Copper Mountain Mining Announces Strong Q2 2020 Financial Results
VANCOUVER, BC, July 29, 2020 /PRNewswire/ - Copper Mountain Mining Corporation (TSX: CMMC) (ASX:C6C) (the "Company" or "Copper Mountain") announces strong second quarter 2020 financial and operating results. All currency is in Canadian dollars, unless otherwise stated. All results are reported on a 100% basis. The Company's Financial Statements and Management Discussion & Analysis ("MD&A") are available at www.CuMtn.com and www.sedar.com.
Q2 2020 HIGHLIGHTS
- Exceeded revised operating plan announced March 10, 2020 with Q2 2020 production of 23.9 million pounds of copper equivalent (comprising of 18.1 million pounds of copper, 7,499 ounces of gold and 86,126 ounces of silver).
- Reduced cash cost per pound significantly in Q2 2020:
- C1 cash cost per pound of copper produced was US$1.48 compared to US$1.74 in Q2 2019.
- All in sustaining cost (AISC) per pound of copper was US$1.67 compared to US$1.85 in Q2 2019.
- All-in cost (AIC) per pound of copper was US$1.67 compared to US$2.35 in Q2 2019.
- Increased revenue to $91 million compared to $65 million in Q2 2019
- Increased gross profit to $30.3 million compared to $1.6 million in Q2 2019
- Increased earnings per share to $0.12 compared to $0.01 in Q2 2019
- Increased cash flow from operations before working capital changes to $41.5 million compared to $4.7 million in Q2 2019.
- Completed the installation of Direct Flotation Reactors in July on schedule and on budget.
- Completed updated Eva Copper Feasibility Study (announced May 7, 2020) demonstrating improved economic and operating metrics, including:
- After-tax NPV (8%) of US$437 million and an after-tax IRR of 29%.
- Total production of 1.5 billion pounds of copper over a 15-year mine life.
- C1 cash costs of US$1.44 per pound of copper, net of by-product credits.
"We are pleased to have achieved such a strong quarter despite the global impact of the COVID-19 virus and the associated lower copper price environment," commented Gil Clausen, Copper Mountain's President and CEO. "The positive outcome was a direct result of our quick response in implementing a revised mine plan in early March, demonstrating the flexibility of the Copper Mountain Mine plan and our team's ability to adapt quickly to changing market conditions. More importantly, we prioritized the health and safety of our employees and we have had no confirmed or presumptive cases of COVID-19 at any of our operations."
Mr. Clausen continued, "With higher metal prices and lower costs, our objective is to build our cash position to allow for a rapid restart of the second stage of the mill expansion project, the installation of the third ball mill. The first stage of our 45,000 tonnes per day (TPD) mill expansion, the installation of the direct flotation reactors, was completed in early July. The Company has also maintained spending on long lead time items associated with the Ball Mill #3 installation and we anticipate recommencing construction in late 2020 or early 2021."
