Anvil Mining Reports Fourth Quarter and Full Year 2009 Results - Net income
of $10.9 million ($0.09 per share) for the fourth quarter 2009
TSX, ASX: AVM
Common shares outstanding 150.4 million
All amounts are expressed in US dollars, unless otherwise stated.
MONTREAL, March 19 /CNW Telbec/ - ("Anvil" or the "Company"), today announced net income from continuing operations for the fourth quarter ended December 31, 2009, of $10.9 million ($0.09 per share), compared to a net loss of $151.2 million (-$2.12 per share) for the fourth quarter of 2008. Net copper sales for the fourth quarter of 2009 totalled $23.5 million, an increase of 69% compared to the fourth quarter 2008. Cash flows from continuing operations, before working capital movements, were $11.5 million ($0.09 per share), compared to a negative cash flow, before working capital movements, of $26.1 million (-$0.37 per share) for the fourth quarter of 2008. For the full year 2009, the Company recorded a net loss from continuing operations of $17.7 million (-$0.18 per share) on net copper sales of $49.2 million. Cash flow from continuing operations for the full year 2009, before working capital movements, was $0.8 million ($0.01 per share). Copper production for the fourth quarter of 2009 and for the full year 2009 totalled 4,970 tonnes and 16,406 tonnes respectively.
The Company's 2009 fourth quarter financial results represent a progressive improvement over the course of 2009, primarily as a result of an improved copper price, the recommencement in March 2009 of operation of the Stage I Heavy Media Separation ("HMS") plant at Kinsevere and the reduced impact of one-off factors associated with the cessation of operations at the Company's Dikulushi, Mutoshi and Kinsevere mines in the DRC during the fourth quarter of 2008.
Since its recommencement, the Kinsevere HMS plant has generated revenue of $50.3 million and incurred cash operating costs of $17.0 million, resulting in a positive cash flow from HMS operations of $33.3 million. After deducting Company expenses of $12.3 million related to care and maintenance of the Dikulushi and Mutoshi mines, corporate overheads, exploration and social development, the HMS plant generated a net cash flow of $21.0 million. During the fourth quarter of 2009, the Kinsevere HMS plant provided a net cash flow of $11.4 million.
Bill Turner, President and CEO of Anvil, commented, "We are pleased to have returned to profitability. The performance of the Kinsevere HMS plant, combined with an improved copper price, has generated strong cash flows and earnings for the fourth quarter. We continue to maintain a low-cost operation at the Kinsevere HMS plant, with a focus on generating positive cash flow until Kinsevere Stage II becomes operational. With the completion of the $200 million financing package with Trafigura in December 2009, the Company is well positioned to complete construction of the Kinsevere Stage II, 60,000 tonne per year SX-EW plant in December 2010 and to commence commissioning during the first quarter of 2011.
Mr. Turner further added, "The Kinsevere Stage II project benefits from having the engineering and design work completed, a significant amount of equipment and materials already on site and a large number of work faces providing a great deal of flexibility. With the return of Ausenco as the EPC contractor and Group 5 as the primary construction sub-contractor, we are making good progress with the construction and fabrication works (see the news release of February 26, 2010). Furthermore, with the end of the wet season now approaching, and the construction workforce increasing to approximately 800 workers by May, the pace of construction works is now beginning to increase significantly."
The complete fourth quarter and year-end 2009 financial statements together with the related Management's Discussion and Analysis ("MD&A") are available on Anvil's website at www.anvilmining.com under the heading "Financial Reports" within the Investor Relations section.
Key points for the fourth quarter
- Net copper sales of $23.5 million, an increase of 69% compared to the
fourth quarter 2008.
- Net income from continuing operations of $10.9 million ($0.09 per
share), compared to a net loss of $151.2 million (-$2.12 per share) for
the fourth quarter of 2008.
- Positive cash flows from continuing operations, before working capital
movements, of $11.5 million ($0.09 per share).
- Quarterly production of 4,970 tonnes of copper.
