Imperial Metals Corporation (the “Company”)
(TSX:III) reports comparative financial results for the three and
six months ended June 30, 2017 and 2016, as summarized in this
release and discussed in detail in the Management’s Discussion
& Analysis. The Company’s financial results are prepared in
accordance with International Financial Reporting Standards. The
reporting currency of the Company is the Canadian (“CDN”) Dollar.
Select Quarter Financial
Information
expressed in thousands, except share and per share amounts |
|
Three Months Ended June 30 |
|
|
Six Months Ended June 30 |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Total
revenues |
$ |
106,741 |
|
$ |
116,200 |
|
$ |
222,490 |
|
$ |
252,985 |
|
Net
income (loss) |
$ |
64,080 |
|
$ |
(4,160 |
) |
$ |
45,328 |
|
$ |
13,569 |
|
Net
income (loss) per share |
$ |
0.68 |
|
$ |
(0.05 |
) |
$ |
0.48 |
|
$ |
0.17 |
|
Diluted
income (loss) per share |
$ |
0.68 |
|
$ |
(0.05 |
) |
$ |
0.48 |
|
$ |
0.17 |
|
Adjusted
net loss (1) |
$ |
(22,250 |
) |
$ |
(1,214 |
) |
$ |
(44,546 |
) |
$ |
(15 |
) |
Adjusted
net loss per share (1) |
$ |
(0.24 |
) |
$ |
(0.01 |
) |
$ |
(0.48 |
) |
$ |
(0.00 |
) |
Adjusted
EBITDA(1) |
$ |
12,851 |
|
$ |
40,488 |
|
$ |
28,039 |
|
$ |
90,339 |
|
Total
assets |
$ |
1,611,646 |
|
$ |
1,446,200 |
|
$ |
1,611,646 |
|
$ |
1,446,200 |
|
Total
debt (including current portion) |
$ |
849,917 |
|
$ |
835,214 |
|
$ |
849,917 |
|
$ |
835,214 |
|
Cash
flow (1)(2) |
$ |
12,341 |
|
$ |
40,327 |
|
$ |
27,406 |
|
$ |
89,752 |
|
Cash flow per share (1)(2) |
$ |
0.13 |
|
$ |
0.49 |
|
$ |
0.29 |
|
$ |
1.10 |
|
(1) Refer to table under heading Non-IFRS
Financial Measures for further details. (2) Cash flow is
defined as the cash flow from operations before the net change in
non-cash working capital balances, income and mining
taxes, and interest paid. Cash flow per share is defined
as Cash flow divided by the weighted average number of common
shares outstanding during the year. |
Revenues decreased to $106.7 million in the June
2017 quarter compared to $116.2 million in the 2016 comparative
quarter, a decrease of $9.5 million or 8%.
Revenue from the Red Chris mine in the June 2017
quarter was $62.3 million compared to $92.0 million in the 2016
comparative quarter. This decrease was attributable to lower grade
ore processed and lower recoveries in the 2017 quarter compared to
the 2016 quarter.
Revenue from the Mount Polley mine in the June
2017 quarter was $44.1 million compared to $24.0 million in the
2016 comparative quarter. This increase was primarily due a higher
quantity of copper sold along with an increased quantity of gold
by-product sold as the mine had not returned to normal operations
for the entire June 2016 quarter.
In the June 2017 quarter, there were 3.5
concentrate shipments from Red Chris mine (2016-5.0 concentrate
shipments) and 1.3 concentrate shipments from Mount Polley mine
(2016-1.0 concentrate shipment). Variations in revenue are impacted
by the timing and quantity of concentrate shipments, metal prices
and exchange rates, and period end revaluations of revenue
attributed to concentrate shipments where copper and gold prices
will settle at a future date.
The London Metals Exchange cash settlement
copper price per pound averaged US$2.57 in the June 2017 quarter
compared to US$2.14 in the 2016 comparative quarter. The London
Metals Exchange cash settlement gold price per troy ounce averaged
US$1,257 in the June 2017 quarter compared to US$1,259 in the June
2016 quarter. The average CDN/US$ Dollar exchange rate was 1.345 in
the June 2017 quarter, 4.3% higher than the exchange rate of 1.289
in the June 2016 quarter. In CDN Dollar terms the average copper
price in the June 2017 quarter was CDN$3.46 per pound compared to
CDN$2.76 per pound in the 2016 comparative quarter and the average
gold price in the June 2017 quarter was CDN$1,691 per ounce
compared to CDN$1,623 per ounce in the 2016 comparative
quarter.
