True Gold Mining Reports Q3 2014 Financial Results
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 24, 2014) - True Gold Mining Inc. (TSX VENTURE:TGM) ("True Gold" or the "Company") reported the financial results and business highlights for the nine-months ended September 30, 2014. To date, all aspects of the Karma Gold Project ("Karma" or the "Project") are on time and on budget.
THIRD QUARTER HIGHLIGHTS
Project Finance - Karma Fully Funded
Secured financing of up to US$120 million from Franco-Nevada Corporation ("Franco-Nevada") and Sandstorm Gold Inc. ("Sandstorm") to fully fund Karma construction as well as certain corporate and Burkina general and administrative costs.
Commenced drawdown under the financing agreement receiving an initial payment of US$37 million. Draw down of the remaining balance will be made over the course of construction.
Permitting - Karma Fully Permitted
The Company received the Kao and Nami exploitation permits.
All five deposits within the Karma Feasibility Study ("Karma FS") mine plan are fully permitted.
No other permits are required under the Karma FS mine plan.
Project Development - Karma Construction Underway
Project construction well underway (earthworks on the plant site terraces are 100% complete and civil works more than 20% complete), on time and on budget, with approximately US$51.5 million (greater than 39%) of the total US$131.5 million Karma initial capex spent and committed to date.
Long lead time capital items ordered, with all mining fleet vehicles and equipment expected on-site by January 2015.
Potential Mine Expansion - North Kao
Completed a Preliminary Economic Assessment on North Kao.
Production rate at North Kao of 118,000 oz Au/year on average over 2.5 year mine life.
North Kao yields an after-tax IRR of 213% and adds approximately US $70.0 million to Karma after tax NPV.
Potential to add US$118 million in after-tax free cash flow to the Karma FS economics.
Project Optimization - Cost/Operating Savings
Secured long-term cement contract at a price lower than one used in the Karma FS.
Increases the Karma FS after-tax NPV by US$20 million to $198.8 million @ US$1,250/oz Au.
Exploration
Completed a 14,712 metre drill program designed to discover additional open-pit, leachable material that could be incorporated into the mine plan for potential mine life extensions or throughput increases.
Geological mapping of the Kao Gold Trend (KGT) is currently underway. With a strike length of more than 10 kilometres, the KGT trend hosts the Kao, North Kao, and Nami deposits.
Burkina Faso
Since the resignation of former President Blaise Compaoré on October 31, Burkina Faso's constitution has been restored and an interim president and prime minister have been named. A 25-member transitional government will be appointed and remain in place until elections are held next year. The Company continues to monitor the situation in Burkina Faso and will provide updates as events warrant.
Financial Results
The following selected financial data is derived from the unaudited condensed interim consolidated financial statements and related notes thereto for the periods indicated, as prepared in accordance with International Financial Reporting Standards. Details of these results are described in the unaudited condensed interim consolidated financial statements and Management's Discussion and Analysis for the nine months ended September 30, 2014. These documents can be found on the Company's website (www.truegold.com) or on SEDAR at www.sedar.com. All amounts are presented in Canadian dollars unless otherwise stated.
Three months ended | Nine months ended | |||
September 30, 2014 | September 30, 2013 | September 30, 2014 | September 30, 2013 | |
Net loss for the period | $(2,888,103) | $(7,844,286) | $(13,923,155) | $(22,754,041) |
Loss and comprehensive loss for the period | $(2,920,874) | $(7,844,286) | $(14,021,468) | $(23,117,293) |
Basic and diluted loss per share | $(0.01) | $(0.03) | $(0.04) | $(0.11) |
As at | ||||
September 30, 2014 | December 31, 2013 | |||
Cash and short term investments | $69,406,684 | $24,014,411 | ||
Working capital | $64,888,046 | $21,189,672 | ||
Total assets | $105,323,085 | $42,758,028 | ||
Current liabilities | $5,056,257 | $3,162,074 | ||
Non-current liabilities | $24,793,477 | $nil | ||
Shareholders' equity | $75,473,351 | $39,595,954 | ||
For the three and nine month periods ended September 30, 2014, we reported a net loss of $2.9 million and $13.9 million respectively, compared to net losses of $7.8 million and $22.8 million for the three and nine month periods ended September 30, 2013. Operating expenses totalled $2.9 million for the three months ended September 30, 2014 down 62% from $7.8 million a year earlier. The principle reason for the change was a decrease in exploration and evaluation expenditures in the amount of $5.1 million as the Company is now focused on development work on the Project. The Company has commenced capitalizing costs related to development in the current period. Operating expenses totalled $14.5 million for the nine months ended September 30, 2014 down 36% from $22.7 million a year earlier. The principle reason for the change was a decrease in exploration and evaluation expenditures in the amount of $8.2 million as the Company is now focused on development work on the Project.
