Imperial Reports 2013 Financial Results

March 31, 2014

Imperial Metals Corporation (the “Company”) (III-TSX) reports financial results for its fiscal year ended December 31, 2013(1). Net income for the year ended December 31, 2013 was $41.0 million ($0.55 per share) compared to net income of $32.6 million ($0.44 per share) in 2012. In addition to variances in revenues and income from mine operations, variations in net income period over period are predominately attributable to movements in foreign exchange and realized and unrealized gains and losses on derivative instruments and taxes.

In 2013 net income was negatively impacted by foreign exchange losses of $2.5 million compared to foreign exchange losses of $0.5 million in 2012 primarily on foreign exchange movements on the increased US Dollar debt being carried by the Company. The average CDN/US Dollar exchange rate in 2013 was 1.03 compared to an average of 1.00 in 2012, and at December 31, 2013 the CDN/US Dollar exchange rate was 1.06.

In 2013 the Company recorded gains on derivative instruments of $1.6 million compared to losses of $2.8 million in 2012. The decrease in the copper and gold price compared to the price in the derivative contracts resulted in a gain in 2013 compared to a loss in 2012.

Revenues were $187.8 million in 2013 compared to $199.4 million in 2012. Revenues are impacted by the timing and quantity of concentrate shipments, metal prices and exchange rate, and period end revaluations of revenue attributed to concentrate shipments where copper price will settle at a future date. The decrease in revenue in 2013 over 2012 is due to lower copper and gold prices partially offset by a weaker Canadian dollar and a larger volume of concentrate shipped for the year. There were eight concentrate shipments in 2013 compared to seven shipments in 2012. The increase in shipment volumes was more than offset by lower copper and gold prices in 2013 compared to 2012.

The London Metals Exchange cash settlement copper price per pound averaged US$3.32 in 2013 compared to US$3.61 in 2012. The London Metals Exchange cash settlement gold price per troy ounce averaged US$1,411 in 2013 compared to US$1,667 in 2012. The CDN Dollar compared to the US Dollar averaged about 3% lower in 2013 than in 2012. In CDN Dollar terms the average copper price in 2013 was CDN$3.42 per pound compared to CDN$3.61 per pound in 2012 and the average gold price in 2013 was CDN$1,451 per ounce compared to CDN$1,667 per ounce in 2012.

Revenue in 2013 was decreased by a $7.1 million negative revenue revaluation compared to a negative revenue revaluation of $2.5 million in 2012. Negative revenue revaluations are the result of the copper price on the settlement date and/or the current period balance sheet date being lower than when the revenue was initially recorded or the copper price at the last balance sheet date. The copper price started the year at US$3.67 per pound and ended the year at US$3.35 per pound, compared to the prior year where the copper price started the year at US$3.48 per pound and ended the year US$3.59 per pound.

Income from mine operations increased to $64.3 million from $56.9 million in 2012 as result improved contribution margins from mine operations.

The Company recorded $8.3 million as its equity share of Huckleberry’s net income during 2013 compared to $5.5 million equity income in 2012.

Income and mining tax expense increased by $4.3 million from 2012 to 2013 due primarily to higher income before taxes.

Cash flow increased to $78.2 million in 2013 from $66.6 million in 2012. Cash flow is a measure used by the Company to evaluate its performance, however, it is not a term recognized under IFRS in Canada. Cash flow 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. The Company believes cash flow is useful to investors and it is one of the measures used by management to assess the financial performance of the Company.

Capital expenditures of $397.2 million in 2013, inclusive of equipment financed by long term debt and capitalized interest, were up from $147.9 million in 2012. The expenditures in 2013 were financed by cash flow from the Mount Polley mine, short term and non-current debt and $38.9 million in equipment financing. At December 31, 2013 the Company had $3.1 million (December, 2012-$2.8 million) in cash. The short term debt balance at December 31, 2013 was $132.4 million (December 31, 2012-$92.4 million). The increase in the short term debt is primarily due to funding the development of the Red Chris project with short term debt which subsequent to year end was fully repaid from the long term financings.

Read More: http://www.imperialmetals.com/s/News_2014.asp?ReportID=645299

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