Imperial Metals Corporation (TSX:III) - reports comparative
financial results for the three months ended March 31, 2013 and
March 31, 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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Three Months Ended March 31
In thousands of CDN$ except per share amounts 2013 2012
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Revenues $50,866 $60,261
Income from mine operations $13,546 $13,782
Net Income $10,621 $ 4,599
Net Income Per Share $ 0.14 $ 0.06
Adjusted Net Income (1) $10,217 $ 8,205
Adjusted Net Income Per Share (1) $ 0.14 $ 0.11
Cash Flow (1) $16,451 $17,895
Cash Flow Per Share (1) $ 0.22 $ 0.24
(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, excluding mining and income taxes and before net change in
working capital balances. 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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Effective January 1, 2013 the Company adopted IFRS11 Joint
Arrangements which establishes the core principle that a party to a
joint arrangement determines the type of joint arrangement in which
it is involved by assessing its rights and obligations and accounts
for those rights and obligations in accordance with that type of
joint arrangement. The Company has reviewed its joint arrangements
and concluded that its investment in the Huckleberry Mines Ltd.
joint venture should be accounted for on the equity basis. The
Ruddock Creek Joint Venture and the Porcher Island Joint Venture
continue to be accounted for as joint operations whereby the
assets, liabilities, revenues and expenses of these entities will
be proportionately consolidated. As a result of the change in the
requirements for the application of the equity method when
accounting for investments in associates and joint ventures from
proportionate consolidation for Huckleberry the comparative
consolidated financial statements have been restated. Refer to Note
28 of the condensed consolidated interim financial statements for
the three months ended March 31, 2013 for details of the changes to
the comparative financial statements.
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.
Revenues were $50.9 million in the March 2013 quarter compared
to $60.3 million in the 2012 quarter. There were two concentrate
shipments from the Mount Polley mine in each of the 2013 and 2012
quarters.
The Company recorded net income of $10.6 million in the March
2013 quarter compared to net income of $4.6 million in the 2012
quarter. Adjusted net income in the quarter was $10.2 million or
$0.14 per share, versus $8.2 million or $0.11 per share in the
March 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 had unrealized net gains on copper derivatives of
$0.5 million in the March 2013 quarter compared to $2.2 million of
unrealized losses in the comparative quarter. The Company had no
realized losses or gains on copper derivatives in the 2013 quarter,
and minimal gains in the 2012 quarter.
Cash flow decreased to $16.5 million in the three months ended
March 31, 2013 from $17.9 million in the comparative quarter. The
$1.4 million decrease is primarily the result of lower cash flow
from operations and higher administration costs.
Capital expenditures increased to $58.3 million from $12.8
million in the comparative 2012 quarter. Expenditures were financed
from cash flow from the Mount Polley mine and from short term debt.
At March 31, 2013 the Company had $0.1 million in cash.
During the March 2013 quarter the Company did not purchase any
common shares for cancellation.
Mount Polley Mine operations
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Three Months Ended March 31
Production 2013 2012
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Ore milled (tonnes) 1,969,909 1,924,701
Ore milled per calendar day (tonnes) 21,888 21,151
Grade % - copper 0.267 0.268
Grade g/t - gold 0.255 0.289
Recovery % - copper 70.8 65.65
Recovery % - gold 63.7 63.42
Copper (lbs) 8,207,487 7,455,346
Gold (oz) 10,311 11,346
Silver (oz) 28,703 24,832
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Through-put for the first quarter 2013 averaged 21,888 tonnes
per calendar day, an increase from the 21,151 tonnes per day
achieved in the comparable 2012 quarter. Copper production was 10%
higher compared to the same quarter in 2012 from virtually the same
grade, with slightly more tonnes milled but much better copper
recovery. Copper recovery increased to 70.8% up from the 65.65%
achieved in the first quarter 2012, as lower copper oxide mineral
content ore was mined from deeper levels in the Springer pit. Waste
stripping for quarter ending March 31, 2013 focused on a pushback
in the Cariboo pit.
