International Minerals Reports $12.9 Million in Pre-Tax Net Income for Third Fiscal Quarter Ending March 31, 2011
SCOTTSDALE, AZ -- (Marketwire) -- 05/16/11 -- International Minerals Corporation (TSX: IMZ) (SWISS: IMZ) (the 'Company') reports excellent financial results for
the third fiscal quarter ended March 31, 2011 (the 'current quarter'),
highlighted by $12.9 million in consolidated net and comprehensive income
before the provision for future income taxes, including record net equity
earnings of $16.5 million from the Company's 40% interest in the Pallancata
Mine in Peru. For the nine months ended March 31, 2011 the Company reported
net and comprehensive income before the provision for future income taxes
of $38.1 million and after tax income of $31.4 million ($0.27 per common
share).
Subsequent to the end of the current quarter, the Company received a record
quarterly dividend distribution of $26.0 million as its 40% share of the
total dividend distribution of $65 million from the Pallancata Mine. This
brings the cumulative dividend distributions received by IMZ to $69.6
million since the mine was first placed into production in September 2007.
All amounts in this news release are reported in US dollars.
Highlights for the Three-Month Period Ended March 31, 2011:
During the current quarter, the Company achieved the following significant
results:
-- The Company reported net and comprehensive earnings (before the
provision for future income taxes) of $12.9 million compared to net
earnings before tax of $3.25 million for the three months ended March
31, 2010. After the provision for future income tax of $5.0 million,
the net and comprehensive income for the current quarter was
$7.9 million ($0.07 million per common share).
-- The Company's 40% share of the Pallancata mine realized record
quarterly net earnings of $16.5 million after the deduction of the
Company's monitoring costs and the amortization of certain
non-reimbursable costs, compared to $6.4 million for the three month
period ended March 31, 2010.
-- Cash and cash equivalents at March 31, 2011 increased to $64.5 million
from $51.7 million at December 31, 2010 and $29.1 million at June 30,
2010.
-- Cash flow from operating activities for the current quarter was
$17.3 million compared to a use of funds of $0.6 million for the
quarter ended March 31, 2010.
-- Gross royalty revenue from Barrick's Ruby Hill gold mine was
$1.5 million for the current quarter, bringing the nine-month total to
$3.5 million. This compares to gross royalty revenue of $0.4 million
for the equivalent three and nine month periods ended March 31, 2010.
-- The Pallancata Mine (100% project basis) produced approximately
2.0 million ounces of silver and 7,780 ounces of gold in the current
quarter, compared to 2.3 million ounces of silver and 8,219 ounces of
gold in the comparable quarter which ended March 31, 2010.
-- The Company's 40% share of production in the current quarter was
approximately 810,000 ounces of silver and 3,112 ounces of gold. The
decrease in gold and silver production for the current quarter compared
to the prior year's comparable quarter was due to a 2.4% decrease in
mill throughput coupled with a decrease in the grade of both silver and
gold processed, the latter due to the fact that the higher metal prices
prevailing during the current quarter allowed lower grade material to
be mined profitably.
-- Direct site costs for the current quarter at the Pallancata Mine were
approximately $2.68 per ounce silver produced (after gold by-product
credits) and total cash costs (as defined by the Gold Institute) were
$5.96 per ounce silver (after gold by-product credits). For the
three-month period ended March 31, 2010, direct site costs and total
cash costs were $3.09 and $5.83 per ounce silver, respectively. Direct
costs were lower in the current quarter compared to the equivalent
quarter in 2010 due to the higher gold by-product credit and lower
mining costs, while total cash costs in the current period were
slightly higher due primarily to the increased government royalty due
to higher silver and gold prices.
Other Financial Information for the Three-month Period Ended March 31,
2011:
-- Other expenses totaled $2.76 million for the current quarter compared
to $2.46 million for the quarter ended March 31, 2010. The increase in
costs in the current quarter is mostly related to increased staffing
levels related to the two corporate acquisitions (Metallic Ventures and
Ventura Gold) completed in 2010.
-- In the current quarter, the Company recognized a future income tax
liability of $5.0 million, representing an assumed 30% tax in Canada on
the net earnings from the Pallancata Mine (see additional information
below).
