Imperial Reports 2012 Third Quarter Financial Results
VANCOUVER, BRITISH COLUMBIA, Nov 08, 2012 (Menafn - MARKETWIRE via COMTEX) --Imperial Metals Corporation - Imperial reportscomparative financial results for the three and nine months endedSeptember 30, 2012 and September 30, 2011 which are summarized belowand discussed in detail in the Management's Discussion and Analysis.The Company's financial results are prepared in accordance withInternational Financial Reporting Standards ("IFRS").
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(unaudited) in thousands of
CDN except per shareTHREE MONTHS ENDEDNINE MONTHS ENDED
amountsSEPT 30SEPT 30
2012201120122011
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Revenues49,16369,409190,409205,994
Income from mine operations15,2268,53149,46856,614
Net Income4,34317,61720,90845,405
Net Income Per Share0.060.240.280.62
Adjusted Net Income (1)7,4324,75526,17223,104
Adjusted Net Income Per
Share (1)0.100.060.350.31
Cash Flow (1)17,17217,44159,86964,051
Cash Flow Per Share (1)0.230.240.810.87
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(1) Adjusted Net Income, Adjusted Net Income Per Share, 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 in Canada.
Adjusted Net Income is defined as net income adjusted for certain items of
a non-operational nature that pertain to future periods as described in
further detail in the Management's Discussion and Analysis under the
heading Adjusted Net Income. Cash Flow is defined as cash flow from
operations, excluding mining and income taxes and before net change in
working capital balances. Adjusted Net Income and Cash Flow Per Share are
the same measures divided by the weighted average number of common shares
outstanding during the period. 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.
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Revenues were 49.2 million in the September 2012 quarter compared to69.4 million in the 2011 quarter. The September 2012 quarterincludes one concentrate shipment from Mount Polley mine and twoconcentrate shipments from Huckleberry mine, compared to twoconcentrate shipments from Mount Polley mine and two concentrateshipments from Huckleberry mine in the comparative 2011 quarter.Variations in quarterly revenue attributed to the timing ofconcentrate shipments can be expected in the normal course ofbusiness. Mount Polley had over 9,000 tonnes of concentrate ininventory at the end of the quarter end and a concentrate shipmentwas made in October 2012.
The Company recorded net income of 4.3 million in the September 2012quarter compared to net income of 17.6 million in the 2011 quarter.Adjusted net income in the quarter was 7.4 million or 0.10 pershare, versus 4.8 million or 0.06 per share in the September 2011quarter. Adjusted net income is calculated by removing the unrealizedgains and losses, net of related income taxes, resulting from mark tomarket revaluation of copper and foreign exchange derivativeinstruments. Adjusted net income is not a measure recognized underIFRS in Canada. It is intended to show the current period financialresults excluding the effect of items not settling in the currentperiod.
Losses on derivative instruments were 4.3 million in the September2012 quarter compared to gains of 16.7 million in the September 2011quarter including unrealized net losses on copper derivatives of 4.1million in the September 2012 quarter compared to 17.5 million ofgains in the September 2012 quarter. The Company realized losses of0.2 million on copper derivatives in the September 2012 quartercompared to losses of 0.8 million in the September 2011 quarter.
Cash flow was virtually the same as in the same quarter last year, at17.2 million in the three months ending September 30 compared to17.4 million in the comparative 2011 quarter.
Capital expenditures increased to 62.3 million from 13.4 million inthe comparative 2011 quarter. The Company financed 8.6 million ofthe capital additions in the September quarter via long term debtcompared to 0.7 million in the comparative quarter. The balance ofthe expenditures were financed from cash flow from the Mount Polleyand Huckleberry mines and from short term debt. At September 30, 2012the Company had 45.2 million in cash and short term investments.
During the September 2012 quarter the Company did not purchase anycommon shares for cancellation.
MOUNT POLLEY MINE OPERATIONS
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PRODUCTIONNINE MONTHS ENDED SEPT 30
20122011
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Ore milled (tonnes)6,136,2025,742,244
Ore milled per calendar day (tonnes)22,39521,034
Grade % - copper0.2740.262
Grade g/t - gold0.3030.266
Recovery % - copper65.7057.16
Recovery % - gold65.0062.16
Copper (lbs)24,390,57518,939,711
Gold (oz)38,91730,496
Silver (oz)85,62067,555
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Throughput continues to exceed plan averaging 22,395 tonnes per day forthe first nine months of 2012. Throughput for the quarter averaged22,278 tonnes per calendar day, which was up from 22,160 achieved inthe comparable period in 2011.
