Capstone Mining today reported that net earnings for 1Q18 surged to US$6.7 million, compared to a loss of US$7.4 million in the same period of 2017. This change was mainly due to the sale of the Minto mine in Yukon, Canada.
Another factor that affected higher net income was increased copper production of 15,152 tons from 14,890 and the associated price increase, as realized prices reached US$2.98/lb compared to US$2.73/lb in 2017.
The operator’s revenues also increased to US$103.1 million, up from US$97.9 million in 1Q17. Cash flow from operating activities increased to US$32.8 million in 1Q18, up 49 percent from US$22 million in 1Q17.
Capstone also made efforts to reduce debt, with long term debt dropping 12 percent to US$274.9 million from US$308.9 million in 1Q17. Net debt reached US160.1 million in 1Q18, down 20 percent from US$199.5 million in 1Q17.
“Capstone reported positive net income and cash flow in the first quarter of 2018, on contributions from both Pinto Valley and Cozamin,” said Darren Pylot, President and CEO of Capstone. “We also announced the sale of our Minto mine for US$37.5 million of cash plus working capital.”
Capston operates two mines, the Pinto Valley concession in Phoenix, Arizona and the Cozamin mine in Zacatecas. Copper revenues at the Cozamin mine amounted to US$26.1 million, lagging behind Pinto Valley at US$79.1 million. However, high production costs and depletion and amortization at Pinto Valley meant net income at Cozamin beat Pinto Valley at US$10.5 million compared to US$6.6 million.
Additionally, Capstone decided to increase cost guidance by US$3 million as a result of its decision to mine the San Rafael zinc zone on the Cozamin property. According to the company, this will “reflect lower unit costs resulting from the additional zinc resources expected to be mined from the San Rafael deposit in 2018, lowering Cozamin’s expected 2018 cash cost by approximately US$0.25 and AISC by approximately US$0.15 per payable pound of copper produced.”
As a result of the San Rafael deposit, containing an additional 7-12 million lb/y, contained zinc production is expected to double. Approximately 200,000oz/y of silver are expected, with associated increases to by-product credits over the next three years. Copper production remains unchanged.
The full report can be found here.