VANCOUVER, BC, Feb. 25, 2021 /CNW/ - Josemaria Resources
Inc. (TSX: JOSE) (OMX: JOSE) (OTCQB: JOSMF) ("Josemaria
Resources" or the "Company"), a 100% owned copper-gold project with
proven and probable mineral reserves(1) of 6.7 billion
pounds of copper ("Cu"), 7 million ounces of gold ("Au"), and 30.7
million ounces of silver ("Ag"), is pleased to announce its
financial results for the year ended December 31, 2020. View PDF version
Adam Lundin, Josemaria Resources'
Chief Executive Officer, comments: "A significant milestone was
reached in 2020, with the completion of the Josemaria Project
Feasibility Study, indicating a USD$1.53
billion after-tax Net Present Value and a 15.4% after-tax
Internal Rate of Return, utilizing metal prices of US$3.00/pound copper, US$1,500/ounce gold and US$18.00/ounce silver. We believe current
commodity prices support our view of a tightening copper market,
where there are a limited number of readily developable projects.
We continue advancing the project towards a construction decision
and recently completed and presented the Environmental and Social
Impact Assessment to the Governor of San Juan Province,
Argentina."
HIGHLIGHTS
- On October 19, 2020, the Company
announced the results of an independent feasibility study (the
"Feasibility Study") of its 100% owned copper-gold Josemaria
Project located in San Juan Province, Argentina (the "Josemaria Project"). The
Feasibility Study was prepared by a team of engineering and
consulting service providers led by Fluor Canada Ltd. with key
sections prepared by SRK Consulting (Canada) Inc., and Knight Piésold Ltd. with
input from a variety of independent consultants and qualified
persons, and in accordance with the disclosure standards of
National Instrument 43-101 ("NI 43-101"). The Feasibility Study
demonstrates a robust, rapid pay-back, low risk project, with an
open pit operation feeding a conventional process plant at 152,000
tonnes per day over a 19 year mine life, yielding average annual
metal production of 136,000 tonnes of Cu, 231,000 ounces of Au and
1,164,000 ounces of Ag. The economic analysis contained in the
Feasibility Study highlights a USD$1.53
billion after-tax Net Present Value (8% discount rate) and
15.4% after-tax Internal Rate of Return at assumed metal prices of
USD$3.00 per pound Cu, USD$1,500 per ounce Au and USD$18 per ounce Ag. The Technical Report
summarizing the results of the Feasibility Study is available under
the Company's website and profile on SEDAR.
- On August 18, 2020, the Company
closed a private placement and concurrent public offering of
46,652,986 common shares of the Company at a price of $0.67 per common share for gross proceeds of
$31.3 million, less issuance costs of
$1.4 million, for net proceeds of
$29.9 million.
- On February 23, 2021, the Company
announced it had presented its Environmental Social Impact
Assessment ("ESIA") to Sergio Uñac, the Governor of San Juan
Province, in a ceremony that brought together prominent Argentine
authorities and executives of Josemaria in celebration of the
project's anticipated positive impact on the Argentine economy. The
ceremony also marked the completion of the ESIA, which is a
significant milestone for the Josemaria team in the pathway to the
development of the project, and sets in motion the permitting and
approval process. The Company expects to formally submit the report
to the environmental authorities during the week commencing
March 1, 2021.
(1)
|
The Josemaria
Project has a proven and probable mineral reserve of 1,012 million
tonnes ("Mt") with diluted grades of 0.30% Cu, 0.22
grams per tonne ("g/t") Au and 0.94g/t Ag, of which 197Mt are in
the proven mineral reserve category, with a low 0.98:1 (waste:ore)
strip ratio (see "NI 43-101 Technical Report, Feasibility Study for
the Josemaria Copper-Gold Project, San Juan Province, Argentina,"
dated effective September 28, 2020 and filed on November 5,
2020.)
|
OUTLOOK
The Company continues to progress toward development of the
Josemaria Project as detailed in the Feasibility Study. A bridging
phase of engineering activities is ongoing, in advance of basic
engineering which is expected to commence in 2021. We continue
active engagement with federal and San Juan provincial authorities
in Argentina to advance the
Josemaria Project, including discussions aimed at finalizing and
securing commercial and fiscal terms applicable to the Josemaria
Project.
