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Nomad Royalty Company Ltd
Symbol NSR
Shares Issued 566,364,957
Close 2021-05-10 C$ 1.11
Recent Sedar Documents

Nomad loses $258,000 (U.S.) in Q1

2021-05-10 19:10 ET - News Release

Mr. Vincent Metcalfe reports

NOMAD ROYALTY COMPANY REPORTS Q1 RESULTS AND DECLARES SECOND QUARTER 2021 DIVIDEND

Vincent Metcalfe, chief executive officer and chair of the board of directors of Nomad Royalty Company Ltd., stated: "Our portfolio delivered a strong first quarter of gold and silver production, and represents a great start to the year. Our focus ahead is on maintaining this positive momentum by delivering on our stated goal of delivering value through further deployment of capital in new opportunities across the globe, which, coupled with the strong organic growth of our current portfolio, will allow Nomad to continue to generate strong free cash flow and support further growth and returns to shareholders" (in U.S. dollars unless otherwise noted).

First quarter highlights:

  • Record quarterly deliveries of 5,575 gold equivalent ounces (GEOs);
  • Gold ounces earned of 5,029 (2,450 for Q1 2020);
  • Silver ounces earned of 37,338 (43,963 for Q1 2020);
  • GEOs (1) sold of 5,575 (3,817 for Q1 2020);
  • Record revenues of $9.7-million ($6.4-million for Q1 2020);
  • Net loss of $300,000 (net income of $1.1-million for Q1 2020);
  • Adjusted net income (1) of $1.9-million ($4.1-million for Q1 2020);
  • Gross profit of $2.9-million ($700,000 for Q1 2020);
  • Cash operating margin (1) of $7.9-million ($5.9-million for Q1 2020);
  • Cash operating margin (1) of 82 per cent (93 per cent for Q1 2020);
  • $25.3-million of cash as at March 31, 2021;
  • Completed the acquisition of the second tranche of the Blackwater gold royalty;
  • Declared a quarterly dividend of 0.5 cent per common share for a total amount of $2.3-million paid on April 15, 2021.

(1) Note the non-international financial reporting standard measure.

Declaration of dividends

Nomad is also pleased to announce a quarterly dividend of 0.5 cent per common share, payable on July 15, 2021, to Nomad's shareholders of record as of the close of business on June 30, 2021.

For shareholders residing in the United States, the dividend will be paid in U.S. dollars based on the daily exchange rate published by the Bank of Canada on June 30, 2021. The dividend has been designated by Nomad as an eligible dividend under the Income Tax Act (Canada).

                                 FIRST QUARTER 2021
  
By category                    Ounces earned            Ounces sold         Revenues ($000)

Gold (in kind)                         4,854                  4,854                 $8,373
Gold (cash received)                     175                      -                    314
                                       5,029                  4,854                  8,687
Silver (in kind)                      37,338                 37,338                    965
Total GEOs (1)                         5,575                  5,575                  9,652

(1) Note the non-international financial reporting standard measure.

For the first quarter of 2021, revenue was sourced 100 per cent from gold and silver. Management's objective for the portfolio 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 64 per cent (94 per cent for Q1 2020) from the Americas, 36 per cent (0 per cent for Q1 2020) from Africa and 0 per cent (6 per cent for Q1 2020) from Australia.

Assets update:

