Operating Cash Flow of $28.6
million, Net Earnings of $9.2
million or $0.02 per share
(All amounts in US$ unless otherwise specified)
VANCOUVER, July 30, 2013 /PRNewswire/ - Capstone Mining
Corp. ("Capstone") (TSX: CS) today announced its financial results
for the three and six months ended June 30,
2013. Net earnings for the quarter were $9.2 million and operating cash flow before
changes in working capital(1) was $28.6 million. Capstone ended the quarter with
cash on hand of $459.7 million.
Copper production for the quarter at Capstone's two operating
mines, Cozamin and Minto, totalled
19.3 million pounds in concentrates (18.6 million pounds of payable
copper) at a C1 cash cost(1) of $1.70 per payable pound of copper produced.
Capstone will hold a conference call and webcast on
Wednesday, July 31, 2013 at
11:30 am Eastern time (8:30 am Pacific time) to discuss these results;
call-in details are provided at the end of this release. This
release should be read in conjunction with Capstone's unaudited
condensed interim consolidated financial statements and
management's discussion and analysis ("MD&A") for the three and
six months ended June 30, 2013, which
are available on Capstone's website at:
http://capstonemining.com/s/Financial_Statements.asp and on SEDAR.
An updated corporate presentation, including results to
June 30, 2013, will also be available
at http://capstonemining.com/s/Presentation.asp.
Overview
|
Q2 2013 |
Q2 2012 |
Q2 2013
YTD |
Q2 2012
YTD |
Revenue ($ millions) |
58.3 |
69.6 |
115.9 |
140.0 |
|
|
|
|
|
Copper in concentrates produced (million
lbs) |
19.3 |
21.9 |
37.9 |
40.5 |
|
|
|
|
|
Payable copper produced (million lbs) |
18.6 |
21.1 |
36.4 |
39.1 |
C1 cash cost per payable pound of copper
produced(1) ($) |
1.70 |
1.36 |
1.71 |
1.40 |
|
|
|
|
|
Copper sold (million lbs) |
17.2 |
20.0 |
32.3 |
36.2 |
Recognized copper price per pound ($) |
3.16 |
3.34 |
3.33 |
3.64 |
|
|
|
|
|
Net earnings ($ millions) |
9.2 |
11.6 |
16.2 |
27.1 |
Net earnings per common share ($) |
0.02 |
0.03 |
0.04 |
0.07 |
|
|
|
|
|
Adjusted net earnings(1) ($
millions) |
13.1 |
14.1 |
19.1 |
36.2 |
Adjusted net earnings(1) per common
share ($) |
0.03 |
0.04 |
0.05 |
0.10 |
|
|
|
|
|
Operating cash flow
before changes in working capital(1) ($
millions) |
28.6 |
29.9 |
48.7 |
59.0 |
Operating cash flow
before changes in working capital per common share(1)
($) |
0.08 |
0.08 |
0.13 |
0.16 |
|
|
|
|
|
Cash and cash equivalents ($ millions) |
|
|
459.7 |
489.3 |
"Net earnings and cash flow were affected by lower copper
prices, although improved from the first quarter of 2013 on higher
volumes sold," said Darren Pylot,
President and CEO of Capstone.
"Activities related to the purchase of BHP Billiton's Pinto
Valley mine continue to advance. In the second quarter the
transaction received U.S. Federal antitrust approval, the Pinto
Valley mine met the operating condition precedent for the
transaction and Capstone filed a National Instrument 43-101
compliant technical report for 968 million tonnes of Measured and
Indicated Mineral Resource. The transaction is expected to close
following transfer of the operating permits, currently expected to
occur near the end of the third quarter," continued Mr. Pylot.
Financial and Production Highlights for the Three Months
Ended June 30, 2013
- Net earnings of $9.2 million or
$0.02 per common share which
included:
-
- Earnings from mining operations of $13.5
million,
-
- Recognized copper price of $3.16
per pound,
- Production costs included a $0.8
million non-cash charge related to the write-down of
inventories at the Minto Mine,
- $5.6 million in current and
deferred tax expenses.
- Adjusted net earnings(1) of $13.1 million or $0.03 per common share after making adjustments
for certain non-cash and non-recurring items.
- Operating cash flow before changes in working
capital(1) of $28.6
million or $0.08 per common
share.
