Equinox Generates Operating Cash Flow of $467 Million in 201
TORONTO, March 9 /CNW/ - Equinox Minerals Limited (TSX and ASX symbol: "EQN") ("Equinox" or the "Company") today released its results of operations for the three and 12 months ended December 31, 2010, and its financial condition as at December 31, 2010.
Equinox will host a conference call and webcast to discuss these results on Wednesday, March 9, 2011 at 18:00 HRS (Toronto time).
All currencies specified in this press release are denominated in U.S. dollars, unless identified otherwise.
HIGHLIGHTS FOR THE YEAR
Equinox made significant progress this year in delivering shareholder value through the optimization of Lumwana as well as through the acquisition of Citadel. Some of Equinox's key achievements during 2010 resulting from these efforts are listed below.
Financial Achievements
•Generated an operating profit(1) of $529 million in 2010, an increase of 170% compared to $196 million in 2009(2). An after tax profit of $269 million in 2010 was also generated compared to an after tax loss of $183 million in 2009(2).
•Cash resources of $320 million at the end of 2010, an increase of 193% compared to $109 million in 2009(2).
•Generated earnings-per-share for the year ended December 31, 2010 of $0.38 compared to a loss-per-share for the year ended December 31, 2009(2) of $0.27.
Operating Achievements
•Completed ramp up of the Lumwana mine.
•Copper production increased to 146,690 tonnes in 2010, an increase of 34% compared to 109,413 tonnes in 2009(2), surpassing the 2010 annual guidance.
•Achieved C1 operating cost(1) of $1.38 per pound of copper for 2010, a decrease of 7% compared to $1.49 in 2009(2).
•Material movement exceeded 100 million tonnes in 2010, an increase of 24% compared to 81.2 million tonnes in 2009(2), following improved operational and mechanical performance.
•Ore milled increased to 18.6 million tonnes in 2010, an increase of 42% compared to 13.1 million tonnes in 2009(2), exceeding design rate of 20 million tonnes per annum ("Mtpa") over the second half of the year.
•Copper recoveries improved to 91% compared to recoveries of 85% in 2009(2), with a lower percentage of transitional ore being treated throughout 2010.
•Mine head grade of 0.86% copper in 2010 compared to head grade of 0.95% in 2009(2), as mining moved away from the central high grade core over the second half of 2010.
•Commenced a two-phased feasibility study (the "Lumwana Expansion Study") to investigate expanding Lumwana to 35 Mtpa by 2014 and awarded the two staged expansion plan for Lumwana to Ausenco. The Lumwana Expansion Study was subsequently modified to include an expansion to a plant capacity of 45 Mtpa.
•Discovered the Chimiwungo East ore sheet, a substantial extension of the Chimiwungo ore body that has the potential to increase the Chimiwungo resource potential to 1 to 1.5 million tonnes.
Corporate Achievements
•Secured a new $400 million corporate loan facility replacing the existing Lumwana project senior and subordinated debt facilities.
•Implemented a takeover offer for Citadel Resource Group Limited ("Citadel") (an Australian Securities Exchange ("ASX") listed base metals and gold company with a portfolio of development and exploration assets located in Saudi Arabia) to acquire all of the issued and outstanding shares of Citadel and by year end had acquired 89.47% of Citadel shares. By January 6, 2011, the Company had acquired 90.59% and initiated compulsory acquisition procedures to acquire all remaining shares in Citadel. The compulsory acquisition process was completed on February 15, 2011.
Subsequent to Year-End
•Announced a takeover bid for Lundin Mining Corporation ("Lundin") (a Toronto Stock Exchange ("TSX") and the NASDAQ OMS Stockholm ("OMX") listed diversified base metals company with a portfolio of operating mines in the DRC, Portugal, Sweden, Spain and Ireland) to acquire all of the issued and outstanding shares of Lundin.
