26 Sep 2022 16:32
26 September 2022
Rambler Reports Financial Results
Half Year Ended 30 June 2022
London, England, Newfoundland and Labrador, Canada - Rambler Metals and Mining plc (AIM: RMM) ("Rambler" or the "Company"), a copper and gold producer, explorer, and developer, today reports its unaudited financial results for the half year ended 30 June 2022.
All currency references in this press release are in U.S. dollars except as otherwise indicated.
HALF YEAR OPERATIONAL RESULTS:
The Ming Mine operation achieved significant growth and development improvements during the first half of FY2022. The period under review has seen the operation ramp up production from 25,000 tonnes of ore in January 2022 to 30,000 tonnes in June 2022 (peak months of 32,000 tonnes in April and May 2022), as well as a consistent increase of grade from 1.49% of copper ('Cu') to in excess of 1.8% Cu in June 2022. A total of 2,635 tonnes of Cu was produced during the period under review, 130% more than in the first half of FY2021.
The operation has also been focused on the establishment and maintenance of multiple ore producing zones in order to provide consistent ore supply to fully utilise mill capacity. During the period, a total of 2,281 metres was developed of which 1,511 metres (60%) was attributed to the development of the 735 and 760 levels in the Lower Footwall Zone ('LFZ'). Unlike the Ming North Zone and Upper Footwall Zone where development activity is expensed, the large tonnages associated with the LFZ justify capitalisation of development costs on these levels. A total development cost of $5.4 million was capitalised in H1 2022 compared to $6.6million in H1 2021.
Operational metrics summary | H1 2022 | H1 2021 | Variance | % |
Nugget Pond Feed (tonnes) | 175,264 | 108,871 | 66,393 | 61% |
Concentrate produced (tonnes) | 10,078 | 5,825 | 4,253 | 73% |
Saleable Cu produced (tonnes) | 2,635 | 1,147 | 1,488 | 130% |
Total Development (metres) | 2,281 | 1,435 | 846 | 59% |
Development (metres) | 1,511 | 997 | 514 | 52% |
Operational (metres) | 770 | 438 | 332 | 76% |
Interim financial result summary | H1 2022 | H1 2021 | Variance | % |
Revenue ($m) | 25.4 | 13.4 | 12.0 | 90% |
Production costs ($m) | 26.3 | 10.4 | 15.9 | 153% |
Administrative expense ($m) | 3.3 | 2.6 | 0.7 | 27% |
EBITDA1 ($m) | (4.3) | (1.1) | (3.2) | 291% |
Operating loss ($m) | (7.9) | (2.1) | (5.8) | 276% |
Loss before tax ($m) | (9.6) | (4.8) | (4.8) | 100% |
Loss per share (in $) | (0.05) | (0.05) | - | 0% |
Development Capital Expenditure ($m) | 5.4 | 6.6 | 1.2 | (18%) |
Cash (utilised)/generated in operating activities before changes in working capital ($m) | (2.4) | 0.7 | (3.1) | (443%) |
C1 Cash cost per lb of saleable copper produced1 (in $) | 4.7 | 3.0 | 1.7 | 56% |
1 Refer to page 6 and 7 for detailed calculations
· Total revenue in H1 2022 was $25.4 million which represents a 90% increase compared to the same period in 2021 (H1 2021: $13.4 million) This is a direct effect of the ramp up in operational activity as production volumes increased by 130% over H1 2021. The first 670 tonnes of Cu sold in the period was still subject to a hedge carried over from 2021 and was completed at $3.49/lb ($7,700 per tonne) and 1,700 tonnes of Cu, being 90% of tonnes delivered to Goodyears Cove waiting for collection by our customer, was subject to provisional invoice pricing being valued at $3.74/lb ($8,245 per tonne). As at 30 June 2022, the mark to market valuation on the provisional invoices had a negative impact on revenue for the period of $2.0million.
· The Company has implemented a price monitoring policy that will manage any negative exposure to the Cu price going forward. The Company has the option to secure the market price from the point that provisional invoices are raised.
· Production costs for the period were 153% higher at $26.3 million (H1 2021: $10.4 million) reflecting the ramp-up in production (130% increase of Cu tonne produced), once off ramp up cost and ongoing inflationary pressure.
· Direct cash costs net of by-product credits ('C1 costs') for the period were $4.65/lb of saleable copper (H1 2021: $3.01/lb). The improving trend of the C1 costs over the period is detailed further below.
Quarterly revenue and cash cost summary | Q1 2022 | Q2 2022 | H1 2022 | June 2022 (month) |
Revenue ($m) | 9.7 | 17.7 | 27.4 | 6.5 |
Mark to Market Adjustment ($m) | - | (2.0) | (2.0) | (2.0) |
Net Revenue ($m) | 9.7 | 15.7 | 25.4 | 4.5 |
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Cash Cost less refinery charges ($m) | 15.7 | 13.4 | 29.1 | 4.5 |
Less Gold Revenue ($m) | (0.7) | (1.4) | (2.1) | (0.5) |
C1 Cost Base ($m) | 15.0 | 12.0 | 27.0 | 4.0 |
Cu Produced (lbs) | 2,349,942 | 3,457,034 | 5,806,976 | 1,376,800 |
C1 Cost ($/lbs) | 6.42 | 3.47 | 4.65 | 2.91 |
· The C1 cost has improved during H1 2022 and was $2.91 /lb in June 2022.
