| August 7, 2008 |
| Imperial Reports 2008 Second Quarter Financial Results |
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 7, 2008) - Imperial Metals Corporation (TSX:III) reports comparative financial results for the three and six months ended June 30, 2008 and June 30, 2007 are summarized below and discussed in detail in the Management's Discussion and Analysis.
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Three Months Six Months Ended
Second Quarter Financial Results Ended June 30 June 30
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(unaudited) in thousands except per
share amounts 2008 2007 2008 2007
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Revenues $ 124,911 $ 93,210 $ 181,508 $ 147,456
Operating Income $ 62,257 $ 27,337 $ 85,335 $ 41,070
Net Income $ 44,236 $ 3,224 $ 45,901 $ 1,302
Net Income Per Share $ 1.35 $ 0.10 $ 1.40 $ 0.04
Adjusted Net Income (1) $ 42,571 $ 19,482 $ 54,617 $ 30,190
Adjusted Net Income Per Share (1) $ 1.30 $ 0.62 $ 1.67 $ 0.97
Cash Flow (1) $ 66,124 $ 25,698 $ 85,653 $ 47,883
Cash Flow Per Share (1) $ 2.02 $ 0.82 $ 2.62 $ 1.54
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(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 generally
accepted accounting principles. 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 $124.9 million in the June 2008 quarter compared to $93.2 million in the 2007 quarter. As anticipated, the higher than normal concentrate inventory levels at March 31, 2008 were reduced in the June 2008 quarter and this, along with higher production levels, resulted in increased levels of ocean shipments in the June 2008 quarter. Variations in quarterly revenue attributed to the timing of concentrate shipments can be expected in the normal course of business.
Operating income for the three months ended June 30, 2008 increased to $62.3 million from $27.3 million in the June 2007 quarter.
Net income was $44.2 million in the June 2008 quarter compared to $3.2 million in the 2007 quarter. Adjusted net income in the quarter was $42.6 million or $1.30 per share, versus $19.5 million or $0.62 per share in the June 2007 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 hedging and removing the unrealized share based compensation expense, net of taxes. Adjusted net income is not a term recognized under generally accepted accounting principles however it does show the current period financial results excluding the effect of items not settling in the current period.
Relatively stable copper prices in the June 2008 quarter resulted in minimal losses on derivative instruments of $0.4 million in the quarter compared to a loss of $14.8 million in the 2007 quarter.
Cash flow increased to $66.1 million in the June 2008 quarter compared to $25.7 million in 2007. The $40.4 million increase is the result of higher operating margins on higher sales volumes and lower realized losses on derivative instruments.
Capital expenditures increased to $13.7 million from the $9.8 million spent in the comparative 2007 quarter. Expenditures in the June 2008 quarter were financed from cash flow from the Mount Polley and Huckleberry mines. At June 30, 2008 the Company had $29.0 million in cash, cash equivalents and short term investments. In July 2008 the Company repaid the balance of its short term debt from collection of accounts receivables and no longer has any short term debt obligations.
During the June 2008 quarter the Company commenced purchases under the Normal Course Issuer Bid and through August 6, 2008 the Company had purchased for cancellation 141,987 common shares at a total cost of $1.2 million.
Mount Polley Mine
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Mine Production Six Months Ended June 30
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(unaudited) 2008 2007
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Ore milled (tonnes) 3,268,958 3,176,072
Ore milled per calendar day (tonnes) 17,961 17,547
Grade % - Copper 0.552 0.455
Grade g/t - Gold 0.308 0.249
Recovery % - Copper 78.36 82.19
Recovery % - Gold 71.53 72.09
Copper produced (lbs) 31,185,087 26,188,483
Gold produced (oz) 23,171 18,358
Silver produced (oz) 262,257 185,835
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Mount Polley metal production for the first six months of 2008 was 31.1 million pounds compared to 26.1 million pounds in the same period of 2007. Mount Polley mine set a copper production record in the second quarter, with 17.48 million pounds copper produced. The mill throughput was 1.78 million tonnes of ore grading 0.592% copper, an average of 19,642 tonnes per day. Concentrate shipments in the second quarter also set a record with over 50,000 wet metric tonnes of concentrate shipped.
