TORONTO - Three Valley Copper Corp. ('TVC' or the 'Company') today announced its operating and financial results for the year ended December 31, 2021.
The Company is focused on growing copper production from, and further exploration of, its primary asset, Minera Tres Valles SpA ('MTV'). Located in Salamanca, Chile, MTV is 95.1% owned by the Company and MTV's main assets are the Minera Tres Valles mining complex and its 46,000 hectares of exploratory lands.
Recent Highlights
Corporate
On October 4, 2021, the Company delivered to the minority shareholder of MTV (the 'Minority Shareholder') the required written notice of its intention to acquire the remaining interest in MTV held by the Minority Shareholder as per the call option notice requirements of the MTV shareholders' agreement.
On October 20, 2021, the Company engaged an independent financial advisor to review and evaluate potential alternatives that may further maximize value for the shareholders of the Company. These alternatives included, inter alia, potential mergers, strategic partnerships, acquisition or dispositions of assets and/or refinancing or amending terms of MTV's long-term debt. To date, the strategic review process has not yet resulted in any binding offers being received by the Company.
On November 25, 2021, the Company successfully closed a bought-deal offering (the 'Bought-Deal Financing') and issued a total of 56,681,000 units (the 'Units') and 819,000 additional common share purchase warrants at an offering price of CAD$0.32 per Unit, for net proceeds of $13.2 million.
Prior to the closing of the Bought-Deal Financing, the Company and its subsidiaries executed an undertaking agreement (the 'Undertaking') with MTV's senior lenders (the 'Lenders') to execute a binding agreement to amend the loan repayment terms of the amended senior secured prepayment facility (the 'Amended Facility') on or prior to September 30, 2022. Under the terms of the Undertaking the Lenders have agreed not to accelerate or enforce their rights or remedies under the Amended Facility should MTV fail to (i) make scheduled loan repayments on March 31, 2022, June 30, 2022 and September 30, 2022 and/or (ii) replenish the operating reserve account to reestablish the minimum reserve as required under the Amended Facility (each, a 'Specific Event of Default'). As per the terms of the Undertaking, the forbearance period is from November 22, 2021 to October 1, 2022. The Undertaking also provides that the net proceeds of the Bought-Deal Financing will not be used to repay any of the loans outstanding under the Amended Facility during the forbearance period. The Lenders will cease to be bound by the Undertaking should the Company not invest CAD$16.0 million, net of all fees and costs associated with the Bought-Deal Financing, into MTV between the closing of the Bought-Deal Financing on November 25, 2021 and April 30, 2022, if an event of default occurs under the Amended Facility other than a Specified Event of Default, or if the Company and the Lenders fail to enter into a definitive agreement by September 30, 2022, pursuant to which the loan repayment schedule in the Amended Facility is revised. The Company does not expect to fulfill its April 30, 2022 obligation under the Undertaking.
Subsequent to the completion of the Bought-Deal Financing, the Company, through its indirectly held subsidiary (SRH Chile SpA), subscribed for additional common shares of MTV for approximately $8.6 million, resulting in the Company's indirect holding of MTV increasing from 91.1% to 95.1% effective December 6, 2021.
On January 24, 2022, the Company announced it temporarily suspended operations at Don Gabriel and does not expect to resume production at Don Gabriel in 2022. Don Gabriel was previously expected to produce approximately 4,600 tonnes of copper cathode in 2022 which represented between 58% and 46% of the Company's preliminary production guidance for 2022 of 8,000 to 10,000 tonnes of copper cathode production. As a result, the Company retracted its revised preliminary operating outlook for 2022 and 2023. The suspension of operations at Don Gabriel resulted in the temporary halt of the start of block caving operations at Papomono.
On March 7, 2022, the Company, with the support of the Lenders and the underground mining contractor, decided to start the operations of the Papomono block caving mine while discussions with the Lenders continue. The Lenders, together with the Company, expressed their intention to provide $11 million of super senior secured funds to MTV, the approvals for and terms of which are being finalized.
