LIMA, Peru, Oct. 26 /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 of 2007. 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, Chief Executive Officer of Buenaventura stated:
"This quarter net income was US$99.9 million, or US$0.79 per ADS, which represents an increase of 23% when compared to 3Q06, while total EBITDA reached US$240.3 million, 31% higher than 3Q06, due to a strong contribution from Buenaventura's direct operations.
In this regard, operating income in 3Q07 was US$88.8 million, 35% higher than the US$66.0 million obtained in 3Q06, while EBITDA from Buenaventura's direct operations totaled US$108.9 million, 62% higher than the figure achieved in 3Q06."
Financial Highlights (in millions of US$, except EPS figures): 3Q07 3Q06 Var% 9M07 9M06 Var% Total Revenues 195.8 144.8 35% 548.2 445.8 23% Operating Income 88.8 66.0 35% 260.9 208.6 25% EBITDA (BVN Direct Operations) 108.9 67.3 62% 305.7 220.1 39% EBITDA (including Yanacocha and Cerro Verde) 240.3 183.0 31% 640.4 651.3 -2% Net Income 99.9 81.2 23% 151.0 347.5 -57% EPS 0.79 0.64 23% 1.19 2.73 -57% Operating Revenue
In 3Q07, net sales were US$188.2 million, a 54% increase when compared to the US$122.3 million reported in 3Q06 mainly due to higher volumes of lead and zinc sold, as well as an increase in the realized prices of all metals, especially gold, which was partially hedged in 2006, and lead. This was partially offset by a decrease in the volume of gold sold due to a higher gold stock of 12,272 ounces as of September 30, 2007, in addition to the lower silver production at Colquijirca.
Royalty income during 3Q07 totaled US$7.6 million, a 32% decrease when compared to the US$11.1 million reported in 3Q06. This was due to lower sales at Yanacocha.
Operating Highlights 3Q07 3Q06 Var% 9M07 9M06 Var% Net Sales (in millions of US$) 188.2 122.3 54% 520.5 368.8 41% Average Realized Price Gold (US$/oz)* 692 542 28% 652 536 21% Average Realized Price Silver (US$/oz) 12.62 11.50 10% 13.00 11.50 13% Average Realized Price Lead (US$/MT) 3,153 1,159 172% 2,679 1,116 140% Average Realized Price Zinc (US$/MT) 3,153 3,333 -5% 3,477 3,007 16% (*) Including Yanacocha Sales Content 3Q07 3Q06 Var% 9M07 9M06 Var% Gold (in oz) Direct Operations 92,969 98,908 -6% 292,889 316,542 -7% Gold (in oz) including Yanacocha 250,070 351,320 -29% 784,695 1,247,745 -37% Silver (in oz) 4,494,822 4,668,163 -4% 12,323,505 13,110,581 -6% Lead (in MT) 10,720 7,646 40% 30,861 22,865 35% Zinc (in MT) 19,755 13,707 44% 55,057 40,931 35%
Net sales for the nine-month period 2007 were US$520.5 million, a 41% increase compared to the same period of 2006 (US$368.8 million), and royalty income was US$22.3 million, a 48% decrease when compared to US$39.2 million in 2006.
Production and Operating Costs
Buenaventura's equity production(1) during 3Q07 was 102,982 ounces of gold, 3% higher than the 99,681 ounces reported in 3Q06; and 3,936,760 ounces of silver, a 1% increase when compared to the 3,888,349 ounces reported in 3Q06.
Equity production(1) for the accumulated nine-month period was 295,034 ounces of gold and 10,541,795 ounces of silver. This represented a decrease of 3% in gold production (304,250 ounces in 2006), and a 5% decrease in silver production compared to 2006 (11,060,240 ounces).
