Metalla Reports Financial Results for the Third Quarter of Fiscal 2019
Metalla Reports Financial Results for the
Third Quarter of Fiscal 2019
(All dollar amounts are in Canadian dollars unless otherwise indicated)
TSXV: MTA
OTCQX: MTAFF
Frankfurt: X9CP
VANCOUVER, April 29, 2019 /CNW/ - Metalla Royalty & Streaming
Ltd. ("Metalla" or the "Company") (TSXV: MTA) (OTCQX: MTAFF)
(FRANKFURT: X9CP) announces its financial results for the third
quarter of fiscal 2019. For complete details of the condensed interim
consolidated financial statements and accompanying management's
discussion and analysis for the nine months ended February 28, 2019,
please see the Company's filings on SEDAR or the Company's
website (http://www.metallaroyalty.com/).
"In the third quarter Metalla completed an over-subscribed private
placement for C$6.8 million and acquired two additional near-term
producing royalties with counterparties that include Pan American
Silver and Atlantic Gold," commented Brett Heath, President, and
CEO of Metalla. "We continue to expect 2019 to be a 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."
THIRD QUARTER FINANCIAL HIGHLIGHTS
During the three months ended February 28, 2019, the Company:
shipped and provisionally invoiced 76,775 (2018 - 158,865)
attributable silver ounces ("oz.") at an average realized price of
US$15.23 (2018 - US$17.12) and average cash cost of US$6.23
(2018 - US$7.32) per oz. (see non-IFRS Financial Measures);
generated operating cash margin of US$9.00 (2018 - US$9.45)
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 77,272 attributable silver oz. remaining and to be sold in
subsequent periods, this was due to delivery delays caused by
the smelter, which led to increased concentrate inventory at the
Endeavor Mine;
recognized revenue from stream interest of $1,442,006 (2018 -
$3,066,670), income from operations of $484,179 (2018 -
$286,446), net loss of $446,105 (2018 - $440,105), and adjusted
EBITDA of $490,168 (2018 - $671,659) (see non-IFRS Financial
Measures);
recorded cash flow from operating activities, before net change
in non-cash working capital items, of $282,728 (2018 -
$619,402), offset by $5,462,568 spent on acquisitions of NSR
royalty interests, resulting in positive working capital of $730,568
(May 31, 2018 - $4,661,792);
acquired a 1.5% NSR royalty on the Cap-Oeste Sur East
("COSE") gold and silver property owned by Pan American Silver
Corp. ("Pan American"), in Santa Cruz, Argentina from
Patagonia Gold PLC ("Patagonia Gold") for US$1,500,000 in
cash;
acquired a 1% NSR royalty on the 15 Mile Stream ("FMS") gold
project owned by Atlantic Gold Corporation ("Atlantic Gold"), in
Nova Scotia, Canada from a private party for US$2,200,000 in
cash and 2,619,000 common shares;
completed a brokered private placement for $6,824,070.24 by
issuing 8,748,808 units at $0.78 per unit;
entered into an arrangement to retire its convertible debenture
held by Coeur Mining, Inc ("Coeur"), which was completed
subsequently; and
declared and paid a monthly dividend of $0.0015 per share.
QUARTERLY UPDATES ON ROYALTIES AND STREAMS
Santa Gertrudis NSR
Agnico Eagle Mines Limited ("Agnico") reported by press release
dated April 25, 2019 that Santa Gertrudis drilling discovered new high-
grade structures at Trinidad and further extends known resource
areas – Highlights include 14.7 g/t gold over 11.5 metres at 170
metres depth at Trinidad and 5.1 g/t gold over 4.5 metres at 33 metres
depth at Greta.
In the first quarter of 2019, 45 drill holes (10,521 metres) were
completed, mainly in the Trinidad, Greta, Viviana, Toro, and Becerros
zones, which form part of the initial full-year budget of 29,000
metres. This drilling focused on extending the mineral resources and
exploring new targets.
Recent assay results from the Trinidad Trend have discovered a
down-plunge extension of the main Amelia deposit and also an
interpreted parallel high-grade structure that increases the potential of
the zone. The discovery of additional structures is a result of better
understanding the controls of mineralization in the district. The results
for the Greta, Viviana, Toro, and Becerros trends represent mainly
deposit extensions.
Recent work at Amelia shows the potential for several parallel
structures at underground depths, with grades higher than the current
mineral resources at the Santa Gertrudis project. These structures
are open along strike and at depth. The Company is also evaluating
different project development scenarios at Santa Gertrudis. The
project contains both low-grade oxide and high-grade sulfide types of
mineralization that have been recognized from the surface down to
410 metres depth locally.
Santa Gertrudis Project – Amelia Deposit Composite Cross Section
(CNW Group/Metalla Royalty and Streaming Ltd.)
