SCOTTSDALE, AZ -- (Marketwired) -- 11/14/13 -- International Minerals Corporation (TSX: IMZ) (SWISS: IMZ) (the "Company" or "IMZ") is pleased to report its operating achievements and financial results for the first fiscal quarter ended September 30, 2013.
All dollar amounts in this news release are reported in US Dollars, unless otherwise noted.
Material Events
On October 1, 2013 (see the Company's news release of that date), Hochschild Mining plc ("Hochschild"), HOC Holdings Canada Inc. (a subsidiary of Hochschild), IMZ and Chaparral Gold Corp ("Chaparral Gold"), a wholly-owned subsidiary of IMZ, entered into a binding arrangement agreement providing for the acquisition of the Company by Hochschild by way of a plan of arrangement transaction (the "Arrangement").
Under the terms of the Arrangement, each IMZ Shareholder (other than Hochschild in respect of the cash portion of the consideration) will receive: (i) cash consideration of $2.38 per IMZ share and (ii) that number of common shares of Chaparral Gold as is equal to the number of IMZ shares held.
Completion of the Arrangement is subject to, among other things, the affirmative vote of at least two-thirds of the votes cast at the meeting by IMZ shareholders and IMZ optionholders voting together as a single class. In addition, Canadian securities law requires minority shareholder approval for the transaction, which means the affirmative vote of at least a simple majority of the votes cast by IMZ shareholders (excluding Hochschild's 3.76 million shares of IMZ and any other shares of any other shareholder excluded under applicable securities laws).
On completion of the Arrangement, IMZ will become an indirect wholly-owned subsidiary of Hochschild including all of the rights, title and interest of IMZ in its Peruvian subsidiaries and its Peruvian mineral projects. The former IMZ shareholders (including Hochschild) will own 100% of the outstanding common shares of Chaparral Gold Corp. All of the rights, title and interest of the non-Peruvian assets and liabilities of IMZ will be transferred to Chaparral Gold Corp. prior to the closing of the Arrangement, including IMZ's cash and receivables (estimated at approximately $58 million) and IMZ's non-Peruvian assets (primarily Nevada assets) and related liabilities.
At the Gemfield project, which is part of the 100%-owned Goldfield property in Nevada, the Company has received confirmation from the U.S. Bureau of Land Management that the Mine Plan of Operations is administratively complete. The acceptance of the Mine Plan of Operations has commenced the formal Environmental Impact Study work and all other permitting activity required for the project. Permitting is expected to take approximately 18 months from the September 2013 acceptance by the US Bureau of Land Management of the Mine Plan of Operations.
Spending Reduction Initiatives
In May 2013, the Company advised shareholders of certain spending reduction initiatives implemented in response to negative developments in the commodity and mining equity markets. On an annualized basis, the spending reductions are on target to meet or exceed the Company's forecast spending reduction targets.
The following is a summary of the results of these initiatives for the first full quarter ended September 30, 2013 ("Q1 2014") during which the cost reduction initiatives were implemented:
- At the Pallancata Mine, expenditures (on a 100% basis) during Q1 2014 were $38.3 million compared to $43.7 million for the quarter ended September 30, 2012 ("Q1 2013"), for a reduction of 12.5%. On an annualized basis, this would reduce expenditure at Pallancata by over $20 million.
- IMZ's administrative and exploration costs in Peru totaled $238,900 in Q1 2014 compared to $485,400 in Q1 2013, a decrease of approximately 51%. In the USA, the Company spent $1.8 million compared to $4.7 million in Q1 2013, a decrease of 62%.
In addition, the Company also made significant reductions in manpower, which should result in sustained cost savings in future years.
It should be noted, however, that the administrative costs for Peru and the USA for Q1 2014 exclude legal, administrative and accounting costs incurred to date associated with the proposed Arrangement with Hochschild, which was announced on October 1, 2013. These costs were not contemplated when the spending reduction initiatives were first implemented by the Company in May, 2013.
