(All amounts in US$ unless otherwise
specified)
VANCOUVER, July 31, 2018 /CNW/ - Capstone Mining Corp.
("Capstone" or the "Company") (TSX: CS) today announced its
financial results for the three and six months ended June 30, 2018. Cash flow from operating
activities for the quarter was $28.8
million or $0.07 per share and
$61.6 million or $0.16 per share year to date. Net income from
continuing operations for the quarter was $8.2 million or $0.02 per share. Copper production for the
quarter from continuing operations totalled 16,940 tonnes (16,336
tonnes of payable copper) at a C1 cash cost1 from
continuing operations of $1.84 per
payable pound produced.
"We generated $28.8 million of
cash flow from operating activities in the second quarter, net
income from continuing operations of $8.2
million and operational performance ended the second quarter
within our guided range," said Darren
Pylot, President and CEO of Capstone.
"Moving forward, we expect that various optimization activities
underway at Pinto Valley will result in increased productivity and
lower costs," continued Mr. Pylot. "At Cozamin, we are very
optimistic that the updated Mineral Resource estimate that we
released in the second quarter will pave the way for an extension
of operations and creates the potential for a mine expansion."
Capstone and Pembridge Resources plc ("Pembridge") entered into
an agreement for the sale of the Minto Mine (the "Transaction").
Given market conditions, Capstone now anticipates the Transaction
will close in the third quarter. As of March
31, 2018, Minto is treated
as a discontinued operation for financial reporting purposes. To
comply with disclosure requirements, Capstone's results have been
adjusted to exclude Minto's
contribution in certain cases and are referred to throughout this
release as "continuing operations." Please refer to financial
statements ended June 30, 2018 for
further information.
Financial and Operational Overview
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Q2
2018
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Q2
2017
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2018
YTD
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2017
YTD
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Revenue from
continuing operations 2, 3, 4 ($
millions)
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101.5
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88.0
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205.2
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185.9
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Copper produced by
continuing operations (tonnes)
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16,940
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19,597
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32,646
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35,027
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Payable copper
produced by continuing operations (tonnes)
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16,336
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18,914
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31,488
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33,804
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C1 cash cost per
payable pound produced 1 ($/lb)
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1.84
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1.70
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1.90
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1.81
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All-in sustaining
cost per payable pound produced 1
($/lb)
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2.55
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2.07
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2.57
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2.25
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Net income (loss)
from continuing operations ($ millions)
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8.2
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11.4
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18.5
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(1.7)
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Net income (loss)
from continuing operations attributable to shareholders ($
millions)
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8.5
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11.5
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19.0
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(1.7)
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Net income (loss)
from continuing operations attributable to
shareholders per common share – basic ($)
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0.02
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0.03
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0.05
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(0.00)
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Adjusted net
income (loss) from continuing operations 1 ($
millions)
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8.3
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(0.7)
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17.7
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(8.8)
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Adjusted net
income (loss) from continuing operations attributable
to shareholders 1 ($
millions)
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8.6
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(0.6)
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18.2
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(8.8)
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Adjusted net
income (loss) from continuing operations attributable
to shareholders per common share 1 – basic
($)
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0.02
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0.00
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0.05
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(0.02)
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Cash flow from
operating activities 4 ($ millions)
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28.8
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4.1
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61.6
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26.1
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Cash flow from
operating activities per common share 1,4 - basic
($)
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0.07
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0.01
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0.16
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0.07
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Operating cash
flow before changes in working capital 1, 4 ($
millions)
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30.7
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26.0
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55.3
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50.1
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Operating cash
flow before changes in working capital per
common share 1 ,4 – basic ($)
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0.08
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0.07
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0.14
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0.13
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Long term debt
(excluding financing fees) ($ millions)
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274.9
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298.9
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274.9
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298.9
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Net debt
1 ($ millions)
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164.8
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216.5
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164.8
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216.5
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2 Q2 2018 includes a provisional pricing adjustment
of $0.1 million (2017 – $0.2 million) related to prior shipments,
equivalent to $nil per pound (2017 – $nil per pound) of copper sold
during the quarter. 2018 YTD includes a provisional pricing
adjustment of $(2.2) million (2017 –
$2.4 million) related to prior
shipments, equivalent to $(0.03) per
pound (2017 – $0.03 per pound) of
copper sold during the six month period.
3 Q2 2018 adjusted realized copper price does not
include any realized derivative losses (2017 loss - $7.7 million or $0.17 per pound) related to copper derivative
contracts exercised during the quarter. 2018 YTD adjusted realized
copper price does not include any realized derivative losses (2017
loss - $19.3 million or $0.21 per pound) related to copper derivative
contracts exercised during the six month period.