· Operating loss for the period was $7.9 million (H1 2021: loss of $2.1 million). This is primarily made up of:
o A significant operational loss was incurred in the first quarter as the Company ramped up towards full capacity but without the benefit of the subsequent increase in Cu volumes.
o Additional costs in the first quarter were incurred as a result of the delay to production for the completion of a second egress and a crusher breakdown.
o The second quarter contributed a small operating profit as the mine started to reach its budgeted production levels.
o Inflationary increases to consumables and energy costs post COVID-19 including significant increase in freight costs.
o Mark to market on copper sales of $2.0 million.
· Earnings before interest, taxes, depreciation, and amortisation ('EBITDA') for the period was a loss of $4.3 million (H1 2021 EBITDA loss: $1.1 million).
FINANCIAL POSITION
· The Company's total current liabilities increased from $18.6 million (as at 31 December 2021) to $28.5 million (as at 30 June 2022). Current liabilities include the NewGen Resources Lending Inc loan with repayments commencing on 31 October 2022, trade and other payables of $15.5 million and the current liability associated with the Elemental Royalties gold stream.
· Trade payables increased by $2.3million during the period.
· The Company's net debt was $20.3 million at 30 June 2022 (31 December 2021: $22.2 million).
· The Company's net current liabilities were $20.0 million as at 30 June 2022 (31 December 2021: $8.8 million).
During the half year, Rambler raised:
· Equity of $5.0 million after expenses; and
· Net $4.6 million through the purchase and sale of the Gold Stream
The application of these funds contributed to:
1) Development capital of $5.4million (H1 2021 $6.6million)
2) Settlement of leases and loans $2.1million (H1 2021 $3.4million)
3) Financing costs $1.1million (FY 2021 $0.6million)
4) Exploration and other assets $1.6million (FY2021 $1.8million)
The shift in financial position of the Company over the 6 months to 30 June 2022 has been caused by a combination of factors that include:
· Increasing production capacity leading to an increase in accounts payable, particularly the case for sub-contracted variable cost services such as long hole drilling and ROM ore haulage.
· Increasing input unit costs, especially for fuel and equipment maintenance.
· Post Covid hyper inflationary increases in consumables due to supply shortage and demand pressure.
· Significant increase in freight charges with the logistics challenges following COVID-19. A reduction in copper price during the second quarter from a level at which it was expected that working capital requirements could be met from revenues.
· The inclusion in current liabilities, as previously stated above, of the Newgen principal repayments from the end of Q3 2022 along with the Elemental and Sandstorm payments.
· A better understanding of the Company's cost structure and opportunities for improvement following considerable work undertaken on improving the Company's financial systems.
These factors have had an impact on operations and accordingly, Rambler is revising its production guidance for 2022 to a range of 6,300 to 6,600 tonnes Cu from 7,000 tonnes. The progress of the NI 43-101 has also been delayed and, subject to funding, is anticipated to be completed in 2023.
CASH FLOW
· Cash utilised from operations before changes in working capital was $2.4 million (H1 2021: cash inflows of $0.7 million).
· Cash generated from operating activities for H1 2022 was $0.5 million (H1 2021: cash utilised of $5.5 million). The cash generated includes an increase in the trade payables during the period of $3.5m.
· The Company received $5.0 million for the sale of shares (after expenses) by way of a placing of 14,466,580 new ordinary shares of 1 pence each at a price of 26.5 pence per share.
· Net cash of $4.6million received from the purchase and sale of the gold stream to Elemental Royalties in April 2022.
· The total capital expenditures for H1 2022 were $7.0 million (H1 2021: $8.4 million) including $5.4 million (H1 2021: $6.6 million) spent on the mineral property at Ming mine, $0.9million (H1 2021: $1.6 million) on property, plant and equipment and $0.7 million (H1 2021: $0.2m) on exploration.
· No Government funds were received during the period under review (H1 2021: $0.4m).
· Leases and loans of $2.1million (H1 2021: $3.4 million) were repaid during the period.
GOING CONCERN
The Group incurred a net loss before tax of $9.6 million for the six months ended 30 June 2022 (2021: $4.8 million). As at 30 June 2022, the Group had net current liabilities of $20.0 million (December 2021: $8.8 million). As set out in the commentary, the Company is able to produce saleable Copper with a positive operational margin. It is therefore evident that the operation has moved away from the requirement of funding to sustain daily operational activities on the mine and is able to service monthly operational cost as incurred, although supply restrictions resulting from our high level of net current liabilities can impact operational performance on a daily basis, in addition the operating margin is dependent on the Cu price which at the time of this release is at a 21 month low.
The balance sheet at December 2021 had net current liabilities of $8.8m which increased to $20.0m at 30 June 2022. A material amount of development has been carried out not only in the period under review but also in the 12-months preceding that which has now resulted in the operation producing some operational cash flow, although this is insufficient to service the working capital requirements. The development of the mine and the losses in the first quarter were only partially funded from new equity and the purchase and sale of the gold stream. The shortfall has resulted in an increase in accounts payable. In addition, debt repayments have now become current.
The balance sheet requires restructuring to support the operations by accelerating repayment of legacy commitments made during the intense Covid period and bringing operational accounts payable balances back to current terms. In addition, rescheduling of the repayment of debt to match Rambler's operational cash flow generation and further capital expenditures to create further efficiencies is required.
