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Nomad Royalty Company Ltd
Symbol NSR
Shares Issued 516,785,210
Close 2020-08-07 C$ 1.55
Recent Sedar Documents

Nomad Royalty earns $7.26-million in Q2

2020-08-07 08:35 ET - News Release

Mr. Vincent Metcalfe reports

NOMAD ROYALTY COMPANY REPORTS STRONG INAUGURAL Q2 RESULTS

Nomad Royalty Company Ltd. has provided its second quarter financial results. All amounts are in U.S. dollars unless otherwise noted.

"Nomad's inaugural quarterly results were very impressive, and the diversified portfolio showed its strength in minimizing volatility seeing minimal production curtailment, while maintaining exposure to rising commodity prices and generating strong cash flow," stated Vincent Metcalfe, chief executive officer.

"We are experiencing increasing levels of activity, we are extremely excited to keep growing the Nomad portfolio and further diversifying through future acquisitions and investment opportunities," commented Joseph de la Plante, chief information officer.

Basis of presentation for Q2 and YTD 2020 financials

On May 27, 2020, Nomad completed its reverse takeover comprising a vend-in transaction of Orion Fund II Portfolio and OMF Fund III (Mg) Ltd. with Orion Mine Finance and a vend-in transaction of certain assets with Yamana Gold Inc. The basis for Nomad's financial statements is the continuation of Orion Fund II Portfolio, as the deemed acquirer of Nomad. The acquisition of OMF Fund III (Mg) Ltd. and the vend-in transaction with Yamana Gold Inc. have been accounted for as acquisition of assets. As per the vend-in agreements, Nomad had a right to all cash flow generated from the assets included in the vend-in agreements effective Jan. 1, 2020.

As such, the Q2 and year-to-date 2020 financial information includes results for OMF Fund III (Mg) Ltd. (which holds the Bonikro gold stream) starting only from May 27, 2020, onward. Orion paid $8.6-million to Nomad at the closing of the RTO transaction. Of this amount, $5.5-million is reflected directly in the statement of income and comprehensive income of Nomad (related to Orion Fund II Portfolio), whereas $3.1-million is reflected in the statement of cash flows, investing activities as Cash acquired and relates to the cash operating margin generated for the revenues from the Bonikro gold stream (OMF Fund III (Mg)) from Jan. 1 to May 27, 2020.

Second quarter highlights

  • Gold ounces earned of 3,179 and 5,629 for the three and six months ended June 30, 2020 (2,450 and 4,900 for the three and six months ended June 30, 2019). Including the Bonikro cash adjustment, the gold ounces earned attributable to Nomad amount to 4,136 and 8,262 for the three and six months ended June 30, 2020;
  • Silver ounces earned of 56,254 and 100,217 for the three and six months ended June 30, 2020 (56,484 and 119,065 for the three and six months ended June 30, 2019);
  • Revenues of $6.0-million and $12.4-million for the three and six months ended June 30, 2020, in addition to $3.1-million in cash received on closing of the RTO transaction as a results of the Bonikro cash adjustment ($4.3-million and $8.5-million for the three and six months ended June 30, 2019);
  • Adjusted net income of $2.3-million and $6.4-million for the three and six months ended June 30, 2020 ($3.0-million and $5.9-million for the three and six months ended June 30, 2019);
  • Cash operating margin of $5.8-million and $11.7-million for the three and six months ended June 30, 2020 ($4.1-million and $8.1-million for the three and six months ended June 30, 2019). Including the Bonikro cash adjustment, the cash operating margin attributable to Nomad amounts to $7.0-million and $13.4-million for the three and six months ended June 30, 2020;
  • Cash operating margin of 96 per cent and 94 per cent for the three and six months ended June 30, 2020.
  • $100,000 in cash costs), or $32 per gold ounce sold, and $200,000 in cash costs(1), or $3 per silver ounce sold, for the three months ended June 30, 2020;
  • $12.2-million in cash at June 30, 2020.

Subsequent to quarter-end highlights

  • Listed on OTCQX under the ticker NSRXF;
  • Entered into an agreement with a syndicate of banks for a $50-million revolving credit facility with the option to increase to $75-million;
  • Acquisition of a 1-per-cent net smelter return royalty on the Troilus gold project located in Quebec, Canada, for a cash consideration of $1.9-million ($2.5-million (Canadian)) and by the issuance of 5,769,231 units of the company.

