Elemental Royalties Announces Record Quarterly Royalty Revenue in Q2 2020
Elemental Royalties Announces Record
Quarterly Royalty Revenue in Q2 2020
VANCOUVER, BC
,
Aug. 31, 2020
/CNW/ - Elemental Royalties Corp. ("
Elemental
" or "the
Company
") (TSX-V: ELE) is pleased to announce its operating and financial results for the second
quarter ended
June 30, 2020
.
For complete details please refer to the Financial Statements and associated Management
Discussion and Analysis for the quarter ended
June 30, 2020
, available on SEDAR (
www.sedar.com
) or the Company's website (
www.elementalroyalties.com
).
Q2 2020 Financial Overview
Gross revenue of
US$1.29 million
, 2020 year to date
US$2.51 million
Cash and cash equivalents balance of
US$1.24 million
plus royalty receivables of
US$1.51
million
Table 1: Royalty Revenue (US$ million)
Q2/2020
Q1/2020
Δ
Q2/2019
Δ
Wahgnion
0.77
0.47
65%
-
>100%
Amancaya
0.35
0.60
(42%)
0.54
(35%)
Kwale
0.17
0.14
17%
0.17
(2%)
Mercedes
1
-
-
-
-
-
Mt Pleasant
-
0.01
(100%)
0.00
(100%)
Total
1.29
1.22
5%
0.71
81%
1. Royalty revenue due to Elemental after hurdle, being the earlier of: (a) the date on which 450,000 ounces
of gold equivalent have been produced after July 28, 2016 and (b) the sixth anniversary of that date (July 28, 2022)
"We are thrilled to report Elemental's highest quarterly revenue ever, fuelled by a significant
increase in production at Wahgnion coinciding with record gold prices."
commented
Frederick Bell
,
CEO.
"With the closing of the
$24 million
financing in July, increased 2020 production guidance at
Wahgnion, and operations returning to normal at Amancaya, the outlook for the remainder of 2020
and beyond remains strong."
Highlights:
As announced on
August 6
, Teranga has increased Wahgnion's 2020 production guidance to
between 150,000 – 165,000 ounces, a 15% – 18% increase from earlier guidance of 130,000 –
140,000 ounces, providing higher than expected royalty revenues
Production at Amancaya was disrupted by a 24 day miners' strike and precautionary measures
due to COVID-19. Austral Gold has maintained 2020 Guidance of 55,000 – 60,000 ounces
Kwale mineral sands operations performed as expected, with good pricing and customer
support
Mercedes has lowered short term production rates to improve efficiencies. Throughput is
expected to increase back towards nameplate over time, aligning with Elemental's royalty
paying from
July 2022
following a time hurdle
Subsequent to the quarter end, completion of
$24 million
financing and commencement of
trading on the TSX Venture Exchange ("TSX-V") of the Company's shares under the symbol
"ELE"
Asset Updates
Wahgnion
The demonstrated outperformance of the newly commissioned Wahgnion Gold Mine in
Burkina
Faso
during its first year of operation has resulted in a material increase in forecast production
through to at least 2025
Operationally, Teranga have reported excellent initial performance, being able to consistently
deliver and process 25% more tonnes than planned, while also delivering the planned grade and
recovery performance predicted by planning
Teranga have rescheduled the Life of Mine production to materially bring revenue forward, and
increase gold deliveries by 15% over the first six years of production to an average of 150,000
ounces per annum
This schedule inevitably reduces the Reserve life as currently defined, but Teranga have
committed to a multiyear exploration program, highlighting the high quality, district scale
potential of the 933km
2
exploration area targeting more than a dozen high priority greenstone
gold targets
Amancaya
Austral Gold have maintained 2020 production guidance for their Chilean operations in spite of
disruptions which resulted in a temporary reduction in total quarterly production to 9.2kOz Au
equivalent,
Elemental's gross royalty revenue of
US$0.35 million
was less affected, with nearly all
production from Amancaya, strong grade performance and stronger gold prices.
