Mr. Brett Heath reports
METALLA REPORTS FINANCIAL RESULTS FOR FISCAL 2018
Metalla Royalty and Streaming Ltd. has released its financial results for the fiscal year 2018. For complete details of the consolidated financial statements and accompanying management's discussion and analysis for the year ended May 31, 2018, please see the Company's filings on SEDAR or the Company's website.
Brett Heath, President and CEO of Metalla commented, "During the 2018 fiscal year, Metalla's revenue and cash flow grew significantly with several royalties added to the portfolio. The Company received regulatory approval for its common shares to trade as a Tier 1 TSX-V Issuer and declared a monthly dividend." Mr. Heath continued, "All of these actions position the Company for our next stage of growth as we continue to scale the business by accretive acquisitions that will maximize value for shareholders and provide leverage to gold and silver prices."
All dollar amounts are in Canadian dollars unless otherwise indicated.
FISCAL 2018 FINANCIAL HIGHLIGHTS
During the year ended May 31, 2018 and subsequently, the Company:
shipped and provisionally invoiced 429,315(1)(2) attributable silver ounces ("oz.") at an average price of US$16.74 per oz. for US$7,186,541 or $8,911,310 (see non-IFRS Financial Measures);had total production of 519,791(1)(2) attributable silver oz. for the fiscal year that included 90,476 attributable silver oz. remaining on May 31, 2018 to be sold in subsequent periods;generated cash margin of US$4,154,857(1)(2) (equivalent to $5,152,023) or US$9.68 per attributable silver oz. towards the Company's operating cash flows from the Endeavor silver stream and New Luika Gold Mine ("NLGM") stream held by Silverback Ltd. ("Silverback") (see non-IFRS Financial Measures);recorded revenue from stream interest of $7,368,331 (2017 - $Nil) and net loss of $2,561,756 (2017 net loss of $3,238,684), resulting in working capital of $4,661,792 (2017 - $1,216,319) as at May 31, 2018;completed the acquisition of an additional 1.0% on the Hoyle Pond Extension Royalties;completed the acquisition of a portfolio of royalty and stream interests from Coeur Mining Inc. ("Coeur") that included the Endeavor Silver Stream, Joaquin 2.0% NSR, Zaruma 1.5% NSR, and Puchuldiza 1.5% NSR;completed the acquisition of a 2.0% NSR royalty on Agnico Eagle Mine Limited's Akasaba West Project;announced the acquisition, through a plan of arrangement, of Valgold Resources for the 2.0% NSR on Osisko Mining Inc.'s Garrison Project;provided a mine plan update for its Endeavor Mine silver stream on production through December 2020 operated by CBH Resources Ltd. ("CBH") (please see news release dated May 29, 2018 for further information);provided update on its Joaquin 2.0% NSR royalty, with expected cash flow as early as the calendar year 2019 in the fourth quarter;received regulatory approval on its listing application as a Tier 1 TSX-V Issuer and, effective February 2, 2018, its common shares began to trade;declared and paid a monthly dividend for January to April 2018 of $0.001 per share to the shareholders of the Company (please see news release dated December 12, 2017 for further information);increased the monthly dividend rate effective June 2018 to $0.0015 per share to the shareholders of the Company (please see news release dated March 19, 2018 for further information); andappointed Mr. Alexander Molyneux and Frank L. Hanagarne, Jr. as members of the Board of Directors.
QUARTERLY UPDATES ON ROYALTIES AND STREAMS
Endeavor Silver Stream
The Endeavor Mine located in New South Wales, Australia was once the region's largest zinc, lead, and silver producer. Commissioned in 1983 as the Elura Mine, the site has been operated by CBH Resources since 2003 and was then renamed as the Endeavor Mine. The orebody at the Endeavor Mine has the form of massive vertical pillars, which is similar to others found in the Cobar Basin. Extraction of approximately 30 million tonnes has occurred to date.
Metalla has the right to buy 100% of the silver production up to 20.0 million ounces (7.0 million ounces have been delivered as of August 2018) from the Endeavor Mine for an operating cost contribution of US$1.00 per ounce of payable silver, indexed annually for inflation, and a further increment of 50% of the amount by which silver price exceeds US$7.00 per ounce.
