International Minerals Reports Net Income (Before Taxes) of US$15.5 million for the Fiscal Year Ended June 30, 2010
Equity Earnings of US$27.5 million from Pallancata Silver Mine, Peru
International Minerals Corporation (Toronto and Swiss stock exchanges:
'IMZ? or 'the Company?) reported $15.5 million in consolidated net
income before income tax provisions for the fiscal year ending June 30,
2010. All amounts in this news release are reported in US dollars.
During the fiscal year, July 1, 2009 through June 30, 2010, IMZ achieved
the following significant accomplishments:
Completed the year ended June 30, 2010 with approximately $29.1
million in cash and equivalents, aggregate working capital of
approximately $30.4 million and total assets of approximately $313
million.
The 40%-owned Pallancata Mine produced 10.1 million ounces of silver
and 37,405 ounces of gold (100% project basis) for the fiscal year, of
which the Company′s 40% share is 4.0 million ounces of silver and
14,962 ounces of gold. IMZ's total cash cost (as defined by the Gold
Institute) is $5.32 per ounce ('/oz?) silver (after gold by-product
credit).
Realized Net Income before taxes of approximately $15.5 million for
the current fiscal year compared to $8.7 million in fiscal year 2009.
After a provision for possible future tax liabilities under Canadian
GAAP related to the Pallancata property, the net income was $8.9
million ($0.087 per share) compared to $0.093 per share in fiscal
2009. Net Income for the year included net equity income from the
Pallancata mine ($27.5 million), a foreign exchange gain of $3.6
million and royalty income of $0.9 million from Barrick's Ruby Hill
gold mine in Nevada.
Cash dividends received in the fiscal year from IMZ′s 40% interest in
the Pallancata Mine were $23.6 million.
- Ventura Acquisition: On January 12, 2010, the Company completed
the acquisition of all of the issued and outstanding shares of Ventura
Gold Corp. by way of a statutory plan of arrangement. Total
consideration paid included approximately 13.7 million shares of the
Company issued to Ventura shareholders valued at $56.9 million,
options and warrants assumed at $1.1 million, Ventura shares
previously held by the Company at $0.2 million plus transaction costs
of $1.3 million for a total of $59.5 million.
Through the acquisition, the Company added to its existing assets
Ventura′s 70% rights to a interest (Hochschild Mining 30%) in the Inmaculada
project in Peru, (currently a 51% interest in direct ownership and
earning up to 70% interest by completing a feasibility study by
September 2013, and issuing 200,000 common shares of the Company over
a five year period commencing in 2011).
- Metallic Acquisition: On February 26, 2010, the Company
completed the acquisition of all of the issued and outstanding shares
of Metallic Ventures Gold Corp. Inc., alsoby way of a
statutory plan of arrangement. Consideration paid to Metallic
shareholders totaled $59.5 million and consisted of $24 million in
cash, 8.5 million common shares of the Company valued at $33.9
million, and $1.6 million in transaction costs.
Through the Metallic acquisition, the Company added to its resource
assets: (a) a 3% Net Smelter Return (NSR) royalty (approximately
$2.5-3.0 million per year based on current metals prices) from Barrick
Gold Corporation′s Ruby Hill gold mine in Nevada; (b) a 100% interest
in the Converse gold exploration project, located in the Battle
Mountain/Cortez mineralized trend of Nevada; and (c) a 100% interest
in the Goldfield gold development project in central Nevada, near the
historic gold mining town of Goldfield.
On October 16, 2009, IMZ completed a normal course issuer bid or share
repurchase program that commenced in October 2008. Total shares
repurchased under the program were 3,397,000 at an average price of
C$2.49 per share for a total cost of C$8,469,172 ($7,020,870). All
shares purchased were cancelled.
On August 24, 2009, the Company was accepted for inclusion in the
Swiss Stock Exchange′s prestigious Swiss Performance Index (the
'SPI?). The Company is currently the only precious metal mining
company listed on the Swiss Stock Exchange and the first ever gold
company to be included in the SPI. In addition, the Company is one of
only 11 foreign companies listed on the SPI.
During the fourth fiscal quarter ended June 30, 2010, IMZ achieved the
following significant accomplishments:
Net equity earnings related to the Company′s 40% interest in the
Pallancata Mine were approximately $8.5 million for the quarter. Cash
dividends received from the mine for the quarter were $6.0 million.
