LIMA, Peru - 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 third quarter (3Q16) and nine-month (9M16) periods ended September 30, 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$).
Third Quarter 2016 Highlights:
- In 3Q16, EBITDA from direct operations was US$83.3 million compared to US$5.6 million reported in 3Q15. Adjusted EBITDA (including associated companies) increased 99% (US$ 134.6 million in 3Q16 compared to the US$ 67.6 million in 3Q15).
- All in Sustaining Cost (AISC*) decreased 51% in 3Q16 (US$ 570/oz) compared to 3Q15 (US$ 1,171/oz).
- At El Brocal, we expect an improvement in 4Q16 due to i) higher ore treated, ii) higher zinc grade and better commercial terms.
- Net income in 3Q16 was negative US$ 24.7 mainly due to El Brocal and Yanacocha results.
- Production from direct operations in 3Q16 was 93k gold ounces and 5.8 million silver ounces, higher compared to 89k gold ounces and 5.6 million silver ounces in 3Q15.
- The Tambomayo project remains in-line with schedule and budget. Total project progress is at 96%. Production ramp up is expected to begin in December 2016.
- Buenaventura´s Net debt/EBITDA ratio has been reduced to 2x. By the end of the year, we expect a ratio of 1.6x-1.9x.
- Dividend payment to be resumed (US$ 0.030 per share/ADS).
| Financial Highlights (in millions of US$, except EPS figures): | ||||||||||||||||||
| 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | |||||||||||||
| Total Revenues | 269.0 | 211.0 | 28% | 781.7 | 694.4 | 13% | ||||||||||||
| Operating Profit | 34.7 | -54.2 | N.A. | 107.4 | -93.5 | N.A. | ||||||||||||
| EBITDA Direct Operations | 83.3 | 5.6 | 1391% | 252.9 | 80.2 | 215% | ||||||||||||
| Adjusted EBITDA (Inc Associates) | 134.6 | 67.6 | 99% | 468.5 | 303.8 | 54% | ||||||||||||
| Net Income | -24.7 | -23.2 | 6% | 82.4 | -24.7 | N.A. | ||||||||||||
| EPS** | -0.10 | -0.09 | 6% | 0.32 | -0.10 | N.A. | ||||||||||||
(*) See Appendix 5
(**) as of September 30, 2016 Buenaventura had 253,986,867 outstanding shares.
Operating Revenues
During 3Q16, net sales were US$263.1 million, a 30% increase compared to the US$202.3 million reported in 3Q15. This result was mainly explained by an increase in all metal prices as well as higher volume sales of copper, zinc and lead.
Royalty income decreased 32% from US$8.7 million in 3Q15 to US$5.9 million in 3Q16 as a result of lower revenues at Yanacocha.
| Operating Highlights | 3Q16 | 3Q15 | Var% | 9M16 | 6M15 | Var% | ||||||||||||
| Net Sales (in millions of US$) | 263.1 | 202.3 | 30% | 763.2 | 669.2 | 14% | ||||||||||||
| Average Realized Gold Price (US$/oz) (1) (2) | 1,334 | 1,103 | 21% | 1,275 | 1,169 | 9% | ||||||||||||
| Average Realized Gold Price (US$/oz) inc. Affiliates (3) | 1,338 | 1,112 | 20% | 1,267 | 1,172 | 8% | ||||||||||||
| Average Realized Silver Price (US$/oz) (1) (2) | 20.83 | 14.50 | 44% | 17.60 | 15.34 | 15% | ||||||||||||
| Average Realized Lead Price (US$/MT) (1) (2) | 1,950 | 1,593 | 22% | 1,839 | 1,734 | 6% | ||||||||||||
| Average Realized Zinc Price (US$/MT) (1) (2) | 2,460 | 1,775 | 39% | 2,092 | 1,998 | 5% | ||||||||||||
| Average Realized Copper Price (US$/MT) (1) (2) | 4,820 | 3,723 | 29% | 4,666 | 4,599 | 1% | ||||||||||||
| Volume Sold | 3Q16 | 3Q15 | Var% | 9M16 | 6M15 | Var% | ||||||||||||
| Gold Oz Direct Operations (1) | 94,539 | 91,370 | 3% | 268,280 | 271,479 | -1% | ||||||||||||
| Gold Oz inc Associated Companies (3) | 173,291 | 217,320 | -20% | 520,267 | 618,138 | -16% | ||||||||||||
| Silver Oz (1) | 4,975,143 | 4,801,621 | 4% | 15,924,538 | 14,239,819 | 12% | ||||||||||||
| Lead MT (1) | 7,138 | 6,409 | 11% | 21,374 | 22,086 | -3% | ||||||||||||
