(All amounts in US$ unless otherwise
specified)
VANCOUVER, April 24, 2018 /CNW/ - Capstone Mining Corp.
("Capstone" or the "Company") (TSX: CS) today announced its
financial results for the quarter ended March 31, 2018. Operating cash flow before
changes in working capital1 from all operations was
$24.6 million or $0.06 per share, with net income from continuing
operations of $10.3 million and
adjusted net income from continuing operations of $10.6 million or $0.03 per share after adjusting for certain
non-cash and non-recurring charges. Copper production from
continuing operations totalled 15,706 tonnes (15,152 tonnes of
payable copper) at a C1 cash cost1 from continuing
operations of $1.95 per payable pound
produced.
"Capstone reported positive net income and cash flow in the
first quarter of 2018, on contributions from both Pinto Valley and
Cozamin," said Darren Pylot,
President and CEO of Capstone. "We also announced the sale of our
Minto Mine for $37.5 million of cash
plus working capital."
"Additionally, we updated our 2018 guidance to reflect the
decision to mine the San Rafael Zinc Zone, which is expected to
significantly increase our by-product revenue at Cozamin" continued
Mr. Pylot.
As of March 31, 2018, Minto is treated as a discontinued operation
for financial reporting purposes. To comply with disclosure
requirements, Capstone's results have been adjusted to exclude
Minto's contribution in certain
cases, and are referred to throughout this release as "continuing
operations". Please refer to financial statements ended
March 31, 2018 for further
information.
Financial and Operational Overview
|
Q1
2018
|
Q1
2017
|
Revenue (2), (3),
(4) ($ millions)
|
103.7
|
97.9
|
|
|
|
Copper produced by
continuing operations (tonnes)
|
15,706
|
15,430
|
|
|
|
Payable copper
produced by continuing operations (tonnes)
|
15,152
|
14,890
|
C1 cash cost per
payable pound produced (1) ($/lb)
|
1.95
|
1.95
|
All-in sustaining
cost per payable pound produced (1)
($/lb)
|
2.59
|
2.48
|
|
|
|
Net Income (loss)
from continuing operations ($ millions)
|
10.3
|
(13.1)
|
Net Income (loss)
from continuing operations attributable to shareholders ($
millions)
|
10.5
|
(13.3)
|
Net income (loss)
from continuing operations attributable to shareholders per common
share ($)
|
0.03
|
(0.03)
|
|
|
|
Adjusted net
income (loss) from continuing operations
(1) ($ millions)
|
10.6
|
(7.7)
|
Adjusted net
income (loss) from continuing operations attributable to
shareholders (1) ($ millions)
|
10.8
|
(7.8)
|
Adjusted
net income (loss) attributable to shareholders per common
share (1) ($)
|
0.03
|
(0.02)
|
|
|
|
Cash flow from
operating activities (4) ($
millions)
|
32.8
|
22.0
|
Cash flow from
operating activities per common share (1), (4)
($)
|
0.08
|
0.06
|
Operating cash
flow before changes in working capital (1,
(4) ($ millions)
|
24.6
|
24.2
|
Operating cash
flow before changes in working capital per common share (1),
(4) ($)
|
0.06
|
0.06
|
|
|
|
Long term debt
(excluding financing fees) ($ millions)
|
274.9
|
308.9
|
|
|
|
Net debt
(1) ($ millions)
|
160.1
|
199.5
|
2 Q1 2018 includes a provisional pricing
adjustment of $(2.3) million (2017 -
$2.2 million) related to prior
shipments, equivalent to $(0.07) per
pound (2017 - $0.06 per pound) of
copper sold during the quarter.
3 Q1 2018 adjusted realized copper price does not
include any realized derivative losses (2017 loss – $11.6 million) equivalent to nil per pound (2017
loss - $(0.29) per pound) related to
copper derivative contracts exercised during the quarter.
4 In accordance with IFRS 5, Minto's results are excluded from revenue in
both the current and comparative period. Minto's results are
included within cash flow amounts in both the current and
comparative period.
Financial and Operational Highlights for the Quarter Ended
March 31, 2018
- Net income from continuing operations of $10.3 million. The net income was attributable to
higher realized copper prices of $2.98 per pound compared to $2.73 per pound in 2017.
- The absence of any commodity derivative losses as Capstone has
been completely unhedged from the beginning of 2018.
- Cash flow from operating activities of $32.8 million or $0.08 per common share.