Agnico reported by press release dated February 14, 2019 that drilling
in 2018 outlined an initial inferred mineral resource of 962,000 oz. of
Au grading 1.09 g/t at the Santa Gertrudis project in Sonora, Mexico.
The 31,127-metre program confirmed the historical drilling and
discovered several high-grade feeder zones on the project highlighted
by 12.1g/t gold over 5.1 metres at 99 metres depth and 9.7g/t gold
over 15.0 metres at 33 metres depth.
The initial exploration budget for 2019 was US$8.2M, which includes
29,000 metres of drilling focused on expanding the mineral resource,
testing the extensions of high-grade structures, and exploring new
targets to be outlined by a target-generation initiative. However, given
the favourable drill results, a supplementary exploration budget of
US$2M has been approved to conduct an additional 11,500-metre drill
program solely focused at Amelia to investigate further "this promising
deposit." This is the second time in 2019 that Agnico has increased its
exploration budget on the 44,145 hectare property.
Agnico is currently evaluating a potential production scenario that
utilizes a heap leach for lower grade mineralization and a small mill
facility to process higher-grade mineralization. Agnico has stated that
the Santa Gertrudis project has the potential to be a similar size
operation to La India, which produced over 100,000 oz. of gold
annually over the previous two years.
Metalla holds a 2.0% NSR royalty on the Santa Gertrudis project.
15 Mile Stream NSR
Atlantic Gold reported by press release dated March 13, 2019 updated
mineral resource estimates following 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. This
resource update is expected to add 2,160 oz. of gold to Metalla's
account over the life of the mine.
Measured
& Indicated
Au
Grade
Contained
Au Inferred
Au
Grade
Contained
Au
Pit Constrained
Resources (Kt) (g/t) (Koz) (Kt) (g/t) (Koz)
Eggerton-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
Atlantic Gold intends to continue to explore FMS in 2019 and 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. Follow-up diamond
drilling is underway to test the easterly extension of the 149 Gold
Deposit. This was the first discovery of the Corridor Regional
Program, an initial program of 6,000 metres is planned.
Metalla holds a 1.0% NSR royalty that covers the entirety of the
Egerton-MacLean, Hudson, the newly-discovered 149 Deposits, and a
majority of the Plenty deposit.
Joaquin and Cap-Oeste Sur Este NSRs
Pan American advanced the development of the COSE and Joaquin
projects in Argentina. Production at both mines is expected to start in
the second half of 2019. At Joaquin, the initial fleet of development
mining equipment was procured, and the development of the
underground access decline continued. At COSE, development of the
underground access decline also continued, along with the
commencement of construction on the first underground electrical
substation.
Pan American has outlined capital expenditures at Joaquin and COSE
in 2019 to complete development and bring both mines into production
totaling US$20M. Both projects remain on budget.
Metalla holds a 2.0% NSR royalty on Joaquin project and 1.5% NSR
royalty on COSE project.
Endeavor 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 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 (7.1 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 has allocated more resources and capital from the development
of new stopes on the existing mineralized zone to developing the
recently discovered Deep Zinc Lode ("DZL") at depth. CBH has
advised the plan is to carry out further drilling to firm up the DZL
resource with initial results expected in Q3 2019. They will be
evaluating the economic viability of the DZL with the goal to sequence
into an expanded mine plan eventually. CBH has advised that they
expect a revised mine plan for the existing orebody in the second half
of calendar 2019. Currently, the current mine plan allows for
production through December 2020.
Garrison NSR
Osisko Mining Inc. ("Osisko") reported by press release dated
February 19, 2019, an updated mineral resources estimate for the
Garrison gold project and an additional press release dated February
20, 2019, it's intent to spin out the Garrison gold project into a new
company. Under the terms of the binding letter agreement, Osisko will
affect a business combination that will result in a reverse takeover of
Chantrell Ventures Corp. and change its name to "O3 Mining
Corporation" ("O3 Mining") subsequently. The proposed transaction is
anticipated to be completed by way of plan of arrangement which will
include the transfer of Osisko's Garrison deposit, Marban deposit,
exploration properties and a portfolio of select securities. O3 Mining
will focus on continuing its consolidation strategy and progressing its
development assets.
The Company views this proposed transaction as a positive
development for the Garrison gold project, which will become the
focus of O3 Mining and provide several key benefits: the ability to
push forward the Garrison 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 the surface is 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. The mineral resource estimate was prepared
by RockRidge and reviewed and audited by Micon International
Limited. Finally, Osisko indicated that the technical report supporting
the mineral resource estimate above would be filed within 45 days but
no filing has yet been made by Osisko.
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.
Metalla holds a 2.0% NSR on the Garrcon and Jonpol projects and
part of the 903 zone on the Garrison project.
Akasaba West NSR
Agnico 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.
Metalla holds a 2% NSR on Akasaba West.