  • Mining operations resume at Blyvoor: Blyvoor gold stream: Blyvoor Gold Pty. Ltd.: Following the first gold shipment at the Blyvoor gold mine, mining activities were temporarily suspended as the result of an unlawful blockade. Since April 12, 2021, Blyvoor gold mine has recommenced operations, and production ramp-up activities are continuing again. With the majority of the work force back to site, blasting, mining, hoisting and crushing activities have now resumed. The Blyvoor gold mine will be fully operational, and additional deliveries will be expected at regular intervals as the mine ramps up to full production capacity by year-end 2021. Safety remains a top priority for all stakeholders, and as such, the Blyvoor gold mine has implemented robust safety standards and strict working procedures. A technical report in connection with the Blyvoor gold mine mineral resource is expected to be completed in the second quarter of 2021.
  • Equinox Gold Corp. acquires Mercedes mine: Mercedes gold and silver stream: Equinox Gold: On April 7, 2021, the company amended its Mercedes and South Arturo silver stream in connection with the closing of the acquisition of Premier Gold Mines Ltd. by Equinox Gold and the creation of a new company called i-80 Gold Corp. The company entered into a second amended and restated purchase and sale agreement (gold and silver) with certain subsidiaries of Equinox in respect of the Mercedes mine in Mexico. Earlier in 2021, Premier Gold announced that there is expansion potential to increase production to 80,000 to 90,000 ounces of gold annually at the Mercedes mine. Equinox has become the owner and operator of the Mercedes mine since April, 2021. Equinox operates seven mines globally, is very well capitalized and is led by a reputable management team with the ability to drive further productivity increases at the mine site.
  • Starting April 7, 2021, the new Mercedes gold and silver stream agreement provides for, in addition to silver deliveries described in the company's audited consolidated financial statements, fixed quarterly gold deliveries of 1,000 ounces of refined gold from the Mercedes mine (subject to upward and downward adjustments in certain circumstances), plus an additional 6.5 per cent of such adjusted amount payable in refined gold. Fixed quarterly gold deliveries shall terminate once an aggregate of 9,000 ounces of gold have been delivered (not including any refined gold received pursuant to the additional 6.5 per cent of the adjusted amount). If the quarterly average gold price is greater than $1,650 per ounce in any quarter, then the aggregate gold quantity deliverable in the next quarter is reduced by 100 ounces of refined gold, and if the quarterly average gold price is less than $1,350 per ounce, then the aggregate gold quantity deliverable is increased by 100 ounces of refined gold. Concurrently with the company entering into the Mercedes gold and silver stream agreement, the gold prepay loan was terminated.
  • Similarly to the previous stream agreement, the Mercedes gold and silver stream agreement will continue to provide for a 100-per-cent silver stream on the Mercedes mine until 3.75 million ounces (2.73 million ounces as of March 31, 2021) of silver have been delivered to the company, as well as minimum annual deliveries of 300,000 ounces of silver until 2.1 million ounces (1.5 million ounces as of March 31, 2021) of silver have been delivered to the company.
  • i-80 Gold acquires South Arturo mine: South Arturo silver stream: i-80 Gold: The company and i-80 Gold entered into a new South Arturo silver stream agreement that provides for deliveries from i-80 Gold to the company of 100 per cent of the ounces of refined silver in attributable production from the existing mineralized areas at the South Arturo mine (40-per-cent ownership by i-80 Gold) and 50 per cent of ounces of refined silver in attributable production from the exploration area. The South Arturo mine is 60 per cent owned by Nevada Gold Mines LLC (NGM), a joint venture between Barrick Gold Corp. and Newmont Corp. and 40 per cent by i-80 Gold. The terms of the South Arturo silver stream are similar to the previous stream agreement.
  • Regarding the South Arturo mine operations, NGM had another exceptional year with production exceeding budget by over 30 per cent. The strong performance was driven by higher production rates that averaged 694 tonnes per day processed. On Jan. 19, 2021, i-80 Gold's predecessor, Premier Gold, published a preliminary feasibility study on South Arturo, which outlined an eight-year mine life and was based on a mineral resource estimate as at Dec. 1, 2020, which included Nomad attributable reserves of 1.9 million ounces of silver (3.8 million tonnes at 15.23 grams per tonne), measured and indicated resources of 4.0 million ounces of silver (20.0 Mt at 6.19 g/t), and an inferred mineral resource of 1.8 million ounces of silver (10.1 Mt at 5.47 g/t). In 2020, drill programs were completed at El Nino, with initial results suggesting the potential to expand underground resources and extend the mine life. A new mineral resource estimate will be completed in 2021 following receipt of all 2020 drilling results.
  • Considerable near-surface upside could lead to additional discoveries at Robertson: Robertson gold royalty: Barrick Cortez Inc.: On Feb. 18, 2021, following a strategic review by executive teams from Barrick and NGM, significant geological prospectivity of the NGM properties was confirmed, and Barrick outlined its key development projects. Barrick mentioned that agile management and exploration and orebody knowledge was implanted at NGM, and was already delivering results. The area between Pipeline and Robertson in the Cortez complex was mentioned as an area with exciting opportunities for major new discoveries.
