SOURCE: International Minerals Corporation

International Minerals Corporation

February 14, 2012 18:00 ET

International Minerals Reports $12.0 Million in Pre-Tax Income for Second Fiscal Quarter Ending December 31, 2011

SCOTTSDALE, AZ--(Marketwire - Feb 14, 2012) - International Minerals Corporation (TSX: IMZ) (SWISS: IMZ) (the "Company") reports continuing excellent financial results for the second fiscal quarter ended December 31, 2011 (the "Current Quarter").

Current Quarter highlights include $12.0 million in pre-tax income and $11.1 million in consolidated net and comprehensive income after tax ($0.09 per share), including net equity earnings of $13.1 million from the Company's 40% interest (Hochschild Mining 60%) in the Pallancata Mine in Peru.

For the six-month period ended December 31, 2011, the Company reported pre-tax income of $27.2 million and consolidated net and comprehensive income after tax of $26.3 million ($0.22 per share).

In addition, during the Current Quarter the Company received cash distributions of $12.0 million from the Pallancata Mine, representing its 40% share of free cash flow from prior periods. IMZ anticipates that it will receive its next cash distribution from Pallancata in early April of 2012.

Other notable highlights include the following news release announcements: (a) on December 19, 2011, the results of an independent Preliminary Economic Assessment ("scoping study") for the Company's 100%-owned Converse project in Nevada and (b) on January 11, 2012, the results of an independent Feasibility Study for the Inmaculada project in Peru (40% IMZ / 60% Hochschild).

All amounts in this news release are reported in US dollars.

Highlights for the Three-Month Period Ended December 31, 2011:

During the Current Quarter, the Company achieved the following significant results:

  • Pre-tax income of $12.0 million for the Current Quarter compared to $16.6 million for the three months ended December 31, 2010 (the "Prior Year's Quarter"). Income for the Prior Year's Quarter included a non-recurring gain of $2.4 million arising from the sale of an 11% interest in the Inmaculada property to Hochschild in December 2010.

  • After-tax consolidated net and comprehensive income of $11.1 million (or $0.09 per share) compared to consolidated net and comprehensive income after tax of $16.6 million (or $0.14 per share) for the Prior Year's Quarter.

  • Realized net earnings of $13.1 million for the Current Quarter from the Company's 40% share of the Pallancata Mine after the deduction of the Company's monitoring costs and the amortization of certain non-reimbursable costs, compared to $16.3 million for the Prior Year's Quarter.

  • Cash and equivalents at December 31, 2011 increased to $95.7 million from $51.7 million at December 31, 2010 and $86.1 million at June 30, 2011.

  • At December 31, 2011 working capital remained robust at $59.8 million compared to working capital of $52.4 million at June 30, 2011.

  • Consolidated cash flow from operating activities for the Current Quarter was $10.7 million compared to consolidated cash flow from operating activities of $20.6 million for the Prior Year's Quarter. Cash flow from operating activities is materially affected by the timing and amount of cash distributions from the Pallancata Mine for any given reporting period.

  • Gross royalty revenue received by IMZ from its 3% net smelter return royalty from Barrick's Ruby Hill gold mine (the "Barrick Royalty") was $1.3 million for the Current Quarter (net royalty income was $0.8 million). These figures compare to gross royalty revenue of $1.2 million and net royalty income of $1.0 million for the Prior Year's Quarter.

  • The Pallancata Mine (on a 100% project basis) produced approximately 2.3 million ounces of silver and 8,304 ounces of gold in the Current Quarter, compared to 2.8 million ounces of silver and 10,045 ounces of gold in the Prior Year's Quarter.

  • The Company's 40% share of production from the Pallancata Mine in the Current Quarter was approximately 916,000 ounces of silver and 3,322 ounces of gold compared to 1.1 million ounces of silver and 4,018 ounces of gold for the Prior Year's Quarter. The decrease in gold and silver production for the Current Quarter compared to the Prior Year's Quarter was due to a decrease in the grade of both silver and gold processed, due primarily 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 $2.35 per ounce silver produced (after gold by-product credits) and total cash costs (as defined by the Gold Institute) were $6.26 per ounce silver (after gold by-product credits). For the Prior Year's Quarter, direct site costs and total cash costs were lower at $1.05 and $4.89 per ounce silver, respectively.

