Coppernico Metals Inc

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

Mark Turner - Scotia Capital Stefan Ioannou - Haywood Securities Don DeMarco - National Bank Financial Marco Rodriguez - Stonegate Capital Partners Craig Hutchinson - TD Securities Peter Campbell - Mackie Research Capital

Thank you, Joanna. After opening remarks by management in which we will review the business and operational results for the second quarter of 2015, 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 outcome to differ materially from 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, Chief Executive Officer of Copper Mountain Mining.

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

Today, we will discuss the 2015 second quarter results of operation at Copper Mountain Mining and our corporate financials. I will briefly summarize the financial results and provide an update on various operational activities, after which Rod will provide financial details for the 2015 second quarter.

For those of you following on the webcast, we’re referring to you to the page number on the supporting slides as we go through the presentation. The 2015 second quarter mine performance had continued to show improvements in both production and reduce operating costs which continued to be our main focus.

Referring to Page 3 of the quarterly cast cost, site cash cost for per pound on the copper produce, net of precious metals credits was U.S. $1.36 per pound for the period as 16.5% decrease compared to the U.S.

$1.63 per pound in the second quarter of 2014. The corporate total cash cost per pound sold, net of precious metals was U.S.

$1.81 per pound copper. We are moving to Page 4, the mine sized pie chart approximately 90% of the site operating costs are composed of 10 major categories.

Site management have successfully tackled these major cost centers and have reduced operating cost from budget by about 11.5% year-to-date. This continuing drive for improvements at the mine are positioning the company wealth whether the current global market condition.

In addition, Copper Mountain’s bottom line continues to benefit from a weaker Canadian dollar relative to the U.S. dollar has approximately 88% of the company’s operating cost have a Canadian dollar cost base.

In keeping with this trend, no major capital expenditures have planned for the second half of 2015 and production improvements are expected to continue through to the end of the year. I’ll now refer you to Page 5, the secondary crusher.

The new $40 million secondary crusher is working at its design capacity and is meeting our expectations for increased mill throughput was allowing us a smoother mill operation. But the secondary crusher having now completed two full quarters of operating at design capacity, it is consistently delivering the SAG Mill feed that is decreased in size from a normal 5.5 inch to 2 inch material.

I’ll now refer you to Page 6 the second quarter operational results. For the three months ended June 30th 2015, the company completed the total of three shipments of copper concentrate generating $56.8 million in revenue after provisional pricing adjustments.

Revenues were down about 16.5% for the quarter as compared to the same period last year, but the revenue during the first half of 2015 at $128.3 million was only slightly lower than the same period last year. Revenues were adversely affected as a result of the 15% lower average realized copper during the first half compared to the same period last year.

Production for the three months ended June 30th, 2015 was 19.5 million pounds copper, 7,800 ounce of gold and 71,100 ounces of silver. This represents a 2% decrease in copper production as compared to the second quarter of 2014, but a 56% increase in gold production as compared to the quarter.

I’ll now refer you to Page 7, the updated 43-101. The majority of the ore will be mined from the Pit 2 area for the balance of 2015.

At the same time, we’ll continue with the Phase 3 push back on the west side of Pit 3. Subsequent to the end of the quarter, preparations for mining activities in the Virginia area were initiated with a new access road to the mill completed.

The Virginia deposit will provide small volumes of higher grade ore for blending into the mill feed during the second half. During the quarter, a total of 14.2 million tons in the period moved including 5.7 million tons or ore and 8.5 million tons of waste.

The mining rate at the end of the period was in the rage of 167,000 tons per day moved. SAG mills throughput continued to improve during the quarter as a result of the finer feed from the secondary crusher.

Copper production during the quarter was in line with guidance. I’ll now refer you to Page 8, the second quarter operational results.

Copper head grade for the year is forecasted to be on average 0.33% copper but because of the higher cold content in Pit 2, the copper equivalent grade is approximately 0.41% copper equivalent. During the quarter, the copper head grade was 0.33% copper which was in line with our forecast.

For the 2015 second quarter, the concentrator milled a total of 3.2 million tons of ore as compared to 2.7 million ton of ore for the same period last year. On the ton per day basis, the 2015 second quarter averaged 35,600 tons per day versus 30,477 tons per day for the same period last year.

This represents a 17% improvement in throughput over the second quarter of 2014 which can directly be attributable to the addition of the permanent secondary crusher. This improvement continued into July as throughput averaged 39,100 ton per day during that month.

