Cash Flow from Operating Activities of $38.9 million, Net Earnings of
$21.1 million or $0.06 per share
(All financial information prepared in accordance with International
Financial Reporting Standards ("IFRS"); all amounts in US$ unless
VANCOUVER, Nov. 7, 2011 /CNW/ - Capstone Mining Corp. (TSX: CS)
("Capstone") today announced its financial results for the three and
nine months ended September 30, 2011. Net earnings for the quarter
were $21.1 million and cash flow from operating activities was $38.9
million. Capstone ended the quarter with cash on hand of $484.2
million and no long-term debt. Copper production for the quarter at
Capstone's two operating mines, Cozamin and Minto, totalled 20.6
million pounds of copper in concentrates (19.9 million pounds of
payable copper) at an estimated total cash cost1 of $1.39 per payable pound.
Capstone will hold a conference call Tuesday, November 8, 2011 at 11:30
am Eastern time (8:30 am Pacific time) to discuss these results;
call-in details are provided at the end of this release. This release should be read in conjunction with Capstone's unaudited
interim consolidated financial statements and management's discussion
and analysis ("MD&A") for the three and nine months ended September 30,
2011, which are available on Capstone's website at: http://capstonemining.com/s/FinancialStatements.asp. An updated corporate presentation, including results to September 30,
2011, will also be available at http://capstonemining.com/s/Presentation.asp.
2011 Q3 Overview
ended Sept. 30,
ended Sept. 30,
ended Sept. 30,
|Gross sales revenue ($ millions)
|Payable copper produced (millions lbs)
|Total estimated cash cost per pound|
of payable copper (1) ($)
|Copper sold - (millions lbs)
|Realized copper price per pound ($)||3.59||3.39||4.00||3.33|
|Net earnings ($ millions)
|Net earnings per share - basic ($)||0.06||0.03||0.21||0.33|
|Adjusted net earnings (1) ($ millions)
|Adjusted net earnings (1) per share ($)||0.04||0.08||0.18||0.25|
|Cash flow from operating activities|
|Cash flow from operating activitiesper share |
- basic ($)(1)
|Cash, including restricted and|
short-term investments ($ millions)
"Net earnings were significantly higher than the same quarter a year
ago," said Darren Pylot, Capstone President and CEO. "The increase was
driven by a gain on derivative instruments versus a loss in the
comparative quarter, though this was partially offset by lower earnings
from mining operations due to higher depletion and amortization and
"We had a solid quarter from an operational standpoint, with both of our
mines achieving record throughput levels this quarter, allowing us to
remain on target to meet our full year 2011 guidance," continued Mr.
Pylot. "On the Santo Domingo Project development front, we released
the Pre-Feasibility Study ("PFS"), staffed the key project management
positions, awarded the Environmental Impact Study contract, commenced
the drill program required for the next stage of development and are
advancing to the Bankable Feasibility Study under the timeline detailed
in the PFS."
Financial and Production Highlights for the Three Months Ended September
Recorded net earnings of $21.1 million or $0.06 per common share which
Earnings from mining operations of $25.3 million,
Administrative and stock based compensation expense of $4.3 million,
Gain on derivative instruments of $9.0 million,
Foreign exchange gain of $2.3 million, and
Current and deferred tax expenses of $12.3 million.
Adjusted net earnings1 were $13.4 million or $0.04 per common share after making adjustments
for certain non-cash and non-recurring items.
Generated cash flow from operating activities of $38.9 million or $0.10
per common share.
Working capital increased to $517.6 million at September 30, 2011 (which
included $484.2 million of cash) from $177.0 million at December 31,
2010. The reported cash position decreased from June 30, 2011 as a
result of the strengthening U.S. dollar. The majority of the Company's
cash position is held in Canadian dollars, but reported in U.S.
Produced a total of 19.9 million pounds of payable copper at an
estimated total cash cost1 of $1.39 per pound of payable copper.
