— Photo courtesy Imperial Metals Imperial Metals Corporation (III-TSX) reported, last week, the company’s financial results for its fiscal year ende
— Photo courtesy Imperial Metals
Imperial Metals Corporation (III-TSX) reported, last week, the company’s financial results for its fiscal year ended December 31, 2014(*).
The Company incurred a net loss for the year ended December 31, 2014 of $37.3 million ($0.50 per share) compared to net income of $41.0 million ($0.55 per share) in 2013. The variation in net income in 2014 compared to 2013 is largely attributable to the reduction in metals production and remediation costs of $67.4 million related to the Mount Polley tailings dam breach. In addition to variances in revenues and income from mine operations described above, variations in net income period over period are also impacted by movements in foreign exchange and realized and unrealized gains and losses on derivative instruments and taxes.
The 2014 net loss included foreign exchange losses related to changes in CDN/US Dollar exchange rates of $20.5 million compared to foreign exchange losses of $2.5 million in 2013. The $20.5 million foreign exchange loss is comprised of a $15.4 million loss on the senior notes, a $3.6 million loss on long term equipment loans, and a loss of $1.5 million on operational items. The average CDN/US Dollar exchange rate in 2014 was 1.105 compared to an average of 1.030 in 2013.
In 2014 the Company recorded net gains on derivative instruments of $5.7 million compared to net gains of $1.6 million in 2013. In 2014 the Company recorded a gain of $3.5 million on the foreign currency swap due to an increase in the CDN/US Dollar exchange rate compared to the exchange rate at inception of the swap. The decrease in the copper and gold price compared to the price in the derivative contracts resulted in a gain of $2.2 million, primarily unrealized, for copper and gold derivative instruments in 2014 compared to a $1.6 million unrealized gain in 2013.
The Company recorded $0.6 million as its equity share of Huckleberry's net income during 2014 compared to $8.3 million in 2013. The lower net income was primarily attributable to a combination of lower sales volumes, lower metal prices and idle mine costs attributable to the temporary shutdown related to the SAG mill bull gear repair and replacement which resulted in the loss of about two months production during 2014.
The Company incurred a pre-tax loss of $43.7 million in 2014 which resulted in a $6.4 million recovery of income and mining taxes compared to a $22.8 million expense in 2013 when the Company had pre-tax income of $63.8 million. Cash flow was negative $6.8 million in 2014 compared to positive cash flow of $78.2 million in 2013. Cash flow is a measure used by the Company to evaluate its performance, however, it is not a term recognized under IFRS in Canada. Cash flow is defined as cash flow from operations before the net change in non-cash working capital balances, income and mining taxes, and interest paid. The Company believes cash flow is useful to investors and it is one of the measures used by management to assess the financial performance of the Company.
Capital expenditures, inclusive of capitalized interest, were $405.1 million in 2014, up from $397.2 million in 2013. The expenditures in 2014 were financed by cash flow from the Mount Polley mine during the period it was operating and from long term debt. At December 31, 2014 the Company had $19.9 million in cash (December 31, 2013-$3.1 million). The Company had no short term debt at December 31, 2014 (December 31, 2013-$132.4 million) as this was all repaid from the long term financing arrangements for the Red Chris project completed in March 2014.