The production disruptions were due to COVID pandemic staffing restrictions at site, and 24
days lost due to strike action associated with the renegotiation of the three year mining
contract. However management indicate that they will still be able to achieve production at the
lower end of their earlier 2020 Guidance of 55,000 – 60,000 ounces of gold equivalent,
indicating expected total production in excess of 28,000 ounces for H2/2020
With the limitations in place, production has virtually all been sourced from the higher grade
Amancaya mine in the Royalty Area
Exploration has also been limited to mapping, reinterpretation and drill planning, with work in the
Royalty Area looking to extend the Amancaya Resource blocks along strike to the north as well
as designing a Resource to Reserve conversion infill drilling program, and working to progress
the next best drilled prospect,
Veta Julia
, to the south west of the mine.
Kwale
Strong royalty revenue from Kwale this quarter of
US$0.17 million
gross, was in the upper end
of Base's guidance for all products for their financial year
As Base Resources (ASX: BSE) Base has lowered forecast production for FY2021 (June year
end), with both fewer tonnes, partly due to a scheduled relocation of mining plant, and slightly
lower grades; resulting in about a 20% drop in forecast ilmenite and zircon production
Rutile, the most economically important product and has been delivering a consistent positive
reconciliation in the South Dune, is only forecast to reduce production volumes by approximately
5%
Market expectations appear strong in spite of expected demand weaknesses, due to a mix of
already contracted sales, stronger than expected demand in some segments and production
disruptions elsewhere
Exploration work is planned, but there is limited potential for significant additional tonnages
beyond the defined Resource within the royalty area.
Mercedes
Mercedes has begun a phased restart to operation after a two month government-mandated
shutdown due to COVID19, with the plan to manage the site workforce by limiting production to
the higher grade Diluvio / Lupita complex and targeting 1.2ktpd of production
Ongoing exploration and delineation drill programs are expected to enable mill throughput to
increase toward nameplate capacity over time
The Diluvio / Lupita complex has generated exploration success, Reserve and Resource
increases and good production, as the geological potential becomes better understood
The start of royalty payments will now almost certainly be initiated by the expiry of a time hurdle
in
July 2022
, rather than the 450,000 ounce production hurdle
Mount Pleasant
Production at
Mt Pleasant
, part of Zijin's larger Paddington Operations, has been intermittent
with small production from stockpiles and pillar recovery at the Homestead underground mine,
while exploration and mine planning takes place on the Tuart and Racetrack orebodies
During Q2 there was no reported production on the royalty area
Zijin's announcement in their 2019 Annual Report of plans for a
A$550M
, 3.3Mtpa low grade /
refractory heap leach project is likely to include the Racetrack Resource in our royalty area, but
details of timing and ore source sequencing have not yet been announced, or probably
determined; and site management have been advising us of a small underground operation
being assessed on the Tuart orebody
Corporate Updates
Subsequent to the end of the second quarter, on
July 28, 2020
, the Company announced the
closing of its previously announced business combination resulting in the reverse takeover
("RTO") of Fengro Industries Corp.
In connection with the RTO, Elemental completed a brokered subscription receipts financing for
gross proceeds of approximately
$24 million
On
July 30, 2020
, Elemental announced the commencement of trading of the Company's shares
on the TSX-V under the symbol "ELE"
Elemental joined Discovery Group, an alliance of public companies focused on the advancement
of mineral exploration and mining projects with a proven track record of generating shareholder
value through responsible, sustainable, and innovative development
About Elemental:
Elemental is a gold focused royalty company with a portfolio of five royalties over producing assets
spanning
Burkina Faso
,
Chile
,
Mexico
,
Kenya
and Western Australia. The portfolio is heavily
weighted towards precious metals and producing royalties, providing a diversified foundation of
revenue from the outset, while minimising shareholder dilution.
Qualified Person:
Richard Evans
, FAusIMM, is Senior Vice President Technical for Elemental, and a qualified person
under National Instrument 43-101 –
Standards of Disclosure for Mineral Projects
, has reviewed and
approved the scientific and technical disclosure contained in this press release.
On behalf of Elemental Royalties Corp.
Frederick Bell
CEO and Director
Elemental Royalties Corp. is a proud member of Discovery Group. For more information please
visit: discoverygroup.ca or contact 604-653-9464.
Neither the TSX Venture Exchange Inc. nor its Regulation Service Provider (as that term is
defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the
adequacy or accuracy of this press release.
