-----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, NdK0uvz81k9gKW86xrv9QTpIRSx+Jya3RMFx9sM91rG8hgO1C58kpYNl+KFwgdTl fwk7Afr24Jz24T02yYnpMw== 0000041304-97-000028.txt : 19970808 0000041304-97-000028.hdr.sgml : 19970808 ACCESSION NUMBER: 0000041304-97-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970707 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970807 SROS: AMEX 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: 1934 Act SEC FILE NUMBER: 001-04350 FILM NUMBER: 97653338 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 August 6, 1997 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 August 6, 1997, 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 August 6, 1997. 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: August 6, 1997 By: /s/ James H. Wood James H. Wood Chief Financial Officer EX-99 2 Exhibit 99.1 Royal Oak Mines Inc. press release, dated August 6, 1997 [Royal Oak Mines Inc. Press Release Letterhead] FOR IMMEDIATE RELEASE FROM KIRKLAND August 6, 1997 - ----------------------------------------------------------------------------- Royal Oak Announces Second Quarter Results and Closure of Colomac Mine Royal Oak Mines Inc. (TSE and AMEX: RYO) announced today the unaudited financial results for the three month and six month periods ended June 30, 1997. All figures are in thousands of Canadian dollars unless otherwise stated. Second Quarter Highlights Financial Position June 30, 1997 December 31, 1996 June 30, 1996 Cash 72,254 197,766 14,797 Total assets 763,876 821,630 580,118 Net debt (1) 173,576 46,876 (12,806) Shareholders' equity 391,340 451,366 459,959 (1) Net debt = Notes payable + current and non-current capital leases - cash
- Gold production of 104,845 ounces, up 23% from the first quarter - Cash costs of US$351 per ounce, down 6% from the first quarter - Cash flow before changes in other operating items of $2.1 million in second quarter - Realized gold price of US$406 per ounce in second quarter - Kemess on track for start-up in April of 1998 - Hope Brook Mine shut-down scheduled for early August of 1997 - Colomac Mine shut-down scheduled for October of 1997 - Completed Namosi deal in Fiji, adding 4.3 million ounces of gold and 9.2 million pounds of copper to the Company's resources Operating Results Three months ended Six months ended June 30 June 30 1997 1996 1997 1996 ------- ------ ------- ------- Gold production (ounces) 104,845 91,447 189,925 179,643 Revenue 58,979 54,797 106,463 105,846 Cash flow before changes in other operating items 2,105 11,188 1,617 17,670 Cash flow before changes in other operating items per share (C$) 0.02 0.08 0.01 0.13 Net income (loss) (52,089) 3,749 (60,202) 5,105 Net income (loss) per share (C$) (0.38) 0.03 (0.43) 0.04 Cash cost of production (US$/oz) 351 315 358 331 Average spot gold price (US$/oz) 343 390 347 395 Average realized gold price (US$/oz) 406 439 405 431 Weighted average common shares outstanding (millions) 138.884 138.196 138.864 135.006 Period-end common shares outstanding (millions) 138.910 138.218 138.910 138.218
Gold production in both the second quarter and first half of this year was positively impacted by an 18% and 6% increase in ore milled, respectively, compared to the same periods in 1996. In addition, a 1% and 4% improvement in mill head grades contributed to improved operations in the two periods. Gold production of 104,845 ounces in the second quarter of 1997 was 13,398 ounces, or 15% higher than the 91,447 ounces produced in the same period a year earlier, and 23% higher than in the first quarter of this year. In the first six months of this year, gold production was 189,925 ounces, an increase of 10,282 ounces, or 6% higher than in the same period in 1996. Revenue in the second quarter of this year was $59.0 million compared to $54.8 million in the same period of 1996, an increase of 8%. In the six month period ended June 30, 1997, revenue of $106.5 million was 1% higher than revenue of $105.8 million in the first half of 1996. The increase in revenue in the two periods this year was mainly attributable to improved operations and the increase in gold production. The Company's average cash cost of production in the second quarter this year was US$351 per ounce, an increase of 11% from the US$315 per ounce in the same period last year. Improved operating performance in the second quarter this year resulted in a 6% decrease in cash costs from US$372 per ounce in the first quarter. The Company expects a further reduction in