Metalla Reports Audited Financial Results for Fiscal 2019
Metalla Reports Audited Financial Results for
Fiscal 2019
(All dollar amounts are in Canadian dollars unless otherwise indicated)
TSXV: MTA
OTCQB: MTAFF
VANCOUVER
,
Sept. 27, 2019
/CNW/ -
Metalla Royalty & Streaming Ltd.
("
Metalla
" or the
"
Company
") (TSXV: MTA) (OTCQB: MTAFF) announces its financial results for fiscal 2019. For
complete details of the consolidated financial statements and accompanying management's
discussion and analysis for the year ended
May 31, 2019
, please see the Company's filings on
SEDAR and EDGAR or the Company's website (
http://www.metallaroyalty.com/
).
"Fiscal 2019 was a transformational year for our Company. We more than doubled the size of the
royalty portfolio, adding key royalties such as
Santa Gertrudis
, COSE, Fifteen Mile Stream,
El
Realito
, Wasamac, and many others" commented
Brett Heath
, President, and CEO of Metalla.
"Looking forward, we expect fiscal 2020 to be another pivotal year for Metalla as we continue to
scale our business and grow our royalty portfolio into what we believe will be one of the most
exciting growth stories for this next commodity cycle."
FINANCIAL HIGHLIGHTS
During the year ended
May 31, 2019
, the Company:
significantly increased the number of royalties held to a total of 45 precious metal assets
through the following notable transactions:
acquired a 2.0% NSR royalty on the
Santa Gertrudis
project owned by Agnico Eagle Mines
Ltd. ("Agnico Eagle")
acquired a 1.5% NSR royalty on the Cap-Oeste Sur East ("COSE") project owned by Pan
American Silver Corp. ("Pan American");
acquired in separate transactions two NSR royalties (3.0% and 1.0%, respectively) on the
Fifteen Mile Stream ("FMS") project owned by St. Barbara Ltd. ("St. Barbara");
acquired a portfolio of 18 royalties or options on royalties from Alamos Gold ("Alamos"),
which include royalties on Agnico Eagle's
El Realito
project and Monarch Gold Corp's
("Monarch Gold") Wasamac project;
completed an oversubscribed private placement for gross proceeds of
$6,824,070
;
entered into an up to
$12,000,000
convertible debt facility with Beedie Capital ("Beedie");
settled the convertible debenture held by Coeur Mining, Inc. in full;
entered into loan arrangements totaling
US$2,000,000
with a syndicate of lenders and
repaid in full subsequently;
closed on the acquisition of a royalty on the Garrison project owned by O3 Mining Inc. ("O3
Mining").
declared and paid an aggregate dividend of
$1,813,738
;
shipped 431,844 (2018 - 429,315) attributable silver ounces ("oz.") at an average realized price
of
US$15.33
(2018 -
US$16.74
) and average cash cost of
US$6.27
(2018 -
US$7.06
) per oz.
(see non-IFRS Financial Measures);
generated operating cash margin of
US$9.06
(2018 -
US$9.68
) per attributable silver oz. from
the Endeavor silver stream and New Luika Gold Mine ("NLGM") stream held by Silverback Ltd.
("Silverback") (see non-IFRS Financial Measures);
had 59,515 (2018 - 90,476) attributable silver oz. remaining at year-end and will be sold in
subsequent periods due to delivery delays caused by the smelter, which led to increased
concentrate inventory at the Endeavor Mine;
recognized revenue from stream interest of
$7,852,661
(2018 -
$7,368,331
), loss from
operations of
$1,449,255
(2018 -
$1,838,359
), net loss of
$2,443,489
(2018 -
$2,561,756
), and
adjusted EBITDA of
$2,097,605
(2018 -
$2,849,227
) (see non-IFRS Financial Measures); and
recorded cash flow from operating activities, before net change in non-cash working capital
items, of
$1,527,957
(2018 -
$2,495,521
), offset by
$13,458,638
spent on acquisitions of NSR
royalty interests, resulting in positive working capital of
$862,799
(2018 -
$4,661,792
).