Recent throughput rates are encouraging and provide the confidence of the budget rate of 37,500 ton per day is achievable on a consistent basis. SAG mill availability was 91% during the second quarter and copper recovery averaged 83.4%.

I’ll now refer you to Page 9, the 43-101 optimization plans. On June 17th, 2015, the company filed a national instrument 43-101 technical report on the resources and reserves of the Copper Mountain Mine.

As suggested by shareholders and analysts, we included an updated ten year optimization mine plan with annual tonnages and grades. Average copper equivalent grade of 0.43% is projected in this ten year plan but as we have done in the past, the company will continue to give guidance yearly ones annual budgeting process is completed.

I’ll now refer you to Page 5, the safety award. The mine is continued with its excellent safety record since being awarded the 2014 Edward Prior award from the BC Government for operating the safest midsized mine in the province.

We’re very proud of our team in continuing their excellent safety performance. As of today, I am pleased to report that the mine has worked two years free of any last time injuries.

Now, I’ll refer you to Page 11, the copper versus mill tonnage. Operational highlights for the second quarter include the SAG mill milestone that’s exceeding the 35,000 ton per day designed capacity for the quarter and continuing through July with average milling rate of 39,100 ton per day.

Further optimization of the mill throughput is the key focus for the - to maximize our copper production. Lolling to the second quarter 2015, we are focused on capitalizing on our trend of continues operational improvements while at the same time, continuing to focus on cost reductions with the strict capital discipline.

The mine is on track for meeting its 2015 guidance level of 80 million pounds of copper and 35,000 ounces of gold. We recognize we have a challenge for the second half and have some plans in place to overcome any shortfall.

I will answer specific questions in the question-and-answer period for those wishing more detail. Now, I’ll turn it over to Rod.

Thank you, Jim. I’ll refer to Page 12 Q2 financial results.

For the three months ended June 30th, 2015, the company recognized net revenue after pricing adjustments and smelter charges of 56.7 million based on an average realized copper price of U.S. $247 per pound compared to net revenues after pricing adjustments and smelter charges at $56 million based on an average provisional copper price of U.S.

$3.08 per pound for the three months ended June 30, 2014. The decrease in revenue is a result of lower copper prices been realized during the quarter despite the slight increase in sales volumes for the quarter.

The mines were total of 18.4 pounds of copper, 63 ounces of gold and 66,700 ounces of silver during the three months ended June 30, 2015 compared to sales of 18 million pounds of copper, 6,300 ounce of gold and 94,900 ounces of silver during the three months ended June 30, 2014. I’ll now refer you to Page 13 of the Q2 financial results.

Cost of sales for the three months ended June 30, 2015 were 55.7 million which resulted in a gross profit of 1.1 million as compared to cost of sales of 57.6 million which resulted in a gross profit of 10.4 million for the three months ended June 30, 2014. The decrease in gross profit is again a result of lower copper prices being realized during the quarter.

General and administrative expenses for the three months ended June 30, 2015 were 2.2 million compared to 1.3 million for the three months ended June 30, 2014. For the three months ended June 30, 2015, the company recorded finance expense of 5.5 million as compared to 2.6 million for the three months ended June 30, 2014.

Finance expense primarily consistent of interest on loans and the amortization of financing fees. For the three months ended June 30, 2015, the company recognized a non-cash unrealized foreign exchange gain of 5.2 million compared with a non-cash unrealized foreign exchange gain of 10.9 million for the three months ended June 30, 2014, which primarily relates to the company’s debt but and is denominated in U.S.

dollars. During the first quarter - during the second quarter, the company recognized a non-cash unrealized gain on the interest rate swap of .4 million as compared with a non-cash unrealized loss in the interest rate loss on the interest rate swap of 1.6 million for the three months ended June 30, 2014, which is related to the revaluation of the interest rate swap liability required under the company’s loan agreement.

It should be noted that these adjustments to income are required under IFRS and are of non-cash in nature as outlined in the company’s MD&A and statement of cash flows. This all resulted in a net loss attributable to shareholders for the three months ended June 30, 2015 of 1.6 million or minus $0.01 per share as compared to net income of 9.5 million or $0.08 per share for the three months ended June 30, 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 readers of the financial statements if just looking at net income only. As a result, management believe that readers 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 financial performance during the period.

