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Copper Mountain Mining Announces Q3 2021 Financial Results

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Copper Mountain Mining Announces Q3 2021 Financial Results

 

 

 

 

 

Copper Mountain Mining Corporation (TSX: CMMC) (ASX: C6C) announces strong third 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.

 

HIGHLIGHTS

  • Production in the third quarter of 2021 was 26.3 million pounds of copper equivalent (comprised of 22.4 million pounds of copper, 7,449 ounces of gold, and 134,987 ounces of silver).
  • C1 cash cost(1) per pound of copper produced in the third quarter of 2021 was US$1.50, all-in sustaining cost (1) per pound of copper was US$1.77, and all-in cost(1) per pound of copper was US$2.17.
  • Revenue for the third quarter of 2021 was $137.2 million from the sale of 24.4 million pounds of copper, 8,308 ounces of gold, and 142,128 ounces of silver, net of pricing adjustments.
  • Gross profit for the third quarter of 2021 was $66.6 million.
  • Net income was $25.8 million, or $0.08 on a per-share basis, and adjusted net income(1) was $41.4 million, or $0.20 on a per share basis(1).
  • Cash flow from operations for the third quarter of 2021 was $90.9 million, or $0.43 on a per-share basis(1).
  • Cash at the end of the third quarter of 2021 was $199.4 million, which included restricted cash of $16.1 million.
  • Commissioning of the third ball mill commenced at the Copper Mountain Mine, with the objective to increase plant milling capacity to 45,000 tonnes per day from 40,000 tonnes per day and improve recovery performance.
  • Exploration success continued with the Company doubling the vertical extent of mineralization at New Ingerbelle in B.C. and identifying three major mineralized zones at Cameron Copper in Australia.
(1) The Company reports the non-GAAP financial measures of C1 cash costs, AISC and AIC per pound of copper, adjusted net income, adjusted net income per share, and cash flow per share to manage and evaluate its operating performance. See “Cautionary Note Regarding Non-GAAP Performance Measures”.

 

“We continued to deliver strong operating metrics and impressive operating cash flow,” commented Gil Clausen, Copper Mountain’s President and CEO.  “With a healthy and increasing cash position, we are on track to advancing our organic growth objective of tripling 2020 production within the next five years, while maintaining a solid balance sheet.  Our Net Debt to trailing twelve-month EBITDA(1) continues to improve, reaching 0.6 at the end of the quarter.”

 

Mr. Clausen added, “In the third quarter, we completed the first step in our multi-tier growth plan with the successful installation of Ball Mill 3 at the Copper Mountain Mine. The next tier of growth is the Eva Copper Project, where project financing and basic engineering is progressing well.   We also announced impressive drill results from our exploration program in the quarter at New Ingerbelle, where we doubled the vertical extent of mineralization, and at Cameron Copper, where we identified three large mineralized zones. We see exceptional exploration upside both in B.C. and in Australia and plan to continue to drill into 2022.”

 

(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
Q3
2020
Q3
2021
9 Mos.
2020
9 Mos.
Mine
Total tonnes mined (000s) 14,483 13,681 45,529 39,547
Ore tonnes mined (000s) 3,053 3,133 10,335 10,388
Waste tonnes (000s) 11,430 10,548 35,194 29,159
Stripping ratio 3.74 3.37 3.41 2.81
Mill
Tonnes milled (000s) 3,417 3,725 10,282 10,928
Feed Grade (Cu%) 0.37 0.29 0.41 0.29
Recovery (%) 79.7 80.4 79.8 78.2
Operating time (%) 92.2 90.8 93.4 91.8
Tonnes milled (TPD) 37,141 40,489 37,664 39,884
Production
Copper (000s lb) 22,406 18,934 73,446 54,498
Gold (oz) 7,449 6,630 23,264 20,268
Silver (oz) 134,987 81,418 443,444 247,560
Sales
Copper (000s lb) 24,416 17,824 73,613 54,565
Gold (oz) 8,308 6,232 23,406 18,885
Silver (oz) 142,128 67,901 425,076 226,767
C1 cash cost per pound of copper produced (US$)(1) 1.50 1.27 1.34 1.58
AISC per pound of copper produced (US$)(1) 1.77 1.43 1.68 1.74
AIC per pound of copper produced (US$)(1) 2.17 1.68 1.97 1.93
Average realized copper price (US$/lb) $4.27 $2.97 $4.15 $2.66
(1) 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 22.4 million pounds of copper, 7,449 ounces of gold, and 134,987 ounces of silver in Q3 2021, as compared to 18.9 million pounds of copper, 6,630 ounces of gold, and 81,418 ounces of silver for Q3 2020. During the quarter, slightly more ore was mined from the lower grade Phase 2 area, which was planned for the commissioning of Ball Mill 3. This resulted in average mill feed grade of 0.37% Cu during the quarter, as compared to average feed grade of 0.42% Cu in the first half of 2021. The average mill feed grade in Q3 2021 was higher than Q3 2020 of 0.29% Cu.