Realized net income before tax of approximately $5.9 million for the
fourth fiscal quarter ended June 30, 2010 compared to a net loss of
$1.9 million for the same period in fiscal year 2009. Net Income for
the quarter included gross royalty income of $0.5 million and a
foreign exchange gain of $3.6 million.
Reported total production (100% project basis) of approximately 2.5
million ounces of silver and 9,320 ounces of gold from the Pallancata
Mine for the fourth quarter, an increase of 9% when compared to 2.3
million ounces of silver and 8,219 ounces of gold in the prior quarter
ended March 31, 2010. Of this total production, the Company′s share
for the fourth quarter was approximately 1 million ounces of silver
and 3,728 ounces of gold.
Reported direct onsite costs at the Pallancata Mine for the current
quarter of $2.40/oz silver (after gold by-product credit) and total
cash costs (as defined by the Gold Institute) of $5.47/oz silver
(after gold by-product credit). These costs per ounce of silver are an
improvement of 22% and 6%, respectively, from the direct onsite cost
and total cash cost of silver reported for the prior quarter ended
March 31, 2010.
Consolidated net income for the year ended June 30, 2010, after a future
tax liability in Peru was $8,926,983 ($0.087 basic and diluted per
share) compared to net income of $8,670,985 ($0.092 per share) for the
equivalent period in 2009. The current year net income is due
principally to: a) the net equity gain in the Pallancata Mine joint
venture of $27,480,224 (2008 ? a gain of $11,531,984) as a result of
increased production and higher realized silver and gold prices; b) a
foreign exchange gain of $3,576,979; and c) royalty revenues of $877,039
received from Barrick's Ruby Hill mine.
Capitalized resource property expenditures (cash and non-cash) for year
ending June 30, 2010, were $6,333,381, which were partially offset by
write-offs of $2,991,908 in other resource properties that the Company
decided did not merit further development, The current fiscal year
resource property expenditures compare to $8,770,318 for the 2009 fiscal
year, reflecting a reduced level of exploration and development activity
in the current fiscal year, primarily as a result of the government
suspension of exploration and mining activity in Ecuador. Expenditures
in Peru have accelerated, however, with the acquisition of the
Inmaculada gold property. Drilling also commenced in Nevada at the newly
acquired Goldfield gold property in Nevada. A total of $139,721,753 was
capitalized to resource properties with the acquisitions of Ventura
($92,168,836) and Metallic ($47,552,917) in January and February of 2010
respectively.
Outlook
During the balance of calendar year 2010 and for fiscal year 2011, the
Company's exploration and development efforts are expected to focus
primarily on:
At the Pallancata Mine:
Continuing production at the 3,000 tpd mining rate, working with our
60% joint venture partner, Hochschild.
Producing approximately 10 million ounces of silver and 33,000 ounces
of gold in calendar 2010 (the Company′s estimate on a 100% project
basis) and maintaining that production rate in calendar 2011. The
Company estimates direct onsite costs at the Pallancata Mine for its
40% share of 2010 production at $3.25/oz silver (after gold by-product
credit) and total cash costs (as defined by the Gold Institute) of
$6.25/oz silver (also after gold by-product credit), with similar
costs expected for calendar 2011.
Increasing mineral resources and reserves to extend the existing mine
life (approximately 4 years based on current reserves).
Continuing with the aggressive exploration and development drilling on
the 70%-controlled Inmaculada gold-silver project, in order to
support delivering a feasibility study by the end of 2011.
Commence a feasibility study at the Goldfield gold project to
be completed in late 2011, with the goal of achieving production by
2014.
Completing a scoping study on the Converse gold-silver project
by second calendar quarter 2011.
Continuing to monitor political developments in Ecuador in
order to protect the Company′s long-term interests in the 100%-owned
Rio Blanco gold-silver project and the Gaby gold project
(approximately 60% interest in estimated contained resource ounces).
The Company intends to seek environmental permits and production
permits and review construction financing requirements in order to
advance the Rio Blanco project towards commercial production
either on a stand-alone basis or with strategic partners.
Continuing to seek additional strategic joint venture alliances, such
as that with Hochschild at Pallancata and Inmaculada, in order to
advance projects with reduced further cash outlays by the Company.
