-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lzf+rxv7/EWIyzm6Tdy2bjoFWcvzFN/NHc/jVCfROgnsCanY7nPCiPKAARhX+/dY ZNW0uidvHa8sF/CN4oX7Jw== 0000041304-96-000015.txt : 19961107 0000041304-96-000015.hdr.sgml : 19961107 ACCESSION NUMBER: 0000041304-96-000015 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961006 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961106 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL OAK MINES INC CENTRAL INDEX KEY: 0000041304 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04350 FILM NUMBER: 96655036 BUSINESS ADDRESS: STREET 1: 5501 LAKEVIEW DR CITY: KIRKLAND STATE: WA ZIP: 98033 BUSINESS PHONE: 6046828320 MAIL ADDRESS: STREET 1: 5501 LAKEVIEW DR CITY: KIRKLAND STATE: WA ZIP: 98033 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Amendment No. 1 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 November 6, 1996 ROYAL OAK MINES INC. (Exact name of registrant as specified in its charter) Commission File Number 1-4350 ONTARIO, CANADA 98-0160821 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) No.) c/o Royal Oak Mines (USA) Inc. 5501 Lakeview Drive Kirkland, Washington U.S.A. 98033 (Address of principal executive offices) (Postal/Zip Code) (206) 822-8992 Registrant's telephone number, including area code Item 5. Other Events Set forth as Exhibit 99.1 hereto is an amendment to, and which amendment replaces, Exhibit 99.1 to the current report on Form 8-K, dated November 6, 1996 earlier filed by the Registrant. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits 99.1 Royal Oak Mines Inc. press release, dated November 6, 1996. SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROYAL OAK MINES INC. Date: November 6, 1996 By: /s/ James H. Wood James H. Wood Chief Financial Officer EX-99 2 Exhibit 99.1 Royal Oak Mines Inc. press release, dated November 6, 1996. [Royal Oak Mines Inc. Press Release Letterhead] FOR IMMEDIATE RELEASE FROM KIRKLAND November 6, 1996 Royal Oak Refocuses to Increase Profitability; Revalues Assets; Announces Third Quarter Results Royal Oak Mines Inc. (TSE and AMEX: RYO) announced today two important steps to refocus its strategy. The Company announced that the Hope Brook Mine in Newfoundland will be closed in the third quarter of 1997 so that the mill and mine equipment can be relocated. In addition, as a result of a reclassification of mineable reserves at the Colomac Mine in the Northwest Territories, a provision has been made to decrease the carrying value of the Colomac property. Hope Brook was purchased by the Company in April of 1992, for $9.5 million (5.9 million shares) and the Company spent approximately $10 million on capital equipment and commissioning. Hope Brook has provided positive cash flow from operations and has contributed to Royal Oak's consolidated cash flow for the last five years. Royal Oak, however, believes that a positive contribution by itself does not justify continuing to operate a mine, or to use certain assets at that mine, if the assets can be better deployed to improve cash flow and earnings. Consistent with this view, the Company, after careful consideration, has determined that substantially all the Hope Brook mining and milling assets will be relocated to the Matachewan project and the Hope Brook mine will discontinue production in the third quarter of 1997. The mill at Hope Brook will be dismantled and transported to the Matachewan Mine, located 56 miles southeast of Timmins. The Matachewan Mine is expected to produce approximately 100,000 ounces of gold annually over the life of the mine at an estimated cash cost of US$227 an ounce, and is scheduled to commence production in the second half of 1998. Capital savings to the Matachewan project as a result of the reallocation of assets and the salvage of the remaining equipment at Hope Brook is expected to be approximately $23 million. The impact of closing the Hope Brook Mine under this strategic initiative results in net cash flow from operations less capital spending improving by approximately $15 million between now and 1998, which includes an estimated $12.3 million during 1997. This increase in cash flow will provide Royal Oak with additional financial flexibility to develop low cost production at Kemess and the expansion at Pamour. Many of the approximately 280 employees at Hope Brook will be considered for employment at other Royal Oak facilities currently under development. At the Colomac Mine for the last nine months, mill output has not reconciled with blasthole grades. A complete reserve audit at the mine has recently been undertaken to reconcile reserves mined through the upper eleven benches. Despite reserve audits by independent consultants in 1986 and 1987, an audit on a 200,000 ton bulk sample taken in 1988 and a further independent reserve audit in 1992, the Company now believes the reserve grade in the zones 2.0, 2.5 and 3.0 where mining is currently underway is 0.046 opt compared to the year-end 1995 estimate