Operating cash flow before changes in
working capital of $199.4 million
(All amounts in US$ unless otherwise specified)
VANCOUVER,
Feb. 17, 2015
/CNW/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today
announced its financial results for the year ended December 31, 2014, with
operating cash flow before changes in working
capital1 for the year a record
$199.4 million. Notwithstanding this
strong performance, Capstone posted a loss for the year of
$22.4 million due to non-cash charges of $55.8 million, including $36.2 million related to a write down of
inventory and capitalized mineral property costs at Minto, $11
million related to the impairment of available-for-sale
securities and $8.6 million in the
carrying value of the Kutcho development
project. Copper production during the
year at Capstone's three operating mines totalled 103,353
tonnes of copper in concentrates and cathode
(99,739 tonnes of payable copper) at a C1
cash cost1 of $1.93
per payable pound of copper produced.
Capstone will hold
a conference call and webcast on Wednesday, February 18, 2015 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be
read in conjunction with Capstone's consolidated financial
statements and management's discussion and analysis ("MD&A")
for year ended December 31, 2014,
which are available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including
results to December 31, 2014, in
addition to the 2014 year-end webcast slides, will also be
available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
NOTE:
The transaction to acquire the Pinto Valley Mine closed on
October 11, 2013 and therefore its
results of operations are included in the Company's reported
results from that date forward.
Overview
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Q4 2014
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Q4 2013
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2014
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2013
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Revenue ($
millions)
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139.5
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136.8
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656.0
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332.0
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Copper in concentrates produced
(tonnes)
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22,478
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25,180
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100,940
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50,972
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Copper cathode produced (tonnes)
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617
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640
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2,413
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640
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Payable copper produced (tonnes)
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22,282
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24,915
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99,739
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49,697
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C1 cash
cost per payable pound of copper produced1
($)
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1.88
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1.78
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1.93
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1.72
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Copper sold (tonnes)
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23,705
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20,084
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103,901
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45,408
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Realized
copper price per pound sold ($)
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2.79
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3.30
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3.03
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3.30
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Net loss ($
millions)
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(34.4)
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(23.4)
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(22.4)
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(11.9)
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Net loss per common share
($)
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(0.09)
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(0.06)
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(0.06)
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(0.03)
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Adjusted EBITDA1 ($
millions)
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40.4
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31.5
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231.6
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105.6
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Adjusted
EBITDA per common share1 ($)
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0.11
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0.08
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0.61
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0.28
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Operating cash flow before changes in working
capital1
($ millions)
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30.7
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22.8
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199.4
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85.7
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Operating
cash flow before changes in working capital per common
share1 ($)
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0.08
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0.06
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0.52
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0.23
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Cash and cash equivalents ($ millions)
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150.1
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104.4
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150.1
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104.0
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Net (debt) cash1 ($
millions)
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(127.7)
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(211.6)
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(127.7)
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(211.6)
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(1) These are alternative performance measures;
please see "Alternative Performance Measures" at the end of this
release.
"This past year was a transitional one for Capstone as we
integrated Pinto Valley into our organization and completed the
first full year of operation under our ownership. The trend of
reducing cash cost and a final fourth quarter C1 cash cost of
$1.82 per pound at that operation
underscore the progress we have made so far," said Darren Pylot, President and CEO of Capstone.
"The significant operating cash flow we generated in 2014 of
$199.4 million also demonstrates the
substantial potential of all of our operations."
"At the same time we continue to manage our business and
growth opportunities in a prudent manner. The need to maintain a
disciplined and flexible approach became particularly evident in
the first part of 2015, when copper prices dropped to a 5-1/2 year
low," continued Mr. Pylot. "Through 2015, we will remain focussed
on maintaining flexibility in both our operating model and
financial position so that we can quickly adapt to market
conditions as required."
Financial and
Production Highlights for the Year Ended December 31, 2014
- Adjusted EBITDA1 of $231.6 million or $0.61 per common share after making adjustments
for certain non-cash and other items.
- Operating cash flow before changes in working
capital1 of $199.4 million
or $0.52 per common
share.
- Net loss of $22.4 million
or $0.06 per common share which
included:
- Earnings from mining operations of $104.7 million,
- Realized copper price of $3.03 per pound.
- Production costs included a $26.3
million non-cash charge related to the write-down of
inventory at the Minto Mine,
- A non-cash charge of $9.9
million related to the write-down of capitalized mineral
property costs at Minto,
- A non-cash charge of $8.6
million related to the write-down of capitalized mineral
property costs at Kutcho,
- A non-cash charge of $11.0
million related to the impairment of available-for-sale
securities,
- $37.4 million in current
and deferred tax expenses.
