VANCOUVER, British Columbia, Mar 24, 2020 (GLOBE NEWSWIRE via COMTEX) -- Imperial Metals Corporation (the "Company") /zigman2/quotes/201189899/delayed CA:III +1.16% reports financial results for its fiscal year ended December 31, 2019.
Select Annual Financial Information Years Ended December 31 expressed in thousands, except share and per share amounts 2019 2018 2017 Continuing Operations: Total revenues $ 71,823 $ 104,437 $ 164,021 Net income (loss) $ (40,266 ) $ (109,464 ) $ 42,891 Net income (loss) per share $ (0.32 ) $ (0.92 ) $ 0.45 Diluted income (loss) per share $ (0.32 ) $ (0.92 ) $ 0.45 Adjusted net loss $ (49,269 ) $ (68,622 ) $ (96,213 ) Adjusted net loss per share $ (0.39 ) $ (0.58 ) $ (1.02 ) Adjusted EBITDA $ (4,490 ) $ (3,334 ) $ (2,944 ) Cash flow $ (3,611 ) $ 106,468 $ 707 Cash flow per share $ (0.03 ) $ 0.90 $ 0.01 Discontinued Operations: Total revenues $ 164,993 $ 255,736 $ 289,092 Net income (loss) $ 362,002 $ (16,131 ) $ 34,222 Net income (loss) per share $ 2.85 $ (0.14 ) $ 0.36 Diluted income (loss) per share $ 2.85 $ (0.14 ) $ 0.36 Adjusted net income (loss) $ 40,284 $ (16,141 ) $ 33,588 Adjusted net income (loss) per share $ 0.32 $ (0.13 ) $ 0.66 Adjusted EBITDA $ 142,858 $ 36,602 $ 91,401 Cash flow $ 23,822 $ 36,981 $ 87,674 Cash flow per share $ 0.19 $ 0.31 $ 0.93 Working capital (deficiency) $ 55,252 $ (789,470 ) $ (238,269 ) Total assets $ 1,058,502 $ 1,573,903 $ 1,723,768 Total debt (including current portion) $ 3,816 $ 871,268 $ 852,378 Refer to table under heading Non-IFRS Financial Measures for further details. Cash flow is defined as the cash flow from operations before the net change in non-cash working capital balances, income and mining taxes, and interest paid. Cash flow per share is defined as Cash flow divided by the weighted average number of common shares outstanding during the year.
Select Items Affecting Net Income (Loss) (presented on an after-tax basis)
Years Ended December 31 expressed in thousands 2019 2018 Net loss before undernoted items from continuing operations $ (14,284 ) $ (16,593 ) Interest expense (46,273 ) (52,183 ) Recovery of BC Mineral taxes including interest 11,288 - Gain on sale of Sterling - 296 Impairment of mineral properties - (79,719 ) Foreign exchange gain (loss) on debt 10,292 (36,214 ) Loss on early repayment of debt (1,289 ) - Settlement and insurance recoveries - 74,949 Net Loss from continuing operations $ (40,266 ) $ (109,464 )
On March 10, 2019, the Company entered into an agreement to sell a 70% interest in the Red Chris mine to Newcrest. The Company completed the sale to Newcrest on August 15, 2019 for a final purchase price of US$804.4 million subject to debt and working capital adjustments. In accordance with IFRS, the Company has classified Red Chris mine as a discontinued operation effective January 1, 2019 up to closing of the transaction with Newcrest on August 14, 2019, and the prior year comparative annual consolidated statement of income (loss) has been restated accordingly. Effective August 15, 2019 onwards, the results from the Red Chris Mine are presented on a proportional basis relative to Imperial's 30% beneficial interest in the joint venture. Unless otherwise stated this MD&A will report the total of continuing and discontinued operations as one total (e.g. net income) for ease of comparison with the prior comparative period.
Revenues decreased to $236.8 million in 2019 compared to $360.2 million in 2018, a decrease of $123.4 million or 34%.
Revenue from the Red Chris mine in 2019 was $200.9 million compared to $255.7 million in 2018. This decrease was attributable to the Company's ownership decreasing to 30% from 100% on August 15, 2019 compared to its 100% share in 2018. There were 13.2 concentrate shipments in 2019 from the Red Chris mine (2018-12.0 concentrate shipments).
