EURO RESSOURCES REPORTS EARNINGS FOR
THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30,
2020
Paris, France, August 6, 2020: EURO
Ressources S.A. (“EURO” or “the Company”) (Paris: EUR) today
announced its unaudited statutory interim financial results
prepared in accordance with French Generally Accepted Accounting
Principles (“GAAP”) and its unaudited condensed interim financial
statements prepared in accordance with International Financial
Reporting Standards (“IFRS”) for the six months ended June 30,
2020. These unaudited interim financial statements were approved by
the Board of Directors on August 6, 2020. All financial
amounts are expressed in Euros (“€” or “euros”) unless otherwise
specified.
Highlights
Under French GAAP, EURO reported a net profit of
€8.5 million (€0.137 per share) for the six months ended
June 30, 2020 (€3.5 million for the second quarter of
2020 (€0.055 per share)) compared to €8.3 million
(€0.132 per share) for the six months ended June 30, 2019
(€3.7 million for the second quarter of 2019 (€0.059 per
share)).
Under IFRS, EURO reported a net profit of €8.3
million (€0.132 per share) for the six months ended June 30, 2020
(€3.3 million for the second quarter of 2020 (€0.053 per
share)) compared to €8.2 million (€0.131 per share) for the
six months ended June 30, 2019 (€4.7 million for the
second quarter of 2019 (€0.074 per share)).
EURO recorded revenues of €12.5 million in
the first six months of 2020 (€5.2 million in the second
quarter of 2020) compared to revenues of €12.4 million in the
first six months of 2019 (€6.5 million reported in the second
quarter of 2019).
On June 11, 2020, EURO paid dividends of
€12.5 million (€0.20 per share).
Liquidity and capital
resources
Cash at June 30, 2020 totaled €28.7 million
as compared to €31.6 million at December 31, 2019. The
decrease was mainly due to the dividends paid, partially offset by
cash flow from operating activities.
Marketable securities
EURO holds marketable securities related to
mining companies which are part of a volatile market. Share
market price exposure risk is related to the fluctuation in the
market price of marketable securities. Investments in marketable
securities are recorded at fair value.
As at June 30, 2020, marketable securities
were comprised of 19,095,345 shares of Orea Mining Corp. (formerly
Columbus Gold Corp) (“Orea”) (9.7% of outstanding shares;
December 31, 2019: 10.6%) and 3,819,069 shares of
Allegiant Gold Ltd. (“Allegiant”) (6.2% of outstanding shares;
December 31, 2019: 6.2%).
During the six month period ended June 30,
2020, the Company recognized an unrealized gain under IFRS
following the increase of the fair value of these marketable
securities. Under IFRS, this gain of €0.3 million was recorded
in other comprehensive income (loss of €0.6 million during the six
months ended June 30, 2019). Under French GAAP, the gain of
€0.1 million was recorded in investment income in the
statement of earnings.
Royalty assets (Refer to
MD&A for more detail)
As at June 30, 2020, the Company’s impairment
review indicated that the facts and circumstances did not represent
an indication of potential impairment. In May 2019, The French
Government declared the Montagne D’Or project not yet compatible
with environmental requirements. The statements by the French
Government regarding the Compagnie Minière Montagne d’Or (the joint
venture) in May 2019, to which the Paul Isnard royalty is attached,
have created some uncertainty around the delivery of the various
authorizations and permits not yet obtained and required for
developing the project, and can potentially affect the operational
and financial capacities of the project. Nevertheless, work
continues on both the design of the project and the environmental
framework around it. According to the press release issued by Orea
Mining Corp. on June 4, 2020, the engineering studies for the
project’s improvements and modifications for mining permits are
expected to be completed by mid-year. In light of the above,
the Company maintains the same assumption as in the impairment test
performed as at December 31, 2019. The Company continues to assume
that the various authorizations and permits would be granted under
conditions that will allow the joint venture to go forward with
this project, although the timing is somewhat uncertain. No
impairment charges were recorded in the statement of earnings for
the second quarter ended June 30, 2020.
Comments on financial results prepared
in accordance with French GAAP for the six month period ended June
30, 2020 compared to the same period in 2019
Under French GAAP and IFRS, EURO accounted for
revenues of €12.5 million, an increase compared to revenues of
€12.4 million for the same period in 2019. Revenues were
primarily attributable to the Rosebel royalty of €12.5 million (six
months ended June 30, 2019: €12.5 million). Revenues were
similar to the prior period, primarily as a result of a higher
average gold price in the first six months of 2020 of US$1,633 per
ounce compared to US$1,307 per ounce in the first six months of
2019 (€3.1 million) and a weakened euro (€0.3 million),
partially offset by lower gold production of 107,794 ounces in the
first six months of 2020 compared to 147,744 ounces in the first
six months of 2019 (€3.4 million), due to lower throughput and
ore mined as a result of the temporary suspension of operations
(see news releases dated July 20, 2020 and July 27, 2020). There
were no other royalties from third parties in French Guiana for the
six months ended June 30, 2020 (first six months of 2019:
-€0.1 million due to a reversal of a previously over estimated
royalty receivable).