On May 29, 2018, the Company announced by news release it had received an updated mine plan from CBH (the " Endeavor Mine Plan "), which includes 1.6 million Ag ounces forecasted to be produced through December 2020 (3). CBH also had exploration success at depth with a potential new zone called the "Deep Zinc Lode," which has the potential to extend the mine life even further (see news release for additional information on the Endeavor Mine Plan). CBH has adopted a rolling mine plan with increased drilling and new frequent updates every two to three years.
Joaquin Project NSR
A 2.0% NSR royalty payable by Pan American Silver Corporation ("Pan American") on minerals mined from the concessions which form part of Joaquin Project located in central Santa Cruz Province, Argentina, 145 kilometres from Manantial Espejo silver-gold mine owned by Pan American.
Pan American has announced that it finalized a preliminary feasibility study on the La Morocha deposit, which is part of Joaquin Project. The study recommends the development of the La Morocha deposit as an underground mine, with processing to occur at Pan American's Manantial Espejo mill. Pan American's Board of Directors has approved a capital investment of approximately US$37.8 million to construct the La Morocha underground mine and obtained authorizations to initiate construction on the mining project. Pan American filed a technical report(4) pursuant to National Instrument 43-101 - Standards of Disclosure for Mining Projects and filed on SEDAR (www.sedar.com). The technical report outlines initial 474,000 tonnes of probable reserves at 721 parts per million ("ppm") Ag and 0.41 ppm Au, representing contained metal of 11 million oz. Ag and 6,300 oz. Au to be targeted during the first three years of the mine plan (please see Pan American's news release dated January 31, 2018 for further information). Pan American has given guidance that production should start in Q4 of the calendar year 2019.
Garrison Project NSR
A 2.0% NSR royalty payable by Osisko Mining Inc. ("Osisko") on certain claims of the Garrison Project (the "Garrison Royalty"), which covers the Garrcon and Jonpol properties, and the eastern portion of the 903 Zone. The Garrison Project is located approximately 100 kilometers east of Timmins, Ontario, and 40 kilometers north of Kirkland Lake. It resides along the famous Golden Highway in the Timmins and Kirkland Lake region which has historically produced over 100 million ounces of gold. The Garrison Project is 100% owned by Osisko and consists of a portfolio of properties spanning a 50 kilometers distance along the Destor-Porcupine Fault Zone, encompassing 16 noncontiguous properties, including the Garrcon and Jonpol properties, 903 Zone, and Buffonta, and Golden Pike advanced exploration properties.
As at the end of January 2018, Osisko has completed 85,000 meters of new drilling since the 2014 resource update to complement the 108,000 meters drilled at Garrison by previous operators. Osisko has announced that it expects to release an updated resource estimate in the calendar year 2018(5).
Akasaba West Royalty
A 2.0% NSR royalty payable by Agnico Eagle Mines Limited ("Agnico") on its Akasaba West Mine. The mine located less than 30 kilometers from Goldex, the deposit is expected to create flexibility and synergies for the Company's operations in the Abitibi region by using extra milling capacity at both Goldex and LaRonde, while reducing costs. Akasaba West currently hosts probable gold reserves of approximately 145,000 ounces (5.2 million tonnes at 0.87 g/t gold and 0.49% copper) and an indicated gold resource of approximately 49,000 ounces (2.2 million tonnes at 0.70 g/t gold and 0.41% copper) as of December 31, 2017 (6). The Akasaba NSR will be payable after the first 210,000 ounces of gold have been produced, and Agnico has a buy-back right of 1.0% for US$7.5 million.
On June 28, 2018, Canada's Minister of Environment and Climate Change, the Hon. Catherine McKenna announced the cabinet's decision to approve the Akasaba West Copper-Gold Mining Project, following a federal environmental assessment. The project, as proposed by Agnico, will include the construction, operation, and decommissioning of an open-pit copper and gold mine located 15 kilometers east of Val-d'Or, Quebec. This project, when it is operational, is projected to create approximately 100 direct jobs, according to its proponent.
