VANCOUVER, BC, April 28,
2023 /CNW/ - Copper Mountain Mining
Corporation (TSX: CMMC) (ASX: C6C) (the "Company" or "Copper
Mountain") announces first quarter 2023 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.
Gil Clausen, Copper Mountain's
President and CEO commented, "We are encouraged with our solid
start to the year. We had a strong performance this quarter despite
starting the year combating a ransomware attack that impacted our
recovery as the plant was operating without its expert system
control and without full utilization of the rougher expansion. We
also experienced reduced throughput for ten days because of limited
fresh water due to a mechanical failure of the reclaim water barge.
Even with these setbacks, we recorded the highest production and
lowest all-in cost quarter since 2021, which was a record year for
the Company. As we finished the first quarter on plan, we remain on
track to achieve our 2023 copper production guidance of between 88
to 98 million pounds at our all-in cost guidance of between
US$2.45 to US$2.95 per pound."
Mr. Clausen added, "Following the quarter, we announced an
exciting and transformative business combination with Hudbay. We
believe the strategic rationale is compelling for all stakeholders
who will benefit from being part of a combined company, which will
have a diversified portfolio of three long life assets and a
leading organic growth pipeline. We see exceptional upside and
potential for significant value to be unlocked with this
transaction."
SUMMARY
- Production in Q1 2023 was 18.9 million pounds of copper
equivalent, including 15.9 million pounds of copper, 5,616 ounces
of gold, and 75,277 ounces of silver.
- Revenue for Q1 2023 was $100.5
million from the sale of 16.1 million pounds of copper,
5,579 ounces of gold, and 78,122 ounces of silver.
- C1 cash cost(1) per pound of copper produced in Q1
2023 was US$3.11, all-in sustaining
cost ("AISC")(1) per pound of copper produced was
US$3.36 and all-in cost
("AIC")(1) per pound of copper produced was US$3.66.
- Net loss for Q1 2023 was $13.0
million, or ($0.06) per-share
and adjusted net income(1) was $0.9 million, or $0.00 per-share. The net loss in Q1 2023 was
primarily due to one-time items including finance expenses
associated with the bond buyback and deferred tax expense on an
increase in decommissioning obligation, totaling $13.0 million.
- EBITDA(1) for Q1 2023 was $16.2 million and adjusted EBITDA(1)
was $17.1 million.
- Cash flow from operating activities before non-cash working
capital items for Q1 2023 was $21.3
million, or $0.10 on a
per-share basis(1), and $9.1
million after non-cash working capital items, or
$0.04 on a per-share
basis(1).
- Cash, cash equivalents and restricted cash as at March 31, 2023 was $71.2
million.
- In January 2023, completed a bond
buyback resulting in the repurchase of the total planned aggregate
principal amount of US$87 million of
bonds, thereby reducing the Company's total nominal value of bonds
outstanding to US$148 million.
- Entered into monthly zero-cost collar option contracts for 3.32
million pounds of copper per month from January to June 2023, with a floor price of US$3.60 per pound and a ceiling price of
US$4.40 per pound.
- After quarter end, the Company announced on April 13, 2023, it has entered into a definitive
agreement (the "Arrangement Agreement") by which Hudbay Minerals
Inc. ("Hudbay") will acquire all the issued and outstanding common
shares of Copper Mountain. Under the terms of the Arrangement
Agreement, each Copper Mountain shareholder will receive 0.381 of a
Hudbay common share for each Copper Mountain common share
held.
-
- The consideration represents approximately C$2.67 per Copper Mountain common share based on
Hudbay's closing share price on April 12,
2023.
- The consideration represents a 23% premium to Copper Mountain
shareholders based on Hudbay's and Copper Mountain's 10-day
volume-weighted-average share prices on April 12, 2023.
- Existing Hudbay and Copper Mountain shareholders will own
approximately 76% and 24% of Hudbay, respectively.
(1)
|
The Company reports
the non-GAAP financial measures of C1 cash cost, AISC, and AIC per
pound of copper produced, adjusted net loss and cash flow from
operating activities per share to manage and evaluate its operating
performance. See "Cautionary Note Regarding Non-GAAP Performance
Measures" in this press release.
