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Copper Mountain Mining Announces Q4 and Full Year 2018 Financial Results

February 15, 2019

Vancouver, British Columbia – February 15, 2019 – Copper Mountain Mining Corporation (TSX: CMMC | ASX:C6C) (the “Company” or “Copper Mountain”) announces fourth quarter and full year 2018 financial 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

FOURTH QUARTER 2018 AND FULL YEAR 2018 HIGHLIGHTS

  • Fourth quarter 2018 production was the strongest quarter of the year, with production increasing 9.7% from the prior year to 24.5 million pounds of copper equivalent (comprised of 20.6 million pounds of copper, 8,124 ounces of gold and 62,711 ounces of silver).
  • Full year 2018 production met guidance, with production increasing 4.6% from the prior year to 92.4 million pounds of copper equivalent (comprised of 78.8 million pounds of copper, 28,250 ounces of gold and 273,913 ounces of silver).
  • C1 cash costs for the fourth quarter decreased 13% compared to the prior year to US$1.60 per pound of copper produced and full year 2018 C1 cash costs decreased 4% compared to the prior year to US$1.77 per pound of copper produced.
  • Revenue for the fourth quarter was $73.1 million from the sale of 19.4 million pounds of copper, 7,475 ounces of gold and 69,761 ounces of silver and revenue for the full year of 2018 was $296.0 million, from the sale of 79.2 million pounds of copper, 26,799 ounces of gold, and 284,086 ounces of silver, net of pricing adjustments.
  • Adjusted earnings per share was ($0.01) for the fourth quarter and $0.02 for the year.
  • Cash flow from operations for the fourth quarter was $28.8 million and $51.3 million for the full year of 2018.
  • In 2018, Mineral Reserves increased at the Copper Mountain Mine, a preliminary economic assessment (PEA) on New Ingerbelle was completed resulting in an after-tax NPV (8%) of US$390 million and a feasibility study was completed for the Eva Copper Project resulting in an after-tax NPV (8%) of US$256 million.

“In 2018, we focused on building a strong foundation from which to grow our business,” said Copper Mountain’s President and CEO, Gil Clausen.  “The Copper Mountain Mine finished the year achieving guidance across all metrics. We are also completing an integrated mine plan which will combine the New Ingerbelle deposit into the Copper Mountain mine plan and may double the mine life. The New Ingerbelle deposit provides the potential to add significant value through the addition of low risk, low cost production, particularly as we evaluate a mill expansion plan, which could allow for increased production levels in our existing mill within our current operating and environmental permits. We expect to complete this integrated life of mine plan and publish a new Technical Report for our Copper Mountain Mine in the first quarter of 2019.”

SUMMARY FINANCIAL RESULTS

Results & Highlights (100%)

Three months ended
December 31,

Year ended
December 31,

(In thousands of CDN$, except for per share amounts)

 2018
$

2017
$

2018
$

2017
$

Financial

 

 

 

 

Revenue

73,149

85,687

296,019

304,080

Gross profit

7,896

20,013

25,306

59,095

Gross profit before depreciation(1)

18,089

34,966

76,352

110,586

Net income (loss)

(18,982)

23,538

(26,876)

67,339

   Earnings (loss) per share - basic

$(0.09)

$0.12

$(0.13)

$0.36

Adjusted net (loss) income(1)

(1,400)

25,311

3,377

46,598

   Adjusted (loss) earnings per share - basic

$(0.01)

$0.19

$0.02

$0.35

EBITDA(1)

(234)

31,564

40,685

122,504

Adjusted EBITDA

17,348

33,337

85,841

90,692

Cash flow from operations

28,777

17,445

51,266

57,274

Cash and cash equivalents – end of year

 

 

46,123

45,133

 

 

 

 

 

  1. Non-GAAP performance measure. See Copper Mountain’s Q4 2018 MD&A for details.

Fourth Quarter 2018 Financial Review

The Company reported a gross profit for Q4 2018 of $7.9 million, compared to $20.0 million for Q4 2017, and a net loss of $19.0 million in Q4 2018, compared to a net income of $23.5 million in Q4 2017.  The increase in the net loss from net income was primarily a result of a non-cash unrealized foreign exchange loss of $14.7 million compared to a non-cash unrealized foreign exchange loss of $1.8 million for Q4 2017, a change of approximately $12.9 million, which was primarily related to the Company’s debt that is denominated in U.S. dollars. The increase in net loss was also due to lower revenue and higher cost of sales year over year.

