-----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, JRbS6tx4JsJaSoU/TYff7oOncUIOD+U/CXIo89Kezc9u7Jl2GkjjXoYkdjteqdFz XB5TLsgKirpq4ETOfSJmBA== 0000041304-96-000007.txt : 19960719 0000041304-96-000007.hdr.sgml : 19960719 ACCESSION NUMBER: 0000041304-96-000007 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960718 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: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04350 FILM NUMBER: 96596300 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 10-Q/A 1 ================================================================================ ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ Commission File Number 1-4350 ROYAL OAK MINES INC. (Exact name of Registrant as specified in its charter) ONTARIO, CANADA NONE (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) c/o Royal Oak Mines (U.S.A.) Inc. 5501 Lakeview Drive Kirkland, Washington U.S.A. 98033 (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code: (206) 822-8992 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No _ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common shares outstanding as of May 7, 1996 was 140,112,913. This includes 1,924,816 shares which are owned by a wholly-owned subsidiary of the Company and may not be voted. ================================================================================ ================================================================================ INDEX Page PART 1. FINANCIAL INFORMATION........................................ Item 1. Consolidated Financial Statements of Royal Oak Mines Inc. and Subsidiaries (All statements are unaudited except for the December 31, 1995 Consolidated Balance Sheet, which has been audited.)......................................... Consolidated Statements of Income - Three Months Ended March 31, 1996 and 1995.................................. Consolidated Balance Sheets - March 31, 1996 and December 31, 1995........................................ Consolidated Statements of Cash Flow - Three Months Ended March 31, 1996 and 1995.................................. Notes to Consolidated Financial Statements (unaudited)...... Signatures............................................................ PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements All tabular amounts are in thousands of Canadian Dollars.
Consolidated Statements of Income (unaudited - Cdn$ 000's except per share amounts) Three months ended March 31 1996 1995 ======= ======= REVENUE $51,049 $47,386 ------- ------- EXPENSES Operating 42,029 44,064 Royalties and marketing 562 219 Administrative and corporate 2,149 1,622 Depreciation and amortization 5,235 3,282 Exploration 960 113 Recovery of loss on foreign currency contracts (767) -- ------- ------- Total operating expenses 50,168 49,300 ------- ------- OPERATING INCOME (LOSS) 881 (1,914) Interest and Other Income, Net (note 3) 1,343 5,778 ------- ------- NET INCOME BEFORE UNDERNOTED 2,224 3,864 Income and mining taxes - current (355) (316) Income and mining taxes - deferred (540) -- Minority interest 27 -- Equity in loss of associated companies -- (45) ------- ------- NET INCOME 1,356 3,503 RETAINED EARNINGS - BEGINNING OF PERIOD 78,538 55,369 ------- ------- RETAINED EARNINGS - END OF PERIOD $79,894 $58,872 ======= ======= EARNINGS PER SHARE $0.01 $0.03 ======= ======= Weighted average number of common shares outstanding (000's)131,817 114,499 ======= ======= The accompanying notes are an integral part of the Consolidated Financial Statements.
Consolidated Balance Sheets (unaudited - Cdn$ 000's) March 31December 31 1996 1995 ======== ========= ASSETS Current Assets Cash and cash equivalents $34,244 $139,410 Short-term investments 6,818 2,971 Receivables 7,408 7,138 Inventories (note 4) 74,562 46,136 Prepaid expenses 6,465 5,620 -------- -------- Total Current Assets 129,497 201,275 Property, Plant and Equipment, net 422,845 191,381 Long-Term Investments 12,894 36,307 -------- -------- TOTAL ASSETS $565,236 $428,963 ======== ======== LIABILITIES Current Liabilities Accounts payable $16,162 $13,640 Accrued payroll 3,419 5,267 Current portion of deferred revenue 11,116 4,523 Income taxes payable 3,512 3,350 Other current liabilities 28,225 15,654 -------- ------- Total Current Liabilities 62,434 42,434 Deferred Revenue and Other Liabilities 41,015 40,800 Deferred Income Taxes 5,604 5,064 Minority Interest in Subsidiary Companies 332 170 -------- -------- TOTAL LIABILITIES 109,385 88,468 -------- -------- SHAREHOLDERS' EQUITY Capital Stock (note 11) Common Stock Authorized - unlimited Outstanding - 138,180,597 (Dec. 31, 1995 - 119,118,714) 375,957 261,957 Retained Earnings 79,894 78,538 -------- -------- TOTAL SHAREHOLDERS' EQUITY 455,851 340,495 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $565,236 $428,963 ======== ======== The accompanying notes are an integral part of the Consolidated Financial Statements.