FINANCIAL RESULTS
|
Three months ended
December 31,
|
Twelve months
ended December 31,
|
(in thousands,
except per share amounts)
|
2020
|
2019
|
2020
|
2019
|
Exploration and project
investigation expenses
|
3,588
|
10,510
|
29,934
|
35,541
|
General and
administration ("G&A")
|
1,692
|
1,293
|
5,753
|
5,364
|
Foreign exchange and
trading (gains) losses realized on equity investments
|
(1,500)
|
(150)
|
(6,490)
|
(229)
|
Gain on spin-out
transaction
|
-
|
-
|
-
|
(30,847)
|
Net loss
|
3,266
|
11,087
|
31,237
|
10,950
|
Basic and diluted loss
per share
|
(0.01)
|
(0.04)
|
(0.12)
|
(0.04)
|
|
|
|
|
|
Exploration and project investigation expenditures are the most
significant expenses of the Company and relate to the future
development of the Josemaria Project. Exploration and project
investigation expenses totaled $29.9
million for the year ended December
31, 2020 compared to $35.5
million for the prior year. The decrease in exploration and
project investigation expenditures for the 2020 year reflects a
general decrease in fieldwork and on-site activities, as well as no
expenditures incurred on the Los Helados and Nacimientos projects,
which were spun-out in July 2019. The
decrease in fieldwork was the result of the Company completing and
publishing the Josemaria Project Feasibility Study but was also
impacted by the shortening of the 2019-2020 field season by
approximately six weeks as the Company demobilized its workforce at
the onset of the novel coronavirus ("COVID-19") pandemic. In the
latter half of 2020, in addition to the Feasibility Study, the
Company continued with its environmental baseline studies and
progressing the ESIA towards completion and submission.
During Q4-20 the Company incurred $3.6
million of exploration and project investigation expenses as
compared to $10.5 incurred during
Q4-19. Expenses were higher during the Q4-19 period as the Company
was carrying out a full set of field season activities, including
drilling, road work, environmental and camp activities. These
activities were not occurring during Q4-20.
General and administration costs for 2020 increased slightly
from $5.4 million in 2019 to
$5.8 million during 2020. The Company
incurred slightly higher salaries and benefits costs due to the
addition of several head office employees that were in place for
the duration of 2020, and slightly higher promotional expenses as
the Company focused on increasing the profile of the Josemaria
Project. These increases were offset in part by lower share-based
compensation expense and professional fees.
During the year ended December 31,
2020, the Company recognized a net monetary loss of
approximately $0.4 million (2019 –
gain of $0.2 million) in relation to
the application of hyper-inflationary accounting for the Company's
Argentine subsidiary. The net monetary impacts recognized are the
results of changes in the Argentine price indices and changes to
the Company's net monetary position during the respective reporting
periods. In other comprehensive loss, the Company recognized a
$0.7 million gain (2019 – loss of
$0.6 million) resulting from the
impact of hyper-inflation, which consists of adjustments recognized
on the continuing inflation of opening non-monetary balances during
the year ended December 31, 2020, and
the ongoing translation of the Company's Argentine subsidiary into
the Canadian dollar presentation currency.
For the year ended December 31,
2020, the Company's net loss totaled $31.2 million compared to $11.0 million for the fiscal 2019 year, with the
difference largely attributable to lower exploration and project
investigation expenses in 2020 as well as the gain on spin-out
transaction of $30.8 million
recognized in 2019.
