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A correction from source is
issued for the press release disseminated today at 12:55 PM ET. The
text in the paragraph immediately following the Huckleberry Mine table
has changed. The revised and updated release follows:
Imperial Metals Corporation (TSX:III) reports comparative financial
results for the three and six months ended June 30, 2011 and June 30,
2010, which are summarized below and discussed in detail in the
Management's Discussion and Analysis. The Company's financial results
are prepared in accordance with International Financial Reporting
Standards ("IFRS"). All dollar amounts are in thousands of
Canadian dollars, unless otherwise specified.
--------------------------------------------------------------------------- Three Months Ended Six Months Ended June 30 June 30 --------------------------------------------------------------------------- (unaudited) in thousands except per share amounts 2011 2010 2011 2010 --------------------------------------------------------------------------- Revenues $ 39,405 $ 53,435 $ 136,585 $ 122,755 Income from mine operations $ 11,806 $ 4,790 $ 48,083 $ 21,086 Net Income $ 8,035 $ 13,596 $ 27,788 $ 11,909 Net Income Per Share $ 0.22 $ 0.38 $ 0.75 $ 0.33 Adjusted Net Income (1) $ 5,354 $ 1,815 $ 18,349 $ 9,469 Adjusted Net Income Per Share (1) $ 0.15 $ 0.05 $ 0.50 $ 0.27 Cash Flow (1) $ 11,094 $ 8,504 $ 46,431 $ 25,219 Cash Flow Per Share (1) $ 0.30 $ 0.23 $ 1.26 $ 0.71 --------------------------------------------------------------------------- (1) Adjusted Net Income, Adjusted Net Income Per Share, 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 in Canada. Adjusted Net Income is defined as net income adjusted for certain items of a non-operational nature that pertain to future periods as described in further detail in the Management's Discussion and Analysis under the heading Adjusted Net Income. Cash Flow is defined as cash flow from operations before net change in working capital balances. Adjusted Net Income and Cash Flow Per Share are the same measures divided by the weighted average number of common shares outstanding during the period. 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.
Revenues were $39.4 million
in the June 2011 quarter compared to $53.4 million in the 2010 quarter.
The June 2011 quarter includes one concentrate shipment from the Mount Polley mine and one concentrate shipment from the
Huckleberry mine, compared to two concentrate shipments from each mine
in the comparative quarter. Variations in quarterly revenue attributed
to the timing of concentrate shipments can be expected in the normal
course of business.
Income before taxes for the three months ended June 2011 decreased to
$11.0 million from $17.4 million in the June 2010 quarter. The Company
recorded a net income of $8.0 million in the June 2011 quarter compared
to net income of $13.6 million in the 2010 quarter. Adjusted net income
in the quarter was $5.4 million or $0.15 per share, versus $1.8 million
or $0.05 per share in the June 2010 quarter. Adjusted net income is
calculated by removing the unrealized gains and losses, net of related
income taxes, resulting from mark to market revaluation of copper and
foreign exchange derivative instruments and in 2010, unrealized share
based compensation expense. Adjusted net income is not a term
recognized under IFRS in Canada however, it does show the current
period financial results excluding the effect of items not settling in
the current period.
Gains on derivative instruments were $1.7 million in the June 2011
quarter compared to gains of $11.1 million in the June 2010 quarter
including unrealized net gains on copper and currency derivatives of
$3.7 million in the June 2011 quarter compared to unrealized net gains
of $12.1 million in the June 2010 quarter. The Company realized losses
of $2.0 million on copper and currency derivatives in the June 2011
quarter compared to losses of $1.0 million in the June 2010 quarter.
Cash flow increased to $11.1 million in the June 2011 quarter compared
to $8.5 million in the 2010 quarter. The $2.6 million increase is
primarily the result of improved operating margins resulting from
substantially higher copper and gold prices offset by the effect of the
weaker US Dollar and lower sales volumes from the Mount Polley and Huckleberry mines.