Zaruma Gold Mine NSR
A 1.5% NSR royalty payable by Core Gold Inc. ("Core Gold," formerly Dynasty Metals & Mining) on minerals mined from the Zaruma gold mine located in the Zaruma-Portovelo Mining District of southern Ecuador, 3 kilometers north of the town of Zaruma. Between the years 2012 and 2014, the Zaruma mine produced 72,430 oz. of gold and 152,292 oz. of silver. The Zaruma gold mine is estimated to contain a measured and indicated resource of 2.62 million tonnes with an average gold grade of 12.97 grams per tonne ("g/t") and an inferred resource of 3.7 million tonnes with an average grade of 12.2 g/t (totaling approximately 1.094 million oz. of gold) in a technical report(7) pursuant to National Instrument 43-101 - Standards of Disclosure for Mining Projects and filed on September 17, 2014.
Core Gold's local subsidiary Elipe S.A has been deemed in corporate good standing by Ecuador's government once again. Elipe S.A is the subsidiary of Core Gold that owns the Zaruma gold mine. This reactivation of Elipe S.A allows Core Gold to regain total control of all operations including financial and administrative operations, and to appoint the General Manager of Elipe S.A. Metalla believes that this is a major step for Core Gold to be able to raise the capital needed to restart operations at Zaruma. Metalla has received royalty payments from Core Gold on production that occurred between 2012 and 2014 from the judgment it acquired as part of the Coeur transaction.
NLGM Silver Stream
A 15% ownership interest in Silverback which owns a 100% silver stream on the New Luika Gold Mine ("NLGM") operated and owned by Shanta Gold Limited ("Shanta"). The low-cost New Luika Gold Mine, which is located in the Songwe District of South Western Tanzania approximately 700 kilometers south-west of Dar es Salaam, achieved its first commercial production in 2012. The ore bodies at New Luika comprise high grade (>6 g/t gold), medium grade (3 to 6 g/t gold), and low grade (1 to 3 g/t gold) ore which overall averages 3.9 g/t gold.
Shanta has commenced underground development at the Ilunga underground mine. Ilunga will shortly be the third active source of high-grade ore at NLGM and has a JORC mineral reserve grading 5.56 g/t, which is higher than the Luika deposit. The current mine design of Ilunga has the potential to contribute up to 25,000 tonnes per month of high grade ore with an estimated average contribution of 20,000 oz. per planned level of development. This will enhance the economics at NLGM but not increase overall production.
Hoyle Pond Extension NSR
A 2.0% NSR royalty payable by Goldcorp Inc. ("Goldcorp") on the Hoyle Pond Extension Royalties which are located on claims that are beneath the Kidd metallurgical complex and immediately adjacent to the east and northeast of the Hoyle Pond mine complex. There is a 500,000 oz. Au exemption on the leased mining rights. Currently, there are no publicly disclosed reserves/resources on the extension property. In Goldcorp's 2017 Mineral Reserves and Mineral Resources estimates update(8) (please see Goldcorp's news release dated October 25, 2017), Goldcorp stated that reserve replacement for the Porcupine camp will be focused on the down plunge extension at Hoyle Pond. Metalla is expecting a significant amount of drilling to take place in the calendar year 2018 on the extension property with the potential to be able to quantify reserves/resources in the calendar year 2019.
Qualified Person
The technical information contained in this news release has been reviewed and approved by Charles Beaudry, geologist M.Sc., member of the Association of Professional Geoscientists of Ontario and of the Ordre des Geologues du Quebec and a consultant to Metalla. Mr. Beaudry is a Qualified Person as defined in "National Instrument 43-101 - Standards of disclosure for mineral projects".
About Metalla
Metalla is a precious metals royalty and streaming company. Metalla provides shareholders with leveraged precious metal exposure through a diversified and growing portfolio of royalties and streams. Our strong foundation of current and future cash generating asset base, combined with an experienced team gives Metalla a path to become one of the leading gold and silver companies for the next commodities cycle.
We seek Safe Harbor.
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