by the Company of 0.053 opt. Based on this analysis, a 253,000 oz. decrease in the mineable ore reserves at Colomac results. The Company has been successful in increasing the mining rate to over 50,000 tpd and milled tonnage to over 9,500 tpd. These production rates exceed the rates in the feasibility study upon which the operation was predicated. The result of mining lower grade ore is that the cash cost at Colomac for the nine month period ended September 30, 1996 was US$369 per ounce. It is anticipated that cash costs will continue at this level. Furthermore, the Company's Kim and Cass projects, which are expected to supply additional higher grade ore to the Colomac mill, are subject to both Federal and Territorial permitting and it is unknown at this time how long the permitting process will take. After deducting 1996 production at Colomac through the third quarter and reclassifying mineable reserves, the readjusted proven and probable reserves at Colomac and Kim-Cass are approximately 358,000 ounces as at the end of September 1996. The Company believes, however, that the Indin Lake land position still hosts excellent exploration potential and Royal Oak will be increasing its exploration focus in the area. Mine life at Colomac beyond the year 1999 cannot be estimated at this time but still appears promising. Revaluation of Assets As a result of the above-mentioned strategic initiatives, the Company will provide for the revaluation of the carrying values of the Hope Brook and Colomac assets, and for the provision for reclamation costs at Hope Brook, in the fourth quarter of 1996. Subject to final analysis, these charges are estimated to be approximately $37.4 million in total. These charges consist of $10 million for reclamation costs at Hope Brook, the revaluation of Hope Brook assets by a reduction of $9.0 million, and the revaluation of Colomac assets by a reduction of $18.4 million. The after-tax impact of these revaluations will be a decrease in net income of approximately $27 million, or $0.19 per share, in the fourth quarter. The revaluations will not significantly affect cash flow from operations and/or EBITDA in 1996. Royal Oak Announces Third Quarter Results The Company also today announced the unaudited financial results for the three month and nine month periods ended September 30, 1996. All figures are in Canadian $000 unless otherwise stated. Three months Nine Months ended September 30 ended September 30 1996 1995 1996 1995 (C> Gold Production (ounces) 104,012 92,159 283,655 276,365 Revenue 77,323 52,258 183,169 153,097 Operating Income 16,083 3,240 21,479 5,622 Net Income 10,216 6,228 15,321 19,479 Net Income Per Share (C$) 0.07 0.05 0.11 0.17 Net Cash Flow from Operations 27,209 5,924 42,844 19,749 Net Cash Flow Per Share from Operations (C$) 0.20 0.05 0.31 0.17 Cash Cost of Production (US$ per ounce) 348 366 337 355 Average Spot Gold Price (US$ per ounce) 385 384 392 384 Average Realized Gold Price (US$ per ounce) 543 418 472 402
Gold production was 104,012 ounces in the third quarter of 1996, an increase of 13% from 92,159 ounces produced in the same period a year earlier. In the nine month period ended September 30, 1996, gold production of 283,655 ounces was 3% higher than 276,365 ounces produced in the same period last year. The increase in gold production in the third quarter this year was attributable to increased production at the Pamour Mine which resulted from the positive impact of higher grade ore from the Nighthawk Mine which is processed at the Pamour mill. (The Nighthawk Mine commenced limited production from development ore towards the end of the third quarter last year). In addition, there was an increase in mill throughput at the Hope Brook Mine compared to the third quarter of 1995 when there was a shortfall in ore mined. In the nine month period this year, the positive impact of production at the Nighthawk Mine on the Pamour operation was sufficient to offset slightly lower production at the Giant, Colomac, and Hope Brook mines compared to the same period last year. Revenue in the third quarter this year was 48% higher than in the same period of 1995, a result of the 13% increase in gold production and a realized gold price of US$543 per ounce which was 30% higher than the US$418 per ounce realized in the third quarter of 1995. Whereas the spot price was effectively unchanged in the comparable quarters the Company recognized a significant hedge gain in the third quarter of this year. The Company took advantage of favourable conditions in the gold market to realize $18.0 million from the one-time buy-back of call options. The Company's regular hedging program resulted in a realized gold price of US$416 per ounce for the third quarter, and US$425 per ounce for the year-to-date period. In the nine month period ended September 30, 1996, revenue increased by 20% from the same period a year earlier and was mainly due to a higher realized gold price of US$472 