True Gold Mining Inc. Reports Q4 2015 Financial Results
VANCOUVER, March 17, 2016 - True Gold Mining Inc. (TSX VENTURE:TGM) ("True Gold" or the "Company") reported the financial results (all dollar figures in US dollars, unless otherwise noted) and business highlights for the year ended December 31, 2015."I am extremely proud of what the True Gold team has accomplished in 2015 and into early 2016. In the last 12 months we have focused on completing construction of Karma and reached our strategic objective of becoming an intermediate gold producer through the combination with Endeavour Mining," stated Christian Milau, President & CEO of True Gold. "We are nearing the finish line with construction all but complete and first gold pour only a handful of weeks away."
PROPOSED ACQUISITON BY ENDEAVOUR MINING CORPORATION OF ALL COMMON SHARES OF TRUE GOLD
On March 4, 2016, True Gold entered into a definitive arrangement agreement (the "Arrangement Agreement") with Endeavour Mining Corporation ("Endeavour"), pursuant to which Endeavour has agreed to acquire all of the issued and outstanding common shares ("True Gold Shares") of True Gold by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia) (the "Transaction").
This transaction delivers on True Gold's objective of becoming an intermediate gold producer. The Karma Mine will become a cornerstone asset within Endeavour's existing portfolio of four operating mines, with the enlarged Endeavour targeting 2016 gold production in excess of 600,000 ounces. The combined company will also benefit from a strong balance sheet, supported by La Mancha Holding S.àr.l.'s ("La Mancha") additional equity investment, to continue to grow the production base. Endeavour will have an enhanced ability to fund its attractive pipeline of development and exploration properties, including the permitted and construction ready Houndé Project.
Under the terms of the Transaction, all of True Gold's issued and outstanding shares will be exchanged on the basis of 0.044 of an Endeavour common share for each True Gold common share (the "Exchange Ratio"). The combined entity will be supported by a strong balance sheet, financial flexibility, as well as a long-term strategic relationship with its 30% shareholder, La Mancha, enabling it to grow through development of its internal pipeline. Endeavour has announced that La Mancha has elected to exercise its pre-emptive right to maintain its 30% interest, contributing additional cash funding of approximately C$83 million in support of the combined company's future growth, and resulting in True Gold shareholders owning approximately 22% of the combined company, on a fully-diluted in-the-money basis.
True Gold and Endeavour have also entered into an unsecured loan agreement whereby Endeavour is providing a $15 million convertible loan (the "Endeavour Loan") for a term of 12 months bearing interest at the rate of LIBOR plus 4%. Drawdown of the Endeavour Loan is at the option of True Gold and is intended as an alternative source of funding to the remaining undrawn $15 million increase option under the Franco-Nevada Corp. ("Franco-Nevada") and Sandstorm Gold Inc. ("Sandstorm") stream financing.
Full details of the Transaction will be included in an information circular that is expected to be distributed to shareholders in late March 2016. It is anticipated that the shareholder meeting and closing of the Transaction will take place in late April 2016.
FOURTH QUARTER HIGHLIGHTS AND SUBSEQUENT EVENTS
True Gold's key milestones achieved:
- Announced combination with Endeavour Mining, positioning Karma as a cornerstone mine within a premier West African focused intermediate gold producer.
- Exceeded 1.9 million man hours without a lost time injury.
- Completed 97% of Karma Mine construction, as of February 29, 2016.
- Remained fully funded through to commercial production.
- Mined 685,000 ore tonnes through February 29, 2016.
- Started leach pad ore stacking and irrigating in early March 2016.
Mine Construction Update:
Karma Mine construction is 97% complete. Mining has been underway since October 2015 with 685,000 ore tonnes mined and more than 650,000 of those tonnes stockpiled as at February 29, 2016 to provide initial feed to the leach pad and processing plant. Commissioning of the crushing, agglomeration and leaching solution distribution circuits is complete and the current focus is on final installation and completion of commissioning of piping, electricals and instrumentation in the ADR plant and gold room, followed by ramp-up to commercial production.
First gold pour is anticipated around the end of March 2016.
Corporate Social Responsibility:
In September 2015, the Company inaugurated a national Stability Forum led by True Gold's strategic advisor M itre Halidou Ouedraogo, a respected Magistrate and Human Rights advocate in Burkina Faso. Me. Halidou was also recently appointed President of CODEL, an independent group appointed to monitor the recent and peaceful presidential elections. The forum was organized by True Gold to foster dialogue and discussion and promote national peace and stability with delegates from a wide range of business, community and political backgrounds, with the confidence that the Forum would provide insight into the ongoing development and evolution of True Gold's activities in the country.
The Minister of Mines of Burkina Faso and Canadian Ambassador to the country visited the Karma Mine on November 12, 2015 where they attended a mine tour and meetings with the community, including regional leaders.
Mining Convention Ratified and Approved:
The Karma Mining Convention was ratified by the Burkina Faso council of Ministers in 2015 and signed by the Ministry of Finance in January 2016. The purpose of the Mining Convention, along with the mining decree, is to provide the basis for True Gold to operate under the 2003 Mining Code, and as such would be subject to a 17.5% corporate tax rate. The Mining Convention is expected to be valid for 20 years and is renewable for subsequent five year periods.
