Capstone Mining 2013 Third Quarter Continues to Deliver Strong Cash Flow
VANCOUVER, British Columbia, October 30, 2013
VANCOUVER, British Columbia, October 30, 2013 /PRNewswire/ --
(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, 2013. Capstone
posted a net loss for the quarter of $4.6 million. Operating cash flow before
changes in working capital ^[ ^1 ^] was $12.7 million. Capstone ended the
quarter with cash on hand of $457.0 million. Copper production for the quarter
at Capstone's two operating mines, Cozamin and Minto, totalled 18.9 million
pounds in concentrates (18.2 million pounds of payable copper) at a C1 cash
cost ^[ ^1 ^] of $1.57 per payable pound of copper produced.
Capstone will hold a conference call and webcast on Thursday, October 31, 2013
at 11:30 am Eastern Time (8:30 am Pacific Time) to discuss these results;
call-in details are provided at the end of this release. This release should
be read in conjunction with Capstone's unaudited condensed interim
consolidated financial statements and management's discussion and analysis
("MD&A") for the three and nine months ended September 30, 2013, which are
available on Capstone's website at:
http://capstonemining.com/s/financial-statements.asp and on SEDAR. An updated
corporate presentation, including results to September 30, 2013, will also be
available at http://capstonemining.com/s/presentations.asp .
Q3 Q3 2013 2012
2013 2012 YTD YTD
Revenue ($ millions) 79.3 93.0 195.2 233.1
Copper in concentrates produced (million
lbs) 18.9 22.6 56.9 63.1
Payable copper produced (million lbs) 18.2 21.8 54.6 60.8
C1 cash cost per payable pound of copper
produced ($) 1.57 1.50 1.66 1.44
Copper sold (million lbs) 23.6 23.4 55.8 59.6
Recognized copper price per pound ($) 3.25 3.84 3.29 3.72
Net (loss) earnings ($ millions) (4.6) 11.4 11.5 38.4
Net (loss) earnings per common share ($) (0.01) 0.03 0.03 0.10
Adjusted net (loss) earnings ($
millions) (6.9) 20.1 12.3 56.2
Adjusted net (loss) earnings[1) per
common share ($) (0.02) 0.05 0.03 0.15
Operating cash flow
before changes in working capital ($
millions) 12.7 30.7 61.3 89.7
Operating cash flow
before changes in working capital per
common share ($) 0.03 0.08 0.16 0.24
Cash and cash equivalents ($ millions) 457.0 509.4
"Our earnings before interest and taxes, adjusted for foreign exchange and the
one time Pinto Valley transaction costs, were $5 million for the quarter,"
said Darren Pylot, President and CEO of Capstone. "Cash flow generation
remained strong, with $12.7 million generated for the quarter from operating
activities, before changes in working capital."
"Looking forward, we have now closed the Pinto Valley acquisition and are
working to integrate the mine into Capstone's operations," continued Mr.
Pylot. "The ramp-up of operations is going well, with targeted throughput,
grade and recoveries frequently being reached.Focus in the fourth quarter
will be on achieving steady-state operations and commencing the process of
identifying opportunities for cost reductions."
Financial and Production Highlights for the Three Months Ended September 30,
*Net loss of $4.6 million or $0.01 per common share which included:
*Earnings from mining operations of $13.6 million.
*Adjusted net loss ^[ ^1 ^] of $6.9 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 $12.7
million or $0.03 per common share.
*Working capital decreased to $480.7 million at September 30, 2013 (which
included $457.0 million of cash and cash equivalents) from $536.0 million
at June 30, 2013.
*Production of 18.2 million pounds of payable copper at a C1 cash cost ^[
^1 ^] of $1.57 per pound of payable copper produced.
*Revenue of $79.3 million on the sale of 23.6 million pounds of copper, 2.8
million pounds of zinc, 1.1 million pounds of lead, 4,565 ounces of gold
and 471,605 ounces of silver.
Operational Highlights for the Three Months Ended September 30, 2013
*Produced 11.6 million pounds of copper in concentrates at a C1 cash cost
^[ ^1 ^] of $1.20 per pound of payable copper.
*Completed 5,757 metres of underground exploration drilling in 11 diamond
*Produced 7.3 million pounds of copper in concentrates at a C1 cash cost ^[
^1 ^] of $2.14 per pound of payable copper.
*Initial development ore released from underground starting in September
Santo Domingo Project:
*Work on the definitive feasibility study and basic engineering continued
as planned for completion by year-end.
*On October 30, 2013, Capstone formally submitted the Environmental Impact
Assessment for the Santo Domingo project. This initiates the formal
environmental assessment process, which is expected to take approximately
15 to 18 months.
*In Q3 2013 Capstone entered into an option agreement with Sociedad Química
y Minera de Chile S.A. to earn up to 70% of Project Providencia in Region
II, Chile which is a very large under-explored land package in the world's
most prolific copper jurisdiction. The initial option is on 350,000
hectares (3,500 square kilometres) and would be reduced over time to a
maximum of 50,000 hectares if a joint venture is ultimately formed.