- Working capital decreased to $106.5 million at December
31, 2014 (which included $150.1
million of cash and cash equivalents) from $139.9 million at December
31, 2013.
- Production of 99,739 tonnes of payable copper at a C1
cash cost1 of $1.93 per pound of payable copper
produced.
- Revenue of $656.0
million generated primarily from the sale of 103,901 tonnes
of payable copper.
Operational
Highlights for the Quarter and Year Ended December 31, 2014
Pinto Valley Mine:
- Produced 14,606 tonnes of copper in concentrates and 617
tonnes of copper cathode during Q4 2014 at a C1 cash
cost1 of $1.82 per pound
of payable copper produced.
- Produced 62,716 tonnes of copper in concentrates and
2,413 tonnes of copper cathode during 2014 at a C1 cash
cost1 of $2.03 per pound
of payable copper produced.
- Completed the Pinto Valley Phase 2
Pre-Feasibility study ("PV2 PFS") in March
2014, extending the mine life at Pinto Valley to 2026, at an
average annual production of 54,200 tonnes of copper in concentrate
and 2,900 tonnes of copper cathode, at a Life of Mine ("LOM") C1
cash cost1 of $2.00 per
pound of payable copper.
- Work is ongoing related to the implementation of
improvements identified by the PV2 PFS, with the project execution
plan in place, orders for the majority of the mine
equipment placed and detailed engineering and construction
underway.
- Completed an internal scoping study in 2014 that
evaluated the resources at Pinto Valley not included in the current
mine plan. As a result, two cases will be advanced to the
Pre-Feasibility study level ("PV3 PFS"). The PV3 PFS base case will
include a 10% to 15% increase in throughput and the possibility of
a mine life extension beyond 2026 and a second case will evaluate a
throughput increase to 90,000 tonnes per day combined with a
potential mine life extension. The PV3 PFS is expected to be
completed in the third quarter of 2015, at which time we will
evaluate the two alternatives and the best use of
capital.
Cozamin Mine:
- Produced 4,573 tonnes of copper in concentrates during Q4
2014 at a C1 cash cost1 of $1.30 per pound of payable copper
produced.
- Produced 19,813 tonnes of copper in concentrates during
2014 at a C1 cash cost1 of $1.26 per pound of payable copper
produced.
- Exploration drilling from surface to test structural
splays off of the main Mala Noche vein system continued throughout
2014.
- During 2014 Capstone acquired 45 mining concessions
covering 770 hectares situated along strike and surrounding current
Capstone claims, giving Capstone control of the majority of the
Mala Noche vein system and many of its subsidiary splays both along
strike and at depth.
Minto Mine:
- Produced 3,299 tonnes of copper in concentrates during Q4
2014 at a C1 cash cost1 of $2.94 per pound of payable copper
produced.
- Produced 18,411 tonnes of copper in concentrates during
2014 at a C1 cash cost1 of $2.33 per pound of payable copper
produced.
- Surface mining was suspended at the end of Q3 2014 due to
delays in receipt of the Water Use License ("WUL") Amendment, which
is required to permit pre-stripping at Minto North. Fresh ore from
underground mining was supplemented with stockpiled ore to feed the
mill in Q4 2014. On February 6, 2015,
the Yukon Water Board requested additional information after the
public comment period closed. Minto responded to this Information Request on
February 16. As a
result, we do not expect that the Minto North deposit will be
stripped as planned at the beginning of Q2 2015. We will continue
to work with the Yukon Water Board to secure the required WUL
Amendment as expeditiously as possible, but will not be making any
commitment of capital until an acceptable permit is received.
Copper prices are currently at levels where the economics of the
Minto Mine, without the Minto North deposit, are questionable. We
are evaluating all options for optimizing the cash flows from
Minto in the current market
climate.
Santo Domingo Project:
- The Company completed the tender process for Engineering,
Procurement, Construction ("EPC") and Engineering, Procurement,
Construction Management ("EPCM") packages for project
development. Capstone has selected POSCO E&C
("POSCO") as the preferred EPC fixed price lump sum contractor for
the Santo Domingo
project. While the EPC contract has not been
negotiated or concluded, Capstone has awarded a Limited Notice to
Proceed to the end of Stage-Gate 1, which will
include confirmation of
completeness of the engineering and
contractual performance
guarantee parameters. This award totals
approximately $4.5 million and is
part of Capstone's previously announced 2015 base case budget of
$16.9 million (of which Capstone's
70% share is $11.8 million). This
work is expected to be completed before the end of Q2 2015.
Following Stage-Gate 1, next steps will be determined and
communicated. The total capital cost of
the project is expected to be at or below the previously estimated
$1.7
billion.