SELECTED FINANCIAL INFORMATION
(in
thousands)
|
|
|
December
31, 2020
|
December
31,
2019
|
Cash
|
|
|
$
|
6,741
|
$
|
4,043
|
Working capital
deficit
|
|
|
|
(24,748)
|
|
(20,872)
|
Mineral
properties
|
|
|
|
10,065
|
|
10,608
|
Total
assets
|
|
|
|
19,745
|
|
18,732
|
Total
liabilities
|
|
|
|
32,101
|
|
35,087
|
The Company does not currently generate income from operations.
As at December 31, 2020, the
Company's working capital deficit is $24.7
million, and while the net $29.9
million financing from August
2020 provides sufficient capital for the Company to fund
operations for the near term, the Company will need further funding
to support the advancement of the Josemaria Project towards
development and to meet general corporate and working capital
requirements. Historically, capital requirements have been funded
through equity financing, joint ventures, disposition of mineral
properties and investments, and through the use of credit
facilities with related parties. While management is confident that
additional sources of funding will be secured to fund planned
expenditures, factors that could affect the availability of
financing include the progress and results of ongoing project
evaluation activities at the Company's Josemaria Project, the state
of international debt and equity markets, investor perceptions and
expectations of the global copper, gold, and/or silver markets, and
the ongoing COVID-19 pandemic. If necessary, the Company may
explore opportunities to revise the due dates of its liabilities,
and/or settle its liabilities through the issuance of common shares
and other equity instruments. Based on the amount of funding
raised, the Company's planned initiatives and other work programs
may be postponed, or otherwise revised, as necessary.
QUALIFIED PERSONS
The technical information in this
press release has been reviewed and approved by Mr. Bob Carmichael, P. Eng. (BC), the Company's Vice
President of Exploration, and Mr. Dustin
Smiley, P. Eng. (BC), the Company's Engineering Manager.
Both Mr. Carmichael and Mr. Smiley are Qualified Persons under
National Instrument 43-101 Standards of Disclosure for Mineral
Projects.
ABOUT JOSEMARIA
Josemaria Resources Inc. is a natural
resources company focused on developing its advanced stage, 100%
owned Josemaria Copper-Gold Project in the San Juan Province of
Argentina. A recently published
Feasibility Study (see "NI 43-101 Technical Report, Feasibility
Study for the Josemaria Copper-Gold Project, San Juan Province,
Argentina" dated effective
September 28, 2020 and filed on
November 5, 2020) demonstrates a
simple and conventional open pit copper-gold project with robust
economics and a rapid payback period. Josemaria is a Lundin
Group company and works in partnership with the Lundin Foundation
to execute best practices in responsible mineral development in
Argentina where the Lundins have a
30-year track record of value creation. The Company is a reporting
issuer in all Provinces and its corporate head office is in
Vancouver, BC. The Company's
shares are listed on the TSX and on Nasdaq Stockholm under the
symbol "JOSE", and trade on the OTCQB under the symbol "JOSMF".
ADDITIONAL INFORMATION
This is information that the
Company is obliged to make public pursuant to the Swedish Financial
Instruments Trading Act. The information was submitted for
publication, through the agency of the contact person set out
below, on February 25, 2021
17:00 EST.
On behalf of the Board of Directors of Josemaria Resources,
Adam Lundin,
President and CEO
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TSX: JOSE | OTCQB: JOSMF | Nasdaq Stockholm: JOSE | WKN: A2PN5S |
ISIN: CA48086P1009
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release includes certain "forward-looking information"
and "forward-looking statements" (collectively "forward-looking
statements") within the meaning of applicable Canadian securities
legislation. All statements, other than statements of historical
fact, included herein, including, without limitation, the future
price of copper, gold and silver; the results of the Feasibility
Study and expected timelines; the timing and amount of estimated
future production; net present values and internal rates of return
at the Josemaria Project; recovery rates; payback periods; costs of
production; capital expenditures; costs and timing of the
development of the Josemaria Project; mine life; the potential
future development of the Josemaria Project and the future
operating or financial performance of the Company; the impact of
COVID-19 on the Company's operations, hyper-inflationary
accounting, the effect of government regulations (or changes
thereto) with respect to restrictions on production, export
controls and duties, income taxes, royalties, expropriation of
property, repatriation of profits, environmental legislation, land
use, water use, mine safety, approval processes and the receipt of
necessary permits are forward-looking statements.
