Imperial Reports 2013 Second Quarter Financial Results

Imperial Reports 2013 Second Quarter Financial Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/14/13 -- Imperial
Metals Corporation (TSX:III) reports comparative financial results
for the three and six months ended June 30, 2013 and June 30, 2012,
summarized in the table below, and discussed in detail in the
Management's Discussion and Analysis. The Company's financial results
are prepared in accordance with International Financial Reporting
Standards ("IFRS").  


 
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In thousands of CDN$ except       THREE MONTHS             SIX MONTHS       
 per share amounts                ENDED JUNE 30           ENDED JUNE 30     
                                    2013        2012        2013        2012
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Revenues                     $    41,317 $    50,883 $    92,183 $   111,144
Income from mine operations  $    13,272 $    13,287 $    26,818 $    27,069
Equity income in Huckleberry $     2,279 $     3,524 $     4,213 $     3,249
Net Income                   $     7,541 $    11,966 $    18,162 $    16,565
Net Income Per Share         $      0.10 $      0.16 $      0.24 $      0.22
Adjusted Net Income (1)      $     5,968 $    10,535 $    16,185 $    18,740
Adjusted Net Income Per                                                     
 Share (1)                   $      0.08 $      0.14 $      0.22 $      0.25
Cash Flow (1)                $    16,036 $    15,825 $    32,487 $    33,720
Cash Flow Per Share (1)      $      0.22 $      0.21 $      0.44 $      0.45
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(1) Adjusted Net Income, Adjusted Net Income Per Share, Cash Flow and Cash  
 Flow Per Share are measures used by the Company to evaluate its            
 performance; however, they are not terms recognized under IFRS in Canada.  
 Adjusted Net Income is defined as net income adjusted for certain items of 
 a non-operational nature that pertain to future periods as described in    
 further detail in the Management's Discussion and Analysis under the       
 heading Adjusted Net Income. Cash Flow is defined as cash flow from        
 operations and before net change in working capital b
alances, income and   
 mining taxes paid, and interest paid. Adjusted Net Income and Cash Flow Per
 Share are the same measures divided by the weighted average number of      
 common shares outstanding during the period. The Company believes these    
 measures are useful to investors because they are included in the measures 
 that are used by management in assessing the financial performance of the  
 Company.                                                                   
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The Sterling mine recommenced operations on July 2012 and reached
commercial production in March 2013. In accordance with the Company's
accounting policy, all revenue and related operating costs prior to
commercial production are applied to the carrying value of the
Sterling mineral property. In the six months ended June 30, 2013 a
total of 1,900 ounces gold were sold and the sale proceeds applied to
the carrying value of the mineral property. 
Revenues were $41.3 million in the June 2013 quarter compared to
$50.9 million in the 2012 quarter primarily due to lower copper and
gold prices and related negative revenue valuations.  
The Company recorded net income of $7.5 million in the June 2013
quarter compared to net income of $12.0 million in the 2012 quarter.
Adjusted net income in the quarter was $6.0 million or $0.08 per
share, versus $10.5 million or $0.14 per share in the June 2012
quarter. Adjusted net income is calculated by removing the unrealized
gains and losses, net of related income taxes, resulting from mark to
market revaluation of copper and foreign exchange derivative
instruments. Adjusted net income is not a measure recognized under
IFRS in Canada. It is intended to show the current period financial
results excluding the effect of items not settling in the current
period. 
The Company recorded $1.1 million gains on copper derivatives in the
June 2013 quarter compared to gains of $0.8 million in the
comparative quarter. The Company had no realized losses or gains on
copper derivatives in the June 2013 quarter compared to realized
gains of $0.2 million in the June 2012 quarter.  
Cash flow increased to $16.0 million in the three months ended June
30, 2013 from $15.8 million in the comparative quarter.  
Capital expenditures increased to $83.2 million from $34.6 million in
the comparative 2012 quarter. Expenditures were financed from cash
flow from the Mount Polley mine, short term debt and non-current debt
of $15.2 million for equipment financed in the current quarter. At
June 30, 2013 the Company had $6.3 million in cash.  
During the June 2013 quarter the Company did not purchase any common
shares for cancellation. 
INCREASE IN LINE OF CREDIT FACILITY  
On June 6, 2013 the Company entered into a line of credit facility
("LOC") with Edco Capital Corporation, a company controlled by Mr.
Edwards. The LOC has been increased from a maximum of $75 million to
a maximum of $130 million. A commitment fee of $275,000 is payable in
respect of the increase in the LOC. All others terms and conditions
of the LOC remain unchanged. The LOC is available for drawdown until
September 30, 2013. It bears interest at 7% per annum and is
repayable the earlier of the completion of a debt financing or
October 1, 2014. Payments pursuant to the LOC constitute a related
party transaction within the meaning of Multilateral Instrument
61-101. Management considers the LOC to be advantageous as it
provides additional timing and flexibility for arranging senior
financing for the Red Chris project. Management also considers the
LOC terms and conditions are reasonable, in the context of the
market. The LOC was reviewed and approved by the independent members
of the Company's Board of Directors. The LOC is exempt from the
formal valuation and minority interest approval requirements of
Multilateral Instrument 61-101 as it represents less than 25% of the
Company's market capitalization. The material change report in
relation to this transaction will be filed less than 21 days before
closing as the Company completed this transaction on August 12, 2013
as all necessary approvals had been received and the Company wished
to complete the transaction as soon as commercially feasible after
such approvals were obtained.  
MOUNT POLLEY MINE OPERATIONS 


