VANCOUVER, British Columbia,
Oct. 27, 2015 /PRNewswire/ --Capstone
Mining Corp. ("Capstone") (TSX: CS) today announced its financial
results for the three and nine months ended September 30, 2015. Operating cash flow before
changes in working capital (1) for the quarter was
$9.2 million or $0.02 per share, with a net loss of $216.0 million and an adjusted net loss of
$16.3 million after adjusting for
certain non-cash and non-recurring charges. Copper production for
the quarter totalled 22,109 tonnes (21,340 tonnes of payable
copper) at a C1 cash cost (1) of $1.98 per payable pound produced with copper
sales for the quarter of 24,645 tonnes at a C1 cash cost
(1) of $2.16 per payable
pound sold.
Capstone will hold a conference call and webcast on
Wednesday, October 28, 2015 at
11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the three and
nine months ended September 30, 2015,
which are available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including results
to September 30, 2015, in addition to
the Q3 2015 webcast slides, will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
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Q3
2015
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Q3
2014
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2015
YTD
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2014
YTD
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Revenue ($
millions)
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113.0
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183.9
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328.4
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516.5
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Copper
produced (tonnes)
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22,109
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26,178
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66,886
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81,560
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Payable copper
produced (tonnes)
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21,340
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24,818
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64,560
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77,457
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C1 cash cost per
payable pound produced (1) ($/lb)
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1.98
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1.87
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2.05
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1.95
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Copper sold
(tonnes)
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24,645
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29,031
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65,200
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80,196
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Realized copper
price per pound sold ($/lb) *
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2.24
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2.98
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2.45
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3.10
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Adjusted realized
copper price per pound sold ($/lb) **
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2.35
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2.98
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2.49
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3.10
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C1 cash cost per
payable pound sold (1) ($/lb)
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2.16
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1.90
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2.05
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1.90
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All-in sustaining
cost per payable pound sold (1) ($/lb)
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2.56
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2.23
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2.50
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2.25
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All-in cost per
payable pound sold (1) ($/lb)
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2.95
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2.51
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2.94
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2.39
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Fully-loaded
all-in cost per payable pound sold (1)
($/lb)
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2.80
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2.72
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2.90
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2.62
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Net income
(loss) ($ millions)
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(216.0)
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(0.1)
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(232.1)
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12.0
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Net earnings
(loss) per common share ($)
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(0.44)
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(0.00)
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(0.48)
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0.03
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Adjusted net
income (loss) (1) ($ millions)
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(16.3)
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11.4
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(23.9)
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35.3
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Adjusted net
earnings (loss) (1) per common share ($)
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(0.04)
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0.03
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(0.06)
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0.09
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Adjusted
EBITDA (1) ($ millions)
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19.6
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70.0
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70.5
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191.1
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Adjusted EBITDA
(1) per common share ($)
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0.05
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0.18
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0.18
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0.50
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Operating cash
flow before changes in working capital (1) ($
millions)
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9.2
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59.0
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47.6
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168.8
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Operating cash
flow before changes in working capital per common share
(1) ($)
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0.02
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0.15
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0.12
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0.44
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Cash and cash
equivalents ($ millions)
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108.5
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176.1
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108.5
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176.1
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Net debt
(1) ($ millions)
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216.1
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121.1
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216.1
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121.1
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* Q3 2015 includes
a negative provisional pricing adjustment of $8.0 million (2014 –
negative $3.9 million) related to prior shipments,
equivalent to
$(0.15) per pound (2014 – $(0.06) per pound) of copper sold during
the quarter. 2015 YTD includes a negative
provisional
pricing adjustment
of $21.6 million (2014 – positive $2.5 million) related to prior
shipments, equivalent to $(0.15) per pound (2014 –
$0.01
per pound) of
copper sold during the nine month period. **Adjusted realized
copper price includes the realized gain of $5.7 million
related
to the put
contracts the Company exercised in Q3 2015.
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"In the third quarter we made several key decisions to reduce
spending in light of the challenging market conditions to protect
our business during this cyclical downturn", said Darren Pylot, President and CEO of Capstone.
"The decisions to cut operating and capital expenditures and to
suspend work on the Santo Domingo
project ensure that we maintain the value of our current business,
while remaining in compliance with our debt covenants for the
foreseeable future."
"We met our production objectives for the quarter with all
operations performing extremely well going into the fourth quarter.
Pinto Valley posted a monthly throughput record in September,
Cozamin overcame earlier production challenges and Minto continued to outperform."
