Dr. Catharine Farrow reports
TMAC NEARING COMMERCIAL PRODUCTION AT HOPE BAY
TMAC Resources Inc. has filed
its year-end financial statements, management's discussion and analysis,
and annual information form for the year ended Dec. 31, 2016, which
documents can be found on the company's website or on SEDAR.
The highlights provided herein are derived from these documents and
should be read in conjunction with them.
Dr. Catharine Farrow, chief executive officer of TMAC, stated: "We are
thrilled with our progress in bringing the Doris mine and mill complex
into production. At year-end, our high-grade ore stockpile totalled
121,600 tonnes grading 14.5 grams per tonne gold and containing 56,500
ounces of gold. On the processing side, we poured our first gold
Feb. 9 and recently completed plant commissioning. The
ore stockpile will be used to augment our mill throughput to 1,000
tonnes per day during 2017 as we ramp up mining to 1,000 tpd and our
planned expansion to 2,000 tonnes per day starting in early 2018. All of
this has been achieved essentially on time and on budget."
She added: "We are now focused on process optimization, on-site operator
training and ramp-up to steady-state production in order to attain
commercial production this quarter. TMAC's schedule and budgetary
successes on its path to production are the result of the tremendous
work and dedication by our employees, Gekko, other contractors and
consultants. We would also like to acknowledge the great support of the
communities of the Kitikmeot region and our Inuit landowners. We look
forward to continuing to deliver on our vision to build the Hope Bay
belt into a multigenerational mining camp."
The Hope Bay project's path to production overview
The path to production plan covered the 24-month period commencing
Jan. 1, 2015, and ended Dec. 31, 2016, and included the completion
of construction, assembly and initial commissioning of the processing
plant. The project is essentially on target with respect to the original
timing as TMAC envisions achieving commercial production of gold during
the first quarter of 2017. The path to production plan did not include
the finalization of commissioning and ramp-up that are included in the
capital expenditures detailed in the 2017 outlook.
With the $9-million of funds raised from the flow-through common share
financing in March, 2016, the total estimated cash outflows, including
working capital, for the combined 2015 and 2016 years, increased from
$325-million to $334-million. As at Dec. 31, 2016, TMAC had incurred
$350-million of expenditures, including $8-million of additional
environmental bonding required under the Doris water licence, and had
completed over 98 per cent of the scope of work with approximately $2-million
left to be incurred. The cash outflows to complete the path to
production plan are, therefore, expected to be approximately 3 per cent higher
than the $308-million budget mainly due to additional expenditures
incurred to complete all of the foundation work on the mill building,
additional installation costs of processing plant at site and additional
costs for vessels for the 2016 sealift, partially offset by cost
reductions in other areas, including mining. In addition, the letters of
credit supporting environmental
rehabilitation bonding are $34-million instead of $26-million. The
increase in environmental bonding results from a number of factors
essentially not within TMAC's control.
The ore stockpile on surface at Dec. 31, 2016, totalled 121,600
tonnes with 56,500 ounces of contained gold (at 14.5 grams per tonne),
compared with TMAC's path to production plan that included having a gold
ore stockpile of 110,700 tonnes containing 55,600 ounces of gold (at
15.2 grams per tonne). The stockpile is to provide the processing plant
with significant feed at start-up and ensure a smooth production ramp-up to
1,000 tonnes per day in 2017 and, following the delivery
and installation of a second Gekko Systems Pty. Ltd. fabricated Python
(crushing, grinding and flotation concentrate producing circuit) to site
in the 2017 sealift, to 2,000 tpd by the end of 2017.
At Dec. 31, 2016, TMAC had $63-million of cash and cash equivalents
excluding restricted cash of $45-million that is composed of a $10-million minimum cash balance in a segregated account in accordance with
the debt facility requirements and $35-million invested in guaranteed
investment certificates set aside as collateral for the letters of
credit that support environmental rehabilitation bonding and provide
security for compliance under various agreements with Inuit
organizations. The proceeds from a bought deal financing of $60-million
are being used for the exploration and development below the diabase
dike at Doris North; however, the timing for these expenditures could
provide a working capital cushion during ramp-up if needed.
2017 outlook
TMAC completed its first gold pour from its Doris mine on Feb. 9,
2017. TMAC's focus for 2017 remains the orderly, but relatively quick,
ramp-up of gold production by the processing plant, the ramp-up of
underground production at Doris from the approximately 1,000 tpd to
2,000 tpd that will be required to feed the current 1,000-tonne-per-day capacity
Python and a second 1,000-tonne-per-day capacity Python planned for delivery in
the 2017 sealift. The key production statistics and expected
expenditures in 2017 are provided in the summary of key production statistics section.
Summary of key production statistics and expected expenditures for 2017:
Ore mined: 275,000 tonnes
Average grade mined: 13 grams per tonne
Ore milled: 325,000 tonnes
Gold sold: 130,000 to 140,000 ounces
Cash cost per ounce sold (2): less than $600 (U.S.)