UPDATES ON ROYALTIES AND STREAMS
COSE 1.5% and Joaquin 2.0% NSRs
Pan American disclosed in their Q2 results on
August 7, 2019
and related conference call that they
spent a combined
US$7,000,000
on the Joaquin and COSE projects during Q2-2019. Underground
development and ground support system implementation is continuing to advance as they move
closer to production.
Development at COSE has extracted 1,500 tonnes at 2,600g/t silver and 33g/t gold which is
currently stockpiled on surface. This grade compares favorably with the reserve grade at COSE of
918g/t silver and 17.7g/t gold. At COSE, Pan American expects production to start in Q4 2019 and
will be limited to mostly development material with stope production in Q1-2020. Metalla expects the
timeline for production at Joaquin to begin shortly after COSE by the end of 2019 limited to mostly
development material with stope production in Q1-2020.
Wasamac 1.5% NSR
Monarch Gold Corp. spent
$2,497,420
on the Wasamac project during the nine months ended
March 31, 2019
. On
December 3, 2018
, Monarch Gold announced the positive results of the
feasibility study prepared by BBA Inc. for the Wasamac gold project. The purpose of the study was
to complete a review and compilation of the resources reclassified in
October 2017
and to integrate
advanced mining designs by integrating Rail-Veyor® technology and a paste backfill system, to
study treatment options and water and tailings management facilities, and to evaluate the economic
aspects of this underground gold project. According to Monarch Gold, the results of the feasibility
study show that the Wasamac project is economically viable and could become a low-cost
production mine. The study also serves as a basis for making a production decision and fully
supports the licensing and financing process.
Highlights from the feasibility study include:
significant production volume with average annual gold production of 142,000 ounces over 11
years;
pre-tax internal rate of return of 23.6%, net present value of
$522,000,000
and a payback
period of 3.6 years;
low production cash cost of
C$720
/ounce (
US$550
/ounce) and
C$826
/ounce (
US$630
/ounce)
all-in sustaining cost;
initial capital costs of
C$464,000,000
, including approximately
C$230,000,000
for the plant and
tailings facility;
strategic location: the mine infrastructure will be located on recently acquired land along the
Trans-Canada Highway and 50 metres from the railway line linked to multiple milling facilities;
and
high exploration potential: the technical report summarizing the results of the feasibility study is
available on the Monarch Gold's website (see technical report titled "Feasibility Study of the
Wasamac Project
Rouyn-Noranda, Quebec, Canada
" with an effective date of
December 1,
2018
).
Santa Gertrudis
2.0% NSR
Agnico Eagle Mines Limited ("Agnico") reported by news release on
July 24, 2019
that they continue
to expand mineralization at the
Santa Gertrudis
project in
Mexico
. The
Trinidad
zone has been
extended by 800 meters ("m") to more than 3 kilometers strike length. Drilling extended the newly
discovered Amelia deposit to a 700-meter strike length and a total depth of 450 meters. Notable
intercepts by Agnico include 8.2 grams per tonne ("g/t") gold over
7.3m
and 8.8g/t gold over
6m
.
Amelia Map (CNW Group/Metalla Royalty and Streaming Ltd.)
Moreover, drilling at the Becarros zone has discovered new mineralization known as the Bertha
target, located
250m
northwest of the Becerros Norte deposit; highlighted by 2.1g/t gold over
9.5m
;
150m
to the south west and 3g/t gold over
8m
. Half of the 2019 supplementary
11,500m
drill
program continues at
Santa Gertrudis
intending to explore new targets and expand the mineral
resources.
Santa Gertrudis Map (CNW Group/Metalla Royalty and Streaming Ltd.)
