Copper Mountain Mining Corporation

Rod Shier - Chief Financial Officer, Corporate Secretary, Director Jim O'Rourke - President, Chief Executive Officer, Director

Matt Murphy - UBS Stefan Ioannou - Haywood Securities Marco Rodriguez - Stonegate Capital Partners Jeff Wareham - Industrial Alliance Peter Campbell - Mackie Research Capital Cliff Hale Sanders - Cormark Securities Craig Hutchinson - TD Securities Sasha Bukacheva - BMO Jackie Przybylowski - Desjardins Capital Markets

Thank you, Joanna. After opening remarks by management in which we will review the business and operational results for the 2015 first quarter, we will open the lines to participants for questions as noted by Joanna.

Please note that comments made today that are not of a historical factual nature may contain forward looking statements. This information by its nature is subject to risks and uncertainties that may cause the stated outcomes to differ materially from the actual outcomes.

Please refer to the bottom of our latest news release for more information. I will now turn the call over to Jim O'Rourke, for his remarks.

Thank you, Rod. Good morning everyone and thank you for joining us today.

Today, we will discuss the 2015 first quarter results of Copper Mountain, and I will briefly summarize the financial results and provide an update on various operational activities after which Rod will provide financial details for the first quarter. The 2015 first quarter performance has continued to show improvements in operational results.

Mining focus has recently shifted from the Pit 3 area to Pit 2 area of the mine, where the copper grades are slightly lower, but the gold grades are higher. The new $40 million secondary crusher is working at its design capacity and we are meeting our expectations in increased mill throughput with a smoother mill operation.

For the third quarter ending March 31, 2015, the company completed the total of four shipments of copper concentrate, generating $71.5 million of revenue after provisional pricing adjustments. Revenues were up about 17% for this quarter as compared with the same period last year and this increase is a result of the extra concentration.

Production for the three months ended March 31, 2015, was 18.4 million pounds of copper, 7,800 ounces of gold and 80,300 ounces of silver. This represents a 3.7 increase in copper production as compared to the first quarter of 2014, with a 44% increase in gold production for the comparable period.

The total cash cost per pound of copper sold net of precious metals was U.S. $1.77 for the period.

Site cash costs per pound of copper produced net of precious metal credits was U.S. $1.21 per pound for the period, a 25% decrease compared to the U.S.

$1.62 per pound of copper during the first quarter 2014. Phase 2 of Pit 3 was completed during the quarter and the start of the Phase 3 pushback on the west side of Pit 3 has commenced.

Mining in Pit 2 area is progressing well and the majority of ore will be supplied from the Pit 2 area for the balance of 2015. Copper head grade for the year is forecasted to average 0.33% copper, but because of the higher gold content in the Pit 2, the copper equivalent grade is approximately 0.41%.

During the quarter a total of 14.7 million tonnes of material was mined, including 5.6 million tonnes of ore and 9.1 million tonnes of waste. The mining rate during the period was in the range of 165,000 tonnes per day moved.

For the 2015 first quarter, the concentrate mill, the total of 2.9 million tonnes of ore as compared with 2.6 million tonnes of ore in the same period last year. On a tonnes per day basis, the 2015 first quarter averaged 33,200 tonne per day versus 29,300 tonne per day for the comparable period last year.

This represents a 13.5% improvement in throughput, which can be attributed to the finer feed provided by the permanent secondary crusher. Mill throughput was reduced on two occasions during the period initially when one of our ball notes was unavailable due to a failed transformer and then when the regrind was out of service and the mill throughput was reduced in order to provide a finer primary grind to maintain a salable concentrate grade.

Once these limitations are in processing were rectified, the mill achieved an all-time high throughput record of 45,939 tonnes per day in early April, and has averaged 37,776 tonnes per day to-date this month. The SAG mill availability average 93.2% during the first quarter, slightly above the 92% planned.

Copper recovery averaged 80.6% compared to the 83.5% achieved in the same period last year. Recovery was adversely affected in the period as a temporary outage of the regrind in the ball.

April month-to-date copper recovery is 82.5% with our higher tonnage course our primary grind. The overall improvement in the mill throughput during the quarter was possible as a result of the secondary crusher as I mentioned earlier and it is operating at its design capacity of 3,000 ton per operating hours and delivering a consistent product in the two-inch material side to the SAG mill.

In February, the mine was awarded the Edward Prior award from the BC government for recognition of the safest mid-size mine within the province. As of mid-April, the mine has worked over 600 days or 1.5 million worker hours, lost time incident free.

Management have aggressively tackled the mine site operating cost budget in order to accommodate potential lower copper prices for 2015, down to the range of the U.S. $250 per pound.

