- Record quarterly production in Q4 2020 of 29.1 million pounds of copper equivalent (comprised of 23.1 million pounds of copper, 8,959 ounces of gold, and 144,934 ounces of silver).
- Full year 2020 production was 77.6 million pounds of copper, exceeding guidance of 70 to 75 million pounds.
- C1 cash cost in Q4 2020 was US$1.43/lb copper produced, all-in sustaining cost (AISC) was US$1.58/lb copper and all-in cost (AIC) was US$1.82/lb copper.
- Full year 2020 C1 cash cost was $1.53/lb copper, AISC was US$1.69/copper, and AIC was US$1.90 per pound, meeting the mid-point of improved and revised AIC guidance of US$1.80 to US$2.00/lb.
- Revenue for Q4 2020 was $106.1 million and for the full year was $341.7 million.
- Earnings per share for Q4 2020 was $0.10 and for the full year was $0.18.
- Cash flow from operations for Q4 2020 was $50.9 million and for the full year was $121.6 million.
- Cash and cash equivalents at the end of 2020 was $85.6 million, an increase of $32.0 million from the end of the third quarter of 2020 and a $53.4 million increase from December 31, 2019.
- In Q4 2020, restarted the Ball Mill 3 Expansion Project to 45,000 tonnes per day, which is expected to be completed in Q3 2021.
- In Q4 2020, a new life of mine plan was announced for the Copper Mountain Mine that includes a further mill expansion to 65,000 tonnes per day, demonstrating increased annual production, lower costs and a significantly higher net present value, when compared to the previous 2019 Technical Report.
“We continued to post another strong quarter with record quarterly production for copper, gold and silver.” commented Gil Clausen, Copper Mountain’s President and CEO. “We finished the year exceeding our annual production guidance and meeting our reduced AIC guidance. Our operating team did an exceptional job in 2020 navigating an uncertain and changing environment. We expect our low cost profile to remain in 2021 and for production to increase by up to 22% to the range of 85 to 95 million pounds of copper this year. Increased production will be driven by higher grades, as already experienced in the fourth quarter of 2020, and increased throughput and recovery following the commissioning of the 45,000 tonnes per day mill expansion planned for completion in the third quarter of 2021. We remain focused on advancing our organic growth pipeline, which includes the further mill expansion to 65,000 tonnes per day at the Copper Mountain Mine and the Eva Copper Project, while maximizing cash flow to continue to build on our healthy cash position.”
In Q4 2020, the Copper Mountain Mine produced a record 23.1 million pounds of copper, 8,959 ounces of gold, and 144,934 ounces of silver. Average mill feed grade increased to 0.40% Cu during the quarter, and 0.44% during the last two months, as compared to average feed grade of 0.31% Cu in Q4 2019. Mill feed grade increased through the quarter as the mill began to process higher grade Phase 3 ore. The higher-grade ore and improved recoveries were the primary reason for record production in Q4 2020.
The mill processed a total of 3.4 million tonnes of ore in Q4 2020 as compared to 3.7 million tonnes in Q4 2019. Mill tonnage was reduced during the last two months of the year to adjust the mill operation to handle an approximate 40% increase in mill feed head grade. Copper recovery was 77.3% in Q4 2020, as compared to copper recovery of 73.0% in Q4 2019, and mill availability averaged 94.1% for Q4 2020 as compared to 93.1% in Q4 2019.
C1 cash cost per pound of copper produced, net of by-product credits, for Q4 2020 decreased 31% to US$1.43 when compared to Q4 2019. The decrease in cost per pound in Q4 2020 was the result of increased production and higher by-product credits, driven by higher gold and silver prices and increased gold and silver production as compared to Q4 2019.
All-in sustaining cost per pound of copper produced (AISC) was US$1.58 in Q4 2020, 30% lower than Q4 2019. The low AISC carries forward from the low C1 cost per pound with addition of lower sustaining capital, lease and applicable administration expenditures of $4.7 million in Q4 2020 as compared to $5.2 million in Q4 2019.
All-in cost per pound of copper produced (AIC) for Q4 2020 improved by 21% to US$1.82 compared to Q4 2019. The low AIC carries forward from the low AISC with the addition of $7.2 million in deferred stripping and $nil of low-grade stockpile mining costs incurred in Q4 2020 as compared to $nil of deferred stripping and $0.8 million of low-grade stockpile costs in Q4 2019.
The significant decrease in C1, AISC, and AIC recognized in Q4 2020 as compared to past quarters was a result of the Company’s strong copper production, cost savings initiatives and operating efficiencies at the Copper Mountain mine, supplemented by an increase in precious metals prices and production for Q4 2020.
Full year 2020
For the full year of 2020, Copper Mountain Mine produced 77.6 million pounds of copper, exceeding 2020 production guidance. Gold and silver production for 2020 was 29,227 ounces of gold and 392,494 ounces of silver. This compares to 72.0 million pounds of copper, 26,747 ounces of gold, and 271,835 ounces of silver produced in 2019. Production was higher in 2020 as a result of processing higher grade ore from Phase 3 in the fourth quarter of 2020.
