-----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, KCNAcqjamkaJAKwIXWOgUs9LfH8s9EF7DcBmVhpy6ZKfPohX0a5CFiW2H+55Y3OG HNiwRiU9kznVqr/vAbhQpw== 0000041304-98-000049.txt : 19981118 0000041304-98-000049.hdr.sgml : 19981118 ACCESSION NUMBER: 0000041304-98-000049 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981111 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL OAK MINES INC CENTRAL INDEX KEY: 0000041304 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 980160821 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04350 FILM NUMBER: 98753820 BUSINESS ADDRESS: STREET 1: 5501 LAKEVIEW DR CITY: KIRKLAND STATE: WA ZIP: 98033 BUSINESS PHONE: 4258228992 MAIL ADDRESS: STREET 1: 5501 LAKEVIEW DR CITY: KIRKLAND STATE: WA ZIP: 98033 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 November 13, 1998 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) (425) 822-8992 - ---------------------------------------- Registrant's telephone number, including area code Item 5. Other Events On November 13, 1998, the Registrant issued the press release set forth as Exhibit 99.1 hereto, which press release is hereby incorporated herein by reference. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (C) Exhibits 99.1 Royal Oak Mines Inc. press release, dated November 13, 1998. 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 13, 1998 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 13, 1998. FOR IMMEDIATE RELEASE FROM KIRKLAND November 13, 1998 Royal Oak Announces Third Quarter Results Royal Oak Mines Inc. (TSE and AMEX: RYO) announced today the unaudited financial results for the three month and nine month periods ended September 30, 1998. All figures are reported in thousands of Canadian dollars unless otherwise stated. Third Quarter Highlights Financial Position September 30, 1998 December 31,1997 September 30, 1997 ------------------ ---------------- ------------------ Cash 5,304 568 36,862 Total assets 840,329 843,386 783,375 Net debt(1) 468,600 274,135 226,665 Shareholders' equity 194,573 316,378 388,978
(1)Net debt = Notes payable + current and non-current capital leases - cash * Net cash used in operating activities of $5.4 million (4 cents per share) in Q3/98 compared with net cash provided by operating activities of $34.6 million (25 cents per share) in Q3/97. * Operating loss of $12.0 million in Q3/98 compared with operating loss of $0.2 million in Q3/97. * Write-down of mine assets of $81.4 million in Q3/98. * Net loss of $107.4 million (72 cents per share) in Q3/98, due in part to an $86.4 million write-down of mine assets and strategic investments, compared with net loss of $2.4 million (2 cents per share) in Q3/97. * Gold production of 44,633 ounces from continuing operations at Giant and Pamour/Nighthawk mines in Q3/98 compared with 48,630 ounces in Q3/97, a decrease of 8%. Total gold production from all operations in Q3/97 (including Hope Brook and Colomac mines that were closed in late 1997) was 94,505 ounces. * Production of 40,096 ounces of gold and 11.1 million pounds of copper contained in concentrates in the year-to-date period from the Kemess South Mine is not included in the consolidated operating results. Kemess reached commercial production on October 7, 1998. Net deferred start-up costs during the commissioning period have been capitalized. * Average cash cost for continuing operations of US$252 per ounce, down 16% from US$299 per ounce in Q3/97. Average cash cost for all operations in Q3/97 was US$310 per ounce. * Average realized gold price of US$324 per ounce in Q3/98, a premium of US$35 an ounce, or 12%, above average spot price of US$289 per ounce. Average year-to-date realized price of US$337 per ounce, a premium of US$43 an ounce, or 15%, above average spot price of US$294 per ounce. Operating Results Three months ended September 30 Nine months ended September 30 1998 1997 1998 1997 ----------- ----------- ----------- ------------ Gold production (ounces) 44,633 94,505 135,922 284,430 Revenue 21,890 53,926 66,940 160,772 Cash flow before changes in other operating items (18,594) 4,208 (15,183) 5,825 Cash flow before changes in other operating items per share (C$) (0.12) 0.03 (0.11) 0.04 Net loss (107,392) (2,362) (140,134) (62,564) Net loss per share (C$) (0.72) (0.02) (0.98) (0.45) Cash cost of production (US$/oz) 252 310 263 344 Average spot gold price (US$/oz) 289 324 294 339 Average realized gold price (US$/oz) 324 412 337 410 Weighted average common shares outstanding (millions) 148.940 138.910 142.274 138.880 Period-end common shares outstanding (millions) 153.044 138.910 153.044 138.910
