Equinox Q2-10 Results Generate Operating Profit of $91.1 million and
Operating Cash Flow of $142.5 million
TORONTO, Aug. 12 /CNW/ - Equinox Minerals Limited (TSX and ASX symbol: "EQN") ("Equinox" or the "Company") today released its results of operations and financial condition for the three month ("Q2-10") and six month ("H1-10") period ended June 30, 2010.
Equinox will host a conference call and webcast to discuss these results on Thursday, August 12, 2010 at 18:00 HRS (Toronto time).
All currencies specified in this press release are denominated in U.S. dollars.
HIGHLIGHTS FOR THE QUARTER -------------------------- Events - Generated an operating profit(1) of $91.1 million, an increase of 11% over the first quarter of 2010 and an after tax profit of $73.4 million, an increase of 128% over the first quarter. - Copper production increased 44% over Q1-10 and by 80% over Q2-09, with 43,835 tonnes (96.64 million pounds) of copper in concentrate produced. - Achieved the lowest quarterly C1 operating cost(1) to date of $1.19 per pound of copper. - Increased cash resources to $212.2 million, an increase of $92.1 million over Q1-10 and as a result of positive operating cash flows. - Achieved Lumwana Mine design output levels for the first time with in excess of 5 million tonnes of ore mined. Total material movement increased by 77% over Q1-10 and by 28% compared to the corresponding quarter in Q2-09. Ore mined increased by 65% over Q1-10 and by 68% compared to the corresponding quarter in Q2-09. - Achieved recoveries of 94% and mine head grade of 1.02% Cu. - Commenced a two-phase feasibility study to investigate expanding the Lumwana Mine to 35 million tonnes per annum ("Mtpa") by 2014. - Initiated an additional $10 million drilling program at the Chimiwungo copper deposit following the first drill hole which intersected significant intercepts of 127m (225m - 352m) of 0.82% Cu including 64m (288m - 352m) of 1.03% Cu.
Commenting on the results, Equinox President and Chief Executive Officer Craig Williams said: "We are extremely pleased to have delivered record copper production and operating profits this quarter. With improvements in all areas of mining and processing operations, our committed hard work over the past year is now paying off; Lumwana is starting to show its true potential."
Performance -------------------------------------------- (in thousands of dollars Three months ended Six months ended except as otherwise June 30 June 30 noted) 2010 2009(2) 2010 2009(2) ------------------------------------------------------------------------- Gross sales $223,934 $127,734 $424,619 $127,734 Net income/(loss) $73,442 ($38,741) $105,969 ($99,332) Earnings/(loss) per share (dollars) $0.10 ($0.06) $0.15 ($0.16) Copper produced in tonnes 43,835 24,413 74,306 46,676 Copper produced in pounds (millions) 96.64 53.8 163.81 102.9 Copper sold in tonnes 35,929 23,635 62,525 47,601 Copper sold in pounds (millions) 79.21 52.11 137.84 104.94 Realized copper price per pound (net of smelter charges) $2.47 $2.08 $2.72 $1.60 C1 operating cost(1) per pound of copper $1.19 $1.44 $1.36 $1.44 Cash and cash equivalents $212,189 $187,249 $212,189 $187,249 Weighted average shares outstanding (in millions) 707.55 675.76 707.48 636.57 ------------------------------------------------------------------------- (1) C1 operating cost is a non-GAAP financial measure. See "Non-GAAP Financial Measures". (2) The Lumwana Mine commercial production commenced April 1, 2009.
In relation to the concentrate offtake contracts, at the end of Q2-10 the Company had 24,533 tonnes of payable copper provisionally priced at $2.95 per pound ($6,498 per tonne) which remained subject to final pricing adjustment in Q3-10. The final pricing adjustments recognized during the second quarter from Q1-10 provisionally priced copper sales was a loss of $9.5 million which is included in the gross sales for the second quarter.
Operations
An operating profit(1) of $91.1 million and an after tax profit of $73.4 million were generated during Q2-10. The operating profit at June 30, 2010 represents an increase of 142% when compared to the June 30, 2009 quarter operating profit of $37.6 million. The after tax profit for the three months ended June 30, 2010 represents an increase of 290% when compared to the June 30, 2009 quarter net loss of $38.7 million.
Production performance at the Lumwana Mine continued to improve in the second quarter with 43,835 tonnes of copper produced at a C1 operating cost(1) of $1.19 per pound of copper. Production for the first half of the year was 74,306 tonnes of copper at a C1 operating cost(1) of $1.36 per pound of copper.
