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
May 15, 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 Identification
incorporation or organization) 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 May 15, 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 May 15, 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: May 15, 1997 By:/s/James H. Wood
----------------
James H. Wood
Chief Financial Officer
Exhibit 99.1 Royal Oak Mines Inc. press release, dated May 15, 1997.
[Royal Oak Mines Inc. Press Release Letterhead]
FOR IMMEDIATE RELEASE FROM KIRKLAND
May 15, 1997
Royal Oak Announces First Quarter Results
Royal Oak Mines Inc. (TSE and AMEX: RYO) announced today the unaudited
financial results for the three months ended March 31, 1997. All figures are
in thousands of Canadian dollars unless otherwise stated.
<TABLE>
Three Months Ended
March 31
1997 1996
-------- --------
<S> <C> <C>
Gold production (ounces) 85,080 88,196
Revenue 47,484 51,049
Operating income (loss) (9,431) 881
Net income (loss) (8,113) 1,356
Net income (loss) per share (C$) (0.06) 0.01
Net cash used in operating activities 66,251 3,666
Net cash used in operating activities per share (C$) 0.48 0.03
Cash cost of production (US$ per ounce) 372 348
Average spot gold price (US$ per ounce) 351 400
Average realized gold price (US$ per ounce) 411 423
Weighted average common shares outstanding (million) 138.845 131.817
Quarter-end common shares outstanding (million) 138.870 138.181
</TABLE>
Gold production of 85,080 ounces in the first quarter of 1997 was 4% less than
the 88,196 ounces produced in the same period a year earlier. The lower
production in the period this year was due to the temporary closure of the
Hope Brook mill in January and February for cost saving measures. The mine
continued to operate, although at a lower production rate than in the first
quarter of 1996. The Company plans to permanently close the Hope Brook
operation in the third quarter of this year when economic ore reserves will be
depleted. Mine and mill equipment will be dismantled and moved to the
Matachewan project in Ontario which is expected to commence production in the
second quarter of 1999. This six month delay from the previously planned
start-up date will allow the Company to conserve cash during this period of
weaker gold prices until the Kemess Mine reaches full production capacity. In
the first quarter this year, gold production at the Giant, Colomac and
Pamour/Nighthawk mines was 5%, 4% and 8% higher, respectively, than in the
first quarter of 1996.
Revenue in the period ended March 31, 1997 was $47.5 million, a decrease of 7%
from revenue of $51.0 million in the same period a year earlier. The decrease
was due to the combined impact of lower gold production and a lower average
realized gold price. The Company realized an average gold price of US$411 per
ounce, 3% below the US$423 per ounce of gold realized in the first quarter of
1996. The average spot gold price of US$351 per ounce in the first quarter
was 12% below the average spot price of US$400 in the same period last year.
The Company's average cash cost of production in the first quarter this year
was US$372 per ounce of gold, an increase of 7% from the US$348 per ounce in
the same period last year. The principal reasons for this increase were
higher costs at Colomac, and higher costs at Hope Brook where lower gold
production resulted from the temporary mill closure. Cash costs at the Giant
and Pamour/Nighthawk mines were below the levels in the first quarter of last
year.
The combination of lower revenue, higher cash costs, and a provision for loss
on foreign currency contracts due to a weaker Canadian dollar impacted
operating income. The operating loss in the first quarter of this year was
$9.4 million compared to operating income of $0.9 million in the same period
last year. In the period ended March 31, 1997, the Company incurred a net
loss of $8.1 million, or 6 cents per share, compared to net income of $1.4
million, or 1 cent per share in the comparable period in 1996. Interest
payable on the Company's U.S.-denominated Senior Subordinated Notes, which
were issued in the third quarter of last year, and the foreign exchange
translation effect on these Notes because of the weaker Canadian dollar,
contributed to the loss in the first quarter.
Net cash used in operating activities was $66.3 million, or 48 cents per
share, in the first quarter of this year compared to $3.7 million, or 3 cents
per share in the same period last year. In the first quarter of this year,
the increase in cash invested in working capital related to operations was
$65.8 million. The primary use of the cash invested in working capital was an
increase in inventory items at the Colomac Mine (supplies are transported to
Colomac in the first quarter of each year), and an increase in accounts
receivable on the Kemess project.
In light of the current market conditions and weak gold price, the Company is
revaluing its high cost production with a view to suspending operations that
do not generate cash flow at a gold price of US$350 per ounce in order to
conserve cash. Royal Oak is constructing and developing a number of major
projects which are expected to decrease cash costs significantly in the
future.
The principal project under construction is the Kemess Mine which is scheduled
to commence production in the second quarter of 1998. Construction is now
approximately 50% complete. Mill steelwork is being erected and major
services have been installed. Mining equipment is being delivered to site in
preparation for pre-production stripping of the open pit in July of this
year. Significant progress is being made on construction of the tailings dam
and on clearing the corridor for installation of the power line.
Approximately $325 million of the total capital cost of $390 million has been
committed in purchase orders and construction contracts. Recruiting of the
approximately 350-person workforce to operate the mine has begun. The Company
will focus on successful completion of its Kemess project and on operating its
lower cash cost mines to maximize operating cash flow.