|
SUMMARY OF OPERATING RESULTS
Copper Mountain Mine (100%
Basis)
|
|
|
Q1 2023
|
Q1 2022
|
Mine
|
|
|
|
|
Total tonnes mined
(000s)
|
|
|
15,800
|
12,230
|
Ore tonnes mined
(000s)
|
|
|
3,800
|
2,888
|
Waste tonnes
(000s)
|
|
|
12,000
|
9,342
|
Stripping
ratio
|
|
|
3.16
|
3.23
|
|
|
|
|
|
Mill
|
|
|
|
|
Tonnes milled
(000s)
|
|
|
3,435
|
2,968
|
Feed Grade
(Cu%)
|
|
|
0.27
|
0.25
|
Recovery (%)
|
|
|
78.7
|
82.0
|
Operating time
(%)
|
|
|
88.7
|
86.3
|
Tonnes milled
(TPD)
|
|
|
38,165
|
32,978
|
|
|
|
|
|
Production
|
|
|
|
|
Copper (000s
lb)
|
|
|
15,864
|
13,224
|
Gold (oz)
|
|
|
5,616
|
5,135
|
Silver (oz)
|
|
|
75,277
|
55,993
|
|
|
|
|
|
Sales
|
|
|
|
|
Copper (000s
lb)
|
|
|
16,122
|
13,487
|
Gold (oz)
|
|
|
5,579
|
5,076
|
Silver (oz)
|
|
|
78,122
|
60,038
|
|
|
|
|
|
C1 cash cost per pound
of copper produced (US$)(1)
|
|
|
3.11
|
3.58
|
AISC per pound of
copper produced (US$)(1)
|
|
|
3.36
|
4.45
|
AIC per pound of copper
produced (US$)(1)
|
|
|
3.66
|
5.08
|
|
|
|
|
|
Average realized copper
price (US$/lb)
|
|
|
$4.02
|
$4.54
|
(1)
|
The Company reports
the non-GAAP financial measures of C1 cash costs, AISC and AIC per
pound of copper produced to manage and evaluate its operating
performance. For further information, see "Cautionary Note
Regarding Non-GAAP Performance Measures" in this press
release.
|
Production
The Copper Mountain Mine produced 15.9 million pounds of copper,
5,616 ounces of gold, and 75,277 ounces of silver in Q1 2023,
compared to 13.2 million pounds of copper, 5,135 ounces of gold,
and 55,993 ounces of silver in Q1 2022. The higher production in Q1
2023 was due to higher mill throughput, higher mill feed grades and
improved operating time.
Mill feed grade in Q1 2023 was 0.27% Cu compared to 0.25% Cu in
Q1 2022. Higher mill feed grade was due to more feed being
delivered from the higher-grade Phase 4 area, compared to quarters
in 2022. Approximately 55% of the high grade mined was from Phase 4
and approximately 45% from the North Pit. In addition, Phase 4
grades were higher than planned at 0.32% Cu. Grades are expected to
continue to improve in the second quarter and third quarter as more
ore is sourced from the higher-grade Phase 4 area.
The mill processed a total of 3.4 million tonnes of ore during
the quarter compared to 3.0 million tonnes in Q1 2022, with mill
availability averaging 88.7% for Q1 2023 compared to 86.3% in Q1
2022. Mill availability was higher than the prior quarter but lower
than target due to the ransomware attack in late December 2022, which resulted in the mill being
preventatively shut down. Full mill production was restored on
January 4th, 2023. In addition, mill
throughput was reduced for ten days as a result of limited water
available due to a mechanical failure of the reclaim water barge.
An alternative process water pumping system was installed in early
March. Average throughput continues to increase from 2022 with
improving plant performance and better utilization of the ball mill
3 circuit.
Copper recovery was 78.7% in Q1 2023 compared to 82.0% in Q1
2022. The ransomware attack resulted in the plant operating without
onstream analysis of the process flows, expert system control, and
full utilization of the rougher expansion for much of the quarter,
which resulted in the lower recovery experienced. All of these
systems were fully restored at quarter end, supporting the 2023
recovery improvement plan.
Costs
C1 cash cost, AISC and AIC per pound of copper produced are
non-GAAP financial measures. See "Cautionary Note Regarding
Non-GAAP Performance Measures" in this press release.
C1 cash cost per pound of copper produced, net of precious metal
credits, for Q1 2023 was US$3.11,
compared to US$3.58 in Q1 2022. The
decrease in C1 cash costs in Q1 2023 was primarily the result of
higher copper production and higher precious metal
credits.
AISC per pound of copper produced for Q1 2023 was US$3.36, compared to US$4.45 in Q1 2022. AISC carries forward from C1
cash costs with the addition of $5.3
million in AISC adjustments, which includes: $4.5 million for lease payments and $1.2 million for applicable mine administration
costs and net of a $0.4 million
credit for sustaining capital. Total sustaining capital
expenditures in Q1 2023 was $3.2
million less $3.6 million in
funding awarded to the Company through the Clean BC Industry Fund
of the Province of British
Columbia in support of our greenhouse gas reduction strategy
to replace diesel equipment through electrification. This compares
to the addition of $14.6 million in
AISC adjustments in Q1 2022, which included $10.2 million for sustaining capital,
$3.9 million for lease payments, and
$0.5 million for applicable mine
administration expenditures.
AIC per pound of copper produced for Q1 2023 was US$3.66, compared to US$5.08 in Q1 2022. AIC carries forward from
AISC, with the addition of deferred stripping mining costs, which
are capitalized, and low-grade stockpile mining costs, which are
recorded as inventory. There was $6.4
million of deferred stripping costs in Q1 2023 as compared
to $10.5 million deferred stripping
costs in Q1 2022. There was no mining of low-grade stockpile
material in Q1 2023 or Q1 2022.