                                                      Q2 2020

              Total attributable                 Ounces earned 
By category        ounces earned (1)   Bonikro cash adjustment (2)   Ounces earned   Ounces sold   Revenues ($000s)

Gold                       4,136                           957               3,179         3,015            $5,185
Silver                    56,254                             -              56,254        56,254               853
Total GEOs                 4,655                           957               3,698         3,534             6,038


  

                                                 FIRST HALF OF 2020

              Total attributable                 Ounces earned 
By category        ounces earned (1)   Bonikro cash adjustment (2)   Ounces earned   Ounces sold   Revenues ($000s)

Gold                       8,262                         2,633               5,629         5,465            $9,147
Silver                   100,217                             -             100,217       184,200             3,267
Total GEOs                 9,251                         2,633               6,618         7,350            12,414

(1) Attributable to Nomad, inclusive of the Bonikro cash adjustment.

(2) Reported in the statement of cash flows, investing activities as cash acquired for $3.1-million, reflecting 
    revenues, net of cash cost of $400 per ounce.


  

                                                        Q2 2020
                                                                                                       Cash
                                                                                                  operating
                                                                                                     margin
                        Attributable        Attributable                     Cash          Cash    and cash
                                GEOs                GEOs        Revenues    costs    adjustment    acquired
                              earned (1)            sold (1)       ($000)   ($000)        ($000)      ($000)
Premier gold   
Prepay loan                    2,450               2,450           4,332        -             -       4,332
Bonikro gold stream            1,686               1,522             853       97         1,233       1,989
Mercedes and South 
Arturo silver streams            147                 147             242       48             -         194
Woodlawn silver stream           372                 372             611      122             -         489
Total                          4,655               4,491           6,038      267         1,233       7,004


  

                                                         H1 2020
  
                                                                                                       Cash
                                                                                                  operating
                                                                                                     margin
                        Attributable        Attributable                     Cash          Cash    and cash
                                GEOs                GEOs        Revenues    costs    adjustment    acquired
                              earned (1)            sold (1)       ($000)   ($000)        ($000)      ($000)

Premier gold   
Prepay loan                    4,900               4,900           8,294        -             -       8,294
Bonikro gold stream            3,362               3,197             853       97         3,149       3,905
Mercedes and South 
Arturo silver streams            400               1,297           2,300      416             -       1,884
Woodlawn silver stream           589                 589             967      192             -         775
Total                          9,251               9,983          12,414      705         3,149      14,858

(1) Attributable to Nomad.

For the second quarter revenue was sourced 100 per cent from gold and silver. The portfolio's objective is to maintain a focus on precious metals (primarily gold and silver) with a target of no more than 10 per cent in revenue from other commodities. Geographically, revenue was sourced 85 per cent from the Americas, 7 per cent from Africa and 8 per cent from Australia.

Corporate update

  • Completed reverse takeover transaction: On May 27, 2020, Nomad completed its reverse takeover comprising two related vend-in transactions as well as a concurrent private placement of subscription.
  • Trading on Toronto Stock Exchange: On May 29, 2020, Nomad graduated from the TSX Venture Exchange and began trading on the Toronto Stock Exchange under the ticker NSR.
  • Trading on OTCQX: On July 13, 2020, Nomad qualified and started to trade on the OTCQX Best Market under the ticker NSRXF.
  • Secured credit facility: On July 15, 2020, Nomad entered into an agreement with a syndicate of banks for a $50-million revolving credit facility with the option to increase to $75-million.
  • Troilus royalty interest: On July 31, 2020, Nomad closed the acquisition of a 1-per-cent NSR on the Troilus gold project located in the Frotet-Evans greenstone belt in the province of Quebec for a cash consideration of $1.9-million and by the issuance of 5,769,231 units.

