Copper Mountain Mining Corporation (TSX: CMMC) (ASX: C6C) announces strong third quarter 2020 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 Discussion & Analysis are available at www.CuMtn.com and www.sedar.com.
Q3 2020 HIGHLIGHTS
“We posted another strong quarter and continued to exceed our revised operating plan with solid operating and financial results,” commented Gil Clausen, Copper Mountain’s President and CEO. “We expect production to continue to increase in the fourth quarter with higher grades and recoveries, at low cost. As a result, we are reducing our 2020 all-in cost guidance to a range of US$1.85 to US$2.00 per pound of copper. We are also maintaining our 2020 production guidance but expect to end the year at the top end of the range.”
“Our plan is to continue to build upon our healthy cash position in anticipation of restarting construction of the third ball mill in early 2021, which is the last stage to complete our 45,000 tonnes per day mill expansion project. We have commenced activities to prepare for construction and forecast commissioning by the end of Q3 2021. The installation of the third ball mill is expected to increase production by 15 to 18% as a result of higher throughput and improved metal recoveries while maintaining the mill head grade. This is the first step of our multi-tier growth plan. This growth pipeline includes a further mill expansion to 65,000 tonnes per day at the Copper Mountain Mine. We expect to publish a technical report in Q4 on this expansion plan. In addition, the Eva Copper Project is being advanced and we are currently developing project financing options and evaluating potential project partners. Our seasoned team continues to steadily de-risk and advance our organic growth plans.”
SUMMARY OF OPERATING RESULTS
|Mine Production Information|
|Copper Mountain Mine (100% Basis)||Q3 2020||Q3 2019||9 Mos. 2020||9 Mos. 2019|
|Total tonnes mined (000s)||13,681||13,965||39,547||47,558|
|Ore tonnes mined (000s)||3,133||2,761||10,388||8,582|
|Waste tonnes (000s)||10,548||11,204||29,159||38,976|
|Tonnes milled (000s)||3,725||3,596||10,928||10,910|
|Feed Grade (Cu%)||0.29||0.26||0.29||0.28|
|Operating time (%)||90.8||91.9||91.8||93.3|
|Tonnes milled (TPD)||40,489||39,087||39,884||39,963|
|Copper (000s lb)||18,934||16,302||54,498||53,362|
|Copper (000s lb)||17,824||17,021||54,565||54,300|
|C1 cash cost per pound of copper produced (US$)(1)||1.27||2.12||1.58||1.87|
|AISC per pound of copper produced (US$)(1)||1.43||2.28||1.74||1.99|
|AIC per pound of copper produced (US$)(1)||1.68||2.67||1.93||2.48|
|Average realized copper price (US$/lb)||2.97||2.65||2.66||2.74|
|(1) Non-GAAP performance measure. See MD&A for details.|
During the third quarter of 2020, the Company continued to operate under the revised operating plan announced in March of 2020. In Q3 2020, the Copper Mountain Mine produced 18.9 million pounds of copper, 6,630 ounces of gold, and 81,418 ounces of silver, as compared to 16.3 million pounds of copper, 6,498 ounces of gold, and 57,225 ounces of silver for Q3 2019.
The mine processed a total of 3.7 million tonnes of ore during the quarter as compared to 3.6 million tonnes in Q3 2019. Average feed grade increased to 0.29% Cu and copper recovery improved to 80.4% in Q3 2020, as compared to average feed grade of 0.26% Cu and copper recovery of 78.2% in Q3 2019, which are the primary reasons for higher production in Q3 2020. Copper grade is expected to continue to improve in Q4 2020, as the Company has completed mining in the Pit#1 area and has restarted mining in the higher grade Pit #3 area. Mining costs are expected to remain at lower levels as the waste haul remains short as Pit#1 is being backfilled with waste rock from Pit#3. Mill availability averaged 90.8% for Q3 2020 as compared to 91.9% in Q3 2019. The slight decrease in mill availability was a result of scheduled preventative maintenance shutdowns in Q3 2020. With expected higher grades and higher recoveries driving increased production in the fourth quarter of 2020, Copper Mountain expects to achieve the higher end of its guidance range for the year.
C1 cash cost per pound of copper produced for Q3 2020 decreased 40% to US$1.27, as compared to US$2.12 in Q3 2019. The decrease in cost per pound in Q3 2020 was the result of higher production, reduced mining costs and higher by-product credits for the gold and silver produced in Q3 2020 as compared to Q3 2019.
All-in sustaining cost per pound of copper produced in Q3 2020 decreased 37% to US$1.43, as compared to US$2.28 in Q3 2019. The low AISC carries forward from the low C1 cost per pound with addition of $3.9 million in sustaining capital, lease and applicable administration expenditures in Q3 2020 as compared to $3.4 million in Q3 2019.
