Veris Gold Corp. Reports Second Quarter Results for 2014
Press Release –
Vancouver, BC – August 15, 2014 – Veris Gold Corp. (“Veris” or the “Company”) (OTCQB: YNGFF) announced its unaudited interim financial and operational results for the second quarter ended on June 30, 2014 on August 15, 2014. This earnings news release should be read in conjunction with the Company’s MD&A, Financial Statements and Notes to the Financial Statements which were filed on SEDAR on August 15, 2014 and are available on the Company’s website at www.verisgold.com.
All dollar amounts are expressed in United States Dollars unless otherwise specified.
Creditor Protection Proceedings
On June 3, 2014, the Company received Notices of Early Termination Date from Deutsche Bank AG London Branch (“DB”) requiring the Company to make payments totaling $89.4 million under the terms of the Senior Secured Gold Forward Facility the Company and DB entered into in 2011 and 2012. Failing to make payments by June 9, 2014 would have allowed DB to take such steps as necessary to enforce its rights against the Company. On June 9, 2014 the Company sought protection under the Companies’ Creditors Arrangement Act (“CCAA”) in the Supreme Court of British Columbia (the “Court”) and the Court issued an order granting the Company’s application for creditor protection. The Company also filed a Chapter 15 case in the United States Bankruptcy Court for the District of Nevada (the “US Court”). The US Court issued an interim order granting provisional relief under Section 1519 of the United States Bankruptcy Code and subsequently entered a formal order on July 23, 2014 with respect to such provisional relief.
The protections in both proceedings (the “Creditor Protection Proceedings”) have currently been extended to (i) September 4, 2014 for the CCAA proceeding and (ii) August 29, 2014 for the Chapter 15 case, when a hearing on the application for recognition of the CCAA proceeding is currently scheduled. The Company and DB have negotiated an interim agreement, which was approved by the US Court on August 6, 2014, and are in the process of negotiating a final agreement to be approved by the US Court, which will be documented in a final Cash Collateral Order. During the Creditor Protection Proceedings, the Company continues its daily operations while pursuing a restructuring through a plan of compromise and arrangement (the “Plan”). The Plan will involve a restructuring of the Company’s current liabilities and will be subject to creditors’ vote and the approval of both the Court and US Court.
Exchange Listing
Trading in the Company’s common stock on the Toronto Stock Exchange (“TSX”) was halted on June 9, 2014, and the Company’s common stock was subsequently delisted on July 18, 2014. The delisting was a direct result of the CCAA proceeding and the Company is currently not exploring alternative listings at this time as the listed securities would likely continue to be suspended under the new listing. Upon completion of the Creditor Protection Proceedings, the Company will evaluate options to relist on the TSX or other possible exchanges.
Operational Highlights for Q2-2014 include:
- 44,295 payable ounces were produced in the second quarter of 2014 (“Q2-14”), representing a 17% increase from the 38,018 ounces produced in the three month period ending June 30, 2013 (“Q2-13”);
- 40,795 ounces were sold in Q2-14, an 11% increase from the 36,590 ounces sold in Q2-13 primarily due to the increased processing of higher grade stockpiled ore built up during recent shutdowns, supplemented with high grade ores from the three underground mine operations and improved overall mill recoveries;
- Revenue in Q2-14 was $53.4 million compared to $46.6 million in Q2-13, driven by an 11% increase in the number of gold ounces sold offset by a 7% decrease in the average price-per-ounce of gold sold in Q2-14 compared to Q2-13 and a $0.9 million reduction in toll milling revenue;
- Total mine production for Q2-14 was 198,156 tons containing an estimated 34,248 ounces of gold, a 27% decline from the 271,880 tons mined in Q2-13 and a 19% decline in contained ounces of gold compared with 42,094 ounces mined in Q2-13. The primary contributor to the reduction in tons arose from transitioning the mining of the SSX-Steer mine to Small Mine Development (“SMD”) on June 1, 2014 but also as a result of supply shortages, primarily cement used in backfill, as a result of the commencement of the Creditor Protection Proceedings;
- The Jerritt Canyon roaster processing facility achieved total average throughput of 3,366 tons per day (“TPD”) in Q2-14, 7% less than the 3,611 TPD achieved in Q2-13. The lower average tonnage processed resulted from the gradual restart of operations after the 21 day mill maintenance shutdown in March 2014 as well as difficulties in processing the higher work index ore for Newmont Mining USA Ltd. (“Newmont”) in May and June. Processing rates were also impacted by shortages of supply which occurred at the commencement of the Creditor Protection Proceedings;
- Development of Saval 4, the fourth underground mine at Jerritt Canyon, recommenced late in Q2-14, with pre-production occurring in July and August. Using existing equipment and crews, the Company plans to mine Saval 4 at a rate between 250 and 300 TPD. Commercial production is expected to be achieved late in the third quarter of 2014; and
- The Company recorded a net loss of $8.1 million, during Q2-14, a $14.0 million increased loss from the $5.9 million net income recorded in Q2-13.
