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, today announced results for the first quarter (1Q17) period ended March 31, 2017. 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 2017 Highlights:
- In 1Q17, EBITDA from direct operations was US$80.7 million, increased 30% compared to US$62.0 million reported in 1Q16. Adjusted EBITDA (including associated companies) increased 21% (US$ 178.1 million) in 1Q17, compared to the US$ 146.8 million in 1Q16.
- Heavy rains due to “Coastal El Niño” did not impacted our operations facilities, however logistics processes were affected.
- Total attributable production in 1Q17 was 135k gold ounces and 6.1 million silver ounces, compared to 158k gold ounces and 6.2 million silver ounces in 2016.
- Tambomayo´s ramp-up has been extended due to a bottleneck detected within the tailing filtering process.
- El Brocal reported its second consecutive quarter of positive operating performance and financial results.
- San Gabriel´s Environmental Impact Assessment (EIA) was approved on March 31, 2017.
- At Cerro Verde, operating and financial results were slightly affected, despite a 21 day strike and the impacts of “Coastal El Niño”.
Financial Highlights (in millions of US$, except EPS figures):
| 1Q17 | 1Q16 |
Var % |
|||||||
| Total Revenues | 278.3 | 227.3 | 22 | % | |||||
| Operating Profit | 23.1 | 13.0 | 77 | % | |||||
| EBITDA Direct Operations | 80.7 | 62.0 | 30 | % | |||||
| Adjusted EBITDA (Inc Associates) | 178.1 | 146.8 | 21 | % | |||||
| Net Income | 70.7 | 51.6 | 37 | % | |||||
| EPS** | 0.28 | 0.20 | 37 | % | |||||
| (*) See Appendix 5 |
| (**) as of March 31, 2017 Buenaventura had a weighted average number of shares outstanding of 253,986,867. |
Operating Revenues
During 1Q17, net sales were US$272.8 million, a 24% increase compared to the US$220.6 million reported in 1Q16. This result was primarily due to an increase in all metal prices as well as higher volume sales of silver, zinc and lead.
Royalty income decreased 18% from US$6.7 million in 1Q16 to US$5.5 million in 1Q17 due to lower revenues at Yanacocha (17% QoQ).
| Operating Highlights | 1Q17 | 1Q16 |
Var % |
||||||
| Net Sales
(in millions of US$) |
272.8 | 220.6 | 24 | % | |||||
| Average Realized Gold Price (US$/oz) (1) (2) | 1,231 | 1,205 | 2 | % | |||||
| Average Realized Gold Price (US$/oz) inc. Affiliates (3) | 1,218 | 1,196 | 2 | % | |||||
| Average Realized Silver Price (US$/oz) (1) (2) | 16.65 | 14.37 | 16 | % | |||||
| Average Realized Lead Price (US$/MT) (1) (2) | 2,290 | 1,782 | 28 | % | |||||
| Average Realized
Zinc Price (US$/MT) (1) (2) |
2,899 | 1,620 | 79 | % | |||||
| Average Realized Copper Price (US$/MT) (1) (2) | 5,999 | 4,427 | 36 | % | |||||
| Volume Sold | 1Q17 | 1Q16 |
Var % |
||||||
| Gold Oz Direct Operations (1) | 78,338 | 80,989 | -3 | % | |||||
| Gold Oz inc Associated Companies (3) | 155,088 | 172,119 | -10 | % | |||||
| Silver Oz (1) | 5,999,608 | 5,314,779 | 13 | % | |||||
| Lead MT (1) | 9,719 | 6,567 | 48 | % | |||||
| Zinc MT (1) | 16,691 | 12,342 | 35 | % | |||||
| Copper MT (1) | 9,829 | 11,098 | -11 | % | |||||
| (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, 40.095% of Coimolache and 43.65% of Yanacocha. |
Production and Operating Costs
In 1Q17, Buenaventura’s gold equity production from direct operations was 62,828; a 4% decrease as compared to 1Q16 (65,376 gold ounces). In 1Q17 Gold production including associated companies was 135,428 ounces; a 14% decrease as compared to the same period 2015. This decline is due to a decrease in production at Yanacocha. Zinc and Lead equity production were higher during 1Q17 compared to 1Q16 mainly as a result increased production at Uchucchacua and El Brocal.