The Company recognized revenue of $73.1 million, net of pricing adjustments and treatment charges, on the sale of 19.4 million pounds of copper, 7,475 ounces of gold, and 69,761 ounces of silver and based on an average realized copper price of US$2.81 per pound.  This is compared to Q4 2017 revenue of $85.7 million, net of pricing adjustments and treatment charges, on the sale of to 18.1 million pounds of copper, 5,622 ounces of gold and 67,359 ounces of silver and based on an average realized copper price of US$3.12 per pound for Q4 2017. Despite higher sales, lower revenue year over year was a result of a 10% lower realized copper price in Q4 2018 compared to Q4 2017 and a Q4 2018 mark-to-market adjustment of negative $2.4 million compared to a positive mark-to-market adjustment of $10.3 million in Q4 2017. 

Cost of sales for Q4 2018 decreased marginally to $65.2 million compared to $65.7 million in Q4 2017, even though more concentrate was sold in Q4 2018 than Q4 2017.   This was because Q4 2017 included a $10.8 million write down to the low-grade stockpile, which was included in cost of sales.

Exploration expenditures in Q4 2018 were $1.2 million, which includes exploration in both Australia and British Columbia. 

Full Year 2018 Financial Review

The Company reported gross profit in 2018 of $25.3 million, compared to $59.1 million in 2017, and a net loss in 2018 of $26.9 million, compared to a net income of $67.3 million in 2017.  The increase in net loss in 2018 from net income in 2017 was primarily a result of a non-cash unrealized foreign exchange loss $23.8 million in 2018, compared to a non-cash unrealized foreign exchange gain of $20.9 million in 2017, a change of approximately $45 million, which was mainly related to the Company’s debt that is denominated in U.S. dollars. The increase in net loss was also due to lower revenue and higher cost of sales year over year.

The Company recognized revenue of $296.0 million in 2018, net of pricing adjustments and treatment charges, on the sale of 79.2 million pounds of copper, 26,799 ounces of gold, and 284,086 ounces of silver based on an average realized copper price of US$2.98 per pound.  This compares to revenue of $304.1 million in 2017, net of pricing adjustments and treatment charges, on the sale of 73.9 million pounds of copper, 23,969 ounces of gold and 260,493 ounces of silver, based on an average realized price of realized copper price of US$2.82 per pound. As required under IFRS, revenue in 2017 included a positive mark to market adjustment of $10.7 million for unsettled shipments outstanding at year end, as compared to a negative mark to market adjustment of $0.9 million for 2018 unsettled shipments at year end.

Cost of sales for 2018 increased by $26 million to $270.7 million compared to $245.0 million in 2017. This increase was due in small part to higher costs for diesel fuel, maintenance and power, but primarily due to the change in ore stockpile inventory with a $13.1 million decrease in 2018 charged to cost of sales as compared to a $14.0 million increase in 2017 charged to ore stockpile inventory.  The drawdown of ore stockpiles in the year is a result of increased development stripping as the Copper Mountain Mine starts to expose higher grade areas of the pit for future years.  As required under IFRS, some of these additional costs of stripping are capitalized when the period stripping ratio exceeds the life of mine stripping ratio of 2:1.

Exploration expenditures for the full year of 2018 were $6.5 million which includes exploration in both Australia and British Columbia.