| Zinc MT (1) | 15,040 | 12,543 | 20% | 42,866 | 39,442 | 9% | ||||||||||||
| Copper MT (1) | 11,225 | 7,456 | 51% | 32,895 | 19,917 | 65% | ||||||||||||
| (1) | Buenaventura’s Direct Operations includes 100% of Buenaventura’s operating units, 100% of La Zanja and 100% of El Brocal | ||
| (2) | The realized price considers the adjustments of quotational periods | ||
| (3) | Considers 100% of Buenaventura’s operating units, 100% of La Zanja, 100% of El Brocal, 40.95% of Coimolache and 43.65% of Yanacocha | ||
For 9M16, net sales increased 14%, from US$669.2 million in 9M15 to US$763.2 million in 9M16. Royalty income for 9M16 was US$18.5 million, lower than US$25.2 million during 9M15.
Production and Operating Costs
In 3Q16, Buenaventura’s gold equity production from direct operations was 4% higher compared to the figure reported in 3Q15 (92,571 gold ounces in 3Q16 vs 88,669 gold ounces in 3Q15). Gold production including associated companies in 3Q16 was 156,905 ounces, 19% lower than the amount reported in the same period 2015. This decline is explained by a decrease in production from Yanacocha. Silver equity production from direct operations increased 5%, mainly due to higher production at the Uchucchacua mine and the Mallay mine.
| Equity Production | 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | ||||||||||||
| Gold Oz Direct Operations(1) | 92,571 | 88,669 | 4% | 257,280 | 254,195 | 1% | ||||||||||||
| Gold Oz including Associated Companies | 156,905 | 194,500 | -19% | 468,222 | 562,553 | -17% | ||||||||||||
| Silver Oz Direct Operations(1) | 5,840,913 | 5,583,565 | 5% | 17,575,037 | 15,232,580 | 15% | ||||||||||||
| Silver Oz including Associated Companies | 6,099,334 | 5,716,336 | 7% | 18,290,013 | 15,624,885 | 17% | ||||||||||||
| Lead MT | 7,087 | 6,542 | 8% | 21,135 | 19,697 | 7% | ||||||||||||
| Zinc MT | 13,175 | 10,047 | 31% | 35,819 | 31,502 | 14% | ||||||||||||
| Copper MT Direct Operations(1) | 7,608 | 5,187 | 47% | 20,978 | 12,640 | 66% | ||||||||||||
| Copper MT including Associated Companies | 31,128 | 16,115 | 93% | 93,361 | 42,275 | 121% | ||||||||||||
| Consolidated Production | 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | ||||||||||||
| Gold Oz(2) | 96,271 | 92,870 | 4% | 269,563 | 267,080 | 1% | ||||||||||||
| Silver Oz(2) | 5,980,514 | 5,854,489 | 2% | 18,024,485 | 16,248,238 | 11% | ||||||||||||
| Lead MT(2) | 8,156 | 7,957 | 3% | 24,676 | 25,148 | -2% | ||||||||||||
| Zinc MT(2) | 18,527 | 15,407 | 20% | 51,179 | 48,209 | 6% | ||||||||||||
| Copper MT(2) | 12,362 | 9,525 | 30% | 35,531 | 23,156 | 53% | ||||||||||||
| (1) | Buenaventura’s Direct Operations includes 100% of Buenaventura’s operating units, 53.06% of La Zanja and 61.32% of El Brocal |
| (2) | Considers 100% of Buenaventura’s operating units, 100% of La Zanja and 100% of El Brocal |
| Orcopampa (100% owned by Buenaventura) | ||||||||||||||||||||||||||
| Production | ||||||||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | |||||||||||||||||||||
| Gold | Oz | 53,167 | 54,035 | -2% | 145,129 | 156,023 | -7% | |||||||||||||||||||
| Silver | Oz | 179,210 | 146,930 | 22% | 492,810 | 392,541 | 26% | |||||||||||||||||||
| Cost Applicable to Sales | ||||||||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | |||||||||||||||||||||
| Gold | US$/Oz | 660 | 636 | 4% | 682 | 676 | 1% | |||||||||||||||||||
Gold production at Orcopampa decreased 2% in 3Q16 (compared to 3Q15) mainly due to lower ore grade (see Appendix 2). Cost Applicable to Sales (CAS) in 3Q16 (660 US$/Oz) increased 4% compared to 3Q15 (636 US$/Oz), mainly due to higher exploration expenses in order to increase resources at the Pucara and the Lucia area.