Cautionary Statement:
The Gold Institute calculation of Direct Site Costs and Total Cash
Costs are non-Canadian GAAP financial measures, which IMZ 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 capital expansion costs and completion,
drilling and development programs on the Company′s projects, timing of
commencement of construction and production, obtaining of required
environmental and production permits, and timing and amounts of future
cash flows from operations. Factors that could cause actual results to
differ materially from anticipated results include risks and
uncertainties such as: risks relating to project capital and production
costs; risks relating to obtaining mining and environmentalpermits;
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 Renewal Annual Information Form for the year ended June 30,
2010, 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
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| ASSETS | |||||
| Current | |||||
Cash and equivalents | $ 29,099,344 | $ 43,775,995 | |||
Receivables | 4,192,295 | 423,983 | |||
Due from related parties | - | 377,328 | |||
Prepaid expenses and deposits | 158,772 | 18,921 | |||
Securities held-for-trading | 2,557,708 | 135,816 | |||
36,008,119 | 44,732,043 | ||||
| Long Term | |||||
Due from related party | - | 75,000 | |||
Property and equipment | 473,093 | 582,878 | |||
Investments | 524,609 | 31,500 | |||
Investment in joint venture | 36,668,508 | 32,396,735 | |||
Resource properties | 225,463,484 | 80,097,809 | |||
Royalty interest in resource property | 13,409,126 | - | |||
Reclamation / environmental bonds | 212,701 | 68,352 | |||
$ 312,759,640 | $ 157,984,317 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current | |||||
Accounts payable | $2,745,732 | $376,940 | |||
Accrued severance and payroll costs | 2,688,028 | 2,274,448 | |||
Due to related party | 11,819 | - | |||
Accrued interest payable on convertible debentures | 174,869 | 158,593 | |||
5,620,448 | 2,809,981 | ||||
| Long term | |||||
Convertible debentures | 36,646,543 | 31,756,199 | |||
Future income tax liability | 38,800,000 | - | |||
| 81,066,991 | 34,566,180 | ||||
| Non-controlling interest in subsidiary | 6,776,100 | - | |||
| Shareholders' equity | |||||
Capital stock | 217,204,514 | 125,678,141 | |||
Contributed surplus | 6,371,244 | 5,326,188 | |||
Equity component of convertible debentures | 4,945,008 | 4,945,008 | |||
Deficit | (3,604,217 | ) | (12,531,200 | ) | |
| 224,916,549 | 123,418,137 | ||||
$ 312,759,640 | $ 157,984,317 | ||||
| On behalf of the Board: | ||||||
| 'Stephen J. Kay? | Director | 'W. Michael Smith? | Director | |||
Stephen J. Kay | W. Michael Smith |
INTERNATIONAL MINERALS CORPORATION
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| ROYALTY INCOME | |||||
Royalty income | $ 877,039 | $ - | |||
Depletion of royalty income | (680,874 | ) | - | ||
| 196,165 | - | ||||
| INCOME FROM JOINT VENTURE | |||||
Equity income from joint venture | 28,896,001 | 8,210,385 | |||
Equity gain on capital contributions in joint venture | - | 4,226,000 | |||
Joint venture monitoring costs | (418,711 | ) | - | ||
Amortization of non-reimbursable costs | (997,066 | ) | (904,401 | ) | |
| 27,480,224 | 11,531,984 | ||||
| EXPENSES | |||||
Amortization | 183,062 | 164,912 | |||
General exploration | 99,261 | 185,781 | |||
Interest and financing costs | 3,669,572 | 3,033,149 | |||
Investor relations | 641,330 | 375,921 | |||
Office and general | 488,666 | 321,226 | |||
Professional fees | 972,566 | 845,243 | |||
Salaries and benefits | 1,234,008 | 853,999 | |||
Salary charge-outs | - | (119,622 | ) | ||
Stock-based compensation | 907,657 | 2,146,211 | |||
Transfer agent and listing fees | 134,377 | 93,118 | |||
Travel | 169,576 | 162,590 | |||
| (8,500,075 | ) | (8,062,528 | ) | ||
| OTHER ITEMS | |||||
Foreign exchange gain | 2,362,727 | 4,613,264 | |||
Unrealized gain (loss) on securities held-for-trading | 1,200,123 | (108,406 | ) | ||
