NGEX REPORTS 2017 RESULTS
NGEx Resources Inc. (TSX: NGQ) (OMX: NGQ)
(“NGEx” or the “Company”) is pleased to announce its results for
the year ended December 31, 2017.
HIGHLIGHTS
- On November 13, 2017, the Company acquired the 40% interest in
the Josemaría project held by its joint exploration partner Japan
Oil, Gas and Metals National Corporation (“JOGMEC”) for total cash
consideration of US$21 million. The cash consideration is payable
in three installments: US$3 million paid in December 2017, US$5
million payable upon a development decision being made, and US$13
million upon commencement of commercial production from the
property. Additionally, JOGMEC retains an option to
purchase up to 40% of the concentrate produced from the project
based on the prevailing market terms at the time of
exercise.
With the acquisition completed, the Company
holds a 100% interest in the Josemaría project in San Juan
Province, Argentina. The acquisition of the Josemaria
interest provides the Company with additional development
options. In particular, studies are being planned for a
stand-alone development option for the Josemaría project in
Argentina focusing on a simple open pit scenario with a shallow,
high-grade starter pit.
- In addition to work on the advanced Los Helados and Josemaría
projects, the Company increased its focus on early-stage
exploration by adding new high-quality copper-gold exploration
projects, the Nacimientos and Acay properties, to its portfolio in
Argentina.
- On January 3, 2018, the Company completed a $12.5 million
private placement, selling an aggregate of 12,500,000 common shares
for net proceeds of $12.1 million. Net proceeds of the
private placement will be used towards ongoing work programs in
Chile and Argentina as well as for general corporate purposes.
Commenting on the quarter and the year Wojtek
Wodzicki, President and CEO remarked, “Our purchase of the 40%
interest in Josemaria added more than 3 billion pounds of copper
and 3 million ounces of gold to NGEx’s mineral resources account
and will allow us to explore new development scenarios.
Ownership of 100% of Josemaria allows us to explore new
opportunities to create value including potentially spinning out
Josemaria. Our acquisition of two new high potential exploration
plays refilled our exploration pipeline. These two
transactions position the company to strongly benefit from what we
believe is the coming bull market for copper.”
OUTLOOK
During 2018, the Company will assess future
development options, continue to optimize and de-risk its projects
and explore options to advance them toward eventual development,
including more active engagement with potential development
partners or acquirers.
Specifically, the Company will seek
opportunities to add value, at modest costs, by:
- Evaluating a stand-alone development scenario for
Josemaría;
- Continuing to look for opportunities to optimize the
engineering studies;
- Continuing ongoing environmental baseline data collection
surveys; and
- Exploring potential regional synergies and cooperative
development plans with other regional operators to use spare
capacity of processing plants and infrastructure, including port
facilities. Innovative development concepts, such as those
used at Teck & Goldcorp's NuevaUnión Project, open up the
potential for sharing infrastructure on a regional scale by
connecting deposits via long distance materials handling
systems.
The Company continues to pursue these de-risking
opportunities and will seek to engage with potential partners to
lay the groundwork for either the eventual development by the
Company and its partner or through a sale to a third
party. The Company is also actively working on
developing drill targets on its newly acquired Nacimientos and Acay
projects for drilling later in 2018.
SELECTED FINANCIAL
INFORMATION
(in
thousands) |
|
|
December 31, 2017 |
December 31, 2016 |
Cash |
|
|
6,789 |
11,185 |
Working capital |
|
|
(986) |
10,746 |
Mineral properties |
|
|
10,056 |
6,322 |
Total assets |
|
|
18,299 |
18,968 |
Long-term liabilities |
|
|
580 |
815 |
LIQUIDITY AND CAPITAL
RESOURCES
The Company began the process of securing
additional sources of financing for its exploration program and
operations during the fourth quarter of 2017 and completed a $12.5
million non-brokered, private placement on January 3, 2018. A
total of $6.5 million was received by the Company prior to the
completion of the private placement and, as a result, was recorded
as a current liability as at December 31, 2017. Net
proceeds raised from the private placement totaled $12.1 million,
which is expected to be adequate in funding forecasted expenditures
for the following twelve months. The decrease in cash and
working capital from the prior year was attributable to ongoing
exploration activities including mineral property acquisitions and
corporate working capital expenditures during the year.
