Capstone Mining Reports Operating Cash Flow Increases 134% to $47.1 Million
(All amounts in US$ unless otherwise specified)
VANCOUVER, May 7, 2014 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial results for the three months ended March 31, 2014, posting a loss of $4.4 million due to a non-cash ore stockpile write-down. Operating cash flow before changes in working capital(1) was $47.1 million compared to $20.1 million in the first quarter of 2013. Copper production for the quarter at Capstone's three operating mines, Pinto Valley, Cozamin and Minto, totalled 27,644 tonnes of copper in concentrates and cathode (26,635 tonnes of payable copper) at a C1 cash cost(1) of $1.89 per payable pound of copper produced.
Capstone will hold a conference call and webcast on Thursday, May 8, 2014 at 11:30 am Eastern Time (8:30 am Pacific Time) to discuss these results; call-in details are provided at the end of this release. This release should be read in conjunction with Capstone's unaudited condensed interim consolidated financial statements and management's discussion and analysis ("MD&A") for the three months ended March 31, 2014, which are available on Capstone's website at: http://capstonemining.com/s/financial-statements.asp and on SEDAR. An updated corporate presentation, including results to March 31, 2014, will also be available at http://capstonemining.com/s/presentations.asp.
NOTE: The transaction to acquire the Pinto Valley Mine closed on October 11, 2013 and therefore its results of operations are included in the Company's reported results from that date forward. As such, there are no comparable Q1 2013 figures for the Pinto Valley Mine.
|Q1 2014||Q1 2013|
|Revenue ($ millions)||160.8||57.7|
|Copper in concentrates produced (tonnes)||27,023||8,430|
|Copper cathode produced (tonnes)||621||-|
|Payable copper produced (tonnes)||26,635||8,111|
|C1 cash cost per payable pound of copper produced(1) ($)||1.89||1.72|
|Copper sold (tonnes)||26,601||6,894|
|Realized copper price per pound sold ($)||3.09||3.51|
|Net (loss) earnings ($ millions)||(4.4)||6.9|
|Net (loss) earnings per common share ($)||(0.01)||0.02|
|Adjusted EBITDA(1) ($ millions)||55.5||23.6|
|Adjusted EBITDA(1) per common share ($)||0.15||0.06|
|Operating cash flow before changes in working capital(1) ($ millions)||47.1||20.1|
|Operating cash flow before changes in working capital per common share(1) ($)||0.13||0.05|
|Net debt (cash)(1) ($ millions)||175.5||
"With all three of our mines operating very well in the first quarter, we generated operating cash flow before changes in working capital of $47 million," said Darren Pylot, President and CEO of Capstone. "That strong cash flow allowed us to reduce our net debt to $175 million, while retaining a cash balance of $136 million."
"We marked a significant milestone in the first quarter with the Pinto Valley pre-feasibility study extending the mine life an additional eight years to 2026," continued Mr. Pylot. "With the mine life confirmed and the operation now stabilized at its targeted run rate, we can fully turn our attention to efficiencies at the mine and commence our planning for the potential long-term operation beyond 12 years."
Financial and Production Highlights for the Three Months Ended March 31, 2014
- Net loss of $4.4 million or $0.01 per common share which included:
- Earnings from mining operations of $17.1 million,
- Realized copper price of $3.09 per pound.
- Production costs included a $10.0 million non-cash charge related to the write-down of ore stockpile inventory at Minto,
- $7.8 million tax expense.
- Adjusted EBITDA(1) of $55.5 million or $0.15 per common share after making adjustments for certain non-cash and other items.
- Operating cash flow before changes in working capital(1) of $47.1 million or $0.13 per common share.
- Working capital increased to $140.3 million at March 31, 2014 (which included $135.7 million of cash and cash equivalents) from $137.4 million at December 31, 2013.
- Production of 26,658 tonnes of payable copper at a C1 cash cost(1) of $1.89 per pound of payable copper produced.