 
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                         THREE MONTHS                   SIX MONTHS          
PRODUCTION               ENDED JUNE 30                 ENDED JUNE 30        
                           2013           2012           2013           2012
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Ore milled                                                                  
 (tonnes)             2,007,735      2,161,954      3,977,644      4,086,655
Ore milled per                                                              
 calendar day                                                               
 (tonnes)                22,063         23,758         21,976         22,454
Grade % - copper          0.306          0.276          0.287          0.272
Grade g/t - gold          0.271          0.306          0.263 
         0.296
Recovery % -                                                                
 copper                   74.06          63.35          72.54          64.40
Recovery % -                                                                
 gold                     68.32          65.22          66.12          64.40
Copper (lbs)         10,035,328      8,341,391     18,242,816     15,796,737
Gold (oz)                11,932         13,703         22,244         25,049
Silver (oz)              33,162         30,196         61,866         55,028
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Quarterly copper production was 10,035,328 pounds, up by 20% from the
comparable quarter in 2012. The increase in copper production is the
result of the higher copper grade and better recovery more than
offsetting the slightly lower throughput. Gold production for the
quarter was down 13% due to lower gold grade ore being treated. 
Copper recovery in July 2013 was 80%, the highest yet achieved from
Springer pit ore.  
Work on the test stope at the Boundary zone is continuing with 156
metres of ramp and cross cut completed in the quarter and the
commencement of excavation of a 200 metre raise to provide increased
ventilation and a secondary escape way.  
HUCKLEBERRY MINE OPERATIONS 


 
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                         THREE MONTHS                   SIX MONTHS          
PRODUCTION               ENDED JUNE 30                 ENDED JUNE 30        
(stated 100% -                                                              
 Imperial's                                                                 
 allocation=                                                                
 50%)                      2013           2012           2013           2012
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Ore milled                                                                  
 (tonnes)             1,538,687      1,470,600      3,019,356      2,917,000
Ore milled per                                                              
 calendar day                                                               
 (tonnes)                16,909         16,160         16,682         16,027
Grade (%) -                                                                 
 copper                   0.343          0.320          0.335          0.306
Recovery (%) -                                                              
 copper                    91.8           90.5           91.3           89.8
Copper (lbs)         10,681,105      9,391,000     20,361,072     17,661,000
Gold (oz)                   791            686          1,501          1,329
Silver (oz)              60,444         51,130        118,316         93,196
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Throughput for the second quarter 2013 averaged 16,909 tonnes per
calendar day up from the 16,160 tonnes achieved in the second quarter
2012. Copper production was up over 13% on higher grades, throughput
and recovery. During the second quarter virtually all of the ore
delivered to the mill came from the 954 to 946 benches within the MZX
pit. Stripping of the tailings and waste from the old Main zone pit
constituted the bulk of the waste mining. 
The new tailings storage facility (TMF-3) construction continued with
good progress on the starter and saddle dams, as well as the piping,
pumping and cycloning infrastructure required to operate the TMF3.  
Huckleberry received approval from the Chief Inspector of Mines in
July to operate the TMF-3. This facility and the new cyclone sand
plant are expected to be in operation by the end of August 2013. 
HUCKLEBERRY EXPLORATION 
A 2013 diamond drill program of approximately 3,500 metres over nine
holes is planned to expand several targets within the mine site area
outlined by 2011 and 2012 drilling. In addition, Huckleberry will
complete a soil sampling program within the nearby North Huckleberry
claims to test for new geophysical or drill targets. Huckleberry's
exploration program commenced in July 2013. 
RED CHRIS CONSTRUCTION UPDATE  
Red Chris mine development is proceeding with 91% of the engineering
complete as of June 30, 2013. Start of commissioning is scheduled for
May 2014. 
The 287 kV Northwest Transmission Line (NTL) from Skeena substation
to Bob Quinn is under construction by BC Hydro with a planned
completion date of May 2014. A subsidiary of Imperial will construct
the 93 kilometre extension (Iskut Extension) from Bob Quinn to
Tatogga. Work on construction of access roads and right of way
clearing for the Iskut Extension began in July after the required
permits were issued by the Province of British Columbia. The clearing
and access road work had originally been scheduled to start in the
spring of 2013. More work will be done during winter months to
compensate for the delay. This additional winter work will be
required to meet the scheduled start of commissioning and will likely
put pressure on our budget for this item. 
Site work continued through spring 2013. Work items in the second
quarter 2013 included: 