SUMMARY OF FINANCIAL RESULTS
Results and Highlights
(100%)
|
|
Three months
ended
March 31,
|
(In thousands of CDN$,
except for per share amounts)
|
|
|
2023
$
|
2022
$
|
Financial
|
|
|
|
|
Revenue
|
|
|
100,497
|
93,858
|
Gross profit
|
|
|
20,188
|
18,576
|
Gross profit before
depreciation(1)
|
|
|
25,954
|
24,051
|
Net loss from
continuing operations
|
|
|
(12,997)
|
(4,197)
|
Loss per share –
basic
|
|
|
(0.06)
|
(0.03)
|
Adjusted net income
(loss)(1)
|
|
|
867
|
(8,805)
|
Adjusted net income
(loss) per share – basic(1)
|
|
|
0.00
|
(0.04)
|
EBITDA(1)
|
|
|
16,155
|
11,221
|
Adjusted
EBITDA(1)
|
|
|
17,054
|
6,613
|
Cash flow from
operating activities
|
|
|
9,099
|
33,314
|
Cash flow from operating activities per share –
basic(1)
|
|
|
0.04
|
0.16
|
Cash, cash equivalents,
and restricted cash – end of period
|
|
|
71,180
|
150,013
|
(1)
|
The Company reports
the non-GAAP financial measures of gross profit before
depreciation, adjusted earnings, adjusted earnings per share,
EBITDA and adjusted EBITDA to manage and evaluate its operating
performance. For further information, see "Cautionary Note
Regarding Non-GAAP Performance Measures" in this press
release.
|
In Q1 2023, revenue was $100.5
million, net of pricing adjustments and treatment charges,
compared to $93.9 million in Q1 2022.
Revenue in Q1 2023 is based on the sale of 16.1 million pounds of
copper, 5,616 ounces of gold, and 75,277 ounces of silver. This
compares to 13.5 million pounds of copper, 5,076 ounces of gold and
60,038 ounces of silver sold in Q1 2022. As noted above, the
increase in revenue was due to higher quantities of all metal sold
which was marginally offset by a smaller positive mark to market
and final adjustment on concentrate sales of $2.0 million for Q1 2023 as compared to a
positive mark to market and final adjustment of $7.1 million for Q1 2022. Higher copper
production and sales in the quarter was due to higher grades and
improved mill throughput in Q1 2023 as compared to Q1 2022.
Cost of sales in Q1 2023 was $80.3
million as compared to $75.3
million for Q1 2022. The increase in cost of sales is
primarily due to less mining costs capitalized to deferred
stripping with $6.9 million of mining
costs capitalized to deferred stripping in Q1 2023 compared to
$11.1 million in Q1 2022. The
increase in cost of sales is also a result of the payment of safety
bonuses to mine site employees in Q1 2023 and higher transportation
costs due to the timing of concentrate shipments and related
shipping and port costs.
The Company generated gross profit of $20.2 million in Q1 2023 as compared to a gross
profit of $18.6 million for Q1 2022.
The Company reported a net loss of $13.0
million for Q1 2023 as compared to a net loss of
$4.2 million for Q1 2022. The
variance in net income for Q1 2023, as compared to Q1 2022, was due
to several items, including:
- Q1 2023 included a $2.0 million
positive mark to market and final adjustments from provisional
pricing on concentrate sales, as compared to a $7.1 million positive adjustment in Q1 2022.
- Higher cost of sales primarily due to less mining costs being
capitalized to deferred stripping in Q1 2023 as compared to Q1
2022.
- Higher finance expenditures due to costs related to the
repurchase of US$87.0 million of
bonds and amortization of finance fees related to the repaid
amount.
- Q1 2023 included a non-cash deferred tax expense of
$13.8 million compared to
$1.4 million in Q1 2022.
The Company recorded adjusted net income(1) of
$0.9 million in Q1 2023, or
$0.00 per share(1),
compared to adjusted net loss(1) of $8.8 million in Q1 2022, or $(0.04) per share(1).
PROJECT DEVELOPMENT UPDATE
Copper Mountain Mine, Canada
All major capital projects including ball mill 3, the rougher
circuit expansion, cleaner circuit expansion, and filter press
expansion were completed in 2022. The focus for 2023 is utilization
and optimization of these circuits to support production. These
projects will continue to add value and support processing higher
grades while maintaining target throughput.
Exploration Update
The Copper Mountain Mine is a large alkalic porphyry deposit
with known copper-gold mineralization occurring over a 5 x 2
kilometre area. A 61 km drilling program was completed during 2021
and 2022 and supported an updated resource model resulting in a 70%
increase in the Measured and Indicated Mineral Resource at Copper
Mountain. The deposit, however, remains open both laterally and at
depth, providing further resource expansion potential. Multiple
historical drill holes end in copper-gold mineralization and
geophysical data suggest that the mineralizing system extends well
below the current known resource.