-- At March 31, 2011, the total future income tax liability was
$39.7 million (including the $5.0 million discussed above).
$26.4 million of this $39.7 million tax liability relates to the 2010
acquisitions of Ventura Gold Corp. and Metallic Ventures Gold Inc., but
the tax would only become payable if the Company sells Ventura or
Metallic. In addition, $17.4 million of the $26.4 million (which
relates to the Ventura acquisition) will be eliminated when the Company
adopts IFRS standards effective July 1, 2011.
$13.3 million of the $39.7 million tax liability assumes that either
the Company sells all or a portion of its interest in the Pallancata
Mine or the earnings from the Pallancata Mine are returned to Canada as
dividends and these dividends are fully subject to tax in Canada.
However, if the dividends are tax sheltered in Canada or reinvested in
Peru then all or a portion of this future tax liability will not be
payable.
The Company reports its interests in the Pallancata Mine and the Inmaculada
property on an equity accounting basis.
Financial Results for the Nine-Month Period Ended March 31, 2011:
-- Consolidated net and comprehensive income (before provision for
possible future income taxes) for the nine-month period ended
March 31, 2011 was $38.1 million and $31.4 million after the provision
for taxes (or net income per common share of $0.27). This compares to
net and comprehensive income after tax provisions of $9.6 million or
$0.10 per share for the comparable nine-month period ended March 31,
2010.
-- The increase in income between the comparative periods resulted
primarily from: a) an increase in the net equity income recognized from
the Pallancata Mine of $22.7 million (or an increase of 120%): b) an
increase in net royalty income of $1.7 million; and c) the recognition
of a $5.6 million gain in the second fiscal quarter related to the sale
of a partial interest in the Inmaculada project. Offsetting the
increases was the write down of mineral property interests of
$2.6 million.
-- Cash flow from operating activities plus dividends received from the
Pallancata Mine for the nine-month period ended March 31, 2011 was
$39.3 million compared to $13.4 million for the comparable period ended
March 31, 2010.
-- Net equity income from the Pallancata Mine for the current nine-month
period of $41.7 million compared to $19.0 million for the comparable
period ending March 31, 2010. This increase was largely a function of
higher metal prices.
-- Net royalty income for the current period was $2.1 million compared to
$0.4 million for the comparable period ending March 31, 2010. The Ruby
Hill Mine royalty interest was not acquired by IMZ until February 2010.
-- Other expenses totaled $6.7 million for the current nine-month period
compared to $6.4 million for the comparable period in 2010. The
principal increases were reported in higher interest costs related to
the convertible debenture (foreign exchange related) and increased
staffing levels related to the two corporate acquisitions completed in
2010.
Operating Statistics for the Pallancata Mine (100% project basis).
The table below reports key operating and cost statistics for the
Pallancata Mine for the quarters ended March 31, 2011 and 2010 and for the
years ended December 31, 2010 and 2009 together with the results from the
quarter ended December 31, 2010.
Quarter Quarter Quarter Year Year
Ended Ended Ended Ended Ended
03/31/2011 03/31/2010 12/31/2010 12/31/2010 12/31/2009
----------- ----------- ----------- ----------- -----------
Ore mined (mt) 222,746 237,967 304,277 1,090,948 904,447
----------- ----------- ----------- ----------- -----------
Ore processed
(mt) 242,061 248,032 281,035 1,071,617 922,521
----------- ----------- ----------- ----------- -----------
Head grade-Ag
(g/t) 303 339 358 344 327
----------- ----------- ----------- ----------- -----------
Head grade-Au
(g/t) 1.31 1.39 1.50 1.40 1.40
----------- ----------- ----------- ----------- -----------
Concentrate
produced (mt) 1,908 2,339 2,283 9,541 7,684
----------- ----------- ----------- ----------- -----------
Silver
production
(oz) 2,017,735 2,333,563 2,762,725 10,135,483 8,420,448
----------- ----------- ----------- ----------- -----------
Gold production
(oz) 7,780 8,219 10,045 35,849 31,975
----------- ----------- ----------- ----------- -----------
Silver Sold
(ozs) 2,327,000 2,133,000 2,549,000 9,998,000 8,405,000
----------- ----------- ----------- ----------- -----------
Gold sold (ozs) 8,630 6,970 8,300 32,600 30,700
----------- ----------- ----------- ----------- -----------
IMZ direct site
costs (US$) 2.68 3.09 1.05 2.22 2.85
----------- ----------- ----------- ----------- -----------
IMZ total cash
costs (US$) 5.96 5.83 4.89 5.47 5.51
----------- ----------- ----------- ----------- -----------
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. Sold gold and silver has been rounded.
