VANCOUVER, October 25, 2016 /PRNewswire/ --
(All amounts in US$ unless
otherwise specified)
Capstone Mining Corp. ("Capstone" or the "Company") (TSX: CS)
today announced its financial results for the three and nine months
ended September 30, 2016. Operating
cash flow before changes in working
capital[1] for the quarter was
$41.5 million or $0.11 per share, with net income of $11.2 million. Copper production for the quarter
totalled 32,027 tonnes (30,939 tonnes of payable copper) at a C1
cash cost[1] of $1.32 per payable pound produced with copper
sales for the quarter of 30,359 tonnes at a C1 cash
cost[1] of $1.49 per payable pound sold.
Capstone will hold a conference call and webcast on
Wednesday, October 26, 2016 at
11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the quarter
ended September 30, 2016, which are
available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including results
to September 30, 2016, in addition to
the Q3 2016 webcast slides, will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
Q3 2016 Q3 2015 2016 YTD 2015 YTD
Revenue ($ millions) 139.9 113.0 366.4 328.4
Copper produced
(tonnes) 32,027 22,109 84,730 66,886
Payable copper produced
(tonnes) 30,939 21,340 81,836 64,560
C1 cash cost per
payable pound
produced[1] ($/lb) 1.32 1.98 1.50 2.05
All-in cost per payable
pound produced[1]
($/lb) 1.65 2.91 1.91 2.97
Fully-loaded all-in
cost per payable pound
produced[1] ($/lb) 1.75 2.75 2.02 2.92
Copper sold (tonnes) 30,359 24,645 80,893 65,200
Realized copper price
per pound sold ($/lb)* 2.18 2.24 2.19 2.45
Adjusted realized
copper price per pound
sold ($/lb) ** 2.21 2.35 2.26 2.49
C1 cash cost per
payable pound sold[1]
($/lb) 1.49 2.16 1.63 2.05
All-in cost per payable
pound sold[1] ($/lb) 1.82 2.95 2.05 2.94
Fully-loaded all-in
cost per payable pound
sold[1] ($/lb) 1.93 2.80 2.16 2.90
Net income (loss) ($
millions) 11.2 (216.0) (15.0) (232.1)
Net income (loss) per
common share ($) 0.03 (0.44) (0.04) (0.48)
Adjusted net income
(loss)[1] ($ millions) 7.8 (16.3) (1.2) (23.9)
Adjusted net income
(loss)[1] per common
share ($) 0.02 (0.04) (0.00) (0.06)
EBITDA[1] ($ millions) 50.5 (185.4) 91.8 (146.5)
Operating cash flow
before changes in
working capital[1] ($
millions) 41.5 9.2 81.9 47.6
Operating cash flow
before changes in
working capital per
common share[1] ($) 0.11 0.02 0.21 0.12
Cash and cash
equivalents ($
millions) 120.4 108.5 120.4 108.5
Net debt[1] ($
millions) 224.2 216.1 224.2 216.1
* Q3 2016 includes a negative provisional pricing adjustment of $1.4
million (2015 - negative $8.0 million) related to prior shipments,
equivalent to $(0.02) per pound (2015 - $(0.15) per pound) of copper
sold during the quarter. 2016 YTD includes a negative provisional
pricing adjustment of $12.9 million (2015 - negative $21.6 million)
related to prior shipments, equivalent to $(0.07) per pound (2015 -
($0.15) per pound) of copper sold during the nine month period. The Q3
2016 and 2016 YTD negative provisional pricing adjustments were
predominantly related to assay adjustments. The Q3 2016 figure of ($1.4
million) is broken down as ($0.3 million) related to price adjustments
and ($1.1 million) related to assay adjustments. This translates into
adjustments of ($0.00) and ($0.02) respectively on a per pound sold
basis. The YTD Q3 2016 figure of ($12.9 million) is broken down as
($0.9 million) related to price adjustments and ($12.0 million) related
to assay adjustments. This translates into adjustments of ($0.01) and
($0.06) respectively on a per pound sold basis.** Q3 2016 Adjusted
realized copper price includes a realized gain of $2.0 million related
to maturing forward contracts and nil related to exercised put
contracts (Q3 2015 - $5.7 million related to exercised put contracts).
2016 YTD Adjusted realized copper price includes a realized gain of
$2.2 million related to maturing forward contracts and $9.6 million
related to exercised put contracts (2015 - $5.7 million related to
exercised put contracts).
"Operating performance in the third quarter continued to be very
strong, setting throughput records at both Pinto Valley and
Minto," said Darren Pylot, President and CEO of Capstone. "In
addition, we received the benefit from a full quarter of processing
high grade Minto North ore."