Revenue in the June 2017 quarter was decreased
by $0.5 million negative revenue revaluation compared to $0.3
million positive revenue revaluation in the 2016 comparative
quarter. Revenue revaluations are the result of the copper price on
the settlement date and/or the current period balance sheet date
being higher or lower than when the revenue was initially recorded
or the copper price at the last balance sheet date.
Net income for the June 2017 quarter was $64.1
million ($0.68 per share) compared to net loss of $4.2 million
($0.05 per share) in the 2016 comparative quarter. The increase in
net income of $68.3 million was primarily due to the following
factors:
- Income/loss from mine operations went from income of $20.2
million in June 2016 to a loss of $5.9 million in June 2017, a
decrease in net income of $26.1 million.
- Foreign exchange gains/losses on current and non-current debt
went from a loss of $1.6 million in June 2016 to a gain of $12.4
million in June 2017, an increase in net income of $14.0
million.
- The Company’s equity loss in Huckleberry went from loss of $1.7
million in June 2016 to income of $1.0 million in June 2017, an
increase in net income of $2.7 million.
- Tax expense went from $2.5 million in June 2016 to a recovery
of $3.5 million in June 2017, an increase in net income of $6.0
million.
- The Company recorded an increase in net income in the June 2017
quarter of $74.8 million as a result of the gain on bargain
purchase for the additional 50% share of Huckleberry.
The June 2017 quarter net income included
foreign exchange gain related to changes in CDN/US Dollar exchange
rate of $12.4 million compared to foreign exchange loss of $2.1
million in the 2016 comparative quarter. The $12.4 million foreign
exchange gain is comprised of a $11.1 million gain on the senior
notes, a $0.3 million gain on long term equipment loans, and a $1.0
million gain on short-term debt and operational items. The average
CDN/US Dollar exchange rate in the June 2017 quarter was 1.345
compared to an average of 1.289 in the 2016 comparative
quarter.
Cash flow was $12.3 million in the June 2017
quarter compared to cash flow of $40.3 million in the 2016
comparative quarter. Cash flow is a measure used by the Company to
evaluate its performance, however, it is not a term recognized
under IFRS. The Company believes Cash flow is useful to
investors and it is one of the measures used by management to
assess the financial performance of the Company.
Capital expenditures were $28.8 million in the
June 2017 quarter, up from $24.2 million in the 2016 comparative
quarter. The June 2017 expenditures included $8.4 million for
tailings dam construction, $10.8 million for component changes on
mobile equipment, $2.8 million for mobile equipment and $6.8
million relating to non-cash consideration received by the Company
in the Sterling gold mine sale in the form of a Net Smelter Royalty
(“NSR”) and Net Operating Profit (“NOP”) which have been included
in mineral properties for the quarter. Further discussion on the
Sterling sale can be found under the heading Sterling Mine.
Liquidity & Capital Resources and
Covenant Waiver
At June 30, 2017, the Company had cash of $8.7
million, $5.2 million undrawn on the senior secured revolving
credit facility (“Senior Credit Facility”) and a working capital
deficiency of $910.8 million, which includes $842.5 million current
portion debt.
Based on the results of operations for the
second quarter of 2017 the Company met three of four financial
covenants contained in its Senior Credit Facility. But for the
waiver referred to below, the Company would not have been in
compliance with one of the financial covenants of the facility. The
Senior Credit Facility matures on March 15, 2018 and has been
classified as a current liability since March 15, 2017.
The Company has obtained a waiver from the
Senior Credit Facility lenders such that no event of default has
occurred under the facility. The waiver covers the period to
September 30, 2017 and requires the Company to deliver a financing
plan to the Senior Credit Facility lenders for their approval prior
to September 30, 2017.
International Accounting Standard 1 requires all
debt to be classified as a current liability where the Company does
not have an unconditional right to defer settlement of the debt for
at least twelve months after the relevant reporting period.
Accordingly, even though no present event of default exists, all
debt, which could, under any circumstances, be accelerated due to
any potential action which could be taken by lenders prior to
twelve months from June 30, 2017 must be classified as a current
liability. Consequently, the second lien secured revolving credit
facility, the senior unsecured notes, the convertible debentures,
the junior credit facility and certain equipment loans are required
to be classified as current liabilities as of June 30, 2017.