| Equity Production | 1Q17 | 1Q16 |
Var % |
||||||
| Gold Oz Direct Operations(1) | 62,828 | 65,376 | -4 | % | |||||
| Gold Oz including Associated(2) Companies | 135,428 | 157,955 | -14 | % | |||||
| Silver Oz Direct Operations(1) | 5,370,294 | 5,898,982 | -9 | % | |||||
| Silver Oz including Associated Companies | 6,133,526 | 6,213,680 | -1 | % | |||||
| Lead MT | 7,802 | 6,982 | 12 | % | |||||
| Zinc MT | 13,570 | 10,368 | 31 | % | |||||
| Copper MT Direct Operations(1) | 6,338 | 6,459 | -2 | % | |||||
| Copper MT including Associated Companies | 29,588 | 30,623 | -3 | % | |||||
| Consolidated Production | 1Q17 | 1Q16 |
Var % |
||||||
| Gold Oz(3) | 80,279 | 84,254 | -5 | % | |||||
| Silver Oz(3) | 6,262,264 | 6,157,018 | 2 | % | |||||
| Lead MT(3) | 10,320 | 8,183 | 26 | % | |||||
| Zinc MT(3) | 20,959 | 14,405 | 20 | % | |||||
| Copper MT(3) | 11,214 | 11,417 | -2 | % | |||||
| (1) | Buenaventura’s Direct Operations includes 100% of Buenaventura’s operating units, 53.06% of La Zanja and 61.32% of El Brocal. | |
| (2) | Consider 100% of Buenaventura´s operating units, 53.06% of La Zanja, 61.32% of el Brocal, 40.095% of Coimolache and 43.65% of Yanacocha. | |
| (3) | Considers 100% of Buenaventura’s operating units, 100% of La Zanja and 100% of El Brocal. |
Orcopampa (100% owned by Buenaventura)
| Production | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Gold | Oz | 42,332 | 44,135 | -4 | % | ||||
| Silver | Oz | 140,095 | 147,414 | -5 | % | ||||
| Cost Applicable to Sales | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Gold | US$/Oz | 777 | 688 | 13 | % | ||||
Gold production at Orcopampa decreased 4% in 1Q17 year on year, primarily due to lower ore grades (see Appendix 2). Cost Applicable to Sales (CAS) in 1Q17 (777 US$/Oz) increased 13% compared to 1Q16 (688 US$/Oz), mainly due to higher contractor expenses (a non-recurrent closing bonus), an increase in meters drifted and lower ounces sold (4% QoQ).
Gold production guidance for 2017 is 180k – 190k ounces.
Uchucchacua (100% owned by Buenaventura)
| Production | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Silver | Oz | 4,021,722 | 4,161,975 | -3 | % | ||||
| Zinc | MT | 1,882 | 1,725 | 9 | % | ||||
| Lead | MT | 2,794 | 2,506 | 11 | % | ||||
| Cost Applicable to Sales | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Silver | US$/Oz | 10.92 | 10.35 | 5 | % | ||||
Silver production in 1Q17 was in line with 1Q16. Cost Applicable to Sales (CAS) in 1Q17 (10.92 US$/Oz) increased 5% compared to 1Q16 (10.35 US$/Oz), mainly due to an increase in labor expenses and higher contractor expenses (a non-recurrent closing bonus).
Silver production guidance for 2017 is 16.0 million – 17.0 million ounces.