The 2023 exploration program will focus in particular on the
identification of areas with the potential to host high-grade "root
zones", analogous to the deeper parts of the Red Chris porphyry in
British Columbia (also an alkalic
porphyry and of similar age), and the deposits in the
Cadia-Ridgeway alkalic porphyry district in Australia. Drill testing of targets began in
February 2023 with approximately 8000
metres of diamond drilling planned in Phase 1 of the program. A 3D
induced polarization ("IP") and resistivity survey is also underway
at New Ingerbelle and will be completed in the second quarter.
Drilling results from Phase 1 are expected mid-year.
CORPORATE UPDATE
Transactions
On April 13, 2023, Hudbay and
Copper Mountain announced the Arrangement Agreement, pursuant to
which, Hudbay will acquire all of the issued and outstanding common
shares of Copper Mountain, pursuant to a court approved plan of
arrangement (the "Transaction").
The Transaction will create a premier Americas-focused copper
mining company that is well-positioned to deliver sustainable cash
flows from an operating portfolio of three long-life mines, as well
as compelling organic growth from a world-class pipeline of copper
expansion and development projects. All assets in the combined
portfolio are located in tier-one mining-friendly jurisdictions of
Canada, Peru and the United
States. The combined company represents the third largest
copper producer in Canada based on
2023 estimated copper production.
Under the terms of the Arrangement Agreement, each Copper
Mountain shareholder will receive 0.381 of a Hudbay common share
for each Copper Mountain common share held.
The Transaction consideration represents approximately
C$2.67 per Copper Mountain common
share and a US$439 million equity
value based on Hudbay's closing share price on April 12, 2023. The Transaction consideration
represents a 23% premium to Copper Mountain shareholders based on
Hudbay's and Copper Mountain's 10-day volume-weighted-average share
prices on April 12, 2023. Existing
Hudbay and Copper Mountain shareholders will own approximately 76%
and 24% of Hudbay, respectively.
Following the closing of the Transaction, the Board of Directors
of Hudbay will include two directors from the Board of Directors of
Copper Mountain, and the management team of Hudbay will include
select members from the management team of Copper Mountain.
In light of the Transaction, Gil
Clausen has postponed his retirement and will remain as
President and Chief Executive Officer of Copper Mountain until
closing.
The Transaction is subject to shareholder approval, the
satisfaction of certain other closing conditions customary in
transactions of this nature, including clearance under the
Competition Act (Canada), B.C.
court approval and applicable stock exchange approvals.
The Transaction is expected to be completed late in the second
quarter or early in the third quarter of 2023. Following completion
of the Transaction, the shares of Copper Mountain will be de-listed
from the Toronto Stock Exchange and the Australian Securities
Exchange.
For more information on the Transaction see Copper Mountain's
press release "Hudbay and Copper Mountain Combine to Create a
Premier Americas-Focused Copper Producer" dated April 13, 2023.
Ransomware Attack
The Company was subject to a ransomware attack late on
December 27, 2022 that affected the
Company's internal IT systems at the Copper Mountain Mine and
corporate office. As a result, the Company isolated operations,
switched to manual processes, where possible, and the mill was
preventatively shutdown to determine the effect on its control
system. On January 1, 2023, the
Company resumed operations of the primary crusher and on
January 4, 2023 the mill was at full
production. The Company has now returned to full business
functionality in a safe and secure manner. Throughout the outage,
all environmental management systems at the Copper Mountain Mine
were operational, and there were no environmental incidents or
injuries to personnel.
The Company has since enhanced its security and monitoring tools
with additional protection and continues to work with external
advisors to review and evaluate additional security measures that
could be implemented to further protect the Company's systems.
Ensuring the safety and security of the Company's systems remain
one of the Company's top priorities.
OUTLOOK
This section of the press release provides management's
production and cost estimates for 2023. See "Cautionary Note
Regarding Forward-Looking Statements" in this press release. C1
cash costs, AISC and AIC per pound of copper produced are non-GAAP
financial measures. See "Cautionary Note Regarding Non-GAAP
Financial Measures" in this press release.
With a solid first quarter, the Company is on track to achieve
2023 production guidance of 88 to 98 million pounds of copper. The
Company forecasts production and grade to increase sequentially
through the first three quarters of the year.
Costs across all metrics have significantly improved in the
first quarter of 2023, and are expected to continue to trend lower,
driven by higher production, lower mining costs and lower
sustaining capital and deferred stripping. The Company is on track
to achieve its 2023 cost guidance.
FIRST QUARTER 2023 FINANCIAL AND OPERATING RESULTS CONFERENCE
CALL AND WEBCAST
Copper Mountain will host a conference call on Friday, April 28, 2023 at 10:30 am Eastern Time (7:30 am Pacific Time) for senior management to
discuss first quarter 2023 results.
