Compania de Minas Buenaventura Announces Second Quarter 2009 Results
LIMA, Peru, July 30 /PRNewswire-FirstCall/ — Compania de Minas Buenaventura S.A.A. (“Buenaventura” or “the Company”) (NYSE: BVN; Lima Stock Exchange: BUE.LM), Peru’s largest, publicly-traded precious metals mining company announced today its results for the second quarter 2009. All figures have been prepared according to Peruvian GAAP and are stated in U.S. dollars (US$).
Comments from the Chief Executive Officer:
Mr. Roque Benavides, Buenaventura’s Chief Executive Officer stated:
“Net income in the second quarter was US$134.4 million, 10% higher than the figure reported in 2Q08, while EBITDA including Yanacocha and Cerro Verde decreased 7% from US$282.8 million in 2Q08 to US$264.1 million in 2Q09.
The increase in net income is explained by the 58% increase in contributions from Yanacocha (US$68.4 million in 2Q09 vs. US$43.3 million in 2Q08), which positively offset lower results from the Company’s direct operations and the lower contribution from Cerro Verde”.
During 2Q09, net sales were US$198.1 million, a 3% decrease when compared to the US$204.3 million reported in 2Q08. The higher volume sold, and higher realized price of gold were offset by the decrease in the realized prices of silver and base metals, as well as the lower volume of zinc sold.
Royalty income during 2Q09 totaled US$14.6 million, a 20% increase when compared to the US$12.1 million reported in 2Q08 due to higher sales at Yanacocha.
Due to the aforementioned lower prices of silver and base metals, net sales for the six month period 2009 were US$361.2 million, a 13% decrease compared to the same period of 2008 (US$416.3 million), while royalty income was US$28.4 million, an 8% increase when compared to the US$26.3 million reported in the comparable period of 2008.
Production and Operating Costs
Buenaventura’s equity production(1) during 2Q09 was 99,322 ounces of gold, 4% lower than the 103,651 ounces reported in 2Q08 due to the lower production at Orcopampa. Silver production during 2Q09 was 3,712,947 ounces, a 6% decrease when compared to the 3,937,250 ounces reported in 2Q08.
Equity production(1) for the first half 2009 was 202,170 ounces of gold and 7,702,881 ounces of silver. This represented stable gold production (202,511 ounces in 2008), and a 2% increase in silver production compared to 2008 (7,860,151 ounces).
Despite the 12-day work stoppage caused by the road blockade to access the mine in June, Orcopampa’s (100%) total gold production was 71,923 ounces, a 3% increase when compared to 2Q08 (70,019 ounces). Production from the Chipmo mine in 2Q09 was 62,398 ounces, an 11% decrease when compared to the 70,019 ounces reported in 2Q08, which was complemented by the old tailings treatment that produced 9,525 gold ounces. Accumulated total gold production for the six-month period 2009 was 144,910 ounces, a 10% increase when compared to 2008 (132,214 ounces).
The decrease in ounces due to the work stoppage led to a cash operating cost in 2Q09 of US$293/oz, 18% higher when compared to 2Q08 (US$249/oz).
At Poracota, gold production in 2Q09 was 11,579 ounces, an increase of 2% when compared to 2Q08 (11,396 ounces), while the cash operating cost increased 39% from US$543/oz in 2Q08 to US$754/oz in 2Q09 due a 27% increase in tonnage treated, and a 19% decline in ore grade. Accumulated gold production for the six-month period 2009 was 24,676 ounces, 17% higher than the figure reported in 2Q08 (21,093 ounces).
Total royalties paid to the government at both Orcopampa and Poracota in 2Q09 was US$2.8 million.
At Uchucchacua (100%), production was affected by a flood in April 2009. Due to this event, total silver production during 2Q09 was 7% lower than 2Q08 (2,698,486 ounces and 2,897,646 ounces, respectively). Zinc production increased 3% (from 2,216 MT in 2Q08 to 2,280 MT in 2Q09), while lead production increased 31% (2,806 MT in 2Q09 vs. 2,149 MT in 2Q08). Accumulated production for the six-month period 2009 was 5,600,956 ounces of silver, 3% lower than in 2008 (5,798,800 ounces); 4,711 MT of zinc, a decrease of 9% when compared to 2008 (5,203 MT) and 15,122 MT of lead, in-line with the figure reported in 2008.
