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Copper Mountain Mining Announces Q2 2021 Financial Results, Achieves Record Operating Cash Flow and Increases Production Guidance

July 26, 2021

Canada NewsWire

VANCOUVER, BC , July 26, 2021  /CNW/ - Copper Mountain Mining Corporation (TSX: CMMC) (ASX:C6C) (the “Company” or “Copper Mountain”) announces strong second quarter 2021 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’s Discussion & Analysis (“MD&A”) are available at www.CuMtn.com and www.sedar.com .

HIGHLIGHTS

  • The Company achieved strong production in the second quarter of 2021 of 29.6 million pounds of copper equivalent (comprised of 25.5 million pounds of copper, 7,627 ounces of gold, and 147,973 ounces of silver).
  • C1 cash cost (1) per pound of copper produced in the second quarter of 2021 was US$1.38  , all-in sustaining cost (AISC) (1) per pound of copper was US$1.83  , and all-in cost (AIC) (1) per pound of copper was US$2.06  .
  • Revenue for the second quarter of 2021 was $142.1 million from the sale of 21.7 million pounds of copper, 6,545 ounces of gold, and 121,291 ounces of silver, net of pricing adjustments.
  • Gross profit for the second quarter of 2021 was $85.8 million and net income was $38.7 million , or $0.12  on a per-share basis.
  • Cash flow from operations for the second quarter of 2021 was $94.6 million , or $0.45  (1) on a per share basis.
  • During the second quarter of 2021, the Company closed a US $250 million senior secured bond issuance to refinance existing debt enabling the Company to access 100% of cash flow from the mine.
  • Cash and cash equivalents at the end of the second quarter of 2021 were $144.5 million -plus restricted cash of $46.7 million .
  • The Company increased 2021 production guidance range to 90 to 100 million pounds of copper.

(1)

The Company reports the non-GAAP financial measures of C1 cash costs, AISC and AIC per pound of copper and cash flow per share to manage and evaluate its operating performance. See “Cautionary Note Regarding Non-GAAP Performance Measures”.

“We posted yet another strong production quarter contributing to record operating cash flow,” commented Gil Clausen , Copper Mountain’s President and CEO.  “As a result of the production achieved to date, we are increasing our production guidance range for 2021 to 90 to 100 million pounds of copper.  As previously guided, we expect grades to moderate for the remainder of the year as we mine proportionally more lower grade Phase 2 ore in the second half of the year, especially in Q4 as we commission and ramp up production from Ball Mill 3.”

Mr. Clausen continued, “The second quarter was transformational as we completed a US$250 million bond financing which has allowed us to restructure our balance sheet so that we can access 100% of excess cash to fund our organic growth plans. We continued to experience high copper prices and generated healthy cash flow building upon our solid cash position. Our Net Debt to last twelve-month EBITDA (1) reduced to 0.7, demonstrating a strong balance sheet. We are now in a position to invest in projects that further improve production efficiencies at Copper Mountain, such as adding filtration and flotation capacity to achieve improved recoveries at throughput rates up to 50,000 tonnes per day.  Our current Ball Mill 3 Expansion Project is on track to commence commissioning in the third quarter of 2021, and we plan to make a formal construction decision on the Eva Project in Queensland by the end of this year. Eva is a key component in achieving our vision of tripling 2020 production within the next five years.”

(1)

The Company reports the non-GAAP financial measures of Net Debt to EBITDA to manage and evaluate its operating performance. For further information, see “Cautionary Note Regarding Non-GAAP Performance Measures”.

SUMMARY OF OPERATING RESULTS

Copper Mountain Mine (100% Basis)

2021
Q2 

2020
Q2 

2021
H1 

2020
H1 

Mine

       

Total tonnes mined (000s)

15,674 

10,947 

31,046 

25,866 

Ore tonnes mined (000s)

3,854 

3,577 

7,282 

7,255 

Waste tonnes (000s)

11,820 

7,370 

23,764 

18,611 

Stripping ratio

3.07 

2.06 

3.26 

2.57 

         

Mill

       

Tonnes milled (000s)

3,435 

3,665 

6,865 

7,203 

Feed Grade (Cu%)

0.42 

0.28 

0.42 

0.29 

Recovery (%)

79.4 

79.0 

79.8 

77.2 

Operating time (%)

94.1 

92.5 

94.0 

92.4 

Tonnes milled (TPD)

37,747 

40,275 

37,928 

39,582 

         

Production

       

Copper (000s lb)

25,515 

18,092 

51,041 

35,564 

Gold (oz)