Endeavor 100% Silver Stream
The Endeavor Mine located in
New South Wales, Australia
was once the region's largest zinc, lead,
and silver producer. Commissioned in 1983 as the Elura Mine, the site has been operated by CBH
Resources Limited ("CBH") since 2003 and was then renamed as the Endeavor Mine. The orebody
at the Endeavor Mine has the form of massive vertical pillars, which is similar to others found in the
Cobar Basin. Extraction of approximately 30 million tonnes has occurred to date.
Metalla has the right to buy 100% of the silver production up to 20.0 million ounces (7.2 million
ounces have been delivered to date) from the Endeavor Mine for an operating cost contribution of
US$1.00
per ounce of payable silver, indexed annually for inflation, and a further increment of 50%
of the amount by which silver price exceeds
US$7.00
per ounce.
CBH announced on
July 17, 2019
that they will scale back production from 25,000 to 17,000 tonnes
per month and staff for the remainder of 2019 while focusing on infill drilling of the new Deep Zinc
Lode Resource to better appraise its future viability. A production decision on the Deep Zinc Lode is
expected in Q4-2019 with the potential to add 3 to 5 years of production. Metalla will continue to
monitor production at the Endeavor Mine.
El Realito
2.0% NSR
At
El Realito
, Agnico reported exploration drilling continued to extend the mineralization laterally and
confirm structures to the east. Agnico increased the drill program at La India in 2019 by an additional
5,000-meters to further expand mineral resources. Drilling in the main structure has yielded several
oxide intercepts including 0.6g/t gold and 4g/t silver over
13.2m
and 0.6g/t gold and 4g/t silver over
8.4m
which were both within
100m
of the surface. Drilling 300 meters east of the main structure,
intersected 0.8g/t gold and 110g/t silver over
11.2m
and 3.1g/t gold and 27g/t silver over
3.4m
which
were also within
100m
of the surface.
El Realito Map (CNW Group/Metalla Royalty and Streaming Ltd.)
15
Mile Stream
1.0% and 3.0% NSRs
Fifteen
Mile Stream
project ("
FMS
") was recently acquired by St Barbara (ASX: SBM) through its
takeover of Atlantic Gold on
July 19, 2019
for
$802 million
. The FMS Project located 57km northeast
of Atlantic Gold's central milling facility at Touquoy and is readily accessible by highway. The project
lies along the same geological trend as other related deposits – Touquoy,
Beaver Dam
and
Cochrane Hill
– and all are hosted within the same critical stratigraphy and structure, over a strike
length of 80 km.
The previous owner Atlantic Gold reported by
press release dated
March 13, 2019
, an updated
mineral resource estimates after recent drilling campaigns at its Touquoy, 15 Mile Stream, and
Cochrane Hill
deposits. Following the drilling of 35,710 metres since the last resource estimate at
the FMS deposit (see technical report titled "
Moose River Consolidated Project,
Nova Scotia,
Canada
, NI 43-101 Technical Report on Moose River Consolidated Phase 1 and 2 Expansion
" with
an effective date of
January 24, 2018
), Atlantic Gold reported an increase of 47% or 216,000 oz. for
a total of 677,000 oz. of contained gold ("Au") between the three deposits of Egerton-MacLean,
Hudson, and Plenty.
Measured &
Indicated
Au
Grade
Contained
Au
Inferred
Au
Grade
Contained
Au
Pit Constrained
Resources
(Kt)
(g/t)
(Koz)
(Kt)
(g/t)
(Koz)
Egerton-MacLean
14,600
1.16
544
1,400
1.24
56
Hudson
1,800
0.78
45
400
1.01
13
Plenty
2,700
1.01
88
300
1.56
15
Total
19,100
1.10
677
2,100
1.24
84
St Barbara intends to continue to explore FMS in 2019 to expand the resource base and convert to
reserves with a large focus on the 149 Deposit. This was the first discovery of the Corridor Regional
Program. A drill program of 6,000 metres was conducted to test the connections between the
Egerton-MacLean Zone and the newly-discovered 149 Deposit located two (2) kilometres to the
north-east, which was omitted from the recent estimate. St Barbara intends to establish a mineral
resource at the 149 Deposit in 2019.