On July 31, 2017 the Company closed a $20.0
million bridge loan financing (“Bridge Loan”) with affiliates of
its two major shareholders. The Bridge Loan matures on the earlier
of October 15, 2017 or the date the Company secures additional
financing.
The Company is reviewing its mine plans and its
capital requirements as a result of lower than expected metal
production in the first half of 2017. This review may require the
Company to secure additional financing or request extension of the
maturity dates of some of its debt. There can be no assurance that
adequate additional financing will be available on terms acceptable
to the Company or at all or that the holders of the Company’s debt
will agree to extend maturity dates. This creates a material
uncertainty that could have an adverse impact on the Company’s
financial condition and results of operations, and may cast
significant doubt on the Company’s ability to continue as a going
concern.
Non-IFRS Financial Measures
The Company reports four non-IFRS financial
measures: Adjusted net income, adjusted EBITDA, cash flow and cash
cost per pound of copper produced which are described in detail
below. The Company believes these measures are useful to investors
because they are included in the measures that are used by
management in assessing the financial performance of the
Company.
Adjusted net income, adjusted EBITDA, and cash
flow are not generally accepted earnings measures and should not be
considered as an alternative to net income (loss) and cash flows as
determined in accordance with IFRS. As there is no
standardized method of calculating these measures, these measures
may not be directly comparable to similarly titled measures used by
other companies.
|
|
expressed in thousands, except share and per share amounts
|
Three Months Ended June 30 |
|
|
|
2017 |
|
|
2016 |
|
Adjusted
net loss |
$ |
(22,250 |
) |
$ |
(1,214 |
) |
Adjusted
net loss per share |
$ |
(0.24 |
) |
$ |
(0.01 |
) |
Adjusted
EBITDA |
$ |
12,851 |
|
$ |
40,488 |
|
Cash
flow |
$ |
12,341 |
|
$ |
40,327 |
|
Cash flow per share |
$ |
0.13 |
|
$ |
0.49 |
|
Adjusted Net Loss and Adjusted Net Loss
per Share
Adjusted net loss in the June 2017 quarter was
$22.3 million ($0.24 per share) compared to an adjusted net loss of
$1.2 million ($0.01 per share) in the 2016 comparative quarter.
Adjusted net income or loss reflects the financial results
excluding the effect of items not settling in the current period
and non-recurring items. Adjusted net income or loss is
calculated by removing the gains or losses, resulting from mark to
market revaluation of derivative instruments not related to the
current period, net of tax, unrealized foreign exchange gains or
losses on non-current debt, net of tax.
Adjusted EBITDA
Adjusted EBITDA in the June 2017 quarter was
$12.9 million compared to $40.5 million in the 2016 comparative
quarter. We define Adjusted EBITDA as net income (loss) before
interest expense, taxes, depletion and depreciation, and as
adjusted for certain other items.
Cash Flow and Cash Flow Per
Share
Cash flow in the June 2017 quarter was $12.3
million compared to $40.3 million in the 2016 comparative quarter.
Cash flow per share was $0.13 in the June 2017 quarter compared to
$0.49 in the 2016 comparative quarter.
Cash flow and cash flow per share are measures
used by the Company to evaluate its performance however they are
not terms recognized under IFRS. Cash flow is defined as cash flow
from operations before the net change in non-cash working capital
balances, income and mining taxes, and interest paid and cash flow
per share is the same measure divided by the weighted average
number of common shares outstanding during the year.
Cash Cost Per Pound of Copper
Produced
The cash cost per pound of copper produced is a
non-IFRS financial measure that does not have a standardized
meaning under IFRS, and as a result may not be comparable to
similar measures presented by other companies. Management uses this
non-IFRS financial measure to monitor operating costs and
profitability. The Company is primarily a copper producer and
therefore calculates this non-IFRS financial measure individually
for its three copper mines, Red Chris, Mount Polley and
Huckleberry, and on a composite basis for these mines.
The cash cost per pound of copper produced is
derived from the sum of cash production costs, transportation and
offsite costs, treatment and refining costs, royalties, net of
by-product and other revenues, divided by the number of pounds of
copper produced during the period.
Variations from period to period in the cash
cost per pound of copper produced are the result of many factors
including: grade, metal recoveries, amount of stripping
charged to operations, mine and mill operating conditions, labour
and other cost inputs, transportation and warehousing costs,
treatment and refining costs, the amount of by-product and other
revenues, the US$ to CDN$ exchange rate and the amount of copper
produced. Idle mine costs during the periods when the Huckleberry
mine was not in operation have been excluded from the cash cost per
pound of copper produced.
