Quaterra Resources Inc.: Form 6-K - Filed by newsfilecorp.com
April 3, 2017
QTA:TSXVENTURE
QTRRF:OTCQB
NR–04–17
QUATERRA ANNOUNCES 2016 YEAR-END FINANCIAL RESULTS
VANCOUVER, B.C. — Quaterra Resources Inc. (“Quaterra”)
has announced its financial results for the year ending December 31, 2016.
The financial statements and MD&A are available at
www.quaterra.com, on SEDAR at www.sedar.com, and on EDGAR at
www.sec.gov. The financial statements have been prepared in accordance
with International Financial Reporting Standards. This news release should be
read in conjunction with those documents. All dollar amounts herein are in U.S.
dollars unless otherwise specified.
2016 Highlights
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From June 2014 to December 2016, Freeport-McMoRan Nevada
LLC (“Freeport Nevada”) provided $12.15 million in funds to Quaterra
subsidiary Singatse Peak Services LLC (“SPS”) with SPS receiving $5.075
million during 2016. These funds were made available in terms of an option
agreement whereby Freeport Nevada can acquire an initial 55% interest in
SPS by spending $40.75 million in three stages starting in June 2014. SPS
used the funds for exploration of the Company’s 51-square-mile property in
the historic Yerington Copper District of Nevada, including drilling,
geophysical surveys, geologic mapping as well as land, water and minerals
rights maintenance, compliance with environmental law and general
administrative expenditures. |
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In 2016, SPS completed an exploration-drilling program at
the Bear deposit, a large porphyry copper system on the Company’s
Yerington property, which it commenced in August 2015. The program was
funded with options payments by Freeport Nevada. |
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The Bear program totaled 20,274.5 feet of drilling in six
holes. Results from twin Hole B-048 supported historic assays from Hole
23B drilled in 1966 by the Anaconda Mining Company. Drilling results from
holes B-049 to B-052 were successful in extending the Bear mineralization
an additional 2,000 feet north-northeast by 3,000 feet
northwest-southeast, with the average mineralized intercept in these four
step-out holes averaging approximately 1,000 feet in thickness. The Bear
deposit remains open in three directions and currently covers more than
two square miles. (For details of drill results please visit the company
website at www.quaterra.com). |
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On June 13, 2016, Quaterra and SPS announced they had
reached an agreement with Freeport Nevada to extend Stage 2 of Freeport
Nevada’s option to acquire an interest in the Company’s Yerington Copper
Project for up to two additional years in return for Freeport Nevada
making option payments totaling $5.75 million. |
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During the two-year extension, SPS may propose special
exploration programs, including work plans and budgets, to be undertaken
with Freeport Nevada’s agreement under an annual drilling program. These
programs can be funded by Freeport Nevada, at its discretion, through
accelerated option payments. Freeport Nevada has the right to terminate
the agreement at any time with 60 days’ notice. |
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On July 14, 2016, Quaterra announced the sale of its
remaining 35% participating interest in the Herbert Glacier project,
Alaska, to its joint venture partner Grande Portage Resources Ltd.
(“Grande Portage”). On closing, Grande Portage issued to Quaterra
1,182,331 shares, among others. (Details of the transaction can be found
in the 2016 MD&A and on the Company website.) |
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Also on July 14, 2016, Quaterra reported that the
previously announced sale of its 50% interest in the Nieves project,
Mexico, has been concluded with payment of the final $1.0 million tranche
owing to Quaterra by Blackberry Ventures, I LLC (“Blackberry”). Quaterra
no longer holds any interest in assets in Mexico. |
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On October 4, 2016, Quaterra received a final payment of
$500,000 from Freeport-McMoRan Mineral Properties LLC (“FMMP”) in terms of
a 2014 agreement whereby FMMP acquired the remaining interests in three of
the Company’s non-core copper and molybdenum properties for $5.0 million.
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Following the conclusion of the Bear drilling program,
SPS began identifying and prioritizing targets for the next phase of
exploration and drilling at Yerington. This work included assessing data
from the 2015-16 drill program and geophysical surveys and geologic
mapping to locate potential open-pitable targets and possible areas of
higher-grade mineralization on the Company’s 51-square mile land package.
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In late 2016, SPS compiled work plans and budgets for a
drill program at Yerington that it presented to Freeport Nevada for
assessment and consideration. |
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On January 19, 2017, Quaterra announced a 2017 drill
program that would test targets throughout the Company’s Yerington land
package. Freeport Nevada agreed to make accelerated option payments of up
to $1.5 million that SPS intends to use to fund the program. |
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On March 29, 2017, Quaterra announced that the 2017 drill
program had commenced. |
Strategy
In the severe downturn of the past five years, Quaterra has
continued to execute its mission of discovery by selling non-core assets to
build cash reserves, and by negotiating an option agreement with Freeport Nevada
to fund work at Yerington. The sale of Herbert Glacier, Nieves and three other
copper and molybdenum properties represent the conclusion of Quaterra’s
strategy to dispose of non-core assets. This effort was largely driven by a need
to build sufficient cash reserves to run its business.
