Capstone Mining Reports Financial Results for Pivotal Year
February 20, 2014 --
(All amounts in US$ unless otherwise specified)
VANCOUVER, Feb. 20, 2014 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial results for the year ended December 31, 2013. Capstone posted a net loss for 2013 of $9.4 million. Operating cash flow before changes in working capital(1) was $85.5 million. Capstone ended the year with cash on hand of $104.0 million. Copper production for the year at Capstone's three operating mines, Pinto Valley (82 days of ownership), Cozamin and Minto, totalled 113.8 million pounds of copper in concentrates and cathode (109.6 million pounds of payable copper) at a C1 cash cost(1) of $1.72 per payable pound of copper produced.
Capstone will hold a conference call and webcast on Friday, February 21, 2013 at 9:30 am Eastern Time (6:30 am Pacific Time) to discuss these results; call-in details are provided at the end of this release. This release should be read in conjunction with Capstone's unaudited condensed interim consolidated financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2013, which are available on Capstone's website at: http://capstonemining.com/s/financial-statements.asp and on SEDAR. An updated corporate presentation, including results to December 31, 2013, will also be available at http://capstonemining.com/s/presentations.asp.
|Q4 2013||Q4 2012||2013||2012|
|Revenue ($ millions)||136.8||72.5||332.0||305.5|
|Copper in concentrates produced (million lbs)||55.5||19.7||112.4||82.8|
|Copper cathode produced (million lbs)||1.4||-||1.4||-|
|Payable copper produced (million lbs)||54.9||18.8||109.6||79.6|
|C1 cash cost per payable pound of copper produced(1) ($)||1.78||1.70||1.72||1.50|
|Copper sold (million lbs)||44.3||19.4||100.1||79.0|
|Realized copper price per pound sold ($)||3.30||3.47||3.30||3.66|
|Net (loss) earnings ($ millions)||(20.9)||18.5||(9.4)||56.2|
|Net (loss) earnings per common share ($)||(0.06)||0.05||(0.02)||0.15|
|Adjusted net earnings(1) ($ millions)||8.1||19.3||20.3||77.9|
|Adjusted net earnings(1) per common share ($)||0.02||0.05||0.05||0.20|
|Operating cash flow before changes in working capital(1) ($ millions)||24.2||24.7||85.5||114.4|
|Operating cash flow before changes in working capital per common share(1) ($)||0.06||0.06||0.23||0.30|
|Cash and cash equivalents ($ millions)||104.0||499.9|
|Net (debt) cash(1) ($ millions)||(207.5)||499.9|
|1)|| These are alternative performance measures; please see "Alternative Performance Measures" at the end of this release. |
"This past year was pivotal for Capstone with the acquisition of the Pinto Valley mine, positioning us as a leading intermediate copper producer," said Darren Pylot, President and CEO of Capstone. "In 2014 at Pinto Valley we plan to stabilize the operation, lower costs and complete the study for the second phase, which is intended to extend the mine life. At Cozamin and Minto we are focused on reducing costs and optimizing operations, and we will further advance and de-risk our Santo Domingo development project."
"Our cash flow remained strong throughout 2013 and we ended the year with over $100 million in cash and a very conservative balance sheet," continued Mr. Pylot. "Our strong financial position provides us with significant flexibility to fund our capital programs and continue to grow the company."
Financial and Production Highlights for the Year Ended December 31, 2013
- Net loss of $9.4 million or $0.02 per common share which included:
- Earnings from mining operations of $57.1 million,
- Realized copper price of $3.30 per pound.
- Production costs included a $12.5 million non-cash charge related to the write-down of inventory at the Minto Mine,
- $14.4 million non-cash charge related to the write-down of capitalized mineral property costs at Minto,
- $15.6 million in current and deferred tax expenses.
- Adjusted net earnings(1) of $20.3 million or $0.05 per common share after making adjustments for certain non-cash and other items.
- Operating cash flow before changes in working capital(1) of $85.5 million or $0.23 per common share.
- Working capital decreased to $140.2 million at December 31, 2013 (which included $104.0 million of cash and cash equivalents) from $562.1 million at December 31, 2012, primarily as a result of closing the transaction to acquire the Pinto Valley Mine on October 11, 2013.
- Production of 109.6 million pounds of payable copper at a C1 cash cost(1) of $1.72 per pound of payable copper produced.
- Revenue of $332.0 million on the sale of 100.1 million pounds of copper, 14.7 million pounds of zinc, 2.3 million pounds of lead, 1,684,341 ounces of silver and 16,131 ounces of gold.