SUMMARY OF OPERATING RESULTS
Mine Production Information |
||||
Copper Mountain Mine (100% Basis) |
2020 |
2019 |
2020 |
2019 |
Mine |
||||
Total tonnes mined (000s) |
10,947 |
16,139 |
25,866 |
33,593 |
Ore tonnes mined (000s) |
3,577 |
3,007 |
7,255 |
5,821 |
Waste tonnes (000s) |
7,370 |
13,132 |
18,611 |
27,772 |
Stripping ratio |
2.06 |
4.37 |
2.57 |
4.77 |
Mill |
||||
Tonnes milled (000s) |
3,665 |
3,764 |
7,203 |
7,314 |
Feed Grade (Cu%) |
0.28 |
0.28 |
0.29 |
0.29 |
Recovery (%) |
79.0 |
78.2 |
77.2 |
79.9 |
Operating time (%) |
92.5 |
95.0 |
92.4 |
94.0 |
Tonnes milled (TPD) |
40,275 |
41,363 |
39,582 |
40,409 |
Production |
||||
Copper equivalent (000s) |
23,946 |
22,112 |
45,717 |
44,305 |
Copper (000s lb) |
18,092 |
18,450 |
35,564 |
37,060 |
Gold (oz) |
7,499 |
6,922 |
13,638 |
14,049 |
Silver (oz) |
86,126 |
65,707 |
166,142 |
127,987 |
Sales |
||||
Copper (000s lb) |
18,879 |
17,931 |
36,741 |
37,279 |
Gold (oz) |
6,289 |
7,044 |
12,653 |
14,070 |
Silver (oz) |
80,294 |
55,276 |
158,866 |
120,268 |
C1 cash cost per pound of copper produced (US$)(1) |
1.48 |
1.74 |
1.74 |
1.76 |
AISC per pound of copper produced (US$)(1) |
1.67 |
1.85 |
1.90 |
1.86 |
AIC per pound of copper produced (US$)(1) |
1.67 |
2.35 |
2.06 |
2.40 |
Average realized copper price (US$ per pound) |
2.43 |
2.72 |
2.49 |
2.79 |
(1) |
Non-GAAP performance measure. See MD&A for details. |
As announced on March 10, 2020, the Company implemented a revised operating plan for 2020 in reaction to the global COVID-19 pandemic and the resulting lower copper price environment. The revised operating plan was focused on maintaining positive margins and cash flow. During the second quarter of 2020 the Company continued to operate on this revised plan, with results exceeding expectations.
In Q2 2020, the Copper Mountain Mine produced 23.9 million pounds of copper equivalent (comprised of 18.1 million pounds of copper, 7,499 ounces of gold, and 86,126 ounces of silver) as compared to 22.1 million pounds of copper equivalent (comprised of 18.4 million pounds of copper, 6,922 ounces of gold, and 65,707 ounces of silver) in Q2 2019. Copper, gold and silver production in Q2 2020 was above the revised operating plan expectations. The mine processed a total of 3.7 million tonnes of ore at an average feed grade of 0.28% Cu and a copper recovery of 79.0% in Q2 2020 as compared to processing 3.8 million tonnes of ore at an average feed grade of 0.28% Cu and a copper recovery of 78.2% in Q2 2019. Copper grade is expected to improve in the second half of 2020, as the Company restarts mining in Pit #3 while maintaining lower costs. Mill availability averaged 92.5% for Q2 2020 as compared to 95.0% in Q2 2019. The slight variance in mill availability was a result of scheduled preventative maintenance shutdowns in Q2 2020.
C1 cash cost per pound of copper produced, net of by-product credits, for Q2 2020 was US$1.48, as compared to US$1.74 in Q2 2019. The decrease in cost per pound in Q2 2020 was the result of reduced mining costs and higher by-product credits (33.9% increase) for the gold and silver produced in Q2 2020 as compared to Q2 2019. AISC per pound of copper produced for Q2 2020 was US$1.67, as compared to US$1.85 in Q2 2019. The low AISC includes $4.8 million in sustaining capital, lease and applicable administration expenditures in Q2 2020 as compared to $2.7 million in Q2 2019.
AIC per pound of copper produced for Q2 2020 was US$1.67 as compared to US$2.35 for Q2 2019. AIC is the same as AISC for Q2 2020 as there were no deferred stripping or low-grade stockpile mining costs incurred in Q2 2020 as compared to $10.7 million of deferred stripping and $1.7 million of low-grade stockpile costs in Q2 2019.
The significant decrease in C1, AISC, and AIC recognized in Q2 2020 as compared to past quarters was a result of the Company's cost savings initiatives and operating efficiencies at the Copper Mountain mine, supplemented by an increase in precious metals prices and production for Q2 2020.