Forward-Looking Statements
This press release contains certain "forward looking statements" and certain "forward-looking
information" as defined under applicable Canadian and U.S. securities laws. Forward-looking
statements and information can generally be identified by the use of forward-looking terminology
such as "may", "will", "should", "expect", "intend", "estimate", "anticipate", "believe", "continue",
"plans" or similar terminology. The forward-looking information contained herein is provided for the
purpose of assisting readers in understanding management's current expectations and plans
relating to the future. Readers are cautioned that such information may not be appropriate for other
purposes. Forward-looking statements and information include, but are not limited to, statements
with respect to the Company's financial guidance, outlook, proposed plans for acquiring additional
royalty and similar interests and the potential of such interests to provide returns and the
completion of mine expansion under construction phases at the mines or properties that the
Company holds an interest in. Forward-looking statements and information are based on forecasts
of future results, estimates of amounts not yet determinable and assumptions that, while believed
by management to be reasonable, are inherently subject to significant business, economic and
competitive uncertainties and contingencies. Forward-looking information is subject to known and
unknown risks, uncertainties and other factors that may cause the actual actions, events or results
to be materially different from those expressed or implied by such forward-looking information,
including but not limited to: the impact of general business and economic conditions; the absence
of control over mining operations from which Elemental will receive royalty payments and risks
related to those mining operations, including risks related to international operations, government
and environmental regulation, delays in mine construction and operations, actual results of mining
and current exploration activities, conclusions of economic evaluations and changes in project
parameters as plans continue to be refined; accidents, equipment breakdowns, title matters, labor
disputes or other unanticipated difficulties or interruptions in operations; problems inherent to the
marketability of gold and other metals; the inherent uncertainty of production and cost estimates
and the potential for unexpected costs and expenses; industry conditions, including fluctuations in
the price of the primary commodities mined at such operations, fluctuations in foreign exchange
rates and fluctuations in interest rates; government entities interpreting existing tax legislation or
enacting new tax legislation in a way which adversely affects Elemental; stock market volatility;
regulatory restrictions; liability, competition, loss of key employees , other related risks and
uncertainties. Elemental undertakes no obligation to update forward-looking information except as
required by applicable law. Such forward-looking information represents management's best
judgment based on information currently available. No forward-looking statement can be
guaranteed and actual future results may vary materially. Accordingly, readers are advised not to
place undue reliance on forward-looking statements or information.
Cautionary Note to U.S. Persons Concerning Estimates of Reserves and Measured, Indicated
and Inferred Resources
Information contained or referenced in this press release or in the documents referenced herein
concerning the properties, technical information and operations of Elemental has been prepared in
accordance with requirements and standards under Canadian securities laws, which differ from the
requirements of US securities laws. The terms "mineral resource", "measured mineral resource",
"indicated mineral resource", "inferred mineral resource" "mineral reserve", "probable mineral
reserve," and "proven mineral reserve" used in this press release or in the documents incorporated
by reference herein are mining terms as defined in accordance with NI 43-101 under guidelines
set out in the Definition Standards for Mineral Resources and Mineral Reserves adopted by the
Canadian Institute of Mining, Metallurgy and Petroleum Council on May 10, 2014. While such
terms are recognized and required by Canadian securities laws, they are not recognized by SEC
standards and normally are not permitted to be used in reports filed with the SEC. Investors are
cautioned not to assume that all or any part of the disclosed mineral resource estimates will ever
be confirmed or converted into reserves that meet the definitions used by the SEC. Disclosure of
contained ounces are or may be permitted disclosure under regulations applicable to Elemental;
however, the SEC normally only permits issuers to report mineralization that does not constitute
"reserves" by SEC standards as in-place tonnage and grade without reference to unit of production
measures. Accordingly, certain information contained in this press release or in the documents
incorporated by reference herein concerning descriptions of mineralization and mineral resources
under these standards may not be comparable to similar information made public by US
companies subject to reporting and disclosure requirements of the SEC.
SOURCE
Elemental Royalties Corp.
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For further information:
about Elemental Royalties Corp. or this news release, please visit our
website at www.elementalroyalties.com or by email at [email protected]
CO: Elemental Royalties Corp.
CNW 16:30e 31-AUG-20