/C O R R E C T I O N — Compania de Minas Buenaventura S.A.A./
In the news release, Compania de Minas Buenaventura Announces First Quarter 2010 Results, issued
Compania de Minas Buenaventura Announces First Quarter 2010 Results
LIMA, Peru, April 29 /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 first quarter 2010. 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:
“During this quarter, the increase in gold sales, the positive results from Cerro Verde and Yanacocha, and higher metal prices resulted in Net Income of US$155.2 million, 55% higher than the figure reported in 1Q09 (US$100.3 million).
EBITDA from Buenaventura’s Direct Operations was US$84.6 million, in-line with the figure reported in 1Q09 (US$83.4 million), while EBITDA including Yanacocha and Cerro Verde increased 25%, from US$223.8 million in 1Q09 to US$280.1 million in 1Q10.”
During 1Q10, net sales were US$187.6 million, a 15% increase when compared to the US$163.1 million reported in 1Q09. This was explained by the higher realized prices of all metals and an increase in the volume of gold, despite lower silver, zinc and lead sold.
Royalty income during 1Q10 totaled US$14.1 million, a 2% increase when compared to the US$13.9 million reported in 1Q09 due to higher sales revenue at Yanacocha.
Production and Operating Costs
Buenaventura’s equity production(1) during 1Q10 was 97,770 ounces of gold, 5% lower than the 102,885 ounces reported in 1Q09 due to a decrease in production from Antapite (30%) and Orcopampa (1%). Silver production during 1Q10 was 3.0 million ounces, a 25% decrease when compared to the 4.0 million ounces reported in 1Q09 due to a decrease in production from Uchucchacua (30%) and Colquijirca (43%).
(1) Production includes 100% of operating units, 100% of CEDIMIN and 45.97% of El Brocal.
Orcopampa’s (100%) results were slightly impacted by a 13-day strike. However, despite the strike, total gold production was 72,119 ounces, in-line with 1Q09 production (72,986 ounces). Production from the Chipmo mine in 1Q10 was 65,130 ounces, in-line with the 65,224 ounces reported in 1Q09, which was complemented by the old tailings treatment that produced 6,989 gold ounces, 10% lower than the 7,762 ounces produced in 1Q09 (Appendix 2).
Cash operating cost in 1Q10 was US$329/oz, 37% higher when compared to 1Q09 (US$240/oz). This was explained by:
- A 60% increase in contractor costs due to a 25% increase in development drifting
- A 35% increase in labor costs
- An increase in Community Relations expenses
- Higher royalties paid to the government (US$1.5 million in 1Q10 vs. US$0.9 million in 1Q09)
At Poracota, gold production in 1Q10 was 13,929 ounces, an increase of 6% when compared to 1Q09 (13,097 ounces), while the cash operating cost increased 42% from US$588/oz in 1Q09 to US$837/oz in 1Q10. This increase was due to a 60% increase in diamond drilling and 20% higher development costs.
Total royalties paid to the government at both Orcopampa and Poracota in 1Q10 were US$1.7 million.
At Uchucchacua (100%), total silver production during 1Q10 was 2,037,956 ounces, 30% lower than 1Q09 (2,902,470 ounces) due to a 12% decline in ore treated, mainly explained by the 14-day strike, a 16% lower silver grade and 5% lower recovery rate (Appendix 2). Zinc production decreased 38% (from 2,431 MT in 1Q09 to 1,516 MT in 1Q10) and lead production decreased 26% (1,756 MT in 1Q10 vs. 2,377 MT in 1Q09).
Cash operating cost in 1Q10 was US$11.0/oz, a 42% increase compared to the US$7.74/oz in 1Q09. This was mainly explained by the lower silver ounces recovered due to the decrease in the silver grade and recovery rate mentioned above, as well as the pursuit of improved manganese content control.
Total royalties paid to the government at Uchucchacua in 1Q10 were US$0.4 million.
At Antapite (100%), total production in 1Q10 was 7,069 ounces of gold, a decrease of 2% compared to 1Q09 (7,209 ounces), mainly due to a 15% decrease in ore milled, explained by the 20-day strike, despite a 12% increase in the gold grade and 3% increase in the recovery rate (Appendix 2).
Gold cash operating cost in 1Q10 was US$782/oz, 10% higher than in 1Q09 (US$709/oz) due to the impact of less ounces recovered and higher labor and community relations expenses.
Total royalties paid to the government at Antapite in 1Q10 totaled US$0.1 million.
At Colquijirca (El Brocal 45.97%), polymetalic ore treated decreased 17% to use plant capacity to treat ore from Marcapunta and leverage higher copper prices. As a consequence, total zinc production decreased 22%, from 15,220 MT reported in 1Q09 to 11,900 MT in 1Q10 (Appendix 2). Total silver production during 1Q10 was 609,867 ounces, a 40% decrease when compared to the 1,008,701 ounces reported in 1Q09, mainly explained by the previously mentioned decrease in tonnage treated, a 31% decrease in the silver ore grade and an 8% lower recovery rate.
Zinc cash cost in Colquijirca increased from US$484/MT in 1Q09 to US$1,337/MT in 1Q10. This was due to a higher stripping ratio (22.55 in 1Q10 vs. 2.53 in 1Q09) despite the higher silver and lead contribution due to an increase in prices.
