LIMA, Peru--(BUSINESS WIRE)--Compañia 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 (“1Q16”) period ended March 31, 2016. All figures have been prepared in accordance with IFRS (International Financial Reporting Standards) on a non GAAP basis and are stated in U.S. dollars (US$).
First Quarter 2016 Highlights:
- In 1Q16, EBITDA from direct operations was US$60.3 million, a 34% increase compared to US$45.0 million reported in 1Q15. Adjusted EBITDA (including associated companies) increased 21% (US$ 145.1 in 1Q16 compared to the US$ 119.9 in 1Q15).
- All In Sustaining Cost (AISC) decreased 35% in 1Q16 (US$ 728/oz in 1Q16 compared to the US$ 1,126/oz in 1Q15). This significant decline reaffirms the cost reduction efforts in Buenaventura’s direct operations.
- Total attributable production in 1Q16 was 158k gold ounces and 6.0 million silver ounces, compared to 187k gold ounces and 5.5 million silver ounces in 1Q15.
- The Tambomayo project is in-line with budget; and the detail engineering was completed. Civil works’ progress is at 52% with full completion expected for 2Q16. Exploration and development works´ is at 86%. Production ramping up is expected by 4Q16.
- The Environmental Impact Assessment (EIA) of the San Gabriel project is expected to be approved in 4Q16 (the Public Hearing will be held in 2Q16).
- Yanacocha distributed dividends of US$300 million in March 2016 (Buenaventura received its equity share of US$131 million).
- At Cerro Verde, the Concentrator #2 achieved full capacity during 1Q16. In March, the mill rate performance was in excess of 370k tons per day.
- Buenaventura is in the process of raising US$ 275 million in long-term debt, in order to reprofile its current short-term debt. The proceeds are expected to be available in 2Q16; terms and conditions of the loan will be of an investment grade company.
Financial Highlights (in millions of US$, except EPS figures):
| 1Q16 | 1Q15 | Var% | |||||||
| Total Revenues | 227.3 | 239.5 | -5% | ||||||
| Operating Profit | 13.0 | -3.7 | N.A. | ||||||
|
EBITDA Direct |
60.3 | 45.0 | 34% | ||||||
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Adjusted EBITDA |
145.1 | 119.9 | 21% | ||||||
| Net Income | 51.6 | 17.3 | 198% | ||||||
| EPS* | 0.20 | 0.07 | 198% | ||||||
(*) as of March 31, 2016 Buenaventura had 254,186,867 outstanding shares.
Operating Revenues
During 1Q16, net sales were US$220.6 million, a 4% decrease compared to the US$230.4 million reported in 1Q15. This was mainly explained by the general decline in all metal prices (except for lead), as well as lower gold, lead and zinc volume sold. Silver volume sold increased 13% partially offsetting the decline in sales.
Royalty income decreased 26%, from US$9.1 million in 1Q15 to US$6.7 million reported in 1Q16. This was due to lower revenues at Yanacocha (27% lower QoQ).
| Operating Highlights | 1Q16 | 1Q15 | Var% | ||||||
| Net Sales
(in millions of US$) |
220.6 | 230.4 | -4% | ||||||
|
Average Realized Gold Price |
1,205 | 1,220 | -1% | ||||||
|
Average Realized Gold Price |
1,196 | 1,256 | -5% | ||||||
|
Average Realized Silver |
14.37 | 15.34 | -6% | ||||||
|
Average Realized Lead Price |
1,782 | 1,705 | 5% | ||||||
| Average Realized
Zinc Price (US$/MT) 1 2 |
1,620 | 2,061 | -21% | ||||||
|
Average Realized Copper |
4,427 | 5,059 | -13% | ||||||
| Volume Sold | 1Q16 | 1Q15 | Var% | ||||||
|
Gold Oz Direct |
80,989 | 93,838 | -14% | ||||||
|
Gold Oz inc Associated |
172,119 | 213,720 | -19% | ||||||
| Silver Oz 1 | 5,314,779 | 4,714,638 | 13% | ||||||
| Lead MT 1 | 6,567 | 9,368 | -30% | ||||||
| Zinc MT 1 | 12,342 | 13,535 | -9% | ||||||
| Copper MT 1 | 11,098 | 3,630 | 206% | ||||||
|
(1) |
Buenaventura’s Direct Operations include 100% of Buenaventura’s operating units, 100% of La Zanja and 100% of El Brocal |
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|
(2) |
The realized price considers the adjustments of quotational periods |
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(3) |
Considers 100% of Buenaventura’s operating units, 100% of La Zanja, 100% of El Brocal, 40.10% of Coimolache and 43.65% of Yanacocha |
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Production and Operating Costs
In 1Q16, Buenaventura’s gold equity production from direct operations remained stable, in line with the figure reported in 1Q15 (79,233 ounces in 1Q16 vs. 79,192 ounces in 1Q15). Gold production, including associated companies, in 1Q16 was 157,955 ounces, 16% lower than the figure reported for the same period of 2015 (187,468 ounces), explained by a decrease in production from Yanacocha. Silver equity production from direct operations increased 11%, mainly due to higher production at the Uchucchacua mine and the Mallay mine.