 

Copper recovery was 79.7% in Q3 2021 as compared to 80.4% in Q3 2020.  The Company continues to advance the installation of additional cleaner circuit capacity to support maximizing recovery on slower kinetic ore types and this is expected to be operational during the first half of 2022.  The mill processed a total of 3.4 million tonnes of ore during the quarter as compared to 3.7 million tonnes in Q3 2020.  Mill tonnage continued at reduced rates in Q3 2021 during periods of high grades in order to manage the volume of copper concentrate being produced. The Company is advancing the installation of additional filtration capacity in order to maintain full throughput during periods of high-grade production.  This project is also expected to be complete in the first half of 2022.  Mill availability averaged 92.2% for Q3 2021 as compared to 90.8% in Q3 2020.  An expansion of the flotation rougher circuit is also planned to be completed in the first half of 2022 to further enhance rougher recovery.

 

To date, there have been no material interruptions to the Company’s operations, logistics and 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 Q3 2021 was US$1.50, as compared to US$1.27 in Q3 2020.  The increase in cost per pound in Q3 2021 was the result of higher mining costs in Q3 2021 as the mine returned to utilizing its full fleet of equipment as compared to the cost saving measures that were implemented in Q3 2020 as a result of COVID 19.

 

All-in sustaining costs per pound of copper produced (AISC) for Q3 2021 was US$1.77, as compared to US$1.43 in Q3 2020.  AISC carries forward from C1 costs with the addition of $7.7 million in sustaining capital, lease and applicable administration expenditures in Q3 2021 as compared to $3.9 million in Q3 2020.  The increase is primarily due to higher sustaining capital of $4.7 million in Q3 2021 as compared to sustaining capital of $1.4 million in Q3 2020.  Sustaining capital increased from the same quarter last year as the Company completed the installation of additional new contact water management systems in the current quarter.

 

Total all-in costs per pound of copper produced (AIC), net of precious metal credits, for Q3 2021 was US$2.17 as compared to US$1.68 for Q3 2020.  AIC carries forward from AISC with the addition of $11.3 million in deferred stripping as compared to $6.4 million deferred stripping in Q3 2020.  Deferred stripping costs in Q3 2021 resulted from the Company’s regular development activities as it continued to advance development of the Phase 4 pushback of the Main Pit which will continue into H1 2022.  The reduced amount of deferred stripping in Q3 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.

 

 

SUMMARY OF FINANCIAL RESULTS

 

Results and Highlights (100%) Three months ended
September 30,
Nine months ended
September 30,
(In thousands of CDN$, except for per share amounts) 2021

$

2020

$

2021

$

2020

$

Financial
Revenue 137,176 94,992 441,447 235,645
Gross profit 66,641 42,019 248,707 57,329
Gross profit before depreciation(1) 73,927 47,091 269,979 74,472
Net income 25,824 33,249 116,604 21,724
Income per share – basic 0.08 0.13 0.39 0.08
Adjusted earnings(1) 41,389 15,078 106,969 15,067
Adjusted earnings per share – basic (1) $0.20 0.08 $0.51 0.08
EBITDA(1) 61,550 51,226 238,494 60,631
Adjusted EBITDA(1) 77,115 33,055 228,859 53,974
Cash flow from operations 90,869 38,595 265,037 70,620
Cash and cash equivalents – end of period 183,333 53,573
(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 Q3 2021, revenue was $137.2 million, net of pricing adjustments and treatment charges, compared to $95.0 million in Q3 2020.  Q3 2021 revenue is based on the sale of 24.4 million pounds of copper, 8,308 ounces of gold, and 142,128 ounces of silver.  This compares to 17.8 million pounds of copper, 6,232 ounces of gold and 67,901 ounces of silver sold in Q3 2020.  As noted above, the increase in revenue is due to higher metal prices and metal sales which were somewhat offset by lower United States to Canadian dollar foreign exchange rates and a negative mark to market and final adjustment on concentrate sales of $7.6 million as compared to a positive mark to market and final adjustment of $11.3 million for Q3 2020.