During the year, the mine processed a total of 14.2 million tonnes of ore at an average feed grade of 0.32% Cu and with a copper recovery of 78.0%. Mill availability averaged 92.4% in 2020 as compared to 93.2% in 2019, the difference being attributable to the maintenance schedule differences between the periods. The new ball mill transformers and SAG mill screen installed in 2019 performed reliably during 2020.
C1 cash cost per pound of copper produced, net of by-product credits, in 2020 decreased by 20% to US$1.53 when compared to 2019. Cash costs have decreased significantly as a result of the revised operating plan announced in Q2 2020 that reduced operating costs by re-sequencing short term production to lower cost mine phases. In addition, stronger precious metal prices experienced in 2020 that resulted in higher by-product credits contributed to lower C1 cash cost.
All-in sustaining costs per pound of copper produced (AISC) in 2020 decreased by 18% to US$1.69 as compared to 2019, driven by the lower C1 cash cost per pound. AISC includes $16.6 million in sustaining capital, lease and applicable administration expenditures, which compares to $13.6 million for 2019.
All-in costs per pound of copper produced (AIC), for 2020 decreased 22% to US$1.90 as compared to 2019. This is a significant decrease from the prior year and demonstrates the ability for the Company to adjust its operating plan to match market conditions to decrease total-all-in costs during the year, while remaining on track with the long-term development plan.
Fourth Quarter 2020
In Q4 2020, revenue was $106.1 million, net of pricing adjustments and treatment charges, compared to $73.7 million in Q4 2019. Q4 2020 revenue is based on the sale of 18.7 million pounds of copper, 7,253 ounces of gold, and 96,509 ounces of silver. This compares to 17.6 million pounds of copper, 6,008 ounces of gold and 76,847 ounces of silver sold in Q4 2019. As noted above, revenue increased significantly during the quarter as a result of increased sales and higher metal prices, including a positive mark to market and final adjustment on concentrate sales of $11.9 million as compared to a positive mark to market and final adjustment of $6.5 million for Q4 2019, a differential of approximately $5.4 million. Q4 2020 revenue before the mark-to-market adjustment is $94.2 million as compared to $67.2 million for Q4 2019.
Cost of sales in Q4 2020 was $58.8 million as compared to $72.1 million for Q4 2019. A substantial part of the decrease in cost of sales is a result of the Company’s cost savings initiatives resulting from the revised operating plan which included utilizing less equipment. Q4 2020 cost of sales did not include any mining costs being allocated to the low-grade stockpile and the Company allocated $8.4 million to deferred stripping. This is compared to Q4 2019 cost of sales which was net of only $0.9 million of deferred stripping and low-grade stockpile costs.
The Company reported net income of $28.5 million in Q4 2020, or $0.10 on a per share basis, as compared to a net loss of $35.7 million, or a loss of $0.14 per share for Q4 2019. The variance in the higher net income for 2020, as compared to 2019, was primarily a result of several items including:
- Significantly higher revenue as a result of higher realized copper, gold and silver prices of 25%, 26% and 42%, respectively, as compared to Q4 2019.
- The inclusion of a non-cash unrealized foreign exchange gain of $13.9 million in Q4 2020 as compared to a non-cash unrealized foreign exchange gain of $5.4 million in Q4 2019, a differential of approximately $8.4 million, which was primarily related to the Company’s debt that is denominated in US dollars.
- Q4 2019 included a one-time non-cash write-down of $48.8 million on the carrying value of the low-grade stockpile. This write-down was the result of the increased reserves and mine life of the Copper Mountain mine which deferred the milling of the low-grade stockpile to 2038. There was no write-down in Q4 2020.
On adjusted basis, the Company recorded a net income of $5.5 million in Q4 2020, or $0.03 on a per share basis, compared to $1.3 million in Q4 2019, or $0.01 on a per share basis.
Full Year 2020
Revenue for the full year of 2020 was $341.7 million, net of pricing adjustments and treatment charges, compared to $288.5 million in 2019. 2020 revenue is based on the sale of 73.3 million pounds of copper, 26,137 ounces of gold and 323,276 ounces of silver. This compares to 71.9 million pounds of copper, 26,478 ounces of gold and 254,541 ounces of silver sold in the same period 2019. The increase in revenue is primarily the result of higher gold and silver prices during the period as well as a positive mark to market adjustment on concentrate sales of $25.2 million as compared to $8.5 million for 2019, a differential of approximately $16.7 million. Mark to market adjustments are higher during periods of increasing copper prices and explains the increase in mark to market from the prior year.
Cost of sales for the full year of 2020 was $237.1 million as compared to $263.4 million for 2019. A substantial part of the decrease in cost of sales is a result of the Company’s cost savings initiatives resulting from the revised operating plan which included utilizing less equipment. Another contributing factor is lower deferred stripping and low-grade stockpile costs, which were $21.3 million for 2020 and $36.1 million for 2019, a difference of $14.8 million.