Gold production guidance for 2016 is 190k – 200k ounces.
| Uchucchacua (100% owned by Buenaventura) | |||||||||||||||||||||
| Production | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | ||||||||||||||||
| Silver | Oz | 4,086,850 | 3,775,051 | 8% | 12,170,024 | 9,801,413 | 24% | ||||||||||||||
| Zinc | MT | 1,950 | 1,293 | 51% | 5,566 | 4,090 | 36% | ||||||||||||||
| Lead | MT | 2,772 | 2,340 | 18% | 7,869 | 5,869 | 34% | ||||||||||||||
| Cost Applicable to Sales | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | ||||||||||||||||
| Silver | US$/Oz | 11.06 | 13.56 | -18% | 10.84 | 14.47 | -25% | ||||||||||||||
Silver production in 3Q16 increased 8% compared to 3Q15, due to higher volumes of ore treated and higher ore grade (see Appendix 2). Cost Applicable to Sales (CAS) in 3Q16 decreased 18% compared to 3Q15, an improvement primarily explained by i) Increasing efficiencies as a result of massive mining using the bench & fill method and ii) lower reagent prices and consumption.
Silver production guidance for 2016 is 15.5 million – 16.5 million ounces.
| Mallay (100% owned by Buenaventura) | ||||||||||||||||||||||
| Production | ||||||||||||||||||||||
| 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | |||||||||||||||||
| Silver | Oz | 412,526 | 323,095 | 28% | 1,252,490 | 928,126 | 35% | |||||||||||||||
| Zinc | MT | 2,740 | 2,445 | 12% | 8,137 | 6,765 | 20% | |||||||||||||||
| Lead | MT | 1,965 | 1,925 | 2% | 5,907 | 5,353 | 10% | |||||||||||||||
| Gold | Oz | 420 | 259 | 62% | 1,460 | 396 | 268% | |||||||||||||||
| Cost Applicable to Sales | ||||||||||||||||||||||
| 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | |||||||||||||||||
| Silver | US$/Oz | 13.05 | 13.99 | -7% | 12.55 | 13.96 | -10% | |||||||||||||||
Silver production in 3Q16 increased 28% compared to 3Q15, mainly due to increased amounts ore treated (see Appendix 2). Cost Applicable to Sales (CAS) in 3Q16 was 7% lower compared to 3Q15 mainly due to more volume sold.
Silver production guidance for 2016 is 1.5 million – 1.9 million ounces.
| Julcani (100% owned by Buenaventura) | |||||||||||||||||||||
| Production | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | ||||||||||||||||
| Silver | Oz | 782,813 | 794,810 | -2% | 2,473,802 | 2,397,790 | 3% | ||||||||||||||
| Cost Applicable to Sales | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var% | 9M16 | 9M15 | Var% | ||||||||||||||||
| Silver | US$/Oz | 11.86 | 12.94 | -8% | 11.32 | 12.70 | -11% | ||||||||||||||
Silver production in 3Q16 is in line with the figure reported in 3Q15. Cost Applicable to Sales (CAS) in 3Q16 was 8% lower than 3Q15, an improvement primarily mainly explained by higher volume sold and lower commercial deductions.
