Capstone Mining Reports 2012 Year End Financial Results
VANCOUVER, British Columbia, March 13, 2013 /PRNewswire/ --
Operating Cash Flow of $114.4 million, Net Earnings of $59.6 million or $0.16 per share
(All amounts in US$ unless otherwise specified)
Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial results for the year ended December 31, 2012. Net earnings for the year were $59.6 million and operating cash flow before changes in working capital(1) was $114.4 million. Net earnings for the fourth quarter were $18.5 million and operating cash flow before changes in working capital(1) was $24.7 million. Capstone ended the year with cash on hand of $499.9 million, a $200 million credit facility and no long-term debt. Copper production for the year at Capstone's two operating mines, Cozamin and Minto, totalled 82.8 million pounds in concentrates (79.6 million pounds of payable copper) at a total cash cost(1) of $1.50 per payable pound of copper produced.
Capstone will hold a conference call and webcast on Thursday, March 14, 2013 at 11:30 am Eastern time (8:30 am Pacific time) to discuss these results; call-in details are provided at the end of this release. This release should be read in conjunction with Capstone's consolidated financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2012, which are available on Capstone's website at: http://capstonemining.com/s/Financial_Statements.asp and on SEDAR. An updated corporate presentation, including results to December 31, 2012, will also be available at http://capstonemining.com/s/Presentation.asp.
Three Months Ended Year Ended December 31 December 31 2012 2011 2012 2011 Revenue ($ millions) 72.5 61.5 305.5 327.8 Copper in concentrates produced (million lbs) 19.7 19.8 82.8 78.3 Payable copper produced (million lbs) 18.8 19.0 79.6 75.5 Total cash cost per payable pound of copper produced (1) ($) 1.70 1.50 1.50 1.45 Copper sold (million lbs) 19.4 16.5 79.0 79.1 Recognized copper price per pound ($) 3.47 3.40 3.66 3.90 Net earnings ($ millions) 18.5 4.9 59.6 60.4 Net earnings per common share ($) 0.05 0.01 0.16 0.20 Adjusted net earnings(1) ($ millions) 19.3 4.2 77.9 52.2 Adjusted net earnings(1) per common share ($) 0.05 0.01 0.20 0.18 Operating cash flow before changes in working capital(1) ($ millions) 24.7 15.0 114.4 120.2 Operating cash flow before changes in working capital per common share(1) ($) 0.06 0.04 0.30 0.41 Cash and cash equivalents ($ millions) 499.9 486.3
(1)The items marked with a "1" are alternative performance measures; please see "Alternative Performance Measures" at the end of this release.
"We had another solid year in 2012," said Darren Pylot, President and CEO of Capstone. "Our revenue, earnings and cash flow remained strong and we exceeded production and cost guidance for the year. Both operating mines are well-positioned to deliver on their targets in 2013."
"We are looking ahead to the growth of the company and in 2013 are reinvesting in our mines and development projects. With approximately ten year mine lives at our operating mines and additional exploration upside, Capstone is poised to deliver strong results well into the future. We plan to advance our development projects in 2013 by formally entering the permitting process at Kutcho and completing key milestones at Santo Domingo, including submitting the Environmental Impact Study and completing the Feasibility Study. We will also continue activities on our greenfield exploration portfolio, with initial drilling campaigns at projects in Chile and Mexico," continued Mr. Pylot.
"With our strong balance sheet we have the financial resources in place to execute on our strategy. In addition, the ability to deploy our balance sheet on opportunistic acquisitions provides Capstone with the flexibility to grow our short term production profile and advance the company to the next level."
Financial and Production Highlights for the Year Ended December 31, 2012
- Recorded net earnings of $59.6 million or $0.16 per common share which included:
- Earnings from mining operations of $113.0 million,
- Recognized copper price of $3.66 per pound,
- Cost of sales included a $5.5 million non-cash charge related to the write-down of ore stockpile inventory at the Minto Mine,
- $29.2 million in current and deferred tax expenses.
- Earnings from mining operations of $113.0 million,
- Adjusted net earnings(1) of $77.9 million or $0.20 per common share after making adjustments for certain non-cash and non-recurring items.
- Generated operating cash flow before changes in working capital1of $114.4 million or $0.30 per common share.
- Working capital increased to $562.1 million at December 31, 2012 (which included $499.9 million of cash and cash equivalents) from $539.8 million at December 31, 2011.
- Produced a total of 79.6 million pounds of payable copper at an estimated total cash cost(1) of $1.50 per pound of payable copper produced.
- Recorded revenue of $305.5 million on the sale of 79.0 million pounds of copper, 13.2 million pounds of zinc, 2.6 million pounds of lead, 18,562 ounces of gold and 1,628,008 ounces of silver.
