CAPSTONE MINING DECEMBER 31, 2007 FOUR MONTH STUB PERIOD RESULTS
February
28, 2008
Vancouver,
B.C. - Capstone Mining Corp. ("Capstone") announces its financial
results for the four month stub period ending December 31, 2007 including
production and sales for the Cozamin mine located in Zacatecas State,
Mexico. All dollar amounts are stated in U.S. dollars unless otherwise
indicated.
Overview
and Highlights
For the four
months ended December 31, 2007, Capstone's earnings, before future income tax
allowance were $16.8 million or $0.21 per share ($0.20 per share diluted),
and earnings, after future income tax allowance, a non-cash item, were $10.4
million or $0.13 per share ($0.12 per share diluted).
- Revenue for the four months
ended December 31, 2007 was $33.0 million. The average realized
price for sales of copper, zinc, lead and silver in the four months was
$3.09/lb, $1.07/lb, $1.24/lb and $8.40/oz respectively.
- Copper production during the
four months ended December 31, 2007 was 9.0 million lbs compared with
13.9 million lbs for the 12 months ended August 31 2007 (65% of the
previous 12 month period).
- At December 31, 2007, Capstone
had working capital of $51.7 million including $25 million in cash, $8.1
million in marketable securities, current receivables of $14.9 and no
bank debt, in addition the fair market value of Capstone's share
ownership of Silverstone Resources Corp. as of today is approximately
$90 million, which is not included in working capital.
- Copper cash costs for the four
months ended December 31, 2007 were $0.96/lb of copper (net of
by-product credits and including smelter, refining, transportation and
all site costs).
- Total costs (the aggregate of
cash costs, royalty, depletion and amortization and accretion) for the
four months ended December 31, 2007 were $1.16/lb.
- Capstone continued its share
buyback plan and purchased an additional 815,500 common shares on the
open market at an average price of CDN$2.76. The shares have been
returned to treasury and cancelled under its normal course issuer bid.
- During the four month stub
period the Cozamin mine operated at its current designed throughput rate
of 2,200 tpd.
|
4 months ended
December 31, 2007
|
Year ended
August 31, 2007
|
|
|
|
Revenue
|
$33.0M
|
$55.3M
|
Copper
|
$26.5M
|
$37.7M
|
Zinc
|
$1.5M
|
$8.0M
|
Lead
|
$1.9M
|
$2.7M
|
Silver
|
$3.1M
|
$6.9M
|
Operating profit
|
$16.8M
|
$27.2M
|
Earnings (before future tax)
|
$16.8M
|
$25.2M
|
EPS - basic (before future tax)
|
$0.21
|
$0.31
|
Earnings (after future taxes)
|
$10.4M
|
$22.7M
|
EPS - basic
|
$0.13
|
$0.28
|
Cozamin
Mine
4
Months Ended December 31, 2007 Production and Sales Highlights
- Capstone produced the
following metals during the year.
- 9.0 million pounds of copper
- 2.5 million pounds of zinc
- 1.6 million pounds of lead
- 414,000 ounces of silver
- Concentrate sales for the
period were dry metric tonnes ("DMT"), containing;
- 8.6 million pounds of copper
- 1.4 million pounds of zinc
- 1.5 million pounds of lead
- 377,000 ounces of silver
Concentrate
inventory at December 31, 2007 was 9,793 DMT (containing 2.8 million pounds
of copper, 2.9 million pounds of zinc and 0.5 million pounds of lead).
December
31, 2007 Production Results and Forecast for 2008 and 2009
|
2008 (F)
|
2009 (F)
|
Total tons milled
|
850,000
|
1,000,000
|
|
|
|
Copper (payable lbs)
|
30,000,000
|
40,000,000
|
Silver (payable ounces)
|
1,300,000
|
1,500,000
|
Zinc (payable lbs)
|
9,000,000
|
10,000,000
|
Lead (payable lbs)
|
5,100,000
|
5,000,000
|
The following
table is a summary of the actual operating statistics for the four months
ended December 31, 2007 and the year ended August 31, 2007.