Asset update

  • Blyvoor gold stream: In response to COVID-19, the operator of Blyvoor gold stream implemented strict health and safety measures. During the second quarter ended June 30, 2020, following the receipt of the key blasting permit, the Blyvoor gold mine commenced day-and-night shift development blasting and also initiated commissioning of its gold plant. The operator is forecasting to produce its first ore in the fourth quarter of 2020.
  • Bonikro gold stream: Operations at the Bonikro mine have not been interrupted to date by the COVID-19 pandemic.
  • South Arturo silver stream: El Nino mine production exceeded expectations during the second quarter. A new National Instrument 43-101 report was commissioned for South Arturo. The JV partners are assessing additional development opportunities including the phase 1 and phase 3 open-pit projects and the potential for an on-site heap leach. The joint venture partners expect to complete the updated technical report during the third quarter with the goal of providing a long-term view of the opportunity provided by this project.
  • Mercedes silver stream: In response to the COVID-19 pandemic and following the Mexican federal government decree on March 30, 2020, Mercedes was placed on care and maintenance. The decree was lifted at the end of May and, upon certification of compliance to protocols intended to minimize the risk of COVID-19 presence and transmission on site, limited ore and waste development as well as delineation and exploration drilling were restarted. Ore was stockpiled in June and processing resumed in early July. During the shutdown, a plan was developed to restart operations with a strategy limiting mining and development activities to the Lupita (including Lupita Extension) and Diluvio zones. This realignment recognizes the need to optimize Mercedes's production to its current reserve base rather than its processing capacity. The new plan will focus on enhancing underground operating efficiencies and supervision in order to minimize dilution and improve ore quality. According to the operator, continuing exploration and delineation drill programs are expected to enable mill throughput toward nameplate capacity over time.
  • RDM NSR royalty: Equinox Gold temporarily suspended mining activities in response to COVID-19 at RDM from March 23 to April 2, 2020. The mine has been operating normally since April 3, 2020, and the temporary suspension did not have a material impact on production. Equinox Gold has budgeted a total capital spend of $22-million at RDM during 2020. Sustaining capital of $5-million relates primarily to the scheduled tailings facility raise. Expansion capital of $17-million relates almost entirely to open-pit expansion and capitalized stripping. The permit required to commence a pit expansion was expected in Q2 2020, which will provide access to higher grade ore for the remainder of the year.
  • Gualcamayo NSR royalty: In response to the COVID-19 pandemic and following the restrictions from the Argentina government, mining operations were stopped between March 20 and April 3, keeping activities on the leaching processes and processing plant. On April 3, mining was added to essential activities and the Gualcamayo operations were normalized.
  • Woodlawn silver stream: In response to the COVID-19 pandemic and following the restrictions imposed by the Australian federal and state governments on March 24, 2020, Woodlawn mine was placed on care and maintenance and has yet to resume operations. Prior to the shutdown, Woodland mine shipped a total of 5,368 dry metric tonnes (dmt) of zinc concentrate and 1,796 dmt of copper concentrate.
  • Troilus NSR royalty: On July 28, Troilus Gold Corp. reported a new mineral resource estimate of 4.96 million indicated gold equivalent (AuEq) ounces and 3.15 million inferred AuEq ounces.
  • On June 30, 2020, there were 511,249,454 common shares of Nomad outstanding.

About Nomad Royalty Company Ltd.

Nomad Royalty is a gold and silver royalty company that purchases rights to a percentage of the gold or silver produced from a mine, for the life of the mine. Nomad owns a portfolio of 10 royalty, stream and gold loan assets, of which five are on currently producing mines. Nomad plans to grow and diversify its low-cost production profile through the acquisition of additional producing and near-term producing gold and silver streams and royalties.

  
  

                          CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                       (in thousands of United States dollars, except per share amounts)
                                                                                                     
                                                  Three months ended June 30,         Six months ended June 30,
                                                       2020             2019             2020             2019

Revenue
Gold and silver sales                                $5,611           $4,290          $11,987           $8,489
Other stream revenue                                    427                -              427                -
Total revenue                                         6,038            4,290           12,414            8,489
Cost of sales
Purchased cost of gold and silver                     4,599            3,620            8,979            6,988
Depletion of royalty and stream interests             1,224              721            2,478            1,492
Total cost of sales                                   5,823            4,341           11,457            8,480
Gross profit (loss)                                     215              (51)             957                9
Other operating expenses
General and administrative expenses                     653              606            1,262            1,225
Share-based compensation                              1,344                -            1,344                -
Listing expenses                                     23,492                -           23,492                -
Total other operating expenses                       25,489              606           26,098            1,225
Operating (loss)                                    (25,274)            (657)         (25,141)          (1,216)
Other income (expenses)
Change in fair value of conversion option            (4,984)               -           (4,984)               -
Change in fair value of gold prepay loan              2,652              784            3,575            1,339
Finance costs                                           (84)               -              (84)               -
Foreign exchange (loss)                                (156)               -             (156)               -
Total other income (expenses)                        (2,572)             784           (1,649)           1,339
Income (loss) before income taxes                   (27,846)             127          (26,790)             123
Income tax recovery                                  35,111                -           35,111                -
Net income and comprehensive income                   7,265              127            8,321              123
Earning per share (basic and diluted)                  0.02             0.00             0.02             0.00

  

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