"Our financial results were meaningfully impacted by difficult
market conditions. We reported a net loss for the quarter which was
impacted by a non-cash charge of $199.2
million related primarily to market condition driven
impairments at Santo Domingo,
Minto and Kutcho."
Financial Highlights for the Three Months Ended September 30, 2015
· Net loss of $216.0
million or $0.44 per common
share which included:
- Loss from mining operations of $23.8
million,
- Production costs included a $7.6
million non-cash charge related to the write-down of
inventory at both Pinto Valley and Minto,
- A non-cash charge of $199.2
million related primarily to the write-down of capitalized
mineral property costs at Santo
Domingo, Minto and
Kutcho,
- Project restructuring costs of $2.0
million related to the Santo
Domingo project,
- A non-cash impairment of $1.1
million against available-for-sale securities,
- A gain on commodity derivatives of $11.1
million, of which $5.4 million
was unrealized,
- $11.5 million in current and
deferred tax recoveries.
· Working capital decreased to $173.4 million at September 30, 2015 (which included $108.5 million of cash and cash equivalents) from
$198.1 million at June 30, 2015.
Financial Highlights for the Nine Months Ended September 30, 2015
· Net loss of $232.1
million or $0.48 per common
share which included:
- Loss from mining operations of $18.6 million,
- Production costs included a $17.0
million non-cash charge related to the write-down of
inventory at Pinto Valley and Minto,
- A non-cash charge of $199.2
million related primarily to the write-down of capitalized
mineral property costs at Santo
Domingo, Minto and
Kutcho,
- A non-cash impairment of $5.5
million against available-for-sale securities,
- Operational restructuring costs of $1.9
million related to Pinto Valley,
- Project restructuring costs of $2.0
million related to the Santo
Domingo project,
- Stand-by fees of $1.3 million at
Minto for reduced open pit mining
rates,
- A gain on commodity derivatives of $18.2
million, of which $12.5
million was unrealized,
- $15.4 million in current and
deferred tax recoveries.
Operational Highlights for the Three and Nine Months Ended
September 30, 2015
Pinto Valley Mine:
- Produced 13,979 tonnes of copper in concentrates and cathode
during Q3 2015 at a C1 cash cost (1) of $2.18 per pound of payable copper produced.
- Produced 44,054 tonnes of copper in concentrates and cathode
during 2015 YTD at a C1 cash cost (1) of $2.05 per pound of payable copper produced.
- Throughput reliability improved during Q3 2015 with significant
progress made during September, when the daily throughput for the
month averaged a record 52,370 tonnes per day ("tpd").
- Work continued during Q3 2015 to advance one PV3 scenario
towards a Pre-Feasibility study ("PV3 PFS"). The PV3 PFS was
originally targeted for completion in Q3 2015; however recent
engineering work and production data indicate the potential for low
cost opportunities for the mill to ramp up in excess of 52,000 tpd.
As a result, Capstone will delay the completion and release of the
PV3 PFS to provide the Company time to determine the highest value
scenario.
Cozamin Mine:
- Produced 4,301 tonnes of copper in concentrates during Q3 2015
at a C1 cash cost (1) of $1.24 per pound of payable copper produced.
- Produced 10,767 tonnes of copper in concentrates during 2015
YTD at a C1 cash cost (1) of $1.55 per pound of payable copper produced.
- Activities related to dilution control produced a significant
improvement in grade for Q3 2015 and recoveries returned to planned
levels. Throughput improved each month during the quarter as the
mine made good progress in catching up development and long-hole
inventory shortfalls carried forward from earlier in the year. The
underground drilling program to infill the Mala Noche footwall zone
mineral resource is nearing completion and the Mala Noche vein west
down-dip extension program has commenced.
- During Q2 2015, Cozamin received all the necessary permits for
surface drilling of brownfield targets. However, this program
was deferred during Q3 2015 as part of the capital expenditure
reduction program, with only 4,115 metres completed of the 12,000
metre budget.
Minto Mine:
- Produced 3,829 tonnes of copper in concentrates during Q3 2015
at a C1 cash cost (1) of $2.10 per pound of payable copper produced, which
included $0.15 per pound of cost
allocated from stockpile that was spent in prior periods, bringing
the actual cash expended during Q3 2015 to $1.95 per pound of payable copper produced.