Under French GAAP, operating expenses (excluding
amortization expense) for the six months ended June 30, 2020 were
€0.57 million compared to €0.46 million during the same period
in 2019. The increase was mainly due to higher administrative costs
in 2020.
The depreciation expense related to intangible
assets was €0.15 million during the first half of 2020
compared to €0.21 million during the first six months of 2019.
This decrease was mainly due to lower production at the Rosebel
mine.
The investment income for the first six months
ended June 30, 2020 was €0.2 million compared to €0.4 million
during the same period in 2019. The decrease was mainly due to
lower interest rates applied to bank balances in 2020.
Financial results included a foreign exchange
gain on bank accounts under French GAAP of €0.04 million in
the first six months of 2020 compared to a foreign exchange gain on
bank accounts of €0.37 million in the first six months of
2019. The decrease of the foreign exchange gain was mainly due to
the weakening of the Euro compared to the United States dollar in
2020 compared to the same period in 2019.
During the first six months ended June 30,
2020, EURO recorded an income tax expense of €3.5 million
compared to €3.9 million during the six months ended June 30,
2019. The decrease was mainly due to the impact of a lower
tax rate and translation adjustments, partially offset by the tax
impact of the change in fair value of the marketable securities in
the six months ended June 30, 2020 compared to the same period in
2019.
Select IFRS financial
results
Since December 31, 2010, EURO no longer prepares
and publishes consolidated financial statements for French
purposes; only French GAAP can be applied for the presentation of
statutory financial statements and approval by the shareholders.
However, in order to comply with Canadian requirements and have
equivalency of information between French financial requirements
and Canadian financial requirements, the following information on
the IFRS financial results is provided for comparison purposes.
Six months ended June 30, 2020
compared to the same period in 2019 (IFRS)
Under IFRS, EURO reported a net profit of €8.3
million (€0.132 per share) for the six months ended June 30, 2020
compared to €8.2 million (€0.131 per share) for the six months
ended June 30, 2019.
Under IFRS, revenues totaled €12.5 million
in the first half of 2020 compared to revenues of
€12.4 million during the same period in 2019, the same as
under French GAAP as explained above.
Operating expenses for the six months ended June
30, 2020 were €0.33 million compared to €0.31 million in
the same period in 2019. The increase was mainly due to higher
administrative costs in 2019.
The amortization expense of €0.19 million
during the six months ended June 30, 2020 was lower than the
amortization expense of €0.26 million recorded during the same
period in 2019, mainly due to lower production at the Rosebel
mine.
Under IFRS, the investment income for the first
six months ended June 30, 2020 was €0.2 million compared to €0.4
million during the same period in 2019, the same as under French
GAAP, as explained above.
EURO recorded a foreign exchange loss of €0.18
million in the first six months of 2020 compared to a gain of
€0.01 million in the first six months of 2019, mainly due to
the revaluation of dividends payable, bank accounts and income tax
payable.
EURO recorded an income tax expense of
€3.7 million in the six months ended June 30, 2020 compared to
€4.0 million in the same period of 2019. The decrease was mainly
due to the tax impact of lower earnings and translation
adjustments, partially offset by the tax impact of the change in
fair value of the marketable securities in the six months ended
June 30, 2020 compared to the same period in 2019.
Second quarter ended June 30, 2020
compared to the same period in 2019 (IFRS)
Under IFRS, EURO reported a net profit of
€3.3 million (€0.053 per share) for the second quarter of 2020
compared to €4.7 million (€0.074 per share) for the second
quarter of 2019.
Revenues were €5.2 million during the
second quarter of 2020, a decrease of 20% compared to
€6.5 million for the second quarter of 2019. Revenues were
only attributable to the Rosebel royalty in the second quarter of
2020 and 2019. The decrease in revenues was mainly due to a lower
gold production of 42,395 ounces in the second quarter of 2020
compared to 76,208 ounces in the second quarter of 2019
(€2.9 million), due to lower throughput and ore mined as a
result of the temporary suspension of operations, partially offset
by a higher average gold price in the second quarter of 2020 of
US$1,711 per ounce compared to US$1,309 per ounce in the second
quarter of 2019 (€1.5 million) and a weakened euro
(€0.1 million).
During the second quarter of 2020, the Company
recorded operating expenses of €0.21 million compared to
€0.17 million during the same period in 2019. The increase was
mainly explained by higher administrative costs in 2020.
The amortization expense of €0.08 million
during the second quarter of 2020 was lower than the amortization
expense of €0.13 million recorded during the second quarter of
2019, mainly due to lower production at the Rosebel mine.