"Our operating cash flow this quarter of $41.5 million has de-levered our balance sheet,
even in this low copper price environment, reducing our net debt by
$20 million from the second quarter
to $224 million," continued Mr.
Pylot. "Subsequent to quarter end, we paid down our drawn debt by
$20 million. We anticipate taking
full advantage of additional free cash flow to further reduce our
debt balance over the coming quarters."
Financial Highlights for the Three Months Ended September 30, 2016
- Net income of $11.2 million or
$0.03 per common share which
included:
- Earnings from mining operations of $27.1
million,
- Production costs included a $6.5
million non-cash recovery related to the reversal of
inventory write-downs, primarily at Minto,
- A gain on commodity derivatives of $1.0
million,
- $3.2 million in current and
deferred tax expense.
- Working capital increased to $186.1 million at
September 30, 2016 from $160.6 million at June 30,
2016, primarily due to strong cash flows generated from
operating activities ($41.1 million).
Financial Highlights for the Nine Months Ended September 30, 2016
- Net loss of $15.0 million or
$0.04 per common share which
included:
- Earnings from mining operations of $2.8
million,
- Production costs included a $1.4
million non-cash charge related to the write-down of
inventories, primarily at Minto,
- Share-based compensation expense of $6.5
million, driven primarily by an increase in Capstone's share
price,
- A gain on commodity derivatives of $4.2
million, comprising $2.8
million on copper forward contracts entered into during Q1
2016 and $1.5 million on $2.60 copper puts entered into during Q2 2015,
which expired in February 2016,
- $7.5 million in current and
deferred tax expense.
- Working capital increased to $186.1 million at
September 30, 2016 from $162.4 million at December
31, 2015 primarily due to $74.4
million of cash flows generated from operating activities
and $15.2 million in proceeds from
the exercise of commodity derivatives.
Production and Additional Highlights for the Three and Nine
Months Ended September 30,
2016
Pinto Valley Mine:
- Produced 16,658 tonnes of copper in concentrates and cathode
during Q3 2016 at a C1 cash
cost[1] of $1.69 per pound of payable copper produced.
- Produced 51,799 tonnes of copper in concentrates and cathode
during 2016 YTD at a C1 cash
cost[1] of $1.59 per pound of payable copper produced.
- During Q3 2016, copper production continued to be strong as a
result of mill throughput above plan, setting a fourth consecutive
quarterly record of 57,295 tonnes per day ("tpd"), as well as
achieving a monthly throughput record of 58,075 tpd in August and a
daily throughput record of 63,900 tpd in September. Higher mill
throughput and better than planned copper grade contributed to
lower costs on a per pound basis.
Cozamin Mine:
- Produced 3,359 tonnes of copper in concentrates during Q3 2016
at a C1 cash cost[1] of
$1.50 per pound of payable copper
produced.
- Produced 10,306 tonnes of copper in concentrates during 2016
YTD at a C1 cash cost[1] of
$1.51 per pound of payable copper
produced.
- During Q3 2016, work continued to advance development, with
daily development rates improving steadily as a result of
improvements implemented throughout the year. Production was
consistent with the Cozamin guidance that was revised at the end of
Q2 2016.
Minto Mine:
- Produced 12,010 tonnes of copper in concentrates during Q3 2016
at a C1 cash cost[1] of
$0.76 per pound of payable copper
produced.
- Produced 22,625 tonnes of copper in concentrates during 2016
YTD at a C1 cash cost[1] of
$1.30 per pound of payable copper
produced.
- Q3 2016 production continued above plan, reaching levels
projected in the increased Q2 2016 Minto guidance. Copper grade
averaged 3.16% for the quarter, reflecting a full quarter of
processing Minto North high grade ore. The mill recorded a
quarterly throughput record, and recoveries were strong due to the
lower than expected oxidized content in the Minto North ore.
- Open pit mining of the Minto North pit was completed at the end
of September 2016, with the mill now
processing high grade stockpile combined with underground ore.
Underground mining continued through Q3 2016 and is planned to
extend into July 2017, as additional
areas of high-grade underground ore continue to be mined. We are
currently reviewing the economics of another stage of mining in the
Area 2 pit that could potentially extend operations through 2017.
We continue to expect the operation will be temporarily closed in
2017 once underground mining is completed and all the ore from the
remaining stockpiles is processed.