FINANCIAL RESULTS
(in thousands, except per share amounts) |
Three months ended December 31, |
Year ended December 31, |
|
2017 |
2016 |
2017 |
2016 |
Exploration expenses |
1,384 |
810 |
5,053 |
6,017 |
General and administration
(“G&A”) |
532 |
474 |
2,933 |
3,145 |
Gain on spin-off
transaction |
- |
- |
- |
(30,032) |
Net loss / (income) |
1,729 |
993 |
7,912 |
(21,335) |
Basic and diluted
loss/(income) per share |
0.01 |
0.00 |
0.04 |
(0.11) |
|
|
|
|
|
For the fourth quarter of 2017, the Company
focused primarily on the acquisition of all remaining interests in
the Josemaría project and investing in the Naciemiento and Acay
projects, resulting in higher cash spent on operating and investing
activities during the last quarter of 2017 compared to the same
period in 2016.
The Company’s net loss for the year ended
December 31, 2017 totaled $7.9 million. The $30 million gain
on the spin-off transaction in 2016 resulted in a net income of
$21.3 million for the year ended December 31, 2016.
The reduction in exploration expenditures for
the year ended December 31, 2017 compared to the prior year
reflects the exclusion of Filo del Sol costs from the Company’s
2017 results subsequent to the completion of the spin out of Filo
Mining Corp. (“Filo Mining”), though it is partially offset by
additional costs incurred on the Naciemientos and Acay
projects.
General and administration (“G&A”) costs for
2017 were lower than 2016 as the Company incurred additional
professional and corporate costs during 2016 to execute and
complete the spinout. Not only did the Company benefit from
cost savings realized from sharing certain G&A corporate costs
with Filo Mining during 2017, a new Argentine legislation exempting
the Company from making net worth tax payments over a two-year
period starting in 2017 brings an additional $0.3 million in cost
savings for the Company. The reduction in G&A costs
were partially offset by a $0.6 million performance incentive
payment made to certain senior management and staff.
CREDIT FACILITY
On November 9, 2017, the Company obtained an
US$1 million unsecured credit facility from an insider of the
Company (the “Facility”) to provide additional financial
flexibility to fund general corporate purposes. The Company issued
a total of 21,467 common shares to the lender as consideration for
providing the Facility in lieu of fees to the Company. All
amounts outstanding under the Debenture were repaid in full on
January 4, 2018. The Facility remains available until August
9, 2018. All securities issued in conjunction with the
Facility are subject to a four-month hold period under applicable
securities law.
The issuance of Common Shares to an insider and
the Debenture each constitute a "related party transaction", as
defined under Multilateral Instrument 61-101 ("MI 61-101"). The
transactions will be exempt from the formal valuation and minority
shareholder approval requirements of MI 61-101 as neither the fair
market value of any shares issued relative to, or the consideration
paid for, the Debenture will exceed 25% of the Company's market
capitalization.
Qualified Persons
Technical disclosure for the Company’s projects
included in this press release, with the exception of the technical
disclosure related to ongoing engineering studies, has been
reviewed and approved by Bob Carmichael, P. Eng. (BC). Mr.
Carmichael is NGEx’s Vice-President of Exploration and a Qualified
Person (“QP”) under National Instrument 43-101 Standards of
Disclosure for Mineral Projects (NI 43-101). Technical disclosure
related to the engineering studies has been reviewed and approved
by James Beck, P. Eng. (ON). Mr. Beck is the Company’s
Vice-President of Corporate Development and Projects and a QP under
National Instrument 43-101 Standards of Disclosure for Mineral
Projects (NI 43-101).
About NGEx
NGEx is a Canadian mineral exploration company
with exploration projects in Chile and Argentina. The Company's
shares are listed on the TSX and on Nasdaq Stockholm under the
symbol "NGQ". The Company's focus is on advancing the development
of its two large copper-gold deposits, Los Helados and Josemaría
(“Project Constellation”), located in Chile's Region III and
adjacent San Juan Province, Argentina. The Company owns a
100% interest in the Josemaría project and is the majority partner
and operator for the Los Helados project. Los Helados is subject to
a Joint Exploration Agreement with its joint exploration partner in
Chile, Pan Pacific Copper.
Additional Information
For further details with regards to the Project
Constellation, please refer to the technical report with an
effective date of February 12, 2016 and titled "Project
Constellation incorporating the Los Helados Deposit, Chile and the
Josemaria Deposit, Argentina NI 43-101 Technical Report on
Preliminary Economic Assessment", prepared by Amec Foster Wheeler
International Ingeniería y Construcción Limitada ("AMEC"). The
Technical Report is available for review under the Company's
profile on SEDAR (www.sedar.com) and on the Company's website
(www.ngexresources.com).
This information is information that NGEx
Resources Inc. is obliged to make public pursuant to the Swedish
Securities Markets Act. The information was submitted for
publication, through the agency of the contact person set out
below, on February 21, 2018 at 6:30 p.m. Pacific Time.
