Ms. Letitia Wong reports
COPPER MOUNTAIN MINING ANNOUNCES Q4 AND FULL YEAR 2018 FINANCIAL RESULTS
Copper Mountain Mining Corp. has provided its fourth quarter and full-year 2018 financial results. All results are reported on a 100-per-cent basis. The company's financial statements and management discussion and analysis (MD&A) are available at the company's website and at SEDAR.
Fourth quarter 2018 and full-year 2018 highlights
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Fourth quarter 2018 production was the strongest quarter of the year, with production increasing 9.7 per cent from the prior year to 24.5 million pounds of copper equivalent (comprising 20.6 million pounds of copper, 8,124 ounces of gold and 62,711 ounces of silver).
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Full-year 2018 production met guidance, with production increasing 4.6 per cent from the prior year to 92.4 million pounds of copper equivalent (comprising 78.8 million pounds of copper, 28,250 ounces of gold and 273,913 ounces of silver).
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Operating (C1) cash costs for the fourth quarter decreased 13 per cent compared with the prior year to $1.60 (U.S.) per pound of copper produced and full-year 2018 C1 cash costs decreased 4 per cent compared with the prior year to $1.77 (U.S.) per pound of copper produced.
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Revenue for the fourth quarter was $73.1-million from the sale of 19.4 million pounds of copper, 7,475 ounces of gold, and 69,761 ounces of silver and revenue for the full year of 2018 was $296.0-million, from the sale of 79.2 million pounds of copper, 26,799 ounces of gold and 284,086 ounces of silver, net of pricing adjustments.
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Adjusted loss per share was one cent for the fourth quarter and earnings of two cents for the year.
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Cash flow from operations for the fourth quarter was $28.8-million and $51.3-million for the full year of 2018.
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In 2018, mineral reserves increased at the Copper Mountain mine, a preliminary economic assessment (PEA) on New Ingerbelle was completed resulting in an after-tax NPV (net present value) (8 per cent) of $390-million (U.S.) and a feasibility study was completed for the Eva copper project resulting in an after-tax NPV (8 per cent) of $256-million (U.S.).
"In 2018, we focused on building a strong foundation from which to grow our business," said Copper Mountain's president and chief executive officer, Gil Clausen. "The Copper Mountain mine finished the year achieving guidance across all metrics. We are also completing an integrated mine plan which will combine the New Ingerbelle deposit into the Copper Mountain mine plan and may double the mine life. The New Ingerbelle deposit provides the potential to add significant value through the addition of low-risk, low-cost production, particularly as we evaluate a mill expansion plan, which could allow for increased production levels in our existing mill within our current operating and environmental permits. We expect to complete this integrated life of mine plan and publish a new technical report for our Copper Mountain mine in the first quarter of 2019."
SUMMARY FINANCIAL RESULTS
(thousands of dollars, except for per share amounts)
Three months ended Dec. 31, Year ended Dec. 31,
2018 2017 2018 2017
Financial
Revenue $73,149 $85,687 $296,019 $304,080
Gross profit 7,896 20,013 25,306 59,095
Gross profit before depreciation 18,089 34,966 76,352 110,586
Net income (loss) (18,982) 23,538 (26,876) 67,339
Earnings (loss) per share -- basic $(0.09) $0.12 $(0.13) $0.36
Adjusted net (loss) income (1,400) 25,311 3,377 46,598
Adjusted (loss) earnings per share -- basic $(0.01) $0.19 $0.02 $0.35
EBITDA (234) 31,564 40,685 122,504
Adjusted EBITDA 17,348 33,337 85,841 90,692
Cash flow from operations 28,777 17,445 51,266 57,274
Cash and cash equivalents -- end of year 46,123 45,133
Fourth quarter 2018 financial review
The company reported a gross profit for Q4 2018 of $7.9-million, compared with $20.0-million for Q4 2017, and a net loss of $19.0-million in Q4 2018, compared with a net income of $23.5-million in Q4 2017. The increase in the net loss from net income was primarily a result of a non-cash unrealized foreign exchange loss of $14.7-million compared with a non-cash unrealized foreign exchange loss of $1.8-million for Q4 2017, a change of approximately $12.9-million, which was primarily related to the company's debt that is denominated in U.S. dollars. The increase in net loss was also due to lower revenue and higher cost of sales year over year.
The company recognized revenue of $73.1-million, net of pricing adjustments and treatment charges, on the sale of 19.4 million pounds of copper, 7,475 ounces of gold, and 69,761 ounces of silver and based on an average realized copper price of $2.81 (U.S.) per pound. This is compared with Q4 2017 revenue of $85.7-million, net of pricing adjustments and treatment charges, on the sale of to 18.1 million pounds of copper, 5,622 ounces of gold and 67,359 ounces of silver, and based on an average realized copper price of $3.12 (U.S.) per pound for Q4 2017. Despite higher sales, lower revenue year over year was a result of a 10-per-cent-lower realized copper price in Q4 2018 compared with Q4 2017 and a Q4 2018 mark-to-market adjustment of negative $2.4-million compared with a positive mark-to-market adjustment of $10.3-million in Q4 2017.
