Imperial Metals Corporation (the “Company”)
(TSX:III) reports financial results for the three and nine months
ended September 30, 2021, as summarized in this release and
discussed in detail in the Management’s Discussion & Analysis.
The Company’s financial results are prepared in accordance with
International Financial Reporting Standards (“IFRS”). The reporting
currency of the Company is the Canadian (“CDN”) Dollar.
QUARTER HIGHLIGHTS
FINANCIAL
Total revenue decreased to $37.1 million in the
September 2021 quarter compared to $38.2 million in the 2020
comparative quarter, a decrease of $1.1 million.
In the September 2021 quarter, the Red Chris
mine (100% basis) had 4.0 concentrate shipments (2020-4.3
concentrate shipments). Variations in revenue are impacted by the
timing and quantity of concentrate shipments, metal prices and
exchange rates, and period end revaluations of revenue attributed
to concentrate shipments where copper and gold prices will settle
at a future date.
The London Metals Exchange cash settlement
copper price per pound averaged US$4.25 in the September 2021
quarter compared to US$2.96 in the 2020 comparative quarter. London
Bullion Market Association, London gold price per troy ounce
averaged US$1,789 in the September 2021 quarter compared to
US$1,911 in the 2020 comparative quarter. The average US/CDN Dollar
exchange rate was 1.260 in the September 2021 quarter, 5.4% lower
than the exchange rate of 1.332 in the 2020 comparative quarter. In
CDN Dollar terms the average copper price in the September 2021
quarter was CDN$5.36 per pound compared to CDN$3.94 per pound in
the 2020 comparative quarter, and the average gold price in the
September 2021 quarter was CDN$2,254 per ounce compared to
CDN$2,545 per ounce in the 2020 comparative quarter.
Revenue in the September 2021 quarter decreased
by $0.8 million due to a negative revenue revaluation as compared
to a $3.3 million positive revenue revaluation in the 2020
comparative quarter. Revenue revaluations are the result of the
metal price on the settlement date and/or the current period
balance sheet date being higher or lower than when the revenue was
initially recorded or the metal price at the last balance sheet
date and finalization of contained metal as a result of final
assays.
Net loss for the September 2021 quarter was $3.8
million ($0.03 per share) compared to net income of $7.1 million
($0.05 per share) in the 2020 comparative quarter. The decrease in
net income of $10.9 million was primarily due to the following
factors:
- Income from mine
operations went from $12.8 million in September 2020 to $4.9
million in September 2021, decreasing net income by $7.9
million.
- General and
Administration expense went from $0.8 million in September 2020 to
$1.3 million in September 2021, decreasing net income by $0.5
million.
- Foreign exchange
gain/loss went from a loss of $1.1 million in September 2020 to a
gain of $0.3 million in September 2021, increasing net income by
$1.4 million.
Cash flow was $7.8 million in the September 2021
quarter compared to $17.4 million in the 2020 comparative quarter.
Cash flow is a measure used by the Company to evaluate its
performance however, it is not a term recognized under IFRS. The
Company believes cash flow is useful to investors and it is one of
the measures used by management to assess the financial performance
of the Company.
Capital expenditures including finance leases
were $33.8 million in the September 2021 quarter, an increase from
$25.4 million in the 2020 comparative quarter. The September 2021
expenditures included $12.8 million in exploration, $9.9 million
for tailings dam construction and $11.1 million on stripping costs
and other capital.
At September 30, 2021, the Company had not
hedged any copper, gold or US/CDN Dollar exchange. Quarterly
revenues will fluctuate depending on copper and gold prices, the
US/CDN Dollar exchange rate, and the timing of concentrate sales,
which is dependent on concentrate production and the availability
and scheduling of transportation.
OPERATIONS
The current impact of the COVID-19 pandemic on
our business is described under Significant Events and Liquidity.
The Company’s plans for 2021 and beyond could be adversely impacted
by the effects of the COVID-19 pandemic. The continuing impact of
COVID-19 to travel and other operating restrictions established to
curb the spread of COVID-19, could materially and adversely impact
the Company’s current plans by causing a temporary closure of the
Red Chris mine, suspending planned exploration work, causing an
economic slowdown resulting in a decrease in the demand for copper
and gold, negatively impacting copper and gold prices, impacting
the Company’s ability to transport or market the Company’s
concentrate or causing disruptions in the Company’s supply
chains.
Red Chris Mine
Metal production for the third quarter of 2021
was 17.2 million pounds copper and 15,249 ounces gold, compared to
22.2 million pounds copper and 18,052 ounces gold produced in the
2020 third quarter.