Managing cashflow constraints are impacting the mining schedule and therefore resolution of legacy commitments is an immediate priority. Following a review of the latest Group working capital forecasts, the Group needs to raise funds to materially reduce the current creditor position in the short term and for general working capital in the next 12 months through an issue of new equity and restructuring of debt. The forecasts assume that agreement can be reached with NewGen to defer capital payments into 2023. However, whilst the Company is engaged in discussions with NewGen, there can be no certainty that NewGen will agree to defer or reschedule the repayment of its loan, or in the event that the loan is deferred and payments are rescheduled, the terms on which the revised loan will be secured.
The Group's ability to continue operating in the normal course of business is dependent upon establishing sufficient operating cash flows from the Ming Mine, and to the extent required, through access to equity and debt markets. These factors together with the continued unpredictability of cost inflation and the copper prices indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.
The consolidated financial statements have been prepared on a going concern basis which assumes that the Group will be able to realise its assets and settle its obligations in the normal course of business. The Board believes that the Ming Mine will generate sufficient operating cash flows to support the day-to-day activities but requires funding to both finance future growth requirements and reduce the working capital deficit. For the period under review, the Group successfully obtained the gold stream funding (net effect of US$4.6million) and raised equity finance of US5.0million net of expenses. Based upon the board's discussions with the Company's brokers and debt funders, the Board reasonably believes that it will be successful in securing the necessary required fundings.
Accordingly, these financial statements do not give effect to any adjustments which would be necessary should the Group be unable to continue as a going concern and, therefore, be required to realise its assets and discharge its liabilities in other than the normal course of business and at amounts different than those reflected in the financial statements. Such adjustments could be material.
Toby Bradbury, President and CEO, Rambler Metals & Mining commented:
"For several years, the two key challenges at Rambler have been the operation of the underground mine and the weakness of the balance sheet.
The underground operational issues are largely resolved. Notwithstanding this, we foresee more cost efficiencies being achieved in the future. Inefficiencies are still being imposed upon the operations due to the limited financial capacity. In many respects, what has been achieved across the board in the operations (mine and mill) is despite the financial challenges that have prevailed.
When looking at the operating performance, a C1 operating cost in June 2022 of $2.91/lb is starting to show the true potential of this mine. This incorporates all the price increases experienced over the period and we expect this number to continue to reduce. We project our C1 cost at the end of 2022 to be in the range of $2.70-2.80/lb
We continue to enhance our financial systems to further our understanding of costs and use every opportunity to implement cost improvements across all facets of the business.
In the meanwhile, with the flexibility we have created in the mine with the advanced level of development, we are reducing development activity. The increased ore tonnage per level that we are seeing in the Lower Footwall Zone gives us this near-term flexibility to adjust to the current downturn in the copper price.
The constraints of working capital have had an impact on operations. While July and August have each produced in excess of 600 tonnes of payable copper, underground mining in September has been challenged with a change in mining sequence where the root cause was a working capital issue. This specific issue has been addressed as a short-term impact but is expected to run into October. As a result, we are adjusting our production guidance for 2022 to a range of 6,300 to 6,600 tonnes Cu from 7,000 tonnes.
Reiterating the potential scale of the business, the resource base at Ming Mine could be sufficient to support an operation 2.5 times its current output (≈20,000 tonnes Cu p.a.) and still have a +15-year mine life. This is the subject of a feasibility study that has to be conducted. However, even at current scale, this mine works and it is predominantly the legacy issues that are holding us back.
In the context of the resource base that Rambler holds, the valuation of the Company, even including its current debt position, is exceedingly low. The operations are proving themselves and future production is at less risk than it has ever been. Over and above this, there is strong exploration potential with 3 new mineralized zones discovered just this year.
The need to bring capital into the business is to ensure that long-standing legacy commitments are met and not to support on-going operations. The current drop in copper price is one which we believe to be temporary, but we also recognise the volatility in the market.
We are in discussions with all relevant parties about the need to restructure our liabilities and believe that practical solutions will be found all round.
In the meanwhile, we are very appreciative of the support of our suppliers, debt providers and shareholders that ensure the operations continue."
ALTERNATIVE (NON-GAAP) PERFORMANCE MEASURES
Certain financial information provided in this report is non-GAAP performance measures but they are key performance measures that management use to monitor performance and assess the overall effectiveness and efficiency of mining operations. These performance measures are in line with industry practice but do not have a standard meaning within IFRS. These performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS.
The non-GAAP performance measures provide meaningful supplemental information regarding operating results because they exclude certain significant items that are not considered indicative of future financial trends either by nature or amount. As a result, these items are excluded for management assessment of operational performance and preparation of annual budgets. These significant items may include, but are not limited to, restructuring and asset impairment charges, individually significant gains and losses from sales of assets, share based compensation, unrealized gains or losses, and certain items outside the control of management. These items may not be non-recurring. However, excluding these items from GAAP or non-GAAP results allows for a consistent understanding of the Company's consolidated financial performance when performing a multi-period assessment including assessing the likelihood of future results. Accordingly, these non-GAAP financial measures may provide insight to investors and other external users of the Company's consolidated financial information.
C1 Cash Costs Per Payable Pound of Copper Produced - net of by-product credits and before deducting any refinery and treatment charges, and is a key performance measure that management uses to monitor performance. Management uses this measure to assess how well the Company's producing mines are performing and to assess overall efficiency and effectiveness of the mining operations and assumes that realized by-product prices are consistent with those prevailing during the reporting period.
