Revett Minerals Inc (NYSEMKT:RVM) Q3 2013 Earnings Call November 11, 2013 11:30 AM ET
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
Good morning, my name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Revett Minerals' Inc. Third Quarter 2013 Conference Call. [Operator Instructions] Thank you.
Mr. Ken Eickerman, you may begin your conference.
Kenneth S. Eickerman
Well, thank you, Lisa. And good day, everyone, and thanks for joining our 2013 third quarter financial and operations conference call. I am Ken Eickerman, the CFO. And joining me today is our President and CEO, John Shanahan; and Doug Miller, 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 Securities laws. These statements involve risks, uncertainties and assumptions that 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 the 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 for the third quarter 2013. Following his remarks, Doug Miller will provide an update of operations, and then I'll walk through the financials, and John will wrap up with our outlook before we finish with your questions. John?
John G. Shanahan
Thanks, Ken. Welcome. Before I get started, perhaps an apology for -- if there's anyone inconvenienced today, on Veterans Day, of course, here in the U.S. and Remembrance Day in Canada. The New York Stock Exchange is open, but I believe the TSX is not operating today. So I'm going to try and be brief. These past 12 months -- it's really been these past 11 months have been difficult. But we've come to a point here where we've made our operating and development decisions in Troy. And so, we've gone from an unknown to a known, in terms of we have clarity, we know what we need to do in the next 12 months to get back into operation. And so despite the structural difficulties that we've encountered at Troy, the Troy Mine remains viable and analyze, of course, a viable operations. Now we've got 10 to 12 months of development work on an entirely new drift. But once completed, we will have access to our mining reserves in the North Sea, and C and A Beds. And with some continued development after that, we will be down to the I Beds, which of course, in total, we're looking at 10-plus years of mine life.
I've been asked a number of times what do we see as our main risk going forward. And ironically, given the underground structural issues that we have had, our operation and development plan is really not risky at all. Our development drift is off our main service added [ph], approximately 1,000 feet back from our underground structure [ph]. It's entirely away to any of these pillar [ph] failures that we have had.
So we're really taking that operational risk out of the equation. And I think, if I had to look at what's our risk going forward, of course, it remains, like every mining operation, susceptible to price risk, silver and copper prices that is, of course. Current metal prices, we can keep our head above water. But if silver and copper prices were to fall significantly, of course, like everyone operating today, we'd have to continually reassess.
But of course, having said that, there remains great upside at Troy. We're certainly highly leveraged to improving metal prices, which we believe that we will see. And of course, as we've discovered in the last 8 years of mining operations at Troy, new development work, exploration, we could see that mine life extended.
We do have a financing need. It's not today and it's not tomorrow, but sometime into the New Year. But we are having discussions with financial institutions that we've worked with over the years to look at the best way to bridge that gap. And as I said, it's not something we need to do today. So we will take our time with our asset base and our resource life. We're looking at the best and most sensible fit for us.
But lastly, I do want to say, and I say this on every quarter, the reason we operate Troy, the reason we're here today, of course, is to see Rock Creek through to fruition. This has been a long road. But as we see from other projects being permitted in the country in various states, we realized that it's not the Rock Creek project, it's just a long and arduous process. but we believe we're nearing the end. We hope to see a supplemental EIS out for public comment into the New Year, hopefully, in the first quarter. And we do expect to see it run by year end. And so our crucial timing is our ability in late spring of 2015, when we commence upgrade -- road upgrade and start Phase 1 development of Rock Creek. And so, rather than look at the past year, which we tend to do a lot, I think, as a company, myself, we need to focus on where we'll be this time next year. I strongly believe we'll be in a better metals price environment. Strongly believe that we'll be back into production at Troy. And of course, we'll be sitting there and looking at a record of decision and gearing up for Phase 1 development at Rock Creek.
Now before I pass you onto Doug Miller for a little bit more detailed explanation of exactly what those development plans are and where we are in that process today, I'd also like to mention that we will be asking our shareholders to vote on a redomiciling motion as a company. We're currently incorporated as an Ontario company, Ontario Securities Commission, but we are looking to redomicile back to Delaware. It's very straightforward and nothing really changes. We'll continue to trade under the symbol RVM. We will have a slight name change. We'll go from Revett Minerals to Revett Mining just to differentiate between the 2. But that timing, of course, is -- we have our filings in with the SEC, so hopefully, we can do that before the end of this year. If not, it will be early into the New Year.
