26 September 2022

Rambler Reports Financial Results

Half Year Ended 30 June 2022

London, England, Newfoundland and Labrador, Canada - Rambler Metals and Mining plc (AIM: RMM) ("Rambler" or the "Company"), a copper and gold producer, explorer, and developer, today reports its unaudited financial results for the half year ended 30 June 2022.

All currency references in this press release are in U.S. dollars except as otherwise indicated.

HALF YEAR OPERATIONAL RESULTS:

The Ming Mine operation achieved significant growth and development improvements during the first half of FY2022. The period under review has seen the operation ramp up production from 25,000 tonnes of ore in January 2022 to 30,000 tonnes in June 2022 (peak months of 32,000 tonnes in April and May 2022), as well as a consistent increase of grade from 1.49% of copper ('Cu') to in excess of 1.8% Cu in June 2022. A total of 2,635 tonnes of Cu was produced during the period under review, 130% more than in the first half of FY2021.

The operation has also been focused on the establishment and maintenance of multiple ore producing zones in order to provide consistent ore supply to fully utilise mill capacity. During the period, a total of 2,281 metres was developed of which 1,511 metres (60%) was attributed to the development of the 735 and 760 levels in the Lower Footwall Zone ('LFZ').  Unlike the Ming North Zone and Upper Footwall Zone where development activity is expensed, the large tonnages associated with the LFZ justify capitalisation of development costs on these levels. A total development cost of $5.4 million was capitalised in H1 2022 compared to $6.6million in H1 2021.

^{1 Refer to page 6 and 7 for detailed calculations}

·      Total revenue in H1 2022 was $25.4 million which represents a 90% increase compared to the same period in 2021 (H1 2021: $13.4 million) This is a direct effect of the ramp up in operational activity as production volumes increased by 130% over H1 2021. The first 670 tonnes of Cu sold in the period was still subject to a hedge carried over from 2021 and was completed at $3.49/lb ($7,700 per tonne) and 1,700 tonnes of Cu, being 90% of tonnes delivered to Goodyears Cove waiting for collection by our customer, was subject to provisional invoice pricing being valued at $3.74/lb ($8,245 per tonne). As at 30 June 2022, the mark to market valuation on the provisional invoices had a negative impact on revenue for the period of $2.0million.

·      The Company has implemented a price monitoring policy that will manage any negative exposure to the Cu price going forward. The Company has the option to secure the market price from the point that provisional invoices are raised.

·      Production costs for the period were 153% higher at $26.3 million (H1 2021: $10.4 million) reflecting the ramp-up in production (130% increase of Cu tonne produced), once off ramp up cost and ongoing inflationary pressure.

·      Direct cash costs net of by-product credits ('C1 costs') for the period were $4.65/lb of saleable copper (H1 2021: $3.01/lb). The improving trend of the C1 costs over the period is detailed further below.

·      The C1 cost has improved during H1 2022 and was $2.91 /lb in June 2022.

·      Operating loss for the period was $7.9 million (H1 2021: loss of $2.1 million).  This is primarily made up of:

o  A significant operational loss was incurred in the first quarter as the Company ramped up towards full capacity but without the benefit of the subsequent increase in Cu volumes.

o  Additional costs in the first quarter were incurred as a result of the delay to production for the completion of a second egress and a crusher breakdown.

o  The second quarter contributed a small operating profit as the mine started to reach its budgeted production levels.

o  Inflationary increases to consumables and energy costs post COVID-19 including significant increase in freight costs.

o  Mark to market on copper sales of $2.0 million.

·      Earnings before interest, taxes, depreciation, and amortisation ('EBITDA') for the period was a loss of $4.3 million (H1 2021 EBITDA loss: $1.1 million).

FINANCIAL POSITION

·      The Company's total current liabilities increased from $18.6 million (as at 31 December 2021) to $28.5 million (as at 30 June 2022). Current liabilities include the NewGen Resources Lending Inc loan with repayments commencing on 31 October 2022, trade and other payables of $15.5 million and the current liability associated with the Elemental Royalties gold stream.

·      Trade payables increased by $2.3million during the period.

·      The Company's net debt was $20.3 million at 30 June 2022 (31 December 2021: $22.2 million).

·      The Company's net current liabilities were $20.0 million as at 30 June 2022 (31 December 2021: $8.8 million).