SUMMARY OF FINANCIAL RESULTS
Results and Highlights (100%) |
Three months ended |
Six months ended |
||
(In thousands of CDN$, except for per share amounts) |
2020 $ |
2019 $ |
2020 $ |
2019 $ |
Financial |
||||
Revenue |
91,089 |
65,144 |
140,653 |
152,014 |
Gross (loss) profit |
30,259 |
1,636 |
15,310 |
24,912 |
Gross (loss) profit before depreciation(1) |
36,222 |
6,801 |
27,381 |
36,416 |
Net (loss) income |
31,933 |
2,529 |
(11,525) |
20,355 |
(Loss) income per share – basic |
0.12 |
0.01 |
(0.05) |
0.07 |
Adjusted earnings(1) |
(1,458) |
(917) |
(11) |
5,119 |
Adjusted earnings per share – basic |
(0.01) |
(0.00) |
(0.00) |
0.03 |
EBITDA(1) |
49,120 |
10,257 |
9,405 |
42,121 |
Adjusted EBITDA |
15,729 |
6,811 |
20,919 |
26,885 |
Cash flow from operations |
15,685 |
23,685 |
32,025 |
47,374 |
Cash and cash equivalents – end of period |
29,003 |
43,896 |
||
(1) |
Non-GAAP performance measure. See MD&A for details. |
In Q2 2020, revenue was $91.1 million, net of pricing adjustments and treatment charges, compared to $65.1 million in Q2 2019. Q2 2020 revenue was based on the sale of 18.9 million pounds of copper, 6,289 ounces of gold, and 80,294 ounces of silver. This compares to 17.9 million pounds of copper, 7,044 ounces of gold and 55,276 ounces of silver sold in Q2 2019. The increase in revenue was primarily a result of the positive mark to market and final adjustment on concentrate sales of $20.3 million as compared to a negative mark to market and final adjustment of $4.2 million for Q2 2019, a differential of approximately $24.5 million.
Cost of sales in Q2 2020 was $60.8 million as compared to $63.5 million for Q2 2019. The reduction in cost of sales was primarily the result of the Company's cost savings initiatives, which included utilizing less equipment and mining fewer tonnes. As a result, Q2 2020 cost of sales did not include mining costs being allocated to the low-grade stockpile or to deferred stripping. This is compared to Q2 2019 cost of sales which was net of $12.0 million of deferred stripping and $1.9 million low-grade stockpile costs.
The Company reported net income of $31.9 million for Q2 2020 as compared to net income of $2.5 million for Q2 2019. The variance in the higher net income for Q2 2020, as compared to Q2 2019, was a result of several items including:
- Revenue in Q2 2020 included a large positive mark to market and final adjustment from provisional pricing on concentrate sales, as mentioned above.
- The inclusion of a non-cash unrealized foreign exchange gain of $14.5 million as compared to a non-cash unrealized foreign exchange gain of $6.7 million in Q2 2019, a differential of approximately $7.8 million, which was primarily related to the Company's debt that is denominated in US dollars.
On adjusted basis, the Company recorded a net loss of $1.5 million in Q2 2020, compared to $0.01 million in Q2 2019.
PROJECT DEVELOPMENT UPDATE
Copper Mountain Mill Expansion
During Q2 2020, the Company completed the first stage of the 45,000 TPD mill expansion project with the installation of Direct Flotation Reactors (DFRs). The DFRs will increase the efficiency and the capacity of the current cleaner circuit, which is expected to increase copper concentrate grade from about 25% to 28%, resulting in lower concentrate transportation, smelting and refining costs. The installation of the DFRs was completed on schedule and on budget. Since the commissioning of the DFR's in early July, the project is achieving the targeted final concentrate grade.
As noted in Q1 2020, as a result of COVID-19, the Company deferred most major capital spend and therefore halted work on the second stage of the Ball Mill expansion plans of the existing Copper Mountain Mine, which is the installation of the third ball mill. The Ball Mill expansion is designed to increase throughput to 45,000 TPD from 40,000 TPD and improve copper recovery as a result of being able to achieve a finer grind of ore. The expansion project includes the installation of a third ball mill that the Company had already purchased. Work has been reduced to completing commitments on the long lead items already ordered at the end of last year, which will allow the project to restart in an efficient and expeditious manner. With the recent stronger copper prices experienced, the Company plans to continue to operate under its revised operating plan and build its cash position with the target to restart the second stage of the Ball Mill expansion project at the end of 2020 or early 2021, dependent on market conditions.