Over the past two years, Quaterra’s subsidiary SPS has been
able to conduct a 20,275-foot six-hole exploration drilling campaign,
geophysical surveys, desktop studies and groundwork at Yerington without
immediate dilution to Quaterra shareholders or in the project. SPS’s efforts at
Yerington are ongoing. It has recently identified compelling targets for the
next phase of drilling and in March 2017 commenced a new drill campaign to test
these targets. Quaterra believes that a significant discovery could be a
catalyst for the development of Yerington into a long-life, district-scale
mining complex. SPS continues to initiate and self-fund desktop studies to
assess the over-all development prospects at Yerington, and surface work
including geologic mapping and geophysical surveys to better understand the
property’s potential and to assist in future drill site selection.
2017 drill program
The 2017 drill program will test targets throughout the
Company’s 51-square-mile land package. Targets have been selected on the basis
of geology, geophysical surveys, previous drilling results, and a recently
completed induced polarization (IP) survey totaling 34 line kilometers. Drilling
will include both reverse circulation (RC) and core, with Layne Christensen
Company, Chandler, Arizona, providing both drill rigs. Holes will be started
using RC and completed with core.
A number of holes will be drilled to test new targets in and
around the Yerington pit and in the MacArthur mine areas. At least two holes
will test targets outside of known mineralized areas in the north and east parts
of the property.
Freeport Nevada has made an accelerated option payment of $1.5
million that SPS is using for the 2017 drilling program. This is in addition to
an option payment in December 2016 of $1.25 million by Freeport Nevada to SPS
that is being used for property maintenance, G&A and environmental
compliance.
Financial results
For the year ended December 31, 2016, the Company incurred a
net loss of $1.6 million compared with a net loss of $3.1 million in 2015. Both
years are significantly affected by the non-cash fair value calculations on
derivative liabilities in addition to the write-down of mineral properties and
disposal of assets in 2016.
Excluding non-cash items, general administrative expenses
decreased by $0.45 million mainly due to the reduction in personnel costs which
were partially offset by higher administration and general office expense due to
the expensed insurance premium paid in 2016.
Professional fees decreased as a result of decreased legal fees
related to the Stage 2 election under the Option Agreement with Freeport Nevada
during 2015. Personnel costs were lower in 2016 due to the management change in
the second half of 2015.
Cash and cash equivalents were $5.65 million at December 31,
2016 compared with $4.55 million at December 31, 2015. The Company held
investments in Guaranteed Investment Certificates of $1.0 million that are
categorized as short-term investments on the balance sheet as of December 31,
2016.
The increase in cash and cash equivalents of $1.14 million was
due to net cash used in operations of $1.03 million being more than offset by
net cash provided by investing activities of $2.3 million.
Net cash provided by investing activities of $2.34 million
consists of option payments $5.075 million received from Freeport Nevada, cash
installments of $2.0 million from Freeport-McMoRan Mineral Properties related to
a mineral property sale entered into in October 2014, and $1.0 million from the
final tranche of the Nieves sale agreement with Blackberry entered into in
December 2014. All installments were completed in the fiscal year 2016. Cash
provided by investing activities was primarily used in exploration activities of
$5.15 million including the Bear deposit drilling program, mineral property
maintenance, and general support in Yerington.
About Quaterra
Quaterra (TSX-V: QTA; OTCQB: QTRRF) is a copper exploration
company currently focused on exploring and advancing its copper properties in
the historic Yerington Copper District, about 70 miles southeast of Reno,
Nevada. Its Yerington assets consist of the Yerington pit sulfide and oxide
deposit previously mined by Anaconda; the MacArthur oxide and sulfide deposit;
the Bear porphyry copper deposit; and several untested exploration targets.
Quaterra’s 51-square-mile land package is situated in a mining-friendly
jurisdiction with a history of copper production and good infrastructure. It
also owns valuable water rights in the district. Quaterra has released NI
43-101-compliant oxide and sulfide resources at both MacArthur and Yerington,
and a preliminary economic assessment at MacArthur. Quaterra’s Yerington assets
are held in wholly-owned subsidiary SPS.
Technical information in this news release has been approved by
Thomas Patton, Ph.D., the CEO of the Company, and a Qualified Person as defined
in NI 43-101.
On behalf of the Board of Directors,
Thomas Patton,
Chairman & CEO
Quaterra Resources Inc.
For more information please contact:
Thomas Patton,
Chairman & CEO
Quaterra Resources Inc.
604-641-2758
Gerald Prosalendis, President and COO
Quaterra Resources
Inc.
604-641-2780
Disclosure note:
Some statements contained in this news release are
forward-looking statements under Canadian securities laws and within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995. These statements
are identified in this news release by words such as “believes”, “anticipates”,
“intends”, “has the potential”, “expects”, and similar language, or convey
estimates and statements that describe the Company’s future plans, objectives,
potential outcomes, expectations, or goals. Since forward-looking statements are
based on assumptions and address future events and conditions, by their very
nature they involve inherent risks and uncertainties. In particular, forward
looking statements in this news release include that the Company will receive
option payments; that exploration drilling will be undertaken, that results will
define further mineralization or high grade zones; that historical and new
exploration will support a resource on the property; and that the Yerington
assets have the potential to support mining operations. These statements are
subject to risks and uncertainties which may cause results to differ materially
from those expressed in the forward-looking statements. A summary of risk
factors that apply to the Company’s operations are included in our management
discussion and analysis filings with securities regulatory authorities, and are
publicly available on our website. Readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the date thereof.
The Company does not undertake to update any forward-looking statement that may
be made from time to time except in accordance with applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