Equity Production(1) 3Q07 3Q06 Var% 9M07 9M06 Var% Gold (oz) 102,982 99,681 3% 295,034 304,250 -3% Gold inc. Yanacocha (oz) 265,862 363,824 -27% 772,525 1,245,417 -38% Silver (oz) 3,936,760 3,888,349 1% 10,541,795 11,060,240 -5% Lead (MT) 5,909 4,387 35% 16,562 13,773 20% Zinc (MT) 10,967 5,568 97% 28,409 19,913 43% Copper (MT)* 14,406 4,533 218% 35,806 13,105 173% (*) Including Cerro Verde
At Orcopampa (100%), total gold production in 3Q07 was 69,983 ounces, a 12% increase when compared to the 62,540 ounces reported in 3Q06 (Appendix 2) due to an increase in ore grade from 0.55 Oz/ST in 3Q06 to 0.60 Oz/ST in 3Q07. Accumulated gold production was 198,789 ounces, a 6% increase when compared to 2006 (188,267 ounces).
Cash operating cost during 3Q07 was US$167/oz, 10% higher when compared to 3Q06 (US$153/oz). This was best explained by higher exploration expenses due to an increase in diamond drilling labor, the impact of the Nuevo Sol appreciation on labor expenses, as well as higher supply prices.
Total royalties paid to the government at Orcopampa in 3Q07 were US$1.4 million.
Poracota, whose permits to begin production were recently obtained, produced 4,830 ounces of gold within a pilot production program during the quarter. Regular production will begin in January 2008.
At Uchucchacua (100%), total silver production during 3Q07 was 2,685,812 ounces a 2% increase when compared to 3Q06 (2,628,593 ounces). Total zinc production increased 84% from 1,204 MT in 3Q06 to 2,210 MT in 3Q07 due to higher zinc grade ore from lower levels of the mine. Accumulated silver production was 6,860,183 ounces, a 5% decrease when compared to 2006 (7,233,823 ounces), while zinc production increased 26% from 3,661 MT in the same period of 2006, to 4,623 MT in 2007.
Cash operating cost in 3Q07 decreased 4% from $4.45/oz in 3Q06 to US$4.29/oz. This was best explained by increased production as a result of higher silver recoveries, and an increase in by-product contribution.
Total royalties paid to the government at Uchucchacua in 3Q07 were US$1.2 million.
At Antapite (100%), total production in 3Q07 was 16,486 ounces of gold, a decrease of 37% when compared to 3Q06 (26,141 ounces), mainly due to a 36% decrease in gold grade from 0.60 Oz/ST to 0.38 Oz/ST. Accumulated gold production was 53,544 ounces, a 32% decrease when compared to 2006 (78,925 oz).
Gold cash operating cost in 3Q07 was US$431/Oz, a 70% increase when compared to US$253/Oz in 3Q06. This increase was explained by lower production due to the decrease in gold grade, as well as an increase in exploration expenses.
Total royalties paid to the government at Antapite in 3Q07 were US$0.3 million.
At Colquijirca (El Brocal) (34.29%), total zinc production for 3Q07 was 23,318 MT, a 54% increase when compared to the 15,129 MT reported in 3Q06 due to a 43% increase in ore mined. Total silver production during 3Q07 was 1,938,095 ounces, a 25% decrease when compared to the 2,599,118 ounces reported in 3Q06 due to normal silver grade production (5.78 oz/MT in 3Q07 compared to 8.02 oz/MT in 3Q06, higher than the average silver grade of the reserves).
Accumulated zinc production for the nine-month period of 2007 was 62,684 MT, a 34% increase when compared to the same period of 2006 (46,794 MT). In the case of silver, total production decreased 27% from 7,224,584 ounces in 2006 to 5,301,821 ounces in 2007.
Zinc cash operating cost for 3Q07 was a negative US$7 per MT due to an increase in the contribution of lead as a by-product.
Total royalties paid to the government at Colquijirca in 3Q07 were US$2.3 million.
Operating Expenses
General and administrative expenses for 3Q07 were US$13.7 million, a 63% increase compared to the US$8.4 million reported in 3Q06 due to a non-cash US$7.2 million provision for the Long-Term Compensation provision. General and administrative expenses for the accumulated period were US$35.3 million, a 38% increase when compared to the US$25.6 million reported in the same period of 2006.