Dial-in and webcast information:
Toronto and international: 1 (416) 764
8650
North America (toll-free): 1 (888)
664 6383
Webcast: https://app.webinar.net/VXjZ7Gmz54l
Replay information:
Toronto and international: 1 (416) 764 8677,
Passcode: 538637#
North America (toll-free): 1 (888)
390 0541, Passcode: 538637#
The conference call replay will be available until 11:59 pm Eastern Time (8:59 pm Pacific Time) on Friday, May 5, 2023. An archive of the audio
webcast will also be available on the Company's website at
www.CuMtn.com.
About Copper Mountain Mining Corporation
Copper Mountain owns 75% of the Copper Mountain Mine, which is
located in southern British
Columbia near the town of Princeton. The Copper Mountain Mine produces
approximately 100 million pounds of copper equivalent on average
per year. 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 website at
www.CuMtn.com.
On behalf of the Board of
COPPER MOUNTAIN MINING CORPORATION
"Gil
Clausen"
Gil Clausen
President and Chief Executive Officer
Cautionary Note Regarding Forward-Looking Statements
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 news release and Copper Mountain does
not intend, and does not assume any obligation, to update these
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required under applicable
securities legislation.
All statements, other than statements of historical facts, are
forward-looking statements. Generally, forward-looking statements
relate to future events or future performance and reflect the
Company's expectations or beliefs regarding future events.
In certain circumstances, forward-looking statements can be
identified, but are not limited to, statements which use
terminology such as "plans", "expects", "estimates", "intends",
"anticipates", "believes", "forecasts", "guidance", scheduled",
"target" or variations of such words, or statements that certain
actions, events or results "may", "could", "would", "might",
"occur" or "be achieved" or the negative of these terms or
comparable terminology. In this document, certain forward-looking
statements are identified, including consummation and timing of the
closing of the Transaction with Hudbay, anticipated benefits
following the successful closing of the Transaction, production and
cost guidance, anticipated production at the Copper Mountain Mine,
financial condition and prospects, anticipated metals prices and
the anticipated sensitivity of the Company's financial performance
to metals prices, the timing and results of the Company's
exploration and development programs, the timing of studies,
announcements, and analysis, events that may affect its operations
and development projects, anticipated cash flows from operations
and related liquidity requirements, the anticipated effect of
external factors on revenue, such as commodity prices, estimation
of mineral reserves and mineral resources, mine life projections,
reclamation costs, economic outlook, the impact of inflation,
government regulation of mining operations, and business and
acquisition strategies. Forward-looking statements involve known
and unknown risks, uncertainties and other factors that could cause
actual results, performance, achievements 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, among
others, risks related to failure to receive approval by Copper
Mountain shareholders, the required court, regulatory and other
consents and approvals to effect the Transaction, the possibility
that the Arrangement Agreement could be terminated under certain
circumstances the successful exploration of the Company's
properties in Canada, market
price, continued availability of capital and financing and general
economic, market or business conditions, extreme weather events,
material and labour shortages, the reliability of the historical
data referenced in this document, and risks set out in Copper
Mountain's public documents, including in each management's
discussion and analysis and the Company's most recent annual
information form, filed on SEDAR at www.sedar.com. Although Copper
Mountain has attempted to identify important factors that could
cause the Company's actual results, performance, achievements and
opportunities to differ materially from those described in its
forward-looking statements, there may be other factors that cause
the Company's results, performance, achievements and opportunities
not to be as anticipated, estimated or intended. While the Company
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.
Accordingly, readers should not place undue reliance on the
Company's forward-looking statements.
Cautionary Note Regarding Non-GAAP Performance
Measures
This document includes certain non-GAAP performance measures
that do not have a standardized meaning prescribed by International
Financial Reporting Standards ("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.
Cash Costs per Pound
Copper cash costs per pound is a key performance measure that
management uses to monitor performance. Management uses this metric
to assess the performance and overall efficiency and effectiveness
of mining operations. Cash costs is not an IFRS measure and,
although it is calculated according to accepted industry practice,
the Company's disclosed cash costs may not be directly comparable
to other base metal producers. Cash costs per pound produced is
calculated by dividing the aggregate of the applicable costs by
copper pounds produced. These measures are calculated on a
consistent basis for the periods presented.
C1 Cash Costs
C1 cash costs is a metric representing the cash cost per unit of
extracting and processing the Company's principal metal product,
copper, to a condition in which it may be delivered to customers
net of gold and silver credits from concentrates sold. It is
provided in order to support peer group comparability and to
provide investors and other stakeholders with additional
information about the underlying cash costs of Copper Mountain and
the impact of gold and silver credits on the operations' cost
structure. C1 cash costs are relevant to understanding the
Company's operating profitability and ability to generate cash
flow. When calculating costs associated with producing a pound of
copper, the Company deducts gold and silver revenue credits as the
production cost is reduced as a result of selling these
products.