- Completion of the second tranche of the previously announced Private
Placement with Trafigura Beheer B.V., for gross proceeds of $68 million
and aggregate proceeds of $100 million.
- Establishment of a $100 million loan facility with Trafigura
Beheer B.V. ("Trafigura").
Key points for the year
- Net sales of $49.2 million.
- Production of 16,406 tonnes of copper.
- Positive cash flows from continuing operations, before working capital
movements, of $0.8 million ($0.01 per share).
- Net loss from continuing operations of $17.7 million (-$0.18 per
share).
- Net unrealized gain of $4.1 million on available-for-sale debt
investments.
- Net unrealized gain of $2.2 million on available-for-sale equity
investments.
Near term objectives (next three months)
- Continued cash positive operation of the Kinsevere HMS plant.
- Completion of mobilisation of contractor personnel to the Kinsevere
site.
- Refinancing of the $100 million loan facility established with
Trafigura in December 2009, to an amount of $140 million.
- Divestment of the Company's interest in the Dikulushi mine.
Longer term objectives (2010 onwards)
- Completion of construction and commissioning of the Kinsevere Stage II
Solvent Extraction-Electrowinning ("SX-EW") plant.
- Completion of a scoping study on options to heap-leach the low-grade
material (0.3-0.7%Cu), which will need to be mined from the currently
designed open pit shells and which will provide additional feed to the
SX-EW plant.
- Completion of additional drilling to allow the Company to further
evaluate the Mutoshi project.
- Initiation of further drilling at Kinsevere to enable the delineation
of an expanded sulphide resource.
- Completion of preliminary studies on the mining and processing of the
sulphide resource at Kinsevere.
- Identification of investment opportunities to enable the consolidation
of the Company's position in the Democratic Republic of Congo and the
establishment of a pipeline of growth prospects.
Kinsevere HMS Production
Since recommencing operations in March 2009, the Kinsevere HMS plant has produced 62,468 tonnes of concentrate, at an average grade of 26.3% copper for 16,406 tonnes of contained copper during 2009. Key performance details of the HMS plant for the fourth quarter and from March 27, 2009 to December 31, 2009 are set out in Table 1 below.
Table 1. Kinsevere Stage I HMS plant: 2009 performance
-----------------------------
March 27, 2009
to December 31,
Q4 2009 2009
-------------------------------------------------------------------------
Ore mined tonnes 164,966 297,459
Ore processed - HMS tonnes 65,313 231,823
Feed grade - HMS % Cu 8.9 8.2
Contained copper - HMS tonnes 5,782 19,066
Copper recovery - HMS % 77.0 76.0
Copper produced in
concentrate - HMS tonnes 4,455 14,499
Copper produced in
concentrate - Spirals tonnes 515 1,907
Copper produced in
concentrate - HMS & Spirals tonnes 4,970 16,406
Copper sold tonnes 7,816 19,577
-------------------------------------------------------------------------
Operating cash cost
(ex mine gate) $/tonne concentrate 304 218
-------------------------------------------------------------------------
1. In addition to producing a coarse concentrate from the HMS plant, a
fine grained, slightly lower grade concentrate is produced from a
spirals circuit, that treats fines ((less than)0.6mm) which are
screened off before the HMS circuit.
Copper production guidance for 2010
For 2010, the Company has budgeted for feed to the Kinsevere crusher of 652,000 tonnes at an average grade of 3.8% copper, approximately half of which is to be sourced from mining and the remainder reclaimed from existing stockpiles. For 2010, the Company expects to produce a total of 15,000 tonnes of copper from the HMS and spirals plants.
Capital expenditure guidance for 2010
Capital expenditure on Kinsevere Stage II is forecast at $185 million. Excluding capital expenditure in connection with Kinsevere Stage II, during 2010, the Company expects to incur capital expenditure of $2.1 million; the majority of which relates to groundwater bore drilling, equipment for pit dewatering, upgrade of the Company's fire fighting capability at Kinsevere, social development and information technology projects. Table 2 summarizes forecast capital expenditure for 2010.