Total assets as at September 30, 2014 have increased since December 31, 2013 by $62.6 million to $105.3 million, mainly due to (i) to an increase in total cash and short term investments reflecting cash inflows from financing transactions through the nine months ended September 30, 2014; (ii) the capitalization of development costs related to the Project, including: Site earthworks, civil construction, Phase 2 of the barrage and other construction activities; and (iii) deposits on the mining fleet and advances for construction materials and services for the Project. This increase was partially offset by cash outflows from operations.
At September 30, 2014 the Company entered into a US$100-million definitive agreement with Franco-Nevada and Sandstorm to complete funding for the construction of Karma. In exchange for US$100.0 million in funding, True Gold is obligated to purchase and deliver 100,000 ounces of gold over five years, and thereafter 6.5% of equivalent production at the Project. In addition, True Gold holds sole option to increase funding by up to US$20.0 million during the first 18 months following the date of the execution of the financing agreement. For the period ended September 30, 2014, the Company has drawn down US$37.0 million ($41.3 million CAD), representing the initial draw down under the financing agreement. During the period ended September 30, 2014 the Company recorded a gain on the change in fair value of the liability of $2.1 million. On December 31, 2013 the Company had no non-current liabilities.
Peter C. Carter, P. Eng., Chief Operating Officer and Vice President Engineering of the Company, is the designated Qualified Person for this news release within the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects and has reviewed and verified that the technical information contained in this release is accurate and approves of the written disclosure of same.
About True Gold
True Gold Mining Inc. is where gold comes to life. We are committed to growing a successful gold exploration, development and production company, by focusing on projects with low costs, low technical risks and solid economics. The Company's board, management and technical teams have proven track records in gold exploration, development, operations and production worldwide.
Additional information about the Company and its activities may be found on the Company's website at www.truegoldmining.com and under the Company's profile at www.sedar.com.
ON BEHALF OF THE BOARD
Dwayne Melrose, President & CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Unless stated otherwise, information of a scientific or technical nature in this press release regarding the Karma Project is summarized, derived or extracted from the technical report entitled "Updated Resource Estimate on the Karma Gold Project, Burkina Faso, West Africa", dated March 13, 2014 prepared by P&E Mining Consultants Inc.,and filed on SEDAR on April 28, 2014.
Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
The quantity and grade of reported Inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred mineral resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.
The mineral resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to True Gold within the meaning of applicable securities laws, including statements with respect to the potential quantity and/or grade of minerals, potential size and expansion of a mineralized zone, proposed timing of exploration and development plans. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "planned", "expect", "project", "predict", "potential", "targeting", "intends", "believe", "potential", and similar expressions, or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "should", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made including, among others, assumptions about future prices of gold, copper, silver and other metal prices, currency exchange rates and interest rates, favourable operating conditions, political stability, obtaining governmental approvals and financing on time, obtaining renewals for existing licences and permits and obtaining required licences and permits, labour stability, stability in market conditions, availability of equipment, accuracy of any mineral resources, successful resolution of disputes and anticipated costs and expenditures. Many assumptions are based on factors and events that are not within the control of Pilot Gold and there is no assurance they will prove to be correct.
Such forward-looking information, involves known and unknown risks, which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking information, including, risks related to the interpretation of results at the Karma Project, reliance on technical information provided by third parties as related to the Karma Project; changes in project parameters as plans continue to be refined; current economic conditions; future prices of commodities; possible variations in grade or recovery rates; the costs and timing of the development of new deposits; failure of equipment or processes to operate as anticipated; the failure of contracted parties to perform; the timing and success of exploration activities generally; satisfaction of Burkina Faso requirements relating to the periodic submissions of Environmental Impact Assessments; possible claims against the Company or its joint venture partners; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, financing or in the completion of exploration, uncertainties relating to the interpretation of drill results and the estimation of mineral resources, the geology, grade and continuity of mineral deposits, accidents, equipment breakdowns, risk of undiscovered, title defects and surface access, the potential for delays in exploration and permitting activities, the potential for unexpected costs and expenses, commodity price fluctuations, currency fluctuations, political risk as well as those factors discussed in the Annual Information Form of the Company dated April 30, 2014 in the section entitled "Risk Factors", under True Gold's SEDAR profile at www.sedar.com.
Although True Gold has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. True Gold disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise unless required by law.
Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied. The mineral resource estimates referenced in this press release use the terms "Indicated Mineral Resources" and "Inferred Mineral Resources". While these terms are defined in and required by Canadian regulations (under NI 43-101), these terms are not recognized by the U.S. Securities and Exchange Commission ("SEC"). "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant "reserves" as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. True Gold is not an SEC registered company.