7,627 

7,499 

15,814 

13,638 

Silver (oz)

147,973 

86,126 

308,457 

166,142 

         

Sales

       

Copper (000s lb)

21,696 

18,879 

49,197 

36,741 

Gold (oz)

6,545 

6,289 

15,098 

12,653 

Silver (oz)

121,291 

80,294 

282,948 

158,866 

         

C1 cash cost per pound of copper produced (US$) (1)

1.38 

1.48 

1.27 

1.74 

AISC per pound of copper produced (US$) (1)

1.83 

1.67 

1.64 

1.90 

AIC per pound of copper produced (US$) (1)

2.06 

1.67 

1.88 

2.06 

         

Average realized copper price (US$/lb)

4.33 

2.43 

4.09 

2.49 

(2)

The Company reports the non-GAAP financial measures of C1 cash costs, AISC and AIC per pound of copper to manage and evaluate its operating performance. For further information, see “Cautionary Note Regarding Non-GAAP Performance Measures”.

The Copper Mountain Mine produced 25.5 million pounds of copper, 7,627 ounces of gold, and 147,973 ounces of silver in Q2 2021, as compared to 18.1 million pounds of copper, 7,499 ounces of gold, and 86,126 ounces of silver in Q2 2020. Similar to Q1 2021, the higher-grade ore from Phase 3 was the primary driver of the near record production in Q2 2021.  Average mill feed grade was 0.42% Cu during the quarter, as compared to average feed grade of 0.28% Cu in Q2 2020.  Grades are expected to be more moderate in Q3 as mining moves from Phase 3 to Phase 2, which has lower grade.  Grades are expected to moderate further in Q4 with a higher percentage of Phase 2 ore planned for the commissioning of Ball Mill 3.

Copper recovery was 79.4% in Q2 2021, as compared to 79.0% in Q2 2020.  The Company is advancing installation of additional cleaner circuit capacity to support maximizing recovery on slower kinetic ore types.  The mill processed a total of 3.4 million tonnes of ore during the quarter as compared to 3.7 million tonnes in Q2 2020.  Mill tonnage continued at reduced rates in Q2 2021 during periods of high grade processing in order to manage the volume of copper concentrate being produced. The Company is also advancing the installation of additional filtration capacity in order to maintain full throughput during periods of high-grade production. This project was originally scheduled for 2022 and is now planned for H2 2021.  Mill availability averaged 94.1% for Q2 2021 as compared to 92.5% in Q2 2020.

To date, there have been no material interruptions to the Company’s operations, logistics, or supply chains as a result of the COVID-19 pandemic. Enhanced health and safety protocols continue to be implemented and monitored.

C1 cash cost per pound of copper produced for Q2 2021 was US$1.38  , as compared to US$1.48  in Q2 2020.  The decrease in cost per pound resulted from higher production and larger by-product credits for the gold and silver produced in Q2 2021 compared to Q2 2020.  Higher by-product credits resulted from improved precious metal prices and greater gold and silver production for Q2 2021 compared to Q2 2020.  The decrease is also a result of $7.1 million in deferred stripping costs capitalized in Q2 2021, compared to $Nil deferred stripping in Q2 2020.

All-in sustaining costs per pound of copper produced (AISC) for Q2 2021 was US$1.83  , as compared to US$1.67  in Q2 2020.  AISC carries forward from C1 cash costs with $14.1 million in sustaining capital, lease, and applicable administration expenditures in Q2 2021 compared to $4.8 million in Q2 2020.  The increase is primarily due to higher sustaining capital of $7.0 million and lease payments of $6.5 million .  Sustaining capital increased from the same quarter last year as the Company completed installing new contact water management systems in the quarter.  Increased lease costs resulted from four new haul truck leases contracted in H1 2021, in addition to four new haul truck leases entered into in late 2020. All of the new trucks are electric trolley assist capable.

Total all-in costs per pound of copper produced (AIC), net of precious metal credits, for Q2 2021 was US$2.06  as compared to US$1.67  for Q2 2020.  AIC carries forward from AISC with the addition of $7.1 million in deferred stripping compared to $Nil deferred stripping in Q2 2020.  Deferred stripping costs in Q2 2021 resulted from the Company’s regular development activities as it continued to advance the development of the Phase 4 pushback of the main pit.  The lack of deferred stripping in Q2 2020 resulted from the Company responding to the lower copper price environment and uncertainty due to the COVID-19 pandemic by resequencing short-term production to lower-cost mining phases to reduce operating costs.  Low-grade stockpile mining expenses did not occur in Q2 2021 or Q2 2020.