cash costs in the third and fourth quarters of this year following closure of the Hope Brook and Colomac mines, and as a result of cost saving measures implemented at the other mines. In the six month period this year, cash costs of US$358 per ounce were 8% higher than the US$331 per ounce recorded in the year-ago period when costs were favourably impacted by temporary suspension of certain operations at the Hope Brook and Pamour mines. Cash flow before changes in other operating items in the second quarter this year was $2.1 million compared to $11.2 million in the same period of 1996. Net cash used in operating activities was $5.6 million, or 4 cents per share, in the second quarter this year. This compared to cash provided by operating activities of $19.3 million, or 14 cents per share in the same period in 1996. In the six month period this year, cash flow before changes in other operating items was $1.6 million compared to $17.7 million in the year-ago period. Net cash used in operating activities was $71.9 million, or 52 cents per share, compared to cash provided by operating activities of $15.6 million, or 12 cents per share, in the same period of 1996. The primary use of cash was investment in working capital for inventory items at the Colomac Mine, and an increase in accounts receivable on the Kemess project prior to receiving funds from the provincial government of British Columbia which have now been paid. Colomac Mine to Close in October Based on current gold prices, high cash costs and diminishing ore reserves, the Company plans to close the Colomac Mine in October when milling of stockpiled ore is expected to be complete. In the second quarter, a $39.7 million write-down was recorded, reducing the value of the Colomac assets to their estimated realizable value. This contributed to a net loss of $52.1 million, or 38 cents per share in the second quarter, and a net loss of $60.2 million, or 43 cents per share in the six-month period this year. In the same periods of 1996, net income was $3.7 million, or 3 cents per share, and $5.1 million, or 4 cents per share, respectively. Interest payable on the Company's U.S.-denominated Senior Subordinated Notes, which were issued in the third quarter of 1996, and the foreign exchange translation effect on these Notes because of the weaker Canadian dollar in the first quarter of this year, contributed to the loss in the three-month and six-month periods ended June 30 this year. Company Sets Strategy to Conserve Cash During Period of Weak Gold Prices On May 15, 1997 the Company announced that it would continue to review its high cash cost operations with a view to suspending or discontinuing production from these operations in light of the current weak gold price. The Company has set a criterion that its mines should produce positive cash flow at a gold price of US$330 per ounce. As a result, the Company plans to permanently close its Hope Brook and Colomac mines. The result of closing the Hope Brook and Colomac mines is expected to result in reduced cash costs at the corporate level from the Timmins and Yellowknife operations to the US$300 to US$310 per ounce range. Royal Oak plans to produce a total of approximately 135,000 ounces of gold in the third and fourth quarters of this year at an estimated cash cost of US$312 per ounce, which is below the current spot price of gold. This is expected to result in estimated production of 325,000 ounces of gold for 1997 at an estimated cash cost of approximately US$338 per ounce. The Company has taken the necessary measures to reduce its cash costs of production at all divisions to below the current spot gold price. Royal Oak has sold forward in spot deferred contracts approximately 312,000 ounces of gold this year at a price of US$395 per ounces. Through other gold hedging activities, the Company expects to receive an average realized price this year in excess of US$400 per ounce. In 1998, the Company expects to produce approximately 343,000 ounces of gold at an estimated cash cost of US$240 per ounce from its Kemess, Timmins and Yellowknife operations. In 1996, the Company embarked on an aggressive capital spending program as part of its long-term growth strategy. Because of the need to conserve cash under current gold market conditions, expenditures over the next two years on certain projects, notably Matachewan and the Pamour expansion, have been reduced and the construction schedule has been delayed. Kemess on Track for Start-Up in Nine Months Time