Contribution to non-controlling interest in subsidiary | (3,687,882 | ) | - | ||
Management fee income | - | 371,570 | |||
Interest income | 294,929 | 970,219 | |||
Write-off of resource properties | (3,655,872 | ) | (637,618 | ) | |
Write-down of investment | - | (7,500 | ) | ||
Write-off of capital assets | (163,356 | ) | - | ||
| (3,649,331 | ) | 5,201,529 | |||
| Net income before income taxes | 15,526,983 | 8,670,985 | |||
| Future income tax expense | (6,600,000 | ) | - | ||
| Net income and comprehensive income for the year | 8,926,983 | 8,670,985 | |||
| Deficit, beginning of year | (12,531,200 | ) | (21,202,185 | ) | |
| Deficit, end of year | $ (3,604,217 | ) | $ (12,531,200 | ) | |
| Earnings per common share ? basic | $ 0.087 | $ 0.092 | |||
| Earnings per common share ? diluted | $ 0.087 | $ 0.092 | |||
| Weighted average number of common shares outstanding | 102,203,014 | 94,497,855 | |||
INTERNATIONAL MINERALS CORPORATION
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| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income for the year | $ 8,926,983 | $ 8,670,985 | |||
Add non-cash items: | |||||
Amortization | 183,062 | 164,912 | |||
Depletion of royalty income | 680,874 | - | |||
Stock-based compensation | 907,657 | 2,146,211 | |||
Unrealized foreign exchange (gain) loss | 3,432,341 | (4,547,318 | ) | ||
Unrealized loss (gain) on securities held-for-trading | (1,200,123 | ) | 108,406 | ||
Write-off of resource properties | 3,655,872 | 637,618 | |||
Interest and financing costs | 1,492,364 | 1,168,087 | |||
Equity income from joint venture | (28,896,001 | ) | (8,210,385 | ) | |
Equity gain on capital contributions in joint venture | - | (4,226,000 | ) | ||
Amortization of non-reimbursable costs | 997,066 | 904,401 | |||
Write-down of investment | - | 7,500 | |||
Contribution to non-controlling interest in subsidiary | 3,687,882 | - | |||
Write-off of capital assets | 163,356 | - | |||
Future income tax expense | 6,600,000 | - | |||
Changes in non-cash working capital items: | |||||
Increase in receivables | (3,749,324 | ) | (283,708 | ) | |
(Increase) decrease in prepaid expenses and deposits | (112,400 | ) | 3,967 | ||
Decrease in accounts payable | (1,148,099 | ) | (1,380,262 | ) | |
Increase in due from related parties | - | (249,284 | ) | ||
Increase in accrued severance and payroll costs | 12,044 | 1,085,003 | |||
Increase in due to related party | 18,777 | - | |||
Net cash used in operating activities | (4,347,669 | ) | (3,999,867 | ) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Share issuance costs | (144,897 | ) | - | ||
Due from related party | 75,000 | (75,000 | ) | ||
Proceeds from the issuance of capital stock | 770,138 | 115,873 | |||
Share buyback | (811,726 | ) | (6,209,144 | ) | |
Net cash used in financing activities | (111,485 | ) | (6,168,271 | ) | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Short-term investments | - | 1,560,496 | |||
Resource property expenditures | (13,819,011 | ) | (7,876,563 | ) | |
Investments in joint venture | (17,444 | ) | (1,352,857 | ) | |
Purchase of property and equipment | (318,331 | ) | (382,662 | ) | |
Loan to Ventura ? prior to acquisition | (1,922,791 | ) | - | ||
Cash acquired in the Ventura acquisition |
| - | |||
Cash paid in the Ventura acquisition |
| ) | - | ||
Cash acquired in the Metallic acquisition |
| - | |||
Cash paid in the Metallic acquisition |
| ) | - | ||
Reclamation / environmental bonds | (9,349 | ) | (13,533 | ) | |
Recovery of investment in joint venture | - | 1,561,267 | |||
Dividends received from joint venture | 23,628,250 | - | |||
Net cash used in investing activities | (10,217,497 | ) | (6,503,852 | ) | |
| Change in cash and equivalents for the year | (14,676,651 | ) | (16,671,990 | ) | |
| Cash and equivalents, beginning of year | 43,775,995 | 60,447,985 | |||
| Cash and equivalents, end of year | $ 29,099,344 | ||||