(All amounts in US$ unless otherwise
specified)
VANCOUVER, Feb. 15, 2017 /CNW/ - Capstone Mining Corp.
("Capstone" or the "Company") (TSX: CS) today announced its
financial results for the three months and year ended December 31, 2016. For the three months ended
December 31, 2016, operating cash
flow before changes in working capital1 was $75.0 million or $0.20 per share, with a net loss of $182.4 million and adjusted net income of
$30.7 million or $0.08 per share after adjusting for certain
non-cash and non-recurring charges. Copper production totalled
29,900 tonnes (28,800 tonnes of payable copper) at a C1 cash
cost1 of $1.26 per payable
pound produced with copper sales of 29,600 tonnes at a C1 cash
cost1 of $1.24 per payable
pound sold.
For the full year ended December 31,
2016, operating cash flow before changes in working
capital1 was $156.9
million or $0.41 per share,
with a net loss of $197.4 million and
adjusted net income of $29.4 million
or $0.08 per share after adjusting
for certain non-cash and non-recurring charges. Copper production
totalled 114,600 tonnes (110,700 tonnes of payable copper) at a C1
cash cost1 of $1.44 per
payable pound produced with copper sales of 110,500 tonnes at a C1
cash cost1 of $1.53 per
payable pound sold.
Capstone will hold a conference call and webcast
on Thursday, February
16, 2017 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the year
ended December 31, 2016, which are
available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR. An updated corporate presentation, including results
to December 31, 2016, and 2016
year-end webcast slides will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
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Q4
2016
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Q4
2015
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2016
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2015
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Revenue ($
millions)
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163.0
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92.1
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529.4
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420.5
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Copper
produced (tonnes)
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29,853
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25,691
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114,583
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92,577
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Payable copper
produced (tonnes)
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28,828
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24,781
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110,663
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89,341
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C1 cash cost per
payable pound produced1 ($/lb)
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1.26
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1.81
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1.44
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1.99
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All-in cost per
payable pound produced1 ($/lb)
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1.77
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2.67
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1.88
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2.88
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Fully-loaded
all-in cost per payable pound produced1
($/lb)
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1.85
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2.67
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1.98
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2.85
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Copper sold
(tonnes)
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29,558
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22,322
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110,450
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87,521
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Realized copper
price per pound sold ($/lb)*
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2.48
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2.05
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2.27
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2.35
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Adjusted realized
copper price per pound sold ($/lb) **
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2.35
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2.26
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2.28
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2.43
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C1 cash cost per
payable pound sold1 ($/lb)
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1.24
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1.82
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1.53
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2.00
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All-in cost per
payable pound sold1 ($/lb)
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1.74
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2.78
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1.97
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2.92
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Fully-loaded
all-in cost per payable pound sold1
($/lb)
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1.82
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2.78
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2.07
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2.89
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Net loss ($
millions)
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(182.4)
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(19.5)
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(197.4)
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(251.5)
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Net loss
attributable to shareholders ($ millions)
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(125.4)
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(19.3)
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(140.0)
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(202.7)
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Net loss
attributable to shareholders per common share ($)
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(0.33)
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(0.05)
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(0.37)
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(0.53)
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Adjusted net
income (loss)1 ($ millions)
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30.7
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(8.0)
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29.4
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(31.9)
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Adjusted net
income (loss)1 attributable to shareholders
($ millions)
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30.9
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(7.8)
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30.0
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(30.4)
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Adjusted net
income (loss)1attributable to shareholders per common
share ($)
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0.08
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(0.02)
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0.08
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(0.08)
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Operating cash
flow before changes in working
capital1 ($ millions)
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75.0
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12.5
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156.9
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60.0
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Operating cash
flow before changes in working capital per common share1
($)
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0.20
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0.03
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0.41
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0.16
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Cash and cash
equivalents ($ millions)
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130.4
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101.6
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130.4
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101.6
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Net
debt1 ($ millions)
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198.6
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247.9
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198.6
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247.9
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* Q4 2016 includes a negative provisional pricing adjustment
of $0.1 million (2015 – negative
$4.2 million) related to prior
shipments, equivalent to $0.00 per
pound (2015 – $(0.09) per pound) of
copper sold during the quarter. YTD includes a negative
provisional pricing adjustment of $12.7
million (2015 – negative $25.8
million) related to prior shipments, equivalent to
$(0.05) per pound (2015 –
$(0.13) per pound) of copper sold
during the year. ** Q4 2016 adjusted realized copper price includes
the provisional pricing adjustments noted above and realized loss
of $8.5 million (2015 gain –
$10.1 million) equivalent to
$(0.13) per pound (2015 gain -
$0.21 per pound) related to copper
derivative contracts exercised during the quarter. YTD includes a
realized gain of $3.3 million (2015 –
$15.9 million) equivalent to
$0.01 per pound (2015 - $0.08 per pound) related to copper derivative
contracts exercised during the year.
