Imperial Metals’ r
evenues decreased to $106.7 million in the June 2017 quarter compared to $116.2 million in the 2016 comparative quarter, a decrease of $9.5 million or 8%.
Revenue from the Red Chris mine in the June 2017 quarter was $62.3 million compared to $92.0 million in the 2016 comparative quarter. This decrease was attributable to lower grade ore processed and lower recoveries in the 2017 quarter compared to the 2016 quarter.
Revenue from the Mount Polley mine in the June 2017 quarter was $44.1 million compared to $24.0 million in the 2016 comparative quarter. This increase was primarily due a higher quantity of copper sold along with an increased quantity of gold by-product sold as the mine had not returned to normal operations for the entire June 2016 quarter.
In the June 2017 quarter, there were 3.5 concentrate shipments from Red Chris mine (2016-5.0 concentrate shipments) and 1.3 concentrate shipments from Mount Polley mine (2016-1.0 concentrate shipment). 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 Metals Exchange cash settlement copper price per pound averaged US$2.57 in the June 2017 quarter compared to US$2.14 in the 2016 comparative quarter. The London Metals Exchange cash settlement gold price per troy ounce averaged US$1,257 in the June 2017 quarter compared to US$1,259 in the June 2016 quarter. The average CDN/US$ Dollar exchange rate was 1.345 in the June 2017 quarter, 4.3% higher than the exchange rate of 1.289 in the June 2016 quarter. In CDN Dollar terms the average copper price in the June 2017 quarter was CDN$3.46 per pound compared to CDN$2.76 per pound in the 2016 comparative quarter and the average gold price in the June 2017 quarter was CDN$1,691 per ounce compared to CDN$1,623 per ounce in the 2016 comparative quarter.
Revenue in the June 2017 quarter was decreased by $0.5 million negative revenue revaluation compared to $0.3 million positive revenue revaluation in the 2016 comparative quarter. Revenue revaluations are the result of the copper 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 copper price at the last balance sheet date.
Net income for the June 2017 quarter was $64.1 million ($0.68 per share) compared to net loss of $4.2 million ($0.05 per share) in the 2016 comparative quarter. The increase in net income of $68.3 million was primarily due to the following factors:
Income/loss from mine operations went from income of $20.2 million in June 2016 to a loss of $5.9 million in June 2017, a decrease in net income of $26.1 million.
Foreign exchange gains/losses on current and non-current debt went from a loss of $1.6 million in June 2016 to a gain of $12.4 million in June 2017, an increase in net income of $14.0 million.
The Company’s equity loss in Huckleberry went from loss of $1.7 million in June 2016 to income of $1.0 million in June 2017, an increase in net income of $2.7 million.
Tax expense went from $2.5 million in June 2016 to a recovery of $3.5 million in June 2017, an increase in net income of $6.0 million.
The company recorded an increase in net income in the June 2017 quarter of $74.8 million as a result of the gain on bargain purchase for the additional 50% share of Huckleberry.
The June 2017 quarter net income included foreign exchange gain related to changes in CDN/US Dollar exchange rate of $12.4 million compared to foreign exchange loss of $2.1 million in the 2016 comparative quarter. The $12.4 million foreign exchange gain is comprised of a $11.1 million gain on the senior notes, a $0.3 million gain on long term equipment loans, and a $1.0 million gain on short-term debt and operational items. The average CDN/US Dollar exchange rate in the June 2017 quarter was 1.345 compared to an average of 1.289 in the 2016 comparative quarter.
Cash flow was $12.3 million in the June 2017 quarter compared to cash flow of $40.3 million in the 2016 comparative quarter. Cash flow is a measure used by the Company to evaluate its performance, however, it is not a term recognized under IFRS. The Company believes Cash flow is useful to investors and it is one of the measures used by management to assess the financial performance of the Company.
Capital expenditures were $28.8 million in the June 2017 quarter, up from $24.2 million in the 2016 comparative quarter. The June 2017 expenditures included $8.4 million for tailings dam construction, $10.8 million for component changes on mobile equipment, $2.8 million for mobile equipment and $6.8 million relating to non-cash consideration received by the Company in the Sterling gold mine sale in the form of a Net Smelter Royalty (“NSR”) and Net Operating Profit (“NOP”) which have been included in mineral properties for the quarter. Further discussion on the Sterling sale can be found under the heading Sterling Mine.
