Compania de Minas Buenaventura Announces Fourth Quarter 2009 Results
LIMA, Peru, Feb. 25 /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 fourth quarter 2009. 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 totaled US$210.4 million, a significant improvement when compared to the loss reported in 4Q08 (negative US$6.1 million).
EBITDA from Buenaventura's Direct Operations was US$116.9 million, 295% higher than the figure reported in 4Q08 (US$29.6 million), while EBITDA including Yanacocha and Cerro Verde increased 392%, from US$73.0 million in 4Q08 to US$359.0 million in 4Q09.
These positive results were mainly driven by higher revenues due to the increases in metal prices, as well as Yanacocha and Cerro Verde's contributions."
Operating Revenue
During 4Q09, net sales were US$243.5 million, a 57% increase when compared to the US$155.0 million reported in 4Q08. This was explained by higher realized prices in all metals despite a decrease in the volume of gold, silver, zinc and lead sold.
Royalty income during 4Q09 totaled US$17.5 million, a 72% increase when compared to the US$10.2 million reported in 4Q08 due to higher sales at Yanacocha.
Net sales for 2009 were US$819.4 million, a 7% increase compared to 2008 (US$766.6 million), while royalty income was US$62.2 million, a 27% increase when compared to the US$48.8 million reported in 2008.
Production and Operating Costs
Buenaventura's equity production(1) during 4Q09 was 113,827 ounces of gold, 1% higher than the 113,068 million ounces reported in 4Q08. Silver production during 4Q09 was 3.5 million ounces, a 12% decrease when compared to the 4.0 million ounces reported in 4Q08.
Equity production(1) for the twelve month 2009 period was 424,731 ounces of gold and 14.8 million ounces of silver. This represented stable gold production (422,732 ounces in 2008), and a 6% decrease in silver production compared to 2008 (15.6 million ounces).
Orcopampa's (100%) total gold production was 87,748 ounces, 12% higher than 4Q08 production (78,459 ounces). Production from the Chipmo mine in 4Q09 was 77,624 ounces, 11% higher than the 70,155 ounces reported in 4Q08, complemented by old tailings treatment, which produced 10,124 gold ounces. Accumulated total gold production for 2009 was 315,227 ounces, an 11% increase when compared to 2008 (284,511 ounces).
Cash operating cost in 4Q09 was US$322/oz, 22% higher when compared to 4Q08 (US$263/oz). This was explained by:
1. A 53% increase in contractor costs due to a 39% increase in diamond drilling and a 43% increase in drifting work.
2. A 23% increase in labor costs.
Cash operating cost for 2009 was US$290/oz, 19% higher than the figure reported in 2008 (US$244/oz).
At Poracota, gold production in 4Q09 was 13,474 ounces, a decrease of 2% when compared to 4Q08 (13,736 ounces), while the cash operating cost increased 69% from US$571/oz in 4Q08 to US$963/oz in 4Q09. This increase was due to a 125% increase in diamond drilling. Accumulated gold production for the twelve- month 2009 period was 51,516 ounces, 12% higher than the figure reported in 2008 (46,126 ounces).
Total royalties paid to the government at both Orcopampa and Poracota in 4Q09 was US$3.6 million.
At Uchucchacua (100%), total silver production during 4Q09 was 18% lower than 4Q08 (2,497,134 ounces and 3,034,526 ounces, respectively) due to a 6% decline in ore treated and 12% lower silver grade. Zinc production decreased 46% (from 2,861 MT in 4Q08 to 1,551 MT in 4Q09), while lead production decreased 48% (1,445 MT in 4Q09 vs. 2,774 MT in 4Q08). Accumulated production for 2009 was 10,555,566 ounces of silver, 8% lower than in 2008 (11,417,199 ounces); 8,209 MT of zinc, a decrease of 27% when compared to 2008 (11,300 MT) and 8,548 MT of lead, 23% lower than the figure reported in 2008 (11,101 MT).
