Imperial Metals Corporation (the “Company”)
(TSX:III) reports financial results for the three and six months
ended June 30, 2022, as summarized in this news release and
discussed in detail in the Management’s Discussion & Analysis.
The Company’s financial results are prepared in accordance with
International Financial Reporting Standards (“IFRS”). The reporting
currency of the Company is the Canadian (“CDN”) Dollar.
QUARTER HIGHLIGHTS
FINANCIAL
Total revenue increased to $36.4 million in the
June 2022 quarter compared to $34.2 million in the 2021 comparative
quarter, an increase of $2.2 million.
In the June 2022 quarter, the Red Chris mine
(100% basis) had 4.5 concentrate shipments (2021-3.8 concentrate
shipments). Variations in revenue are impacted by the timing and
quantity of concentrate shipments, metal prices and exchange rates,
and period end revaluations of revenue attributed to concentrate
shipments where copper and gold prices will settle at a future
date.
The London Metals Exchange cash settlement
copper price per pound averaged US$4.32 in the June 2022 quarter
compared to US$4.40 in the 2021 comparative quarter. London Bullion
Market Association, London gold price per troy ounce averaged
US$1,873 in the June 2022 quarter compared to US$1,816 in the 2021
comparative quarter. The average US/CDN Dollar exchange rate was
1.277 in the June 2022 quarter, 4.0% higher than the exchange rate
of 1.228 in the 2021 comparative quarter. In CDN Dollar terms the
average copper price in the June 2022 quarter was CDN$5.52 per
pound compared to CDN$5.40 per pound in the 2021 comparative
quarter, and the average gold price in the June 2022 quarter was
CDN$2,391 per ounce compared to CDN$2,230 per ounce in the 2021
comparative quarter.
A negative revenue revaluation in the June 2022
quarter was $7.3 million as compared to a $0.7 million negative
revenue revaluation in the 2021 comparative quarter. Revenue
revaluations are the result of the metal price on the settlement
date and/or the current period balance sheet date being higher or
lower than when the revenue was initially recorded or the metal
price at the last balance sheet date and finalization of contained
metal as a result of final assays.
Net loss for the June 2022 quarter was $29.3
million ($0.21 per share) compared to net loss of $5.1 million
($0.04 per share) in the 2021 comparative quarter. The increase in
net loss of $24.2 million was primarily due to the following
factors:
- Income from mine
operations went from $1.5 million in June 2021 to $0.1 million in
June 2022, increasing net loss by $1.4 million.
- Mount Polley
restart costs went from $nil in June 2021 to $30.2 million in June
2022, increasing net loss by $30.2 million.
- Idle mine costs
went from $6.3 million in June 2021 to $1.7 million in June 2022,
decreasing net loss by $4.6 million.
- Tax recovery
went from $1.9 million in June 2021 to $5.4 million in June 2022,
decreasing net loss by $3.5 million.
Capital expenditures including leases were $39.6
million in the June 2022 quarter, an increase from $23.8 million in
the 2021 comparative quarter. The June 2022 expenditures included
$11.8 million in exploration, $8.2 million for tailings dam
construction and $19.6 million on stripping costs and other
capital.
At June 30, 2022, the Company had not hedged any
copper, gold or US/CDN Dollar exchange. Quarterly revenues will
fluctuate depending on copper and gold prices, the US/CDN Dollar
exchange rate, and the timing of concentrate sales, which is
dependent on concentrate production and the availability and
scheduling of transportation.
OPERATIONS
The current impact of the COVID-19 pandemic on
our business is described under Significant Events and Liquidity in
the Management’s Discussion & Analysis. The Company’s plans for
2022 and beyond could be adversely impacted by the effects of the
COVID-19 pandemic. The continuing impact of COVID-19 to travel and
other operating restrictions established to curb the spread of
COVID-19, could materially and adversely impact the Company’s
current plans by causing a temporary closure of the Red Chris mine,
suspending planned exploration work, causing an economic slowdown
resulting in a decrease in the demand for copper and gold,
negatively impacting copper and gold prices, impacting the
Company’s ability to transport or market the Company’s concentrate
or causing disruptions in the Company’s supply chains.
