Compania de Minas Buenaventura Announces First Quarter 2006 Results
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Thursday April 27, 11:23 pm ET
LIMA, Peru, April 27 /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 first quarter of 2006. All figures have been prepared in Peruvian GAAP and are stated in current Peruvian Nuevos Soles (S/.). For the convenience of the reader, figures are stated in U.S. dollars (US$) at a rate of S/.3.358 per US$1.00 for 1Q06 and S/.3.263 per US$1.00 for 1Q05.
Comments from the Chief Executive Officer:
Mr. Roque Benavides, Chief Executive Officer of Buenaventura stated:
"This quarter, Buenaventura's net income was US$125.1 million, or US$0.98 per ADS, which represents an increase of 89% when compared with 1Q05. This figure includes a negative effect in mark-to-market variation of US$10.3 million.
Operating income was US$55.7 million, 111% higher than the figure recorded in 1Q05 due mainly to higher silver production and higher prices of silver, zinc and lead that benefited all our operations. Total EBITDA was US$190.8 million, which represented a 62% increase when compared to 1Q05. EBITDA from Buenaventura's direct operations was US$50.6 million, 87% higher than in 1Q05."
Financial Highlights (in millions of US$, except EPS figures):
1Q06 1Q05 Var%
Total Revenues 132.0 82.9 59%
Operating Income 55.7 26.4 111%
EBITDA
(BVN Direct Operations) 50.6 27.1 87%
EBITDA
(including Yanacocha and
Cerro Verde) 190.8 117.5 62%
Net Income 125.1 66.3 89%
EPS 0.98 0.52 89%
Net Income Adjusted 135.4 59.2 129%
EPS Adjusted 1.06 0.47 129%
Operating Revenue
During 1Q06, net sales were US$106.3 million, a 58% increase when compared to the US$67.3 million reported in 1Q05 due to a 24% increase in silver sales as well as higher silver, lead and zinc prices. Royalty income during 1Q06 totaled US$13.0 million, a 29% increase when compared to the US$10.1 million reported in 1Q05. This was due to higher sales at Yanacocha.
Operating Highlights 1Q06 1Q05 Var.
Net Sales
(in millions of US$) 106.3 67.3 58%
Average Realized Price Gold
(US$/oz) Direct Operations* 344 376 -8%
Average Realized Price Gold
(US$/oz) inc. Yanacocha 506 415 22%
Average Realized Price
Silver (US$/oz) 9.70 6.94 40%
Average Realized Price
Lead (US$/TM) 1,226 979 25%
Average Realized Price
Zinc (US$/TM) 2,140 1,247 72%
Average Realized Price Copper
(US$/Lb) inc. Cerro Verde 2.24 1.48 51%
(*) Does not include derivatives effect
Sales Content
1Q06 1Q05 Var.
Gold (in oz) Direct
Operations 100,120 85,228 17%
Gold (in oz) including
Yanacocha 436,165 422,594 3%
Silver (in oz) 4,030,366 3,250,029 24%
Lead (in MT) 7,838 6,830 15%
Zinc (in MT) 12,981 12,536 4%
Production and Operating Costs
Buenaventura's equity production(1) during 1Q06 was 93,144 ounces of gold, 5% higher than the 88,367 ounces reported in 1Q05, and 3,314,758 ounces of silver, a 1% increase when compared to the 3,288,099 ounces reported in 1Q05.
Equity Production(1)
1Q06 1Q05 Var.
Gold (in oz) 93,144 88,367 5%
Gold (including Yanacocha) 442,537 435,785 2%
Silver (in oz) 3,314,758 3,288,099 1%
Lead (in MT) 4,254 4,244 0%
Zinc (in MT) 6,587 6,004 10%
Copper (including Cerro Verde) 4,216 2,015 109%
At Orcopampa (100%), total gold production in 1Q06 was 61,751 ounces, an 8% increase when compared to the 56,972 ounces in 1Q05.
Cash operating costs increased 10%, from US$118/oz in 1Q05 to US$130/oz in 1Q06. This was mainly explained by an increase in supplies and contractors' expenses due to 135% increase in the decline construction to deepen the mine. Exploration and development labors increased from 228m in the 1Q05 to 556m in the 1Q06.
Total royalties paid to the government at Orcopampa in 1Q06 totaled US$0.18 million.
At Uchucchacua (100%), total silver production during 1Q06 was 2,172,766 ounces, a 14% decrease when compared to the 2,536,761 ounces in 1Q05. For safety reasons the Company temporarily decided to:
1. Exploit in areas that reported lower silver grades.
2. Change the drilling method, which prevented from maintaining regular
tonnage.
As a consequence of these decisions, and due to higher development expenses in the Casualidad Alta area, in preparation for the future oxide ore production, cash operating cost increased 33% from $2.69/oz in 1Q05 to US$3.57/oz in 1Q06.
Total royalties paid to the government at Uchucchacua in 1Q06 totaled US$0.23 million.
At Antapite (78.04%), total production during 1Q06 was 24,958 ounces of gold a 5% decrease when compared to the 26,308 produced in 1Q05 due to a 6% decrease in the gold grade.
Gold cash operating cost in 1Q06 was US$230/oz, a 19% increase when compared to the US$193/oz in 1Q05. This was due to lower ounces recovered as well as higher fuel consumption and prices.