Forward-looking statements are frequently, but not always,
identified by words such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible", and similar
expressions, or statements that events, conditions, or results
"will", "may", "could", or "should" occur or be achieved. These
forward-looking statements may also include statements regarding
perceived merit of properties; exploration plans and budgets;
mineral reserves and resource estimates; work programs; capital
expenditures; timelines; strategic plans; market prices for
precious and base metals; or other statements that are not
statements of fact. In addition, statements relating to "mineral
resources" and "mineral reserves" are deemed to be forward-looking
information, as they involve the implied assessment, based on
certain estimates and assumptions that the mineral resources and
mineral reserves described can be profitably produced in the
future.
Forward-looking statements involve various risks and
uncertainties. There can be no assurance that such statements will
prove to be accurate, and actual results and future events could
differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from the Company's expectations include the Company's
ability to finance the development of its mineral properties;
commodity price fluctuations; assumptions and discount rates being
appropriately applied to the Feasibility Study, uncertainty as to
whether there will ever be production at the Company's Josemaria
Project and any other future mineral exploration and development
properties; risks related to the Company's ability to commence
production and generate revenues or obtain adequate financing for
its planned exploration and development activities; risks related
to lack of infrastructure including but not limited to the risk
whether or not the Josemaria Project will receive the requisite
permits and, if it does, whether the Company will build the
Josemaria Project; risks related to inclement weather which may
delay or hinder activities at the Company's mineral properties;
risks related to the Company's dependence on third parties for the
development of its projects; uncertainties relating to the
assumptions underlying resource and reserve estimates; mining and
development risks, including risks related to infrastructure,
accidents, equipment breakdowns, labor disputes, bad weather,
non-compliance with environmental and permit requirements or other
unanticipated difficulties with or interruptions in development,
construction or production; the geology, grade and continuity of
the Company's mineral deposits; the uncertainties involving success
of exploration, development and mining activities; permitting
timelines; risks pertaining to the outbreak of the global
pandemics, including COVID-19; government regulation of mining
operations; environmental risks; unanticipated reclamation
expenses; prices for energy inputs, labour, materials, supplies and
services; uncertainties involved in the interpretation of drilling
results and geological tests and the estimation of mineral reserves
and mineral resources; the need for cooperation of government
agencies and indigenous groups in the development and operation of
properties including the Josemaria Project; unanticipated variation
in geological structures, metal grades or recovery rates;
fluctuations in currency exchange rates; unexpected cost increases
in estimated capital and operating costs; the need to obtain
permits and government approvals; uncertainty related to title to
the Company's mineral properties, anticipated use of proceeds from
financings including the financing completed on August 18, 2020, the ability of the Company to
satisfy the conditions of the terms and conditions of the
debentures issued pursuant to the 2018, 2019, 2020 and Lorito
Facilities, including repayment thereof upon their respective
maturity dates and the issuance of Common Shares thereunder and the
timing and success in obtaining requisite regulatory (including
TSX) approvals and other risks and uncertainties disclosed in the
Company's periodic filings with Canadian securities regulators and
in other Company reports and documents filed with applicable
securities regulatory authorities from time to time, including the
Company's Annual Information Form available under the Company's
profile at www.sedar.com. In addition, these statements involve
assumptions made with regard to the Company's ability to develop
the Josemaria Project and to achieve the results outlined in the
Feasibility Study; the ability to raise the capital required to
fund construction and development of the Josemaria Project; and the
results and impact of future exploration at the Josemaria Project.
The Company's forward-looking statements reflect the beliefs,
opinions, and projections on the date the statements are made. The
Company assumes no obligation to update the forward-looking
statements or beliefs, opinions, projections, or other factors,
should they change, except as required by law.
SOURCE Josemaria Resources Inc.