Copper Mountain Mining Corporation

Gil Clausen - President, Chief Executive Officer Rod Shier - Chief Financial Officer Don Strickland - Chief Operating Officer

Orest Wowkodaw - Scotiabank Don DeMarco - National Bank Financial

Good morning everyone and thank you for joining us. Today I have with me Rod Shier, Copper Mountain’s Chief Financial Officer and Don Strickland our Chief Operating Officer.

I’ll begin by providing highlights on the quarter. Rod will provide a more detailed discussion on our financial results followed by Don who will speak to our operation, then we’ll wrap up and open up the call for questions.

Moving to slide four, we had a solid second quarter with copper equivalent production up 13% from the second quarter last year to 23.1 million pounds. This includes copper production of 20 million pounds, which is 16% more than the comparative period last year.

Gold was up 10% to 6,500 ounces and silver was up 8% to 68,400 ounces. Site cash costs were US $1.40 per pound produced and total cash costs were US $1.80 per pound sold; slightly higher than the second quarter last year, but lower than the first quarter this year by 4% and 6% respectively.

Revenue and operating income was up significantly year-over-year driven by higher production and copper price. Of note, this quarter we completed the Altona acquisition which provides a pipeline of organic growth with the Eva Copper Project and other perspective projects in our land holdings in Australia.

This acquisition has completely changed the Copper Mountain story and is really transformative for the company. Also we started the second phase of drilling at our New Ingerbelle project in DC; that’s another huge potential growth contributor.

Our results so far have been very encouraging and we will continue to report results throughout the third quarter. So all-in-all a very exciting quarter for the company.

I’ll now turn the call over to Rod who will review our financial results in more detail.

Thank you, Gil. Starting on slide six, the company recognized revenues of $84.2 million after pricing adjustments and treatment charges for the second quarter ended June 30, 2018.

This was based on sales of $19.9 millio0n pounds of copper, 6,300 ounces of gold and 70,000 ounces of silver. Comparative revenues for Q2, 2017 were $67.1 million after pricing adjustment and smelter charges.

As Gil mentioned, the increase in revenue was based on higher copper production and copper price. The average realized copper price for the second quarter 2018 was US $3.12 per pound as compared to US $2.58 per pound for the quarter ended June 30, 2017.

As noted on slide seven, cost of sales for the quarter ended June 30, 2018 were $63.5 million, which resulted in a gross profit of $20.7 million as compared to cost of sales of $58.8 million which resulted in a gross profit of $8.3 million for the second quarter of last year. The increase in cost of sales was a direct result of selling more copper during the quarter.

General and administrative expenses which include some mine site administrative expenses were $3.6 million for the second quarter this year compared to $1.7 million for the same period last year. This quarter included several one-time non-recurring expenses.

For the quarter ended June 30, 2018, the company recorded finance expense of $3.8 million which compares to $3.3 million for the same period last year. Finance expense primarily consists of interest on loans and the amortization of financing fees and therefore with the rising interest rates we have experienced higher financing expenses.

For the second quarter of 2018, the company recognized a non-cash, unrealized foreign exchange loss of $6.4 million compared with a noncash unrealized foreign exchange gain of $7.3 million for the second quarter of 2017, which primarily relates to the company’s debt that is denominated in U.S. dollars.

This all resulted in a net gain attributable to shareholders of the company for the second quarter of 2018 of $2.2 million or $0.01 per share as compared to a net income of $7.2 million of $0.05 per share for the same period last year. As noted in past conference calls, foreign exchange gains and losses can change quarterly and yearly and can result in significant swings.

This is not the case this quarter as our unrealized foreign exchange losses was offset by our pricing adjustments on metal sales resulting in very similar adjusted EBITDA and adjusted earnings figures as compared to EBITDA and net income. The company had cash flow from operations before working capital changes of $40.1 million during the second quarter of 2018 as compared to $25.9 million for this second quarter ended June 30, 2017.

At the end of the quarter, the company had-cash-on hand of $72 million after making principal and interest payments of $13.3 million in June. In conclusion we delivered a strong quarter.

And now Don will provide our Q2 operational update.

Thank you, Rod. Starting on the slide 9, mining activities continued in the Pit 2 west, Saddle and Pit 3 areas during the quarter.

The mine commenced the next pushback on Pit 2 west resulting in additional waste removal during the quarter and in higher strip ratio of 3.8:1. Higher stripping is expected to continue in the third quarter and be less than 2:1 in the fourth quarter.

The record 19.5 million tons of materials was mined including 4 million of tons of ore and 15.5 million tons of waste. The mine average 215,000 tons per day moved approximately 13% above our guidance of 190,000 tons per day.

Favorable haulage profiles and additional efficiency gains contributed to these above average mining rates. Turning to slide 10, during the quarter the mill processed a total of 3.4 million tons of ore, averaging 37,000 tons per day and mill operating time averaged 89%.

While the latter was marginally impacted as a result of the replacement of two ball mill transformers, we are still on plan. The mill feed averaged 0.34% copper.

