Q1 Report Out https://stockhouse.com/news/press-releases/2022/04/26/copper-mountain-mining-announces-q1-2022-financial-results
VANCOUVER, BC, April 26, 2022 /PRNewswire/ - Copper Mountain Mining Corporation (TSX: CMMC) (ASX: C6C) (the "Company" or "Copper Mountain") announces first quarter 2022 financial and operating results. All currency is in Canadian dollars, unless otherwise stated. All results are reported on a 100% basis. The Company's Financial Statements and Management's Discussion & Analysis ("MD&A") are available at www.CuMtn.com and www.sedar.com.
Gil Clausen, Copper Mountain's President and CEO, stated, "We managed through a very difficult first quarter, which was largely due to temporary impacts to production and costs. Lower production was a result of operating at reduced mill throughput and lower grade, as we continued to run the secondary crusher at lower power draw due to the damaged main shaft, resulting in low and very coarse feed to the mill. This issue is now resolved. We installed a new main shaft in early April and the secondary crusher is back at full capacity. A spare shaft was also purchased for delivery in August. With the newly commissioned third ball mill operating, and the secondary crusher back on spec, we are ramping up the milling circuit to full capacity of 45,000 tonnes per day and expect to be at this level consistently through the balance of 2022. Higher grade ore from Phase 4 of the Copper Mountain Main Pit is planned for the second half of 2022 with the newly developed North Pit providing the bulk of the feed through Q2. The first quarter was an aberration due to a confluence of adverse events, which are now behind us. We expect the second quarter to improve from the first quarter and the second half to be considerably stronger than the first half of the year. However, we are increasing our all-in cost guidance for 2022 to US$2.25 to US$2.75 per pound of copper to reflect Q1 2022 results and the inflationary pressures being experienced globally."
"We also had many positive achievements in the quarter, with large strides in our sustainability efforts" added Mr. Clausen. "The Company exceeded our 2021 sustainability targets of achieving at least an "A" or "Yes" rating on each of the Mining Association of Canada's Towards Sustainable Mining protocols. The Trolley Assist project, which aims at reducing carbon emissions at the Copper Mountain Mine by at least 30%, was successfully commissioned, and we wrapped-up our extensive exploration program at the Copper Mountain Mine. Work is now underway on updating the mineral reserve and mineral resource estimate with a new life of mine plan, which will include an expansion study. All of these are progressing on schedule for mid-2022."
SUMMARY
- Production in Q1 2022 was 15.6 million pounds of copper equivalent (13.2 million pounds of copper, 5,135 ounces of gold, and 55,993 ounces of silver), 48% lower than Q1 2021, which was a record production quarter, primarily driven by lower mill head grade and lower throughput resulting from the damaged secondary crusher.
- The secondary crusher's new main shaft was installed in early April and the mill is ramping up to full capacity.
- Revenue for Q1 2022 was $93.9 million from the sale of 13.5 million pounds of copper, 5,076 ounces of gold, and 60,038 ounces of silver.
- C1 cash cost (1) per pound of copper produced in Q1 2022 was US$3.58, higher than Q1 2021 of US$1.15, primarily due to lower copper production, temporary contractor maintenance expenses, temporary contract crushing expenditures, and inflationary pressures on costs, particularly diesel.
- All-in sustaining cost ("AISC") (1) per pound of copper of US$4.45 and all-in cost ("AIC") (1) per pound of copper of US$5.08 was significantly higher compared to Q1 2021 largely driven by higher C1 cash cost, the lease expense and capitalization of assembly costs for seven new Trolley Assist haul trucks, the acquisition cost of new "MineSense" shovel grade control systems and new haul road construction costs that will greatly improve truck cycle times starting in Q2 2022.
- Net loss for Q1 2022 was $4.2 million, or ($0.03) on a per-share basis.
- Cash flow from operations for Q1 2022 was $33.3 million, or $0.16 on a per-share basis(1).
- Cash, cash equivalents and restricted cash at the end of March 31, 2022 was $159.2 million.
