-----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, TLJXaR6soVkttX7+x4Cs7SPMIC8Ey0FU37vh0bdnpC4AoF/vl8dsSKd48gVDrtQC I07MB8J3MEKRu59vKsoKXw== 0000041304-97-000035.txt : 19971020 0000041304-97-000035.hdr.sgml : 19971020 ACCESSION NUMBER: 0000041304-97-000035 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970707 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971017 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: SEC FILE NUMBER: 001-04350 FILM NUMBER: 97697607 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 October 16, 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 October 16, 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 October 16, 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: October 16, 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 October 16, 1997 [Royal Oak Mines Inc. Press Release Letterhead] FOR IMMEDIATE RELEASE FROM KIRKLAND October 16, 1997 - ----------------------------------------------------------------------------- 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, 1997. All figures are reported in thousands of Canadian dollars unless otherwise stated. Third Quarter and Year-to-Date Highlights Financial Position September 30, 1997 December 31, 1996 September 30, 1996 Cash 36,862 197,766 233,042 Total assets 783,375 821,630 844,950 Net debt (1) 226,665 46,876 7,006 Shareholders' equity 388,978 451,366 472,114 (1) Net debt = Notes payable + current and non-current capital leases - cash
* Strategic mine closures to improve future profitability of the Company * Gold production of 94,505 ounces in third quarter, and 284,430 ounces year-to-date * Cash costs of US$310 per ounce, down 12% from second quarter and 17% from first quarter * Cash flow before changes in other operating items of $4.2 million in third quarter, and $5.8 million year-to-date * Realized gold price of US$412 per ounce in third quarter, and US$410 per ounce year-to-date * Kemess on track for start-up in six months' time, in April of 1998 * Hope Brook Mine shut down in mid-August of 1997 on depletion of ore reserves * Colomac operations scheduled for closure at the end of October, 1997, on completion of milling of stockpiled ore Operating Results Three months ended Nine months ended September 30 September 30 1997 1996 1997 1996 ----- ----- ----- ----- Gold production (ounces) 94,505 104,012 284,430 283,655 Revenue 54,116 77,323 160,579 183,169 Cash flow before changes in other operating items 4,208 22,515 5,825 40,185 Cash flow before changes in other operating items per share (C$) 0.03 0.16 0.04 0.30 Net income (loss) (2,362) 10,216 (62,564) 15,321 Net income (loss) per share (C$) (0.02) 0.07 (0.45) 0.11 Cash cost of production (US$/oz) 310 348 344 337 Average spot gold price (US$/oz) 324 385 339 392 Average realized gold price (US$/oz) 412 543 410 472 Weighted average common shares outstanding (millions) 138.910 138.286 138.880 136.099 Period-end common shares outstanding (millions) 138.910 138.680 138.910 138.680
Gold production in the third quarter and for the year-to-date was impacted by the closure of both the Hope Brook and Colomac mines. The closure of these mines for economic reasons is expected to improve the future profitability of the Company. Furthermore, the ore reserves at both Hope Brook and Colomac were close to being depleted. As a result of these mine closures, gold production in the third quarter of 94,505 ounces was 9% less than the 104,012 ounces produced in the same period a year earlier. Gold production in the second quarter this year was 104,845 ounces. In the year-to-date period ended September 30, 1997, gold production of 284,430 ounces was similar to the 283,655 ounces produced in the nine-month period in 1996. Revenue in the third quarter of this year was $54.1 million compared to $77.3 million in the same period of 1996, a decrease of 30%. In the nine-month period ended September 30, 1997, revenue of $160.6 million was 12% lower than revenue of $183.2 million in the same period of 1996. The decrease in revenue in the two periods this year mainly reflected lower realized gold prices, and the lower gold production in the third quarter this year. Realized gold prices in both the third quarter and year-to-date periods were significantly lower, 24% and 13% respectively, than in the same periods last year. In the third quarter last 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 latter contributed to hedge gains of $31.8 million in the nine-month period last year. The cessation of mining operations at Hope Brook and Colomac in the third quarter resulted in generally improved results in the period for the Company. Cash costs of US$310 per ounce in the third quarter were 11% lower than the US$348 per ounce recorded in the same period last year, and were 12% lower than the second quarter cash costs of US$351 per ounce. The Company expects a further reduction in cash costs