 
--  Construction of power line structure accesses on the 18 kilometre route
    from Tatogga to the mine site 
--  Preparation of the primary crusher, MSE wall and transfer tower
    foundations 
--  Installation 6,751 m3 of concrete to date into the process building
    foundations, grade beams, mill piers and raft slab 
--  Construction of crane pads around the process building for steel
    erection starting in July 
--  Installation of a water diversion and sediment control structures around
    the Tailings Impoundment Area (TIA) 
--  Construction of foundation drains for the TIA North Starter Dam

 
The crews have worked 599,881 personnel hours with 66 first aids, 7
medical aids and 0 lost time accidents. Construction camp occupancy
reached 325 in June. 
The first concrete pour in 2013 was on March 24. Concrete pours are
planned to mid-November 2013. The process plant building structural
steel erection started in early July with completion planned by
October 31. The primary crusher, MSE wall, overland conveyor and
coarse ore reclaim tunnel are to be installed this year. Construction
has begun on the site electrical substation. 
The North Starter Dam earthworks are ongoing in the TIA utilizing a
combination of equipment owned by Red Chris with support from the
Tahltan Nation Development Corporation and other contractors. The
mining fleet Caterpillar 793 trucks (4) and 994 loader arrived on
site for assembly over the summer. 
The work at Red Chris to date has been funded by cash flow from
operations, equipment financed by non-current debt, the Company's
line of credit and a new $75.0 million line of credit facility with a
significant shareholder. This line of credit facility was increased
to $130.0 million after June 30, 2013. Total expenditures and
commitments at Red Chris mine development were $316.1 million at
quarter end of which $171.6 million has been paid. 
RED CHRIS EXPLORATION  
Exploration at Red Chris has been temporarily suspended while the
Company completes the development of the Red Chris mine. 
STERLING MINE 