- Exceeded 2021 sustainability targets, achieving at least an "A" or "Yes" rating on each of the Mining Association of Canada's Towards Sustainable Mining protocols.
- Successfully commissioned the Trolley Assist project, which targets reduction of carbon emissions at the Copper Mountain Mine by at least 30%.
- Positive drilling results continued during the quarter at New Ingerbelle, extending mineralization to the west, with the Company completing the balance of the 2021 drill program in the quarter.
- Entered into zero-cost collar options for 3.3 million pounds of copper per month through 2022 with a floor price of US$4.00 per pound and an average ceiling price of US$4.91 per pound.
| (1) | The Company reports the non-GAAP financial measures of C1 cash costs, AISC and AIC per pound of copper produced and cash flow from operations per share to manage and evaluate its operating performance. See "Cautionary Note Regarding Non-GAAP Performance Measures" in this press release. |
SUMMARY OF OPERATING RESULTS
| Copper Mountain Mine (100% Basis) | Q1 2022 | Q1 2021 |
| Mine | | |
| Total tonnes mined (000s) | 12,230 | 15,372 |
| Ore tonnes mined (000s) | 2,888 | 3,428 |
| Waste tonnes (000s) | 9,342 | 11,944 |
| Stripping ratio | 3.23 | 3.48 |
| | | |
| Mill | | |
| Tonnes milled (000s) | 2,968 | 3,430 |
| Feed Grade (Cu%) | 0.25 | 0.42 |
| Recovery (%) | 82.0 | 80.2 |
| Operating time (%) | 86.3 | 93.9 |
| Tonnes milled (TPD) | 32,978 | 38,111 |
| | | |
| Production | | |
| Copper (000s lb) | 13,224 | 25,526 |
| Gold (oz) | 5,135 | 8,187 |
| Silver (oz) | 55,993 | 160,484 |
| | | |
| Sales | | |
| Copper (000s lb) | 13,487 | 27,501 |
| Gold (oz) | 5,076 | 8,553 |
| Silver (oz) | 60,038 | 161,657 |
| | | |
| C1 cash cost per pound of copper produced (US$)(1) | 3.58 | 1.15 |
| AISC per pound of copper produced (US$)(1) | 4.45 | 1.46 |
| AIC per pound of copper produced (US$)(1) | 5.08 | 1.71 |
| | | |
| Average realized copper price (US$/lb) | 4.54 | 3.90 |
| (1) | The Company reports the non-GAAP financial measures of C1 cash costs, AISC and AIC per pound of copper produced to manage and evaluate its operating performance. For further information, see "Cautionary Note Regarding Non-GAAP Performance Measures" in this press release. |
Production
The Copper Mountain Mine produced 13.2 million pounds of copper, 5,135 ounces of gold, and 55,993 ounces of silver in Q1 2022, as compared to Q1 2021, which was a record production quarter, of 25.5 million pounds of copper, 8,187 ounces of gold, and 160,484 ounces of silver. Production was lower during the quarter due to lower grades and reduced mill throughput as the Company continued to run the secondary crusher at reduced rates due to the damaged main shaft which occurred late in 2021. The Company has determined the root cause of the damage and has since improved the systems to prevent a recurrence. The main shaft was temporarily weld repaired in December 2021, but the temporary nature of the fix required the Company to reduce crushing power to sustain operations, thereby increasing the crushed product size of the ore feed going to the SAG mill. The coarser ore feed resulted in low SAG throughput. A new main shaft was installed in the first week of April 2022 at a cost of approximately $0.8 million and throughput rates have since returned to normal operating levels. With the recently commissioned third ball mill, the mill will be ramping up towards the full mill capacity of 45,000 tonnes per day this month, which will be a key driver to increased production for the remainder of the year.
The mill processed a total of 3.0 million tonnes of ore during the quarter as compared to 3.4 million tonnes in Q1 2021. The average mill feed grade was 0.25% Cu during Q1 2022, as compared to average feed grade of 0.42% Cu in Q1 2021. This was due to ore being mined predominantly from the lower grade Phase 2 area for most of the quarter. The Company plans on mining from the higher-grade Phase 4 area of the Main Pit and the North Pit in the second half of 2022, further contributing to higher production levels in the second half of the year.