Financial Performance for the First Fiscal Quarter Ended September 30, 2013:
For Q1 2014, the Company reported:
- net income from continuing operations after tax of $952,815 ($0.01 per share), which was driven primarily by earnings from the Pallancata Mine of $2,482,200 (IMZ's 40% share) compared to net income from continuing operations after tax of $10,674,646 ($0.09 per share) for Q1 2013. The main reason for the reduced income at Pallancata was the significant decline in gold and silver prices which reduced reported revenues;
- a loss from discontinued operations after tax of $240,000 compared to a net loss from discontinued operations after tax of $1,061,890 for Q1 2013. The losses in both periods were a result of ongoing maintenance and closure costs associated with the Ecuadorian discontinued operations;
- net and comprehensive income after tax of $712,815 ($0.01 per share) compared to a net and comprehensive income after tax of $9,612,756 ($0.08 per share) for Q1 2013; and
- other factors which materially impacted reported income included:
- the Pallancata Mine operations reported income of $2,482,200 (IMZ's 40% share) compared to income of $10,681,607 in Q1 2013. The impact of the decline in silver and gold prices accounted for the majority of the earnings decline. During Q1 2014, as compared to Q1 2013, the average silver price decreased to $21.37 per ounce from $29.91 per ounce. Silver ounces sold (IMZ 40% share) decreased to 639,622 ounces from 660,140 ounces in Q1 2013. In addition, IMZ's share of gold sales decreased marginally to 2,195 ounces in Q1 2014 from 2,348 ounces in Q1 2013, while the average gold price decreased to $1,328 per ounce from $1,655 per ounce, respectively.
- during Q1 2014, other income items contributed to income from continuing operations by $224,925 compared to the contribution from other income items of $1,547,592 in Q1 2013. In Q1 2013, the Company recorded substantially larger gains on foreign exchange and on investments than in Q1 2014. In Q1 2013 interest income was also about $43,000 greater than in Q1 2014.
- during Q1 2014, expenses totaled $1,754,310 compared to $1,554,553 in Q1 2013. The increase in expenses in Q1 2014 was a result of an increase in administration and salaries expenses related to general exploration administration costs that were capitalized in prior periods and also because the Company incurred a significant increase in legal fees relating to costs associated with the proposed Arrangement with Hochschild.
- the Pallancata Mine operations reported income of $2,482,200 (IMZ's 40% share) compared to income of $10,681,607 in Q1 2013. The impact of the decline in silver and gold prices accounted for the majority of the earnings decline. During Q1 2014, as compared to Q1 2013, the average silver price decreased to $21.37 per ounce from $29.91 per ounce. Silver ounces sold (IMZ 40% share) decreased to 639,622 ounces from 660,140 ounces in Q1 2013. In addition, IMZ's share of gold sales decreased marginally to 2,195 ounces in Q1 2014 from 2,348 ounces in Q1 2013, while the average gold price decreased to $1,328 per ounce from $1,655 per ounce, respectively.
Operating Statistics for the Pallancata Mine (100% project basis).
The table below reports key operating and cost statistics for the Pallancata Mine for the fiscal quarters ended September 30, 2013 and 2012 and for the most recently completed fiscal and calendar years.
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Quarter Quarter Fiscal Calendar
Ended Ended Year Ended Year Ended
09/30/2013 09/30/2012 06/30/2013 12/31/2012
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Ore mined (tonnes) 272,466 276,459 1,091,078 1,059,329
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Ore processed (tonnes) 273,147 277,092 1,089,744 1,094,250
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Head grade- Ag (grams/tonne) (1) 264 257 253 256
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Head grade- Au (grams/tonne) (1) 1.1 1.2 1.2 1.1
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Silver production (ounces) (2) 1,896,426 1,893,274 7,368,722 7,440,604
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Gold production (ounces) (2) 6,758 6,814 28,322 26,231
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Silver sold (ounces) (3) 1,599,060 1,651,900 7,312,860 7,279,600
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Gold sold (ounces) (3) 5,487 5,870 27,308 25,100
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IMZ total cash costs per ounce
silver produced, net of by- $9.78 $8.49 $9.27 $9.16
product credits (US$) (4)
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Total cash costs, per ounce
silver equivalents produced $11.89 $12.05 $12.71 $12.65
(US$) (5)
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All-in Sustaining Mine costs,
per ounce silver equivalent $17.42 $20.34 $19.86 $20.52
sold (US$) (6)
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Notes:
