(All amounts in US$ unless otherwise
specified)
VANCOUVER, July 28, 2015 /CNW/ - Capstone Mining Corp.
("Capstone") (TSX: CS) today announced its financial results for
the three and six months ended June 30,
2015. Operating cash flow before changes in working
capital1 for the quarter was $21.8 million or $0.06 per share, with net income and adjusted net
income of $1.3 million. Copper
production for the quarter totalled 21,100 tonnes (20,367 tonnes of
payable copper) at a C1 cash cost1 of $2.22 per payable pound produced with copper
sales for the quarter of 20,473 tonnes at a C1 cash
cost1 of $2.09 per payable
pound sold.
Capstone will hold a conference call and webcast
on Wednesday, July
29, 2015 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the three and
six months ended June 30, 2015, which
are available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including results
to June 30, 2015, in addition to the
Q2 2015 webcast slides, will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
|
Q2
2015
|
Q2
2014
|
2015
YTD
|
2014
YTD
|
Revenue ($
millions)
|
112.5
|
171.7
|
215.4
|
332.5
|
|
|
|
|
|
Copper
produced (tonnes)
|
21,100
|
27,333
|
44,777
|
54,548
|
|
|
|
|
|
Payable copper
produced (tonnes)
|
20,367
|
26,394
|
43,220
|
52,639
|
C1 cash cost per
payable pound produced (1) ($/lb)
|
2.22
|
2.05
|
2.09
|
1.99
|
|
|
|
|
|
Copper sold
(tonnes)
|
20,473
|
24,563
|
40,555
|
51,164
|
Realized copper
price per pound sold ($/lb) *
|
2.67
|
3.36
|
2.57
|
3.17
|
C1 cash cost per
payable pound sold (1) ($/lb)
|
2.09
|
1.94
|
1.99
|
1.90
|
All-in sustaining
cost per payable pound sold (1) ($/lb)
|
2.56
|
2.25
|
2.46
|
2.28
|
All-in cost per
payable pound sold (1) ($/lb)
|
2.84
|
2.34
|
2.95
|
2.35
|
Fully-loaded
all-in cost per payable pound sold (1)
($/lb)
|
2.78
|
2.67
|
2.97
|
2.60
|
|
|
|
|
|
Net income
(loss) ($ millions)
|
1.3
|
16.6
|
(16.0)
|
12.2
|
Net earnings
(loss) per common share ($)
|
0.00
|
0.04
|
(0.04)
|
0.03
|
|
|
|
|
|
Adjusted net
income (loss) (1) ($ millions)
|
1.3
|
18.3
|
(7.6)
|
24.0
|
Adjusted net
earnings (loss) (1) per common share ($)
|
0.00
|
0.05
|
(0.02)
|
0.06
|
|
|
|
|
|
Adjusted
EBITDA (1) ($ millions)
|
26.6
|
64.8
|
51.0
|
121.2
|
Adjusted EBITDA
(1) per common share ($)
|
0.07
|
0.17
|
0.13
|
0.32
|
|
|
|
|
|
Operating cash
flow before changes in working capital
(1) ($ millions)
|
21.8
|
59.5
|
38.3
|
109.8
|
Operating cash
flow before changes in working capital per common share
(1) ($)
|
0.06
|
0.16
|
0.10
|
0.29
|
|
|
|
|
|
Cash and cash
equivalents ($ millions)
|
97.6
|
128.5
|
97.6
|
128.5
|
|
|
|
|
|
Net debt
(1) ($ millions)
|
202.0
|
181.0
|
202.0
|
181.0
|
* Q2 2015 includes a
negative provisional pricing adjustment of $0.9 million (2014 –
positive $8.4 million) related to prior shipments, equivalent to
$0.02 per pound (2014 – $0.16 per pound) of copper sold during the
quarter. 2015 YTD includes a negative provisional pricing
adjustment of $13.6 million (2014 – positive $6.3 million) related
to prior shipments, equivalent to $0.15 per pound (2014 – $0.06 per
pound) of copper sold during the six month period.
|
|
1 These are
alternative performance measures; please see "Alternative
Performance Measures" at the end of this release.
|
"In the second quarter of 2015 we continued our focus on
flexibility and execution," said Darren
Pylot, President and CEO of Capstone. "We maintained our
financial flexibility by entering into zero-cost collars for 36,000
tonnes of copper production at a minimum price of US$2.60 per pound to the end of Q3 2015 to ensure
we can execute our 2015 capital program in this difficult copper
price environment."
"We are executing on the operational improvements at Pinto
Valley with respect to mill reliability and are approaching our
run-rate target. Minto has
delivered significant outperformance while awaiting the amended
Water Use Licence, offsetting a guidance shortfall at Cozamin,
demonstrating the operational flexibility of multiple producing
assets."
"In the second quarter we received approval of the Environmental
Impact Assessment ("EIA") for the Santo
Domingo project. We have maintained our development
flexibility by moving the project forward in a phased manner,
focussing on the copper portion of the project first. We are now
working on delivering an updated Feasibility Study for a phased
approach that is more aligned with current market conditions,
expected to be released in 2016."
Financial Highlights for the Three Months Ended June 30, 2015
- Net income of $1.3 million which
included:
- Earnings from mining operations of $0.4
million,
- Production costs included a $6.9
million non-cash charge related to the write-down of
inventory at Minto,
- A non-cash impairment of $0.8
million against available-for-sale securities,
- A non-cash unrealized gain on commodity derivatives of
$7.1 million,
- $5.7 million in current and
deferred tax recoveries.
- Working capital increased to $198.1 million at
June 30, 2015 (which included
$97.6 million of cash and cash
equivalents) from $193.6 million at
March 31, 2015.
