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Revett Mining (NYSEMKT:RVM)

Q1 2014 Earnings Call

May 13, 2014 11:30 am ET

Executives

Kenneth S. Eickerman - Chief Financial Officer, Principal Accounting Officer and Controller

John G. Shanahan - Chief Executive Officer, President, Non-Independent Director, Member of Environmental Committee and Member of Safety Committee

Douglas Paul Miller - Vice President of Operations

Analysts

Anthony Alford

Operator

Good morning, my name is Candace, and I will be your conference operator today. At this time, I would like to welcome everyone to the Revett Mining, Inc. Q1 2014 Conference Call. [Operator Instructions] Mr. Ken Eickerman, you may begin your conference.

Kenneth S. Eickerman

Well thank you, Candace, and good day, everyone, and thanks for joining our first quarter financial and operational conference call. I'm Ken Eickerman, the CFO, and joining me today is our President and CEO, John Shanahan; and Doug Miller, our Vice President of Operations.

Before we begin, I would like to note that this call contains forward-looking statements that are made pursuant to Safe Harbor provisions of the Federal Security laws. These statements involve risks, uncertainties and assumptions and may cause actual results to differ materially from those anticipated. Listeners to the call are advised to review the risk factors contained in our most recent annual report on Form 10-K for descriptions of risks, uncertainties and assumptions related to forward-looking statements.

Please note, this call is intended for investors and may not be reproduced by the media, in whole or in part, without prior consent. At this time, I'll turn the call over to our President and CEO, John Shanahan, who will recap the results of the first quarter 2014. Following his remarks, Doug Miller will provide an update of operations, and then I'll walk through the financials, and then John will wrap up with our outlook, before we finish with your questions. John?

John G. Shanahan

Okay. Thanks, Ken, and welcome, everybody, to our first quarter 2014 call. It's only been a short while since we had our 2013 full year call. But we do believe it's important that we continue to host these calls on a regular basis. Of course, in a big-picture sense, we're really pleased to see that copper prices are showing some strength. I think it's going to be interesting over the next 6 months or so to see how continuing falling stocks around the world and, I think, coupled with what appears to be very, very large short positions by hedge funds, how it all shakes out.

We remain very positive, given that the consumption levels around the world are still positive and that stocks continue to fall, we remain very positive too about falling copper price -- to rising copper prices. Copper prices seemed to have found a bottom, just around -- or just under $20, which appears to be a critical cash cost number for a lot of mid-sized silver miners. If that's the bottom, at around $20, and we really do like to see that, we do like the potential there as well.

Our efforts to redevelop the Troy Mine continue as we had planned. Our development schedule, as you probably know, is not a straight line because we do have to take into account a number of factors, such as we move along at a great clip when we're dual drifting. We do have to slow down, of course, when we go through some known structures. And hopefully, not too often, but we do have to work around some equipment holdups and challenges there as well.

I'll let Doug Miller, our VP of Operations, go through that in a little bit more detail, but I just want to be clear with everyone that our focus remains, very clearly, getting the Troy Mine back into operation and completing our permitting at Rock Creek.

Now our timeline at Troy is more so in our hands, and we're still focused on being in the mineralized zones of the North C Beds in the third quarter, back into limited production in the fourth quarter of this year, and from there, we're still targeting mid-2015 where we believe we can get back to full production capabilities. And we're not wavering from that focus. And so day in, day out, we have crews up at the Troy Mine, working away to get to where we need to be.

With regards Rock Creek, the agencies and, particularly, the U.S. Forest Service as a lead agency, continue to work towards the completion of the supplemental EIS. It's an extensive body of work, which covers many aspects of that operation. And the agency has conveyed many times to us that this document needs to be complete and comprehensive and able to withstand any potential legal challenges.

We've come so far on the Rock Creek project. We've been through the litigation cycle, for most part of it, we certainly have come out. There's certainly is no fatal flaw or nothing to tell us that Rock Creek cannot be permitted, cannot be operated at -- operated within all the rules and regulations, and operated as a project that we're all going to be very, very proud of. We do it at Troy, we know we can do it at Rock Creek. But we also want a complete and comprehensive document, and so we hope that in the coming months, the draft SEIS will be circulated amongst the cooperating agencies and culminate in an SEIS for public comment sometime later this year.

Now this timeline is not ours, but we know it's approaching completion. We know the agencies are working diligently and putting their best foot forward and we're part of that process.

With that, I'd like to pass the call to Doug Miller, and I look forward to answering any questions that you may have later in the call. Thank you, Doug.