- Working capital decreased to $536.0
million at June 30, 2013
(which included $459.7 million of
cash and cash equivalents) from $553.1
million at March 31,
2013.
- Production of 18.6 million pounds of payable copper at a C1
cash cost(1) of $1.70 per
pound of payable copper produced.
- Revenue of $58.3 million on the
sale of 17.2 million pounds of copper, 3.2 million pounds of zinc,
0.3 million pounds of lead, 4,653 ounces of gold and 385,142 ounces
of silver.
Operational Highlights for the Three Months Ended
June 30, 2013
Cozamin Mine:
- Produced 12.2 million pounds of copper in concentrates at a C1
cash cost(1) of $1.22 per
pound of payable copper.
- Completed 5,211 metres of underground exploration drilling in 9
diamond drill holes.
Minto Mine:
- Produced 7.2 million pounds of copper in concentrates at a C1
cash cost(1) of $2.49 per
pound of payable copper.
- Continued underground development of the ramp access by a
contractor, with initial development ore release from underground
still on track for the third quarter of 2013.
- The environmental assessment, which is the first step towards
permitting all new reserves identified in the Phase V and VI
pre-feasibility studies, was submitted to the Yukon Environmental
Socio-Economic Assessment Board (YESAB) for evaluation on
July 5, 2013.
Santo Domingo Project:
- Work on the definitive feasibility study and basic engineering
continued as planned for completion by year-end.
- Work on the environmental impact assessment for the project
remains on track for completion and submission by year-end.
Kutcho Project:
- The project environmental assessment continued to advance
during Q2 2013, with further work identified to address technical
development and stakeholder comments.
- A combination of Kutcho technical development and resource
demands related to Capstone's proposed acquisition of Pinto Valley
has slowed progress on Kutcho's development.
- Further work is required to refine the project concept, to
evaluate engineering design alternatives and to update project
economic expectations. In light of the time required to complete
this additional work, the environmental assessment will not be
submitted in Q3.
Proposed Pinto Valley Acquisition:
- On April 28, 2013, Capstone and
BHP Copper Inc., a subsidiary of BHP Billiton Ltd. ("BHP Billiton")
announced that they had entered into a definitive agreement
pursuant to which Capstone will acquire BHP Billiton's Pinto Valley
copper mining operation and the associated San Manuel Arizona
Railroad Company in Arizona, USA
for $650 million.
- The purchase price is being paid in cash and is subject to
customary adjustments. The purchase price will be satisfied from
Capstone's existing $200 million
Senior Secured Revolving Credit Facility ($176 million available) and from a new 2.5-year
$200 million Senior Secured Reducing
Revolving Credit Facility, that are respectively committed and
underwritten by The Bank of Nova
Scotia, as well as with cash on hand. The new facility will
include customary covenants and closing conditions, including
closing of the Pinto Valley acquisition, and will bear interest at
market rates. The acquisition agreement is not conditional upon
financing.
- On June 11, 2013, Capstone
announced that the proposed transaction was approved by the U.S.
Federal Trade Commission under the Hart-Scott Rodino Antitrust
Improvements Act. Additionally, Capstone announced that the Pinto
Valley operation achieved throughput and copper production targets
that surpassed the thresholds stipulated in the acquisition
agreement as a condition precedent to closing. Over a 20-day period
in May, Pinto Valley production averaged 49,100 tonnes per day at
an average grade of 0.33% copper, producing 6.5 million pounds of
copper. Copper recovery averaged 84.2%, producing a copper
concentrate with an average grade of 29.0%. Also, in
connection with the transaction, Capstone filed a National
Instrument 43-101 compliant technical report in June, related to
the 968 million tonne Measured and Indicated Mineral Resource at
Pinto Valley.
- Pinto Valley concentrate production continued to ramp up
following the successful restart of mining operations during Q4
2012, with production of 35.5 million pounds of payable copper
production in concentrate and 5.5 million pounds of payable copper
cathode production during the first six months of 2013.
- Transition teams from BHP Billiton and Capstone have a
significant number of transition activities either completed or
well underway and Capstone's post-closing integration team is
substantially in place. The most significant remaining condition is
the transfer of the operating permits. The proposed transaction is
expected to close shortly after the permit transfers are complete,
which is currently anticipated to occur in late Q3 2013. The
proposed transaction remains subject to these and other customary
closing conditions and there can be no assurance such conditions
will be met or that the transaction will close.
