(All amounts in US$ unless otherwise specified)
VANCOUVER, Oct. 30, 2013 /PRNewswire/ - Capstone Mining
Corp. ("Capstone") (TSX: CS) today announced its financial results
for the three and nine months ended September 30, 2013. Capstone posted a net loss
for the quarter of $4.6 million.
Operating cash flow before changes in working capital(1)
was $12.7 million. Capstone ended the
quarter with cash on hand of $457.0
million. Copper production for the quarter at Capstone's two
operating mines, Cozamin and Minto, totalled 18.9 million pounds in
concentrates (18.2 million pounds of payable copper) at a C1 cash
cost(1) of $1.57 per
payable pound of copper produced.
Capstone will hold a conference call and webcast on
Thursday, October 31, 2013 at
11:30 am Eastern Time (8:30 am Pacific Time) to discuss these results;
call-in details are provided at the end of this release. This
release should be read in conjunction with Capstone's unaudited
condensed interim consolidated financial statements and
management's discussion and analysis ("MD&A") for the three and
nine months ended September 30, 2013,
which are available on Capstone's website at:
http://capstonemining.com/s/financial-statements.asp and on SEDAR.
An updated corporate presentation, including results to
September 30, 2013, will also be
available at http://capstonemining.com/s/presentations.asp.
Overview
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Q3 2013 |
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Q3 2012 |
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2013 YTD |
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2012 YTD |
Revenue ($ millions) |
79.3 |
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93.0 |
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195.2 |
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233.1 |
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Copper in concentrates
produced (million lbs) |
18.9 |
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22.6 |
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56.9 |
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63.1 |
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Payable copper produced
(million lbs) |
18.2 |
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21.8 |
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54.6 |
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60.8 |
C1 cash cost per payable pound of
copper produced(1) ($) |
1.57 |
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1.50 |
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1.66 |
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1.44 |
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Copper sold (million
lbs) |
23.6 |
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23.4 |
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55.8 |
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59.6 |
Recognized copper price per pound
($) |
3.25 |
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3.84 |
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3.29 |
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3.72 |
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Net (loss) earnings ($
millions) |
(4.6) |
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11.4 |
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11.5 |
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38.4 |
Net (loss) earnings per common
share ($) |
(0.01) |
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0.03 |
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0.03 |
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0.10 |
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Adjusted net (loss)
earnings(1) ($ millions) |
(6.9) |
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20.1 |
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12.3 |
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56.2 |
Adjusted net (loss)
earnings(1) per common share ($) |
(0.02) |
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0.05 |
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0.03 |
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0.15 |
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Operating cash flow
before changes in working capital(1) ($
millions) |
12.7 |
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30.7 |
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61.3 |
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89.7 |
Operating cash flow
before changes in working capital per common share(1)
($) |
0.03 |
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0.08 |
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0.16 |
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0.24 |
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Cash and cash equivalents
($ millions) |
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457.0 |
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509.4 |
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"Our earnings before interest and taxes, adjusted for foreign
exchange and the one time Pinto Valley transaction costs, were
$5 million for the quarter," said
Darren Pylot, President and CEO of
Capstone. "Cash flow generation remained strong, with $12.7 million generated for the quarter from
operating activities, before changes in working capital."
"Looking forward, we have now closed the Pinto Valley
acquisition and are working to integrate the mine into Capstone's
operations," continued Mr. Pylot. "The ramp-up of operations is
going well, with targeted throughput, grade and recoveries
frequently being reached. Focus in the fourth quarter will be
on achieving steady-state operations and commencing the process of
identifying opportunities for cost reductions."
Financial and Production Highlights for the Three Months
Ended September 30, 2013
- Net loss of $4.6 million or
$0.01 per common share which
included:
-
- Earnings from mining operations of $13.6
million.
- Adjusted net loss(1) of $6.9
million or $0.02 per common
share after making adjustments for certain non-cash and
non-recurring items.
- Operating cash flow before changes in working
capital(1) of $12.7
million or $0.03 per common
share.
- Working capital decreased to $480.7
million at September 30, 2013
(which included $457.0 million of
cash and cash equivalents) from $536.0
million at June 30, 2013.
- Production of 18.2 million pounds of payable copper at a C1
cash cost(1) of $1.57 per
pound of payable copper produced.
- Revenue of $79.3 million on the
sale of 23.6 million pounds of copper, 2.8 million pounds of zinc,
1.1 million pounds of lead, 4,565 ounces of gold and 471,605 ounces
of silver.
Operational Highlights for the Three Months Ended
September 30, 2013
Cozamin Mine:
- Produced 11.6 million pounds of copper in concentrates at a C1
cash cost(1) of $1.20 per
pound of payable copper.
- Completed 5,757 metres of underground exploration drilling in
11 diamond drill holes.
Minto Mine:
- Produced 7.3 million pounds of copper in concentrates at a C1
cash cost(1) of $2.14 per
pound of payable copper.
- Initial development ore released from underground starting in
September 2013.
Santo Domingo Project:
- Work on the definitive feasibility study and basic engineering
continued as planned for completion by year-end.
- On October 30, 2013, Capstone
formally submitted the Environmental Impact Assessment for the
Santo Domingo project. This
initiates the formal environmental assessment process, which is
expected to take approximately 15 to 18 months.
Greenfield Exploration:
- In Q3 2013 Capstone entered into an option agreement with
Sociedad Química y Minera de Chile S.A. to earn up to 70% of
Project Providencia in Region II, Chile which is a very large under-explored
land package in the world's most prolific copper jurisdiction. The
initial option is on 350,000 hectares (3,500 square kilometres) and
would be reduced over time to a maximum of 50,000 hectares if a
joint venture is ultimately formed. Capstone is the operator of the
project and may earn up to a 70% interest in the property, with the
right to withdraw from the project at any time.