Increased throughput, improved recoveries, and better grades resultedin increased copper and gold production of 29% and 28% respectivelyfrom the levels achieved in the first nine months of 2011. Goldproduction for the third quarter was 13,869 ounces up slightly from13,703 ounces produced in the second quarter, setting another recordquarterly gold production since the restart of Mount Polleyoperations in 2005.
MOUNT POLLEY EXPLORATION
Surface diamond drilling continues at Mount Polley with twoexploration drill rigs onsite. The drill program is testing formineralization beneath and adjacent to the Springer pit, and at theQuarry zone north of the Wight pit. During the 2012 third quarter12,200 metres of diamond drilling were completed in 22 drill holes.The two surface drills are still working beneath the Cariboo pit,immediately adjacent to Springer, and at Quarry zone. Undergrounddrilling resumes at the Boundary zone in the first week of November,at which time one surface rig will be shut down.
HUCKLEBERRY MINE OPERATIONS
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PRODUCTIONNINE MONTHS ENDED SEPT 30
(stated 100% - Imperial's allocation= 50%)20122011
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Ore milled (tonnes)4,410,8004,480,300
Ore milled per calendar day (tonnes)16,09816,411
Grade (%) - copper0.2990.382
Recovery (%) - copper89.890.2
Copper (lbs)26,096,00034,044,000
Gold (oz)1,9462,758
Silver (oz)139,155173,127
Molybdenum (lbs)4,5566,929
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Copper grade and recovery were both lower in the first nine months of2012 compared to the same period in 2011. A significant portion ofthe mill feed this year is from low grade stockpiles. Throughput forthe period averaged 16,098 tonnes per day, virtually the same as for2011. With lower grade and recovery, copper production was just over26 million pounds, down about 23% from the same nine month period in2011.
Work on the construction of the new tailings facility was suspendedin October after a successful first year of construction. The starterdam at the new tailings storage facility was completed to anelevation of approximately 927 metres, exceeding the target elevationof 924 for the first year construction program by three metres. Over2.1 million cubic metres of material was placed in the starter dam tothe end of September 2012.
The financial results from Huckleberry continue to have a significantimpact on Imperial's results. Imperial's share of Huckleberry'sincome from mine operations was 4.1 million in the September 2012quarter compared to 3.9 million in the September 2011 quarter.Although Huckleberry had two shipments in each of the September 2012and 2011 quarters, Huckleberry's income from mine operationsincreased due to positive revenue revaluations in 2012 compared tolarge negative revenue revaluations in 2011.
HUCKLEBERRY EXPLORATION
Three main targets were the focus of the exploration drilling programat Huckleberry: MZ Deep, Old Nag Quarry and NW MZO. Review of theTitan-24 data collected in 2011 led to drilling two holes, totalling1,148 metres, designed to test a moderate chargeability/resistivityanomaly beneath the limits of known mineralization in the Main zonedeposit. Both holes returned significant mineralized intervals, shownon the table below, confirming the extension of the deposit to depthand to the east. These results may indicate the presence of acontinuous zone of copper mineralization at depth that connects theMain zone and East zone deposits. Additional drill holes are plannedto further assess the potential of this target.
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TotalIntervalIntervalIntervalCopper Molybdenum
lengthfromtolength
Drill Hole #(m)(m)(m)(m)%%
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MZDP12-6526.39273.41465.43192.020.3420.006
including303.89373.9970.100.5110.007
MZDP12-7621.18343.81514.50170.690.3180.004
including423.06490.1267.060.4210.003
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Eight holes totalling 2,053 metres drilled in late 2011, and afollow-up drilling program of eight holes totalling 2,206 metres in2012, defined the western extension of the Main zone deposit beneaththe Old Nag Quarry located directly adjacent to the planned MZO pit.The quarry was a source of non-acid generating rock early in the minelife. Results from this drilling indicated the presence of asignificant volume of low-grade (0.20-0.25% Cu) material nearsurface.