 

Cost of sales in Q3 2021 was $70.5 million as compared to $53.0 million for Q3 2020.  The increase in cost of sales can largely be attributed to the increase in volume of copper sold in Q3 2021 as compared to Q3 2020. Cost of sales is also affected by the allocation of mine operating costs to deferred stripping with $12.8 million, inclusive of $1.5 million in depreciation, allocated to deferred stripping in Q3 2021, compared to $7.8 million, inclusive of $0.8 million in depreciation, in Q3 2020.

 

The Company generated a gross profit of $66.6 million in Q3 2021 as compared to a gross profit of $42.0 million in Q3 2020. Net income for Q3 2021 was $25.8 million as compared to net income of $33.2 million for Q3 2020.   The variance in net income in Q3 2021 as compared to Q3 2020 is a result of several items, including:

 

  • Higher revenue due to more pounds sold at a higher average price as compared to Q3 2020.
  • A $7.6 million negative mark to market and final adjustment from provisional pricing on concentrate sales in Q3 2021, as compared to an $11.3 million positive mark to market and final adjustment from provisional pricing on concentrate sales for Q3 2020, a differential of approximately $18.9 million.
  • A non-cash unrealized foreign exchange loss of $7.6 million as compared to a gain of $6.9 million in Q3 2020, a differential of approximately $14.5 million, which was primarily related to the Company’s debt that is denominated in US dollars.
  • A non-cash deferred tax expense of $13.8 million as compared to $10.1 million for Q3 2020.

 

On an adjusted basis, the Company recorded a net income of $41.4 million in Q3 2021, or $0.20 per share, compared to $15.1 million in Q3 2020, or $0.08 per share.

 

PROJECT DEVELOPMENT UPDATE

 

Copper Mountain Mine, Canada

 

The Company successfully installed and commenced commissioning of Ball Mill 3 in the third quarter of 2021. The Company expects to add slurry to the new mill in early Q4 2021 with full capacity expected to be achieved by year end.  The Ball Mill 3 Expansion Project is designed to increase mill throughput to 45,000 tonnes per day from 40,000 tonnes per day and improve copper recovery as a result of achieving a finer grind of ore.

 

Eva Copper Project, Australia

 

The Company continued to advance basic engineering and project financing during the quarter. A final capital cost, operating cost and update on project economics is expected to be complete and announced in the fourth quarter of 2021, ahead of a final construction decision.

 

EXPLORATION UPDATE

 

Canada

 

The exploration drilling program which was initiated in March 2021, with the objective of expanding resources and reserves at the Copper Mountain Main Pit, North Pit and New Ingerbelle continued in the third quarter.  Following on favourable results, more drill rigs are expected to be added and drilling is planned to continue into the first quarter of 2022.

 

In the third quarter, the Company announced positive results from the drilling at New Ingerbelle. The current drill program encountered long intercepts of high-grade mineralization with continuity.   For details, please see the Company’s September 9, 2021 press release.

 

Australia

 

The 2021 exploration program designed to discover additional copper, copper-gold or gold deposits at the Company’s Cameron Copper Project, which is situated 40 kilometres south of its Eva Copper Project, continued through the third quarter.  The program, which consists of detailed geophysical, geochemical and geological surveys followed by drill testing, produced encouraging results with three mineralized zones identified. The drill program encountered intercepts of high-grade mineralization, within long, low-grade mineralized envelopes, with lateral continuity between intercepts of up to 1 kilometre. For drill hole results, please see Copper Mountain’s October 12, 2021 press release.

 

As a result of the success to date, a second round of drill testing has begun.  The Company plans to carry out further drilling that will also include new undrilled targets with significant copper-gold anomalies in surface soil and rock samples.

 

OUTLOOK

The Company reaffirms its upward revised 2021 production guidance of 90 to 100 million pounds of copper and the Company expects to be at the top end of the 2021 AIC guidance of US$1.80 to US$2.00 per pound due to inflationary pressures on the costs of fuel and steel used in operations.

 

Q3 2021 FINANCIAL AND OPERATING RESULTS CONFERENCE CALL AND

 

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 100% owned 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 Mining Corporation
Condensed Consolidated Statements of Financial Position
(In thousands of Canadian dollars)

 

September 30,  2021

$

December 31, 2020

$

Assets
Current assets
Cash and cash equivalents 183,333 85,571
Restricted cash 16,103
Accounts receivable and prepaid expenses 14,428 30,413
Inventory 34,103 38,038
Other financial assets 675
248,642 154,022
Reclamation bonds 4,485 4,162
Deferred tax assets 2,084 473
Property, plant and equipment 661,156 552,648
Low grade stockpile 64,879 64,836
981,246 776,141
Liabilities
Current liabilities
Accounts payable and accrued liabilities 64,630 44,400
Amounts payable to related parties 3,644
Current portion of long-term debt 23,031 79,559
Current tax liability 4,349 1,578
92,010 129,181
Provisions 24,459 18,371
Due to related parties 145,918
Long-term debt 342,166 129,153
Deferred tax liability 75,183 4,465
533,818 427,088
Equity