On March 31, 2022, MTV did not pay interest due to the Lenders and consequently effective that date the Company is in default with the terms of the existing Amended Facility and the Lenders may exercise their security rights and/or remedies pursuant to the terms of the Amended Facility. In addition, amounts due to the unsecured creditors of the JRA (as defined below) (the 'Unsecured Creditors') on March 31, 2022 were postponed until June 30, 2022 with the approval of the Creditors' Committee representing the Unsecured Creditors of the Judicial Reorganization Agreement ('JRA').
Operations
The Company continued to further advance the development of Papomono during the fourth quarter of 2021 completing its planned initial construction and developments in mid-January 2022.
Copper cathode production in the fourth quarter of 2021 was 2.5 million pounds, consistent with copper cathode production in the third quarter. Total copper cathode production for 2021 was 9.3 million pounds (10.8 million pounds in 2020).
Copper cathodes sales in the fourth quarter of 2021 were 2.3 million pounds, consistent with the third quarter, bringing total copper cathodes sales for the year to 8.9 million pounds (8.6 million pounds in 2020).
The Company's revised operating guidance for 2021 was to produce between 4,500 and 5,500 tonnes of copper cathodes. Actual production for 2021 was slightly lower than guidance at 4,209 tonnes which represents less than 25% of MTV's overall copper cathode production capacity.
For the year ended December 31, 2021, capital expenditures of $14.0 million were incurred related to Papomono expenditures.
Financial
Reported annual gross loss of $21.4 million on a realized average copper price per pound1 of $3.70 compared to a gross loss of $10.8 million in 2020 on a realized average copper price per pound1 of $2.58.
Adjusted EBITDA from continuing operations1 for the year was negative $4.2 million compared to negative $5.2 million in 2020.
Net loss per share attributable to owners of the Company for the year was $0.68 compared to $0.60 in 2020.
At December 31, 2021, held cash and cash equivalents of $13.7 million and cash and cash equivalents of approximately $8.2 million as at the date hereof, the majority of which is segregated at the public company, separate from MTV.
About Three Valley Copper Corp.
TVC, headquartered in Toronto, Ontario, Canada is focused on growing copper production from, and further exploration of, its primary asset, Minera Tres Valles SpA. Located in Salamanca, Chile, MTV is 95.1% owned by the Company and MTV's main assets are the Minera Tres Valles mining complex and its 46,000 hectares of exploratory lands.
Non-IFRS Performance Measures
'Cash costs', 'EBITDA', 'Adjusted EBITDA', 'Realized copper price', 'Working Capital', 'Working Capital Deficiency', and 'Net Debt' are non-IFRS performance measures. These non-IFRS performance measures do not have a standardized meaning prescribed by IFRS. These measures may differ from those used by, and may not be comparable to such measures as reported by, other issuers. The Company believes that these measures are commonly used by certain investors, in conjunction with conventional IFRS measures, to enhance their understanding of the Company's performance.
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this news release, contain forward-looking information (collectively referred to herein as the 'Forward-Looking Statements') within the meaning of applicable Canadian securities laws. The use of any of the words 'expect', 'anticipate', 'continue', 'estimate', 'may', 'will', 'project', 'should', 'believe', 'plans', 'intends' and similar expressions are intended to identify Forward-Looking Statements. In particular, but without limiting the foregoing, this news release contains Forward-Looking Statements pertaining to: ongoing and possible future events of default and the possibility of the liquidation of MTV; expressed intentions of the Company and the Lenders to provide additional capital to fund MTV; expectations regarding negotiations with the Lenders; future outcomes and expectations related to MTV's ongoing operations; the possibility of the Company acquiring the non-controlling interest of MTV and expanding its inventory of reserves and resources; impacts of a favorable copper price environment in the future; expectations regarding the costs and timing of Papomono's ramp-up, including timing of the start of formal caving operations; impacts of COVID-19 and the Company's and MTV's precautions to manage and mitigate same; future block caving efforts and the expected benefits therefrom and timing thereof; expectations for the future of Don Gabriel; the status of the Company's strategic review; expectations regarding exploration, the cost, timing and success of such initiatives and MTV's labour and health and safety initiatives and expectations.