4 In accordance with IFRS 5, Minto's results are excluded from revenue but
included within cash flow amounts in both the current and
comparative period.
Financial and Operational Highlights for the Three Months
Ended June 30, 2018
- Produced a total of 16,336 tonnes of payable copper from
continuing operations at a C1 cash cost1 of $1.84 per pound of payable copper produced.
- Revenue of $101.5 million
generated primarily from the sale of 14,384 tonnes of copper from
continuing operations.
- Net income from continuing operations of $8.2 million. The decrease was primarily
attributable to lower gains on commodity derivatives, with the
conclusion of all commodity derivative contracts in 2017. Earnings
from mining operations was higher primarily due to higher realized
copper prices of $3.15 per
pound.
- Cash flow from operating activities of $28.8 million or $0.07 per common share.
- Working capital remained materially consistent; $186.0 million at June 30,
2018 from $184.0 million at
March 31, 2018.
- Operating cash flow before changes in working
capital1 of $30.7 million
or $0.08 per share was higher due to
higher operating cash flows at Pinto Valley and Cozamin, primarily
due to higher copper prices at both mines and the conclusion of all
commodity derivative contracts at the end of 2017, partially offset
by lower operating cash flows at Minto.
Financial and Operational Highlights for the Six Months Ended
June 30, 2018
- Produced a total of 31,488 tonnes of payable copper from
continuing operations at a C1 cash cost1 of $1.90 per pound of payable copper produced.
- Revenue of $205.2 million
generated primarily from the sale of 30,346 tonnes of copper from
continuing operations.
- Net income from continuing operations of $18.5 million. The increase in net income was
primarily attributable to:
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- Higher realized copper prices of $3.06 per pound; and
- The absence of any commodity derivative losses as Capstone has
been completely unhedged since the beginning of 2018.
- Cash flow from operating activities of $61.6 million or $0.16 per common share.
- Working capital remained materially consistent; $186.0 million at June 30,
2018 from $189.4 million at
December 31, 2017. Working capital at
June 30, 2018 included $4.1 million of non-current assets and
non-current liabilities associated with Minto due to the presentation as a
discontinued operation.
- Operating cash flow before changes in working
capital1 of $55.3 million
or $0.14 per share was slightly
higher due to higher operating cash flows at Cozamin and Pinto
Valley, primarily due to higher copper prices, the conclusion of
all commodity derivative contracts at the end of 2017, partially
offset by lower operating cash flows at Minto.
Production, Costs and Additional Highlights
Pinto Valley Mine:
- Produced 13,420 tonnes of copper during Q2 2018 at a C1 cash
cost1 of $2.15 per pound
of payable copper produced and all-in sustaining cost1
of $2.79 per pound of payable copper
produced.
- Produced 24,841 tonnes of copper during 2018 YTD at a C1 cash
cost1 of $2.27 per pound
of payable copper produced and all-in sustaining cost1
of $2.87 per pound of payable copper
produced.
- At Pinto Valley, production increased compared with the first
quarter as result of higher grade and improved recoveries.
Production remains within the guided range at the mid point of the
year, with the mine plan calling for rising grade in the second
half of the year versus the first half.
- In the second quarter, members of six unions at Pinto Valley
voted to ratify a new four-year collective bargaining agreement,
effective May 30, 2018. The new
agreement provides more flexibility in hiring and work practices
and we expect that it will allow Capstone to better attract
employees and reduce reliance on contractors.
Cozamin Mine:
- Produced 3,519 tonnes of copper during Q2 2018 at a C1 cash
cost1 of $0.67 per pound
of payable copper produced and all-in sustaining cost1
of $1.43 per pound of payable copper
produced.
- Produced 7,805 tonnes of copper during 2018 YTD at a C1 cash
cost1 of $0.69 per pound
of payable copper produced and all-in sustaining cost1
of $1.43 per pound of payable copper
produced.
- At Cozamin, copper production for the quarter was as planned.
Zinc production increased from the prior quarter as processing of
zinc development ore began to ramp up from the San Rafael zinc
zone.
- During the second quarter, the Company completed an updated
National Instrument 43-101 compliant Mineral Resource estimate for
the Cozamin Mine. Compared to Cozamin's Mineral Resources as at
December 31, 2017, this latest
estimate converted or added an additional 115 thousand tonnes of
copper in the Indicated category in the Mala Noche Footwall Zone,
reflecting all drilling for which assays have been received up to
March 19, 2018.