per ounce which was 17% above that in the same period a year earlier. The average spot price of US$392 per ounce was 2% higher than in the same period last year. Hedge gains of $31.8 million were realized in the nine month period ended September 30 this year which included $18.0 million from the one-time buy-back of call options noted above. The impact of the high realized gold price on revenue in both periods this year, in addition to a 5% decrease in cash costs in each period from the year-ago periods, resulted in improved operating income; $16.1 million in the third quarter and $21.5 million in the nine month period of 1996, compared to $3.2 million and $5.6 million, respectively, in the comparable 1995 periods. Net income of $10.2 million in the third quarter of 1996 was 64% higher than $6.2 million in the same period a year earlier. In the nine month period, net income decreased by 21% from $19.5 million a year ago to $15.3 million this year. EBITDA for the third quarter of 1996 was $26.8 million and for the year to date was $46.0 million. The Company expects to produce approximately 400,000 ounces of gold in 1996 at an estimated cash cost of approximately $335 per ounce. The lower production level and increase in cash cost from the previous estimates mainly result from mining the lower grade ore at Colomac. "We are still on target to become a senior-tier gold producer at an average cash cost of under US$230 an ounce -- well below the industry average -- by the year 2000", said Ms. Witte, President and CEO of Royal Oak. "Achieving that goal is expected to give our shareholders the higher valuations accorded by the market to senior-tier producers. "We started the Company by building an asset base through acquiring under- performing and inactive mines at very attractive prices of under 10 cents on the dollar," said Ms. Witte. "We then returned these mines to profitability by increasing production and cutting costs. We have been very successful but are now entering a new phase of our growth, based on the development of large, long-life, low-cost gold mines." "Our Kemess Project, for example, is today's largest mine development in Canada. It has mineable ore reserves of 4.1 million ounces of gold, and one billion pounds of copper. The Company's wholly-owned subsidiary, Kemess Mines Inc., has successfully completed the assessment process under the Canadian Environmental Assessment Act and on November 4, 1996 received from the Department of Fisheries and Oceans a formal Authorization upon terms and conditions to proceed with the project. Construction is proceeding on schedule for start-up in the second quarter of 1998. Kemess and our Pamour Mine expansion in particular, are important core assets and hold the key to Royal Oak's future." Conference Call Royal Oak's management will be holding an open conference call at 2:00 p.m. Toronto time on Wednesday, November 6, 1996. Mining analysts, investors and the media are invited to phone (416)620-8855 approximately 5 to 10 minutes beforehand. For further information, contact: or in Europe contact: Mr. J. Graham Eacott Mr. David Williamson Vice President, Investor Relations David Williamson Associates Royal Oak Mines International Investor Relations 5501 Lakeview Drive 78 Old Broad Street, 3rd Floor Kirkland, WA 98033 London, England EC2M 1QP Telephone (206)822-8992 Telephone 011-44-171-628-3989 Facsimile (206)822-3552 Facsimile 011-44-171-920-0563 ROYAL OAK MINES INC. Consolidated Balance Sheets (unaudited - Cdn$ 000's) September 30 December 31 1996 1995 ======== =========== ASSETS Current Assets Cash and cash equivalents $233,042 $139,410 Short-term investments 20,779 2,971 Receivables 16,577 7,138 Inventories 69,413 46,136 Prepaid expenses 9,460 5,620 -------- -------- Total Current Assets 349,271 201,275 Property, Plant and Equipment, net 469,790 191,381 Long-Term Investments 16,559 36,307 Deferred charges and Other 9,330 -- -------- -------- TOTAL ASSETS $844,950 $428,963 ======== ======== LIABILITIES Current Liabilities Acccounts payable $ 30,521 $13,640 Accrued payroll 2,813 5,267 Current portion of deferred revenue 20,801 4,523 Income taxes payable 4,118 3,350 Interest payable 4,049 -- Other current liabilities 17,294 15,654 -------- ------- Total Current Liabilities 79,596 42,434 Deferred Revenue 25,646 25,188 Other Liabilities 15,191 15,612 Deferred Income Taxes 13,884 5,064 Senior Subordinated Notes 238,385 -- Minority Interest in Subsidiary Companies 134 170 -------- -------- TOTAL LIABILITIES 372,836 88,468 -------- -------- SHAREHOLDERS' EQUITY Capital Stock Common stock Authorized - unlimited Outstanding - 138,680,263 (Dec. 31, 1995 - 119,118,714) 378,255 261,957 Retained Earnings 93,859 78,538 -------- -------- TOTAL SHAREHOLDERS' EQUITY 472,114 340,495 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $844,950 $428,963 ======== ======== Certain 1995 items have been reclassified to conform with the 1996 presentation. ROYAL OAK MINES INC.