"Our strong operating performance in 2016 exceeded guidance,
setting records at Pinto Valley, Minto and for Capstone as a
whole," said Darren Pylot, President
and CEO of Capstone. "All three of our mines generated positive net
earnings, with throughput success at Pinto Valley and processing of
high grade Minto North ore being key
drivers in 2016."
"Despite a challenging copper price environment for most of the
year, we generated operating cash flow of $156.9 million, allowing us to reduce our debt by
$40 million," continued Mr. Pylot.
"We anticipate taking full advantage of additional free cash flow
to further reduce our debt over the coming quarters."
"Our year end results included a non-cash write-down of our
Santo Domingo project based on
lower forecast iron prices," continued Mr. Pylot. "The project does
however, continue to have considerable optionality in a rising
market."
Financial and Production Highlights for the Quarter Ended
December 31, 2016
- Net loss of $182.4 million
included:
- Income from mining operations of $55.8
million,
- Realized copper price of $2.48
per pound
- Production costs included a $2.0
million non-cash charge related to the write-down of
inventory (primarily supplies) at the Pinto Valley, Minto and
Cozamin mines,
- A non-cash impairment charge of $189.2
million related to mineral property, plant and equipment at
Santo Domingo,
- A commodity derivative loss of $29.9
million, comprising a realized loss of $8.5 million and unrealized losses of
$21.4 million,
- An income tax expense of $1.9
million.
- Operating cash flow before changes in working
capital1 was $75.0 million
or $0.20 per share.
- Working capital increased to $171.1 million at
December 31, 2016 (which included
$130.4 million of cash and cash
equivalents) from $162.4 million at
December 31, 2015.
- Produced a total of 28,828 tonnes of payable copper at an
estimated C1 cash cost1 of $1.26 per pound of payable copper produced and
fully-loaded all-in cost1 of $1.85 per pound of payable pound copper
produced.
- Revenue of $163.0 million
generated primarily from the sale of 29,557 tonnes of payable
copper.
Financial and Production Highlights for the Year Ended
December 31, 2016
- Net loss of $197.4 million
included:
- Earnings from mining operations of $87.7
million,
- Realized copper price of $2.27
per pound
- Production costs included a $3.4
million non-cash charge related to the write-down of
inventory at the Pinto Valley, Minto and Cozamin Mines,
- A non-cash impairment charge of $189.2
million related to the Santo
Domingo property,
- A commodity derivative loss of $25.6
million, comprising a realized gain of $3.3 million combined with an unrealized loss of
$28.9 million,
- An income tax expense of $9.4
million.
- Operating cash flow before changes in working
capital1 of $156.9 million
or $0.41 per common share.
- Working capital increased $8.7
million to $171.1 million at December 31, 2016 (which included $130.4 million of cash and cash equivalents) from
$162.4 million at December 31, 2015.
- Production of 110,663 tonnes of payable copper at a C1 cash
cost1 of $1.44 per pound
of payable copper produced and fully-loaded all-in cost1
of $1.98 per pound of payable pound
copper produced.
- Revenue of $529.4 million
generated primarily from the sale of 110,450 tonnes of copper.
Production and Additional Highlights
Pinto Valley
Mine:
- Produced 17,051 tonnes of copper during Q4 2016 at a C1 cash
cost1 of $1.70 per pound
of payable copper produced and all-in cost1 of
$2.06 per pound of payable copper
produced.
- Produced 68,850 tonnes of copper during 2016 at a C1 cash
cost1 of $1.61 per pound
of payable copper produced and all-in cost1 of
$1.95 per pound of payable copper
produced.
- Copper production at Pinto Valley exceeded expectations, with
mill throughput and head grade above plan for the quarter and year.
Throughput averaged 56,800 tonnes per day ("tpd") and 56,200 tpd
for the fourth quarter and full year, respectively. The operation
continued to demonstrate the mine's potential, achieving a new
daily throughput record of over 64,000 tpd in December.
Cozamin Mine:
- Produced 4,001 tonnes of copper during Q4 2016 at a C1 cash
cost1 of $1.40 per pound
of payable copper produced and all-in cost1 of
$2.06 per pound of payable copper
produced.
- Produced 14,307 tonnes of copper during 2016 at a C1 cash
cost1 of $1.48 per pound
of payable copper produced and all-in cost1 of
$1.88 per pound of payable copper
produced.
- During 2016, Cozamin experienced a mine development shortfall
resulting in lower production, however, during the second half of
the year Cozamin conducted a management reorganization and a number
of additional processes were implemented to improve the development
rates. Development rates continued to improve through the second
half of the year (7,725 meters H2 2016 vs. 5,880 meters H1
2016).
- During Q4 2016, Cozamin achieved the revised target production
due to a better than planned average head grade of 1.63% copper
offset by lower than planned mill throughput.
Minto Mine:
- Produced 8,801 tonnes of copper during Q4 2016 at a C1 cash
cost1 of $0.33 per pound
of payable copper produced, which included $0.11 per pound of cost allocated from stockpile
that was spent in prior periods, bringing the actual cash expended
during Q4 2016 to $0.22 per pound of
payable copper produced and all-in cost1 of $0.43 per payable pound of copper produced.