During the half year, Rambler raised:

·      Equity of $5.0 million after expenses; and

·      Net $4.6 million through the purchase and sale of the Gold Stream

The application of these funds contributed to:

1)    Development capital of $5.4million (H1 2021 $6.6million)

2)    Settlement of leases and loans $2.1million (H1 2021 $3.4million)

3)    Financing costs $1.1million (FY 2021 $0.6million)

4)    Exploration and other assets $1.6million (FY2021 $1.8million)

The shift in financial position of the Company over the 6 months to 30 June 2022 has been caused by a combination of factors that include:

·      Increasing production capacity leading to an increase in accounts payable, particularly the case for sub-contracted variable cost services such as long hole drilling and ROM ore haulage.

·      Increasing input unit costs, especially for fuel and equipment maintenance.

·      Post Covid hyper inflationary increases in consumables due to supply shortage and demand pressure.

·      Significant increase in freight charges with the logistics challenges following COVID-19. A reduction in copper price during the second quarter from a level at which it was expected that working capital requirements could be met from revenues.

·      The inclusion in current liabilities, as previously stated above, of the Newgen principal repayments from the end of Q3 2022 along with the Elemental and Sandstorm payments.

·      A better understanding of the Company's cost structure and opportunities for improvement following considerable work undertaken on improving the Company's financial systems.

These factors have had an impact on operations and accordingly, Rambler is revising its production guidance for 2022 to a range of 6,300 to 6,600 tonnes Cu from 7,000 tonnes. The progress of the NI 43-101 has also been delayed and, subject to funding, is anticipated to be completed in 2023.

CASH FLOW

·      Cash utilised from operations before changes in working capital was $2.4 million (H1 2021: cash inflows of $0.7 million).

·      Cash generated from operating activities for H1 2022 was $0.5 million (H1 2021: cash utilised of $5.5 million). The cash generated includes an increase in the trade payables during the period of $3.5m.

·      The Company received $5.0 million for the sale of shares (after expenses) by way of a placing of 14,466,580 new ordinary shares of 1 pence each at a price of 26.5 pence per share.

·      Net cash of $4.6million received from the purchase and sale of the gold stream to Elemental Royalties in April 2022.

·      The total capital expenditures for H1 2022 were $7.0 million (H1 2021: $8.4 million) including $5.4 million (H1 2021: $6.6 million) spent on the mineral property at Ming mine, $0.9million (H1 2021: $1.6 million) on property, plant and equipment and $0.7 million (H1 2021: $0.2m) on exploration.

·      No Government funds were received during the period under review (H1 2021: $0.4m).

·      Leases and loans of $2.1million (H1 2021: $3.4 million) were repaid during the period.

GOING CONCERN

The Group incurred a net loss before tax of $9.6 million for the six months ended 30 June 2022 (2021: $4.8 million). As at 30 June 2022, the Group had net current liabilities of $20.0 million (December 2021: $8.8 million). As set out in the commentary, the Company is able to produce saleable Copper with a positive operational margin. It is therefore evident that the operation has moved away from the requirement of funding to sustain daily operational activities on the mine and is able to service monthly operational cost as incurred, although supply restrictions resulting from our high level of net current liabilities can impact operational performance on a daily basis, in addition the operating margin is dependent on the Cu price which at the time of this release is at a 21 month  low.

The balance sheet at December 2021 had net current liabilities of $8.8m which increased to $20.0m at 30 June 2022. A material amount of development has been carried out not only in the period under review but also in the 12-months preceding that which has now resulted in the operation producing some operational cash flow, although this is insufficient to service the working capital requirements. The development of the mine and the losses in the first quarter were only partially funded from new equity and the purchase and sale of the gold stream.  The shortfall has resulted in an increase in accounts payable. In addition, debt repayments have now become current.

The balance sheet requires restructuring to support the operations by accelerating repayment of legacy commitments made during the intense Covid period and bringing operational accounts payable balances back to current terms. In addition, rescheduling of the repayment of debt to match Rambler's operational cash flow generation and further capital expenditures to create further efficiencies is required.

Managing cashflow constraints are impacting the mining schedule and therefore resolution of legacy commitments is an immediate priority. Following a review of the latest Group working capital forecasts, the Group needs to raise funds to materially reduce the current creditor position in the short term and for general working capital in the next 12 months through an issue of new equity and restructuring of debt. The forecasts assume that agreement can be reached with NewGen to defer capital payments into 2023. However, whilst the Company is engaged in discussions with NewGen, there can be no certainty that NewGen will agree to defer or reschedule the repayment of its loan, or in the event that the loan is deferred and payments are rescheduled, the terms on which the revised loan will be secured.