Net debt - a performance measure used by the Company to assess its financial position and is comprised of loans and borrowings (excluding deferred financing costs) and cash and cash equivalents.
EBITDA - net income (loss) attributable to shareholders before net finance expense, tax expense, and depletion and amortization.
Six months | Six months | ||
Reconciliation of C1 Cash Costs
| Ended 30 June | Ended 30 June | |
| 2022 | 2021 | |
| US$'000 | US$'000 | |
Production costs | 26,321 | 10,419 | |
Less by-product credits for concentrate produced | (2,113) | (2,297) | |
General and administrative costs of Ming Mine | 2,823 | 1,992 | |
C1 costs | 27,031 | 10,114 | |
Saleable pounds of copper ('000) | 5,807 | 3,357 | |
C1 costs per pound of saleable copper ($) |
| 4.65 | 3.01 |
Six months | As on | ||
Reconciliation of Net Debt
| Ended 30 June | 30 June | |
| 2022 | 2021 | |
| US$'000 | US$'000 | |
Loans and borrowings current portion | (8,202) | (3,296) | |
Loans and borrowings non-current portion | (11,610) | (17,674) | |
Deferred financing costs of West Face loan | (696) | (2,290) | |
Deferred financing costs of NewGen loan | (852) | - | |
Imputed finance cost on interest free loan | (383) | (497) | |
Cash and cash equivalents | 1,464 | 1,605 | |
Net Debt |
| (20,279) | (22,152) |
Six months | Six months | ||
EBITDA
| Ended 30 June | Ended 30 June | |
| 2022 | 2021 | |
| US$'000 | US$'000 | |
Loss before tax | (9,613) | (4,754) | |
Depreciation and amortisation | 3,657 | 2,435 | |
Net finance costs | 1,669 | 1,196 | |
EBITDA |
| (4,287) | (1,123) |
The audited financial statements as at December 31, 2021 are available on the Company's website at http://www.ramblermines.com
Tim Sanford, P.Eng., is the Qualified Person responsible for the technical content of this release and has reviewed and approved it accordingly. Mr. Sanford is an employee of Rambler Metals and Mining Canada Limited. Tonnes referenced are dry metric tonnes unless otherwise indicated.
Results reported are accurate and reflective as of the date of release. The Company performs regular auditing and reconciliation reviews on its mining and milling processes as well as stockpile inventories, following which past results may be adjusted to reflect any changes.
Abbreviations :
g/t = grammes per tonne
dmt = dry metric tonnes
mtpd = metric tonnes per day
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR') which has been incorporated into UK law by the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.
ABOUT RAMBLER METALS AND MINING
Rambler is a mining and development company that in November 2012 brought its first mine into commercial production. Rambler has a 100 per cent ownership in the Ming Copper-Gold Mine, a fully operational base and precious metals processing facility and year-round bulk storage and shipping facility; all located on the Baie Verte peninsula, Newfoundland and Labrador, Canada.
The Company has established a production profile to meet current mill capacity of 1,350 metric tonnes per day with a target grade of 2% Cu and is evaluating growth opportunities from that base.
Along with the Ming Mine, Rambler also owns 100 per cent of the former producing Little Deer/Whales Back copper mines.
Rambler is listed in London under AIM:RMM.
For further information, please contact:
Toby Bradbury President and CEO Rambler Metals & Mining Plc Tel No: +44 (0) 20 7096 0662 Fax No: +44 (0) 20 8609 0313 | Celeste van Tonder CFO Rambler Metals & Mining Plc Tel No: +44 (0) 20 7096 0662 Fax No: +44 (0) 20 8609 0313 | Tim Sanford. P. Eng. Vice President and Corporate Secretary Rambler Metals & Mining Plc Tel No: +1 (709) 532 5736 Fax No: +1 (709) 800 1921 |
Nominated Advisor (NOMAD) |
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Ewan Leggat, Caroline Rowe SP Angel Corporate Finance LLP Tel No: +44 (0) 20 3470 0470 | ||
Website: www.ramblermines.com
Caution Regarding Forward Looking Statements:
Certain information included in this press release, including information relating to future financial or operating performance and other statements that express the expectations of management or estimates of future performance constitute "forward-looking statements". Such forward-looking statements include, without limitation, statements regarding copper, gold and silver forecasts, the financial strength of the Company, estimates regarding timing of future development and production and statements concerning possible expansion opportunities for the Company. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief are based on assumptions made in good faith and believed to have a reasonable basis. Such assumptions include, without limitation, the price of and anticipated costs of recovery of, copper concentrate, gold and silver, the presence of and continuity of such minerals at modeled grades and values, the capacities of various machinery and equipment, the availability of personnel, machinery and equipment at estimated prices, mineral recovery rates, and others. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, interpretation and implications of drilling and geophysical results; estimates regarding timing of future capital expenditures and costs towards profitable commercial operations. Other factors that could cause actual results, developments or events to differ materially from those anticipated include, among others, increases/decreases in production; volatility in metals prices and demand; currency fluctuations; cash operating margins; cash operating cost per pound sold; costs per ton of ore; variances in ore grade or recovery rates from those assumed in mining plans; reserves and/or resources; the ability to successfully integrate acquired assets; operational risks inherent in mining or development activities and legislative factors relating to prices, taxes, royalties, land use, title and permits, importing and exporting of minerals and environmental protection. Accordingly, undue reliance should not be placed on forward-looking statements and the forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as at the date hereof and the Company does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise, except as required under applicable security law.
