-----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, Mmw3Er+c66rSYJnUtiFkF7emuCuTkLlt1ND6+Xlnq9Ey8EyDKzgjJnXWxqJdB7oR gjUNc1FYSCLadhn7x/daQA== 0000041304-98-000021.txt : 19980401 0000041304-98-000021.hdr.sgml : 19980401 ACCESSION NUMBER: 0000041304-98-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980331 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: 98584209 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 March 31, 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 March 31, 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 March 31, 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: March 31, 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 March 31, 1998. FOR IMMEDIATE RELEASE FROM KIRKLAND March 31, 1998 Royal Oak Announces 1997 Results of Operations Royal Oak Mines Inc. (TSE and AMEX: RYO) announced today the unaudited operating results for the fourth quarter and year ended December 31, 1997. All figures are in thousands of Canadian dollars unless otherwise stated. Fourth Quarter and Year Highlights Financial Position December 31, 1997 December 31, 1996 Cash 568 197,766 Total assets 843,386 821,630 Net debt (1) 274,136 46,876 Shareholders' equity 316,378 451,366 (1) Net debt = Notes payable + current and non-current capital leases - cash - - Strategic mine closures to improve future mine operating margins - - Gold production of 66,919 ounces in fourth quarter, and 351,349 ounces for the year - - Cash costs of US$274 per ounce in fourth quarter, and US$330 per ounce for the year - - Cash provided by operating activities of $104.5 million in fourth quarter, and $67.3 million in 1997 - - Realized gold price of US$327 per ounce in fourth quarter, and US$393 per ounce for the year - - Construction of Kemess Mine over 92% complete and scheduled for start-up in early May of 1998 - - Hope Brook Mine placed on care and maintenance - - Colomac operations closed down in December of 1997, on completion of milling of stockpiled ore, and placed on care and maintenance Operating Results Three months ended Twelve months ended December 31 December 31 1997 1996 1997 1996 -------- ------- -------- ------- Gold production (ounces) 66,919 105,548 351,349 389,203 Revenue 30,395 71,999 191,167 255,168 Cash provided by operating activities 104,472 15,900 67,251 57,259 Cash provided by operating activities per share (C$) 0.75 0.11 0.48 0.42 Net income (loss) (72,651) (21,306) (135,215) (5,985) Net income (loss) per share (C$) (0.52) (0.15) (0.97) (0.04) Cash cost of production (US$/oz) 274 357 330 343 Average spot gold price (US$/oz) 307 376 331 388 Average realized gold price (US$/oz)327 505 393 481 Weighted average common shares outstanding (millions) 138.930 138.734 138.892 136.758 Period-end common shares outstanding (millions) 138.940 138.845 138.940 138.845 In 1997, gold production was on budget at 351,349 ounces, but was 10% lower than the record 389,203 ounces produced in 1996. The decrease in production in 1997 was mainly due to the permanent closure of the Hope Brook Mine in September after depletion of ore reserves, and the Colomac Mine in December for economic reasons. Both mines have been placed on care and maintenance. Gold production in the fourth quarter of 1997 was 66,919 ounces, 38,629 ounces less than the 105,548 ounces produced in the same period a year earlier, and mainly reflects the closure of the Hope Brook and Colomac mines. Revenue of $191.2 million in 1997 included hedging gains of $33.7 million and was 25% less than record revenue of $255.2 million reported in 1996 when hedging gains were $51.3 million. In the fourth quarter of 1997, revenue was $30.4 million compared to revenue of $72.0 million in the comparable period of 1996. The decrease in revenue in both periods was due to the combined impacts of lower production and lower average realized gold prices. The average realized gold price in 1997 was US$393 per ounce compared to the record US$481 per ounce in 1996. In the fourth quarters of 1997 and 1996, the realized prices were US$327 per ounce and US$505 per ounce, respectively. In 1997, the Company incurred a loss of $135.2 million, or 97 cents per share, compared to a loss of $6.0 million, or 4 cents per share, in 1996. The loss in 1997 reflected a provision for loss on currency and commodity contracts of $46.3 million, (approximately $22 million of realized losses and approximately $24 million of unrealized losses) of which $32.2 million was incurred in the fourth quarter; a $34.1 million loss on investments in gold mining companies, of which $33.0 million was reported in the fourth quarter; and a write-down of $39.7 million on the Colomac assets, which was reported in the second quarter. In the fourth quarter of 1997, the Company incurred a loss of $72.7 million, or 52 cents per share, compared to a loss of $21.3 million, or 15 cents per share, in the comparable period a year ago. In 1997, cash costs were US$330 per ounce, 4% lower than US$343 per ounce for the prior year. The reduction in cash costs reflected closure of the high cost Colomac and Hope Brook mines in the latter part of the year, as well as the implementation of cost control measures such as reducing the workforce at the Pamour and Giant mines in the fourth