Five holes totalling 1,650 metres were drilled in late 2011 to thenorthwest of the MZO pit, where the Titan-24 survey had definedseveral targets of interest. These holes returned local intersectionsof ore-grade material, and three additional holes totalling 604metres were drilled in 2012 to determine if there was continuitybetween these zones and the mineralization in the active pit.Drilling in the area did not define any significant continuous zonesof mineralization, and no further exploration is planned for the NWMZO.
Follow-up exploration in 2012 will include, drilling one more hole tofurther test the area between the East and Main zones at depth,completing a further Titan geophysical survey to the south of theprevious survey, and additional drilling along the southern margin ofthe MZO pit.
RED CHRIS CONSTRUCTION UPDATE
Mass excavation is complete in the process plant but is ongoing inthe truck shop and reclaim tunnel areas. Completion is expected bythe end of October. Concrete aggregates have been produced from agravel source located within the tailings impoundment area (TIA) andare being hauled to the plant site area via the TIA access road. Thefirst foundation pour for the concentrate storage shed was onSeptember 24. Concrete pours are planned to mid-November 2012.Concrete placement will then be suspended until Spring 2013.
A Nordberg 54" x 80" gyratory crusher, purchased used, was completelydismantled and trucked from Sahuarita, Arizona to Mount Polley forrefurbishing. The right of way for conveyors, light vehicle road andheavy vehicle road has been cleared and grubbed for the first 1.4 kmbetween the coarse ore stockpile and the primary crusher. The mainaccess road has been completed to single lane access from 3.2 km to 8km at Coyote Creek.
Engineering is approximately 59% complete.
The work at Red Chris is being funded by cash flow from operationsand an expanded line of credit. Discussions with BC Hydro areunderway regarding service from the Bob Quinn substation at the endof the new Northwest Transmission Line to the Red Chris mine. Work onthe Northwest Transmission Line is underway and BC Hydro expects thefacilities to be in service by the end of May 2014.
RED CHRIS EXPLORATION UPDATE
Exploration results from all the Red Chris drilling are now availableon the Company's website. The most significant of the new drilling isRC12-580 which has extended the deep mineralization discovered belowthe Gully zone in late 2011. The mineralized intersection is 605.8metres grading 0.39% copper, 0.43 g/t gold and 2.00 g/t silver. Thedrill hole was collared approximately 200 metres grid north frompreviously reported hole RC11-477, which intersected 807.5 metresgrading 0.31% copper, 0.29 g/t gold and 1.61 g/t silver.
Two higher grade intervals contained within the mineralizedintersection in RC12-580 were 47.5 metres grading 1.00% copper, 1.06g/t gold and 3.87 g/t silver and 95.0 metres grading 0.77% copper,0.73 g/t gold and 2.69 g/t silver. These two intervals containbreccia fragments displaying alteration and mineralization verysimilar to the high grade feeder system observed in the deep portionsof the East zone. The presence of these breccia fragments support theexploration model that the Gully zone mineralization is related to aseparate feeder system to the one defined below the East zone.
Exploration drilling at Red Chris was suspended once constructionbegan in May 2012 and the project focus shifted to mine development.
STERLING MINE
Underground mining developed 948 feet of drift on the 3292, 3260, and3220 levels. Cross cuts from the main access drifts into and throughthe ore body were driven. From these cross cuts and from the mainaccess, longhole drilling and blasting will commence in the fourthquarter. Underground core drilling focused on delineating the extentsof the 144 zone ore body within the stoping area, and drilling intothe hanging wall for geo-technical assessment.
Installation of a refurbished main ventilation fan near the bottom ofthe ventilation raise was completed during the third quarter. Theventilation system was modified utilizing the new main fan to drawfresh air down the main haulage ramp and out the vent raise. The newsystem provides sufficient airflow to allow for the use of a largermore efficient haulage vehicle.
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NINE MONTHS ENDED
PRODUCTIONSEPT 30
2012
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Ore Stacked (tons)64,505
Grade (oz/t) - gold0.083
Gold (oz) - in-heap5,354
Gold (oz) - in-process & poured2,799
Gold shipped (oz)2,077
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Loading of the leach pad continued, and in the quarter an additional14,000 tons containing approximately 1,250 ounces were loaded ontothe leach pad. A total of 2,077 ounces of gold was poured and shippedto the refinery.