(See Company website www.ramblermines.com for H1/22 Results)
unaudited interim condensed consolidated income statement for the six months ended 30 June 2022
| Six months | Six months | |
| Ended 30 June | Ended 30 June | |
| 2022 | 2021 | |
Note | $'000 | $'000 | |
Revenue | 4 | 25,439 | 13,367 |
Production costs | (26,321) | (10,419) | |
Depreciation and amortization | (3,657) | (2,435) | |
Gross (loss)/profit | (4,539) | 513 | |
Administrative expenses | (3,332) | (2,647) | |
Operating loss | (7,871) | (2,134) | |
Foreign exchange (loss)/gain | (642) | 247 | |
Gain/(loss) in fair value of forward contract | 1,168 | (3,202) | |
Gain/ (loss) in fair value of gold streaming | 227 | (6) | |
Loss on fair value revaluation - Elemental | (800) | - | |
Other Income | 5 | 137 | 2,543 |
Other expenses | 5 | (163) | (1,006) |
Net finance costs | (1,669) | (1,196) | |
Loss before tax | (9,613) | (4,754) | |
Income tax charge | 2,708 | - | |
Net loss for the period | (6,905) | (4,754) | |
Other comprehensive income Items that may be reclassified into profit or loss |
| ||
Exchange differences on translation of foreign operations | 14 | (1,764) | 1,962 |
Items that will not be reclassified to the income statement | |||
Gain on fair value of equity investment | - | 135 | |
Other comprehensive (loss)/gain for the period | (1,764) | 2,097 | |
Total comprehensive loss for the period | (8,669) | (2,657) | |
Basic and diluted loss per share | 3 | (0.046) | (0.053) |
unaudited interim condensed consolidated statement of financial position as at 30 June 2022
30 June 2022 | 31 December 2021 | ||
Note | US$'000 | US$'000 | |
Assets |
|
| |
Intangible assets |
| 4,189 | 3,672 |
Mineral property |
| 56,524 | 53,740 |
Property, plant and equipment |
| 22,449 | 23,566 |
Deferred tax | 32,084 | 29,919 | |
Restricted cash | 3,504 | 3,568 | |
Total non-current assets |
| 118,750 | 114,465 |
Inventory | 6 | 4,691 | 4,356 |
Trade and other receivables | 7 | 2,408 | 1,421 |
Derivative financial asset | - | 2,473 | |
Cash and cash equivalents | 1,464 | 1,605 | |
Total current assets |
| 8,563 | 9,855 |
Total assets |
| 127,313 | 124,320 |
Liabilities | |||
Loans and borrowings | 9 | 8,202 | 3,296 |
Derivative financial liabilities | 361 | 1,163 | |
Gold Stream | 4,320 | 749 | |
Gold liability | 173 | 222 | |
Trade and other payables | 8 | 15,477 | 13,217 |
Total current liabilities |
| 28,533 | 18,647 |
Net current liabilities | 7 | (19,970) | (8,792) |
Loans and borrowings | 9 | 11,610 | 17,674 |
Gold Stream | 9,120 | 8,098 | |
Gold liability | 99 | 124 | |
Provision | 1,747 | 1,767 | |
Trade and other payables | 8 | 2,014 | 1,505 |
Total non-current liabilities |
| 24,590 | 29,168 |
Net assets |
| 74,190 | 76,505 |
Equity | |||
Issued capital | 19,888 | 19,654 | |
Share premium | 144,526 | 138,739 | |
Share warrants reserve | 1,484 | 1,484 | |
Share Options reserve | 3,546 | 3,184 | |
Merger reserve | 180 | 180 | |
Translation reserve | (18,212) | (16,419) | |
Retained profits | (77,222) | (70,317) | |
Total equity |
| 74,190 | 76,505 |
Consolidated Statement of Changes in Equity
Ordinary Share | Deferred Share | Share | Warrants | Share option | Merger | Translation | Other | Retained | Total | |||||||||||
Capital | Capital | Premium | Reserve | Reserve | Reserve | Reserve | Reserve | Profits | ||||||||||||
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |||||||||||
Balance at January 1, 2022 |
1,960 | 17,694 | 138,739 | 1,484 | 3,184 | 180 |
(16,419) | - |
(70,317) |
76,505 |
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Comprehensive income |
| |||||||||||||||||||
Loss for the period | - | - | - | - | - | - | - | - |
(6,905) |
(6,905) |
| |||||||||
Foreign exchange translation differences | - | - | - | - | - | - | (1,793) | - | - | (1,793) |
| |||||||||
Total other comprehensive income | - | - | - | - | - | - | - | - | - | - |
| |||||||||
Total comprehensive income for the period | - | - | - | - | - | - | (1,793) | - | - | (1,793) |
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Transactions with owners |
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Issue of share capital | 234 |
- | 6,049 | - | - | - | - | - | - | 6,283 |
| |||||||||
Share issue expenses | - | - | (263) | - | - | - | - | - | - | (263) |
| |||||||||
Warrants exercised | - | - | 1 | - | - | - | - | - | - | 1 |
| |||||||||
Share-based payments | - | - | - | - | 362 | - | - | - | - | 362 |
| |||||||||
Transactions with owners | 234 | - | 5,787 | - | 362 | - | - | - | - | 6,383 |
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Balance at June 30, 2022 | 2,194 | 17,694 | 144,526 | 1,484 | 3,546 | 180 |
(18,212) | - |
(77,222) |
74,190 |
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Consolidated Statement of Changes in Equity (continued)
Ordinary Share | Deferred Share | Share | Warrants | Share option | Merger | Translation | Other | Retained | Total | |
Capital | Capital | Premium | Reserve | Reserve | Reserve | Reserve | Reserve | Profits | ||