Cash operating cost in 2Q09 was US$9.39/oz, a 31% increase compared to the $7.18/oz in 2Q08. This was best explained by:
- A 45% increase in contractor expenses, explained by a 14% increase in tonnage exploited to offset the 16% decline in ore grade obtained from non-flooded areas; while pumping efforts and additional work to clean-up the affected area and the 30% increase in diamond drilling work. This was partially offset by an 8% decrease in supply costs.
- The lower lead and zinc by-product contribution due to lower realized prices.
Total royalties paid to the government at Uchucchacua in 2Q09 was US$0.9 million.
At Antapite (100%), total production in 2Q09 was 7,926 ounces of gold, a decrease of 17% compared to 2Q08 (9,546 ounces), mainly due to a 31% decrease in the ore milled despite the 19% increase in grade, and the 3% lower recovery rate.. Accumulated gold production was 15,135 ounces, a 38% decrease when compared to 2008 (24,408 oz).
Gold cash operating cost in 2Q09 was US$780/oz, a 12% increase when compared to the US$695/oz in 2Q08. This increase was due to lower gold production.
Total royalties paid to the government at Antapite in 2Q09 US$0.2 million.
At Colquijirca (El Brocal 45.97%), total zinc production was 18,802 MT in 2Q09, a 21% decrease when compared to the 23,845 MT reported in 2Q08 due to a 22% decrease in ore grade and a decrease in the recovery rate. Total silver production during 2Q09 was 844,838 ounces, a 28% decrease when compared to the 1,172,068 ounces reported in 2Q08 due to a 28% decline in silver grades despite the 6% higher recovery rate. Total lead production for 2Q09 was 4,816 MT, a 27% decrease when compared to 6,604 MT in 2Q08.
For the six-month period 2009, total zinc production was 34,022 MT, a 24% decrease when compared to the 44,850 MT reported in 2008. In the case of silver, total production decreased 19% from 2,388,396 ounces in 2008 to 1,941,114 ounces in 2009. Lead production for the first half 2009 was 9,295 MT, 23% lower than in the same period in 2008 (12,112 MT).
Zinc cash cost in Colquijirca increased 80%, from US$327/MT in 2Q08 to US$590/MT in 2Q09 with. This was due to lower lead and silver by-product contribution as a consequence of lower prices, in addition to the aforementioned lower zinc grade in the tonnage milled.
At Marcapunta, copper production for 2Q09 was 2,039 MT, 6% higher than in 2Q08 (1,918 MT). Accumulated copper production for 2009 was 4,031 MT, a 22% increase when compared to 3,297 MT in the same period 2008.
Total royalties paid to the government at Colquijirca in 2Q09 US$0.4 million.
General and administrative expenses for 2Q09 were US$19.1 million, 97% higher than the figure reported in 2Q08 (US$9.7 million) due to a US$8.1 million provision for doubtful collectables. General and administrative expenses for the six-month period 2009 totaled US$35.8 million, a 4% decrease when compared to the US$37.2 million reported in the same period of 2008.
Exploration costs in non-operational mining sites
Exploration costs at non-operational mining sites during 2Q09 were US$10.0 million, a 37% decrease compared to the US$15.7 million reported in 2Q08. The main efforts were focused at the La Zanja (US$3.0 million), Mallay (US$1.7 million), Marcapunta (US$1.0 million) and Tantahuatay (US$1.0 million) projects. Exploration costs at non-operating mining sites during the six-month period 2009 were US$17.2 million, a 37% decrease when compared to the same period in 2008 (US$27.2 million).
- Environmental impact studies were approved by the Ministry of Energy and Mines on April 24, 2009 for the La Zanja (53.06% and operator Buenaventura and 47% Newmont Mining) and on June 22, 2009 for the Tantahuatay (40% and operator Buenaventura, 44% Southern Copper and 16% Others) projects, both located in Cajamarca. Consequently, measured and indicated mineral resources in these projects will be upgraded to JORC compliant proven and probable ore reserves with an aggregate of 60.4 Mt @ 0.70 g/t Au and 9.9 g/t Ag in oxides, at a 0.3 g/t Au cut-off. Construction of a 15,000 tpd open pit and heap leach operation has begun at La Zanja and will start at Tantahuatay as soon as Compania Minera Coimolache S.A completes the acquisition of surface rights.