Garrison 2.0% NSR
Osisko Mining Inc. ("Osisko") completed the spin-out of the Garrison gold project into a new
company called O3 Mining. The Company views this proposed transaction as a positive development
for the Garrison gold project, which will become a material asset of O3 Mining and provide several
potential benefits: the ability to push Garrison forward the project on a standalone basis and the
flexibility to consolidate other projects in close proximity to build critical mass that can attract
development by major mining companies. The table below outlines the mineral resource estimate for
the Garrison gold deposit:
Measured
& Indicated
Au
Grade
Contained
Au
Inferred
Au
Grade
Contained
Au
Pit Constrained
(Kt)
(g/t)
(Koz)
(Kt)
(g/t)
(Koz)
Garrcon
20,711
0.97
644
2,834
1.83
167
Jonpol
7,165
1.63
376
471
1.92
29
903
15,734
1.08
548
6,961
1.01
225
Total
43,610
1.12
1,568
10,266
1.28
421
The estimate is based on 1,115 drill holes totaling 342,874 metres of drilling completed by previous
operators and includes 197 holes totaling 87,251 metres by Osisko between 2016 and
July 2018
.
Global non-pit constrained resources at a 0.4 g/t Au cut-off to 300 metres below surface are 1.87
million oz. gold at 1.06 g/t Au in the measured & indicated category and 0.61 million oz. gold at 0.92
g/t Au in the inferred category (see technical report titled "
A Mineral Resource Estimate for the
Garrcon, Jonpol and 903 Zones at the Garrison Township,
Black River
–
Matheson Area
,
Northeastern Ontario
" with an effective date of
February 12, 2019
).
Based on the updated resource estimate, management believes Osisko's intent to prioritize the open
pit potential of the Garrison deposit which may envision three (3) separate pits and a centralized
milling facility as the project continues to move forward under O3 Mining's direction.
Akasaba West 2.0% NSR
Agnico Eagle has reported that development of the Akasaba West open pit is scheduled for 2021
based on the prioritization of development capital spending. Akasaba West contains probable
mineral reserves of 147,000 ounces of gold and 25,800 tonnes of copper (5.4 million tonnes grading
0.84 g/t gold and 0.48% copper) and is expected to contribute approximately 20,000 ounces of gold
per year to the Goldex production profile once in production.
NLGM 15% Silver Stream
Shanta Gold Limited ("Shanta") announced on
July 15, 2019
an updated resource estimate at its
New Luika Gold Mine ("NLGM") which is expected to extend the mine life.
Highlights from the resource estimate include:
drilling at Bauhinia Creek ("BC") Central, conducted in April and
May 2019
, has converted
126,787 ounces of gold in Inferred Resources grading 3.15 g/t into 83,543 ounces of gold in
Indicated Resources grading 7.85 g/t, a suitable level of confidence for these ounces to be
incorporated into the Mine Plan;
a further 58,553 ounces of gold in new Inferred Resources grading 4.79 g/t have been added to
the Mineral Resource;
these new high grades, underground Indicated Resources are expected to be supplemented
with medium/low-grade ounces to match the historically blended feed grade of 4.3g/t gold;
incorporation of the additional Resource ounces is expected to extend the current Life of Mine
to at least 2025;
Shanta's strategy is to maintain a rolling 5-8-year life of mineable ounces which balances the
cost of exploration with visibility on future production;
the next phase of drilling on the mining licenses over the next 12 months will target conversion of
a further 220,300 ounces of gold in Inferred Resources into Indicated Resources at BC as well
as other deposits, namely: the Ilunga, Luika and
Elizabeth Hill
orebodies.
