| | (all amounts in US dollars)
Wheaton River reported net earnings of $4.1 million ($0.02 per
share) for the three months ended March 31, 2003, on sales of
$17.9 million. This is a substantial increase compared with net
earnings of $262,000 for the first quarter of 2002.
Also, the Company has today received $11.2 million from the
Alumbrera Mine, which represents the first cash distribution to
Alumbrera shareholders.
The 2003 net earnings resulted primarily from the Luismin
operations, which earned $3.3 million for the three months, with
Alumbrera also contributing $0.5 million for the two-week period
from the date of acquisition, March 18, 2003 to March 31, 2003.
A total of 55,666 gold equivalent ounces were sold during the
quarter, at a total cash cost of US$175, net of by-product copper
credits.
"We are extremely pleased with these results" stated Ian Telfer,
Chief Executive Officer. "Not only are the Mexican operations
performing in excess of expectations, but our 25% share of the
Alumbrera earnings for two weeks contributed $516,000 to our net
earnings. Furthermore, today we have received a cash distribution
of $11,200,000 from Alumbrera, following our recent acquisition.
Earnings and cash flows will be further enhanced following our
purchase of an additional 12.5% interest in Alumbrera, financed
with debt, which we expect to close before the end of June,
2003."
Wheaton's annualized production is expected to be over 500,000
gold equivalent ounces at an estimated cash cost per gold
equivalent ounce of less than $125 (net of by-product copper
credits), after increasing its interest in Alumbrera to 37.5%.
/T/
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
FIRST QUARTER REPORT
MARCH 31, 2003
/T/
The following discussion and analysis should be read in
conjunction with the Company's unaudited consolidated financial
statements and the related notes thereto. All figures are in
United States dollars unless otherwise noted.
/T/
First Quarter Highlights
- Net earnings of $4,064,000 ($0.02 per share) compared with net
earnings of $262,000 ($0.00 per share) in the first quarter of
2002. (note 1)
- 55,666 gold equivalent ounces sold.(notes 1, 2)
- Total cash costs of $175 per gold equivalent ounce.(notes 1, 2, 3)
- Acquired the Peak Mine in Australia and 25% of the Alumbrera Mine
in Argentina, effective March 18, 2003.
- Agreement to acquire an additional 12.5% of the Alumbrera Mine,
thereby increasing Wheaton's interest to 37.5%. This acquisition
will be funded with debt and is expected to close in June 2003.
- Total assets increased 148% from December 31, 2002 to $377,267,000.
- Shareholders' equity increased 191% from December 31, 2002 to
$314,900,000.
(1) including Wheaton's 25% share of Alumbrera and 100% of Peak
operations for the two week period from March 18 to March 31,
2003.
(2) gold and silver are accounted for as co-products at the Luismin
mines. Silver sales are converted into gold sales using the
ratio of the gold market price to the silver market price. For
the period ended March 31, 2003, Luismin mines sold 1,562,000
ounces of silver and the equivalency ratio was 76 ounces of
silver equals one ounce of gold sold. Therefore, gold equivalent
sales for the period includes 20,533 ounces derived from silver.
(3) net of by-product copper credits at Alumbrera.
Results of Operations
Three Months Ended March 31
/T/
Net earnings for the three months ended March 31, 2003 totalled
$4,064,000 ($0.02 per share), on sales of $17,866,000. This
compared with net earnings of $262,000 in 2002, on sales of $nil,
as the Company's Golden Bear Mine ceased production in 2001.
The Company consolidates the Luismin and Peak operations and
accounts for its investment in the Alumbrera Mine under the
equity method. Note 11 to the financial statements shows
summarized, combined financial statements that account for the
Alumbrera Mine on a proportionate consolidation basis.
The 2003 net earnings resulted primarily from the Luismin
operations (earnings of $3,313,000 on sales of 46,110 gold
equivalent ounces). Alumbrera contributed earnings of $516,000
for the two week period from the date of acquisition, on sales of
4,712 ounces of gold and 3,551,000 pounds of copper (Wheaton's
25% share). Peak incurred a net loss of $191,000 for the two week
period from the date of acquisition on sales of 4,844 ounces, as
a result of treating lower grade ore from pit operations,
compared with a more normal mix that includes higher grade ore
from underground.
Sales for the first quarter of 2003 resulted primarily from the
Luismin operations and included Peak for the period from March 18
to March 31, 2003. The average realized gold price for the
quarter was $351 per ounce. Alumbrera sales are not included in
the financial statements as the Company uses the equity method to
account for this investment.