Imperial’s 30% portion of Red Chris mine third
quarter production was 5.2 million pounds copper and 4,575 ounces
gold.
|
Three Months Ended September 30* |
|
Nine Months Ended September 30* |
|
2021 |
2020 |
|
2021 |
2020 |
Ore milled - tonnes |
2,543,495 |
2,777,245 |
|
7,199,572 |
7,196,524 |
Ore milled per calendar day -
tonnes |
27,647 |
30,187 |
|
26,372 |
26,265 |
Grade % - copper |
0.389 |
0.460 |
|
0.407 |
0.553 |
Grade g/t - gold |
0.336 |
0.398 |
|
0.365 |
0.462 |
Recovery % - copper |
79.0 |
78.8 |
|
78.5 |
81.0 |
Recovery % - gold |
55.6 |
50.8 |
|
55.1 |
53.9 |
Copper – 000’s pounds |
17,244 |
22,203 |
|
50,704 |
71,112 |
Gold –
ounces |
15,249 |
18,052 |
|
46,550 |
57,536 |
* 100% Red Chris mine production
Metal production for both the three and nine
months ended September 30, 2021, decreased compared to the same
periods in 2020. The decrease in metal production is largely due to
lower metal grades, with copper grade 15.4 % lower and gold grade
15.6% lower compared to September 2020 quarter.
The copper and gold production levels (100%
basis) in the September 2021 quarter were close to those in the
June 2021 quarter, 17.2 million pounds of copper and 15,249 ounces
of gold were produced in the September 2021 quarter compared to
production of 17.6 million pounds of copper and 15,451 ounces of
gold in the June 2021 quarter, with slightly lower gold and copper
grades, being offset by higher through-put in the September 2021
quarter.
The results of the recently released Red Chris
Block Cave Pre-Feasibility Study (PFS), have confirmed Imperial’s
long held belief that Red Chris had the potential to become a
long-life, low-cost block cave copper gold mine. The exploration
decline for the proposed block cave development had progressed to
393 metres by October 20, 2021.
There are significant opportunities to enhance
the results of the PFS including the ‘early mining’ of the
highest-grade pods in the East Zone and the emerging opportunity
associated with the discovery of new distinct higher-grade zones of
mineralization such as East Ridge.
Drilling at the newly discovered East Ridge
continues to expand the extent of mineralization in this zone and
has demonstrated continuity of the copper gold mineralization over
dimensions of about 400 metres high, 400 metres long and 125 metres
wide. Contained within this zone of mineralization is a
higher-grade portion with dimensions of approximately 300 metres
high, 300 metres long and 100 metres wide. East Ridge remains open
to the east and at depth. During the third quarter, there were up
to eight diamond drill rigs in operation. A further 29,388 metres
of drilling was completed in 24 drill holes, with all drill holes
intersecting mineralization (except twelve drill holes which were
dedicated geotechnical holes).
Jim Miller-Tait, P.Geo., Imperial Metals Vice
President Exploration, is the designated Qualified Person as
defined by National Instrument 43-101 for the Red Chris exploration
program and has reviewed this information.
Imperial’s 30% share of exploration,
development, and capital expenditures were $28.2 million in the
September 2021 quarter compared to $26.3 million in the 2020
comparative quarter.
Mount Polley Mine
Mount Polley operations ceased in May 2019 and
the mine remains on care and maintenance status. The mine restart
plan prepared in 2019, is being updated to include revised pit
designs, results of recent drilling and current metal prices. The
Company is actively seeking to secure financing to fund the restart
of the mine. The COVID-19 pandemic continues to impact the mine
restart timeline.
Site personnel continue to maintain access, fire
watch, manage collection, treatment and discharge of site contact
water and actively monitor the tailings storage facility. In
addition, work to facilitate the restart of operations at Mount
Polley continued during the quarter. This work included:
- a small crew of
mechanics continuing to prepare the mining fleet;
- testing
blasthole drills by starting a blasthole pattern on the 1120 metres
bench in the Springer Pit Phase 4 pit; and
- hiring
mechanical and electrical contractors to inspect and repair as
required, equipment in the crusher and concentrator.
For the September 2021 quarter, Mount Polley
incurred idle mine costs comprised of $5.8 million in operating
costs and $0.6 million in depreciation expense.
Exploration, development, and capital
expenditures in the September 2021 quarter were $1.3 million
compared to $0.2 million in the 2020 comparative quarter.
Huckleberry Mine
Huckleberry operations ceased in August 2016 and
the mine remains on care and maintenance status. The Company
anticipates the restart of Huckleberry will follow the start of
operations at Mount Polley.
Site personnel continue to focus on maintaining
access, water management (treatment and release of mine contact
water into Tahtsa Reach), snow removal, maintenance of site
infrastructure and equipment, mine permit compliance, environmental
compliance monitoring and monitoring tailings management
facilities.