Therefore if we remove all the accounting non-cash items, the company reported an adjusted EBITDA of 15.4 million and adjusted earnings of 3.4 million or about $0.03 per share for the three months ended June 30, 2015 as compared to an adjusted EBITDA of 10.2 million and adjusted loss of 1.8 million or $0.02 per share for the three months ended June 30, 2014. As of June 30, 2015, the company had cash on hand of 22.3 million as compared to 14.7 million at the end of the first quarter.

To date, we have paid back about U.S. $83 million in principal and interest on our low cost strategic debt.

Our senior credit facility has now been reduced to U.S. $129 million, in addition, our debt is currently carrying an interest rate of just under 1%.

In conclusion, the second quarter of 2015 delivered strong operational results that produced 15 million in cash flow from operations during the quarter and was driven by total cash cost as the site of $1.81 for pound of copper which resulted in adjusted earnings of 7.8 million for the six months. We are confident that are production targets will be met and we will continue to accumulate cash on balance sheet.

I’d now like to open the lines up for any questions that people may have.

Hey good morning, guys.

Good morning, Mark.

Just a few I guess operational questions for, some maybe a few financial questions, but the 39,100 tons per date achieved so far in July. Just wanted to I guess confirm that’s calendar day and then if you can what the availability of the [indiscernible] has the availability been better than we can sort of expect going forward or better than design?

Yes, definitely it’s per calendar day to start with Mark. And secondly the operating time was high, it was about 96% and versus a budget of 92%.

And we feel that crew will have been making big strides in terms of increase in their availability.

Perfect. Is there anything for the balance of the quarter where we could sort of expect like planned down time to bring it back down to around the 92, or is?

We have our plant shutdowns but the - I think the team have been doing a great job of getting these times down. Obviously we’ve been improving substantially.

We’re still budgeting 92% of them. We will have the odd month where we have bigger jobs and others.

But overall we are planning the average 92.

Okay, perfect. And then just operationally I guess more of a conceptual question for next year, it’s obviously the copper prices come at the end the Q2 and I mean you benefiting from weaker Canadian dollar during that time too but just conceptually how can I guess the mine plan, what levers can you pull to sort of tweak the mine plan if copper prices were to stay where they are and then given sort of great profile for next year and I am just taking some more qualitatively or conceptually in terms of, do you need to mine at the rate that you are right now, so obviously you are mining at greater rates to put or to achieve a great head grade?

Is there conceptually some options where you can maybe park form of the trucks but, just looking for some flexibility levers you can pull in the mine plan to sort of preserve the cash margin should copper prices stay where they are?

Right, number one, we are not mining extract increase head grade. I don’t know if that clarifies that.

What we are doing and I think we have a slight on our Page I forget - I was which shows - Page 7, which shows where we are mining in Pit 2 and where we are mining in Pit 3. We plan to maintain our mining rate at these levels provided all the price doesn’t fall completely out of ballpark, but in order to maintain our long term plan, we would continue to mine in the 165,000 ton a day range and probably sweating the head grade a little bit from some of ore from Virginia and then later oil, that would be our main focus.

Great, okay I guess see what I was getting, that was a low grade stockpile if yes much needed to be put into that low grade stockpile to maintain the 0.31 next year if there were some flexibility around maybe putting last ton into that but point from other areas in the Pit?

No. We pretty well mine according to our long term mine plan Mark and I guess with regard to that as I say we do have some potential for increase grade but we also have some other potential cost savings over working on.

And we believe that we can continue the way we are and maintain our cost in the $1.80 per pound range.

Perfect and most of those costs are more in the mine side of just on the mills in terms of increase in throughput?

Our costs are pretty stable. We typically are 16, 17 million a month and we believe we can maintain that.

Obviously we have some months are that are higher than others depending on the major jobs. We don’t try on smooth things out.

We take the cost as they occur and report them accordingly. And I think we are pretty stable in that regard.

I have to emphasis that team at the site are doing an excellent job in tackling those 10 high cost or major cost centers. And we are working on the mall.

We are working on improvements of way storage areas, things like that. So I think we got a number of things to work on and maintain where we are.

Great. Maybe just one more question actually for Rod before I jump to the back to the queue.

Just in terms of the covenants on the debt, I know there is I guess they are all disclosable, but there was a bit debt service account that one point how to have 12 million on that, what’s - under the current offer price environment and FX, what’s sort of that’s taking there, is any additional funds going to have to replace into that reserve accounts again or we’re not expecting to go into there?

No. We’re not at this point in time.

