VANCOUVER, British Columbia,
July 31, 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 and six months
ended June 30, 2017. Cash flow from
operating activities for the quarter was $4.1 million or $0.01 per share and cash flow from operating
activities before changes in working capital for the quarter was
$26.0 million or $0.07 per share. The net income for the quarter
was $12.8 million or $0.03 per share and adjusted net income was
$0.7 million or break-even on a per
share basis after adjusting for certain non-cash and non-recurring
charges. Copper production for the quarter totalled 24,002 tonnes
(23,176 tonnes of payable copper) at a C1 cash
cost[1] of $1.75 per payable pound produced with copper
sales for the quarter of 20,771 tonnes at a C1 cash
cost[1] of $1.74 per payable pound sold.
"Operational performance in the second quarter was on plan, with
costs trending down from the first quarter," said Darren Pylot, President and CEO of Capstone.
"Most importantly, Pinto Valley returned to full production,
setting quarterly and monthly throughput records."
"For the second half of the year, approximately half of our
production is unhedged and completely unhedged in 2018 and beyond,"
continued Mr. Pylot.
Overview
2017
Q2 2017 Q2 2016 YTD 2016 YTD
Revenue ($ millions) 115.2 100.2 243.2 226.5
Copper produced (tonnes) 24,002 28,157 44,952 52,704
Payable copper produced (tonnes) 23,176 27,200 43,407 50,900
C1 cash cost per payable pound
produced[1] ($/lb) 1.75 1.51 1.85 1.61
All-in cost per payable pound
produced[1] ($/lb) 2.10 1.92 2.35 2.07
Fully-loaded all-in cost per
payable pound produced[1] ($/lb) 2.26 2.01 2.51 2.19
Copper sold (tonnes) 20,771 22,549 42,353 50,534
Realized copper price per pound
sold ($/lb)* 2.56 2.21 2.63 2.20
Adjusted realized copper price per
pound sold ($/lb) ** 2.40 2.21 2.42 2.29
C1 cash cost per payable pound
sold[1] ($/lb) 1.74 1.66 1.72 1.72
All-in cost per payable pound
sold[1] ($/lb) 2.14 2.15 2.23 2.19
Fully-loaded all-in cost per
payable pound sold[1] ($/lb) 2.31 2.26 2.39 2.30
Net income (loss) ($ millions) 12.8 (13.4) 5.4 (26.2)
Net income (loss) attributable to
shareholders ($ millions) 12.9 (13.2) 5.4 (25.9)
Net income (loss) per common share
($) 0.03 (0.03) 0.01 (0.07)
Adjusted net income (loss)[1] ($
millions) 0.7 (7.5) (1.7) (9.0)
Adjusted net income (loss)[1]
attributable to shareholders ($
millions) 0.8 (7.3) (1.7) (8.8)
Adjusted income net loss[1] per
common share ($) 0.00 (0.02) (0.00) (0.02)
Cash flow from operating activities 4.1 1.1 26.1 33.3
Cash flow from operating activities
per common share ($) 0.01 0.00 0.07 0.09
Operating cash flow before changes
in working capital[1] ($ millions) 26.0 21.6 50.1 40.5
Operating cash flow before changes
in working capital per common
share[1] ($) 0.07 0.06 0.13 0.11
Cash and cash equivalents ($
millions) 82.4 100.2 82.4 100.2
Net debt[1 ]($ millions) 216.5 243.9 216.5 243.9
* Q2 2017 includes a provisional pricing adjustment of $0.2 million
(2016 - negative $5.8 million) related to prior shipments, equivalent to
nil per pound (2016 - $(0.12) per pound) of copper sold during the
quarter. 2017 YTD includes a provisional pricing adjustment of $5.4
million (2016 - negative $11.5 million) related to prior shipments,
equivalent to $0.06 per pound (2016 - ($0.10) per pound) of copper sold
during the six month period. The Q2 2017 and 2017 YTD provisional
pricing adjustments were predominantly related to assay adjustments. The
Q2 2017 figure of ($0.2 million) is broken down as $0.6 million related
to price adjustments and ($0.4 million) related to assay adjustments.