All-in sustaining cost per ounce sold (2): less than $750 (U.S.)
Capital expenditures:
Sustaining: $15-million
Preproduction and expansion: $35-million
Exploration and evaluation: $22-million
(1) Canadian-dollar/U.S.-dollar exchange of 1.30.
(2) A non-international financial reporting standard measure.
(3) The prefeasibility study anticipated 136,000 ounces of gold recovered and sold.
The preproduction and expansion capital for 2017 includes the costs
associated with completing the commissioning of the processing plant to
commercial production, completing and installing the second Python,
including its related equipment and infrastructure, the construction of
additional site bed space for 80 people, and the development of the Doris
North BTD zone that is dependent on further exploration success but is
anticipated to be a future source of ore to feed the expanding capacity
of the processing plant. Preproduction and expansion capital in 2017 is
forecast to be $35-million and includes a one-time charge of $8-million,
payable to Nunavut Tunngavik Inc. in eight equal quarterly instalments,
for achieving first gold production at Hope Bay.
Sustaining capital expenditures are estimated to be $15-million and
include costs for construction activities in the tailings impoundment
area, water discharge, surface equipment, an equipment wash bay, final
installation and commissioning of the last two generators at the power
plant, and other miscellaneous items.
2017 objectives
Hope Bay project:
-
Achieve commercial production of gold during the first quarter of 2017
and ramp-up to full production;
- Deliver, in 2017, sealift and install and commission the second Python
in the processing plant;
- Safely deliver consumables, materials, supplies and
additional mobile equipment in the 2017 sealift;
- Explore and develop the Doris North BTD zone for production by early
2018;
- Construct additional bed space for 80 people at site;
- Commission the last two generators at the power plant;
- Conduct 6,500 metres of surface drilling at Madrid North (Naartok);
- Reopen the Boston camp and conduct 7,500 metres of exploration
drilling;
- Support the technical review of the Madrid-Boston draft environmental
impact statement and progress to submission of the final environmental
impact statement and Type A water licence application;
- Obtain the Madrid Type B water licence to allow TMAC to move forward
with development of surface infrastructure, underground advanced
exploration and bulk sampling.
Financial and corporate:
- Commence monthly repayments of the debt facility on July 31, 2017.
Financial and operating results
Statement of profit or loss
Net loss and comprehensive loss for the three months ended Dec. 31,
2016, were $7.2-million, compared with a net loss and comprehensive loss
of $3.2-million for the three months ended Dec. 31, 2015.
Conference attendance
TMAC will be attending the BMO Capital Markets 2017 Global Metals and
Mining Conference in Hollywood, Fla., United States of America, from Feb. 26, 2016, to March
1, 2017. The company will be at booth No. 2500 at the PDAC 2017
International Convention, Trade Show and Investors Exchange from March 5 to 8,
2017, Toronto, Ont., Canada.
About TMAC Resources
Inc.
TMAC holds a 100-per-cent interest in the Hope Bay project located in Nunavut,
Canada. TMAC is a fully financed, emerging gold producer, with the Doris
mine expected to achieve commercial production in the first quarter of
2017. The company has a board of directors with depth of experience and
market credibility and an exploration and development team with an
extensive record of developing high-grade, profitable underground
mines.
Scientific and technical information
Scientific and technical information related to Doris mine development
was prepared by, and all other scientific and technical information
contained in this document was reviewed and approved by, David King,
PGeo, the vice-president, exploration and geoscience, of TMAC, and Paul
Christman, PEng, the manager of mining of TMAC, each of whom is a
qualified person as defined by National Instrument 43-101 (standards
of disclosure for mineral projects).
STATEMENT OF PROFIT OR LOSS
(expressed in millions of dollars)
Year ended Dec. 31, 2016 Year ended Dec. 31, 2015
General and administrative
Salaries and wages $6.8 $3.2
Share-based payments 2.8 2.5
Professional and consulting fees 0.5 1.1
Travel 0.3 0.2
Investor relations 0.5 0.1
Office, regulatory and general 1.1 0.8
---- ----
12.0 7.9
Writedown of obsolete inventory 2.3 -
Impairment of equipment and assets held for sale 2.0 1.4
Loss on sale of equipment - 1.3
---- ----
Loss before the following 16.3 10.6
Finance income (0.8) (0.6)
Finance expense 0.7 2.0
Business development expenses - 0.9
Foreign exchange loss (gain) 1.2 (0.9)
Fair value loss (gain) 0.2 (0.4)
Other (0.3) 0.5
---- ----
Loss before income taxes for the year 17.3 12.1
Deferred income tax expense (recovery) (4.1) (2.5)
---- ----
Net loss and comprehensive loss for the year 13.2 9.6
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Net loss per share,
basic and diluted $0.16 $0.15
We seek Safe Harbor.
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