SUMMARY OF FINANCIAL RESULTS

Results and Highlights (On a 100% basis)

Three months ended
June 30,

Six months ended
June 30,

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

2021 $

2020 $

2021 $

2020 $

Financial

       

Revenue

142,064 

91,089 

304,271 

140,653 

Gross profit

85,786 

30,259 

182,066 

15,310 

Gross profit before depreciation (1)

92,085 

36,222 

196,051 

27,381 

Net income (loss)

38,662 

31,933 

90,780 

(11,525)

Income (loss) per share – basic

0.12 

0.12 

0.30 

(0.05)

Adjusted earnings (1)

32,161 

(1,458)

65,580 

(11)

Adjusted earnings per share – basic

0.15 

(0.01)

0.31 

(0.00)

EBITDA (1)

80,958 

49,120 

176,943 

9,405 

Adjusted EBITDA

74,457 

15,729 

151,743 

20,919 

Cash flow from operations

94,574 

15,685 

174,167 

32,025 

Cash and cash equivalents – end of period

   

144,462 

29,003 

           

(1)

The Company reports the non-GAAP financial measures of gross profit before depreciation, adjusted earnings and EBITDA to manage and evaluate its operating performance. For further information, see “Cautionary Note Regarding Non-GAAP Performance Measures”.

In Q2 2021, revenue was $142.1 million , net of pricing adjustments and treatment charges, compared to $91.1 million in Q2 2020.  Q2 2021 revenue resulted from 21.7 million pounds of copper, 6,545 ounces of gold, and 121,291 ounces of silver sold.  This production compares to 18.9 million pounds of copper, 6,289 ounces of gold, and 80,294 ounces of silver sold in Q2 2020.  The increase in revenue is primarily due to higher metal prices and metal sales which were somewhat offset by lower United States to Canadian dollar foreign exchange rates and lower positive mark to market and final adjustment on concentrate sales.  In Q2 2021, there was a positive mark to market and final adjustment on concentrate sales of $8.8 million compared to a positive mark to market and final adjustment of $20.3 million in Q2 2020.

Cost of sales in Q2 2021 was $56.3 million compared to $60.8 million for Q2 2020.  Mine operating costs are net of $8.1 million of mining costs allocated to deferred stripping in Q2 2021 and $Nil in Q2 2020.

The Company generated a gross profit of $85.8 million in Q2 2021, compared to a gross profit of $30.3 million for Q2 2020.   Net income for Q2 2021 was $38.7 million , compared to $31.9 million for Q2 2020.  The variance in the higher net income in Q2 2021 is a result of several items, including:

  • Higher revenue as a result of more pounds sold at a higher average price as compared to Q2 2020;
  • An $8.8 million positive mark to market and final adjustment from provisional pricing on concentrate sales, as compared to a $20.3 million positive mark to market and final adjustment from provisional pricing on concentrate sales for Q2 2020, a differential of approximately $11.5 million  ;
  • A non-cash unrealized foreign exchange loss of $0.4 million in Q2 2021 as compared to a gain of $14.5 million in Q2 2020, a differential of approximately $14.9 million , which was primarily related to the Company’s debt that is denominated in US dollars; and
  • Non-cash deferred tax expense of $23.8 million as compared to $6.6 million for Q2 2020.

The Company recorded a net income of $32.2 million in Q2 2021 on an adjusted basis, or $0.15  per share, compared to a net loss of $1.5 million in Q2 2020, or $0.01  per share.

PROJECT DEVELOPMENT UPDATE

Copper Mountain Mine, Canada

The Company continued to progress the Ball Mill 3 Expansion Project during the quarter with construction well advanced.  The Ball Mill 3 Expansion Project will increase mill throughput to 45,000 tonnes per day from 40,000 tonnes per day and improve copper recovery due to achieving a finer grind of ore.  As of the end of the quarter, concrete foundations are complete, structural steel is well advanced, and the mill assembly has commenced.  The Ball Mill 3 Expansion Project is on track for commissioning late in the third quarter of 2021.

Eva Copper Project, Australia

The Company continued to advance project financing during the quarter and is on track for completion in the fourth quarter of 2021.  Basic engineering also continues to progress well, with a final construction estimate planned to be complete in the fourth quarter ahead of a final construction decision to be made by the end of 2021.

EXPLORATION UPDATE

Canada

Exploration drilling to expand resources and reserves in the Copper Mountain North and New Ingerbelle deposits was initiated in March of 2021 and is planned for completion in the third quarter of 2021.  Additional drilling within the Main pit at the Copper Mountain Mine is also ongoing.