Total cash costs for the quarter were $175 per gold equivalent
ounce (net of by-product copper credits). Cash costs at Luismin
were $185 per gold equivalent ounce compared to $182 in fiscal
2002, despite an 8% increase in the Mexican peso/US dollar
exchange rate compared with the prior year. Cash costs at Peak
for the two week period amounted to $330 per ounce due to
production from lower grade open pit operations. Cash costs at
Alumbrera were minus $81 per ounce for the two week period (net
of by-product copper credits).
General and administrative expense in the first quarter of 2003
was $2,077,000 including $1,088,000 from Luismin operations,
$70,000 from Peak operations and $919,000 of Canadian head office
costs. General and administrative expense of $506,000 was
incurred in the same period of 2002 by the Canadian head office.
The increased head office costs in 2003 reflect the growth and
increased level of corporate activity.
Exploration expense was $299,000 in the first three months of
2003 relating primarily to Luismin, compared to $378,000 in 2002
incurred to explore several flow-through joint venture projects
in Canada.
/T/
Other income 2003 2002
Interest income $ 455 $ 84
Gain on sale of marketable securities 786 1,027
Foreign exchange 552 50
Other items (219) 3
------------------------
$ 1,574 $ 1,164
------------------------
------------------------
/T/
The gain on sale of marketable securities in the first quarter of
2003 and 2002 resulted from the sale of 250,000 and 666,667
Kinross shares, respectively. The foreign exchange gain in 2003
was primarily due to the appreciation of Canadian and Australian
dollar denominated amounts against the US dollar.
In the first quarter of 2003 the Company recorded an income tax
expense of $1,551,000 which represents future income taxes.
Liquidity and Capital Resources
At March 31, 2003, the Company had cash and cash equivalents of
$20,540,000 (December 31, 2002 - $22,936,000) and working capital
of $17,918,000 (December 31, 2002 - $24,422,000).
Total assets increased to $377,267,000 at March 31, 2003 from
$152,098,000 at December 31, 2002, primarily due to the March 18,
2003 acquisition from Rio Tinto Limited of 100% of the Peak Gold
Mine in Australia and a 25% interest in the Alumbrera Mine in
Argentina. Total cash consideration was $214,156,000 including
acquisition costs, of which $33,801,000 was apportioned to Peak
and $180,355,000 to Alumbrera.
This acquisition was financed through the February 2003 sale of
230,000,000 subscription receipts for gross proceeds of
$217,949,000 (Cdn$333,500,000) less share issue costs of
$15,514,000. In March 2003, each subscription receipt was
exercised into one common share and one-quarter of one common
share purchase warrant, where one whole share purchase warrant
entitles the holder to purchase one common share at a price of
Cdn$1.65 before May 30, 2007.
During the quarter ended March 31, 2003, the Company invested a
total of $2,358,000 in property, plant and equipment, primarily
at the Luismin mines. During the first quarter of 2002 proceeds
of $13,013,000 were received from the sale of short-term money
market instruments and $2,345,000 from the sale of Kinross common
shares.
Outlook
In the opinion of management, the working capital at March 31,
2003, together with cash flows from operations, are sufficient to
support the Company's normal operating requirements. The Company
has also arranged an Australian $5,000,000, unsecured, revolving
working capital facility for the Peak Mine, of which $302,000 was
drawn down at March 31, 2003. Additional capital was generated in
May 2003 when the Company received proceeds of $5,106,000 from
the exercise of warrants and will receive a cash distribution
from Alumbrera in the approximate amount of $11,000,000 by the
end of May.
On March 25, 2003 the Company exercised its first right of
refusal to acquire an additional 25% interest of Alumbrera from
BHP Billiton Ltd. ("BHP"). Subsequently, on April 3, 2003 the
Company entered into an agreement with Rio Algom Limited, a
subsidiary of BHP, and Northern Orion Explorations Ltd. ("NNO")
to acquire BHP's 25% interest in Alumbrera for a total purchase
price of $180,000,000. Under the terms of the agreement, the
Company and NNO will each acquire an interest of 12.5% in
Alumbrera for $90,000,000 in cash, of which up to $25,000,000 may
be deferred for a period of two years at an interest rate of
LIBOR plus 2%. Completion of the acquisition is subject to a
number of conditions including regulatory and third party
approvals and consents, and is expected to close during June
2003. The Company intends to finance its 12.5% interest with debt
and does not anticipate issuing additional equity. This
transaction will increase Wheaton's interest in the Alumbrera
Mine to 37.5%.
