Imperial Reports Second Quarter 2019 Financial Results
Press Release
Vancouver | August 14, 2019 | Imperial Metals Corporation (the “Company”) (TSX:III) reports financial results for the three and six months ended June 30, 2019, as summarized in this release and discussed in detail in the Management’s Discussion
- The Company’s financial results are prepared in accordance with International Financial Reporting Standards. The reporting currency of the Company is the Canadian (“CDN”) Dollar.
QUARTER HIGHLIGHTS
FINANCIAL
On March 10, 2019, the Company entered into an agreement to sell a 70% interest in the Red Chris mine to Newcrest. In accordance with IFRS, the Company has classified Red Chris mine as a discontinued operation effective January 1, 2019 and asset held for sale as at June 30, 2019, and the prior year comparative quarter consolidated statement of income (loss) has been restated accordingly.
Total revenue increased to $83.6 million in the June 2019 quarter compared to $80.1 million in the 2018 comparative quarter, an increase of $3.5 million or 4.4%.
Revenue from the Red Chris mine in the June 2019 quarter was $61.9 million compared to $57.3 million in the 2018 comparative quarter. This increase was attributable to a higher quantity of copper concentrate sold along with slightly higher gold prices partially offset by lower copper prices and a negative revenue revaluation.
Revenue from the Mount Polley mine in the June 2019 quarter was $21.7 million compared to $22.8 million in the 2018 comparative quarter. The decrease was attributable to lower sales volumes and metal prices.
In the June 2019 quarter there were 3.1 concentrate shipments from the Red Chris mine (2018-2.6 concentrate shipments) and 0.7 concentrate shipments from the Mount Polley mine (2018-0.7 concentrate shipment). 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$2.77 in the June 2019 quarter compared to US$3.12 in the 2018 comparative quarter. The London Metals Exchange cash settlement gold price per troy ounce averaged US$1,310 in the June 2019 quarter compared to US$1,306 in the 2018 comparative quarter. The average CDN/US Dollar exchange rate was 1.338 in the June 2019 quarter, 3.6% higher than the exchange rate of 1.291 in the June 2018 quarter. In CDN Dollar terms the average copper price in the June 2019 quarter was CDN$3.71 per pound compared to CDN$4.03 per pound in the 2018 comparative quarter, and the average gold price in the June 2019 quarter was CDN$1,752 per ounce compared to CDN$1,686 per ounce in the 2018 comparative quarter.
Revenue in the June 2019 quarter decreased by $4.8 million due to a negative revenue revaluation as compared to a $6.9 million negative revenue revaluation in the 2018 comparative quarter. Revenue revaluations are the result of the metal prices 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 prices at the last balance sheet date and finalization of contained metal as a result of final assays.
Net loss from continuing operations for the June 2019 quarter was $9.7 million ($0.08 per share) compared to net loss of $22.4 million ($0.19 per share) in the 2018 comparative quarter. The decrease in net loss of $12.7 million was primarily due to the following factors:
Loss from mine operations went from a loss of $1.2 million in June 2018 to a loss of $2.2 million in June 2019, an increase in loss of $1.0 million.
Interest expense went from $18.3 million in June 2018 to $18.1 million in June 2019, a decrease in loss of $0.2 million.
Foreign exchange gains/losses went from a loss of $9.2 million in June 2018 to a gain of $9.1 million in June 2019, a decrease in loss of $18.3 million. The average CDN/US Dollar exchange rate in the June 2019 quarter was 1.338 compared to an average of 1.291 in the 2018 comparative quarter.
Tax recovery went from $10.7 million in June 2018 to $4.0 million in June 2019, an increase in loss of $6.7 million.
Cash flow from continuing operations was $0.2 million in the June 2019 quarter compared to $0.8 million in the 2018 comparative quarter. Cash flow is a measure used by the Company to evaluate its performance, however, it is not a term recognized under IFRS. 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 attributed to continuing operations was $0.6 million in the June 2019 quarter, down from $3.4 million in the 2018 comparative quarter. The reduction was due to placing Mount Polley on care and maintenance.
At June 30, 2019, the Company has not hedged any copper, gold or CDN/US Dollar exchange. Quarterly revenues will fluctuate depending on copper and gold prices, the CDN/US Dollar exchange rate, and the timing of concentrate sales, which is dependent on concentrate production and the availability and scheduling of transportation.
OPERATIONS
Red Chris Mine(1)
Red Chris second quarter metal production was 17.60 million pounds copper and 7,580 ounces gold. Copper production was up from the first quarter by 26%, while gold production was down by 10%. Gold production was down on lower grade as virtually all mill feed came from the Main zone, with less feed coming from the mid pit area where gold grades are higher. Metal recoveries were 76.20% copper and 42.56% gold, compared to 73.84% copper and 48.06% gold achieved in the first quarter.
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