RUDDOCK CREEK
The 2012 exploration program commenced in early July and wascompleted the last week of October. The program included surfacediamond drilling on the V and Creek zones, underground diamonddrilling of the Lower E zone and an additional 69 metres ofunderground development of the Lower E zone for the collection of ametallurgical bulk sample. In total 18 holes were completed in the Vzone, 7 holes in the Creek zone and 26 holes from underground for atotal of 10,081 metres of surface drilling and 5,843 metres ofunderground drilling.
Mitsui Mining and Smelting Co. Ltd. and Itochu Corporation have anoption to earn a 50% interest in the Ruddock Creek Property. Mitsuiand Itochu spent 14 million by March 31, 2012 to earn a 35% workinginterest. They elected to spend a further 6 million by March 31,2013 to earn an additional 15% working interest, at which pointRuddock Creek Joint Venture will be owned 50% Imperial, 30% Mitsuiand 20% Itochu.
OUTLOOK
Production from Mount Polley and Imperial's 50% share of Huckleberryfor the nine months of 2012 totalled 37,438,357 pounds copper, 39,890ounces gold and 155,197 ounces silver, which is respectively 99%,111% and 129% of the planned production. We expect to be very closeto our production target of 50.5 million pounds of copper by yearend, and exceed our target of 48,000 ounces of gold, with MountPolley exceeding budget.
Construction at Red Chris is well underway. Mass excavation iscomplete in the process plant area, and is ongoing in the truck shopand reclaim tunnel areas. The access road from the plant area to thetailings impoundment area (TIA) is also complete, enabling haulage tothe process plant of concrete aggregates produced from a gravelsource located in the TIA. September 24 marked the first concretepour of the project, in the foundation of the concentrate storageshed. Red Chris is on schedule for plant start-up in 2014.
The first construction of the new tailing storage facility atHuckleberry is ahead of schedule and should be ready to receivetailings when required next summer.
Work at Red Chris is currently being financed through cash flow fromexisting operations and an existing 75 million credit facility fromthe Company's bankers. To provide Imperial with additional workingcapital, the Company's bankers have agreed to increase Imperial'scredit facility from 75 million to 150 million, and to extend thematurity date of the entire credit facility to September 30, 2013.The Company's forecast cash flow and the increased credit facilitywill support Red Chris construction until mid-2013 and will enablethe Company to substantially reduce the risk related to thedevelopment prior to completing additional financing, as more than50% of development costs are projected to be spent or committed bythat date. This will also enable the Company to finalize arrangementsfor power supply with BC Hydro prior to completing additionalfinancing.
DETAILED FINANCIAL INFORMATION IS PROVIDED IN THE COMPANY'SMANAGEMENT'S DISCUSSION & ANALYSIS CONTAINED IN THE THIRD QUARTERREPORT AVAILABLE ON WWW.SEDAR.COM AND WWW.IMPERIALMETALS.COM.
CAUTIONARY NOTE REGARDING "FORWARD-LOOKING INFORMATION":
THIS INFORMATION IS A REVIEW OF THE COMPANY'S OPERATIONS ANDFINANCIAL POSITION AS AT AND FOR THE PERIOD ENDED SEPTEMBER 30, 2012,AND PLANS FOR THE FUTURE BASED ON FACTS AND CIRCUMSTANCES AS OFNOVEMBER 5, 2012. EXCEPT FOR STATEMENTS OF HISTORICAL FACT RELATINGTO THE COMPANY, INCLUDING OUR 50% INTEREST IN HUCKLEBERRY, CERTAININFORMATION CONTAINED HEREIN CONSTITUTES FORWARD-LOOKING STATEMENTS.
WHEN WE DISCUSS MINE PLANS; COSTS AND TIMING OF CURRENT AND PROPOSEDEXPLORATION; DEVELOPMENT; PRODUCTION AND MARKETING; CAPITALEXPENDITURES; THE CONSTRUCTION OF THE NORTHWEST TRANSMISSION LINE;CASH FLOW; WORKING CAPITAL REQUIREMENTS; AND THE REQUIREMENT FORADDITIONAL CAPITAL; OPERATIONS; REVENUE; MARGINS AND EARNINGS; FUTUREPRICES OF COPPER AND GOLD; FUTURE FOREIGN CURRENCY EXCHANGE RATES;FUTURE ACCOUNTING CHANGES; FUTURE PRICES FOR MARKETABLE SECURITIES;FUTURE RESOLUTION OF CONTINGENT LIABILITIES; RECEIPT OF PERMITS; OROTHER THINGS THAT HAVE NOT YET HAPPENED IN THIS REVIEW WE ARE MAKINGSTATEMENTS CONSIDERED TO BE FORWARD-LOOKING INFORMATION ORFORWARD-LOOKING STATEMENTS UNDER CANADIAN AND UNITED STATESSECURITIES LAWS. WE REFER TO THEM IN THIS NEWS RELEASE ASFORWARD-LOOKING INFORMATION.