Following the acquisition of the additional 12.5% interest in the
Alumbrera mine, Wheaton expects to have, in 2003, annualized
production of over 500,000 gold equivalent ounces (425,000 gold
ounces and 6 million silver ounces) at an estimated cash cost per
gold equivalent ounce of less than $125 (net of by-product copper
credits).
/T/
Wheaton River Minerals Ltd
Consolidated Statements of Operations
Three Months Ended March 31
(US dollars and shares in thousands, except per share amounts -
Unaudited)
------------------------------------------------------------------
------------------------------------------------------------------
March 31 March 31
Note 2003 2002
--------- ---------
Sales $ 17,866 $ -
Cost of sales 10,119 -
Royalties 60 -
Depreciation and depletion 1,642 -
Reclamation 68 -
--------- ---------
11,889 -
--------- ---------
Earnings from mining operations 5,977 -
--------- ---------
Expenses and other income
General and administrative 2,077 506
Exploration 299 378
Interest and finance fees 12 6
Depreciation 64 6
Other income 4 (1,574) (1,164)
--------- ---------
878 (268)
--------- ---------
Earnings before the following 5,099 268
Equity in earnings of Minera
Alumbrera Ltd 7 516 -
--------- ---------
Earnings before income taxes 5,615 268
Income taxes (1,551) (6)
--------- ---------
Net earnings $ 4,064 $ 262
--------- ---------
--------- ---------
Basic and diluted earnings per
share $ 0.02 $ 0.00
--------- ---------
--------- ---------
Weighted-average number of shares
outstanding 244,368 63,019
--------- ---------
--------- ---------
The accompanying notes form an integral part of these consolidated
financial statements
Wheaton River Minerals Ltd
Balance Sheets
(US dollars and shares in thousands - Unaudited)
------------------------------------------------------------------
------------------------------------------------------------------
March 31 December 31
Note 2003 2002
--------- ---------
Assets
Current
Cash and cash equivalents $ 20,540 $ 22,936
Marketable securities 1,131 1,543
Accounts receivable 5,863 5,617
Product inventory 5 5,242 156
Supplies inventory 4,398 3,300
Other 872 782
--------- ---------
38,046 34,334
Reclamation deposits 998 933
Property, plant and equipment, net 6 151,897 110,896
Equity investment in Minera
Alumbrera Ltd 7 180,871 -
Future income taxes 5,333 5,613
Other 122 322
--------- ---------
$ 377,267 $ 152,098
--------- ---------
--------- ---------
Liabilities
Current
Bank loan 8 $ 302 $ -
Accounts payable and accrued
liabilities 19,806 9,796
Income taxes payable 20 116
--------- ---------
20,128 9,912
Future income taxes 18,678 17,509
Provision for reclamation and
closure 16,917 11,271
Future employee benefits 6,644 5,352
--------- ---------
62,367 44,044
--------- ---------
Shareholders' Equity
Share purchase options 494 410
Contributed surplus 600 600
Share capital
Common shares - Authorized:
unlimited shares, no par value;
Issued and outstanding: 421,053
(December 31, 2002 - 190,400) 317,850 115,152
Deficit (4,044) (8,108)
--------- ---------
314,900 108,054
--------- ---------
$ 377,267 $ 152,098
--------- ---------
--------- ---------
The accompanying notes form an integral part of these consolidated
financial statements
Wheaton River Minerals Ltd
Consolidated Statements of Shareholders' Equity
Three Months Ended March 31, 2003 and Year Ended December 31, 2002
(US dollars, shares and warrants in thousands - Unaudited)
-----------------------------------------------------------------
-----------------------------------------------------------------
Common Shares Special Warrants
-------------------- --------------------
Note Shares Amount Warrants Amount
--------- --------- --------- ---------
At January 1, 2002 56,601 $ 25,999 9,910 $ 3,110
Special warrants
issued - - 110,000 82,068
Special warrants
exercised 119,910 85,178 (119,910) (85,178)
Share options
exercised 1,355 411 - -
Warrants exercised 3,450 2,010 - -
Shares issued on
acquisition of
Luismin SA de CV 9,084 6,805 - -
Share issue costs - (5,251) - -
Fair value of stock
options issued to
non-employees - - - -
Net earnings - - - -
-------------------- --------------------
At December 31, 2002 190,400 $ 115,152 - $ -
Share options
exercised 453 161 - -
Warrants exercised 200 102 - -
Shares issued 9 230,000 217,949 - -