Capital expenditures increased to $28.7 million from $13.6 million in
the comparative 2010 quarter and included the first equipment purchases
for the Red Chris project. In addition, in June 2011 the Company
purchased the minority interest in American Bullion Minerals Ltd. for
$25.1 million to now hold 100% of the Red Chris project. All
expenditures in the June 2011 quarter were financed from short term
debt and cash flow from the Mount Polley and
Huckleberry mines except for $0.7 million of mobile mining equipment
financed by long term debt. At June 30, 2011 the Company had $47.0
million in cash, cash equivalents and short term investments.
During the June 2011 quarter the Company did not purchase any common
shares for cancellation.
Mount Polley Mine --------------------------------------------------------------------------- Production Six Months Ended June 30 --------------------------------------------------------------------------- 2011 2010 --------------------------------------------------------------------------- Ore milled (tonnes) 3,703,519 3,868,170 Ore milled per calendar day (tonnes) 20,461 21,371 Grade % - copper 0.277 0.323 Grade g/t - gold 0.271 0.300 Recovery % - copper 58.24 63.42 Recovery % - gold 61.91 67.49 Copper (lbs) 13,156,684 17,442,703 Gold (oz) 20,002 25,160 Silver (oz) 45,970 83,289 ---------------------------------------------------------------------------
Mill throughput averaged
21,852 tonnes per day for the 2011 second
quarter, up substantially from the 2011 first quarter when weather
hampered throughput averaging 19,055 tonnes
per day. Copper and gold production was up compared to the 2011 first
quarter at approximately 7 million pounds copper and 10,770 ounces
gold. All ore continues to come from the Phase 3 pushback of the
Springer pit. Shipments of dense media magnetite in June 2011 were
5,111 tonnes.
Exploration at Mount Polley continued with
two surface diamond drills and one underground diamond drill. Surface
drilling of 12,290 metres in 21 drill holes
were completed in the WX, C2, Cariboo and
Springer areas and 4,020 metres was cored in
29 drill holes from underground at the Boundary zone. Surface exploration
remains focused on targets within the C2 and Cariboo
areas, and further underground development is planned for the Boundary
zone now that the initial phase of underground drilling is complete.
The wholly owned Mount Polley open pit
copper/gold mine is located 56 kilometres
northeast of Williams Lake, British Columbia.
Huckleberry Mine --------------------------------------------------------------------------- Production Six Months Ended June 30 --------------------------------------------------------------------------- (100% - Imperial owns 50%) 2011 2010 --------------------------------------------------------------------------- Ore milled (tonnes) 2,900,100 2,805,400 Ore milled per calendar day (tonnes) 16,022 15,500 Grade (%) - copper 0.409 0.382 Recovery (%) - copper 90.6 91.3 Copper (lbs) 23,701,000 21,564,000 Gold (oz) 1,785 1,536 Silver (oz) 124,913 96,269 Molybdenum (lbs) 6,923 58,958 ---------------------------------------------------------------------------
Copper production was 10.5 million pounds in
the 2011 second quarter compared to 13.2 million in the 2011 first
quarter as a significant portion of the mill feed was from lower grade
stockpiles, while mining focused on the pushback of the Main Zone Extension
highwall. Copper recovery from these
stockpiled ores 88.5%, lower than the 92.3% achieved in the first
quarter when higher grade freshly mined ores were treated.
An application for an amendment to Huckleberry's Mines Act permit was
submitted to allow for the development and operation of the Main Zone
Optimization pit, an expansion of the Main Zone pit that could add up
to 8 years to Huckleberry's mine life. The amendment is anticipated to
be approved by the Province in the third quarter 2011.
A Titan 24 Magnetotellurics and IP/
Resistivity survey consisting of four lines covering 9,300 metres was completed to test potential deep copper
mineralization below the Main Zone Optimization pit design as well as
previously established copper and aeromagnetic anomalies. Follow up
rock chip sampling and diamond drilling is planned to test the
resulting IP anomalies.
Imperial owns 50% of the Huckleberry open pit copper/molybdenum mine
located 123 kilometres southwest of Houston,
British Columbia.