Construction at the Kemess gold-copper mine, the Company's core asset, is proceeding on schedule and is approximately 55% complete. Over $350 million of the approximate $425 million capital cost has been committed in purchase orders for capital equipment and construction contracts. The Kemess project is fully funded from cash and securities in treasury of approximately C$109 million (at July 31, 1997); compensation, investment and economic assistance from the B.C. government totalling up to C$166 million; and from cash expected to be provided from current operations in the next three quarters, as well as from approximately $90 million in permitted debt capacity and equipment leasing packages. To date, the B.C. government has reimbursed Royal Oak approximately C$79 million and is up to date in its payments. The Company plans to commence production at Kemess in nine months time, in April of 1998. The estimated average life-of-mine production rate is 250,000 ounces of gold and 60 million pounds of copper per year. Average life-of-mine cash costs are estimated at US$205 per ounce of gold and $0.52 per pound of copper. Higher copper prices have partially offset lower gold prices such that cash flow from the Kemess Mine is not expected to be materially affected. At a gold price of US$350 per ounce and a copper price of US$1.00 per pound, average annual cash flow from Kemess is expected to be approximately C$90 million. Average annual cash flow is expected to increase by approximately C$9 million for a US$25 per ounce increase in the gold price, and to increase by approximately C$9 million for a US$0.10 per pound increase in the copper price. Outlook Margaret K. Witte, President and CEO of Royal Oak, commenting on the outlook for the Company, said, "Despite the current low gold price and the impact this is having on many gold companies, we are extremely encouraged by the outlook for Royal Oak. We are currently conserving cash on other development projects to ensure that our capital development program at Kemess is fully funded. Our large Kemess project is on track for start-up in April of next year. Low-cost production and long reserve life at Kemess is the key to our future growth and improved profitability and to maximizing shareholder value. We are excited about the opportunities that we will be able to pursue based on the cash flow that Kemess will generate." For further information contact: or in Europe contact: Mr. J. Graham Eacott Mr. David Williamson Vice President, Investor Relations David Williamson Associates Limited Royal Oak Mines International Investor Relations 5501 Lakeview Drive 8 Old Broad Street, 2nd Floor Kirkland, WA 98033-7314 London, England EC2M 1QP Telephone: (425) 822-8992 Telephone: 011-44-171-628-3989 Facsimile: (425) 822-3552 Facsimile: 011-44-171-920-0563 ROYAL OAK MINES Consolidated Balance Sheets (unaudited - Cdn$ 000's) June 30 December 31 1997 1996 (audited) ========== =========== ASSETS Current Assets Cash and cash equivalents $ 72,254 $197,766 Marketable securities 590 590 Receivables 66,344 17,492 Inventories 51,485 61,844 Prepaid expenses 8,362 7,729 -------- -------- Total Current Assets 199,035 285,421 Property, Plant and Equipment, net 493,558 482,733 Long-Term Investments 61,414 44,255 Deferred Charges and Other Assets 9,869 9,221 -------- -------- TOTAL ASSETS $763,876 $821,630 ======== ======== LIABILITIES Current Liabilities Accounts payable $ 25,263 $ 21,094 Accrued payroll costs 3,102 3,514 Accrued reclamation costs 2,010 -- Deferred revenue and capital leases 8,893 13,508 Income and other taxes payable 4,816 3,894 Senior subordinated notes interest payable 9,831 10,180 Other current liabilities 16,376 20,383 -------- -------- Total Current Liabilities 70,291 72,573 Deferred Revenue and Other Liabilities 38,597 35,205 Deferred Reclamation Costs 20,988 17,622 Senior Subordinated Notes 241,728 239,680 Deferred Income Taxes 843 5,064 Minority Interest in Subsidiary Companies 89 120 -------- -------- TOTAL LIABILITIES 372,536 370,264 -------- -------- SHAREHOLDERS' EQUITY Capital Stock Common stock Authorized - unlimited Outstanding - 138,910,263 (Dec. 31, 1996 - 138,845,263) 378,989 378,813 Retained Earnings 12,351 72,553 -------- -------- TOTAL SHAREHOLDERS' EQUITY 391,340 451,366 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $763,876 $821,630 ======== ========