Cash Cost Per Pound of Copper Produced
expressed in thousands, except cash cost per pound of copper
produced |
|
|
|
|
Three Months Ended June 30, 2017 |
|
|
|
|
|
|
Huckleberry |
Red |
Mount |
|
|
100 |
% |
|
50 |
% |
Chris |
Polley |
Composite |
Cash cost
of copper produced in US$ |
$ |
- |
|
$ |
- |
|
$ |
35,372 |
$ |
9,758 |
$ |
45,130 |
Copper
produced – pounds |
|
- |
|
|
- |
|
|
15,423 |
|
5,606 |
|
21,029 |
Cash cost
per lb copper produced in US$ |
$ |
- |
|
$ |
- |
|
$ |
2.29 |
$ |
1.74 |
$ |
2.15 |
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
|
|
|
|
|
|
Huckleberry |
Red |
Mount |
|
|
100 |
% |
|
50 |
% |
Chris |
Polley |
Composite |
Cash cost
of copper produced in US$ |
$ |
14,315 |
|
$ |
7,157 |
|
$ |
23,174 |
$ |
14,548 |
$ |
44,879 |
Copper
produced – pounds |
|
7,713 |
|
|
3,857 |
|
|
26,737 |
|
5,314 |
|
35,908 |
Cash cost
per lb copper produced in US$ |
$ |
1.86 |
|
$ |
1.86 |
|
$ |
0.87 |
$ |
2.74 |
$ |
1.25 |
|
|
|
|
|
|
|
Six Months Ended June 30, 2017 |
|
|
|
|
|
|
Huckleberry |
Red |
Mount |
|
|
100 |
% |
|
50 |
% |
Chris |
Polley |
Composite |
Cash cost
of copper produced in US$ |
$ |
- |
|
$ |
- |
|
$ |
75,028 |
$ |
20,600 |
$ |
95,628 |
Copper
produced – pounds |
|
- |
|
|
- |
|
|
31,751 |
|
11,067 |
|
42,818 |
Cash cost
per lb copper produced in US$ |
$ |
- |
|
$ |
- |
|
$ |
2.36 |
$ |
1.86 |
$ |
2.23 |
|
|
|
|
|
|
|
Six Months Ended June 30, 2016 |
|
|
|
|
|
|
Huckleberry |
Red |
Mount |
|
|
100 |
% |
|
50 |
% |
Chris |
Polley |
Composite |
Cash cost
of copper produced in US$ |
$ |
28,939 |
|
$ |
14,470 |
|
$ |
46,476 |
$ |
23,080 |
$ |
84,026 |
Copper
produced – pounds |
|
15,991 |
|
|
7,995 |
|
|
50,242 |
|
13,493 |
|
71,730 |
Cash cost
per lb copper produced in US$ |
$ |
1.81 |
|
$ |
1.81 |
|
$ |
0.93 |
$ |
1.71 |
$ |
1.17 |
OPERATIONS
Due to weaker than expected results in the
second quarter as previously announced, the production target for
the year for the Red Chris and Mount Polley mines were adjusted to
102-107 million pounds copper compared to the initial target of
110-118 million pounds copper.
Red Chris Mine
Metal production for the June 2017 quarter was
15.4 million pounds copper and 6,159 ounces gold. These results
were weaker than targeted and similar to the production levels
achieved in the March 2017 quarter. Copper recovery was 75.79%,
down from the 78.34% achieved in the June 2016 quarter, while
treating substantially lower copper grades of 0.341% compared to
0.587% treated in the June 2016 quarter. The mill achieved average
throughput of 29,707 tonnes per calendar day for the June 2017
quarter which was 99% of design and up 3% from the comparable
quarter in 2016. We have continued to make progress with throughput
and operating time and in July throughput averaged 32,303 tonnes
per calendar day, setting a new record for monthly average mill
throughput at Red Chris.
Mining the upper benches of the Phase 3 pushback
is still yielding significant volumes of high clay ore. Mill
throughput is being maximized, while treating this softer ore, to
offset the lower recoveries achieved while treating these ores. In
late May 2017 the installation of a seventh rougher cell was
completed and began operation.