SUMMARY OPERATING RESULTS

Copper Mountain Mine (100% Basis)

  Q4 
2018

Q4
 2017

 Annual 
2018

Annual
2017

Mine:

 

 

 

 

Total tonnes mined (000’s)

19,730

18,998

74,337

72,597

Ore tonnes mined (000’s)

4,407

7,370

20,567

26,204

Waste tonnes (000’s)

15,323

11,628

53,770

46,393

Stripping ratio

3.48

1.58

2.61

1.77

 

 

 

 

 

Mill:

 

 

 

 

Tonnes milled (000’s)

3,873

3,692

14,535

14,086

Feed Grade (Cu%)

0.30

0.32

0.31

0.32

Recovery (%)

81.0

75.1

79.8

77.2

Operating time (%)

96.0

93.4

92.6

90.3

Tonnes milled (TPD)

42,098

40,130

39,822

38,592

 

 

 

 

 

Production:

 

 

 

 

Copper (000’s lbs)

20,628

19,556

78,847

75,791

Gold (oz)

8,124

5,206

28,250

23,633

Silver (oz)

62,711

70,384

273,913

277,094

 

 

 

 

 

Sales:

 

 

 

 

Copper (000’s lbs)

19,431

18,091

79,195

73,860

Gold (oz)

7,475

5,622

26,799

23,969

Silver (oz)

69,761

67,359

284,086

260,493

 

 

 

 

 

Costs and Prices

 

 

 

 

Total operating costs (C1) per pound of copper produced (US$)(1)

$1.60

$1.85

$1.77

$1.84

All-in-sustaining costs per pound of copper produced (US$)(1,2)

$1.90

$1.99

$2.13

$2.00

Average realized copper price (US$) 

$2.81

$3.12

$2.98

$2.82

  1. Non-GAAP performance measure. See Copper Mountain’s Q4 2018 MD&A for details.
  2. Copper cash costs have been updated to industry recognized metrics of total operating costs (C1) and with the addition of All in Sustaining Costs per pound of copper produced the Company believes this disclosure will present the full cost of copper production associated with the Copper Mountain mine and take steps in further supporting peer group comparability. See the non-GAAP performance measures section of this MD&A for details of these calculations.

Fourth Quarter 2018 Operating Results Review

In Q4 2018, the Copper Mountain Mine produced 20.6 million pounds of copper, 8,124 ounces of gold, and 62,711 ounces of silver compared to 19.6 million pounds of copper, 5,206 ounces of gold, and 70,384 ounces of silver in Q4 2017. Increased recoveries for all metals and a 5% increase in tonnes milled resulted in strong production results for Q4 2018 and the strongest quarter for copper and gold production in 2018. Increased gold production can be attributed to the new flash floatation circuit installed in the second half of 2018.

Total operating costs (C1) for Q4 2018 were US$1.60 per pound of copper produced, 13% lower than the C1 costs for Q4 2017 of US$1.85 per pound of copper produced. The improvement in costs, when compared to the prior year, is related to several factors including 5% higher copper production in the quarter, a 5% decrease in total mine operating costs in Q4 2018, and a weakening of the Canadian dollar to the United States dollar used when translating C1 costs to United States dollars. It should be noted that substantially all of the Company’s operating costs are priced in Canadian dollars. The decrease in C1 costs is also affected by the levels of deferred stripping in the period as these excess stripping costs are treated as capital expenditures. Deferred stripping costs are captured in all-in-sustaining costs (AISC) and not included in C1 costs. The total cash value of deferred stripping in Q4 2018 was $4.6 million compared to Nil in Q4 2017.

Full Year 2018 Operating Results Review

In 2018, the Copper Mountain Mine achieved annual copper production guidance, producing 78.8 million pounds of copper, 28,250 ounces of gold, and 273,913 ounces of silver compared to 75.8 million pounds of copper, 23,633 ounces of gold, and 277,094 ounces of silver in 2017. This represents an increase of 4% for copper, 19% for gold and a slight 1% decrease in silver production. Increases for copper and gold production as compared to the prior year is a result of improved recoveries and mill throughput in 2018, offset slightly by lower grades being milled in 2018.  Improved recoveries in the mill can be attributed to the installation of the new flash flotation circuit in the third quarter of 2018. Recoveries contributed to strong annual production results which included an increase of total tonnes milled by 3%.