1. The reported head grades for silver and gold are based on the overall metallurgical balance for the process plant.
2. The difference between "produced" metal ounces and "sold" metal ounces is in-process concentrate. Numbers for gold and silver ounces in the sold category have been rounded.
3. Silver and gold ounces sold are reported as gross ounces.
4. Total cash costs per ounce silver produced, using the Gold Institute definition, comprise: mine operating costs, mined ore inventory adjustment, toll processing costs, mine general and administrative costs, Hochschild management fee, concentrate transportation and smelting costs, and government royalty. This cost per ounce metric is net of gold by-product credits.
5. Total cash costs per ounce silver equivalent produced using the Gold Institute definition, comprise: mine operating costs, mined ore inventory adjustment, toll processing costs, mine general and administrative costs, Hochschild management fee, concentrate transportation and smelting costs, and government royalty. Silver equivalent ounces produced is equal to silver ounces produced plus gold ounces produced converted to silver ounces produced using the spot monthly average price ratio between gold and silver.
6. All-in Sustaining Mine Costs per ounce silver equivalent sold (as defined by the Company) includes total cash costs plus mine plant and equipment, deferred mine development, all mine related exploration, workers' profit share and all community spending related to the mine. Silver equivalent ounces sold is equal to silver ounces sold plus gold ounces sold converted to silver ounces sold using the spot monthly average price ratio between gold and silver. All-in Sustaining Mine Costs are defined in the Company's management discussion and analysis filed on SEDAR on November 14, 2013.
Company Outlook
If the Arrangement is completed as contemplated, then the "Company Outlook" activities below related to Pallancata and Inmaculada will not be applicable to the Company. Additional information concerning the proposed Arrangement, including certain risk factors and financial information may be found in IMZ's Management Information Circular for the 2013 Annual Meeting of Shareholders and Special Meeting of Securityholders filed on SEDAR or available on the Company's website at www.intlminerals.com.
During the remainder of the 2013 calendar year and for the 2014 fiscal and calendar years, the Company's exploration and development efforts are expected to focus primarily on:
- At the 40%-owned Pallancata Silver Mine in Peru, working with Hochschild to (a) produce approximately 7.4 million ounces of silver and 26,000 ounces of gold during both calendar periods (the Company's estimate on a 100% project basis), (b) increase profitability by reducing both operating and capital expenditures., and (c) increase mineral resources and reserves to extend the existing mine life (approximately 3.5 years based on current reserves).
- At the 40%-owned Inmaculada gold-silver project, also in Peru, in cooperation with Hochschild advancing the project to production in the second half of 2014, subject to financing of IMZ's share of the remaining capital expenditures (approximately $56 million) and the timely receipts of all permits required for the mine.
- At the 100%-owned Gemfield heap leach gold project at the Goldfield property in Nevada, completing the permitting and commencing construction, subject to financing, with a goal of commencing production in the second half of 2016.
- Continually evaluating all facets of the Company's capital, technical and administrative expenditures to reduce costs in response to the current depressed market conditions in the mining sector and precious metal markets.
- Continuing to seek strategic acquisitions in precious metals properties and/or companies in low political risk countries in the Americas.
Hochschild Mining plc does not accept any responsibility for the adequacy or inadequacy of the disclosure made in this news release and any such responsibility is hereby disclaimed in all respects.
The Company's Financial Statements and Management's Discussion and Analysis (MD&A) are posted on the Company's website at: www.intlminerals.com/investors/financial-reports or at www.sedar.com under the Company's name.