|
4 months
ended
Dec 31, 2007
|
Year ended
Aug 31, 2007
|
Total tons mined
|
251,716
|
484,641
|
Tons of ore milled
|
260,714
|
461,933
|
Copper grade (%)
|
1.79
|
1.59
|
Zinc grade (%)
|
1.24
|
1.47
|
Silver grade (g/t)
|
69
|
71
|
Lead grade (%)
|
0.52
|
0.6
|
Copper recovery (%)
|
87.1
|
86
|
Zinc recovery (%)
|
41.3
|
44.9
|
Silver recovery (%)
|
73.3
|
73
|
Lead recovery (%)
|
49.8
|
52.6
|
Copper production (million DMT lbs)
|
9.0
|
13.9
|
Zinc production (million DMT lbs)
|
2.5
|
6.8
|
Silver production ('000 ounces)
|
414
|
747
|
Lead production (million DMT lbs)
|
1.6
|
3.0
|
Note:
Silver reports to all concentrates.
Stub
Four Month Period Production Highlights
Copper
- Copper in concentrate produced
during the four month period was 9.0 million pounds of copper, year
ended August 31, 2007 was 13.9 million.
- Copper concentrate sales for
the period were 18,277 dry metric tons ("DMT"), containing 8.6
million pounds of copper, year ended August 31, 2007 was 11.8 million.
- The average price for sales of
copper in the period was $3.09/lb.
- Copper concentrate inventory
at December 31, 2007 was 5,631 DMT, an increase in inventory from the
5,447 DMT of concentrate on hand at August 31, 2007.
- Silver in the copper
concentrate produced during the period totaled 335,000 ounces.
Zinc
- Zinc in concentrate produced
during the four month period was 2.5 million pounds of zinc, year ended
August 31, 2007 was 6.8 million.
- Zinc sales for the period were
1,799 DMT, containing 1.4 million pounds of zinc, year ended August 31,
2007 was 5.0 million.
- The average price for sales of
zinc in the period was $1.07/lb.
- Zinc concentrate inventory at
December 31, 2007 was 3,804 DMT, an increase in inventory from the 2,413
DMT of concentrate on hand at August 31, 2007.
- Silver in the zinc concentrate
produced during the period totaled 12,000 ounces.
Lead
- Lead in concentrate produced
during the four month period was 1.6 million pounds of lead, year ended
August 31, 2007 was 3.0 million.
- Lead concentrate sales for the
period were 1,147 DMT, containing 1.5 million pounds of lead, year ended
August 31, 2007 was 2.8 million.
- The average price for sales of
lead in the period was $1.24/lb.
- Lead concentrate inventory at
December 31, 2007 was 358 DMT, an increase in inventory from the 290 DMT
of concentrate on hand at August 31, 2007.
- Silver in the lead concentrate
produced during the period totaled 67,000 ounces.
Mill
Expansion Project
Tons mined and
processed were higher in the four months ended December 31, 2007 compared to
previous 2007 periods as expansion to the 2,200 tpd was completed in
September. Capital expenditures are budgeted at $10 million to further
expand the facility to 3,000 tpd which is expected to be completed by the
fourth quarter this year.
Labour
There were 4
minor lost time accidents during the period from both operations and
construction. The number of personnel at the end of the period was 530,
of which approximately 90 were contractors related to the expansion project.
Four
Month Actual Sales
Actual sales
and costs for the year are tabulated below.
|
4 months
ended
Dec 31, 2007
|
Copper (million lbs)
|
8.6
|
Zinc (million lbs)
|
1.4
|
Lead (million lbs)
|
1.5
|
Silver ('000 ounces)
|
377
|
Copper production costs, net of by product
credits, per lb of copper
|
$0.55
|
Off property costs for transport, smelting
and refining per lb of copper
|
$0.41
|
Total cash costs of production per lb of
copper
|
$0.96
|
Copper
production costs in the four months ended December 31, 2007 were $0.21 above
plan reflecting the impact of the company having sold less zinc and writing
down a portion of the zinc with lower grade in the concentrate and the lower
by product metal prices.
Financial
Results
The
information in this news release and the selected financial information
contained in the following pages should be read in conjunction with the
audited Consolidated Financial Statements and Management Discussion and
Analysis for the four months ended December 31, 2007, which will be available
at Capstone's website at www.capstonemining.com and at www.sedar.com.