Eva Copper Project
The Company completed an updated Eva Copper 2020 Feasibility Study and announced its results on May 7, 2020, which demonstrated improved economics and operating metrics, including a higher after-tax NPV, increased production, lower cash costs and a longer mine life, when compared to the prior 2018 Feasibility Study results.
Results included:
- After-tax NPV at an 8% discount of US$437 million and an after-tax IRR of 29%.
- Total production of 1.5 billion pounds of copper over a 15-year mine life.
- C1 cash costs of US$1.44 per pound of copper, net of by product credits
- Total initial development capital of US$382 million.
2020 OUTLOOK
The Company reaffirms its 2020 production and AIC guidance of 70 to 75 million pounds of copper and US$2.20 and US$2.35 per pound of copper produced, respectively. Copper production is expected to be more heavily weighted to the second half of the year, as a result of higher grades and as the Company begins to mine coarser grained ore areas that have higher recovery associated with them. AIC for the first half of 2020 is below the AIC guidance and although the Company expects to continue to operate at lower costs in the second half, the Company is not adjusting guidance at this time given any uncertainty that may arise from unforeseen impacts that COVID-19 may have in the future. The Company will assess its cost guidance on a quarter by quarter basis.
Q2 2020 FINANCIAL AND OPERATING RESULTS CONFERENCE CALL AND WEBCAST
Copper Mountain will host a conference call on Wednesday, July 29, 2020 at 7:30 am (Pacific Time) for senior management to discuss the second quarter 2020 results.
Dial-in information:
Toronto and international: 647-427-7450
North America (toll-free): 1-888-231-8191
To participate in the webcast live via computer go to:
https://produceredition.webcasts.com/starthere.jsp?ei=1339910&tp_key=930bdc54ab
Replay Call Information
Toronto and international: 416-849-0833, Passcode: 1289867
North America (toll-free): 1-855-859-2056, Passcode: 1289867
The conference call replay will be available until 8:59 pm (Pacific Time) on August 5, 2020. An archive of the audio webcast will also be available on the company's website at http://www.cumtn.com.
2020 ANNUAL GENERAL MEETING
The Company will be holding its 2020 Annual Meeting of Shareholders on Wednesday, September 9, 2020 at 2:00 pm (Vancouver Time). Given the ongoing health concerns related to the COVID-19 virus, it is imperative to achieve social distancing to reduce risk of the virus spreading. As a result, to mitigate risks to the health and safety of the communities, shareholders, employees and other stakeholders of the Company, Copper Mountain will be holding a virtual meeting. The Company encourages shareholders to participate via live audio webcast. Please refer to the Company's proxy circular, which will be sent to shareholders in August, for further details.
About Copper Mountain Mining Corporation
Copper Mountain's flagship asset is the 75% owned Copper Mountain mine located in southern British Columbia near the town of Princeton. The Copper Mountain mine currently produces approximately 90 million pounds of copper equivalent, with average annual production expected to increase to approximately 120 million pounds of copper equivalent. Copper Mountain also has the development-stage Eva Copper Project in Queensland, Australia and an extensive 2,443 km2 highly prospective land package in the Mount Isa area. Copper Mountain trades on the Toronto Stock Exchange under the symbol "CMMC" and Australian Stock Exchange under the symbol "C6C".
Additional information is available on the Company's web page at www.CuMtn.com.
On behalf of the Board of
COPPER MOUNTAIN MINING CORPORATION
"Gil Clausen"
Gil Clausen, P.Eng.