Total royalties paid to the government at Antapite in 1Q06 totaled US$0.13 million.
At Colquijirca (34.29%), total zinc production was 15,508 MT in 1Q06, a 15% increase when compared to the 13,534 MT in 1Q05 due to higher zinc grade. Total silver production during 1Q06 was 1,997,908 ounces, a 140% increase when compared to the 831,727 ounces in 1Q05. This additional production was possible due to higher grade of silver in the area of the open pit under exploitation.
Zinc cash operating costs decreased 85% from US$711 per MT in 1Q05 to US$105 per MT in 1Q06. This was due to a significant silver and lead by- product credit contribution.
Total royalties paid to the government at Colquijirca in 1Q05 totaled US$0.36 million.
Operating Expenses
General and administrative expenses for 1Q06 were US$8.1 million, a 21% increase compared to the US$6.7 million in 1Q05. This increase was due to the annual increase in payroll and the provision for the Company's long-term compensation program.
Exploration costs in non-operating areas during 1Q06 were US$8.3 million, a 40% increase compared to the US$6.0 million during 1Q05. This quarter's figure includes a US$3.5 million expense for the purchase of mining concessions.
Operating Income
Operating income in 1Q06 was US$55.7 million, a 111% increase compared to the US$26.4 million in 1Q05. This was mainly due to an increase in silver sales in Colquijirca, as well as higher silver, zinc and lead realized prices.
Income from Non-Consolidated Affiliates
Buenaventura's income from non-consolidated affiliates was US$92.3 million during 1Q06, an increase of 79% when compared to the US$51.5 million reported in 1Q05. This increase is explained by higher results obtained at Yanacocha (US$76.6 million) and Cerro Verde (US$15.3 million).
At Yanacocha (43.65%), 1Q06 total gold production was 800,443 ounces of gold, an increase of 1% when compared to 1Q05 production (795,917 ounces), we continue to budget 2.6 million ounces for the full year.
Gold cash cost at Yanacocha during 1Q06 was US$165/oz, which represented a 12% increase compared to a gold cash cost of US$147/oz in 1Q05 mainly due to an increase in tons mined, increased consumption of higher priced commodities, in addition to higher labor costs.
Net income at Yanacocha during 1Q06, was US$173.0 million, a 54% increase when compared to the 1Q05 figure (US$112.6 million) due to higher gold prices.
During 1Q06, EBITDA was US$288.8 million, an increase of 40% compared to 1Q05 (US$207.0 million). This increase was due to the 30% higher realized price of gold that increased from US$425/oz in 1Q05 to US$554/oz in 1Q06.
At Cerro Verde (18.48%), 1Q06 total copper production was 22,741 MT a 5% increase when compared to 1Q05 (21,705 MT).
Net sales at Cerro Verde increased 39% from US$67.2 million in 1Q05 to US$93.5 million in 1Q06 mainly due to an increase in the average price of copper in spite of a 6.2 million pounds lower dispatch of copper (lower sales) that increased inventories. Cost of sales during the 1Q06 was 25% over sales (40% in 1Q05).
In 1Q06, net income reached US$77.2 million, a 136% increase compared to the 1Q05 (US$32.7 million).
Capital expenditures for 1Q06 were US$162.6 million (US$32.7 million in 1Q05) of which US$160.3 million was allocated to the construction of the Primary Sulfide Project. Regarding this project, engineering is nearly complete, while advances are ahead schedule and within budget, despite increases in supply prices.
Net Income
This quarter, Buenaventura's net income was US$125.1 million, representing US$0.98 per ADS, a 89% increase compared to 1Q05. This figure includes a loss of US$10.3 million, from a "change in the fair value of derivative instruments" (in accordance with IAS39 for derivative instruments). Without considering this effect, net income for the quarter was US$135.4 million, or US$1.06 per ADS.
Hedging Operations
On March 22, 2006, 340,000 gold ounces were converted from derivatives to physical delivery commitments with no cash effect for the Company. At the end of 1Q06, the Company has all its gold commitments in physical delivery as shown in Exhibit 3.
The total hedge book mark-to-market value as of 04/01/2006 was a negative US$584.4 million.
During 1Q06, the Company executed 150,000 ounces of silver in derivative instruments.
Project Development
UCHUCCHACUA
-- The sulfides cyanidation plant project was completed in April according
to budget and testing will begin in May. The complementary facility to
treat oxide ore is expected to be completed in 3Q06 with an estimated
investment of US$3.6 million.
-- This quarter the Company started deepening the Master Shaft from 4060
to 3900 levels, which will lead to deepening the Carmen and Socorro
mines. Expected total investment for this project is US$10.3 million.
ORCOPAMPA
-- Ramps at Nazareno and Prometida mines were extended 635m in the 1Q06
reaching the level 3490. This project began in May 2004 and accumulated
an investment of US$19.8 million as of March 31, 2006. We expect
completion by the end of 2006. Likewise, an auxiliary shaft to improve
ventilation and ore transport will be constructed in the Prometida
area.
MARCAPUNTA
-- In the 1Q06, the main decline advanced 246m, accumulating up to date
1,222m. We expect an advance of 300m in the main ramp during the next
quarter. In addition, in Marcapunta North, a pilot plant to treat 1000
MT/day is expected to begin full operations in 3Q06.
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 three mines in Peru and also has controlling interests in four 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) and is one of the most important precious metal producers in the world. |