Financial and Production Highlights for the Three Months Ended December 31, 2012
- Recorded net earnings of $18.5 million:
- Earnings from mining operations of $29.4 million, which was partially offset by general and administrative expenses of $4.3 million, share-based compensation of $1.0 million, a gain on foreign exchange of $1.5 million and current and deferred income taxes of $7.2 million.
- Earnings from mining operations were driven by revenue of $72.5 million on the sale of 19.4 million pounds of copper, 3.9 million pounds of zinc, 0.4 million pounds of lead, 5,700 ounces of gold and 452,000 ounces of silver.
- Produced a total of 18.8 million pounds of payable copper at an estimated total cash cost1 of $1.70 per pound of payable copper produced.
- Adjusted net earnings(1) were $19.3 million or $0.05 per common share after making adjustments for certain non-cash and non-recurring items.
- Operating cash flow before changes in working capital(1) of $24.7 million or $0.06 per share.
Operational Highlights for the Year Ended December 31, 2012
Cozamin Mine, Mexico:
- Achieved record mill throughput in 2012, averaging 3,205 tonnes per day.
- Produced a record 46.9 million pounds of copper in concentrates during the year.
- Completed 27,114 metres of underground exploration drilling in 48 diamond drill holes.
- Completed 4,754 metres of surface exploration drilling in 5 diamond drill holes.
- In two separate resource updates announced in February 2012 and March 2013, the Measured and Indicated resource in Mala Noche Footwall Zone ("MNFWZ") increased to 188.6 million pounds of contained copper, which includes the MNFWZ reserves.
- Incorporated a copper reserve in the MNFWZ of 2.27 million tonnes at a grade of 1.96% copper, based on the initial resource estimate, bringing the remaining mine life at Cozamin to nine years.
- Completed 1,138 metres of development drifting on the MNFWZ, mining 107,356 tonnes of development ore an average grade 1.9% copper for the year.
Minto Mine, Yukon:
- Achieved record mill throughput in 2012, averaging 3,665 tonnes per day.
- Produced 35.9 million pounds of copper in concentrates. This was lower than 2011 due to lower grades compared with the previous year as a result of a higher proportion of stockpile material feeding the mill.
- In October 2012, the amendment to Minto's Water Use License was approved, allowing the placement of Area 2/118 tailings into the mined out Main Pit. All necessary permits are in place to mine all identified reserves in the Area 2/118 open pit and underground mines.
- Commenced underground development with the initial excavation of the portal and began development of the decline by a contractor. Initial ore release from the underground is planned for the third quarter of 2013.
- Completed the Phase VI Preliminary Feasibility Study, which includes additional underground mineral reserves from the Copper Keel and Wildfire zones in the Minto Mine plan. The study extends the mine life to 2022 with yearly average copper production of 40 million pounds at an average cash cost of $1.92/lb of payable copper.
- Completed 29,539 metres of exploration drilling in 84 diamond drill holes.
- Added 67 million pounds of copper resources in the M&I category and 11 million pounds in the Inferred category after an update of the Minto South Deposit block model. Added an additional 101 million pounds of copper resources in the M&I category and 86 million pounds in the Inferred category from the Fireweed Extension of Minto East and Inferno North Extension of Minto North.
Santo Domingo Project, Chile:
- Awarded the contract for the preparation of the Santo Domingo project environmental impact study to Knight Piésold.
- Awarded the feasibility study ("FS") and basic engineering to AMEC, with NCL Ingeniería y Construcción Ltda. providing the mining section of the FS.
- Selected a port location and completed preliminary engineering studies for this greenfield port site located 110 kilometres from the Santo Domingo project. The port site was chosen because of its exceptionally high availability for loading iron vessels. Formal application for the marine concession was made in March 2013.
- In connection with preparation of the FS, AMEC, NCL and Capstone personnel have completed a preliminary estimate of the development capital to build the Santo Domingo project. The capital cost is currently estimated at $1.5 to 1.8 billion, dependent on flow sheet variables and mine equipment lease/purchase options. Capstone is continuing on schedule to complete the FS by year-end.
- Subsequent to year-end, an additional 1,470 metres of condemnation drilling was completed in support of the FS to sterilize a new tailings deposition area, which was identified as a superior location during the optimization process.
Kutcho Project, British Columbia:
- Basic engineering continued to support the compilation of the environmental application and revision of capital and operating expenditure estimates.
- A Section 13 Order has been issued by the British Columbia Environmental Assessment Office based on the revised Project Description and the Application Information Requirements were approved for the environmental assessment application.
- Consultation with First Nations, moving towards Impact Benefit Agreements, continued throughout 2012.