  • Direct site and total cash costs were higher in the Current Quarter compared to the Prior Year's Quarter because of lower metal production, inflationary cost pressures and an unfavorable appreciation of the Peruvian Sol against the US dollar for mine-related site costs.

Other Financial Information for the Three-month Period Ended December 31, 2011:

  • Other expenses totaled $1.7 million for the Current Quarter compared to $1.9 million for the Prior Year's Quarter. The decrease in costs in the Current Quarter are mostly due to lower interest and financing costs related to the convertible debentures, as there is no remaining amortization of the deferred financing costs on the debentures because of their maturity in May 2012. The only significant increase in spending compared to the Prior Year's Quarter was a $206,000 increase in professional fees, primarily incurred during the adoption of International Financial Reporting Standards (IFRS).

  • Other items represented a reduction in income of $0.3 million for the Current Quarter compared to net other income of $1.3 million for the Prior Year's Quarter. As previously discussed, other income for the quarter ended December 31, 2010 included a $2.4 million gain from the sale of an 11% interest in Inmaculada to Hochschild.

  • In the Current Quarter, the Company recognized a withholding tax expense of $820,000, which was the Peruvian withholding tax (4.1%) on a cash dividend received by IMZ from its Peruvian subsidiary.

  • At December 31, 2011, the Company's total deferred income tax liability was $8.0 million, which represents the deferred tax liability recorded on the January 2010 acquisition of Metallic Ventures. This tax liability is expected to be a non-cash item and will be amortized at such time as operations commence at the Goldfield or Converse properties or it will be expensed if they are both sold or abandoned.

The Company accounts for its 40% interest in Suyamarca (which owns and operates the Pallancata Mine and the Inmaculada development property) on an equity accounting basis.

Financial Results for the Six-Month Period Ended December 31, 2011:

  • The Company reported pre-tax income of $27.2 million for the six-month period ended December 31, 2011 (the "Current Six Month Period") compared to pre-tax income of $25.2 million for the six-month period ended December 31, 2010 (the "Previous Six Month Period").

  • Consolidated net and comprehensive income after tax for the Current Six Month Period was $26.3 million ($0.22 per share) compared to $25.2 million in consolidated net and comprehensive income ($0.22 per share) for the Previous Six Month Period and the increase was primarily due to increased equity income from the Pallancata Mine.

  • Consolidated cash flow from operating activities for the Current Six Month Period was $30.4 million compared to $22.1 million for the Previous Six Month Period, with the increase due to an increase in cash distributions from the Pallancata Mine.

  • Net equity income from the Pallancata Mine for the Current Six Month Period was $27.9 million compared to $25.2 million for the Previous Six Month Period. This increase was largely a function of higher metal prices offset by lower metal production and sales.

  • Net royalty income from the Barrick Royalty for the Current Six Month Period was $1.5 million compared to net royalty income of $1.6 million for the Previous Six Month Period.

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 December 31, 2011 and 2010, respectively and for the calendar years ended December 31, 2011 and 2010, respectively, together with the results for the quarter ended September 30, 2011.

Quarter
Ended
12/31/2011
Quarter
Ended
12/31/2010
Quarter
Ended
09/30/2011
Year
Ended
12/31/2011
Year
Ended
12/31/2010
Ore mined (mt) 291,607 304,277 269,273 1,039,674 1,090,948
Ore processed (mt) 293,060 281,035 268,673 1,070,467 1,071,617
Head grade- Ag (g/t) 293 358 313 301 344
Head grade-Au (g/t) 1.27 1.50 1.43 1.33 1.40
Concentrate produced (mt) 2,363 2,283 2,266 8,608 9,541
Silver production (oz) 2,288,930 2,762,725 2,290,805 8,767,394 10,135,483
Gold production (oz) 8,304 10,045 9,370 33,881 35,849
Silver Sold ( ozs) 2,636,200 2,548,700 1,935,300 9,063,800 9,998,000
Gold sold (ozs) 9,315 8,333 8,017 33,900 32,600
IMZ direct site costs (US$) 2.35 1.05 1.01 2.20 222
IMZ total cash costs (US$) 6.26 4.89 5.44 6.38 5.47

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. Silver sales have been rounded.
3. Silver and gold ounces sold are reported as gross 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 gold by-product credits.
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 the government royalty. The costs per ounce are net of gold by-product credits.