Cost of sales for Q4 2018 decreased marginally to $65.2-million compared with $65.7-million in Q4 2017, even though more concentrate was sold in Q4 2018 than Q4 2017. This was because Q4 2017 included a $10.8-million writedown to the low-grade stockpile, which was included in cost of sales.
Exploration expenditures in Q4 2018 were $1.2-million, which includes exploration in both Australia and British Columbia.
Full-year 2018 financial review
The company reported gross profit in 2018 of $25.3-million, compared with $59.1-million in 2017, and a net loss in 2018 of $26.9-million, compared with a net income of $67.3-million in 2017. The increase in net loss in 2018 from net income in 2017 was primarily a result of a non-cash unrealized foreign exchange loss of $23.8-million in 2018, compared with a non-cash unrealized foreign exchange gain of $20.9-million in 2017, a change of approximately $45-million, which was mainly related to the company's debt that is denominated in U.S. dollars. The increase in net loss was also due to lower revenue and higher cost of sales year over year.
The company recognized revenue of $296.0-million in 2018, net of pricing adjustments and treatment charges, on the sale of 79.2 million pounds of copper, 26,799 ounces of gold and 284,086 ounces of silver based on an average realized copper price of $2.98 (U.S.) per pound. This compares with revenue of $304.1-million in 2017, net of pricing adjustments and treatment charges, on the sale of 73.9 million pounds of copper, 23,969 ounces of gold and 260,493 ounces of silver, based on an average realized price of realized copper price of $2.82 (U.S.) per pound. As required under IFRS (international financial reporting standards), revenue in 2017 included a positive mark-to-market adjustment of $10.7-million for unsettled shipments outstanding at year-end, as compared with a negative mark-to-market adjustment of $900,000 for 2018 unsettled shipments at year-end.
Cost of sales for 2018 increased by $26-million to $270.7-million compared with $245.0-million in 2017. This increase was due in small part to higher costs for diesel fuel, maintenance and power, but primarily due to the change in ore stockpile inventory with a $13.1-million decrease in 2018 charged to cost of sales as compared with a $14.0-million increase in 2017 charged to ore stockpile inventory. The drawdown of ore stockpiles in the year is a result of increased development stripping as the Copper Mountain mine starts to expose higher grade areas of the pit for future years. As required under IFRS, some of these additional costs of stripping are capitalized when the period stripping ratio exceeds the life of mine stripping ratio of 2:1.
Exploration expenditures for the full year of 2018 were $6.5-million which includes exploration in both Australia and British Columbia.
SUMMARY OPERATING RESULTS
Copper Mountain mine (100% basis) Q4 2018 Q4 2017 Annual 2018 Annual 2017
Mine
Total tonnes mined (000s) 19,730 18,998 74,337 72,597
Ore tonnes mined (000s) 4,407 7,370 20,567 26,204
Waste tonnes (000s) 15,323 11,628 53,770 46,393
Stripping ratio 3.48 1.58 2.61 1.77
Mill
Tonnes milled (000s) 3,873 3,692 14,535 14,086
Feed grade (Cu %) 0.30 0.32 0.31 0.32
Recovery (%) 81.0 75.1 79.8 77.2
Operating time (%) 96.0 93.4 92.6 90.3
Tonnes milled (tpd) 42,098 40,130 39,822 38,592
Production
Copper (000s lb) 20,628 19,556 78,847 75,791
Gold (oz) 8,124 5,206 28,250 23,633
Silver (oz) 62,711 70,384 273,913 277,094
Sales
Copper (000s lb) 19,431 18,091 79,195 73,860
Gold (oz) 7,475 5,622 26,799 23,969
Silver (oz) 69,761 67,359 284,086 260,493
Costs and prices
Total operating costs (C1) per pound of
copper produced (US$) $1.60 $1.85 $1.77 $1.84
All-in-sustaining costs per pound of
copper produced (US$) $1.90 $1.99 $2.13 $2.00
Average realized copper price (US$) $2.81 $3.12 $2.98 $2.82
Fourth quarter 2018 operating results review
In Q4 2018, the Copper Mountain mine produced 20.6 million pounds of copper, 8,124 ounces of gold and 62,711 ounces of silver compared with 19.6 million pounds of copper, 5,206 ounces of gold and 70,384 ounces of silver in Q4 2017. Increased recoveries for all metals and a 5-per-cent increase in tonnes milled resulted in strong production results for Q4 2018 and the strongest quarter for copper and gold production in 2018. Increased gold production can be attributed to the new flash flotation circuit installed in the second half of 2018.
