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NORTHERN VERTEX REPORTS SECOND FISCAL QUARTER 2019 FINANCIAL RESULTS. SIGNIFICANT SWING TO POSITIVE WORKING CAPITAL; OPTIMIZING OPERATIONS

Feb 28, 2019 Download PDF   Share:  Share on Facebook   Share on Twitter   Share on Google Plus   Share on LinkedIn

February 28, 2019, Vancouver, B.C. - Northern Vertex Mining Corp. (TSX.V: NEE) (OTC Nasdaq Intl.: NHVCF) (the “Company” or “Northern Vertex”) announces that the Company’s interim consolidated financial results for the second fiscal quarter 2019 ended December 31, 2018 have been filed on SEDAR. The full version of the Condensed Interim Consolidated Financial Statements and Management’s Discussion & Analysis can be viewed on the Company’s website at www.northernvertex.com or under the Company’s profile on SEDAR at www.sedar.com.  As a result of the change in the Company’s presentation currency all amounts are now expressed in United States dollars (USD$) unless otherwise noted. Canadian dollars are noted as (“CAD$” or “C$”).

Ken Berry, President and Chief Executive Officer of Northern Vertex Mining, stated, “During the quarter we dramatically improved our balance sheet and had over $0.5 million of earnings from mine operations before depreciation and amortization.  Our working capital increased by nearly $18 million, going from a sizable deficit to a surplus of $9.1 million.  Our balance sheet was strengthened when we retired our $20 million senior loan facility and partnered with Maverix Metals Inc. for a $20 million silver streaming arrangement. Our gold production is un-hedged and remains fully exposed to recent gold price strength.  We also closed an $8 million private placement, in which our largest shareholder Greenstone Resources II L.P. continued to show their strong support.  On the back of our strengthened financial position, we also recognize and are addressing a number of operating issues affecting the ramp-up at the Moss Mine.  Our second quarter financial results were lower than expected due to certain issues that impacted costs and production off the leach pad. These issues, that we have addressed and continue to monitor, include: electrical installation challenges which resulted in crushing plant shut downs, insufficient site water supply requiring water to be trucked to site which increased costs, higher than expected levels of oxygen in the Merrill Crowe vacuum tower causing lower plant recoveries and increased reagent costs and under saturation of the heap leach pad causing lower gold concentrations going to the Merrill Crowe plant.

We are now pleased to report that electrical issues appear resolved and the crushing plant has now operated for 12 weeks with no significant unscheduled downtime. Water hauling has stopped which saves approximately $300,000 a month as a newly installed well on the property is producing sufficient water. Oxygen in the Merrill Crowe plant has been greatly reduced resulting in much higher plant recoveries from 77% in the quarter ended December 31, 2018 to 90% for the month of January 2019. New pumping capacity was recently added to the leach pad increasing solution flow from 2,000 gpm up to 3,000 gpm and a rotating leach schedule is underway to achieve the desired saturation levels in the heap. These changes are expected to increase and stabilize the daily production.”

HIGHLIGHTS

Financial Results

  • Cash was $7.68 million at December 31, 2018, compared to $5.72 million at June 30, 2018.  The increase was primarily due to cash received from financings during the quarter, including the silver stream advance from Maverix Metals Inc., which were offset by repayment of debt and interest payments. 
  • Loss for the quarter was $5.27 million ($0.03 per share) compared to a loss of $0.63 million ($0.00 per share) for the same period last year. 
  • Earnings from mine operations, excluding depreciation and depletion, was $0.53 million for the quarter.
  • Gold and silver sales for the quarter, including sales of ounces produced prior to commercial production, were $6.5 million through the sale of 5,149 gold ounces and 14,081 silver ounces with average realized prices per ounce of $1,215 and $14.43 respectively

Finance

  • Completed a $28 million financing consisting of a $20 million silver advance from Maverix Metals Inc., pursuant to a silver streaming agreement, and a concurrent $8 million private placement.
  • Retired $20 million senior secured credit facility eliminating monthly payments of approximately $1.3 million and significantly strengthening the Company’s balance sheet and improving cash flow. 
  • Subsequent to the second fiscal quarter of 2019 the Company closed two tranches of a non-brokered private placement, issuing an aggregate of 14,624,074 units at a purchase price of C$0.24 per unit for gross proceeds of $2.67 million.

Operational Team

  • A third crushing crew was mobilized in mid-November to increase plant utilization operating 24 hours per day and six days per week.
  • Subsequent to the end of the quarter an Operations Manager was added to a team of over 100 men and women.

Operating Results for the Quarter and Six Months Ended December 31, 2018

 

 

Three Months Ended
December 31, 2018 

 

Six Months Ended
December 31, 2018

Mining

   

 

Ore mined

t

411,354

 

892,569

Waste mined

t

883,088

 

  1,607,969

Total mined

t

1,294,442

 

  2,500,538

Strip ratio

waste/ore

  2.15

 

  1.80

Crushing

    

Tonnes stacked

t

443,234

 

916,149

Tonnes stacked per day (average)

tpd

4,818

 

  4,979

Tonnes stacked per operating day

tpd

8,365

 

  7,830

Tonnes stacked per operating hour

tph

445

 

460

Contained gold ounces stacked

oz.

9,905 

 

  21,780 

Contained silver ounces stacked

oz.

142,986 

 

263,770 

Gold grade

g/t

  0.70

 

  0.74

Silver grade

g/t

  10.03

 

  8.96

Processing

   

 

Merrill Crowe recovery - gold

%

69

 

77

Merrill Crowe recovery - silver

%

93

 

94

Gold ounces produced

oz.

