(All amounts in US$ unless otherwise specified)
VANCOUVER, British Columbia,
Feb. 12, 2019 /PRNewswire/ --
Capstone Mining Corp. ("Capstone" or the "Company") (TSX: CS)
announced its financial results for the three months and year ended
December 31, 2018. Cash flow from
operating activities for the quarter was $54.2 million or $0.14 per share and $131.1
million or $0.34 per share for
the full year.
"Operational performance at our mines steadily improved as the
year progressed, with increased production as well as reduced costs
quarter-over-quarter," said Darren
Pylot, President and CEO of Capstone. "We ended 2018 strong
and are well positioned for a solid 2019."
Q4 2018 HIGHLIGHTS
- Capstone achieved 2018 guidance from continuing
operations with consolidated production of 155.2 million pounds
of copper and C1 cash cost1 of $1.83 per pound payable produced.
- Q4 2018 copper production from continuing operations of 42.3
million pounds and C1 cash cost1 of
$1.70 per payable pound produced.
Q4 was the third consecutive quarterly performance improvement in
2018.
- Operating cash flow before changes in working
capital1 of $19.1
million. A reduction in net debt during Q4 2018 of
$20.2 million and a $15.0 million repayment on the Revolving Credit
Facility ("RCF") for a total of $55.0
million in RCF repayments during 2018. Q4 2018 operating
cash flow before changes in working capital1 was
impacted by lower sales volumes in Q4 2018 than Q3 2018.
- Adjusted net income from continuing
operations1 of $7.9
million ($0.02 per share)
and net loss from continuing operations of $15.2 million (($0.04) per share). Net loss included
non-recurring restructuring charges and non-cash deferred tax asset
write-downs. Refer to the Alternative Performance Measures section
in the Management's Discussion & Analysis for the year ended
December 31, 2018 for details.
- Cozamin reserves increased by ~90% and targeting 30%
increase in production by end of 2020.
- Positive technical report with strong economics released for
Santo Domingo and strategic
process launched:
-
- NPV (after-tax) of $1.0 billion
and IRR of 22%.
- Robust, permitted copper-iron oxide-gold project; shovel-ready
by early-2020.
- Strategic process launched to optimize the ownership structure
to align with Capstone's financing capabilities and maximize the
value of the project for Capstone's shareholders.
- Minto mine placed on
temporary care and maintenance to preserve value while the
Company continues to run a strategic sale process.
OPERATIONAL OVERVIEW
|
Q4
2018
|
Q4
2017
|
2018
|
2017
|
Copper Production
(million pounds)
|
|
|
|
|
Pinto
Valley
|
33.0
|
35.6
|
119.0
|
126.4
|
Cozamin
|
9.3
|
9.4
|
36.2
|
36.9
|
Total
from continuing operations
|
42.3
|
45.0
|
155.2
|
163.3
|
C1 Cash
Cost1 ($/lb) Produced
|
|
|
|
|
Pinto
Valley
|
1.97
|
1.79
|
2.16
|
1.95
|
Cozamin
|
0.75
|
1.04
|
0.75
|
1.16
|
Consolidated from
continuing operations
|
1.70
|
1.63
|
1.83
|
1.77
|
Consolidated copper production from continuing operations of
155.2 million pounds and C1 cash cost1 of
$1.83 per pound produced for 2018 was
in line with guidance.
Pinto Valley Mine
Pinto Valley's Q4 2018 production
increased from the third quarter on planned higher throughput.
Throughput improved due to increased stabilization of operations
and reliability improvements in the crushing and milling circuits.
Average grade of 0.34% during the quarter was in accordance with
the mine plan.
Cozamin Mine
Cozamin's Q4 2018 copper production
increased from the third quarter on higher throughput of 3,030
tonnes per day. Production from the San Rafael zinc zone ramped up
to planned levels during Q3 2018, resulting in the highest
quarterly zinc production in Q4 2018. Zinc production in 2018
totaled 15 million pounds.
