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Imperial Metals Corp (2)
Symbol III
Shares Issued 154,871,341
Close 2022-08-08 C$ 2.84
Market Cap C$ 439,834,608
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Imperial Metals loses $29.27-million in Q2

2022-08-08 18:44 ET - News Release

Mr. Brian Kynoch reports

IMPERIAL REPORTS SECOND QUARTER 2022 FINANCIAL RESULTS

Imperial Metals Corp. has released financial results for the three and six months ended June 30, 2022, as summarized in this news release and discussed in detail in management's discussion and analysis. The company's financial results are prepared in accordance with international financial reporting standards.

Quarter highlights

Financial

Total revenue increased to $36.4-million in the June, 2022, quarter compared with $34.2-million in the 2021 comparative quarter, an increase of $2.2-million.

In the June, 2022, quarter, the Red Chris mine (100-per-cent basis) had 4.5 concentrate shipments (2021: 3.8 concentrate shipments). Variations in revenue are impacted by the timing and quantity of concentrate shipments, metal prices and exchange rates, and period-end revaluations of revenue attributed to concentrate shipments where copper and gold prices will settle at a future date.

The London Metal Exchange cash settlement copper price per pound averaged $4.32 (U.S.) in the June, 2022, quarter compared with $4.40 (U.S.) in the 2021 comparative quarter. London Bullion Market Association, London, gold price per troy ounce averaged $1,873 (U.S.) in the June, 2022, quarter compared with $1,816 (U.S.) in the 2021 comparative quarter. The average U.S./Canadian-dollar exchange rate was 1.277 in the June, 2022, quarter, 4.0 per cent higher than the exchange rate of 1.228 in the 2021 comparative quarter. In Canadian-dollar terms, the average copper price in the June, 2022, quarter was $5.52 per pound compared with $5.40 per pound in the 2021 comparative quarter, and the average gold price in the June, 2022, quarter was $2,391 per ounce compared with $2,230 per ounce in the 2021 comparative quarter.

A negative revenue revaluation in the June, 2022, quarter was $7.3-million as compared with a $700,000 negative revenue revaluation in the 2021 comparative quarter. Revenue revaluations are the result of the metal price on the settlement date and/or the current-period balance sheet date being higher or lower than when the revenue was initially recorded or the metal price at the last balance sheet date and finalization of contained metal as a result of final assays.

Net loss for the June, 2022, quarter was $29.3-million (21 cents per share) compared with net loss of $5.1-million (four cents per share) in the 2021 comparative quarter. The increase in net loss of $24.2-million was primarily due to the following factors:

  • Income from mine operations went from $1.5-million in June, 2021, to $100,000 in June, 2022, increasing net loss by $1.4-million.
  • Mount Polley restart costs went from nil in June, 2021, to $30.2-million in June, 2022, increasing net loss by $30.2-million.
  • Idle mine costs went from $6.3-million in June, 2021, to $1.7-million in June, 2022, decreasing net loss by $4.6-million.
  • Tax recovery went from $1.9-million in June, 2021, to $5.4-million in June, 2022, decreasing net loss by $3.5-million.

Capital expenditures including leases were $39.6-million in the June, 2022, quarter, an increase from $23.8-million in the 2021 comparative quarter. The June, 2022, expenditures included $11.8-million in exploration, $8.2-million for tailings dam construction, and $19.6-million on stripping costs and other capital.

At June 30, 2022, the company had not hedged any copper, gold or U.S./Canadian-dollar exchange. Quarterly revenues will fluctuate depending on copper and gold prices, the U.S./Canadian-dollar exchange rate, and the timing of concentrate sales, which is dependent on concentrate production and the availability and scheduling of transportation.

Operations

The current impact of the COVID-19 pandemic on business is described under significant events and liquidity in management's discussion and analysis. The company's plans for 2022 and beyond could be adversely impacted by the effects of the COVID-19 pandemic. The continuing impact of COVID-19 to travel and other operating restrictions, established to curb the spread of COVID-19, could materially and adversely impact the company's current plans by causing a temporary closure of the Red Chris mine, suspending planned exploration work, causing an economic slowdown resulting in a decrease in the demand for copper and gold, negatively impacting copper and gold prices, impacting the company's ability to transport or market the company's concentrate, or causing disruptions in the company's supply chains.

Red Chris mine

Metal production for the second quarter of 2022 was 22.0 million pounds copper and 19,540 ounces gold, compared with 17.6 million pounds copper and 15,450 ounces gold produced in second quarter 2021.

Imperial Metals' 30-per-cent portion of Red Chris mine second quarter production was 6.6 million pounds copper and 5,862 ounces gold.

Metal production was higher by 25.2 per cent for copper and 26.5 per cent for gold compared with the second quarter of 2021 primarily due to higher recoveries (80.5 per cent versus 79.6 per cent for copper and 60.6 per cent compared with 55.4 per cent for gold) and increased copper and gold grades.

Exploration drilling at Red Chris is continuing with up to eight drills in operation during the second quarter, focusing on expanding the East Ridge zone and gathering geotechnical information for infrastructure related to the development of a block cave. The exploration decline had advanced 1,717 metres as of July 20, 2022. Work on the block cave feasibility study is continuing and is targeted to be released in the first half of 2023.

Imperial Metals' 30-per-cent share of exploration, development and capital expenditures was $33.9-million in the June, 2022, quarter compared with $23.3-million in the 2021 comparative quarter.

Mount Polley mine

The company began the work required to reopen the mine in the fourth quarter of 2021. Initial mill commissioning and operations began on June 25, 2022. Commissioning work continues into the third quarter, with six of the eight mills in the grinding circuit now in operation. During the second quarter, 62,775 tonnes were milled, and 6.3 million tonnes were mined, achieving a day rate of 69,013 tonnes per day. By the end of the second quarter, approximately 1.3 million tonnes had been stockpiled for future milling.

The restart of the facilities took approximately three months longer than planned due to difficulties in hiring operating personnel, certain supply chain challenges, and unanticipated electrical and mechanical work that needed to be completed to get the plant operating. Also, the failure of a key electrical component two weeks after the restart of mill operations caused a 10-day delay in the ramp-up of mill operations.

For the June, 2022, quarter, Mount Polley incurred restart costs composed of $29.6-million in operating costs and $600,000 in depreciation expense.

Exploration, development and capital expenditures in the June, 2022, quarter were $5.2-million compared with $100,000 in the 2021 comparative quarter.

Huckleberry mine

Huckleberry operations ceased in August, 2016, and the mine remains on care and maintenance status. The company anticipates working toward the restart of Huckleberry following the start of operations at Mount Polley.

Site personnel continues to focus on maintaining site access, water management (treatment and release of mine contact water into Tahtsa Reach), maintenance of site infrastructure and equipment, mine permit compliance, environmental compliance monitoring, and monitoring tailings management facilities.

Geotechnical programs conducted in 2021 have indicated that some work is required to upgrade the existing facility and provided information required to update the tailings facility design for future operations. A program of geotechnical and depressurization drilling is under way to collect the data so that these two tasks can be completed.

For the June, 2022, quarter, Huckleberry incurred idle mine costs composed of $1.5-million in operating costs and $200,000 in depreciation expense.

About Imperial Metals Corp.

Imperial Metals is a Vancouver-based exploration, mine development and operating company with holdings that include the Mount Polley mine (100 per cent), the Huckleberry mine (100 per cent) and the Red Chris mine (30 per cent). Imperial Metals also holds a portfolio of 23 greenfield exploration properties in British Columbia.

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