THE FORWARD-LOOKING INFORMATION IN THIS NEW RELEASE TYPICALLYINCLUDES WORDS AND PHRASES ABOUT THE FUTURE, SUCH AS: PLAN, EXPECT,FORECAST, INTEND, ANTICIPATE, ESTIMATE, BUDGET, SCHEDULED, BELIEVE,MAY, COULD, WOULD, MIGHT, WILL. WE CAN GIVE NO ASSURANCE THAT THEFORWARD-LOOKING INFORMATION WILL PROVE TO BE ACCURATE. IT IS BASED ONA NUMBER OF ASSUMPTIONS MANAGEMENT BELIEVES TO BE REASONABLE,INCLUDING BUT NOT LIMITED TO: THE CONTINUED OPERATION OF THECOMPANY'S MINING OPERATIONS, NO MATERIAL ADVERSE CHANGE IN THE MARKETPRICE OF COMMODITIES AND EXCHANGE RATES, THAT THE MINING OPERATIONSWILL OPERATE AND THE MINING PROJECTS WILL BE COMPLETED IN ACCORDANCEWITH THEIR ESTIMATES AND ACHIEVE STATED PRODUCTION OUTCOMES,VOLATILITY IN THE COMPANY'S SHARE PRICE AND SUCH OTHER ASSUMPTIONSAND FACTORS AS SET OUT HEREIN.
IT IS ALSO SUBJECT TO RISKS ASSOCIATED WITH OUR BUSINESS, INCLUDINGBUT NOT LIMITED TO: RISKS INHERENT IN THE MINING AND METALS BUSINESS;COMMODITY PRICE FLUCTUATIONS AND HEDGING; COMPETITION FOR MININGPROPERTIES; SALE OF PRODUCTS AND FUTURE MARKET ACCESS; MINERALRESERVES AND RECOVERY ESTIMATES; CURRENCY FLUCTUATIONS; INTEREST RATERISK; FINANCING RISK; ENVIRONMENTAL RISK; FOREIGN ACTIVITIES; LEGALPROCEEDINGS; AND OTHER RISKS THAT ARE SET OUT IN OUR ANNUALINFORMATION FORM AND BELOW.
IF OUR ASSUMPTIONS PROVE TO BE INCORRECT OR RISKS MATERIALIZE, OURACTUAL RESULTS AND EVENTS MAY VARY MATERIALLY FROM WHAT WE CURRENTLYEXPECT AS SET OUT IN THIS REVIEW. WE RECOMMEND YOU REVIEW THECOMPANY'S MANAGEMENT'S DISCUSSION & ANALYSIS IN THE QUARTERLYFINANCIAL REPORT FOR THE PERIOD ENDED JUNE 30, 2012 AND THE ANNUALREPORT FOR THE YEAR ENDED DECEMBER 31, 2011, WHICH INCLUDES ADISCUSSION OF MATERIAL RISKS THAT COULD CAUSE ACTUAL RESULTS TODIFFER MATERIALLY FROM OUR CURRENT EXPECTATIONS. FORWARD-LOOKINGINFORMATION IS DESIGNED TO HELP YOU UNDERSTAND MANAGEMENT'S CURRENTVIEWS OF OUR NEAR AND LONGER TERM PROSPECTS, AND IT MAY NOT BEAPPROPRIATE FOR OTHER PURPOSES. WE WILL NOT NECESSARILY UPDATE THISINFORMATION UNLESS WE ARE REQUIRED TO BY SECURITIES LAWS.
Contacts:
Imperial Metals Corporation
Brian Kynoch
President
604.669.8959
Imperial Metals Corporation
Andre Deepwell
Chief Financial Officer
604.488.2666
Imperial Metals Corporation
Sabine Goetz
Investor Relations
604.488.2657
info@imperialmetals.com
www.imperialmetals.com
SOURCE: Imperial Metals Corporation
mailto:info@imperialmetals.com
http://www.imperialmetals.com
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