VANCOUVER, British Columbia,
April 25, 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 quarter ended
March 31, 2017. Cash flow from
operating activities was $22.0
million or $0.06 per share.
The net loss for the period was $7.4
million or $0.02 per share and
the adjusted net loss was $2.0
million or $0.01 per share
after adjusting for certain non-cash and non-recurring charges.
Copper production for the quarter totalled 20,950 tonnes (20,230
tonnes of payable copper) at a C1 cash
cost[1]of $1.98
per payable pound produced with copper sales for the quarter of
21,582 tonnes at a C1 cash cost[1] of
$1.69 per payable pound sold.
Capstone will hold a conference call and
webcast on Wednesday, April
26, 2017 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these results;
call-in details and information on associated slides are provided
at the end of this release. This release should be read in
conjunction with Capstone's consolidated financial statements and
management's discussion and analysis ("MD&A") for the quarter
ended March 31, 2017, which are
available on Capstone's website
at http://capstonemining.com/investors/financial-reporting/default.aspx and
on SEDAR. An updated corporate presentation, including results to
March 31, 2017, in addition to the Q1
2017 year-end webcast slides, will also be available
at http://capstonemining.com/investors/events-and-presentations/default.aspx.
Overview
Q1 2017 Q1 2016
Revenue ($ millions) 128.0 126.2
Copper produced (tonnes) 20,950 24,547
Payable copper produced (tonnes) 20,230 23,694
C1 cash cost per payable pound produced[1] ($/lb) 1.98 1.72
All-in cost per payable pound produced[1] ($/lb) 2.64 2.23
Fully-loaded all-in cost per payable pound produced[1] ($/lb) 2.80 2.36
Copper sold (tonnes) 21,582 27,985
Realized copper price per pound sold ($/lb)* 2.68 2.19
Adjusted realized copper price per pound sold ($/lb) ** 2.44 2.35
C1 cash cost per payable pound sold[1] ($/lb) 1.69 1.77
All-in cost per payable pound sold[1] ($/lb) 2.31 2.22
Fully-loaded all-in cost per payable pound sold[1] ($/lb) 2.46 2.33
Net loss ($ millions) (7.4) (12.8)
Net loss attributable to shareholders ($ millions) (7.5) (12.7)
Net loss per common share ($) (0.02) (0.03)
Adjusted net loss[1] ($ millions) (2.0) (1.5)
Adjusted net loss[1] attributable to shareholders ($ millions) (2.1) (1.5)
Adjusted net loss[1] per common share ($) (0.01) (0.00)
Cash flow from operating activities $22.0 $32.2
Cash flow from operating activities per common share ($) 0.06 0.08
Operating cash flow before changes in working capital[1] ($
millions) 24.2 18.9
Operating cash flow before changes in working capital per common
share[1] ($) 0.06 0.05
Cash and cash equivalents ($ millions) 109.4 121.1
Net debt[1]($ millions) 199.5 228.2
* Q1 2017 includes a provisional pricing adjustment of
$5.2 million (2016 -
negative $5.6 million) related to
prior shipments, equivalent to $0.11
per pound (2016 - $(0.09) per pound) of copper sold during the
quarter. ** Q1 2017 adjusted realized copper price includes the
provisional pricing adjustments noted above and realized loss of
$13.9 million (2016 gain -
$9.6 million) equivalent to
$(0.29) per pound (2016 gain -
$0.16 per pound) related to copper
derivative contracts exercised during the quarter.
"In the first quarter of 2017 we generated $22 million of operating cash flow despite
challenging operating conditions at Pinto Valley," said
Darren Pylot, President and CEO of
Capstone. "All three of our mines generated positive net earnings
for the quarter, supported by higher realized metal prices."
"We also recently announced a two year extension of our credit
facility, to 2021, giving Capstone significant financial
flexibility to meet our current and anticipated operating
requirements," continued Mr. Pylot. "In addition, at current copper
prices, we anticipate the continuation of operations at
Minto until mid-2020 with a
potential mine life extension beyond 2020."
Financial and Operational Highlights for the Quarter Ended
March 31, 2017
- Net loss of $7.4 million
included:
- Earnings from mining operations of $27.0
million,
- Realized copper price of $2.68
per pound
- Production costs included a $1.1
million non-cash charge related to the
write-down of inventory at the Pinto Valley mine
- A commodity derivative loss of $13.9
million, comprising a realized loss of $11.6 million combined with an unrealized
loss of $2.3 million,
- An income tax expense of $3.9
million.
- Operating cash flow before changes in working
capital[1] of $24.2 million or $0.06 per common share.
- Working capital decreased $22.8
million to $148.3 million at
March 31, 2017 from $171.1 million at December
31, 2016. Cash decreased to $109.4
million at March 31, 2017 from
$130.4 million at December 31, 2016 largely as a result of a
$20.0 million debt repayment made in
January, 2017.
- Production of 20,230 tonnes of payable copper at a C1 cash
cost[1] of $1.98 per pound of payable copper produced and
fully-loaded all-in cost[1] of
$2.80 per pound of payable pound
copper produced.
- Revenue of $128.0 million
generated primarily from the sale of 21,582 tonnes of copper.
