SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
February 13, 1997
ROYAL OAK MINES INC.
(Exact name of registrant as specified in its charter)
Commission File Number 1-4350
ONTARIO, CANADA 98-0160821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Royal Oak Mines (USA) Inc.
5501 Lakeview Drive
Kirkland, Washington
U.S.A. 98033
(Address of principal executive offices) (Postal/Zip Code)
(206) 822-8992
Registrant's telephone number, including
area code
Item 5. Other Events
On February 10, 1997, the Registrant issued the press release set
forth as Exhibit 99.1 hereto, which press release is hereby incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Royal Oak Mines Inc. press release, dated February 10, 1997.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
ROYAL OAK MINES INC.
Date: February 13, 1997 By: /s/ James H. Wood
James H. Wood
Chief Financial Officer
Exhibit 99.1 Royal Oak Mines Inc. press release, dated February 10, 1997.
[Royal Oak Mines Inc. Press Release Letterhead]
FOR IMMEDIATE RELEASE FROM KIRKLAND
February 10, 1997
Royal Oak Announces 1996 Results of Operations
Royal Oak Mines Inc. (TSE and AMEX: RYO) announced today the unaudited operating
results for the fourth quarter and year ended December 31, 1996. All figures
are in thousands of Canadian dollars unless otherwise stated.
<TABLE>
Three Months Year
ended December 31 ended December 31
1996 1995 1996 1995
(audited)
<S> <C> <C> <C> <C>
Gold Production (ounces) 105,548 94,786 389,203 371,151
Revenue $71,999 $55,214 $255,168 $208,311
Operating Income (Loss) 7,725 (879) 29,204 4,743
Net Income (Loss) (21,306) 3,691 (5,985) 23,169
Net Income (Loss) Per Share (C$) (0.15) 0.03 (0.04) 0.20
Net Cash Flow from Operations 14,605 12,011 57,449 31,760
Net Cash Flow Per Share from
Operations (C$) 0.11 0.10 0.42 0.27
Weighted Average Common Shares Outstanding 136,758,106 117,900,306
Year-end Common Shares Outstanding 138,845,263 119,118,714
Cash Cost of Production (US$/ounce) $357 $364 $343 $358
Average Spot Gold Price (US$/ounce) 376 385 388 384
Average Realized Gold Price
(US$/ounce) 505 430 481 409
</TABLE>
In 1996, gold production was 389,203 ounces, an increase of 5% from the 371,151
ounces produced in 1995. In the fourth quarter of 1996, gold production was
105,548 ounces compared to 94,786 ounces in the same period a year earlier.
Revenue of $255.2 million in 1996 included hedging gains of $51.3 million and
was 22% higher than revenue of $208.3 million in 1995. As a result of the
hedging gains, the realized gold price was US$481 per ounce of gold compared to
US$409 per ounce in 1995.
Operating income in 1996 was $29.2 million compared to $4.7 million in 1995.
The increase was due to the higher revenue in 1996 which was partly offset by
higher depreciation charges and exploration costs. A net loss of $6.0 million
($0.04 per share) was incurred in 1996 compared to net income of $23.2 million
($0.20 per share) in 1995. The loss in 1996 reflects a fourth quarter provision
totalling $37.6 million for the revaluation of the carrying values of the Hope
Brook and Colomac assets, and for the provision for reclamation costs at Hope
Brook.
In 1996, cash costs were reduced to US$343 per ounce of gold from US$358 per
ounce in the previous year, the result of the implementation of a number of cost
control measures as well as the benefits of processing higher grade ore from the
Nighthawk Mine at the Pamour mill in Timmins.
Production and cash cost estimates for 1997
As announced last November, Royal Oak plans to close its Hope Brook Mine in
Newfoundland in September, 1997 when it is estimated that economic ore reserves
will be depleted. As a result, gold production in 1997 is forecast to decline
to 375,000 ounces at an estimated cash cost of US$325 per ounce.
As part of the Company's successful gold hedging program, approximately 310,000
ounces of gold production for 1997 have been sold forward at US$395 per ounce.
This gives the Company significant price protection in the current weak gold
market where the US$340 per ounce level is being tested.
Ore reserves increased in 1996
Mineable ore reserves were increased from 9.263 million ounces of gold at
December 31, 1995 to 9.875 million ounces at year-end 1996, an increase of
612,000 ounces of gold. At the Timmins operations in Ontario, mineable ore
reserves increased by 1,020,000 ounces of gold, most of which was at the open
pit where a highly successful drilling program enabled the Pamour expansion
project to be significantly increased in scale and scope.
In 1996, mineralized material was increased by 1.081 million ounces of gold, or
17%, from 6.303 million ounces to 7.384 million ounces at year-end. Most of
this increase was attributable to the successful drilling programs at the
Timmins and Matachewan properties at the Ontario Division.
Total resources in 1996 increased by 11%, or 1.693 million ounces of gold, to
17.259 million ounces from 15.566 million ounces at the end of 1995.