Total operating costs (C1) for Q4 2018 were $1.60 (U.S.) per pound of copper produced, 13 per cent lower than the C1 costs for Q4 2017 of $1.85 (U.S.) per pound of copper produced. The improvement in costs, when compared with the prior year, is related to several factors including 5 per cent higher copper production in the quarter, a 5-per-cent decrease in total mine operating costs in Q4 2018, and a weakening of the Canadian dollar to the United States dollar used when translating C1 costs to United States dollars. It should be noted that substantially all of the company's operating costs are priced in Canadian dollars. The decrease in C1 costs is also affected by the levels of deferred stripping in the period as these excess stripping costs are treated as capital expenditures. Deferred stripping costs are captured in all-in sustaining costs (AISC) and not included in C1 costs. The total cash value of deferred stripping in Q4 2018 was $4.6-million compared with nil in Q4 2017.
Full year 2018 operating results review
In 2018, the Copper Mountain mine achieved annual copper production guidance, producing 78.8 million pounds of copper, 28,250 ounces of gold and 273,913 ounces of silver compared with 75.8 million pounds of copper, 23,633 ounces of gold and 277,094 ounces of silver in 2017. This represents an increase of 4 per cent for copper, 19 per cent for gold and a slight 1-per-cent decrease in silver production. Increases for copper and gold production as compared with the prior year is a result of improved recoveries and mill throughput in 2018, offset slightly by lower grades being milled in 2018. Improved recoveries in the mill can be attributed to the installation of the new flash flotation circuit in the third quarter of 2018. Recoveries contributed to strong annual production results which included an increase of total tonnes milled by 3 per cent.
Total C1 costs for 2018 were $1.77 (U.S.) per pound of copper produced, 4 per cent lower than the C1 costs for 2017 of $1.84 (U.S.). The improvement in costs per pound is a result of higher copper production in 2018 and slightly lower total mine operating costs when compared with 2017, after taking into account cost associated with increased low-grade stockpile inventories in 2017, as required under IFRS. The decrease in C1 costs was also affected by the levels of deferred stripping in the year as these mining costs are treated as capital expenditures and deferred as required under IFRS. Deferred stripping costs are captured in AISC and not included in C1 costs. The total cash value of deferred stripping in 2018 was $20.2-million, compared with $1.5-million in 2017.
Q4 2018 financial and operating results conference call and webcast
The company will hold a conference call on Friday, Feb. 15, 2019, at 7:30 a.m. Pacific Standard Time for management to discuss the Q4 2018 financial and operating results.
Live dial-in information
Toronto and international: 1-647-427-7450
North America (toll-free): 1-888-231-8191
To participate in the webcast live via computer go to the On24 website.
Replay call information
Toronto and international: 1-416-849-0833
Passcode: 5973748
North America toll-free: 1-855-859-2056
Passcode: 5973748
The conference call replay will be available from 12:30 p.m. PST on Feb. 15, 2019, until 8:59 p.m. PST on Feb. 22, 2019. An archive of the audio webcast will also be available on the company's website.
About Copper Mountain Mining Corp.
Copper Mountain's flagship asset is the 75-per-cent-owned Copper Mountain mine located in Southern British Columbia near the town of Princeton. The Copper Mountain mine produces about 100 million pounds of copper equivalent per year with a large resource that remains open laterally and at depth. Copper Mountain also has the permitted, development stage Eva copper project in Queensland, Australia, and an extensive 397,000-hectare highly prospective land package in the Mount Isa area.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
For the years ended Dec. 31, 2018, and 2017
(in thousands of dollars, except for earnings per share)
2018 2017
Revenue $296,019 $304,080
Cost of sales (270,713) (244,985)
Gross profit 25,306 59,095
General and administration (10,990) (6,757)
Property investigation - (35)
Share-based compensation (1,605) (2,152)
Income from operations 12,711 50,151
Finance income 582 319
Finance expense (15,564) (13,070)
Unrealized gain (loss) on interest rate swap 716 (87)
Foreign exchange (loss) gain (23,788) 20,949
(Loss) income before tax (25,343) 58,262
Current resource tax expense (1,217) (1,879)
Deferred income and resource tax (expense) recovery (316) 10,956
Net (loss) income (26,876) 67,339
Other comprehensive loss
Foreign currency translation adjustment (1,655) -
Total comprehensive (loss) income (28,531) 67,339
Net (loss) income and comprehensive (loss) income attributable to
Shareholders of the company (22,337) 47,963
Non-controlling interest (4,539) 19,376
(26,876) 67,339
(Loss) income per share
Basic $(0.13) $0.36
Diluted $(0.13) $0.35
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