Kutcho Project:
- Development activities related to the environmental assessment
process, including government and stakeholder consultations and
associated engineering support, were largely on hold during Q3 2013
as Capstone focused on the acquisition of Pinto Valley. As a result
of that acquisition, Kutcho's production profile and mine life no
longer fits within Capstone's growth strategy and strategic
alternatives will be evaluated. No additional work will be carried
out on the project during the remainder of 2013.
Acquisition of Pinto Valley Mining Operations:
- On October 11, 2013, Capstone and
BHP Copper Inc., a subsidiary of BHP Billiton Ltd. ("BHP Billiton")
closed the previously announced transaction whereby Capstone
acquired BHP Billiton's Pinto Valley copper mining operation and
the associated San Manuel Arizona Railroad Company (collectively,
"Pinto Valley") in Arizona, US for
$650 million.
- The purchase price was paid in cash, from cash on hand and debt
facilities. The Company retains a conservative capital structure
with approximately $82 million of
cash and cash equivalents, as of October 25,
2013.
- The restart of the Pinto Valley mine, which commenced in
December 2012, is continuing with a
targeted run rate of 50,800 tonnes per day by the end of 2013, with
annualized production of 130 million to 150 million pounds of
copper per year. Capstone will commence reporting full operating
and production information for Pinto Valley with its 2013 annual
report.
- An experienced work force remains in place, with 98% of Pinto
Valley's 650 employees accepting Capstone's offer of employment,
including all key positions. Steve
Winkelmann, formerly Capstone's Vice President of North
American Operations, has been appointed Pinto Valley's Mine General
Manager. Mr. Winkelmann has 40 years of mining experience,
including at large mining operations, primarily in the United States and most recently in
Arizona.
- Pinto Valley concentrate production continued to ramp up
following the successful restart of mining operations during Q4
2012, with production of 59.5 million pounds of payable copper
production in concentrate and 7.3 million pounds of payable copper
cathode production during the first nine months of 2013.
- The Capstone Pinto Valley team will initially focus on
continuing to ramp up production levels and the integration of the
operations to achieve the company's targets. At the same time,
leadership will identify opportunities for cost reduction,
reliability enhancement and throughput maximization.
- Capstone believes that considerable potential exists to upgrade
the existing 968 million tonnes of measured and indicated mineral
resources (grading 0.35 per cent copper at a 0.25-per-cent cut-off
grade) into reserves, potentially extending the operation beyond
the current reserve life as reported by BHP Billiton. A preliminary
feasibility study ("PFS") is under way, which will target the
measured and indicated mineral resources for potential conversion
to reserves, with expected completion in early 2014. The PFS will
consider the potential to extend operations within the currently
permitted boundaries. In addition, Capstone plans to commission
engineering and economic studies to consider all remaining current
mineral resources and their potential for development.
Production Outlook
Capstone's 2013 guidance for Cozamin and Minto 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.
Pinto Valley is projected to produce 22 to 27 million pounds of
contained copper during Q4 2013, based on the historical operating
performance of the mine. There is no associated guidance being
provided with respect to cost at this time, given the lack of
recent steady-state historical cost information. Further guidance
will be provided in early 2014 when Capstone issues its annual
production and cost guidance.
Conference Call and Webcast Details
Date: |
Thursday, October 31, 2013 |
Time: |
11:30 am Eastern Time -- 8:30 am Pacific Time |
Dial in: |
North America: 1-888-390-0546, International:
+416-764-8688 |
Webcast: |
http://www.newswire.ca/en/webcast/detail/1209423/1327063 |
Replay: |
North America: 1-888-390-0541, International:
+416-764-8677 |
Replay Passcode: |
438476 |
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The conference call replay will be available until November 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 focused on copper, with
three producing mines; the Pinto Valley copper-molybdenum-silver
mine located in Arizona, US, the
Cozamin copper-silver-zinc-lead mine 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
Region III, Chile, in partnership
with Korea Resources Corporation, and the 100% owned Kutcho
copper-zinc-gold-silver project in British Columbia, Canada, as well as
exploration properties in Canada,
Chile and Mexico. Using our cash flow and strong balance
sheet as a platform, Capstone's strategy is to continue to grow
with mineral resource and reserve expansions and exploration, and
through acquisitions in politically stable, mining-friendly
regions. We will pace our growth with our financial capacity,
ensuring we retain, as a priority, sufficient financial flexibility
to meet the requirements of our existing operations and our
committed development projects, while maintaining an adequate
cushion to deal with market volatility and operating risks inherent
in the mining industry. Our headquarters are in Vancouver, Canada and we are listed on the
Toronto Stock Exchange (TSX). Further information is available at
www.capstonemining.com.
(1) These are alternative performance measures; please see
"Alternative Performance Measures" at the end of this release.
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 timing of completing the PFS and follow-on
engineering and economic studies for Pinto Valley, the anticipated
production from the Pinto Valley Mine, the realization of mineral
reserve estimates, 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".
Forward-looking statements are based on a number of assumptions
which may prove incorrect, including, but not limited to, the
exploration and development potential of the project, current and
future commodity prices and exchange rates and continued daily
operation of the Pinto Valley Mine. 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 Brad Skeeles, P. Eng., Vice President 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 nine months ended
September 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 refers to a technical
report that 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.
SOURCE Capstone Mining Corp.