5,218

 

10,772

Silver ounces produced

oz.

21,110

 

41,646

Sales

 

 

 

 

Gold ounces sold

oz.

5,149

 

10,553

Silver ounces sold

oz.

14,081

 

33,118

Permitting
The company is fully permitted to operate an open pit, heap leach operation with gold and silver recovery on patented claims owned by the company. 

During the first quarter, the company was successful in their applications for Right of Way permits to allow construction of a powerline from Bullhead City to the mine site and upgrading the mine access road from Silver Creek Road (a county regional road) to the mine site.

In the second quarter, permitting efforts were focused on the acquisition of permits to expand the mining and leaching operations onto federal lands adjacent to the Company’s private lands.   These efforts included the preparation of a cultural resource inventory, a biological evaluation and conceptual design of required and possible infrastructure and surface disturbance.

A Mine Plan of Operations (“MPO”) has been prepared, is under review, and is expected to be submitted to the Kingman Field Office of the Bureau of Land Management (BLM) prior to the end of fiscal year ended June 30, 2019. Approval of the MPO, including statutory requirements for public input and environmental assessment, would permit the company to access, mine and process the entire mineral resource identified in the Preliminary Economic Assessment (Technical Report dated November 22, 2017) and possible future expansions of the resource along strike and to depth. The expansion onto federal lands would also enable the company to expand site support facilities including the assay and process testing labs, offices, warehousing, maintenance, water wells and waterlines. Proposed future exploration activities on the adjacent federal lands are included in the MPO.

Exploration
Detailed mapping, soil and rock chip sampling of specific high-priority areas to better define drill targets were completed during the second quarter. Compilation of the data from this work program, along with the proprietary data provided by Perry Durning and Frank Hillemeyer into the company data base continued into the third fiscal quarter.

The focus is now on resource expansion along the immediate strike extensions of the deposit to the west and east where gold mineralization remains open ended and is known from previous drilling and surface sampling. Several mineralized areas occur along strike to the west, namely the Mordor, Reynolds and Far West. Historic drilling has returned results such as Reynold’s holes WO 91-06 (26m @ 0.446 ppm Au) and WO-91-07 (98m @ 0.496 ppm Au). The Moss resource is also open to the east (known as the “Eastern Extension”), where previous core drill holes stopped short of Moss Vein. Importantly, a subsequent drilled water well cut through the Moss mineralized structure at depth.

Planning will include the selection of road and trail access routes, drill pad and sump construction, reclamation programs.  Particular attention will be directed towards the minimization of surface disturbance, avoidance of any cultural or biological areas of concern and mitigation of disturbance.  

Closes Final Tranche of Oversubscribed Financing of $2.67M from $2.0M
Under the final tranche of the Private Placement, the Company has issued an aggregate of 3,511,574 units (each a “Unit”) at a purchase price of C$0.24 per Unit for gross proceeds to the Company of $640,511. Each Unit consists of one common share (“Common Share”) and one transferable common share purchase warrant (“Warrant”). Each Warrant entitles the holder to acquire one Common Share at an exercise price of C$0.40 per share until February 27, 2021. Cash finder’s fees to arm’s length parties totaling C$1,440 have been paid on this portion of the Private Placement.

The net proceeds of the Private Placement will be used to fund the continued ramp up of mining operations at the Moss Mine, located in Arizona and for working capital and general corporate purposes.  All securities issued pursuant to this tranche of the Private Placement are subject to a four month hold period under applicable securities laws in Canada, ending on June 28, 2019. The Private Placement is subject to the final acceptance of the TSX Venture Exchange.

The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended, or any State Securities Laws and may not be offered or sold in the United States or to the account or benefit of a U.S. person absent an exemption from the registration requirements of such Act. This release does not constitute an offer for sale of securities in the United States.

Stock Options
The Company reports stock options have been granted to employees, officers, directors and consultants of the Company to purchase up to an aggregate of 10 million shares at a price of C$0.24 per share for a period of five years.

About Northern Vertex Mining Corp.
Northern Vertex Mining Corp., the newest gold producer in the US, is focused on low cost gold and silver production at its 100% owned Moss Mine in NW Arizona. The Company has experience across all areas of operations, mine development, exploration, acquisitions and financing of mining projects. With operations at the flagship Moss Mine achieving commercial production the Company intends to consolidate additional producing or near-term production gold assets within the Western US. Through mergers and acquisitions Northern Vertex’s corporate goal is to become a mid-tier gold producer with over 200,000 ounces of gold production annually.

ON BEHALF OF THE BOARD OF NORTHERN VERTEX
“Kenneth Berry”
President & CEO

For further information, please visit www.northernvertex.com
or contact Investor Relations at: 604-601-3656 or at 1-855-633-8798

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements:
This news release contains statements about our future business and planned activities. These are “forward-looking” because we have used what we know and expect today to make a statement about the future. Forward-looking statements including but are not limited to comments regarding the timing and content of upcoming work and analyses. Forward-looking statements usually include words such as scheduled, may, intend, plan, expect, anticipate, believe or other similar words. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by the Company as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies.  Many factors, known and unknown, could cause actual results to be materially different from those expressed or implied by such forward-looking statements.  We believe the expectations reflected in these forward-looking statements are reasonable. However, actual events and results could be substantially different because of the risks and uncertainties associated with our business or events that happen after the date of this news release. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date made. As a general policy, we do not update forward-looking statements except as required by securities laws and regulations.  US investors should be aware that mining terminology used for Canadian mineral project reporting purposes differs significantly from US terminology.

2019 number 5