Compania de Minas Buenaventura Announces Third Quarter 2010 Results
LIMA, Peru, Oct. 28 /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 third 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:
“Net income during the quarter was US$174.1 million, a 17% increase when compared to the figure reported in 3Q09 (US$148.5 million), mainly due to a 54% increase in operating income.
EBITDA from Buenaventura’s Direct Operations was US$116.9 million, 15% higher than the figure reported in 3Q09 (US$101.9 million), while EBITDA including Yanacocha and Cerro Verde increased 3%, from US$313.5 million in 3Q09 to US$323.9 million in 3Q10.
These results were mainly driven by higher metal prices, an increase in silver, lead and gold sold, as well as the solid results from Cerro Verde”.
Financial Highlights (in millions of US$, except EPS figures):
3Q10 3Q09 Var% 9M10 9M 09 Var% Total Revenues 279.9 230.9 21% 707.0 620.5 14% Operating Income 96.5 62.8 54% 218.8 193.3 13% EBITDA 116.9 101.9 15% 272.8 276.3 -1% (BVN Direct Operations) EBITDA 323.9 313.5 3% 832.8 803.1 4% (inc. Yanacocha and Cerro Verde) Net Income 174.1 148.5 17% 440.2 383.2 15% EPS* 0.68 0.58 17% 1.73 1.51 15%
(*) Buenaventura has a total of 254,442,328 shares outstanding.
During 3Q10, net sales were US$265.9 million, a 24% increase when compared to the US$214.6 million reported in 3Q09. This was explained by the higher realized prices in all metals and an increase in the volume of gold, silver and lead sold.
Royalty income in 3Q10 totaled US$14.0 million, a 14% decrease when compared to the US$16.2 million reported in 3Q09 due to lower gold volume sold at Yanacocha.
Accumulated net sales in 2010 were US$665.5 million, a 16% increase compared to the same period of 2009 (US$575.9 million), while royalty income was US$41.5 million, a 7% decrease when compared to the US$44.6 million reported in the comparable period of 2009.
Production and Operating Costs
Buenaventura’s equity production(1) in 3Q10 was 118,367 ounces of gold, 9% higher than the 108,736 ounces reported in 3Q09. Silver production in 3Q10 was 3.6 million ounces, a 3% increase when compared to the 3.5 million ounces reported in 3Q09.
Equity production(1) in the nine month period 2010 was 326,113 ounces of gold and 10.0 million ounces of silver. This represented a 5% increase in gold production (310,905 ounces in 9M09), and an 11% decrease in silver production compared to 2009 (11.2 million ounces).
Orcopampa’s (100%) total gold production was 81,828 ounces, in-line with 3Q09 production (82,569 ounces). Production from the Chipmo mine in 3Q10 was 76,153 ounces, 3% higher than the 73,849 ounces reported in 3Q09, which was complemented by the old tailings treatment which produced 5,675 gold ounces (8,720 ounces in 3Q09). Accumulated total gold production in the nine-month period 2010 was 234,430 ounces, a 3% increase when compared to 2009 (227,479 ounces).
Cash operating cost in 3Q10 was US$358/oz, 20% higher when compared to 3Q09 (US$299/oz). This was explained by:
- A 38% increase in contractor costs due to a 17% increase in drifting work and a 4% increase in diamond drilling.
- 20% higher labor costs mainly explained by non-recurring negotiation closure bonuses (80% of the total increase), as well as an increase in salaries and the 5% appreciation of the Nuevo Sol.
At Poracota, gold production in 3Q10 was 16,230 ounces, an increase of 21% when compared to 3Q09 (13,366 ounces), while the cash operating cost was US$919/oz, in-line with the figure reported in 3Q09. Accumulated gold production for the nine-month period 2010 was 45,127 ounces, 19% higher than the figure reported in 2009 (38,043 ounces).
Total royalties paid to the government at both Orcopampa and Poracota in 3Q10 totaled US$4.3 million.
At Uchucchacua (100%), total silver production in 3Q10 was 2.5 million ounces, similar to 3Q09, despite the 2% decrease in silver grade and a 5% decline in recoveries, offset by an 8% increase in ore treated. Zinc production in 3Q10 was 1,970 MT, also similar to 3Q09, while lead production increased 14% (2,193 MT in 3Q10 vs. 1,921 MT in 3Q09). Accumulated production in the nine-month period 2010 was 6.9 million ounces of silver, 15% lower than in 2009 (8.1 million ounces); 5,367 MT of zinc, a decrease of 19% when compared to 2009 (6,658 MT) and 5,951 MT of lead, 16% lower than the figure reported in 2009 (7,104 MT).
Cash operating cost in 3Q10 was US$12.82/oz, a 21% increase compared to the $10.62/oz in 3Q09. This was best explained by:
- 23% higher labor costs mainly explained by a non-recurring negotiation closure bonuses (70% of the total increase), as well as an increase in salaries and the 5% appreciation of the Nuevo Sol.