Share issue costs 9 - (15,514) - -
Fair value of stock
options issued to
non-employees 9 - - - -
Net earnings - - - -
-------------------- --------------------
At March 31, 2003 421,053 $ 317,850 - $ -
-----------------------------------------
-----------------------------------------
Share Contrib-
Purchase uted
Note Options Surplus Deficit Total
--------- --------- --------- ---------
At January 1, 2002 $ 317 $ 600 $ (13,710) $ 16,316
Special warrants
issued - - - 82,068
Special warrants
exercised - - - -
Share options
exercised - - - 411
Warrants exercised - - - 2,010
Shares issued on
acquisition of
Luismin SA de CV - - - 6,805
Share issue costs - - - (5,251)
Fair value of stock
options issued to
non-employees 93 - - 93
Net earnings - - 5,602 5,602
--------- --------- --------- ---------
At December 31, 2002 $ 410 $ 600 $ (8,108) $ 108,054
Share options
exercised - - - 161
Warrants exercised - - - 102
Shares issued 9 - - - 217,949
Share issue costs 9 - - - (15,514)
Fair value of stock
options issued to
non-employees 9 84 - - 84
Net earnings - - 4,064 4,064
--------- --------- --------- ---------
At March 31, 2003 $ 494 $ 600 $ (4,044) $ 314,900
-----------------------------------------
-----------------------------------------
The accompanying notes form an integral part of these consolidated
financial statements
Wheaton River Minerals Ltd
Consolidated Statements of Cash Flows
Three Months Ended March 31
(US dollars in thousands - Unaudited)
------------------------------------------------------------------
------------------------------------------------------------------
March 31 March 31
Note 2003 2002
--------- ---------
Operating Activities
Net earnings $ 4,064 $ 262
Reclamation expenditures (17) (100)
Items not affecting cash
Depreciation and depletion 1,706 6
Gain on sale of marketable
securities (786) (1,027)
Provision for reclamation 68 -
Future employee benefits 192 -
Future income taxes 1,449 -
Share purchase options 84 -
Equity in earnings of Minera
Alumbrera Ltd 7 (516) -
Other (28) -
Change in non-cash working
capital 3,855 (191)
--------- ---------
Cash generated (used) by
operating activities 10,071 (1,050)
--------- ---------
Financing Activities
Bank loan 8 302 -
Common shares issued 218,212 94
Common share issue costs (15,514) -
--------- ---------
Cash generated by financing
activities 203,000 94
--------- ---------
Investing Activities
Short-term money market
instruments - 13,013
Proceeds on sale of marketable
securities 1,310 2,345
Property, plant and equipment (2,358) (174)
Acquisition of Peak Gold Mines
Pty Ltd, net of cash acquired 3 (34,064) -
Acquisition of equity interest in
Minera Alumbrera Ltd 3 (180,355) -
--------- ---------
Cash (used) generated by
investing activities (215,467) 15,184
--------- ---------
(Decrease) increase in cash and
cash equivalents (2,396) 14,288
Cash and cash equivalents,
beginning of period 22,936 1,735
--------- ---------
Cash and cash equivalents, end of
period $ 20,540 $ 15,963
--------- ---------
--------- ---------
Supplemental cash flow
information 10
The accompanying notes form an integral part of these consolidated
financial statements
Wheaton River Minerals Ltd
Notes to the Consolidated Financial Statements
Three Months Ended March 31, 2003
(US dollars, except where otherwise stated - Unaudited)
------------------------------------------------------------------
------------------------------------------------------------------
/T/
1. DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
Wheaton River Minerals Ltd (the "Company") is engaged in gold
mining and related activities including exploration, extraction,
processing, refining and reclamation. The Company has mining
operations in Mexico, Argentina and Australia and has ongoing
exploration activities in Mexico and Australia. During 2002 it
also carried on exploration activities in Canada. The Company is
also in the process of reclaiming the Golden Bear Mine in Canada,
which ceased commercial production in 2001.
On March 18, 2003 the Company acquired the Peak Mine in Australia
and a 25% interest in the Alumbrera Mine in Argentina. In
addition, on March 25, 2003, the Company exercised its first
right of refusal to acquire an additional 25% interest in the
Alumbrera Mine in conjunction with a third party (Note 3).