FINANCIAL OVERVIEW
Please refer to the Company's financial statements, related
notes and accompanying Management's Discussion and
Analysis for a full review of its forth quarter and full year 2018
financial and operational results. This can be accessed by clicking
on this link: Q4-2018 MD&A and Financial Statements.
|
Q4
2018
|
Q4
2017
|
2018
|
2017
|
2016
|
Revenue from
continuing operations2 ($ millions)
|
98.0
|
126.5
|
415.9
|
430.4
|
374.6
|
Net (loss) income
from continuing operations ($ millions)
|
(15.2)
|
37.4
|
7.4
|
44.6
|
(223.9)
|
Adjusted net
income (loss) from continuing operations1 ($
millions)
|
7.9
|
11.2
|
31.5
|
(3.3)
|
(0.5)
|
Net income
(loss) ($ millions)
|
(39.0)
|
29.5
|
(23.6)
|
55.1
|
(197.4)
|
Adjusted
EBITDA1 from continuing operations
($ millions)
|
31.2
|
38.7
|
126.5
|
94.9
|
89.4
|
Cash flow from
operating activities2 ($
millions)
|
54.2
|
44.8
|
131.1
|
112.5
|
125.3
|
Operating cash
flow before changes in working capital1,
2 ($ millions)
|
19.1
|
38.2
|
100.4
|
129.7
|
156.9
|
Total assets
($ millions)
|
1,336.1
|
1,400.5
|
1,336.1
|
1,400.5
|
1,395.0
|
Net
debt1 ($ millions)
|
150.1
|
158.7
|
150.1
|
158.7
|
198.6
|
2 In
accordance with IFRS 5, Minto's results are excluded from revenue
but included within cash flow amounts in both the current and
comparative period.
|
OUTLOOK - 2019 PRODUCTION, COST AND CAPITAL GUIDANCE
In 2019, Capstone expects to produce between 145 million and 160
million pounds of copper at a C1 cash cost1 of between
$1.80 and $2.00 per pound payable copper produced.
2019
Guidance
|
Pinto
Valley
|
Cozamin
|
Santo
Domingo
|
Total
|
Production and
Cost
|
Copper production
(million pounds)
|
115 –
125
|
30 –
35
|
-
|
145 -
160
|
C1 Cash
Cost1,2
|
$2.10 -
$2.25
|
$0.90 -
$1.05
|
-
|
$1.80 -
$2.00
|
Capital
Expenditure ($ millions, rounded)
|
Sustaining
|
26.5
|
29.0
|
-
|
55.5
|
Capitalized
Stripping3
|
13.5
|
-
|
-
|
13.5
|
Expansionary
|
6.0
|
4.0
|
10.54
|
20.5
|
Total Capital
Expenditure
|
46.0
|
33.0
|
10.5
|
89.5
|
Exploration ($
millions, rounded)
|
Brownfield5
|
-
|
6.0
|
-
|
6.0
|
Greenfield6
|
-
|
-
|
-
|
6.0
|
Total
Exploration
|
-
|
6.0
|
-
|
12.0
|
2 Per
pound of payable copper produced, net of by-product credits and
treatment and selling costs.
|
3
Capitalized stripping is included as an operating cost in the PV3
PFS; however, under IFRS accounting guidelines, stripping costs are
capitalized when certain criteria are met.
|
4 On a
100% basis, the total is approximately $15 million; ownership is
70% Capstone and 30% KORES.
|
5
Brownfield exploration is capitalized.
|
6
Greenfield exploration is expensed.
|
CONFERENCE CALL AND WEBCAST DETAILS
Capstone will hold a conference call and webcast on Wednesday, February 13, 2019 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
below. This release is not suitable on a standalone basis for
readers unfamiliar with Capstone and should be read in conjunction
with Capstone's consolidated financial statements and management's
discussion and analysis ("MD&A") for the quarter ended
December 31, 2018, which are
available on Capstone's website at
https://capstonemining.com/investors/financial-reporting/default.aspx
and on SEDAR, all of which have been reviewed and approved by
Capstone's Board of Directors. An updated corporate presentation
will also be available at
https://capstonemining.com/investors/events-and-presentations/default.aspx.
Date:
|
Wednesday, February
13, 2019
|
Time:
|
11:30 am Eastern Time
(8:30 am Pacific Time)
|
Dial
in:
|
North America:
1-888-390-0546, International: +416-764-8688
|
Webcast:
|
https://event.on24.com/wcc/r/1877147/BCD1389992682067485D8D0C5727099E
|
Replay:
|
North America:
1-888-390-0541, International: +416-764-8677
|
Replay
Passcode:
|
521712#
|
The conference call replay will be available until Wednesday, February 20, 2019. The conference call
audio file will be available on Capstone's website within 48 hours
of the call at
https://capstonemining.com/investors/events-and-presentations/default.aspx.