In Q2-10, a record 5.09 million tonnes of ore was mined, with 4.57 million tonnes of ore milled, at a head grade of 1.02% Cu and copper recovery of 94%, which resulted in the production of 43,835 tonnes of copper. This was 44% higher than the first quarter and 80% higher than the corresponding quarter in 2009. Although still impacted by some wet weather early in April, total material moved was 26.6 million tonnes, which represents an annualized rate in excess of 100 million tonnes, while ore mined exceeded 5 million tonnes (equivalent to annualized 20 Mtpa) for the first time.
Lumwana Mine Production Statistics ------------------------------------------------------------------------- Q2 Q1 Q4 Q3 Q2 Production Statistic Measure 2010 2010 2009 2009 2009 ------------------------------------------------------------------------- Total material movement Tonnes (m) 26.60 14.99 22.23 29.30 20.80 Ore mined Tonnes (m) 5.09 3.09 4.20 4.02 3.03 Ore processed Tonnes (m) 4.57 3.59 3.96 3.82 3.03 Head grade Copper % 1.02 0.93 0.94 0.92 0.98 Copper recovery Copper % 94 92 93 80 82 Concentrate grade Copper % 44 44 46 47 39 Copper in concentrate Tonnes 43,835 30,471 34,626 28,111 24,413 Copper in concentrate Pounds (m) 96.64 67.18 76.33 61.97 53.82 Copper sold Tonnes 35,929 26,596 31,410 26,470 23,640 C1 operating cost(1) Per Pound $1.19 $1.60 $1.53 $1.46 $1.44 -------------------------------------------------------------------------
Improvements in mobile equipment availability, equipment utilization and productivity all contributed to the improvement in material mined. The improved utilization and productivity resulted from the Hitachi fleet moving into new pit stages, to both the north and the south of the Starter Pit, which had been stripped of oxide material by the light fleet over the wet season. The opening up of these additional stages and improved planning practices resulted in longer working faces, larger blasts and higher benches, leading to more efficient and productive mining during Q2-10. Most of the ore mined was still sourced from the higher grade Starter Pit over the quarter, but this will shift to the new stages over the remainder of the year resulting in lower grade feed to the mill.
The maintenance improvement program, undertaken in conjunction with Hitachi, has resulted in an improvement in equipment availability with the focus now shifting to planned maintenance and better management of parts inventories. Two of the new Hitachi EH4500 trucks have been now been commissioned, with assembly of the other three expected to be completed progressively over Q3-10. At times, the shovels were truck-limited, with longer waste hauls while raising the height of the tailings dam, but management expects this to be mitigated as the lift finishes in Q3-10 and the five new trucks become available.
The mill and crusher had a planned six-day shutdown in May, but produced at rates of close to 20 Mtpa in April and June. The primary constraint is now the Crushing circuit and plans are underway to improve utilization, availability and feed rates to the Crusher in the third quarter. Very little transitional ore was treated during the second quarter and this saw record recoveries of 94%. It is expected that some transition ore will be treated over the remainder of the year and this will see lower recoveries over the second half of 2010.
C1 operating costs(1) were $1.19 per pound of copper which was a significant (26%) decrease from Q1-10, an 18% decrease from Q2-09 and the lowest quarterly operating costs achieved to date. The cost improvements were largely driven by high head grades and improved mining efficiencies. Head grades and recoveries in the second half of 2010 are expected to be lower which will negatively impact C1 operating costs(1) for the remainder of the year.
In addition to the 5.09 million tonnes of copper ore mined during Q2-10, mining of the uranium zones at Valeria South and Valeria North within the Malundwe pit continued during the quarter with 1.145 million tonnes of uranium-copper ore mined. The uranium-copper ore stockpile on the ROM pad has increased to 4.2 million tonnes of 924 ppm uranium and 0.8% copper. This uranium-copper ore is being diverted away from the copper concentrator, and is being classified and expensed as "waste" to the copper project. This uranium-copper ore stockpile may be treated at a later date, if and when the Company builds a uranium plant.
Production Guidance
The Lumwana Mine continues to ramp up both the mine and process plant operations, with the mine achieving design throughput during the second quarter. It is anticipated that ramp up of the process plant to design throughput will be achieved in the second half of 2010. Management estimates that Lumwana will produce 135,000 tonnes (300 million pounds) of copper metal in concentrates at an average estimated C1 operating cost(1) of $1.35 per pound for the 2010 year.
