SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
July 7, 1997
ROYAL OAK MINES INC.
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(Exact name of registrant as specified in its charter)
Commission File Number 1-4350
ONTARIO, CANADA 98-0160821
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
c/o Royal Oak Mines (USA) Inc.
5501 Lakeview Drive
Kirkland, Washington
U.S.A. 98033
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(Address of principal executive offices) (Postal/Zip Code)
(425) 822-8992
Registrant's telephone number, including
area code
Item 5. Other Events
On July 7, 1997, the Registrant issued the following press release:
[Royal Oak Mines Inc. Press Release Letterhead]
FOR IMMEDIATE RELEASE FROM KIRKLAND
July 7, 1997
Blockade to Royal Oak's Kemess Mine Lifted
Royal Oak Mines Inc. (TSE and AMEX: RYO) announced today that the blockade on
the Finlay Forest Road was lifted last Friday. Equipment and supplies are
flowing freely to the Company's Kemess mine site. The blockade, which lasted
several days, has not affected the construction schedule. The Kemess Mine is
scheduled to commence production in April 1998.
Royal Oak announced on June 27, 1997 that it had reached agreement with the
provincial government of British Columbia on the terms and conditions of the
compensation, investment and economic assistance package that the government
is providing. The capital cost of the Kemess project is estimated at
approximately C$425 million. The increase from the previous estimate of C$390
million includes all working capital necessary for start-up, payment of higher
stumpage fees under the terms of the formal agreement with the provincial
government, and design changes to the tailings dam based on geotechnical
considerations.
The Kemess Mine is scheduled to produce an average of 250,000 ounces of gold
and 60 million pounds of copper per year, equivalent to approximately 450,000
ounces of gold and gold equivalents. The average life-of-mine cash cost is
estimated to be approximately US$200 per ounce of gold and US$0.50 per pound
of copper. Based on current mineable ore reserves, mine life at Kemess is
expected to be approximately 16 years.
Royal Oak completed the purchase of Kemess in January 1996 for C$202 million
and has invested to date an additional C$300 million for a total of C$502
million. The current market capitalization of Royal Oak is approximately
C$330 million which is less than the current value of Kemess. The Company
currently has approximately C$80 million in its treasury.
As a result of the high copper component at Kemess and the strong copper price
which has risen over the last year from US$0.85 to approximately US$1.15 per
pound, the current depressed gold price has not affected the fundamental
economics of the Kemess project. Kemess, combined with the Timmins and
Yellowknife operations are scheduled to produce approximately 480,000 ounces
of gold and gold equivalent ounces in 1998 at an average cash cost of less
than US$240 per ounce.
Commenting on the fall in the gold price in the last few days, Margaret K.
Witte, President and CEO of Royal Oak, said, "We must be patient during this
panic in the gold market and recognize that a substantial amount of production
at Kemess will be from copper which has demonstrated increasing price strength
over the last twelve months. The cash flow which is expected to be generated
from Kemess starting in 1998 indicates significant appreciation in share price
can be anticipated. All our shareholders should take this opportunity to
increase their holdings."
For further information contact: or in Europe contact:
Mr. J. Graham Eacott Mr. David Williamson
Vice President, Investor Relations David Williamson Associates Limited
Royal Oak Mines International Investor Relations
5501 Lakeview Drive 78 Old Broad Street, 2nd Floor
Kirkland, WA 98033-7314 London, England EC2M 1QP
Telephone: (425) 822-8992 Telephone: 011-44-171-628-3989
Facsimile: (425) 822-3552 Facsimile: 011-44-171-920-0563
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: July 7, 1997 By: /s/ James H. Wood
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James H. Wood
Chief Financial Officer