All-in Sustaining Costs (AISC)
AISC is an extension of C1 cash costs discussed above and is
also a key performance measure used by management to measure
performance. Management uses this measure to analyze margins
achieved on existing assets while sustaining and maintaining
production at current levels. Development capital, including
deferred stripping and certain exploration costs are excluded from
this definition as these are costs typically incurred to extend
mine life or materially increase the productive capacity of
existing assets, or for new operations. As this measure seeks to
present a full cost of copper production associated with sustaining
current operations, mining costs associated with sustaining
capital, certain applicable corporate administration costs and
mining equipment lease costs are included.
All-in Costs (AIC)
AIC is an extended cash-based cost metric providing further
information on the total cash, capital, and overhead outlay per
unit of copper produced in both the short-term and over the full
life cycle of the Company's operations. As a result, deferred
stripping and mining costs allocated to the low-grade stockpile on
a cash basis are included as these development activities are
performed in support of future mining operations under the existing
life-of-mine plan. As this measure seeks to present the total cost
of copper production associated with sustaining current and future
operations, it allows Copper Mountain to assess the ability to
support current and future production from the generation of
operating cash flows.
A reconciliation of site cash costs, C1 cash costs, AISC, and
AIC is provided below:
Cash Costs per Pound Produced
(100%)
|
|
Three months ended
March 31,
|
(In thousands of CDN$,
unless otherwise noted)
|
|
|
2023
$
|
2022
$
|
Cost of
sales
|
|
|
80,309
|
75,282
|
Adjustments
|
|
|
|
|
Depreciation and
depletion
|
|
|
(5,766)
|
(5,475)
|
Change in
inventory
|
|
|
3,577
|
(329)
|
Transportation
costs
|
|
|
(4,785)
|
(2,836)
|
Site cash
costs
|
|
|
73,335
|
66,642
|
Adjustments
|
|
|
|
|
Transportation
costs
|
|
|
4,785
|
2,836
|
Treatment and refining
costs
|
|
|
3,821
|
2,968
|
By-product credits
(gold and silver)
|
|
|
(15,321)
|
(12,463)
|
C1 cash
cost
|
|
|
66,620
|
59,983
|
Adjustments
|
|
|
|
|
Sustaining
capital
|
|
|
(366)
|
10,249
|
Lease
payments
|
|
|
4,507
|
3,872
|
Applicable
administration
|
|
|
1,213
|
472
|
All-in sustaining
costs (AISC)
|
|
|
71,974
|
74,576
|
Adjustments
|
|
|
|
|
Deferred
stripping
|
|
|
6,413
|
10,469
|
All-in costs
(AIC)
|
|
|
78,387
|
85,045
|
|
|
|
|
|
Average foreign
exchange rate (CDN$ to US$)
|
|
|
0.7403
|
0.7898
|
|
|
|
|
|
Copper production (000s
lb)
|
|
|
15,864
|
13,224
|
|
|
|
|
|
C1 cash costs
(US$/lb produced (net))
|
|
|
$3.11
|
$3.58
|
All-in sustaining
costs (AISC) (US$/lb produced (net))
|
|
|
$3.36
|
$4.45
|
All-in costs (AIC)
(US$/lb produced (net))
|
|
|
$3.66
|
$5.08
|
|
|
|
|
|
Average realized copper
price (US$/lb)
|
|
|
$4.02
|
$4.54
|
Adjusted Net Income
Adjusted net income removes the effects of the following
transactions from operating income as reported under IFRS:
- Pricing adjustments on concentrate and metal sales;
- Derivative gains/losses;
- Foreign exchange gains/losses; and
- Non-recurring transactions.
Management believes that these transactions do not reflect the
underlying operational performance of the Company's mining
operations and are also not indicative of future operating
results.
Adjusted Net Income
|
|
Three months ended
March
31,
|
(In thousands of CDN$,
except per share amounts)
|
|
|
2022
$
|
2021
$
|
Net loss from
continuing operations
|
|
|
(12,997)
|
(4,197)
|
Adjustments
|
|
|
|
|
Pricing adjustments on
concentrate sales
|
|
|
(1,962)
|
(7,059)
|
Loss on
derivative
|
|
|
265
|
5,115
|
Foreign exchange loss
(gain)
|
|
|
60
|
(2,664)
|
Deferred tax on
increase in decommissioning obligation
|
|
|
7,740
|
-
|
Finance costs on bond
buyback
|
|
|
5,225
|
-
|
Loss on the sale of
fixed assets
|
|
|
2,536
|
-
|
Adjusted net income
(loss)
|
|
|
867
|
(8,805)
|
Weighted average number
of common shares outstanding, as
reported – basic (thousands)
|
|
|
213,893
|
210,767
|
Adjusted net income
(loss) per share - basic
|
|
|
$0.00
|
$(0.04)
|
EBITDA and Adjusted EBITDA
EBITDA and adjusted EBITDA are non-GAAP performance measures and
represent net earnings before interest, income taxes, and
depreciation. EBITDA is presented because it is an important
supplemental measure of the Company's performance and is frequently
used by securities analysts, investors, and other interested
parties in the evaluation of companies in the industry, many of
which present EBITDA when reporting their results. The Company
believes EBITDA is an appropriate supplemental measure of debt
service capacity and performance of its operations.
