VANCOUVER, British Columbia,
February 15, 2017 /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 months and year
ended December 31, 2016. For the
three months ended December 31, 2016,
operating cash flow before changes in working
capital[1] 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
cost[1] of $1.26 per payable pound produced with copper
sales of 29,600 tonnes at a C1 cash
cost[1] of $1.24 per payable pound sold.
For the full year ended December 31,
2016, operating cash flow before changes in working
capital[1] 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
cost[1] of $1.44 per payable pound produced with copper
sales of 110,500 tonnes at a C1 cash
cost[1] of $1.53 per payable pound sold.
Capstone will hold a conference call and
webcast on Thursday,
February 16, 2017 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the year
ended December 31, 2016, which are
available on Capstone's website
at http://capstonemining.com/investors/financial-reporting/default.aspx and
on SEDAR. An updated corporate presentation, including results to
December 31, 2016, and 2016 year-end
webcast slides will also be available
at http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
Q4 2016 Q4 2015 2016 2015
Revenue ($ millions) 163.0 92.1 529.4 420.5
Copper produced (tonnes) 29,853 25,691 114,583 92,577
Payable copper produced (tonnes) 28,828 24,781 110,663 89,341
C1 cash cost per payable pound
produced[1] ($/lb) 1.26 1.81 1.44 1.99
All-in cost per payable pound
produced[1] ($/lb) 1.77 2.67 1.88 2.88
Fully-loaded all-in cost per
payable pound produced[1] ($/lb) 1.85 2.67 1.98 2.85
Copper sold (tonnes) 29,558 22,322 110,450 87,521
Realized copper price per pound
sold ($/lb)* 2.48 2.05 2.27 2.35
Adjusted realized copper price
per pound sold ($/lb) ** 2.35 2.26 2.28 2.43
C1 cash cost per payable pound
sold[1] ($/lb) 1.24 1.82 1.53 2.00
All-in cost per payable pound
sold[1] ($/lb) 1.74 2.78 1.97 2.92
Fully-loaded all-in cost per
payable pound sold[1] ($/lb) 1.82 2.78 2.07 2.89
Net loss ($ millions) (182.4) (19.5) (197.4) (251.5)
Net loss attributable to
shareholders ($ millions) (125.4) (19.3) (140.0) (202.7)
Net loss attributable to
shareholders per common share ($) (0.33) (0.05) (0.37) (0.53)
Adjusted net income (loss)[1]
($ millions) 30.7 (8.0) 29.4 (31.9)
Adjusted net income (loss)[1]
attributable to shareholders
($ millions) 30.9 (7.8) 30.0 (30.4)
Adjusted net income (loss)[1]
attributable to shareholders
per common share ($) 0.08 (0.02) 0.08 (0.08)
Operating cash flow before
changes in working capital[1]
($ millions) 75.0 12.5 156.9 60.0
Operating cash flow before
changes in working capital per
common share[1] ($) 0.20 0.03 0.41 0.16
Cash and cash equivalents
($ millions) 130.4 101.6 130.4 101.6
Net debt[1 ]($ millions) 198.6 247.9 198.6 247.9
* 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
capital[1] 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 cost[1] of
$1.26 per pound of payable copper
produced and fully-loaded all-in
cost[1] 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
capital[1] 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
cost[1] of $1.44 per pound of payable copper produced and
fully-loaded all-in cost[1] 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
cost[1] of $1.70 per pound of payable copper produced and
all-in cost[1] of $2.06 per pound of payable copper produced.
- Produced 68,850 tonnes of copper during 2016 at a C1 cash
cost[1] of $1.61 per pound of payable copper produced and
all-in cost[1 ]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
cost[1] of $1.40 per pound of payable copper produced and
all-in cost[1] of $2.06 per pound of payable copper produced.
- Produced 14,307 tonnes of copper during 2016 at a C1 cash
cost[1] of $1.48 per pound of payable copper produced and
all-in cost[1] 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
cost[1] 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 cost[1 ]of
$0.43 per payable pound of copper
produced.
- Produced 31,426 tonnes of copper during 2016 at a C1 cash
cost[1] 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 cost[1 ]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 Cost[1] of
$1.60 to $1.70, All-In
Cost[1] of $2.15
to $2.25 and Fully-Loaded All-In
Cost[1] 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: Thursday, February 16, 2017
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=1323771&s=1&k=AFC597F521C716D97270B033FC966280
Replay: North America: 1-888-390-0541, International: +416-764-8677
Replay
Passcode: 063291#
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 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 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 http://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 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 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.
Cindy Burnett, VP, Investor
Relations and Communications, +1-604-637-8157,
cburnett@capstonemining.com