ROYAL OAK MINES INC. Consolidated Statements of Income (unaudited - Cdn$ 000's except per share amounts) Three months ended Nine months ended September 30 September 30 ------------------ ------------------ 1996 1995 1996 1995 ======== ======== ======== ======== REVENUE $ 77,323 $ 52,258 $183,169 $153,097 -------- -------- -------- -------- EXPENSES Operating 49,544 45,648 130,926 135,300 Royalties and marketing 807 610 2,215 1,718 Administrative and corporate 2,500 2,100 7,360 7,045 Depreciation and amortization 7,587 3,694 18,953 9,964 Exploration 1,424 237 3,833 491 Recovery of loss on foreign currency contracts (622) (3,271) (1,597) (7,043) -------- -------- -------- -------- Total operating expenses 61,240 49,018 161,690 147,475 -------- -------- -------- -------- OPERATING INCOME 16,083 3,240 21,479 5,622 OTHER INCOME (EXPENSE) Interest and other income, net 3,214 3,416 5,762 15,583 Interest expense (126) (43) (213) (137) Long-term debt interest (3,590) -- (3,590) -- Long-term debt interest capitalized 1,926 -- 1,926 -- -------- -------- -------- -------- NET INCOME BEFORE UNDERNOTED 17,507 6,613 25,364 21,068 Income and mining taxes - current (361) (279) (1,084) (1,248) Income and mining taxes - deferred (6,814) -- (8,820) -- Minority interest 6 85 36 94 Equity in income (loss) of associated companies (122) (191) (175) (435) -------- -------- -------- -------- NET INCOME 10,216 6,228 15,321 19,479 RETAINED EARNINGS - BEGINNING OF PERIOD 83,643 68,619 78,538 55,368 -------- -------- -------- -------- RETAINED EARNINGS - END OF PERIOD $ 93,859 $ 74,847 $ 93,859 $ 74,847 ======== ======== ======== ======== EARNINGS PER SHARE $0.07 $0.05 $0.11 $0.17 ======== ======== ======== ======== Weighted average number of common shares outstanding (000's) 138,286 119,021 136,099 117,510 ======== ======== ======== ======== Certain 1995 items have been reclassified to conform with the 1996 presentation.
ROYAL OAK MINES INC. Consolidated Statements of Cash Flow (unaudited - Cdn$ 000's) Three months ended Nine months ended September 30 September 30 ------------------ ------------------ 1996 1995 1996 1995 ======== ======== ======== ======== CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Consolidated net income for the period $ 10,216 $ 6,228 $ 15,321 $ 19,479 Items not affecting cash: Depreciation and amortization 7,587 3,694 18,953 9,964 Deferred income tax 6,814 -- 8,820 -- Recovery of loss on foreign currency contracts (622) (3,271) (1,597) (7,043) Other 116 156 284 391 -------- -------- -------- -------- CASH FLOW 24,111 6,807 41,781 22,791 Net changes in other operating items 3,098 (883) 1,063 (3,042) -------- -------- -------- -------- Net cash provided by (used in) operating activities 27,209 5,924 42,844 19,749 -------- -------- -------- -------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES Issue of common shares 1,940 268 116,298 14,843 Issuance of senior subordinated notes 238,385 -- 238,385 -- Cost of senior subordinated notes (8,616) -- (8,616) -- Reclamation -- 3,000 -- 3,000 Other (1,801) (76) 624 (223) -------- ------- -------- -------- Net cash provided by financing activities 229,908 3,192 346,691 17,620 -------- ------- -------- -------- CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES Investment in Kemess capital assets through purchase of companies -- -- (201,976) -- Decrease in long-term investments -- -- 26,882 -- Investment in capital assets through purchase of Consolidated Professor Mines Limited (15) -- (15,858) -- Investment in other capital assets, net (41,972) (8,440) (74,188) (25,726) Investment in exploration and non-producing properties, net 657 (8,309) (5,035) (13,965) Change in other assets (1,648) (13,814) (7,919) (14,950) -------- -------- -------- -------- Net cash used in investing activities (42,978) (30,563) (278,094) (54,641) -------- -------- -------- -------- INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS DURING PERIOD 214,139 (21,447) 111,441 (17,272) CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 39,683 183,113 142,381 178,938 -------- -------- -------- -------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $253,822 $161,666 $253,822 $161,666 ======== ======== ======== ======== Certain 1995 items have been reclassified to conform with the 1996 presentation.
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