Table 2. Capital expenditure 2010
-------------------------------------
Area of expenditure $ millions
-------------------------------------
Kinsevere Operations 2.1
-------------------------------------
Kinsevere Stage II 185.0
-------------------------------------
Entry Premium Payments(1) 5.0
-------------------------------------
1. Payment to La Générale des Carrières et des Mines ("Gécamines") in
connection with the amendment to the Kinsevere Lease Agreement reached
in January 2009. A payment of $5.0 million was made in January 2010.
Short term hedging position
During October 2009, the Company entered into a zero-cost transaction with its off-take partner Trafigura to hedge some of its anticipated HMS copper production for the first half of 2010. Under the terms of the transaction, the Company has locked in a floor price of $2.50 per pound and a cap price of $3.53 per pound and will receive the market price where the copper price is between $2.50 per pound and $3.53 per pound.
Cash and liquidity
As at December 31, 2009, the Company had $121.6 million in cash and cash equivalents. As at March 18, 2010, Anvil had approximately $101.1 million in cash, $18.2 million in available-for-sale investments and $9.5 million of trade receivables, the majority of which it expects to realize during the first half of 2010.
In addition, the Company recently completed a debt financing with Trafigura, making available to the Company a $100 million loan facility which will be available for drawdown only after the funds from the previously announced equity financing have been utilised. The Company is well advanced in discussions with a group of commercial banks to refinance the $100 million loan facility established with Trafigura, to an amount of $140 million and expects to finalise a term sheet for the refinanced facility later this month. The additional funding is sought in order to ensure that the Company has sufficient funding available to meet the Kinsevere Stage II commissioning and ramp-up costs that are expected to be incurred during the first half of 2011, the Pas de Porte (entry premium) payment due to Gécamines for the Company's Mutoshi project and the recommencement of exploration and development activity.
Changes to directors and officers
Pursuant to the Ancillary Rights Agreement in place with Trafigura, the completion of the $200 million financing arrangement with Trafigura provided for the appointment of a third director to the Company's board of directors, nominated by Trafigura. In February 2009, Mr. Kenneth Brown resigned as a director of the Company and Mr. Deon Garbers was appointed to the Company's board of directors to fill the vacancy so created. Mr. Garbers is a metallurgical engineer with 20 years experience in the mining industry. Mr Garbers is also a member of the Technical Committee, comprised of both Trafigura and Company representatives, which provides technical support for the Company's operations, in particular, the development of Kinsevere Stage II.
Mr. Craig Munro, the Company's Senior Vice President Corporate and CFO will retire at the end of this month. The recruitment process for Mr. Munro's replacement is currently underway and in the interim, Mr. Lui Evangelista, the Company's Financial Controller will be acting CFO.
Fourth Quarter and Year-End 2009 Results Conference Call and Webcast
The Company will hold a conference call at 8:30 a.m. (Canada, Toronto time) today, Friday March 19, 2010, coinciding with 8:30 p.m. (AWST - Australia, Perth time) on the same day, to discuss the results.
The details to access the conference call and the live audio webcast are as follows:
Conference call:
(Please call approximately five minutes prior to the scheduled start of the call).
- Toll-free within North America: 1-888-231-8191
- For local and overseas calling: 1-647-427-7450
Live audio webcast of the conference call (listen mode only):
- CNW Group website at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2986500 (English)
http://www.cnw.ca/fr/webcast/viewEvent.cgi?eventID=2986500 (French)
Replay Information (available for a period of 7 days):
The conference call will be recorded and a playback of the call will be available after the event by dialling: Toll Free: 1-800-642-1687 or local at 416-849-0833, 514-807-9274, 613-667-0035, 403-451-9481, 778-371-8506 or 902-455-3955.
Conference ID/Password number: 60431316 followed by the pound # key.
Anvil Mining Limited is a copper producer whose shares are listed for trading on the Toronto Stock Exchange (as common shares) and the Australian Securities Exchange (as CDIs) under the symbol AVM.