Silver production guidance for 2016 is 3.0 million – 3.4 million ounces.
| La Zanja (53.06% owned by Buenaventura) | |||||||||||||||||||||
| Production | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | ||||||||||||||||
| Gold | Oz | 37,407 | 35,653 | 5% | 106,984 | 103,362 | 4% | ||||||||||||||
| Silver | Oz | 50,309 | 78,844 | -36% | 159,012 | 241,969 | -34% | ||||||||||||||
| Cost Applicable to Sales | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | ||||||||||||||||
| Gold | US$/Oz | 641 | 906 | -29% | 568 | 838 | -32% | ||||||||||||||
Gold production in 3Q16 increased 5% compared to 3Q15. CAS in 3Q16 decreased 29% compared to 3Q15, an improvement primarily due to i) lower headcount generated by new synergies with Tantahuatay mine, ii) lower reagent and explosives prices and consumption, and iii) lower contractor expenses resulting from more favorable prices.
Gold production guidance for 2016 is 130k – 140k ounces.
| Tantahuatay (40.10% owned by Buenaventura) | |||||||||||||||||||||
| Production | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | ||||||||||||||||
| Gold | Oz | 39,595 | 34,739 | 14% | 110,890 | 97,085 | 14% | ||||||||||||||
| Silver | Oz | 162,983 | 259,433 | -37% | 587,551 | 598,392 | -2% | ||||||||||||||
| Cost Applicable to Sales | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | ||||||||||||||||
| Gold | US$/Oz | 527 | 484 | 9% | 476 | 542 | -12% | ||||||||||||||
Gold production in 3Q16 increased 14% compared to the figure reported in 3Q15. CAS in 3Q16 increased 9% compared to 3Q15 mainly due to an inventory write-down and higher exploration expenses.
Gold production guidance for 2016 is 145k – 155k ounces
| El Brocal (61.32%* owned by Buenaventura) | |||||||||||||||||||||
| Production | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | ||||||||||||||||
| Copper | MT | 12,291 | 9,446 | 30% | 35,312 | 22,895 | 54% | ||||||||||||||
| Zinc | MT | 13,836 | 11,670 | 19% | 37,477 | 37,353 | 0% | ||||||||||||||
| Silver | Oz | 468,806 | 735,760 | -36% | 1,476,348 | 2,486,399 | -41% | ||||||||||||||
| Cost Applicable to Sales | |||||||||||||||||||||
| 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | ||||||||||||||||
| Copper | US$/Lb | 2.17 | 2.34 | -7% | 2.18 | 2.39 | -9% | ||||||||||||||
| Zinc | US$/Lb | 0.92 | 0.83 | 12% | 0.80 | 0.75 | 7% | ||||||||||||||
During 3Q16, copper production increased 30% compared to 3Q15, due to a higher ore volume treated and ore grade. Moreover, in 3Q16 zinc production increased 19% as a result of higher ore treated.
| (*) | Since August 2016, the new ownership of El Brocal is 61.32%. | |
In 3Q16, zinc Cost Applicable to sales (CAS) increased 34% compared to 3Q15 mainly due to lower ore grade and lower silver by-product contribution. Copper CAS in 3Q16 decreased 12% compared to 3Q15 mainly due higher ore grade and lower commercial deductions per ton resulting from the renegotiation of commercial contracts.
Zinc production guidance for 2016 is 55k – 65k MT, while copper production guidance for 2016 is 40k – 50k MT.
General and Administrative Expenses
General and administrative expenses in 3Q16 were US$16.9 million, 15% lower compared to the US$19.8 million in 3Q15. For 9M16, the expense was US$58.0 million (US$58.8 million in 9M15).