Consolidated Statements of Cash Flow (unaudited - Cdn$ 000's) Three months ended March 31 1996 1995 ======== ======= CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Consolidated net income for the period $1,356 $3,503 Items not affecting cash: Depreciation and amortization 5,235 3,282 Deferred income tax 540 -- Recovery of loss on foreign currency contracts (767) -- Other 118 (361) ------- ------- CASH FLOW 6,482 6,424 Net change in non-cash working capital (note 5) (16,133) (5,037) ------- ------- Net cash provided by (used in) operating activities (9,651) 1,387 ------- ------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES Increase in deferred revenue, net 5,985 4,425 Issue of common shares (note 11) 114,000 14,506 Other 1,430 (72) ------- ------- Net cash provided by financing activities 121,415 18,859 ------- ------- CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES Investment in Kemess capital assets through purchase of companies (note 8) (201,976) -- Decrease in long-term investments (note 8) 26,882 -- Investment in capital assets through purchase of Consolidated Professor Mines Limited (note 9) (13,252) -- Investment in other capital assets, net (19,428) (7,697) Investment in exploration and non-producing properties, net(2,066) (2,223) Change in other assets (3,243) (320) ------- ------- Net cash used in investing activities (213,083) (10,240) ------- ------- INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS DURING PERIOD (101,319) 10,006 CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 142,381 178,937 ------- ------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $41,062 $188,943 ======= ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $39 $52 Income taxes $355 $316 Cash consists of cash and short-term investments. The accompanying notes are an integral part of the Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (tabular amounts in thousands of Canadian dollars unless otherwise stated) 1. Interim Financial Statement Accounting Policies The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP") which, in the case of Royal Oak Mines Inc. (the "Company"), differ in certain material respects from United States generally accepted accounting principles ("U.S. GAAP"), as described in Note 7. Also, they do not include all of the disclosures required by generally accepted accounting principles for annual statements. In the opinion of management all adjustments considered necessary for fair presentation have been included in these statements. Operating results for the three months ended March 31, 1996, are not necessarily indicative of the results that may be expected for the full year ending December 31, 1996. For further information, see the Company's Consolidated Financial Statements, including the accounting policies and notes thereto, included in the Annual Report and Form 10-K for the year ended December 31, 1995. The calculations of net earnings per share are based upon the weighted average number of common shares of the Company outstanding each period. Where outstanding convertible property materially dilute earnings per share, fully diluted earnings per share are disclosed. 2. Presentation Certain amounts for 1995 have been reclassified to conform with the current year's presentation. 3. Interest and other income, net
Three months ended March 31 1996 1995 ---- ---- Interest income $1,024 $2,518 Gain on sale of securities 446 3,022 Other, net (127) 238 ------ ------ Interest and other income, net $1,343 $5,778 ====== ======
4. Inventories March 31 December 31 1996 1995 -------- ----------- Bullion in process $17,755 $18,574 Stores and operating supplies 56,807 27,562 -------- ------- Inventories $74,562 $46,136 ======== ======= The increase in stores and operating supplies resulted from the need to bring in up to one year's supply of operating and maintenance materials over a winter road to the Colomac mine site during the first quarter. Due to the remote nature of the Colomac mine, the most effective way to manage the stores and operating supplies inventory is to transport them over a winter ice road from January to March. The freight costs associated with this inventory have been included in the cost of the inventory and will be expensed throughout the year as the inventory is utilized. 