Revenue from the Mount Polley mine in 2019 was $34.9 million compared to $104.4 million in 2018. The decrease was attributable to the mine being on care and maintenance from May 2019 onwards. Mount Polley mine had only 1.0 concentrate shipment in 2019 (2018-3.0 concentrate shipments).
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 metal prices will settle at a future date.
The London Metals Exchange cash settlement copper price per pound averaged US$2.72 in 2019 compared to US$2.96 in 2018. The London Metals Exchange cash settlement gold price per troy ounce averaged US$1,392 in 2019 compared to US$1,269 in 2018. The average US$ strengthened by 2.0% compared to the CDN$ in 2019 over 2018. In 2019 the average copper price was CDN$3.61 per pound and the average gold price was CDN$1,847 per ounce compared to 2018 when the average copper price was CDN$3.84 per pound and the average gold price was CDN$1,645 per ounce.
Revenue in 2019 decreased by a $3.3 million negative revenue revaluation compared to a negative revenue revaluation of $19.0 million in 2018. Revenue revaluations are the result of the metal prices 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 metal prices at the last balance sheet date and finalization of contained metals as a result of final assays.
Net loss from continuing operations in 2019 was $40.3 million ($0.32 per share) compared to net loss of $109.5 million ($0.92 per share) in 2018. The majority of decrease in net loss of $69.2 million was primarily due to the following factors:
The average US$/CDN$ exchange rate in the 2019 was 1.327 compared to an average of 1.296 in 2018.
Cash flow from continuing operations was negative $3.6 million in 2019 compared to positive cash flow of $106.5 million in 2018. 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 were $20.0 million in 2019, up from $14.5 million in 2018. The increase was due to the inclusion of Red Chris expenditures from August 15, 2019 onwards representing Imperial's 30% proportionate share compared to the prior year where these expenditures were classified as discontinued operations.
At December 31, 2019 the Company had $90.0 million in cash compared to $18.6 million at December 31, 2018.
NON-IFRS FINANCIAL MEASURES
The Company reports four non-IFRS financial measures: adjusted net income, adjusted EBITDA, cash flow and cash cost per pound of copper produced which are described in detail below. 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.
Adjusted net income, adjusted EBITDA, and cash flow are not generally accepted earnings measures and should not be considered as an alternative to net income (loss) and cash flows as determined in accordance with IFRS. As there is no standardized method of calculating these measures, these measures may not be directly comparable to similarly titled measures used by other companies.
Adjusted Net Loss and Adjusted Net Loss per Share
Adjusted net loss from continuing operations in 2019 was $49.3 million ($0.39 per share) compared to an adjusted net loss of $68.6 million ($0.58 per share) in 2018. Adjusted net income or loss shows the financial results excluding the effect of items not settling in the current period and non-recurring items. Adjusted net income or loss is calculated by removing the gains or loss, resulting from acquisition and disposal of property, mark to market revaluation of derivative instruments not related to the current period, net of tax, unrealized foreign exchange gains or losses on non-current debt, net of tax.
Adjusted EBITDA from continuing operations in 2019 was a loss of $4.5 million compared to a loss of $3.3 million in 2018. We define Adjusted EBITDA as net income (loss) before interest expense, taxes, depletion and depreciation, and as adjusted for certain other items.
Cash Flow and Cash Flow Per Share
Cash flow from continuing operations in 2019 was negative $3.6 million compared to positive $106.5 million in 2018. Cash flow per share was $0.00 in 2019 compared to $0.90 in 2018.
Cash flow and cash flow per share are measures used by the Company to evaluate its performance however they are not terms recognized under IFRS. Cash flow is defined as cash flow from operations before the net change in non-cash working capital balances, income and mining taxes, and interest paid and cash flow per share is the same measure divided by the weighted average number of common shares outstanding during the year.
Cash Cost Per Pound of Copper Produced
The Company is primarily a copper producer and therefore calculates this non-IFRS financial measure individually for its three copper mines, Red Chris (30% share effective August 15, 2019), Mount Polley and Huckleberry, and on a composite basis for these mines.