in the fourth quarter of this year, and anticipates that cash costs at the Pamour and Giant mines will be under US$300 per ounce next year as a result of improved operating efficiencies and cost-saving measures currently being implemented. For the nine-month period ended September 30, 1997, cash costs of US$344 per ounce were comparable to the US$337 per ounce reported in the same period a year ago. Cash flow before changes in other operating items in the third quarter this year was $4.2 million compared to $22.5 million in the same period of 1996. Net cash provided by operating activities was $34.6 million, or 25 cents a share, in the third quarter this year, compared to $25.6 million, or 19 cents a share, in the same period of 1996. In the nine-month period this year, cash flow before changes in other operating items was $5.8 million compared to $40.2 million in the year-earlier period. Net cash used in operating activities was $37.2 million, or 27 cents a share, compared to net cash provided by operating activities of $41.2 million, or 30 cents a share, in the same period of 1996. Kemess Mine Scheduled to Commence Production in April, 1998 Our new Kemess Mine is scheduled to commence production in April of next year. Construction is estimated to be approximately 65% complete. Approximately $384 million of the estimated capital cost of $430 million has now been committed in purchase orders for capital equipment and construction contracts. As at the end of September, the B.C government had reimbursed the Company approximately $100 million of its economic assistance package of up to $166 million, and is current in its payments. The estimated average annual life-of-mine production rate at Kemess is approximately 250,000 ounces of gold at an estimated average cash cost of US$79 per ounce of gold (copper is credited against operating costs at US$1.00 per pound). Mine life, based on mineable ore reserves of approximately 4.1 million ounces of gold, is estimated at approximately 16 years. Outlook Margaret K. Witte, President and CEO of Royal Oak commenting on the outlook for the Company, said, "We are encouraged by the improvement in our operating results in the third quarter after closing down our Hope Brook and Colomac mines. We have made substantial reductions to our cash costs in successive quarters this year and expect this trend will continue into next year. We are on track to start production at our new Kemess mine in six months' time, in April of next year. Kemess's low-cost production over a long reserve life will improve the profitability of Royal Oak which we expect will increase shareholder value. The exploration potential at Kemess is excellent. The Company is confident that ore reserves can be increased and that mine life will be extended beyond the current 16 years. We continue to defer the development of our other capital projects in this weak gold market in order to conserve cash to ensure completion of the construction of our Kemess Mine. We are excited about the potential for continued growth of our Company from the substantial cash flow that Kemess will generate." For further information: or in Europe contact: Mr. J. Graham Eacott Mr. David Williamson Vice President, Investor Relations David Williamson Associates Limited Royal Oak Mines International Investor Relations 5501 Lakeview Drive 15 St. Helen's Place, 3rd Floor Kirkland, WA 98033-7314 London, England EC3A 6DE Telephone: (425) 822-8992 Telephone: 011-44-171-628-3989 Facsimile: (425) 822-3552 Facsimile: 011-44-171-920-0563 www.royal-oak-mines.com Royal Oak Mines Inc. Consolidated Balance Sheets (unaudited - Cdn$ 000's) September 30 December 31 1997 1996 (audited) ======== ========= ASSETS Current Assets Cash and cash equivalents $ 36,862 $197,766 Marketable securities 590 590 Receivables 60,345 17,492 Inventories 34,540 61,844 Prepaid expenses 4,625 7,729 -------- -------- Total Current Assets 136,962 285,421 Property, Plant and Equipment, net 577,472 482,733 Long-Term Investments 58,989 44,255 Deferred Charges and Other Assets 9,952 9,221 --------- --------- TOTAL ASSETS $783,375 $821,630 ========= ========= LIABILITIES Current Liabilities Accounts payable and accrued liabilities $ 63,383 $ 59,065 Capital leases 3,601 2,514 Deferred revenue 10,978 10,994 --------- --------- Total Current Liabilities 77,962 72,573 Deferred Revenue and Other Liabilities 33,358 32,757 Capital Leases 18,198 2,448 Deferred Reclamation Costs 22,236 17,622 Senior Subordinated Notes 241,728 239,680 Deferred Income Taxes 843 5,064 Minority Interest in Subsidiary Companies 72 120 --------- --------- TOTAL LIABILITIES 394,397 370,264 --------- --------- SHAREHOLDERS' EQUITY Capital Stock Common stock Authorized - unlimited Outstanding - 138,910,263 (Dec. 31, 1996 - 138,845,263) 378,989 378,813 Retained Earnings 9,989 72,553 --------- ---------- TOTAL SHAREHOLDERS' EQUITY 388,978 451,366 --------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $783,375 $821,630 ========= ==========