5. Net change in non-cash working capital. Three months ended March 31 1996 1995 ---- ---- Cash provided by (used in): Receivables $(270) $(36) Inventories (28,426) (25,038) Prepaid expenses (845) (621) Accounts payable, accrued payroll and other current liabilities 13,246 20,871 Income taxes payable 162 (213) -------- ------- Net change in non-cash working capital $(16,133) $(5,037) ======== ======= 6. Reclamation and Environmental Remediation The Company's current and proposed mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect its employees, the general public and the environment and believes its operations are in compliance with all applicable laws and regulations, in all material respects. The Company has, and expects to in the future, comply with such laws and regulations, including making all required expenditures. Where estimated reclamation and closure costs are reasonably determinable, the Company has recorded a provision for environmental liabilities, using the unit of production method, based on management's estimate of these costs. Such estimates are subject to adjustment based on changes in laws and regulations and as new information becomes available. 7. Reconciliation to United States Generally Accepted Accounting Principles Reconciliation of net income in accordance with Canadian GAAP to net income in accordance with U.S. GAAP is as follows: Three months ended March 31 1996 1995 ------ ------ Net income in accordance with Canadian GAAP $1,356 $3,503 Adjustments: Depreciation and amortization (716) (942) Income taxes 251 -- ------ ------ Net income in accordance with U.S. GAAP $891 $2,561 ====== ====== Earnings per share in accordance with U.S. GAAP:$0.01 $0.02 ===== ===== The effects on the balance sheets of the Company at March 31, prepared in accordance with U.S. GAAP, are: March 31 1996 1995 ---- ---- Increase (decrease): Property, plant and equipment $ 66,995 $(7,103) Prepaid expenses (pension asset) $(359) -- Deferred income taxes $ 79,254 -- Retained earnings $(12,618) $(7,103) 8. Acquisition of Geddes Resources Limited, El Condor Resources Ltd. and St. Philips Resources Inc. On January 11, 1996, the Company acquired all of the outstanding shares of Geddes Resources Limited ("Geddes"), El Condor Resources Ltd. ("El Condor") and St. Philips Resources Inc. ("St. Philips") not already owned by the Company pursuant to a series of signed agreements (the "Plan of Arrangement") on the following terms: Geddes: 0.30 shares of the Company for each share of Geddes. El Condor: 0.95 shares of the Company plus $2.00 cash for each share of El Condor. St. Philips: $3.40 cash for each share of St. Philips. The Company issued 19,011,883 common shares and paid approximately $56 million in cash pursuant to the Plan of Arrangement. The January 11, 1996 closing price on The Toronto Stock Exchange for the Company's common shares was $6.00. This price was used to value the common shares issued under the Plan of Arrangement. As at December 31, 1995, the Company's investment in Geddes, El Condor and St. Philips amounted to approximately $26.9 million and was included in long-term investments. The following outlines the details of the purchase price and its allocation to the assets and liabilities acquired: El St. Geddes Condor Philips Total -------- ------- ------- -------- Purchase price: Cash paid, including open market purchases $ 3,220 $ 34,222 $ 38,562 $ 76,004 Issue of common shares 37,650 76,421 -- 114,071 -------- -------- -------- -------- 40,870 110,643 38,562 190,075 Initial carrying value of Geddes 9,192 -- -- 9,192 Transaction and other costs 2,290 680 679 3,649 -------- -------- -------- -------- 52,352 111,323 39,241 202,916 Cash and cash equivalents acquired from companies (561) (1) (378) (940) -------- -------- -------- -------- Total $ 51,791 $111,322 $ 38,863 $201,976 ======== ======== ======== ======== Allocated to: Property, plant and equipment $ 52,101 $112,087 $ 39,015 $203,203 Other assets 31 151 9 191 Total liabilities (341) (916) (161) (1,418) -------- -------- -------- -------- Total $ 51,791 $111,322 $ 38,863 $201,976 ======== ======== ======== ======== These transactions were linked to the resolution of the claim for compensation from the Government of British Columbia (the "B.C. Government") which, in 1993, appropriated the Windy Craggy property from Geddes and declared the area a provincial park. Under the terms of an agreement among the B.C. Government, the Company and Geddes, the B.C. Government has agreed to an economic assistance package and compensation valued at up to $166 million. The majority of these funds are payable to the Company over the next three years. The following shows pro forma what the results of operations would have been if the acquisition had occurred at the beginning of the period: Three months ended March 31 1996 1995 ---- ---- Revenue $51,049 $47,386 Net income $1,356 $2,421 Earnings per share - basic $0.01 $0.02 Earnings per share - fully diluted $0.01 $0.02 On April 29, 1996, the Company received the