Caution Regarding Forward Looking Statements: This news release contains "forward-looking statements" and "forward-looking information", based on assumptions and judgements of management regarding future events and results. Such "forward-looking statements" and "forward-looking information" which may include, but are not limited to the operation of the Kinsevere HMS plant, the collection of the Company's trade receivables and the Company's plans for expansions of the Kinsevere copper mine. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "is expecting", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes", or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might", or "will" be taken, occur or be achieved. The purpose of forward-looking information is to provide the reader with information about management's expectations and plans for 2010. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anvil and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, the actual market prices of the available-for-sale investments, the actual market price of copper, changes in project parameters as plans continue to be evaluated, and the possibility of cost overruns, as well as those factors disclosed in the Company's filed documents. There can be no assurance that the Stage II expansion of the Kinsevere copper mine will proceed as planned and within expected time limits and budgets or that, when completed, the expanded Kinsevere Copper Project will operate as anticipate, or that Anvil will be able to divest its interest in Dikulushi if and when desired, or that the Kinsevere Stage I HMS plant will operate in accordance with forecast performance or that the Company will complete the refinancing of the Trafigura loan facility as planned.
Appendix
Key Financial and Production Data (unaudited)
-------------------------------------------------------------------------
3 months ended 12 months ended
December 31 December 31
2009 2008 2009 2008
-------------------------------------------------------------------------
Sales: ($ millions) 23.5 13.9 49.2 191.2
-------------------------------------------------------------------------
Operating profit / (loss) :
($ millions) 8.7 (50.1) (7.0) (3.0)
-------------------------------------------------------------------------
Provision for impairment:
($ millions) - (97.6) (2.9) (103.1)
Exploration expenditure
written off ($ millions) - (28.8) (3.2) (31.3)
-------------------------------------------------------------------------
Net Income / (loss):
($ millions) 10.9 (151.2) (17.7) (138.5)
-------------------------------------------------------------------------
PRODUCTION STATISTICS:
Consolidated Group
Copper produced in
concentrates (tonnes) 4,970 7,488 16,406 41,354
Silver produced in
concentrates (ounces) - 174,463 - 1,095,801
Per Mine
Kinsevere mine
Ore mined (tonnes) 164,966 404,636 297,459 2,653,103
Ore processed(1) (tonnes) 65,313 59,219 231,823 350,027
Copper grade (% Cu) 8.9 9.9 8.2 9.5
Contained copper in ore
(tonnes) 5,782 5,849 19,066 33,159
Recovery Cu (%) 77.0 76.2 76.0 69.0
Copper produced in
concentrates - HMS (tonnes) 4,455 4,457 14,499 22,858
Copper produced in
concentrate - Spirals (tonnes) 515 1,907
Copper produced in
concentrate - HMS and Spirals
(tonnes) 4,970 4,457 16,406 22,858
-------------------------------------------------------------------------
Costs of production ($)
Operating cash costs per
tonne of concentrate
(ex mine gate) $/t 304 461 218 311
-------------------------------------------------------------------------
Dikulushi mine
Ore mined (tonnes) - 19,776 - 101,064
Ore processed (tonnes) - 117,577 - 463,094
Feed grade (% Cu) - 2.3 - 3.1
Contained Copper in Ore (tonnes) - 2,689 - 14,326
Recovery Cu (%) - 64.8 - 77.1
Copper produced in concentrates
(tonnes) - 1,743 - 11,047
Silver produced in concentrates
(ounces) - 174,463 - 1,095,801
Operating cash cost (ex mine
gate) (after silver credits)
($/lb) - 4.04 - 1.13
-------------------------------------------------------------------------
Total cash costs from operations
($/lb) - -
-------------------------------------------------------------------------
Mutoshi mine
Ore mined (tonnes) - - - 428,361
Ore processed(1) (tonnes) - 89,296 - 462,495
Copper grade (% Cu) - 3.6 - 3.9
Contained copper in ore (tonnes) - 3,243 - 17,867
Recovery Cu (%) - 39.7 - 41.7
Copper produced in concentrates
(tonnes) - 1,288 - 7,448
-------------------------------------------------------------------------
Costs of production: ($)
Operating cash costs per tonne
of concentrate (ex mine gate) - 1,606 - 1,043
-------------------------------------------------------------------------
1. Ore processed at Mutoshi and Kinsevere relates to ore processed
through the HMS plants.
