Tuesday November 9, 5:09 pm Eastern Time
Company Press Release
Dayton Reports Record Earnings And Results
VANCOUVER, B.C.--(BUSINESS WIRE)--Nov. 9, 1999--Dayton Mining Corporation (AMEX:DAY - news; TSE:DAY - news) announces today earnings of $927,000 (or $0.00 per share) for the three months ended September 30, 1999. All amounts unless otherwise stated, are in U.S. dollars.
On March 31, 1999 the Company's shareholders and debentureholders approved the exchange of all its debentures into shares. Effective on that date under Canadian accounting practice known as ``fresh start' accounting, all Dayton's assets and liabilities were revalued. Effective January 1, 1999 Dayton changed its reporting currency from Canadian dollars to U.S. dollars. The 1998 comparative information reported herewith has been translated from the originally reported Canadian dollar amounts at the exchange rate at the end of 1998, in accordance with accounting principles generally accepted in Canada. Realized gold prices and cash operating costs reported here for 1998 are based upon the actual U.S. dollars received or expended.
Financial Review
For the three months ended September 30, 1999, under fresh start accounting Dayton had earnings of $927,000 (or $0.00 per share). Fresh start accounting required that the gold hedging contracts scheduled to mature from April through December 1999 be recorded at market value at March 31, 1999. Dayton realized a total of $1,561,000 on gold contracts during the quarter, but $1,155,000 of this amount was not included in income for the period because of fresh start accounting. Cash flow from operations for the quarter was a record $3,161,000.
Revenues, after royalties, recognized for the quarter were $8,990,000 and the average price recorded in income for gold sold during the quarter was $270 per ounce. The average price actually realized for gold sold during the quarter, including gold contract proceeds was $304 per ounce compared with $318 per ounce for the same period in 1998.
Gold production at the Andacollo Gold Mine for the quarter was 34,001 ounces at a cash operating cost of $188 per ounce compared with 25,507 ounces at a cash operating cost of $226 per ounce in the same period in 1998. During the quarter ended September 30, 1999, 1.6 million tonnes of ore grading 0.93 grams of gold per tonne were crushed and stacked on the leach pad.
For the six months ended September 30,1999 Dayton had earnings of $494,000 (or $0.00 per share). Cash flow from operations were $5,883,000. Foreign exchange gains of $239,000 arising in the six months, that would previously have been included in cash flow from operations, have been excluded and are disclosed separately in the statement of cash flow to comply with new Canadian accounting requirements.
Subsequent to September 30, 1999, Dayton's gold contract program was modified. Dayton closed out its put options and certain spot deferred contracts, and entered into a program of spot deferred contracts consisting of 30,000 ounces at prices from $301 to $304 per ounce, maturing at various dates from November 1999 to January 2000.
Bill Myckatyn, Chairman, President and CEO states ``The continuing improvements at the Andacollo Mine have resulted in the best ever financial quarter in Dayton's history. The Company currently has cash of US$5 million and intends to repay its remaining bank debt of $1.7 million prior to year-end.'
``Effective November 30, 1999 Don MacDonald, Chief Financial Officer of Dayton, will be leaving the Company and joining a diamond exploration and development company based in Vancouver. Don has been with Dayton for over 8 years and during that time was responsible for all financial aspects of the Company. He was instrumental in the Company obtaining the project financing that allowed Dayton to develop the Andacollo Gold Mine, and his experience and knowledge will be missed. We wish him all the best in his new position.'
The Andacollo operation has completed its Y2K preparations. The operation is believed to be 99.5% Y2K compliant in general and 100% compliant in critical areas of the operation. A significant number of suppliers of non-critical goods and services have reported the completion of their Y2K compliance programs. The potential problems arising from non-compliant suppliers are being mitigated through a systematic increase in goods provided by these suppliers. Dayton has relied on the information and assurances provided by its suppliers and cannot guarantee that all eventualities have been covered.
Dayton Mining Corporation holds a 100% interest in the Andacollo Gold Mine located in central Chile, and trades on both the American Stock Exchange (AMEX) and Toronto Stock Exchange (TSE) under the trading symbol DAY.
``Safe Harbor' Statement: The statements, which are not historical facts contained in this release, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from targeted results. These risks and uncertainties include but are not limited to significant declines in precious metals prices; currency fluctuations; increases in production costs; differences in ore grades, recovery rates, and tonnes mined from those expected; changes in mining, or heap leaching rates from currently planned rates; the results of current exploration activities and new opportunities; and other factors detailed in the Company's filings with the U.S. Securities and Exchange Commission.
For further information please contact Diane Thomas Garrett, Vice President, Corporate Development and Investor Relations, 604/662-8383.
