(All amounts in US$ unless otherwise specified)
VANCOUVER, April 28, 2015 /PRNewswire/ - Capstone
Mining Corp. ("Capstone") (TSX: CS) today announced its financial
results for the quarter ended March 31,
2015. Operating cash flow before changes in working
capital1 was $16.5 million
or $0.04 per share, with a net loss
of $17.4 million and an adjusted net
loss of $8.9 million after adjusting
for certain non-cash and non-recurring charges. Copper production
for the quarter totalled 23,677 tonnes of copper (22,853 tonnes of
payable copper) at a C1 cash cost1 of $1.97 per payable pound produced versus copper
sales for the quarter of 20,082 tonnes at a C1 cash
cost1 of $1.89 per payable
pound sold.
Capstone will hold a conference call and webcast
on Wednesday, April
29, 2015 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the quarter
ended March 31, 2015, which are
available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including results
to March 31, 2015, in addition to the
Q1 2015 webcast slides, will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
|
Q1
2015
|
Q1
2014
|
Revenue ($
millions)
|
102.9
|
160.8
|
|
|
|
Copper
produced (tonnes)
|
23,677
|
27,215
|
|
|
|
Payable copper
produced (tonnes)
|
22,853
|
26,245
|
C1 cash cost per
payable pound produced (1) ($/lb)
|
1.97
|
1.92
|
|
|
|
Copper sold
(tonnes)
|
20,082
|
26,601
|
Realized copper price
per pound sold ($/lb) *
|
2.47
|
2.99
|
C1 cash cost per
payable pound sold (1) ($/lb)
|
1.89
|
1.86
|
All-in sustaining
cost per payable pound sold (1) ($/lb)
|
2.36
|
2.28
|
All-in cost per
payable pound sold (1) ($/lb)
|
3.05
|
2.33
|
Fully-loaded all-in
cost per payable pound sold (1) ($/lb)
|
3.15
|
2.50
|
|
|
|
Net loss ($
millions)
|
(17.4)
|
(4.4)
|
Net loss per common
share ($)
|
(0.04)
|
(0.01)
|
|
|
|
Adjusted net
loss ($ millions)
|
(8.9)
|
(4.4)
|
Adjusted net loss per
common share ($)
|
(0.02)
|
(0.01)
|
|
|
|
Adjusted
EBITDA (1) ($ millions)
|
24.3
|
56.4
|
Adjusted EBITDA
(1) per common share ($)
|
0.06
|
0.15
|
|
|
|
Operating cash
flow before changes in working capital (1) ($
millions)
|
16.5
|
50.2
|
Operating cash flow
before changes in working capital per common share (1)
($)
|
0.04
|
0.14
|
|
|
|
Cash and cash
equivalents ($ millions)
|
122.6
|
135.7
|
|
|
|
Net debt
(1) ($ millions)
|
177.2
|
175.5
|
* Q1 2015 includes a
negative provisional pricing adjustment of $12.7 million related to
prior shipments,
equivalent to $0.29 per pound of copper sold during the
quarter.
|
1 These are
alternative performance measures; please see "Alternative
Performance Measures" at the end of this release.
|
"In the first quarter of 2015 we focused on flexibility and
execution," said Darren Pylot,
President and CEO of Capstone. "We maintained our financial
flexibility by renegotiating our credit lines, identifying
discretionary components within our 2015 capital plan and matching
the advancement of our development projects to our financial
capacity as copper prices touched on a six-year low."
"Our focus on execution centred on mill reliability at Pinto
Valley," continued Mr. Pylot. "We developed plans and commenced
improvement activities, with one important step being the
completion of a reorganization and realignment at Pinto Valley
during the first quarter. As we advance activities around our
maintenance programs, we will continue to achieve guidance, while
taking the necessary steps to meet our throughput goals."
"In the first quarter we also realized significant success in
executing at Minto while continuing to wait for the issuance of an
amended Water Use Licence. As the public hearing on the amendment
occurred the first week in March, the best course of action was to
keep surface mining on standby and await receipt of the amendment,
expected in the second quarter. Our mine plan provides the
flexibility to access Minto North as
quickly as possible once approval is granted."
Financial and Production Highlights for the Quarter Ended
March 31, 2015
- Net loss of $17.4 million or
$0.05 per common share which
included:
- Earnings from mining operations of $4.9
million,
- Realized copper price of $2.47
per pound sold and a C1 cash cost1 of $1.89 per payable pound sold.
- Production costs included a $2.6
million non-cash charge related to the write-down of
inventory at the Minto Mine,
- A non-cash charge of $3.6 million
related to the impairment of available-for-sale securities,
- Operational restructuring costs of $2.2
million related to Pinto Valley,
- Stand-by fees of $1.1 million at
Minto for reduced open pit mining rates,
- $1.7 million in current and
deferred tax expenses.
- Adjusted EBITDA1 of $24.3
million or $0.06 per common
share after making adjustments for certain non-cash and other
items.
- Operating cash flow before changes in working
capital1 of $16.5 million
or $0.04 per common share.
- Adjusted net loss1 of $8.9
million or $0.02 per common
share after making adjustments for certain non-recurring
items.