Town Development
The Lumwana town development continues to advance with 931 houses completed as at June 30, 2010. The commercial and retail developments, including the recently opened Lumwana supermarket, are advancing and a self-sustaining modern town environment is being developed.
In June 2010, the Commerce, Trade and Industry Minister of the Republic of Zambia launched the Lumwana Multi-Facility Economic Zone ("MFEZ") after granting the Company a Statutory Instrument to operate MFEZ within the 1,355 km(2) Lumwana large scale mining license. The objective of the MFEZ is to kick start industrial and economic development in the manufacturing sector near Lumwana Mine and to ultimately enhance domestic and export oriented business activity through the provision of competitive environments that encourage investors to set up businesses with relative ease. At capacity, it is hoped the MFEZ will create some 13,000 jobs and initial investment of $60 million has already been secured from local and foreign investors. Once established, the estimated 13,000 jobs would be in addition to the 3,800 jobs already created by the Company at its wholly-owned Lumwana Mine.
Corporate Activities
Equinox held its annual shareholders' meeting on May 7, 2010 at which shareholders re-elected the directors, re-appointed PricewaterhouseCoopers as the Company's auditors and authorized and approved until 2013 the Company's Long-Term Incentive Plan.
Exploration Activities
The Company has accelerated its exploration program on the 1,355 km(2) Large Scale Mining License that surrounds the Lumwana Mine. This program primarily focused on the Chimiwungo East area, adjoining the previously defined Chimiwungo Open Pit that is planned as the second stage of Lumwana development.
Chimiwungo East ---------------
The induced polarization geophysical anomalies identified during Q4-09 in the Chimiwungo East area were the focus of exploration during Q2-10. Evaluation of the geophysical target was undertaken by two drill programs within the footprint of the interpreted south plunging shoot at Chimiwungo East and its daylight position.
Chimiwungo East Shallow Target: RC drilling (43 RC drill holes totaling 4,544m) evaluated the potential for near surface sulphide ore in the daylight position of the mineralization. The three ore horizons that typify Chimiwungo mineralization were intersected on all section lines. Assay results have been received only for the northern part of the drill grid where the mineralized sheets come to surface. Ore grade intercepts have been returned from oxide, transition and sulphide mineralization and as the sequence dips to the south, it is expected that the volume of sulphides will increase down dip of the oxidized ore schists.
Chimiwungo East Down Plunge Target: Diamond core drilling (8 holes totaling 4,407m) was conducted on three drill traverses to test down plunge the potential for an ore shoot to exist at Chimiwungo East similar to that at the Chimiwungo Main shoot 2 km further to the west. The objective was to identify sufficient grade and thickness to establish the viability of extending the Chimiwungo open pit eastwards into this area. In the first quarter, the Company reported that the first hole of this drill program (CHI0084) intersected 127m of 0.85% Cu from 225m, including 65m of 1.06% Cu. These are significant intercepts and support the concept of a south plunging shoot of higher grade mineralization at Chimiwungo East.
An additional seven deep diamond holes on the interpreted down plunge trend were completed during the second quarter. The geological core logging suggests that thicker mineralization typical of a shoot was intersected on all three drill traverses with significant widths of copper sulphides, bornite and chalcopyrite identified in core. Table 1 presents the assays received to date, with only one hole now outstanding (CHI0058). Assay results for holes CHI0055 and CHI0057 suggest that these holes were drilled to the east of the ore shoot, where the mineralization has returned to the typical planar habit of the stacked ore schists. CHI0059 and CHI0083 support the concept of an ore shoot plunging south from CHI0084.