We have continued to adjust that we’re essentially its corporate guarantees that fund that account, so there is no funding required to be in that account and there hasn’t been since they won. And we’ve got an extension for another year to June of next year and we just addressed that on a year-by-year basis.

It’s - as you know it’s very friendly debt and they were only real covenant is our debt service coverage ratio which were well above, which were 1.25 and that’s disclosable and fall on SEDAR.

Alright, perfect. Thanks guys.

Yeah, congrats on good operations in the quarter. I’ll turn to the back of the queue.

Thanks Mark.

Great, thanks guys. Just it’s great to see the cash cost sort of down at $1.80 level.

I am just wondering we know now you’ve had sort of two full quarter with the new segregation, do you have a feel for sort of where they are like the unit operating cost for that piece of equipment are coming in and are they - I guess more importantly I think sort of in line with what you had originally planned for expected?

Yes, I would say they are right in line. I think we still have some tweaking to do with regard to the secondary crusher.

We’ve been changing the metal content in where parts a little bit and improving our rates, we’ve also been changing a little bit of the profile to get a little bit better performance out of it. But the costs are well within our budget.

Can you give an idea sort of what they are, they are going to pertain crusher basis or whatever?

Less than $0.50.

Less than $0.50, okay that’s helpful, that’s great. And then just maybe on a slightly different note, just with the striping going forward, is it fair to assume that over the foreseeable future, we are going to see this strip ratio stay what is even decrease and more importantly sort of stay below that magic 2 to 1 number from an accounting point of view?

Yeah, from an accounting point of view, you saw where our strip ratio was this quarter around 1.5 and we expect that to continue as we utilize the low grade stockpile as well so if you are accounting that in that calculation.

Okay, great. Thanks very much, guys.

Okay.

Hi there? Can you talk a little about any trends in G&A spending and expected quarterly CapEx requirements going forward?

Thanks.

Sure. I’ll let Rod talk to that.

Okay. On the CapEx Don, like other companies out there, we’ve tightened out belt, there is a difference between a launch and a need and our sustaining capital, it’s fairly nominal.

You’ve seen the first half of this year, we spent around $700,000 on capital and we expect that similar amount in the second half of the year. So our original - if I compared to our original budget, it’s 00 our original budget was around $5 million but we determined some things are not required at this time.

Okay.

Okay.

From an administration point of view, we’re fairly consistent quarter-to-quarter is up a little bit this year as there were some management bonuses based on the performance from 2014.

Okay, super. That’s all from me.

Hi, good morning, guys. Thank you for taking my questions.

Just I have a really quick one in terms of your guys thought process, as it relates to current copper prices and then any sort of expectations you have for short term price and I know it’s kind of difficult and who knows. But just want to try a get a sense for how you guys are thinking about from a production standpoint as well.

Well I think what we did at the start of the year when copper prices did drop, we tackled our budge head on and management came up with a new plan and some cost reductions. And I think I mentioned in the talk, we’re down about 11.5% on our operation cost as compared to our original budget.

And we did identify the ten key cost centers and we continue to tackle it. But also with regard to the operation itself, we continued to increase our tonnage and also look at ways we can maybe up to grades a little bit and try and improve some of our profiles and what not in terms of how it’s - for the Pit to get our cost down even further.

Alright and last quick question and I’ll get back in the queue. You talked about additional cost reductions in the second half of the year trying to focus on that, if copper prices continue to decline.

Can you kind of quantify how much more you can take out of the system if you will?

Yeah, I think we have some other considerations, if copper price drop below $2 definitely we have some other cost savings we can tackle, but I think it’s pretty much were this stage.

Got it. Thanks a lot of guys.

Good morning. Thanks for talking my call.

A question that - follow-up question the CapEx, if you are only spending about a 1.5 million this year, will there be a catch up here in 2016 and maybe can you give us a sense of what that number might be? I imagine there will some capitalize striping perhaps in 2016?

No, there is no capitalize striping Craig, we take that each quarter as it comes through. In terms of the CapEx items are budgeting process because we have our project financing.

We put everything in our budget at the beginning of that because it does get approved by the banks and then we do have another process that goes through to ensure that that’s still a valid capital - sustained capital addition that we do need. And so we do have something way there.

And with regard to future capital, we still believe we are in that $3 to $5 million a year areas borrowing any change in the plans going forward in the mine.

Okay. Is there any big tailings expansions at all required?

Yes, we will have some of those coming up. We have some flexibility there.