Company Outlook

During the 2012 fiscal and calendar years, the Company's exploration and development efforts are focused on:

  • At the Pallancata silver mine in Peru:
    • Working with Hochschild to continue production at the 3,000 tpd mining rate to produce approximately 8.0 million ounces of silver and 34,000 ounces of gold in calendar year 2012 (the Company's estimate on a 100% project basis).
    • Increasing mineral resources and reserves to extend the existing mine life (approximately a 4 years based on current reserves).

  • At the Inmaculada gold-silver project in Peru:
    • Working with Hochschild to continue with mine development and construction with production targeted to commence prior to the end of calendar year 2013.
    • Continuing with an aggressive exploration program in order to expand reserves and resources.

  • At the Goldfield gold project in Nevada, to complete a feasibility study in the summer of 2012, with the goal of potential production in calendar 2015.

  • At the Converse gold project in Nevada, to commence a feasibility study in the summer of 2012.

  • At the Rio Blanco gold-silver project in Ecuador, to conclude discussions with the Ecuadorian government with respect to the negotiation of a production contract, which will include quantification 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 before the end of the calendar year.

  • Enhancing cash flow by acquiring a producing asset or assets 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 view the Company's financial statements and MD&A, please click the following link:
http://www.intlminerals.com/financialreports.php

Cautionary Statement:

The Gold Institute calculation of Direct Site Costs and Total Cash Costs are non-IFRS 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 completion of economic studies and the 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, 2011, 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.

INTERNATIONAL MINERALS CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(Expressed in United States dollars)
(Unaudited)
December 31,
2011
June 30,
2011
July 1,
2010
ASSETS
Current
Cash and equivalents $ 95,730,036 $ 86,127,062 $ 29,099,344
Receivables 1,513,474 4,567,909 4,192,295
Due from related party 182,597 557,367 -
Prepaid expenses and deposits 160,766 135,969 158,772
Investments 4,160,727 4,437,839 3,082,317
Current assets 101,747,600 95,826,146 36,532,728
Non-current
Property, plant and equipment
Investment in Ruby Hill royalty 10,521,808 11,402,904 13,409,126
Other property, plant and equipment 554,092 504,033 473,093
Total property, plant and equipment 11,075,900 11,906,937 13,882,219
Investment in associate 126,475,665 118,898,399 36,668,508
Investment in resource properties 155,536,960 141,619,839 202,263,484
Reclamation / environmental bonds 213,108 213,108 212,701
Non-current assets 293,301,633 272,638,283 253,026,912
Total assets $ 395,049,233 $ 368,464,429 $ 289,559,640
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable $ 1,165,373 $ 778,529 $ 2,745,732
Accrued severance and payroll costs 1,445,523 1,436,516 2,688,028
Due to related parties 20,705
73,079
11,819
Accrued interest payable on convertible debentures 179,538 187,661 174,869
Convertible debentures 39,171,881 40,944,188 -
Current liabilities 41,983,020 43,419,973 5,620,448
Non-current
Convertible debentures - - 36,646,543
Deferred income tax liability 8,000,000 8,000,000 8,600,000
Non-current liabilities 8,000,000 8,000,000 45,246,543
Shareholders' equity
Capital stock 239,610,642 245,260,695 217,204,514
Reserves 4,699,078 4,774,831 7,100,512
Equity component of convertible debentures 4,945,008 4,945,008 4,945,008
Equity gain on carried interest 7,400,000 - -
Retained earnings 88,411,485 62,063,922 2,666,515
Capital and reserves attributable to the equity holders of the Company 345,066,213 317,044,456 231,916,549
Non-controlling interest in subsidiary - - 6,776,100
Total liabilities and shareholders' equity $ 395,049,233 $ 368,464,429 $ 289,559,640
Approved on February 13, 2012 by the Directors:
"Stephen J. Kay" Director "W. Michael Smith" Director
Stephen J. Kay W. Michael Smith

INTERNATIONAL MINERALS CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Expressed in United States dollars)
For the three and six month periods ended December 31 (Unaudited)

