VANCOUVER, BRITISH COLUMBIA, November 30, 2016 -- Lupaka Gold Corp. ("Lupaka Gold" or "the Company") (TSX.V:LPK, FRA:LQP) reports its financial results for the nine months ended September 30, 2016.
The following is taken from the Company's condensed consolidated interim Financial Statements and Management's Discussion and Analysis for the nine months ended September 30, 2016, both of which are filed at www.sedar.com under the Company's profile.
Notable events - the Company's events of note for the nine months ended September 30, 2016 and to date are as follows:
- On October 6, 2016, the Company provided an update regarding its three development projects;
- On August 25, 2016, the Company announced the appointment of Lucio Pareja to its Board. Lucio brings to the Board his extensive experience in the development and ongoing operations of producing underground and open pit mines in Peru. The Company also announced that the Board had accepted the resignation of director Jaime Pinto;
- On June 30, 2016, the Company announced that it had:
- executed a definitive Pre-Paid Forward Gold Purchase Agreement with PLI Huaura Holdings LP ("PLI Financing"), a limited partnership organized under the laws of British Columbia, to fund the completion of development and initiate production at the Invicta Gold Project, upon the Company's completion of certain conditions precedent;
- completed a bridge loan financing for gross proceeds of $750,000 with a group of third-party individuals (83%) and Insiders of the Company (17%). The Company paid $8,100 cash in finders' fees and $16,300 in other costs in connection with third-party investors; and
- On February 22, 2016 the Company announced that it had completed a non-brokered private placement of common shares for total gross proceeds of $419,500 (see "Outstanding Share Data" below for additional details) and completed its second run-of-mine bulk test of 532 tonnes, achieving total recoveries of 87.52% for Gold, 91.18% for Silver and 91.52% for Copper;
Summarized Financial Highlights -- all amounts are in Canadian Dollars unless otherwise stated:
|Nine months ended September 30|
|General and administration||373||745|
|Finance income -- interest||--||(5)|
|Foreign exchange (gain) loss||(7)||24|
|Loss for the period||1,596||2,809|
|Loss per share - Basic and diluted||$0.01||$0.03|
Exploration and development expenses -- all such expenses relate to the Peru operations of the Company and they totalled $1,175,000 for 2016 compared to $2,045,000 for 2015, a net decrease of $870,000 for the period, as a result of: a net decrease of $900,000 in Camp, Community Relations and Related costs; and a net increase of $30,000 in Project Administration.
General and administration expenses -- all such expenses relate to the Canadian operations of Lupaka Gold and they totalled $373,000 for 2016 compared to $745,000 for 2015, with the decrease of $372,000 being the result of:
A net decrease of $208,000 in Salaries and Benefits; a decrease of $149,000 in Shareholder and Investor Relations; a decrease of $23,000 in Office and General expenses; and an increase of $8,000 in Professional and Regulatory Fees.
A snapshot of the Company's balance sheet is as follows:
|In thousands of dollars||September 30,|
|Cash and cash equivalents||73||52|
|Working capital (defined as current assets less current liabilities)||(1,784)||(1,816)|
The principal changes in the Company's cash during the nine months ended September 30, 2016 were as follows:
- Cash used in operating activities in the nine months ended September 30, 2016 was $1.491,000 ($2,613,000 -- nine months ended September 30, 2015), principally to fund the Company's loss for the period of $1,596,000 ($2,809,000 -- nine months ended September 30, 2015), non-cash charges including depreciation of $40,000 ($113,000 -- nine months ended September 30, 2015), and share-based compensation of $61,000 ($66,000 -- nine months ended September 30, 2015), and offset by a $18,000 gain on disposal of equipment ($Nil -- nine months ended September 30, 2015), as well as a net decrease of $11,000 in non-cash working capital (net increase of $17,000 -- nine months ended September 30, 2015).
- There was $17,000 in investing activities in the nine months ended September 30, 2015, including $20,000 in proceeds on the sale of equipment and $3,000 in purchases of equipment, compared with net cash used in investing activities of $87,000 in the nine months ended September 30, 2015 for purchases of equipment.
- Net cash from financing activities in the nine months ended September 30, 2016 totalled $1,437,000, consisting of $400,000 in proceeds from a February 2016 private placement, $725,000 in net proceeds from a bridge loan that closed on September 30, 2016, $296,000 from exercises of share purchase warrants and $16,000 from exercises of stock options.
Total current liabilities as at September 30, 2016 totalled $1,923,000 ($1,937,000 - December 31, 2015), comprised of accounts payable and accrued liabilities, mostly for community and Invicta project-related obligations, as well as an accrued liability of $644,000 for severance due to the Company's former President & CEO. Long-term liabilities consisted of provisions for reclamation of $273,000 ($278,000 - December 31, 2015), the difference being attributable to changes in foreign exchange rates from December 31, 2015 to September 30, 2016 and the accreted balance of a bridge loan of $433,000 ($Nil - December 31, 2015) that closed on June 30, 2016.
Status of PLI Financing
Invicta continues to move forward and we anticipate start-up of on-site work shortly. Although the Pre-Paid Forward Gold Purchase Agreement with PLI Huaura Holdings LP (the "PLI Financing") was signed on June 30, 2016, the actual receipt of funding has experienced delays due to completion of a number of conditions-precedent items such as clarification of tax issues, amendment of various security-related clauses of pre-existing royalty agreements on the Invicta property and the process of formally registering the liens and mortgages in Peru, as required under the financing agreement.
