Imperial Metals Corporation (TSX:III) reports comparative financial
results for the three and six months ended June 30, 2013 and June
30, 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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In thousands of CDN$ except THREE MONTHS SIX MONTHS
per share amounts ENDED JUNE 30 ENDED JUNE 30
2013 2012 2013 2012
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Revenues $ 41,317 $ 50,883 $ 92,183 $ 111,144
Income from mine operations $ 13,272 $ 13,287 $ 26,818 $ 27,069
Equity income in Huckleberry $ 2,279 $ 3,524 $ 4,213 $ 3,249
Net Income $ 7,541 $ 11,966 $ 18,162 $ 16,565
Net Income Per Share $ 0.10 $ 0.16 $ 0.24 $ 0.22
Adjusted Net Income (1) $ 5,968 $ 10,535 $ 16,185 $ 18,740
Adjusted Net Income Per
Share (1) $ 0.08 $ 0.14 $ 0.22 $ 0.25
Cash Flow (1) $ 16,036 $ 15,825 $ 32,487 $ 33,720
Cash Flow Per Share (1) $ 0.22 $ 0.21 $ 0.44 $ 0.45
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(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 and before net change in working capital balances, income and
mining taxes paid, and interest paid. 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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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. In the six months ended
June 30, 2013 a total of 1,900 ounces gold were sold and the sale
proceeds applied to the carrying value of the mineral property.
Revenues were $41.3 million in the June 2013 quarter compared to
$50.9 million in the 2012 quarter primarily due to lower copper and
gold prices and related negative revenue valuations.
The Company recorded net income of $7.5 million in the June 2013
quarter compared to net income of $12.0 million in the 2012
quarter. Adjusted net income in the quarter was $6.0 million or
$0.08 per share, versus $10.5 million or $0.14 per share in the
June 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 recorded $1.1 million gains on copper derivatives in
the June 2013 quarter compared to gains of $0.8 million in the
comparative quarter. The Company had no realized losses or gains on
copper derivatives in the June 2013 quarter compared to realized
gains of $0.2 million in the June 2012 quarter.
Cash flow increased to $16.0 million in the three months ended
June 30, 2013 from $15.8 million in the comparative quarter.
Capital expenditures increased to $83.2 million from $34.6
million in the comparative 2012 quarter. Expenditures were financed
from cash flow from the Mount Polley mine, short term debt and
non-current debt of $15.2 million for equipment financed in the
current quarter. At June 30, 2013 the Company had $6.3 million in
cash.
During the June 2013 quarter the Company did not purchase any
common shares for cancellation.
INCREASE IN LINE OF CREDIT FACILITY
On June 6, 2013 the Company entered into a line of credit
facility ("LOC") with Edco Capital Corporation, a company
controlled by Mr. Edwards. The LOC has been increased from a
maximum of $75 million to a maximum of $130 million. A commitment
fee of $275,000 is payable in respect of the increase in the LOC.
All others terms and conditions of the LOC remain unchanged. The
LOC is available for drawdown until September 30, 2013. It bears
interest at 7% per annum and is repayable the earlier of the
completion of a debt financing or October 1, 2014. Payments
pursuant to the LOC constitute a related party transaction within
the meaning of Multilateral Instrument 61-101. Management considers
the LOC to be advantageous as it provides additional timing and
flexibility for arranging senior financing for the Red Chris
project. Management also considers the LOC terms and conditions are
reasonable, in the context of the market. The LOC was reviewed and
approved by the independent members of the Company's Board of
Directors. The LOC is exempt from the formal valuation and minority
interest approval requirements of Multilateral Instrument 61-101 as
it represents less than 25% of the Company's market capitalization.
The material change report in relation to this transaction will be
filed less than 21 days before closing as the Company completed
this transaction on August 12, 2013 as all necessary approvals had
been received and the Company wished to complete the transaction as
soon as commercially feasible after such approvals were
obtained.
