Denarius Metals Announces 2023 Fiscal Year Results
Toronto, April 25, 2024 - Denarius Metals Corp. (Cboe CA: DMET) (OTCQX: DNRSF) ("Denarius Metals" or "the Company") announced today that it has filed its audited consolidated financial statements, management's discussion and analysis (MD&A) and Annual Information Form (AIF) for the year ended December 31, 2023. These documents can be found on its website at www.denariusmetals.com and by reviewing its profile on SEDAR+ at www.sedarplus.ca. All financial figures contained herein are expressed in U.S. dollars unless otherwise noted.
Denarius Metals is an emerging metals producer with two mines, Zancudo in Colombia and Aguablanca in Spain, marching toward the start of production within the next 12 months. In March 2024, the Company graduated its listing to Cboe Canada followed by a change of its trading symbol to "DMET". The Company continues to trade on the OTCQX in the United States under the symbol "DNRSF".
In 2023, Denarius Metals continued its momentum to further the exploration and development work at its projects. The Company incurred total exploration and capital expenditures of approximately $15.0 million in 2023 compared with $9.1 million in 2022.
The Company's Zancudo Project moved to the forefront in 2023 with total exploration and capital expenditures of $6.3 million, up from $0.2 million in 2022, as the Company commenced its construction activities to bring the project into production in 2024. The economic viability of the Zancudo Project was established in a NI 43-101 Technical Report dated December 14, 2023 (the "Zancudo Technical Report") which includes a Preliminary Economic Assessment ("PEA") that envisions a 10-year mine life over which the Company expects to generate net revenue of approximately $1.0 billion from the sale of approximately 576,000 payable ounces of gold and 8.8 million payable ounces of silver at a life-of-mine ("LOM") average all-in sustaining cost ("AISC") of $1,059 per ounce of gold. In December 2023, the Company received the mining permits that allow it to start mining activities once the Environmental Impact Study ("EIS") is approved by Corantioquia, the local environmental authority. The EIS was submitted to Corantioquia in November 2023 and the Company expects to receive approval in the second quarter of 2024. The Zancudo Technical Report also includes an Inferred Mineral Resource estimate ("MRE") with an effective date of October 24, 2023 comprising 4.1 million tonnes grading 6.5 g/t gold and 107 g/t silver totaling 860,000 ounces of gold and 14.1 million ounces of silver. Denarius Metals is commencing a 10,000 meters infill drilling program in April 2024 to upgrade Inferred Resources to the Indicated category and to support future mine development.
The acquisition of a 50% interest in Rio Narcea Recursos, S.L. ("RNR") in late 2023 has become an important catalyst to build the Company's presence in Spain and to accelerate its creation of a long-life polymetallic producer leveraging the synergies between the Aguablanca and Lomero Projects. RNR's two primary assets include a 5,000 tonnes per day ("tpd") processing plant (the "RNR Plant") and the Aguablanca underground mine, one of the only mines in Spain able to produce both nickel and copper. RNR has both its mining and environmental permits in place. On April 11, 2024, the Company announced the results of a Pre-Feasibility Study (the "Aguablanca PFS") which supports the economic viability of the Aguablanca Project. The Company acquired its 50% interest in RNR for EUR 25.0 million (equivalent to approximately $27 million) cash, of which 10% was paid in 2023 and the balance is scheduled to be paid in instalments in 2024. As the operator of the Aguablanca Project, the Company will lead the activities on behalf of the joint venture over the balance of 2024 to re-start the RNR Plant and to de-water and prepare the underground mine to commence production in early 2025. Using 50% of the RNR Plant's capacity, the Aguablanca PFS envisions a six-year mine life generating 43.2 million pounds of payable nickel and 34.6 million pounds of payable copper resulting in LOM net revenue of $480 million through the sale of approximately 406,359 tonnes of nickel-copper concentrates with an AISC of $4.04 per pound of payable nickel on a by-product credit basis. At long-term nickel and copper prices of $7.30 per pound and $3.50 per pound, respectively, the Aguablanca PFS generates solid returns with undiscounted after-tax project cash flow on a 100% basis of $105.7 million.
