VANCOUVER, April 24, 2018 /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, 2018. Operating cash flow
before changes in working
capital[1] 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
cost[1] 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
capital[1] 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
cost[1] 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
cost[1] of $2.41 per pound of payable copper produced and
all-in sustaining cost[1] 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
cost[1] of $0.71 per pound of payable copper produced and
all-in sustaining cost[1] 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
cost[1] by $0.25 per pound of payable copper produced and
all-in sustaining cost[1] 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 cost[1] by
approximately $0.25 and all-in
sustaining cost[1] 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 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, 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
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, 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.
Cindy Burnett, VP, Investor
Relations and Communications, 604-637-8157,
cburnett@capstonemining.com