The Group's ability to continue operating in the normal course of business is dependent upon establishing sufficient operating cash flows from the Ming Mine, and to the extent required, through access to equity and debt markets. These factors together with the continued unpredictability of cost inflation and the copper prices indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.

The consolidated financial statements have been prepared on a going concern basis which assumes that the Group will be able to realise its assets and settle its obligations in the normal course of business. The Board believes that the Ming Mine will generate sufficient operating cash flows to support the day-to-day activities but requires funding to both finance future growth requirements and reduce the working capital deficit. For the period under review, the Group successfully obtained the gold stream funding (net effect of US$4.6million) and raised equity finance of US5.0million net of expenses. Based upon the board's discussions with the Company's brokers and debt funders, the Board reasonably believes that it will be successful in securing the necessary required fundings.

Accordingly, these financial statements do not give effect to any adjustments which would be necessary should the Group be unable to continue as a going concern and, therefore, be required to realise its assets and discharge its liabilities in other than the normal course of business and at amounts different than those reflected in the financial statements. Such adjustments could be material.

Toby Bradbury, President and CEO, Rambler Metals & Mining commented:

"For several years, the two key challenges at Rambler have been the operation of the underground mine and the weakness of the balance sheet. 

The underground operational issues are largely resolved. Notwithstanding this, we foresee more cost efficiencies being achieved in the future.  Inefficiencies are still being imposed upon the operations due to the limited financial capacity.  In many respects, what has been achieved across the board in the operations (mine and mill) is despite the financial challenges that have prevailed.

When looking at the operating performance, a C1 operating cost in June 2022 of $2.91/lb is starting to show the true potential of this mine.  This incorporates all the price increases experienced over the period and we expect this number to continue to reduce. We project our C1 cost at the end of 2022 to be in the range of $2.70-2.80/lb

We continue to enhance our financial systems to further our understanding of costs and use every opportunity to implement cost improvements across all facets of the business.

In the meanwhile, with the flexibility we have created in the mine with the advanced level of development, we are reducing development activity.  The increased ore tonnage per level that we are seeing in the Lower Footwall Zone gives us this near-term flexibility to adjust to the current downturn in the copper price.

The constraints of working capital have had an impact on operations.  While July and August have each produced in excess of 600 tonnes of payable copper, underground mining in September has been challenged with a change in mining sequence where the root cause was a working capital issue.  This specific issue has been addressed as a short-term impact but is expected to run into October.  As a result, we are adjusting our production guidance for 2022 to a range of 6,300 to 6,600 tonnes Cu from 7,000 tonnes.

Reiterating the potential scale of the business, the resource base at Ming Mine could be sufficient to support an operation 2.5 times its current output (≈20,000 tonnes Cu p.a.) and still have a +15-year mine life.  This is the subject of a feasibility study that has to be conducted.  However, even at current scale, this mine works and it is predominantly the legacy issues that are holding us back.

In the context of the resource base that Rambler holds, the valuation of the Company, even including its current debt position, is exceedingly low. The operations are proving themselves and future production is at less risk than it has ever been. Over and above this, there is strong exploration potential with 3 new mineralized zones discovered just this year.

The need to bring capital into the business is to ensure that long-standing legacy commitments are met and not to support on-going operations.  The current drop in copper price is one which we believe to be temporary, but we also recognise the volatility in the market.

We are in discussions with all relevant parties about the need to restructure our liabilities and believe that practical solutions will be found all round.

In the meanwhile, we are very appreciative of the support of our suppliers, debt providers and shareholders that ensure the operations continue."

ALTERNATIVE (NON-GAAP) PERFORMANCE MEASURES

Certain financial information provided in this report is non-GAAP performance measures but they are key performance measures that management use to monitor performance and assess the overall effectiveness and efficiency of mining operations. These performance measures are in line with industry practice but do not have a standard meaning within IFRS. These performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS.