- Working capital increased to $193.6 million at
March 31, 2015 (which included
$122.6 million of cash and cash
equivalents) from $106.5 million at
December 31, 2014.
- Production of 22,853 tonnes of payable copper at a C1 cash
cost1 of $1.97 per pound
of payable copper produced.
- Revenue of $102.9 million
generated primarily from the sale of 20,082 tonnes of payable
copper at a realized copper price of $2.47 per pound sold and a C1 cash
cost1 of $1.89 per pound
sold.
Operational Highlights for the Quarter Ended March 31, 2015
Pinto Valley Mine:
- Produced 15,809 tonnes of copper in concentrates and cathode at
a C1 cash cost1 of $1.93
per pound of payable copper produced.
- During Q1 2015, an additional hydraulic shovel and three more
haul trucks arrived at site as part of the capital considered under
the PV2 expansion plan.
- Completed a reorganization to improve operational efficiency
and accountability. As part of the redesign, approximately 40
salaried staff left the organization and a further 30 people
changed roles, resulting in a reduction to the salaried workforce
of 15% and restructuring costs of $2.2
million recognized in the quarter.
- Work continued during the quarter to advance two PV3 scenarios
towards a 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 3,773 tonnes of copper in concentrates at a C1 cash
cost1 of $1.51 per pound
of payable copper.
- Mine development rates were reviewed in Q1 2015 with a focus on
improvement through training, thereby helping to ensure sufficient
underground production inventory going forward.
- Efforts continued throughout Q1 2015 on the permitting process
for additional surface drilling at the Cozamin mine site with the
permit expected to be received in Q2 2015.
- Underground access for the Mala Noche vein resource drilling
program is advancing on plan with an expected start to the program
in Q3 2015.
Minto Mine:
- Produced 4,095 tonnes of copper in concentrates at a C1 cash
cost1 of $2.58 per pound
of payable copper produced, which included $0.14 per pound of cost allocated from stockpile
which was spent in prior periods, bringing the actual cash expended
during Q1 2015 to $2.44 per pound of
payable copper produced.
- The hearing with the Yukon Water Board on the Water Use Licence
Amendment took place in the first week of March and the Company
awaits receipt of the licence. The current plan has the mill
continuing to process ore from underground and stockpiles, with
surface mining on hold until receipt of the required licence, which
is expected in Q2 2015.
Santo Domingo Project:
- The Company completed the tender process for Engineering,
Procurement, and Construction ("EPC") and Engineering, Procurement,
and 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 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.
- During Q2 2015 the Company expects to present its third
addendum for the Environmental Impact Assessment. Based on the
current timetable it is now expected to be approved 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 Q2 2015.
Greenfield Exploration:
- Exploration work at Project Providencia in Region II,
Chile during Q1 2015 included
minor infill soil sampling and trenching. Drilling resumed in late
March but was temporarily halted due to extensive flash flooding in
the Atacama region.
- Four separate copper-gold prospects are slated for testing when
drilling resumes in Q2 2015. Two targets are porphyry-type and two
are IOCG / Manto type. To date in 2015, a total of 496 metres of RC
drilling was completed in two holes before the temporary
shutdown.
New Alternative Performance Measures
Effective for 2015, Capstone has commenced reporting C1 cash
cost1 on the basis of per pound of payable copper
SOLD as well as the previously reported per pound of payable
copper PRODUCED.
The Company has also commenced reporting additional Alternative
Performance Measures that are more fulsome in nature, all of which
will be reported on the basis of per pound of copper SOLD:
- All-in sustaining cost1 – equal to C1
cash1 cost plus sustaining costs.
- All-in cost1 – equal to all-in sustaining
costs1 plus development capital.
- Fully-loaded all-in cost1 – equal to all-in
costs1 plus taxes and interest on long term debt.
These new unit cost figures are meant to provide our
stakeholders with a better understanding of the economics of our
operations. Additionally, each measure has been defined in a
detailed table at the end of the MD&A for the quarter ended
March 31, 2015.
Production Outlook
Capstone's 2015 guidance for 90,000 tonnes (±5%) of copper in
concentrates and cathode, at a C1 cash cost1 of
$2.00 to $2.10 per pound of payable
copper produced net of by-product credits and selling costs,
remains unchanged.
Conference Call and Webcast Details
Date:
|
Wednesday, April 29,
2015
|
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/1492981/1662973
|
Replay:
|
North America:
1-888-390-0541, International: +416-764-8677
|
Replay Passcode:
|
822166#
|
The conference call replay will be available until Wednesday, May 13, 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
extend the lives of our current mines with mineral resource and
reserve expansions, to advance the Santo
Domingo development project, conduct focused exploration and
grow 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 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
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 "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; counterparty risks associated with sales
of our metals; changes in general economic conditions; increased
operating and capital costs; operating in foreign jurisdictions
with risk of changes to governmental regulation; impact of climatic
conditions on our Pinto Valley, Cozamin and Minto operations;
increasing energy prices; our ability to integrate new acquisitions
into our operations, 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 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 Consolidated Interim
Management's Discussion and Analysis for the quarter ended
March 31, 2015 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 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.