Imperial Metals Corp., 2013 Earnings Call, Apr 01, 2014
Mar 31 14
Imperial Metals Corp., 2013 Earnings Call, Apr 01, 2014
Imperial Metals Corporation Announces Earnings and Production Results for the Fourth Quarter and Full Year Ended December 31, 2013; Provides Financial and Production Guidance for 2014
Mar 31 14
Imperial Metals Corporation announced earnings results for the fourth quarter and full year ended December 31, 2013. Net income for the year ended December 31, 2013 was $41.0 million or $0.54 per diluted share compared to net income of $32.6 million or $0.43 per diluted share in 2012. In addition to variances in revenues and income from mine operations, variations in net income period over period are predominately attributable to movements in foreign exchange and realized and unrealized gains and losses on derivative instruments and taxes. In 2013 net income was negatively impacted by foreign exchange losses of $2.5 million compared to foreign exchange losses of $0.5 million in 2012 primarily on foreign exchange movements on the increased US Dollar debt being carried by the Company. Revenues were $187.8 million in 2013 compared to $199.4 million in 2012. Revenues are impacted by the timing and quantity of concentrate shipments, metal prices and exchange rate, and period end revaluations of revenue attributed to concentrate shipments where copper price will settle at a future date. The decrease in revenue in 2013 over 2012 is due to lower copper and gold prices partially offset by a weaker Canadian dollar and a larger volume of concentrate shipped for the year. There were eight concentrate shipments in 2013 compared to seven shipments in 2012. The increase in shipment volumes was more than offset by lower copper and gold prices in 2013 compared to 2012. Income from mine operations increased to $64.3 million from $56.9 million in 2012 as result improved contribution margins from mine operations. Cash flow increased to $78.2 million in 2013 from $66.6 million in 2012. Capital expenditures of $397.2 million in 2013, inclusive of equipment financed by long term debt and capitalized interest, were up from $147.9 million in 2012. The expenditures in 2013 were financed by cash flow from the Mount Polley mine, short term and non-current debt and $38.9 million in equipment financing. Adjusted net income in 2013 was $40.1 million or $0.54 per share compared to $36.8 million or $0.50 per share in 2012. Adjusted EBITDA in 2013 was $86.6 million compared to $72.6 million in 2012.
Mineral sales revenues in the fourth quarter of 2013 were $44.0 million, $14.6 million lower than in the same quarter of 2012. There were a total of two shipments in each of the fourth quarters of 2013 and 2012 from Mount Polley. Sales revenue is recorded when title for concentrate is transferred on ship loading. Variations in quarterly revenue attributed to the timing of concentrate shipments can be expected in the normal course of business. The decrease in revenue in the 2013 quarter is largely due to lower copper and gold prices. The company recorded net income of $8.1 million or $0.11 per share in the fourth quarter of 2013 compared to net income of $11.7 million or $0.16 per share in the prior year quarter. Expenditures for exploration and ongoing capital projects at Mount Polley, Red Chris and Sterling totaled $117.4 million during the three months ended December 31, 2013 compared to $52.2 million in the 2012 comparative quarter. The increase of $65.2 million in 2013 was primarily due to higher development expenditures at Red Chris.
At Mount Polley, 2013 production totaled 38.5 million pounds copper and 45,823 ounces gold, compared to the 33.8 million pounds copper and 52,236 ounces gold produced in 2012. Copper production was up on higher grades and recovery, while gold production was lower with lower gold grades being treated. The annual average mill throughput was 21,799 tonnes per day down slightly from the record of 22,191 tonnes per day set in 2012. Mining at Mount Polley continues to be focused on the lower benches of the phase 3 Springer pit, which has lower levels of oxidation and as a result, copper and gold recovery were both higher in 2013 than in 2012. Huckleberry Mine: Increase in copper grade and recovery in 2013 resulted in 41.2 million pounds copper produced, up 17% from 35.1 million pounds in 2012.
Base and precious metals production allocable to Imperial in 2014 from the Mount Polley, Huckleberry and Sterling mines is anticipated to be 65.0 million pounds copper, 56,700 ounces gold and 220,000 ounces silver. The copper production estimate will be impacted by the bull gear failure at Huckleberry. Huckleberry production originally estimated at 42.0 million pounds copper will likely be lower. Cash flow protection for the balance of 2014 is supported by derivative instruments that will see the Company receive certain minimum prices for copper and gold as disclosed under the heading Derivative Instruments. However, the quarterly revenues will fluctuate depending on copper and gold prices, the CDN Dollar/US Dollar exchange rate, and the timing of concentrate sales which is dependent on concentrate production and the availability and scheduling of transportation. Exploration in 2014 will be limited in scope, and will be conducted at its existing mining operations: Mount Polley, Huckleberry and Sterling. Mount Polley will continue to focus on the excavation of a test stope in the Boundary zone. Forecast production for 2014 from Sterling is 8,000 ounces gold. Huckleberry's 2014 forecast production was to be 42.0 million pounds copper and 200,000 ounces silver, however with the failure of the SAG mill bull gear on February 26, 2014 this production level will likely not be met. Crews have been working diligently to fully assess and repair the damage caused by this failure. In early April, Huckleberry plans to resume normal operations with the SAG mill rotating in the opposite direction. Forecast production for 2014 from Mount Polley is 44.0 million pounds copper, 47,000 ounces gold and 120,000 ounces silver. Huckleberry's 2014 forecast production was to be 42.0 million pounds copper and 200,000 ounces silver, however with the failure of the SAG mill bull gear on February 26, 2014 this production level will likely not be met. Huckleberry's income from mine operations was $31.2 million in 2013 compared to $24.8 million in 2012. Forecast production for 2014 from Sterling is 8,000 ounces gold.
Imperial Metals Corporation Announces Closing of Previously Announced Financings
Mar 12 14
Imperial Metals Corporation announced it has closed its previously announced offering of USD 325 million 7% Senior Notes. The notes are unsecured and will mature on March 15, 2019. Interest on the notes will accrue and be payable semi-annually on each March 15 and September 15, commencing September 15, 2014. Concurrently with the closing of the notes offering, the company entered into a five year senior secured credit facility with a syndicate of lenders providing for a USD 200 million revolving credit facility consisting of two tranches: a USD 50 million revolving working capital tranche for general corporate purposes and a USD 150 million revolving construction tranche to fund Red Chris project costs. The company has used a portion of the net proceeds of the notes offering and borrowings under the senior credit facility to repay the outstanding amounts under its USD 250 million unsecured line of credit with Edco Capital Corporation and its revolving demand loan agreement with a commercial lender. The company intends to use the balance of such proceeds and borrowings to fund capital expenditures related to the Red Chris project and for general corporate purposes.