Pasinex Reports Third Quarter 2019 Results
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Pasinex Reports Third Quarter 2019 Results
TORONTO, ON – November 28, 2019 – Pasinex Resources Limited (CSE: PSE) (FSE: PNX)
(The “Company” or “Pasinex”) today reported financial results for the third 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 income was lower than it was 2018. Adjusted
consolidated net income (1) for the nine months ended September 30, 2019 was approximately
$2.5 million. Consolidated net loss for the nine months ended was approximately $0.6 million.
Financial and Operational Highlights
Three Months Ended
September 30
Nine Months Ended
September 30
Financial: 2019 2018 2019 2018
Equity gain from Horzum AS $ 135,701 $ 521,675 $ 672,139 $ 5,311,546
Adjusted equity gain from Horzum AS (1) $ 1,217,147 $ 521,675 $ 2,470,539 $ 5,311,546
Dividend received from investment in Horzum AS $ 135,701 $ - $ 672,139 $ 765,963
Consolidated net (loss) income $ (245,251) $ (194,998) $ (568,710) $ 1,461,216
Basic net income per share $ 0.00 $ 0.00 $ 0.00 $ 0.01
Diluted net income per share $ 0.00 $ 0.00 $ 0.00 $ 0.01
Cash used in operating activities $ 92,936 $ 686,920 $ 174,241 $ 847,568
Weighted average shares outstanding 144,395,674 142,608,718 144,368,289 142,307,484
Operational:
Three Months Ended
September 30
Nine Months Ended
September 30
2019 2018 2019 2018
Horzum AS operational data (100% basis):
Zinc product mined (wet) tonnes 3,216 10,619 14,296 36,736
Zinc product sold (wet) tonnes 1,502 12,979 11,558 35,651
Zinc product sold grade 44% 33% 37% 33%
Gross margin (1) 73% 52% 64% 68%
CAD cost per tonne mined (1) $ 398 $ 193 $ 306 $ 166
USD cash cost per pound of zinc mined (1) $ 0.38 $ 0.19 $ 0.30 $ 0.17
Steve Williams, CEO of Pasinex commented, “Horzum AS produced as expected for the first
nine months of 2019, with an operating gross margin of 64%. However, the first nine months of
2019 ended with a net loss of $1,880,455 after recognition of an impairment of the Akmetal
receivable of approximately $6.8 million.
We continue to stand by the original production guidance for 2019 which indicated 14,000 –
17,000 tonnes (wet) for the year.”
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Pasinex Highlights
For the three and nine months ended September 30, 2019 Pasinex incurred an
approximately $0.25 million and $0.57 million loss, respectively, compared to a net loss of
approximately $0.2 million for the three months ended September 30, 2018 and net income
of approximately $1.5 million for the nine months ended September 30, 2018. The increase
in net losses in 2019 is largely due to lower equity gains from Horzum AS, which in turn is
due to lower production for the year and also lower realized zinc prices. In addition, the lower
equity gain reflects the significant impairment of Akmetal debt to Horzum AS.
The equity gains from Horzum AS for the three and nine months ended September 30, 2019
were approximately $0.14 million and $0.67 million, respectively, compared with
approximately $0.5 million and $5.3 million for the same periods in 2018.
Pinargozu mined 3,216 tonnes in the third quarter versus 4,293 in the second quarter of
2019 and 6,787 tonnes of material in the first quarter of 2019. This compares with 13,037,
13,080 and 10,619 tonnes in the first, second and third quarters of 2018, respectively. As
expected, mine production has decreased in 2019, because of difficulties in gaining access
to the available ore and operating fewer shifts related to available cash.
Similar to production, sales volumes are down between years, at 1,502 tonnes in third
quarter 2019 versus 12,979 tonnes in the same period in 2018. Sales volumes for the nine
months ended September 30, 2019 were 11,558 tonnes versus 35,651 tonnes for the same
period in 2018.
In May 2019, the Company entered into a Debt Agreement with Akmetal to resolve the
collectability of the trade receivable owing from them to Horzum AS. The terms of the Debt
Agreement include a minimum amount of repayments on a monthly basis plus the chance
for additional repayments from proceeds Akmetal would receive from the sale of its other
assets (see Loan Receivable – Akmetal). Akmetal has not honoured the terms of the Debt
Agreement and has not been able to complete the sale of its other assets as it had planned.
As a result, the financial position of Horzum AS and the Company has weakened further.
During the third quarter of 2019, the local tax office in Turkey issued an action against the
Turkish based directors and officers of Horzum AS for late payment of taxes due. Horzum
AS has been in negotiations with the central tax office in Turkey to finalize a payment plan.
Those negotiations are expected to be complete in December 2019.
In September 2019 the underground workers at the Pinargozu mine in Turkey, commenced
a strike action for late payment of their wages. This action was resolved during the month of
October. Ore production at the Pinargozu mine resumed upon the workers return to work
during October 2019.
On September 11, 2019 the Company announced that it had changed the payment date on
an option payment due on the Spur Option Agreement. The payment was originally
scheduled to be made on September 11, 2019 and was changed to December 11, 2019. In
addition, the 2019 exploration obligations were deferred to 2020.
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During the third quarter of 2019, the Company received $95,000 from related parties of the
Company. Subsequent to the end of the quarter the Company received an additional
$190,000 from those related parties.
During the quarter ended September 30, 2019, the Company appointed a new Chief
Financial Officer to its management team. In addition, the Company’s VP – Exploration
resigned to pursue other endeavours.
Note 1
Please note that all dollar amounts in this news release are expressed in Canadian dollars
unless otherwise indicated. Refer also to the year-end 2019 Management’s Discussion and
Analysis (MD&A) and Audited Financial Statements found on SEDAR.com for more information.
This news release includes non-GAAP measures, including adjusted equity gain from Horzum
AS, adjusted consolidated net income, gross margin, cost per tonne mined and US$ cash cost
per pound of zinc mined. 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 Shipping Program, sells to zinc
smelters / refiners from its mine site in Turkey. The Company also holds 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 mining 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 results of the Company to be materially different from the historical results or from any future results
expressed or implied by such forward-looking statements.
All statements within, other than statements of historical fact, are to be considered forward looking. Although
Pasinex believes the expectations expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not a guarantee of future performance and actual results or
developments may differ materially from those in forward-looking statements. Factors that could cause
actual results to differ materially from those in forward-looking statements include market prices, continued
availability of capital and financing, exploration results, and general economic, market or business
conditions. There can be no assurances that such statements will prove accurate and, therefore, readers
are advised to rely on their own evaluation of such uncertainties. We do not assume any obligation to
update any forward-looking statements.