a consummation devoutly to be wishd

Capstone Mining (CS.to) 4q14 results

The title of Capstone Mining (CS.to) 4q14 earnings NR this evening is…

Capstone Mining 2014 Financial Results Highlight Significant Cash Flow Generation

…in which we note those upbeat words. Highlight. Significant. Cash. Generation. Oooh, just bringing on that wet feeling in my underwear. But then comes the sub-header that reads…

“Operating cash flow before changes in working capital of $199.4 million”

…and you just know the narrative’s in trouble already, even at this early stage of the News Release spindoctoring, because if the best they can manage is a made up line item it’s not going well.
Let us be clear; “operating cash flow before changes in working capital” does not exist. To be utterly and absolutely crystalline in our clarity on this matter, “operating cash flow before changes in working capital” Does. Not. Fucking. Well. Exist. For the same reasons ‘adjusted net income’ doesn’t exist or any of the other unicorn accountancy terms out there these days to mask over crappy financials, for that matter. Give us a break willyaz? 
However, things that do exist include gross profits (they come after COGS, royalties and deprec/deplet/amort get backed out), operating profits (post G&A, exploration, stock-based compensation, some impairments etc) and net profits (pay those pesky financial dues, pay those pesky tax bills, get to the bottom line). And here’s how CS.to has done on those real metrics recently:
Even on the best looking of those three, gross profits, the number comes in at $104.74 for 2014. So tell me about the $199.4m number you stuck at the top of the NR guys again, it’s so innarestin how them there numbers work.

But sadly for CS.to, for you and for I, running machines at a mine isn’t everything you need to do to make a profit in mining and the bottom line sadness is that CS lost U$22.39m in 2014. And that shows over at the balance sheet too because…

…working cap’s down by nearly $21m since 4q13. So CS.to loses just over $20m on the year and its working cap drops by just over $20m in a year. Funny how the real numbers come in similar to one another, innit guv? And all this while CS sold its copper at an average of over U$3/lb in 2014, so guess how well it’s set to do now that copper’s under U$2.60/lb? Yeah, that’s my guess too. And the market’s, by the looks of things.
So, now you know what CS.to’s idea of a successful year looks like. End.

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