Significant progress made on principal development projects
During 1996, significant progress was made on the Company's principal
development projects. At the large Kemess gold-copper project in British
Columbia construction started in July of last year. The concrete has been
poured in the mill building and steel erection will commence shortly. The
airstrip and the 450-person camp have been completed. Production is scheduled
to commence in the second quarter of 1998. Annual life-of-mine production is
forecast at 250,000 ounces of gold at an estimated cash cost of US$189 per
ounce, and 60 million pounds of copper at US$0.48 per pound. Mine life in
excess of 16 years is expected based on current ore reserves.
At the Matachewan project in Ontario, permitting is proceeding satisfactorily.
Mine planning and detailed design of the processing plant, infrastructure and
tailings facility are underway. The #3 shaft is being dewatered and the hoist
and headframe have been commissioned. Installation of the powerline, and the
pipeline to the Montreal River, has been completed. Following the closure of
the Hope Brook Mine in September of this year, items of mill and mine equipment
are scheduled to be shipped to Matachewan in the spring of 1998 when
construction will commence. Pre-stripping of the open pit will also start at
this time. Underground production and milling are planned to commence in the
fourth quarter of 1998. Average annual production over the 10-year mine life
is expected to be 100,000 ounces of gold per year at an estimated cash cost
of US$225 per ounce.
On the Pamour expansion at Timmins, Ontario, detailed engineering and design of
the "Superpit" and the 15,000 tpd mill are underway. Considerable progress has
been made on environmental baseline studies and a project prospectus is being
prepared. The new plant is expected to be in production in the fourth quarter
of 1999. The Timmins operations are expected to be in operation for over 20
years at an annual production rate of approximately 240,000 ounces of gold per
year at an estimated cash cost of US$225 per ounce when full capacity is
reached.
Outlook
Commenting on the long-term outlook for Royal Oak, the Company's President and
Chief Executive Officer, Margaret Witte, said, "We are very pleased with the
progress being made on our principal development projects at Kemess and
Matachewan, and on the expansion of the Timmins operations. Construction on
these projects is on track and we expect to be producing approximately one
million ounces of gold annually by the year 2000 at an estimated cash cost of
US$215 per ounce".
"In the near-term, we have sold forward substantially all of our 1997 gold
production at US$395 per ounce which gives us significant price protection in
the present weak gold market".
"We recognize that 1996 was a challenging year for the Company and appreciate
the support of our employees and shareholders throughout the year."
Conference Call
Royal Oak's management will be holding an open conference call at 2:00 p.m.
Toronto time (11:00 a.m. Pacific time) on Monday, February 10, 1997 to review
operating results for 1996 and to discuss the outlook for 1997 and beyond.
Mining analysts, investors and the media are invited to phone (416) 620-4001
approximately 5 to 10 minutes beforehand. A replay of the conference call can
be accessed by dialling (416) 626-4119 until midnight Thursday, February 13,
1997.
For further information, contact: or in Europe contact:
Mr. J. Graham Eacott Mr. David Williamson
Vice President, Investor Relations David Williamson Associates
Royal Oak Mines International Investor Relations
5501 Lakeview Drive 78 Old Broad Street, 3rd Floor
Kirkland, WA 98033 London, England EC2M 1QP
Telephone: (206) 822-8992 Telephone: 011-44-171-628-3989
Facsimile: (206) 822-3552 Facsimile: 011-44-171-920-0563
<TABLE>
ROYAL OAK MINES INC.
Consolidated Balance Sheets
(unaudited - Cdn$ 000's)
December 31 December 31
1996 1995
======== ===========
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $197,766 $139,410
Marketable securities 28,259 2,971
Receivables 17,492 7,138
Inventories 61,844 46,136
Prepaid expenses 7,729 5,620
-------- --------
Total Current Assets 313,090 201,275
Property, Plant and Equipment, net 482,733 191,381
Long-Term Investments 16,586 36,307
Deferred Charges and Other Assets 9,221 --
-------- --------
TOTAL ASSETS $821,630 $428,963
======== ========
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 61,579 $37,911
Current portion of deferred revenue 10,994 4,523
------- -------
Total Current Liabilities 72,573 42,434
Deferred Revenue and Other Liabilities 52,827 40,800
Deferred Income Taxes 5,064 5,064
Senior Subordinated Notes 239,680 --
Minority Interest in Subsidiary Companies 120 170
-------- --------
TOTAL LIABILITIES 370,264 88,468
-------- --------
SHAREHOLDERS' EQUITY
Capital Stock
Common stock
Authorized - unlimited
Outstanding - 138,845,263
(Dec. 31, 1995 - 119,118,714) 378,813 261,957
Retained Earnings 72,553 78,538
-------- --------
TOTAL SHAREHOLDERS' EQUITY 451,366 340,495
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $821,630 $428,963
======== ========
Certain 1995 items have been reclassified to conform with the 1996
presentation.
</TABLE>
<TABLE>
ROYAL OAK MINES INC.
