Copper Mountain Mining Corporation T.CUM

Prepare for a mediocre Q2

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Q1 was excellent, but management has made it clear that Q2 will be weak:

Gil Clausen, Copper Mountain's President and CEO. "Production was higher in the first quarter as we mined mostly from Phase 3, which has higher grade ore. As we move to increase the ratio of ore production from Phase 2 of the main pit, we expect to see grades moderate somewhat. Phase 2 of the main pit has lower mining costs than Phase 3 as we are mining upper benches of ore that are closer to the primary crusher and waste dumps. As a result of our record first quarter and the expected continued strong production throughout the year, we expect production to be in the upper half of our annual production range of 85 to 95 million pounds of copper."

If production for the year is predicted to be 92.5 M pounds, and Q1 saw 25.5 M pounds, the remaining 3 quarters will average 22.3 M pounds, a 13% reduction.  In addition, Ball Mill 3 is expected to be on line in Q4, so it would be reasonable to expect at least 25M pounds in Q4.  That would leave 21 M pounds for Q2 and Q3, an 18% drop from Q1.

The good news is that the price of copper is cooperating, and a higher price will make up for much of the reduced production.  Also, even with a small (and temporary) reduction in profits, the stock is still an amazing value.  When you account for the fact that production will probably increase by 2.5X to 3X in the next 5 years, the stock is still an absolute bargain.