Financial Highlights for the Six Months Ended June 30, 2015
- Net loss of $16.0 million or
$(0.04) per common share which
included:
- Earnings from mining operations of $5.2
million,
- Production costs included a $9.4
million non-cash charge related to the write-down of
inventory at Minto,
- A non-cash impairment of $4.4
million against available-for-sale securities,
- Operational restructuring costs of $1.9
million related to Pinto Valley,
- Stand-by fees of $1.1 million at
Minto for reduced open pit mining
rates,
- A non-cash unrealized gain on commodity derivatives of
$7.1 million,
- $3.9 million in current and
deferred tax recoveries.
- Working capital increased to $198.1 million at
June 30, 2015 (which included
$97.6 million of cash and cash
equivalents) from $106.5 million at
December 31, 2014.
Operational Highlights for the Three and Six Months Ended
June 30, 2015
Pinto Valley Mine:
- Produced 14,266 tonnes of copper in concentrates and cathode
during Q2 2015 at a C1 cash cost1 of $2.06 per pound of payable copper produced.
- Produced 30,075 tonnes of copper in concentrates and cathode
during 2015 YTD at a C1 cash cost1 of $1.99 per pound of payable copper produced.
- Throughput reliability improved during Q2 2015, resulting in a
daily average of 48,103 tonnes per day ("tpd") for Q2 2015.
Subsequent to quarter end, Pinto Valley has continued to reduce
operating variability and as of July 26,
2015 has averaged 49,600 tpd in July.
- Work continued during Q2 2015 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. A second case,
evaluating a throughput increase to 90,000 tonnes per day combined
with a potential mine life extension, is not expected to generate
returns meaningfully higher than the base case to justify the
potential additional development and capital risk and will not be
advanced in the PV3 PFS. The base case PV3 PFS is expected to be
completed in Q3 2015, at which time we will evaluate the results
and determine a path forward.
Cozamin Mine:
- Produced 2,693 tonnes of copper in concentrates during Q2 2015
at a C1 cash cost1 of $2.09 per pound of payable copper produced.
- Produced 6,466 tonnes of copper in concentrates during 2015 YTD
at a C1 cash cost1 of $1.75 per pound of payable copper produced.
- Despite progress in Q2 2015 on improving development
performance and increasing long-hole inventory, the mine continues
to work through changes made to the Company's mining procedures and
the need to adapt practices (particularly related to grade control)
to increase ore production from the footwall zone.
- During Q2 2015, Cozamin received all the necessary permits for
surface drilling, allowing the surface exploration program to be
executed on plan for 2015.
Minto Mine:
- Produced 4,141 tonnes of copper in concentrates during Q2 2015
at a C1 cash cost1 of $2.85 per pound of payable copper produced, which
included $0.38 per pound of cost
allocated from stockpile that was spent in prior periods, bringing
the actual cash expended during Q2 2015 to $2.47 per pound of payable copper produced.
- Produced 8,236 tonnes of copper in concentrates during 2015 YTD
at a C1 cash cost1 of $2.72 per pound of payable copper produced, which
included $0.26 per pound of cost
allocated from stockpile that was spent in prior periods, bringing
the actual cash expended during 2015 YTD to $2.46 per pound of payable copper produced.
- The Yukon Water Board issued a draft Water Use Licence on
May 29, 2015 and is now in the
process of issuing the final licence. We continue to process
underground and stockpiled ore while we await receipt of the final
licence in order to pre-strip the Minto North deposit.
Santo Domingo Project:
- During Q2 2015, the Company presented its third addendum for
the EIA. During the first week of July the EIA was approved and the
project received regulatory approval to proceed.
- An internal analysis that considers a reduced throughput rate
of 30,000 to 35,000 tpd, with a focus on copper either initially or
exclusively, will be advanced as a Phased Approach Feasibility
Study ("Phased Approach FS") to assess this option. Expenditures
for H2 2015 to advance the Phased Approach FS and maintain the
owners' team and social license is estimated at $15.6 million, of which Capstone's 70% share is
$10.9 million. Both KORES and POSCO
Engineering and Construction Co., Ltd. ("POSCO") are supportive of
this approach and budget.
Greenfield Exploration:
- Exploration work at Project Providencia in Region II,
Chile during Q2 2015 focused
primarily on drilling of four separate copper-gold prospects. Two
targets are porphyry-type and two are IOCG/Manto type. During
the quarter a total of 8,036 metres of RC drilling in 31 holes was
completed on this project.
Production Outlook
Capstone's 2015 production guidance of 90,000 tonnes (±5%) of
copper, 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. However, the distribution by mine is expected to be
different than originally guided, with outperformance at
Minto expected to make up most of
the anticipated shortfall at Cozamin for the year.
Conference Call and Webcast Details
Date:
|
Wednesday, July 29,
2015
|
Time:
|
11:30 am Eastern Time
(8:30 am Pacific Time)
|
Dial in:
|
North America:
1-888-390-0546, International: +1-416-764-8688
|
Webcast:
|
http://event.on24.com/r.htm?e=1000199&s=1&k=6E7B88DAB505C62F38A067093BB73611
|
Replay:
|
North America:
1-888-390-0541, International: +1-416-764-8677
|
Replay
Passcode:
|
620193#
|
The conference call replay will be available until Thursday, August 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/events-and-presentations/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 "anticipated", "guidance", "plan", "estimated" 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 Gregg Bush, P. Eng., Senior Vice President and
Chief Operating Officer. Technical Information related to mineral
exploration activities has been reviewed and approved by
Brad Mercer, P. Geol., Senior Vice
President, Exploration. Both are 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 June 30, 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.