Mallay (100% owned by Buenaventura)
| Production | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Silver | Oz | 320,372 | 408,619 | -22 | % | ||||
| Zinc | MT | 2,174 | 2,764 | -21 | % | ||||
| Lead | MT | 1,322 | 2,069 | -36 | % | ||||
| Cost Applicable to Sales | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Silver | US$/Oz | 13.18 | 11.93 | 10 | % | ||||
Silver production in 1Q17 decreased 22% year on year, primarily due to lower ore grades (see Appendix 2). Cost Applicable to Sales (CAS) in 1Q17 increased by 10% year on year, primarily due to a decrease in ounces sold (9% QoQ).
Silver production guidance for 2017 is 1.5 million – 1.7 million ounces.
Julcani (100% owned by Buenaventura)
| Production | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Silver | Oz | 666,236 | 853,052 | -22 |
% |
||||
| Cost Applicable to Sales | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Silver | US$/Oz | 13.36 | 10.66 | 25 | % | ||||
Silver production in 1Q17 was 22% lower compared to 1Q16; primarily due to a decrease in ore treated (15% QoQ) and lower ore grades (10% QoQ). Cost Applicable to Sales (CAS) in 1Q17 (13.36 US$/Oz) was 25% higher than 1Q16 (10.66 US$/Oz), primarily explained by lower production. Management changed the mining method at Julcani after rock fall resulted in a fatal accident in January 2017, temporarily impacting productivity. This effect has been already surpassed.
Silver production guidance for 2017 is 3.0 million – 3.4 million ounces.
La Zanja (53.06% owned by Buenaventura)
| Production | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Gold | Oz | 32,255 | 34,193 | -6 | % | ||||
| Silver | Oz | 68,931 | 59,236 | 16 | % | ||||
| Cost Applicable to Sales | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Gold | US$/Oz | 723 | 538 | 34 | % | ||||
Gold production in 1Q17 decreased by 6% year on year, in line with the mine production plan. Cost Applicable to Sales (CAS) in 1Q17 (723 US$/Oz) increased 34% compared to 1Q16 (538 US$/Oz), primarily due to i) increased reagent consumption (associated with an increase in acid water treated), ii) decrease in ounces sold (3% QoQ) and iii) lower ore grades.
Gold production guidance for 2017 is 115k – 125k ounces.
Tantahuatay (40.10% owned by Buenaventura)
| Production | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Gold | Oz | 31,245 | 34,562 | -10 | % | ||||
| Silver | Oz | 133,274 | 243,990 | -45 | % | ||||
| Cost Applicable to Sales | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Gold | US$/Oz | 508 | 427 | 19 | % | ||||
Gold production in 1Q17 decreased 10% year on year, in line with the mine production plan. Cost Applicable to Sales (CAS) in 1Q17 (508 US$/Oz) increased 19% compared to 1Q16 (427 US$/Oz) mainly due to a decrease in ounces sold and higher exploration expenses.
Gold production guidance for 2017 is 145k – 155k ounces
El Brocal (61.32% owned by Buenaventura)
| Production | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Copper | MT | 11,155 | 11,344 | -2 | % | ||||
| Zinc | MT | 16,903 | 9,916 | 70 | % | ||||
| Silver | Oz | 1,044,908 | 526,724 | 98 | % | ||||
| Cost Applicable to Sales | |||||||||
| 1Q17 | 1Q16 | Var % | |||||||
| Copper | US$/MT | 4,877 | 4,823 | 1 | % | ||||
| Zinc | US$/MT | 1,947 | 1,474 | 32 | % | ||||
Copper production in 1Q17 was in line with 1Q16. In 1Q17 zinc production increased 70% compared to 1Q16 mainly due to an increase ore treated and higher ore grades.
In 1Q17, zinc Cost Applicable to Sales (CAS) increased 32% year to year, mainly due to higher commercial deductions triggered by higher zinc prices (79% QoQ), which activated the treatment charges escalators. Copper CAS in 1Q17 was in line with the figure reported in 1Q16.
