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Compania de Minas Buenaventura Announces Fourth Quarter 2010 Results

February 24, 2011

LIMA, Peru, Feb. 24, 2011 /PRNewswire/ — 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 results for the fourth 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 fourth quarter was US$222.8 million, a 6% increase when compared to the figure reported in 4Q09 (US$210.4 million), mainly due to a 133% increase in operating income.

EBITDA from Buenaventura’s Direct Operations was US$246.0 million, 110% higher than the figure reported in 4Q09 (US$116.9 million), while EBITDA including Yanacocha and Cerro Verde increased 31%, from US$359.0 million in 4Q09 to US$470.1 million in 4Q10.

These results were mainly driven by an increase in gold and copper sales from Buenaventura’s direct operations, as well as the higher metal prices”.

Financial Highlights (in millions of US$, except EPS figures):


                           4Q10      4Q09
    Total Revenues          396.8     261.0
    Operating Income        218.7      93.9
    EBITDA                  246.0     116.9
    (BVN Direct
     Operations)
    EBITDA                  470.1     359.0
    (inc. Yanacocha and
     Cerro Verde)
    Net Income              222.8     210.4
    EPS*                     0.88      0.83


                              Var%   FY 2010
    Total Revenues              52%    1,103.8
    Operating Income           133%      437.6
    EBITDA                     110%      551.7
    (BVN Direct
     Operations)
    EBITDA                      31%    1,335.9
    (inc. Yanacocha and
     Cerro Verde)
    Net Income                   6%      662.9
    EPS*                         6%        2.6


                           FY 2009         Var%
    Total Revenues            881.5          25%
    Operating Income          287.2          52%
    EBITDA                    393.1          40%
    (BVN Direct
     Operations)
    EBITDA                  1,162.7          15%
    (inc. Yanacocha and
     Cerro Verde)
    Net Income                593.6          12%
    EPS*                       2.33          12%

(*) Buenaventura has a total of 254,442,328 shares outstanding.

Operating Revenue

During 4Q10, net sales were US$382.3 million, a 57% increase when compared to the US$243.5 million reported in 4Q09. This was explained by an increase in the volume of gold and copper sold, as well as higher realized prices across all metals.

Royalty income in 4Q10 totaled US$14.4 million, a 18% decrease when compared to the US$17.5 million reported in 4Q09 due to lower gold volume sold at Yanacocha.


    Operating Highlights  4Q10   4Q09    Var%  FY 2010   FY 2009   Var%
    --------------------  ----   ----    ----   -------   -------   ----
          Net Sales        382.3   243.5   57%   1,047.9     819.4    28%
          ---------        -----   -----  ---    -------     -----   ---
    (in millions of US$)
    --------------------
    Average Realized Gold
     Price Gold (US$/oz)*  1,380   1,122   23%     1,253       988    27%
    ---------------------  -----   -----  ---      -----       ---   ---
    Average Realized Gold
     Price (US$/oz) inc.
           Yanacocha       1,370   1,108   24%     1,232       978    26%
    ---------------------  -----   -----  ---      -----       ---   ---
       Average Realized
         Silver Price
           (US$/oz)*       26.50   17.65   50%     20.86     15.52    34%
       ----------------    -----   -----  ---      -----     -----   ---
    Average Realized Lead
        Price (US$/MT)*    2,364   2,321    2%     2,106     1,926     9%
    ---------------------  -----   -----  ---      -----     -----   ---
    Average Realized Zinc
        Price (US$/MT)*    2,268   2,207    3%     2,136     1,757    22%
    ---------------------  -----   -----  ---      -----     -----   ---
       Average Realized
         Copper Price
           (US$/MT)*       8,758   6,650   32%     8,114     5,641    44%
       ----------------    -----   -----  ---      -----     -----   ---

(*) Buenaventura’s Direct Operations

                                    Sales Content
                            4Q10       4Q09
                            ----       ----
       Gold (in oz)*       145,466     112,702
     Gold (in oz) inc.
          Yanacocha        293,361     335,459
      Silver (in oz)*    3,481,657   3,721,247
       Lead (in MT)*         3,279       8,085
       Zinc (in MT)*         8,545      15,816
       -------------         -----      ------
      Copper (in MT)*        9,471       2,210
      ---------------        -----       -----


