VANCOUVER, February 17, 2015 /PRNewswire/ --
Operating cash flow before changes in
working capital of $199.4 million
(All amounts in US$ unless otherwise specified)
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 capital[1] 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
cost[1] of $1.93 per payable pound of copper
produced.
Capstone will hold a conference call and
webcast on Wednesday, February
18, 2015 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for year ended
December 31, 2014, which are
available on Capstone's website
at http://capstonemining.com/investors/financial-reporting/default.aspx and
on SEDAR. An updated corporate presentation, including results to
December 31, 2014, in addition to the
2014 year-end webcast slides, will also be available
at http://capstonemining.com/investors/events-and-presentations/default.aspx.
NOTE: The transaction to acquire the Pinto
Valley Mine closed on October 11,
2013 and therefore its results of operations are included in
the Company's reported results from that date forward.
Overview
Q4 2014 Q4 2013 2014 2013
Revenue ($ millions) 139.5 136.8 656.0 332.0
Copper in concentrates produced (tonnes) 22,478 25,180 100,940 50,972
Copper cathode produced (tonnes) 617 640 2,413 640
Payable copper produced (tonnes) 22,282 24,915 99,739 49,697
C1 cash cost per payable pound of copper produced[1]
($) 1.88 1.78 1.93 1.72
Copper sold (tonnes) 23,705 20,084 103,901 45,408
Realized copper price per pound sold ($) 2.79 3.30 3.03 3.30
Net loss ($ millions) (34.4) (23.4) (22.4) (11.9)
Net loss per common share ($) (0.09) (0.06) (0.06) (0.03)
Adjusted EBITDA[1]($ millions) 40.4 31.5 231.6 105.6
Adjusted EBITDA per common share[1] ($) 0.11 0.08 0.61 0.28
Operating cash flow before changes in working
capital[1]($ millions) 30.7 22.8 199.4 85.7
Operating cash flow before changes in working capital
per common share[1] ($) 0.08 0.06 0.52 0.23
Cash and cash equivalents ($ millions) 150.1 104.4 150.1 104.0
Net (debt) cash[1] ($ millions) (127.7) (211.6) (127.7) (211.6)
[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 EBITDA[1] 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
capital[1] 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
cost[1] 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
cost[1] 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
cost[1] 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
cost[1] 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
cost[1] of $1.30 per pound of payable copperproduced.
- Produced 19,813 tonnes of copper in concentrates during 2014 at
a C1 cash cost[1] 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 cost[1] of
$2.94 per pound of payable
copperproduced.
- Produced 18,411 tonnes of copper in concentrates during 2014 at
a C1 cash cost[1] 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 ofcompleteness 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 EBITDA[1] 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
capital[1] 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 cost[1] 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
cost[1] 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: Wednesday, February 18, 2015
Time: 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 http://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
http://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 http://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.
Cindy Burnett, VP, Investor
Relations and Communications, +1-604-637-8157,
cburnett@capstonemining.com