Pasinex Reports First Quarter 2019 Results and Debt Repayment Agreement with Joint Venture Partner
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Pasinex Reports First Quarter 2019 Results and Debt Repayment
Agreement with Joint Venture Partner
TORONTO, ON – May 28, 2019 – Pasinex Resources Limited (CSE: PSE) (FSE: PNX) (The
“Company” or “Pasinex”) today reported financial results for the first quarter of 2019 . As
expected, production from Horzum AS was lower than the prior year and combined with lower
realized zinc prices in 2019, consolidated net incom e was lower than 2018. Adjusted
consolidated net income for the first quarter of 2019 was $0.5 million. Consolidated loss for the
year was $0.2 million reflecting the impact of a $0.5 million impairment on the zinc material used
and owing from Akmetal (joint venture partner) to Horzum AS.
Highlights –Q1 2019 and 2018
(Canadian dollars) First Quarter
2019 2018
Pasinex financial results:
Consolidated net income (loss) $ (214,850) $ 726,021
Adjusted consolidated net income(1) $ 455,225 $ 2,412,621
Equity gain from Horzum AS $ 250,055 $ 2,984,186
Adjusted equity gain from Horzum AS(1) $ 920,130 $ 2,984,186
Dividend received from Horzum AS $ 250,055 $ 383,593
Basic net income (loss) per share $ - $ 0.01
Horzum AS operational data (100% basis):
Zinc produced (wet) tonnes 6,787 13,037
Zinc sold (wet) tonnes 7,659 12,721
Zinc grade 30% 35%
Gross margin(1) 59% 75%
C$ cost per tonne mined(1) $ 257 $ 190
US$ cash cost per pound of zinc produced(1) $ 0.31 $ 0.18
(1) Refer to Note 1
Steve Williams, CEO of Pasinex commented, “Horzum AS produced as expected and managed
its costs diligently so that a strong 59% margin was achieved in the quarter. Drilling continues at
Pinargozu to find a parallel oxide system to improve the production estimates for the year.
Studies are on-going to determine the appropriate measures to mitigate the excess water at
depth so that development can continue to access the higher grade sulphide material.
In May, we entered into a legal debt repayment agreement with Akmetal. The agreement
requires that a minimum repayment of the debt owing to Horzum As is made on a monthly basis
and it strengthens certain control provisions within the joint venture agreement. We will
adamantly make certain that Akmetal is maximizing the debt repayments owing to Horzum AS
to provide sufficient cash flows to Pasinex.”
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Pasinex Highlights
• Pasinex’s adjusted consolidated net income for the first quarter of 2019 was $0.5 million,
which included a $0.9 million adjusted equity gain from Horzum AS.
• The adjusted equity gain decreased period over period largely due to lower sales volumes at
lower realized zinc sales prices (see Horzum AS Highlights below).
• Q1 2019 adjusted consolidated net income excludes an impairment on a receivable owing
from the joint venture partner (Akmetal) to Horzum AS recorded in equity loss.
• A $0.5 million impairment charge on the receivable from Akmetal was included in equity loss
from Horzum AS. The full amount of the rec eivable owing from Akmetal to Horzum AS was
written down to zero in 2018 to reflect significantly increased credit risk. In the first quarter of
2019, Akmetal used approximately 4,000 tonnes of zinc oxide at a cost of appro ximately $1
million (100% basis). Th is amount was recorded as a receiv able from Akmetal and then
written down to zero (see further details below).
• On May 10, 2019, Pasinex entered into a legally binding debt repayment agreement (“Debt
Agreement”) with Akmetal and Horzum AS. The debt repayments will be made by means of
Akmetal’s delivery of all sulphide zinc and some oxide zinc material from its wholly owned
Horzum mine. Horzum AS will sell the material and proceeds from the sale will be used to
repay the debts owing. Akmetal will guarantee a minimum of 300 tonnes of zinc material per
month. In addition, a portion of proceeds from sale of certain other of Akmetal assets will
also be used to repay the debts owing. The Debt Agreement provides a legal mechanism for
Horzum AS to receive payment of the debts owing but it still does not demonstrate credit
worthiness from Akmetal and as a result the receivable remains written d own to ze ro. The
Company will continue to vigorously pursue receipt of funds from Akmetal and re-assess the
expected credit losses on a regular basis. Any recovery of the receivable will be recorded in
the equity gain from Horzum AS.