  • On May 5, 2021, Barrick mentioned that, at Robertson, it was converting improved geological knowledge of the area into growth opportunities. Stepout drilling, 300 metres beyond the existing resource blocks, suggests there is considerable near-surface upside that could lead to additional discoveries and validate the potential of this area. Barrick is also looking at Pipeline, an old Tier 1 asset, immediately adjacent to Robertson, which could provide a significant addition to Cortez life of mine. At Robertson, on the western side of the district, drilling results were received from the Distal target, to the west of current resources, testing a structure which is potentially analogous to the controls of mineralization at the Gold Pan/39A zone. These results yielded multiple significant intercepts, confirming the nature of the hypothesized mineralization control and an updip extension to surface. Follow-up drilling commencing in the second quarter of 2021 will target the extent of the mineralization updip and to the north. Metallurgical testwork for processing at the Pipeline oxide mill and the heap leach is in progress. Continuing on the western side of the district, sectional interpretation is in progress between the Carlin-type Pipeline and Crossroads deposits, as well as intrusive related mineralization at Robertson five kilometres to the north. Surface mapping and sampling have identified a favourable structural setting between the Pipeline/Crossroads and Robertson deposits with folds and thrust faulting, as well as high-angle faults carrying anomalous gold indicative of leakage from a target at depth. The area has no historic deep drilling and will be tested by framework drilling in the second quarter of 2021.
  • Woodlawn strategic process active: Woodlawn silver stream: Heron Resources Ltd.: During the first quarter of 2021, Heron engaged in negotiations with potential counterparties. These negotiations are commercial in confidence and are continuing. Heron will provide further updates as the strategic process continues.
  • A number of technical investigations and engineering programs continued or were completed during the quarter. These studies and programs were undertaken to identify value-adding opportunities in support of the current strategic process and are aimed at addressing technical issues that were identified during Woodlawn's operational phase. Upgraded flotation reagent system design work was completed, and flotation froth pumping design and flow sheet development were largely completed with the remaining work to be finalized next quarter. The Woodlawn mine site remains on care and maintenance following the suspension of operations on March 24, 2020, with activities focused on preserving mining and processing infrastructure for future restart, along with environmental management of the site.
  • Grade control program at Blackwater further derisks initial project: Blackwater gold royalty: Artemis Gold Inc.: On Feb. 9, 2021, Artemis Gold announced that it had submitted applications to the government of British Columbia to undertake an early work construction program in respect of its Blackwater gold project in British Columbia, Canada. The construction program is designed to focus on clearing key infrastructure areas, including haul roads, the Stage 1 tailing storage facility and camp areas. In addition, construction of the mine access road and plant-site bulk earthworks will be fast-tracked to facilitate early mobilization of the engineering, procurement and construction contractor to site upon receipt of major works permits. The permitting process in respect of the construction program is expected to take several months with approvals anticipated in the second quarter of 2021.
  • On March 29, 2021, Artemis Gold executed a binding memorandum of understanding with Ausenco Engineering Canada Inc. providing for a guaranteed maximum price (GMP) for a fixed-price engineering, procurement and construction (EPC) contract to construct a 5.5-million-tonne-per-annum processing facility and associated infrastructure for the Blackwater gold project in central British Columbia. On April 9, 2021, Artemis Gold executed a credit-approved mandate letter and term sheet from Macquarie Bank Ltd. and National Bank of Canada to arrange a $360-million (Canadian) project loan facility (PLF), to finance a significant component of the estimated construction costs of the Blackwater gold project. Subject to final credit approval and final due diligence, Macquarie and National Bank would agree to each underwrite 50 per cent of the PLF. In support of its definitive feasibility study (DFS) and in preparation for commencement of construction for the Blackwater gold project, Artemis Gold has been conducting the following activities: ore grade control drilling to refine the detailed grade schedule and mine plan for the first year of production, metallurgical testwork, geotechnical drilling as part of site preparation work, and a B.C. Hydro study. The work program in the first six months of 2021 is on track to culminate with the completion of the DFS on the Blackwater gold project by mid-2021.
  • On May 4, 2021, Artemis Gold provided interim results of grade control drilling of high-grade near-surface mineralization. The primary objectives of the grade control drilling program were to optimize the grade selectivity and mine schedule for managing the ore tonnes and grade to be processed in the first year of operations, more accurately delineate ore and waste boundaries to mitigate dilution, optimize drill and blast designs, and provide a larger sample size to reduce grade variability. A further update on the grade control drilling results and conclusions will be provided later in second quarter of 2021 once all final assay results have been completed and interpreted by Artemis Gold.
