Rambler Mines & Metals plc
Management's Discussion & Analysis ('MD&A')
For the Quarter Ended January 31, 2015
This MD&A, including appendices, is intended to help the reader understand Rambler Metals and Mining plc ('the parent company') and its subsidiaries (the
'Group' or 'Rambler'), our operations and our present business environment. It has been prepared as of March 19, 2015 and covers the results of operations for the quarter ended January 31, 2015. This discussion should be read in conjunction with the audited Financial Statements for the year ended July 31, 2014 and notes thereto. This consolidated financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") and their interpretations issued by the International Accounting Standards Board ("IASB"), as adopted by the European Union and with IFRS and their interpretations issued by the IASB. The presentation currency is Canadian dollars. These statements together with the following MD&A are intended to provide investors with a reasonable basis for assessing the potential future performance. See Forward Looking Statement disclosure in Appendix 5.
Rambler Metals and Mining plc
Salatin House
19 Cedar Road Sutton Surrey
SM2 5DA
CONTENTS
GROUP OVERVIEW ......................................................................................................................................................................................................... 2
OPERATIONAL UPDATE FOR THE SECOND QUARTER .................................................................................................................................................... 3
FINANCIAL RESULTS ....................................................................................................................................................................................................... 7
OPERATIONAL SUMMARY.............................................................................................................................................................................................. 8
HEALTH AND SAFETY.................................................................................................................................................................................................... 11
OUTLOOK ..................................................................................................................................................................................................................... 12
CAPITAL PROJECTS REVIEW ......................................................................................................................................................................................... 13
FINANCIAL REVIEW ...................................................................................................................................................................................................... 14
SUMMARY OF QUARTERLY RESULTS ........................................................................................................................................................................... 15
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION....................................................................................................................................... 16
COMMITMENTS AND LOANS ....................................................................................................................................................................................... 18
APPENDIX 1 - LOCATION MAP..................................................................................................................................................................................... 20
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE ................................................................................... 21
APPENDIX 3 - NON-GAAP FINANCIAL MEASURES ....................................................................................................................................................... 22
APPENDIX 4 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES ............................................................................................................................... 24
CHANGES IN ACCOUNTING POLICIES ....................................................................................................................................................................... 27
APPENDIX 5 - OTHER MATTERS................................................................................................................................................................................... 28
Outstanding Share & Option Data ........................................................................................................................................................................... 28
Forward Looking Information .................................................................................................................................................................................. 28
Further information ................................................................................................................................................................................................. 30
1 Rambler Metals and Mining plc MD&A Q2 Fiscal 2015
GROUP OVERVIEW
The strategic vision of the Group is to become Atlantic Canada's leading mine operator and resource developer. Its principal activity is the development, mining and exploration of the Ming Copper-Gold Mine ('Ming mine') in Newfoundland and Labrador (see map referenced in Appendix 1) and the exploration and development of other properties located in Atlantic Canada. Since the declaration of commercial production in November 2012 the Group has generated sufficient free cash flows to repay its credit facility and is now net debt free. Following the revision of its mine plan during the quarter the Group looks to continue generating operating cash flows and return to profitability as it continues working towards demonstrating the economic viability of the Ming mine's large Lower Footwall Zone mineral resource.
The Group is looking forward to:
1. Returning to be a profitable copper and gold producer with a focus on further optimization and utilization of the existing infrastructure at the Nugget Pond milling facility.
2. Creating organic growth through the integration of the Ming mine's Lower Footwall Zone ('LFZ'), extending the life of
mine and increasing the annual concentrate production.
3. Increasing revenue through the integration of the existing gold hydromet plant into the production stream and focusing
on the Group's operations with the goal of reducing its overall operating costs.
4. Increasing available resources and reserves through further exploration both within the Ming mine and current land holdings.
5. Selectively pursuing strategic growth opportunities including joint ventures, acquisitions, strategic alliances and equity positions.
The Group's directors and management believe that these priorities have created a solid foundation for Rambler, and its shareholders, as it continues working towards building a successful and long term mining company.
The parent Company's Ordinary Shares trade on the London AIM market under the symbol "RMM" and the T SX Venture Exchange under the symbol "RAB".
2 Rambler Metals and Mining plc MD&A Q2 Fiscal 2015
OPERATIONAL UPDATE FOR THE SECOND QUARTER
In summary
The second quarter of the fiscal year proved challenging with economic factors affecting cash flow and profitability coupled with grade and production issues as previously announced in the press release dated January 30, 2015. In the release the Company announced immediate cost cutting measures with a revised fiscal mine plan designed to provide financial stability while targeting the lower end of production guidance for Fiscal 2015. Improvements in copper head grade in February to 2.77 per cent and 3.15 per cent so far in March demonstrate that the Company has corrected the dilution control issues. With the continuing strength of the US Dollar against the Canadian Dollar providing a natural hedge against the low copper price, the implementation of short term cost cutting measures and the improvement in grade the Company expects to be marginally cash generative in Q3 2015.
Operational highlights of the second quarter of the 2015 fiscal year included:
Production
è Produced a total of 4,648 dry metric tonnes ('dmt') (Q1/15 - 5,072 dmt) of copper concentrate during the quarter. Concentrate produced during the second quarter averaged 27.6% copper with 8.5 g/t gold and 66.1 g/t silver (Q1/15:
28.5% copper with 9.0 g/t gold and 66.1 g/t silver) with milling recoveries for copper and gold averaging 97.1% and 69.2% respectively (Q1/15: 97.1% and 69.2% respectively).
è During the second quarter daily tonnage through the copper concentrator averaged 596 dmt compared to an average of 636 dmt in Q1/15 and 554 dmt in Q2/14. The tonnage milled in Q2/15 was 54,869 dmt compared to 58,546 dmt in Q1/15
è Shipped copper concentrate, totalling approximately 5,205 dmt via the Group's port storage facility at Goodyear's Cove, Newfoundland and Labrador. In addition, at quarter end 2,546 dmt of invoiced copper concentrate remained in storage together with non-invoiced concentrate of 95 dmt.
OPERATIONAL UPDATE FOR THE SECOND QUARTER (Continued)
3 Rambler Metals and Mining plc MD&A Q2 Fiscal 2015
è Average production costs (before royalties, depreciation and amortisation) for the quarter were $162 (Q1/15 $111, Q2/14: $154) per tonne of ore milled and $2.61 (Q1/15: $1.70, Q2/14: $1.57) per equivalent pound of copper. The increase in costs per tonne compared to the previous quarter (Q1/15) is attributed to fewer tonnes milled and higher production costs in Q2/15. The increase in equivalent pound of copper cost is mainly attributable to the decrease in grades resulting in fewer equivalent pounds of copper produced. The decrease was a result of unplanned dilution of ore production stopes due to hanging wall sloughing within the 1807 and South (upper) zones.
è A summary of the Company's AICC (All-In-Cash-Cost) per equivalent pound of copper produced together with the average sales price of copper for the past four quarters are shown below. Total costs increased between Q1/15 and Q2/15 as a result of the fall in copper grade in January 2015 and increased capital development costs.
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