2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
(a) Basis of presentation
These unaudited interim consolidated financial statements have
been prepared in accordance with Canadian generally accepted
accounting principles for interim financial information and they
follow the same accounting policies and methods of application as
the audited consolidated financial statements of the Company for
the year ended December 31, 2002 except as noted below. These
unaudited interim consolidated financial statements do not
include all the information and note disclosures required by
generally accepted accounting principles for annual financial
statements and therefore should be read in conjunction with the
most recent annual audited consolidated financial statements and
the notes below.
These consolidated financial statements include the accounts of
the Company and its subsidiaries. Principal subsidiaries and
investments at March 31, 2003 are listed below:
/T/
Ownership
Investment Interest Status Operations Owned
----------------------------------------------------------------------
Luismin SA de CV
("Luismin") 100% Subsidiary San Dimas, San Martin and
La Guitarra mines in Mexico
Peak Gold Mines
Pty Ltd ("Peak") 100% Subsidiary Peak Mine in Australia
Minera Alumbrera
Ltd ("Alumbrera") 25% Investment Alumbrera Mine in Argentina
/T/
(b) Equity investment
The Company's investment in Alumbrera has been accounted for
using the equity method whereby the investment has been initially
recorded at cost and the carrying value adjusted thereafter to
include the Company's share of earnings since the acquisition
date.
(c) Provision for reclamation and closure
On January 1, 2003 the Company adopted the standard of the CICA
handbook, Asset Retirement Obligations, which requires that the
fair value of liabilities for asset retirement obligations be
recognized in the period in which they are incurred. A
corresponding increase to the carrying amount of the related
assets is generally recorded and depreciated over the life of the
asset. The amount of the liability is subject to re-measurement
at each reporting period. This differs from the prior practice
that involved accruing for the estimated reclamation and closure
liability through charges to income on a unit-of-production basis
over the estimated life of the mine. The effect of the change has
no material impact on the Company's financial statements.
3. ACQUISITION OF MINERA ALUMBRERA LTD AND PEAK GOLD MINES PTY
LTD
On March 18, 2003 the Company acquired a 25% indirect interest in
Alumbrera and a 100% interest in Peak from Rio Tinto Ltd. The
acquisition of the 25% interest in Alumbrera was through
intermediate holding companies with assets relating solely to the
investment in Alumbrera. The purchase price for Alumbrera and
Peak totaled $214,156,000 including acquisition costs. Alumbrera
and Peak operate gold and copper mines located in Argentina and
Australia, respectively.
(a) Minera Alumbrera Ltd
The acquisition of the 25% indirect interest in Alumbrera has
been accounted for using the equity method and earnings of
Alumbrera have been included in the earnings of the Company since
March 18, 2003. The total purchase price was $180,000,000 plus
acquisition costs of $355,000. The excess of the underlying net
assets over the investment in Alumbrera at March 18, 2003 is
estimated to be $59,400,000, which has been preliminarily
allocated to mining property, plant and equipment and the related
tax balances.
Long-term project debt held by Alumbrera was incurred to finance
the construction and operation of the Alumbrera Mine. The debt is
formalized by a Common Security Agreement between Alumbrera, the
owners of Alumbrera, and a consortium of commercial banks that
was originally signed on February 26, 1997. The remaining balance
outstanding at March 31, 2003 is $262,725,000 of which
$75,304,000 is current. There are certain pledges and mortgages
associated with this agreement that apply to Alumbrera's assets.
The project debt is non-recourse to the Company.
On March 25, 2003 the Company exercised its first right of
refusal to acquire an additional 25% interest of Alumbrera from
BHP Billiton Ltd ("BHP"). Subsequently, on April 3, 2003 the
Company entered into an agreement with Rio Algom Ltd, a
subsidiary of BHP, and Northern Orion Explorations Ltd ("NNO") to
acquire BHP's 25% interest in Alumbrera for a total purchase
price of $180,000,000. Under the terms of the agreement, the
Company and NNO will each acquire an interest of 12.5% in
Alumbrera for $90,000,000 in cash, of which up to $25,000,000 may
be deferred for a period of two years at an interest rate of
LIBOR plus 2%. Completion of the acquisition, anticipated in June
2003, is subject to a number of conditions and consents including
all requisite regulatory and third party approvals.