Red Chris Production |
Three Months Ended June 30 |
Six Months Ended June 30 |
|
2017 |
2016 |
2017 |
2016 |
Ore
milled - tonnes |
2,703,363 |
2,636,332 |
5,106,864 |
4,780,129 |
Ore
milled per calendar day - tonnes |
29,707 |
28,971 |
28,215 |
26,264 |
Grade
% - copper |
0.341 |
0.587 |
0.363 |
0.606 |
Grade
g/t - gold |
0.192 |
0.400 |
0.196 |
0.391 |
Recovery
% - copper |
75.79 |
78.34 |
77.64 |
78.78 |
Recovery
% - gold |
36.92 |
53.77 |
37.27 |
54.49 |
Copper –
000’s pounds |
15,423 |
26,737 |
31,751 |
50,242 |
Gold –
ounces |
6,159 |
18,213 |
11,971 |
32,772 |
Silver – ounces |
26,875 |
66,054 |
54,827 |
122,435 |
Exploration, development and capital
expenditures were $18.7 million in the June 2017 quarter compared
to $11.0 million in the comparative 2016 quarter.
Mount Polley Mine
On July 15, 2017 Mount Polley mine operations
were temporarily suspended as a result of an Evacuation Order and
restrictions on highway use issued by the Cariboo Regional District
for the City of Williams Lake. The mine recalled crews and
restarted operations on July 31, after the Evacuation Order was
downgraded to an Evacuation Alert, allowing employees to return to
their homes. Some restrictions on highway use remain in place.
Metal production for the June 2017 quarter was
5.6 million pounds copper and 13,958 ounces gold, up 5% for copper
and 47% for gold respectively from the June 2016 quarter metal
production. Throughput was up 13% averaging 19,544 tonnes per day
and the gold grade was up 20% for the June 2017 quarter compared to
the June 2016 quarter. Production in the third quarter will be
impacted by the two weeks of operating time lost due to the
Evacuation Order.
Mount Polley ProductionMount Polley
Production |
Three Months Ended June 30 |
Six Months Ended June 30 |
|
2017 |
2016 |
2017 |
2016 |
Ore
milled - tonnes |
1,779,403 |
1,573,542 |
3,472,164 |
3,282,690 |
Ore
milled per calendar day - tonnes |
19,554 |
17,292 |
19,183 |
18,037 |
Grade
% - copper |
0.212 |
0.224 |
0.209 |
0.268 |
Grade
g/t - gold |
0.334 |
0.277 |
0.344 |
0.304 |
Recovery
% - copper |
67.33 |
68.33 |
69.23 |
69.52 |
Recovery
% - gold |
73.15 |
67.62 |
72.35 |
69.82 |
Copper –
000’s pounds |
5,606 |
5,314 |
11,067 |
13,493 |
Gold –
ounces |
13,958 |
9,476 |
27,769 |
22,389 |
Silver – ounces |
10,537 |
17,104 |
21,414 |
52,135 |
Exploration, development and capital
expenditures were $3.1 million in the June 2017 quarter compared to
$13.2 million in the comparative 2016 quarter.
The 2016/2017 Martel drilling program was
successful in expanding the understanding of the geology and
economic potential for the Martel zone. A new resource has
been completed from the drill program results as provided in the
following table:
Martel Zone Resource
Estimate
|
Cut-off |
$MHV |
Tonnes |
$MHV |
Copper % |
Gold g/t |
Silver g/t |
Measured
|
>= |
30 |
6,417,850 |
53.86 |
0.92 |
0.28 |
5.83 |
Indicated |
>= |
30 |
390,953 |
49.58 |
0.77 |
0.38 |
5.16 |
Inferred |
>= |
30 |
635,620 |
87.92 |
1.29 |
0.59 |
8.32 |
M&I |
>= |
30 |
6,808,804 |
53.62 |
0.91 |
0.28 |
5.79 |
The Company’s Qualified Person (as defined by
National Instrument 43-101) for the drill program is Chris Rees,
Ph.D., P.Geo., and for the resource estimate is Greg Gillstrom,
P.Eng.
Huckleberry Mine
The Huckleberry open pit copper mine, currently
on care and maintenance, is located 88 kilometres from Houston in
west central British Columbia. The Huckleberry property consists of
two mining leases covering 2,422 hectares and 39 mineral claims
encompassing approximately 17,358 hectares.