ROYAL OAK MINES Consolidated Statements of Income (unaudited - Cdn$ 000's except per share amounts) Three months ended Six months ended June 30 June 30 --------------------- --------------------- 1997 1996 1997 1996 ======== ======== ======== ======== REVENUE $ 58,979 $ 54,797 $106,463 $105,846 -------- -------- ------- -------- EXPENSES Operating 51,006 39,310 94,058 81,339 Royalties and marketing 447 846 871 1,408 Administrative and corporate 3,544 2,694 6,196 4,843 Depreciation and amortization 6,158 5,954 11,950 11,030 Reclamation 1,246 177 2,376 336 Exploration and other 1,319 1,449 2,666 2,409 Provision for loss on currency and commodity contracts 7,357 (209) 9,875 (976) -------- -------- -------- -------- Total operating expenses 71,077 50,221 127,992 100,389 -------- -------- -------- -------- OPERATING INCOME (LOSS) (12,098) 4,576 (21,529) 5,457 OTHER INCOME (EXPENSE) Interest and other income, net 547 1,121 2,499 2,503 Interest expense (69) (64) (187) (103) Senior subordinated notes interest (6,503) -- (12,847) -- Senior subordinated notes interest capitalized 5,544 -- 9,964 -- Foreign currency translation on senior subordinated notes 490 -- (2,048) -- Write-down of mine assets (39,700) -- (39,700) -- -------- -------- -------- -------- NET INCOME (LOSS) BEFORE UNDERNOTED (51,789) 5,633 (63,848) 7,857 Income and mining taxes - current (313) (368) (639) (723) Income and mining taxes - deferred -- (1,466) 4,221 (2,006) Minority interest (5) 3 31 30 Equity in income of associated companies 18 (53) 33 (53) -------- -------- -------- -------- NET INCOME (LOSS) (52,089) 3,749 (60,202) 5,105 RETAINED EARNINGS - BEGINNING OF PERIOD 64,440 79,894 72,553 78,538 -------- -------- -------- -------- RETAINED EARNINGS - END OF PERIOD $ 12,351 $ 83,643 $ 12,351 $ 83,643 ======== ======== ======== ======== EARNINGS (LOSS) PER SHARE $ (0.38) $ 0.03 $ (0.43) $ 0.04 ======== ======== ======== ======== Weighted average number of common shares outstanding (000's) 138,884 138,196 138,864 135,006 ======== ======== ======== ========
ROYAL OAK MINES Consolidated Statements of Cash Flow (unaudited - Cdn$ 000's) Three months ended Six months ended June 30 June 30 ------------------- ------------------- 1997 1996 1997 1996 ======== ======== ======== ======== CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Consolidated net income (loss) for the period $ (52,089) $ 3,749 $ (60,202) $ 5,105 Items not affecting cash: Depreciation and amortization 6,158 5,954 11,950 11,030 Reclamation 1,246 177 2,376 336 Deferred income tax -- 1,466 (4,221) 2,006 Provision for loss on currency and commodity contracts 7,357 (209) 9,875 (976) Foreign currency translation on senior subordinated notes (490) -- 2,048 -- Deferred charges and other 223 51 91 169 Write-down of mine assets 39,700 -- 39,700 -- -------- -------- -------- ------- CASH FLOW 2,105 11,188 1,617 17,670 Net change in other operating items (7,713) 8,113 (73,476) (2,035) -------- -------- -------- -------- Net cash provided by (used in) operating activities (5,608) 19,301 (71,859) 15,635 -------- -------- -------- -------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES Issue of common shares 65 359 177 114,359 Capital lease payable (249) 1,019 (527) 939 Deferred credits and other (18) (25) (18) 1,485 -------- ------- -------- -------- Net cash provided by (used in) financing activities (202) 1,353 (368) 116,783 -------- ------- -------- -------- CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES Investment in Kemess capital assets through purchase of companies -- -- -- (201,976) (Increase)decrease in long-term investments (17,846) -- (17,846) 26,882 Investment in capital assets through purchase of Consolidated Professor Mines Limited -- (2,592) -- (15,844) Investment in other capital assets, net (15,426) (12,788) (30,736) (32,216) Investment in exploration and non-producing properties, net (2,377) (3,626) (4,068) (5,692) Change in other assets (48) (3,027) (635) (6,270) -------- -------- -------- -------- Net cash used in investing activities (35,697) (22,033) (53,285) (235,116) -------- -------- -------- -------- INCREASE (DECREASE) IN CASH AND MARKETABLE SECURITIES DURING PERIOD (41,507) (1,379) (125,512) (102,698) CASH AND MARKETABLE SECURITIES AT BEGINNING OF PERIOD 114,351 41,062 198,356 142,381 -------- -------- -------- -------- CASH AND MARKETABLE SECURITIES AT END OF PERIOD $ 72,844 $ 39,683 $ 72,844 $ 39,683 ======== ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 69 $ 47 $ 13,386 $ 86 Income taxes $ 25 $ 175 $ 65 $ 530 Cash consists of cash and short-term investments.
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