Buenaventura Announces First Quarter 2013 Results
Apr 29th 2013 9:21PM
Updated Apr 29th 2013 10:40PM
Buenaventura Announces First Quarter 2013 Results
LIMA, Peru--(BUSINESS WIRE)-- Compañia de Minas Buenaventura S.A.A. ("Buenaventura" or "the Company") (NYSE: BVN; BVL: BUE.LM), Peru's largest, publicly-traded precious metals mining company, announced today results for the first quarter 2013 (1Q13) ended March 31, 2013. All figures have been prepared in accordance with International Financial Reporting Standards (IFRS) 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 for the first quarter 2013 was US$102.7 million, 51% lower than the figure reported in 1Q12 (US$208.1 million). EBITDA from Buenaventura's direct operations was US$93.8 million, 45% lower than the figure reported in 1Q12 (US$171.5 million), while EBITDA, including affiliates, decreased 36%, from US$418.1 million in 1Q12 to US$267.9 million in 1Q13.
These results were mainly due to lower metal prices, higher operating costs and lower contributions from both affiliates: Yanacocha and Cerro Verde.
Financial Highlights (in millions of US$, except EPS figures):
|EBITDA Direct Operations||93.8||171.5||-45%|
|EBITDA Including Affiliates||267.9||418.1||-36%|
(*) 254,232,571 shares outstanding, as of March 31, 2013.
Within this release, Buenaventura presents financial measures in accordance with IFRS, as well as on a non-GAAP basis.
During 1Q13, net sales were US$340.9 million, a 5% decrease compared to the US$359.0 million reported in 1Q12, due to lower metal prices (except lead) and a decline in gold and copper volume sold.
Royalty income decreased 24% from US$18.1 million in 1Q12, to US$13.8 million reported in 1Q13 and was due to lower revenues at Yanacocha.
(in millions of US$)
|Average Realized Gold Price Gold (US$/oz)*||1,606||1,721||-7%|
|Average Realized Gold Price (US$/oz) inc. Associates||1,619||1,707||-5%|
|Average Realized Silver Price (US$/oz)*||29.92||32.20||-7%|
|Average Realized Lead Price (US$/MT)*||2,257||2,085||8%|
Average Realized Zinc Price (US$/MT)*
|Average Realized Copper Price (US$/MT)*||7,896||8,361||-6%|
(*) Buenaventura's Direct Operations
|Gold Oz inc Associates||259,077||291,826||-11%|
(*) Buenaventura's Direct Operations
Production and Operating Costs
Equity production1 in 1Q13 was 119,201 ounces of gold, 1% higher than the 117,852 ounces reported in 1Q12, mainly due to higher production in La Zanja and Tantahuatay despite the temporary stop production at Poracota and Antapite, while we continue developing additional resources. Silver production during 1Q13, including affiliates, was 4.7 million ounces, a 14% increase compared to the figure reported in 1Q12 (4.2 million oz.).
|Equity Production 1|
|Gold (oz) Direct Operations||119,201||117,852||1%|
|Gold (oz) inc. Associates||243,811||277,798||-12%|
|Silver (oz) inc. Associates||4,724,682||4,160,842||14%|
|Lead ( MT)||7,052||4,907||44%|
|Zinc ( MT)||9,614||7,735||24%|
|Copper (MT) inc. Affiliates||13,359||15,338||-13%|
Orcopampa's 2 total gold production in 1Q13 was 62,480 ounces, 10% lower than the 69,265 ounces reported in 1Q12. Production from the Chipmo mine in 1Q13 was 58,369 ounces, 6% lower compared to the 62,358 ounces reported in 1Q12, due to a 8% decrease in ore grade (see Appendix 2). The old tailings' treatment produced 4,112 gold ounces (compared to 6,907 oz. in 1Q12).
Cash operating cost in 1Q13 was US$639/oz., 38% higher when compared to 1Q12 (US$463/oz.). This was a result of lower gold production and higher labor and supply expenses due to greater exploration efforts.
At Uchucchacua,3 total silver production in 1Q13 was 2.93 million ounces, 7% higher when compared to 2.74 million ounces in 1Q12. This was due to an 11% increase in the recovery rate (see Appendix 2). Zinc production in 1Q13 was 1,998 MT, 10% lower than the figure reported in 1Q12 (2,215 MT), while lead production increased 13% (2,205 MT in 1Q13 vs. 1,952 MT in 1Q12).