Metalla holds a 15% interest in the silver stream on NLGM, which grants the right to purchase silver
at 10% of the prevailing spot price at delivery.
Hoyle Pond Extension 2.0% NSR
Metalla owns a 2.0% NSR royalty payable by Newmont Goldcorp Inc. on the Hoyle Pond Extension
Royalties, which are located on claims that are beneath the Kidd metallurgical complex and
immediately adjacent to the east and northeast of the Hoyle Pond mine complex. There is a 500,000
oz. gold exemption on the leased mining rights. As of the end of 2018, approximately 2,000 ounces
of gold was produced from Metalla's royalty claims and total reserves and resources included
52,820 oz Au at an average grade of 8.4 g/t gold. Drilling is expected to continue through 2019 with
18,000 to 20,000 metres on the extension.
QUALIFIED PERSON
The technical information contained in this news release has been reviewed and approved by
Charles Beaudry
, geologist M.Sc., member of the Association of Professional Geoscientists of
Ontario
and the Ordre des Géologues du Québec and a consultant to Metalla. Mr. Beaudry is a
Qualified Person as defined in "National Instrument 43-101
Standards of disclosure for mineral
projects
".
ABOUT METALLA
Metalla is a precious metals royalty and streaming company. Metalla provides shareholders with
leveraged precious metal exposure through a diversified and growing portfolio of royalties and
streams. Our strong foundation of current and future cash-generating asset base, combined with an
experienced team gives Metalla a path to become one of the leading gold and silver companies for
the next commodities cycle.
For further information, please visit our website at
www.metallaroyalty.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in
the policies of the TSXV) accept responsibility for the adequacy or accuracy of this release.
No securities regulatory authority has either approved or disapproved of the contents of this news
release. The securities being offered have not been, and will not be, registered under the United
States Securities Act of 1933, as amended (the ''U.S. Securities Act''), or any state securities laws,
and may not be offered or sold in
the United States
, or to, or for the account or benefit of, a "U.S.
person" (as defined in Regulation S of the U.S. Securities Act) unless pursuant to an exemption
therefrom. This press release is for information purposes only and does not constitute an offer to
sell or a solicitation of an offer to buy any securities of the Company in any jurisdiction.
Non-IFRS Financial Measures
Certain marked information are alternative performance measures and readers should refer to
non-international financial reporting standards ("IFRS") financial measures in the Company's
Management's Discussion and Analysis for the year ended
May 31, 2019
as filed on SEDAR and
on EDGAR and as available on the Company's website for further details. Metalla has included
certain performance measures in this press release that do not have any standardized meaning
prescribed by IFRS including average cash cost per ounce of attributable silver, average realized
price per ounce of attributable silver, and cash margin. Average cost per ounce of attributable
silver is calculated by dividing the cash cost of sales, plus applicable selling charges, by the
attributable ounces sold. In the precious metals mining industry, this is a common performance
measure but does not have any standardized meaning. The Company believes that, in addition to
conventional measures prepared in accordance with IFRS, certain investors use this information to
evaluate the Company's performance and ability to generate cash flow. Cash margin is calculated
by subtracting the average cash cost per ounce of attributable silver from the average realized
price per ounce of attributable silver. The Company presents cash margin as it believes that
certain investors use this information to evaluate the Company's performance in comparison to
other companies in the precious metals mining industry who present results on a similar basis.
The presentation of these non-IFRS measures is intended to provide additional information and
should not be considered in isolation or as a substitute for measures of performance prepared in
accordance with IFRS. Other companies may calculate these non-IFRS measures differently.