  • Large exploration program continues at Moss: Moss gold royalty: Northern Vertex Mining Corp.: Northern Vertex is conducting an aggressive exploration program with three drill rigs on site to expand the resource with the aim at extending the mine life and testing district-scale targets. Recent results intersected high grade at the Ruth vein target, widespread mineralization within the Gold Bridge and West Extension targets located 1.5 kilometres west of the pit, and similar Moss pit mineralization at the West target. Phase 2 drilling program was initiated in November, 2020, and extended to February, 2021; phase 2 will focus on the high-grade Ruth vein target and resource infill at Gold Bridge and target new discoveries within extensive stockwork gold and silver mineralization both on strike and at depth at the Moss mine. The combined phase 1 and 2 drilling programs will total 32,000 metres. In addition to the multiphased exploration program, Northern Vertex continued to implement a number of new initiatives to further optimize operations and reduce costs at the Moss mine.
  • The Moss mine is currently the largest pure gold and silver mine in Arizona, with large-scale exploration potential. Northern Vertex has indicated that during the first half of 2021, the exploration plan includes infill drilling, property-wide exploration and drill target definition for resource expansion. For the second half of 2021, the exploration focus will be on resource expansion drilling, regional geophysics and a priority regional target drilling campaign.
  • On April 19, 2021, Northern Vertex announced production of 9,912 gold equivalent ounces for the quarter ended March 31, 2021, from the Moss mine. Production from the West pit continued to improve as Northern Vertex has now developed large production benches, which allow for maximum mining efficiency. The initial stripping to expose the Moss vein in the West pit is largely complete. Although forecast grades and production will be lower in 2021 versus 2020, the current infill drilling program has identified numerous areas where additional drilling could improve the resource model and ultimately the mine. Northern Vertex is very excited about its evolving knowledge of the mineralization of the Moss mine and believes that there are substantial opportunities to improve and expand the operation.
  • $35-million growth capital investment at RDM: RDM gold royalty: Equinox: On Feb. 9, 2021, Equinox announced an investment of $35-million in growth capital relating entirely to capitalized stripping for a pushback of the open pit, providing lower strip access to the orebody in future years. As per Equinox disclosure, the RDM gold mine production for 2021 is estimated at 55,000 to 60,000 ounces of gold with cash costs of $1,000 to $1,050 per ounce and all-in sustaining costs (AISC) of $1,175 to $1,225 per ounce. AISC at the RDM gold mine in 2021 includes $10-million of sustaining capital, of which $6-million relates to increasing capacity of the tailings storage facility, with $2-million for equipment and $2-million for buildings and infrastructure.
  • Exploration activity at Suruca: Suruca gold royalty: Lundin Mining Corp.: In 2017, the Suruca Southwest mineralization was discovered, exhibiting similar geological features to the Chapada deposit. Lundin Mining stated that during 2020, the objective was to delineate the copper-gold mineralization to the southwest of Suruca. At year-end 2020, 1,051 holes have been drilled for an aggregate total of 87,211 metres at Suruca. During 2020, drilling was carried out in the copper-gold Suruca SW portion, where 2,047 m were drilled in 14 holes, notably hole SU-1085 reported 27.4 metres at 0.25 per cent Cu and 0.19 gram per tonne Au from 35 metres, which included 9.6 metres of 0.32 per cent Cu and 0.24 g/t Au from 38 metres. Separate metallurgical testwork programs were initiated for the oxide and sulphide samples. Kappes, Cassiday & Associates updated and completed a testwork program, which confirmed the amenability of Suruca ore to cyanide leaching and recommended further compaction testwork.
  • Troilus Gold Corp. expands SW zone by 40 per cent to 1.5 kilometres: Troilus gold royalty: Troilus: In early 2021, Troilus reported positive results on the SW zone, including a 200-metre stepout hole, which intersected high-grade gold-bearing mineralization between 50 metres and 450 metres from surface, and located outside of the National Instrument 43-101 mineral resource envelope and the open pit proposed in the PEA. On March 16, 2021, Troilus reported additional assay results from the SW zone, expanding the mineralized strike length by a further 25 per cent. On April 8, 2021, Troilus reported assay results for additional five drill holes from the SW zone, further expanding the gold zone by 40 per cent to 1.5 kilometres. These results follow the winter 2021 drilling program, where Troilus implemented a 7,000-metre-per-month drilling program with the objective of expanding the mineral resource estimate at the SW zone, definition drilling in the Z87 and J zone, and geotechnical drilling in support of the prefeasibility study. A prefeasibility study is expected to be published in the second half of 2021, and an environmental impact study targeted for early 2022 for the Troilus gold project.