                            Var%   FY 2010
                            ----    -------
       Gold (in oz)*          29%    461,817
     Gold (in oz) inc.
          Yanacocha          -13%  1,101,525
      Silver (in oz)*         -6% 13,176,383
       Lead (in MT)*         -59%     22,970
       Zinc (in MT)*         -46%     43,562
       -------------         ---      ------
      Copper (in MT)*        329%     15,946
      ---------------        ---      ------


                           FY 2009       Var%
                           -------       ----
       Gold (in oz)*        419,222        10%
     Gold (in oz) inc.
          Yanacocha       1,321,993       -17%
      Silver (in oz)*    15,208,726       -13%
       Lead (in MT)*         30,214       -24%
       Zinc (in MT)*         64,198       -32%
       -------------         ------       ---
      Copper (in MT)*         7,677       108%
      ---------------         -----       ---

(*) Buenaventura Direct Operations

Accumulated net sales in 2010 were US$1,047.9 million, a 28% increase compared to 2009 (US$819.4 million), while royalty income was US$55.9 million, a 10% decrease when compared to the US$62.2 million reported in 2009.

Production and Operating Costs

Buenaventura’s equity production(1) in 4Q10 was 132,437 ounces of gold, 16% higher than the 113,827 ounces reported in 4Q09. Silver production in 4Q10 was 3.5 million ounces, a 2% decrease when compared to the figure reported in 4Q09.

Equity production(1) in 2010 was 458,765 ounces of gold and 13.5 million ounces of silver. This represented an 8% increase in gold production (424,731 ounces in 2009), and a 9% decrease in silver production compared to 2009 (14.8 million ounces).

                                Equity Production(1)
                          4Q10         4Q09
                          ----         ----
    Gold (oz)             132,437      113,827
    Gold (oz) inc.
     Yanacocha            276,969      331,516
    Silver (oz)         3,468,729    3,538,286
    Lead ( MT)              3,351        4,927
    Zinc ( MT)              2,243        9,687
    ----------              -----        -----
    Copper (MT) inc.
     Cerro Verde           19,611       15,263
    ----------------       ------       ------


                         Var%   FY 2010
                         ----    -------
    Gold (oz)              16%    458,765
    Gold (oz) inc.
     Yanacocha            -16%  1,096,762
    Silver (oz)            -2% 13,470,186
    Lead ( MT)            -32%     18,380
    Zinc ( MT)            -77%     25,535
    ----------            ---      ------
    Copper (MT) inc.
     Cerro Verde           28%     66,133
    ----------------      ---      ------


                        FY 2009       Var%
                        -------       ----
    Gold (oz)             424,731        8%
    Gold (oz) inc.
     Yanacocha          1,323,127      -17%
    Silver (oz)        14,759,846       -9%
    Lead ( MT)             20,752      -11%
    Zinc ( MT)             40,959      -38%
    ----------             ------      ---
    Copper (MT) inc.
     Cerro Verde           61,613        7%
    ----------------       ------      ---

Orcopampa’s (100%) Production from the Chipmo mine in 4Q10 was 79,408 ounces, 2% higher than the 77,624 ounces reported in 4Q09, while the old tailings treatment produced 5,857 gold ounces (10,124 ounces in 4Q09). As a consequence, total gold production in 4Q10 was 85,265 ounces, 3% lower than the 87,748 ounces reported in 4Q09. Accumulated total gold production in 2010 was 319,694 ounces, a 1% increase when compared to 2009 (315,227 ounces).

Cash operating cost in 4Q10 was US$349/oz, 8% higher when compared to 4Q09 (US$322/oz). This was mainly explained by the 42% decrease in gold production from the treatment of old tailings and higher labor costs. Cash operating cost for 2010 was US$349/oz, 20% higher than the figure reported in 2009 (US$290/oz).

At Poracota, gold production in 4Q10 was 14,676 ounces, an increase of 9% when compared to 4Q09 (13,474 ounces) due to a 7% increase in the recovery rate. Cash operating cost was US$999/oz, 4% higher than the figure reported in 4Q09 (US$963/oz), explained by a 31% increase in drifting work. Accumulated gold production in 2010 was 59,803 ounces, 16% higher than the figure reported in 2009 (51,516 ounces). Cash cost for 2010 was US$919/oz, a 13% increase when compared to US$812/oz in 2009.