Exploration Costs at non-operational mining sites
Exploration costs at non-operational mining sites during 3Q07 were US$10.9 million, a 27% increase compared to the US$8.6 million reported in 3Q06. The main efforts were focused at the Marcapunta (US$1.8 million), Breapampa (US$1.2 million), El Milagro (US$1.5 million), Trapiche (US$0.7 million), Mallay (US$1.7 million) and Argentina (US$0.5 million) projects. Exploration costs at non-operating mining sites during the first nine-month period 2007 were US$31.3 million (26% at Colquijirca and Marcapunta), a 29% increase when compared to the same period of 2006 (US$24.3 million).
Operating income
Operating income in 3Q07 was US$88.8 million, a 35% increase compared to the US$66.0 million reported in 3Q06. This result was mainly due to the US$51.0 million increase in operating revenues, despite the US$17.1 million increase in operating costs, US$11.0 million the operating expenses.
For the nine-month period 2007, operating income was US$260.9 million, a 25% increase when compared to the US$208.6 million reported in 2006.
Share in Affiliated Companies
During 3Q07, Buenaventura's income from non-consolidated affiliates was US$67.8 million, an increase of 4% when compared to the US$65.0 million reported in 3Q06. This increase is explained by an 121% increase in contributions from Cerro Verde (US$50.1 million in 3Q07 versus US$22.6 million in 3Q06), which offset the 60% decrease in Yanacocha's contribution (US$16.7 million in 3Q07 versus US$41.7 million in 3Q06). Accumulated 2007 income from non-consolidated affiliates totaled US$171.6 million, a 36% decrease compared to the US$268.4 million reported in 2006.
YANACOCHA
At Yanacocha (43.65%), 3Q07 gold production was 373,150 ounces of gold, a decrease of 38% when compared to 3Q06 (605,139 ounces). Gold production for the nine-month 2007 period was, as planned, 1,093,910 ounces, a decrease of 49% compared to the 2,156,168 ounces reported in the comparable period of 2006. The Company estimates full-year production of approximately 1.6 million ounces.
Cash cost at Yanacocha during 3Q07 was US$369/oz, which represented a 70% increase from the US$217/oz reported in 3Q06. This is explained by the decrease in gold production and the higher proportion of waste and tons mined. For 2007, the Company estimates an average cash cost of US$340-US$360/oz.
Net income at Yanacocha during 3Q07 was US$39.5 million, a 59% decrease when compared to the 3Q06 figure (US$96.9 million). Accumulated net income for 2007 was US$123.5 million, 74% lower than the same period of 2006 (US$467.4 million).
During 3Q07, EBITDA totaled US$100.8 million, a decrease of 50% compared to 3Q06 (US$200.5 million). This decrease was due to the 38% decrease in volume of gold sold despite higher realized gold prices, which increased from US$619/oz in 3Q06 to US$682/oz in 3Q07. Accumulated 2007 EBITDA was US$300.8 million, a decrease of 63% when compared to the US$816.6 million reported in 2006.
CAPEX for 3Q07 was US$88.8 million, a 60% increase when compared to the US$55.6 reported in 3Q06, mainly devoted to the construction of the Gold Mill project to be completed by year-end.
CERRO VERDE
At Cerro Verde (18.50%), 3Q07 copper production was 77,636 MT, a 217% increase compared to 3Q06 (24,501 MT). This increase is explained by the impact of the new primary sulfide processing plant, which operated at full capacity during the quarter. Copper production for the accumulated 2007 period totaled 193,004 MT, 172% higher than the figured reported in the same period of 2006 (70,840 MT).
During 3Q07, net income was US$264.2 million, a 111% increase compared to 3Q06 (US$125.1 million), best explained by higher sales, which increased 221% from US$187.4 million in 3Q06 to US$601.1 million in 3Q07 as a result of the aforementioned increase in production.