Cautionary Statement:
The Gold Institute calculation of Total Cash Costs per ounce of silver produced, Total Cash Costs per ounce of silver equivalents produced and the Company's calculation of All-in Sustaining Mine Costs per silver equivalent ounces sold are non-IFRS financial measures, which Company management believes are useful in measuring operational performance. Please refer to the Company's Management's Discussion and Analysis for the fiscal quarter ended September 30, 2013 (on SEDAR) for a detailed description of how these cost metrics are calculated. Some of the statements contained in this release are "forward-looking statements" within the meaning of Canadian securities law requirements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this release include statements regarding, production expectations, estimates of costs on a per ounce basis (produced or sold) drilling and development programs on the Company's projects, timing of completion of economic studies, construction and production schedules, the outcome of the securityholders' vote regarding the plan of arrangement with Hochschild at the Company's 2013 Annual Meeting of Shareholders and Special Meeting of Securityholders and, obtaining any required environmental, construction and production permits. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to obtaining mining and environmental permits; delays in completing economic studies mining and development risks; financing risks; risk of commodity price fluctuations; the uncertainty in estimating and then obtaining the fair market value of the Rio Blanco receivable, certain estimates and assumptions used in determining the Company's financial results, political and regulatory risks; the outcome of the securityholders' vote concerning to the proposed plan of arrangement transaction with Hochschild and other risks and uncertainties detailed in the Company's Annual Information Form for the year ended June 30, 2013, and the Company's Management Information Circular for the 2013 Annual Meeting of Shareholders and Special Meeting of Securityholders, which are available at www.sedar.com under the Company's name. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
INTERNATIONAL MINERALS CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Expressed in United States dollars)
(Unaudited)
September 30, June 30,
2013 2013
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ASSETS
Current
Cash and equivalents $ 51,470,277 $ 58,199,104
Receivables 97,558 38,652
Due from related party 292 40,662
Prepaid expenses and deposits 52,318 90,316
Investments 866,893 1,040,678
Discontinued operations - receivables 12,418,409 12,523,409
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Current assets 64,905,747 71,932,821
Non-current
Property, plant and equipment 34,854,001 34,209,262
Investment in associate 180,908,273 178,606,440
Investment in resource properties 50,891,473 50,574,239
Discontinued operations - receivables 2,287,013 2,287,013
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Non-current assets 268,940,760 265,676,954
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Total assets $ 333,846,507 $ 337,609,775
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accruals $ 1,104,770 $ 1,565,261
Due to related parties 138,218 5,813
Discontinued operations - Ecuador resource
properties 416,325 4,720,866
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Current liabilities 1,659,313 6,291,940
Non-current
Deferred income tax liability 8,160,000 8,160,000
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Non-current liabilities 8,160,000 8,160,000
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Shareholders' equity
Capital stock 240,924,988 240,924,988
Reserves 5,099,526 5,163,916
Equity gain on carried interest 40,000,000 40,000,000
Retained earnings 38,002,680 37,068,931
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Shareholders' equity 324,027,194 323,157,835
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Total liabilities and shareholders' equity $ 333,846,507 $ 337,609,775
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Nature and continuance of operations
Subsequent events
Approved on November 12, 2013 by the Directors:
"Stephen J. Kay" Director "W. Michael Smith" Director
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Stephen J. Kay W. Michael Smith
The accompanying notes are an integral part of these consolidated financial statements and can be found on the Company's website at:
http://www.intlminerals.com/investors/financial-reports.
