Yellowhead puts Harper Creek assessment on hold
2015-11-13 15:24 ET - News Release
Mr. Frank Wheatley reports
YELLOWHEAD MINING INC. - 2015 THIRD QUARTER REPORT
Yellowhead Mining Inc. has released its results of operations for the nine months ended Sept. 30, 2015.
For the full condensed consolidated interim financial statements and management's discussion and analysis for the third financial quarter ended Sept. 30, 2015, please see SEDAR or the company's website.
Highlights
Key highlights for the for the third quarter ended Sept. 30, 2015, together with the nine months ended Sept. 30, 2015, and subsequent weeks, include:
- Acceptance of the environmental assessment (EA) application for the Harper Creek project for review, with the 180-day application review period, commencing on Jan. 28, 2015;
- Release of the Mount Polley tailings facility storage breach report on Jan. 30, 2015;
- As a result of the report, the Ministry of Energy and Mines and the British Columbia Environmental Assessment Office (BC EAO) have requested the company provide additional information and undertake additional work on the EA application to address the results of and recommendations contained in the report;
- In order to allow time to provide the additional information and undertake the additional work required as a consequence of the report, on June 30, 2015, the company requested and received a timeline suspension from the BC EAO to the EA review;
- On Aug. 4, 2015, the company announced that its board of directors, subject to regulatory and legal approvals, approved a secured bridge loan of $500,000 and the undertaking of a rights offering to provide working capital for the company;
- On Aug. 21, 2015, the company announced it would be offering rights to holders of its common shares of record at the close of business Sept. 1, 2015;
- On Oct. 1, 2015, the company announced the completion of its rights offering. The company issued a total of 24,751,431 shares under the rights offering at a price of 4.5 cents per share for gross proceeds of $1,113,814. A total of 14,035,706 common shares were issued under the basic subscription privilege and a total of 10,715,725 common shares were issued under the additional subscription privilege;
- Also on Oct. 1, 2015, the company announced that it would be deferring all expenditures on the project due to weakness in the commodity and capital markets;
- The company is currently investigating additional sources of financing with a view to moving forward with the EA review in order to obtain the EA certificate for the project in 2016.
SUMMARY OF THIRD QUARTER RESULTS (in thousands of Canadian dollars, except per-share amounts) Three months ended Nine months ended Sept. 30, Sept. 30, 2015 2014 2015 2014 Administrative expenses $285 $435 $1,321 $1,462 Exploration and evaluation expenses 35 1,612 801 3,984 Other expense/(income) 1 (19) (12) (65) Net loss and comprehensive loss for the period 321 2,028 2,110 5,381 Basic and diluted loss per share for the period 0.00 0.02 0.02 0.05
Yellowhead has no revenue from operations. Results can fluctuate significantly from period to period due to the level of development activities on the project.
Review of quarterly results
The loss in the third quarter of 2015 was $321,000, compared with $2.03-million in the third quarter of 2014. This decrease in loss of $1.71-million was mainly due to a decrease in exploration and evaluation expenses. Exploration and evaluation expenses were $35,000 for the third quarter of 2015, as compared with $1.61-million for the third quarter of 2014. In the third quarter of 2014, the company incurred costs related to the update of both the feasibility study and the EA application for the project. In the third quarter of 2015, the company incurred costs related primarily to the EA application. Expenditures on the EA application were lower in the third quarter of 2015 as compared with the third quarter of 2014 as the company utilized fewer technical consultants in order to preserve cash. Environmental assessment costs decreased from $1.41-million in the third quarter of 2014 to $18,000 in the third quarter of 2015. Administration costs in the third quarter of 2015 were $285,000, compared with $435,000 in the third quarter of 2014. The decrease in administration costs is due to lower wages and benefits, lower travel and investor relations, and lower professional fees as the company reduced expenditures to conserve cash.
Review of year-to-date results (nine months ended Sept. 30, 2015 (YTD 2015)), compared with the nine months ended Sept. 30, 2014 (YTD 2014)
The loss in YTD 2015 was $2.11-million as compared with $5.38-million in YTD 2014. This decrease in loss of $3.27-million was primarily due to a decrease in exploration and evaluation expenses of $3.18-million. The YTD 2014 exploration and evaluation expenses related to the update of both the feasibility study and the EA application for the project while the YTD 2015 costs primarily related to the EA application. Environmental assessment costs were lower in YTD 2015 as compared with YTD 2014 as the company entered the review phase, and reviewed and responded to comments from the EAO, CEA Agency, first nations and the public, and utilized fewer technical consultants than in the initial preparation of the EA application. In 2015, the company also reduced expenditures on the EA application in order to conserve cash. YTD 2015 administration costs were $1.32-million, compared with $1.46-million in YTD 2014 as higher consulting costs in YTD 2015 related to costs incurred in connection with continuing consultation and discussions with the first nations. These were offset by lower wages and benefits, lower share based compensation, lower travel and investor relations, and lower professional fees.
Cash and cash equivalents
The company had cash and cash equivalents of $1.88-million as at Sept. 30, 2015, as compared with cash and cash equivalents of $3.68-million as at Dec. 31, 2014. As at Sept. 30, 2015, the company had working capital of $1.72-million, as compared with working capital of $2.69-million as at Dec. 31, 2014.
Outlook
On Oct. 1, 2015, the company announced the board of directors had concluded that, in light of current conditions in the commodity markets and the international capital markets, it was in the best interests of all of the shareholders to defer any additional expenditures on the project until such time as more favourable commodity and capital markets presented themselves.
The company is currently investigating additional sources of financing with a view to moving forward with the EA review in order to obtain the EA certificate for the project in 2016.
Notwithstanding efforts to source additional financing, work on the EA application is currently on hold, and all environmental baseline monitoring activities have also been suspended, until further notice. Continuation of environmental monitoring was a condition to continuing with the EA review imposed by the BC EAO, and cessation of all such activities will increase the risk that the BC EAO will require the collection of fresh environmental baseline data to be analyzed and incorporated into an updated EA application prior to continuing with the EA review. If a prolonged hiatus occurs during the EA review, then there is also an increased risk that the information in the EA application will become stale dated, and as a result, the EA application will have to be redone, and the EA application process restarted.
We seek Safe Harbor.