Capstone Reports 2012 Third Quarter Financial Results; Cash Flow from Operations Remains Strong
Cash Flow from Operating Activities of $25.8 million, Net Earnings of
$12.8 million or $0.03 per share
(All amounts in US$ unless otherwise specified)
VANCOUVER, Nov. 7, 2012 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial results for the three and nine months ended September 30, 2012. Net earnings for the quarter were $12.8 million and cash flow from operating activities was $25.8 million. Capstone ended the quarter with cash on hand of $509.4 million and a $200 million credit facility. Copper production for the quarter at Capstone's two operating mines, Cozamin and Minto, totalled 22.6 million pounds in concentrates at a total cash cost(1) of $1.50 per payable pound.
Capstone will hold a conference call and webcast on Thursday, November 8, 2012 at 11:30 am Eastern time (8:30 am Pacific time) to discuss these results; call-in details are provided at the end of this release. This release should be read in conjunction with Capstone's unaudited condensed interim consolidated financial statements and management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2012, which are available on Capstone's website at: http://capstonemining.com/s/Financial_Statements.asp and on SEDAR. An updated corporate presentation, including results to September 30, 2012, will also be available at http://capstonemining.com/s/Presentation.asp.
Sept. 30, 2012
Sept. 30, 2011
Sept. 30, 2012
Sept. 30, 2011
|Gross sales revenue ($ millions)||99.7||97.9||250.0||287.0|
|Copper in concentrates produced (million lbs)||22.6||20.6||63.1||58.5|
|Payable copper produced (million lbs)||21.8||19.9||60.8||56.5|
|Total cash cost per payable pound of copper produced (1) ($)||1.50||1.39||1.44||1.42|
|Copper sold (million lbs)||23.4||23.3||59.6||62.6|
|Recognized copper price per pound ($)||3.84||3.66||3.72||4.03|
|Net earnings ($ millions)||12.8||21.1||41.1||55.5|
|Earnings per common share ($)||0.03||0.06||0.11||0.21|
|Adjusted net earnings(1) ($ millions)||21.6||13.4||58.6||47.9|
|Adjusted net earnings(1) per common share ($)||0.06||0.04||0.15||0.18|
|Cash flow from operating activities ($ millions)||25.8||38.9||72.2||75.4|
|Cash flow from operating activities per common share(1) ($)||0.07||0.10||0.19||0.28|
|Cash and cash equivalents ($ millions)||509.4||484.2|
"Both mines continued to run well, generating solid cash flow from operating activities of $72.2 million over the first nine months of the year," said Darren Pylot, President and CEO of Capstone. "On the project development side, we have chosen to align our Santo Domingo project timeline to more closely coincide with the expected availability of low cost power in the area of our project in Chile, rather than fast track the timeline. This revised timeline will allow us an opportunity to optimize the project and we will take full advantage of the slowdown to perform optimization and trade-off studies to ensure the lowest capital and operating costs are achieved at the feasibility study stage."
"We remain fully committed to the project and will explore all opportunities to advance it as quickly as possible, but only on a timeline that maximizes returns. Our cash balance, credit facility, access to credit and the Korea Resources Corporation strategic partnership and financing agreement for the Santo Domingo project, combined with on-going cash flow from operations, give us considerable financial flexibility to opportunistically redeploy our capital in the short term, while at all times maintaining a balance sheet that allows us to advance Santo Domingo," continued Mr. Pylot.
Financial and Production Highlights for the Three Months Ended September 30, 2012
- Recorded net earnings of $12.8 million or $0.03 per common share which included:
- Earnings from mining operations of $21.2 million,
- Recognized copper price of $3.84 per pound.
- Cost of sales included a $5.7 million non-cash charge related to the write-down of ore stockpile inventory at the Minto Mine,
- $5.5 million in current and deferred tax expenses.
- Adjusted net earnings(1) of $21.6 million or $0.06 per common share after making adjustments for certain non-cash and non-recurring items.
- Generated cash flow from operating activities of $25.8 million or $0.07 per common share.
- Working capital increased to $567.8 million at September 30, 2012 (which included $509.4 million of cash and cash equivalents) from $533.1 million at December 31, 2011.
- Produced a total of 21.8 million pounds of payable copper at an estimated total cash cost(1) of $1.50 per pound of payable copper produced.
- Recorded gross sales revenue of $99.7 million on the sale of 23.4 million pounds of copper, 2.5 million pounds of zinc, 0.6 million pounds of lead, 6,880 ounces of gold and 351,366 ounces of silver.
Financial and Production Highlights for the Nine Months Ended September 30, 2012
- Recorded net earnings of $41.1 million or $0.11 per common share which included:
- Earnings from mining operations of $64.1 million,
- Recognized copper price of $3.72 per pound.
- Cost of sales included a $5.7 million non-cash charge related to the write-down of ore stockpile inventory at the Minto Mine,
- $22.0 million in current and deferred tax expenses.
- Adjusted net earnings(1) of $58.6 million or $0.15 per common share after making adjustments for certain non-cash and non-recurring items.