Exploration in Non-Operating Areas
Exploration costs in non-operating areas during 3Q16 were US$6.4 million compared with US$5.3 million in 3Q15. During the period, Buenaventura’s main exploration efforts were focused on the Tambomayo project (US$1.75 million), the San Gabriel project (US$1.21 million) and Marcapunta Norte (US$0.32 million). For 9M16, the expense was US$14.8 million (US$25.7 million in 9M15).
Share in Associated Companies
During 3Q16, Buenaventura’s share in associated companies was negative US$11.9 million, compared to US$13.4 million reported in 3Q15, composed by:
| Share in the Result of Associates (in millions of US$) | 3Q16 | 3Q15 | Var % | 9M16 | 9M15 | Var % | ||||||||||||
| Cerro Verde | 9.5 | 1.3 | 621% | 44.3 | 10.1 | 339% | ||||||||||||
| Coimolache | 4.9 | 4.1 | 20% | 17.0 | 9.1 | 87% | ||||||||||||
| Yanacocha | -26.2 | 8.0 | N.A. | -24.1 | 42.4 | N.A. | ||||||||||||
| Total | -11.9 | 13.4 | N.A. | 37.2 | 61.6 | -40% | ||||||||||||
YANACOCHA
At Yanacocha (43.65% owned by Buenaventura), during 3Q16, gold production was 147,386 ounces, 39% lower than 3Q15 production (242,454 ounces). For 9M16, gold production was 483,258 ounces, 32% lower than 706,433 ounces in 9M15.
Gold production guidance at Yanacocha for 2016 is 630k – 660k ounces.
In 3Q16, Yanacocha reported a net loss of US$60.1 million compared to a net income of US$18.2 million reported in 3Q15. CAS in 3Q16 was US$1,040/oz, 65% higher than the US$630/oz reported in 3Q15 mainly due to: i) an inventory write-down of US$49.4 million in 3Q16 (US$19.9 million in 3Q15), and ii) lower volume sold (145,582 gold ounces in 3Q16 vs 257,606 gold ounces in 3Q15).
Advancing Yanacocha sulfides through Chaquicocha exploration drilling.
Capital expenditures at Yanacocha were US$26.7 million in 3Q16, while for 9M16 was US$62.7 million.
CERRO VERDE
At Cerro Verde (19.58% owned by Buenaventura), during 3Q16 copper production was 120,124 MT (23,520 MT attributable to Buenaventura), a 115% increase compared to 3Q15 (55,811 MT and 10,928 MT attributable to Buenaventura). For 9M16, copper production was 369,681 MT (72,384 MT attributable to Buenaventura).
During 3Q16, Cerro Verde reported a net income of US$48.3 million compared to net income of US$6.7 million in 3Q15. This increase was primarily due to: i) a lower cash cost, and ii) higher volumes sold. For 9M16, net income was US$226.0 million (compared to US$46.5 million in 9M15).
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 net income in 3Q16 was US$4.9 million (US$4.1 million in 3Q15). For 9M16, the contribution was US$17.0 million, compared to US$9.1 million reported in 9M15.
Project Development and Exploration
The Tambomayo Project (100% ownership)
- Proyect is on schedule and within budget
- Total CAPEX: US$ 340 M
- Overall project progress is at 96% (As of September 2016)
- Exploration and mine development are completed (100% of progress).
- The construction progress of the facilities is at 93%.
- The following facilities have been completed and already commissioned:
- Tailings dam
- Water dam
- Power line and substations
- Access road
- Crusher and stockpile area
The San Gabriel Project (100% ownership)
- Environmental Impact Assessment (EIA) of the project´s construction is expected to be approved in December 2016.
- Objectives for 4Q16:
- Drilling program: 3,000 meters in order to confirm resources and certainty
- Complete Metallurgical studies to be completed in order to improve recovery
Other
During the October 27, 2016 meeting, the Board of Directors meeting passed the following resolution:
- Declaration of cash dividend of US$ 0.030 per share or ADS, payable on November 30, 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 project.
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 2015 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
Source: Buenaventura