The Plan has been very successful with the total site cost being reduced 15% below the budget for this past quarter. Operational highlights for the first quarter include reduced operating costs, slightly higher head grades, improved mill availability and steady progress in SAG mill throughput.

Looking to the remainder of 2015, we are focused on capitalizing on our trend of continuous operational improvements. We are very pleased with the progress of increased mill throughput provides confidence that the 35,500 tonne per day plan for this year is achievable.

The mine is on track in meeting its guidance level of 80 million pounds of copper and 35,000 ounces of gold. I would like to point out that the 2015 gold forecast is a 55% increase over the 26,600 ounces produced last year.

In Canadian dollars this account for about CDN $20 million extra value, I will answer any specific questions in the question period and for any details that you may wish. I would like now to turn it over to Rod.

Thank you, Jim. For the three months ended March 31, 2015, the company recognized net revenue after pricing adjustments and smelter charges of $71.5 million, based on an average realized copper price of U.S.

$264 per pound. Compared to net revenues after pricing adjustments of smelter charges of $61.2 million, based on an average provisional copper price of U.S.

$319 per pound for the three months ended March 31, 2014. Despite the lower average copper price realized during the quarter revenues were up as a result of increased copper sales during the quarter.

The mine sold a total of 21.5 million pounds of copper. 7,600 ounces of gold and 92,700 ounces of silver during the three months ended March 31, 2015, compared to a total of 19.8 million pounds of copper 6,500 ounces of gold and 98,700 ounces of silver during the three months ended March 31, 2014.

Cost of sales for the three months ended March 31, 2015 were $64.7 million, which resulted in a gross profit of $6.7 million as compared to cost of sales of $60.1 million, which resulted in a gross profit of $1.1 million for the three months ended March 31, 2014. This increase in cost was compared to the first quarter of 2014, as a result of processing more ore and selling more copper during the period.

General and administrative expenses for the three months ended March 31, 2015 were $1.9 million compared to $1.6 million for the three months ended March 31, 2014. Non-cash share-based compensation reflects an expense of $0.3 million for the three months ended March 31, 2015 as compared to an expense of $1.4 million for the three months ended March 31, 2014.

The decrease was due to fewer stock options vesting during the period. For the three months ended March 31, 2015, the company recorded finance income of $0.1 million and finance expense of $2.5 million as compared with finance income of $0.02 million and finance expense of $2.1 million for the three months ended March 31, 2014.

Finance expense primarily consists of interest on loans and the amortization of financing fees. For the three months ended March 31, 2015, the company recognized the non-cash unrealized foreign-exchange loss of $32.2 million compared with the non-cash unrealized foreign-exchange loss of $11.5 million for the three months ended March 31, 2014, which primarily relates to the company's debt that is denominated in U.S.

dollars. During the first quarter, the company recognized the non-cash unrealized loss on the interest rate swap of $2 million as compared with the non-cash unrealized gain on the interest rate swap of $0.9 million for the three months ended March 31, 2014, which is related to the revaluation of the interest rate swap liability required under the company's loan agreements.

It should be noted that these adjustments to income are required under IFRS and are non-cash in nature as outlined in the company's MD&A and statement of cash flow. For the three months ended March 31, 2015, the company recorded a current resource tax of $0.4 million and the current and deferred income tax recovery of $0.7 million as compared with the current resource tax expense of $0.1 million and a current and deferred income tax recovery or $0.9 million for the three months ended March 31, 2014.

This all results in a net loss attributable to shareholders for the three months ended March 31, 2015, of $23.9 million or $0.20 per share as compared to a net loss of $12.1 million or $0.10 per share for the three months ended March 31, 2014. Management of the company believe that as a result of the company having U.S.

denominated debt, selling copper, gold and silver in U.S. dollars and reporting the financial statements in Canadian dollars, the unrealized foreign-exchange loss or gain each quarter is misleading to the reader of the financial statements if just looking at net income only.

As a result management, believe that the reader of the financial statement should look to adjusted EBITDA, adjusted earnings and adjusted earnings per share as a better way to evaluate the company's performance during the period. Therefore, if we remove all the accounting non-cash items, the company reported an adjusted EBITDA of $18.4 million and adjusted earnings of $4.3 million or about $0.04 per share for the three months ended March 31, 2015, as compared to an adjusted EBITDA of $17.1 million and an adjusted earnings of $6.7 million or about $0.07 per share for the three months ended March 31, 2014.

As at March 31, 2015, the company had cash on hand of $14.8 million and $19 million in concentrate sales receivable as we had a shipment of concentrate right at the end of the quarter. On the hedging front, I would like to remind everyone on the line today that we have no commodity hedging in place and an extremely attractive debt financing package.