Underground ramping and drifting in the Boundary zone continued
with 340 metres completed in the first quarter 2013.
Mount Polley exploration
Surface drilling
During the 2013 March quarter, two surface diamond drill holes
were completed for a total of 1,095 metres. The holes were drilled
to complete the designed program that was largely completed in the
2012 fourth quarter to test deep mineralization in the southeast
area of Springer zone.
Underground drilling
Underground diamond drilling resumed in the Boundary zone on
February 1. During the first quarter 2013 a total of 41 holes were
completed totalling 3,415 metres of NQ diamond drilling. The
drilling continued into April to ensure all targets had been
adequately tested.
Huckleberry Mine operations
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Production Three Months Ended March 31
(stated 100% - Imperial's allocation= 50%) 2013 2012
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Ore milled (tonnes) 1,480,669 1,446,300
Ore milled per calendar day (tonnes) 16,452 15,893
Grade (%) - copper 0.326 0.291
Recovery (%) - copper 90.9 89.0
Copper (lbs) 9,679,968 8,269,000
Gold (oz) 710 643
Silver (oz) 57,872 42,065
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Copper production for the first quarter 2013 increased 17% with
increases in through-put, recovery and grade compared to the first
quarter 2012. The major contributor to the higher production was
grade, as the majority of ore milled was from the Main Zone
Extension pit, not low grade stockpiles.
Huckleberry exploration
In February 2013 a comprehensive geophysical model of the mine
site area was completed, incorporating data from historical
magnetometer and IP surveys with data from Titan-24 DC-IP/MT
surveys conducted in 2011 and 2012. Huckleberry staff is currently
developing a drill program for 2013 that will build off of this
information and drill results from 2012. Regional work in 2013 will
include a soil sampling program on the Huckleberry North claims,
directed towards developing new geophysical or drill targets for
2014/2015.
Red Chris Construction Update
Red Chris mine development is proceeding with 85% of the
engineering complete as of March 31, 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 km extension (NTL Extension) from
Bob Quinn to Tatogga. The permit applications are with the
provincial ministries for review and consultation. Construction of
power line structures access will begin summer of 2013 upon receipt
of permits, with completion scheduled May 2014.
Site work continued unhindered through the relatively mild
winter weather. Work items in the first quarter included:
-- site clearing
-- erection of a truck shop for the open pit equipment
-- construction of a 2.7 km heavy haul road between the truck shop and
primary crusher
-- construction of a 2.5 km overland conveyor right of way and service road
from the primary crusher to the coarse ore bin
-- excavation for primary crusher and mechanically stabilized earth (MSE)
wall at 95%, final blast scheduled for early May
-- topsoil stripping in the tailings impoundment area
-- installation of additional camp modules (camp facility capacity now 480
persons)
The first concrete pour in 2013 was on March 24. Concrete pours
are planned to mid-November 2013. The process plant building
structural steel has begun arriving on site for erection starting
July 1 with completion by October 31. The primary crusher, MSE
wall, overland conveyor and coarse ore reclaim tunnel are to be
installed this year.
Sediment control and water diversion structures are under
construction in the Tailings Impoundment Area (TIA) in preparation
for building the North Starter Dam. Earthworks in the TIA area are
to be completed utilizing a combination of equipment owned by Red
Chris with support from the Tahltan Nation Development
Corporation.
The work at Red Chris to date has been funded by cash flow from
operations and the expanded line of credit. Red Chris development
project has made expenditures and commitments totalling $258.2
million and has paid for $140.0 million of these to the end of
March 2013.
Red Chris Exploration Update
The Red Chris exploration program was suspended in May 2012 when
the project focus shifted from exploration to mine development.
Sterling Mine
Stoping operations from the 3292 level produced 26,931 tons and
development of 744 feet of drift on the 3320, 3285, and 3260 levels
resulted in an additional 6,934 tons of ore.