Douglas Paul Miller

Thanks, John. First of all, I'd like to report that our safety record is still at 0 lost-time accidents and 0 reportable accidents, and that's been in excess of 365,000 hours and 595 days without a reportable or a lost-time accident. So in excess of 1.5 years. Progress on the I Bed drifting, John has pretty well explained it, we're fairly well on target. We have slowed down the last couple of months that we've -- as we've intersected a couple of structures, structures that we knew were there from our mapping of the Middle Quartzite. The first one we refer to as a splay off of the B Fault. We are through it in our East drift, and we were into it in our West drift. So we have stood a lattice girder, steel, concrete-reinforced sets through that in the East drift and in the process of standing those sets in the West drift. The East drift is about 250 feet further to the south advanced than the West drift, and it is now at the B Fault, and we're standing steel, those same lattice girder steel sets, to reinforce the B Fault.

We should be through that B Fault probably by this time next week. As John pointed out, the advanced rate slows down considerably as you get to these structures and you have to add additional support. And the advance is usually about 3 to 4 feet per day, with the shock [ph] creating the reinforced concrete sets and extra bolting and so on and so forth. And we're still on target for our budgeted or projected limited production for the fourth quarter of 2014, and surely on target for full production by midyear of 2015.

That's pretty much it. I'll turn it back over to Ken Eickerman.

Kenneth S. Eickerman

Well thanks, Doug. Just a quick picture of our finances. At the end of March, we ended with cash on hand of right at over -- a little over $9 million, and working capital of about $12 million, both of which are an improvement from our year-end balances of $8 million in cash and $10.6 million in working capital. During the first quarter, we did liquidate our available-for-sale securities, and we generated around $800,000 in cash. In addition, we settled an insurance claim on some damaged mine equipment, and received $1.9 million in early April of this year. In addition to that, we also completed a private placement of our common shares and raised $3.4 million during the first quarter of 2014. So we're pleased with those efforts, at the same time, we're going to continue our efforts in raising additional funds and we'll consider all options.

And as John hit on, we're continuing our efforts to moving that Rock Creek permitting forward, and we spent almost $0.25 million during the first quarter. For the remainder of 2014, we plan on continuing these efforts, and we'll see this thing through.

So with that, I'll turn it back over to John and be happy to answer any questions later on. Mr. Shanahan?

John G. Shanahan

I apologize, I pushed the mute button. Candace, I think, it's probably appropriate that we would take some questions, if that's okay?

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from Tony Alford with Alford Investment.

Anthony Alford

I've got a question for you. I was looking here on the news announcement, you guys have gone down 3,955 total feet, and to go down to 7,500 to the C Beds. Could we get an idea of what is the cost -- I don't know if this would be a question for you or for Doug, but what is the cost per foot and how much more money do we think we'll need to raise to get there into the ore bed?

John G. Shanahan

Yes. Tony, I think it's -- and, Doug, correct me if I'm wrong, it's approximately just under $1,000 per foot. Remembering that our adits there or our -- is around 20x20. Doug, is that a reasonable...

Douglas Paul Miller

It is under -- it's about under $900 a foot. And again, there were some early accrued expenses, ventilation-type expenses, that will be used for the rest of the drifting. So that'll continue, hopefully continue to drop down in price or in cost.

John G. Shanahan

So, Tony, approximately $900 per foot. We will need, approximately, to complete -- to get us all the way through to mid-2015, at a minimum I believe it's, at this stage, about $5 million. And efforts at the moment are focused on some sort of debt instrument that we can do. We believe that, given the fact that we have assets, given the fact that we really don't have any debt other than about $0.5 million, at the moment, on our equipment leases, we think we are well positioned to complete that.

Operator

[Operator Instructions] And we have no further questions at this time.

John G. Shanahan

Well thank you. Once again, we just appreciate everyone's interest. As I said earlier in my comments, we are focused. We're not looking elsewhere, we're not looking to do anything else other than what we set out to do. Given the issues that we had at the Troy Mine in December 2012, we know that Troy is a valuable asset. Given our 12 years of mine life ahead of us, we need to redevelop that. We're believers in metal prices, we're believers in our ability to be a safe and efficient operator. And of course, we're believers in our ability to complete the permitting of Rock Creek. So for us, it's -- that's what we do and we're going to continue to try and do it as best as we possibly can. So I thank everybody for their interest, and as I think everyone knows, we're always happy to have any discussions or answer any questions at any time with any of our shareholders or stakeholders. Thanks, Candace.

Operator

And this concludes today's conference call. You may now disconnect.

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