Mr. Darren Pylot reports
CAPSTONE MINING THIRD QUARTER 2018 FINANCIAL RESULTS
Capstone Mining Corp. has released its financial results for the three and nine months ended Sept. 30, 2018. Cash flow from operating activities for the quarter was $15.3-million or four cents per share and $76.9-million or 20 cents per share year to date. Net income from continuing operations for the quarter was $4.1-million or one cent per share. Copper production for the quarter from continuing operations totalled 18,600 tonnes (17,900 tonnes of payable copper) at a C1 cash cost (1) from continuing operations of $1.85 per payable pound produced.
(All amounts are in U.S. dollars unless otherwise specified.)
"Our mines performed as expected in the third quarter, and we have seen an upward trend in production as we move through 2018," said Darren Pylot, president and chief executive officer of Capstone. "Year to date, we have generated $76.9-million of cash flow from operating activities and net income from continuing operations of $22.6-million.
"At Pinto Valley, we are starting to see results from the various optimization activities under way through increasing plant availability," continued Mr. Pylot. "Copper production at Cozamin for the quarter was higher than projected, and quarterly zinc production was the highest in over five years. We remain on track to meet our full-year consolidated copper production guidance from continuing operations."
Highlights:
- Third quarter 2018 copper production and C1 cash cost (1)
from continuing operations of 18,600 tonnes and $1.85 per payable pound produced; this represents increased production compared with first quarter 2018 and second quarter 2018, and was in accordance with plan;
- Highest quarterly zinc production in over five years; production from the San Rafael zinc zone at the Cozamin mine ramped up to planned levels by mid-quarter;
- Updated technical report for the Cozamin mine expected in fourth quarter 2018; Capstone expects to release an updated technical report for the Cozamin mine in fourth quarter 2018, including updated reserves and resources and the results of a material-handling optimization aimed at increasing the production from the mine to utilize the current 20-per-cent unused processing plant capacity;
- Results of updated technical report expected in fourth quarter 2018 for Santo Domingo; work continued on updating the Santo Domingo copper-iron project technical report to reflect current economic and operational inputs.
OPERATIONAL OVERVIEW
Q3 2018 Q3 2017 2018 YTD 2017 YTD
Copper production (tonnes)
Pinto Valley 14,200 14,400 39,000 41,200
Cozamin 4,400 4,200 12,200 12,500
Total from continuing operations 18,600 18,600 51,200 53,700
C1 cash cost (1) ($/lb) produced
Pinto Valley $2.15 $2.06 $2.23 $2.01
Cozamin 0.87 1.10 0.76 1.21
Consolidated from continuing operations 1.85 1.84 1.88 1.82
Pinto Valley performed as expected in the third quarter, with planned higher grade feeding the mill as scheduled. In the third quarter, Cozamin's copper production was higher than projected, and zinc production increased from the second quarter as planned. Production and cost guidance from continuing operations remain unchanged.
FINANCIAL OVERVIEW
Q3 2018 Q3 2017 2018 YTD 2017 YTD
Revenue from continuing operations (2) ($ millions) $112.7 $118.0 $317.9 $303.9
Net income from continuing operations ($ millions) 4.1 8.9 22.6 7.1
Net income from continuing operations attributable to
shareholders ($ millions) 4.3 8.9 23.4 7.2
Net income from continuing operations attributable to
shareholders per common share -- basic and diluted ($) 0.01 0.02 0.06 0.02
Adjusted net income (loss) from continuing operations
(1) ($ millions) 4.8 (5.6) 22.3 (14.4)
Adjusted net income (loss) from continuing operations
attributable to shareholders (1) ($ millions) 5.1 (5.5) 23.1 (14.3)
Adjusted net income (loss) from continuing operations
attributable to shareholders per common share (1) --
basic and diluted ($) 0.01 (0.01) 0.06 (0.04)
Net income ($ millions) 1.3 20.2 15.4 25.6
Net income attributable to shareholders ($ millions) 1.5 20.3 16.2 25.6
Net income attributable to shareholders per common share --
basic and diluted ($) 0.00 0.05 0.04 0.07
Adjusted EBITDA from continuing operations (1) ($ millions) 29.8 28.8 94.4 57.0
Cash flow from operating activities (2) ($ millions) 15.3 41.7 76.9 67.7
Cash flow from operating activities per common share
(1, 2) -- basic ($) 0.04 0.11 0.20 0.18
Operating cash flow before changes in working capital
(1, 2) ($ millions) 25.9 41.4 81.3 91.6
Operating cash flow before changes in working capital
per common share (1, 2) -- basic ($) 0.07 0.11 0.21 0.24
Management team updates
As part of the strengthening and technical advancement of the company's operations and projects, the corporate and Pinto Valley senior management teams have been strengthened with the recruitment of three key individuals.
