LIMA, Peru, Oct. 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 third quarter 2008. 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:
"Net income in 3Q08 was US$100.6 million, or US$0.40 per ADS, in-line with the figure reported in 3Q07.
Operating income in the third quarter was US$71.4 million, 20% lower than the figure reported in 3Q07, while EBITDA from Buenaventura's direct operations totaled US$91.3 million, 16% lower than the figure achieved in 3Q07. This decrease is explained by the higher costs reported at some of the Company's mines, as well as a decrease in several metal prices. Yanacocha's better performance in terms of production and profits, partially offset Buenaventura's direct operations results as well as Cerro Verde's lower contribution in 3Q08, best explained by a decrease in copper prices, resulting in a 4% decline in total EBITDA."
Operating Revenue
During 3Q08, net sales were US$195.3 million, a 4% increase when compared to the US$188.2 million reported in 3Q07, mainly due to a 17% increase in the volume of gold sold, as well as a 26% increase in the realized prices of gold. This was partially offset by a decrease in the volume of silver and zinc sold, as well as lower zinc and lead prices.
Royalty income during 3Q08 totaled US$12.2 million, a 61% increase when compared to the US$7.6 million reported in 3Q07. This was due to higher sales at Yanacocha.
Net sales for the nine-month period 2008 were US$611.6 million, an 18% increase compared to the same period of 2007 (US$520.5 million), while royalty income was US$38.6 million, a 73% increase when compared to US$22.3 million in the comparable period of 2007.
Production and Operating Costs
Buenaventura's equity production(1) during 3Q08 was 106,161 ounces of gold, 3% higher than the 102,982 ounces reported in 3Q07; and 3,682,022 ounces of silver, a 6% decrease when compared to the 3,936,760 ounces reported in 3Q07.
Equity production(1) for the accumulated nine-month period was 308,683 ounces of gold and 11,557,431 ounces of silver. This represented an increase of 5% in gold production (295,034 ounces in 2007), and a 10% increase in silver production compared to 2007 (10,541,795 ounces).
At Orcopampa (100%), total gold production in 3Q08 was 73,342 ounces, a 5% increase when compared to the 69,983 ounces reported in 3Q07. Accumulated gold production was 205,557 ounces, a 3% increase when compared to 2007 (198,788 ounces).
Cash operating costs during 3Q08 were US$248/oz, 48% higher when compared to 3Q07 (US$167/oz). This was explained by:
1. Higher contractor expenses due to an increase in exploration labor and fees 2. An increase in reagent consumption for the new plant to treat old tailings 3. Higher energy prices 4. Five-day (July) stoppage due to a road blockade
At Poracota, gold production in 3Q08 was 11,297 ounces, while cash operating costs were US$621/oz.
Total royalties paid to the government at both Orcopampa and Poracota in 3Q08 were US$2.5 million.
At Uchucchacua (100%), total silver production during 3Q08 was 2,583,873 ounces, a 4% decrease when compared to 3Q07 (2,685,812 oz), mainly due to a 10% decrease in the ore grade despite a 7% increase in the recovery rate. Likewise, zinc production increased 46% (3,236 MT in 3Q08 vs. 2,210 MT in 3Q07), while lead production increased 31% (3,144 MT in 3Q08 vs. 2,398 MT in 3Q07).
Accumulated production for the nine-month period 2008 was 8,382,673 ounces of silver, 22% higher than in 2007 (6,860,183 oz); 8,439 MT of zinc, an increase of 83% when compared to 2007 (4,623 MT) and 8,327 MT of lead, 46% higher than in 2007 (5,702 MT).
Cash operating costs in 3Q08 were US$8.06/oz, an 88% increase compared to the $4.29/oz in 3Q07. This was best explained by:
1. The lower lead and zinc by-product contribution due to lower prices 2. An increase in diamond drilling (11,505m in 3Q08 vs. 9,065m in 3Q07) 3. Higher contractor expenses 4. Higher energy prices
Total royalties paid to the government at Uchucchacua in 3Q08 were US$1.1 million.
At Antapite (100%), total production in 3Q08 was 9,351 ounces of gold, a decrease of 43% compared to 3Q07 (16,486 ounces), mainly due to a 47% decrease in gold grade from 0.38 Oz/ST to 0.20 Oz/ST. Accumulated gold production was 33,759 ounces, a 37% decrease when compared to 2007 (53,544 oz).