- Revenue of $160.8 million generated primarily from the sale of 26,601 tonnes of payable copper.
Operational Highlights for the Three Months Ended March 31, 2014
Pinto Valley Mine:
- Produced 16,701 tonnes of copper in concentrates and 621 tonnes of copper cathode at a C1 cash cost(1) of $2.06 per pound of payable copper, a 20 cent per pound reduction relative to the fourth quarter of 2013. This trend is expected to continue as the operation completes its ramp-up, begins to take advantage of the conversion to its own operating system at the end of February and gathers momentum from productivity improvement initiatives begun following the transaction in Q4 2013.
- Completed the Pinto Valley Phase 2 prefeasibility study ("PV2 PFS") in March 2014, extending the mine life at Pinto Valley to 2026, at an average annual production of 54,200 tonnes of copper in concentrate and 2,900 tonnes of copper cathode, at a C1 cash cost(1) of $2.00 per pound of payable copper.
- Produced 5,101 tonnes of copper in concentrates at a C1 cash cost(1) of $1.23 per pound of payable copper, demonstrating an ability to control on-site cost inflation and maintain its second quartile cost position.
- Produced 5,221 tonnes of copper in concentrates at a C1 cash cost(1) of $1.94 per pound of payable copper as compared to $2.50 per pound in Q1 2013 as a result of strong throughput, better grades and effective cost control.
Santo Domingo Project:
- Work on the Feasibility study ("FS") and engineering continued, with the FS on target for completion mid-year 2014.
- Exploration work continued during Q1 2014 at both the Project Providencia in Region II, Chile and the Cumbral Project (Westminster Resources Ltd. Option) in Sonora, Mexico. Capstone is now in receipt of the airborne magnetic, VTEM and radiometric surveys and is executing a large ground follow-up program of mapping and geochemistry at Providencia while diamond drilling commenced at the Cumbral porphyry project.
Capstone's 2014 guidance for 102,000 tonnes ±5% of copper in concentrates and 2,800 tonnes of cathode, at a C1 cash cost(1) of $1.90 to $2.00 per pound of payable copper, net of by-product credits and selling costs, remains unchanged.
Conference Call and Webcast Details
Capstone will host a conference call and webcast on Thursday, May 8, 2014 at 11:30 am Eastern Time (8:30 am Pacific Time).
|Date:||Thursday, May 8, 2014|
|Time:||11:30 am Eastern Time (8:30 am Pacific Time)|
|Dial in:||North America: 1-888-390-0546, International: +416-764-8688|
|Replay:||North America: 1-888-390-0541, International: +416-764-8677|
The conference call replay will be available until May 22, 2014. 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, 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 copper-silver mine in Zacatecas State, Mexico and the Minto copper mine in Yukon, Canada. In addition, Capstone has two copper 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 copper-zinc Kutcho project in British Columbia, Canada, as well as exploration properties in Chile and Mexico. Using our cash flow and strong balance sheet as a platform, Capstone's strategy is to continue to grow with mineral resource and reserve expansions and exploration, and through acquisitions in politically stable, mining-friendly regions. We will pace our growth with our financial capacity, ensuring we retain, as a priority, sufficient financial flexibility to meet the requirements of our existing operations and our committed development projects, while maintaining an adequate cushion to deal with market volatility and operating risks inherent in the mining industry. 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 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 "may", "future", "expected", "intends" and "estimates". 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 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 under the Company's profile on SEDAR at 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. The Company provides 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 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 Brad Skeeles, P. Eng., Vice President of North American Operations, Brad Mercer, P. Geol., Vice President, Exploration (Technical Information related to mineral exploration activities), and Gregg Bush, P. Eng., Senior Vice President and Chief Operating Officer, all 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 Interim Management's Discussion and Analysis for the year ended March 31, 2014 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 may refer to technical reports that use 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.
(1) These are alternative performance measures; please see "Alternative Performance Measures" at the end of this release.
SOURCE Capstone Mining Corp.