Subject:
Stockwatch: Anvil Range Mining Corp - News Release
Date:
Fri, 08 Aug 1997 16:55:26 -0700
From:
newsout@canada-stockwatch.com
To:
dmcrobb@kermode.net
Loan from Cominco completed; 6mo financial results
Anvil Range Mining Corp ARO
Shares issued 20,500,000 Aug 8 close $3.00
Fri 8 Aug 97 News Release
Mr Patrick J. Mars reports
Anvil Range Mining has secured the previously announced $15 million 8.5%
loan from Cominco Ltd. Proceeds of the loan will be applied to a stripping
program at the Grum mine, which is expected to commence as soon as
possible.
The loan will be advanced in two tranches. The first tranche of $10 million
will be advanced immediately, and the company will issue 3.3 million
warrants exercisable at $3 per share in conjunction with the receipt of
this tranche. The warrants are exercisable for a term of the earlier of
three years, or 1.5 years after final repayment of the loan. Completion of
the second tranche of $5 million, together with a further 1.7 million
warrants carrying identical terms, is conditional upon receipt of
shareholder approval from shareholders other than Cominco and its
associates and affiliates.
Based on current mining plans, the company will require an additional $25
to $30 million in capital to finance mill modifications and the restart of
operations. In addition, a line of credit will be required to finance the
working capital of the company. Anvil Range expects that the required
capital will be raised through a combination of private placements and a
rights offering to all shareholders of the company. These transactions will
be subject to regulatory approval. Cominco has confirmed that, subject to
market conditions, it will participate on a pro-rata basis in any such
issue. The company is currently working with its financial advisor, RBC
Dominion Securities, to develop the optimum financial structure for the
refinancing.
The company continues to work towards its objectives of lowering its cost
structure and improving the efficiency and productivity of its operations,
and as previously announced has signed a memorandum of understanding with
Yukon government as part of its program to reduce costs. Assuming it
achieves these objectives, and the outlook for zinc continues to be
favourable, full scale milling operations will resume as soon as sufficient
stripping has been completed.
Mr Mars also reports
In 1996, Anvil Range changed its fiscal year end from October to December.
Accordingly, results for the second quarter of 1997 are compared to the
three month period ended July 31 1996.
In the second quarter of 1997, Anvil Range recorded a loss of $5.0 million,
or $0.28 per share, compared to earnings of $7.0 million ($0.43 per share)
for the quarter ended July 31 1996. With no production in the period, the
financial results reflect the cost of maintaining the mine facilities and
Anvil Range's operations at the Port of Skagway on a stand-by basis.
Revenue for the second quarter of 1997 was $1.2 million, which represents
adjustments on previously recorded sales. The rise in zinc prices during
the second quarter has resulted in higher than expected payments for
previously recorded shipments. Freight and delivery costs reflect
adjustments recorded in the quarter for freight costs on shipments booked
previously.
The loss for the six month period ended June 30 1997 was $4.7 million
($0.26 per share). In the six month period ended July 31 1996 Anvil Range
earned $8.9 million ($0.54 per share).
As previously announced, Anvil Range's operations at Faro have been kept on
a stand-by basis since the milling operations were temporarily shut down on
March 30 1997. Mining operations were temporarily suspended on December 20
1996. Anvil Range has continued to carry out the environmental work
required by its operating licences.
Cash Flow and Liquidity
For the first six months of 1997, cash flow from operations was $12.3
million, compared to $0.8 million in 1996. The company's cash position
improved by $18.8 million in the same period in 1997, which compares to a
use of cash of $8.6 million in the comparable period of 1996. The
realization of Anvil Range's accounts receivable contributed to the
increase in cash flow from operations.
Financing and Future Plans
Anvil Range had previously announced that a stripping program at its Grum
orebody lasting approximately three months was required before milling
operations could be resumed. On August 7 1997, the company announced that
it had secured the previously announced $15 million 8.5% loan from Cominco
Ltd to finance this program, which is expected to commence as soon as
possible.