Although TVC believes that the Forward-Looking Statements are reasonable, they are not guarantees of future results, performance or achievements. A number of factors or assumptions have been used to develop the Forward-Looking Statements, including: the possibility that the Lenders and the Company are able to negotiate additional funding for MTV to continue its operations, there being no additional significant disruptions affecting the development and operation of MTV; the availability of certain consumables (including water) and services and the prices for power and other key supplies being approximately consistent with assumptions in the Technical Report; labour and materials costs being approximately consistent with assumptions in the Technical Report; fixed operating costs being approximately consistent with assumptions in the Technical Report; permitting and arrangements with stakeholders being consistent with current expectations as outlined in the Technical Report; certain tax rates, including the allocation of certain tax attributes, being applicable to MTV; the availability of financing for the Company's and MTV's planned operations and development activities; assumptions made in mineral resource and mineral reserve estimates and the financial analysis based on these estimates, including (as applicable), but not limited to, geological interpretation, grades, commodity price assumptions, metallurgical performance, extraction and mining recovery rates, hydrological and hydrogeological assumptions, capital and operating cost estimates, and general marketing, political, business and economic conditions, the continued availability of quality management, critical accounting estimates, existing water supply will continue, supplemental water availability will continue, the geopolitical risk of Chile will remain stable, including risks related to labour disputes, the construction and expansion of mining operations including the Papomono Masivo incline block caving underground mining project, as well as the timing thereof and production therefrom; expected timelines for repayment of indebtedness of MTV; the company's access to capital in order to fund the exercise of the call option and the ability of the Company to continue as a going concern.
Actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements should assumptions underlying the Forward-Looking Statements prove incorrect or should one or more risks or other factors materialize, including: (i) possible variations in grade or recovery rates; (ii) copper price fluctuations and uncertainties; (iii) delays in obtaining governmental approvals or financing; (iv) risks associated with the mining industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to mineral reserves, production, costs and expenses and labour, health, safety and environmental risks) and risks associated with the other portfolio companies' industries in general; (v) performance of the counterparty to the ENAMI Contract; (vi) risks associated with investments in emerging markets; (vii) general economic, market and business conditions; (viii) market volatility that would affect the ability to enter or exit investments; (ix) failure to secure additional financing for MTV or the Company in the future on acceptable terms to the Company, if at all; (x) commodity price and foreign exchange fluctuations and uncertainties; (xi) risks associated with catastrophic events, manmade disasters, terrorist attacks, wars and other conflicts, or an outbreak of a public health pandemic or other public health crises, including COVID-19; (xii) being inconsistent those risks disclosed under the heading 'Financial Risk Management' in TVC's Management's Discussion and Analysis for the period ended December 31, 2021; (xiii) being inconsistent with current expectations including, without limitation, the impact of any political tensions and uncertainty in Chile, or actions taken by any local or national government, including but not limited to amendments to mining laws and regulatory actions; (xiv) the impact and probability of operational, geological and environmental risks at MTV being inconsistent with current expectations (xiv) outcomes and potential benefits of the strategic review process; differing from expectations; (xvi) the failure of negotiations with the Lenders to restructure the Company's debt under the Amended Facility and (xvii) unfavourable results related to arbitration with the Company's minority shareholder. The Forward-Looking Statements speak only as of the date hereof, unless otherwise specifically noted, and TVC does not assume any obligation to publicly update any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable Canadian securities laws.
Cautionary Note to United States Investors Concerning Estimates of measured, indicated and inferred mineral resources
Disclosure regarding the Company's mineral properties, including with respect to mineral reserve and mineral resource estimates included in this news release, was prepared in accordance with NI 43-101. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. NI 43-101 differs significantly from the disclosure requirements of the Securities and Exchange Commission (the 'SEC') generally applicable to U.S. companies. Accordingly, information contained in this news release is not comparable to similar information made public by U.S. companies reporting pursuant to SEC disclosure requirements.
Contact:
Michael Staresinic
Tel: (416) 943-7107
Email: mstaresinic@threevalleycopper.com
THREE VALLEY COPPER CORP. 
