Capstone Mining Reports Record Cash Flow for 2014 Second Quarter
Operating cash flow before changes in working capital of $56.5 million
Net earnings of $16.6 million or $0.04 per share
(All amounts in US$ unless otherwise specified)
VANCOUVER, Aug. 7, 2014 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial results for the three and six months ended June 30, 2014. Net earnings for the quarter were $16.6 million and operating cash flow before changes in working capital(1) was a record $56.5 million. Copper production for the quarter at Capstone's three operating mines, Pinto Valley, Cozamin and Minto, totalled 27,738 tonnes of copper in concentrates and cathode (26,785 tonnes of payable copper) at a C1 cash cost(1) of $2.03 per payable pound of copper produced.
Capstone will hold a conference call and webcast on Friday, August 8, 2014 at 11:30 am Eastern time (8:30 am Pacific time) to discuss these results; call-in details are provided at the end of this release. This release should be read in conjunction with Capstone's unaudited condensed interim consolidated financial statements and management's discussion and analysis ("MD&A") for the three and six months ended June 30, 2014, which are available on Capstone's website at: http://capstonemining.com/s/financial-statements.asp and on SEDAR. An updated corporate presentation, including results to June 30, 2014, will also be available at http://capstonemining.com/s/presentations.asp.
NOTE: The transaction to acquire the Pinto Valley Mine closed on October 11, 2013 and therefore its results of operations are included in the Company's reported results from that date forward. As such, there are no comparable Q2 2013 or 2013 YTD figures for the Pinto Valley Mine.
|Q2 2014||Q2 2013||2014 YTD||2013 YTD|
|Revenue ($ millions)||171.7||58.3||332.5||115.9|
|Copper in concentrates produced (tonnes)||27,212||8,765||54,235||17,195|
|Copper cathode produced (tonnes)||526||-||1,147||-|
|Payable copper produced (tonnes)||26,785||8,419||53,444||16,530|
|C1 cash cost per payable pound of copper produced(1) ($)||2.03||1.70||1.96||1.71|
|Copper sold (tonnes)||24,563||7,783||51,164||14,632|
|Realized copper price per pound sold ($)||3.36||3.16||3.17||3.33|
|Net earnings ($ millions)||16.6||9.2||12.2||16.2|
|Net earnings per common share ($)||0.04||0.02||0.03||0.04|
|Adjusted EBITDA(1) ($ millions)||64.8||28.8||121.2||52.8|
|Adjusted EBITDA(1) per common share ($)||0.17||0.08||0.32||0.14|
Operating cash flow before changes in working
capital(1) ($ millions)
Operating cash flow before changes in working capital
per common share(1) ($)
|Net debt (cash)(1) ($ millions)||181.0||(456.3)||181.0||(456.3)|
"The second quarter shows a significant increase in cash flow driven by higher copper sales, primarily from Pinto Valley, coupled with consistent production from Cozamin and Minto," said Darren Pylot, President and CEO of Capstone. "Year-to-date Adjusted EBITDA(1) more than doubled year over year, demonstrating Capstone's substantial growth over the last 12 months."
Financial and Production Highlights for the Three Months Ended June 30, 2014
- Net earnings of $16.6 million or $0.04 per common share which included:
- Earnings from mining operations of $45.5 million,
- Realized copper price of $3.36 per pound.
- Production costs included a $1.8 million non-cash charge related to the write-down of inventory at Minto,
- $15.2 million tax expense.
- Adjusted EBITDA(1) of $64.8 million or $0.17 per common share after making adjustments for certain non-cash and other items.
- Operating cash flow before changes in working capital(1) of $56.5 million or $0.15 per common share.
- Working capital increased to $162.8 million at June 30, 2014 (which included $128.5 million of cash and cash equivalents) from $137.4 million at December 31, 2013.
- Production of 26,785 tonnes of payable copper at a C1 cash cost(1) of $2.03 per pound of payable copper produced.
- Revenue of $171.7 million generated primarily from the sale of 24,563 tonnes of payable copper.
Operational Highlights for the Three and Six Months Ended June 30, 2014
Pinto Valley Mine:
- Produced 16,892 tonnes of copper in concentrates and 526 tonnes of copper cathode during Q2 2014. The C1 cash cost(1) was $2.13 per pound of payable copper produced.
- Produced 33,593 tonnes of copper in concentrates and 1,147 tonnes of copper cathode during 2014 YTD at a C1 cash cost(1) of $2.10 per pound of payable copper produced.
- Pinto Valley's C1 cash cost(1) was negatively impacted by the loss of production resulting from a failure of one of six ball mills in May 2014 and its associated downtime for 25 days. The daily average throughput increased to 49,400 tonnes per day in June for a Q2 2014 average of 45,700 tpd versus a targeted rate of 50,000 tpd. Subsequent to quarter end, July throughput averaged 49,300 tpd.
- Work is ongoing related to the implementation of improvements identified by the Pinto Valley Phase 2 prefeasibility study ("PV2 PFS"), with the project execution plan in place, orders for the majority of the mine equipment placed and detailed engineering underway.
- Capstone believes there is potential to extend the mine life beyond the PV2 reserve life of 2026 if Mineral Resources not currently included in the PV2 life of mine plan can be successfully converted into Mineral Reserves. The Pinto Valley Phase 3 ("PV3") study was started in Q2 2014, and is composed of two phases. The first phase of PV3 - planned for completion by year end 2014 - will include high level mine plans, tailings storage and flow sheet analysis for various throughput expansion cases.
- Produced 5,191 tonnes of copper in concentrates during Q2 2014 at a C1 cash cost(1) of $1.23 per pound of payable copper produced.
- Produced 10,292 tonnes of copper in concentrates during 2014 YTD at a C1 cash cost(1) of $1.23 per pound of payable copper produced.
- Exploration drilling from surface to test structural splays off of the main Mala Noche vein system at Cozamin commenced in Q2 2014. Many of these brownfield targets are on separate structures from the one hosting Cozamin's reserves and resources.
- On August 5, 2014 Capstone filed a technical report updating Mineral Resource and Mineral Reserve estimates for Cozamin. The net impact was a reduction of approximately $7 million in net asset value.
- Produced 5,129 tonnes of copper in concentrates during Q2 2014 at a C1 cash cost(1) of $2.46 per pound of payable copper produced.
- Produced 10,350 tonnes of copper in concentrates during 2014 YTD at a C1 cash cost(1) of $2.20 per pound of payable copper produced.
Santo Domingo Project:
- Released the Feasibility Study in June 2014 (prepared on a 100% basis; Capstone owns 70%), which had an after-tax net present value of $797 million (8% discount rate) and an after-tax internal rate of return of 17.9% with a payback period of 4.2 years.
- Exploration work continued during Q2 2014 at Project Providencia in Region III, Chile. Capstone completed the airborne magnetic, and versatile time domain electromagnetic and radiometric surveys and is now preparing for a drill program, forecasted to start in late 2014.
Capstone's 2014 guidance for 102,000 tonnes ±5% of copper in concentrates, 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
|Date:||Friday, August 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 August 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. 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 three and six months ended June 30, 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.
SOURCE Capstone Mining Corp.