Additional highlights:
- Total Net Debt/EBITDA was 1.7:1 at September 30, 2016. With the Total Net
Debt/EBITDA ratio falling below 2.0:1, under the revolving credit
facility ("RCF") we realized a 25 basis point reduction in interest
rates effective mid-October 2016 to
LIBOR plus 3.00% from LIBOR plus 3.25%.
- On October 25, 2016 a repayment
of $20.0 million was made on the RCF,
reducing the outstanding balance to $328.9
million. At the same time, Capstone chose to reduce the
credit available under the RCF from $440
million to $420 million, which further reduces the interest
rate to LIBOR plus 2.75%.
Operating Outlook
Capstone's consolidated 2016 guidance remains unchanged. The 2016
guidance is to produce 108,000 tonnes (±5%) of copper from its
Pinto Valley, Cozamin and Minto
mines at a C1 cash cost[1] of
$1.45 to $1.55, an All-in
cost[1] of $1.90 to $2.00 and Fully-loaded all-in
cost[1] of $2.05 to $2.15 per pound of payable copper
produced.
Capstone expects to finish the year at the high end of the
consolidated production guidance. Consolidated C1 cash cost, All-in
cost, and Fully-loaded all-in cost guidance remains unchanged, as
lower costs at Pinto Valley and higher volume at Minto are expected to offset higher operating
costs at Cozamin.
Conference Call and Webcast Details
Date: Wednesday, October 26,
2016
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://event.on24.com/r.htm?e=1239352&s=1&k=8BAA23C969A4C534E3BE63477AC38ADA
Replay: North America: 1-888-390-0541, International:
+416-764-8677
Replay Passcode: 651862#
The conference call replay will be available until Wednesday, November 2, 2016. The conference call
audio and transcript will be available on Capstone's website within
48 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
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 Kutcho copper-zinc
project in British Columbia,
Canada, as well as exploration properties in Chile and US. Capstone's strategy is to focus
on the optimization of operations and assets in politically stable,
mining-friendly regions, centred in the Americas. 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 Capstone 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 our expectations or beliefs regarding
future events. Forward-looking statements include, but are not
limited to, statements with respect to the estimation of mineral
resources and mineral reserves, the realization of mineral reserve
estimates, the timing and amount of estimated future production,
costs of production and capital expenditures, the success of our
mining operations, environmental risks, unanticipated reclamation
expenses and title disputes. In certain cases, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "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", "anticipate", "planned",
"potentially", "expect", "expects" and "expected". By their very
nature, forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, amongst
others, risks related to inherent hazards associated with mining
operations, assumptions related to geotechnical condition of
tailings facilities, future prices of copper and other metals,
compliance with financial covenants, surety bonding, our ability to
raise capital, counterparty risks associated with sales of our
metals, use of financial derivative instruments and associated
counterparty risks, foreign currency exchange rate fluctuations,
changes in general economic conditions, accuracy of mineral
resource and mineral reserve estimates, operating in foreign
jurisdictions with risk of changes to governmental regulation,
compliance with governmental regulations, compliance with
environmental laws and regulations, reliance on approvals, licences
and permits from governmental authorities, impact of climatic
conditions on our Pinto Valley, Cozamin and Minto operations, aboriginal title claims and
rights to consultation and accommodation, land reclamation and mine
closure obligations, uncertainties and risks related to the
potential development of the Santo Domingo Project, increased
operating and capital costs, challenges to title to our mineral
properties, dependence on key management personnel, potential
conflicts of interest involving our directors and officers,
corruption and bribery, limitations inherent in our insurance
coverage, labour relations, increasing energy prices, competition
in the mining industry, risks associated with joint venture
partners, our ability to integrate new acquisitions into our
operations, cybersecurity threats 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 our actual results,
performance or achievements to differ materially from those
described in our forward-looking statements, there may be other
factors that cause our results, performance or achievements not to
be as anticipated, estimated or intended. There can be no assurance
that our forward-looking statements will prove to be accurate, as
our actual results, performance or achievements could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on our 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 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
Management's Discussion and Analysis for the quarter ended
September 30, 2016 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 US securities laws. Without
limiting the foregoing, this news release may refer to technical
reports that use the terms "indicated" and "inferred" resources. US
investors are cautioned that, while such terms are recognized and
required by Canadian securities laws, the SEC does not recognize
them. Under US 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. US
investors are cautioned not to assume that all or any part of
indicated resources will ever be converted into reserves. US
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, US 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 US companies subject to the reporting and disclosure
requirements of the SEC.
[1] This is an alternative performance measure; please see "Alternative Performance
Measures" at the end of this release.
Cindy Burnett, VP, Investor
Relations and Communications, +1-604-637-8157,
cburnett@capstonemining.com