VANCOUVER, British Columbia, October 29, 2014 /PRNewswire/ --
Operating cash flow before changes in working capital of $57.1million
(All amounts in US$ unless otherwise specified)
Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial results for the three and nine months ended September 30, 2014, with operating cash flow before changes in working capital[1]for the quarter a record $57.1 million. Capstone posted a loss for the quarter of $0.1 million due to non-cash charges of $3.0 million related to a write down of inventory at Minto and a non-cash impairment charge of $8.6 million in the carrying value of the Kutcho development project. Copper production during the quarter at Capstone's three operating mines totalled 26,178 tonnes of copper in concentrates and cathode (25,270 tonnes of payable copper) at a C1 cash cost[1]of $1.84 per payable pound of copper produced.
Capstone will hold a conference call and webcast on Thursday, October 30, 2014at 11:30 am Eastern time (8:30 am Pacific time) to discuss these results; call-in details and information on associated slides are provided at the end of this release.This release should be read in conjunction with Capstone's unaudited condensed interim consolidated financial statements and management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2014, which are available on Capstone's website at http://capstonemining.com/investors/financial-reporting/default.aspxand on SEDAR. An updated corporate presentation, including results to September 30, 2014, in addition to the Q3 2014 webcast slides, will also be available athttp://capstonemining.com/investors/events-and-presentations/default.aspx.
NOTE:The transaction to acquire the Pinto Valley Mine closed on October 11, 2013 and therefore its results of operations are included in the Company's reported results from that date forward. As such, there are no comparable Q3 2013 or 2013 YTD figures for the Pinto Valley Mine.
Overview
Q3 2014 2013
2014 Q3 2013 YTD YTD
Revenue ($ millions) 183.9 79.3 516.5 195.2
Copper in concentrates produced (tonnes) 25,529 8,595 79,764 25,790
Copper cathode produced (tonnes) 649 - 1,796 -
Payable copper produced (tonnes) 25,270 8,252 78,713 24,782
C1 cash cost per payable pound of copper produced[1] ($) 1.84 1.57 1.92 1.66
Copper sold (tonnes) 29,032 10,691 80,196 25,323
Realized copper price per pound sold ($) 2.98 3.25 3.10 3.29
Net (loss) earnings ($ millions) (0.1) (4.6) 12.0 11.5
Net (loss) earnings per common share ($) 0.00 (0.01) 0.03 0.03
Adjusted EBITDA[1]($ millions) 70.0 21.3 191.2 74.1
Adjusted EBITDA per common share[1] ($) 0.18 0.06 0.50 0.20
Operating cash flow before changes in working
capital[1]($ millions) 57.1 13.6 161.8 62.9
Operating cash flow before changes in working capital
per common share[1] ($) 0.15 0.04 0.42 0.17
Net debt (cash)[1] ($ millions) 121.1 (453.8) 121.1 (453.8)
[1]These are alternative performance measures; please see "Alternative Performance Measures" at the end of this release.
"We posted a strong quarter operationally, with all of our mines tracking well against our 2014 cost and production guidance," said Darren Pylot, President and CEO of Capstone. "The results of the cost reductions and operating efficiencies that we are implementing at Pinto Valley were evident during the third quarter, with C1 cash costs[1]of $1.90 per pound of copper."
"This quarter also demonstrated our significant ability to generate cash, setting another quarterly record for cash flow from operations," continued Mr. Pylot. "We used our cash to reduce net debt by $60 million, ending the quarter with net debt of $121 million, which includes $176 million of cash and cash equivalents, providing Capstone with a strong balance sheet to sustain our business plan and to protect against market volatility."
Financial and Production Highlights for the Three Months Ended September 30, 2014
- Adjusted EBITDA[1]of $70.0 million or $0.18 per common share after making adjustments for certain non-cash and other items.
- Operating cash flow before changes in working capital[1]of $57.1 million or $0.15 per common share.
- Net loss of $0.1 million or $0.00 per common share which included:
o Earnings from mining operations of $31.4 million,- Realized copper price of $2.98 per pound.
oProduction costs included a $3.0 million non-cash charge related to the write-down of inventory at Minto,
o$8.6 million non-cash charge related to the impairment of capitalized mineral property costs at the Kutcho project,
o$10.8 million tax expense.
- Working capital increased to $152.8 million at September 30, 2014 (which included $176.1 million of cash) from $137.4 million at December 31, 2013.
- Production of 25,270 tonnes of payable copper at a C1 cash cost[1]of $1.84 per pound of payable copper produced.
- Revenue of $183.9 million generated primarily from the sale of 29,032 tonnes of payable copper.
Operational Highlights for the Three and Nine Months Ended September 30, 2014
Pinto Valley Mine:
- Produced 15,812 tonnes of copper in concentrates and 649 tonnes of copper cathode during Q3 2014. The C1 cash cost[1]was $1.90 per pound of payable copper produced.