Australia

The 2021 exploration program designed to discover additional copper, copper-gold or gold deposits within the Company’s large landholdings continued through the second quarter.  The program, which consists of detailed geophysical, geochemical and geological surveys followed by drill testing, is progressing well and is planned for completion early in the third quarter of 2021.

OUTLOOK

As a result of strong production in the first half of 2021,  the Company is increasing its 2021 annual production guidance to 90 to 100 million pounds of copper. The Company also reaffirms annual AIC guidance of US$1.80  to US$2.00  per pound.  As the Company optimizes and improves its operations, it has approved an additional cleaner cell and filter press capital project, which is expected to be complete by the end of 2021.  The extra filtration capacity will allow the Company to maintain throughput capacity during periods of high-grade production.  As a result of this additional investment, the Company is revising its development capital guidance for 2021 to US$40 million .

Please see “Cautionary Note Regarding Forward-Looking Statements.”

Q2 2021 FINANCIAL AND OPERATING RESULTS CONFERENCE CALL AND WEBCAST

Copper Mountain will host a conference call on Monday, July 26, 2021  at 7:30 am (Pacific Time) for senior management to discuss second quarter 2021 results.

Dial-in information:
Toronto and international: 1 (416) 764 8650
North America (toll-free): 1 (888) 664 6383
To participate in the webcast live via computer go to:
https://produceredition.webcasts.com/starthere.jsp?ei=1478739&tp_key=16f12ee090 

Replay Call Information
Toronto and international: 1 (416) 764 8677, Passcode: 524127#
North America (toll-free): 1 (888) 390 0541, Passcode: 524127#

The conference call replay will be available until 8:59 pm (Pacific Time) on August 9, 2021  . 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 currently produces approximately 100 million pounds of copper equivalent per year, with average annual production expected to increase to approximately 140 million pounds of copper equivalent.  Copper Mountain also has the development-stage Eva Copper Project in Queensland, Australia and an extensive 2,100 km 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.

Cautionary Note Regarding Non-GAAP Performance Measures
This document includes certain non-GAAP performance measures that do not have a standardized meaning prescribed by IFRS.  These measures may differ from those used and may not be comparable to such measures as reported by other issuers.  The Company believes that these measures are commonly used by certain investors, in conjunction with conventional IFRS measures, to enhance their understanding of the Company’s performance.  These performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures have been derived from the Company’s financial statements and applied on a consistent basis.  The calculation and an explanation of these measures is provided in the Company’s MD&A and such measures should be read in conjunction with the Company’s financial statements.

Copper Mountain Mining Corporation
Condensed Consolidated Statements of Financial Position
(In thousands of Canadian dollars)

 

June 30, 2021 

$

December 31, 2020 

$

     

Assets

   
     

Current assets

   

Cash and cash equivalents

144,462 

85,571 

Restricted cash

46,728 

-

Accounts receivable and prepaid expenses

35,562 

30,413 

Inventory

41,803 

38,038 

Other financial assets

1,447 

-

 

270,002 

154,022 

     
     
     

Reclamation bonds

4,409 

4,162 

Deferred tax assets

3,335 

473 

Property, plant and equipment

618,779 

552,648 

Low grade stockpile

64,879 

64,836 

     
 

961,404 

776,141 

Liabilities

   
     

Current liabilities

   

Accounts payable and accrued liabilities

55,466 

44,400 

Amounts payable to related parties

-

3,644 

Current portion of long-term debt

62,387 

79,559 

Current tax liability

2,279 

1,578 

 

120,132 

129,181 

     

Provisions

25,415 

18,371 

Due to related parties

-

145,918 

Long-term debt

331,525 

129,153 

Deferred tax liability

62,535 

4,465 

 

539,607 

427,088 

Equity

Attributable to shareholders of the Company:

   

 

Share capital

286,613 

283,926 

Contributed surplus

18,931 

19,611 

Accumulated other comprehensive loss

(3,059)

(520)

Retained Earnings (deficit)

27,666 

(35,153)

 

330,151 

267,864 

Non-controlling interest

91,646 

81,189 

Total equity

421,797 

349,053 

     
 

961,404 

776,141 

 

Copper Mountain Mining Corporation
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
(In thousands of Canadian dollars, except for number of and earnings per share)

 

Three months ended

June 30,

Six months ended

June 30,

 

2021 

$

2020 

$

2021 

$

2020 

$

         