Technical and Third Party Information
Metalla has limited, if any, access to the properties on which Metalla holds a royalty, stream or
other interest. Metalla is dependent on, (i) the operators of the mines or properties and their
qualified persons to provide technical or other information to Metalla, or (ii) on publicly available
information to prepare disclosure pertaining to properties and operations on the mines or
properties on which Metalla holds a royalty, stream or other interest, and generally has limited or
no ability to independently verify such information. Although Metalla does not have any knowledge
that such information may not be accurate, there can be no assurance that such third-party
information is complete or accurate. Some information publicly reported by operators may relate to
a larger property than the area covered by Metalla's royalty, stream or other interest. Metalla's
royalty, stream or other interests often cover less than 100% and sometimes only a portion of the
publicly reported mineral reserves, resources and production of a property.
The disclosure was prepared in accordance with Canadian National Instrument 43-101 ("NI 43-
101"), which differs significantly from the current requirements of the U.S. Securities and
Exchange Commission (the "SEC") set out in Industry Guide 7. Accordingly, such disclosure may
not be comparable to similar information made public by companies that report in accordance with
Industry Guide 7. In particular, this news release may refer to "mineral resources", "measured
mineral resources", "indicated mineral resources" or "inferred mineral resources". While these
categories of mineralization are recognized and required by Canadian securities laws, they are not
recognized by Industry Guide 7 and are not normally permitted to be disclosed in SEC filings by
U.S. companies that are subject to Industry Guide 7. U.S. investors are cautioned not to assume
that any part of a "mineral resource", "measured mineral resource", "indicated mineral resource",
or "inferred mineral resource" will ever be converted into a "reserve." In addition, "reserves"
reported by the Company under Canadian standards may not qualify as reserves under Industry
Guide 7. Under Industry Guide 7, mineralization may not be classified as a "reserve" unless the
mineralization can be economically and legally extracted or produced at the time the "reserve"
determination is made. Accordingly, information contained or referenced in this news release
containing descriptions of mineral deposits may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure requirements of Industry Guide 7.
"Inferred mineral resources" have a great amount of uncertainty as to their existence and great
uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of
an inferred mineral resource will ever be upgraded to a higher category. Further, while NI 43-101
permits companies to disclose economic projections contained in preliminary economic
assessments and pre-feasibility studies, which are not based on "reserves", U.S. companies have
not generally been permitted under Industry Guide 7 to disclose economic projections for a mineral
property in their SEC filings prior to the establishment of "reserves". Disclosure of "contained
ounces" in a resource is permitted disclosure under Canadian reporting standards; however,
Industry Guide 7 normally only permits issuers to report mineralization that does not constitute
"reserves" by Industry Guide 7 standards as in-place tonnage and grade without reference to unit
measures. Historical results or feasibility models presented herein are not guarantees or
expectations of future performance.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking information" and "forward-looking statements" within
the meaning of applicable Canadian and U.S. securities legislation. The forward-looking
statements herein are made as of the date of this press release only, and the Company does not
assume any obligation to update or revise them to reflect new information, estimates or opinions,
future events or results or otherwise, except as required by applicable law. Often, but not always,
forward-looking statements can be identified by the use of words such as "plans", "expects", "is
expected", "budgets", "scheduled", "estimates", "forecasts", "predicts", "projects", "intends",
"targets", "aims", "anticipates" or "believes" or variations (including negative variations) of such
words and phrases or may be identified by statements to the effect that certain actions "may",
"could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking
information in this press release includes, but is not limited to, statements with respect to future
events or future performance of Metalla, disclosure regarding the precious metal purchase
agreements and royalty payments to be paid to Metalla by property owners or operators of mining
projects pursuant to net smelter returns and other royalty agreements of Metalla, continued ramp-
up at the Endeavor Mine, management's expectations regarding Metalla's growth, results of
operations, estimated future revenues, carrying value of assets, future dividends, and
requirements for additional capital, production estimates, production costs and revenue, future
demand for and prices of commodities, expected mining sequences, business prospects, and
opportunities. Such forward-looking statements reflect management's current beliefs and are
based on information currently available to management.
Forward-looking statements involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or implied by the
forward-looking statements. The forward-looking statements contained in this press release are
based on reasonable assumptions that have been made by management as at the date of such