Consolidated operating results for 1998 do not include production from the Kemess South Mine. In the third quarter during the start-up and commissioning period, Kemess produced 37,051 ounces of gold and 9.8 million pounds of copper contained in concentrates. Total production since start-up was 40,096 ounces of gold and 11.1 million pounds of copper. The Kemess South Mine commenced production in the concentrator on May 19, 1998 and reached commercial production on October 7, 1998. Revenues from the sale of gold and copper contained in concentrates during the start-up and commissioning period have been netted against start-up costs. Net deferred start-up costs have been capitalized on the consolidated balance sheet. Operating results in the three months and nine months ended September 30, 1998 compared with the same two periods in 1997 were impacted by the closure of the Hope Brook and Colomac mines in September and December of 1997, respectively. Both mines were placed on care and maintenance. In the third quarter of 1998, gold production from continuing operations at the Giant and Pamour/Nighthawk mines was 44,633 ounces, a decrease of 8% from production of 48,630 ounces in the same period of 1997. Total gold production in the third quarter of 1997, including production from the Hope Brook and Colomac mines, was 94,505 ounces. In the nine months ended September 30, 1998 gold production from continuing operations was 135,922 ounces, a decrease of 7% from production of 145,917 ounces in the same period of 1997. Total gold production in the year to date period of 1997 was 284,430 ounces. Revenue in the third quarter of 1998 was $21.9 million compared with $53.9 million in the same period of 1997. The decrease in revenue in the third quarter this year reflected a decrease in gold production of 49,872 ounces, mainly due to the closure of the Hope Brook and Colomac mines, and a decrease of 21% in the average realized gold price from US$412 per ounce to US$324 per ounce. Revenue in the third quarter of 1998 included hedging gains of $2.4 million compared with $12.3 million in the same period of 1997. Revenue in the nine months ended September 30, 1998 was $66.9 million compared with $160.8 million in the same period of 1997. The decrease in revenue in the year-to-date period of 1998 was due to a decrease in gold production of 148,508 ounces, and a decrease of 18% in the realized gold price from US$410 per ounce to US$337 per ounce. Revenue in the period this year included hedging gains of $8.3 million compared with $30.8 million in the same period of 1997. In the third quarter of 1998, the average cash cost of production for continuing operations at the Giant and Pamour/Nighthawk mines was US$252 per ounce, a decrease of 16% from the US$299 per ounce reported in the same period of 1997. The significant reduction in cash cost was attributed to sustained cost-cutting measures implemented in the fourth quarter of 1997 and a 9% decrease in the value of the Canadian dollar against the U.S. dollar. In the third quarter of 1997, the Company reported an average cash cost for all operations of US$310 per ounce, which reflected the impact of the high cost Hope Brook and Colomac mines that were subsequently closed toward the end of the year. In the nine-month period this year, the average cash cost of production for continuing operations was US$263 per ounce, a decrease of 17% from the US$316 per ounce in the same period of 1997. In the period ended September 30, 1997 the average cash cost for all operations was US$344 per ounce. In the third quarter of 1998, the Company reported an operating loss of $12.0 million primarily due to the impact of declining gold prices on revenue, a depreciation and amortization expense of $6.2 million and a loss of $6.4 million after terminating currency and commodity contracts. In the third quarter of 1997 there was an operating loss of $0.2 million. The Company reported an operating loss of $25.9 million in the nine-month period ended September 30, 1998 compared with an operating loss of $21.3 million in the same period of 1997. The Company recorded depreciation and amortization expense of $16.9 million and $15.9 million in the two periods, respectively, and losses on currency and commodity contracts of $9.9 million and $14.1 million in each period. In the third quarter of 1998, the Company reported pre-tax charges against income of $81.4 million representing a write down of mine assets, and a $5.0 million write-down of long-term investments. There was no write-down in the third quarter of 1997. In the year-to-date period of 1998, the combined write- down of $86.4 million compared with a write down of $39.7 million in the same period of 1997. The Company reported a net loss of $107.4 million, or 72 cents a share, in the third quarter of 1998 compared with a net loss of $2.4 million, or 