Consolidated Statements of Income
(unaudited - Cdn$ 000's except per share amounts)
Three months ended Twelve months ended
December 31 December 31
------------------ -------------------
1996 1995 1996 1995
======== ======== ========= ========
<S> <C> <C> <C> <C>
REVENUE $ 71,999 $ 55,214 $ 255,168 $208,311
-------- -------- --------- --------
EXPENSES
Operating 50,943 46,914 181,869 182,214
Royalties and marketing 689 817 2,904 2,535
Administrative and corporate 1,979 1,504 9,339 8,549
Depreciation and amortization 6,499 4,001 24,900 13,645
Reclamation 2,111 930 2,663 1,250
Exploration and other 909 128 4,742 619
Provision for (Recovery of) loss on foreign
currency contracts 1,144 1,799 (453) (5,244)
-------- -------- --------- --------
Total operating expenses 64,274 56,093 225,964 203,568
-------- -------- --------- --------
OPERATING INCOME (LOSS) 7,725 (879) 29,204 4,743
OTHER INCOME (EXPENSE)
Interest and other income, net 3,007 5,457 8,556 20,902
Long-term debt interest (6,499) -- (10,089) --
Long-term debt interest capitalized 3,436 -- 5,362 --
Closure costs and write-down of mineral
resource properties (37,633) (891) (37,633) (891)
-------- -------- --------- --------
INCOME (LOSS) BEFORE UNDERNOTED (29,964) 3,687 (4,600) 24,754
Income and mining taxes - current 184 (294) (900) (1,542)
Income and mining taxes - deferred 8,820 -- -- --
Minority interest 14 500 50 594
Equity in income (loss) of associated
companies (360) (202) (535) (637)
-------- -------- --------- --------
NET INCOME (LOSS) (21,306) 3,691 (5,985) 23,169
RETAINED EARNINGS - BEGINNING OF PERIOD 93,859 74,847 78,538 55,369
-------- -------- --------- --------
RETAINED EARNINGS - END OF PERIOD $ 72,553 $ 78,538 $ 72,553 $ 78,538
======== ======== ========= ========
EARNINGS (LOSS) PER SHARE $(0.15) $0.03 $(0.04) $0.20
======== ======== ========= ========
Weighted average number of
common shares outstanding (000's) 138,734 119,072 136,758 117,900
======== ======== ========= ========
Certain 1995 items have been reclassified to conform with the 1996 presentation.
</TABLE>
<TABLE>
ROYAL OAK MINES INC.
Consolidated Statements of Cash Flow
(unaudited - Cdn$ 000's)
Three months ended Twelve months ended
December 31 December 31
------------------ -------------------
1996 1995 1996 1995
======== ======== ========= ========
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Consolidated net income (loss) for the period $(21,306) $ 3,691 $ (5,985) $ 23,169
Items not affecting cash:
Depreciation and amortization 6,499 4,001 24,900 13,645
Reclamation 2,111 930 2,663 1,250
Deferred income tax (8,820) -- -- --
Provision for (Recovery of) loss on
foreign currency contracts 1,144 1,799 (453) (5,244)
Write-down of resource properties and
other assets 37,633 891 37,633 891
Other 730 (348) 1,014 44
-------- -------- --------- --------
CASH FLOW 17,991 10,964 59,772 33,755
Net changes in other operating items (3,386) 1,047 (2,323) (1,995)
-------- -------- --------- --------
Net cash provided by operating activities 14,605 12,011 57,449 31,760
-------- -------- --------- --------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Issue of common shares 557 (248) 116,855 14,595
Issuance of senior subordinated notes 1,295 -- 239,680 --
Cost of senior subordinated notes (170) -- (8,786) --
Accrued reclamation on acquisition -- -- -- 3,000
Other 1,377 (78) 2,001 (300)
-------- ------- --------- --------
Net cash provided by (used in) financing
activities 3,059 (326) 349,750 17,295
-------- ------- --------- --------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Investment in Kemess capital assets through
purchase of companies -- -- (201,976) --
Decrease in long-term investments -- -- 26,882 --
Investment in capital assets through purchase
of Consolidated Professor Mines Limited (242) -- (16,100) --
Net additions to property, plant and
equipment (44,623) (26,327) (123,844) (66,018)
Investments, net of sales (596) (4,050) (7,697) (19,025)
Change in other assets -- (593) (820) (568)
-------- -------- --------- --------
Net cash used in investing activities (45,461) (30,970) (323,555) (85,611)
-------- -------- --------- --------
INCREASE (DECREASE) IN CASH AND MARKETABLE
SECURITIES DURING PERIOD (27,797) (19,285) 83,644 (36,556)
CASH AND MARKETABLE SECURITIES AT BEGINNING
OF PERIOD 253,822 161,666 142,381 178,937
-------- -------- --------- --------
CASH AND MARKETABLE SECURITIES AT END OF
PERIOD $226,025 $142,381 $226,025 $142,381
======== ======== ========= ========
Certain 1995 items have been reclassified to conform with the 1996 presentation.
</TABLE>