Revenue

142,064 

91,089 

304,271 

140,653 

Cost of sales

(56,278)

(60,830)

(122,205)

(125,343)

Gross profit

85,786 

30,259 

182,066 

15,310 

         

Other income and expenses

       

General and administration

(4,263)

(914)

(9,531)

(3,360)

Share based compensation

(4,532)

(575)

(10,491)

(1,203)

Operating income

76,991 

28,770 

162,044 

10,747 

         

Finance income

31 

31 

49 

105 

Finance expense

(10,469)

(4,133)

(13,400)

(7,432)

Gain (loss) on derivatives

(1,915)

(76)

(1,915)

(1,018)

Foreign exchange (loss) gain

(417)

14,463 

2,829 

(12,395)

Income (loss) before tax

64,221 

39,055 

149,607 

(9,993)

         

Current tax expense

(1,733)

(505)

(3,590)

(513)

Deferred income expense

(23,826)

(6,617)

(55,237)

(1,019)

Net income (loss)

38,662 

31,933 

90,780 

(11,525)

         

Other comprehensive income (loss)

       

Foreign currency translation adjustment

(1,378)

4,192 

(2,539)

1,085 

Total comprehensive income (loss)

37,284 

36,125 

88,241 

(10,440)

         
         

Net income (loss) attributable to:

       

Shareholders of the Company

26,167 

23,373 

62,819 

(8,961)

Non-controlling interest

12,495 

8,560 

27,961 

(2,564)

 

38,662 

31,933 

90,780 

(11,525)

Earnings (loss) per share:

       

Basic

0.12 

0.12 

0.30 

(0.05)

Diluted

0.12 

0.12 

0.29 

(0.05)

         

Weighted average shares outstanding, basic (thousands)

209,467 

191,331 

209,013 

191,331 

Weighted average shares outstanding, diluted (thousands)

219,642 

194,194 

216,401 

191,331 

Shares outstanding at end of the period (thousands)

209,889 

191,331 

209,889 

191,331 

 

Copper Mountain Mining Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)

 

Three months ended June 30,

Six months ended June 30,

 

2021 

$

2020 

$

2021 

$

2020 

$

Cash flows from operating activities

       

Net income (loss) for the period

38,662 

31,933 

90,780 

(11,525)

 

Adjustments for:

       

Depreciation

6,331 

5,964 

14,115 

12,096 

Unrealized foreign exchange (gain) loss

(4,502)

(7,791)

(6,446)

11,933 

Loss on derivatives

1,915 

76 

1,915 

1,018 

Deferred income tax expense

23,810 

6,617 

55,221 

1,019 

Finance expense

10,469 

4,133 

13,400 

7,432 

Share based compensation

4,532 

575 

10,491 

1,203 

 

81,217 

41,507 

179,476 

23,176 

Net changes in working capital items

13,357 

(25,822)

(5,309)

8,849 

Net cash from operating activities

94,574 

15,685 

174,167 

32,025 

         

Cash flows from investing activities

       

Purchase of copper puts

(3,397)

-

(3,397)

-

Reclamation bonds

(415)

(246)

(415)

Deferred stripping activities

(7,147)

-

(15,188)

(7,437)

Purchase of property, plant and equipment

(33,744)

(9,657)

(49,479)

(15,792)

Net cash used in investing activities

(44,285)

(10,072)

(68,310)

(23,644)

         

Cash flows from financing activities

       

Net proceeds from issuance of bonds

287,785 

 

287,785 

 

Proceeds on exercise of options

1,229 

-

1,720 

-

Increase in restricted cash

(45,615)

-

(45,615)

-

Advances from non-controlling interest

-

-

20,393 

24,223 

Payments made to non-controlling interest

(178,310)

-

(178,310)

-

Loan principal paid

(93,868)

(6,057)

(113,988)

(28,756)

Interest paid

(7,193)

(3,299)

(8,260)

(5,031)

Finance lease payments

(6,470)

(2,128)

(9,175)

(2,993)

Net cash used in financing activities

(42,442)

(11,484)

(45,450)

(12,557)

         

Effect of foreign exchange rate changes on cash and cash equivalents

(450)

(1,349)

(1,516)

1,053 

         

Increase (decrease) in cash and cash equivalents

7,397 

(7,220)

58,891 

(3,123)

         

Cash and cash equivalents - Beginning of period

137,065 

36,223 

85,571 

32,126 

         

Cash and cash equivalents - End of period

144,462 

29,003 

144,462 

29,003 

       
           
 

SOURCE Copper Mountain Mining Corporation

 

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