Red Chris
The results from 40 deep diamond drill holes completed during the
period from June 2010 to May 2011 are expected to be received by the
end of September following which an updated mineral resource will be
calculated for Red Chris.
Three deep drill holes totalling 3,060.8 metres were drilled during the second quarter,
completing the deep drilling program which was designed to define the
mineralized system to at least 1,000 metres
below surface in the area of the proposed open pit.
The focus at Red Chris will be on permitting, engineering, procurement
and development. Engineering for the 30,000 tonne
per day mine has started. The contract to complete the detailed design
has been awarded to AMEC. Two major pieces of used equipment, a 12,000 hp 34 foot diameter SAG mill and a 40 cubic yard
P&H 2800 electric shovel, have been purchased from Northgate's Kemess mine.
The Northwest Mine Development Review Committee is scheduled to meet in
mid-September to review the Red Chris project. BC Hydro indicated in a
recent news release that design and geotechnical work is underway that
will lead to actual construction of the Northwest Transmission Line,
scheduled to begin next year. Hydro did note that clearance of
right-of-ways and other work is already underway.
The Red Chris copper/gold property in northwest British Columbia is 80 kilometres south of Dease
Lake and 18 kilometres southeast of the
village of Iskut.
Sterling
Underground sampling and drilling continued on the 3180 and 3220 levels
to investigate the northerly down dip extent of the 144 zone.
Underground development for the current quarter totalled
540 feet. A total of 27,200 tons of heap leachable material grading
approximately 0.095 ounces per ton has been generated by development in
the 144 zone.
During the remainder of 2011 plans are to complete construction of a
new leach pad and recovery plant that will allow the restart of gold
production at Sterling. These facilities will be put in place to
generate cash flow to fund further development and exploration of the
144 Zone. The total capital cost implementing this plan is estimated to
be US$8 million.
The Sterling gold property is located 185 kilometres
northwest of Las Vegas, Nevada.
Ruddock Creek
At the Ruddock Creek property during the second quarter, underground
development and diamond drilling continued in the lower E-Zone. The
decline was extended a further 49.5 metres,
while 28 holes totaling 4,972.9 metres of
underground diamond drilling were completed. Total underground drilling
to June 30 in the current program was 66 holes totalling
11,959.2 metres, while the decline has been
extended a total of 306.5 metres. The
underground drilling program will be completed in early August 2011 and
surface drilling programs have commenced on the Q, Creek and U Zones.
The Ruddock Creek zinc/lead property is located 155 kilometres
northeast of Kamloops in the Scrip Range of the Monashee
Mountains in southeast British Columbia.
Outlook
An application for an amendment to Huckleberry's Mines Act permit was submitted
to allow for the development and operation of the Main Zone
Optimization pit, an expansion of the Main Zone pit that could add up
to 8 years to Huckleberry's mine life. The amendment is anticipated to
be approved by the Province in the third quarter 2011.
A second phase of underground development is planned at Mount Polley's Boundary zone to follow up on the
excellent results obtained in the underground drilling.
A leach pad and other infrastructure will be constructed at Sterling so
the production of gold can be restarted. This will enable Sterling to
generate cash, while underground development and exploration continues.
Detailed engineering and procurement for Red Chris has begun. AMEC has
been engaged to complete detailed engineering for the 30,000 tonne per day mine. Two key pieces of equipment, a
34 foot diameter SAG mill and 40 cubic yard electric shovel have been
purchased. Once assays from all the 2010 and 2011 diamond drilling are
received, a new resource estimate will be completed for Red Chris. This
is expected to be completed in the fourth quarter 2011.
The acquisition of the minority interest in American Bullion Minerals
Ltd. in June 2011 gives Imperial 100% ownership of the Red Chris
project. Funding for the American Bullion Minerals Ltd. share
acquisition and equipment purchases from Kemess
was provided by an expanded line of credit from the Bank of Montreal
and by cashflow from Mount Polley.
Detailed financial information is provided in the Company's
Management's Discussion & Analysis contained in the Second Quarter
Report available on www.sedar.com and
www.imperialmetals.com.
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