INTERNATIONAL MINERALS CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in United States dollars)
For the three months ended September 30 (Unaudited)
2013 2012
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Income from associate, Minera Suyamarca S.A.C. $ 2,482,200 $ 10,681,607
Other income 224,925 1,547,592
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Total income 2,707,125 12,229,199
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Expenses
Amortization and depreciation (190,001) (195,727)
Salaries and employee benefits (807,188) (590,099)
Administrative costs (600,577) (514,148)
Stock-based compensation (156,544) (254,579)
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Total expenses (1,754,310) (1,554,553)
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Income from continuing operations before taxes 952,815 10,674,646
Income taxes - -
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Income from continuing operations after taxes 952,815 10,674,646
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Discontinued operations, net of taxes
Costs of discontinued operations - Ecuador
resource properties (240,000) (1,061,890)
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(Loss) from discontinued operations (240,000) (1,061,890)
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Net income and comprehensive income after taxes $ 712,815 $ 9,612,756
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Income from continuing operations after taxes
per common share
Basic $ 0.01 $ 0.09
Diluted $ 0.01 $ 0.09
(Loss) from discontinued operations after taxes
per common share
Basic $ (0.00) $ (0.01)
Diluted $ (0.00) $ (0.01)
Net income after taxes per common share
Basic $ 0.01 $ 0.08
Diluted $ 0.01 $ 0.08
============ ============
Weighted average number of common shares
outstanding - basic 117,636,376 117,585,887
Weighted average number of common shares
outstanding - diluted 117,636,376 117,913,846
============ ============
The accompanying notes are an integral part of these consolidated financial statements and can be found on the Company's website at:
http://www.intlminerals.com/investors/financial-reports.
INTERNATIONAL MINERALS CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
For the three months ended September 30 (Unaudited)
2013 2012
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CASH FLOW FROM CONTINUING OPERATIONS
Net income for the period from continuing
operations $ 952,815 $ 10,674,646
Adjustments to net income:
Amortization and depreciation 190,001 195,727
Stock-based compensation 156,544 254,579
Unrealized foreign exchange gain (7,442) (66,197)
Realized gain on sale of investments (73,498) (200,456)
Unrealized gain on investments (31,735) (453,944)
Equity income from investment in associate (2,482,200) (10,681,607)
Interest income (57,927) (101,084)
Cash distributions received from investment
in associate - 6,000,000
Changes in non-cash working capital items:
(Increase) decrease in receivables (38,747) 52,508
Decrease (increase) in prepaid expenses and
deposits 37,998 (7,590)
(Decrease) increase in accounts payable (103,935) 170,488
Decrease in due from related party 40,370 193,528
Increase in due to related party 132,405 17,780
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Net cash flow (used in) provided by continuing
operations (1,285,351) 6,048,378
Discontinued operations - Ecuador resource
properties (4,439,541) (1,019,403)
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Net cash flow (used in) discontinued
operations (4,439,541) (1,019,403)
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Net cash flow (used in) provided by operating
activities (5,724,892) 5,028,975
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CASH FLOW FROM (USED IN) FINANCING ACTIVITIES
Proceeds from the issuance of common shares - 18,327
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Net cash flow (used in) financing activities - 18,327
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CASH FLOW FROM (USED IN) INVESTING ACTIVITIES
Resource property expenditures (267,246) (4,293,249)
Purchase of investments - -
Sale of investments 286,460 1,115,193
Interest received 37,767 98,317
Property, plant and equipment expenditures (1,060,916) (14,942)
Reclamation bond deposit - (25,000)
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Net cash flow (used in) investing activities (1,003,935) (3,119,681)
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Change in cash and equivalents for the period (6,728,827) 1,927,621
Cash and equivalents, beginning of period 58,199,104 81,243,474
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Cash and equivalents, end of period $ 51,470,277 $ 83,171,095
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The accompanying notes are an integral part of these consolidated financial statements and can be found on the Company's website at:
http://www.intlminerals.com/investors/financial-reports.
For additional information, contact:
In North America:
Paul Durham
VP Corporate Relations
Tel: +1 203-940-2538
In Europe:
Oliver Holzer
Marketing Consultant
+41 44 853 00 47
Renmark Financial Communications:
Robert Thaemlitz
+1-514-939-3989
Email Contact
Or email us at: Email Contact
Internet Site: http://www.intlminerals.com