MOUNT POLLEY MINE OPERATIONS
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THREE MONTHS SIX MONTHS
PRODUCTION ENDED JUNE 30 ENDED JUNE 30
2013 2012 2013 2012
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Ore milled
(tonnes) 2,007,735 2,161,954 3,977,644 4,086,655
Ore milled per
calendar day
(tonnes) 22,063 23,758 21,976 22,454
Grade % - copper 0.306 0.276 0.287 0.272
Grade g/t - gold 0.271 0.306 0.263 0.296
Recovery % -
copper 74.06 63.35 72.54 64.40
Recovery % -
gold 68.32 65.22 66.12 64.40
Copper (lbs) 10,035,328 8,341,391 18,242,816 15,796,737
Gold (oz) 11,932 13,703 22,244 25,049
Silver (oz) 33,162 30,196 61,866 55,028
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Quarterly copper production was 10,035,328 pounds, up by 20%
from the comparable quarter in 2012. The increase in copper
production is the result of the higher copper grade and better
recovery more than offsetting the slightly lower throughput. Gold
production for the quarter was down 13% due to lower gold grade ore
being treated.
Copper recovery in July 2013 was 80%, the highest yet achieved
from Springer pit ore.
Work on the test stope at the Boundary zone is continuing with
156 metres of ramp and cross cut completed in the quarter and the
commencement of excavation of a 200 metre raise to provide
increased ventilation and a secondary escape way.
HUCKLEBERRY MINE OPERATIONS
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THREE MONTHS SIX MONTHS
PRODUCTION ENDED JUNE 30 ENDED JUNE 30
(stated 100% -
Imperial's
allocation=
50%) 2013 2012 2013 2012
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Ore milled
(tonnes) 1,538,687 1,470,600 3,019,356 2,917,000
Ore milled per
calendar day
(tonnes) 16,909 16,160 16,682 16,027
Grade (%) -
copper 0.343 0.320 0.335 0.306
Recovery (%) -
copper 91.8 90.5 91.3 89.8
Copper (lbs) 10,681,105 9,391,000 20,361,072 17,661,000
Gold (oz) 791 686 1,501 1,329
Silver (oz) 60,444 51,130 118,316 93,196
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Throughput for the second quarter 2013 averaged 16,909 tonnes
per calendar day up from the 16,160 tonnes achieved in the second
quarter 2012. Copper production was up over 13% on higher grades,
throughput and recovery. During the second quarter virtually all of
the ore delivered to the mill came from the 954 to 946 benches
within the MZX pit. Stripping of the tailings and waste from the
old Main zone pit constituted the bulk of the waste mining.
The new tailings storage facility (TMF-3) construction continued
with good progress on the starter and saddle dams, as well as the
piping, pumping and cycloning infrastructure required to operate
the TMF3.
Huckleberry received approval from the Chief Inspector of Mines
in July to operate the TMF-3. This facility and the new cyclone
sand plant are expected to be in operation by the end of August
2013.
HUCKLEBERRY EXPLORATION
A 2013 diamond drill program of approximately 3,500 metres over
nine holes is planned to expand several targets within the mine
site area outlined by 2011 and 2012 drilling. In addition,
Huckleberry will complete a soil sampling program within the nearby
North Huckleberry claims to test for new geophysical or drill
targets. Huckleberry's exploration program commenced in July
2013.
RED CHRIS CONSTRUCTION UPDATE
Red Chris mine development is proceeding with 91% of the
engineering complete as of June 30, 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 kilometre extension (Iskut Extension) from Bob
Quinn to Tatogga. Work on construction of access roads and right of
way clearing for the Iskut Extension began in July after the
required permits were issued by the Province of British Columbia.
The clearing and access road work had originally been scheduled to
start in the spring of 2013. More work will be done during winter
months to compensate for the delay. This additional winter work
will be required to meet the scheduled start of commissioning and
will likely put pressure on our budget for this item.
Site work continued through spring 2013. Work items in the
second quarter 2013 included:
-- Construction of power line structure accesses on the 18 kilometre route
from Tatogga to the mine site
-- Preparation of the primary crusher, MSE wall and transfer tower
foundations
-- Installation 6,751 m3 of concrete to date into the process building
foundations, grade beams, mill piers and raft slab
-- Construction of crane pads around the process building for steel
erection starting in July
-- Installation of a water diversion and sediment control structures around
the Tailings Impoundment Area (TIA)
-- Construction of foundation drains for the TIA North Starter Dam
The crews have worked 599,881 personnel hours with 66 first
aids, 7 medical aids and 0 lost time accidents. Construction camp
occupancy reached 325 in June.
