August 5, 2016, Vancouver, British Columbia—TriMetals Mining Inc. (TSX: TMI and TMI.B, US OTCQX: TMIAF and TMIBF), reports the release of its unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2016 and the related management’s discussion and analysis of financial position and results of operations (“MD&A”). In this press release, all amounts are expressed in U.S. dollars, unless otherwise indicated.
At June 30, 2016 the Company had $2,612,080 in cash and cash equivalents which included $1,699,747 (CDN$2.2 million) in cash received for the first tranche of a private placement that closed on July 5, 2016. Subsequent to June 30, 2016, the Company received additional CDN$2.1 million in cash for the second tranche of the private placement which closed on July 11, 2016.
On July 26, 2016 the Company announced the start of the 2016 drill program at Gold Springs (NR 16-17 dated July 26, 2016). The program, which consists of 20,000 feet of drilling (6,100 metres), is expected to cost approximately $1.3 million, and includes drilling, road and drill-pad construction, geochemistry, camp costs and environmental studies for permitting among other things.
The Company reported a net loss of $19,960,453 ($0.15 per share) during the three months ended June 30, 2016 (2015 – $2,062,047 ($0.02 per share)) and a net loss of $21,981,999 ($0.16 per share) (2015 – $1,350,031 ($0.01 per share)) during the six months ended June 30, 2016. The 2016 three-month loss includes a non-cash charge of $18,988,076 (2015 – $1,570,634) due to the significant change in the fair value of the Company’s Class B shares during that period. Under International Financial Reporting Standards, the Company’s Class B shares are considered to be financial instruments, not equity instruments, and classified as non-current liabilities in the Company’s balance sheet. The Class B shares are measured at fair value at each period-end, which is based on the closing price of the Class B shares on the Toronto Stock Exchange (“TSX”), and changes in fair values are included in the determination of earnings/loss for the period. During Q2, 2016, the closing price of the Class B shares on the TSX increased from CDN$0.12 per Class B share at March 31, 2016 to CDN$0.33 per Class B share at June 30, 2016. This significant price increase during Q2, 2016 gave rise to the non-cash charge of $18,988,076. The non-cash charge for the six-month period ended June 30, 3016 amounted $20,490,977 (2015 – $432,557) as the closing price of the Class B shares on the TSX at December 31, 2015 was CDN$0.11 per share.
General and administrative expenses for the three-month period increased from $523,987 in 2015 to $720,145 in 2016 and for the six-month period from $1,071,341 in 2015 to $1,141,564 in 2016. Excluding the impact of share-based payments, which is a non-cash expense, and tend to fluctuate significantly between quarters in accordance with the timing of stock option grants and the Company’s share price, general and administrative expenses decreased in 2016 by a factor of 18% in the six-month period and 12% in the three-month period when compared to the same periods of 2015, as the Company has continued to streamline its operations and administration in Q2.
Total exploration spending for the six months ended June 30, 2016 decreased to $565,105 from $1,100,653 incurred in the six months ended June 30, 2015. The current period costs included $466,987 incurred at Gold Springs which included costs associated with further analysis of exploration data, ongoing metallurgical testing and environmental studies for permitting. In addition, the Company expanded its Gold Springs property holdings by acquiring a 64.75 hectare Utah State mineral lease at a cost of $20,000. At Escalones, the Company incurred costs of $98,118 which mainly included land payments and supervision.
The comparative 2015 six-month costs included $872,634 incurred at Gold Springs which mainly included costs associated with updating the resource estimate and ongoing metallurgical testing to support the updated PEA. A total of $228,019 was incurred at Escalones, including a cash option payment of $100,000.
The oral hearing in the Company’s subsidiary, South American Silver Limited’s (“SASL”) international arbitration against the Plurinational State of Bolivia (“Bolivia”) was held in Washington, D.C., on July 11 to July 21, 2016 (NR 16-16, July 25, 2016). Pursuant to the procedural orders in place, both parties will submit post-hearing memorials, due on a date yet to be determined, after which the Tribunal will deliberate and issue a final award. It is typical for tribunals in this type of arbitration to require six to twelve months to finalize and issue a final award.