- A 33% rise in contractor expenses due to higher productivity bonuses.
Total royalties paid to the government at Uchucchacua in 3Q10 totaled US$1.1 million.
At Antapite (100%), total production in 3Q10 was 9,396 ounces of gold, an increase of 13% compared to 3Q09 (8,297 ounces), mainly due to a 16% increase in ore treated. Accumulated gold production was 26,026 ounces, an 11% increase when compared to 2009 (23,430 oz).
Gold cash operating cost in 3Q10 was US$760/oz, 1% lower than in 3Q09 (US$766/oz).
Total royalties paid to the government at Antapite in 3Q10 totaled US$0.2 million.
La Zanja (53.06%) started to leach ore in pads on August 6, 2010. The first gold bar was obtained on September 7, 2010. Total production in 3Q10 was 10,660 ounces of gold (5,656 oz attributable to Buenaventura).
At El Brocal (46.08%), the first stage of the expansion project was completed.
At Marcapunta, copper production for 3Q10 was 1,672 MT, 28% lower than 3Q09 (2,312 MT). Accumulated copper production in 9M10 was 6,850 MT, an 8% increase when compared to 6,343 MT in the same period 2009. Cash cost at Marcapunta for 3Q10 was US$5,940/MT (includes US$2,568/MT of treatment charges and deductions), an 87% increase when compared to US$3,183/MT reported in 3Q09.
At Colquijirca, total zinc production was 13,771 MT in 3Q10, an 18% decrease when compared to the 16,795 MT reported in 3Q09 due to a 13% decline in tonnage of polymetalic ore to allow higher copper ore treatment and a 10% decrease in ore grade. Total silver production in 3Q10 was 765,963 ounces, a 16% decrease when compared to the 916,637 ounces reported in 3Q09, mainly explained by the previously-mentioned decline in tonnage treated, an 8% decrease in the silver ore grade and 5% lower recovery rate. Total lead production for 3Q10 was 4,668 MT, an 11% decrease when compared to 5,225 MT in 3Q09.
For 9M10, total zinc production was 35,340 MT, a 30% decrease when compared to the 50,818 MT reported in 9M09. In the case of silver, total production decreased 31%, from 2.8 million ounces in 9M09 to 1.9 million ounces in 9M10. Lead production for the first nine-months 2010 was 11,583 MT, 20% lower than the same period in 2009 (14,520 MT).
Zinc cash cost in Colquijirca increased 9%, from US$594/MT in 3Q09 to US$648/MT in 3Q10. This was due to the lower zinc metallic content produced.
Total royalties paid to the government at Colquijirca and Marcapunta in 3Q10 totaled US$0.9 million.
(1) Production includes 100% of operating units, 100% of CEDIMIN, 53.06% of La Zanja and 46.08% of El Brocal.
General and administrative expenses in 3Q10 were US$27.9 million, 18% lower than the figure reported in 3Q09 (US$34.2 million) due to a lower ‘mark to market’ provision for long-term compensation (US$15.9 million in 3Q10 vs. US$20.8 million in 3Q09). General and administrative expenses in the nine-month period 2010 totaled US$66.8 million, 4% lower than the US$69.9 million reported in the same period of 2009.
Exploration Costs in Non-Operational Mining Sites
Exploration costs at non-operational mining sites, which include care and maintenance, in 3Q10 were US$7.8 million, a 10% increase compared to the US$7.1 million reported in 3Q09. The main efforts were focused at the Castrejon prospect at La Zanja (US$0.9 million), Mallay (US$0.9 million), El Brocal (US$3.2 million) and Colquemayo (US$0.5 million) projects.
Exploration costs at non-operating mining sites in the nine-month period 2010 were US$25.9 million, a 7% increase when compared to the same period in 2009 (US$24.3 million).
Operating income in 3Q10 was US$96.5 million, a 54% increase compared to the US$62.8 million reported in 3Q09. This result was mainly explained by higher revenues and lower administrative expenses.
Accumulated operating income for the period was US$218.8 million, an increase of 13% when compared to the figure reported in 2009 (US$193.3 million).
Share in Affiliated Companies
During 3Q10, Buenaventura’s income from non-consolidated affiliates was US$118.1 million, 6% lower than the US$125.5 million reported in 3Q09. Yanacocha’s contribution to these results decreased 29%, from US$88.2 million in 3Q09 to US$62.4 million 3Q10, partially offset by a 56% increase in contributions from Cerro Verde, which rose from US$37.3 million in 3Q09 to US$58.1 million in 3Q10.
Accumulated income from non-consolidated affiliates in the nine-month 2010 period was US$316.2 million, an increase of 4% compared to the US$303.8 million reported in 2009.