Copper recovery was 82.0% in Q1 2022 as compared to 80.2% in Q1 2021. Mill availability averaged 86.3% for Q1 2022 as compared to 93.9% in Q1 2021. Mill availability was lower in Q1 2022 principally due to the replacement of the SAG mill feed conveyor belt during the quarter and additional mill downtime related to the damaged secondary crusher. The SAG mill feed conveyor belt was fully replaced for the first time since the start of operations.
The Company continues to advance the plant improvement and optimization projects currently underway at the mine. Both the installation of additional cleaner circuit capacity to support maximizing recovery on slower kinetic ore types and the installation of additional filtration capacity are expected to be completed during the first half of 2022. The expansion to the rougher flotation circuit is planned to be completed in Q3 2022. With the completion of these projects, the replacement of the new main shaft for the secondary crusher, which is now complete, and as Copper Mountain begins to mine higher grade ore from the Phase 4 area, production is expected to be considerably higher in the second half of 2022.
Costs
C1 cash cost per pound of copper produced, net of precious metal credits, for Q1 2022 was US$3.58, as compared to US$1.15 in Q1 2021. The variance in C1 cash costs for Q1 2022, as compared to Q1 2021, was due to several items:
- Lower copper production of 48% due to lower mill feed grade and reduced mill throughput.
- Temporary costs incurred in the quarter for mobile equipment repairs and maintenance, portable crushing equipment to supplement the secondary crusher and increased maintenance contractor support required to assist with managing COVID-19 related workforce absences and major conveyor belt rip repairs due to the significant cold weather that occurred in late 2021 and early 2022. These additional costs are not expected to recur through the remainder of 2022.
- To a lesser extent, costs increased due to inflationary pressures on diesel, steel, and mill consumable costs with price increases of 63%, 19%, and 10%, respectively.
- Lower precious metal credits resulting from lower gold and silver production due to lower grades and reduced mill throughput.
With production levels expected to increase throughout the remainder of the year and an easing of the temporary operating costs from Q1 2022, the Company anticipates C1 cash cost per pound of copper to markedly improve for the remainder of 2022.
AISC per pound of copper produced for Q1 2022 was US$4.45, as compared to US$1.46 in Q1 2021. AISC carries forward from C1 cash costs with the addition of $14.6 million in sustaining capital, lease, and applicable administration expenditures in Q1 2022 as compared to $10.1 million in Q1 2021. The increase was primarily due to higher leasing costs of $3.9 million as compared to $2.7 million in Q1 2021 as well as sustaining capital of $10.2 million in Q1 2022 as compared to sustaining capital of $6.4 million in Q1 2021. The higher leasing costs were principally due to the purchase of new Trolley Assist haul trucks. Sustaining capital costs for Q1 2022 were higher than Q1 2021 mainly due to $2.9 million of expenditures to improve grade control systems and new road construction that will eliminate traffic interference with haulage trucks on the main waste haul road, thereby improving productivity through reducing haul truck cycle times and delays. These haul truck productivity improvement capital expenditures are expected to be completed in Q2 2022. Sustaining capital also continues to include costs associated with the mine's environmental water management projects. The mine water management projects have been substantially advanced and are expected to be fully completed in Q3 2022.
AIC per pound of copper produced for Q1 2022 was US$5.08, as compared to US$1.71 in Q1 2021. AIC carries forward from AISC with the addition of $10.5 million in deferred stripping as compared to $8.0 million deferred stripping in Q1 2021. Deferred stripping costs in Q1 2022 were from regular development activities as the Company continued to advance development of the Phase 4 pushback of the Copper Mountain Main Pit.