| Equity Production | 1Q16 | 1Q15 | Var% | ||||||
|
Gold Oz Direct Operations1 |
79,233 | 79,192 | 0% | ||||||
|
Gold Oz including Associated |
157,955 | 187,468 | -16% | ||||||
| Silver Oz Direct Operations1 | 5,996,810 | 5,410,922 | 11% | ||||||
|
Silver Oz including Associated |
6,213,680 | 5,544,704 | 12% | ||||||
| Lead MT | 6,982 | 7,440 | -6% | ||||||
| Zinc MT | 10,368 | 11,345 | -9% | ||||||
| Copper MT Direct Operations1 | 6,459 | 2,189 | 195% | ||||||
|
Copper MT including Associated |
30,623 | 11,710 | 162% | ||||||
Orcopampa’s (100% owned by Buenaventura)
| Production | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Gold | Oz | 44,135 | 50,068 | -12% | ||||||||
| Silver | Oz | 147,414 | 112,210 | 31% | ||||||||
| Cost Applicable to Sales | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Gold | US$/Oz | 688 | 744 | -8% | ||||||||
Gold production at Orcopampa decreased 12% in 1Q16, compared to 1Q15, due to lower grade (Appendix 2).
Cost Applicable to Sales (CAS) in 1Q16 decreased 8%. This was mainly explained by:
|
1. |
Lower labor costs. |
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|
2. |
Lower contractor costs, due to better mining unit prices, as a result of contract renegotiations. |
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|
3. |
A decrease in reagents’ consumption and price. |
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| Gold production guidance for 2016 is 200k – 210k ounces. |
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1 Direct Operation production includes 100% of Buenaventura’s operating units, 53.06% of La Zanja, 56.29% of El Brocal and 40.10% of Coimolache.
Uchucchacua (100% owned by Buenaventura)
| Production | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Silver | Oz | 4,161,975 | 3,529,174 | 18% | ||||||||
| Zinc | MT | 1,725 | 1,586 | 9% | ||||||||
| Lead | MT | 2,506 | 2,059 | 22% | ||||||||
| Cost Applicable to Sales | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Silver | US$/Oz | 10.58 | 15.47 | -32% | ||||||||
Silver production during 1Q16 increased 18% compared to 1Q15, due to higher ore treated and higher ore grade (Appendix 2).
Cost Applicable to Sales (CAS) in 1Q16 decreased 32% (US$ 10.58/oz of silver in 1Q16 compared to US$ 15.47/oz in 1Q15), mainly explained by:
|
1. |
Lower labor costs. |
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|
2. |
A reduction in consumable costs, mainly due to efficiencies achieved in the usage of explosive materials. |
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|
3. |
Lower contractor costs due to better mining and hauling unit prices. |
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Silver production guidance for 2016 is 15.5 million – 16.5 million ounces.
Mallay (100% owned by Buenaventura)
| Production | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Silver | Oz | 408,619 | 307,254 | 33% | ||||||||
| Zinc | MT | 2,764 | 2,179 | 27% | ||||||||
| Lead | MT | 2,069 | 1,652 | 25% | ||||||||
| Cost Applicable to Sales | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Silver | US$/Oz | 11.93 | 14.39 | -17% | ||||||||
Silver production in 1Q16 increased 33% compared to 1Q15, due to higher ore treated (Appendix 2).
Cost Applicable to Sales (CAS) in 1Q16 decreased 17% (US$ 11.93/oz of silver in 1Q16 compared to US$ 14.39/oz in 1Q15) due to lower consumable costs, mainly in explosive materials and reagents.
