Imperial Metals Corporation

Imperial Metals Corporation

August 14, 2009 14:43 ET

Imperial Reports 2009 Second Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2009) - Imperial Metals Corporation (TSX:III) reports comparative financial results for the three and six months ended June 30, 2009 and June 30, 2008 are summarized below and discussed in detail in the Management's Discussion and Analysis.

Three Months Ended Six Months Ended
June 30 June 30
(unaudited) in thousands
except per share amounts 2009 2008 2009 2008
Revenues $ 48,897 $ 124,911 $ 83,795 $ 181,508
Operating Income $ 856 $ 62,257 $ 3,449 $ 85,335
Net (Loss) Income $ (6,562) $ 44,236 $ (13,900) $ 45,901
Net (Loss) Income Per Share $ (0.20) $ 1.35 $ (0.43) $ 1.40
Adjusted Net Income(1) $ 2,575 $ 42,571 $ 13,856 $ 54,617
Adjusted Net Income Per Share(1) $ 0.09 $ 1.30 $ 0.43 $ 1.67
Cash Flow(1) $ 15,484 $ 66,124 $ 20,171 $ 85,653
Cash Flow Per Share(1) $ 0.48 $ 2.02 $ 0.62 $ 2.62

Revenues were $48.9 million in the June 2009 quarter compared to $124.9 million in the 2008 quarter.

Concentrate inventory levels were substantially higher than normal at June 30 with each mine having a concentrate shipment of about 10,000 tonnes at port and ready for shipment at quarter end. As a result, both Mount Polley and Huckleberry had concentrate shipments in July. Variations in quarterly revenue attributed to the timing of concentrate shipments can be expected in the normal course of business.

Operating income for the three months ended June 2009 decreased to $0.9 million from $62.3 million in the June 2008 quarter.

Net loss was $6.6 million in the June 2009 quarter compared to net income of $44.2 million in the 2008 quarter. Adjusted net income in the quarter was $2.6 million or $0.09 per share, versus $42.6 million or $1.30 per share in the June 2008 quarter. Adjusted net income is calculated by removing the unrealized gains and losses, net of related income taxes, resulting from mark to market revaluation of copper hedging and removing the unrealized share based compensation expense, net of taxes. Adjusted net income is not a term recognized under generally accepted accounting principles however it does show the current period financial results excluding the effect of items not settling in the current period.

The Company realized gains on derivative instruments of $4.7 million in the quarter compared to a realized loss of $2.1 million in the 2008 quarter. The increase in copper prices since December 31, 2008 resulted in unrealized losses of $13.9 million in the June quarter compared to unrealized gains of $1.7 million in the June 2008 quarter. In total the Company recorded losses on derivative instruments of $9.2 million in 2009 versus $0.4 million in 2008.

(1) Adjusted Net Income, Adjusted Net Income Per Share, Cash Flow and Cash Flow Per Share are measures used by the Company to evaluate its performance; however, they are not terms recognized under generally accepted accounting principles. Adjusted Net Income is defined as net income adjusted for certain items of a non-operational nature that pertain to future periods as described in further detail in the Management's Discussion and Analysis under the heading Adjusted Net Income. Cash Flow is defined as cash flow from operations before net change in working capital balances. Adjusted Net Income and Cash Flow Per Share are the same measures divided by the weighted average number of common shares outstanding during the period.

The Company believes these measures are useful to investors because they are included in the measures that are used by management in assessing the financial performance of the Company.

Cash flow decreased to $15.5 million in the June 2009 quarter compared to $66.1 million in the 2008 quarter. The $50.6 million decrease is primarily the result of reduced operating margins at Mount Polley and Huckleberry, and large period end concentrate inventory.

Capital expenditures decreased to $6.0 million from $13.7 million in the comparative 2008 quarter. Expenditures in the June 2009 quarter were financed from cash flow from the Mount Polley and Huckleberry mines. At June 30, 2009 the Company had $14.7 million in cash, cash equivalents and short term investments.

During the June 2009 quarter the Company made no purchases under the Normal Course Issuer Bid.

Mount Polley Mine

Production Six Months Ended June 30
(unaudited) 2009 2008
Ore milled (tonnes) 3,456,269 3,268,958
Ore milled per calendar day (tonnes) 19,095 17,961
Grade % - Copper 0.393 0.552
Grade g/t - Gold 0.309 0.308
Recovery % - Copper 57.19 78.36
Recovery % - Gold 66.04 71.53
Copper produced (lbs) 17,135,481 31,185,087
Gold produced (oz) 22,667 23,171
Silver produced (oz) 114,511 262,257

Mill throughput and copper head grade averaged 20,706 tonnes per day, up 15% from the first quarter throughput of 17,467 tonnes per day. Copper production was up 30% to 9.7 million pounds, as a result of the additional throughput and increased recovery, 59% compared to 55% in the first quarter. Gold production also increased from 9,937 troy ounces in the first quarter to 12,728 troy ounces. The majority of ore delivered to the mill was from the Springer pit. The remaining ore was delivered from the Wight and Southeast pits to blend with the oxidized Springer ore.