A geotechnical drilling program was conducted
during the quarter to gather the information required to update the
tailings facility designs for future operations and to provide
information required for dam safety reviews.
For the September 2021 quarter, Huckleberry
incurred idle mine costs comprised of $1.2 million in operating
costs and $0.2 million in depreciation expense.
Exploration, development, and capital
expenditures in the September 2021 quarter were $1.8 million
compared to $0.5 million in the 2020 comparative quarter.
EARNINGS AND CASH FLOW
Select Quarter Financial
Information
expressed in
thousands of dollars, except share and per share amounts |
Three Months Ended |
Nine Months Ended |
September 30 |
September 30 |
|
2021 |
|
|
2020 |
|
2021 |
|
|
2020 |
Operations: |
|
|
|
|
Total revenues |
$ |
37,064 |
|
$ |
38,161 |
$ |
104,329 |
|
$ |
111,182 |
Net income (loss) |
$ |
(3,772 |
) |
$ |
7,063 |
$ |
(11,389 |
) |
$ |
24 |
Net income (loss) per share |
$ |
(0.03 |
) |
$ |
0.05 |
$ |
(0.09 |
) |
$ |
0.00 |
Diluted income (loss) per share |
$ |
(0.03 |
) |
$ |
0.05 |
$ |
(0.09 |
) |
$ |
0.00 |
Adjusted net income (loss) (1) |
$ |
(3,489 |
) |
$ |
7,015 |
$ |
(11,165 |
) |
$ |
132 |
Adjusted net income (loss) per share (1) |
$ |
(0.02 |
) |
$ |
0.05 |
$ |
(0.08 |
) |
$ |
0.00 |
Adjusted EBITDA (1) |
$ |
8,136 |
|
$ |
17,243 |
$ |
19,050 |
|
$ |
36,001 |
Cash flow (1)(2) |
$ |
7,780 |
|
$ |
17,412 |
$ |
18,408 |
|
$ |
35,937 |
Cash flow per share (1)(2) |
$ |
0.06 |
|
$ |
0.14 |
$ |
0.14 |
|
$ |
0.28 |
Working Capital |
$ |
21,950 |
|
$ |
27,082 |
$ |
21,950 |
|
$ |
27,082 |
Total assets |
$ |
1,122,484 |
|
$ |
1,092,134 |
$ |
1,122,484 |
|
$ |
1,092,134 |
Total debt (including current portion) (3) |
$ |
4,850 |
|
$ |
2,847 |
$ |
4,850 |
|
$ |
2,847 |
(1) |
Refer to Non-IFRS Financial Measures for further details. |
(2) |
Cash flow is defined as the cash flow from operations before the
net change in non-cash working capital balances, income and mining
taxes, and interest paid. Cash flow per share is defined as cash
flow divided by the weighted average number of common shares
outstanding during the year. |
(3) |
Total debt consists mainly of equipment leases. |
Select Items Affecting Net Income (Loss)
(presented on an after-tax basis)
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
expressed in thousands of dollars |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net income (loss) before
undernoted items |
$ |
(3,348 |
) |
$ |
7,253 |
|
$ |
(10,492 |
) |
$ |
935 |
|
Interest expense |
|
(141 |
) |
|
(238 |
) |
|
(673 |
) |
|
(803 |
) |
Foreign exchange gain (loss)
on debt |
|
(283 |
) |
|
48 |
|
|
(224 |
) |
|
(108 |
) |
Net Income (Loss) |
$ |
(3,772 |
) |
$ |
7,063 |
|
$ |
(11,389 |
) |
$ |
24 |
|
NON-IFRS FINANCIAL MEASURES
The Company reports four non-IFRS financial
measures: adjusted net income, adjusted EBITDA, cash flow and cash
cost per pound of copper produced which are described in detail
below. 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.
Adjusted net income, adjusted EBITDA, and cash
flow are not generally accepted earnings measures and should not be
considered as an alternative to net income (loss) and cash flows as
determined in accordance with IFRS. As there is no standardized
method of calculating these measures, these measures may not be
directly comparable to similarly titled measures used by other
companies.
Adjusted Net Income (Loss) and Adjusted
Net Income (Loss) Per Share
Adjusted net loss in the September 2021 quarter
was $3.5 million ($0.02 per share) compared to an adjusted net
income of $7.0 million ($0.05 per share) in the 2020 comparative
quarter. Adjusted net income (loss) shows the financial results
excluding the effect of items not settling in the current period
and non-recurring items. Adjusted net income (loss) is calculated
by removing the gains or loss, resulting from acquisition and
disposal of property, mark to market revaluation of derivative
instruments not related to the current period, net of tax,
unrealized foreign exchange gains or losses on non-current debt,
net of tax.