In conclusion, the first quarter of 2015 delivered record operational results and we are confident our production targets for 2015 will be achieved. I would now like to open the line up for any questions that people may have.

Good morning. Sorry if I missed it.

I was just wondering if you reiterated your cost guidance $2 per pound for the year.

Yes. We did, Matt.

We have given that as guidance at the beginning of the year, we do not see swaying from that at this stage and production guidance remains the same as well.

Sure. What should we look as the main factors to move cash cost.

I mean, they are pretty good number in Q1, and it sounds like throughput is picking up, so hopefully that is the positive. I mean, have you seen the full impact of the oil price drop.

Do you think or just what are some of those moving factors that we should think about through the course of the year? Thanks.

Good questions, Matt. As Jim noted in his brief presentation, as a result of copper prices being lower in the first part of the year, we went back to mines site [ph], we forecast our cost being for the year and where could we cut cost or reduce costs as our original budgeting was based on $0.03 copper, so we produced a new forecast that was based $2.50 copper, and you certainly have seen some of those savings come through in this first quarter.

Things like fuel, yes. We have seen reduction in fuel prices.

I think our original budget was $1.10, and we are in more the $0.85, $0.87 per liter for diesel as an example. We have also seen tire reduction pricing, so those savings are starting to come through.

Okay. Thanks.

Great. Thanks, guys.

Great to see the operating costs coming down maybe just to a certain extent with Matt's question, is it both in terms of the initiatives to save OpEx on site, is it mostly on the consumable side or do you think sort of in the day-to-day operations that you are implementing little bit different now - bringing the cost down as well.

I think, I would have to say both, Stefan. We have done a lot of things like eliminating over time, reducing contractor participation, but also renegotiating a lot of the items.

As Rod mentioned tire cost. Ocean freight came down substantially and a number of things, so we have tackled [ph] everything in all fronts.

Okay. Great.

I noticed in the release you had some description on the exploration side, just wondering with the stuff at the Virginia Pit, is that stuff that would sort of potentially seen at the end of the Copper Mountain mine plan or is it something you would be looking to bring in sooner than later?

No. We would probably look at trying to them sooner.

It is a little higher grade and bit of a sweetener and also it makes room for expanding our waste tonnes with a shorter haulage distance.

Okay. Great.

Maybe just one last quick question, just in terms of the shipments Rod mentioned, there was one shipment that went out just at the very end of Q1, just looking at Q2 do you think you probably get four shipments out again or is it possible you that we might only get just given the timing of production versus sales?

Yes. Stefan, again, it is based on our production, but I would think we are trying to do one per month and get the larger shipments and that way we get actual, but cheaper ocean freight.

Okay. Got you.

Okay. Thanks very much guys.

Appreciate it.

Good morning, guys. Thanks for taking my questions.

Just a couple of quick questions here, just ones why do not you kind of reiterated or review here the Delta on the copper production and the sales volume for copper, is that just for the last shipment at the end of the quarter or there is something else there?

Yes. That is right, Marco.

I mean, the difference your sales and production it is a timing issue of shipments and when they are going, so you know we had some inventories at the end of last year. As Stefan pointed out, we had four shipments this quarter.

Got you. Then in terms of the cost in this particular quarter, employee cost came up about $12 million, a little bit higher than the run rate from last year and depreciation kind of moved up a bit here to $12 million, was there any one-time items in there or are those kind of good numbers to model on?

Those are good numbers to model on. I mean, our employee count, we have kept to a minimum, but depreciation with more production goes up, it is based on a unit production basis.

Got it. Last question and I will jump back in queue, a little bit of tax benefit in the quarter versus a tax payment, if you will.

Can you kind of talk a little bit about that?

Well, I guess, one of the things that we benefit from here is we got a big tax shelter with the original capital cost approaching the CCA [ph], so we are actually tax free for a number of years here. With the exception of BC mineral tax, so we will be paying the 2% BC mineral tax, but we will be sheltered by federal potential tax for a few years.

For model purpose, do you expect that tax rate then for the fiscal year to be minimal?

Yes. Your tax rate will be minimal for the first - next three.

Again, it depends on what copper pricing you are using, but I would expect the tax rate to be just your BC mineral tax for the next two-three years.

Thanks a lot guys.

Well, thanks for the operational update, guys. I hope you do not mind I am going to ask you a couple of claims related question.

Your property package has 338 claims I think it was what I was able to find, covering about 6,700 hectares. When I was looking at the annual information folder, it says that about 10% of your claims primarily in your Northwestern property area are subject to certain production royalties.

