Capstone Mining 2013 First Quarter Financial Results Demonstrate Solid
Progress and Growth
VANCOUVER, British Columbia, May 8, 2013
VANCOUVER, British Columbia, May 8, 2013 /PRNewswire/ --
-- Operating Cash Flow of $20.1 million, Net Earnings of $6.9 million or $0.02
per share (All amounts in US$ unless otherwise specified)
Capstone Mining Corp. ("Capstone") (TSX: CS) today announced its financial
results for the three months ended March 31, 2013. Net earnings for the
quarter were $6.9 million and operating cash flow before changes in working
capital ^(1) was $20.1 million. Capstone ended the quarter with cash on hand
of $485.4 million, a $200 million credit facility and no long-term debt.
Copper production for the quarter at Capstone's two operating mines, Cozamin
and Minto, totalled 18.6 million pounds in concentrates (17.9 million pounds
of payable copper) at a C1 cash cost ^(1) of $1.72 per payable pound of copper
Capstone will hold a conference call and webcast on Wednesday, May 8, 2013 at
11:30 am Eastern time (8:30 am Pacific time) to discuss these results; call-in
details are provided at the end of this release. This release should be read
in conjunction with Capstone's unaudited condensed interim consolidated
financial statements and management's discussion and analysis ("MD&A") for the
three months ended March 31, 2013, which are available on Capstone's website
at: http://capstonemining.com/s/Financial_Statements.asp and on SEDAR. An
updated corporate presentation, including results to March 31, 2013, will also
be available at http://capstonemining.com/s/Presentation.asp .
Q1 2013 Q1 2012
Revenue ($ millions) 57.7 70.4
Copper in concentrates produced (million lbs) 18.6 18.6
Payable copper produced (million lbs) 17.9 17.9
C1 cash cost per payable pound of copper produced(1) ($) 1.72 1.45
Copper sold (million lbs) 15.1 16.2
Recognized copper price per pound ($) 3.51 4.02
Net earnings ($ millions) 6.9 15.7
Net earnings per common share ($) 0.02 0.04
Adjusted net earnings(1) ($ millions) 6.1 22.3
Adjusted net earnings(1) per common share ($) 0.02 0.06
Operating cash flow before changes in working capital(1)
($ millions) 20.1 28.7
Operating cash flow before changes in working capital per
common share(1) ($) 0.05 0.08
Cash and cash equivalents ($ millions) 485.4 501.7
(1) These are alternative performance measures; please see "Alternative
Performance Measures" at the end of this release.
"Net earnings and cash flow were impacted by lower copper prices this
quarter," said Darren Pylot, President and CEO of Capstone. "However, we are
very pleased with the status of our operating mines, both of which have
reached a level of operating maturity that permits considerable flexibility in
their operations, allowing them to respond quickly as mining conditions
"The most significant news occurred subsequent to quarter end, with our
announced agreement to purchase BHP Billiton's Pinto Valley copper mine and
associated infrastructure in Arizona. We expect this transaction to close in
the third quarter of 2013, and have a meaningful impact on our copper
production," continued Mr. Pylot.
Financial and Production Highlights for the Three Months Ended March 31, 2013
*Net earnings of $6.9 million or $0.02 per common share which included:
*Earnings from mining operations of $13.3 million,
*Recognized copper price of $3.51 per pound,
*Production costs included a $0.2 million non-cash charge related to
the write-down of ore stockpile inventory at the Minto Mine,
*$2.8 million in current and deferred tax expenses.
*Adjusted net earnings ^(1) of $6.1 million or $0.02 per common share after
making adjustments for certain non-cash and non-recurring items.
*Operating cash flow before changes in working capital ^(1) of $20.1
million or $0.05 per common share.
*Working capital decreased to $553.1 million at March 31, 2013 (which
included $485.4 million of cash and cash equivalents) from $562.1 million
at December 31, 2012.
*Production of 17.9 million pounds of payable copper at a C1 cash cost ^(1)
of $1.72 per pound of payable copper produced.
*Revenue of $57.7 million on the sale of 15.1 million pounds of copper, 4.4
million pounds of zinc, 0.7 million pounds of lead, 4,792 ounces of gold
and 381,689 ounces of silver.
Operational Highlights for the Three Months Ended March 31, 2013
*Produced 10.1 million pounds of copper in concentrates during Q1 2013 at a
C1 cash cost ^(1) of $1.06 per pound of payable copper.