- Working capital decreased by $5.4
million to $184.0 million at
March 31, 2018 from $189.4 million at December
31, 2017.
- Operating cash flow before changes in working
capital1 of $24.6 million
or $0.06 per share was slightly
higher due to higher operating cash flows at Cozamin, primarily due
to higher copper prices, the absence of any negative forward
commodity derivative contracts settlements in Q1 2018, mostly
offset by lower operating cash flows at Minto.
- Produced a total of 15,152 tonnes of payable copper from
continuing operations at a C1 cash cost1 of $1.95 per pound of payable copper produced.
- Revenue of $103.7 million
generated primarily from the sale of 15,962 tonnes of copper from
continuing operations.
Production and Additional Highlights for the Quarter Ended
March 31, 2018
Pinto Valley Mine:
- Produced 11,421 tonnes of copper during Q1 2018 at a C1 cash
cost1 of $2.41 per pound
of payable copper produced and all-in sustaining cost1
of $2.96 per pound of payable copper
produced.
- At Pinto Valley, production was lower than planned with
throughput and recoveries at the low end of expectations due to
unplanned downtime. Grade was in line with the mine plan for the
quarter, with higher head grade and production expected over the
remainder of the year.
Cozamin Mine:
- Produced 4,285 tonnes of copper during Q1 2018 at a C1 cash
cost1 of $0.71 per pound
of payable copper produced and all-in sustaining cost1
of $1.43 per pound of payable copper
produced.
- At Cozamin, production for the quarter was better than expected
from higher grade.
- Metallurgical test work was completed around the technical and
economic recoverability of the existing zinc resource in the San
Rafael zinc zone. This resulted in a revision to the mine plan,
bringing in additional zinc resources, starting in July. It is
expected that in 2018 this could double contained zinc production
(an additional 7 million pounds) and lower C1 cash cost1
by $0.25 per pound of payable copper
produced and all-in sustaining cost1 by $0.15 per payable pound produced. Additional zinc
production of between 7 million and 12 million pounds per year and
approximately 200,000 ounces of silver per year are anticipated,
with associated increases to by-product credits over the
next three years. Copper production remains unchanged as the
added zinc processing will come from existing unutilized mill
capacity.
Operating Outlook
Capstone's consolidated production
and cost guidance from continuing operations remains unchanged for
the full year.
Cozamin's cost guidance has been updated to reflect lower unit
costs resulting from the additional zinc resources expected to be
mined from the San Rafael deposit in 2018, lowering Cozamin's
expected 2018 C1 cash cost1 by approximately
$0.25 and all-in sustaining
cost1 by approximately $0.15 per payable pound of copper produced.
Cozamin's 2018 capital guidance has been increased by $3.0 million as a result of this change,
primarily related to the additional required development to access
the San Rafael zone. Cozamin's expected 2018 copper production
remains unchanged.
Exploration cost guidance is unchanged. Consolidated
capital guidance is $90.0 million
with the addition of the $3.0 million
development expenditure related to San Rafael zone at Cozamin.
Conference Call and Webcast Details
Capstone will hold
a conference call and webcast on Wednesday,
April 25, 2018 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 below. This release is not
suitable on a standalone basis for readers unfamiliar with Capstone
and 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,
2018, which are available on Capstone's website at
http://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR, all of which have been reviewed and approved by
Capstone's Board of Directors. An updated corporate presentation,
including results to March 31, 2018
and Q1 webcast slides will also be available at
http://capstonemining.com/investors/events-and-presentations/default.aspx.
Date:
|
Wednesday, April 25,
2018
|
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=1626391&s=1&k=ED9664FBED1580A051E48EE6D0B7D2E2
|
Replay:
|
North America:
1-888-390-0541, International: +416-764-8677
|
Replay
Passcode:
|
285507#
|
The conference call replay will be available until Wednesday, May 2, 2018. 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 polymetallic mine in
Zacatecas State, Mexico and the
Minto copper mine in Yukon, Canada. In addition, Capstone has the
large scale 70% owned copper-iron Santo
Domingo development project in Region III, Chile, in partnership with Korea Resources
Corporation as well as a portfolio of exploration properties.
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 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, uncertainties
related to the proposed transaction for the sale of Minto
Explorations Ltd., uncertainties related to the proposed
transaction for the sale of Minto Explorations Ltd., 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
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 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, 2018 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.
Certain prior period alternative performance measures have been
restated to conform with current period classification.
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SOURCE Capstone Mining Corp.