quarter. In the fourth quarter of 1997, cash costs of US$274 per ounce were 23% lower than the US$357 per ounce reported in the same period a year earlier. Year End 1997 Ore Reserves Reflect Lower Gold Prices The Company reported estimated mineable ore reserves of 7.0 million ounces of gold at December 31, 1997 compared to 9.9 million at the end of the previous year. The decrease reflects a gold price of $495 per ounce (US$350 per ounce) compared to $527 per ounce (US$390 per ounce) a year earlier. The Company reported a total resource of approximately 19.5 million ounces of gold at the end of 1997 compared to 17.3 million ounces at the end of 1996. In addition, the Company reported an estimated mineable copper ore reserve of 996 million pounds at Kemess at the end of 1997, calculated at a copper price of US$0.95 per pound, compared to 990 million pounds of copper, calculated at a copper price of US$1.10 per pound, at the end of 1996. The estimated total copper resource at the end of 1997 was 10.7 billion pounds and includes the resource at the Namosi deposit in Fiji, which was not included in the resource of 1.6 billion pounds of copper reported at the end of 1996. Production and Cash Cost Estimates for 1998 and 1999 The Company expects to commence production at the Kemess Mine in May of this year. In 1998, the Company plans to produce a total of approximately 363,000 ounces of gold at an estimated cash cost of US$208 per ounce, net of copper credits at US$0.80 per pound. In 1999, when the Kemess Mine is expected to be in full production, budgeted total production is approximately 477,000 ounces of gold at an estimated cash cost of US$182 per ounce, net of copper credits at US$0.90 per pound. The Company currently does not have any gold production sold forward. Subsequent Events Subsequent to the end of the year, on March 25, 1998 the Company announced that it had obtained US$120 million, subject to various approvals and completion of customary documentation, to refinance and fund the completion of the Kemess Mine. The financing is in the form of Senior Secured Notes arranged by Trilon Financial Corporation of Toronto. The Company has requested an extension to the filing date for its Form 10-K from the Securities and Exchange Commission until the financing has been completed. Outlook Commenting on the long-term outlook for Royal Oak, the Company's President and Chief Executive Officer, Margaret Witte, said, "Our operating results in 1997 reflected a challenging year as we had to deal with the impact of significantly lower gold prices than in the previous three years. The Company has taken aggressive steps by shutting down unprofitable assets and writing down currency positions due to the weak Canadian dollar. Furthermore, the cost-cutting measures taken in the fourth quarter of last year at the Pamour and Giant mines has continued into the first quarter this year where cash costs are approximately US$285 per ounce, and below the current price of gold. Notwithstanding these difficulties, we are extremely encouraged by the long-term outlook for the Company as we plan to commence production in May at the low-cost, long-life Kemess gold-copper mine. Kemess represents the anticipated turnaround of Royal Oak, and the cash flow that the mine is expected to generate, particularly when gold and copper prices return to levels of the last three years, should enable the Company to grow with less reliance on the capital markets than in the past. We appreciate the support of our employees and the holders of our securities during the past year, and look forward to sharing with you the results of operations at Kemess over the next few quarters." 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 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 Internet site: http://www.royal-oak-mines.com ROYAL OAK MINES INC. Consolidated Balance Sheets (in thousands of Canadian dollars) (Unaudited) December 31 December 31 1997 1996 =========== =========== ASSETS Current Assets Cash and cash equivalents $ 568 $197,766 Marketable securities 9,875 28,259 Receivables 30,923 17,492 Inventories 21,120 61,844 Prepaid expenses 3,967 7,729 ----------- ----------- Total current assets 66,453 313,090 Property, Plant and Equipment 730,314 482,733 Long-term Investments 12,145 16,586 Reclamation and Other Deposits 14,332 -- Deferred Charges and Other Assets 20,142 9,221 ------------ ----------- $843,386 $821,630 ============ =========== LIABILITIES Current Liabilities Accounts payable $108,888 $ 21,094 Accrued payroll costs 2,599 3,514 Deferred revenue 20,085 10,994 Capital leases 4,531 2,514 Income taxes payable 1,723 3,894 Senior subordinated notes interest payable 10,326 10,180 Accrued unrealized loss on derivatives 21,327 -- Retainage payable 14,698 -- Other current liabilities 9,135 20,383 ------------ ----------- Total Current Liabilities 193,312 72,573 Deferred Revenue 23,330 22,897 Other Liabilities 57,427 29,930 Senior Subordinated Notes 250,338 239,680 Deferred Income Taxes 2,532 5,064 Minority Interest in Subsidiary Companies 69 120 ------------ ----------- TOTAL LIABILITIES 527,008 370,264 ------------ ----------- Contingencies and commitments SHAREHOLDERS' EQUITY Capital Stock Common stock Authorized - unlimited Outstanding - 138,940,263 (1996 - 138,845,263) 379,040 378,813 Retained Earnings (Deficit) (62,662) 72,553 ------------ ----------- TOTAL SHAREHOLDERS' EQUITY 316,378 451,366 ------------ ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $843,386 $821,630 ============ ===========