At the Lomero Project, just 88 km from Aguablanca, the Company incurred exploration and capital expenditures in 2023 of $6.1 million compared with $7.6 million incurred in 2022. The Company focused its effort at the Lomero Project in 2023 on completing its validation and infill drilling programs to increase its confidence in the geologic model associated with the historic Lomero-Poyatos deposit. Since 2021, the Company has carried out a three-phase exploration program comprising a total of 146 holes representing 44,228 meters of drilling. This work culminated in a NI 43-101 Technical Report dated November 2, 2023 (the "Lomero Technical Report") in which the Company converted approximately 73% of the initial Inferred MRE prepared in 2022 to the Indicated Mineral Resources category. The updated MRE, with an effective date of July 31, 2023, comprises 7.7 Mt of Indicated Resources at a 1.91% CuEq and 3.5 Mt of Inferred Resources at a 1.46% CuEq. Work is getting underway to prepare a PEA for the Lomero Project, expected to be completed by mid-2024, utilizing the other 50% capacity available at the RNR Plant. The Company also expects to commence its greenfield drilling campaign at the Lomero Project in the second half of 2024.
In Northern Spain, exploration expenditures incurred at the Toral Project by the Company in 2023, the first year after signing the option agreement in late 2022 with Europa Metals Ltd. ("Europa"), amounted to approximately $2.6 million. The 2023 drilling campaign comprised approximately 6,200 meters of validation and infill drilling in nine holes completed within the project's known Indicated Mineral Resource area. All holes completed were successful in intersecting mineralization adjacent to selected, previously reported high grade intersections within the Toral Project's Indicated Resource block. The Company is currently working on an updated MRE incorporating the 2023 drilling results to be followed by the preparation of a PEA later in 2024. In October 2023, the Company achieved a milestone under the option agreement with the submission of the formal application for a mining license for the Toral Project to the Junta of Castille and Leon, the local mining authority.
To fund its operating and investing activities in 2023, the Company completed two equity private placements in early 2023 followed by a private placement of Convertible Debentures in October 2023. These private placements resulted in net proceeds totaling approximately $25.6 million, of which $1.8 million was placed in trust to fund interest payments on the Convertible Debentures while construction is being completed at the Zancudo Project. The Company also received $2.2 million in cash from Aris Mining Corporation, a related party, in February 2023 on the termination of the Guia Antigua Project license. At December 31, 2023, the Company has cash and cash equivalents of $7.6 million. In addition, the Company has cash in trust of $1.5 million to fund the Convertible Debentures' interest payments through October 2024.
Denarius Metals reported a net loss of $9.4 million ($0.15 per share) in the fourth quarter of 2023 bringing the net loss for the full year in 2023 to $14.4 million ($0.27 per share) compared with a net loss of $7.4 million ($0.36 per share) in 2022. The 2023 net loss includes a $7.0 million non-cash loss on financial instruments, $1.4 million of finance costs and a $1.9 million non-cash charge for accumulated foreign currency translation adjustments related to its disposition of the Guia Antigua Project. The 2022 net loss included a $4.3 million impairment charge related to the disposition of the Guia Antigua Project.
2024 Outlook
The year ahead is shaping up to be a catalyst driven year for Denarius Metals in the execution of its strategy to bring its first two projects into operation within the next 12 months.