Adjusted EBITDA
Adjusted EBITDA in the September 2021 quarter
was $8.1 million compared to $17.2 million in the 2020 comparative
quarter. We define Adjusted EBITDA as net income (loss) before
interest expense, taxes, depletion, and depreciation, and as
adjusted for certain other items.
Cash Flow and Cash Flow Per
Share
Cash flow in the September 2021 quarter was $7.8
million compared to $17.4 million in the 2020 comparative quarter.
Cash flow per share was $0.06 in the September 2021 quarter
compared to $0.14 in the 2020 comparative quarter.
Cash flow and cash flow per share are measures
used by the Company to evaluate its performance however they are
not terms recognized under IFRS. Cash flow is defined as cash flow
from operations before the net change in non-cash working capital
balances, income and mining taxes paid, and interest paid. Cash
flow per share is the same measure divided by the weighted average
number of common shares outstanding during the year.
Cash Cost Per Pound of Copper
Produced
Company is primarily a copper producer and
therefore calculates this non-IFRS financial measure individually
for its three copper mines, Red Chris (30% share), Mount Polley and
Huckleberry, and on a composite basis for these mines.
Variations from period to period in the cash
cost per pound of copper produced are the result of many factors
including: grade, metal recoveries, amount of stripping charged to
operations, mine and mill operating conditions, labour and other
cost inputs, transportation and warehousing costs, treatment and
refining costs, the amount of by-product and other revenues, the
US$ to CDN$ exchange rate and the amount of copper produced.
Idle mine costs during the periods when the
Huckleberry and Mount Polley mines were not in operation have been
excluded from the cash cost per pound of copper produced.
Calculation of Cash Cost Per Pound of Copper
Produced
expressed in thousands of dollars, except cash cost per pound of
copper produced |
Three Months EndedSeptember 30 |
Nine Months EndedSeptember 30 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Cash cost of copper produced in US$ |
$ |
10,007 |
$ |
9,471 |
$ |
35,332 |
$ |
27,417 |
Copper produced – pounds |
|
5,173 |
|
6,661 |
|
15,210 |
|
21,333 |
Cash cost per lb copper produced in US$ |
$ |
1.93 |
$ |
1.42 |
$ |
2.32 |
$ |
1.29 |
For detailed information, refer to Imperial’s
2021 Third Quarter Report available on imperialmetals.com and
sedar.com
About Imperial
Imperial is a Vancouver based exploration, mine
development and operating company. The Company, through its
subsidiaries, owns a 30% interest in the Red Chris mine, and a 100%
interest in both the Mount Polley and Huckleberry copper mines in
British Columbia. Imperial also holds 100% interest in the Ruddock
Creek lead/zinc property.
Company Contacts
Brian Kynoch | President |
604.669.8959
Darb Dhillon | Chief Financial
Officer | 604.669.8959
Cautionary Note Regarding
Forward-Looking Statements
Certain information contained in this news
release are not statements of historical fact and are
“forward-looking” statements. Forward-looking statements relate to
future events or future performance and reflect Company
management’s expectations or beliefs regarding future events and
include, but are not limited to, statements regarding the Company’s
expectations with respect to the impact of COVID-19 on the
Company’s business and operations; metal pricing and its impact on
revaluations of revenue; the fluctuation of quarterly revenues;
expectations regarding the potential cost and length of life mine
of Red Chris; the progression of the exploration decline for the
proposed block cave development; expectations and timing regarding
current and future exploration and drilling programs; the potential
significant opportunities to enhance the results of the PFS
including the early mining of highest-grade pods in the East Zone
and the discovery of new distinct higher grade zones of
mineralization; the potential to define further zones of
higher-grade mineralization in the East Ridge; the focus of site
personnel on care, maintenance and rehabilitation activities at
Mount Polley and Huckleberry; updates to the mine restart plans
prepared for Mount Polley; expectations regarding Mount Polley and
Huckleberry restart timelines; the Company’s ability to secure
financing to fund the restart of Mount Polley; and the usefulness
and comparability of certain non-IFRS financial measures.
In certain cases, forward-looking statements can
be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "outlook", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or statements that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved" or the negative of these terms or comparable terminology.
By their very nature forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements.
In making the forward-looking statements in this
release, the Company has applied certain factors and assumptions
that are based on information currently available to the Company as
well as the Company’s current beliefs and assumptions. These
factors and assumptions and beliefs and assumptions include, the
risk factors detailed from time to time in the Company’s interim
and annual financial statements and management’s discussion and
analysis of those statements, all of which are filed and available
for review on SEDAR at www.sedar.com. Although the Company has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended, many of which are beyond the Company’s
ability to control or predict. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements and all
forward-looking statements in this news release are qualified by
these cautionary statements.
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