Total all-in cost per pound of copper produced, net of credits, for Q3 2020 decreased 37% to US$1.68, as compared to US$2.67 in Q3 2019. The low AIC carries forward from the low AISC with the addition of $6.4 million in deferred stripping and $nil of low-grade stockpile mining costs incurred in Q3 2020 as compared to $8.3 million of deferred stripping and $0.3 million of low-grade stockpile costs in Q3 2019.
The significant decrease in C1, AISC, and AIC recognized in Q3 2020 as compared to past quarters was a result of the Company’s strong copper production, cost savings initiatives and operating efficiencies at the Copper Mountain mine, supplemented by an increase in precious metals prices and production for Q3 2020.
SUMMARY OF FINANCIAL RESULTS
|Results and Highlights (100%)||Three months ended
|Nine months ended
|(In thousands of CDN$, except for per share amounts)||2020 $||2019 $||2020 $||2019 $|
|Gross profit before depreciation(1)||47,091||4,866||74,472||41,282|
|Net income (loss)||33,249||(10,595)||21,724||9,761|
|Income (loss) per share – basic||0.13||(0.05)||0.08||0.03|
|Adjusted earnings per share – basic||0.08||(0.03)||0.08||(0.00)|
|Cash flow from operations||38,595||368||70,620||46,893|
|Cash and cash equivalents – end of period||53,573||36,008|
|(1) Non-GAAP performance measure. See MD&A for details.|
In Q3 2020, revenue was $95 million, net of pricing adjustments and treatment charges, compared to $62.7 million in Q3 2019. Q3 2020 revenue is based on the sale of 17.8 million pounds of copper, 6,232 ounces of gold, and 67,901 ounces of silver. This compares to 17.0 million pounds of copper, 6,400 ounces of gold and 57,426 ounces of silver sold in Q3 2019. Revenue increased significantly as a result of increased sales and higher metal prices, including a positive mark to market and final adjustment on concentrate sales of $11.3 million. This compares to a negative mark to market and final adjustment of $2.4 million for Q3 2019, a differential of approximately $13.7 million. Q3 2020 revenue before the mark to market adjustment was $83.7 million as compared to $63.6 million for Q3 2019.
Cost of sales in Q3 2020 was $53.0 million as compared to $64.1 million for Q3 2019. A substantial part of the decrease in cost of sales is a result of the Company’s cost savings initiatives resulting from the revised operating plan which included utilizing less equipment. Q3 2020 cost of sales did not include any mining costs being allocated to the low-grade stockpile and the Company allocated $6.4 million to deferred stripping. This is compared to Q3 2019 cost of sales which was net of $8.3 million of deferred stripping and low-grade stockpile costs.
The Company reported net income of $33.2 million for the three-month period ended September 30, 2020 as compared to a net loss of $10.6 million for the same period of 2019. The variance in the higher net income for 2020, as compared to 2019, was a result of several items including:
On adjusted basis, the Company recorded a net income of $15.1 million in Q3 2020, compared to a net loss of $5.6 million in Q3 2019.
PROJECT DEVELOPMENT UPDATE
Copper Mountain Mill Expansion
In July 2020, the Company completed the first stage of the Ball Mill Expansion project which included installation of the Direct Flotation Reactors (DFRs). The Ball Mill Expansion is designed to increase throughput to 45,000 tonnes per day from 40,000 tonnes per day and improve copper recovery as a result of being able to achieve a finer grind of ore. The DFRs have increased the efficiency and the capacity of the current cleaner circuit, and as planned increased copper concentrate grade from about 24 to 28%, resulting in lower concentrate transportation, smelting and refining costs during Q3 2020. The installation of the DFRs was completed on schedule and on budget.
As noted in Q1 2020, as a result of COVID-19, the Company deferred all major capital spend and therefore halted work on the second stage of the Ball Mill Expansion project, which deferred the actual installation of a third ball mill that the Company had already purchased and had delivered to site. Work was reduced to completing commitments on long lead items, which would allow the project to restart in an efficient and expeditious manner. The Company has re-commenced activities for the installation of the third ball mill for a construction start in early 2021. Copper Mountain is planning for commissioning of the Ball Mill Expansion project by the end of Q3 2021.
The Company is reducing its 2020 AIC guidance to a range of US$1.85 to US$2.00 per pound of copper from a range of US$2.20 to US$2.35 per pound of copper. The Company reaffirms its 2020 production guidance of 70 to 75 million pounds of copper and expects to be at the higher end of the range. Copper production is expected to be stronger in the fourth quarter of 2020 as a result of higher grades and improved recoveries.
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 90 million pounds of copper equivalent, with average annual production expected to increase to approximately 120 million pounds of copper equivalent. Copper Mountain also has the development-stage Eva Copper Project in Queensland, Australia and an extensive 2,443 km2 highly prospective land package in the Mount Isa area. Copper Mountain trades on the Toronto Stock Exchange and Australian Stock Exchange.
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We acknowledge the [financial] support of the Government of Canada.