Cash operating cost in 4Q09 was US$11.61/oz, a 60% increase compared to the $7.25/oz in 4Q08. This was best explained by:
1. 28% lower by-product contribution due to a decrease in zinc and lead production.
2. An 82% rise in contractor expenses explained by a 19% increase in diamond drilling and a 12% increase in drifting work.
3. The decrease in silver ounces recovered was due to the previously mentioned decline in silver grade, while controlling manganese recovery and content.
Total royalties paid to the government at Uchucchacua in 4Q09 was US$1.3 million.
At Antapite (100%), total production in 4Q09 was 7,574 ounces of gold, a decrease of 17% compared to 4Q08 (9,130 ounces), mainly due to a 29% decrease in ore milled despite a 13% increase in the gold grade and 3% increase in the recovery rate. Accumulated 2009 gold production was 31,004 ounces, a 28% decrease when compared to 2008 (43,319 oz).
Gold cash operating cost in 4Q09 was US$881/oz, 15% higher than 4Q08 (US$755/oz) due to the impact of a reduction in the amount of ounces recovered. The 14% increase in gold grade and higher recovery did not offset the lower tonnage treated. For 2009, cash operating cost was US$784/oz, 23% higher than in 2008 (US$637/oz).
Total royalties paid to the government at Antapite in 4Q09 was US$0.1 million.
At Colquijirca (El Brocal 45.97%), total zinc production was 16,872 MT in 4Q09, an 9% decrease when compared to the 18,612 MT reported in 4Q08 due to 9% decline in tonnage treated and a 4% decrease in ore grade despite a 2% decrease in the recovery rate. Total silver production during 4Q09 was 880,865 ounces, a 5% increase when compared to the 841,744 ounces reported in 4Q08, mainly explained by a 14% increase in the silver ore grade despite a 9% decrease in the tonnage treated. Total lead production for 4Q09 was 5,614 MT, a 5% decrease when compared to 5,939 MT in 4Q08.
For 2009, total zinc production was 67,690 MT, a 17% decrease when compared to the 81,630 MT reported in 4Q08. In the case of silver, total production decreased 19%, from 4,493,191 ounces in 2008 to 3,651,041 ounces in 2009. Lead production for the twelve-month 2009 period was 20,135 MT, 19% lower than the same period in 2008 (24,963 MT).
Zinc cash cost in Colquijirca increased from US$626/MT in 4Q08 to US$1,083/MT in 4Q09. This was due to a higher stripping ratio (10.55 in 4Q09 vs. 3.03 in 4Q08) despite the higher zinc and lead contributions due to an increase in prices.
At Marcapunta, copper production for 4Q09 was 1,941 MT, 7% lower than 4Q08 (2,090 MT). Accumulated copper production in 2009 was 8,284 MT, an 11% increase when compared to 7,496 MT in 2008.
Total royalties paid to the government at Colquijirca in 4Q09 was US$1.6 million.
Operating Expenses
General and administrative expenses for 4Q09 were US$18.8 million, higher than the figure reported in 4Q08 (negative US$5.7 million) due to the reverse adjustment of the long-term compensation provision (negative US$15.3 million) reported in the comparable period of 2008. General and administrative expenses for the twelve-month period 2009 totaled US$88.8 million, a 154% increase when compared to the US$34.9 million reported in 2008 due to the US$16.8 million in doubtful accounts related to Doe Run, as well as the reverse adjustment of the long-term compensation provision (negative US$21.7 million) reported in 2008.
Exploration Costs in non-operational mining sites
Exploration costs at non-operational mining sites, which include care and maintenance during 4Q09 were US$5.7 million, a 59% decrease compared to the US$14.1 million reported in 4Q08. The main efforts were focused at the Breapampa (US$1.2 million), Trapiche (US$1.0 million), Marcapunta (US$0.9 million) and Mallay (US$1.7 million) projects. Exploration costs at non- operating mining sites during 2009 were US$30.0 million, a 46% decrease when compared to 2008 (US$55.2 million).