Copper recovery averaged 81%, while gold recovery averaged 62% for the quarter. The column flotation cell upgrade completed in Q1 continues to perform well, and the flash flotation installation is scheduled for commissioning in Q3.

Turning to slide 11, on the exploration front we have been very active, both at New Ingerbelle and in Australia. During the quarter exploration work commenced on the Phase 2 drilling program, which is following up on the 2017 Phase 1 drilling program.

Phase 1 program was successful in validating and confirming the historical data, as well as confirming significant gold mineralization at New Ingerbelle. The objectives of the Phase 2 drilling program are to continue to expand the New Ingerbelle resource and to convert incurred mineral resources to the measured and indicated status.

We’re planning to drill a total of 30 holes within a $1.6 million budget. We have announced the first seven Phase 2 drill holes and they have been very encouraging.

Complete drill results from this program followed by an updated of mineral resource estimate as planned for Q3 of 2018. The ultimate objective after Phase 3 is to add more than $150 million tons of measured and indicated resource to support starting the feasibility study.

Turning to slide 12, with our acquisition of Altona mining in April this year, we now hold a significant mineral land position of approximately 4,000 square kilometers in the Eastern Mount Isa inlier area of Australia. We control a dominant position of the Rose Bee fault complex, spanning a distance of some 250 kilometers.

The company’s 2018 exploration program includes extensive early stage exploration fieldwork, follow-up fieldwork on drilling on previously identified targets and more focused drilling on several targets in the area we refer to as the Cameron copper project. We aim to extend previously encountered mineralization and move toward defining a mineral resource for the Cameron copper project.

And with that, back to Gil to conclude.

Thanks Don and Rod. Turning to slide 14, we are reiterating guidance for the year.

We had a good first half of 2018. Production was on track as planned.

We expect production to be lighter in the third quarter as a result of planned lower grade being mined. Production is expected to be marginally lower, perhaps as much as 10% lower, but we expect the fourth quarter to offset that, it would be 10% higher.

So on balance we are still on track to meet our production guidance of 80 million pounds per year of copper. On slide 15, looking forward for the remainder of the year in terms of news flow, in the coming weeks we intend to continue to report your results for New Ingerbelle Phase 2 program.

We’ve announced results for seven as Don mentioned of the 30 holes so far. Once this program is complete and we have all the assays, we will put all this information into an updated mineral resource for New Ingerbelle.

This was planned to be completed before the end of September. September will be a busy month.

We’ll also be putting out an updated reserve and a resource on the Copper Mountain Mine, as well as a new mine plan. We’ve been working on the feasibility study for Eva.

Our team sees tremendous upside over what was in our view a drill limited JORC feasibility study done Altona. We are assessing the full potential of this asset and plan to announce development planned news this and the in the four quarter we plan on reporting results from the exploration program that we started in Australia that Dan spoke about earlier on the call.

A very busy but exciting time for us at Copper Mountain. Moving on to slide 16, all of these catalogs I just mentioned, lay out the basis of our organic growth pipeline.

Our flagship asset, Copper Mountain provides a solid cash flowing base to grow from. We then layer on growth from Eva, New Ingerbelle and what we see as our next significant exploration target Cameron Copper which is about 30 kilometers south of Eva.

We see significant organic growth falling into a steady, natural project development progression over the next several years. We will be very systematic with these projects in order to prudently advance and finance our growth.

In the next two or three years coupled with a stronger copper price, the company expects to have two cash flowing assets with additional growth on the table. We’ll be able to move an asset into cash flowing position when the next asset is ready for the development construction cycle.

This will allow us to manage our balance sheet effectively and provide this growth to our shareholders. The growth of Copper Mountain is timed perfectly in our view with the developing bull market for copper over the next six to eight years.

There are no other companies in the copper sector of our size that have this type of manageable growth profile that has the potential to create so much value to our shareholders and that can be done in a non-dilutive manner. So it’s a very exciting time for Copper Mountain, and that concludes our presentation today.

Operator, if we could open up the call for questions.

Hi, good morning, and Gil congratulations on the new role. I wanted to get your sense or I guess your vision for Cloncurry and Eva specifically.

I mean under – when the acquisition was done earlier this year, there seemed to be a mandate to rush this thing into development, almost as early as the end of this. I’m just curious how your vision might be different and what the expected sort of timeline might be for this asset in terms of development and production.

Thank you.

Thanks Orest. As I mentioned just a little while ago, we really like the Eva project a lot.

We had an analysis done which is a JORC feasibility study done on Eva, which had very good results. We did diligence on that as part of the acquisition and we are satisfied with the quality of the work that was done on that.

We’ve looked at this asset and talked to the geologic team and we got a pretty solid sense that this deposit is rather drill limited. As you may know a lot of the deposit was drilled out with RC drilling to a depth of up to 250 to 300 meters, and the deposit is completely open at debt and several of the satellite deposits are still open along strike and at depth as well.

So as you know, when you look at laying out a mine and doing mine planning and development and location of the infrastructure – getting a good sense for where these deposits want to go is I think important. So we’ve been doing a lot of work on that and we’re just wrapping up some of our conclusions on where these deposits might go and what impact that may have on what was designed as infrastructure at Eva and we’ll be able to give some guidance to the market.