Royal Oak Mines Inc. Consolidated Statements of Income (unaudited - Cdn$ 000's except per share amounts) Three months ended Nine months ended September 30 September 30 ------------------ ------------------ 1997 1996 1997 1996 ======== ======== ======== ======== REVENUE $ 54,116 $ 77,323 $160,579 $183,169 -------- -------- -------- -------- EXPENSES Operating 40,595 49,587 134,653 130,926 Royalties and marketing 357 807 1,228 2,215 Administrative and corporate 2,361 2,517 8,557 7,360 Depreciation and amortization 4,615 7,371 16,565 18,401 Reclamation 1,247 216 3,623 552 Exploration and other 1,299 1,424 3,965 3,833 Provision for (Recovery of) loss on currency and commodity contracts 4,070 (621) 13,945 (1,597) -------- -------- -------- -------- Total operating expenses 54,544 61,301 182,536 161,690 -------- -------- -------- -------- OPERATING INCOME (LOSS) (428) 16,022 (21,957) 21,479 OTHER INCOME (EXPENSE) Interest and other income (expense), net (103) 1,663 2,396 4,166 Interest expense (140) (110) (327) (213) Senior subordinated notes interest (6,887) (3,590) (19,734) (3,590) Senior subordinated notes interest capitalized 5,568 1,926 15,532 1,926 Foreign currency translation on senior subordinated notes -- 1,596 (2,048) 1,596 Write-down of mine assets -- -- (39,700) -- -------- -------- -------- -------- NET INCOME (LOSS) BEFORE UNDERNOTED (1,990) 17,507 (65,838) 25,364 Income and mining taxes - current (313) (361) (952) (1,084) Income and mining taxes - deferred -- (6,814) 4,221 (8,820) Minority interest 17 6 48 36 Equity in income (loss) of associated companies (76) (122) (43) (175) -------- -------- -------- -------- NET INCOME (LOSS) (2,362) 10,216 (62,564) 15,321 RETAINED EARNINGS - BEGINNING OF PERIOD 12,351 83,643 72,553 78,538 -------- -------- -------- -------- RETAINED EARNINGS - END OF PERIOD $ 9,989 $ 93,859 $ 9,989 $ 93,859 ======== ======== ======== ======== EARNINGS (LOSS) PER SHARE $ (0.02) $ 0.07 $ (0.45) $ 0.11 ======== ======== ======== ======== Weighted average number of common shares outstanding (000's) 138,910 138,286 138,880 136,099 ======== ======== ======== ========
Royal Oak Mines Inc. Consolidated Statements of Cash Flow (unaudited - Cdn$ 000's) Three months ended Nine months ended September 30 September 30 ------------------ ------------------ 1997 1996 1997 1996 ======== ======== ======== ======== CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Consolidated net income (loss) for the period $ (2,362) $10,216 $(62,564) $15,321 Items not affecting cash: Depreciation and amortization 4,615 7,371 16,565 18,401 Reclamation 1,248 216 3,624 552 Deferred income tax -- 6,814 (4,221) 8,820 Provision for (Recovery of) unrealized loss on currency and commodity contracts 506 (621) 10,381 (1,597) Foreign currency translation on senior subordinated notes -- (1,596) 2,048 (1,596) Deferred charges and other 201 115 292 284 Write-down of mine assets -- -- 39,700 -- -------- -------- -------- -------- CASH FLOW 4,208 22,515 5,825 40,185 Net change in other operating items 30,430 3,098 (43,046) 1,063 -------- -------- -------- -------- Net cash provided by (used in) operating activities 34,638 25,613 (37,221) 41,248 -------- -------- -------- -------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES Issue of common shares -- 1,940 177 116,298 Capital lease obligation 16,277 (655) 15,750 284 Issuance of senior subordinated notes -- 239,981 -- 239,981 Cost of senior subordinated notes (111) (8,616) (129) (8,616) Deferred credits and other -- (1,146) -- 340 -------- -------- -------- -------- Net cash provided by financing activities 16,166 231,504 15,798 348,287 -------- -------- -------- -------- CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES Investment in Kemess capital assets through purchase of companies -- -- -- (201,976) (Increase) decrease in long-term investments 2,741 -- (15,105) 26,882 Investment in capital assets through purchase of Consolidated Professor Mines Limited -- (15) -- (15,858) Investment in other capital assets, net* (87,823) (41,972) (118,559) (74,188) Investment in exploration and non-producing properties, net (454) 657 (4,522) (5,035) Change in other assets (660) (1,648) (1,295) (7,919) -------- --------- --------- -------- Net cash used in investing activities (86,196) (42,978) (139,481) (278,094) -------- --------- --------- -------- INCREASE (DECREASE) IN CASH AND MARKETABLE SECURITIES DURING PERIOD (35,392) 214,139 (160,904) 111,441 CASH AND MARKETABLE SECURITIES AT BEGINNING OF PERIOD 72,844 39,683 198,356 142,381 -------- --------- --------- -------- CASH AND MARKETABLE SECURITIES AT END OF PERIOD $ 37,452 $253,822 $ 37,452 $253,822 ======== ========= ========= ======== * Investment in capital assets is net of B.C. Government assistance
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