The Company's
earnings before future tax accruals for the four months ended December 31,
2007 were $16.8 million or $0.21 per share compared to earnings of $25.2
million or $0.31 per share for the year ended August 31, 2007. The
Company's net earnings for December 31, 2007 were $10.4 million or $0.13 per
share compared to $22.7 million or $0.28 per share for August 31, 2007 after
future income tax allowance, a non-cash item.
The Company
reported revenues for the four month period of $33.0 million (year ended
August 31, 2007 - $55.3 million). Revenues consisted of copper
concentrate sales of $26.5 million, zinc concentrate sales of $1.5 million,
lead concentrate sales of $1.9 million and silver in concentrate sales of
$3.1 million.
Cost of sales
for the four month period was $9.0 million (year ended August 31, 2007 -
$14.2 million), treatment and transportation charges were $5.3 million
(August 31, 2007 - $10.1 million), royalty charges were $0.6 million (August
31, 2007 - $1.4 million) and depletion was $0.9 million (August 31, 2007 -
$1.7 million).
For the four
month period ended December 31, 2007, the Company recorded an unrealized gain
related to mark-to-market on the outstanding derivative contracts in the
amount of $2,928,644 (August 31, 2007 - $Nil).
A future
income tax provision of $6.3 million was recorded at December 31, 2007
compared to $2.5 million at August 31, 2007. The increase in the income
tax provision is mainly due to the reversal of the current future income tax
asset set up at August 31, 2007 as well as an increase in the excess of book
value of capital assets over tax values.
Glencore
International AG and Trafigura Beheer B.V. purchases the concentrates
produced by the Cozamin mine pursuant to the terms of a written
contract.
Capstone
Mining Corp.
Selected Financial Information
Consolidated
Balance Sheets
|
Dec
31,
|
Aug
31,
|
|
2007
|
2007
|
|
|
|
Cash
|
$
25,114,753
|
$
35,988,166
|
Marketable securities
|
8,097,348
|
-
|
Investment in Silverstone Resources Corp.
|
39,022,891
|
28,498,044
|
Property, plant and equipment
|
45,655,190
|
44,616,033
|
Other assets
|
27,090,014
|
24,888,492
|
|
|
|
Total assets
|
144,980,196
|
133,990,735
|
|
|
|
Deferred revenue
|
41,398,281
|
43,056,390
|
Other liabilities
|
17,833,194
|
15,561,814
|
|
|
|
Total liabilities
|
59,231,475
|
58,618,204
|
Shareholder's equity
|
85,748,721
|
75,372,531
|
|
|
|
Total liabilities and shareholders' equity
|
144,980,196
|
133,990,735
|
Consolidated
Statements of Operations
|
Four
months ended
Dec 31,
|
Year
ended
Aug 31,
|
|
2007
|
2007
|
|
|
|
Total revenues
|
$
32,975,274
|
$
55,335,647
|
Total cost of sales
|
(16,157,585)
|
(28,138,291)
|
Operating profit
|
16,817,689
|
27,197,356
|
G&A and other expenses
|
(3,437,958)
|
(3,773,660)
|
Other items
|
3,409,803
|
1,726,946
|
Earnings (loss) before income taxes
|
16,789,534
|
25,150,642
|
Future income tax
|
(6,333,610)
|
(2,479,593)
|
Earnings (loss) for the year
|
10,415,923
|
22,671,049
|
|
|
|
EPS - Basic
|
0.13
|
0.28
|
EPS - Diluted
|
0.12
|
0.27
|
Capstone will
host a conference call on Friday, February 29 at 8:00 a.m. Pacific Time
(11:00 AM Eastern Time) to discuss these results. The conference call may be
accessed by dialing 1.866.514.1894 in North America or 1.480.248.5085
internationally, please ask for the Capstone Mining Corp. conference call.
The conference call will be archived for later playback until March 7, 2008
and can be accessed by dialing 1.866.501.5559 and the passcode is
21264082#.
ABOUT
CAPSTONE
Capstone is a
Canadian based mining company currently operating the 100% owned Cozamin
copper-silver-lead-zinc mine located in Zacatecas State, Mexico. Capstone has
approximately 81.4 million shares outstanding and is well financed with no
bank debt. More information is available online at: www.capstonemining.com.
For further
information about the Company, please contact:
Chris Tomanik or Mark Patchett, Telephone: (604) 684-8894 / Facsimile: (604)
688-2180
Email: ctomanik@capstonemining.com
or mpatchett@capstonemining.com
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