Red Chris Mine
Metal production for the second quarter of 2022
was 22.0 million pounds copper and 19,540 ounces gold, compared to
17.6 million pounds copper and 15,450 ounces gold produced in the
2021 second quarter.
Imperial’s 30% portion of Red Chris mine second
quarter production was 6.6 million pounds copper and 5,862 ounces
gold.
|
Three Months Ended June 30* |
|
Six Months Ended June 30* |
|
2022 |
2021 |
|
2022 |
2021 |
Ore milled -tonnes |
2,576,109 |
2,493,319 |
|
4,601,566 |
4,656,078 |
Ore milled per calendar day
-tonnes |
28,309 |
27,399 |
|
25,423 |
27,399 |
Grade % - copper |
0.486 |
0.402 |
|
0.450 |
0.416 |
Grade g/t - gold |
0.394 |
0.348 |
|
0.375 |
0.381 |
Recovery % - copper |
80.5 |
79.6 |
|
77.3 |
78.3 |
Recovery % - gold |
60.6 |
55.4 |
|
57.0 |
54.8 |
Copper -000’s pounds |
22,005 |
17,575 |
|
35,316 |
33,459 |
Gold
-ounces |
19,540 |
15,450 |
|
31,628 |
31,300 |
* 100% Red Chris mine production
Metal production was higher by 25.2% for copper
and 26.5% for gold compared to the second quarter of 2021 primarily
due to higher recoveries (80.5% versus 79.6% for copper and 60.6%
compared to 55.4% for gold) and increased copper and gold
grades.
Exploration drilling at Red Chris is ongoing
with up to eight drills in operation during the second quarter,
focusing on expanding the East Ridge zone and gathering
geotechnical information for infrastructure related to the
development of a block cave. The exploration decline had advanced
1,717 metres as of July 20, 2022. Work on the Block Cave
Feasibility Study is ongoing and is targeted to be released in the
first half of 2023.
Imperial’s 30% share of exploration,
development, and capital expenditures were $33.9 million in the
June 2022 quarter compared to $23.3 million in the 2021 comparative
quarter.
Mount Polley Mine
The Company began the work required to reopen
the mine in the fourth quarter of 2021. Initial mill commissioning
and operations began on June 25, 2022. Commissioning work continues
into the third quarter, with six of the eight mills in the grinding
circuit now in operation. During the second quarter, 62,775 tonnes
were milled and 6.3 million tonnes were mined, achieving a day rate
of 69,013 tonnes per day. By the end of the second quarter
approximately 1.3 million tonnes had been stockpiled for future
milling.
The restart of the facilities took approximately
three months longer than planned due to difficulties in hiring
operating personnel, certain supply chain challenges and
unanticipated electrical and mechanical work that needed to be
completed in order to get the plant operating. Also, the failure of
a key electrical component two weeks after the restart of mill
operations caused a 10-day delay in the ramp up of mill
operations.
For the June 2022 quarter, Mount Polley incurred
restart costs comprised of $29.6 million in operating costs and
$0.6 million in depreciation expense.
Exploration, development, and capital
expenditures in the June 2022 quarter were $5.2 million compared to
$0.1 million in the 2021 comparative quarter.
Huckleberry Mine
Huckleberry operations ceased in August 2016 and
the mine remains on care and maintenance status. The Company
anticipates working towards the restart of Huckleberry following
the start of operations at Mount Polley.
Site personnel continue to focus on maintaining
site access, water management (treatment and release of mine
contact water into Tahtsa Reach), maintenance of site
infrastructure and equipment, mine permit compliance, environmental
compliance monitoring and monitoring tailings management
facilities.
Geotechnical programs conducted in 2021 have
indicated that some work is required to upgrade the existing
facility and provided information required to update the tailings
facility design for future operations. A program of geotechnical
and de-pressurization drilling is underway to collect the data so
that these two tasks can be completed.
For the June 2022 quarter, Huckleberry incurred
idle mine costs comprised of $1.5 million in operating costs and
$0.2 million in depreciation expense.