- Produced 31,426 tonnes of copper during 2016 at a C1 cash
cost1 of $1.03 per pound
of payable copper produced, which included $0.03 per pound of cost allocated from stockpile
that was spent in prior periods, bringing the actual cash expended
during 2016 to $1.00 per pound of
payable copper produced and all-in cost1 of $1.12 per payable pound of copper produced.
- Copper production for the quarter met expectations while full
year throughput, grade and recoveries all exceeded plan. In the
fourth quarter the mill processed stockpiles, supplemented by
underground mining.
- Produced 39,506 ounces of gold contained in copper concentrate,
and 11,675 ounces of gold contained in gold concentrate, for a
total of 51,181 ounces produced during 2016. Under the terms of the
Precious Metal Stream Agreement with Silver Wheaton, Capstone
receives market rates for 50% of gold produced in excess of 30,000
ounces in a twelve-month period. We exceeded this threshold during
Q4 and as a result Capstone is entitled to sell 8,320 ounces of
gold at market rates. 5,100 of these ounces were sold in Q4 2016
and the remaining 3,220 ounces are expected to be sold in H1
2017.
Additional highlights:
- On January 13, 2017 a second
repayment of $20.0 million was made
on the RCF, reducing the outstanding balance to $308.9 million. At the same time, Capstone chose
to permanently reduce the credit available under the RCF from
$420 million to $400 million. This
payment was in addition to a $20.0
million payment and permanent credit reduction made in Q4
2016. The combination of this lower commitment and the strong debt
coverage ratio at December 31, 2016
resulted in the Company achieving the second lowest tier on the RCF
pricing grid with interest rates of LIBOR plus 2.75% and stand-by
fees of 0.6188%. This will result in annualized savings of almost
$1.5 million per year in interest and
stand-by fees.
- As a result of the decline in long term iron ore prices during
2016, Capstone recorded an impairment on the Santo Domingo development Copper/Iron project
of $189.2 million during Q4
2016.
Operating Outlook
Capstone's 2017 production guidance
is for 94,000 tonnes (±5%) of copper at a C1 Cash Cost1
of $1.60 to $1.70, All-In
Cost1 of $2.15 to $2.25
and Fully-Loaded All-In Cost1 of $2.20 to $2.30, per pound of payable copper
produced net of by-product and selling costs.
Capital Outlook
Capstone's 2017 capital expenditures
are expected to be $67 million, with
$35 million for sustaining capital at
Pinto Valley and Cozamin, $2 million
related to PV3 permitting activities and $30
million for capitalized stripping at Pinto Valley. An
additional $10 million is budgeted
for both brownfield and greenfield exploration, however as
exploration activities are discretionary they will be aligned with
prevailing market conditions, financing capacity and corporate
priorities.
Conference Call and Webcast Details
Date:
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Thursday, February
16, 2017
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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=1323771&s=1&k=AFC597F521C716D97270B033FC966280
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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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063291#
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The conference call replay will be available until Thursday, February 23, 2017. 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 www.capstonemining.com.
Cautionary Note Regarding Forward-Looking
Information
This document may contain "forward-looking
information" within the meaning of Canadian securities legislation
and "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995
(collectively, "forward-looking statements"). These forward-looking
statements are made as of the date of this document and Company
does not intend, and does not assume any obligation, to update
these forward-looking statements, except as required under
applicable securities legislation.
Forward-looking statements relate to future events or future
performance and reflect Company management's expectations or
beliefs regarding future events and include, but are not limited
to, statements with respect to the estimation of mineral reserves
and mineral resources, the realization of mineral reserve
estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, success of mining
operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims and limitations on insurance
coverage. In certain cases, forward-looking statements can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "outlook", "guidance", "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", "may", "future", "expected",
"intends" and "estimates". By their very nature forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, among others,
risks related to actual results of current exploration activities;
changes in project parameters as plans continue to be refined;
future prices of mineral resources; possible variations in ore
reserves, grade or recovery rates; accidents; assumptions related
to geotechnical conditions of tailings facilities; dependence on
key personnel; labour pool constraints; labour disputes;
availability of infrastructure required for the development of
mining projects; delays or inability to obtain governmental and
regulatory approvals for mining operations or financing or in the
completion of development or construction activities; counterparty
risks associated with sales of our metals; 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; compliance with
debt covenants, and other risks of the mining industry as well as
those factors detailed from time to time in the Company's interim
and annual financial statements and management's discussion and
analysis of those statements, all of which are filed and available
for review under the Company's profile on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. The Company
provides no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements.
National Instrument 43-101 Compliance
Unless otherwise
indicated, Capstone has prepared the technical information in this
news release ("Technical Information") based on information
contained in the technical reports, news releases and MD&A's
(collectively the "Disclosure Documents") available under Capstone
Mining Corp.'s company profile on SEDAR at 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 year
ended December 31, 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.
SOURCE Capstone Mining Corp.