• At March 31, 2019 the Company’s cash balance was $0.2 million with $0.7 million in current
payables, excluding shareholder loans payable. The Company relies on dividends from
Horzum AS to fund its spending. The 2019 production forecast for Pinargozu is
approximately 19,000 tonnes (half of 2018 production), but in combination with the sale of
inventory on hand at January 1, 2019 and the replenishment of inventory used by Akmetal
there should be adequate cash flow to fund operations at Horzum AS as well as fund non-
discretionary spending at Pasinex for the next twelve m onths. Drilling will continue through
2019 at Pinargozu to find a parallel oxide system in an effort to increase 2019 production.
• In May 2019 the Company received an additional $100,000 from a shareholder to pay for
certain overdue administration costs.
Horzum AS Highlights (described on a 100% basis)
The decrease in adjusted equity gain from H orzum AS is a result of the following operational
and financial highlights:
• In 2019, Horzum AS produced 6,787 tonnes (wet weight) of direct shipping material with an
average grade of 3 0% zinc. Mine production was down from 201 8 production of 13,037
tonnes reflecting difficulties in gaining access to the available ore.
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• Sales volumes are down between periods, at 7,659 tonnes in Q1 2019 and 12,721 tonnes in
Q1 2018, consistent with the lower production.
• Gross sales decreased to $4.3 million in Q1 2019 from $9.5 million in Q1 2018; a result of
lower zinc sulphide sales volumes and lower LME zinc prices in 2019.
• Total costs per tonne mined in Q1 2019 were $257 per tonne or US$0.31 per pound of zinc
produced. This compares to $190 per tonne mined in Q1 2018 or US$0.18 per pound of zinc
produced. Although the unit costs are higher than the prior year due to the decreased
production, the costs are very competitive as confirmed by a strong gross margin of 59% in
the first quarter.
Note 1
Please note that all dollar amounts in this news release are expressed in Canadian dollars
unless otherwise indicated. Refer also to the year-end 2019 Management’s Discussion and
Analysis (MD&A) and Audited Financial Statements found on SEDAR.com for more information.
This news release includes non-GAAP measures, including adjusted equity gain from Horzum
AS, adjusted consolidated net income, gross margin, cost per tonne mined and US$ cash cost
per pound of zinc produced. A reconciliation of these non-GAAP measures to the GAAP
financial statements is included in the MD&A.
About Pasinex
Pasinex Resources Limited is a Toronto -based mining company which owns 50% of the
producing Pinargozu high grade zinc mine and, under a Direct Ship ping Program, sells to zinc
smelters / refiners from i ts mine site in Turkey. The Company also h olds an option to acquire
80% of the Spur high-grade zinc exploration project in Nevada. Pasinex has a strong technical
management team with many years of experience in mineral exploration and m ining project
development. The mission of Pasinex is to build a mid-tier zinc company based on its mining
and exploration projects in Turkey and Nevada.
Visit our web site at: www.pasinex.com
On Behalf of the Board of Directors
PASINEX RESOURCES LIMITED
“Steve Williams”
Steve Williams Evan White
President/CEO Manager of Corporate Communications
Phone: +1 416.861.9659 Phone: +1 416.906.3498
Email: [email protected] Email: [email protected]
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The CSE does not accept responsibility for the adequacy or accuracy of this news release.
This news release includes forward -looking statements that are subject to risks and uncertainties.
Forward-looking statements involve known and unknown risks, uncertainties, and other factors that could
cause the actual re sults of the Company to be materially diffe rent from the historical results or from any
future results expressed or implied by such forward-looking statements.
All statements within, other than statements of hist orical fact, are to be considered forward lo oking.
Although Pasinex believes the expect ations expressed in such forward -looking statements are based on
reasonable assumptions, such statement s are not guarantees of future performance and actual results or
developments may dif fer materially from those in forward -looking statements. Factors tha t could cause
actual results to differ materially from those in forward -looking statements include mark et prices,
continued availability of capital and financing, explor ation results, and general economic, market or
business conditions. There can be no ass urances that such statements will prove accurate and,
therefore, readers are advised to rely on their o wn evaluation of such uncertainties. We do not assume
any obligation to update any forward-looking statements.