Zinc production guidance for 2017 is 60k – 70k MT, while copper production guidance for 2017 is 55k – 65k MT.
General and Administrative Expenses
1Q17 General and Administrative expenses were US$22.5 million; a 5% increase as compared to the US$21.4 million in 1Q16 mainly due to an increase insurance expenses (29% QoQ).
Exploration in Non-Operating Areas
1Q17 Exploration costs in Non-Operating Areas were US$2.3 million compared with US$3.5 million in 1Q16. During the period, Buenaventura’s primarily focused its exploration efforts on the Marcapunta Norte (US$0.38 million) and San Gabriel projects (US$0.19 million).
Share in Associated Companies
During 1Q17, Buenaventura’s share in associated companies was US$44.9 million, compared to US$28.4 million reported in 1Q16, comprised of:
| Share in the Result of Associates (in millions of US$) |
1Q17 | 1Q16 | Var % | ||||||
| Cerro Verde | 36.0 | 19.0 | 90 | % | |||||
| Coimolache | 4.3 | 5.7 | -25 | % | |||||
| Yanacocha | 4.6 | 3.7 | 23 | % | |||||
| Total | 44.9 | 28.4 | 58 | % | |||||
YANACOCHA
At Yanacocha (43.65% owned by Buenaventura), 1Q17 gold production was 137,621 ounces (60,072 ounces attributable to Buenaventura); a 24% decrease as compared to the 180,348 ounces (78,722 ounces attributable to Buenaventura) produced in 1Q16.
Gold production guidance at Yanacocha for 2017 is 530k – 560k ounces.
In 1Q17, Yanacocha reported a net income of US$10.4 million, compared to a net income of US$8.5 million reported in 1Q16.
CAS in 1Q17 was US$823/oz; a 12% increase as compared to the US$734/oz reported in 1Q16 mainly due to lower volume sold (147,821 gold ounces in 1Q17 vs 180,348 gold ounces in 1Q16).
The Quecher Main project engineering (oxide deposit) is being developed, a decision to progress is expected in 2H17. In the case of Yanacocha Sulphides, technical and economic viability has been improving, with an update expected in 2H17.
Capital expenditures at Yanacocha were US$12.6 million in 1Q17.
CERRO VERDE
At Cerro Verde (19.58% owned by Buenaventura), 1Q17 copper production was 118,744 MT (23,250 MT attributable to Buenaventura), a 4% decrease compared to 1Q16 (123,414 MT and 24,164 MT attributable to Buenaventura).
During 1Q17, Cerro Verde reported a net income of US$184.0 million compared to net income of US$96.9 million in 1Q16. This increase was primarily due to: i) an increase in volumes sold and ii) higher realized price (US$2.83/Lb in 1Q17 compared to US$2.23/Lb in 1Q16).
Capital expenditures at Cerro Verde were US$24.7 million in 1Q17.
|
Cerro Verde´s Debt: |
||||
| 1. | Syndicated Loan (US$1.8B): US$540 million of which have been prepaid. | |||
| 2. | Shareholder´s Loan (US$0.6B): US$85 million of which have been prepaid. | |||
Copper production guidance at Cerro Verde for 2017 is 500k MT – 550k MT.
COIMOLACHE (Tantahuatay operation)
At Coimolache (40.10% owned by Buenaventura), 1Q17 attributable contribution to net income was US$4.3 million (US$5.7 million in 1Q16).
Project Development and Exploration
The Tambomayo Project (100% ownership)
- Project ramp-up has been extended due to additional adjustments that have to be made in the tailings filtering process.
- Full capacity expected by 3Q17.
- Updated 2017 Production Guidance of 60k – 90k Au Oz.
The San Gabriel Project (100% ownership)
- Environmental Impact Assessment (EIA) was approved on March 31, 2017.
- Prefeasibility in progress to complete:
- Mining method and rock support analysis
- Metallurgical test to optimize the design of the processing plant and recovery rate
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