The Company reported net income of $50.3 million in 2020 compared to a net loss of $25.1 million in 2019. The variance in net income in 2020 was a result of several items including:
- Revenue was higher as a result of higher copper, gold and silver prices of 4.0%, 28.5% and 27.4%, respectively;
- Revenue included a higher positive mark to market adjustment from provisional pricing on concentrate sales of $16.7 million, compared 2019, as discussed above;
- In 2019, the Company recognized a one-time non-cash write-down of $48.8 million on the carrying value of the low-grade stockpile. This write-down was the result of the increased reserves and mine life of the Copper Mountain mine which deferred the milling of the low-grade stockpile to 2038. There were no write-downs in 2020.
On adjusted basis, the Company recorded a net income of $20.6 million in 2020, or $0.11 on a per share basis, compared to $0.8 million, or $0.00 on a per share basis, in 2019.
PROJECT DEVELOPMENT UPDATE
Late in 2020, on the strength of stronger metal prices and an increasing cash balance, the Company restarted the second and final stage of the Ball Mill 3 Expansion Project. The Ball Mill 3 Expansion Project is designed to increase mill throughput to 45,000 tonnes per day from 40,000 tonnes per day and improve copper recovery as a result of achieving a finer grind of ore. Demolition has been completed in the area where the third ball mill is to be installed and excavation work for the Ball Mill 3 foundations has commenced. The Ball Mill 3 Expansion Project is on track to complete commissioning by the end of Q3 2021.
On November 30, 2020, the Company announced a new life of mine plan for the Copper Mountain Mine, which included a proposed further mill expansion to 65,000 tonnes per day. The new life of mine plan increased the Copper Mountain Mine’s after-tax Net Asset Value (NPV) at an 8% discount rate to US$1.0 billion. Average annual production is expected to be approximately 106 million pounds of copper and 60,000 ounces of gold at average C1 cash costs of US$1.19 per pound (over the first ten years). The 65,000 tonnes per day expansion builds upon the 45,000 tonnes per day mill expansion currently underway.
Eva Copper Project
During the fourth quarter the Company advanced a project development alternative analysis for the Eva Copper Project for Board consideration. The Company expects to provide guidance on the project development plan in the second quarter of this year.
The Company expects production to increase up to the range of 85 to 95 million pounds of copper in 2021 as a result of higher grade. Similar to 2020, the Company expects production to be stronger in the second half of 2021 as a result of higher head grades and the commissioning of the Ball Mill 3 expansion project in the third quarter of 2021, which will improve recovery and increase throughput to 45,000 tonnes per day.
The Company expects all-in cost (AIC) to remain low in 2021, estimating AIC to be between US$1.80 to US$2.00 per pound as a result of higher production and improved grade.
Q4 and Year End 2020 FINANCIAL AND OPERATING RESULTS CONFERENCE CALL AND WEBCAST
Copper Mountain will host a conference call on Tuesday, February 16, 2021 at 7:30 am (Pacific Time) for senior management to discuss fourth quarter and full year 2020 results.
Toronto and international: 647-427-7450
North America (toll-free): 1-888-231-8191
To participate in the webcast live via computer go to:
Replay Call Information
Toronto and international: 416-849-0833, Passcode: 7194614
North America (toll-free): 1-855-859-2056, Passcode: 7194614
The conference call replay will be available until 8:59 pm (Pacific Time) on February 23, 2021. An archive of the audio webcast will also be available on the company’s website at http://www.cumtn.com.
About Copper Mountain Mining Corporation
Copper Mountain’s flagship asset is the 75% owned Copper Mountain mine located in southern British Columbia near the town of Princeton. The Copper Mountain mine currently produces approximately 100 million pounds of copper equivalent, with average annual production expected to increase to approximately 140 million pounds of copper equivalent. Copper Mountain also has the development-stage Eva Copper Project in Queensland, Australia and an extensive 2,100 km2 highly prospective land package in the Mount Isa area. Copper Mountain trades on the Toronto Stock Exchange under the symbol “CMMC” and Australian Stock Exchange under the symbol “C6C”.
Additional information is available on the Company’s web page at www.CuMtn.com.
Cautionary Note Regarding Forward-Looking Statements
This news release may contain forward-looking statements and forward-looking information (together, “forward-looking statements”) within the meaning of applicable securities laws. All statements, other than statements of historical facts, are forward-looking statements. Generally, forward-looking statements can be identified by the use of terminology such as “plans”, “expects”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “occur” or “be achieved”. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance and opportunities to differ materially from those implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include the successful exploration of the Company’s properties in Canada and Australia, the reliability of the historical data referenced in this press release and risks set out in Copper Mountain’s public documents, including in each management discussion and analysis, filed on SEDAR at www.sedar.com. Although Copper Mountain believes that the information and assumptions used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by applicable law, Copper Mountain disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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