Gold cash operating costs in 3Q08 were US$755/oz, a 75% increase when compared to the US$431/oz in 3Q07. This increase was due to:
1. The lower gold content due to lower grades 2. An increase in diamond drilling (9,662m in 3Q08 vs. 6,020m in 3Q07)
Total royalties paid to the government at Antapite in 3Q08 were US$0.2 million.
At Colquijirca (El Brocal) (34.91%), total zinc production was 18,169 MT in 3Q08, a 22% decrease when compared to the 23,318 MT reported in 3Q07 due to a 5% decrease in the ore grade and a 9% decrease in the ore mined. Total silver production during 3Q08 was 1,263,051 ounces, a 35% decrease when compared to the 1,938,095 ounces reported in 3Q07 due to lower silver grade.
For the nine-month period 2008, total zinc production was 63,018 MT, in- line with the figure reported in the same period of 2007 (62,684 MT). In the case of silver, total production decreased 31% from 5,301,821 ounces in 2007 to 3,651,447 ounces in 2008.
Zinc cash operating costs for 3Q08 were US$30 per MT compared to a negative US$7 per MT in 3Q07, due a decrease in lead and silver contribution.
At Marcapunta, copper production for 3Q08 was 2,109 MT and 5,406 MT for the accumulated period of 2008. Cash cost for 3Q08 was US$3,752/MT of copper.
Total royalties paid to the government at Colquijirca in 3Q08 were US$1.2 million.
Operating Expenses
General and administrative expenses for 3Q08 were US$3.4 million, a 75% decrease compared to the US$13.7 million reported in 3Q07 due to a lower Long-Term Compensation provision (a credit of US$6.5 million). General and administrative expenses for the nine-month period 2008 were US$40.6 million, a 15% increase when compared to the US$35.3 million reported in the same period of 2007.
Exploration Costs in non-operational mining sites
Exploration costs at non-operational mining sites during 3Q08 were US$14.0 million, a 28% increase compared to the US$10.9 million reported in 3Q07. The main efforts were focused at the Marcapunta (US$2.9 million), Mallay (US$2.2 million), La Zanja (US$2.2 million) and El Milagro (US$1.2 million) projects. Exploration costs at non-operating mining sites during the nine- month period 2008 were US$41.2 million, a 31% increase when compared to the same period in 2007 (US$31.3 million).
Operating Income
Operating income in 3Q08 was US$71.4 million, a 20% decrease compared to the US$88.8 million reported in 3Q07. This result was mainly due to the previously mentioned increase in costs at the Company's mining operations.
Accumulated operating income for the period was US$266.8 million, a 2% increase when compared to the US$260.9 million reported in the comparable period of 2007.
Share in Affiliated Companies
During 3Q08, Buenaventura's income from non-consolidated affiliates was US$75.3 million, an increase of 11% when compared to the US$67.8 million reported in 3Q07. This increase is explained by the US$43.7 million contribution from Yanacocha (US$16.7 million in 3Q08) and the US$31.5 million contribution from Cerro Verde (US$50.1 million in 3Q07). Accumulated income from non-consolidated affiliates was US$319.5 million, an increase of 82% compared to the US$175.2 million reported in the comparable period of 2007.
YANACOCHA
At Yanacocha (43.65%), 3Q08 gold production was 448,721 ounces of gold, an increase of 20% when compared to 3Q07 (373,150 ounces). Gold production for the nine-month 2008 period was 1,391,010 ounces, an increase of 27% when compared to the 1,093,910 ounces reported in the comparable period of 2007.
Costs applicable to sales (CAS) at Yanacocha during 3Q08 were US$375/oz, in-line with the figure reported in 3Q07 of US$369/oz.
Net income at Yanacocha during 3Q08 was US$100.6 million, a 155% increase when compared to the 3Q07 figure (US$39.5 million). Accumulated net income for 2008 was US$386.4 million, 213% higher than the same period of 2007 (US$123.5 million).
During 3Q08, EBITDA totaled US$196.4 million, an increase of 95% compared to 3Q07 (US$100.8 million). This increase was due to an increase in the volume of gold sold and 26% higher realized gold prices, which increased from US$682/oz in 3Q07 to US$862/oz in 3Q08. EBITDA for the nine-month period 2008 was US$689.9 million, an increase of 129% when compared to the US$300.8 million reported in 2007.