- Non-reserve mineralization at the Trapiche project in Apurimac has been expanded to 499.5 Mt @ 0.48% Cu with 0.015% Mo, at a 0.2% Cu cut-off, as a result of 10,914 meters of additional diamond drilling completed during the last drilling campaign. Potentially, acid-leachable material within this inferred resource has grown to 169.5 Mt @ 0.57% Cu in the supergene enrichment chalcocite blanket. The Company is currently upgrading the metallurgical, geostatistical and economic appraisals of the Trapiche porphyry Cu (Mo) project with C.H. Plenge & Cia. S.A. laboratories and AMEC mine engineering consultants.
- At the Chucapaca project, the Company has completed its 7,800 meter diamond drilling commitment with Minera Gold Fields Peru S.A. and exercised a US$2.0 million option for Gold Field’s 2,100 hectare mining properties in Moquegua. Buenaventura has discovered an 800m x 200m mineralized diatreme breccia, called Canahuire, with native gold and auriferous pyrite. The sulfide mineralization remains open at depth, and laterally to the west and north. Minera Gold Fields Peru S.A. has in turn exercised a claw-back option to earn 51%, and is currently managing the Chucapaca project, intending to diamond drill an additional 20,000 meters at Canahuire.
- At Breapampa in Ayacucho, the Company has completed 8,000 meters of diamond drilling committed for Phase 1 of Buenaventura’s mining lease and option agreement with Newmont Peru S.R.L, and has started the second and final stage of drilling with 4,400 meters dedicated to the Senccata and Pucagallo prospects. In addition to the 200,000 oz Au reserve determined last year at Parcaorcco, during 2009, Buenaventura has added 100,000 oz. Au in oxides, as inferred resources at 0.6 g/t Au grade in the Senccata and Pucagallo prospects, located 7 km west of Parcaorcco. This project extends over 93,400 hectares of mineral concessions owned by Newmont Peru S.R.L, with a five year lease to Buenaventura with an option to acquire the entire 100% for US$15 million.
Operating income in 2Q09 was US$71.4 million, a 23% decrease compared to the US$92.7 million reported in 2Q08. This result was mainly explained by lower sales due to a decrease in silver and base metal prices, as well as higher costs at the Company’s direct operations.
Accumulated operating income for the period was US$130.4 million, a 33% decrease when compared to the US$195.4 million reported in 2008.
Share in Affiliated Companies
During 2Q09, Buenaventura’s income from non-consolidated affiliates was US$98.3 million, in-line with the US$98.6 million reported in 2Q08. Yanacocha’s contribution to these results increased 58%, from US$43.3 million in 2Q08 to US$68.4 million 2Q09, offset by a 45% decline in contributions from Cerro Verde (US$29.9 million in 2Q09 vs. a US$55.3 million in 2Q08). Accumulated income from non-consolidated affiliates for the six-month period 2009 was US$178.2 million, a decrease of 27% compared to the US$244.3 million reported in 2008.
At Yanacocha (43.65%), 2Q09 gold production was 516,693 ounces of gold, an increase of 23% compared to 2Q08 (441,911 ounces). Gold production for the six-month 2009 period was 1,015,610 ounces, an increase of 8% compared to the 942,289 ounces reported in the same period of 2008.
Costs applicable to sales (CAS) at Yanacocha during 2Q09 were US$336/oz, 13% lower than the figure reported in 2Q08 (US$386/oz).
Net income at Yanacocha during 2Q09 was US$157.8 million, a 58% increase when compared to the 2Q08 figure (US$99.6 million). Accumulated net income for 2009 was US$295.7 million, 3% higher than in 2008 (US$285.8 million).
During 2Q09, EBITDA totaled US$282.6 million, an increase of 46% compared to 2Q08 (US$193.8 million). This increase was due to a 26% increase in net sales (US$488.8 million in 2Q09 vs. US$387.8 million in 2Q08) due to a 23% increase in ounces of gold sold and higher realized gold prices. EBITDA for the six-month period 2009 was US$522.2 million, an increase of 6% when compared to the US$493.5 million reported in 2008.
CAPEX for 2Q09 was US$28.6 million.
At Cerro Verde (19.26%), 2Q09 copper production was 76,812 MT, a 5% decrease when compared to 2Q08 (81,023 MT). Copper production in the first half of 2009 totaled 152,526 MT, 2% lower than the figured reported in the same period of 2008 (156,393 MT).