Silver production guidance for 2016 is 1.5 million – 1.9 million ounces.
Julcani (100% owned by Buenaventura)
| Production | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Silver | Oz | 853,052 | 816,352 | 4% | ||||||||
| Cost Applicable to Sales | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Silver | US$/Oz | 10.66 | 13.24 | -19% | ||||||||
Silver production in 1Q16 increased 4% compared to 1Q15 production, due to higher ore treated and higher ore grade (Appendix 2).
Cost Applicable to Sales (CAS) in 1Q16 decreased 19% (US$ 10.66/oz of silver in 1Q16 compared to US$ 13.24/oz in 1Q15) explained by lower labor and consumable costs (explosive materials).
Silver production guidance for 2016 is 3.0 million – 3.4 million ounces.
La Zanja (53.06% owned by Buenaventura)
| Production | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Gold | Oz | 34,193 | 30,455 | 12% | ||||||||
| Silver | Oz | 59,236 | 95,308 | -38% | ||||||||
| Cost Applicable to Sales | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Gold | US$/Oz | 597 | 779 | -23% | ||||||||
Gold production in 1Q16 increased 12% compared to 1Q15, due to higher ore leached.
Cost Applicable to Sales (CAS) in 1Q16 decreased 23% (US$ 597/oz of gold in 1Q16 compared to US$ 779/oz in 1Q15) explained by lower labor and reagent costs.
Gold production guidance for 2016 is 130k – 140k ounces.
Tantahuatay (40.10% owned by Buenaventura)
| Production | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Gold | Oz | 34,562 | 30,207 | 14% | ||||||||
| Silver | Oz | 243,990 | 160,264 | 52% | ||||||||
| Cost Applicable to Sales | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Gold | US$/Oz | 427 | 650 | -34% | ||||||||
Gold production in 1Q16 increased 14% compared to 1Q15, due to higher ore grade.
Cost Applicable to Sales (CAS) in 1Q16 decreased 34% (US$ 427/oz of gold in 1Q16 compared to US$ 650/oz in 1Q15) due to lower contractor and reagent costs.
Gold production guidance for 2016 is 140k – 150k ounces
El Brocal (56.29% owned by Buenaventura)
| Production | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Copper | MT | 11,344 | 3,869 | 193% | ||||||||
| Zinc | MT | 9,916 | 14,020 | -29% | ||||||||
| Silver | Oz | 526,724 | 982,254 | -46% | ||||||||
| Cost Applicable to Sales | ||||||||||||
| 1Q16 | 1Q15 | Var % | ||||||||||
| Copper | US$/MT | 4,823 | 5,536 | -13% | ||||||||
| Zinc | US$/MT | 1,474 | 1,506 | -2% | ||||||||
During 1Q16, copper production increased 193% compared to 1Q15, mainly due to higher ore treated. Moreover, in 1Q16 zinc production decreased 29%, due to lower ore treated and a lower zinc grade.
In 1Q16, zinc Cost Applicable to Sales (CAS) remained in line with the figure reported during 1Q15. Additionally, copper Cost Applicable to Sales (CAS) in 1Q16 decreased 13% (US$ 4,823/MT of copper in 1Q16 compared to US$ 5,536/MT in 1Q15), mainly explained by lower contractor costs due to better mining unit prices.
Zinc production guidance for 2016 is 60k – 70k MT, while copper production guidance for 2016 is 35k – 45k MT.
General and Administrative Expenses
General and administrative expenses in 1Q16 were US$21.4 million, an increase of 4% compared to the US$20.7 million reported in 1Q15.
Exploration in Non-Operating Areas
Exploration in non-operating areas during 1Q16 was US$3.5 million compared with the US$10.7 million in 1Q15. During the period, Buenaventura’s main exploration efforts were focused on the Tambomayo project (US$1.8 million) and Marcapunta (US$0.3 million).
Share in Associated Companies
During 1Q16, Buenaventura’s share in associated companies was US$28.4 million, compared to the US$36.3 million reported in 1Q15, comprised by:
| Share in the Result of Associates
(in millions of US$) |
1Q16 | 1Q15 | Var % | ||||||
| Cerro Verde | 19.0 | 8.0 | 138% | ||||||
| Coimolache | 5.7 | 2.1 | 173% | ||||||
| Yanacocha | 3.7 | 26.2 | -86% | ||||||
| Total | 28.4 | 36.3 | -22% | ||||||
YANACOCHA
At Yanacocha (43.65% owned by Buenaventura), during 1Q16, gold production was 180,348 ounces, 27% lower than 1Q15 production (248,055 ounces), due to a lower gold grade.
