Iberian Minerals Corp. (TSX VENTURE:IZN) today announced financial and operating
results for the year ending December 31, 2009, with comparative figures for the
year ending December 31, 2008. The 2009 audited consolidated financials
statements and related notes, and Management Discussion and Analysis may be
found on www.sedar.com. The Company reported a net loss of $ 249.6 million for
fiscal 2009, representing $0.81 per share.
In addition, the Company has filed an Annual Information Form for the year ended
December 31, 2009.
Highlights for the Year Ended December 31, 2009
Financial:
Year ended December 31, 2009
-- Net loss was $249.64 million or $0.81 per share for the year, compared
with net income of $47.79 million or $0.19 per share in 2008. The loss
in 2009 was primarily due to an unrealized loss on derivative financial
instruments of $360.79 million compared to a $255.62 million unrealized
gain on derivative financial instruments and a $280.15 million realized
gain on derivative financial instruments in the prior year. The prior
year's realized and unrealized gains on derivative financial instruments
were offset by impairment of mining interests and goodwill of $394.18
million.
-- Before the impact of unrealized gain or loss on derivative financial
instruments net income before income taxes was $28.03 million or $0.09
per share, compared with a net loss before income taxes of $155.26
million or $0.62 per share in 2008. The unrealized loss on commodity
derivative contracts must be recorded in accordance with GAAP. Future
loss (or gain) to be realized upon settlement of the commodity
derivative contracts may differ materially.
-- Sales in the year were $161.13 million compared to $97.87 million in
2008.
-- Cash flow from operations before changes in non-cash working capital was
$35.44 million compared with $285.69 million in 2008. Cash flow from
operations after changes in non-cash working capital was $9.58 million
compared with $201.48 million in 2008.
Three months ended December 31, 2009
-- Net loss was $68.34 million or $0.20 per share for the fourth quarter,
compared with net loss of $16.15 million or $0.06 per share in the
fourth quarter of 2008. The loss in 2009 was primarily due to an
unrealized loss on derivative financial instruments of $122.09 million
compared to a $148.60 million unrealized gain on derivative financial
instruments and a $280.15 million realized gain on derivative financial
instruments in the prior year period. The prior year period realized and
unrealized gains on derivative financial instruments were offset by
impairment of mining interests and goodwill of $394.18 million.
-- Before the impact of unrealized gain or loss on derivative financial
instruments net income before income taxes was $10.24 million or $0.03
per share, compared with a net loss before income taxes of $142.89
million or $0.56 per share in the fourth quarter of 2008. The unrealized
loss on commodity derivative contracts must be recorded in accordance
with GAAP. Future loss (or gain) to be realized upon settlement of the
commodity derivative contracts may differ materially.
-- Sales in the period were $70.84 million compared to $22.40 million in
2008.
-- Cash flow from operations before changes in non-cash working capital was
$12.63 million compared with $264.40 million in 2008. Cash flow used in
operations after changes in non-cash working capital was $2.90 million
compared with cash provided by operations of $183.72 million in the
fourth quarter of 2008.
Operational - CMC:
Twelve months ended December 31, 2009 versus eleven months ended December 31, 2008
-- Operations at the Condestable Mine remained in a steady state.
-- CMC processed 2,159,549 tonnes of ore in the period versus 2,028,022
tonnes in the prior year.
-- Copper concentrate shipments in the period were 95,339 tonnes versus
94,425 tonnes in the prior year.
-- Contained copper production in the period was 23,832 tonnes versus
23,228 tonnes in the prior year.
-- Operating costs for the period (C1 and C3) were US$ 0.90 and US$ 1.24
per payable pound of copper versus prior year C1 and C3 of US$ 0.96 and
US$ 1.42 respectively.
Three months ended December 31, 2009 versus 2008
-- CMC processed 544,084 tonnes of ore in the period versus 554,838 tonnes
in the prior year.
-- Copper concentrate shipments in the period were 23,429 tonnes versus
26,744 tonnes in the prior year.
-- Contained copper production in the period was 5,879 tonnes versus 6,390
tonnes in the prior year.
-- Operating costs for the period (C1 and C3) were US$ 0.94 and US$ 1.38
per payable pound of copper versus prior year C1 and C3 of US$ 0.98 and
US$ 1.44 respectively.
Other
-- On December 23, 2009 the Company announced that an agreement has been
entered into with Corianta S.A., a subsidiary of Cementos Pacasmayo
S.A.A., member of Hochschilds Group to purchase all remaining interest
in the Raul Mine, which forms part of the Condestable operation. The
purchase price is US$ 28.00 million, and is to close by March 31, 2010.