First-stage diamond drilling totaling 24,000m is complete at Chucapaca. Results are sufficiently encouraging to warrant mine initiation and a scoping study is scheduled for completion by July 2010. Insufficient drilling has been done to establish a definitive gold grade for the Canahuire deposit, but indications are that it will be economically viable. Portions of the Canahuire deposit are copper-bearing, but low-grade. Metallurgical test work is ongoing with encouraging initial results for combined floatation and CIL cyanidation.
Exploration at the Cerro Castrejon target, 7 km southwest of the La Zanja open pit/heap leach project, is at a very early stage with 2,500m of diamond drilling completed. However, despite a limited amount of work, it is clear that the La Zanja joint venture has discovered a molybdenum and copper deposit of significant size and grade. Mineralization is sulfide dominant hosted by a tourmaline breccia pipe with dimensions of 200mx300m, with a 300m to 400m vertical extension.
At Breapampa Buenaventura has exercised its US$15 million option to buy out Newmont. Buenaventura is in the process of analyzing the feasibility of completing an environmental impact study and construction permits by the end of 2010. The first open pit/heap leach operation will be initiated thereafter at one of the three small oxide gold deposits in these highly prospective 93,400 hectares of mining rights. The Parcca Orcco deposit has in-pit probable reserves of 4.7 Mt at 1.3 g/t gold and 22.2 g/t silver
At Trapiche, Buenaventura was able to report 552 Mt in total resources with 0.46% copper and 0.013% molybdenum amenable for conventional flotation for both the primary and enriched sulfides. Test results show concentrate grades between 22% and 30% copper with recoveries that fluctuate between 75% and 82%.
Tuyumina is a Cedimin prospect located 20 km East of the Paula mine. Two new veins were discovered with a discontinuous outcrop exceeding 5 km in the N 70 degrees E direction. Prospecting in the central area began with trenches in late 2009; the veins exposed are 2m to 3m wide and show typical quartz- adularia low sufidation assemblages. The Olivia vein has a 100m central zone with 6 g/t to 30 g/t gold and 4 oz/t to 25 oz/t silver. The Company is currently evaluating depth potential with two diamond drilling rigs.
Operating Income
Operating income in 4Q09 was US$93.9 million, a 456% increase compared to the US$16.9 million reported in 4Q08. This result was mainly explained by the 58% increase in total revenues, from US$165.2 million in 4Q08 to US$261.0 million in 4Q09.
Accumulated operating income for 2009 was US$287.2 million, in-line with the figure reported in 2008 (US$283.7 million).
Share in Affiliated Companies
During 4Q09, Buenaventura's income from non-consolidated affiliates was US$147.6 million, 590% higher than the US$21.4 million reported in 4Q08. Yanacocha's contribution to these results increased 160%, from US$38.4 million in 4Q08 to US$99.7 million 4Q09, while contributions from Cerro Verde increased from negative US$17.0 million in 4Q09 to US$47.9 million in 4Q08. Accumulated income from non-consolidated affiliates in 2009 was US$451.3 million, an increase of 32% compared to the US$340.9 million reported in 2008.
YANACOCHA
At Yanacocha (43.65%), 4Q09 gold production was 498,716 ounces of gold, an increase of 19% compared to 4Q08 (419,329 ounces). Gold production for the twelve-month 2009 period was 2,058,180 ounces, an increase of 14% compared to the 1,810,338 ounces reported in the same period of 2008.
Cost applicable to sales (CAS) at Yanacocha in 4Q09 was US$319/oz, 10% lower than the figure reported in 4Q08 (US$356/oz). For 2009, CAS was US$325/oz, a 9% decrease when compared to US$358/oz reported in 2008.
Net income at Yanacocha during 4Q09 was US$228.5 million, a 154% increase when compared to the 4Q08 figure (US$90.1 million). Accumulated net income in 2009 was US$727.1 million, 53% higher than in 2008 (US$476.5 million).