Cash operating cost in 1Q13 was US$17.73/oz, 1% lower than the figure reported in 1Q12 (US$17.89/oz) and mainly due to the higher production, lower treatment charges and higher by-product contributions that were partially offset by higher expenses for labor and contractors due to productivity bonuses that were paid in March.
At Julcani4, total production in 1Q13 was 612,034 ounces of silver, 3% lower compared to 1Q12 (631,627 ounces).
Silver cash operating cost in 1Q13 was US$14.49/oz, 13% higher than 1Q12 (US$12.77/oz), mainly due to an increase in labor and contractor expenses in preparation for the plant expansion from 400 TPD to 500 TPC.
Breapampa 5 commenced operations in November 2012. Total production in 1Q13 was 20,484 ounces of gold and a cash cost of US$501/oz.
La Zanja 6 total production in 1Q13 was 31,206 ounces of gold (16,558 oz attributable to Buenaventura), a 19% increase when compared to 1Q12 (26,329 oz or 13,970 oz attributable to Buenaventura).
Cash operating cost in 1Q13 was US$645/oz., 30% higher than 1Q12 (US$495/oz.) due to higher contractor costs due to an increase in ore mined as well as supply costs increases (mainly the result by an increase of reagent consumption and prices).
Tantahuatay 7 total production in 1Q13 was 34,307 ounces of gold (13,737 oz. attributable to Buenaventura) vs 26,329 oz reported in 1Q12 (11,053 oz attributable to Buenaventura). Cash operating cost in 1Q13 was US$341/oz, 32% lower than the US$497/oz in 1Q12.
At El Brocal8(53.76% owned by Buenaventura), silver, zinc and lead production in 1Q13 was 484,914 oz, 6,950 MT and 2,892 MT, respectively. This represented a 9% increase in silver (443,942 oz in 1Q12), a 9% decrease in zinc (7,607 MT in 1Q12) and a 27% increase in lead (2,279 MT). Zinc cash cost decreased 45% from US$1,346/MT to US$742/MT, due to lower treatment charges and higher silver by-product contribution.
Copper production was 4,536 MT, 22% lower than the 5,614 MT reported in 1Q12. Copper cash cost was US$6,230/MT, 25% higher than 1Q12 (US$4,984/MT).
General and Administrative Expenses
General and administrative expenses in 1Q13 reached US$16.0 million, 46% lower than the figure reported in 1Q12 (US$29.8 million).
Exploration in non-operating areas
Exploration in non-operating areas during 1Q13 reached US$21.8 million, 12% higher than the figure reported in 1Q12 (US$19.4 million). During the period, Buenaventura's main exploration efforts were focused at the projects of Tambomayo (US$6.3 million), Trapiche (US$4.7 million) and Chancas (US$2.8 million).
Operating income in 1Q13 was US$59.4 million, a 55% decrease compared to the US$131.9 million reported in 1Q12. This decrease was mainly due to a 30% rise in operating costs as well as 12% higher exploration expenses, despite 46% lower General and Administrative expenses, while revenues also decreased 6%.
Share in Associated Companies
During 1Q13, Buenaventura's share in associated companies was US$84.2 million, 38% lower than the US$136.2 million reported in 1Q12. Yanacocha's contribution to these results declined 42%, from US$88.2 million in 1Q12 to US$51.0 million in 1Q13, while Cerro Verde's contribution decreased 40% from US$45.1 million in 1Q12 to US$27.2 million in 1Q13.
At Yanacocha9, 1Q13 gold production was 285,475 ounces of gold, 22% lower than 1Q12 production (366,428 oz.) higher than budget.
Costs applicable to sales (CAS) at Yanacocha in 1Q13 were US$607/oz., 26% higher than the figure reported in 1Q12 (US$481/oz.) due to lower production. Net income at Yanacocha in 1Q13 was US$116.8 million, 42% lower compared to 1Q12 (US$202.0 million).
During 1Q13, EBITDA totaled US$260.9 million, a 28% decrease compared to 1Q12 (US$364.0 million). This decrease was mainly due to a 23% decrease in sales.
Capital expenditures at Yanacocha were US$97.7 million in 1Q13 compared to US$227.4 million in 2Q12.
At Cerro Verde10 1Q13 copper production was 55,214 MT, a 13% decrease compared to 1Q12 (63,295 MT).