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
Balance at January 1, 2021 | 1,087 | 17,694 | 115,191 | 3,185 | 2,311 | 180 | (15,888) | 172 | (56,616) | 67,316 |
Comprehensive income | ||||||||||
Loss for the period | - | - | - | - | - | - | - | - | (4,754) |
(4,754) |
Foreign exchange translation differences | - | - | - | - | - | - | 1,962 | - | - | 1,962 |
Gain on fair value of equity investment (net of tax) | - | - | - | - | - | - | - | 135 | - | 135 |
Total other comprehensive income | - | - | - | - | - | - | - | 135 | - | 135 |
Total comprehensive income for the period | - | - | - | - | - | - | 1,962 | 135 | - | 2,097 |
Transactions with owners | ||||||||||
Issue of share capital | 356 |
- | 10,352 | - | - | - | - | - | - | 10,706 |
Share issue expenses | - | - | (566) | - | - | - | - | - | - | (567) |
Warrants exercised | 22 | - | 668 | (298) | - | - | - | - | - | 394 |
Share-based payments | - | - | - | - | 252 | - | - | - | - | 252 |
Transactions with owners | 378 | - | 10,454 | (298) | 252 | - | - | - | - | 10,786 |
Balance at June 30, 2021 | 1,465 | 17,694 | 125,645 | 2,887 | 2,563 | 180 | (13,926) | 307 | (61,370) | 75,445 |
unaudited interim condensed consolidated statement of cash flows for the six month ended 30 June 2022
Six months | Six months | ||
ended 30 June | ended 30 June | ||
2022 | 2021 | ||
$'000 | $'000 | ||
Cash flows from operating activities |
| ||
Loss before tax | (9,614) | (4,754) | |
Depreciation and amortisation | 3,657 | 2,460 | |
Gain on sale of non-core assets | - | (2,424) | |
Loss on derivative financial instruments | 1,971 | 172 | |
(Gain)/loss on fair value of forward contract | (1,168) | 3,202 | |
(Gain)/loss in fair value on Gold Streaming | (227) | 6 | |
Share based payments | 362 | 252 | |
Foreign exchange difference | 1,133 | (287) | |
Finance cost | 1,428 | 1,164 | |
Reclamation and site closure costs | 17 | 32 | |
Gain on fair value of government interest-free loan | - | (119) | |
Other expense | - | 1,006 | |
Cash (utilised)/generated in operating activities before changes in working capital | (2,441) | 710 | |
Decrease/(Increase)in other receivables | 94 | (716) | |
(Increase) in inventory | (422) | (580) | |
(Increase) in trade receivables | (855) | (575) | |
(Increase)/decrease in prepayments | (255) | (794) | |
Decrease/(Increase)in derivative financial instruments | 863 | (613) | |
Increase/(decrease) in trade payables and creditors | 3,489 | (2,885) | |
Net cash generated/(utilised) in operating activities |
| 473 | (5,453) |
Cash flows from investing activities |
| ||
Interest received | - | 9 | |
Proceeds from sale of non-core assets | - | 2,000 | |
Acquisition of evaluation and exploration assets | (688) | (214) | |
Acquisition of Mineral property - net | (5,436) | (6,567) | |
Acquisition of property, plant and equipment | (917) | (1,601) | |
Net cash utilised in investing activities |
| (7,041) | (6,373) |
Cash flows from financing activities |
| ||
Issue of share capital | 5,318 | 10,708 | |
Warrants exercised | 1 | 392 | |
Share issue expenses | (263) | (566) | |
Interest paid | (1,079) | (616) | |
Government assistance loan | - | 403 | |
Elemental Gold stream | 11,000 | - | |
Repayment of Gold Stream | (6,432) | (850) | |
Repayment of Loans | (1,107) | (2,188) | |
Lease payments | (997) | (1,184) | |
Net cash generated in financing activities |
| 6,441 | 6,099 |
Net decrease in cash and cash equivalents | (127) | (5,727) | |
Cash and cash equivalents at beginning of period | 1,605 | 6,242 | |
Effect of exchange rate fluctuations on cash held | (10) | 168 | |
Cash and cash equivalents at end of period |
| 1,464 | 683 |
Notes to the Consolidated Financial Statements
1. Nature of operation and going concern
Rambler Metals and Mining Plc (the "Company") is a limited company incorporated and domiciled in United Kingdom whose shares are publicly traded. The registered office of the Company is located at 3 Sheen Road, Richmond Upon Thames, Surrey, United Kingdom. The principal activity of the Company and its subsidiaries (collectively "the Group") is the operation, development, and exploration of the Ming Copper-Gold Mine ("Ming Mine") located in Baie Verte, Newfoundland and Labrador, Canada.
The Group incurred a net loss before tax of $9.6 million for the six months ended 30 June 2022 (2021: $4.8 million). As at 30 June 2022, the Group had net current liabilities of $20.0 million (December 2021: $8.8 million). As set out in the commentary, the Company is able to produce saleable Copper with a positive operational margin. It is therefore evident that the operation has moved away from the requirement of funding to sustain daily operational activities on the mine and is able to service monthly operational cost as incurred, although supply restrictions resulting from our high level of net current liabilities can impact operational performance on a daily basis, in addition the operating margin is dependent on the Cu price which at the time of this release is at a 21 month low.