*Completed 5,560 metres of underground exploration drilling in 10 diamond
*A resource update was announced in March 2013, bringing the Measured and
Indicated resource in Mala Noche Footwall Zone ("MNFWZ") to 188.6 million
pounds of contained copper, which includes the MNFWZ reserves.
*Produced 8.4 million pounds of copper in concentrates during Q1 2013 at a
C1 cash cost ^(1) of $2.50 per pound of payable copper.
*Continued underground development of the ramp access by a contractor, with
initial development ore release from underground still on track for the
third quarter of 2013.
Santo Domingo Project:
*Selected a port location and completed preliminary engineering studies for
this greenfield port site located 110 kilometres from the Santo Domingo
project. The port site was chosen because of its exceptionally high
availability for loading iron vessels. Formal application for the marine
concession was made in March 2013.
*In connection with preparation of the feasibility study ("FS"), Capstone
personnel has completed a preliminary estimate of the development capital
required to build the Santo Domingo project. The capital cost is currently
estimated at between $1.5 to $1.8 billion, dependent upon flow sheet
variables and mine equipment lease/purchase options. Capstone is
continuing on schedule to complete the FS by year end.
*Completed 1,272 metres of condemnation drilling in support of the FS to
sterilize a new tailings deposition area, which was identified as a
superior location during the optimization process.
*Engineering activities continued to support the compilation of the
environmental application as well as the evaluation of project design
alternatives and review of project cost expectations.
*The Application Information Requirements for the environmental assessment
application were approved in Q4 2012.
*Consultation with First Nations, moving towards Impact Benefit Agreements,
continued during Q1 2013.
*The project remains on track to submit an environmental assessment
application near mid-2013.
Proposed Pinto Valley Acquisition:
*On April 28, 2013, Capstone and BHP Copper Inc., a subsidiary of BHP
Billiton Ltd. ("BHP Billiton") announced that they had entered into a
definitive agreement pursuant to which Capstone will acquire BHP
Billiton's Pinto Valley copper mining operation and the associated San
Manuel Arizona Railroad Company in Arizona, USA for $650 million.
*The purchase price is being paid in cash and is subject to customary
adjustments. The purchase price will be satisfied from Capstone's existing
$200 million Senior Secured Revolving Credit Facility ($176 million
available) and from a new 2.5-year $200 million Senior Secured Reducing
Revolving Credit Facility, that are respectively committed and
underwritten by The Bank of Nova Scotia, as well as with cash on hand. The
new facility will include customary covenants and closing conditions,
including closing of the Pinto Valley acquisition, and will bear interest
at market rates. The acquisition agreement is not conditional upon
*The purchase agreement includes typical closing conditions, including
regulatory approvals. Closing of the transaction is expected to occur in
the third quarter of 2013.
*Capstone's Normal Course Issuer Bid will be suspended until the proposed
acquisition of Pinto Valley has been completed.
Capstone's 2013 guidance of 85 million pounds (± 5%) of copper contained in
concentrates at a C1 cash cost ^(1) of $1.65 to $1.75 per pound of payable
copper, net of by-product credits and selling costs, remains unchanged.
Conference Call and Webcast Details
Date: Wednesday, May 8, 2013
Time: 11:30 am Eastern Time -- 8:30 am Pacific Time
Dial in: North America: 1-888-390-0605, International: +1-416-764-8609
Replay: North America: 1-888-390-0541, International: +1-416-764-8677
Replay Passcode: 378784
The conference call replay will be available until May 23, 2013. 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 preferentially focused on copper, 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 properties in Canada, Chile, Mexico
and Australia. Using our cash flow and strong balance sheet as a springboard,
Capstone aims to grow with continued mineral resource and reserve expansions,
exploration, and through acquisitions in politically stable, mining-friendly
regions. Our headquarters are in Vancouver, Canada and we are listed on the
TSX. Further information is available at http://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
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 conversion of mineral resources
to mineral reserves, the realization of mineral reserve estimates, the
anticipated date of closing of the acquisition of Pinto Valley and the
associated financing, 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; 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 on SEDAR at http://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
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 http://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 Wright, P. Eng., Business Development
Manager (Technical Information related to mining and production) and Brad
Mercer, P. Geol., 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
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 months ended March
31, 2013 as filed on SEDAR and as available on the Company's website for
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 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 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.
For further information:
Cindy Burnett, VP, Investor Relations and Communications
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