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 12, 1998
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
- ------------------------------- -------------------------------
(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)
(425) 822-8992
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Registrant's telephone number, including
area code
<PAGE>
Item 5. Other Events
On May 12, 1998, 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 12,
1998.
<PAGE>
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 12, 1998 By: /s/ James H. Wood
---------------------
James H. Wood
Chief Financial Officer
Exhibit 99.1 Royal Oak Mines Inc. press release, dated May 12,
1998.
FOR IMMEDIATE RELEASE FROM KIRKLAND
May 12, 1998
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,
1998. All figures are in thousands of Canadian dollars unless
otherwise stated.
First Quarter Highlights
Financial Position
March 31, 1998 December 31, 1997 March 31, 1997
-------------- ----------------- --------------
Cash 63 568 113,761
Total assets 842,541 843,386 810,207
Net debt (1) 334,724 274,136 132,915
Shareholders' equity 318,638 316,378 443,365
(1) Net debt = Notes payable + current and non-current capital leases - cash
* Operating income of $3.2 million in Q1/98 compared with an
operating loss of $9.2 million in Q1/97.
* Net income of $2.3 million (2 cents per share) in Q1/98
compared with a net loss of $8.1 million (6 cents per share) in
Q1/97.
* Cash flow before other operating items of $0.9 million in
Q1/98 compared with a cash deficiency of $0.5 million in Q1/97.
* Operating results in Q1/98 were favourably impacted by
closure of the high cost Hope Brook and Colomac mines toward the
end of last year.
* Gold production from continuing operations at Giant and
Pamour/Nighthawk mines was 45,557 ounces, down 5% from 47,999
ounces produced in Q1/97. Total gold production from all
operations in Q1/97 was 85,080 ounces.
* Average cash cost of US$280 per ounce from continuing
operations was down 16% from US$332 per ounce in Q1/97. Average
cash cost for all operations in Q1/97 was US$372 per ounce.
* Average realized gold price of US$345 per ounce, a premium
of US$51 per ounce, or 17% above average spot price of US$294 per
ounce.
* Arranged US$120 million debt financing to complete Kemess
project.
* Scheduled start-up of Kemess this week.
<PAGE>
Royal Oak Announces First Quarter Results, Page 2
Operating Results
Three months ended March 31
1998 1997
------- --------
Gold production (ounces) 45,557 85,080
Revenue 22,429 47,974
Cash flow before changes in other operating items 930 (488)
Cash flow before changes in other operating items
per share (C$) 0.01 --
Net income (loss) 2,260 (8,113)
Net income (loss) per share (C$) 0.02 (0.06)
Cash cost of production (US$/oz) 280 372
Average spot gold price (US$/oz) 294 351
Average realized gold price (US$/oz) 345 411
Weighted average common shares outstanding (millions) 138.940 138.845
Period-end common shares outstanding (millions) 138.940 138.870
Operating results in the first quarter of 1998, compared with the
same period in 1997, were favourably impacted by the closure of
the high cost Hope Brook and Colomac mines in September and
December of 1997, respectively. Both mines were placed on care
and maintenance.
In the first quarter of 1998, gold production from continuing
operations at the Giant and Pamour/Nighthawk mines was 45,557
ounces, a decrease of 5% from the 47,999 ounces produced at these
mines in the same period of 1997. Total gold production in the
first quarter of 1997 (including production from the Hope Brook
and Colomac mines) was 85,080 ounces.
Revenue in the first quarter of this year was $22.4 million
compared with $48.0 million in the same period of 1997. The
decrease in revenue in the period this year reflected a decrease
in gold production of 39,523 ounces, mainly due to the closure of
the Hope Brook and Colomac mines, and a decrease of 16% in the
average realized gold price to US$345 per ounce from US$411 per
ounce in the first quarter of 1997. Revenue in the first quarter
of 1998 included hedging gains of $3.2 million compared with $8.0
million in the same period last year.
In the first quarter of 1998, the Company reported operating
income of $3.2 million compared with an operating loss of $9.2
million in the first quarter of 1997. Net income in the first
quarter of 1998 was $2.3 million, or 2 cents per share, compared
with a net loss of $8.1 million, or 6 cents per share, in the
same period last year.
