Josemaria Reports Third Quarter 2021 Results
VANCOUVER, BC, Nov. 15, 2021 /CNW/ - Josemaria Resources Inc. (TSX: JOSE) (OMX: JOSE) (OTCQB: JOSMF) ("Josemaria Resources" or the "Company"), is pleased to announce its results for the three and nine months ended September 30, 2021. View PDF
Adam Lundin, Josemaria Resources' Chief Executive Officer, comments: "We continue to push the Josemaria Project forward on all fronts. Basic Engineering has commenced and is ongoing, and preparations are in place, with the expansion of our exploration camp facilities, to commence a multi-faceted 65,000-metre drill program during the fourth quarter. We are successfully recruiting personnel with considerable experience in constructing and commissioning large scale mines. Active engagement continues with federal and San Juan provincial authorities in Argentina, including discussions aimed at finalizing and securing commercial and fiscal terms applicable to the project and ESIA approval. We continue to progress the Josemaria Project as we believe copper is the key to a low carbon future, and a new supply of responsibly mined copper is critical as the world shifts to clean energy and new technologies. Current commodity prices support our view of a tightening copper market, where there are a limited number of readily developable projects due to under investment in the sector over the last decade."
THIRD QUARTER 2021 HIGHLIGHTS
The Company's net loss for the three and nine months ended September 30, 2021 was $10.4 million and $25.4 million, respectively, compared to $2.7 million and $28.0 million, respectively, for the same periods in 2020. The increase in net loss for the three months ended September 30, 2021 as compared to the same period in 2020 mainly reflects the Company having conducted an increased level of engineering, environmental and other key studies focused on furthering the Josemaria Project towards development. The net loss for the nine months ended September 30, 2021 is slightly lower than the net loss for the same period in 2020 as the Company had conducted a field program during Q4 2019 into Q1 2020 which included reserve definition drilling and advanced ongoing environmental studies in support of the Feasibility Study for the Josemaria Project, which was published in October 2020.
Exploration and project investigation expenses of $15.8 million and $27.3 million were incurred during the three and nine months ended September 30, 2021, as compared to $2.5 million and $26.3 million incurred during the comparative periods, respectively, in 2020. During the nine months ended September 30, 2021, the Company's primary exploration and project investigation expenses consisted of engineering and optimization studies, expenditures associated with supporting the ongoing ESIA approval process in Argentina, commercial and fiscal studies and negotiations, environmental baseline studies, roadwork and related studies, and community relations.
G&A costs for the three and nine months ended September 30, 2021 totaled $1.8 million and $6.2 million, respectively, compared to $1.1 million and $4.1 million, respectively, over the same periods in 2020. The increase was mainly the result of higher salaries and benefits due to voluntary salary reductions for the senior management group not being in place during the comparative 2021 period and higher discretionary management bonuses, and higher share-based compensation expenses due to a larger number of options having been granted as recruitment of personnel has increased. Share-based compensation is a non-cash charge reflecting the expense associated with the vesting of outstanding stock options during the period.
During the three and nine months ended September 30, 2021, the Company added $14.3 million of fixed assets related to the planned field season commencing in Q4 2021 (no such additions in the prior comparative periods). The fixed assets consist of modular buildings that will house the field and administrative teams carrying out field activities and the drill program.
From time to time, as part of the capital funding process from the Canadian parent to the Argentinian subsidiary, the Company will purchase equity instruments via a third-party investment broker. The equity instruments are transferred from the parent to the subsidiary and held for a pre-determined period, typically five business days, and then sold. The Company conducts such transactions on an intra-period basis and does not hold the equity instruments at period end. For the three months ended September 30, 2021, the Company realized a trading loss of $1,441,065 (2020 – $679,619) and a foreign exchange gain of $9,511,348 (2020 – $1,265,499) as a result of holding the equity instruments for a net realized gain of $8,070,283 (2020 – $585,880). For the three months ended September 30, 2021, the Company also incurred an unrealized loss on available for sale equity investments of $17,307 (2020 – gain of $70,859). During the nine months ended September 30, 2021, the Company realized a trading loss of $1.8 million (2020 – $1.6 million) and a foreign exchange gain of $11.6 million (2020 – $6.7 million) as a result of holding the equity instruments for a net realized gain of $9.8 million (2020 – $4.9 million). The increase in net gain is the result of the Company having conducted an increased quantum of such transactions during Q3 2021 than in the comparative period as a result of funding increased in-country activity in Argentina.
During the nine months ended September 30, 2021, the Company recognized a net monetary loss of $0.4 million (2020 – $0.3 million) in relation to the application of hyper-inflationary accounting for the Company's Argentinian subsidiary, which began July 1, 2018. In other comprehensive loss, the Company recognized a gain of $2.5 million resulting from the impact of hyper-inflation which consists of adjustments recognized on the continuing inflation of opening non-monetary balances during the nine months ended September 30, 2021 (2020 – $1.8 million) and the ongoing translation of the Company's Argentinian subsidiary into the Canadian dollar presentation currency following July 1, 2018, as mentioned above. A detailed discussion regarding the application of hyper-inflationary accounting has been provided in Note 3 to the condensed interim consolidated financial statements.
SELECTED FINANCIAL INFORMATION
The Company does not currently generate income from operations. The Company anticipates that it will need further funding in order to advance the Josemaria Project, and for general corporate and working capital purposes. Historically, capital requirements have been funded through equity financing, joint ventures, disposition of mineral properties and investments, and 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 exploration and project investigation activities at the 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 novel coronavirus pandemic ("COVID-19"). 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.
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.
On behalf of the Board of Directors of Josemaria Resources,
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Forward-looking information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. 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 Josemaria Project; 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, the ability of the Company to satisfy the conditions of the terms and conditions of the debentures issued pursuant credit facilities, including repayment thereof upon their respective maturity dates and the issuance of Common Shares thereunder 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 regards 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 information reflects the beliefs, opinions, and projections on the date the statements are made. The Company assumes no obligation to update the forward-looking information or beliefs, opinions, projections, or other factors, should they change, except as required by law.
SOURCE Josemaria Resources Inc.
Company Codes: Toronto:JOSE, Oslo:JOSE, OTC-QB:JOSMF
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