Share capital

On March 31, 2021, there were 566,364,957 common shares of Nomad outstanding. As at May 10, 2021, the company had 566,387,457 common shares, 11,593,715 share options and 22,881,734 common share purchase warrants outstanding. The company also had 1,461,300 restricted share units and 673,800 deferred share units outstanding. Pursuant to the deferred payment payable to Yamana Gold Inc. and based on the Canadian-dollar/U.S.-dollar daily exchange rate published by the Bank of Canada on May 10, 2021, 13,508,037 common shares would be issuable should the conversion option be exercised on such date.

Qualified person

Vincent Cardin-Tremblay, PGeo, vice-president, geology, of Nomad Royalty, is the qualified person as defined in National Instrument 43-101, who has reviewed and approved the technical content of this news release.

About Nomad Royalty Company Ltd.

Nomad 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 14 royalty and stream assets, of which seven are on currently producing mines. Nomad plans to expand 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 (LOSS) AND COMPREHENSIVE INCOME (LOSS) 
      (amounts expressed in thousands of U.S. dollars, except per-share amounts)
    
                                                            Three months ended          
                                                       March 31, 2021   March 31, 2020

Revenue
Gold and silver sales                                          $9,338           $6,376
Other revenue                                                     314                -
                                                             --------         --------
Total revenue                                                   9,652            6,376
                                                             --------         --------
Cost of sales
Purchased cost of gold and silver                               3,306            4,380
Depletion of royalty, stream and other interests                3,470            1,254
                                                             --------         --------
Total costs of sales                                            6,776            5,634
                                                             --------         --------
Gross profit                                                    2,876              742
Other operating expenses (income)
General and administrative expenses                             1,375              609
Share-based compensation                                          662                -
Change in fair value of gold prepay loan                        1,118             (923)
                                                             --------         --------
Total other operating expenses (income)                         3,155             (314)
                                                             --------         --------
Operating income (loss)                                          (279)           1,056
Other income (expenses)
Change in fair value of conversion option                         394                -
Finance costs                                                    (403)               -
Foreign exchange (loss)                                            (9)               -
                                                             --------         --------
Total other expenses                                              (18)               -
                                                             --------         --------
Income (loss) before income taxes                                (297)           1,056
                                                             --------         --------
Income tax recovery                                                39                -
                                                             --------         --------
Net income (loss) and comprehensive income (loss)                (258)           1,056
                                                             --------         --------
Earnings per share
Basic and diluted                                                0.00             0.00
                                                             --------         --------

We seek Safe Harbor.

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