Improvements were made to the mine ventilation system by
developing a raise between the 3260 and 3320 levels, creating a
less restrictive pathway for providing fresh air to the 3260 level.
Further changes will be required once active mining resumes on the
3320 level, which will include a drive-through ventilation curtain
and/or door.
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Three Months Ended Year Ended
Production March 31, 2013 December 31, 2012
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Ore Stacked - tons 29,688 77,944
Gold Grade - oz/ton 0.072 0.082
Gold ounces - added to heap 2,138 6,393
Gold ounces - in-process & poured 1,760 3,613
Gold shipped - ounces 769 2,852
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In the 2013 first quarter an additional 29,688 tons containing
approximately 2,138 ounces were stacked on the leach pad, of which
12,821 tons containing 1,068 ounces was stacked in March. With the
main 144 zone stope now well established, ore can be released at a
higher rate. A second underground haul truck is being acquired to
increase the mining rate.
Ruddock Creek
The Ruddock Creek Joint Venture is owned by Imperial (50%),
Mitsui Mining and Smelting Co. Ltd. (30%) and Itochu Corporation
(20%). During the March 2013 quarter, an updated resource
calculation for the Ruddock Creek property was completed.
The Joint Venture is currently planning the 2013 program which
will include metallurgical testing of dense media separation,
flotation, acid base accounting, paste backfill, humidity cell
testing and site infrastructure studies. Metallurgical work 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 for future
permitting and engineering studies.
Outlook
Base and precious metals production allocable to Imperial in
2013 from the Mount Polley, Huckleberry and Sterling mines is
anticipated to be 58.5 million pounds copper, 54,600 ounces gold
and 195,000 ounces silver.
At Mount Polley the focus will be on increasing mining
productivity to ensure the stripping required by the new mine plan
to access the ore is completed in a timely and cost effective
manner. The first underground stoping operations in the Boundary
zone are expected to begin this year. Mount Polley is expected to
produce 38.5 million pounds copper, 43,000 ounces gold and 100,000
ounces silver in 2013.
At Huckleberry the focus will be the completion and
commissioning of the new tailings storage facility, and on
increasing mining productivity to ensure the Main Zone Optimization
pit is able to supply mill feed when the Main Zone Extension pit is
completed. Huckleberry is expected to produce 40.0 million pounds
copper, 3,200 ounces gold and 190,000 ounces silver in 2013.
At Sterling the focus will be on mining the sub-level cave which
was started in January 2013. Pulling ore from this caving operation
will be key to achieving the 2013 production target of 10,000
ounces gold. At Sterling, a record 12,821 tons containing 1,068
ounces of gold was mined and stacked on the leach pad in March. To
further increase the mining rate an additional underground haulage
truck is being acquired to increase the mining rate, to our target
of 18,000 tons per month.
Engineering at Red Chris was 85% complete as of March 31, 2013.
In 2013 the focus on-site will be the erection of the mill building
and to have the structure enclosed by October 2013. This will
enable the installation of equipment inside the building to proceed
during the winter of 2013-2014 and start commissioning in May 2014.
Key to meeting this schedule will be the completion of the 287kV
Northwest Transmission Line (NTL) from Skeena substation to Bob
Quinn, and a 93 kilometre extension from Bob Quinn to Tatogga (NTL
Extension). The Company will need to secure further financing in
2013 to fund construction costs at Red Chris. Completion of this
funding is expected by the summer of 2013.
Ruddock Creek expenditures will be funded by Imperial and the
joint venture partners. The work at Ruddock Creek will include
metallurgical testing and environmental and engineering
studies.
Information Related to this Press Release
Detailed financial information is provided in the Management's
Discussion & Analysis within the 2013 First 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 March 31, 2013,
and plans for the future based on facts and circumstances as of May
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
604.488.2657investor@imperialmetals.com www.imperialmetals.com
Imperial Metals (TSX:III)
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