SUMMARY OF FINANCIAL RESULTS
| Results and Highlights (100%) | | Three months
ended
March 31, |
| (In thousands of CDN$, except for per share amounts) | | | 2022$ | 2021$ |
| Revenue | | | 93,858 | 162,207 |
| Gross profit | | | 18,576 | 96,280 |
| Gross profit before depreciation(1) | | | 24,051 | 103,966 |
| Net income (loss) | | | (4,162) | 52,118 |
| Income (loss) per share – basic | | | (0.03) | $0.18 |
| Adjusted earnings (loss)(1) | | | (9,277) | 33,419 |
| Adjusted earnings (loss) per share – basic (1) | | | (0.04) | $0.16 |
| EBITDA(1) | | | 11,256 | 95,985 |
| Adjusted EBITDA(1) | | | 6,141 | 77,286 |
| Cash flow from operations | | | 33,314 | 79,593 |
| Cash flow from operations per share – basic (1) | | | 0.16 | 0.38 |
| Cash and cash equivalents – end of period | | | 143,501 | 137,065 |
| | | | | | |
| (1) | The Company reports the non-GAAP financial measures of gross profit before depreciation, adjusted earnings, adjusted earnings per share, EBITDA and adjusted EBITDA to manage and evaluate its operating performance. For further information, see "Cautionary Note Regarding Non-GAAP Performance Measures". |
In Q1 2022, revenue was $93.9 million, net of pricing adjustments and treatment charges, compared to $162.2 million in Q1 2021. Revenue in Q1 2022 is based on the sale of 13.5 million pounds of copper, 5,076 ounces of gold, and 60,038 ounces of silver. This compares to 27.5 million pounds of copper, 8,553 ounces of gold and 161,657 ounces of silver sold in Q1 2021. The decrease in revenue was due to lower quantities of all metal sold and a smaller positive mark to market and final adjustment on concentrate sales of $7.1 million as compared to a positive mark to market and final adjustment of $15.5 million for Q1 2021. Lower copper production and sales in the quarter was due to lower grades and reduced mill throughput as the Company continued to run the secondary crusher at reduced rates due to the damaged main shaft.
Cost of sales in Q1 2022 was $75.3 million as compared to $65.9 million for Q1 2021. The increase in cost of sales can largely be attributed to the increase in scheduled repairs and maintenance during the quarter as well as additional costs incurred for portable crushing equipment to supplement the secondary crusher reduced capacity during the quarter as a result of the damaged main shaft. Cost of sales also increased as a result of higher fuel and steel costs, increased maintenance contractor support required to assist with managing COVID-19 related workforce absences and the significant cold weather that occurred in late 2021 and early 2022.
The Company generated gross profit of $18.6 million in Q1 2022 compared to a gross profit of $96.3 million in Q1 2021. The Company reported a net loss of $4.2 million for Q1 2022 compared to net income of $52.1 million in Q1 2021. The variance in net income for Q1 2022, as compared to Q1 2021, was due to several items, including:
- Lower revenue in Q1 2022 due to less pounds of copper sold as compared to Q1 2021.
- Q1 2022 included a $7.1 million positive mark to market and final adjustment from provisional pricing on concentrate sales, as compared to an $15.5 million positive mark to market and final adjustment from provisional pricing on concentrate sales for Q1 2021.
- Higher cost of sales in Q1 2022 due to scheduled maintenance and increased operating costs as compared to Q1 2021.
On an adjusted basis, the Company recorded a net loss of $9.3 million in Q1 2022, or $0.04 per share, compared to net earnings of $33.4 million in Q1 2021, or $0.16 per share.
PROJECT DEVELOPMENT UPDATE
Copper Mountain Mine, Canada
The Company successfully installed and commissioned Ball Mill 3 in the second half of 2021. The Ball Mill 3 Expansion Project was designed to increase mill throughput to 45,000 tonnes per day from 40,000 tonnes per day and improve copper recovery due to achieving a finer ore grind. Ball Mill 3 operated well during the quarter.
The plant optimization and improvement projects at the mine site continue to progress. The cleaner column expansion project and the filter press expansion are on track to be completed by the end of Q2 2022. The rougher expansion project is in progress and expected to be completed in Q3 2022. Phase 1 of the Trolley Assist project was completed during the first quarter and on April 4, 2022 the Company announced the successful commissioning of the one kilometer trolley-assist haul ramp and seven pantograph-equipped electric haul trucks.