President and Chief Executive Officer
Cautionary Note Regarding Forward-Looking Statements
This news release may contain forward-looking statements and forward-looking information (together, "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical facts, are forward-looking statements. Generally, forward-looking statements can be identified by the use of terminology such as "plans", "expects", "estimates", "intends", "anticipates", "believes" or variations of such words, or statements that certain actions, events or results "may", "could", "would", "might", "occur" or "be achieved". Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance and opportunities to differ materially from those implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include the successful exploration of the Company's properties in Canada and Australia, the reliability of the historical data referenced in this press release and risks set out in Copper Mountain's public documents, including in each management discussion and analysis, filed on SEDAR at www.sedar.com. Although Copper Mountain believes that the information and assumptions used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by applicable law, Copper Mountain disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Copper Mountain Mining Corporation
Condensed Consolidated Interim Statements of Financial Position
(Unaudited in thousands of Canadian dollars)
June 30, 2020 $ |
December 31, 2019 $ |
|
Assets |
||
Current assets |
||
Cash and cash equivalents |
29,003 |
32,126 |
Accounts receivable and prepaid expenses |
33,502 |
27,947 |
Inventory |
29,145 |
35,299 |
91,650 |
95,372 |
|
Reclamation bonds |
4,155 |
3,740 |
Deferred tax assets |
27,302 |
28,088 |
Property, plant and equipment |
533,475 |
501,663 |
Low grade stockpile |
65,521 |
64,978 |
722,103 |
693,841 |
|
Liabilities |
||
Current liabilities |
||
Accounts payable and accrued liabilities |
45,029 |
41,366 |
Amounts payable to related parties |
3,828 |
104,698 |
Current portion of long-term debt |
65,201 |
60,260 |
Current tax liability |
1,461 |
1,186 |
115,519 |
207,510 |
|
Provisions |
17,391 |
18,104 |
Due to related parties |
131,271 |
- |
Long-term debt |
187,158 |
188,123 |
Deferred tax liability |
2,436 |
2,203 |
453,775 |
415,940 |
|
Equity Attributable to shareholders of the Company: |
||
Share capital |
266,663 |
266,663 |
Contributed surplus |
19,490 |
18,623 |
Accumulated other comprehensive loss |
(3,073) |
(4,158) |
Accumulated deficit |
(79,477) |
(70,516) |
203,603 |
210,612 |
|
Non-controlling interest |
64,725 |
67,289 |
Total equity |
268,328 |
277,901 |
722,103 |
693,841 |
Copper Mountain Mining Corporation
Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)
For the Three and Six Months Ended June 30
(Unaudited in thousands of Canadian dollars, except for number of and earnings per share)
Three months ended |
Six months ended |
|||
2020 $ |
2019 $ |
2020 $ |
2019 $ |
|
Revenue |
91,089 |
65,144 |
140,653 |
152,014 |
Cost of sales |
(60,830) |
(63,508) |
(125,343) |
(127,102) |
Gross profit |
30,259 |
1,636 |
15,310 |
24,912 |
Other income and expenses |
||||
General and administration |
(914) |
(2,631) |
(3,360) |
(5,392) |
Share based compensation |
(575) |
(526) |
(1,203) |
(1,187) |
Operating income |
28,770 |
(1,521) |
10,747 |
18,333 |
Finance income |
31 |
151 |
105 |
254 |
Finance expense |
(4,133) |
(4,442) |
(7,432) |
(8,241) |
Unrealized loss on interest rate swap |
