Buenaventura profits take a 90% beating on dehedging

Peruvian miner Buenaventura (NYSE: BVN) saw its profits plummet 90% year-on-year in the second quarter to US$14.5mn due to the unwinding of its hedge book, the company said in its quarterly results statement.

By ridding itself of its forward sale contracts to take advantage of high spot prices, Buenaventura's Q2 profit took a US$64.7mn hit. Profits for the first half of this year registered at US$51.1mn or 81% behind the year-ago period.

Revenues, however, went up 9% in 2Q07 to US$188mn versus US$173mn in 2Q06 and to US$352mn in the first half, or 17% more than in the first half of last year.

Ebitda - taking into account the company's 43.7% stake in the Yanacocha gold mine and 18.5% of the Cerro Verde mine, both in Peru - fell 20% with respect to the year-ago period in the second quarter to US$207mn and dropped 9% to US$400mn in the first half.

Excluding the two equity interests, Ebitda rose 31% to US$111mn, Buenaventura said.

PRODUCTION

Buenaventura produced 98,177oz of gold in 2Q07, up 1% compared to 97,250oz in 2Q06, and 192,525oz in the first half of 2007 versus 190,394oz year-on-year, also a 1% rise.

However including Yanacocha, where grades have been falling notably in recent quarters, the company's total gold output registered at 230,257oz in Q2 compared to 327,630oz year-on-year, a 30% drop. First semester output also fell 25% to 507,137oz of gold.

Buenaventura's silver production amounted to 3.54Moz in 2Q07 versus 3.85Moz in 2Q06 and to 7.24Moz in 1H07 compared to 7.16Moz in 1H06.

Copper production was up at 11,930t in April-June compared to 4,366t year-on-year while zinc rose slightly at 8,977t compared to 7,753t in 2Q06. Lead dropped to 4,945t last quarter compared to 5,133t in the year-earlier period.

OUTPUT MINE BY MINE

The Orcopampa mine registered gold output of 65,587oz in 2Q07 with a 3% increase over the year-earlier period while cash costs rose 16% to US$163/oz due mostly to drilling expenses.

Uchucchacua's silver production fell 11% to 2.17Moz in the second quarter mainly due to a 10-day strike in May and lower recovery rates. Cash costs rose 34% to US$4.31/oz on lower output and higher reagent consumption at the mine's new cyanidation plant.

Antapite produced 34% less gold at 18,395oz in 2Q07 due to a sharp drop in grades. Cash costs rose 69% to US$360/oz on lower output and exploration costs.

Buenaventura's stake in the Colquijirca mine yielded 20,382t of zinc in the second quarter, a 26% increase over the year-earlier period. Cash costs went down 58% to US$259/t due to higher throughput.

Yanacocha's total output, of which Buenaventura receives 43.7%, was 302,590oz gold in the second quarter or 60% less than in 2Q06. Cash costs skyrocketed 127% to US$436/oz due to higher waste mined and lower production. US miner Newmont (NYSE: NEM) controls Yanacocha with 51.3%.

Cerro Verde's total output catapulted 173% to 64,487t copper in this year's second quarter.

All operations are in Peru.

Publication: Business News Americas - English News
Provider: Business News Americas
Date: July 30, 2007 (21:14)