Total C1 costs for 2018 were US$1.77 per pound of copper produced, 4% lower than the C1 costs for 2017 of US$1.84. The improvement in costs per pound is a result of higher copper production in 2018 and slightly lower total mine operating costs when compared to 2017, after taking into account cost associated with increased low-grade stockpile inventories in 2017, as required under IFRS. The decrease in C1 costs was also affected by the levels of deferred stripping in the year as these mining costs are treated as capital expenditures and deferred as required under IFRS. Deferred stripping costs are captured in AISC and not included in C1 costs. The total cash value of deferred stripping in 2018 was $20.2 million, compared to $1.5 million in 2017.

Q4 2018 FINANCIAL AND OPERATING RESULTS CONFERENCE CALL AND WEBCAST

The Company will hold a conference call on Friday, February 15, 2019 at 7:30 am (Pacific Standard Time) for management to discuss the Q4 2018 financial and operating results.

Live Dial-in Information
Toronto and international:           1 (647) 427-7450
North America (toll-free):            1 (888) 231-8191
To participate in the webcast live via computer go to:
https://event.on24.com/wcc/r/1912233/DA8D8425873C22105A0E0F317371DD61 

Replay Call Information
Toronto and international:           1 (416) 849-0833                               Passcode: 5973748
North America (toll-free):            1 (855) 859-2056                               Passcode: 5973748
The conference call replay will be available from 12:30 pm (PST) on February 15, 2019 until 20:59 pm PST on February 22, 2019. An archive of the audio webcast will also be available on the company’s website at http://www.cumtn.com .

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 produces about 100 million pounds of copper equivalent per year with a large resource that remains open laterally and at depth. Copper Mountain also has the permitted, development stage Eva Copper Project in Queensland, Australia and an extensive 397,000 hectare highly prospective land package in the Mount Isa area.

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.
Chief Executive Officer

For further information, please contact:
Letitia Wong, Vice President Corporate Development & Investor Relations
604-682-2992 Email: [email protected]  or
Dan Gibbons, Investor Relations 604-682-2992 ext. 238 Email: [email protected]

Website: www.CuMtn.com

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
Consolidated Statements of Financial Position
(In thousands of Canadian dollars)

 

December 31,
2018
$

December 31,
2017 $

 

 

 

Assets

 

 

 

 

 

Current assets

 

 

Cash and cash equivalents

46,123

45,133

Accounts receivable and prepaid expenses

18,923

29,314

Inventory

55,801

68,135

 

 

 

 

120,847

142,582

 

 

 

Deferred acquisition costs

-

1,121

Reclamation bonds

8,752

8,228

Deferred tax assets

13,980

10,956

Property, plant and equipment

448,237

414,041

Low grade stockpile

109,846

91,021

 

 

 

 

701,662

667,949

Liabilities

 

 

 

 

 

Current liabilities

 

 

Accounts payable and accrued liabilities

37,494

42,122

Amounts payable to related parties

69,026

43,633

Current portion of long-term debt

52,956

48,649

Current tax liability

622

1,285

 

160,098

135,689

 

 

 

Provisions

6,571

6,521

Interest rate swap liability

601

2,081

Long-term debt

229,001

258,373

Deferred tax liability

2,135

-

 

398,406

402,664

 

 

 

Equity
Attributable to shareholders of the Company:

 

 

 

 

 

Share capital

263,822

195,670

Contributed surplus

17,378

15,724

Accumulated other comprehensive loss

(1,655)

-

Accumulated deficit

(48,030)

(25,693)

 

231,515

185,701

Non-controlling interest

71,741

79,584

Total equity

303,256

265,285

 

 

 

 

701,662

667,949

Copper Mountain Mining Corporation
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
For the Years Ended December 31, 2018 and 2017
(In thousands of Canadian dollars, except for number of and earnings per share)

 

 

 