Mike Wickersham has joined Pinto Valley as mine general manager. He is a chemical engineer with over 35 years of experience in the mining and mineral processing industry. Previously, he held a series of roles at Rio Tinto's Iron Ore Company of Canada (IOCC) as vice-president, future operations; vice-president, northern operations; and general manager, integration. Prior to that, he held mine and production management positions at Rio Tinto's boron operations and held technical and production roles across the production chain at Kennecott Utah Copper for 12 years.
In addition, Albert Garcia has been appointed as vice-president, projects. He is a professional engineer with leadership experience in engineering, construction, mining and executive project management in large capital-intensive projects in challenging locations. Previously, he was senior vice-president and chief operating officer of Latin American operations at Aecom and was the consultant engineering director on Capstone's Santo Domingo project in 2014. He has a PhD in engineering from the University of Missouri-Columbia and an MS in civil engineering from San Jose State University. His immediate priority is to update the 2014 Santo Domingo feasibility study to reflect current economic and operational inputs.
As previously reported, Raman Randhawa will assume the chief financial officer role, effective Jan. 1, 2019. Mr. is a Canadian chartered professional accountant (CPA and CA) with over 17 years of financial and leadership experience in the mining sector. Before joining Capstone, he spent 13 years at Goldcorp in a series of senior management roles and brings with him a unique mix of finance and operational experience in mining, finance, capital markets and business planning. His transition is on track, and James Slattery, senior vice-president and chief financial officer, is expected to retire Dec. 31, 2018, as planned.
Outlook -- 2018 production and cost guidance
Capstone's 2018 consolidated production guidance from continuing operations of 71,000 tonnes (plus or minus 5 per cent) of copper, consolidated C1 cash cost (1) guidance from continuing operations of $1.75 to $1.85 and all-in sustaining cost (1) guidance from continuing operations of $2.50 to $2.60 per payable pound produced remain unchanged. Pinto Valley's costs are expected to be slightly higher than guided, offset by lower-than-guided costs at Cozamin.
Consolidated capital expenditure guidance of $90.0-million and total exploration guidance of $12.4-million remain unchanged.
Minto has been excluded from consolidated production and cost guidance.
Conference call and webcast details
Capstone will hold a conference call and webcast on Oct. 31, 2018, at 11:30 a.m. Eastern Time (8:30 a.m. Pacific Time) to discuss these results. Call-in details and information on associated slides are provided herein. This release is not suitable on a stand-alone basis for readers unfamiliar with Capstone and should be read in conjunction with Capstone's consolidated financial statements and management's discussion and analysis for the quarter ended Sept. 30, 2018, which are available on Capstone's website and on SEDAR, all of which have been reviewed and approved by Capstone's board of directors. An updated corporate presentation, including results to Sept. 30, 2018, in addition to the third quarter 2018 webcast slides, will also be available at the company's website.
Date: Oct. 31, 2018
Time: 11:30 a.m. Eastern Time (8:30 a.m. 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
Replay passcode: 808789 followed by the number sign
The conference call replay will be available until Nov. 7, 2018. The conference call audio and transcript will be available on Capstone's website within 48 hours of the call.
About Capstone Mining Corp.
Capstone Mining is a Canadian base metal mining company, focused on copper. The company is committed to the responsible development of its assets and the environments in which it operates. Its two producing mines are the Pinto Valley copper mine located in Arizona, United States, and the Cozamin polymetallic mine in Zacatecas state, Mexico. In addition, Capstone has the large-scale 70-per-cent-owned copper-iron Santo Domingo development project in Region III, Chile, in partnership with Korea Resources Corp., the Minto copper mine in Yukon, Canada, currently on care and maintenance, as well as a portfolio of exploration properties.
National Instrument 43-101 compliance
Unless otherwise indicated, Capstone has prepared the technical information in this news release based on information contained in the technical reports, news releases, and management's discussions and analyses, available under Capstone Mining's company profile on SEDAR. Each disclosure document was prepared by, or under the supervision of, a qualified person as defined in National Instrument 43-101 (Standards of Disclosure for Mineral Projects) of the Canadian Securities Administrators. 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 was prepared by, or under the supervision of, a qualified person as defined in National Instrument 43-101 (Standards of Disclosure for Mineral Projects) of the Canadian Securities Administrators. The disclosure of the technical information contained in this news release has been reviewed and approved by Gregg Bush, PEng, senior vice-president and chief operating officer. Technical information related to mineral exploration activities has been reviewed and approved by Brad Mercer, PGeol, senior vice-president, exploration. Both are qualified persons under NI 43-101.
(1) These are alternative performance measures.
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