idle and fond bondage

TMAC runs a financing (TMR.to)

The last time we mentioned TMAC Resources (TMR.to) here on the open blog was September 13th and the advent of its 2q18 financials, a quick note that ended “This is not good, people. Not good at all“. Since then (compared to gold and silver miners index, XAU)…
…yup, not a surprise. And tonight we get this news:
TORONTO, Sept. 19, 2018 (GLOBE NEWSWIRE) — TMAC Resources Inc. (TSX: TMR) (“TMAC” or the “Company”) announces today that it intends to raise approximately C$90 million via a C$66.5 million private placement (the “Private Placement”)
that the Company’s largest shareholders have committed to and a further
C$23.5 million via a concurrent marketed overnight public offering of
common shares and flow-through common shares (the “Public Offering”). 
Certain members of the Board and management of TMAC have also committed
to approximately C$4.7 million of the Public Offering, and their
commitment, together with the Private Placement is expected to represent
approximately 80% of the shares issued under the financing tranches. continues here
This one also filed under U for unsurprising. It’s still undecided on the exact price, but as the large holders are framing it around C$4.25 that looks like a reasonable assumption this evening. Assuming it’s fully taken up, here’s the effect on the share count.

And not my sharpest focus graph ever, for some reason the computer chewed it up. Juuuust about clear enough, though. We also get a bit of detail about what TMR plans to do with that cash further down the NR…
The net proceeds of
the Public Offering and the Private Placement will be used as follows:
C$57 million for debt repayment, C$15 million for exploration and C$16 million
for capital expenditures. The capital expenditures will consist of C$8
million for plant improvements, C$6 million for underground equipment
and C$2 million for materials to construct a fifth diesel tank at
Roberts Bay.
…and from that, again assuming that all goes to plan and it closes by the end of Q3, here’s how I think book value per share is affected:
This one is clearly dilutive. And as gross are C$90m and net proceeds apparently C$88m (according to that list), we hope the lawyers and brokers on this deal enjoy their two million dollars. Bless em.
As for ops, we got some idea of how Hope Bay is going now in this segment of the NR:
Mr. Neal went on to
say, “TMAC confirms its statements from the second quarter news release
and conference call that the plant performance has been improving since
the end of July, with throughput for August and early September
averaging greater than 1,550 tonnes per day and recoveries greater than
80% based on preliminary operating data.  Installation of additional
gravity concentrators in the plant in order to drive improved recoveries
targeting at least 90% are ongoing and the status of this initiative
will be reported with the third quarter results in early November.  The
improvements in the plant, combined with the funds received from the
equity financing, is sufficient to remove the uncertainty about TMAC
breaching the covenants under the debt facility as disclosed in TMAC’s
second quarter results.
That compares to the data given by the company in its 2q18 MD&A, which is summed up by this passage:
Rock commissioning in the second concentrator line (“CL2”) began on June 3, 2018. The commissioning of CL2 has been significantly better than the first concentrator line (“CL1”). The ramp up started with the first material tonnage processed through CL2 on June 13, 2018 and CL1 and CL2 have now firmly demonstrated the capability of processing 2,000 tonnes per day (“tpd”) capacity within six weeks. 
The Plant as a whole exceeded 2,000 tpd for the first time on July 15, 2018, whereas CL1 took more than 50 weeks to reliably process 1,000 tpd. The Plant did however experience greater downtime than was expected in June and July, with seven days in June and ten days in July at less than 400 tpd throughput.
As a result of the downtime, there were 26,000 tonnes and 31,500 tonnes, respectively, processed in June and July. During July, the Plant processed at an average of more than 1,450 tpd during operating days and, importantly, has averaged more than 1,750 tpd from July 24 to July 31, including four consecutive days at greater than 2,000 tpd.
That’s a bit of a hodge-potch, but there is data there. We do know this:
  • June processed tonnes: 867tpd
  • July processed tonnes: 1,016tpd
  • August processed tonnes: 1,550tpd
And while they’re still below the 2ktpd design of the mill, that’s certainly an improvement. On the other hand we note that in the MD&A script filed on SEDAR August 13th, it says that the two concentrator lines (CL1 and CL2 combined) will be able to run at their design capacity of 2,000 tones per day “within six weeks”. We’re now at 5 1/2 weeks and if we go with the “early September greater than 1,550tpd” line (that means 1551 of course) it’s possible we get that next next up to 2k as planned by next week. But…well…maybe…or maybe not…
Anyway, let’s round off this bits’n’pieces post on the faltering TMAC and its need for more cash by taking a guess on Q3 production.
  • tonnage guess:127,500
  • grade guess: 10g/t
  • recoveries guess: 81%
Total ounces produced: 33,220
And at C$50m in sales they might break even, but that’s not a moneymaking number for TMAC yet. Anyway, I’ll leave these guesstimates here and come back to see how bad they were when the company announces Q3 production.

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