TABLE 1: Diamond Drill Intercepts - Chimiwungo East Shoot Target ------------------------------------------------------------------------- Intercept (m) Hole ID East North Dip Azimuth ---------------------- From To Width ------------------------------------------------------------------------- CHI0054 379502 8641802 -80 360 299 373.2 74.2 ------------------------------------------------------------------------- incl 299 325 26 ------------------------------------------------------------------------- incl 331 366 35 ------------------------------------------------------------------------- CHI0055 379833 8641622 -70 320 372 449 77 ------------------------------------------------------------------------- incl 385 399.2 14.2 ------------------------------------------------------------------------- CHI0056 379343 8641103 -80 360 566 626.5 60.5 ------------------------------------------------------------------------- incl 591 609 18 ------------------------------------------------------------------------- incl 617.9 626.5 8.6 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CHI0057 379737.51 8641102 -80 360 567 583 16 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CHI0059 379098.4 8640200 -80 360 517 594.1 77.1 ------------------------------------------------------------------------- incl 543.8 594.1 50.3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CHI0083 378950 8641100 -80 360 407 530 123 ------------------------------------------------------------------------- incl 500.2 530 29.8 ------------------------------------------------------------------------- ------------------------------------------ Interval Copper top Hole ID Cu% mineral- below ization surface ------------------------------------------ CHI0054 0.69 sulphide 294 ------------------------------------------ 0.77 sulphide 294 ------------------------------------------ 0.80 sulphide 326 ------------------------------------------ CHI0055 0.37 sulphide 350 ------------------------------------------ 1.06 sulphide 362 ------------------------------------------ CHI0056 0.87 sulphide 557 ------------------------------------------ 1.52 sulphide 582 ------------------------------------------ 1.27 sulphide 609 ------------------------------------------ ------------------------------------------ CHI0057 0.54 sulphide 558 ------------------------------------------ ------------------------------------------ CHI0059 0.84 sulphide 509 ------------------------------------------ 1.08 sulphide 536 ------------------------------------------ ------------------------------------------ CHI0083 0.51 sulphide 401 ------------------------------------------ 1.31 sulphide 493 ------------------------------------------ NOTE: Intercepts in bold are indicative intercepts across the three ore schist units and include barren gneiss units that lie between the schists; the intervals below these that are not bolded represent intercepts within that overall bold intercept where Cu (greater than or equal to) 0.2% and the interval may contain (less than or equal to) 4m of sub-grade material.
The copper mineralization at Chimiwungo is open both to the south and east, and pit optimization studies suggest that the size of the Chimiwungo Pit is limited by the current extent of drilling. As a consequence of the encouraging results at Chimiwungo East, a substantially expanded drill program has commenced to evaluate expected areas for extensions, increase hole density and gain a better understanding of the structural controls on the mineralization. This work should also provide a better spread of drill data to enable mine expansions to be optimized to the scale of the Chimiwungo deposit. The Company now has four diamond rigs and two RC percussion rigs working in the Chimiwungo area.
http://files.newswire.ca/707/Deposit.pdf
Zambia Regional Exploration Targets -----------------------------------
In November 2009, the Company was granted the 1,957 km(2) Mufapanda license, an Iron Oxide Copper Gold target which is located 250 km southeast of Lumwana and 195 km west-northwest of Lusaka. Ground work has commenced with mapping, soil and rock chip sampling programs underway, and the construction of a semi-permanent field camp for the field teams. The planned exploration program includes an airborne magnetic, radiometric and gravity survey over the property to provide the essential foundation for exploration for this style of mineralization. Due to the proximity of Mufapanda to an air force base, airborne access has been restricted and the Company continues to seek permission to fly an airborne geophysical survey.
The Company holds additional exploration tenements and applications elsewhere in Zambia that have been affected by the introduction of legislation in 2008 that governs the title and commitments on prospecting licenses in Zambia. The Company is working closely with the Government of the Republic of Zambia (the "GRZ") to resolve the inconsistencies and ambiguities in the legislation before committing expenditure to these regional tenements. No work is being undertaken on these properties currently.
Expansion and Optimization Plans
Significant opportunities exist at the Lumwana Mine following the completion of ramp up to further expand and optimize the concentrator and mine throughput rate; to assess and evaluate the additional near mine deposits discovered to date; and to develop the Lumwana Mine uranium resource. Equinox will continue to assess these opportunities for expansion and organic growth at the Lumwana Mine.
The Lumwana processing plant is capable of treating ore at rates above the design capacity of 20 Mtpa and management believes it is capable of treating about 24 Mtpa without any significant modification. Once Lumwana reaches design capacity, it is the Company's objective over a further period of 18 months to increase mine output to achieve this 24 Mtpa target. However, given the very large resource and long mine life of the Lumwana Mine, there is potential to increase mine output further to 35 Mtpa. Such an increase will require expansion of the processing plant and possibly mining fleet.
During the second quarter, Equinox commenced a two phased feasibility study to investigate an expansion to 35 Mtpa of the Lumwana copper project with the award of the engineering contract to Ausenco. The Ausenco work is anticipated to take approximately ten months to complete with results expected by the end of the first quarter of 2011.
The Phase 1 expansion to 24 Mtpa throughput rate at Lumwana is a continuation of mine ramp up. It is expected to be largely achieved through project optimization and "de-bottlenecking" with some supplemental ore feed required from Chimiwungo and achieved with limited additional capital and within an 18-month time frame.