On behalf of the board
Wojtek Wodzicki
President and CEO
For further information, please contact: Sophia
Shane, Corporate Development (604) 689-7842.
This news release does not constitute an offer
to sell or a solicitation of an offer to buy the securities
described herein in the U.S., or in any jurisdiction in which such
an offer or sale would be unlawful. The securities described herein
have not been and will not be registered under the U.S. Securities
Act of 1933, as amended, or any U.S. state securities laws and may
not be offered or sold in the U.S. or to the account or benefit of
a U.S. person or a person in the U.S. absent registration or an
applicable exemption from the registration requirements.
Cautionary Note Regarding Forward-Looking
Statements
Certain statements made and information
contained herein in the press release constitutes “forward-looking
information” and forward-looking statements” within the meaning of
applicable securities legislation (collectively, “forward-looking
information”). The forward-looking information contained in
this press release is based on information available to the Company
as of the date of this press release. Except as required under
applicable securities legislation, the Company does not intend, and
does not assume any obligation, to update this forward looking
information. Generally, this forward-looking information can
frequently, but not always, be identified by use of forward-looking
terminology such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes",
or variations of such words and phrases or statements that certain
actions, events, conditions or results “will”, "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotations thereof. All such forward-looking
information is based on the opinions and estimates of the relevant
management as of the date such statements are made and are subject
to important risk factors and uncertainties, many of which are
beyond the Company's ability to control or predict.
All statements other than statements of
historical fact may be forward-looking statements. Forward-looking
information is necessarily based on estimates and assumptions that
are inherently subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information, including but not limited to: risks
and uncertainties relating to, among other things, the inherent
uncertainties regarding cost estimates, changes in commodity and
metal prices, currency fluctuation, financing, unanticipated
resource grades and recoveries, infrastructure, results of
exploration activities, cost overruns, availability of materials
and equipment, timeliness of government approvals, taxation,
political risk and related economic risk and unanticipated
environmental impact on operations as well as other risks and
uncertainties more fully described under "Risks Factors", and
elsewhere, in the Company's most recent Annual Information Form
available under the Company's profile at www.sedar.com and the
Company's website.
The Company believes that the expectations
reflected in the forward-looking statements and information
included in this press release are reasonable but no assurance can
be given that these expectations will prove to be correct and such
forward-looking statements and information should not be unduly
relied upon. This statement and information speaks as of the
date of the press release. In particular, this press release
contains forward-looking statements or information with respect to
the anticipated use of proceed from the Facility, and the timing
and success in obtaining requisite regulatory approvals, the
evaluation of additional properties for potential acquisitions;
terms and conditions of a credit Facility; the potential
development or sale to a third party of Project Constellation; cost
estimates and other assumptions used in the PEA and expectations
from the PEA; the Company’s expectations and estimates with respect
to cost estimates and other assumptions used in the PEA and
expectations from the PEA; the assumptions used in the updated
mineral resources estimates for the Los Helados and Josemaría
projects; exploration and development expenditures; the timing and
nature of any potential development scenarios; opportunities to
improve project economics; potential regional synergies and
cooperative development plans with other regional operators,
exploration targets, the potential recovery of gold from the oxide
cap at Josemaría, the potential acquisition of new copper-gold
exploration projects, estimations for copper and other commodity
prices, mineral resources, costs, success of exploration
activities; expectations with regard to adding to mineral resources
through exploration; permitting time lines; ability to obtain
surface and water rights and property interests; currency exchange
rate fluctuations; requirements for additional capital; government
regulation of mining activities; environmental risks; unanticipated
reclamation expenses; title disputes or claims; limitations on
insurance coverage; and other risks and uncertainties.
Forward-looking information is based on certain
assumptions that the Company believes are reasonable, including
that the current price of and demand for commodities will be
sustained or will improve, the supply of commodities will remain
stable, that the general business and economic conditions will not
change in a material adverse manner, that financing will be
available if and when needed on reasonable terms and that the
Company will not experience any material labour dispute, accident,
or failure of plant or equipment. These factors are not, and
should not be construed as being, exhaustive. Although the
Company has attempted to identify important factors that would
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, or intended.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. All of
the forward-looking information contained in this document is
qualified by these cautionary statements. Readers are
cautioned not to place undue reliance on forward-looking
information due to the inherent uncertainty thereof.
Statements relating to "mineral resources" are
deemed to be forward looking information, as they involve the
implied assessment, based on certain estimates and assumptions that
the mineral resources described can be profitably produced in the
future.
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