Production and Additional Highlights for the Quarter Ended
March 31, 2017
Pinto Valley Mine:
- Produced 11,300 tonnes of copper during Q1 2017 at a C1 cash
cost[1] of $2.18 per pound of payable copper produced and
all-in cost[1] of $2.77 per pound of payable copper produced.
- Copper production at Pinto Valley was lower quarter over
quarter for a number of reasons. First, it was affected by a 7-day
planned shutdown in January to complete repairs in the fine ore
bins and the tailing thickener distribution system and then by
considerable rain in the first quarter. Pinto Valley received five
inches of rain over a two day period in late January, followed by
additional rainfall in the following weeks. This rain reduced
mining productivity and slowed the primary crusher intake, delaying
the return to full operations from the planned shutdown. Mine plan
sequencing also had to be changed to address high moisture in the
bottom of the pit. Following this shutdown, the saturated fine ore
placed additional stress on the primary crusher mainframe. As a
result, the lower frame replacement, originally deferred from Q2
2016, was done over 11 days in late February and early March.
Temporary primary crushing units allowed for production at reduced
rates. Full production resumed on March 9,
2017 and since then throughput has averaged above 59,000
tonnes per day as of April 24.
Cozamin Mine:
- Produced 4,130 tonnes of copper during Q1 2017 at a C1 cash
cost[1] of $1.33 per pound of payable copper produced and
all-in cost[1] of $1.94 per pound of payable copper produced.
- During Q1 2017, grade and throughput both improved for the
quarter, with recovery comparable to Q1 2016. This is in part due
to the significant progress made in development rates since the
process and contractor changes which were made in 2016.
- Subsequent to quarter end, on April 4,
2017, the precious metal streaming arrangement with Silver
Wheaton Corp. expired. After this date, the full silver by-product
credit is earned by Cozamin. As included in our guidance, this is
expected to increase our by-product credits by approximately
$0.40 per pound.
Minto Mine:
- Produced 5,520 tonnes of copper during Q1 2017 at a C1 cash
cost[1] of $2.05 per pound of payable copper produced and
all-in cost[1 ]of
$2.10 per payable pound of copper
produced.
- During Q1 2017, grade for the quarter was lower than originally
planned due to mine plan sequencing changes. These were made to
optimize the mine plan in anticipation of the extension of
operations at Minto beyond 2017
and to reduce re-handling costs. As a result, more low grade,
partially oxidized ore was directed to the mill causing recoveries
to be slightly behind plan. This was partially offset by higher
throughput.
- At current copper prices, Capstone anticipates the continuation
of operations at Minto until
mid-2020, subject to permitting and regulatory approvals. Capstone
is also evaluating further deposits for re-inclusion into reserves,
which may support additional mine life beyond 2020.
Additional highlights:
- Effective April 19, 2017, the
Company amended its Senior Secured Corporate Revolving Credit
Facility ("RCF") to provide for an extension to April 19, 2021 and a reduction in the credit
available under the facility. The amendment:
- Extends the maturity of the Third Amended and Restated Credit
Agreement from January 16, 2019 to
April 19, 2021;
- Reduces the credit limit to $350
million on April 19, 2017 and
requires an annual $25 million
reduction on each anniversary of the facility to $275 million on April 19,
2020;
- Maintains the current pricing grid (starting at LIBOR + 2.5%
and increasing to LIBOR + 3.5% based on the total leverage ratio)
until March 31, 2019, after which
date pricing increases to LIBOR + 3.0% (adjustable to LIBOR + 4.5%
depending on the total leverage ratio); and
- Cancels the accordion feature of $60
million.
All other material terms and conditions of the existing RCF
remain in place.
In addition to the amendment described above, Capstone repaid
$10 million on April 19, 2017, reducing drawn debt to
$298.9 million.
Operating Outlook
Capstone's 2017 production guidance for 94,000 tonnes (±5%) of
copper at C1 cash cost[1
]of $1.60 to $1.70 per
pound of payable copper produced and All-in
cost[1 ]of
$2.15 to $2.25 per pound of payable
copper produced remains unchanged. Minto and Cozamin are expected to complete the
year on, or slightly above, plan and Pinto Valley is expected to
attain higher run rates for the remainder of 2017 since the major
planned maintenance activity was completed in the first
quarter.
Conference Call and Webcast Details
Date: Wednesday, April 26, 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=1383293&s=1&k=8C2CB279A9CAA1477A4D9A6573F75350
Replay: North America: 1-888-390-0541, International: +416-764-8677
Replay
Passcode: 472544#
The conference call replay will be available until Wednesday, May 3, 2017. The conference call audio
and transcript will be available on Capstone's website within
approximately 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
polymetallic 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 "anticipate", "guidance", "plan" 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, future prices of copper and
other metals, compliance with financial covenants, surety bonding,
our ability to raise capital, Capstone's ability to acquire
properties for growth, 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, maintaining ongoing social license to operate,
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, legal proceedings 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 March 31, 2017 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.
Please contact: Cindy Burnett,
VP, Investor Relations and Communications, +1-604-637-8157,
cburnett@capstonemining.com