- Produced 12,065 tonnes of copper in concentrates during 2015
YTD at a C1 cash cost (1) of $2.52 per pound of payable copper produced, which
included $0.22 per pound of cost
allocated from stockpile that was spent in prior periods, bringing
the actual cash expended during 2015 YTD to $2.33 per pound of payable copper produced.
- The Yukon Water Board issued the Water Use Licence ("WUL") on
August 5, 2015, which completes the
final stage of permitting for all of the mineral reserves
identified in the July 2012 Phase VI
Pre-Feasibility Study. Stripping of the Minto North deposit began
immediately, with first ore release expected in Q4 2015.
Santo Domingo Project:
- The Company's Environmental Impact Assessment ("EIA") was
approved during July 2015.
- With copper and iron prices continuing to deteriorate over the
summer, Capstone suspended most work on its Santo Domingo project during September, and
has downsized the Santiago and
Diego de Almagro offices in Chile.
A decision to renew development work will be contingent on a range
of factors, including a recovery in the longer term outlook for
copper and iron.
Balance Sheet Flexibility
At the end of Q3 2015, Capstone had drawn $328.9 million on its low cost $440 million committed revolving credit facility
("RCF") due January 2019 and had net
debt of $216.1 million. Covenants on
the RCF comprise EBITDA/Interest Expense ≥ 2.5:1, Senior Secured
Net Debt/EBITDA of not more than 3:1 and Total Net Debt/EBITDA of
not more than 4:1. As at September 30,
2015, actual EBITDA/Interest Expense was 7.4:1, Senior
Secured Net Debt/EBITDA was 2.6:1 and Total Net Debt/EBITDA was
2.6:1. For covenant purposes EBITDA is calculated on a rolling 12
month average.
On September 9, 2015 Capstone
announced reductions to planned 2015 capital expenditures and site
operating costs, and suspended work on the Santo Domingo project to ensure greater
financial flexibility. These actions, when combined with the
$2.60 copper put options on
approximately half of production with pricing periods running to
February 2016, place Capstone in a
position to maintain the value of its current operations while
remaining in compliance with all of its debt covenants at guided
production and costs through 2015, with an average realized copper
price of $2.00 per pound for Q4 2015.
In 2016, with the expected increases in grade at Pinto Valley and
Minto as well as lower capital
expenditures, the Company expects to remain in covenant compliance
at an average realized copper price as low as $2.20 per pound for the first half of the year.
For the second half of the year, Capstone expects to remain in
compliance down to an average realized copper price of
approximately $1.85 per pound, as the
full financial benefit of processing the high grade Minto North ore
is realized.
Capstone has a number of additional options to further enhance
its liquidity should the market deteriorate further, including:
- Covenant relief - Preliminary discussions with members of our
RCF lending syndicate indicate there is potential to obtain
temporary covenant revisions should the need arise.
- Pre-payment financing linked to off-take commitments for
copper.
- The sale of the silver production at Cozamin beginning
May 2017 (following expiry of the
current stream in April 2017).
These actions could provide significant relief and allow the
Company to remain in compliance with its covenants even if
commodity prices deteriorated further and remained at depressed
levels for an extended period. At present, the Company does not
require, and has no intention of implementing these steps, but
continues to monitor the market and its financial position to
ensure we are positioned to manage through the cycle.
Production Outlook
Capstone's 2015 production guidance
of 90,000 tonnes (±5%) of copper with C1 cash cost (1)
of $1.95 to $2.05 per pound of
payable copper produced net of by-product credits and selling costs
remains unchanged from the Capstone news release dated September 9, 2015.
Conference Call and Webcast Details
Date:
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Wednesday, October
28, 2015
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Time:
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11:30 am Eastern Time
(8:30 am Pacific Time)
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Dial in:
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North America:
1-888-390-0546, International: +416-764-8688
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Webcast:
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http://event.on24.com/r.htm?e=1038558&s=1&k=1254FEDB54C1081882502320EE278DC1
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Replay:
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North America:
1-888-390-0541, International: +416-764-8677
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Replay
Passcode:
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845615#
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The conference call replay will be available until Wednesday, November 11, 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,
maintain optionality on the Santo
Domingo development project, prudently progress the
exploration portfolio 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
September 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.
(1) These are
alternative performance measures; please see "Alternative
Performance Measures" at the end of this release.
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Cindy Burnett, VP, Investor
Relations and Communications, +1-604-637-8157,
cburnett@capstonemining.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/capstone-mining-third-quarter-2015-financial-results-300167414.html
SOURCE CNW Ltd (Toronto)