We are not really pushed in that area. Our tailing facility is in very good shape.

I think you are probably aware that after the situation at mill quality, we have to move forward. Our updated report through last December and then we had to get an extra independent consulting firm to review that and then the government itself got another firm to review that.

And what we’ve done there is we’ve - one the recommendations that came out of that was the companies have independent if you will review board and we’ve set that up and we’ve had the meanings at site and we have a number of ideas that we’re kicking around that would further improve it. But we definitely got a cleat bell to help for the near term and we could have some expenditures in the next few years that we are working on now.

Okay, thank. That’s one last question.

Just I know when you mine plan for next year targeting like an average rate of 40,000 tons a day, so what areas improvement are you guys looking at potential optimization areas to get 40,000 tons per day on a sustainable basis?

Okay, I think the main one is the secondary crusher, just more improvements there. When we design that we were looking at target of somewhere P-80 of 38 millimeter and we’re probably a little course of that not right now.

We do find that when we get the fine material, I mean we hit tonnages well over 40,000 tons a day. So we’re continuing to tweak the crusher, change the ball mill profile a little bit.

We added a little bit more magnesium or manganese, we’ve gone from 16% to 18% on all the metals changed a little more meet on the balls, they were moving faster. All of these things well improved the number one the operating time of the secondary crusher.

Also the sizing and I think with that we definitely can get it through the SAG mill. We’ve got some modifications we’re doing in mill in terms of the ball mill, the screens of the discharge of the SAG mill.

So there is a number of items we are working on and I think we’ve been very encouraged so far in particularly with the July results. And it’s been going very, very nicely in the side of got a good handle on it and it’s going quite smoothly.

So we believe the improvements are there and readily available.

Okay, thanks very much, guys.

Hi. Sorry, thanks.

Just one quick follow-up for Rod, in terms of the provisional pricing and I am not sure if I missed it in the MD&A here but are you able to quantify how many pounds you do have sort of outstanding that are provisionally priced from - at the end of the quarter, just trying to get an impact or sense of the impact if pop up raised potentially stay down here for the next quarter?

I don’t have on top of my head, asked me, it’s going to be probably in the order of 20 million pounds, because you always have that rolling, able to doing one.

Right for the three, okay.

Yeah.

Yeah, okay the ballpark figure just want to make sure.

And you know where you happen to get it in that quarter, we’ve had quarters where you have a little bit dip in the price and you are down as opposed to where it was at the end of the quarter too.

Yeah and unfortunately or fortunately timing, so.

Yeah, that’s right.

Okay, thank you. Thanks, guys.

Good morning, Jim, Rod, good quarter, it looks like everything is running pretty much as it should, that’s a good news. Quite question for you, it’s just kind of a technical question on the SAG mill Jim.

You know the way things have been configured now with the secondary crusher, you are effectively running the SAG mill as a big ball mill and I am just kind of wondering in terms of where in maintenance, if your expectation or observation is that ware and maintenance on the SAG mill is any better or any worse that what it was before you are going to stop the secondary pressure?

I think it’s been improving Peter, in other words, less maintenance can better wear, but also the guys are doing a lot of work with regard to line of profiles and what not. And I guess moving the design more and more toward a less violent operation and more like a ball mill where you have got attrition grinding versus impact grinding.

Right, right, and in that regard, just again kind of a technical question, how is the steel consumption like for the balls, is it about the same of higher or lower?

Good question. I think it’s gone down a little bit.

Okay. So overall like your observation at this point anyway is that the finer feet of the SAG mill is that it’s basically reduced wear and maintenance on the SAG with the exception that perhaps your maintenance are doing a bit of a better job like adapting to the new feed and that’s a pretty fair assessment then?

Yeah, it’s fair assessment. And as I said they are doing some modification on liners, shell liners in particular where we are decreasing the left angle as I say to bring bore in line with ball mill versus impact grinding.

I see, I see, so that would potentially account for the decrease wear like on your liners and so on then to?

Right.

I got it. Okay, okay, Jim, thank you, very much.

Okay, thanks Peter.

Yeah, thank you very much, everyone for joining us. And I think we’re very confident that we can move forward with hopefully more improvements during our next call in the next quarter.

And obviously with the increase tonnage we also get increase copper production to try and gain a little bit there and ensure that we meet our guidance.

Okay, thanks again everybody. And as usual if you have any question you can at least contact us directly, Jim and I are always available for direct questions.

Thank you, very much. Bye.

Bye.