- Capstone's Normal Course Issuer Bid has been suspended until
the proposed acquisition of Pinto Valley has been completed.
Production Outlook
Capstone's 2013 guidance of 85 million pounds (± 5%) of copper
contained in concentrates at a C1 cash cost(1) of
$1.65 to $1.75 per pound of payable
copper, net of by-product credits and selling costs, remains
unchanged.
Conference Call and Webcast Details
|
|
Date: |
Wednesday, July 31, 2013 |
Time: |
11:30 am Eastern Time -- 8:30 am Pacific Time |
Dial in: |
North America: 1-888-390-0605, International:
+416-764-8609 |
Webcast: |
http://www.newswire.ca/en/webcast/detail/1178711/1290143 |
Replay: |
North America: 1-888-390-0541, International:
+416-764-8677 |
Replay Passcode: |
363769 |
|
|
The conference call replay will be available until August 14, 2013. The conference call audio and
transcript will be available on Capstone's website within
approximately 24 hours of the call at
http://capstonemining.com/s/Conference_Calls.asp.
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian base metals mining company,
committed to the responsible development of our assets and the
environments in which we operate. We are preferentially focused on
copper, with two producing copper mines, the Cozamin
copper-silver-zinc-lead mine located in Zacatecas State,
Mexico and the Minto copper-gold-silver mine in Yukon, Canada. In addition, Capstone has two
development projects, the large scale 70% owned Santo Domingo copper-iron-gold project in
Chile in partnership with Korea
Resources Corporation and the 100% owned Kutcho
copper-zinc-gold-silver project in British Columbia, as well as exploration
properties in Canada, Chile, Mexico
and Australia. Using our cash flow
and strong balance sheet as a springboard, Capstone aims to grow
with continued mineral resource and reserve expansions,
exploration, and through acquisitions in politically stable,
mining-friendly regions. Our headquarters are in Vancouver, Canada and we are listed on the
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 Mining Corp. (the
"Company") 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 Company management's expectations or
beliefs regarding future events and include, but are not limited
to, statements with respect to the estimation of mineral reserves
and mineral resources, the conversion of mineral resources to
mineral reserves, the realization of mineral reserve estimates, the
anticipated date of closing of the acquisition of Pinto Valley and
the associated financing, the timing and amount of estimated future
production, costs of production, capital expenditures, success of
mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims and limitations on insurance
coverage. In certain cases, forward-looking statements can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "outlook", "budget", "scheduled",
"estimates", "forecasts", "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", "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 "scheduled", "guidance", "plan", "planned",
"estimated", "projections", "projected" and "expected". By their
very nature forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Such factors include, among others, risks related to
actual results of current exploration activities; changes in
project parameters as plans continue to be refined; future prices
of mineral resources; possible variations in ore reserves, grade or
recovery rates; accidents; dependence on key personnel; labour pool
constraints; labour disputes; availability of infrastructure
required for the development of mining projects; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; 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 on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on 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 disclosure of the Technical Information contained in this
news release has been reviewed and approved by Stephen Winkelmann, Registered Member of The
Society for Mining, Metallurgy, and Exploration, Inc. ("SME"),
Capstone VP of North American Operations (Technical Information
related to mining and production) and Brad
Mercer, P. Geol., Vice President, Exploration (Technical
Information related to mineral exploration activities), both
Qualified Persons under NI 43-101. In addition, Gregg Bush, Senior Vice President and Chief
Operating Officer reviewed all Technical Information in this news
release.
Alternative Performance Measures
The items marked with a "(1)" are alternative
performance measures and readers should refer to Alternative
Performance Measures in the Company's Interim Management's
Discussion and Analysis for the three and six months ended
June 30, 2013 as filed on SEDAR and
as available on the Company's website for further details.
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 U.S. securities laws. Without
limiting the foregoing, this news release uses the terms
"indicated" and "inferred" resources. U.S. investors are cautioned
that, while such terms are recognized and required by Canadian
securities laws, the SEC does not recognize them. Under U.S.
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. U.S. investors are cautioned not
to assume that all or any part of indicated resources will ever be
converted into reserves. U.S. 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, U.S. 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 U.S.
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.
SOURCE Capstone Mining Corp.