During 4Q09, EBITDA totaled US$374.1 million, an increase of 135% compared to 4Q08 (US$159.4 million). This increase was due to a 62% increase in revenues (US$561.9 million in 4Q09 vs. US$347.6 million in 4Q08) due to an 18% increase in ounces of gold sold and the 37% increase in realized gold prices. EBITDA for 2009 was US$1,232.6 million, a 45% increase when compared to the US$849.2 million reported in 2008.
CAPEX for 4Q09 was US$52.9 million and US$146.5 million for 2009.
CERRO VERDE
At Cerro Verde (19.26%), 4Q09 copper production was 74,611 MT, a 7% decrease when compared to 4Q08 (79,894 MT). Copper production in 2009 totaled 300,109 MT, 5% lower than the figured reported in 2008 (315,014 MT).
During 4Q09, Cerro Verde reported net income of US$244.6 million compared to a negative US$100.4 million reported in 4Q08.
Accumulated net income in 2009 was US$708.5 million, a 1% decrease compared to 2008 (US$718.4 million), while sales totaled US$1,757.5 million, a decrease of 4% compared to 2008 (US$1,835.9 million).
CAPEX in 4Q09 totaled US$17.0 million and US$91.9 million for 2009.
Net Income
This quarter, Buenaventura's net income was US$210.4 million, representing US$0.83 per share compared to negative US$6.1 million in 4Q08 (negative US$0.02 per share). This was mainly explained by the 590% increase in contributions from Yanacocha and Cerro Verde.
Net income in 2009 was US$593.6 million (US$2.33 per share) compared to the US$153.3 million (US$0.60 per share) reported in 2008.
Project Development
ORCOPAMPA
-- Mine hoist renewal in the Chipmo area to transport ore from lower levels of the mine that will permit mining cost reductions. CAPEX US$3.3 million.
-- 2nd stage old tailings retreatment to recover 38,000 oz of gold and 1.1 M oz of silver. CAPEX US$5.5 million.
-- Tailing Dam #4 expansion for an additional 1.8 years. CAPEX US$10.4 million.
UCHUCCHACUA
-- Mine hoist renewal in the Carmen mine to transport ore from lower levels of the mine that will permit mining cost reductions. CAPEX US$4.2 million.
-- Improving the pumping system to avoid floods. CAPEX US$2.2 million.
-- Leaching plant work to incorporate into reserves current ore resources with manganese content and increase production moving forward.
COLQUIJIRCA
-- Expansion of metallurgical facilities to increase plant capacity from 6,000 TPD to 18,000 TPD, which considers the construction of a new tailing dam. CAPEX US$200 million.
HUANZA HYDROELECTRICAL PLANT
-- Construction of a 90 Mw hydroelectric plant to ensure energy supplies from a clean and renewable source for direct operations and projects. CAPEX US$145 million.
LA ZANJA
La Zanja started the construction of leaching pads and the Bramadero Dam on July 1, 2009. It is expected to initiate operations in July 2010. CAPEX US$55.5 million. In 2009, project expenditures totaled US$22.0 million. The mine construction progress is summarized in the following chart:
Board Resolutions
At the Board of Director's meeting held February 25, 2010, the Board passed the following resolutions:
To call for the Annual Shareholders Meeting to be held March 26, 2010 to:
-- Approve the financial statements as of December 31, 2009
-- Approve the 2009 Annual Report
-- Approve a cash dividend of US$0.30 per share or ADS to be paid in U.S. currency.
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, 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 below.
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 45.97% of El Brocal.
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 protected]
Contacts in New York:
Maria Barona / Peter Majeski
i-advize Corporate Communications, Inc.
Tel: (212) 406-3690
Email: [email protected]
Visit our website: http://www.buenaventura.com
SOURCE Compania de Minas Buenaventura S.A.A.
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