Total royalties paid to the government at both Orcopampa and Poracota in 4Q10 totaled US$4.3 million.

At Uchucchacua (100%), total silver production in 4Q10 was 2.4 million ounces, a decrease of 4% when compared to 2.5 million ounces in 4Q09, due to an 8% decrease in silver grade and a 3% decline in recoveries, positively offset by an 8% increase in ore treated. Zinc production in 4Q10 was 1,620 MT, an increase of 4% from the 1,551 MT reported in 4Q09, while lead production increased 34% (1,930 MT in 4Q10 vs. 1,445 MT in 4Q09). Accumulated production in 2010 was 9.3 million ounces of silver, 12% lower than in 2009 (10.6 million ounces); 6,988 MT of zinc, a decrease of 15% when compared to 2009 (8,209 MT) and 7,881 MT of lead, 8% lower than the figure reported in 2009 (8,548 MT).

Cash operating cost in 4Q10 was US$13.69/oz, an 18% increase compared to the US$11.61/oz in 4Q09. This was best explained by:

  1. A 25% rise in contractor expenses due to increased drifting work and productivity bonuses.
  2. The previously mentioned 4% decrease in production.
  3. The increase in silver prices lead to higher royalties paid to the government, as well as higher commercial deductions to payable silver content.

Cash operating cost in 2010 was US$12.35/oz, a 27% increase when compared to US$9.75/oz in 2009.

Total royalties paid to the government at Uchucchacua in 4Q10 totaled US$1.9 million.

At Antapite (100%), total production in 4Q10 was 9,777 ounces of gold, an increase of 29% compared to 4Q09 (7,574 ounces), mainly due to a 10% increase in ore treated and 16% higher ore grade. Accumulated gold production was 35,803 ounces, a 15% increase when compared to 2009 (31,004 oz).

Gold cash operating cost in 4Q10 was US$767/oz, 13% lower than in 4Q09 (US$881/oz), mainly explained by the increase in production as previously mentioned. During 2010, cash cost was US$762/oz, a 3% decrease when compared to US$784/oz in 2009.

Total royalties paid to the government at Antapite in 4Q10 totaled US$0.2 million.

La Zanja (53.06%) total production in 4Q10 was 34,046 ounces of gold (18,044 ounces attributable to Buenaventura), while the cash operating cost was US$332/oz. Accumulated gold production in 2010 (started production in September 2010) was 44,706 ounces of gold (23,694 ounces attributable to Buenaventura), with a 2010 cash cost of US$339/oz.

Total royalties paid to the government at La Zanja in 4Q10 totaled US$0.5 million.

At El Brocal (46.08%), during 4Q10, full capacity of the concentrator plant was devoted to copper ore treatment to benefit from the high copper prices.

It is important to point out that copper production in 4Q10 came from: Marcapunta Norte, the high copper grade area at Tajo Norte and a stock pile of copper ore accumulated during previous two years, which contained high silver grades.

Copper production for 4Q10 was 10,108 MT, 421% higher than 4Q09 (1,941 MT). Accumulated copper production in 2010 was 16,971 MT, a 105% increase when compared to 8,284 MT in 2009. Copper cash cost for 4Q10 was US$2,836/MT, a 25% decrease when compared to the US$3,774/MT reported in 4Q09, mainly due to higher by-product contribution from the silver and gold content in concentrate. Cash cost for 2010 was US$3,530/MT, 11% higher than the US$3,192/MT reported in 2009.

Silver production in 4Q10 was 494,227 ounces, 46% lower than the 909,023 ounces in 4Q09. Accumulated silver production decreased 34%, from 3.8 million ounces in 2009 to 2.5 million ounces in 2010.

Total zinc production in 2010 was 35,340 MT, a 48% decrease when compared to the 67,690 MT reported in 2009. Lead production in 2010 was 11,583 MT, 42% lower in 2009 (20,135 MT).

Total royalties paid to the government at Colquijirca and Marcapunta in 4Q10 totaled US$2.2 million.