This translates into adjustments of nil and nil respectively on a per
pound sold basis. The YTD Q2 2017 figure of $5.4 million broken down as
$3.7 million related to price adjustments and $1.7 million related to
assay adjustments. This translates into adjustments of $0.04 and $0.02
respectively on a per pound sold basis. ** Q2 2017 adjusted realized
copper price includes the provisional pricing adjustments noted above
and realized loss of $7.7 million (2016 gain - $0.2 million) equivalent
to $(0.16) per pound (2016 gain - nil per pound) related to copper
derivative contracts exercised during the quarter. 2017 YTD adjusted
realized copper price includes the provisional pricing adjustments noted
above and realized loss of $19.3 million (2016 gain - $9.8 million)
equivalent to $(0.21) per pound (2016 gain - 0.09 per pound) related to
copper derivative contracts exercised during the period.
Financial Highlights for the Three Months Ended June 30, 2017
- Net income of $12.8 million
included:
- Earnings from mining operations of $21.1
million,
- Realized copper price of $2.56
per pound
- A commodity derivative gain of $3.8
million, comprising a realized loss of $7.7 million combined with an unrealized gain of
$1.3 million and reversals of
unrealized losses recorded in a previous period of $10.2 million,
- Production costs included a non-cash reversal of $(0.7) million related to the write-down of
inventory at Pinto Valley,
- An income tax expense of $4.5
million.
- Cash flow from operating activities of $4.1 million or $0.01 per common share.
- Operating cash flow before changes in working
capital[1] of $26.0 million or $0.07 per common share.
- Working capital increased $8.7
million to $157.0 million at June 30, 2017 from $148.3
million at March 31, 2017.
Cash decreased to $82.4 million at
June 30, 2017 from $109.4 million at March
31, 2017 largely as a result of a $10.0 million debt repayment made in April, 2017
and $9.0 million in payments made
related to the commodity derivatives during Q2'17.
- Production of 23,176 tonnes of payable copper at a C1 cash
cost[1] of $1.75 per pound of payable copper produced and
fully-loaded all-in cost[1] of
$2.26 per pound of payable pound
copper produced.
- Revenue of $115.2 million
generated primarily from the sale of 20,771 tonnes of copper.
Financial Highlights for the Six Months Ended June 30, 2017
- Net income of $5.4 million or
$0.01 per common share which
included:
- Earnings from mining operations of $48.1
million,
- Production costs included a non-cash charge of $0.4 million related to the write-down of
inventory at Pinto Valley,
- A commodity derivative loss of $10.1
million, comprising a realized loss of $19.4 million, an unrealized loss of $6.0 million and reversals of unrealized losses
recorded in a previous period of $15.3
million.
- $8.4 million in current and
deferred income tax expense.
- Cash flow from operating activities of $26.1 million or $0.07 per common share.
- Operating cash flow before changes in working
capital[1] of $50.1 million or $0.13 per common share.
- Working capital decreased $14.1
million to $157.0 million at June 30, 2017 from $171.1
million at December 31, 2016.
Cash decreased to $82.4 million at
June 30, 2017 from $130.4 million at December
31, 2016 largely as a result of $30.0
million in debt repayments and $19.3
million in payments made related to the commodity
derivatives during 2017 YTD.
- Production of 43,407 tonnes of payable copper at a C1 cash
cost[1] of $1.85 per pound of payable copper produced and
fully-loaded all-in cost[1] of
$2.51 per pound of payable pound
copper produced.
- Revenue of $243.2 million
generated primarily from the sale of 42,353 tonnes of copper.
Production and Additional Highlights for the Three and Six
Months Ended June 30,
2017
Pinto Valley Mine:
- Produced 15,491 tonnes of copper during Q2 2017 at a C1 cash
cost[1] of $1.84 per pound of payable copper produced and
all-in cost[1] of $2.17 per pound of payable copper produced.
- Produced 26,791 tonnes of copper during 2017 YTD at a C1 cash
cost[1] of $1.98 per pound of payable copper produced and
all-in cost[1] of $2.42 per pound of payable copper
produced.
- At Pinto Valley, throughput averaged 58,700 tonnes per day
("tpd") for the quarter, setting a quarterly throughput record as
well as achieving a new monthly throughput record in May of 60,350
tpd. Grade, recoveries and production were as planned for the
quarter.
Cozamin Mine:
- Produced 4,106 tonnes of copper during Q2 2017 at a C1 cash
cost[1] of $1.19 per pound of payable copper produced and
all-in cost[1] of $1.73 per pound of payable copper produced.
- Produced 8,236 tonnes of copper during 2017 YTD at a C1 cash
cost[1] of $1.26 per pound of payable copper produced and
all-in cost[1] of $1.84 per pound of payable copper produced.
- At Cozamin, grade and recoveries were as expected, with
throughput continuing ahead of plan with ongoing improvement in
mine production and mine development.
- On April 4, 2017, the precious
metal streaming arrangement with Wheaton Precious Metals Corp.