The loan will be advanced in two tranches. The first tranche of $10 million
will be advanced immediately, and the company will issue 3.3 million
warrants exercisable at $3 per share in conjunction with the receipt of
this tranche. The warrants are exercisable for a term of the earlier of
three years, or 18 months after final repayment of the loan. Completion of
the second tranche of $5 million, together with a further 1.7 million
warrants carrying identical terms, is conditional upon receipt of
shareholder approval from shareholders other than Cominco and its
associates or affiliates.
Based on current mining plans, the company will require an additional $25
to $30 million in capital to finance the mill modifications and the restart
of operations. In addition, a line of credit will be required to finance
the working capital of the company. The company expects that the required
capital will be raised through a combination of private placements and a
rights offering to all shareholders of the company. These transactions will
be subject to regulatory approval. Cominco has confirmed that, subject to
market conditions, it will participate on a pro-rata basis in any such
rights issue. The company is currently working with its financial advisers,
RBC Dominion Securities, to develop the optimum financial structure for the
company.
The company continues to work towards its objectives of lowering its cost
structure and improving the efficiency and productivity of its operations,
and as previously announced, has signed a memorandum of understanding with
the Yukon government as part of its program to reduce costs. The agreement
calls for the government to contribute $200,000 annually for five years to
assist with training, $340,000 to finance exploration programs and to
organize a workshop which will be charged with the task of lowering the
company's energy costs by $3 million per year.
Assuming these endeavors are successful and that the outlook for zinc, the
company's major product, continues to be favourable, full scale milling
operations will resume as soon as sufficient stripping has been completed.
Management
On May 31 1997, Mr Kurt Forgaard resigned as president and CEO. Mr
Forgaard, a founder of Anvil Range, was a significant contributor to the
successful startup of operations in 1994 and 1995.
Mr Patrick Mars was appointed president and CEO, effective June 1 1997. Mr
Mars, previously a director and chairman of the audit committee, brings
many years of experience in the mining and investment business to Anvil
Range.
Mr Fritz Prugger has been appointed general manager, Faro Operations,
effective August 9 1997. Mr Prugger has had an extensive career in the
mining industry including service as managing director of Cominco's
zinc-lead mining affiliate in Spain. During 1996 he was responsible for the
preparation of a pre-feasibility study of the company's Grizzly project.
STATEMENT OF EARNINGS
Three months ended June 30
($ 000's)
1997 1996
Revenue $ 1,206 $ 54,926
Freight and delivery (530) (4,371)
-------- --------
676 50,555
Operating and
property maintenance
costs 3,274 33,390
Exploration - 427
Corporate
administration 832 2,096
Amortization of
capital and
other assets 767 5,660
-------- --------
Earnings (loss)
from operations (4,197) 8,982
Other income
(expenses)
Interest income 50 227
Interest on long
term debt (861) (1,476)
Interest expense
Other (13) (258)
Foreign exchange
gain (loss) 61 (176)
-------- --------
(763) (1,683)
-------- --------
Earnings (loss) before
large corporation and
production taxes (4,960) 7,299
Provision for large
corporation and
production taxes 75 225
-------- --------
Net earnings (loss) $ (5,035) $ 7,074
======== ========
Earnings (loss)
per share $ (0.28) $ 0.43
STATEMENT OF EARNINGS
Six months ended June 30
($ 000's)
1997 1996
Revenue $ 30,771 $108,507
Freight and delivery (3,478) (10,140)
-------- --------
27,293 98,367
Operating and
property maintenance
costs 23,589 72,099
Exploration 143 582
Corporate
administration 1,866 3,421
Amortization of
capital and
other assets 3,737 10,635
-------- --------
Earnings (loss)
from operations (2,042) 11,630
Other income
(expenses)
Interest income 156 969
Interest on long
term debt (1,740) (3,082)
Interest expense
Other (338) (584)
Foreign exchange
gain (loss) (576) 221
-------- --------
(2,498) (2,476)
-------- --------
Earnings (loss) before
large corporation and
production taxes (4,540) 9,154
Provision for large
corporation and
production taxes 150 290
-------- --------
Net earnings (loss) $ (4,690) $ 8,864
======== ========
Earnings (loss)
per share $ (0.26) $ 0.54
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