Buenaventura Announces First Quarter 2011 Results

LIMA, Peru, April 28, 2011 /PRNewswire/ -- 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 results for the first quarter 2011. All figures have been prepared in accordance with 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 first quarter was US$218.3 million, a 40% increase when compared to the figure reported in 1Q10 (US$156.4 million), mainly due to a 171% increase in operating income.

EBITDA from Buenaventura's Direct Operations was US$205.0 million, 142% higher than the figure reported in 1Q10 (US$84.6 million), while EBITDA including Yanacocha and Cerro Verde increased 40%, from US$280.1 million in 1Q10 to US$394.6 million in 1Q11.

These results were mainly driven by an increase in gold, silver and copper sales from Buenaventura's direct operations, as well as the higher metal prices.

It is important to note the positive impact of Buenaventura's new La Zanja operation when comparing 1Q11 vs. 1Q10 operating results".

Financial Highlights (in millions of US$, except EPS figures):

(*) As of March 31, 2011, Buenaventura had a total of 254,442,328 shares outstanding.

Operating Revenue

During 1Q11, net sales were US$363.5 million, a 94% increase when compared to the US$187.6 million reported in 1Q10. This was explained by an increase in the volume of gold, silver and copper sold, as well as higher realized prices across all metals.

Royalty income in 1Q11 decreased 13% from US$14.1 million reported in 1Q10 to US$12.3 million in 1Q11 due to lower gold volume sold at Yanacocha.

(*) Buenaventura's Direct Operations

(*) Buenaventura Direct Operations

Production and Operating Costs

Buenaventura's equity production(1) in 1Q11 was 116,270 ounces of gold, 19% higher than the 97,770 ounces reported in 1Q10. Silver production in 1Q11 was 3.5 million ounces, an 18% increase when compared to the figure reported in 1Q10 (3.0 million oz).

Orcopampa's (100% owned by Buenaventura) production from the Chipmo mine in 1Q11 was 73,570 ounces, 13% higher than the 65,130 ounces reported in 1Q10, while the old tailings treatment produced 4,954 gold ounces (compared to 6,989 ounces in 1Q10). As a consequence, total gold production in 1Q11 was 78,524 ounces, 9% higher than the 72,119 ounces reported in 1Q10. (See Appendix 2)

Cash operating cost in 1Q11 was US$373/oz, 12% higher when compared to 1Q10 (US$333/oz). This was mainly explained by the 29% decrease in gold production from the treatment of old tailings, increased consumption of support supplies and higher labor costs.

At Poracota, gold production in 1Q11 was 12,101 ounces, a decrease of 13% when compared to 1Q10 (13,929 ounces) due to an 18% decrease in the ore grade (See Appendix 2). Cash operating cost was US$982/oz, 17% higher than the figure reported in 1Q10 (US$840/oz), explained by a 27% increase in diamond drilling.

Total royalties paid to the government at both Orcopampa and Poracota in 1Q11 totaled US$2.7 million.

At Uchucchacua (100% owned by Buenaventura), total silver production in 1Q11 was 2.5 million ounces, an increase of 23% when compared to 2.0 million ounces in 1Q10, due to 21% increase in ore volume treated (See Appendix 2). Zinc production in 1Q11 was 1,902 MT, an increase of 25% from the 1,516 MT reported in 1Q10, while lead production increased 12% (1,974 MT in 1Q11 vs. 1,756 MT in 1Q10).

Cash operating cost in 1Q11 was US$14.98/oz, a 35% increase compared to US$11.12/oz in 1Q10. This increase was primarily due to a 35% rise in contractor expenses due to increased drifting work, and higher royalties paid to the government, as well as higher commercial deductions to payable silver content, in each case due to the increased price of silver.

Total royalties paid to the government at Uchucchacua in 1Q11 totaled US$1.5 million.

At Antapite (100% owned by Buenaventura), total production in 1Q11 was 8,254 ounces of gold, an increase of 17% compared to 1Q10 (7,069 ounces), mainly due to a 19% increase in ore treated (See Appendix 2).

Gold cash operating cost in 1Q11 was US$916/oz, 15% higher than in 1Q10 (US$799/oz), mainly due to an increase in labor costs.