The Phase 2 expansion study will investigate the further expansion of the Lumwana Mine to 35 Mtpa. A scoping study aimed at identifying the appropriate mining and processing scale for the Lumwana operation has indicated that the Chimiwungo orebody would be capable of sustaining a mining rate of 35 Mtpa of ore feed to an expanded Lumwana plant. Further scoping work has indicated that the plant expansion could be implemented by incorporating an additional SAG mill to support a milling rate of similar scale. Preliminary estimates indicate that an expansion to 35 Mtpa would take approximately three to four years to complete and cost in the order of $300 million to $400 million.
Equinox also completed in 2008 a uranium feasibility study (the "UFS") investigating the onsite treatment of discrete and high grade uranium mineralization contained within the Lumwana Mine copper pit shells. The UFS has confirmed the potential viability of onsite uranium treatment. During Q2-10, Equinox undertook an assessment of the uranium offtake market aimed at identifying the current level of demand and available terms for uranium offtake. The findings of this assessment supported recent industry research suggesting that current supply levels outweigh demand and as a result the prevailing offtake terms are currently more favorable to offtakers. However, the uranium market is predicted to tighten over the next two to three years primarily due to forecast increases in demand from China. Equinox will continue to monitor the uranium market and assess the future development of the uranium project. Should Equinox be successful in negotiating viable uranium offtake agreements and securing the requisite project capital financing, the Company estimates plant construction to take approximately 18 to 24 months. The decision to proceed with the development of the Lumwana uranium project will depend, subject to Board approval, on a number of factors including satisfactory financing and offtake terms being secured. In the interim, the separate stockpiling of Lumwana Mine uranium ore is ongoing and to the end of Q2-10, the stockpile totaled 4.2 million tonnes at 924 ppm uranium and 0.8% copper.
Equinox will continue to review and assess opportunities for organic growth and expansion, and corporate opportunities to grow the Company.
Outlook
Mine and process plant operations continued to ramp up at the Lumwana Mine, with the mine achieving design throughput during Q2-10. Consistent with previous guidance, it is anticipated that ramp up of the Lumwana Mine and process plant operations to design throughput will be achieved in the second half of 2010. Management estimates that Lumwana will produce 135,000 tonnes (300 million pounds) of copper metal in concentrates at an average estimated C1 operating cost(1) of $1.35 per pound for the 2010 year.
For further, detailed financial and other results of operations, readers are directed to such information contained in the accompanying 2009 financials posted on Equinox's website (www.equinoxminerals.com) and filed on SEDAR (www.sedar.com). Readers are also directed to the cautionary notices and disclaimers contained herein and therein.
CONSOLIDATED BALANCE SHEETS As at June 30, 2010 and December 31, 2009 (unaudited) 2010 2009 ---------------------- ASSETS $000 $000 Current assets Cash and cash equivalents 212,189 109,130 Accounts receivable 99,419 134,193 Prepayments 10,061 16,080 Inventories 92,105 67,428 ---------------------- 413,774 326,831 Restricted cash 25,338 26,164 Property, plant and equipment 1,097,267 1,102,773 Other financial assets 1,475 1,906 ---------------------- 1,537,854 1,457,674 ---------------------- LIABILITIES Current liabilities Accounts payable and accrued liabilities 85,082 62,504 Current portion of long term debt 113,363 113,229 Current portion of finance leases 8,120 9,339 Current portion of derivative instruments 44,971 85,179 Current other liabilities 392 160 ---------------------- 251,928 270,411 Long term debt 337,540 405,423 Finance leases 15,938 16,762 Income tax liability 6,727 6,727 Future income tax liability 62,683 5,938 Asset retirement obligation 7,762 7,504 Long term compensation 3,080 2,469 Derivative instruments - 22,131 Other payables 64,828 39,737 ---------------------- 750,486 777,102 ---------------------- SHAREHOLDERS' EQUITY Share capital 738,871 737,838 Retained earnings/(deficit) 31,249 (74,720) Contributed surplus 16,322 15,966 Accumulated other comprehensive income 926 1,488 ---------------------- 787,368 680,572 ---------------------- 1,537,854 1,457,674 ---------------------- CONSOLIDATED STATEMENTS OF INCOME For the three and six months ended June 30, 2010 and 2009 (unaudited) Three months ended Six month ended June 30 June 30 2010 2009 2010 2009 -------------------------------------------- $'000 $'000 $'000 $'000 Copper sales revenue 223,934 127,734 424,619 127,734 Smelter treatment charges (28,596) (15,370) (49,418) (15,370) -------------------------------------------- Net