EARNINGS AND CASH FLOW
Select Quarter Financial
Information
expressed in
thousands of dollars, except share and per share amounts |
Three Months Ended June 30 |
|
Six Months Ended June 30 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Operations: |
|
|
|
|
Total revenues |
$ |
36,383 |
|
$ |
34,215 |
|
$ |
69,509 |
|
$ |
67,265 |
|
Net loss |
$ |
(29,275 |
) |
$ |
(5,075 |
) |
$ |
(36,200 |
) |
$ |
(7,617 |
) |
Net loss per share |
$ |
(0.21 |
) |
$ |
(0.04 |
) |
$ |
(0.26 |
) |
$ |
(0.06 |
) |
Diluted loss per share |
$ |
(0.21 |
) |
$ |
(0.04 |
) |
$ |
(0.26 |
) |
$ |
(0.06 |
) |
Adjusted net loss(1) |
$ |
(29,706 |
) |
$ |
(5,111 |
) |
$ |
(48,460 |
) |
$ |
(7,676 |
) |
Adjusted net loss per share(1) |
$ |
(0.21 |
) |
$ |
(0.04 |
) |
$ |
(0.34 |
) |
$ |
(0.06 |
) |
Adjusted EBITDA(1) |
$ |
(22,950 |
) |
$ |
8,283 |
|
$ |
(36,330 |
) |
$ |
10,914 |
|
Cash earnings(1)(2) |
$ |
(23,130 |
) |
$ |
8,102 |
|
$ |
(36,461 |
) |
$ |
10,628 |
|
Cash earnings per share(1)(2) |
$ |
(0.16 |
) |
$ |
0.06 |
|
$ |
(0.26 |
) |
$ |
0.08 |
|
Working capital (deficiency)deficiency |
$ |
(62,806 |
) |
$ |
39,233 |
|
$ |
(62,806 |
) |
$ |
39,233 |
|
Total assets |
$ |
1,231,314 |
|
$ |
1,126,405 |
|
$ |
1,231,314 |
|
$ |
1,126,405 |
|
Total debt (including current portion) |
$ |
99,092 |
|
$ |
5,252 |
|
$ |
99,092 |
|
$ |
5,252 |
|
(1) |
Refer
to Non-IFRS Financial Measures for further details. |
(2) |
Cash earnings is defined as the cash flow from operations
before the net change in non-cash working capital balances, income
and mining taxes, and interest paid. Cash earnings per share is
defined as cash earnings divided by the weighted average number of
common shares outstanding during the year. |
NON-IFRS FINANCIAL MEASURES
The Company reports four non-IFRS financial
measures: adjusted net loss, adjusted EBITDA, cash earnings and
cash cost per pound of copper produced which are described in
detail below. 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.
Adjusted net loss, adjusted EBITDA, cash
earnings and cash cost per pound of copper are not standardized
financial measures under IFRS and might not be comparable to
similar financial measures disclosed by other issuers.
Adjusted Net Loss and Adjusted Net Loss
Per Share
Adjusted net loss is derived from operating net
loss by removing the gains or loss, resulting from acquisition and
disposal of property, mark to market revaluation of derivative
instruments not related to the current period, net of tax,
unrealized foreign exchange gains or losses on non-current debt,
net of tax and other non-recurring items. Adjusted net loss in the
June 2022 quarter was $29.7 million ($0.21 per share) compared to
an adjusted net loss of $5.1 million ($0.04 per share) in the 2021
comparative quarter. We believe that the presentation of adjusted
net loss helps investors better understand the results of our
normal operating activities and the ongoing cash generating
potential of our business.
Adjusted EBITDA
Adjusted EBITDA in the June 2022 quarter was
negative $23.0 million compared to positive $8.3 million in the
2021 comparative quarter. We define adjusted EBITDA as net loss
before interest expense, taxes, depletion, and depreciation, and as
adjusted for certain other items.
We believe that the presentation of adjusted
EBITDA is appropriate to provide additional information to
investors about certain non-cash items and is useful to investors
as an important indicator of our operations and the performance of
our core business.
Cash Earnings and Cash Earnings Per
Share
Cash earnings in the June 2022 quarter was
negative $23.1 million compared to positive $8.1 million in the
2021 comparative quarter. Cash earnings per share was negative
$0.16 in the June 2022 quarter compared to positive $0.06 in the
2021 comparative quarter.