2 cents a share, in the same period last year.In the nine months ended September 30, 1998 the net loss was $140.1 million, or 98 cents a share, compared with a net loss of $62.6 million, or 45 cents a share, in the same period of 1997. Cash used in operations before net change in other operating items in the third quarter of 1998 was $18.6 million, or 12 cents a share, compared with cash flow of $4.2 million, or 3 cents a share in the same period of 1997. In the third quarter of this year, net cash used in operating activities was $5.4 million, or 4 cents a share, compared with net cash provided by operating activities of $34.6 million, or 25 cents a share. In the nine-month period ended September 30, 1998 cash used in operations before net change in other operating items was $15.2 million, or 11 cents a share, compared with cash flow of $5.8 million, or 4 cents a share, in the nine-month period of 1997. Net cash used in operating activities was $78.8 million, or 55 cents a share, in the period ended September 30, 1998 compared with $37.2 million, or 27 cents a share, in the same period a year earlier. Outlook Margaret K. Witte, president and chief executive officer of Royal Oak, commenting on the outlook for the Company, said, "We are very pleased with operations at our Kemess South Mine. The mine has now been in commercial production for over a month and operating performance is meeting our expectations. In 1998, the Company expects to produce a total of approximately 278,000 ounces of gold from all operations at an estimated cash cost of US$240 per ounce, net of copper by-product revenue credit of US$0.75 cents a pound. The Company has produced a total of 176,018 ounces of gold to September 30, 1998 including 40,096 ounces from Kemess during the start-up and commissioning period. We are pleased that our Timmins and Yellowknife operations are generating positive cash flow. Because of continued weakness in the gold price and little encouraging news on the horizon, the Company decided to revalue its assets at a gold price of US$300 per ounce. This valuation resulted in an extensive write-down on all our assets, except for our large Kemess property position, in the third quarter. The Company does not anticipate a further write-down of assets at the end of this year. We are working actively with our financial advisors to refinance the US$120 million of short-term Senior Secured Debentures with a long-term conventional project finance facility at a significantly lower interest rate. We expect to complete this transaction early in the New Year." For further information: Investor Relations Royal Oak Mines Inc. Voice Mail: (425) 822-8992, or Facsimile: (425) 822-3552, or Web site: http//www.royal-oak-mines.com Royal Oak Mines Inc. Consolidated Balance Sheets (unaudited - Cdn$ 000's) September 30 December 31 1998 1997 (audited) ======== ========= ASSETS Current Assets Cash and cash equivalents $ 5,304 $ 568 Marketable securities 560 9,875 Receivables 11,340 30,923 Inventories 14,170 21,120 Prepaid expenses 6,268 3,967 -------------- -------------- Total Current Assets 37,642 66,453 Property, Plant and Equipment, net 724,574 730,314 Long-Term Investments 7,437 12,145 Reclamation and Other Deposits 13,914 14,332 Deferred Charges and Other Assets 56,762 20,142 -------------- -------------- TOTAL ASSETS $ 840,329 $ 843,386 ============== ============== LIABILITIES Current Liabilities Accounts payable $ 29,543 $ 123,586 Accrued payroll costs 3,843 2,599 Deferred revenue 18,495 20,085 Obligation under commodity contracts 30,305 -- Capital leases 4,702 4,531 Taxes payable 2,761 1,723 Long-term debt interest payable 6,041 10,326 Accrued unrealized loss on derivatives -- 21,327 Other current liabilities 18,367 9,135 ------------- ------------- Total Current Liabilities 114,057 193,312 Deferred Revenue 23,193 23,330 Other Liabilities 56,219 57,427 Long-Term Debt 449,759 250,338 Deferred Income Taxes 2,532 2,532 Minority Interest in Subsidiary Companies (4) 69 ------------- ------------- TOTAL LIABILITIES 645,756 527,008 ------------- ------------- SHAREHOLDERS' EQUITY Share Capital Authorized - unlimited Outstanding 153,043,927 (Dec. 31, 1997 - 138,940,263) 397,369 379,040 Deficit (202,796) (62,662) ------------- ------------- TOTAL SHAREHOLDERS' EQUITY 194,573 316,378 ------------- ------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 840,329 $ 843,386 ============= =============