(formerly Silver Wheaton Corp.) expired. After this date, the full
silver by-product credit is earned by Cozamin resulting in an
increase to by-product credits of $0.23 per payable pound of copper produced in Q2
2017 vs. Q2 2016.
Minto Mine:
- Produced 4,406 tonnes of copper during Q2 2017 at a C1 cash
cost[1] of $1.93 per pound of payable copper produced and
all-in cost[1 ]of
$1.95 per payable pound of copper
produced.
- Produced 9,926 tonnes of copper during 2017 YTD at a C1 cash
cost[1] of $2.00 per pound of payable copper produced and an
all-in cost[1 ]of
$2.03 per payable pound of copper
produced.
- At Minto, production for the
quarter was impacted by mine sequencing changes to support a mine
life extension. Throughput continued higher than planned, but head
grade and recoveries were lower than originally guided due to a
higher percentage of partially oxidized ore feeding the mill from
the Area 2, Stage 3 open pit and underground mining running
slightly behind schedule.
- 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:
- Capstone repaid $10 million on
the senior secured corporate revolving credit facility ("RCF") on
April 19, 2017, reducing drawn debt
to $298.9 million.
Outlook
Production Guidance:
Capstone expects to be within the range of 2017 consolidated
production guidance of 94,000 tonnes (±5%) of copper. Minto and Cozamin are expected to complete the
year on, or above, plan, largely offsetting Pinto Valley's first
quarter deficit.
Operating Cost Guidance:
Capstone anticipates that consolidated C1 cash
cost[1], All-in
cost[1] and Fully-loaded all-in
cost[1] will end the year between
$0.15 and $0.20 per pound of payable
copper produced higher than originally guided.
At Minto, C1 cash
cost[1 ]and
all-in cost[1]are expected to increase by
approximately $0.50 per pound of
payable copper produced. The mine sequencing changes to support the
mine life extension have resulted in lower production than
initially guided in the first half of 2017. In addition, the
revised Minto mine plan that
extends operations beyond 2017 brings the Minto East underground
and an extension of the Area 2 open pit into the mine plan.
Development to access the Minto East deposit is ongoing and the
stripping of the extension of the Area 2 pit will commence in
H2'17, with resulting ore processed primarily in 2018. Because the
development and stripping activities related to Minto East and the
extension of the Area 2 pit are planned to take less than 12
months, all development and stripping costs will be expensed in
2017. The Area 2 open pit extension will supplement the ore mined
from the higher grade underground deposits.
At Pinto Valley, increased costs related to the first quarter
production deficit are expected to add between $0.10 and $0.20 to Pinto Valley's C1 cash
cost[1 ]and
all-in cost[1]per pound of payable copper
produced.
Cozamin's 2017 C1 cash
cost[1 ]and
all-in cost[1
]are expected to be slightly higher than guided as a
result of lower by-product credits per payable pound of copper
produced and additional planned capital, respectively.
1. This is an alternative performance measure; please see
"Alternative Performance Measures" at the end of this release.
Capital and Exploration Guidance
At Cozamin, an additional $1.0
million in capital development is planned to be spent by
year-end as the mine has been advancing at higher than planned
development rates. As a result Cozamin's 2017 sustaining capital
guidance is increased from $18.0
million to $19.0
million.
Also at Cozamin, a further $1.1
million has been approved to test brownfield targets along
strike from the Mala Noche Footwall Zone ("MNFWZ") and east of the
San Rafael zinc zone, and as a result, Cozamin's 2017 capitalized
exploration guidance is increased from $5.0
million to $6.1 million.
At Minto, $0.6 million has been added to the 2017 H2
capital budget for definition drilling at Minto East and Ridgetop
in support of the design of the extended mine plan.
All other capital and exploration guidance remains
unchanged.
Conference Call and Webcast Details
Capstone will hold a conference call and webcast on Monday, July 31, 2017 at 11:30 a.m. Eastern time (8:30 a.m. Pacific time) to discuss these
results.
Date: Monday, July 31, 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=1421361&s=1&k=20DB088377B441B928A92B347D0179CE
Replay: North America: 1-888-390-0541, International: +416-764-8677
Replay
Passcode: 103102#
The conference call replay will be available until Monday, August 7, 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.
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 June 30, 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
June 30, 2017, in addition to the Q2
2017 webcast slides, will also be available
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", "outlook", "planned",
"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, 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 June 30, 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.
Cindy Burnett, VP, Investor
Relations and Communications, 604-637-8157,
cburnett@capstonemining.com