Construction activities have progressed at the Zancudo Project through the first few months of 2024 as the Company awaits the approval of the EIS that will enable its mine contractor to commence mining operations. Preparation of the processing plant site will begin shortly as the plant equipment has started shipping from China and will be fully mobilized at the project site to facilitate installation and commissioning over the summer to be ready to start operations in the fourth quarter this year. The company recently announced that it has agreed to commercial terms with Trafigura Pte. Ltd. ("Trafigura"), a leading global commodities group, for the sale at market prices of 100% of the high-grade gold-silver concentrates to be produced at the Zancudo Project over the next eight years. The Company has taken steps in 2024 through two international tender processes to enhance its liquidity while it completes the construction and carries out a 10,000 meters infill drilling program at Zancudo. The Company received $5.0 million in cash from the recent sale of a 3% net smelter return royalty on Zancudo's future production to a syndicate of third-party private investors. In addition, the Company is currently also arranging a secured prepayment financing of up to $10.0 million with Trafigura that will be funded as the Company reaches prescribed milestones during the completion of its construction activities at the Zancudo Project in 2024. The prepayment financing will be repaid from production during the 26 months following start-up of the processing plant and is subject to finalization of definitive documents and regulatory approvals, as applicable.
In Spain, priority is being given to the activities required over the balance of 2024 to re-start the RNR Plant and to de-water and commence development of the Aguablanca underground mine through a local contract miner to commence production in early 2025. Discussions are also underway with the RNR Shareholder Group regarding the potential integration of the Aguablanca and Lomero Projects that could streamline the development of the larger combined operation while reducing the amount payable in 2024 by the Company for the acquisition of its 50% interest in RNR. To fund its share of the capital investment and working capital at Aguablanca, along with the acquisition related instalments of EUR 2.5 million each in March and May, the Company is evaluating its financing options, including discussions with offtakers interested in arranging a long-term commercial agreement for the nickel-copper concentrates to be produced from the Aguablanca mine. In April 2024, the Company announced the results of the Aguablanca PFS. In the second quarter of 2024, the Company expects to finalize a PEA for the Lomero Project and in the second half of 2024, a PEA for the Toral Project. Greenfield drilling is also planned to commence at the Lomero Project in the second half of 2024.
About Denarius Metals
Denarius Metals is a Canadian junior company engaged in the acquisition, exploration, development and eventual operation of polymetallic mining projects in high-grade districts.
In Spain, the Company owns a 100% interest in the Lomero Project, a polymetallic deposit located on the Spanish side of the prolific copper rich Iberian Pyrite Belt, and a 50% interest in Rio Narcea Recursos, S.L., which has the rights to exploit the historic producing Aguablanca nickel-copper mine, including a 5,000 tpd processing plant, located in Monesterio, Extremadura, Spain, approximately 88 km NW from the Lomero Project. The Company is also carrying out an exploration campaign on the Toral Zn-Pb-Ag Project located in the Leon Province, Northern Spain pursuant to an option and joint-venture arrangement with Europa Metals Ltd. pursuant to which it can acquire up to an 80% ownership interest in Europa Metals Iberia S.L., a wholly-owned Spanish subsidiary of Europa which holds the Toral Project.
In Colombia, Denarius Metals is carrying out construction activities at its 100%-owned Zancudo Project, which includes the historic producing Independencia mine, to develop production and cash flow commencing in 2024 through local contract mining and commencing a drilling program on the Zancudo deposit which remains open in all directions.
Additional information on Denarius Metals can be found on its website at www.denariusmetals.com and by reviewing its profile on SEDAR+ at www.sedarplus.ca.
Cautionary Statement on Forward-Looking Information
This news release contains "forward-looking information", which may include, but is not limited to, statements with respect to anticipated business plans or strategies, including construction activities and timing to commence mining operations at the Zancudo Project, completion of the Trafigura financing, exploration programs, re-start of operations and timing to commence production at the Aguablanca Project, potential integration of the Aguablanca and Lomero Projects, preliminary economic assessments and future financings. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Denarius Metals to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption "Risk Factors" in the Company's Annual Information Form dated April 25, 2024 which is available for view on SEDAR+ at www.sedarplus.ca. Forward-looking statements contained herein are made as of the date of this press release and Denarius Metals disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.
For Further Information, Contact:
Michael Davies
Chief Financial Officer
(416) 360-4653
investors@denariusmetals.com
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