Project Approval Certificate (formerly known as the Mine Development Certificate) for the Kemess South Project, from the B.C. Government following resolution of environmental assessment matters. The Kemess gold-copper project in north central British Columbia is scheduled to commence production in April 1998. The mineable ore reserves at year-end 1995 contained approximately 4.1 million ounces of gold and one billion pounds of copper. The Company is moving ahead with the development and construction of this project. Engineering on the project is estimated to be 30% complete. Construction contracts for the plant and infrastructure facilities are expected to be awarded in the next few weeks. Construction on the project will commence in early July. The capital cost of the Kemess project has been estimated at $390 million, including contingency and start-up costs. Financing for the Kemess project will include up to $166 million by way of an economic assistance and compensation package from the B.C. Government. The Company's wholly-owned subsidiary, Kemess Mines Inc. (formerly known as Geddes Resources Limited) received the first of two equal compensation payments of $14.5 million in April 1996, the final payment being due in April 1997. The Company will fund the balance of the capital cost from cash in treasury, future operating cash flow and debt. The Company does not plan to issue any new equity in connection with this project. The Company will apply for and seek to obtain all necessary permits, licences, approvals and other authorizations as project development continues. 9. Acquisition of Consolidated Professor Mines Limited On February 5, 1996, the Company made a public offer to purchase all of the outstanding common shares of Consolidated Professor Mines Limited ("Consolidated Professor") at a cash price of $0.80 per share for a total purchase price of approximately $16 million. At March 31, 1996, the Company had purchased approximately 17.4 million shares for a total price of $13.3 million. The Company announced on April 29, 1996, that more than 90% of the issued and outstanding common shares of Consolidated Professor had been tendered to its offer. The Company has taken up all the shares tendered and will acquire all remaining shares in accordance with compulsory acquisition procedures. The acquisition is part of the Company's strategic plan to increase ore reserves and production at its Ontario Division. Consolidated Professor has a 100% interest in the Duport Gold Project in the Kenora mining district in northwest Ontario. The Company intends to review production plans and continue the mine permitting process. 10. Credit Line The Company entered into a $28 million unsecured, revolving line of credit with a major Canadian bank in the first quarter. This line will be used as necessary to finance working capital for current operations. At March 31, 1996, no amounts were outstanding under this facility. 11. Capital Stock (a) Changes in capital
Number of shares Amount ----------- -------- Balance, December 31, 1994 114,494,747 $247,362 Exercise of warrants - Series 2 4,475,300 14,545 Issued for share purchase options 6,667 6 Share issue and other related costs -- (45) ----------- -------- Balance, March 31, 1995 issued and outstanding 118,976,714 $261,868 =========== ======== Balance, December 31, 1995 121,043,530 $270,811 Issued to acquire Geddes and El Condor (See note 8) 19,011,883 114,071 Issued for share purchase options 50,000 110 Share issue and other related costs -- (181) ----------- -------- Balance, March 31, 1996 issued and outstanding 140,105,413 384,811 Conmpany shares held by Witteck Development Inc. (see note 11(b)) (1,924,816) (8,854) ----------- -------- Balance, March 31, 1996 for financial reporting purposes 138,180,597 $375,957 =========== ========
(b) Company shares held by Witteck Development Inc. During 1995, the Board of Directors and the shareholders approved the acquisition of all of the shares of Witteck Development Inc. ("Witteck") whose sole asset is an investment in the Company of 1,924,816 shares. This investment has been recorded as a reduction of capital stock on the balance sheet. Consequently, the shares of the Company that are held by Witteck have been excluded from the determination of earnings per share information. SIGNATURES Pursuant to the requirements 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: July 18, 1996 By /s/ Margaret K. Witte ------------------------ Margaret K. Witte President and Chief Executive Officer Date: July 18, 1996 By /s/ James H. Wood ------------------------ James H. Wood Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----