(b) Peak Gold Mines Pty Ltd
The acquisition of 100% of Peak has been accounted for using the
purchase method and the results from Peak's operations have been
included in the Company's results of operations from March 18,
2003. The preliminary allocation of the purchase price is
summarized in the table below.
/T/
(in thousands)
Purchase price:
Cash $ 33,583
Acquisition costs 218
---------
$ 33,801
---------
---------
Net assets acquired:
Cash $ (263)
Non-cash working capital 115
Property, plant and equipment 40,349
Other non-current assets 117
Provision for reclamation and closure (5,417)
Other non-current liabilities (1,100)
---------
$ 33,801
---------
---------
4. Other Income
March 31 March 31
(in thousands) 2003 2002
--------- ---------
Interest income $ 455 $ 84
Gain on sale of marketable securities 786 1,027
Foreign exchange 552 50
Other (219) 3
--------- ---------
$ 1,574 $ 1,164
--------- ---------
--------- ---------
5. PRODUCT INVENTORY
March 31 December 31
(in thousands) 2003 2002
--------- ---------
Stockpiled ore $ 2,615 $ -
Work in process 574 -
Finished goods 2,053 156
--------- ---------
$ 5,242 $ 156
--------- ---------
--------- ---------
6. PROPERTY, PLANT AND EQUIPMENT
March 31, 2003
Accumulated
(in thousands) Cost Depletion Net
---------------------------------
Mineral properties and deferred
costs
San Dimas Mines, Mexico $ 70,480 $ (2,406) $ 68,074
San Martin Mine, Mexico 8,078 (442) 7,636
La Guitarra Mine, Mexico 539 (10) 529
Peak Mine, Australia 13,721 (133) 13,588
---------------------------------
92,818 (2,991) 89,827
---------------------------------
Plant and equipment
San Dimas Mines, Mexico 24,945 (1,291) 23,654
San Martin Mine, Mexico 7,360 (321) 7,039
La Guitarra Mine, Mexico 231 (3) 228
Peak Mine, Australia 26,588 (69) 26,519
Corporate, Canada 446 (209) 237
Other, Mexico 2,521 (135) 2,386
---------------------------------
62,091 (2,028) 60,063
---------------------------------
Properties under development
San Pedrito Project, Mexico 2,007 - 2,007
---------------------------------
$ 156,916 $ (5,019) $ 151,897
---------------------------------
---------------------------------
December 31, 2002
Accumulated
(in thousands) Cost Depletion Net
---------------------------------
Mineral properties and deferred
costs
San Dimas Mines, Mexico $ 69,380 $ (1,666) $ 67,714
San Martin Mine, Mexico 7,827 (284) 7,543
La Guitarra Mine, Mexico 439 (8) 431
Peak Mine, Australia - - -
---------------------------------
77,646 (1,958) 75,688
---------------------------------
Plant and equipment
San Dimas Mines, Mexico 24,524 (857) 23,667
San Martin Mine, Mexico 7,066 (214) 6,852
La Guitarra Mine, Mexico 231 - 231
Peak Mine, Australia - - -
Corporate, Canada 440 (198) 242
Other, Mexico 2,459 (81) 2,378
---------------------------------
34,720 (1,350) 33,370
---------------------------------
Properties under development
San Pedrito Project, Mexico 1,838 - 1,838
---------------------------------
$ 114,204 $ (3,308) $ 110,896
---------------------------------
---------------------------------
7. EQUITY INVESTMENT IN MINERA ALUMBRERA LTD
(in thousands)
Cost at March 18, 2003 (Note 3 (a)) $ 180,355
Equity in earnings of Minera Alumbrera
Ltd - from March 18, 2003 516
---------
$ 180,871
---------
---------
/T/
8. BANK LOAN
The Company obtained an Australian $5,000,000, unsecured,
revolving working capital facility for its Peak Mine operations
of which $302,000 (Australian $500,000) was drawn down at March
31, 2003. The loan bears interest related to the Australian
treasury bill rate plus 1.5%.
In addition, the Company obtained an Australian $6,100,000
performance bond to secure its reclamation obligations for the
Peak Mine.
9. SHAREHOLDERS' EQUITY
(a) Private placement
On February 27, 2003, the Company issued and sold 230,000,000
subscription receipts by way of private placement for gross
proceeds of $217,949,000 (Cdn$333,500,000) less agents'
commissions and expenses of $15,514,000 (Cdn$23,758,000). In
March 2003 each subscription receipt was converted into one
common share and one-quarter of one common share purchase
warrant, where one whole share purchase warrant entitles the
holder to purchase one common share at a price of Cdn$1.65 before
May 30, 2007.