Variations from period to period in the cash cost per pound of copper produced are the result of many factors including: grade, metal recoveries, amount of stripping charged to operations, mine and mill operating conditions, labour and other cost inputs, transportation and warehousing costs, treatment and refining costs, the amount of by-product and other revenues, the US$ to CDN$ exchange rate and the amount of copper produced.
Idle mine costs during the periods when the Huckleberry and Mount Polley mines were not in operation have been excluded from the cash cost per pound of copper produced.
Calculation of Cash Cost Per Pound of Copper Produced expressed in thousands, except cash cost per pound of copper produced Year Ended December 31, 2019 *Red **Mount Financial Chris Polley Statements Cash cost of copper produced in US$ $ 123,368 $ 12,907 $ 136,275 Copper produced - pounds 50,334 3,825 54,159 Cash cost per lb copper produced in US$ $ 2.45 $ 3.37 $ 2.52 Year Ended December 31, 2018 *Red **Mount Financial Chris Polley Statements Cash cost of copper produced in US$ $ 141,223 $ 29,032 $ 170,255 Copper produced - pounds 60,349 14,974 75,323 Cash cost per lb copper produced in US$ $ 2.34 $ 1.94 $ 2.26
DEVELOPMENTS DURING 2019
Red Chris Mine
On August 15, 2019, Imperial completed the sale of a 70% interest in the Red Chris copper and gold mine to Newcrest. The Company and Newcrest formed a joint venture for the operation of Red Chris with Newcrest acting as operator. The Company retains a 30% joint venture interest in the Red Chris mine.
During 2019, a production plan was developed following an in-depth review of historic data, with key assumptions being identified and validated against past performance. The plan reflects a lower mining rate as compared to 2018 (105,000 tonnes per day vs. 130,000 tonnes per day). The metal production for 2019 was estimated by a similar application of historic data for incorporation of mill availability, throughput (tonnes per operating hour) and recovery.
Mine teams followed the plan with the intent of targeting higher grades using an internal Geo Met process which focused on daily reviews by the onsite teams relating to geological and metallurgical performance. The maintenance teams focused on both scheduled and unscheduled downtimes in the plant which included formal measures as part of the business KPI system. These initiatives were successful, with the mill achieving 90% availability.
In the mill, 'donut' launders were installed on the first two rougher cells during December 2019, and four more are expected to be installed during the 2020 first quarter. The new launders are expected to increase the mass pull in the rougher circuit and lead to increased recovery of copper and gold.
Red Chris mine 2019 metals production was 71.9 million pounds copper, 36,471 ounces gold, and 133,879 ounces silver, of which Imperial's portion of the production, representing 100% for the period January 1 through August 14, 2019 and 30% of production for the period August 15 through December 31, 2019 was 50.3 million pounds copper, 25,177 ounces gold, and 90,577 ounces silver.
Red Chris metals production guidance (100%), provided by Newcrest in August 2019 for the period August 15, 2019 to June 30, 2020 (to conform to their annual year end of June 30, 2020), is in the range of 63-79 million pounds copper and 36,000-50,000 ounces gold.
Annual Production for the Year Ended December 31 2019 2018 Ore milled - tonnes 10,430,762 10,668,313 Ore milled per calendar day - tonnes 28,577 29,228 Grade % - copper 0.412 0.339 Grade g/t - gold 0.244 0.259 Recovery % - copper 76.0 75.6 Recovery % - gold 44.5 47.1 Copper - 000's pounds 71,880 60,349 Gold - ounces 36,471 41,935 Silver - ounces 133,879 103,634
Exploration in 2019 included over 17,500 metres of drilling completed in the Gully/Far West area, in search for additional zones of higher grade mineralization within the Red Chris porphyry corridor, and in the East zone, designed to obtain geological, geotechnical and metallurgical data to support future studies for underground block cave mining. Initial results were released on January 29, 2020. Drilling in the Gully zone discovered additional mineralization, including 304 metres grading 0.2% copper and 0.44 g/t gold in hole RC-19-603.
Exploration, development and capital expenditures were $42.5 million in 2019 compared to $62.9 million in 2018 (100% to August 15, 2019, and 30% thereafter).
Mount Polley Mine
Mount Polley mine ceased operations May 26, 2019, and remains on care and maintenance. Metal production for the period January 1 to May 26, 2019 was 3.8 million pounds copper, 10,619 ounces gold, and 11,119 ounces silver.