At Yanacocha (43.65%), 3Q10 gold production was 355,150 ounces of gold, a decrease of 35% compared to 3Q09 (543,854 ounces). Gold production in the nine-month 2010 period was, according to guidance, 1,130,504 ounces, but a decrease of 28% compared to the 1,559,465 ounces reported in the same period 2009.
Cost applicable to sales (CAS) at Yanacocha in 3Q10 was US$437/oz, 42% higher than the figure reported in 3Q09 (US$308/oz) due to higher diesel costs, higher labor costs (including worker’s participation) and an increase in royalties.
Net income at Yanacocha in 3Q10 was US$143.6 million, a 29% decrease when compared to the 3Q09 figure (US$202.8 million). Accumulated net income in 2010 was US$450.5 million, a 10% decrease from 2009 (US$498.5 million).
During 3Q10, EBITDA totaled US$253.9 million, a decrease of 24% compared to 3Q09 (US$336.3 million). This decrease was explained by the 19% decline in revenues (US$436.4 million in 3Q10 vs. US$535.8 million in 3Q09) due to a 36% decrease in ounces of gold sold. EBITDA for 9M10 was US$781.4 million, a 9% decrease when compared to the US$858.5 million reported in 2009.
The Company continues to expect total 2010 gold production at Yanacocha to be between 1,460,000 and 1,550,000 ounces, with costs applicable to sales near the high end of $360 and $400 per ounce. This is due primarily to higher royalties and worker’s participation costs as a result of higher realized gold prices.
CAPEX in 3Q10 was US$84.3 million, while for the cumulative period, CAPEX totaled US$194.9.
At Cerro Verde (19.26%), 3Q10 copper production was 74,768 MT, a 2% increase when compared to 3Q09 (72,973 MT). Accumulated copper production in 9M10 totaled 225,108 MT, in-line with the same period 2009 (225,498 MT).
During 3Q10, Cerro Verde reported net income of US$304.1 million, a 53% increase when compared to US$198.1 million in 3Q09. Accumulated net income in 9M10 was US$679.5 million, a 46% increase compared to the same period 2009 (US$463.9 million).
CAPEX in 3Q10 totaled US$29.2 million, and US$74.8 million for the nine-month period 2010.
This quarter, Buenaventura’s net income was US$174.1 million, representing US$0.68 per share compared to US$148.5 million in 3Q09 (17% increase). This was mainly explained by the 54% increase in operating income despite a 29% decrease in contributions from Yanacocha.
Net income for the nine-month period 2010 was US$440.2 million (US$1.73 per share), a 15% increase when compared to the US$383.2 million (US$1.51 per share) reported in the same period 2009.
- 2nd stage of old tailings retreatment to recover 38,000 oz of gold and 1.1 M oz of silver. As of September 2010, all equipment was purchased, while the assembly of 5 thickeners was ongoing. This project will be completed in 4Q10. Total investment as of September, 2010 was US$3.7 million out of a total budget of US$5.5 million.
- Tailing Dam #4 expansion for an additional 1.8 years was completed. Only auxiliary work for security and environment remain pending. Total investment as of September 2010 was US$11.1 million out of a total budget of US$10.4 million.
- The chemical plant project to clean manganese content from lead-silver concentrates to obtain better commercial terms and improve the mining process is in progress. Total investment as of September, 2010 was US$1.6 million out of a total budget of US$33 million.
- Total estimated CAPEX is US$72.0 million.
As of September 30, 2010, project expenditures totaled US$13.6 million. The construction permit was obtained on May 24, 2010. The duration of the construction phase will be approximately 10 months. The mine construction progress is summarized in the following chart:
Progress as of September 30, Structure 2010 --------- ----------------------------- Tantahuatay pit 0% ---------------- --- Waste rock deposit 0% ------------------ --- Waste soil deposit 22.2% ------------------ ---- Top soil deposit 6.4% ---------------- --- Leaching platform 8.5% ----------------- --- Processing plant 10% ---------------- ---
The Board of Director’s meeting held October 28, 2010, passed the following resolution:
Declaration of a cash dividend of US$0.16 per share or ADS, to be paid in U.S. dollars on November 30, 2010 to shareholders of record as of November 16, 2010. The ex-dividend date is November 12, 2010.
For a full version of Buenaventura 3Q10 Results, please visit the Company’s webpage at: www.buenaventura.com.pe.
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 and Recuperada), has controlling interest in three mining companies (El Brocal, La Zanja and CEDIMIN) 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.
If a printed version of the Company’s 2009 Form 20-F is requested, please contact the persons indicated below, otherwise, download a PDF format file from our web site.
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.
Visit our website: http://www.buenaventura.com
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: firstname.lastname@example.org Contacts in New York: Maria Barona / Peter Majeski i-advize Corporate Communications, Inc. Tel: (212) 406-3690 Email: email@example.com
SOURCE Compania de Minas Buenaventura S.A.A.