3-Month Period
12/31/2011

3-Month Period
12/31/2010

6-Month Period
12/31/2011

6-Month Period
12/31/2010
ROYALTY INCOME
Royalty income $ 1,342,793 $ 1,191,653 $ 2,524,946 $ 2,012,035
Depletion of royalty interest (429,668 ) (149,089 ) (881,096 ) (262,094 )
Net proceeds tax (67,139 ) (59,583 ) (126,247 ) (100,602 )
Net royalty income 845,986 982,981 1,517,603 1,649,339
INCOME FROM ASSOCIATE
Equity income from associate 13,448,800 16,425,307 28,538,000 25,671,826
Joint venture monitoring costs (177,110 ) (39,870 ) (232,212 ) (113,295 )
Amortization of non-reimbursable costs (180,367 ) (111,466 ) (360,734 ) (360,733 )
Net income from associate 13,091,323 16,273,971 27,945,054 25,197,798
EXPENSES
Amortization 13,252 8,796 24,843 17,434
General exploration (16,888 ) 7,503 23,609 17,169
Interest and financing costs 536,184 976,191 1,097,992 1,923,174
Investor relations 196,504 233,231 386,864 357,542
Office and general 209,887 126,627 565,369 322,666
Professional fees 323,763 117,199 326,245 194,111
Salaries and benefits 283,484 277,672 525,296 567,749
Stock-based compensation 81,040 105,838 174,739 317,908
Transfer agent and listing fees 38,326 7,444 87,656 49,747
Travel 48,842 84,675 85,022 98,768
Total expenses (1,714,394 ) (1,945,176 ) (3,297,635 ) (3,866,268 )
OTHER ITEMS
Foreign exchange (loss) gain (770,799 ) (701,719 ) 1,032,910 (698,009 )
Unrealized gain (loss) on securities held-for-trading 432,106 1,107,687 (261,412 ) 1,952,476
Gain on sale of interest in mineral property - 2,361,579 - 2,361,579
Interest income 136,650 41,757 291,507 77,779
Gain on settlement of debt - 5,717 - 5,717
Write-off of resource properties (60,463 ) (2,296,639 ) (60,463 ) (2,296,639 )
Recovery of resource properties - 777,280 - 777,280
Total other items (262,506 ) 1,295,662 1,002,542 2,180,183
Income before taxes 11,960,409 16,607,438 27,167,564 25,161,052
Withholding tax (820,000 ) - (820,000 ) -
Net and comprehensive income after taxes 11,140,409 16,607,438 26,347,564 25,161,052
Earnings per common share - basic $ 0.09 $ 0.14 $ 0.22 $ 0.22
Earnings per common share - diluted $ 0.09 $ 0.14 $ 0.22 $ 0.21
Weighted average number of common shares outstanding - basic 120,467,808 117,870,479 120,427,588 116,562,399
Weighted average number of common shares outstanding - diluted 126,942,725 119,051,197 127,010,765 117,383,847

INTERNATIONAL MINERALS CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
For the three and six month periods ended December 31 (Unaudited)

3-Month Period
Ended
12/31/2011

3-Month Period
Ended
12/31/2010

6-Month Period
Ended
12/31/2011

6-Month Period
Ended
12/31/2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period $ 11,140,409 $ 16,607,438 $ 26,347,564 $ 25,161,052
Add non-cash items:
Amortization 13,252 (39,219 ) 24,843 (26,913 )
Depletion of royalty income 429,668 149,089 881,096 262,094
Stock-based compensation 81,040 105,838 174,739 317,908
Unrealized foreign exchange loss (gain) 505,062 2,081,120 (1,565,952 ) 2,077,410
Unrealized (gain) loss on investments (432,106 ) (1,107,687 ) 261,412 (1,952,476 )
Write-off of resource properties 60,463 2,296,639 60,463 2,296,639
Interest and financing costs 536,184 1,027,712 1,097,992 1,974,695
Equity income from associate (13,448,800 ) (16,425,307 ) (28,089,200 ) (25,671,826 )
Amortization of non-reimbursable costs 180,367 111,466 360,734 360,733
Gain in sale of ownership interest - (2,361,579 ) - (2,361,579 )
Add cash item: Cash distributions received from associate 12,000,000 20,000,000 28,000,000 20,000,000
Changes in non-cash working capital items:
Decrease (increase) in receivables (703,270 ) (1,037,099 ) 3,054,435 2,112,473
Decrease (increase) in prepaid expenses and deposits 9,147 130,435 (24,797 ) 126,126
Increase in accounts payable 13,905 1,148,958 64,289 -
Decrease in due from related parties 374,770 - 374,770 -
Decrease in accrued severance and payroll costs (96,166 ) (2,099,122 ) (96,717 ) (2,616,552 )
Increase (decrease) in due to related party (6,348 ) 3,035 (52,374 ) 9,120
Net cash provided by operating activities 10,657,577 20,591,716 30,424,497 22,068,903
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common shares 361,973 22,567,985 669,360 22,608,369
Convertible debenture interest payment (1,097,992 ) (1,099,780 ) (1,097,992 ) (1,099,780 )
Net cash provided by (used in) financing activities (736,019 ) 21,468,205 (428,632 ) 21,508,589
CASH FLOWS FROM INVESTING ACTIVITIES
Resource property expenditures (5,377,472 ) (5,710,312 ) (13,493,375 ) (10,795,134 )
Investments in associate - (10,000,000 ) - (10,000,000 )
Purchase of investments - - (157,165 ) (148,054 )
Purchase of property and equipment (101,700 ) - (132,020 ) (6,105 )
Reclamation / environmental bonds - - - (3,407 )
Purchase of treasury stock (6,610,331 ) - (6,610,331 ) -
Net cash used in investing activities (12,089,503 ) (15,710,312 ) (20,392,891 ) (20,952,700 )
Change in cash and equivalents for the period (2,167,945 ) 26,349,609 9,602,974 22,624,792
Cash and equivalents, beginning of period 97,897,981 25,374,527 86,127,062 29,099,344
Cash and equivalents, end of period $ 95,730,036 $ 51,724,136 $ 95,730,036 $ 51,724,136