- Generated cash flow from operating activities of $72.2 million or $0.19 per common share.
- Produced a total of 60.8 million pounds of payable copper at an estimated total cash cost(1) of $1.44 per pound of payable copper produced.
- Recorded gross sales revenue of $250.0 million on the sale of 59.6 million pounds of copper, 9.3 million pounds of zinc, 2.2 million pounds of lead, 12,864 ounces of gold and 1,176,401 ounces of silver.
Operational Highlights for the Three Months Ended September 30, 2012
Cozamin Mine, Mexico:
- Achieved copper production of 11.0 million pounds.
- Recorded cash costs(1) of $1.12 per pound of payable copper produced.
- Continued the 32,000 metre 2012 exploration program. Work in the quarter focused on the Mala Noche Footwall Zone, drilling 8,565 metres during the quarter, bringing the year-to-date total to 27,546 metres.
- Continued development of the MNFWZ reserves.
Minto Mine, Yukon:
- Achieved copper production of 11.6 million pounds.
- Recorded cash costs(1) of $1.86 per pound of payable copper produced.
- Recorded a $5.7 million non-cash charge related to the write-down of its ore stockpile inventory.
- Completed new mineral resource estimates for the Fireweed and Inferno North deposits, resulting in a resource estimate of 101 million pounds of copper in the indicated category and 86 million pounds in the inferred category, at a 1.2% copper cut-off grade.
- Commenced underground development with the initial excavation of the portal.
- Subsequent to quarter end, the amendment to Minto's Water Use License was approved, allowing placement of tailings into the mined out Main Pit. Tailings have been deposited in the Main Pit since the beginning of November, resulting in an estimated cost savings of C$5.00 per tonne of ore milled.
Santo Domingo Project, Chile:
- A Project Director with over 25 years of project, construction and engineering management experience, including extensive Owner and EPCM project management experience, has been hired to be based in Santiago to lead the Owner's team.
- The bid process for power supply was completed with only one compliant proposal ultimately received. The proponent's power project related to that proposal has subsequently met with substantial delays as a result of a recent court decision in Chile and the proposal was withdrawn. As a result, the bid process was closed without advancing a power purchase agreement. Discussions continue with a number of power suppliers to determine the best course of action.
- The Bankable Feasibility Study was originally targeted for completion in the first quarter of 2013. However, given the current state of the electricity market in Chile, reasonable rates for electric power are not expected to be available until 2017-2018, so Capstone has chosen to slow the project timeline to more closely align with power availability. The revised date for completion of the study will be the first quarter of 2014 and will incorporate a number of optimizations and trade-off studies. At the same time, indications are that the build time for the project will be 24 months. As a result, the targeted start up for the project is now mid-2017 at the earliest, but will be continually evaluated to align with any developments in the Chilean power supply.
- The environmental impact study is expected to be completed as planned, however starting the formal assessment may be delayed to allow incorporation of project improvements.
Kutcho Project, British Columbia:
- The Kutcho Project is in the pre-application stage of the environmental assessment process and work continued with the provincial and federal agencies to towards finalizing the draft Application Information Requirements.
- Continued the First Nations consultation program, including negotiations around agreements leading to Impact Benefit Agreements.
- Advanced basic engineering which has been allocated into three control work packages: the access road, surface infrastructure and mine development.
Capstone's 2012 guidance of 80 million pounds (± 5%) of copper contained in concentrates at a total cash cost(1) of $1.55 to $1.65 per pound of payable copper, net of by-product credits and selling costs, remains unchanged. With copper production of 63.1 million pounds at a total cash cost per payable pound of copper produced of $1.44 for the first nine months of the year, we are on target to meet our original guidance for the year.
Conference Call and Webcast Details
Capstone will host a conference call and webcast on Thursday, November 8, 2012 at 11:30 am Eastern time (8:30 am Pacific time).
Date: Thursday, November 8, 2012
Time: 11:30 am Eastern Time (8:30 am Pacific Time)
Dial in: North America: 1-888-231-8191, International: 1-647-427-7450
Replay: North America: 1-855-859-2056, International: 1-416-849-0833
Replay Passcode: 38430666
The conference call replay will be available until November 22, 2012. 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 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 Australia, Canada, Chile and Mexico. Using its cash flow and strong balance sheet as a springboard, Capstone aims to grow organically through continued mineral resource and reserve expansions and through acquisitions in politically stable, mining-friendly regions. Additional 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 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; 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 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 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 Sagman, P. Eng., Capstone's Vice President, Technical Services (Technical Information related to mining and production) and Brad Mercer, P. Geol., Capstone's 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 for Capstone 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 Interim Management's Discussion and Analysis for the three and nine months ended September 30, 2012 as filed on SEDAR and as available on the Company's website for further details.
Cautionary Note to United States Investors
This press 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 press 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 press release may not be comparable to information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.
(1) The items marked with a "1" are alternative performance measures; please see "Alternative Performance Measures" at the end of this release.
SOURCE Capstone Mining Corp.