- Produced 49,412 tonnes of copper in concentrates and 1,796 tonnes of copper cathode during 2014 YTD at a C1 cash cost[1]of $2.03 per pound of payable copper produced.
- Work is ongoing related to the implementation of improvements identified by the Pinto Valley Phase 2 pre-feasibility study ("PV2 PFS"), with the project execution plan in place, orders for the majority of the mine equipment placed and detailed engineering and construction underway.
Cozamin Mine:
- Produced 4,948 tonnes of copper in concentrates during Q3 2014 at a C1 cash cost[1]of $1.29 per pound of payable copper produced.
- Produced 15,240 tonnes of copper in concentrates during 2014 YTD at a C1 cash cost[1]of $1.25 per pound of payable copper produced.
- Exploration drilling from surface to test structural splays off of the main Mala Noche vein system continued in Q3 2014.
- During the quarter Capstone acquired 45 mining concessions covering 770 hectares situated along strike and surrounding current Capstone claims, giving Capstone control of the majority of the Mala Noche vein system and many of its subsidiary splays both along strike and at depth.
- On August 5, 2014, Capstone filed a technical report updating Mineral Resource and Mineral Reserve estimates for Cozamin. Using a $35/tonne net smelter return ("NSR") cut-off grade ("COG") at December 31, 2013, the Cozamin Indicated Mineral Resources, inclusive of Mineral Reserves, totaled 395 million pounds of copper and Inferred Mineral Resources totaled 184 million pounds of copper.Probable Mineral Reserves at December 31, 2013 totaled 259 million pounds of copper using a $42.50/tonne NSR COG for the San Roberto and Mala Noche Footwall copper zones and $38/tonne for the San Rafael zinc zone, which represents an expected mine life of 6.5 years. This compares with Proven and Probable Reserves of 311 million pounds of copper as disclosed in the Company's 2013 Annual Information Form.
Minto Mine:
- Produced 4,762 tonnes of copper in concentrates during Q3 2014 at a C1 cash cost[1]of $2.18 per pound of payable copper produced.
- Produced 15,112 tonnes of copper in concentrates during 2014 YTD at a C1 cash cost[1]of $2.19 per pound of payable copper produced.
- Surface mining has been suspended since the end of Q3 2014 due to delays in receipt of the Water Use License Amendment, which is required to permit pre-stripping at Minto North. Underground mining will continue along with the milling of underground and stockpiled ore.
Santo Domingo Project:
- The Company initiated the tender process for EPC/EPCM packages for project development.
- The government issued a second addendum request with respect to the EIS process, with a slate of 175 observations to be addressed during Q4 2014.
- A third party objection to the Santo Domingo port concession application was rejected by the Chilean Armed Forces, clearing the way for final approval of the application.
Greenfield Exploration:
- Exploration work continued during Q3 2014 at Project Providencia in Region II, Chile. Capstone completed extensive soil and rock geochemical surveys as well as geological mapping and also started several different Induced Polarization surveys. Eight different prospect areas have been identified for their potential to host copper gold mineralization of porphyry-type and IOCG and Manto type mineralization. Preparations are underway to start drilling targets in Q4 2014.
Corporate:
- On September 5, 2014 Capstone announced the launch of $300 million of Senior Notes maturing in 2022. The Notes offering was intended to opportunistically repay borrowings under the Capstone's two existing credit facilities. As market conditions deteriorated in the week following the announcement, the Company discontinued the offering as targeted terms and conditions were not achievable. As of the date of this news release the market has not improved to a level aligned with the Company's criteria for a borrowing. The Company will continue to monitor the high yield market and is prepared to take advantage of it should conditions improve. With current liquidity, availability under existing facilities and strong cash flow from operations, the Company has more than sufficient capacity to meet its anticipated capital requirements and is under no compulsion to access the high yield market.
Production Outlook
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: Thursday, October 30, 2014
Time: 11:30 am Eastern Time (8:30 am Pacific Time)
Dial in: North America: 1-888-390-0546, International: +416-764-8688
Webcast: http://www.newswire.ca/en/webcast/detail/1420970/1578324
Q3 2014 webcast
slides: http://capstonemining.com/investors/financial-reporting/default.aspx
Replay: North America: 1-888-390-0541, International: +416-764-8677
Replay Passcode: 273766#
The conference call replay will be available until Thursday, November 13, 2014. The conference call audio and transcript will be available on Capstone's website within approximately 24 hours of the call athttp://capstonemining.com/investors/conference-calls-and-webcasts/default.aspx.
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 athttp://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 athttp://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 athttp://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 43-101Standards of Disclosure for Mineral Projectsof 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 43-101Standards of Disclosure for Mineral Projectsof 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 (Technical Information related to mining and production), 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 nine months ended September 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.
Cindy Burnett, VP, Investor Relations and Communications, +1-604-637-8157, cburnett@capstonemining.com