Recorded gross sales revenue of $97.9 million on the sale of 23.3
million pounds of copper, 4.7 million pounds of zinc, 0.9 million
pounds of lead, 5,633 ounces of gold and 413,093 ounces of silver.
Financial and Production Highlights for the Nine Months Ended September
Recorded net earnings of $55.5 million or $0.21 per common share which
Earnings from mining operations of $93.8 million,
Administrative and stock based compensation expense of $15.1 million,
Gain on derivative instruments of $7.8 million,
Gain on disposal of investments of $1.5 million,
Foreign exchange loss of $1.2 million, and
Current and deferred tax expenses of $33.2 million.
Adjusted net earnings1 were $47.9 million or $0.18 per common share after making adjustments
for certain non-cash and non-recurring items.
Generated cash flow from operating activities of $75.4 million or $0.28
per common share.
Produced a total of 56.5 million pounds of payable copper at an
estimated total cash cost1 of $1.42 per pound of payable copper.
Recorded gross sales revenue of $287.0 million on the sale of 62.6
million pounds of copper, 11.0 million pounds of zinc, 2.5 million
pounds of lead, 18,037 ounces of gold and 1,102,749 ounces of silver.
Operating Highlights for the Three Months Ended September 30, 2011
Produced 9.9 million pounds of payable copper at a total cash cost1 of $1.24 per pound of payable copper.
Following completion of an initial mineral resource estimate for the
Mala Noche Footwall Zone ("MNFWZ") in the second quarter, work
continued on a follow-up mineral resource estimate incorporating
additional drill data. The new resource estimate will be complete in
the fourth quarter and used as the basis of engineering studies
Completed 9,204 metres of surface diamond drilling in 9 holes on various
targets, and 5,914 metres of underground diamond drilling in 15 holes
targeting the MNFWZ. Underground drilling is continuing at the MNFWZ
with two rigs for the remainder of 2011 and into 2012. The MNFWZ
mineralized structure remains open to the east and down dip.
Produced 10.0 million pounds of payable copper at a total cash cost1 of $1.55 per pound of payable copper.
Continued stripping of the next pit in the mining sequence, the Area 2
pit, with ore production anticipated in the second quarter of 2012.
Following completion of a mineral resource estimate in the second
quarter incorporating drilling results from Wildfire/Copper Keel and
combining these areas with Area 2/118 (now known as Minto South Deposit
or MSD), work continued in the third quarter on a follow-up mineral
resource estimate incorporating additional drill data. The new mineral
resource estimate will be complete in the fourth quarter and used as
the basis for the Phase VI PFS currently underway.
Completed 6,695 metres of exploration diamond drilling in 18 holes
bringing the year to date totals to 38,416 metres in 112 drill holes.
Drilling in the third quarter focused mostly on testing new exploration
targets and is expected to continue into the fourth quarter as long as
weather conditions allow. Drilling is anticipated to restart in early
Santo Domingo, Chile:
Completed a Pre-Feasibility Study ("PFS") that contemplates an 18 year
mine life, with an after-tax IRR of 22%, NPV of US$1.1 billion at an 8%
discount rate and a 3 year payback with average annual production of
144 million pounds of copper, 4.1 million tonnes of iron and 15,000
ounces of gold.
The core Chilean management team for the project has been recruited,
which includes the General Manager announced in August. By quarter
end, a Health, Safety, Environmental and Communities Manager was in
place, and a Project Manager joined in mid-October. A Legal and
Permitting Manager is committed to start by early November. This core
leadership team has both operational and project development experience
in mines and projects belonging to Codelco, Barrick, Kinross, BHP and
Anglo American in Chile.
The contract for the preparation of the Santo Domingo Environmental
Impact Study ("EIS") was awarded to Knight Piésold.
A 12-hole geotechnical drilling program and a 12,000 metre in-fill
drilling program are underway to provide support for the Bankable
Feasibility Study stage.
Kutcho, British Columbia:
During the third quarter, detailed engineering continued to support the
compilation of the Environmental Application. This includes optimizing
the access road design, completion of a hydrogeology-drilling program
and excavating test pits required for the soils baseline study.