Operating Expenses

General and administrative expenses in 4Q10 were US$25.8 million, 37% higher than the figure reported in 4Q09 (US$18.8 million) due to a higher ‘mark to market’ provision for long-term compensation (US$9.4 million in 4Q10 vs. US$0.2 million in 4Q09). General and administrative expenses in 2010 totaled US$92.6 million, a 4% higher than the US$88.8 million reported in 2009.

Exploration Costs in Non-Operational Mining Sites

Exploration costs at non-operational mining sites, which include care and maintenance, in 4Q10 were US$10.2 million, a 77% increase compared to the US$5.7 million reported in 4Q09. The main efforts were focused at the Colquemayo (US$1.5 million), Mallay (US$4.1 million), Chiptaj-Chancas (US$0.8 million), Breapampa (US$0.7 million) and Chaje (US$0.4 million) projects.

Exploration costs at non-operating mining sites in 2010 were US$36.1 million, a 20% increase when compared to 2009 (US$30.0 million).

Operating Income

Operating income in 4Q10 was US$218.7 million, a 133% increase compared to the US$93.9 million reported in 4Q09. This result was mainly explained by higher operating margins.

Accumulated operating income in 2010 was US$437.6 million, an increase of 52% when compared to the figure reported in 2009 (US$287.2 million).

Share in Affiliated Companies

During 4Q10, Buenaventura’s income from non-consolidated affiliates was US$112.5 million, 24% lower than the US$147.6 million reported in 4Q09. Yanacocha’s contribution to these results decreased 39%, from US$99.7 million in 4Q09 to US$61.0 million in 4Q10, partially offset by a 51% increase in contributions from Cerro Verde, which rose 50% from US$47.9 million in 4Q09 to US$72.0 million in 4Q10.

Accumulated income from non-consolidated affiliates in 2010 was US$428.7 million, a decrease of 5% compared to the US$451.3 million reported in 2009.

YANACOCHA

At Yanacocha (43.65%), 4Q10 gold production was 331,117 ounces of gold, a decrease of 34% compared to 4Q09 (498,716 ounces) due to a 58% decline in the ore mined. This reduction was explained by the severe weather conditions in Cajamarca during December, which negatively impacted roads, causing a low availability of shovels and loading equipment. Gold production in 2010 was 1,461,620 ounces, a decrease of 29% compared to the 2,058,180 ounces reported in 2009.

Cost applicable to sales (CAS) at Yanacocha in 4Q10 was US$577/oz, 81% higher than the figure reported in 4Q09 (US$319/oz) due to higher diesel costs and higher labor costs (including worker’s participation) as a consequence of the previously mentioned decline in production. Cash cost in 2010 was US$448/oz, 38% higher than the figure reported in 2009 (US$325/oz).

Net income at Yanacocha in 4Q10 was US$139.4 million, a 39% decrease compared to the 4Q09 figure (US$228.5 million). Accumulated net income in 2010 was US$589.9 million, a 19% decrease from 2009 (US$727.1 million).

During 4Q10, EBITDA totaled US$241.7 million, a decrease of 35% compared to 4Q09 (US$374.1 million). This decrease was mainly explained by the 18% decline in revenues (US$459.9 million in 4Q10 vs. US$561.9 million in 4Q09), due to a 34% decrease in ounces of gold sold. EBITDA for 2010 was US$1,023.1 million, a 17% decrease when compared to the US$1,232.6 million reported in 2009.

CAPEX in 4Q10 was US$103.7 million, while for the cumulative period, CAPEX totaled US$298.6 million.

CERRO VERDE

At Cerro Verde (19.26%), 4Q10 copper production was 77,603 MT, a 4% increase when compared to 4Q09 (74,611 MT). Accumulated copper production in 2010 totaled 302,711 MT, virtually flat compared to 2009 (300,109 MT).

During 4Q10, Cerro Verde reported net income of US$375.0 million, a 53% increase when compared to US$244.6 million in 4Q09. Accumulated net income in 2010 was US$1,054.4 million, a 49% increase compared to 2009 (US$708.5 million).

CAPEX in 4Q10 totaled US$45.0 million, and US$119.8 million for the twelve-month period.