Performance
Three
months ended
December 31 Twelve
months ended
December 31
(in thousands of dollars except as otherwise noted) 2010 2009(2) 2010 2009(2)
Gross sales $325,509 $233,431 $1,046,787 $531,962
Net income/(loss) $91,984 ($27,465) $269,105 ($183,063)
Earnings/(loss) per share (dollars) $0.13 ($0.04) $0.38 ($0.27)
Copper produced in tonnes 33,939 34,626 146,690 87,150
Copper produced in pounds (millions) 74.8 76.3 323.4 192.1
Copper sold in tonnes 33,421 31,410 131,730 81,520
Copper sold in pounds (millions) 73.68 69.24 290.42 179.72
Realized copper price per pound (net of smelter charges) $4.05 $2.97 $3.25 $2.61
C1 operating cost(1) per pound of copper $1.64 $1.53 $1.38 $1.49
Cash and cash equivalents $319,476 $109,130 $319,476 $109,130
Weighted average shares outstanding (in thousands) 717,983 706,210 710,209 670,385
(1) The terms "C1 operating cost" and "operating profit" are non-GAAP financial measures. 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 the fourth quarter of 2010, the Company had 22,739 tonnes of payable copper provisionally priced at $4.37 per pound ($9,637 per tonne) which remained subject to final pricing adjustment in the first quarter of 2011. The final pricing adjustments recognized during the fourth quarter of 2010 from the previous quarter provisionally priced copper sales was a profit of $10 million, which is included in the gross sales for the fourth quarter of 2010.
OPERATIONS
An operating profit(1) of $529 million and an after tax profit of $269 million were generated for the year ended December 31, 2010. The operating profit(1) for 2010 represents an increase of 170.3% when compared to the 2009(2) operating profit(1) of $196 million due to the increase in copper sold, higher copper prices and reduced C1 operating costs(1). The after tax profit for 2010 represents an increase of $452 million when compared to the 2009(2) net loss of $183 million.
During the year, the mine and process plant operations at Lumwana were fully ramped up. Ore processed at the Lumwana mine for the year was 18.6 million dry metric tonnes of ore, producing 354,256 dry metric tonnes of concentrate at an average copper grade of 41%. This resulted in copper produced in concentrate of 146,690 tonnes (323 million pounds) at an average C1 operating cost(1) of $1.38 per pound.
During the year, the mine ramped up to the full production rate with, material movements of 100.5 million tonnes, representing a 24% increase relative to 2009(2). Improvements in mobile equipment availability, equipment utilization and productivity, together with improved wet season management, 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. 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 the year. Ore mined was 17.6 million tonnes, operating at a rate exceeding 20 Mtpa over the last eight months of the year.
The plant processed 18.6 million tonnes of copper ore after running at the design rate of 20 Mtpa for the second half of the year. The head grade of the material treated was 0.86% copper following the treatment of lower grade material later in the year as mining moved away from the higher grade central zones. Copper recoveries were 91% and fluctuated throughout the year in line with the amount of transitional ore being treated.
In addition to the copper ore mined during the year, 2.1 million tonnes of uranium rich ore was mined and stockpiled. The uranium ore stockpile on the ROM pad has increased to 4.6 million tonnes of 900 ppm uranium and 0.8% copper. This copper-uranium ore is being diverted away from the copper concentrator, and is being classified as "waste" to the copper project. This uranium-rich copper ore stockpile may be treated at a later date, if and when the Company builds a uranium processing plant.
C1 operating costs(1) were $1.38 per pound of copper which was a significant reduction of 7% from 2009(2) costs. The cost improvements were largely driven by improved mining efficiencies and higher throughput, despite falling head grades. C1 operating costs(1) in the fourth quarter increased to $1.64 as a result of falling head grades, increases in diesel costs, MARC expenditure related to undercarriage rebuilds and excessive tire usage at the start of the wet season. First and fourth quarter costs have traditionally been higher due to increased tire usage and lower equipment productivity during the wet season.
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