At Marcapunta, copper production for 1Q10 was 2,142 MT, 8% higher than 1Q09 (1,991 MT). Cash cost was US$4,137/MT, 50% higher than the US$2,761/MT reported in 1Q09.
Total royalties paid to the government at Colquijirca in reached 1Q10 US$0.4 million.
General and administrative expenses for 1Q10 were US$10.6 million, 37% lower than the figure reported in 1Q09 (US$16.7 million) due to the decrease in the long-term compensation provision.
Exploration Costs in non-operational mining sites
Exploration costs at non-operational mining sites, which include care and maintenance, during 1Q10 were US$7.9 million, an 8% increase compared to the US$7.2 million reported in 1Q09. The main efforts were focused at the La Zanja (US$2.2 million), Breapampa (US$0.3 million), Marcapunta (US$1.1 million) and Mallay (US$1.9 million) projects.
Operating income in 1Q10 was US$67.6 million, a 15% increase compared to the US$59.0 million reported in 1Q09. This result was mainly explained by the 14% increase in total revenues, from US$177.0 million in 1Q09 to US$201.7 million in 1Q10, in addition to the 37% decrease in general and administrative expenses mentioned above.
Share in Affiliated Companies
During 1Q10, Buenaventura’s income from non-consolidated affiliates was US$111.9 million, 40% higher than the US$79.9 million reported in 1Q09. Cerro Verde’s contribution to these results increased 127%, from US$20.1 million in 1Q09 to US$45.5 million in 1Q10. Likewise, Yanacocha’s contribution increased 18%, from US$59.8 million in 1Q09 to US$70.6 million 1Q10.
At Yanacocha (43.65%), 1Q10 gold production was 422,798 ounces of gold, a decrease of 15% compared to 1Q09 (498,917 ounces) due to lower mill grades and recoveries, combined with lower tons placed on leach pads related to the mining plan.
Costs applicable to sales (CAS) at Yanacocha in 1Q10 was US$387/oz, 14% higher than the figure reported in 1Q09 (US$338/oz) due to lower production, higher stripping ratios and higher costs related to maintenance, workers’ participation and royalties.
Net income at Yanacocha during 1Q10 was US$162.5 million, an 18% increase when compared to the 1Q09 figure (US$137.9 million). EBITDA totaled US$273.1 million, an increase of 14% compared to 1Q09 (US$239.5 million). These positive results were due to an 8% increase in revenues (US$460.5 million in 1Q10 vs. US$427.2 million in 1Q09) due to a 23% rise in realized gold prices despite a 12% decrease in ounces of gold sold.
CAPEX for 1Q10 was US$57.1 million.
At Cerro Verde (19.26%) 1Q10 copper production was 74,954 MT, a 1% decrease when compared to 1Q09 (75,713 MT).
During 1Q10, Cerro Verde reported net income of US$238.6 million, a 125% increase when compared to the US$106.2 million reported in 1Q09, while EBITDA increased 104%, from US$194.0 million in 1Q09 to US$396.3 million in 1Q10 mainly due to the 67% increase in revenues.
CAPEX in 1Q10 totaled US$23.1 million.
This quarter, Buenaventura’s net income was US$155.2 million, representing US$0.61 per share, a 55% increase when compared to the US$100.3 million reported in 1Q09 (US$0.39 per share). This was mainly explained by the 40% increase in contributions from Yanacocha and Cerro Verde, as well as the 15% increase in Operating Income.
- 2nd stage old tailings retreatment to recover 38,000 oz of gold and 1.1 M oz of silver. This project will be completed in 4Q10. CAPEX totals US$5.5 million. Total investment as of March, 2010 was US$2.8 million.
- Tailing Dam #4 expansion for an additional 1.8 years. This project will be completed in 3Q10. CAPEX totals US$10.4 million. Total investment as of March, 2010 was US$7.0 million.
- Manganese sulphate plant to incorporate into reserves current ore resources with manganese content and increase production is moving forward. The development of the engineering is ongoing.
- Expansion of metallurgical facilities to increase plant capacity from 6,000 TPD to 18,000 TPD, including the construction of a new tailing dam. CAPEX totals US$200.0 million. Total investment as of March, 2010 was US$90.0 million.
HUANZA HYDROELECTRICAL PLANT
- Construction of a 90 Mw hydro electric plant to ensure energy supplies from a clean and renewal source for direct operations and projects. CAPEX totals US$145 million. Total investment as of March, 2010 was US$19.2 million.
- Expected to initiate operations in July, 2010. Total revised CAPEX is US$63.0 million.
As of March 31, 2010, project expenditures have totaled US$32.5 million. The mine construction progress is summarized in the following chart:
Structure Progress as of March 31, 2010 Waste Dam of San Pedro Sur Mine 24% Bramadero Dam 90% Main Access 100% Processes Plant ADR 42% Leaching Platform 49% Solution and torment wells 77% Camps, Office, and General store 78% Supervision - EPCM 85%
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.
Contacts in Lima: Roque Benavides / Carlos Galvez Compania de Minas Buenaventura S.A.A. Tel: (511) 419-2538 / 419-2540 Investor Relations: Daniel Dominguez Tel: (511) 419-2536 Email: email@example.com Contacts in New York: Maria Barona / Peter Majeski i-advize Corporate Communications, Inc. Tel: (212) 406-3690 Email: firstname.lastname@example.org
SOURCE Compania de Minas Buenaventura S.A.A.