The non-GAAP performance measures provide meaningful supplemental information regarding operating results because they exclude certain significant items that are not considered indicative of future financial trends either by nature or amount. As a result, these items are excluded for management assessment of operational performance and preparation of annual budgets. These significant items may include, but are not limited to, restructuring and asset impairment charges, individually significant gains and losses from sales of assets, share based compensation, unrealized gains or losses, and certain items outside the control of management. These items may not be non-recurring. However, excluding these items from GAAP or non-GAAP results allows for a consistent understanding of the Company's consolidated financial performance when performing a multi-period assessment including assessing the likelihood of future results. Accordingly, these non-GAAP financial measures may provide insight to investors and other external users of the Company's consolidated financial information.

C1 Cash Costs Per Payable Pound of Copper Produced - net of by-product credits and before deducting any refinery and treatment charges, and is a key performance measure that management uses to monitor performance. Management uses this measure to assess how well the Company's producing mines are performing and to assess overall efficiency and effectiveness of the mining operations and assumes that realized by-product prices are consistent with those prevailing during the reporting period.

Net debt - a performance measure used by the Company to assess its financial position and is comprised of loans and borrowings (excluding deferred financing costs) and cash and cash equivalents.

EBITDA - net income (loss) attributable to shareholders before net finance expense, tax expense, and depletion and amortization.

The audited financial statements as at December 31, 2021 are available on the Company's website at http://www.ramblermines.com

Tim Sanford, P.Eng., is the Qualified Person responsible for the technical content of this release and has reviewed and approved it accordingly. Mr. Sanford is an employee of Rambler Metals and Mining Canada Limited.  Tonnes referenced are dry metric tonnes unless otherwise indicated.

Results reported are accurate and reflective as of the date of release.  The Company performs regular auditing and reconciliation reviews on its mining and milling processes as well as stockpile inventories, following which past results may be adjusted to reflect any changes.

Abbreviations :

g/t = grammes per tonne

dmt = dry metric tonnes

mtpd = metric tonnes per day                                                                                                     

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR') which has been incorporated into UK law by the European Union (Withdrawal) Act 2018.  Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

ABOUT RAMBLER METALS AND MINING

Rambler is a mining and development company that in November 2012 brought its first mine into commercial production.  Rambler has a 100 per cent ownership in the Ming Copper-Gold Mine, a fully operational base and precious metals processing facility and year-round bulk storage and shipping facility; all located on the Baie Verte peninsula, Newfoundland and Labrador, Canada.

The Company has established a production profile to meet current mill capacity of 1,350 metric tonnes per day with a target grade of 2% Cu and is evaluating growth opportunities from that base. 

Along with the Ming Mine, Rambler also owns 100 per cent of the former producing Little Deer/Whales Back copper mines. 

Rambler is listed in London under AIM:RMM.

For further information, please contact:

Website: www.ramblermines.com 

Caution Regarding Forward Looking Statements:

Certain information included in this press release, including information relating to future financial or operating performance and other statements that express the expectations of management or estimates of future performance constitute "forward-looking statements".  Such forward-looking statements include, without limitation, statements regarding copper, gold and silver forecasts, the financial strength of the Company, estimates regarding timing of future development and production and statements concerning possible expansion opportunities for the Company.  Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief are based on assumptions made in good faith and believed to have a reasonable basis.  Such assumptions include, without limitation, the price of and anticipated costs of recovery of, copper concentrate, gold and silver, the presence of and continuity of such minerals at modeled grades and values, the capacities of various machinery and equipment, the availability of personnel, machinery and equipment at estimated prices, mineral recovery rates, and others.  However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements.  Such risks include, but are not limited to, interpretation and implications of drilling and geophysical results; estimates regarding timing of future capital expenditures and costs towards profitable commercial operations.  Other factors that could cause actual results, developments or events to differ materially from those anticipated include, among others, increases/decreases in production; volatility in metals prices and demand; currency fluctuations; cash operating margins; cash operating cost per pound sold; costs per ton of ore; variances in ore grade or recovery rates from those assumed in mining plans; reserves and/or resources; the ability to successfully integrate acquired assets; operational risks inherent in mining or development activities and legislative factors relating to prices, taxes, royalties, land use, title and permits, importing and exporting of minerals and environmental protection.  Accordingly, undue reliance should not be placed on forward-looking statements and the forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement.  The forward-looking statements contained herein are made as at the date hereof and the Company does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise, except as required under applicable security law.

(See Company website www.ramblermines.com for H1/22 Results)

unaudited interim condensed consolidated income statement for the six months ended 30 June 2022

unaudited interim condensed consolidated statement of financial position as at 30 June 2022