 
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                                  THREE MONTHS             SIX MONTHS       
PRODUCTION                        ENDED JUNE 30           ENDED JUNE 30     
                                    2013        2012        2013        2012
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Ore Stacked - tons                47,112      49,822      76,800      49,822
Gold Grade - oz/ton                0.081       0.082       0.078       0.082
Gold ounces - added to heap        3,826       4,109       5,964       4,109
Gold ounces - in-process &                                                  
 poured                            3,147       1,194       3,916       1,194
Gold shipped - ounces              2,205         817       2,974         817
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Stoping operations from the 3292, 3260 and 3220 levels produced
41,884 tons of ore. Development work, both drifting and raising
produced 5228 tons of ore and 2525 tons of waste. Development work
included completion of a ventilation raise from 3260 to 3220 levels,
an ore-pass from 3220 to the 3180 levels and the associated access
drifts. 
In the second quarter 2013 a total of 47,112 tons of ore, containing
3,826 ounces of gold, were stacked onto the leach pad at an average
grade of 0.081 ounces per ton. 
RUDDOCK CREEK 
The Ruddock Creek Joint Venture is owned by Imperial (50%), Mitsui
Mining and Smelting Co. Ltd. (30%) and Itochu Corporation (20%). The
Ruddock Creek zinc/lead property is located 155 kilometres northeast
of Kamloops in the Scrip Range of the Monashee Mountains in southeast
British Columbia. 
The Joint Venture is currently completing the 2013 program which will
include site infrastructure studies and metallurgical testing of
dense media separation, flotation, acid base accounting, paste
backfill, humidity cell testing. The metallurgical work, which is
well underway, will include the collecting and testing of the Upper
E, Lower E, Creek and V zones separately. Also continuing is the
collection of baseline environmental and geotechnical information,
including trenching and geotechnical core drilling, for future
permitting and engineering studies. New higher capacity water control
structures for underground discharge are being constructed for future
programs. 
OUTLOOK 
With production from Mount Polley, Sterling and our 50% share of
Huckleberry production totalling 28.4 million pounds copper, 26,910
ounces gold and 123,023 ounces silver during the first six months of
2013, production for the year should be close to our guidance of 58.5
million pounds of copper, 54,600 ounces of gold and 195,000 ounces of
silver. 
Sterling production is expected to increase as the monthly tonnage
delivered the heap leach pad increased from 12,198 tons in April to
17,718 tons in June. In July 19,519 tons were stacked on the heap.
The gold grade is also expected to increase in the second quarter as
mining operations move into the core of the 144 zone. 
At Huckleberry mine the TMF-3 should be in service in August.
Operations will focus on removal of waste and tailings from the old
Main zone pit, so the MZO pit will be ready to supply mill feed in
2014. 
Virtually all Mount Polley ore for the rest of the year will come
from the Springer pit, but ongoing stripping of the old Cariboo pit
is beginning to release some ore.  
INFORMATION RELATED TO THIS PRESS RELEASE 
Detailed financial information is provided in the Management's
Discussion & Analysis within the 2013 Second Quarter Report available
on www.imperialmetals.com and on www.sedar.com. 
ABOUT IMPERIAL 
Imperial is an exploration, mine development and operating company
based in Vancouver, British Columbia. The Company operates the Mount
Polley copper/gold mine in British Columbia and the Sterling gold
mine in Nevada. Imperial has 50% interest in the Huckleberry
copper/molybdenum mine and has 50% interest in the Ruddock Creek
lead/zinc property, both in British Columbia. The Company is in
development of its wholly owned Red Chris copper/gold property in
British Columbia.  
CAUTIONARY NOTE REGARDING "FORWARD-LOOKING INFORMATION" 
This information is a review of the Company's operations and
financial position as at and for the period ended June 30, 2013, and
plans for the future based on facts and circumstances as of August
14, 2013. Except for statements of historical fact relating to the
Company, including our 50% interest in Huckleberry, certain
information contained herein constitutes forward-looking information. 
When we discuss mine plans; costs and timing of current and proposed
exploration; development; production and marketing; capital
expenditures; construction of transmission lines; cash flow; working
capital requirements and the requirement for additional capital;
operations; revenue; margins and earnings; future prices of copper
and gold; future foreign currency exchange rates; future accounting
changes; future prices for marketable securities; future resolution
of contingent liabilities; receipt of permits; or other matters that
have not yet occurred, we are making statements considered to be
forward-looking information or forward-looking statements under
Canadian and United States Securities Law. We refer to them in this
press release as forward-looking information.  
The forward-looking information in this press release may include
words and phrases about the future, such as: plan, expect, forecast,
intend, anticipate, estimate, budget, scheduled, believe, may, could,
would, might or will. We can give no assurance the forward-looking
information will prove to be accurate. It is based on a number of
assumptions management believes to be reasonable, including but not
limited to: the continued operation of the Company's mining
operations, no material adverse change in the market price of
commodities or exchange rates, that the mining operations will
operate and the mining projects will be completed in accordance with
their estimates and achieve stated production outcomes and such other
assumptions and factors as set out herein. 
It is also subject to risks associated with our business, including
but not limited to: risks inherent in the mining and metals business;
commodity price fluctuations and hedging; competition for mining
properties; sale of products and future market access; mineral
reserves and recovery estimates; currency fluctuations; interest rate
risks; financing risks; regulatory and permitting risks;
environmental risks; joint venture risks; foreign activity risks;
legal proceedings; and other risks that are set out in the Company's
Management's Discussion & Analysis in the 2012 Annual Report.  
If our assumptions prove to be incorrect or risks materialize, our
actual results and events may vary materially from what we currently
expect as provided in this press release. We recommend you review the
Company's Management's Discussion & Analysis in the 2012 Annual
Report, which includes discussion of material risks that could cause
actual results to differ materially from our current expectations.
Forward-looking information is designed to help you understand
management's current views of our near and longer term prospects, and
it may not be appropriate for other purposes. We will not necessarily
update this information unless we are required to by securities laws.
Contacts:
Imperial Metals Corporation
Brian Kynoch
President
604.669.8959 
Imperial Metals Corporation
Andre Deepwell
Chief Financial Officer
604.488.2666 
Imperial Metals Corporation
Gordon Keevil
Vice President Corporate Development
604.488.2677 
Imperial Metals Corporation
Sabine Goetz
Shareholder Communications
604.488.2657
investor@imperialmetals.com
www.imperialmetals.com
 
 
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