Eva Copper Project, Australia
The Company announced updated economics for the Eva Copper Project, including capital and operating costs, at the end of 2021. The Eva Copper Project's economics remain strong and have improved compared to the May 2020 Feasibility Study. The Company also formally approved the construction plan for the Eva Copper Project subject to advancing detailed engineering to 80%, obtaining committed project financing and the lifting of COVID-19 restrictions in Queensland, Australia. The Company continues to advance project financing discussions and has engaged Ausenco Projects Australia Pty Ltd to complete detailed engineering on the project.
Exploration Update
Canada
The drilling program, which was initiated in March 2021 with the objective of expanding resources and reserves at the Copper Mountain Main Pit, North Pit and New Ingerbelle, was completed in March 2022. The program consisted of a total of 38,000 metres of diamond drilling. Results were positive with significant copper intersections below the current reserve pits.
In January, the Company announced continued positive results from drilling at New Ingerbelle, extending mineralization at depth and to the west. For details, please see the Company's January 20, 2022 and September 9, 2021 press releases. The Company plans to incorporate the results of the 2021-2022 drilling program into an updated mineral reserves and mineral resources estimate, along with a new "Life of Mine Plan" based on an expansion, which is expected to be published in mid-2022.
Australia
In late 2021, the Company completed an exploration program on its Cameron Copper Project, located approximately 40 kilometres south of its Eva Copper Project. The program was designed to discover additional copper, copper-gold or gold deposits. The program, which consisted of detailed geophysical, geochemical, and geological surveys followed by drill testing, produced encouraging results with multiple mineralized zones identified.
A total of 60 reverse circulation holes (6,997 metres of drilling) and 7 diamond drill holes (1,341 metres of drilling) were completed on a series of targets at Cameron (C1, C1 South, C2, C3, C6, and C24). The drill program encountered intercepts of high-grade mineralization, within long, low-grade mineralized envelopes, with lateral continuity between intercepts of up to 1 kilometre. For drill hole results please see Copper Mountain's October 12, 2021 press release. Analysis and interpretation of the drilling results is ongoing and will guide further target definition and drilling in 2022.
OUTLOOK
As a result of the production results in Q1 2022, the Company expects to achieve the lower end of its annual guidance range of 80 to 90 million pounds of copper. The Company expects production in the second half of the year to be stronger than the first half of 2022 as throughput rates reach the increased capacity of 45,000 tonnes per day following the secondary crusher repair in April 2022 and as the Company mines higher grade ore from Phase 4 of the Copper Mountain Main Pit and North Pit. The second quarter of 2022 is expected to be a transition quarter as production and costs begin to improve from the first quarter, with the second half of the year expected to be significantly stronger.
The Company is increasing its AIC per pound of copper cost guidance for 2022 to be between US$2.25 to US$2.75 as a result of the higher-than-planned AIC in Q1 2022 and inflationary pressures. As production is expected to increase throughout 2022, and as many cost items in Q1 2022 were non-recurring in nature, the Company expects AIC to improve for the remainder of 2022.
Please see "Cautionary Note Regarding Forward-Looking Statements."
Q1 2022 FINANCIAL AND OPERATING RESULTS CONFERENCE CALL AND WEBCAST
Copper Mountain will host a conference call on Tuesday, April 26, 2022 at 7:30 am (Pacific Time) for senior management to discuss first quarter 2022 results.
Dial-in information:
Toronto and international: 1 (416) 764 8650
North America (toll-free): 1 (888) 664 6383
Webcast: https://produceredition.webcasts.com/starthere.jsp?ei=1540119&tp_key=3297d7e2a6
Replay information:
Toronto and international: 1 (416) 764 8677, Passcode: 910085#
North America (toll-free): 1 (888) 390 0541, Passcode: 910085#
The conference call replay will be available until 8:59 pm (Pacific Time) on May 3, 2022. An archive of the audio webcast will also be available on the company's website at https://www.cumtn.com.