During 2Q09, Cerro Verde reported net income of US$159.6 million, a 47% decrease compared to the US$301.3 million reported in 2Q08, best explained by lower sales revenue, which decreased from US$687.1 million in 2Q08 to US$408.5 million in 2Q09 due to lower realized copper prices.
Accumulated 2009 net income was US$265.8 million, a 59% decrease compared to the same period of 2008 (US$653.4 million), while sales totaled US$728.6 million, a decrease of 48% compared to 2008 (US$1,398.5 million).
CAPEX in 2Q09 totaled US$30.3 million.
This quarter, Buenaventura’s net income was US$134.4 million, representing US$0.53 per share, an 11% increase compared to US$121.7 million in 2Q08 (US$0.48 per share).
Net income for the six-month period 2009 was US$234.7 million (US$0.92 per share) compared to the US$58.8 million (US$0.23 per share) reported in the same period of 2008.
The deepening of the Carmen and Socorro mines has not progressed as scheduled due to a flood inside the mine. However, completion is still expected in 1Q10.
At the Carmen mine, the deepening of the Master Shaft has already reached level 3920. Likewise, Ramp 760 is currently at level 3973 and will continue deepening to reach level 3950 in 4Q09. By the end of the first semester 2010, Ramp 760 is expected to reach level 3920, allowing it to communicate with the Shaft.
The deepening of the Luz Shaft at the Socorro mine reached level 4058 and will continue until level 3990. Completion is expected for 4Q09. The construction of ramp 626 recently reached level 3933 and is expected to deepen to level 3920 by the end of 2009.
Total investment for 2009 will be US$4.7 million.
As of June 2009, the deepening of the Nazareno Shaft and Ramp 16 are at level 3223 and 3221, respectively. In both cases, they will continue deepening to reach level 3170 in 2Q10.
The deepening of the Prometida Shaft reached level 3300 in June 2009, and will continue deepening to reach level 3290 by the end of 2009. In addition, in the Prometida Shaft is expected to communicate with the surface (175m) by the end of 2009.
La Zanja started the construction of leaching pads and the Bramadero Dam on July 1, 2009. It is expected to initiate operations in 3Q10. Total investment for the project will be US$ 55.5 million, of which US$ 37.8 million will be spent in 2009.
During 2Q09, project expenditures have totaled US$3.0 million. As a result, the mine construction progress is summarized in the following chart:
Compania de Minas Buenaventura S.A.A. is Peru’s largest, publicly traded, precious metals company and a major holder of mining rights in Peru. The Company is engaged in the mining, processing, development and exploration of gold and silver and other metals via wholly owned mines as well as through its participation in joint exploration projects.
Buenaventura currently operates several mines in Peru (Orcopampa, Poracota, Uchucchacua, Antapite, Julcani, Recuperada and Caraveli). Has controlling interest in two mining companies (CEDIMIN and El Brocal) as well as a minority interest in several other mining companies in Peru. The Company owns 43.65% in Minera Yanacocha S.R.L. (a partnership with Newmont Mining Corporation), an important precious metal producer, and 19.26% in Sociedad Minera Cerro Verde, an important Peruvian copper producer.
To request a printed version of the Company’s 2008 Form 20-F, please contact the persons indicated above.
Note on Forward-Looking Statements
This press release may contain forward-looking information (as defined in the U.S. Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including those concerning the Company’s, Yanacocha and Cerro Verde’s costs and expenses, results of exploration, the continued improving efficiency of operations, prevailing market prices of gold, silver, copper and other metals mined, the success of joint ventures, estimates of future explorations, development and production, subsidiaries’ plans for capital expenditures, estimates of reserves and Peruvian political, economical, social and legal developments. These forward-looking statements reflect the Company’s view with respect to the Company and Yanacocha’s future financial performance. Actual results could differ materially from those projected in the forward-looking statements as a result of a variety of factors discussed elsewhere in this Press Release.
(1) Production includes 100% of operating units, 100% of CEDIMIN and 45.97% of El Brocal.
CONTACT: in Lima: Roque Benavides, Compania de Minas Buenaventura S.A.A., +511-419-2538, or Carlos Galvez, +511-419-2540; Investor relations: Daniel Dominguez, +511-419-2536 firstname.lastname@example.org; in New York: Maria Barona or Peter Majeski, i-advize Corporate Communications, Inc., +1-212-406-3690, email@example.com
SOURCE Compania de Minas Buenaventura S.A.A.