Additional highlights:
- D. James Slattery, Capstone's
Senior Vice President and CFO has announced his retirement from
Capstone at the end of this year. As part of Capstone's succession
plan, Raman Randhawa, Capstone's
Vice President, Finance, Financial Planning & Analysis will
move into the CFO role at that time. Mr. Randhawa is a Canadian
Chartered Professional Accountant (CPA, CA) with over 17 years of
financial and leadership experience in the mining sector. Before
joining Capstone in April 2018, he
spent 13 years at Goldcorp in a series of senior management roles
and prior to that was with Ernst & Young.
Outlook - 2018 Production and Cost Guidance
Capstone's
2018 consolidated production guidance from continuing operations of
71,000 tonnes (±5%) of copper and consolidated all-in sustaining
cost1 guidance from continuing operations of
$2.50-$2.60 per payable pound produced remains
unchanged. Pinto Valley's costs are expected to be slightly higher
than guided, offset by lower than guided costs at Cozamin.
Consolidated capital expenditure guidance of $90.0 million is unchanged.
Cozamin Brownfield exploration cost guidance has been increased
from $7.0 million to $9.0 million to further advance the exploration
program at Cozamin. Greenfield exploration cost guidance has been
increased from $3.0 million to
$3.7 million to further advance
Greenfield opportunities in Chile
and Mexico. As a result, total
Exploration cost guidance has increased from $10.0 million to $12.7
million.
Minto has been excluded from
consolidated production and cost guidance.
Conference Call and Webcast Details
Capstone will hold
a conference call and webcast on Wednesday,
August 1, 2018 at 11:30 a.m. Eastern
time (8:30 a.m. Pacific time)
to discuss these results; call-in details and information on
associated slides are provided below. This release is not suitable
on a standalone basis for readers unfamiliar with Capstone and
should be read in conjunction with Capstone's consolidated
financial statements and management's discussion and analysis
("MD&A") for the quarter ended June 30,
2018, which are available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR, all of which have been reviewed and approved by
Capstone's Board of Directors. An updated corporate presentation,
including results to June 30, 2018,
in addition to the Q2 2018 webcast slides, will also be available
at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Date:
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Wednesday, August 1,
2018
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Time:
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11:30 am Eastern Time
(8:30 am Pacific Time)
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Dial
in:
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North America:
1-888-390-0546, International: +416-764-8688
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Webcast:
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https://event.on24.com/wcc/r/1679032/50134473A997CEF460B4AB58062FF714
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Replay:
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North America:
1-888-390-0541, International: +416-764-8677
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Replay
Passcode:
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519478#
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The conference call replay will be available until Wednesday, August 8, 2018. The conference call
audio and transcript will be available on Capstone's website within
48 hours of the call at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
About Capstone Mining Corp.
Capstone Mining Corp. is a
Canadian base metals mining company, focused on copper. We are
committed to the responsible development of our assets and the
environments in which we operate. Our three producing mines are the
Pinto Valley copper mine located in Arizona, US, the Cozamin polymetallic mine in
Zacatecas State, Mexico and the
Minto copper mine in Yukon, Canada. In addition, Capstone has the
large scale 70% owned copper-iron Santo
Domingo development project in Region III, Chile, in partnership with Korea Resources
Corporation as well as a portfolio of exploration properties.
Capstone's strategy is to focus on the optimization of operations
and assets in politically stable, mining-friendly regions, centred
in the Americas. Our headquarters are in Vancouver, Canada and we are listed on the
Toronto Stock Exchange (TSX). Further information is available at
www.capstonemining.com.
Cautionary Note Regarding Forward-Looking
Information
This document may contain "forward-looking
information" within the meaning of Canadian securities legislation
and "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995
(collectively, "forward-looking statements"). These forward-looking
statements are made as of the date of this document and Capstone
does not intend, and does not assume any obligation, to update
these forward-looking statements, except as required under
applicable securities legislation.
Forward-looking statements relate to future events or future
performance and reflect our expectations or beliefs regarding
future events. Forward-looking statements include, but are not
limited to, statements with respect to the estimation of mineral
resources and mineral reserves, the realization of mineral reserve
estimates, the timing and amount of estimated future production,
costs of production and capital expenditures, the success of our
mining operations, environmental risks, unanticipated reclamation
expenses and title disputes. In certain cases, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases, or statements that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "occur" or "be
achieved" or the negative of these terms or comparable terminology.
In this document certain forward-looking statements are identified
by words including "anticipate", "guidance", "plan" and "expected".