INTERNATIONAL MINERALS CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Expressed in United States dollars, except share amounts)
DECEMBER 31, 2011 (Unaudited)
Share Capital
Number of shares Share capital Reserves for share based payments Equity
component of convertible debt
Equity gain
on carried
interest
Retained
earnings
Total Non-controlling interest Total
equity
Balance July 1, 2010 115,242,581 $ 217,204,514 $ 7,100,512 $ 4,945,008 $ - $ 2,666,515 $ 231,916,549 $ 6,776,100 $ 238,692,649
Issued on exercise of options 592,500 3,961,328 (1,319,104 ) - - - 2,642,224 - 2,642,224
Issued on private placement 3,655,746 20,000,000 - - - - 20,000,000 - 20,000,000
Share issuance costs - (33,856 ) - - - - (33,856 ) - (33,856 )
Stock-based compensation - - 317,908 - - - 317,908 - 317,908
Inmaculada contribution loss - - - - - (1,421,000 ) (1,421,000 ) 1,421,000 -
Sale of controlling interest in Quellopata - - - - - - - (8,197,100 ) (8,197,100 )
Net income for the period - - - - - 26,582,052 26,582,052 - 26,582,052
Balance December 31, 2010 119,490,827 $ 241,131,986 $ 6,099,316 $ 4,945,008 - $ 27,827,567 $ 280,003,877 $ - $ 280,003,877
Issued on conversion of debentures 2,616 18,570 - - - - 18,570 - 18,570
Issued on exercise of options 804,120 4,110,139 (1,356,470 ) - - - 2,753,669 - 2,753,669
Stock-based compensation - - 31,985 - - - 31,985 - 31,985
Net income for the period - - - - - 34,236,355 34,236,355 - 34,236,355
Balance June 30, 2011 120,297,563 $ 245,260,695 $ 4,774,831 $ 4,945,008 - $ 62,063,922 $ 317,044,456 $ - $ 317,044,456
Issued on conversion of debentures 5,813 40,425 - - - - 40,425 - 40,425
Issued on exercise of options 179,500 919,853 (250,493 ) - - - 669,360 - 669,360
Purchase of treasury stock - (6,610,331 ) - - - - (6,610,331 ) - (6,610,331 )
Stock-based compensation - - 174,739 - - - 174,739 - 174,739
Equity gain on carried interest - - - - 7,400,000 - 7,400,000 - 7,400,000
Net income for the period - - - - - 26,347,564 26,347,564 - 26,347,564
Balance at December 31, 2011 120,482,876 $ 239,610,642 $ 4,699,078 $ 4,945,008 $ 7,400,000 $ 88,411,485 $ 345,066,213 $ - $ 345,066,213

Contact Information

  • For additional information, contact:

    In North America
    Paul Durham
    VP Corporate Relations
    Tel: +1 480 483 9932

    In Europe
    Oliver Holzer
    Marketing Consultant
    +41 44 853 00 47

    Or email us at: Email Contact
    Internet Site: http://www.intlminerals.com