Revenues were 16% lower in Q1 2013 than in Q1 2012, and with metal shipments consistent quarter over quarter, the decline was primarily due to realized copper and molybdenum prices being 12% and 21% lower, respectively. Cash costs(i) of production, when comparing Q1 2013 to Q1 2012, on a co-product accounting basis, was 18% higher for copper and 6% lower for molybdenum. The higher on-site operating costs on a per ton milled basis were primarily a result of lower throughput rates and lower production levels achieved in Q1 2013 as compared to Q1 2012 (see Mineral Park Mine discussion below for further details). As a result of the above noted operating factors, gross profit was $0.5 million in Q1 2013, as compared to $14.0 million in Q1 2012. In addition to the impact of the mining operations, variations in net income achieved in Q1 2013 of $1.8 million, as compared to Q1 2012, were impacted by cost reductions in administration expenses, realized and unrealized gains/losses on derivative instruments, and non-cash share based compensation and taxes. Administration expenses, excluding non-cash share based compensation expenses, were 35% lower in Q1 2013 when compared to Q1 2012.
MINERAL PARK MINE
For Q1 2013, Mineral Park produced 9.1 million pounds of copper in concentrates and copper cathode and 2.4 million pounds of molybdenum in concentrates. Production during Q1 2013 at Mineral Park was impacted by additional maintenance downtime taken to re-install the Company's repaired natural gas turbine (which, since its reinstallation, has been exceeding operational expectations), and to reconfigure the SAG mills and pebble handling system. Additionally, as planned during the quarter, the Company mined through harder sections of the mineral deposit while also completing the dewatering of the Ithaca pit. The completion of these tasks permitted mining to resume in the Ithaca pit in the second quarter of 2013. Now that the pit has been dewatered, ore from Ithaca, which has higher copper grades than the other areas being mined, has provided, and is expected to continue to provide, additional blending options for the various ore types at the mine.
For Q1 2013, mill throughput averaged 42,738 tpd and recoveries for copper in concentrates and molybdenum in concentrates averaged 82.5% and 82.3%, respectively for Q1 2013, the fourth consecutive quarter that recoveries have been above mill design rates.
As discussed above, average mill throughput rates have recently increased due to optimization of the internal configuration of the two SAG mills and changing the pebble handling processes by feeding a higher proportion of the recycled pebbles directly into the four ball mills. As a result of these optimizations, from March 21, 2013 (when the optimizations to the grinding circuit were completed) to May 9, 2013, average throughput rates, have increased significantly. Over this 49 day period, mill throughput rates, on a sustained basis and at an average ore grind index of 11.3, have averaged 50,000 tpd, the stated design capacity.
Other optimization initiatives that have contributed to the recent increase in average mill throughput include: (1) implementing a hard ore and zinc modeling program that has increased ore blending options to manage hardness and zinc content, (2) implementing a blasting optimization program that has reduced oversize ore going to the primary crusher and to the mill, and (3) the commissioning of two additional haul trucks in March 2013, with a third truck expected to arrive in June 2013.
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