Adjusted EBITDA is presented as a further supplemental measure
of the Company's performance and ability to service debt. Adjusted
EBITDA is prepared by adjusting EBITDA to eliminate the impact of
several items that are not considered indicative of ongoing
operating performance.
Adjusted EBITDA is calculated by adding to EBITDA certain items
of expense and deducting from EBITDA certain items of income that
are not likely to recur or are not indicative of the Company's
future operating performance consisting of:
- Pricing adjustments on concentrate and metal sales;
- Derivative gains/losses;
- Foreign exchange gains/losses; and
- Non-recurring transactions.
While some of the adjustments are recurring, other non-recurring
expenses do not reflect the underlying performance of the Company's
core mining business and are not necessarily indicative of future
results. Furthermore, gains/losses on derivative instruments, and
foreign currency translation gains/losses are not necessarily
reflective of the underlying operating results for the reporting
periods presented.
EBITDA and Adjusted EBITDA
|
|
Three months ended
March 31,
|
(In thousands of
CDN$)
|
|
|
2023
$
|
2022
$
|
Net income loss from
continuing operations
|
|
|
(12,997)
|
(4,197)
|
Adjustments
|
|
|
|
|
Finance
income
|
|
|
(675)
|
(284)
|
Finance
expense
|
|
|
12,568
|
8,198
|
Depreciation
|
|
|
5,766
|
5,475
|
Current tax
expense
|
|
|
386
|
621
|
Deferred income and
resource tax expense
|
|
|
11,107
|
1,408
|
EBITDA
|
|
|
16,155
|
11,221
|
Adjustments
|
|
|
|
|
Mark to market
adjustments on concentrate sales
|
|
|
(1,962)
|
(7,059)
|
Loss on
derivatives
|
|
|
265
|
5,115
|
Foreign exchange loss
(gain)
|
|
|
60
|
(2,664)
|
Loss on the sale of
fixed assets
|
|
|
2,536
|
-
|
Adjusted
EBITDA
|
|
|
17,054
|
6,613
|
Copper Mountain Mining Corporation
Condensed
Consolidated Statements of Financial Position
(In
thousands of Canadian dollars)
|
March 31,
2023
$
|
December 31, 2022
$
|
|
|
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
Cash and cash
equivalents
|
54,521
|
83,653
|
Restricted
cash
|
16,659
|
130,990
|
Accounts receivable and
prepaid expenses
|
35,620
|
33,334
|
Inventory
|
42,608
|
38,448
|
Other assets
|
872
|
1,903
|
|
|
|
|
150,280
|
288,328
|
|
|
|
Other assets
|
1,745
|
2,651
|
Mineral properties, plant and
equipment
|
773,949
|
744,447
|
Low grade
stockpile
|
64,541
|
64,541
|
|
|
|
|
990,515
|
1,099,967
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
Accounts payable and
accrued liabilities
|
78,220
|
86,212
|
Accounts payable to
related parties
|
-
|
13,672
|
Current portion of
lease liabilities
|
14,011
|
13,746
|
Current portion of
long-term debt
|
13,533
|
131,377
|
Taxes
payable
|
17,122
|
16,735
|
Other financial
liabilities
|
265
|
-
|
|
123,151
|
261,742
|
|
|
|
Provisions and other
liabilities
|
47,600
|
18,149
|
Lease liabilities
|
42,114
|
45,427
|
Long-term debt
|
180,796
|
176,541
|
Deferred tax liability
|
99,498
|
88,392
|
|
493,159
|
590,251
|
|
|
|
Equity
Attributable to shareholders of the
Company:
|
|
|
|
|
|
Share capital
|
293,711
|
292,929
|
Contributed surplus
|
17,170
|
17,319
|
Accumulated other comprehensive
loss
|
(164)
|
(168)
|
Retained earnings
|
88,484
|
100,901
|
|
399,201
|
410,981
|
Non-controlling interest
|
98,155
|
98,735
|
Total equity
|
497,356
|
509,716
|
|
|
|
|
990,515
|
1,099,967
|
Copper Mountain Mining Corporation
Condensed
Consolidated Statements of Income and Comprehensive
Income
(In thousands of Canadian dollars, except for
number of and earnings per share)
|
|
Three months ended
March 31,
|
|
|
|
2023
$
|
2022
$
|
|
|
|
|
|
Revenue
|
|
|
100,497
|
93,858
|
Cost of
sales
|
|
|
(80,309)
|
(75,282)
|
Gross
profit
|
|
|
20,188
|