Consolidated Balance Sheets
in thousands of US dollars
Sep 30 Dec 31
1999 1998
----------- ---------
(unaudited) (note 1a)
Assets
Current assets
Cash and short term investments 5,054 7,794
Restricted cash 2,000 12,863
Investments in marketable securities 402 348
Bullion settlements receivable 957 1,700
Other receivables 1,070 1,741
Gold contracts 1,027 -
Inventories 8,866 8,988
----------- ---------
19,376 33,434
Property, plant and equipment 30,637 45,016
Other assets 61 2,913
----------- ---------
50,074 81,363
=========== =========
Liabilities
Current liabilities
Accounts payable 5,395 7,063
Bank loan 3,333 16,190
Capital lease obligation 1,495 3,376
Convertible debentures - liability - 2,415
----------- ---------
10,223 29,044
----------- ---------
Bank loan - 1,667
Capital lease obligation 5,608 5,319
Convertible debentures - liability - 12,404
Accrued closure costs 1,925 1,363
----------- ---------
7,533 20,753
----------- ---------
Shareholders' Equity
Share capital 31,824 59,251
Convertible debentures - equity - 48,210
Retained earnings (deficit) 494 (75,895)
----------- ---------
32,318 31,566
----------- ---------
50,074 81,363
=========== =========
Consolidated Income Statements
in thousands of US dollars
(unaudited)
Post Reorganization Pre Reorganization
(note 1b) (note 1b)
------------------- --------------------
Three Six Three Nine Three
months months months months months
ended ended ended ended ended
Sep 30 Sep 30 Mar 31 Sep 30 Sep 30
1999 1999 1999 1998 1998
------ ------ ------ ------ ------
Revenues
Sales (note 2) 8,990 19,110 10,182 20,276 7,771
------ ------ ------ ------ ------
Cost of sales
Operating costs 6,381 13,935 6,448 15,206 5,592
Depreciation, depletion
and amortization 1,128 3,248 2,180 5,084 2,055
------ ------ ------ ------ ------
7,509 17,183 8,628 20,290 7,647
------ ------ ------ ------ ------
1,481 1,927 1,554 (14) 124
------ ------ ------ ------ ------
Expenses
Amortization of deferred
financing costs - - 115 518 148
Exploration - 25 66 555 26
Foreign exchange (52) (239) (109) (5) 576
General and
administrative 425 1,231 560 3,967 847
Interest expense 256 561 608 3,215 980
Interest income (75) (145) (96) (1,368) (335)
------ ------ ------ ------ ------
554 1,433 1,144 6,882 2,242
------ ------ ------ ------ ------
Net income (loss)
for the period 927 494 410 (6,896) (2,118)
====== ====== ====== ======= =======
Per share:
Net income (loss)
per share $0.00 $0.00 $(0.02) $(0.24) $(0.07)
Consolidated Statement of Shareholders' Equity
in thousands of US dollars
(unaudited)
Convertible Retained
Share debentures earnings
capital - equity (Deficit) Total
------- ---------- --------- -------
At December 31, 1998 59,251 48,210 (75,895) 31,566
Debenture equity accretion
during period - 1,029 (1,029) -
Net income for the period - - 410 410
Restructuring costs (950) - - (950)
Reallocated to share capital
for "fresh start" (76,514) - 76,514 -
Revaluation adjustment
for "fresh start" 50,037 (49,239) - 798
------- ---------- --------- -------
At March 31, 1999 31,824 - - 31,824
Net income for the period - - 494 494
------- ---------- --------- -------
At September 30, 1999 31,824 - 494 32,318
======= ========== ========= =======
Consolidated Statements of Cash Flow
in thousands of US dollars
(unaudited)
Post Reorganization Pre Reorganization
------------------- ------------------
Three Six Three Nine Three
months months months months months
ended ended ended ended ended
Sep 30 Sep 30 Mar 31 Sep 30 Sep 30
1999 1999 1999 1998 1998
------ ------- ------ ------ ------
Net income (loss) for
the period 927 494 410 (6,896) (2,118)
Adjustment to reconcile
net income (loss) to cash
provided by operations:
Depletion, depreciation
and amortization 1,128 3,248 2,180 5,084 2,055
Foreign exchange (52) (239) - - -
Amortization of deferred
financing costs - - 115 518 148
Amortization of deferred
foreign exchange - - - 1,928 993
Amortization of other
assets 3 7 8 28 13
Amortization of gold
contracts 1,155 2,373 - - -
------ ------- ------ ------ ------
Cash flow from
operations 3,161 5,883 2,713 662 1,091
Bullion settlements
receivable 438 977 (234) 606 320
Other receivables (49) 45 114 1,036 395
Inventories (355) 734 (4) (2,676) (6)
Accounts payable 389 (4,229) (341) (2,094) (892)
------ ------- ------ ------ ------
Cash flow provided by operating
activities 3,584 3,410 2,248 (2,466) 908
------ ------- ------ ------ ------
INVESTING ACTIVITIES
Purchases of marketable
securities - - - (327) -
Purchases of property, plant
and equipment (110) (317) (339) (5,021) (1,835)
Settlements with
contractors 733 733 - - -
Deferred
stripping (1,200) (2,300) (1,400) (4,507) (1,527)
Other assets 19 (10) 50 256 173
Accrued closure costs 125 151 53 253 128
------ ------- ------ ------ ------
Cash flow used for investing
activities (433) (1,743) (1,636) (9,346) (3,061)
------ ------- ------ ------ ------
FINANCING ACTIVITIES
Restricted cash - - 10,857 (1,715) (11,592)
Principal repayments
of bank loan (1,667) (2,667) (11,857) (20,250) (3,471)
Principal repayments
of capital lease (373) (747) (844) (2,205) (806)
------ ------- ------ ------ ------
Cash flow used for financing
activities (2,040) (3,414) (1,844) (24,170) (15,869)
------ ------- ------ ------ ------
FOREIGN EXCHANGE 52 239 - - -
------ ------- ------ ------ ------
Net increase (decrease)
in cash 1,163 (1,508) (1,232) (35,982) (18,022)
Cash, beginning of
period 3,891 6,562 7,794 47,523 29,563
------ ------- ------ ------ ------
Cash, end of
period 5,054 5,054 6,562 11,541 11,541
====== ======= ====== ====== ======
Per share:
Cash flow from
operations
- basic $0.01 $0.02 $0.07 $0.02 $0.03
Cash flow from
operations
- fully diluted $0.01 $0.02 $0.05 $0.01 $0.02
1. Basis of presentation
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable in Canada.