Total royalties paid to the government at Antapite in 1Q11 totaled US$0.3 million.

La Zanja (53.06% owned by Buenaventura) total production in 1Q11 was 25,151 ounces of gold (13,345 ounces attributable to Buenaventura), while the cash operating cost was US$386/oz.

Total royalties paid to the government at La Zanja in 1Q11 totaled US$0.4 million.

At El Brocal (46.08% owned by Buenaventura), full capacity of the concentrator plant was devoted to copper ore treatment to leverage the high copper prices in 1Q11.

Copper production for 1Q11 was 7,473 MT, 249% higher than 1Q10 (2,142 MT). Copper cash cost for 1Q11 was US$3,220/MT, a 22% decrease when compared to the US$4,137/MT reported in 1Q10 due to higher by-product contribution from the silver and gold content in concentrate. Silver production in 1Q11 was 453,674 ounces, 26% lower than the 609,867 ounces produced in 1Q10.

Total royalties paid to the government at Colquijirca and Marcapunta in 1Q11 totaled US$0.8 million.

Operating Expenses

General and administrative expenses in 1Q11 were US$17.0 million, 51% higher than the figure reported in 1Q10 (US$11.3 million) due to higher administrative labor expenses.

Exploration Costs in Non-Operational Mining Sites

Exploration costs at non-operational mining sites, which include care and maintenance, in 1Q11 were US$10.6 million, a 35% increase compared to the US$7.9 million reported in 1Q10. Buenaventura's main exploration efforts were focused at the Marcapunta (US$1.9 million), La Joya (US$0.8 million) and Mallay (US$2.3 million) projects.

Operating Income

Operating income in 1Q11 was US$176.5 million, a 171% increase compared to the US$65.2 million reported in 1Q10. This increase was mainly due to the 94% increase in net sales as a result of higher average realized prices and increases in the volume of gold, silver and copper sold.

Share in Affiliated Companies

During 1Q11, Buenaventura's income from non-consolidated affiliates was US$105.7 million, 6% lower than the US$112.3 million reported in 1Q10. Yanacocha's contribution to these results decreased 32%, from US$70.6 million in 1Q10 to US$48.1 million in 1Q11, partially offset by a 39% increase in contributions from Cerro Verde, which rose from US$45.9 million in 1Q10 to US$63.9 million in 1Q11.

YANACOCHA

At Yanacocha (43.65% owned by Buenaventura), 1Q11 gold production was 288,214 ounces of gold, a decrease of 32% compared to 1Q10 (422,798 ounces) due to a 34% decline in the ore mined.

Costs applicable to sales at Yanacocha in 1Q11 were US$603/oz, 56% higher than the figure reported in 1Q10 (US$387/oz) due to higher labor costs and consumption of processing commodities (lime, grinding balls and cyanide), partially offset by lower worker's participation.

Net income at Yanacocha in 1Q11 was US$110.7 million, a 32% decrease compared to the 1Q10 figure (US$162.5 million).

During 1Q11, EBITDA totaled US$193.9 million, a decrease of 29% compared to 1Q10 (US$273.1 million). This decrease was mainly due to a 18% decline in revenues (US$380.1 million in 1Q11 vs. US$460.9 million in 1Q10) due to a 32% decrease in the volume of gold sold.

Capital expenditures at Yanacocha were US$105.4 million in 1Q11.  

CERRO VERDE

At Cerro Verde (19.26% owned by Buenaventura), 1Q11 copper production was 79,463 MT, a 6% increase when compared to 1Q10 (74,954 MT).

During 1Q11, Cerro Verde reported net income of US$367.7 million, a 54% increase when compared to US$238.6 million in 1Q10.

Capital expenditures at Cerro Verde in 1Q11 totaled US$21.0 million.

Net Income

This quarter, Buenaventura's net income was US$218.3 million (US$0.86 per share), 40% higher compared to the US$156.4 million (US$0.61 per share) reported in 1Q10. This increase was mainly due to a 171% increase in operating income, partially offset by a 32% decrease in contributions from Yanacocha.