The first concrete pour in 2013 was on March 24. Concrete pours
are planned to mid-November 2013. The process plant building
structural steel erection started in early July with completion
planned by October 31. The primary crusher, MSE wall, overland
conveyor and coarse ore reclaim tunnel are to be installed this
year. Construction has begun on the site electrical substation.
The North Starter Dam earthworks are ongoing in the TIA
utilizing a combination of equipment owned by Red Chris with
support from the Tahltan Nation Development Corporation and other
contractors. The mining fleet Caterpillar 793 trucks (4) and 994
loader arrived on site for assembly over the summer.
The work at Red Chris to date has been funded by cash flow from
operations, equipment financed by non-current debt, the Company's
line of credit and a new $75.0 million line of credit facility with
a significant shareholder. This line of credit facility was
increased to $130.0 million after June 30, 2013. Total expenditures
and commitments at Red Chris mine development were $316.1 million
at quarter end of which $171.6 million has been paid.
RED CHRIS EXPLORATION
Exploration at Red Chris has been temporarily suspended while
the Company completes the development of the Red Chris mine.
STERLING MINE
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THREE MONTHS SIX MONTHS
PRODUCTION ENDED JUNE 30 ENDED JUNE 30
2013 2012 2013 2012
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Ore Stacked - tons 47,112 49,822 76,800 49,822
Gold Grade - oz/ton 0.081 0.082 0.078 0.082
Gold ounces - added to heap 3,826 4,109 5,964 4,109
Gold ounces - in-process &
poured 3,147 1,194 3,916 1,194
Gold shipped - ounces 2,205 817 2,974 817
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Stoping operations from the 3292, 3260 and 3220 levels produced
41,884 tons of ore. Development work, both drifting and raising
produced 5228 tons of ore and 2525 tons of waste. Development work
included completion of a ventilation raise from 3260 to 3220
levels, an ore-pass from 3220 to the 3180 levels and the associated
access drifts.
In the second quarter 2013 a total of 47,112 tons of ore,
containing 3,826 ounces of gold, were stacked onto the leach pad at
an average grade of 0.081 ounces per ton.
RUDDOCK CREEK
The Ruddock Creek Joint Venture is owned by Imperial (50%),
Mitsui Mining and Smelting Co. Ltd. (30%) and Itochu Corporation
(20%). The Ruddock Creek zinc/lead property is located 155
kilometres northeast of Kamloops in the Scrip Range of the Monashee
Mountains in southeast British Columbia.
The Joint Venture is currently completing the 2013 program which
will include site infrastructure studies and metallurgical testing
of dense media separation, flotation, acid base accounting, paste
backfill, humidity cell testing. The metallurgical work, which is
well underway, 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,
including trenching and geotechnical core drilling, for future
permitting and engineering studies. New higher capacity water
control structures for underground discharge are being constructed
for future programs.
OUTLOOK
With production from Mount Polley, Sterling and our 50% share of
Huckleberry production totalling 28.4 million pounds copper, 26,910
ounces gold and 123,023 ounces silver during the first six months
of 2013, production for the year should be close to our guidance of
58.5 million pounds of copper, 54,600 ounces of gold and 195,000
ounces of silver.
Sterling production is expected to increase as the monthly
tonnage delivered the heap leach pad increased from 12,198 tons in
April to 17,718 tons in June. In July 19,519 tons were stacked on
the heap. The gold grade is also expected to increase in the second
quarter as mining operations move into the core of the 144
zone.
At Huckleberry mine the TMF-3 should be in service in August.
Operations will focus on removal of waste and tailings from the old
Main zone pit, so the MZO pit will be ready to supply mill feed in
2014.
Virtually all Mount Polley ore for the rest of the year will
come from the Springer pit, but ongoing stripping of the old
Cariboo pit is beginning to release some ore.
INFORMATION RELATED TO THIS PRESS RELEASE
Detailed financial information is provided in the Management's
Discussion & Analysis within the 2013 Second 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 June 30, 2013,
and plans for the future based on facts and circumstances as of
August 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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