a. Change in reporting currency
The consolidated financial statements have historically been expressed in Canadian dollars. As a result of sales revenues and a significant portion of expenses, assets and debt being denominated in, or determined with reference to, United States dollars, the US dollar has become the principal currency of the Company's business. Accordingly, the US dollar has been adopted as the reporting currency and the currency of measurement effective January 1, 1999.
The comparative financial statements for prior periods have been translated into United States dollars using a translation of convenience at the December 31, 1998 rate of US$1.00 to Cdn$1.5310.
b. Reorganization of the Company's debt and ``fresh start' accounting
On March 31, 1999 the Company completed a financial restructuring in which all of the convertible debentures of the Company were converted into 310,500,000 common shares of the Company. This has been reflected in the financial statements as a financial reorganization in accordance with generally accepted accounting principles. As a result of this restructuring, the Company's assets and liabilities have been subject to a comprehensive revaluation and the balance sheet has been prepared on a ``fresh start' basis as at March 31, 1999.
Under this basis of presentation comparative statements for prior periods would not be required. However, to facilitate the assessment of certain elements of operating performance, a balance sheet at December 31, 1998, a statement of shareholders' equity, a comparative income statement, and a comparative statement of cash flow for certain prior periods have been presented. Segmented information for the three month period ended March 31, 1999 has also been presented. The comparative information does not reflect any of the adjustments required to record the ``fresh start'.
2. Revenue
Post Reorganization Pre Reorganization
------------------- ------------------
Three Six Three Nine Three
months months months months months
ended ended ended ended ended
Sep 30 Sep 30 Mar 31 Sep 30 Sep 30
1999 1999 1999 1998 1998
------ ------ ------ ------ ------
Gold sales 8,772 18,882 9,302 17,408 7,107
Gold contract
proceeds 1,561 3,010 1,069 3,022 724
Royalties (188) (409) (189) (154) (60)
------ ------ ------ ------ ------
10,145 21,483 10,182 20,276 7,771
Accounting
adjustments:
Amortization of (1,155) (2,373) - - -
gold contracts
------ ------ ------ ------ ------
Sales 8,990 19,110 10,182 20,276 7,771
====== ====== ====== ====== ======
As a result of the ``fresh start' accounting referred to in note 1, the Company's gold contracts were recognized as an asset at March 31, 1999 at their estimated fair value of $3,400,000. These gold contracts expire at various dates to December 31, 1999 and are being recognized against revenue over the life of the original contracts.
At September 30, 1999 the Company's gold contracts consisted of 21,000 ounces of put options at $340 per ounce expiring at various dates during the fourth quarter of 1999. Subsequent to September 30, 1999, these put options and certain spot deferred contracts were closed out and the Company entered into a program of spot deferred contracts consisting of 30,000 ounces at prices from $301 to $304 per ounce, maturing at various dates from November 1999 to January 2000.
3. Segmented information
The Company operates in one business segment, gold mining.
As at September 30, 1999
------------------------
Canada Chile Total
------ ------ ------
Total assets 7,248 42,826 50,074
Property, plant & equipment - 30,637 30,637
Post-Reorganization Pre-Reorganization
-------------------- -------------------
Six months ended Three months ended
September 30, 1999 March 31, 1999
-------------------- -------------------
Canada Chile Total Canada Chile Total
------ ----- ----- ------ ----- -----
Purchases of PP&E - 273 273 - 339 339
DD&A - 3,248 3,248 - 2,180 2,180
Gold sales revenue 637 18,473 19,110 1,068 9,114 10,182
Interest income 113 32 145 79 17 96
Interest expense - 561 561 284 324 608
Net income (loss) (198) 692 494 298 112 410
--------------------------------------------------------------------------------
Contact:
Dayton Mining Corp.
Diane Thomas Garrett, Vice President, Corporate
Development and Investor Relations, 604/662-8383 |