However, the balance sheet at December 2021 had net current liabilities of $8.8m which increased to $20.0m at 30 June 2022. A material amount of development has been carried out not only in the period under review but also in the 12-months preceding that which has now resulted in the operation producing some operational cash flow, although this is insufficient to service the working capital requirements. The development of the mine and the losses in the first quarter were only partially funded from new equity and the purchase and sale of the gold stream. The shortfall has resulted in an increase in accounts payable. In addition, debt repayments have now become current.
The balance sheet requires restructuring to support the operations by accelerating repayment of legacy commitments made during the intense Covid period and bringing operational accounts payable balances back to current terms. In addition, rescheduling of the repayment of debt to match Rambler's operational cash flow generation and further capital expenditures to create further efficiencies is required.
Managing cashflow constraints are impacting the mining schedule and therefore resolution of legacy commitments is an immediate priority. Following a review of the latest Group working capital forecasts, the Group needs to raise funds to materially reduce the current creditor position in the short term and for general working capital in the next 12 months through an issue of new equity and restructuring of debt. The forecasts assume that agreement can be reached with NewGen to defer capital payments into 2023. However, whilst the Company is engaged in discussions with NewGen, there can be no certainty that NewGen will agree to defer or reschedule the repayment of its loan, or in the event that the loan is deferred and payments are rescheduled, the terms on which the revised loan will be secured.
The Group's ability to continue operating in the normal course of business is dependent upon establishing sufficient operating cash flows from the Ming Mine, and to the extent required, through access to equity and debt markets. These factors together with the continued unpredictability of cost inflation and the copper prices indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.
The consolidated financial statements have been prepared on a going concern basis which assumes that the Group will be able to realise its assets and settle its obligations in the normal course of business. The Board believes that the Ming Mine will generate sufficient operating cash flows to support the day-to-day activities but requires funding to both finance future growth requirements and reduce the working capital deficit. For the period under review, the Group successfully obtained the gold stream funding (net effect of US$4.6million) and raised equity finance of US5.0million net of expenses. Based upon the board's discussions with the Company's brokers and debt funders, the Board reasonably believes that it will be successful in securing the necessary required fundings.
Accordingly, these financial statements do not give effect to any adjustments which would be necessary should the Group be unable to continue as a going concern and, therefore, be required to realise its assets and discharge its liabilities in other than the normal course of business and at amounts different than those reflected in the financial statements. Such adjustments could be material.
2. Basis of preparation
The consolidated financial statements are presented in United States dollars ("US dollars" or "$"), rounded to the nearest thousand dollars, except the notes to the consolidated financial statements or when otherwise indicated. US dollars is used as the presentation currency in line with industry peers.
The Board reviews the Group's budgets, cashflow forecasts and its adaptability to suit prevailing circumstances and the Board considers that the Group has adequate resources to continue its operational existence for the foreseeable future, subject to the material uncertainty referenced in Note 1.
The consolidated interim financial information for the six months ended 30 June 2022 has been reviewed by the Board and the Chief Financial Officer and were approved for issue on 26 September 2022. The consolidated interim financial information for six months ended 30 June 2022 and comparatives for six months ended 30 June 2021 are unaudited. It does not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2021 Annual Report.
The same accounting policies, presentation and methods of computation are followed in the interim consolidated financial information as were applied in the Group's latest annual audited financial statements except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2022 and will be adopted in the 2022 annual financial statements.
3. Loss per share
| Number | |
In issue at January 1, 2021 | 81,356,440 | |
Effect of shares issued during period | 9,201,063 | |
Weighted average number of ordinary shares for 6 months to June 30, 2021 | 90,557,503 | |
In issue at January 1, 2022 |
| 144,679,553 |
Effect of shares issued during period |
| 5,553,195 |
Weighted average number of ordinary shares for 6 months to June 30, 2022 | 150,232,748 |
| Six months to | Six months to | |
30 June | 30 June | ||
2022 | 2021 | ||
Loss for the period (US$'000) | (6,905) | (4,754) | |
Weighted average number of ordinary shares ('000) | 150,233 | 90,557 | |
Loss per share (US$) | (0.047) | (0.053) |
4. Revenue
Six months | Six months | ||
| Ended 30 June | Ended 30 June | |
| 2022 | 2021 | |
| US$'000 | US$'000 | |
Revenue from sale of commodities | 27,410 | 13,539 | |
Loss on fair value of provisional priced commodities | (1,971) | (172) | |
25,439 | 13,367 |
The fair value adjustment on Revenue results from the impact of the quoted metal prices on provisional invoices not being finalised at the end of June 2022. All provisional invoices were revalued to reflect the market value of the Copper and Gold at 30 June 2022.