In the first quarter of 1998, the average cash cost of production
for continuing operations at the Giant and Pamour/Nighthawk mines
was US$280 per ounce, a decrease of 16% from the average of
US$332 per ounce for these mines in the same period of 1997. In
the first quarter of last year, the average cash cost for all
operations was US$411 per ounce, which reflected the combined
impact of the high cost Hope Brook and Colomac mines that were
subsequently closed toward the end of the year. The average cash
cost of US$280 per ounce at the Giant and Pamour/Nighthawk mines
in the period this year reflects major cost-cutting initiatives
implemented in the fourth quarter of last year when an average
cash cost of US$285 per ounce was reported for these mines.
Cash flow before changes in other operating items was $0.9
million in the first quarter of 1998 compared with a cash
deficiency of $0.5 million in the same quarter last year. Net
cash used in operating activities
<PAGE>
Royal Oak Announces First Quarter Results, Page 3
was $35.3 million in the first quarter of this year compared with
net cash used of $66.3 million in the same period last year. The
net change in cash used in other operating items of $36.2 million
and $65.8 million in the respective periods mainly reflects
increases in accounts payable related to the Kemess project.
Kemess Mine Scheduled to Commence Production this Week
The Kemess gold copper mine in north central British Columbia is
scheduled to commence production within the next few days after
completing construction of the mill and the tailings pipeline.
Over 9 million tons of waste has been stripped from the open pit
during the pre-production phase in order to expose ore for
drilling and blasting. Ore has already been hauled to the
primary crusher to commission the equipment. Power is now being
delivered to the mine site through the 230 kV transmission line.
Outlook
Margaret K. Witte, president and chief executive officer of Royal
Oak, commenting on the outlook for the Company, said, "We are
very excited about starting our new Kemess Mine within the next
few days. Building the Kemess facility has been a great
challenge for Royal Oak and we value the commitment of our
construction workforce, suppliers and contractors who have
supported the Company, particularly during this difficult period.
We expect to close the previously announced US$120 million debt
financing as soon as documentation is complete, allowing us to
resolve our short-term liquidity problems.
We are also encouraged that the average cash cost at our Giant
and Pamour operations has been maintained at the US$280 per ounce
level after we took some major cost cutting initiatives in the
fourth quarter last year. As a result, we were able to generate
operating income, earnings, and cash flow before other operating
items in the first quarter of this year despite a weak gold
market.
The last twelve months have been a difficult time for Royal Oak
as we have overcome a number of challenges on our Kemess project
and have taken steps to improve our cost structure going forward
by closing the high cost Hope Brook and Colomac mines. I believe
the worst is now behind us as we are about to commence production
at Kemess and complete our financing. I look forward to sharing
with you during the remainder of this year the results of
operations at Kemess as the mine reaches its operating targets."
For further information contact: or in Europe contact:
Mr. J. Graham Eacott Mr. David Williamson
Vice President, Investor Relations David Williamson Associates
Royal Oak Mines International Investor Relations
5501 Lakeview Drive 15 St. Helen's Place, 3rd Floor
Kirkland, WA 98033-7314 London, England, EC3A 6DE
Telephone:(425) 822-8992 Telephone:011-44-171-628-3989
Facsimile:(425) 822-3552 Facsimile:011-44-171-920-0563
Internet site: http://www.royal-oak-mines.com
<PAGE>
<TABLE> Royal Oak Mines Inc.
Consolidated Balance Sheets
(unaudited - Cdn$ 000's)
March 31 December 31
1998 1997
========= ===========
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 63 $ 568
Marketable securities 560 9,875
Receivables 14,294 30,923
Inventories 16,204 21,120
Prepaid expenses 4,523 3,967
---------- ----------
Total Current Assets 35,644 66,453
Property, Plant and Equipment, net 758,695 730,314
Long-Term Investments 12,373 12,145
Reclamation and Other Deposits 14,360 14,332
Deferred Charges and Other Assets 21,469 20,142
---------- ----------
TOTAL ASSETS $ 842,541 $ 843,386
========== ==========
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 95,577 $ 135,320
Deferred revenue 16,066 20,085
Capital leases 4,446 4,531
Taxes payable 1,563 1,723
Long-term debt interest payable 4,579 10,326
Accrued unrealized loss on derivatives 18,258 21,327
---------- ----------
Total Current Liabilities 140,489 193,312
Deferred Revenue 23,132 23,330
Other Liabilities 46,817 57,427
Long-Term Debt 310,895 250,338
Deferred Income Taxes 2,532 2,532
Minority Interest in Subsidiary Companies 38 69
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TOTAL LIABILITIES 523,903 527,008
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SHAREHOLDERS' EQUITY
Capital Stock
Common stock
Authorized - unlimited
Outstanding - 138,940,263
(Dec. 31, 1997 - 138,940,263) 379,040 379,040
Deficit (60,402) (62,662)
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TOTAL SHAREHOLDERS' EQUITY 318,638 316,378
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 842,541 $ 843,386
========== ==========
</TABLE>
<PAGE>
<TABLE>
Royal Oak Mines Inc.