Attributable to shareholders of the Company:

 

Share capital

287,407 283,926
Contributed surplus 19,017 19,611
Accumulated other comprehensive loss (4,132) (520)
Retained Earnings (deficit) 45,463 (35,153)
347,755 267,864
Non-controlling interest 99,673 81,189
Total equity 447,428 349,053
981,246 776,141

 

 

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
September 30,
    Nine months ended
September 30,
2021

$

2020

$

2021

$

2020

$

Revenue 137,176 94,992 441,447 235,645
Cost of sales (70,535) (52,973) (192,740) (178,316)
Gross profit 66,641 42,019 248,707 57,329
Other income and expenses
General and administration (2,272) (1,836) (11,803) (5,196)
Share based compensation (2,141) (863) (12,632) (2,066)
Operating income 62,228 39,320 224,272 50,067
Finance income 88 517 137 622
Finance expense (10,240) (3,741) (23,640) (11,173)
Loss on derivatives (794) (2) (2,709) (1,020)
Foreign exchange (loss) gain (7,570) 6,938 (4,729) (5,457)
Loss (gain) on sale of fixed asset 400 (102) 388 (102)
Income before tax 44,112 42,930 193,719 32,937
Current tax expense (4,420) 385 (8,010) (128)
Deferred income expense (13,868) (10,066) (69,105) (11,085)
Net income 25,824 33,249 116,604 21,724
Other comprehensive income
Foreign currency translation adjustment (1,073) 897 (3,612) 1,982
Total comprehensive income 24,751 34,146 112,992 23,706
Net income attributable to:
Shareholders of the Company 17,797 24,420 80,616 15,459
Non-controlling interest 8,027 8,829 35,988 6,265
25,824 33,249 116,604 21,724
Earnings per share:
Basic 0.08 0.13 0.39 0.08
Diluted 0.08 0.13 0.37 0.08
Weighted average shares outstanding, basic
(thousands)
209,921 191,544 209,320 191,403
Weighted average shares outstanding, diluted
(thousands)
219,453 193,035 218,840 192,082
Shares outstanding at end of the period (thousands) 210,166 192,301 210,166 192,301

 

 

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

 

Three months ended
September 30,
Nine months ended 
September 30,
2021

$

2020

$

2021

$

2020

$

Cash flows from operating activities
Net income for the period 25,824 33,249 116,604 21,724
Adjustments for:
Depreciation 7,342 5,072 21,457 17,168
(Gain) Loss on sale of fixed asset (400) 102 (388) 102
Unrealized foreign exchange (gain) loss 10,448 (6,077) 3,975 5,856
Loss on derivatives 794 2 2,709 1,020
Deferred income tax expense 13,868 10,066 69,105 11,085
Finance expense 10,240 3,741 23,640 11,173
Share based compensation 2,141 863 12,632 2,066
70,257 47,018 249,734 70,194
       Net changes in working capital items 20,612 (8,423) 15,303 426
Net cash from operating activities 90,869 38,595 265,037 70,620
Cash flows from investing activities
Purchase of copper puts (3,397)
Deferred stripping activities (11,316) (6,402) (26,504) (13,839)
Purchase of property, plant and equipment (27,729) (4,970) (77,208) (20,762)
Reclamation bonds (77) (4) (323) (419)
Net cash used in investing activities (39,122) (11,376) (107,432) (35,020)
Cash flows from financing activities
Net proceeds from issuance of bonds 287,785
Proceeds on exercise of options 6 482 1,725 482
Decrease (increase) in restricted cash 29,951 (15,664)
Advances from non-controlling interest 22,313 20,393 46,536
Payments made to non-controlling interest (178,310)
Loan principal paid (40,064) (21,343) (154,052) (50,099)
Interest paid (1,948) (1,894) (10,208) (6,925)
Finance lease payments (2,403) (2,007) (11,577) (5,000)
Net cash used in financing activities (14,458) (2,449) (59,908) (15,006)
Effect of foreign exchange rate changes on cash and cash
equivalents
1,582 (200) 65 853
Increase in cash and cash equivalents 38,871 24,570 97,762 21,447
Cash and cash equivalents – Beginning of period 144,462 29,003 85,571 32,126
Cash and cash equivalents – End of period 183,333 53,573 183,333 53,573

 

Posted November 1, 2021

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