NGEx Reports 2018 Results
VANCOUVER, Feb. 20, 2019 /CNW/ - NGEx Resources Inc. (TSX: NGQ) (Nasdaq Stockholm: NGQ) ("NGEx" or the "Company") is pleased to announce its results for the year ended December 31, 2018. View PDF Version.
- During the fourth quarter of 2018, the Company completed a Preliminary Feasibility Study ("PFS") on its 100% owned Josemaría Project in San Juan Province, Argentina. The PFS evaluated a stand-alone development option for the Josemaría project in Argentina which contemplates an open pit mine with a shallow, high-grade starter pit. The study was completed and announced on November 20, 2018 showing positive economics for the Josemaría Project with a US$2.0 Billion after-tax NPV using an 8% discount rate and 19% IRR.
- With the PFS complete, the Company intends to advance Josemaría towards production by completing a feasibility study ("FS"), securing water rights, and advancing its environmental permitting plans. Field work in support of the feasibility study, including resource and geotechnical drilling, began during the fourth quarter.
- Copper-Gold Discovery at Nacimientos Project - A three-hole scout drilling program was carried out at the Company's new Nacimientos copper/gold project located in San Juan Province, Argentina during the second quarter of 2018. Drill results confirmed the presence of an extensive porphyry copper-gold system and a large epithermal system under younger cover rocks. These encouraging results will be used to guide further exploration in the 2019-2020 field season.
- On February 1, 2019, the Company completed a $20 million private placement, selling an aggregate of 20,000,000 common shares for net proceeds of $19.7 million. Net proceeds of the private placement will be used towards ongoing work programs in Argentina and Chile as well as for repayment of balance drawn on the debenture and general corporate purposes.
The Company continues to optimize and de-risk its advanced stage projects by exploring options and alternatives to advance each towards eventual development. Management is pursuing the following opportunities to add value to the Company's projects:
- Completing a feasibility study of the Josemaría deposit as a stand-alone project (the "Feasibility Study");
- Continuing environmental baseline studies that will provide information required to prepare an environmental impact assessment report in support of project permitting; and
- Exploring opportunities for potential development partnerships as well as 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 Nueva Unión Project and Barrick & Goldcorp's Norte Abierto Project, demonstrate an opportunity to share infrastructure on a regional scale by connecting multiple deposits.
The Company is targeting completion of a feasibility study on the Josemaría Project by the second quarter of 2020, with the objective of advancing the project towards permitting and eventual development. The Company plans to review development options for the Los Helados project. In addition to work programs planned for the Company's advanced-stage projects, the Company will continue to advance its early-stage exploration projects in the upcoming season. In particular, the Company will use the information gathered from the initial scout drilling campaign at Nacimientos to plan a more extensive drill program. The Company will also continue to evaluate other exploration projects for potential acquisitions and to lay the groundwork for its next generation of projects.
To devote adequate resources towards the completion of a FS and development of the Josemaría Project, the Company is considering a restructure of its operations through a transaction that would separate the Josemaría Project from the Company's other projects through a Plan of Arrangement under the Canada Business Corporations Act. The completion of any spin-out and any listing of the resulting entity would be subject to completion of a definitive agreement, regulatory approval, including the approval of the TSX, the approval of shareholders of the Company and the Supreme Court of British Columbia. The final terms of the structure, including the spin-out ratio to NGEx shareholders, retained equity level and timing of the record date are expected to be determined in due course, and remain subject to definitive documentation and approval by the board of directors. Notwithstanding the foregoing, the board of directors reserve the right to elect not to proceed with any spin-out.
SELECTED FINANCIAL INFORMATION
December 31, 2018
December 31, 2017
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 2018 by securing a US$5 million unsecured credit facility (the "2018 Facility"). The amounts drawn on the 2018 Facility was repaid in full on February 5, 2019 following the completion of the $20 million private placement which closed on February 1, 2019. The Company plans to use the net proceeds of the private placement towards ongoing work programs in Argentina and Chile, including: a feasibility study on the Josemaría Project; engineering and exploration studies on the Company's other projects; repayment of the balance drawn on the Company's credit facility, which was completed on February 5, 2019; and for general corporate purposes. On an ongoing basis, management evaluates and adjusts as necessary its planned level of activities, including planned exploration and administrative costs to ensure adequate levels of working capital are maintained.
The reduction 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 2018. The $3.7 million working capital deficiency as at December 31, 2018 was remediated upon completion of the private placement in February 2019.
(in thousands, except per share amounts)
Three months ended
General and administration and other items ("G&A")
Basic and diluted loss per share
The Company's net loss for the year ended December 31, 2018 totaled $15.1 million. Exploration expenditures are the most significant expenditures of the Company and reflect the costs of conducting exploration activities and project investigations on its South American projects. The increase in exploration expenditures for the year ended December 31, 2018, compared to the prior year, is due to the advancement of the Josemaría project with the completion of a PFS and carrying out field work in support of a feasibility study during the fourth quarter of 2018. The Company has also completed a three-hole scout drilling program to test and confirm the geological model at Nacimientos, which has resulted in higher exploration costs incurred during the year.
General and administration ("G&A") costs for 2018 increased from $2.9 million to $3.4 million, as a result of higher share-based compensation, which is a non-cash cost reflecting the expenses associated with the vesting of outstanding options during the period. Excluding share-based compensation, G&A costs for the year ended December 31, 2018 totaled $2.6 million, which is relatively consistent with the $2.5 million reported for the prior year. The Company incurred higher promotion and public relations costs as management hosted a site visit for investors and analysts, participated in more industry conferences and undertook additional promotional marketing trips during the year. The increase in public relations costs was offset by a reduction in incentive bonuses paid in 2018.
Technical disclosure for the Company's projects included in this press release 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) and Jamie Beck P. Eng. Mr. Beck is NGEx's Vice President Corporate Development and Projects and a Qualified Person ("QP") under National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
NGEx is a Canadian mineral exploration company with projects in Argentina and Chile. The Company's shares are listed on the TSX and on Nasdaq Stockholm under the symbol "NGQ". The Company's main focus is on advancing the development of its two large copper-gold deposits, Los Helados and Josemaría, 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, subject to a Joint Exploration Agreement with its joint exploration partner in Chile, Pan Pacific Copper. The Company is also actively seeking new exploration projects and carrying out earlier stage exploration on projects with large scale potential.
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 20, 2019 at 7:00 p.m. Pacific Time.
On behalf of the board
President and CEO
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 timing of a feasibility study of the Josemaría Project; the anticipated use of proceeds from the private placement financing; statements regarding a proposed restructuring of its operations and board, shareholder, court and regulatory approval thereof; environmental studies; exploration and development plans and activities; cost estimates and other assumptions used in the Josemaría PFS and expectations from the Josemaría PFS; the assumptions used in the mineral reserves and resources for the Josemaría project; the assumptions used in the mineral resources for the Los Helados project; 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 evaluation and potential acquisition of new copper-gold exploration projects; estimations for copper and other commodity prices, mineral reserves and 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.
SOURCE NGEx Resources Inc.