(76) |
(96) |
(1,018) |
(490) |
Foreign exchange (loss) gain |
14,463 |
6,709 |
(12,395) |
12,774 |
Income (loss) before tax |
39,055 |
801 |
(9,993) |
22,630 |
Current tax expense |
(505) |
(463) |
(513) |
(976) |
Deferred income (expense) recovery |
(6,617) |
2,191 |
(1,019) |
(1,299) |
Net income (loss) |
31,933 |
2,529 |
(11,525) |
20,355 |
Other comprehensive income (loss) |
||||
Foreign currency translation adjustment |
4,192 |
(1,904) |
1,085 |
(2,707) |
Total comprehensive income (loss) |
36,125 |
625 |
(10,440) |
17,648 |
Net income (loss) attributable to: |
||||
Shareholders of the Company |
23,373 |
1,102 |
(8,961) |
13,602 |
Non-controlling interest |
8,560 |
1,427 |
(2,564) |
6,753 |
31,933 |
2,529 |
(11,525) |
20,355 |
|
Earnings (loss) per share: |
||||
Basic |
0.12 |
0.01 |
(0.05) |
0.07 |
Diluted |
0.12 |
0.01 |
(0.05) |
0.07 |
Weighted average shares outstanding, basic (thousands) |
191,331 |
188,216 |
191,331 |
188,199 |
Weighted average shares outstanding, diluted (thousands) |
192,020 |
190,751 |
191,331 |
190,720 |
Shares outstanding at end of the period (thousands) |
191,331 |
188,237 |
191,331 |
188,237 |
Copper Mountain Mining Corporation
Condensed Consolidated Interim Statements of Cash Flows
For the Three and Six Months Ended June 30,
(Unaudited in thousands of Canadian dollars)
Three months ended June 30, |
Six months ended June 30, |
|||
2020 $ |
2019 $ |
2020 $ |
2019 $ |
|
Cash flows from operating activities |
||||
Net income (loss) for the period |
31,933 |
2,529 |
(11,525) |
20,355 |
Adjustments for: |
||||
Depreciation |
5,964 |
5,183 |
12,096 |
11,522 |
Unrealized foreign exchange (gain) loss |
(7,791) |
(5,906) |
11,933 |
(9,588) |
Unrealized loss on interest rate swap |
76 |
96 |
1,018 |
490 |
Deferred income tax expense (recovery) |
6,617 |
(2,191) |
1,019 |
1,299 |
Finance expense |
4,133 |
4,442 |
7,432 |
8,241 |
Share based compensation |
575 |
526 |
1,203 |
1,187 |
41,507 |
4,679 |
23,176 |
33,506 |
|
Net changes in working capital items |
(25,822) |
19,006 |
8,849 |
13,868 |
Net cash from operating activities |
15,685 |
23,685 |
32,025 |
47,374 |
Cash flows from investing activities |
||||
Transaction costs |
- |
(850) |
- |
(850) |
Reclamation bonds |
(415) |
- |
(415) |
- |
Deferred stripping activities |
- |
(10,744) |
(7,437) |
(24,344) |
Purchase of property, plant and equipment |
(9,657) |
(5,560) |
(15,792) |
(7,820) |
Net cash (used in) from investing activities |
(10,072) |
(17,154) |
(23,644) |
(33,014) |
Cash flows from financing activities |
||||
Proceeds on exercise of options and warrants |
- |
19 |
- |
26 |
Advances from non-controlling interest |
- |
- |
24,223 |
15,035 |
Payments made to non-controlling interest |
- |
- |
- |
(329) |
Loan principal paid |
(6,057) |
(9,541) |
(28,756) |
(22,369) |
Interest paid |
(3,299) |
(3,734) |
(5,031) |
(6,230) |
Finance lease payments |
(2,128) |
(711) |
(2,993) |
(1,274) |
Net cash used in financing activities |
(11,484) |
(13,967) |
(12,557) |
(15,141) |
Effect of foreign exchange rate changes on cash and cash equivalents |
(1,349) |
(615) |
1,053 |
(1,446) |
Decrease in cash and cash equivalents |
(7,220) |
(8,051) |
(3,123) |
(2,227) |
Cash and cash equivalents - Beginning of period |
36,223 |
51,947 |
32,126 |
46,123 |
Cash and cash equivalents - End of period |
29,003 |
43,896 |
29,003 |
43,896 |
SOURCE Copper Mountain Mining Corporation
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