- On January 27, 2015, the
third information request from the authorities was received. Under
the current timetable the Environmental Impact Assessment is now
expected to be received during Q2 2015, which aligns with the
revised engineering development plan outlined above.
- A third party objection to the Santo Domingo port concession application was
rejected by the Chilean Armed Forces, clearing the way for the
anticipated approval of the application in Q1 2015.
Greenfield Exploration:
- Exploration work at Project Providencia in Region II,
Chile during 2014 included
extensive soil and rock geochemical surveys, geological mapping,
several different Induced Polarization surveys, and drilling. Eight
different prospect areas were identified for their potential to
host copper gold mineralization of porphyry-type and IOCG and Manto
type mineralization.
- Exploration work during Q4 2014 at Project Providencia
included drilling of 7,036 metres over 25 holes.
Corporate:
- Subsequent to year-end, Capstone entered into an amended
senior secured corporate revolving credit facility ("RCF") for up
to $500-million. This facility amends
Capstone's existing senior secured corporate revolving term
facility and allowed for the repayment and cancellation of the
existing senior secured reducing revolving credit
facility.
- The RCF comprises a committed $440-million plus a $60-million accordion. It has a four-year term
maturing in January, 2019 (with extension rights on mutual
consent), an interest rate of US LIBOR plus 3.0% (adjustable in
certain circumstances) and a standby fee of 0.675%, payable on the
undrawn balance of the facility. The $60-million accordion may be exercised by
Capstone once additional credit is committed from existing and/or
new lenders.
Financial and Production Highlights for the
Quarter Ended December 31,
2014
In Q4 2014 the Company recorded a net loss of $34.4 million. The main contributors to the net
loss were:
- Non-cash charges of $32.3
million relating to a write down of inventory
($11.4 million) and capitalized
mineral property costs ($9.9 million)
at Minto and the impairment of
available-for-sale securities ($11.0
million).
- A reduction in realized copper price from $3.30 per pound in Q4 2013 to $2.79 per pound in Q4 2014, a decrease of
15%
- Adjusted EBITDA1 was $40.6 million or $0.11 per common share after making adjustments
for certain non-cash and other items.
- Operating cash flow before changes in working
capital1 was $30.7 million
or $0.08 per share.
- Working capital decreased to $106.5 million at December
31, 2014 from $139.9 million
at December 31, 2013.
- Produced a total of 22,282 tonnes of payable copper at an
estimated C1 cash cost1 of $1.88 per pound of payable copper
produced.
- Revenue of $142.0 million
generated primarily from the sale of 23,751 tonnes of payable
copper.
Production
Outlook
Capstone's 2015 guidance for 90,000 tonnes ±5% of copper
in concentrates, at a C1 cash cost1 of $2.00 to $2.10 per pound of payable copper, net
of by-product credits and selling costs, remains
unchanged.
Conference Call
and Webcast Details
Date:
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Wednesday, February
18, 2015
|
Time:
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11:30 a.m. Eastern
Time (8:30 a.m. Pacific Time)
|
Dial in:
|
North America:
1-888-390-0546, International: +416-764-8688
|
Webcast:
|
http://www.newswire.ca/en/webcast/detail/1460897/1625621
|
Replay:
|
North America:
1-888-390-0541, International: +416-764-8677
|
Replay Passcode:
|
380257#
|
The conference call replay will be available until
Wednesday, March 4, 2015. The conference call audio and transcript
will be available on Capstone's website within approximately 24
hours of the call at http://capstonemining.com/investors/conference-calls-and-webcasts/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
copper-silver mine in Zacatecas State, Mexico and the Minto copper mine in Yukon, Canada. In addition, Capstone has two
copper development projects; the large scale 70% owned copper-iron
Santo Domingo project in Region
III, Chile, in partnership with
Korea Resources Corporation, and the 100% owned copper-zinc Kutcho
project in British Columbia,
Canada, as well as exploration properties in Chile. 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.
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 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 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 "may", "future", "expected", "intends",
"guidance" and "estimates". 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 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 or inability to obtain governmental and regulatory approvals
for mining operations or financing or in the completion of
development or construction activities; compliance with debt
covenants, 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 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. The Company
provides 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 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 Brad Skeeles, P. Eng.,
Vice President of North American Operations (Technical Information
related to mining and production), Brad
Mercer, P. Geol., Vice President, Exploration (Technical
Information related to mineral exploration activities), and
Gregg Bush, P. Eng., Senior Vice
President and Chief Operating Officer, all Qualified Persons under
NI 43-101.
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 year ended December 31, 2014 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 may refer to
technical reports that use 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.