Consolidated Balance Sheets
(Expressed in thousands of United States dollars)
------------------------------
December 31 December 31
2009 2008
$ $
------------------------------
ASSETS
Current assets
Cash and cash equivalents 120,753 45,033
Accounts receivable 17,967 24,243
Inventories 14,220 31,064
Available-for-sale ("AFS") investments 1,243 24,032
Prepaid expenses and deposits 25,899 51,258
Current assets classified as held for sale 2,114 -
------------------------------
182,196 175,630
------------------------------
Non-current assets
Restricted cash 887 871
Equity accounted investment - 1,320
Available-for-sale ("AFS") investments 16,827 -
Deferred financing fees 2,865 -
Long-term inventory 11,163 10,651
Long-term receivable 15,468 12,464
Exploration and acquisition expenditure 62,384 51,352
Property, plant and equipment 324,562 280,334
Non-current assets classified as held
for sale 5,156 -
------------------------------
439,312 356,992
------------------------------
Total assets 621,508 532,622
------------------------------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 12,037 34,731
Derivative financial instrument 586 -
Income taxes payable 6 463
Provisions 1,712 2,460
Current portion of long-term debt 290 362
Current portion of liabilities directly
associated with non-current assets
classified as held for sale 1,764 -
------------------------------
16,395 38,016
------------------------------
Non-current liabilities
Future income tax liability 21,048 24,431
Other non-current liability 6,711 -
Long-term debt 74 321
Asset retirement obligations 12,858 12,980
Non-current portion of liabilities
directly associated with non-current
assets classified as held for sale 983 -
------------------------------
41,674 37,732
------------------------------
Total liabilities 58,069 75,748
------------------------------
Non-controlling interest 260 1,909
------------------------------
58,329 77,657
------------------------------
Shareholders' equity
Equity accounts 510,347 383,419
Retained earnings 50,067 70,987
Accumulated other comprehensive income 2,765 559
------------------------------
Total shareholders' equity 563,179 454,965
------------------------------
621,508 532,622
------------------------------
Consolidated Statements of Income and Comprehensive Income
(Expressed in thousands of United States dollars
except per share amounts)
-----------------------------------------
3 months ended 12 months ended
December 31 December 31
2009 2008 2009 2008
-----------------------------------------
Revenue from continuing
operations 23,576 13,864 49,235 191,240
Operating expenses (9,151) (51,519) (39,779) (150,876)
Amortization (5,658) (12,431) (16,480) (43,400)
-----------------------------------------
8,767 (50,086) (7,024) (3,036)
Other income 454 1,345 1,322 8,173
Share of loss in associates - - - (891)
Provision for impairment of
assets - (97,625) (2,876) (103,142)
Write back of provision for
impairment of assets 8,133 - 4,052 -
Loss on derivative instrument (586) - (586) -
General, administrative and
marketing (2,721) (4,614) (10,067) (22,748)
Exploration expenditure
written off - (28,790) (3,225) (31,290)
Foreign exchange gains (143) 239 461 140
Stock based compensation (446) (798) (1,891) (2,582)
Interest and financing fees (378) (307) (1,140) (1,379)
-----------------------------------------
Loss before income tax and
non-controlling interest 13,080 (180,636) (20,974) (156,755)
Income tax expense / credit
benefit (2,134) 23,135 3,299 12,857
Non-controlling interest
share of (gain) / loss 6,345 - 5,361
-----------------------------------------
Net profit / (loss) from
continuing operations 10,946 (151,156) (17,675) (138,537)
Loss from discontinued
operation before
non-controlling interest
share of loss (1,669) - (3,651) -
Non-controlling interest
share of loss 218 - 406 -
-----------------------------------------