sales revenue 195,338 112,364 375,201 112,364 Direct and indirect mining costs 77,543 59,520 155,595 59,520 Amortization and depreciation 19,239 11,747 33,465 11,747 Royalties 7,495 3,513 12,938 3,513 -------------------------------------------- Cost of sales 104,277 74,780 201,998 74,780 -------------------------------------------- 91,061 37,584 173,203 37,584 -------------------------------------------- Expenses Derivative (gain)/loss (39,557) 74,312 (23,799) 172,414 Exploration costs 1,441 1,045 2,341 2,109 Other operating costs 7,772 1,489 9,510 1,489 General and administration 2,886 3,567 6,018 5,149 Financing costs 9,163 15,391 18,021 15,924 Long term compensation expense 556 419 912 1,401 Other (income)/expense (4,412) 2,826 (2,514) 3,819 -------------------------------------------- (22,151) 99,049 10,489 202,305 -------------------------------------------- Profit/(Loss) before income tax 113,212 (61,465) 162,714 (164,721) Income tax (expense)/benefit (39,770) 22,724 (56,745) 65,389 -------------------------------------------- Net income/(loss) for the period 73,442 (38,741) 105,969 (99,332) -------------------------------------------- Basic earnings/(loss) per share $0.10 ($0.06) $0.15 ($0.16) Diluted earnings/(loss) per share $0.10 - $0.15 - Weighted basic average number of shares outstanding (000's) 707,546 675,762 707,484 636,565 Weighted diluted average number of shares outstanding (000's) 720,424 695,423 720,362 656,227 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three and six months ended June 30, 2010 and 2009 (unaudited) Three months ended Six month ended June 30 June 30 -------------------------------------------- 2010 2009 2010 2009 $'000 $'000 $'000 $'000 Income/(loss) for the period 73,442 (38,741) 105,969 (99,332) Other comprehensive (losses)/ income Net unrealized (losses)/ gains on available-for-sale securities (565) 1,051 (562) 1,139 -------------------------------------------- Total comprehensive income/ (loss) 72,877 (37,690) 105,407 (98,193) -------------------------------------------- CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the three and six months ended June 30, 2010 and 2009 (unaudited) Three months ended Six month ended June 30 June 30 2010 2009 2010 2009 -------------------------------------------- $'000 $'000 $'000 $'000 Share capital Balance at start of period 738,582 581,477 737,838 581,477 Issue of shares - 148,325 - 148,325 Share issue costs - (7,356) - (7,356) Conversion of stock options 289 307 1,033 307 ------------------------------------------------------------------------- Balance at end of period 738,871 722,753 738,871 722,753 ------------------------------------------------------------------------- Balance at start of period (42,193) 47,752 (74,720) 108,343 Income/(loss) for the period 73,442 (38,741) 105,969 (99,332) ------------------------------------------------------------------------- Balance at end of period 31,249 9,011 31,249 9,011 ------------------------------------------------------------------------- Balance at start of period 15,956 21,228 15,966 20,400 Stock based compensation 493 546 1,065 1,374 Transferred to share capital on exercise of stock options (127) (123) (709) (123) Forfeited stock options - (526) - (526) ------------------------------------------------------------------------- Balance at end of period 16,322 21,125 16,322 21,125 ------------------------------------------------------------------------- Accumulated other comprehensive income Balance at start of period 1,491 76 1,488 (12) Net unrealized gain/(losses) on available-for-sale securities (565) 1,051 (562) 1,139 ------------------------------------------------------------------------- Balance at end of period 926 1,127 926 1,127 ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS For the three and six months ended June 30, 2010 and 2009 (unaudited) Three months ended Six month ended June 30 June 30 2010 2009 2010 2009 -------------------------------------------- $'000 $'000 $'000 $'000 Cash flows (used in)/provided by operating activities Income/(loss) for the period 73,442 (38,741) 105,969 (99,332) Items not affecting cash: Amortization and depreciation 20,545 11,806 36,098 11,859 Unrealized foreign exchange (gain)/loss (2,280) 4,474 (2,164) 4,579 Long term compensation expense 418 598 912 1,730 Income tax expense/ (benefit) 39,770 (22,724) 56,745 (65,389) Mark to market changes in derivative instruments (39,557) 74,312 (23,799) 172,414 (Payments)/proceeds from settlement of derivative instruments (18,162) 14,419 (38,540) 48,654 Deferred payments 18,245 3,513 27,257 3,513 Accretion Expense 130 92 258 183 Net financing costs 3,643 2,429 3,309 (10,910) Changes in non-cash working capital (Increase) in inventories (25,275) (6,204) (24,677) (13,497) Increase in accounts payable and accrued liabilities 15,905 17,362 22,578 13,347 Decrease/(increase) in accounts receivable and prepayments 55,639 (36,512) 40,793 (50,620) -------------------------------------------- 142,463 24,824 204,739 16,531 -------------------------------------------- Cash flows (used in)/provided by financing activities Issue of share capital 184 148,325 671 148,325 Share issue costs - (7,356) - (7,356) Payments of loan origination fees and break fees (125) - (32,847) - Proceeds from borrowings - - 275,701 4,044 Repayment of borrowings (36,682) (16,684) (313,109) (17,299) Finance lease principal repayments (2,217) (273) (5,962) (542) -------------------------------------------- (38,840) 124,012 (75,546) 127,172 -------------------------------------------- Cash flows (used in)/provided by investing activities Decrease/(increase) in restricted cash 828 (3) 825 19 Payments for property, plant and equipment (12,073) (5,312) (26,544) (7,656) -------------------------------------------- (11,245) (5,315) (25,719) (7,637) -------------------------------------------- Net increase in cash and cash equivalents 92,378 143,521 103,474 136,066 Cash and cash equivalents - start of period 120,112 44,174 109,130 51,327 Exchange rate changes on cash held in foreign currencies (301) (446) (415) (144) -------------------------------------------- Cash and cash equivalents - end of period 212,189 187,249 212,189 187,249 --------------------------------------------
Q2-2010 Conference Call & Webcast
The Company's President & CEO, Craig R. Williams and COO, Cobb Johnstone will host a conference call and webcast to discuss the results
Date: Thursday, August 12, 2010 ----- Time: 18:00 HRS (Toronto time) ----- 18:00 HRS (New York time) 23:00 HRS (London time) 00:00 HRS (Lusaka time - Friday, August 13, 2010) 06:00 HRS (Perth time - Friday, August 13, 2010) 08:00 HRS (Sydney / Melbourne time - Friday, August 13, 2010) Webcast: The Company's website at www.equinoxminerals.com -------- Dial-in International: +1 201-689-8035 ---------------------- Dial-in Australia: 0011-800-4626-6666 (Toll-free) ------------------ Dial-in North America: +1 877-407-8035 (Toll-free) ---------------------- Dial-in UK & EU: 00-800-4626-6666 (Toll-free) ---------------- Conference ID: 353537. Call in 10 minutes prior to the call and -------------- an operator will be available to assist you Replay: Available approximately one hour after ------- completion of the call and until 23:59 HRS (Toronto time) on September 12, 2010 Replay Dial-in: +1-201-612-7415 (International) and --------------- +1-877-660-6853 (North America). To access the recording, please enter Account No. 286, followed by the Conference ID: 353537. An archived transcript of the call will also be available on the Company's website Craig R. Williams - President & Chief Executive Officer -------------------------------------------------------
About Equinox
Equinox Minerals Limited is an international mining company dual listed on the Canadian (Toronto) and Australian stock exchanges.
The Company is currently focused on operating its 100% owned large scale Lumwana Copper Mine in Zambia, one of the largest new copper mines to be developed globally over the last few years.
Equinox acquired the Lumwana project in 1999 and following nearly 10 years of feasibility, financing and construction, commissioned the mine, plant and infrastructure in December 2008. Situated 220 km northwest of the Zambian Copperbelt, Lumwana is now a major copper mine.
Lumwana is mining and processing in excess of 20 million tonnes of ore per year, mined at an average life of mine strip ratio of 4.2:1. Lumwana ore, which is predominantly sulphide, is treated through a large, yet conventional plant, producing a copper concentrate for sale to local and international offtakers.
In addition, Equinox is looking at opportunities to grow the Company through both internal expansion and through the international search for mergers and acquisitions.
For information on Equinox and technical details on the Lumwana Project please refer to the company website at www.equinoxminerals.com
------------------------------------------------------------------------- Cautionary Notes ---------------- Forward-Looking Statements --------------------------
Certain information contained or incorporated by reference in this press release, including any information as to the Company's strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or operating performance, constitutes "forward-looking statements" within the meaning of Canadian securities laws. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements can often, but not always, be identified by the use of words such as "plans", "expects", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "predicts", "potential", "continue" or "believes", or variations (including negative variations) of such words; or statements that certain actions, events or results "may", "could", "would", "should", "might", "potential to", or "will" be taken, occur or be achieved or other similar expressions concerning matters that are not historical facts.