Exploration drilling during the quarter focused on the Boundary and Springer areas. Drilling at the Boundary zone defined and expanded the magnetite breccia which hosts high grade/copper gold mineralization. Hole ND08-42 returned 32.3 metres at 1.43% copper and 1.47 g/t gold, and N08-44 returned 22.3 metres at 1.56% copper and 1.21 g/t gold. This mineralization's high grade and vertical nature make it possible to consider mining it by underground methods. Upon completion of the current drilling, the data will be compiled for the engineering team at Mount Polley to consider the economics of either open pit or underground mining options.
Additional targets identified in the first round of drilling at the Boundary zone will be followed up in the third quarter. One new target was intercepted in hole ND08-47 which intersected 49.5 metres of magnetite breccia grading 0.65% copper and 0.54 g/t gold beneath the known Boundary zone. This may be a lower extension of the main breccia body, but is more likely the first drill hole into a separate but nearby magnetite breccia.
Imperial owns 100% of the Mount Polley open pit copper/gold mine which is located 56 kilometres northeast of Williams Lake, British Columbia.
Huckleberry Mine
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Mine Production Six Months Ended June 30
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(100% - Imperial owns 50%) (unaudited) 2008 2007
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Ore milled (tonnes) 2,901,749 3,172,247
Ore milled per calendar day (tonnes) 15,944 17,526
Grade (%) - Copper 0.303 0.535
Grade (%) - Molybdenum 0.007 0.016
Recovery (%) - Copper 88.6 88.3
Recovery (%) - Molybdenum 23.9 21.0
Copper produced (lbs) 17,190,001 33,065,291
Gold produced (oz) 1,456 3,351
Silver produced (oz) 113,145 112,047
Molybdenum produced (lbs) 102,123 241,252
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Huckleberry's production is now all from the Main Zone Extension (MZX). The ore is lower grade than that of the East zone pit, and it has proven to be harder to grind. Molybdenum recovery from the MZX has proven to be better than planned.
Drilling and mine design work is being completed to investigate the feasibility of expanding the MZX pit. The study of expansion has the potential to add approximately two years to the mine life. The current reserves are sufficient to feed the mill to the fourth quarter of 2010.
An exploration drill program at the White Creek property, located 8 kilometres north of the mill sit, will investigate new targets. A total of six holes are planned.
Imperial owns 50% of the Huckleberry open pit copper/molybdenum mine which is located 123 kilometres southwest of Houston, British Columbia.
Sterling
Underground drilling in the second quarter expanded the eastern extension of the 144 zone and identified an open ended mineralized trend on the west side. Gold mineralization grading up to 0.145 ounces per ton (4.95 g/t) gold has been identified within the latite dike that divides the two halves of the mineralized system. Further definition drilling of the main 144 zone encountered high grade gold mineralization typical of the core of the system, with grades up to 1.006 ounces per ton (34.49 g/t) gold over 15 feet.
Subsequent to the second quarter, the current phase of 144 zone underground drilling was completed. Positive results included confirmation of high grade mineralization within the 144 zone, discovery and definition of the east extension of the 144 zone, discovery of an open mineralization trend on the west side of the 144 zone and discovery of the gold-hosting potential of the latite dike which divides the main 144 zone from the east extension. These discoveries will result in a recalculation of the total mineralized resource contained in the 144 zone.
The wholly owned Sterling gold property is located 185 kilometres northwest of Las Vegas, Nevada.
Red Chris
The Red Chris project received approval to proceed with exploration and geotechnical work under an exploration permit. On June 13 the Federal Court of Appeal set aside the September 2007 decision by the Federal Court Trial Division, and confirmed the Federal environmental assessment of the Red Chris project, which concluded the project is unlikely to cause significant adverse environmental effects. This decision of the Federal Court of Appeal may be subject to further appeal to the Supreme Court of Canada.
Construction of a 15 kilometre access trail is underway and is expected to be completed in September. Following completion, an exploration program and a detailed geotechnical investigative program will be initiated.
The Red Chris property is located 80 kilometres south of Dease Lake in northwest British Columbia.
Outlook
Imperial will focus exploration activity in 2008 on four key projects: Red Chris, Mount Polley, Sterling and Huckleberry.
Detailed financial information is provided in Management's Discussion and Analysis in the Second Quarter Report available on the Company's website and on SEDAR (www.sedar.com). | |