Is that 10% of the claims or 10% of the acreage?

Good question. We have about 18,000 acres and yours is one of the older carries in BC, so it actually back to Crown grants.

Right now in the present mine plan, under our present plan, we have zero that are attributable to royalties. There's some claims on the property that are subject to royalties, but they have not been brought into the mine plan at this stage.

The areas where we do have royalties and it is typically 5% that is smelter returned are in the northern area that is outside our mining area as we currently know it. There we do not have any reserves, per say, we have a little bit of resources, but no reserves.

Okay. Are you it is a number of claims that are around 10% or is it acreage then?

That would be an acreage number, not a claim number, so this claim could be a different acreage, right?

Right. Now it would not be - they issued a press release back in September of 2013 that asserted in NSR and the property of over 1,500 acres, so that is about twice what you guys reporting on it.

Would you want to comment on that that?

I can't comment on that. I have not seen that release, nor on how many they are seeing.

Okay. Great.

Thanks guys. I appreciate you digging into that for me.

Good morning, everybody. Thanks for taking my phone call here.

I do have a few questions. For 2015, you are citing an average copper grade of the 0.33% copper, but a copper equivalent grade of 0.41%, so I was wondering if you could disclosed what gold and silver grades you are assuming in that calculation?

It was back into calculation based on production, Peter, so I will have to back out. Yes.

It was based on our gold production was going up this year and I just do not have that grade off the top of my head, but I can certainly get that.

Okay. Sure.

Thanks.

Peter, just take our forecast of 80 million pounds and 7,800 of the gold.

Okay. Then at what gold price - I am sorry?

Sure. 35,000 ounces of gold and 80 million pounds of copper.

That was a 250 copper. What was the gold price that you used?

I think it was actually, I think I used the last time I did it, Peter was $2.70 comp ranges, so - the other day.

Okay. 270.

Yes. Gold price around $12,000.

$1,200, okay, I can back that out. No problem at all.

Okay. Thank you.

On the Virginia, the exploration update that you provided is there a current resource on the Virginia Pit?

It is a modest resource. Yes.

Okay. Then can you remind me what the Virginia Pit is approximately.

We were looking at about 0.45.

Okay. Your hope would be perhaps getting some more tonnes there at something close to that grade.

Is that like fair for a target?

That is true, but we are not planning any more drilling in that area.

I see. Will you do an updated resource for Virginia this year or have you done everything that you plan to do?

I think, we have pretty well done everything we planned to do, Peter. It is pretty small area.

Okay.

Not going to make a major impact.

I understand. One final question is that I am actually having trouble reconciling your comments about cost cutting measures against the reported site operating cost.

I make the site operating costs in the quarter to be like the second highest ever after I do the inventory adjustment. Is there a suggestion here that site costs might have been even higher in the quarter had it not been like for these cost cutting measures?

I do not think so. We have been very consistent, Peter, with the cost in quarter-over-quarter.

I mean, the one thing people will note on this quarter is there was no deferred stripping as a result of the strip ratio being under 2:1 this quarter. We foresee that being for the balance of the year, so you have not seen any requirement for adjusting cost under IFRS as a result of that, so I do not know if maybe that is what you are taking into consideration during the quarter.

I am not sure.

No. I am just looking at your reported site operating costs of $40.2 million and inventory adjustment of $6.6 million is what I am looking at here.

Just to sort of get an overall site cost like a quarter-by-quarter cost then that is the second highest that I have using this method here. I guess that was offset somewhat by the previous quarter, where it was one of lower quarters, but I am just trying to get an average run rate as what kind of a cost on a quarterly basis it takes to run the operation there.

Obviously, the higher the grade, the lower the recovery, the better would be recovery. Those costs on a unit basis are going to fluctuate quite a bit, so you may have had a lower cost per pound copper, but that was because you had perhaps higher grade than what the average was.

I am just trying to look at it from first principles, how much does it cost to like run that operation on a quarterly basis?

I guess, when we say it was a decrease of 15%, that takes into account obviously fuel prices, higher prices, all of the activities that going operating in the mine.

Those would be consumables then?

Yes. Mainly consumable.

Okay.

I mean, we have limited our number of employees. I mean, that has come down a little bit.

We made some savings in those areas, but mainly the consumables. I mean, the rest is pretty well fixed.

Yes. Exactly.

I have this, Pete. If you want to send me what you are doing Peter, I could…

Yes. Sure.

Yes.

When I look at the average, I just divide your 40.2 by the average 13.4 million a month was just pretty cheap from our perspective.

Yes. Okay.

You said. Okay.

You said 13.4, right? Okay.

