation in a way which adversely affects Elemental; stock
market volatility; regulatory restrictions; liability, competition,
loss of key employees, other related risks and uncertainties.
Elemental undertakes no obligation to update forward-looking
information except as required by applicable law. Such
forward-looking information represents management's best judgment
based on information currently available. No forward-looking
statement can be guaranteed and actual future results may vary
materially. Accordingly, readers are advised not to place undue
reliance on forward-looking statements or information.
Cautionary Note to U.S. Persons Concerning Estimates of
Reserves and Measured, Indicated and Inferred Resources
Information contained or referenced in this press release or
in the documents referenced herein concerning the properties,
technical information and operations of Elemental has been prepared
in accordance with requirements and standards under Canadian
securities laws, which differ from the requirements of US
securities laws. The terms "mineral resource", "measured mineral
resource", "indicated mineral resource", "inferred mineral
resource" "mineral reserve", "probable mineral reserve," and
"proven mineral reserve" used in this press release or in the
documents incorporated by reference herein are mining terms as
defined in accordance with NI 43-101 under guidelines set out in
the Definition Standards for Mineral Resources and Mineral Reserves
adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum Council on May 10, 2014. While such terms are
recognized and required by Canadian securities laws, they are not
recognized by SEC standards and normally are not permitted to be
used in reports filed with the SEC. Investors are cautioned not to
assume that all or any part of the disclosed mineral resource
estimates will ever be confirmed or converted into reserves that
meet the definitions used by the SEC. Disclosure of contained
ounces are or may be permitted disclosure under regulations
applicable to Elemental; however, the SEC normally only permits
issuers to report mineralization that does not constitute
"reserves" by SEC standards as in-place tonnage and grade without
reference to unit of production measures. Accordingly, certain
information contained in this press release or in the documents
incorporated by reference herein concerning descriptions of
mineralization and mineral resources under these standards may not
be comparable to similar information made public by US companies
subject to reporting and disclosure requirements of the
SEC.
SOURCE Elemental Royalties Corp.