Clearing work has begun at the Pond zone pit which contains approximately 1.37 million tonnes grading 0.476% copper, 0.27 g/t gold and 6.89 g/t silver. We expect to begin receiving ore from this pit in 2009. Good copper recovery is expected as this ore is not oxidized.

Exploration expenditures at Mount Polley were $1.4 million in the June 2009 quarter compared to $1.0 million in the June 2008 quarter. The 2009 drill program has focused on the Boundary zone. Highlights include drill hole ND09-79 which intersected 157.0 metres grading 1.73% copper, 1.11 g/t gold and 10.53 g/t silver starting at 158.1 metres below surface. This area is being explored for underground mineable mineralization that is too deep to be captured in the current open pit design. A 500 metre long underground ramp, to provide access from the Wight pit to the Boundary zone, has been designed and submitted for approval. The ramp will be used to conduct further exploration and to provide access for potential underground mining of this zone.

Exploration has also been conducted in the Springer and other zones on the property, as well as the Pond zone where the objective is to delineate high grade mineralization below the designed open pit which may be amenable to underground mining. Drill hole PZ09-35 returned 71.3 metres grading 0.57% copper, 0.22 g/t gold and 6.81 g/t silver but more notably included a 4.4 metre section of 4.20% copper, 1.03 g/t gold and 52.31 g/t silver. Drill hole PZ09-43 also proved fruitful with an intercept of 9.3 metres grading 6.40% copper, 0.89 g/t gold and 67.68 g/t silver. The 2009 drill program at the Pond zone will explore the portion of skarn mineralization that carries the highest grades discovered to date.

The Mount Polley open pit copper/gold mine, located 56 kilometres northeast of Williams Lake, British Columbia, is wholly owned by Imperial.

Huckleberry Mine

Production Six Months Ended June 30
(100% - Imperial owns 50%) (unaudited) 2009 2008
Ore milled (tonnes) 3,007,400 2,901,749
Ore milled per calendar day (tonnes) 16,616 15,944
Grade (%) - Copper 0.359 0.303
Grade (%) - Molybdenum 0.006 0.007
Recovery (%) - Copper 90.8 88.6
Recovery (%) - Molybdenum (i) 23.9
Copper produced (lbs) 21,622,000 17,191,001
Gold produced (oz) 1,667 1,456
Silver produced (oz) 127,785 113,145
Molybdenum produced (lbs) 10,227 102,123
(i) molybdenum circuit was only run for a few days during period due to
low grades and prices

Copper production increased during the first six months compared to the same 2008 period. Throughput, grade and recovery all improved. Molybdenum was produced only for a few days when higher grades were intersected in the pit.

In the second quarter Huckleberry approved an extension of the mine plan, which includes the Saddle zone resource, and will provide for mill feed to extend milling operations to the end of 2011. Annual estimated copper production will be about 40 million pounds per year. The Saddle zone resource, located between the Main Zone pit and the Main Zone Extension pit, has a high potential to provide additional extensions to the mine life depending on the copper price.

Imperial owns 50% of the Huckleberry open pit copper/molybdenum mine located 123 kilometres southwest of Houston, British Columbia.

Red Chris

Exploration at the Red Chris property was restarted during the second quarter. The current planned program includes an expanded and deep penetrating geophysical program, shallow reconnaissance drilling to map the till covered plateau area, and the restart of a deep diamond drill program to further explore the depth potential of the Red Chris deposit.

The Red Chris copper/gold property is located 80 kilometres south of Dease Lake in northwest British Columbia.


A program of diamond drilling from underground workings was begun in the second quarter. The program is ongoing, with 27 holes totaling 8,435 feet drilled to date. Underground diamond drilling has targeted the 144 zone to the north, west and south, and mineralization in the latite dike that divides the 144 zone from its east extension.

The wholly owned Sterling gold property is located 185 kilometres northwest of Las Vegas, Nevada.


With the copper price climbing, and the production at Mount Polley increasing during the current quarter, we increased the pace of exploration at Red Chris and Sterling. We are excited about the potential of Mount Polley's Boundary zone to provide higher grade material to supplement the lower grade Springer ores, and to begin an underground access ramp this year.

Recently we have taken advantage of the higher copper prices to hedge a portion of Mount Polley copper to September 2010, establishing a floor price of US$2.20 per pound of copper for about 40% of our expected production.

As always, we look to grow our Company. Subsequent to the quarter end we announced a proposed business combination with Selkirk Metals Corp. Selkirk will bring several British Columbia mineral properties to the combined company including the Ruddock Creek lead/zinc property and the Catface copper property. These and several other properties will add to Imperial's large resource base in British Columbia, and we are keen to utilize our experience and proven mine development skills to advance these properties.

Detailed financial information is provided in the Management's Discussion and Analysis in the Second Quarter Report available on the Company's website and on SEDAR (

Contact Information

  • Imperial Metals Corporation
    Brian Kynoch
    604.687.4030 (FAX)
    Imperial Metals Corporation
    Andre Deepwell
    Chief Financial Officer
    Imperial Metals Corporation
    Sabine Goetz
    Investor Relations