5. Other income
Six months | Six months | |
Ended 30 June | Ended 30 June | |
2022 | 2021 | |
$'000 | $'000 | |
Gain on fair value of government interest-free loan | - | 119 |
Gain from sale of non-core assets | - | 2,424 |
Interest and other income | 137 | - |
Total other income | 137 | 2,543 |
Write off non- refundable deposit | - | (732) |
Imputed interest of long-term payables | (163) | (274) |
Total other expenses | (163) | (1,006) |
6. Inventory
30 June | 31 December | |||
| 2022 | 2021 | ||
$'000 | $'000 | |||
Metals in process | 1,736 | 1,172 | ||
Operating supplies, net of provision | 2,955 | 3,184 | ||
4,691 | 4,356 |
7. Trade and other receivables
30 June | 31 December | |||
2022 | 2021 | |||
$'000 | $'000 | |||
Trade receivables | 855 | - | ||
Other receivables | - | 73 | ||
Sales taxes recoverable | 726 | 726 | ||
Prepayments | 827 | 622 | ||
2,408 | 1,421 |
8. Trade and other payables
Trade and other payables less than one year | 30 June | 31December | ||
2022 | 2021 | |||
$'000 | $'000 | |||
Trade payables | 13,942 | 10,555 | ||
Other payables | 779 | 1,004 | ||
Accrued expenses | 2,534 | 3,163 | ||
| 17,255 | 14,722 |
9. Loans and Borrowings
30 June | 31 December | ||
| 2022 | 2021 | |
| $'000 | $'000 | |
Non-current liabilities |
|
|
|
Finance lease liabilities | 1,598 | 2,058 | |
NewGen Loan | 8,585 | 14,135 | |
Government assistance | 1,427 | 1,481 | |
11,610 | 17,674 | ||
|
| ||
Current liabilities |
|
|
|
Finance lease liabilities | 1,869 | 1,832 | |
NewGen Loan | 6,229 | 372 | |
Government assistance | 104 | 102 | |
Advance Purchase Facility | - | 990 | |
8,202 | 3,296 |
NewGen Loan
During 2021 the Group completed a 3-year senior secured debt financing for a total of US$16.4 million with NewGen Resource Lending Inc. ("NewGen"). The loan bears interest at the rate of 8.0% plus the greater of:
(i) US Dollar 3-month LIBOR; and
(ii) 1.75% per annum, payable monthly.
The loan matures in three years and principal repayments will commence the month following the first anniversary of the closing date of the first tranche being October 2022 and be paid monthly thereafter (i.e. fully amortized for the remaining 24 months from the date of first principal payment until the end of the third year).
The loan was subject to 3% arrangement fees of the gross amount which was recognised as deferred cost. As part of the loan agreement, 4,109,818 warrants were issued with exercise price of £0.2661 per share. The warrants expire in four years. The fair value of warrants of $0.9 million is determined through Black Scholes model. Further, Gold equivalent payment (GEP) in total of 144 ounces will be paid over twenty-eight months. The fair value of the GEP at 30 June 22 is $0.27 million (December 2021: $0.34 million). The total deferred cost of $2.4 million is amortised over the term of loan. The principal balance of the NewGen Loan of $16.4 million remains unchanged since December 2021, as the principal repayments only commence in October 2022 onwards and the carrying amount (net of deferred expense) of the loan is $14.8 million (Dec 2021: 14.5million) as of 30 June 2022.
Government Assistance
In 2019, Group received $0.4 million in interest free repayable contributions from a Canadian government agency. Contributions to a total of $1.6 million are available in support of the Phase II expansion project for the mine. The contributions are repayable over eight years from May 2019. Due to COVID-19 pandemic Canadian government provided the moratorium period from April to December 2020. The fair value of the contributions received, calculated at a market interest rate of 12%, have been classified as a financial liability with the difference between the fair value and the amount received credited against the cost of assets under construction. The fair value of loan as at 30 June 2022 is $0.9 million (December 2021: $1 million).
In 2020, Group received further $0.4 million in interest free repayable contributions from a Canadian government agency as part of assistance to COVID-19 outbreak. The contributions are repayable over three years from January 2023.The fair value of the contributions received, calculated at a market interest rate of 12%, have been classified as other income. The fair value of loan as at 30 June 2022 is $0.63 million (December 2021: $0.61 million).
Lease liabilities
Minimum lease Payments | Interest | Principal | Minimum lease Payments | Interest | Principal | ||
2022 | 2022 | 2022 | 2021 | 2021 | 2021 | ||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | ||
Less than one year | 2,029 | 160 | 1,869 | 2,029 | 197 | 1,832 | |
Between one and five years | 1,662 | 64 | 1,598 | 2,137 | 79 | 2,058 | |
3,691 | 224 | 3,467 | 4,166 | 276 | 3,890 |
Under the terms of the lease agreements, no contingent rents are payable. The lease liabilities are secured on the Right of Use assets.
10. GOLD STREAM NOTE
· In April 2022, the Company received upfront cash consideration of US$11 million from Elemental Royalties Corp.('Elemental'). Elemental will receive quarterly payments for 50% of the accountable gold produced by the Company until 10,000 ounces of gold have been delivered, decreasing to 35% for a further delivery of 5,000 ounces of gold and 25% for the remainder of the life of the mine.
· Elemental will make ongoing payments to the Company equal to 20% of the market price of gold for each ounce of gold delivered.
· Rambler will make minimum gold deliveries of 1,200 ounces to Elemental in each of the first three years of the Agreement.
· Rambler has completed the repurchase of its previous gold stream with Sandstorm Gold Royalties ("Sandstorm"). The consideration for the repurchase is US$7m less payable gold delivered since 1 October 2021 and 1,150 oz of gold to be delivered over the next 18 months.
SUBSEQUENT EVENTS
· On the 4th July 2022 Board of Directors authorized the issuance of 393,664 Restricted Share Units to persons discharging managerial responsibilities and a former director of the Company.