Gold production guidance at Yanacocha for 2016 is 630k – 660k ounces.
In 1Q16, Yanacocha reported net income of US$8.5 million compared to the US$37.4 million reported in 1Q15, mainly explained by lower volume sold (179k gold ounces sold in 1Q16 compared to 246k gold ounces sold in 1Q15). Cost Applicable to Sales (CAS) in 1Q16 was US$734/oz, 53% higher than the US$479/oz reported in 1Q15, mainly due to: i) a higher inventory write-down (US$28.0 million in 1Q16 compared to US$4.5 million in 1Q15), and ii) lower volume sold.
Capital expenditures at Yanacocha were US$13.7 million in 1Q16, while for 1Q15 it was US$15.2 million.
Yanacocha continues to have a strong pipeline of growth projects, this include: Quecher Main (prefeasibility), Chaquicocha Sulphides and Yanacocha Verde (scoping) and Maqui Maqui (exploration).
CERRO VERDE
At Cerro Verde (19.58% owned by Buenaventura), during 1Q16 copper production was 123,414 MT (24,164 MT attributable to Buenaventura), a 154% increase compared to 1Q15 (48,623 MT and 9,520 MT attributable to Buenaventura).
During 1Q16, Cerro Verde reported a net income of US$96.9 million compared to the US$40.7 million reported in 1Q15. This was mainly due to higher volume sold and a lower cash cost (US$ 1.2/lb of copper in 1Q16 compared to US$ 1.9/lb in 1Q15).
Capital expenditures at Cerro Verde were US$72.7 million in 1Q16, 84% lower compared to the US$468.9 million reported in 1Q15.
Cerro Verde’s plant expansion was completed in-line with schedule and budget (US$4.6 billion), becoming the largest concentration facility in the world. Full capacity operating rates were achieved during 1Q16. In March 2016, the average daily throughput was 373 TPD, higher than the nominal capacity of 360K TPD.
Copper production guidance at Cerro Verde for 2016 is 500k MT – 550k MT.
COIMOLACHE (Tantahuatay operation)
At Coimolache (40.10% owned by Buenaventura), attributable contribution to the net income in 1Q16 was US$ 5.7 million compared to the US$ 2.1 million reported in 1Q15.
Project Development and Exploration
The Tambomayo Project (100% ownership)
- Production ramp-up is expected to start in 4Q16
- Civil works progress is at 52% (expected to be completed in 2Q16)
- Mechanical and structural installation works at 35% progress (expected to be completed in 3Q16)
- The mill equipment is already mounted on their bases
- CAPEX: US$ 340 M (Total disbursement as of 1Q16 US$192 M)
- Exploration and mine development US$122 M (disbursement as of 1Q16 US$102 M)
- Civil works and Equipment US$218 M (disbursement as of 1Q16 US$90 M)
The San Gabriel Project (100% ownership)
- The project has been rescheduled in order to preserve cash flow
- Geomechanical studies were completed in 1Q16
- Environmental Impact Assessment (EIA) of the project´s construction is expected to be approved in 4Q16 (the Public Hearing will be held in 2Q16)
- Objectives for 1S16:
- Continue the construction of a 450 meters exploration ramp
- Drilling program: 7,000 meters (1,000 as of 1Q16) in order to confirm resources and certainty
Buenaventura's Cash and Debt Situation
- Currently Buenaventura is in the process of raising a US$ 275 million long-term loan. The proceeds are expected to be available in 2Q16.
| Proceeds from this new debt will be used for the following: | ||||
|
a. Reprofiling of BVN´s current short-term debt. |
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| b. Partially finance the construction of the Tambomayo Project. | ||||
- Yanacocha distributed a cash dividend of US$ 300 million
| BVN received US$ 131 million in March 2016. | ||||
* * *
Company Description
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 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*, Mallay*, Julcani*, El Brocal, La Zanja and Coimolache and is developing the Tambomayo and San Gabriel projects.
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.
For a printed version of the Company’s Form 20-F, please contact the investor relations contacts on page 1 of this report, or download the PDF format file from the Company’s web site at www.buenaventura.com.
(*) 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, economic, 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.