ABOUT CAPSTONE MINING CORP.
Capstone Mining Corp. is a Canadian base metals mining company,
focused on copper. We are committed to the responsible development
of our assets and the environments in which we operate. Our two
producing mines are the Pinto Valley copper mine located in
Arizona, US and the Cozamin
polymetallic mine in Zacatecas State, Mexico. In addition, Capstone has the large
scale 70% owned copper-iron Santo
Domingo development project in Region III, Chile in partnership with Korea Resources
Corporation, the Minto copper mine
in Yukon, Canada currently on care
and maintenance, as well as a portfolio of exploration properties.
Capstone's strategy is to focus on the optimization of operations
and assets in politically stable, mining-friendly regions, centred
in the Americas. Our headquarters are in Vancouver, Canada and we are listed on the
Toronto Stock Exchange (TSX). Further information is available at
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 the Company does not
intend, and does not assume any obligation, to update these
forward-looking statements, except as required under applicable
securities legislation.
Forward-looking statements relate to future events or future
performance and reflect our expectations or beliefs regarding
future events. Forward-looking statements include, but are not
limited to, statements with respect to the estimation of mineral
resources and mineral reserves, the realization of mineral reserve
estimates, the timing and amount of estimated future production,
costs of production and capital expenditures, the success of our
mining operations, environmental risks, unanticipated reclamation
expenses and title disputes. In certain cases, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "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 "guidance" and "expects". By their very nature,
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. Such factors include, amongst
others, risks related to inherent hazards associated with mining
operations and closure of mining projects, future prices of copper
and other metals, compliance with financial covenants, surety
bonding, our ability to raise capital, Capstone's ability to
acquire properties for growth, counterparty risks associated with
sales of our metals, use of financial derivative instruments and
associated counterparty risks, foreign currency exchange rate
fluctuations, changes in general economic conditions, accuracy of
mineral resource and mineral reserve estimates, operating in
foreign jurisdictions with risk of changes to governmental
regulation, compliance with governmental regulations, compliance
with environmental laws and regulations, reliance on approvals,
licences and permits from governmental authorities, impact of
climatic conditions on our operations, aboriginal title claims and
rights to consultation and accommodation, land reclamation and mine
closure obligations, uncertainties and risks related to the
potential development of the Santo Domingo Project, increased
operating and capital costs, challenges to title to our mineral
properties, maintaining ongoing social license to operate,
dependence on key management personnel, potential conflicts of
interest involving our directors and officers, corruption and
bribery, limitations inherent in our insurance coverage, labour
relations, increasing energy prices, competition in the mining
industry, risks associated with joint venture partners, our ability
to integrate new acquisitions into our operations, cybersecurity
threats, legal proceedings, 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 MD&A of
those statements, all of which are filed and available for review
under the Company's profile on SEDAR at www.sedar.com. Although the
Company has attempted to identify important factors that could
cause our actual results, performance or achievements to differ
materially from those described in our forward-looking statements,
there may be other factors that cause our results, performance or
achievements not to be as anticipated, estimated or intended. There
can be no assurance that our forward-looking statements will prove
to be accurate, as our actual results, performance or achievements
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on our
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
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 technical information in this news release ("Technical
Information") 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"). The disclosure of Technical Information and information
related to mineral exploration activities contained in this news
release have been reviewed and approved by Brad Mercer, P. Geol., Senior Vice President,
Operation and Exploration.
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 Management's Discussion and
Analysis for the quarter ended December 31,
2018 as filed on SEDAR and as available on the Company's
website.
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 US securities laws. Without
limiting the foregoing, this news release may refer to technical
reports that use the terms "indicated" and "inferred" resources. US
investors are cautioned that, while such terms are recognized and
required by Canadian securities laws, the SEC does not recognize
them. Under US 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. US
investors are cautioned not to assume that all or any part of
indicated resources will ever be converted into reserves. US
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, US 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 US companies subject to the reporting and disclosure
requirements of the SEC.
1 This is an alternative performance measure; please
see "Alternative Performance Measures" at the end of this
release.
Paul Jones, VP, Business
Development and Investor Relations, 604-674-0891,
pjones@capstonemining.com