Electromagnetic anomalies generated by a Versatile Time Domain
Electromagnetic ("VTEM") survey flown earlier this year were drill
tested in the third quarter. The results are still being compiled, but
no new economically significant mineralization was discovered and no
further drilling is contemplated in 2011.
During October 2011 the Company entered into copper forward purchase
contracts at $3.08 per pound to offset its remaining outstanding copper
forward sales contracts. This decision was made to allow the Company
to participate in any future copper price increases. As at October 31,
2011, 100% of the outstanding copper forward sales contracts had been
offset. The offsetting copper forward purchase contracts entered into
in October 2011 locked in an approximate $1.0 million gain on an
equivalent number of copper forward sales contracts.
Capstone reaffirms full year 2011 production guidance. With year to date
production of 58.5 million pounds of copper in concentrates and both
mines presently operating on plan, the expectation is that production
will reach 80 million pounds for the year. In the fourth quarter,
production at Cozamin is expected to be above third quarter levels as
the mine plan calls for higher grade ore. At Minto, the successful
contract pre-crushing will continue until permanent improvements are
implemented, and continuing high throughput is expected to offset the
processing of lower grade material from stockpile. Cost guidance
remains at the previously revised $1.45 to $1.50 per payable pound of
Work on engineering studies at Cozamin that will apply economic
parameters to the MNFWZ resource block model to determine economic
viability continued in the third quarter, with completion targeted in
the fourth quarter of 2011.
At Minto, driven by a new mineral resource estimate, Capstone has a PFS
("Phase VI PFS") scheduled to be completed in early 2012. The
preliminary resource estimate released in the second quarter determined
the initial scope of the PFS. A more robust estimate incorporating
additional drilling, originally targeted to be complete in the third
quarter, is underway with completion expected shortly.
In addition to the Phase VI PFS, a separate internal scoping study is
being conducted of a larger open pit/milling scenario. The resource
update and the result of the internal scoping evaluation of the larger
throughput scenario are expected in the fourth quarter of 2011.
At Santo Domingo the critical activity for the fourth quarter is the
bidding process and awarding of the Bankable Feasibility Study. A
request for proposal (the "RFP") is being prepared and the contract
award is scheduled to be completed by year-end.
Development activities at Kutcho for the remainder of 2011 will be
focused on the environmental and socio-economic assessment process and
consultations towards permitting mine development.
Conference Call and Webcast Details
Capstone will host a conference call on Tuesday, November 8, 2011 to
discuss these results. The conference call and webcast details are as
Tuesday, November 8, 2011|
11:30 am Eastern Time (8:30 am Pacific Time)
North America -- 1.888.231.8191, International -- 1.647.427.7450
North America -- 1. 855.859.2056, International -- 1.416.849.0833
The conference call replay will be available until November 22, 2011. A
transcript of the call will also be made available on Capstone's
website (http://capstonemining.com/s/ConferenceCalls.asp) within approximately 24 hours of the call.
About Capstone Mining Corp.
Capstone Mining Corp. is a Canadian mining company with two producing
copper mines, the Cozamin copper-silver-zinc-lead mine located 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 Chile in
partnership with Korea Resources Corporation and the 100% owned Kutcho
copper-zinc-gold-silver project in British Columbia, as well as
exploration at properties in Chile, British Columbia and Australia.
Using its cash flow and strong balance sheet as a springboard, Capstone
aims to grow organically through continued mineral resource and reserve
expansions and through acquisitions in politically stable,
mining-friendly regions. Capstone is included in the S&P/TSX Composite
Index and S&P/TSX Global Mining Index. Additional 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 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 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", "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. 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; 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
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 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 contained in this news release has been
prepared under the supervision of, and its disclosure has been reviewed
by, John Sagman, P. Eng., Capstone's Vice President, Technical Services
(technical information related to mining and production) and Brad
Mercer, P. Geol., Capstone's 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 for Capstone, 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, 2011 as filed on SEDAR and as available on the Company's website
for further details.