Project Development

LA ZANJA EXPANSION

• Pampa Verde Project. Construction will begin in 2Q11. This project includes the development of the Pampa Verde Pit, a mine waste deposit, an acid water plant and the construction of a road to connect the Pampa Verde Pit with San Pedro Sur Leach Pad Stage II. Construction will be completed in the third quarter 2012. Total investment for this project is expected to be US$32.5 million.

MANGANESE SULFATE PLANT

• Buenaventura commenced construction of a manganese sulfate plant in 1Q11 with a total budget of US$56.0 million. The objective of this plant is to remove the manganese content in the Uchucchacua lead-silver concentrates using chemical processes.

• The facilities will be located on the Northern Coast of Lima and include an acid washing plant, a sulfuric acid plant and a manganese sulfate plant.

TANTAHUATAY

• Total estimated CAPEX is US$72.0 million. As of March 31, 2011, project expenditures have totaled US$44.3 million. The construction permit was obtained May 24, 2010. The mine construction progress is summarized in the following chart:

HUANZA HYDROELECTRICAL PLANT

• As of March 31, 2011, Buenaventura's total investment in the Huanza Project was US$76.4 million, representing 58% from the entire budget. US$66.0 million of the total amount invested was financed via a leasing agreement with Banco del Credito Del Peru (Total leasing agreement: US$119.0 million).

• Construction progress at the Huanza Project through March 31, 2011 was as follows:
• Water Conduction Tunnel: 4,462m were completed, representing 44% of scheduled construction.
• Powerhouse: excavation was completed and the first shipment of electromechanical equipment arrived.
• Pallca Dam: excavation was completed and is ready to start with the concrete base construction.

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 and Recuperada). Buenaventura also has a controlling interest in three mining companies (El Brocal, La Zanja and CEDIMIN) 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, 19.26% of Sociedad Minera Cerro Verde, an important Peruvian copper producer, and 49% of Canteras del Hallazgo S.A, which owns the Chucapaca project.

For a printed version of the Company's 2009 Form 20-F, please contact the persons indicated on the first page of this release, or download a PDF format file from the Company's web site.

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.

Endnotes:

*** In this release, Buenaventura presents financial measures in accordance with Peruvian GAAP and also on a non-GAAP basis.  EBITDA (Buenaventura Direct Operations) and EBITDA (including Yanacocha and Cerro Verde) included in this release are non-GAAP financial measures. Please see the consolidated financial information below for information reconciling non-GAAP financial measures to comparable Peruvian GAAP financial measures.

**Tables to follow**

APPENDIX 1

(*)Consolidates

(**) Equity Accounting

APPENDIX 2

APPENDIX 3

Note:

EBITDA (Buenaventura Direct Operations) consists of earnings before net interest, taxes, depreciation and amortization, share in associated companies, net, loss on currency exchange difference, other, net, provision for workers' profit sharing and provision for long-term officers' compensation.  

EBITDA (including Yanacocha and Cerro Verde) consists of EBITDA (Buenaventura Direct Operations), plus (1) Buenaventura's equity share of EBITDA (Yanacocha) and (2) Buenaventura's equity share of EBITDA (Cerro Verde). EBITDA (Yanacocha) and EBITDA (Cerro Verde) were similarly calculated using financial information provided to Buenaventura by Yanachocha and Cerro Verde, respectively.

Buenaventura presents EBITDA (Buenaventura Direct Operations) and EBITDA (including Yanacocha and Cerro Verde) to provide further information with respect to its operating performance and the operating performance of its equity investees, Yanachocha and Cerro Verde. EBITDA (Buenaventura Direct Operations) and EBITDA (including Yanacocha and Cerro Verde) are not a measure of financial performance under Peruvian GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider EBITDA (Buenaventura Direct Operations) and EBITDA (including Yanacocha and Cerro Verde) as alternatives to operating income or net income determined in accordance with Peruvian GAAP, as an indicator of Buenaventura's, Yanacocha's or Cerro Verde's operating performance, or as an alternative to cash flows from operating activities, determined in accordance with Peruvian GAAP, as an indicator of cash flows or as a measure of liquidity.

APPENDIX 4