CAPEX for 3Q08 was US$27.0 million. CERRO VERDE
At Cerro Verde (18.68%), 3Q08 copper production was 78,728 MT, a 1% increase when compared to 3Q07 (77,636 MT). Copper production in the nine-month period 2008 totaled 235,120 MT, 22% higher than the figured reported in the same period of 3Q07 (193,004 MT).
During 3Q08, net income was US$165.5 million, a 37% decrease compared to 3Q07 (US$264.2 million), best explained by lower sales revenue, which decreased 32% from US$601.1 million in 3Q07 to US$411.3 million in 3Q08 due to lower copper prices, specifically a sales revenue adjustment of US$189.8 million to account for the final prices of previous quarters sales.
Accumulated 2008 net income was US$818.8 million, a 28% increase compared to the 2007 period (US$639.7 million), while net sales were US$1,809.8 million, an increase of 32% compared to the same period in 2007 (US$1,371.8 million).
CAPEX in 3Q08 totaled US$26.6 million. Net Income
This quarter, Buenaventura's net income was US$100.6 million, representing US$0.40 per ADS, in-line with the figure reported in 3Q07 (US$99.9 million or US$0.39 per ADS).
Net income for the nine-month period 2008 was US$159.3 million (US$0.63 per ADS), an increase of 3% when compared to the US$154.7 million (US$0.61 per ADS) reported in the same period of 2007.
Project Development UCHUCCHACUA -- The deepening and integration of the Carmen and Socorro mines includes: -- Carmen Mine: The deepening of the Master Shaft from level 3,990 to level 3,930. Infrastructure auxiliary work is 81% complete, and is expected to be concluded by 1Q09. The development of level 3,990 to communicate with the Socorro mine is 82% complete, and is expected to be finished by 4Q08. -- Socorro Mine: The construction of ramp 626 to reach level 3,920 (1,250 meters) is 50% complete and is expected to be concluded by 1Q09. The development of level 3,990 to communicate with the Carmen mine is 87% complete and is expected to be finished by 1Q09. The work to deepen the Luz Shaft to reach level 3,920 from level 4,060 will begin after the completion of level 3,990.
During 3Q08, total investment was US$1.0 million (accumulated US$10.3 million).
-- The plant expansion from 2,500 STPD to 3,000 STPD includes a 13' x 20' grinding mill, flotation cells, a 25' x 10' thickener and 1 press filter. All equipment has been installed and operations commenced in September 2008. Total investment was US$4.6 million. ORCOPAMPA -- The deepening of the Nazareno Shaft from level 3,290 to level 3,230 during 2008, included 28 meters (60 meters) of deepening work, which started in April 2008 and is 47% complete. The construction of ramps 15 and 16 to reach level 3,230 from level 3,290 started in January 2008 and includes 720 meters of drifting. At the end of 3Q08, work is 91% complete.
Accumulated investment during 2008 was US$3.5 million from an estimated investment of US$4.5 million.
-- The deepening of the Prometida Shaft from level 3,440 to level 3,290 (150 meters) commenced in October 2007 and is 63% complete. This project is expected to be concluded in 2Q09. Accumulated investment at the end of 3Q08 was US$2.3 million from a total investment of US$3.8 million. -- The construction of facilities to treat the old flotation tailings to permit the recovery of approximately 53,000 ounces of gold in 2008 and 2009 was completed in August. Accumulated investment was US$10.9 million. Board Resolutions
At the Board of Director's meeting, held October 30, 2008, the Board passed the following resolution:
Declaration of a cash dividend of US$0.09 per share or ADS, to be paid in U.S. dollars on November 26, 2008 to shareholders of record as of November 18, 2008. The ex-dividend date is November 14, 2008.
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 several mines in Peru (Orcopampa, 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% of Minera Yanacocha S.R.L. (a partnership with Newmont Mining Corporation), an important precious metal producer, and 18.68% of Sociedad Minera Cerro Verde, an important Peruvian copper producer.
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 34.91% of El Brocal.
Contacts in Lima:
Roque Benavides or Carlos Galvez
Compania de Minas Buenaventura S.A.A.
+011-511-419-2538 or 419-2540
Investors
Daniel Dominguez
+011-511-419-2536