For further information contact: or in Europe contact:
Mr. J. Graham Eacott Mr. David Williamson
Vice President, Investor Relations David Williamson Associates
Royal Oak Mines International Investor Relations
5501 Lakeview Drive 78 Old Broad Street, 3rd Floor
Kirkland, WA 98033 London, England, EC2M 1QP
Telephone: (425) 822-8992 Telephone: 011-44-171-628-3989
Facsimile: (425) 822-3552 Facsimile: 011-44-171-920-0563
<TABLE>
Consolidated Balance Sheets
(unaudited - Cdn$ 000's)
March 31 December 31
1997 1996
======== ===========
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $113,761 $197,766
Marketable securities 590 590
Receivables 50,858 17,492
Inventories (note 4) 82,965 61,844
Prepaid expenses 14,011 7,729
-------- --------
Total Current Assets 262,185 285,421
Property, Plant and Equipment, net 494,181 482,733
Long-Term Investments 44,006 44,255
Deferred Charges and Other Assets 9,835 9,221
-------- --------
TOTAL ASSETS $810,207 $821,630
======== ========
LIABILITIES
Current Liabilities
Accounts payable $ 16,268 $21,094
Accrued payroll costs 3,579 3,514
Accrued reclamation costs 6,668 --
Deferred revenue and capital leases 14,722 13,508
Income and other taxes payable 4,478 3,894
Senior subordinated notes interest payable 3,189 10,180
Other current liabilities 27,968 20,383
-------- -------
Total Current Liabilities 76,872 72,573
Deferred Revenue and Other Liabilities
Deferred Reclamation Costs 12,084 17,622
Senior Subordinated Notes (note 12) 242,218 239,680
Deferred Income Taxes 843 5,064
Minority Interest in Subsidiary Companies 105 120
-------- --------
TOTAL LIABILITIES 366,842 370,264
-------- --------
SHAREHOLDERS' EQUITY
Capital Stock (note 11)
Common stock
Authorized - unlimited
Outstanding - 138,870,263
Dec. 31, 1996 - 138,845,263) 378,925 378,813
Retained Earnings 64,440 72,553
-------- --------
TOTAL SHAREHOLDERS' EQUITY 443,365 451,366
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $810,207 $821,630
======== ========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<TABLE>
Consolidated Statements of Income
(unaudited - Cdn$ 000's except per share amounts)
Three months ended
March 31
------------------
1997 1996
======== ========
<S> <C> <C>
REVENUE $ 47,484 $ 51,049
-------- --------
EXPENSES
Operating 43,052 42,029
Royalties and marketing 424 562
Administrative and corporate 2,652 2,149
Depreciation and amortization 5,792 5,076
Reclamation 1,130 159
Exploration and other 1,347 960
Provision for (Recovery of) loss on foreign
currency contracts 2,518 (767)
-------- --------
Total operating expenses 56,915 50,168
-------- --------
OPERATING INCOME (LOSS) (9,431) 881
OTHER INCOME (EXPENSE)
Interest and other income, net (note 3) 1,952 1,382
Interest expense (118) (39)
Senior subordinated notes interest (6,344) --
Senior subordinated notes interest capitalized 4,420 --
Foreign currency translation on senior
subordinated notes (2,538) --
-------- --------
NET INCOME (LOSS) BEFORE UNDERNOTED (12,059) 2,224
Income and mining taxes - current (326) (355)
Income and mining taxes - deferred 4,221 (540)
Minority interest 36 27
Equity in income of associated companies 15 --
-------- --------
NET INCOME (LOSS) (8,113) 1,356
RETAINED EARNINGS - BEGINNING OF PERIOD 72,553 78,538
-------- --------
RETAINED EARNINGS - END OF PERIOD $ 64,440 $ 79,894
======== ========
EARNINGS PER SHARE $(0.06) $0.01
======== ========
Weighted average number of
common shares outstanding (000's) 138,845 131,817
======== ========
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
<TABLE>
Consolidated Statements of Cash Flow
(unaudited - Cdn$ 000's)
Three months ended
March 31
------------------
1997 1996
======== ========
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Consolidated net income (loss) for the period $ (8,113) $ 1,356
Items not affecting cash:
Depreciation and amortization 5,792 5,076
Reclamation 1,130 159
Deferred income tax (4,221) 540
Provision for (Recovery of) loss on
foreign currency contracts 2,518 (767)
Foreign currency translation on senior
subordinated notes 2,538 --
Deferred charges and other (132) 118
-------- --------
CASH FLOW (488) 6,482
Net change in other operating items (65,763) (10,148)
-------- --------
Net cash used in operating activities (66,251) (3,666)
-------- --------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Issue of common shares 112 114,000
Capital lease payable (278) (80)
Deferred credits -- 1,510
-------- -------
Net cash provided by financing activities (166) 115,430
-------- -------
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 -- (13,252)
Investment in other capital assets, net (15,310) (19,428)
Investment in exploration and
non-producing properties, net (1,691) (2,066)
Change in other assets (587) (3,243)
Net cash used in investing activities (17,588) (213,083)
-------- --------
INCREASE (DECREASE) IN CASH AND MARKETABLE
SECURITIES DURING PERIOD (84,005) (101,319)
CASH AND MARKETABLE SECURITIES AT BEGINNING OF PERIOD 198,356 142,381
-------- --------
CASH AND MARKETABLE SECURITIES AT END OF PERIOD $114,351 $ 41,062
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 13,317 $ 39
Income taxes $ 40 $ 355
</TABLE>
Cash consists of cash and short-term investments.
The accompanying notes are an integral part of the Consolidated Financial
Statements.