The proceeds from this private placement were used to finance the
acquisition of the 25% indirect interest in Alumbrera and 100% of
Peak.
(b) Share purchase options
Share purchase options with a fair value of $84,000 were granted
to non-employees in the first quarter of 2003 (2002 - $Nil),
which was charged to operations during the period. In February
2003, the Company granted 4,425,000 share purchase options at an
exercise price of Cdn$1.40 and which expire February 2006.
(c) Pro forma compensation expense
If the Company had included share purchase options granted to
employees in the calculation of compensation expense, net
earnings would be as follows:
/T/
March 31 March 31
(in thousands) 2003 2002
--------- ---------
Net earnings $ 4,064 $ 262
Pro forma compensation expense (1,913) -
--------- ---------
Pro forma net earnings $ 2,151 $ 262
--------- ---------
--------- ---------
Pro forma basic and diluted
earnings per share $ 0.01 $ 0.00
--------- ---------
--------- ---------
/T/
Pro forma compensation expense is determined using an option
pricing model assuming no dividends are to be paid, a weighted
average volatility of the Company's share price of 77%, an annual
risk free interest rate of 4% and expected lives of three years
(2002 - 70%, 5% and five years, respectively).
10. SUPPLEMENTAL CASH FLOW INFORMATION
/T/
March 31 March 31
(in thousands) 2003 2002
--------- ---------
Non-cash financing activities
Marketable securities received on
sale of assets held for resale $ 142 $ -
Operating activities included the
following cash payments
Interest paid - 5
Income taxes paid 62 11
/T/
11. SEGMENTED INFORMATION
The Company's reportable operating and geographical segments are
summarized in the table below. Also summarized below is the
Company's 25% interest in Alumbrera in Argentina as if the
Company had proportionately consolidated it since March 18, 2003,
the acquisition date.
/T/
Three Months Ended March 31, 2003
(in thousands) Luismin Peak Corporate Consolidated
--------------------------------------------
Statements of Operations
Sales $ 16,262 $ 1,604 $ - $ 17,866
--------------------------------------------
Cost of sales 8,521 1,598 - 10,119
Depreciation and
depletion 1,440 202 - 1,642
Other 70 58 - 128
--------------------------------------------
10,031 1,858 - 11,889
--------------------------------------------
Earnings from mining
operations 6,231 (254) - 5,977
General and
administrative expenses (1,088) (70) (919) (2,077)
Interest and
financing fees (11) - (1) (12)
Other (expenses)
income (602) - 1,813 1,211
Equity in earnings
of Minera Alumbrera
Ltd - - 516 516
--------------------------------------------
Earnings (loss)
before income taxes 4,530 (324) 1,409 5,615
Income tax (expense)
recovery (1,217) 133 (467) (1,551)
--------------------------------------------
Net earnings (loss) $ 3,313 $ (191) $ 942 $ 4,064
--------------------------------------------
--------------------------------------------
March 31, 2003
Balance Sheets
Cash $ 9,183 $ 2,697 $ 8,660 $ 20,540
Other current assets 7,900 7,270 2,336 17,506
Property, plant and
equipment 111,553 40,107 237 151,897
Investment in Minera
Alumbrera Ltd - - 180,871 180,871
Other non-current
assets 5,213 242 998 6,453
--------------------------------------------
$ 133,849 $ 50,316 $ 193,102 $ 377,267
--------------------------------------------
--------------------------------------------
Current liabilities
other than long-term
debt $ 7,224 $ 10,181 $ 2,723 $ 20,128
Long-term debt - - - -
Other non-current
liabilities 33,672 6,525 2,042 42,239
Intercompany
balances 85,451 33,801 (119,252) -
Shareholders' equity 7,502 (191) 307,589 314,900
--------------------------------------------
$ 133,849 $ 50,316 $ 193,102 $ 377,267
--------------------------------------------
--------------------------------------------
Three Months Ended March 31, 2003
(25%)
(in thousands) Adjustments Alumbrera Combined
--------------------------------------------
Statements of Operations
Sales $ - $ 3,304 $ 21,170
--------------------------------------------
Cost of sales - 1,528 11,647
Depreciation and
depletion - 1,055 2,697
Other - 94 222
--------------------------------------------
- 2,677 14,566
--------------------------------------------
Earnings from mining
operations - 627 6,604
General and
administrative
expenses - (5) (2,082)
Interest and