Cash earnings and cash earnings per share are
measures used by the Company to evaluate its performance however
they are not terms recognized under IFRS. We believe that the
presentation of cash earnings and cash earnings per share is
appropriate to provide additional information to investors about
how well the Company can earn cash to pay its debts and manage its
operating expenses and investment. Cash earnings is defined as cash
flow from operations before the net change in non-cash working
capital balances, income and mining taxes paid, and interest paid.
Cash earnings per share is the same measure divided by the weighted
average number of common shares outstanding during the year.
Cash Cost Per Pound of Copper
Produced
Company is primarily a copper producer and
therefore calculates this non-IFRS financial measure individually
for its three copper mines, Red Chris (30% share), Mount Polley and
Huckleberry, and on a composite basis for these mines.
Variations from period to period in the cash
cost per pound of copper produced are the result of many factors
including: grade, metal recoveries, amount of stripping charged to
operations, mine and mill operating conditions, labour and other
cost inputs, transportation and warehousing costs, treatment and
refining costs, the amount of by-product and other revenues, the
US$ to CDN$ exchange rate and the amount of copper produced.
Idle mine and mine restart costs during the
periods when the Huckleberry and Mount Polley mines are not in
operation have been excluded from the cash cost per pound of copper
produced.
Calculation of Cash Cost Per Pound of Copper
Produced
expressed in
thousands of dollars,except cash cost per pound of copper
produced |
Three Months Ended June 30 |
Six Months Ended June 30 |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Cash cost of copper produced in US$ |
$ |
9,609 |
$ |
11,995 |
$ |
20,750 |
$ |
25,346 |
Copper produced – pounds |
|
6,602 |
|
5,272 |
|
10,595 |
|
10,037 |
Cash cost per lb copper
produced in US$ |
$ |
1.46 |
$ |
2.28 |
$ |
1.96 |
$ |
2.53 |
For detailed information, refer to Imperial’s
2022 Second Quarter Report available on imperialmetals.com and
sedar.com
About Imperial
Imperial is a Vancouver based exploration, mine
development and operating company with holdings that include the
Mount Polley mine (100%), the Huckleberry mine (100%), the Red
Chris mine (30%). Imperial also holds a portfolio of 23 greenfield
exploration properties in British Columbia.
Company Contacts
Brian Kynoch | President | 604.669.8959
Darb Dhillon | Chief Financial Officer |
604.669.8959
Cautionary Note Regarding
Forward-Looking Statements
Certain information contained in this news
release are not statements of historical fact and are
“forward-looking” statements. Forward-looking statements relate to
future events or future performance and reflect Company
management’s expectations or beliefs regarding future events and
include, but are not limited to, statements regarding the Company’s
expectations with respect to the impact of COVID-19 on the
Company’s business and operations; metal pricing and demand;
fluctuation of revenues; potential development plans and mining
methods at Red Chris; progress and advancement of the exploration
decline; timing regarding completion of the Block Cave Feasibility
Study; expectations regarding care, maintenance and rehabilitation
activities at Mount Polley and Huckleberry; expectations regarding
timing of mine restart plans at Huckleberry; metal production
guidance and estimates; expectations and timing regarding current
and future exploration and drilling programs; and expectations
regarding the usefulness of non-IFRS financial measures including
adjusted net loss, adjusted EBITDA, cash earnings and cash cost per
pound of copper.
In certain cases, forward-looking statements can
be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "outlook", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or statements that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved" or the negative of these terms or comparable terminology.
By their very nature forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements.
In making the forward-looking statements in this
news release, the Company has applied certain factors and
assumptions that are based on information currently available to
the Company as well as the Company’s current beliefs and
assumptions. These factors and assumptions and beliefs and
assumptions include, the risk factors detailed from time to time in
the Company’s interim and annual financial statements and
management’s discussion and analysis of those statements, all of
which are filed and available for review on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended, many of which are
beyond the Company’s ability to control or predict. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements and all forward-looking statements in this news release
are qualified by these cautionary statements.
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