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Msg  439792 of 452462  at  8/9/2022 6:53:19 AM  by




“At Florence Copper, we are still waiting for the US Environmental Protection Agency (“EPA”) to begin the public comment period for the draft Underground Injection Control permit. This permit is the final key permit required to construct and operate the commercial production facility. All indications from the EPA are that there are no outstanding items remaining with the permit and they are just completing final internal sign offs. The public comment period is expected to be 45 days. During the second quarter, development costs of $27 million were incurred including procurement of long lead time items that were committed to last year. Capital spending on Florence will now slow down until we receive the final UIC permit,” continued Mr. McDonald. 


Second Quarter Review

Second quarter cash flow from operations was $18.3 million, earnings from mining operations before depletion and amortization* was $7.2 million and net loss was $5.3 million ($0.02 loss per share);
Gibraltar produced 20.7 million pounds of copper for the quarter. Head grades averaged 0.17% which was lower than expected due to the complexity of the ore zones mined in the upper benches of the Gibraltar pit resulting in higher than normal mining dilution. Grades and copper production are expected to improve significantly in the second half of the year;
Mill throughput outperformed recent quarters, in line with expectations, due to the softer ore from the Gibraltar pit. Copper recoveries were 77.3% for the quarter and were impacted by the lower head grade;
Total site costs* in the second quarter have increased due primarily to the impact of higher diesel costs;
Gibraltar sold 21.7 million pounds of copper in the quarter (100% basis) at an average realized copper price of US$4.08 per pound;
The decline in copper prices during the second quarter resulted in negative provisional price adjustments of $5.5 million and a write-down of ore stockpile inventories of $1.5 million;
Adjusted EBITDA* was $1.7 million and Adjusted net loss* was $16.1 million ($0.06 loss per share), and these amounts include the negative provisional price adjustments and inventory write-down;
The Company has copper collar contracts in place to protect a minimum copper price until mid-2023. The copper price collars outstanding at the end of the second quarter resulted in an unrealized gain of $30.7 million. Subsequent to quarter-end, $15.2 million of this gain was realized as cash proceeds upon payout of the July contract and through a repricing of the copper price floors from US$4.00 to US$3.75 per pound for the remainder of 2022;
Development costs incurred for Florence Copper were $27.0 million in the quarter and included further payments for major processing equipment for the SX/EW plant, other pre-construction activities and ongoing site costs; and
The Company had a cash balance of $176 million and has approximately $240 million of available liquidity at June 30, 2022, including its undrawn US$50 million revolving credit facility.

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