During 1Q13, Cerro Verde reported net income of US$138.8 million, a 40% decrease compared to US$232.3 million in 1Q12. This was mainly due to a 31% decrease in sales revenues (US$393.6 million in 1Q13 versus US$568.8 million in 1Q12).
Capital expenditures at Cerro Verde in 1Q13 totaled US$170.0 million versus US$82.1 million in 1Q12.
COIMOLACHE (Tantahuatay operation)
Coimolache's11, attributable contribution decreased by 2% (US$8.1 million in 1Q13 vs. US$8.3 million in 1Q12).
CANTERAS DEL HALLAZGO (Chucapaca project)
At the Chucapaca Project12, a value-engineering phase was initiated to improve the project's financial returns after the completion of a Feasibility Study. Additional studies will be directed towards evaluating potential options, especially an underground mining scenario, a review of capital expenditures, along with re-commencement of an exploration phase at the Chucapaca Area of Interest (AOI).
In 1Q13, Buenaventura's total disbursement at the Chucapaca project was US$2.1 million.
Buenaventura's 1Q13 net income was US$102.7 million (US$0.40 per share), a 51% decrease compared to the US$208.1 million (US$0.82 per share) reported in 1Q12.
LA ZANJA DEVELOPMENT PROGRAM
- The Pampa Verde Project will allow the development of a new open pit, an expansion of the current leach pad and improvements to the operation's road access. Construction began in 2Q11. Total investment in this project is US$78 million. Completion is expected for 3Q13.
- Additional geotechnical study for slope stability was developed during 1Q13.
RIO SECO MANGANESE SULFATE PLANT
- Buenaventura continued the construction of the manganese sulphate plant. Total budget for the project is US$ 90.0 million. As of the end of 1Q13, total expenditures reached US$ 82.0 million.
- The project includes an acid leaching plant, a sulphuric acid plant and a manganese sulphate crystallization plant. Additionally, it includes a warehouse for storing low manganese Ag-Pb concentrate and the finished manganese sulphate crystals.
- As of 1Q13, electrical and automation installations were completed. Mechanical assembly, electrical and automation installations for the sulphuric acid and crystallization plants are expected to be completed during 2Q13.
- The project is expected to begin operations during 2Q13.
HUANZA HYDROELECTRICAL PLANT
- Construction progress at the Huanza Project during the quarter included:
|1.||Water Conduction Tunnel: 10,074 meters of construction - 100% complete.|
|2.||Power plant: civil work - 100% complete.|
|3.||Pallca Dam: 100% complete.|
|4.||Penstock: 100% complete.|
|5.||Construction of electromechanical equipment is nearly complete (50%).|
|6.||Commissioning of the Pallca Dam began February 26, 2013 and will continue on different sections on a progressive basis (Tunnel May 15, Penstock June, Test Running Unit 1 June 30).|
* * *
About the Company
Compañía 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, 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*, Breapampa*, Mallay*, Antapite*, Julcani*, Recuperada*, El Brocal, La Zanja, Coimolache and CEDIMIN*).
The Company owns 43.65% of Minera Yanacocha S.R.L (a partnership with Newmont Mining Corporation), an important precious metal producer; 19.58% of Sociedad Minera Cerro Verde, an important Peruvian copper producer, and 49% of Canteras del Hallazgo S.A, owner the Chucapaca project.
For a printed version of the Company's 2012 Form 20-F, please contact th investor relations contacts located on the first page of this report or download the from the Company's web site at www.buenaventura.pe.
(*) Operations wholly owned by Buenaventura
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's 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's, Yanacocha's and Cerro Verde'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.
Equity Participation in
Subsidiaries and Affiliates (as of March 31, 2013)
|Equity %||Mines / Business|
|Cedimin S.A.C*||100.00||Shila / Paula|
|Consorcio Energetico de Huancavelica S.A*||100.00||Energy - Huanza Hydroelectrical Project|
|Buenaventura Ingenieros S.A*||100.00||Engineering Consultant|
|Minera La Zanja S.A*||53.06||La Zanja|
|Sociedad Minera El Brocal S.A.A*||53.76||Colquijirca and Marcapunta|
|Canteras del Hallazgo S.A **||49.00||Chucapaca Project|
|Compañía Minera Coimolache S.A **||40.04||Tantahuatay|
|Minera Yanacocha S.R.L **||43.65||Yanacocha|
|Sociedad Minera Cerro Verde S.A.A **||19.58||Cerro Verde|
(**) Equity Accounting