Net profit / (loss) 9,495 (151,156) (20,920) (138,537)
Other comprehensive income,
net of taxes
-----------------------------------------
Net unrealized gains on
available-for-sale investments 268 5,854 2,206 127
-----------------------------------------
Total comprehensive
income / (loss) 9,763 (145,302) (18,714) (138,410)
-----------------------------------------
Profit / (loss) per share from
continuing operations:
Basic & Diluted loss
per share ($) 0.09 (2.12) (0.18) (1.95)
Profit / (loss) per share:
Basic & Diluted loss
per share ($) 0.08 (2.12) (0.22) (1.95)
Consolidated Statement of Cash Flows
(Expressed in thousands of United States dollars)
-----------------------------------------
3 months ended 12 months ended
December 31 December 31
2009 2008 2009 2008
-----------------------------------------
$ $ $ $
Cash flows from operating
activities
Net (loss) / income for
the period 10,946 (151,156) (17,675) (138,537)
Items not affecting cash:
- Amortization 5,612 12,431 16,480 43,400
- Provision for impairment
of assets 97,625 2,876 103,142
- Write back of provision
for impairment of assets (8,133) - (4,052) -
- Loss on derivative
instrument 586 - 586 -
- Non-cash finance costs 337 233 983 1,312
- Provision for doubtful debts - 7,775 - 7,775
- Exploration expenditure
written off - 28,790 3,225 31,290
- Share of loss in associates - - - 891
- (Gain) / Loss on sale of
assets (79) - (207) 278
- Non-controlling interest
share of income / (loss) - (6,345) - (5,361)
- Unrealized foreign exchange
gains/(losses) (255) 1,240 113 298
- Future income tax 2,082 (17,460) (3,382) (13,271)
- Stock based compensation 447 798 1,891 2,582
Changes in non-cash working
capital (5,153) 5,098 4,468 8,709
-----------------------------------------
6,390 (20,970) 5,306 42,508
-----------------------------------------
Cash flows from investing
activities
Payments for property, plant
and equipment (8,494) (48,692) (49,313) (186,156)
Proceeds from sale of assets (265) 10 869 475
Payments for exploration
expenditure (7,776) (9,325) (9,967) (33,271)
Proceeds of principal
repayments from investments 159 489 12,790 13,399
-----------------------------------------
(16,376) (57,518) (45,621) (205,553)
-----------------------------------------
Cash flows from financing
activities
Proceeds from issue of shares
& warrants (net of issue
expenses) 65,158 - 124,317 711
Deferred borrowing costs (2,865) - (2,865) -
Movement in restricted cash (149) (550) (267) (550)
Proceeds from borrowings
(net of fees incurred) - - - 800
Shares purchased under ESSIP - (1,982) - (1,982)
Repayments of borrowings - - (319) (117)
Disbursements on behalf of
Dikulushi Trusts (67) (1,063) - (6,610)
-----------------------------------------
62,077 (2,402) 120,866 (7,748)
-----------------------------------------
Cash flows from
discontinued operations 9 - (4,492) -
Net increase / (decrease) in
cash and cash equivalents 52,100 (80,890) 76,059 (170,793)
Cash and cash equivalents at
beginning of the period 69,008 125,485 45,033 215,754
Effects of exchange rate
changes on cash held in
foreign currencies 126 438 142 72
-----------------------------------------
Total cash and cash
equivalents at end of
the period 121,234 45,033 121,234 45,033
-----------------------------------------
Less cash and cash
equivalents at the end of
the period relating to
discontinued operations (481) - (481) -
-----------------------------------------
Cash and cash equivalents at
the end of the period for
continuing operations 120,753 45,033 120,753 45,033
%SEDAR: 00020549E
For further information: Craig Munro, Senior Vice President Corporate & CFO, +61 (8) 9481 4700, [email protected] (Perth); Robert La Vallière, Vice President Corporate Affairs, (Office) +1 (514) 448 6664, (Cell) +1 (514) 944 9036, [email protected] (Montréal); Website: www.anvilmining.com
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