The investment income during the second quarter
of 2020 was €0.06 million compared to €0.23 million for the second
quarter of 2019. The decrease was mainly due to lower interest
rates applied to bank balances in 2020.
EURO recorded a foreign exchange loss of €0.19
million in the second quarter of 2020 compared to a loss of
€0.02 million in the second quarter of 2019, mainly due to the
revaluation of dividends payable, bank accounts and income tax
payable.
EURO recorded an income tax expense of
€1.5 million in the second quarter of 2020 compared to
€1.8 million in the second quarter of 2019. The decrease was
mainly due to the tax impact of lower earnings partially offset by
the tax impact of the change in fair value of the marketable
securities in the second quarter of 2020 compared to the same
period in 2019.
Outlook
The Rosebel royalty production is anticipated to
be between 160,000 ounces and 180,000 ounces in 2020. The range of
production guidance has been lowered for 2020 reflecting the
operational impact of the global COVID-19 crisis and the suspension
of operations on June 12, 2020.
In 2020, the Rosebel royalty is expected to
provide revenues to the Company of between approximately
€18.8 million and €21.3 million (US$21.0 million and
US$23.8 million). These pre-tax numbers assume a gold price of
US$1,675 per ounce and an exchange rate of €1 for US$1.12. The
impact of changes in the average gold price on EURO’s annual
revenues, based on an estimated production of 170,000 ounces, would
be approximately US$1.7 million for each US$100 per ounce
change in the gold price. The impact of a 5% change in the average
foreign exchange rate on EURO’s annual revenues would be
approximately €1.0 million. EURO’s cash flow is expected to be
primarily affected by income tax payments. The Company maintains
certain cash available to pursue opportunities that would enhance
the Company's long-term business.
GLOBAL COVID-19 CRISIS
The global COVID-19 pandemic continues to evolve
including the continuing imposition of restrictions on the movement
of people and goods, social distancing measures, restrictions on
group gatherings, quarantine requirements and contact tracing. The
Company has been closely monitoring and taking necessary measures
to manage the impact of the COVID-19 crisis on all aspects of its
operations.
The Rosebel mine in Suriname was moved into
self-confinement on March 22, 2020 to better protect employees and
communities, and to support the continuity of operations. Given the
surge in COVID-19 infections in Suriname, a number of personnel at
Rosebel were diagnosed with COVID-19. In response, the unionized
employees at Rosebel initiated a work stoppage on June 12, 2020
which required Rosebel to concurrently suspend operations. In
conjunction with the Surinamese Health Authorities, Rosebel
implemented all required preventative measures. Rosebel was put
under quarantine by the Health Authorities on June 25, 2020. The
quarantine was subsequently lifted on July 15, 2020. The suspension
of operations ended on July 16, 2020, with the recall of employees
and contractors beginning shortly thereafter. Operations resumed on
July 24, 2020 with the restart of the mill and mine operations.
About EURO
EURO is a French company whose main assets are a
royalty on the Rosebel Gold Mine production in Suriname (the
“Rosebel royalty”), a royalty on the Paul Isnard concessions, and
marketable securities. The Rosebel Gold Mine is 95%-owned by
IAMGOLD Corporation (“IAMGOLD”), and is operated by IAMGOLD. The
royalty on the Paul Isnard concessions is a net smelter returns
production royalty on future production of the Paul Isnard
concessions and an area of interest surrounding the concessions in
French Guiana, owned under a joint venture agreement between Orea
Mining Corp. and Nord Gold SE.
EURO has approximately 62.5 million shares
outstanding. At June 30, 2020, IAMGOLD France S.A.S. (“IAMGOLD
France”), an indirect wholly owned subsidiary of IAMGOLD, owned
approximately 89.71% of all issued outstanding shares of EURO. As
at June 30, 2020, IAMGOLD France held 56,058,191 shares
representing 112,116,382 voting rights or 94.25% of the voting
rights of EURO. This threshold crossing results from a double
voting rights allocation.
Statements Regarding Forward-Looking
Information: Some statements in this news
release are forward-looking statements. Investors are cautioned
that forward-looking statements are inherently uncertain and
involve risks and uncertainties. There can be no
assurance that future developments affecting the Company will be
those anticipated by management.
Not for distribution to United States newswire
services or for dissemination in the United States. The securities
referred to herein have not been registered under the United States
Securities Act of 1933, as amended (the Securities Act), and may
not be offered or sold in the United States or to a U.S. person
absent registration, or an applicable exemption from the
registration requirements of the Securities Act.
Additional information relating to
EURO Ressources S.A. is available on SEDAR at
www.sedar.com. Further requests for information should be
addressed to:
Tidiane BarryDirecteur Général Tel: +1 450 677 0040 Email :
tbarry@euroressources.net |
Sophie HalléDirecteur Général DéléguéTel: +1 450 677 0040
Email : shalle@euroressources.net |
- PR 20-10EN 2020 08 06 EURO - News release-2020 Q2
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