financing fees - (132) (144)
Other (expenses)
income - 247 1,458
Equity in earnings
of Minera Alumbrera
Ltd (516) - -
--------------------------------------------
Earnings (loss)
before income taxes (516) 737 5,836
Income tax (expense)
recovery - (221) (1,772)
--------------------------------------------
Net earnings (loss) $ (516) $ 516 $ 4,064
--------------------------------------------
--------------------------------------------
March 31, 2003
Balance Sheets
Cash $ - $ 34,775 $ 55,315
Other current assets - 36,341 53,847
Property, plant and
equipment - 183,606 335,503
Investment in Minera
Alumbrera Ltd (180,871) - -
Other non-current
assets - 46,098 52,551
--------------------------------------------
$(180,871) $ 300,820 $ 497,216
--------------------------------------------
--------------------------------------------
Current liabilities
other than long-term
debt $ - $ 9,960 $ 30,088
Long-term debt - 65,681 65,681
Other non-current
liabilities - 44,308 86,547
Intercompany
balances (87,359) 87,359 -
Shareholders' equity (93,512) 93,512 314,900
--------------------------------------------
$(180,871) $ 300,820 $ 497,216
--------------------------------------------
--------------------------------------------
Three Months Ended March 31, 2002
Luismin Peak Corporate Consolidated
--------------------------------------------
Statements of Operations
General and
administrative
expenses $ - $ - $ (506) $ (506)
Interest and
financing fees - - (6) (6)
Other income - - 780 780
--------------------------------------------
Earnings before
income taxes - - 268 268
Income tax expense - - (6) (6)
--------------------------------------------
Net earnings $ - $ - $ 262 $ 262
--------------------------------------------
--------------------------------------------
December 31, 2002
Balance Sheets
Cash $ 6,223 $ - $ 16,713 $ 22,936
Other current assets 9,064 - 2,334 11,398
Property, plant and
equipment 110,654 - 242 110,896
Other non-current
assets 5,613 1,255 6,868
--------------------------------------------
$ 131,554 $ - $ 20,544 $ 152,098
--------------------------------------------
--------------------------------------------
Current liabilities $ 9,402 $ - $ 510 $ 9,912
Non-current
liabilities 32,009 - 2,123 34,132
Intercompany
balances 85,147 - (85,147) -
Shareholders' equity 4,996 - 103,058 108,054
--------------------------------------------
$ 131,554 $ - $ 20,544 $ 152,098
--------------------------------------------
--------------------------------------------
Three Months Ended March 31, 2002
(25%)
Adjustments Alumbrera Combined
--------------------------------------------
Statements of Operations
General and
administrative
expenses $ - $ - $ (506)
Interest and
financing fees - - (6)
Other income - - 780
--------------------------------------------
Earnings before
income taxes - - 268
Income tax expense - - (6)
--------------------------------------------
Net earnings $ - $ - $ 262
--------------------------------------------
--------------------------------------------
December 31, 2002
Balance Sheets
Cash $ - $ - $ 22,936
Other current assets - - 11,398
Property, plant and
equipment - - 110,896
Other non-current
assets - - 6,868
--------------------------------------------
$ - $ - $ 152,098
--------------------------------------------
--------------------------------------------
Current liabilities $ - $ - $ 9,912
Non-current
liabilities - - 34,132
Intercompany
balances - - -
Shareholders' equity - - 108,054
--------------------------------------------
$ - $ - $ 152,098
--------------------------------------------
--------------------------------------------
/T/
12. SUBSEQUENT EVENTS
(a) Sale of La Guitarra Mine
In April 2003 the Company agreed to sell the La Guitarra Mine to
Genco Resources Ltd ("Genco") for shares and cash totaling
$5,000,000. Consideration to be paid on closing will be shares of
Genco with a fair value of $900,000 and $100,000 in cash. The
remaining payments are to be made annually for eight years in
cash or equivalent shares of $500,000 per annum.
(b) Exercise of warrants
In May 2003, the Company received proceeds of $5,106,000 from the
exercise of 9,350,000 warrants at Cdn$0.75 per warrant.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Wheaton River Minerals Ltd.
Investor Relations
(604) 696-3000
(604) 696-3001 (FAX)
Email: ir@wheatonriver.com
Website: www.wheatonriver.com |