By their very nature, forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, amongst others, risks related to inherent hazards
associated with mining operations and closure of mining projects,
future prices of copper and other metals, compliance with financial
covenants, surety bonding, our ability to raise capital, Capstone's
ability to acquire properties for growth, counterparty risks
associated with sales of our metals, use of financial derivative
instruments and associated counterparty risks, foreign currency
exchange rate fluctuations, changes in general economic conditions,
accuracy of mineral resource and mineral reserve estimates,
operating in foreign jurisdictions with risk of changes to
governmental regulation, compliance with governmental regulations,
compliance with environmental laws and regulations, reliance on
approvals, licences and permits from governmental authorities,
impact of climatic conditions on our Pinto Valley, Cozamin and
Minto operations, aboriginal title
claims and rights to consultation and accommodation, land
reclamation and mine closure obligations, uncertainties and risks
related to the potential development of the Santo Domingo Project,
uncertainties related to the proposed transaction for the sale of
Minto Explorations Ltd., increased operating and capital costs,
challenges to title to our mineral properties, maintaining ongoing
social license to operate, dependence on key management personnel,
potential conflicts of interest involving our directors and
officers, corruption and bribery, limitations inherent in our
insurance coverage, labour relations, increasing energy prices,
competition in the mining industry, risks associated with joint
venture partners, our ability to integrate new acquisitions into
our operations, cybersecurity threats, legal proceedings and other
risks of the mining industry as well as those factors detailed from
time to time in the Company's interim and annual financial
statements and management's discussion and analysis of those
statements, all of which are filed and available for review under
the Company's profile on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors
that could cause our actual results, performance or achievements to
differ materially from those described in our forward-looking
statements, there may be other factors that cause our results,
performance or achievements not to be as anticipated, estimated or
intended. There can be no assurance that our forward-looking
statements will prove to be accurate, as our actual results,
performance or achievements could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on our forward-looking statements.
National Instrument 43-101 Compliance
Unless otherwise
indicated, Capstone has prepared the technical information in this
news release ("Technical Information") based on information
contained in the technical reports, news releases and MD&A's
(collectively the "Disclosure Documents") available under Capstone
Mining Corp.'s company profile on SEDAR at www.sedar.com. Each
Disclosure Document was prepared by, or under the supervision of, a
qualified person (a "Qualified Person") as defined in National
Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators ("NI
43-101"). Readers are encouraged to review the full text of
the Disclosure Documents which qualifies the Technical
Information. Readers are advised that mineral resources that
are not mineral reserves do not have demonstrated economic
viability. The Disclosure Documents are each intended to be read as
a whole, and sections should not be read or relied upon out of
context. The Technical Information is subject to the assumptions
and qualifications contained in the Disclosure Documents.
The technical information in this news release ("Technical
Information") was prepared by, or under the supervision of, a
qualified person (a "Qualified Person") as defined in National
Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators ("NI
43-101"). The disclosure of the Technical Information contained in
this news release has been reviewed and approved by Gregg Bush, P. Eng., Senior Vice President and
Chief Operating Officer. Technical Information related to mineral
exploration activities has been reviewed and approved by
Brad Mercer, P. Geol., Senior Vice
President, Exploration. Both are Qualified Persons under NI
43-101.
Alternative Performance Measures and
Reconciliations
The items marked with a "1" are
alternative performance measures and readers should refer to
Alternative Performance Measures and Reconciliations in the
Company's Consolidated Management's Discussion and Analysis for the
quarter ended June 30, 2018 as filed
on SEDAR and as available on the Company's website.
Cautionary Note to United States Investors
This news
release contains disclosure that has been prepared in accordance
with the requirements of Canadian securities laws, which differ
from the requirements of US securities laws. Without limiting the
foregoing, this news release may refer to technical reports that
use the terms "indicated" and "inferred" resources. US investors
are cautioned that, while such terms are recognized and required by
Canadian securities laws, the SEC does not recognize them. Under US
standards, mineralization may not be classified as a "reserve"
unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time
the reserve determination is made. US investors are cautioned not
to assume that all or any part of indicated resources will ever be
converted into reserves. US investors should also understand that
"inferred resources" have a great amount of uncertainty as to their
existence and as to whether they can be mined legally or
economically. It cannot be assumed that all or any part of
"inferred resources" will ever be upgraded to a higher category.
Therefore, US investors are also cautioned not to assume that all
or any part of inferred resources exist, or that they can be mined
legally or economically. Accordingly, information concerning
descriptions of mineralization and resources contained in this news
release may not be comparable to information made public by US
companies subject to the reporting and disclosure requirements of
the SEC.
1 These are alternative performance measures; please
see "Alternative Performance Measures" at the end of this
release.
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SOURCE Capstone Mining Corp.