Capstone is the operator of the project and may earn up to a 70% interest
in the property, with the right to withdraw from the project at any time.
*Development activities related to the environmental assessment process,
including government and stakeholder consultations and associated
engineering support, were largely on hold during Q3 2013 as Capstone
focused on the acquisition of Pinto Valley. As a result of that
acquisition, Kutcho's production profile and mine life no longer fits
within Capstone's growth strategy and strategic alternatives will be
evaluated. No additional work will be carried out on the project during
the remainder of 2013.
Acquisition of Pinto Valley Mining Operations:
*On October 11, 2013, Capstone and BHP Copper Inc., a subsidiary of BHP
Billiton Ltd. ("BHP Billiton") closed the previously announced transaction
whereby Capstone acquired BHP Billiton's Pinto Valley copper mining
operation and the associated San Manuel Arizona Railroad Company
(collectively, "Pinto Valley") in Arizona, US for $650 million.
*The purchase price was paid in cash, from cash on hand and debt
facilities. The Company retains a conservative capital structure with
approximately $82 million of cash and cash equivalents, as of October 25,
*The restart of the Pinto Valley mine, which commenced in December 2012, is
continuing with a targeted run rate of 50,800 tonnes per day by the end of
2013, with annualized production of 130 million to 150 million pounds of
copper per year. Capstone will commence reporting full operating and
production information for Pinto Valley with its 2013 annual report.
*An experienced work force remains in place, with 98% of Pinto Valley's 650
employees accepting Capstone's offer of employment, including all key
positions. Steve Winkelmann, formerly Capstone's Vice President of North
American Operations, has been appointed Pinto Valley's Mine General
Manager. Mr. Winkelmann has 40 years of mining experience, including at
large mining operations, primarily in the United States and most recently
*Pinto Valley concentrate production continued to ramp up following the
successful restart of mining operations during Q4 2012, with production of
59.5 million pounds of payable copper production in concentrate and 7.3
million pounds of payable copper cathode production during the first nine
months of 2013.
*The Capstone Pinto Valley team will initially focus on continuing to ramp
up production levels and the integration of the operations to achieve the
company's targets. At the same time, leadership will identify
opportunities for cost reduction, reliability enhancement and throughput
*Capstone believes that considerable potential exists to upgrade the
existing 968 million tonnes of measured and indicated mineral resources
(grading 0.35 per cent copper at a 0.25-per-cent cut-off grade) into
reserves, potentially extending the operation beyond the current reserve
life as reported by BHP Billiton. A preliminary feasibility study ("PFS")
is under way, which will target the measured and indicated mineral
resources for potential conversion to reserves, with expected completion
in early 2014. The PFS will consider the potential to extend operations
within the currently permitted boundaries. In addition, Capstone plans to
commission engineering and economic studies to consider all remaining
current mineral resources and their potential for development.
Production Outlook Capstone's 2013 guidance for Cozamin and Minto 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.
Pinto Valley is projected to produce 22 to 27 million pounds of contained
copper during Q4 2013, based on the historical operating performance of the
mine. There is no associated guidance being provided with respect to cost at
this time, given the lack of recent steady-state historical cost information.
Further guidance will be provided in early 2014 when Capstone issues its
annual production and cost guidance.
Conference Call and Webcast Details
Date: Thursday, October 31, 2013
Time: 11:30 am Eastern Time -- 8:30 am 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: 438476
The conference call replay will be available until November 14, 2013. The
conference call audio and transcript will be available on Capstone's website
within approximately 24 hours of the call at
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 focused on copper, with three producing mines; the Pinto
Valley copper-molybdenum-silver mine located in Arizona, US, the Cozamin
copper-silver-zinc-lead mine 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 Region III, Chile, in partnership with Korea Resources Corporation,
and the 100% owned Kutcho copper-zinc-gold-silver project in British Columbia,
Canada, as well as exploration properties in Canada, Chile and Mexico. 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 at http://www.capstonemining.com .
(1) These are alternative performance measures; please see "Alternative
Performance Measures" at the end of this release.
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 timing of completing the PFS and follow-on
engineering and economic studies for Pinto Valley, the anticipated production
from the Pinto Valley Mine, 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 "scheduled", "guidance", "plan", "planned", "estimated",
"projections", "projected" and "expected". Forward-looking statements are
based on a number of assumptions which may prove incorrect, including, but not
limited to, the exploration and development potential of the project, current
and future commodity prices and exchange rates and continued daily operation
of the Pinto Valley Mine. 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 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
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 Brad Skeeles, P. Eng., Vice President of North
American Operations (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 and nine months ended September 30, 2013 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 refers to a
technical report that 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.
For further information:
Cindy Burnett, VP, Investor Relations and Communications +1-604-637-8157
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