Consolidated Statements of Income (Loss)
(unaudited - Cdn$ 000's except per share amounts)
Three months ended March 31
---------------------------
1998 1997
============ ============
<S> <C> <C>
REVENUE $ 22,429 $ 47,974
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EXPENSES
Operating 18,231 42,978
Care and maintenance 1,337 74
Royalties and marketing 291 424
Administrative and corporate 2,246 2,652
Depreciation and amortization 4,004 5,553
Reclamation 584 1,130
Exploration and other 447 1,347
Provision for (Recovery of) loss
on foreign currency and commodity
contracts (7,894) 3,008
---------- ----------
Total operating expenses 19,246 57,166
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OPERATING INCOME (LOSS) 3,183 (9,192)
OTHER INCOME (EXPENSE)
Interest and other income (expense), net (8) 1,713
Interest expense (297) (118)
Long-term debt interest (8,208) (6,344)
Interest capitalized 8,208 4,420
Foreign currency translation loss on
long-term debt (292) (2,538)
---------- ---------
INCOME (LOSS) BEFORE UNDERNOTED 2,586 (12,059)
Income and mining taxes - current (420) (326)
Income and mining taxes - deferred -- 4,221
Minority interest 31 36
Equity in income of associated companies 63 15
---------- ----------
NET INCOME (LOSS) 2,260 (8,113)
RETAINED EARNINGS (DEFICIT) - BEGINNING OF PERIOD (62,662) 72,553
---------- ----------
RETAINED EARNINGS (DEFICIT) - END OF PERIOD $ (60,402) $ 64,440
========== ==========
EARNINGS (LOSS) PER SHARE $ 0.02 $ (0.06)
========== ==========
Weighted average number of common shares
outstanding (000's) 138,940 138,845
========== ==========
Certain of 1997 amounts have been reclassified to conform with the current
year's presentation.
</TABLE>
<PAGE>
<TABLE>
Royal Oak Mines Inc.
Consolidated Statements of Cash Flow
(unaudited - Cdn$ 000's)
Three months ended March 31
1998 1997
============ ============
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) for the period $ 2,260 $ (8,113)
Items not affecting cash:
Depreciation and amortization 4,004 5,553
Amortization of deferred finance costs 425 239
Deferred income tax -- (4,221)
Reclamation 584 1,130
Provision for (Recovery of) unrealized
loss on foreign currency and commodity
contracts (6,539) 2,518
Foreign currency translation on senior
subordinated notes 292 2,538
Deferred charges and other (96) (132)
---------- ----------
Cash flow 930 (488)
Net change in other operating items (36,197) (65,763)
---------- ----------
Net cash used in operating activities (35,267) (66,251)
---------- ----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Issue of common shares -- 112
Capital lease obligation (474) (278)
Issue of Senior Secured Debt 64,059 --
Issue costs of long-term debt (5,566) --
---------- ----------
Net cash provided by (used in) financing activities 58,019 (166)
---------- ----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Proceeds from asset sales 4,267 --
Investment in other capital assets, net (36,446) (46,275)
BC Government assistance -- 30,965
Investment in exploration and non-producing
properties, net (274) (1,691)
Change in other assets (119) (587)
---------- ----------
Net cash used in investing activities (32,572) (17,588)
---------- ----------
DECREASE IN CASH AND MARKETABLE SECURITIES
DURING PERIOD (9,820) (84,005)
CASH AND MARKETABLE SECURITIES AT BEGINNING
OF PERIOD 10,443 198,356
---------- ----------
CASH AND MARKETABLE SECURITIES AT END OF PERIOD $ 623 $ 114,351
========== ==========
</TABLE>