Net Income

This quarter, Buenaventura’s net income was US$222.8 million (US$0.88 per share), 6% higher compared to the US$210.4 million reported in 4Q09. This was mainly explained by the 133% increase in operating income despite a 39% decrease in contributions from Yanacocha.

Net income for 2010 was US$662.9 million (US$2.60 per share), a 12% increase when compared to the US$593.6 million (US$2.33 per share) reported in 2009.

Project Development

ORCOPAMPA

  • 2nd stage of old tailings retreatment to recover 38,000 oz of gold and 1.1 M oz of silver. The project was near completion as of December 31, 2010. Total investment in 2010 was US$6.1 million out of a total budget of US$5.5 million.
  • Tailing Dam #4A expansion to add 4.5 years. The process to select the company responsible for construction is underway. The construction is expected to begin in 2Q11, with completion scheduled for 3Q12. Total estimated investment is US$19.6 million.

UCHUCCHACUA

  • The chemical plant project to clean manganese content from lead-silver concentrates to obtain better commercial terms and improve the mining process is underway. During 4Q10, total investment was US$3.1 million out of a total budget of US$33 million.

TANTAHUATAY

  • Total estimated CAPEX is US$72.0 million.

As of December 31, 2010, project expenditures totaled US$21.5 million. The construction permit was obtained on May 24, 2010. The duration of the construction phase will be approximately 10 months.

Board Resolutions

At the Board of Directors meeting held February 24, 2011, the Board of Directors passed the following Resolutions:

To call for the Annual Shareholders Meeting to be held March 25, 2011 to:

  • Approve the financial statements as of December 31, 2010
  • Approve the 2010 Annual Report
  • Approve a cash dividend of US$0.33 per share or ADS to be paid in U.S. currency
  • The election of the Board of Directors for 2011 – 2013 period

Company Description

Companía 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.

For a full version of this release, please visit www.buenaventura.com.pe.

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.

APPENDIX 1


                                       BVN
                                     Equity %
                                     --------
    Cedimin S.A.C*                     100.00
    --------------                     ------
    Consorcio Energetico de
     Huancavelica S.A*                 100.00
    -----------------------            ------
    Buenaventura Ingenieros S.A*       100.00
    ----------------------------       ------
    Minera La Zanja S.A*                53.06
    --------------------                -----
    Sociedad Minera El Brocal
     S.A.A*                             46.08
    -------------------------           -----
    Canteras del Hallazgo S.A **        49.00
    ----------------------------        -----
    Companía Minera Coimolache S.A
     **                                 40.09
    ------------------------------      -----
    Minera Yanacocha S.R.L **           43.65
    -------------------------           -----
    Sociedad Minera Cerro Verde
     S.A.A **                           19.26
    ---------------------------         -----


                                                Operating
                                            Mines / Business
                                            ----------------
    Cedimin S.A.C*                            Shila / Paula
    --------------                            -------------
    Consorcio Energetico de
     Huancavelica S.A*                           Energy
    -----------------------                      ------
    Buenaventura Ingenieros S.A*         Engineering Consultant
    ----------------------------         ----------------------
    Minera La Zanja S.A*                        La Zanja
    --------------------                        --------
    Sociedad Minera El Brocal           Colquijirca and Marcapunta
     S.A.A*                                      Project
    -------------------------          ---------------------------
    Canteras del Hallazgo S.A **            Chucapaca Project
    ----------------------------            -----------------
    Companía Minera Coimolache S.A
     **                                    Tantahuatay Project
    ------------------------------         -------------------
    Minera Yanacocha S.R.L **                   Yanacocha
    -------------------------                   ---------
    Sociedad Minera Cerro Verde
     S.A.A **                                  Cerro Verde
    ---------------------------                -----------

(*)Consolidates

(**) Equity Accounting


    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: ddominguez@buenaventura.com.pe

    Contacts in New York:
    Peter Majeski
    i-advize Corporate Communications, Inc.
    Tel: (212) 406-3694
    Email: buenaventura@i-advize.com

(1) Production includes 100% of operating units, 100% of CEDIMIN, 53.06% of La Zanja and 46.08% of El Brocal.

SOURCE Compania de Minas Buenaventura S.A.A.


Source: newswire