18,576
|
|
|
|
|
|
Other income and
expenses
|
|
|
|
|
General and
administration
|
|
|
(4,838)
|
(6,420)
|
Share-based
compensation
|
|
|
(2,100)
|
(3,959)
|
Operating
income
|
|
|
13,250
|
8,197
|
|
|
|
|
|
Finance
income
|
|
|
675
|
284
|
Finance
expense
|
|
|
(12,568)
|
(8,198)
|
Foreign exchange (loss)
gain
|
|
|
(60)
|
2,664
|
Loss on
derivatives
|
|
|
(265)
|
(5,115)
|
Loss on disposal of
equipment
|
|
|
(2,536)
|
-
|
Loss before tax
|
|
|
(1,504)
|
(2,168)
|
|
|
|
|
|
Current tax
expense
|
|
|
(386)
|
(621)
|
Deferred income tax
expense
|
|
|
(11,107)
|
(1,408)
|
Net loss from
continuing operations
|
|
|
(12,997)
|
(4,197)
|
Net income from
discontinued operations
|
|
|
-
|
35
|
Net loss
|
|
|
(12,997)
|
(4,162)
|
|
|
|
|
|
Other comprehensive (loss)
income
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
4
|
724
|
Comprehensive loss
|
|
|
(12,993)
|
(3,438)
|
|
|
|
|
|
Net (loss) income from continuing operations
attributable to:
|
|
|
|
|
Shareholders of the
Company
|
|
|
(12,417)
|
(6,337)
|
Non-controlling interest
|
|
|
(580)
|
2,140
|
|
|
|
(12,997)
|
(4,197)
|
|
|
|
|
|
Net (loss) income attributable
to:
|
|
|
|
|
Shareholders of the
Company
|
|
|
(12,417)
|
(6,302)
|
Non-controlling
interest
|
|
|
(580)
|
2,140
|
|
|
|
(12,997)
|
(4,162)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share from continuing
operations:
|
|
|
|
|
Basic
|
|
|
(0.06)
|
(0.03)
|
Diluted
|
|
|
(0.06)
|
(0.03)
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
Basic
|
|
|
(0.06)
|
(0.03)
|
Diluted
|
|
|
(0.06)
|
(0.03)
|
|
|
|
|
|
Weighted average shares outstanding, basic
(thousands)
|
|
|
213,893
|
210,767
|
Weighted average shares outstanding, diluted
(thousands)
|
|
|
213,893
|
210,767
|
Shares outstanding at end of the year
(thousands)
|
|
|
214,383
|
211,250
|
Copper Mountain Mining Corporation
Condensed
Consolidated Statements of Cash Flows
(In thousands of
Canadian dollars)
|
|
Three months ended
March 31,
|
|
|
|
2023
$
|
2022
$
|
Cash flows from operating
activities
|
|
|
|
|
Net loss for the
period
|
|
|
(12,997)
|
(4,162)
|
Adjustments
for:
|
|
|
|
|
Depreciation
|
|
|
5,883
|
5,646
|
Loss on disposal of
equipment
|
|
|
2,536
|
-
|
Unrealized foreign
exchange gain
|
|
|
(175)
|
(2,562)
|
Unrealized loss on
derivatives
|
|
|
265
|
5,115
|
Deferred income tax
expense
|
|
|
11,107
|
1,408
|
Finance
expense
|
|
|
12,568
|
8,198
|
Share-based
compensation
|
|
|
2,100
|
3,959
|
|
|
|
21,287
|
17,602
|
Net changes in non-cash working
capital items
|
|
|
(12,188)
|
15,712
|
Net cash provided by
operating activities
|
|
|
9,099
|
33,314
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
Deferred stripping
activities
|
|
|
(6,413)
|
(10,469)
|
Development of mineral
property, plant and equipment
|
|
|
(1,862)
|
(37,646)
|
Other assets
|
|
|
1,937
|
953
|
Net cash used in
investing activities
|
|
|
(6,338)
|
(47,162)
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
Common shares issued on
exercise of options
|
|
|
322
|
928
|
Repayment of loan to
non-controlling interest
|
|
|
(13,672)
|
-
|
Loan principal
repaid
|
|
|
(117,206)
|
-
|
Restricted
cash
|
|
|
113,681
|
(8,964)
|
Interest
paid
|
|
|
(10,452)
|
(1,008)
|
Finance lease
payments
|
|
|
(4,507)
|
(3,872)
|
Net cash used in
financing activities
|
|
|
(31,834)
|
(12,916)
|
|
|
|
|
|
Effect of foreign exchange rate changes on cash and
cash
equivalents
|
|
|
(59)
|
(1,637)
|
|
|
|
|
|
Decrease in cash and cash
equivalents
|
|
|
(29,132)
|
(28,401)
|
Cash and cash equivalents - Beginning of
year
|
|
|
83,653
|
171,902
|
Cash and cash equivalents - End of
year
|
|
|
54,521
|
143,501
|
|
|
|
|
|
|
|
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SOURCE Copper Mountain Mining Corporation