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Imperial Reports First Quarter 2019 Financial Results

by pnationtalk on May 15, 201981 Views

Vancouver | May 14, 2019 | Imperial Metals Corporation (the “Company”) (TSX:III) reports financial results for the three ended March 31, 2019, 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. The reporting currency of the Company is the Canadian (“CDN”) Dollar.

QUARTER HIGHLIGHTS

FINANCIAL

On March 10, 2019, the Company entered into an agreement to sell a 70% interest in the Red Chris mine to Newcrest. In accordance with IFRS, the Company has classified Red Chris mine as a discontinued operation effective January 1, 2019 and asset held for sale as at March 31, 2019, and the prior year comparative quarter consolidated statement of income has been restated accordingly. Unless otherwise stated this MD&A will report the total of continuing and discontinued operations as one total for ease of comparison with the prior comparative period.

Total revenue decreased to $76.7 million in the March 2019 quarter compared to $117.9 million in the 2018 comparative quarter, a decrease of $41.2 million or 34.9%. Revenue from the Red Chris mine in the March 2019 quarter was $62.9 million compared to $81.9 million in the 2018 comparative quarter. This decrease was attributable to a lower quantity of copper concentrate sold along with lower copper prices and slightly higher gold prices partially offset by the positive revenue revaluation noted below. Revenue from the Mount Polley mine in the March 2019 quarter was $13.8 million compared to $36.0 million in the 2018 comparative quarter due to lower production which was partially offset by the positive revenue revaluation noted below.

In the March 2019 quarter, there were 2.6 concentrate shipments from the Red Chris mine (2018-4.0 concentrate shipments) and 0.3 concentrate shipments from the Mount Polley mine (2018-1.0 concentrate shipment). 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$2.82 in the March 2019 quarter compared to US$3.16 in the 2018 comparative quarter. The London Metals Exchange cash settlement gold price per troy ounce averaged US$1,304 in the March 2019 quarter compared to US$1,329 in the 2018 comparative quarter. The average CDN/US Dollar exchange rate was 1.329 in the March 2019 quarter, 5% higher than the exchange rate of 1.265 in the March 2018 quarter. In CDN Dollar terms the average copper price in the March 2019 quarter was CDN$3.75 per pound compared to CDN$4.00 per pound in the 2018 comparative quarter, and the average gold price in the March 2019 quarter was CDN$1,734 per ounce compared to CDN$1,681 per ounce in the 2018 comparative quarter.

Revenue in the March 2019 quarter increased by $2.5 million due to a positive revenue revaluation as compared to a $5.6 million negative revenue revaluation in the 2018 comparative quarter. Revenue revaluations are the result of the copper 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 copper price at the last balance sheet date and finalization of contained metal as a result of final assays.

Net loss from continuing operations for the March 2019 quarter was $2.3 million ($0.02 per share) compared to net loss of $31.1 million ($0.27 per share) in the 2018 comparative quarter. The decrease in net loss of $28.8 million was primarily due to the following factors:

Loss from mine operations went from income of $0.2 million in March 2018 to a loss of $2.5 million in March 2019, an increase in net loss of $2.3 million.

Interest expense went from $17.8 million in March 2018 to $18.4 million in March 2019, an increase in net loss of $0.6 million.

Foreign exchange gains/losses on current and non-current debt went from a loss of $11.3 million in March 2018 to a gain of $9.1 million in March 2019, a decrease in net loss of $20.4 million.

Tax recovery went from $1.2 million in March 2018 to $14.1 million in March 2019, a decrease in net loss of $12.9 million.

The March 2019 quarter net income included a foreign exchange gain from continuing operations related to changes in CDN/US Dollar exchange rate of $8.9 million compared to a foreign exchange loss of $11.4 million in the 2018 comparative quarter. The $8.9 million foreign exchange gain is comprised of a $9.1 million gain on the senior notes and a $0.2 million loss on operational items. The average CDN/US Dollar exchange rate in the March 2019 quarter was 1.329 compared to an average of 1.265 in the 2018 comparative quarter.

Cash flow from continuing operations was $nil in the March 2019 quarter compared to cash flow of $4.7 million in the 2018 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 attributed to continuing operations was $0.7 million in the March 2019 quarter, down from $4.2 million in the 2018 comparative quarter. The majority of the March 2019 expenditures were related to curtailment expenditures for the Mount Polley shutdown.

At March 31, 2019, the Company has not hedged any copper, gold or CDN/US Dollar exchange. Quarterly revenues will fluctuate depending on copper and gold prices, the CDN/US Dollar exchange rate, and the timing of concentrate sales, which is dependent on concentrate production and the availability and scheduling of transportation.

OPERATIONS

Red Chris Mine (1)

Red Chris first quarter metal production was 13.10 million pounds copper and 8,317 ounces gold. Mill throughput averaged 26,315 tonnes per calendar day during the first quarter, down from the 28,783 achieved in the same quarter last year. Metal recoveries were 73.84% copper and 48.06% gold, compared to 77.22% copper and 47.37% gold in the comparable 2018 quarter.

The reduced throughput and recovery in the quarter were the result of challenges with water reclaim quantity and quality. A large portion of the available water in the Tailings Impoundment Area became unavailable due to freezing, owing to extreme cold temperatures. Operations were sustained by utilizing the available free water to continue operations at a reduced rate. The period of reduced operations extended from about February 9 to March 28, with warming temperatures and adjusted tailings deposition management providing sufficient water for operations to return to normal throughput rates.

Three Months Ended March 31

2019 2018
Ore milled – tonnes 2,368,337 2,590,490
Ore milled per calendar day – tonnes 26,315 28,783
Grade % – copper 0.340 0.447
Grade g/t – gold 0.227 0.310
Recovery % – copper 73.84 77.22
Recovery % – gold 48.06 47.37
Copper – 000’s pounds 13,100 19,725
Gold – ounces 8,317 12,215
Silver – ounces 22,627 34,881

Exploration, development and capital expenditures were $9.3 million in the March 2019 quarter compared to $4.9 million in the comparative 2018 quarter.

  • The Red Chris Mine was classified as a discontinued operation effective January 1, 2019 and the comparative period has been restated accordingly.

Mount Polley Mine

Mount Polley first quarter metal production was 2.31 million pounds copper and 6,147 ounces gold. Mill throughput averaged 13,653 tonnes per calendar day during the first quarter. Metal recoveries were 38.37% copper and 57.47% gold, compared to 75.67% copper and 73.75% gold in the comparable 2018 quarter. Copper oxide percentages in the 2019 first quarter averaged 40.9%, up substantially from the average of 13.4% in the comparable 2018 quarter. Copper oxide content negatively impacted metal recoveries as copper oxide minerals do not respond well to flotation recovery methods.

Extremely cold winter temperatures also affected the Mount Polley mill throughput during the first quarter. Freezing ore in chutes and stockpiles limited the milling rates from the latter part of January into late February. During February 2019, only 9,764 dry metric tonnes were treated per calendar day milled, versus 17,531 dry metric tonnes treated during February 2018. Warmer temperatures in March improved mill throughput, which averaged over 16,000 tonnes per day in March and about 18,000 tonnes per day for the first 20 days of April. Milling of low grade stockpiles are targeted to continue to the end of May 2019, at which time the mine will be placed on care and maintenance until there is a sustained improvement in the price of copper.

Read More: https://www.imperialmetals.com/assets/docs/2019-05-14_NR_III_jU2598Ix2.pdf

NT4

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