Without limitation, statements that the Company anticipates that ramp up of the Lumwana mine and process plant to design throughput will be achieved in the second half of 2010; that Management estimates that Lumwana will produce 135,000 tonnes (300 million pounds) of copper metal in concentrates at an average estimated C1 operating cost(1) of $1.35 per pound for the 2010 year; that head grades and recoveries in the second half of 2010 are expected to be lower which will negatively impact C1 operating costs(1) for the remainder of the year; and statements with respect to the expansion and optimization plans, including the timing and other related matters of such statements, are forward-looking statements. The purpose of forward-looking statements is to provide the reader with information about management's expectations and plans for 2010 and subsequent years. Actual results may vary.
Forward-looking statements are necessarily based on a number of factors, estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such factors, estimates and assumptions include, but are not limited to, anticipated financial or operating performances of Equinox, it subsidiaries and their respective projects; future prices of copper and uranium; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; estimated costs of future production; the grade, quality and content of the concentrate produced; the sale of production and the performance of offtakers; capital, operating and exploration expenditures; costs and timing of the development of the Lumwana Mine, the costs of Equinox's hedging policy; costs and timing of future exploration; requirements for additional capital; government regulation of exploration, development and mining operations; environmental risks; reclamation and rehabilitation expenses; title disputes or claims; and limitations of insurance coverage. These risks and uncertainties are fully described in detail in the Company's Annual Information Form dated March 15, 2010 which can be found on SEDAR at www.sedar.com or the Company's website at www.equinoxminerals.com. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Without limitation, in stating that the Company anticipates that ramp up of the Lumwana mine and process plant to design throughput will be achieved in the second half of 2010 and that Management estimates that Lumwana will produce 135,000 tonnes (300 million pounds) of copper metal in concentrates at an average estimated C1 operating cost(1) of $1.35 per pound, the Company has assumed that its ongoing efforts towards improving efficiencies will result in improvements in mine, mill and processing plant performance and in availability and utilization of the mining fleet, that the Hitachi trucks will arrive on schedule and will improve availability and utilization of the mining fleet and that the wet season will not have a material effect on production In stating that the head grades and recoveries in the second half of 2010 are expected to be lower which will negatively impact C1 operating costs(1) for the remainder of the year, the Company has assumed that it will be mining a greater amount of transitional ore from the surface of additional pits, which transitional ore will dilute head grade and recoveries. In making statements with respect to the expansion and optimizations plans, including the schedule and timing, anticipated results and work required to complete the plans and achieve the desired results, the Company has assumed that the preliminary studies completed to date prove to be accurate, any costs associated with completing such plans will be feasible, that the materials, labour, regulatory approvals and expertise will be available and that the price and demand for copper and uranium will be profitable and that it will secure any necessary financing and/or offtake commitments on satisfactory terms and that the underlying assumption and information in the preliminary studies are correct.
Readers are cautioned that forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Equinox and/or its subsidiaries, including costs, production and returns, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These factors are fully discussed in the Company's Annual Information Form dated March 15, 2010. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made or incorporated in this press release are qualified by these cautionary statements.
Although Equinox has attempted to identify statements containing important factors that could cause actual actions, event or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein are made as of the date of this document based on the opinions and estimates of management on the date statements containing such forward looking information are made, and Equinox disclaims any obligation to update any forward-looking information, whether as a result of new information, estimates or opinions, future events or results or otherwise. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information.
Technical Information ---------------------
Certain technical information in this press release has been summarized or extracted from the Technical Report on the Lumwana Project, North Western Province, Republic of Zambia dated June 2008 and as re-filed in April 2009 (the "Technical Report"). Scientific and technical information contained in this press release has been prepared under the supervision of Robert Rigo, BEng., FAusIMM, MIEAust, Vice President, Project Development of Equinox who is a "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Readers are cautioned not to rely solely on the summary of information contained in this release, but should read the Technical Report which is posted on Equinox's website at www.equinoxminerals.com and filed on SEDAR at www.sedar.com and any future amendments to such report. Readers are also directed to the cautionary notices and disclaimers contained therein.
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For further information: Craig R. Williams, (President and Chief Executive Officer); Michael Klessens, (Vice President - Finance and Chief Financial Officer), Phone: +61 (0) 8 9322 3318, Email: [email protected]; or Kevin van Niekerk, (V.P. Investor Relations), Phone: +1 (416) 865 3393, Email: [email protected]; or David Griffiths, (Gryphon Management Australia), Phone +61 (0) 419 912 496, Email: [email protected]
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