As soon as funding is received, the Company intends to ramp-up to a 350 tonnes per day ("tpd") production rate as soon as reasonable while processing all mineralized material on a contract basis. Once a steady-state 350 tpd production rate is established, expansion potential and a timetable for the construction of Invicta's own processing facility will be developed.
"We have experienced significant logistical delays in completing all of the conditions precedent for our previously announced PLI Financing but anticipate getting these out of the way imminently." Stated Gordon Ellis, C.E.O., "As the financial statements show, the Company's expenses to date are approximately one-half of what they were during the same period last year, as we have been reducing costs where possible, while maintaining the activities required to move our projects forward and satisfy the aforementioned conditions precedent. We at Lupaka look forward to moving on to the active production stage at Invicta and to the creation of internal cash flow."
Grant of Incentive Stock Options
Effective November 28, 2016, the Company has granted, pursuant to its 2010 Incentive Stock Option Plan, incentive stock options to directors, officers, employees and consultants of the Company for the purchase of up to 2,435,000 shares for an aggregate of 8,695,000 or 8% in the capital stock of the Company. The options vest over 18 months from date of grant and are exercisable on or before November 28, 2021, at a price of $0.16 per share.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy of this news release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Lupaka Gold Corp., Investor Relations at +1 (604) 681-5900, e-mail: email@example.com or visit the Company's website at www.lupakagold.com.
Cautionary Note Regarding the Invicta Production Decision
The decision to commence production at the Invicta Gold Project and the Company's plans for a mining operation as referenced herein (the "Production Decision and Plans") were based on economic models prepared by the Company in conjunction with management's knowledge of the property and the existing preliminary estimate of measured, indicated and inferred mineral resources on the property. The Production Decision and Plans were not based on a preliminary economic assessment, a pre-feasibility study or a feasibility study of mineral reserves demonstrating economic and technical viability. Accordingly, there is increased uncertainty and economic and technical risks of failure associated with the Production Decision and Plans, in particular the risk that mineral grades will be lower than expected, the risk that construction or ongoing mining operations are more difficult or more expensive than expected, the risk that the Company will not be able to transport or sell the mineralized rock it produces to local custom toll mills on the terms it expects, or at all; production and economic variables may vary considerably, due to the absence of a detailed economic and technical analysis according to and in accordance with NI 43-101.
Cautionary Statements Regarding Forward Looking Information
All statements, trend analysis and other information contained in this press release relative to anticipated future events or results constitute forward-looking statements. All statements, other than statements of historical fact, included herein, including, without limitation, any statements relating to the PLI Financing, the receipt of and anticipated use of proceeds of the PLI Financing, the Company's plans and intentions for Invicta, the expected benefits from a Company-owned processing facility and mineral resource estimates, are forward-looking statements. Forward-looking statements are based on assumptions, estimates and opinions of management at the date the statements are made that the Company believes are reasonable, including: that the PLI Financing is consummated on the anticipated terms, that the supplies, equipment, personnel, permits, and local community approvals required to conduct the Company's planned pre-production and development activities will be available on reasonable terms, that the Company will be able to comply with the delivery and other obligations in any PLI Financing agreements, that the contemplated Company-owned processing facility will, if acquired or constructed, achieve the expected benefits, that results of exploration activities will be consistent with management's expectations and that the Company will not experience any material accident, labour dispute, or failure of equipment and with respect to the planned mining operations at Invicta; that pre-production mine development can be completed in the time and for the cost projected; that the Company will be able to obtain funding for planned production expenses; that mineralization on the Invicta project will be of the grades and in the locations expected; that the Company will be able to extract and transport mineralized rock efficiently and sell the mineralized rock at the prices and in the manner and quantities expected; that permits will be received on the terms and timeline expected and that other regulatory or permitting issues will not arise; that mining methods can be employed in the manner and at the costs expected and that such methods yield the results the Company expects them to. However, forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such risks, uncertainties and other factors include, among others: all of the risks described in this news release; failure of the PLI Financing to close on the proposed terms or at all, including due to the Company's inability to complete the conditions precedent, the risk that the contemplated Company-owned processing facility will not be completed or will not achieve the expected benefits, the risk that actual results of exploration and development activities will be different than anticipated; that the Company will not be able to comply with the delivery or other obligations in the PLI Financing and the risk that PLI will enforce its security over the Company's assets, including its mineral properties; that cost of labour, equipment or materials will increase more than expected; that the future price of gold will decline; that the Canadian dollar will strengthen against the U.S. dollar; that mineral resources are not as estimated; unexpected variations in mineral resources, grade or recovery rates; risks related to shipping mineralized rock; the risk that local mills cannot or will not buy or process mineralized rock from the planned production for the prices expected or at all; risk of accidents, labour disputes and other risks generally associated with mineral exploration; unanticipated delays in obtaining or failure to obtain community, governmental or regulatory approvals or financing; and all of the risks generally associated with the development of mining facilities and the operation of a producing mine, as well as the risks described in the Company's annual information form, which is available on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to not be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof. Lupaka Gold does not undertake any obligation to update forward-looking statements except as required by applicable securities laws. Investors should not place undue reliance on forward-looking statements.