On April 28, 2017 the Company became the sole
owner of Huckleberry by virtue of Huckleberry exercising its right
of first refusal to purchase for cancellation all the shares of
Huckleberry held by a syndicate of Japanese companies in exchange
for cash consideration of $2.0 million. Huckleberry became a
wholly-owned subsidiary of the Company on that date.
The Company had a 50% interest in Huckleberry
that was accounted for on the equity basis of accounting. The
Company has accounted for the acquisition of the remaining 50%
interest in Huckleberry as a business combination whereby the net
assets acquired are recorded at fair value. The fair values
disclosed at June 30, 2017 are provisional estimates because the
acquisition only occurred on April 28, 2017, and due to a number of
factors, including the complexity of valuing mineral property
interests at various stages of development, further work will be
required to confirm the final fair values. The finalization of the
fair values of the assets and liabilities acquired is expected to
be reported no later than the Company’s December 31, 2017 financial
statements, the final fair values may be materially different than
the provisional fair values outlined below.
The Company has provisionally estimated the
acquisition date fair values of the acquired assets and liabilities
of Huckleberry and the fair value of the Company’s previously held
50% interest in Huckleberry by reference to their pre-acquisition
carrying values, a level 3 fair value measurement. These
pre-acquisition carrying values had been subject to normal
impairment assessment pre and post-acquisition with no impairment
charges recorded.
The following table summarizes the consideration
transferred to acquire 100% interest in Huckleberry and the
provisional fair values of identified assets acquired and
liabilities assumed at the acquisition date:
expressed in thousands of dollars Assets Relinquished |
|
Accrued
receivable due to the Company |
$ |
1,009 |
|
Fair
value of the Company’s initial 50% investment in Huckleberry
|
|
77,832 |
|
|
$ |
78,841 |
|
Identifiable Assets Acquired and Liabilities Assumed |
|
Cash |
$ |
18,440 |
|
Reclamation bonds |
|
14,135 |
|
Prepaid
and other receivables |
|
648 |
|
Inventory |
|
7,941 |
|
Mineral
properties |
|
164,265 |
|
Trade
and other payables |
|
(1,668 |
) |
Deferred
trade payables |
|
(4,925 |
) |
Future
site reclamation provisions |
|
(45,171 |
) |
|
$ |
153,665 |
|
Gain on
bargain purchase of Huckleberry |
$ |
74,824 |
|
From the date of acquisition on April 28, 2017
to June 30, 2017, Huckleberry incurred idle mine costs comprised of
$1.0 million in operating costs and $0.9 million in depreciation
expense.
Refer to Imperial’s 2017 Second Quarter Report on
imperialmetals.com and sedar.com for detailed information.
Earnings Announcement Conference Call is scheduled
for August 15, 2017 at 10:00am PDT | 1:00pm EDT
Management will discuss the 2017 Second Quarter Report. Conference
call-in numbers: 778.383.7413 Vancouver 416.764.8688
Toronto 587.880.2171 Calgary 888.390.0546 North America
– toll free Conference call playback is available until 11:59pm
August 22, 2017 by calling 888.390.0541 or 416.764.8677 | playback
passcode 542839# |
About ImperialImperial is a
Vancouver based exploration, mine development and operating
company. The Company, through its subsidiaries, owns the Red Chris,
Mount Polley and Huckleberry copper mines in British Columbia.
Imperial also holds a 50% interest in the Ruddock Creek
lead|zinc property in British Columbia.
Forward-Looking Information and Risks
Notice
The information in this news release provides a
summary review of the Company’s operations and financial position
as at and for the period ended June 30, 2017, and plans for the
future based on facts and circumstances as of August 14, 2017.
Except for statements of historical fact relating to the Company,
including our past 50% interest in Huckleberry, certain information
contained herein constitutes forward-looking information which are
prospective in nature and reflect the current views and/or
expectations of Imperial. Often, but not always, forward-looking
information can be identified by the use of statements such as
"plans", "expects" or "does not expect", "is expected",
"scheduled", "estimates", "forecasts", "projects", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "should", "would",
"might" or "will" be taken, occur or be achieved. Such information
in this MD&A includes, without limitation, statements
regarding: the potential for the Company’s review of its mine plans
necessitating additional financing or extension of the maturity
dates for some of its debt; use of proceeds from financings and
credit; the 2017 production targets for the Red Chris and Mount
Polley mines; improved recoveries at Red Chris mine as a result of
higher grade ore from lower benches in the Main zone pit; mine
plans; costs and timing of current and proposed exploration and
development; production and marketing; capital expenditures;
adequacy of funds for projects and liabilities; the receipt of
necessary regulatory permits, approvals or other consents; outcome
and impact of litigation; cash flow; working capital requirements;
the requirement for additional capital; results of operations,
production, revenue, margins and earnings; future prices of copper
and gold; future foreign currency exchange rates and impact; future
accounting changes; and future prices for marketable
securities.