Operational Highlights for the Year Ended December 31, 2013
Pinto Valley Mine:
- Completed the acquisition of the Pinto Valley Mine from BHP Billiton on October 11, 2013 for a purchase price of $650.0 million less a working capital adjustment of $0.1 million.
- Produced 29.6 million pounds of copper in concentrates and 1.4 million pounds of copper cathode during 2013 (82 days of ownership) at a C1 cash cost1 of $2.26 per pound of payable copper.
- Produced 45.5 million pounds of copper in concentrates at a C1 cash cost(1) of $1.18 per pound of payable copper.
- Completed 19,836 metres of underground infill/step-out exploration drilling in 33 diamond drill holes during 2013 primarily focused in the Mala Noche Footwall Zone.
- Produced 37.2 million pounds of copper in concentrates at a C1 cash cost(1) of $1.93 per pound of payable copper.
- Initial development ore released from underground during September 2013.
Santo Domingo Project:
- Work on the Feasibility study ("FS") and engineering continued, with the FS now expected to be completed in the first half of 2014.
- On October 29, 2013, Capstone formally submitted the Environmental Impact Assessment for the Santo Domingo project. This initiates the formal environmental assessment process, which is expected to take approximately 15 to 18 months.
- During 2013 Capstone entered into an option agreement with Sociedad Química y Minera de Chile S.A. to earn up to 70% of Project Providencia in Region II, Chile, which is a very large under-explored land package in the world's most prolific copper jurisdiction. The initial option is on 350,000 hectares (3,500 square kilometres) and would be reduced over time to a maximum of 50,000 hectares if a joint venture is ultimately formed. Capstone is the operator of the project and may earn up to a 70% interest in the property with the right to withdraw from the project at any time.
- Development activities at Kutcho were not significantly advanced in 2013 as Capstone focused on the acquisition of Pinto Valley. Following the successful close of the Pinto Valley transaction, Kutcho's production profile and mine life no longer fit within Capstone's growth strategy and strategic alternatives are being evaluated. Based on the intention of management to dispose of this asset, Kutcho's assets and liabilities have been classified in the December 31, 2013 audited financial statements as held for sale.
Financial and Production Highlights for the Quarter Ended December 31, 2013
In Q4 2013 the Company recorded a net loss of $20.9 million. The main contributors to the net loss were:
- Earnings from mining operations were $16.7 million, which was more than offset by the Minto mineral property write-down of $14.4 million, G&A expenses of $5.8 million, Pinto Valley transaction costs of $3.4 million, net finance expense of $3.4 million, and tax expense of $6.1 million.
- Adjusted net earnings(1) were $8.1 million or $0.02 per common share, after making adjustments for certain non-cash and other items.
- Operating cash flow before changes in working capital(1) was $24.2 million or $0.06 per share.
- Working capital decreased to $140.2 million at December 31, 2013 (which included $104.0 million of cash and cash equivalents) from $480.7 million at September 30, 2013, primarily as a result of closing the transaction to acquire the Pinto Valley Mine on October 11, 2013.
- Produced a total of 56.9 million pounds of payable copper at an estimated C1 cash cost(1) of $1.78 per pound of payable copper produced.
- Revenue of $136.8 million on the sale of 44.4 million pounds of copper, 4.3 million pounds of zinc, 0.2 million pounds of lead, 2,100 ounces of gold and 446,000 ounces of silver.
Capstone's 2014 guidance for Cozamin and Minto is 38,500 tonnes (± 5%) of copper contained in concentrates at a C1 cash cost(1) of $1.85 to $1.95 per pound of payable copper, net of by-product credits and selling costs. Pinto Valley guidance will follow before the end of the first quarter.
Conference Call and Webcast Details
Capstone will host a conference call and webcast on Friday, February 21, 2014 at 9:30 am Eastern Time (6:30 am Pacific Time).
|Date:||Friday, February 21, 2014|
|Time:||9:30 am Eastern Time -- 6:30 am Pacific Time|
|Dial in:||North America: 1-888-390-0546, International: +1-416-764-8688|
|Replay:||North America: 1-888-390-0541, International: +1-416-764-8677|
The conference call replay will be available until March 7, 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, committed to the responsible development of our assets and the environments in which we operate. We are focused on copper, with three producing mines; the Pinto Valley copper-molybdenum mine located in Arizona, US, the Cozamin copper-silver-zinc-lead mine 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 Region III, Chile, in partnership with Korea Resources Corporation, and the 100% owned Kutcho copper-zinc-gold-silver 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 December 31, 2013 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.
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