But I have to say everything we see about these projects looks, this project in particular, Eva looks very, very good and you know our objective with Eva is going to be to put together a solid development plan. We know that we’ve got a permitted project.

If we have to modify anything it’s a permitted modification which can be done in a in a very expeditious way and we’ll make sure that we also have no questions with respect to our execution when it comes to financing as well. So we’re working on a financing plan, we’re working on finalizing the execution plan for Eva and when everything comes together we’ll come to the market and disclose.

Okay, but does that mean that – I mean if you are planning to do more drilling because of the – like you said, the deposits open it at depth. Does that mean the feasibility study also get pushed out or delayed or will you be releasing kind of an intern feasibility without incorporating the current drilling.

We’re actually doing that assessment as we speak. I think right now we’ve got – what we’ve done is we’ve pushed out or extended the mineralization conceptually at depth.

Because we know geologically we have a very solid understanding of these deposits geologically, they’re just drill limited at depth. So in essence, we pushed out the deposit to see what the impact would be, the same sorts of drill to see what the impact would be on infrastructure.

We may have to do some adjustments, it’s not going to have any material impact on capital, but we may have to do some adjustments; we are just wrapping up that analysis. So in fact, we are talking about resources that can be drilled after the mine is developed and put in production, but we just want to make sure that we have the dump line and the mill location solid before we invest heavily in infrastructure.

Okay, alright thanks very much.

Hi guys, thanks for taking my call. First I might as well continue with the questions of Eva.

Can you just give us some details on what the scope of the project update will be in September? What can we expect to receive?

I think you’ll probably end up seeing the project definition and the layout of the mine and the differences between the JORC analysis and what we’ve concluded on our analysis at Copper Mountain. We’ve done a couple of things that you should know Don and with respect to the design of Eva, we’ve sort of taken a slightly different approach than in the JORC study.

We’ve implemented a design and an operation for Eva in terms of the study that is more, bulk mining, where we have implemented some larger equipment shovels and trucks in more of a – I wouldn’t call it necessarily a North American style design, but it could be because the Ernest Henry mine, which is very close to our operations has a similar style open pit mine, but more of a bulk mining approach to these deposits, which they can certainly support. It drives lower operating costs, significantly lower operating costs.

So you know just getting all that finalized now in the report is going to allow us to put together a feasibility study, and NI 43-101 feasibility study that has slightly different operating parameters and slightly different production parameters and will have reduced operating costs profile over what was previously done.

Okay, perfect. I guess we’ll wait for the feasibility study to provide for example a mine plan or economics around the project.

Correct.

Okay. Then a couple of questions also on CapEx.

So we will – you guys telegraphed the push back on Pit 2 and hence I see the differed stripping there. What should we assume for dispersed stripping in Q3 or for the back end of the year?

That, you’re going to see stripping reduced significantly. We’ve got – as it was pointed out by John, we’re seeing stripping in the fourth quarter of under 2:1, and that’s really starting to come into play in late – in the the third quarter as well.

So now from sort of this point forward you’ll see a reduction in stripping will be back under 2:1 in the fourth.

Okay, great thanks. And then looking at the PP&E expenses CapEx, is it – can you provide a little bit more – a little bit of color on what makes up these expenses.

I see that they’ve increased a fair bit over the previous quarter. I suspected a portion of it’s probably exploration CapEx at – in Australia, but if you could just provide clarification, that’ll be helpful.

I’ll turn that over to Don – Oh sorry! To Rod, sorry Rod.

You’re right. We are incurring additional exploration expenditures as part of our program Don.

In Australia we had a budget of about $5 million and that will be added to the balance sheet as we go forward here. With respect to your larger increase, you’re quite correct, it’s the deferred stripping.

We had about $14.7 million that was added to property, plant and equipment as a result the deferred stripping. Any time you bring that strip ratio above 2:1, we have to normalize it under IFRS and bring it back down to 2:1.

As Gil pointed out, it was going through the start of a push back here and that’s going to be reduced later in the year in the fourth quarter. That will be under our life mine of average of 2:1.

Oh, okay! I thought I saw – I don’t have the financials open in front of me, but I saw this on the item for deferred stripping and then I separate then under PP&E, hence my question was more to what makes up the PP&E.

That might have been $10 million on 100% basis.

You’ve got some expenditures that we’ve gone out in advance for development down here in Australia and we suffered some of these long lead items and we’ve had to make deposit payments on some of these equipment, and for example we identified a ball mill early on, and so in order to keep our program on track, we elected to go out there and secure these items.

Super, okay that’s wonderful. And do you expect this just to be sort of one-time in Q2 or would you expect also some of this to carry over into Q3?

You’re going to see a few more of these types of expenditures in Q3 and in Q4. We’ve negotiated as best we can to try and push out these expenditures until the study is completely done, but in in order to secure some of these long lead items sometime we have to move in advance.

Okay, great. Thank you.

That’s all for me and good luck as you guys work through the economic thing and get going on development.

Thanks very much John.

I appreciate it.