Forward-looking information is not based on
historical facts, but rather on then current expectations, beliefs,
assumptions, estimates and forecasts about the business and the
industry and markets in which the Company operates, including, but
not limited to, assumptions that: the Company will be able to
advance and complete remaining planned rehabilitation activities
within expected timeframes; there will be no significant delay or
other material impact on the expected timeframes or costs for
completion of rehabilitation of the Mount Polley mine and
implementation of Mount Polley’s long term water management plan;
the Company’s initial rehabilitation activities at Mount Polley
will be successful in the long term; all required permits,
approvals and arrangements to proceed with planned rehabilitation
and Mount Polley’s long term water management plan will be obtained
in a timely manner; there will be no material operational delays at
the Red Chris or Mount Polley mines; equipment will operate as
expected; there will not be significant power outages; there will
be no material adverse change in the market price of commodities
and exchange rates; the Red Chris and Mount Polley mines will
achieve expected production outcomes (including with respect to
mined grades and mill recoveries); and Imperial will have access to
capital as required and satisfy and/or obtain amendments of
financial covenants contained in its credit facilities and other
loan documents. Such statements are qualified in their entirety by
the inherent risks and uncertainties surrounding future
expectations. We can give no assurance that the forward-looking
information will prove to be accurate.
Forward-looking information involves known and
unknown risks, uncertainties and other factors which may cause
Imperial’s actual results, revenues, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the statements constituting
forward-looking information. Important risks that could cause
Imperial’s actual results, revenues, performance or achievements to
differ materially from Imperial’s expectations include, among other
things: that additional financing that may be required may not be
available to Imperial on terms acceptable to Imperial or at all;
that Imperial may be unable to satisfy and/or obtain amendments of
financial covenants contained in its credit facilities and other
loan documents; that the Company’s lenders may not agree to
extend the maturity dates of some of its debt and may thereby
create material uncertainty that could have an adverse impact on
the Company’s financial condition and results of operations casting
significant doubt on the Company’s ability to continue as a going
concern; uncertainty regarding the outcome of sample testing and
analysis being conducted on the area affected by the Mount Polley
Breach; risks relating to the timely receipt of necessary approvals
and consents to proceed with the rehabilitation plans; risks
relating to the remaining costs and liabilities and any unforeseen
longer-term environmental consequences arising from the Mount
Polley Breach; uncertainty as to actual timing of completion of
rehabilitation activities and the implementation of Mount Polley’s
long term water management plan; risks relating to the impact of
the Mount Polley Breach on Imperial’s reputation; the quantum of
claims, fines and penalties that may become payable by Imperial and
the risk that current sources of funds are insufficient to fund
liabilities; risks that Imperial will be unsuccessful in defending
against any legal claims or potential litigation; risks of
protesting activity and other civil disobedience restricting access
to the Company’s properties; failure of plant, equipment or
processes to operate in accordance with specifications or
expectations; cost escalation, unavailability of materials and
equipment, labour unrest, power outages or shortages, and natural
phenomena such as weather conditions negatively impacting the
operation of the Red Chris mine or the Mount Polley mine; changes
in commodity and power prices; changes in market demand for the
Company’s concentrate; inaccurate geological and metallurgical
assumptions (including with respect to the size, grade and
recoverability of mineral reserves and resources); and other
hazards and risks disclosed within this Management’s Discussion and
Analysis for the three and six months ended June 30, 2017 and other
public filings which are available on Imperial’s profile at
sedar.com. For the reasons set forth above, investors should not
place undue reliance on forward-looking information. Imperial does
not undertake to update any forward-looking information, except in
accordance with applicable securities laws.
Company Contacts
Brian Kynoch | President | 604.669.8959
Andre Deepwell | Chief Financial Officer | 604.488.2666
Steve Robertson | Vice President Corporate Affairs | 604.488.2669
Gordon Keevil | Vice President Corporate Development | 604.488.2677
Sabine Goetz | Shareholder Communications | 604.488.2657 | investor@imperialmetals.com
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