Accumulated 2007 net income was US$639.7 million, an 87% increase compared to the US$342.7 million reported in the same period of 2006. Accumulated net sales for 2007 were US$1,371.8 million, an increase of 182% compared to 2006 (US$486.6 million).
CAPEX in 3Q07 totaled US$12.4 million. Net Income
This quarter, Buenaventura's net income was US$99.9 million, representing US$0.79 per ADS, a 23% increase when compared to the US$81.2 million reported (US$0.64 per ADS) in 3Q06. This increase was explained by the higher contribution from Buenaventura's direct operations, in addition to contributions from Cerro Verde (US$50.1 million in 3Q07 versus US$22.6 million in 3Q06), which completely offset the decreased contribution from Yanacocha (US$16.7 million in 3Q07 versus US$41.7 million in 3Q06).
Net income for the nine-month period 2007 was US$151.0 million (US$1.19 per ADS), a decrease of 57% when compared to the US$347.5 million (US$2.7 per ADS) reported in the same period of 2006 due to the effect of the un-winding of the Company's hedging position reported during the first half of the year.
Hedging Operations
The total hedge book mark-to-market value as of September 30, 2007 was a negative (US$380.6 million), compared to a negative (US$305.0 million) as of June 30, 2007.
Project Development UCHUCCHACUA The deepening of the Carmen and Socorro mines include: Carmen Mine: The construction of ramp 760 was completed in September as scheduled. The deepening of the Master Shaft is currently 98% complete and is expected to be completed by December 2007. The development at level 3990, which involves drifting 2,394 meters, is 22% complete and is expected to completed by August 2008. Socorro Mine: The construction of ramp 626 is currently 61% complete, and is expected to be finished by 1Q08. The expansion of the project includes the development at level 3990 by drifting 1,350 meters, which began during 3Q07, as well as a 150 meter deepening of the Luz Shaft, scheduled to begin in April 2008. During 2007, total investment was US$2.6 million (accumulated US$5.7 million) of a budgeted US$10.3 million. ORCOPAMPA The deepening of the Master Shaft (located in the Nazareno mine) from level 3390 to level 3290 was completed. As the mineralization continues at lower levels of the mine, the deepening shaft will continue until level 3230. Total investment for this project as of September 30, 2007 was US$7.4 million. The sinking of the Prometida Shaft from level 3590 to level 3290 is 50% complete. The expansion of tailing dam Number 4, to increase capacity to 1.3 million DST, is currently 95% complete. To date, investment has totaled US$5.4 million. Total estimated investment for this project is $5.8 million to be completed in 4Q07. The construction of the project to retreat tailings from the older Tailing Dam Number 3 started in September 2007. Completion is expected by 2Q08. This will allow the recovery of approximately 53,000 gold ounces and 190,000 silver ounces in two years, with an estimated investment of US$5.7 million. Board Resolutions
At the Board of Director's meeting, held October 26, 2007, the Board passed the following resolution:
Declaration of a cash dividend of US$0.18 per share or ADS, to be paid in U.S. dollars on November 29, 2007 to shareholders of record as of November 15, 2007. The ex-dividend date is November 13, 2007.
* * * Company Description
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 six mines in Peru and also has controlling interests in two mining companies 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) which is one of the most important precious metal producers in the world and 18.50% in Sociedad Minera Cerro Verde S.A.A, an important copper Peruvian Company.
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 34.29% of El Brocal. APPENDIX 1 Equity Participation in Affiliates and Subsidiaries BVN Operating Equity % Mines Minera Yanacocha 43.65 Yanacocha Sociedad Minera El Brocal* 34.29 Colquijirca Sociedad Minera Cerro Verde 18.50 Cerro Verde Cedimin* 100.00 Shila / Paula Minera Minasnioc* 60.00 Minasnioc Project Minera La Zanja * 53.06 La Zanja Project Buenaventura Ingenieros* 100.00 - Consorcio Energetico de Huancavelica* 100.00 - *Consolidates Visit our website: http://www.buenaventura.com/