And I'm happy to take some questions on that.
With that, I'd like to pass it over to our VP of Operations, Doug Miller, who's up at the Troy Mine. Thank you, Doug.
Douglas Paul Miller
Thank you, John. First, I'd like to report that as of September, Troy Mine completed 1 year without any lost time accidents or reportable injuries. Not an easy feat, seeing how that a vast majority of our people were working in other areas than they're normally accustomed to.
As everyone knows by now, that our access, that we continue to look for an access in the Lower Quartzite, continued run into hurdles. We determined that in about mid-October that, that access was unsafe to continue to pursue. And therefore, pulled back out of our pumping and advancement to the South and determined that we would then drive an alternate access drift into the North C Beds and the I Beds.
We had petitioned for a modification at the K Order, basically lift the K Order of, generally speaking, everything North of the B Fault in our Little Quartzite and Lower Quartzite areas of the workings. That was granted in late October, and that allowed us then to begin the development drift John spoke of, which would access the North C Beds and the I Beds.
It was near the end of October. At that time, we also had an additional reduction in the workforce. And began that development drift. And today, we're probably about 140 feet advanced into that drift. As John pointed out, it will take 10 to 12 months to offer this declined access to North C Bed ore body and approximately 18 months to intercept the I Beds, which are South of the cross fault.
That's -- I guess, I'll turn it back over to you, Ken?
Kenneth S. Eickerman
Okay, thanks, Doug. As most of you have seen, we reported a net loss for the third quarter of about $600,000 or $0.02 a share, in comparing that to the prior year, where we had a profit of $4.5 million, or $0.13 a share.
The Troy mine suspension-related costs in the third quarter was $2.1 million, and that spending basically reflects the design and the related costs for accessing this new added that we're going to go to.
We're still spending money on the Rock Creek EIS in the third quarter. We spent about $300,000 with our SEIS contractors and related costs. So we're still 100% committed to moving that forward.
On our balance sheet, we ended the quarter with cash and short-term investments of over $12 million. And we had working capital of $13.5 million.
All discretionary spending and exploration spending has been placed on hold until profitable mining resumes in late 2014. But as I mentioned, we are still continued, focused on moving the Rock Creek EIS -- SEIS forward.
With that, I'll turn it back over to John for some final comments.
John G. Shanahan
Well, thanks, Ken. I think out of my script here today, of course, is to talk about outlook. And I think I already worked through that. Just where -- what we need to do and where we need to be at this time. So with that, I would like to ask Lisa, our operator, if we could perhaps have some questions.
[Operator Instructions] And you have a question from the line of Spencer Lehman.
You mentioned that sometime next year, you'll probably need to do some financing and you would look at some financial institutions. Might you also explore the possibility of getting that financing from a larger mining company that might want to come aboard here, looking at Rock Creek and maybe, had taken either a position in the company or maybe exchanging some stock for the financing, something along those lines?
John G. Shanahan
Yes, Spencer. Nothing is off the table. I suppose what is off the table is a dumb equity -- financing that wouldn't work for our shareholders right now. I think as we explore a number of possibilities, we've got time, as we are able to develop along this drift, obviously, certainty rises. But you're right. We are not opposed to looking at all options that are available which make the most sense for our shareholders, which make the most sense in our ability to get back into operation at Troy, which of course, leads us to our ability to see Rock Creek through to fruition. So, yes, Spencer, there is certainly nothing that we are not looking at and analyzing at the moment.
[Operator Instructions] And I have no further questions in queue. I'll turn it back to the presenters.
John G. Shanahan
Well, thank you very much. Once again, I just appreciate everybody taking their time today. And we'll keep working away that it. We'll continue to do these quarterly calls. I think it's important for us to have open access and information out there with our investors. So with that, I would like to thank everybody for their time today. Thank you, Lisa.
You're welcome. This concludes today's conference call. You may now disconnect.
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