SASL seeks monetary compensation for damages in the amount of $385.7 million, which includes $307.2 million for all of its losses caused by Bolivia’s breaches of the UK-Bolivia Treaty, plus $78.5 million in pre-award interest but excludes fees and costs incurred in connection with the arbitration proceeding. As an alternative, SASL had been seeking restitution of the Malku Khota project along with monetary damages for project-delay in the amount of $176.4 million, including pre-award interest, but after the second round of pleadings, SASL elected not to pursue its claim for restitution of the project itself along with the delay damages due to, among other things, the fact that restitution is rarely granted by tribunals (and even when it is, States are usually given the option of paying current fair market value in lieu of restitution), the changes in the Bolivian mining law since the expropriation impose onerous conditions on foreign investors, and Bolivia’s conduct during the arbitration.
The priorities of the Company are to (i) continue with the exploration program at Gold Springs with the intention of expanding the mineral resource and moving the project closer to production; (ii) seek an appropriate joint venture partner for the Escalones copper-gold porphyry project in Chile; (iii) continue international arbitration proceedings against Bolivia to recover full compensation based on the fair market value for the Malku Khota project; and (iv) diligently continue managing the Company’s cash resources.
About TriMetals Mining Inc.
TriMetals Mining Inc. is a growth focused mineral exploration company creating value through the exploration and development of the near surface, Gold Springs gold-silver project in mining friendly Nevada and Utah in the U.S.A.
The Company’s approach to business combines the team’s track record of discovery and advancement of large projects, key operational and process expertise, and a focus on community relations and sustainable development. Management has extensive experience in the global exploration and mining industry.
The Company’s common shares and Class B shares are listed on the Toronto Stock Exchange under the symbols “TMI” and “TMI.B” and the common shares and Class B shares also trade on the OTCQX market under the symbol “TMIAF” and “TMIBF”. Additional information related to TriMetals Mining Inc. is available at www.trimetalsmining.com and on SEDAR at www.sedar.com.
Certain statements contained herein constitute “forward-looking statements”. Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as “expect”, “seek”, “continue”, “typical”, “will”, “usually”, “intention”, “creating”, “and similar expressions. These forward- looking statements are based on current expectations and entail various risks and uncertainties. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, the outcome of the international arbitration process, including the timing and the quantum of damages to be obtained, management’s expectation with regard to the final amount of costs, fees and other expenses and commitments payable in connection with the arbitration, and any inability or delay in the collection of the value of any award or settlement; and risks of the mineral exploration industry which may affect the advancement of the Gold Springs or Escalones projects, including possible variations in mineral resources or grade, recovery rates, metal prices, availability of sufficient financing to fund further required work in a timely manner and on acceptable terms, availability of equipment and qualified personnel, failure of equipment or processes to operate as anticipated, changes in project parameters as plans continue to be refined; and other risks more fully described in the Company’s Annual Information Form filed and publicly available on SEDAR at www.sedar.com. The assumptions made in developing the forward-looking statements include: the ability of the Company to realize value from its investments in Bolivia; the arbitration proceeding in a customary manner and in accordance with Procedural Order No. 1 (as amended in April and June 2015 and in January 2016) and the third party funder honoring its contractual commitments, the accuracy of current resource estimates and the interpretation of drill, metallurgical testing and other exploration results; the continuing support for mining by local governments in Nevada, Utah and Chile, the availability of equipment and qualified personnel to advance the Gold Springs project; and the execution of the Company’s existing plans and further exploration and development programs for the Gold Springs Project, which may change due to changes in the views of the Company or if new information arises which makes it prudent to change such plans or programs.
Readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason. Unless otherwise indicated, forward-looking statements in this news release describe the Company’s expectations as of August 5, 2016.
TriMetals Mining Inc. Contact:
President & CEO
Chief Financial Officer