Cool. Okay.

Well, Rod, perhaps I will follow up with you via e-mail afterwards, especially on that, I guess I can write back out those gold and silver grades, so that is fine. Thanks for taking my call this morning.

I appreciate it.

Hi. Good morning, everyone.

Just quick question clean up what was just previously asked and I do have a couple of little question. What droves the rather large inventory adjustment this quarter is the first question.

Then I just wanted to ask question on, obviously in April now that you have bedded down the ball mill and regrind mill again, you have seen some pretty impressive individual days. At this point, obviously, you are not changing your guidance, what is the risk to the upside, I guess, are you continuing to see the performance you are seeing now or is there some limiting factor later in the year where you think the average throughput rate will start to come down?

Then just a final question, really, just as a statement more than anything else. Obviously, this year's debt repayments are relatively manageable.

In 2016 and 2017, they start to creep up. What are you going to do in sort of a downside risk protection sort of scenario if we continue to see sort of $2.75 to $2.00 copper?

We are not going to build a lot of cash. What do you think between yourselves and your partners you could do on that front?

Okay. Sanders, fair with your first question on the inventory.

Yes.

Okay. Then I will start with your first question on the inventory, so the inventory movement during the quarter was about $5.5 million and that relates to your low grades stockpile part of the original plan.

We are stockpiling lower grade material and that will be run towards the end of the mine life.

With regard to the mill tonnage, we are budgeting 37,500 tonne per day. 92% operating time, and at this time we do not see anything that is going to interfere with that.

Everything is running very well right now. I think as we mentioned, we have been above that, but we are still looking at that as our average.

Then with regard to your debts scenario, if I am correct our debt is in a low payback period right now. The original debt, we had years one-seven were normal payments this year is one of those years.

As we move out, there is a couple of the factors that go forward here forecasting them a little bit higher copper grade as we move forward. We just started to pushback this year, so a couple of years out, you will be into Pit 3, so that is higher grade material, and hence more and more production.

The other thing is, when we started had some 17-year mine life and I think as of the start of last year, we still had a 17-year mine life, so we have a longer mine life, so you can always look at your reserves and go back and discussed with the bank about re-forecasting on our repayment schedule if you had to go there. I am not saying we have go there at all as we are pretty comfortable with our debt at this stage.

Great. I just wanted to highlight some of those alternatives you will have on your plate if necessary?

I appreciate that, Cliff.

Good morning. My question is on reserves.

If I look at the end of the 2014 reserve update, the grades for copper about 0.29% at the end of 2013, they were around 0.27%, so they increased by about 7% despite mining higher above average grades in 2014, so I was wondering what was driving those higher grades. Do you plan to put out an updated technical report of mine plans to just give us a sense of what grades are going to look like in 2016, 2017 and beyond?

Thanks.

Yes. As far as reserves are concerned and reserves, we will be putting on an updated reserve report and Peter should have that ready to go here in the second few weeks and that will hopefully address your question.

Okay. Would that include the mine plan as well?

It does not include a mine plan as well.

It does not. Okay.

Thank you.

Thank you, operator. Rod, just wondering if you can provide little bit more color on the pushback.

What is your estimated of cost and what is the timing in terms of starting and finishing? Also, are we going to see that in part of capitalized stripping or is it going to go through the operating cost?

Yes. Good question, Sasha.

The life of mine ratio is 2:1. As I mentioned earlier, this year we are under that, including your pushback on pit rate and that pushback is going to take you out in the order of 18 months.

You will be starting to get down there at the bottom of the pit, so none of that costs gets capitalized. It all goes to the income statement.

Okay. Thank you.

Thanks very much. I just had a question for you.

I noticed in the production report you guys put out earlier this month that there was another transformer failure earlier this year. I know that you guys have done a lot of work on mitigating those risks going forward.

I was wondering if you could comment on how this transformer failure may have impacted your processes and if there is anything more that you guys think you can do to reduce the risk of these going forward?

Yes. ABB have sent in a team from Switzerland to trying and address this, plus we have our own consultants involved in it and we are expecting a report in about another week.

Which regard to changes, we implemented the number of changes and we believe that this should be behind us, particularly on the SAG mill, where we put disconnects in to prevent the stopping or starting of the transformers. With regard to the ball mills as I said, ABB have sent a team in and the plan is to get a report from them and a detailed study early in next couple of weeks.

Okay. That is all for me.

Thanks very much.

Well, thank you very much, everyone, for dialing into our first quarter 2015 conference call. We are very pleased with the results.

As always Jim and I are here for questions if you have to follow-up with any additional question. Thank you very much.

Goodbye.

Thank you.