Renewal of Exploration Permits:
In March 2016, the Liguidi and Rounga exploration permits were renewed by the Burkina Faso Ministry of Mines. Each permit was renewed for a period of three years and may be renewed twice for successive three-year periods.
Project Finance - Karma Mine is Fully Funded:
Karma is forecast to be funded through to production. As at February 29, 2016 the project has $10.4 million in capital expenditures remaining to complete construction with available funding sources of $33.8 million, including $14.8 million of cash.
FINANCIAL RESULTS
The following selected financial data is derived from the audited consolidated financial statements and related notes thereto for the years ended December 31, 2015 and 2014 (the "Annual Financial Statements"), as prepared in accordance with International Financial Reporting Standards. Details of these results are described in the Annual Financial Statements and related Management's Discussion and Analysis ("MD&A"). These documents can be found on the Company's website (www.truegoldmining.com) or on SEDAR (www.sedar.com).
| Year ended | ||||
| December 31, 2015 | December 31, 2014 | |||
| Net loss for the year | $(4,770,080) | $(15,508,969) | ||
| Comprehensive loss for the year | $(9,827,872) | $(20,113,786) | ||
| Basic and diluted loss per share | $(0.01) | $(0.04) | ||
| As at | ||||
| December 31, 2015 | December 31, 2014 | |||
| Cash, restricted cash and short term investments | $5,359,740 | $48,903,395 | ||
| Total assets | $126,615,562 | $110,057,215 | ||
| Current liabilities | $28,666,134 | $5,725,593 | ||
| Non-current liabilities | $44,706,781 | $41,956,675 | ||
| Shareholders' equity | $53,242,647 | $62,374,947 | ||
True Gold's primary activity for the year ended December 31, 2015 was the construction of the Karma Mine, which is reflected in the increase in property, plant and equipment to $115.7 million at December 31, 2015 from the $58.6 million at the beginning of 2015.
At December 31, 2015, the Company was in the development stage and, therefore, does not have revenues from operations. For the year ended December 31, 2015, we reported a net loss of $4.8 million, compared to a net loss of $15.5 million for the year ended December 31, 2014. Operating expenses totalled $9.8 million for the ended December 31, 2015, down 42% from $16.9 million a year earlier. The principle reason for the decline was a decrease in exploration and evaluation expenditures in the amount of $6.8 million as the Company was focused on development work on the Karma Mine and a $10.0 million gain on change in fair value of financial liability as a result of a change in gold price inputs and decrease in gold prices through the end of 2015 (twelve months ended December 31, 2014 - gain of $2.9 million). These favourable 2015 variances were offset by $5.1 million in write-off of damaged equipment and $1.2 million in non-recurring costs incurred during the suspension of construction (year December 31, 2014 - $nil and $nil, respectively) following a demonstration in January 2015 at the mine site.
In August 2014, the Company entered into a $100 million definitive Agreement with Franco-Nevada Corp. (the "Franco-Nevada") and Sandstorm Gold Ltd. (the "Sandstorm") to fund the construction of the Karma Mine. In exchange for $100 million in funding, True Gold is obligated to deliver 100,000 ounces of gold over five years (20,000 ounces per year), and thereafter 6.5% of equivalent production at the Karma Mine. True Gold has the option to defer delivery of each months' ounces by up to one year. In addition, True Gold holds the option to increase funding up to an additional $20 million, in consideration for delivery of an additional 30,000 ounces of gold. The Company will also receive 20% of the spot price of gold for every ounce delivered, under the agreement. As at December 31, 2015, the Company has drawn $84.5 million of the available funds. At December 31, 2015, $14.0 million of the fair value of the financial liability through profit and loss is classified as current, with the remaining balance of $43.3 million classified as non-current. The final $15.5 million of the $100 million and $5 million of the $20 million increase option were drawn in early January 2016.
In January 2016, True Gold entered into a $10 million equipment refinancing facility with Auramet International LLC ("Auramet"), of which $6 million was drawn in February 2016. Along with the Endeavour Loan, the Auramet financing provides an alternative to drawing all of the $20 million increase option from the stream finance providers and also provides an additional and flexible source of capital as we move to production.
About True Gold
True Gold Mining Inc. is where gold comes to life. We are committed to growing a successful gold 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, and production worldwide.
ON BEHALF OF THE BOARD
Christian Milau
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.
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, that the Company will receive additional drawdowns under the financing agreement with Franco-Nevada and Sandstorm and anticipated costs and expenditures. Many assumptions are based on factors and events that are not within the control of True 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; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, 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, uncertainties related to the Company's relationship with communities that surround its properties in Burkina Faso, risks related to the financing agreement with Franco-Nevada and Sandstorm, including the Company's ability to meet its scheduled delivery obligations, 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 March 16, 2016 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.
Contact
Investor inquiries:
Tel: 604-801-5020
info@truegoldmining.com