ROYAL OAK MINES INC. Consolidated Statements of Income and Retained Earnings (Deficit) (in thousands of Canadian dollars except per share amounts) (Unaudited) Year ended December 31 ---------------------------------------- 1997 1996 1995 ------------ ------------ ------------ REVENUE $191,167 $255,168 $208,311 EXPENSES Operating 160,522 181,869 182,024 Royalties and marketing 1,986 2,904 2,535 Administrative and corporate 9,617 9,339 8,549 Depreciation and amortization 22,200 24,900 13,645 Reclamation 4,054 2,663 1,250 Exploration and other 10,257 4,742 619 Provision for (Recovery of) loss on foreign currency and commodity contracts 46,294 (453) (5,244) ------------ ------------ ------------ Total operating expenses 254,930 225,964 203,378 ------------ ------------ ------------ OPERATING INCOME (LOSS) (63,763) 29,204 4,933 OTHER INCOME (EXPENSE) Interest and other income (expense), net 4,549 6,053 12,701 Interest expense (704) (378) (298) Senior subordinated notes interest (26,737) (10,089) -- Interest capitalized 22,906 5,362 -- Foreign currency translation on senior subordinated notes (364) 190 -- Write-down of mine assets (39,700) (37,633) (891) Gain (loss) on investments (34,112) 2,691 8,309 ------------ ------------ ------------ INCOME (LOSS) before undernoted (137,925) (4,600) 24,754 Income and mining taxes (recovery/(expense)) - current 2,279 (900) (1,542) Income and mining taxes (recovery/(expense)) - deferred 2,532 -- -- Minority interest 52 50 594 Equity in income (loss) of associated companies (2,153) (535) (637) ------------ ------------ ------------ NET INCOME (LOSS) (135,215) (5,985) 23,169 RETAINED EARNINGS - BEGINNING OF PERIOD 72,553 78,538 55,369 ------------ ------------ ------------ RETAINED EARNINGS (DEFICIT) - END OF PERIOD $ (62,662) $ 72,553 $ 78,538 ============ ============ ============ EARNINGS (LOSS) PER SHARE - BASIC $ (0.97) $ (0.04) $ 0.20 ============ ============ ============ EARNINGS (LOSS) PER SHARE - FULLY DILUTED $ (0.97) $ (0.04) $ 0.20 ============ ============ ============ Weighted average number of common shares outstanding (000's) 138,892 136,758 117,900 ============ ============ ============
ROYAL OAK MINES INC. Consolidated Statements of Cash Flow (in thousands of Canadian dollars) (Unaudited) Year ended December 31 ------------------------------------------- 1997 1996 1995 ------------- ------------- ------------- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net (loss) income for the period $(135,215) $ (5,985) $ 23,169 Items not affecting cash: Depreciation and amortization 22,200 24,900 13,645 Reclamation 4,054 2,663 1,250 Deferred income tax (2,532) -- -- Provision for (Recovery of) unrealized loss on foreign currency and commodity contracts 24,254 (453) (5,244) Foreign currency translation on senior subordinated notes 364 (190) -- Write-down of mine assets 39,700 37,633 891 Write-down of resource properties and mine development 8,229 144 -- Equity loss and write-down of long-term investments 3,424 535 637 Deferred charges and other 90 335 (593) ------------- ------------- ------------- (35,432) 59,582 33,755 Net change in other operating items 102,683 (2,323) (1,995) ------------- ------------- ------------- Net cash provided by operating activities 67,251 57,259 31,760 ------------- ------------- ------------- CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES Issue of common shares 227 116,855 14,595 Capital lease obligation 19,404 1,711 -- Issue of senior subordinated notes -- 239,870 -- Issue costs of senior subordinated notes and secured debt (254) (8,786) -- Accrued reclamation on acquisition of Red Mountain -- -- 3,000 Deferred credits and other -- 290 (300) ------------- ------------- ------------- Net cash provided by financing activities 19,377 349,940 17,295 ------------- ------------- ------------- CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES Investment in Kemess capital assets through purchase of companies -- (201,976) -- Decrease in long-term investments 1,017 26,882 -- Proceeds from asset sales 7,075 -- -- Investment in capital assets through purchase of Consolidated Professor Mines Limited -- (16,100) -- Additions to property, plant and equipment (421,343) (146,170) (66,018) British Columbia Government assistance 131,833 22,326 -- Reclamation and other deposits (14,332) -- -- Investment in exploration and non-producing properties, net (5,252) (7,697) (19,025) Other assets (1,208) (820) (568) ------------- ------------- ------------- Net cash used in investing activities (302,210) (323,555) (85,611) ------------- ------------- ------------- INCREASE (DECREASE) IN CASH AND MARKETABLE SECURITIES DURING PERIOD (215,582) 83,644 (36,556) CASH AND MARKETABLE SECURITIES AT BEGINNING OF PERIOD 226,025 142,381 178,937 ------------- ------------- ------------- CASH AND MARKETABLE SECURITIES AT END OF PERIOD $ 10,443 $ 226,025 $ 142,381 ============= ============= ============
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