Royal Oak Mines Inc. Consolidated Statements of Income (Loss) (unaudited - Cdn$ 000's except per share amounts) Three months ended Nine months ended September 30 September 30 -------------------- ------------------ 1998 1997 1998 1997 ========= ========= ========= ========= REVENUE $ 21,890 $ 53,926 $ 66,940 $ 160,772 --------- --------- --------- --------- EXPENSES Operating 17,043 40,547 52,290 134,455 Care and maintenance 896 48 3,207 198 Royalties and marketing 285 357 888 1,228 Administrative and corporate 2,259 2,361 6,719 8,557 Depreciation and amortization 6,166 4,394 16,881 15,872 Reclamation 557 1,247 1,725 3,623 Exploration and other 298 1,299 1,217 3,965 Loss on foreign currency and commodity contracts 6,418 3,880 9,914 14,138 --------- --------- --------- --------- Total operating expenses 33,922 54,133 92,841 182,036 --------- --------- --------- --------- OPERATING LOSS (12,032) (207) (25,901) (21,264) OTHER INCOME (EXPENSE) Interest and other income (expense), net (2,168) (324) (3,023) 1,703 Interest expense (1,286) (140) (1,929) (327) Long-term debt interest (14,719) (6,887) (33,327) (19,734) Interest capitalized 11,453 5,568 29,638 15,532 Foreign currency translation loss on long-term debt (1,874) -- (3,130) (2,048) Write-down of long-term investment (5,000) -- (5,000) -- Write-off of financing costs -- -- (15,011) -- Write-down of mine assets (81,400) -- (81,400) (39,700) --------- --------- --------- --------- LOSS BEFORE UNDERNOTED (107,026) (1,990) (139,083) (65,838) Income and mining taxes - current (420) (313) (1,261) (952) Income and mining taxes - deferred -- -- -- 4,221 Minority interest 25 17 72 48 Equity in income of associated companies 29 (76) 138 (43) --------- --------- --------- --------- NET LOSS (107,392) (2,362) (140,134) (62,564) RETAINED EARNINGS (DEFICIT) - BEGINNING OF PERIOD (95,404) 12,351 (62,662) 72,553 --------- --------- --------- --------- RETAINED EARNINGS (DEFICIT) - END OF PERIOD $(202,796) $ 9,989 $(202,796) $ 9,989 ========= ========= ========= ========= LOSS PER SHARE $ (0.72) $ (0.02) $ (0.98) $ (0.45) ========= ========= ========= ========= Weighted average number of common shares outstanding (000's) 148,940 138,910 142,274 138,880 ========= ========= ========= =========
Royal Oak Mines Inc. Consolidated Statements of Cash Flow (unaudited - Cdn$ 000's) Three months ended Nine months ended September 30 September 30 1998 1997 1998 1997 --------- --------- --------- --------- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net loss for the period $(107,392) $ (2,362) $(140,134) $ (62,564) Items not affecting cash: Depreciation and amortization 6,166 4,394 16,881 15,872 Amortization of deferred financing costs 1,026 221 2,135 693 Reclamation 557 1,248 1,725 3,624 Deferred income tax -- -- -- (4,221) Gain (loss) on foreign currency and commodity contracts (7,036) 506 -- 10,381 Foreign currency translation on long-term debt 1,874 -- 3,130 2,048 Write-down of mine assets 81,400 -- 81,400 39,700 Write-down of long-term investment 5,000 -- 5,000 -- Write-off of deferred financing costs -- -- 15,011 -- Deferred charges and other (189) 201 (331) 292 --------- --------- --------- --------- Cash flow (18,594) 4,208 (15,183) 5,825 Net change in other operating items 13,218 30,430 (63,609) (43,046) --------- --------- --------- --------- Net cash provided by (used in) operating activities (5,376) 34,638 (78,792) (37,221) --------- --------- --------- --------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES Issue of share capital (6) -- (6) 177 Capital lease obligation 726 16,277 (221) 15,750 Long-term derivatives payable 10,102 -- 10,102 -- Issue of long-term debt 7,260 -- 240,369 -- Retirement of long-term debt -- -- (64,232) -- Issue costs of long-term debt (1,001) (129) (19,342) (129) --------- --------- --------- --------- Net cash provided by financing activities 17,081 16,148 166,670 15,798 --------- --------- --------- --------- CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (Increase) decrease in long-term investments (123) 2,741 (123) (15,105) Proceeds from asset sales 988 -- 13,861 -- Investment in other capital assets, net (23,001) (127,920) (103,147) (237,443) B. C. Government assistance -- 40,097 -- 118,884 Investment in exploration and non-producing properties, net (1,112) (454) (1,926) (4,522) Change in other assets 424 (642) (1,122) (1,295) --------- --------- --------- --------- Net cash used in investing activities (22,824) (86,178) (92,457) (139,481) --------- --------- --------- --------- DECREASE IN CASH AND MARKETABLE SECURITIES DURING THE PERIOD (11,119) (35,392) (4,579) (160,904) CASH AND MARKETABLE SECURITIES AT BEGINNING OF PERIOD 16,983 72,844 10,443 198,356 --------- --------- --------- --------- CASH AND MARKETABLE SECURITIES AT END OF PERIOD $ 5,864 $ 37,452 $ 5,864 $ 37,452 ========= ========= ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of capitalized interest) $ 302 $ 7,964 $ 1,761 $ 11,386 Income taxes $ -- $ 25 $ -- $ 90
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