2018
$

2017
$

Revenue

 

 

296,019

 

304,080

Cost of sales

 

 

(270,713)

(244,985)

Gross profit

 

25,306

59,095

 

 

 

 

 

General and administration

 

 

(10,990)

(6,757)

Property investigation

 

 

-

(35)

Share based compensation

 

 

(1,605)

(2,152)

Income from operations

 

 

12,711

50,151

 

 

 

 

 

Finance income

 

 

582

319

Finance expense

 

 

(15,564)

(13,070)

Unrealized gain (loss) on interest rate swap

 

 

716

(87)

Foreign exchange (loss) gain

 

 

(23,788)

20,949

(Loss) income before tax

 

 

(25,343)

58,262

 

 

 

 

 

Current resource tax expense

 

 

(1,217)

(1,879)

Deferred income and resource tax (expense) recovery

 

(316)

10,956

Net (loss) income

 

 

(26,876)

67,339

 

 

 

 

 

Other comprehensive loss

 

 

 

 

Foreign currency translation adjustment

 

 

(1,655)

-

Total comprehensive (loss) income

 

 

(28,531)

67,339

 

 

 

 

 

Net (loss) income and comprehensive (loss) income attributable to:

 

 

 

 

Shareholders of the Company

 

 

(22,337)

47,963

Non-controlling interest

 

 

(4,539)

19,376

 

 

 

(26,876)

67,339

(Loss) income per share:

 

 

 

 

Basic

 

 

$(0.13)

$0.36

Diluted

 

 

$(0.13)

$0.35

 

 

 

 

 

Weighted average shares outstanding, basic

 

 

172,201,295

133,301,425

Weighted average shares outstanding, diluted

 

 

172,201,295

136,893,439

Shares outstanding at end of the year

 

 

188,170,359

134,285,192

Copper Mountain Mining Corporation
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2018 and 2017
(In thousands of Canadian dollars)

 

 

 

2018
$

2017
$

Cash flows from operating activities

 

 

 

 

Net (loss) income for the year

 

 

(26,876)

67,339

 
Adjustments for:

 

 

 

 

Depreciation

 

 

51,046

51,491

Loss on disposal of fixed assets

 

 

-

(25)

Unrealized foreign exchange loss (gain)

 

 

17,601

(20,155)

Unrealized (gain) loss on interest rate swap

 

 

(716)

87

        Deferred income and resource tax expense (recovery)

 

310

(10,956)

Finance expense

 

 

15,564

13,070

Share based compensation

 

 

1,327

1,945

 

 

 

58,256

102,796

       Net changes in working capital items

 

 

(6,990)

(45,522)

Net cash from operating activities

 

 

51,266

57,274

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Cash acquired in acquisition of Altona

 

 

29,115

-

Transaction costs for Altona transaction

 

 

(2,291)

-

Share issue costs for Altona transaction

 

 

(364)

-

Deferred stripping activities

 

 

(20,185)

(1,485)

Deferred acquisition costs

 

 

-

(1,121)

Development of property, plant and equipment

 

 

(21,537)

(3,779)

Purchase of reclamation bond

 

 

(396)

-

Proceeds on disposal of fixed asset

 

 

-

52

Net cash used in investing activities

 

 

(15,658)

(6,333)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds on exercise of options and warrants

 

 

224

1,179

Contributions from non-controlling interest

 

 

28,412

21,618

Payments made to non-controlling interest

 

 

(3,304)

-

Loan principal paid

 

 

(44,074)

(37,361)

Interest paid

 

 

(12,122)

(12,521)

Finance lease payments

 

 

(6,511)

(8,218)

Net cash used in financing activities

 

 

(37,375)

(35,303)

 

 

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

2,757

(1,914)

 

 

 

 

 

Increase in cash and cash equivalents

 

 

990

13,724

 

 

 

 

 

Cash and cash equivalents - Beginning of year

 

 

45,133

31,409

Cash and cash equivalents - End of year

 

 

46,123

45,133

 

 

 

 

 

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