3. Silver and gold ounces sold are now reported as gross ounces. IMZ has
also restated the previously reported sales, which had been reported as
net payable ounces.
4. Direct site costs per ounce silver and total cash costs per ounce silver
reflect a 'mined ore inventory adjustment'. IMZ believes that this
calculation more accurately matches costs with ounces of production
(Also see notes 4 and 5 below).
5. Direct site costs per ounce silver comprise direct mining costs, mined
ore inventory adjustment, toll processing costs and. mine general and
administrative costs. The cost per ounce is net of by-product credit,
with by-product gold revenue offsetting operating costs.
6. Total cash costs, 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, local and regional taxes
and government royalty (currently approximately 3% of gross revenue for
Pallancata). The cost per ounce is net of by-product credit, with
by-product gold revenue offsetting operating costs.
Company Outlook
During the 2011 calendar year, the Company's exploration and development
efforts are expected to focus primarily on:
-- At the Pallancata Silver Mine in Peru:
-- Working with Hochschild to continue production at the 3,000 tpd mining
rate to produce approximately 9.3 million ounces of silver and 36,500
ounces of gold in calendar year 2011 (the Company's estimate on a 100%
project basis).
-- Increasing mineral resources and reserves to extend the existing mine
life (approximately a 4 year mine life based on current reserves).
-- At the Inmaculada gold-silver project in Peru:
-- Working with Hochschild to continue with the aggressive exploration
and development program.
-- Complete a feasibility study by the end of calendar year 2011.
-- Move the project into production by approximately December, 2013,
pursuant to the agreement entered into with Hochschild during the
fiscal quarter ended December 31, 2010.
-- At the Goldfield gold project in Nevada, to complete a feasibility
study by the middle of calendar year 2012, with the goal of potential
production in 2015.
-- At the Converse gold project in Nevada, to complete a scoping study by
the end of December 2011.
-- At the Rio Blanco gold-silver project in Ecuador, to conclude
discussions with the Ecuadorian government with respect to the
negotiation of an exploitation contract, which will include
clarification of certain tax and royalty issues related to the 2009
Mining Law.
-- Also subject to clarification of the mining law issues mentioned above,
to advance the Gaby gold project with the commencement of a feasibility
study.
-- Completion of the agreements with the Chinese company (China CAMC
Engineering Co. Ltd.) for the financing and construction of the Rio
Blanco and Gaby projects in Ecuador.
-- Enhancing cash flow by acquiring a producing asset in a low-risk
political and environmental jurisdiction in the Americas.
-- Continuing to seek additional strategic joint venture alliances, such
as that with Hochschild at Pallancata and Inmaculada, in order to
fast-track projects to production and to reduce future cash outlays by
the Company.
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.
To access full copies of March 31, 2011 Financial Statements and Management
Discussion and Analysis (MD&A), please click this link:
http://www.intlminerals.com/financialreports.php.
Cautionary Statement:
The Gold Institute calculation of Direct Site Costs and Total Cash Costs
are non-Canadian GAAP financial measures, which Company management believes
are useful in measuring operational performance. 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, drilling and development programs on the Company's projects,
timing of commencement of construction and production and, obtaining of
required environmental 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; mining and development risks; financing risks; risk
of commodity price fluctuations; political and regulatory risks; risks
related to the new mining law in Ecuador, and other risks and uncertainties
detailed in the Company's Annual Information Form for the year ended June
30, 2010, which is 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.
For additional information, contact:
In North America
Paul Durham
VP Corporate Relations
Tel: 1 480 483 9932
Or email us at: Email Contact
In Europe
Oliver Holzer
Marketing Consultant
41 44 853 00 47
Internet Site:
http://www.intlminerals.com