- The project remains on track to submit an environmental assessment application in mid-2013.
Capstone's 2013 guidance of 85 million pounds (± 5%) of copper contained in concentrates at a total cash cost(1) of $1.65 to $1.75 per pound of payable copper, net of by-product credits and selling costs, remains unchanged.
Adoption of Advance Notice Policy
Capstone also announces the approval by its board of directors (the "Board") of an advance notice policy (the "Policy"). The purpose of the Policy is to provide shareholders, directors and management of the company with a clear framework for nominating directors.
Among other things, the Policy includes a provision that requires advance notice to be given to Capstone in circumstances where nominations of persons for election to the Board are made by shareholders other than pursuant to: (i) a requisition of a meeting made pursuant to the provisions of the British Columbia Business Corporations Act (the "Act"); or (ii) a shareholder proposal made pursuant to the provisions of the Act. The Policy fixes a deadline by which director nominations must be submitted to Capstone prior to any annual or special meeting of shareholders and sets forth the information that must be included in the notice to the company in order for a nominee to be eligible for election.
In the case of an annual meeting, notice to Capstone must be given no fewer than 35 nor more than 60 days prior to the date of the meeting; provided that if the meeting is to be held on a date that is fewer than 50 days after the date on which the first public announcement of the date of the meeting was made, notice may be given no later than the close of business on the 10th day following such public announcement.
In the case of a special general meeting that is not also an annual meeting, notice to the company must be made no later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made.
The Policy is effective and in full force and effect as of the date it was approved. In accordance with the terms of the Policy, the Policy will be put to shareholders of Capstone for approval at the next Annual General Meeting ("AGM") to be held on May 8, 2013, and if the policy is not confirmed at the meeting by ordinary resolution of shareholders, the Policy will terminate and be of no further force and effect following the termination of the AGM.
Conference Call and Webcast Details
Capstone will host a conference call and webcast on Thursday, March 14, 2013 at 11:30 am Eastern time (8:30 am Pacific time).
Date: Thursday, March 14, 2013 Time: 11:30 am Eastern Time (8:30 am Pacific Time) Dial in: North America: 1-888-390-0605, International: 1-416-764-8609 Webcast: http://www.newswire.ca/en/webcast/detail/1096935/1195123 Replay: North America: 1-888-390-0541, International: 1-416-764-8677 Replay Passcode: 017456
The conference call replay will be available until March 28, 2013. The conference call audio and transcript will be available on Capstone's website within approximately 24 hours of the call at http://capstonemining.com/s/Conference_Calls.asp.
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian base metals mining company, committed to the responsible development of our assets and the environments in which we operate. We are preferentially focused on copper, with two producing copper mines, the Cozamin copper-silver-zinc-lead mine located in Zacatecas State, Mexico and the Minto copper-gold-silver mine in Yukon, Canada. In addition, Capstone has two development projects, the large scale 70% owned Santo Domingo copper-iron-gold project in Chile in partnership with Korea Resources Corporation and the 100% owned Kutcho copper-zinc-gold-silver project in British Columbia, as well as exploration at properties in Canada, Chile, Mexico and Australia. Using our cash flow and strong balance sheet as a springboard, Capstone aims to grow with continued mineral resource and reserve expansions, exploration, and through acquisitions in politically stable, mining-friendly regions. Our headquarters are in Vancouver, Canada and we are listed on the 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 Mining Corp. (the "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", "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 "scheduled", "guidance", "plan", "planned", "estimated", "projections", "projected" and "expected". 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; dependence on key personnel; labour pool constraints; labour disputes; availability of infrastructure required for the development of mining projects; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; 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 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. There can be 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 disclosure of the Technical Information contained in this news release has been reviewed and approved by John Wright, P. Eng., Business Development Manager (Technical Information related to mining and production) and Brad Mercer, P. Geol., Vice President, Exploration (Technical Information related to mineral exploration activities), both Qualified Persons under NI 43-101. In addition, Gregg Bush, Senior Vice President and Chief Operating Officer reviewed all Technical Information in this news release.
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 Management's Discussion and Analysis for the year ended December 31, 2012 as filed on SEDAR and as available on the Company's website for further details.
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 U.S. securities laws. Without limiting the foregoing, this news release uses the terms "indicated" and "inferred" resources. U.S. investors are cautioned that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under U.S. 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. U.S. investors are cautioned not to assume that all or any part of indicated resources will ever be converted into reserves. U.S. 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, U.S. 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 U.S. companies subject to the reporting and disclosure requirements of the SEC.
For further information:
Cindy Burnett, VP, Investor Relations and Communications
SOURCE Capstone Mining Corp.