Copper Mountain Mining Corporation (TSX: CMMC) (ASX:C6C) 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 are available at www.CuMtn.com and www.sedar.com.
|(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$250 million bond financing which has allowed us to restructure our balance sheet so that we can access 100% of excess cash to fund our organic growth plans. We continued to experience high copper prices and generated healthy cash flow building upon our solid cash position. Our Net Debt to last twelve-month EBITDA(1) reduced to 0.7, demonstrating a strong balance sheet. We are now in a position to invest in projects that further improve production efficiencies at Copper Mountain, such as adding filtration and flotation capacity to achieve improved recoveries at throughput rates up to 50,000 tonnes per day. Our current Ball Mill 3 Expansion Project is on track to commence commissioning in the third quarter of 2021, and we plan to make a formal construction decision on the Eva Project in Queensland by the end of this year. Eva is a key component in achieving our vision of tripling 2020 production within the next five years.”
|(1)||The Company reports the non-GAAP financial measures of Net Debt to EBITDA to manage and evaluate its operating performance. For further information, see “Cautionary Note Regarding Non-GAAP Performance Measures”.|
SUMMARY OF OPERATING RESULTS
|Copper Mountain Mine (100% Basis)||2021
|Total tonnes mined (000s)||15,674||10,947||31,046||25,866|
|Ore tonnes mined (000s)||3,854||3,577||7,282||7,255|
|Waste tonnes (000s)||11,820||7,370||23,764||18,611|
|Tonnes milled (000s)||3,435||3,665||6,865||7,203|
|Feed Grade (Cu%)||0.42||0.28||0.42||0.29|
|Operating time (%)||94.1||92.5||94.0||92.4|
|Tonnes milled (TPD)||37,747||40,275||37,928||39,582|
|Copper (000s lb)||25,515||18,092||51,041||35,564|
|Copper (000s lb)||21,696||18,879||49,197||36,741|
|C1 cash cost per pound of copper produced (US$)(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, 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 $Nil deferred stripping in Q2 2020. Deferred stripping costs in Q2 2021 resulted from the Company’s regular development activities as it continued to advance the development of the Phase 4 pushback of the main pit. The lack of deferred stripping in Q2 2020 resulted from the Company responding to the lower copper price environment and uncertainty due to the COVID-19 pandemic by resequencing short-term production to lower-cost mining phases to reduce operating costs. Low-grade stockpile mining expenses did not occur in Q2 2021 or Q2 2020.
SUMMARY OF FINANCIAL RESULTS
|Results and Highlights (On a 100% basis)||Three months ended
|Six months ended
|(In thousands of CDN$, except for per share amounts)||2021 $||2020 $||2021 $||2020 $|
|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 per share – basic||0.15||(0.01)||0.31||(0.00)|
|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:
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 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.
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.
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.”
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 km2 highly prospective land package in the Mount Isa area. Copper Mountain trades on the Toronto Stock Exchange and Australian Stock Exchange.
Copper Mountain Mining Corporation
Condensed Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
|June 30, 2021
|December 31, 2020
|Cash and cash equivalents||144,462||85,571|
|Accounts receivable and prepaid expenses||35,562||30,413|
|Other financial assets||1,447||–|
|Deferred tax assets||3,335||473|
|Property, plant and equipment||618,779||552,648|
|Low grade stockpile||64,879||64,836|
|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|
|Due to related parties||–||145,918|
|Deferred tax liability||62,535||4,465|
Attributable to shareholders of the Company:
|Accumulated other comprehensive loss||(3,059)||(520)|
|Retained Earnings (deficit)||27,666||(35,153)|
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
| Six months ended
|Cost of sales||(56,278)||(60,830)||(122,205)||(125,343)|
|Other income and expenses|
|General and administration||(4,263)||(914)||(9,531)||(3,360)|
|Share based compensation||(4,532)||(575)||(10,491)||(1,203)|
|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)|
|Earnings (loss) per share:|
|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,|
|Cash flows from operating activities|
|Net income (loss) for the period||38,662||31,933||90,780||(11,525)|
|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|
|Share based compensation||4,532||575||10,491||1,203|
|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)||–|
|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)|
|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|
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