Development and operational - MATSA:
-- The Company continued the ramp-up of production at MATSA, with
commercial production declared during the fourth quarter of 2009 with
effect from October 1, 2009.
-- During the development and ramp up phase for the nine months ended
September 30, 2009, MATSA processed 488,557 tonnes of ore and produced
20,571 tonnes of copper concentrate, 10,742 tonnes of zinc concentrate,
6,937 tonnes of copper-lead bulk concentrate, and 913 tonnes of lead
concentrate for revenues of US$ 27.90 million. As this revenue was
generated prior to declaration of commercial production it was
capitalized for accounting purposes.
-- In the fourth quarter MATSA processed 360,458 tonnes of ore.
-- Shipments in the fourth quarter were 20,398 tonnes of copper
concentrate, 2,473 tonnes of zinc concentrate and 2,368 tonnes of
copper-lead bulk concentrate. Contained metal was 5,074 tonnes of copper
and 1,218 tonnes of zinc.
-- Operating costs for the fourth quarter (C1 and C3) were US$ 2.61 and US$
3.34 per payable pound of copper. C1 and C3 cost figures were higher
than anticipated for steady state as the production rate in the period
was below nameplate capacity of 1.7 Mtpa at 85%. In addition, grade and
recovery were below targets.
Summarized Financial Results
For accounting purposes, to September 30, 2009, MATSA was considered to be in a
pre-production phase. As such, sales and costs and expenses of mining operations
incurred in this phase were not recognized in the operating statement and were
capitalized in property, plant and equipment until such time that MATSA achieved
commercial production. Commercial production at MATSA was declared with effect
from October 1, 2009. As such sales and costs of expenses of mining operations
for MATSA were recognized in the operating statement of the Company in the
fourth quarter of 2009.
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Year ended December 31, 2009 2008
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$ $
Sales 161,133 97,866
Costs and expenses of mining operations 133,674 105,363
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Gross margin 27,459 (7,497)
Expenses
Administrative expenses and other 18,144 9,675
Foreign exchange (gain)/loss (18,711) 23,029
Unrealized (gain)/loss on derivative financial
instruments 360,789 (255,616)
Realized gain on derivative financial instruments - (280,150)
Impairment of investments - 1,026
Impairment of mining interests and goodwill - 394,183
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Total expenses (other income) 360,222 (107,853)
Net income (loss) before income taxes (332,763) 100,356
Non-controlling interest (1,063) 4,685
Income tax expense 14,130 7,355
Future income tax recovery (96,189) 40,522
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Net (loss) income (249,641) 47,794
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Basic (loss) income per share ($) (0.81) 0.19
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Diluted (loss) income per share ($) (0.81) 0.18
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Key Operating Statistics
CMC operating statistics
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Three months Twelve months (i)
Periods ended December 31, Unit 2009 2008 2009 2008
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Ore mined t 590,493 571,815 2,231,798 2,052,081
Ore processed t 544,084 554,838 2,159,549 2,028,022
Copper ore grade % 1.21 1.24 1.22 1.24
Concentrate grade % 25 24 25 25
Copper recovery rate % 90 93 91 93
Copper concentrate DMT 23,429 26,744 95,339 94,425
Copper contained in
concentrate t 5,879 6,390 23,832 23,228
Gold contained in
concentrate oz 3,952 4,790 17,361 16,091
Silver contained in
concentrate oz 70,472 72,015 250,504 259,676
Payable copper contained in
concentrate t 5,630 6,074 22,952 22,105
Payable gold contained in
concentrate oz 3,586 4,324 15,764 14,527
Payable silver contained in
concentrate oz 63,254 64,295 226,357 231,848
C1 cost per lb of payable
copper USD $ 0.94 $ 0.98 $ 0.90 $ 0.96
C3 cost per lb of payable
copper USD $ 1.38 $ 1.44 $ 1.24 $ 1.42
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(i) in 2008 the period was for eleven months ended December 31, 2008.
MATSA operating statistics
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Three months ended December 31, Unit 2009
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Copper ore
----------------------------------------------
Ore mined t 322,275
Ore processed t 321,951
Copper ore grade % 1.84
Concentrate grade % 23
Copper recovery rate % 81
Copper concentrate DMT 20,398
Copper contained in concentrate t 4,800
Silver contained in concentrate oz 51,536
Payable copper contained in concentrate t 4,596
Payable silver contained in concentrate oz 31,862
Polymetallic ore
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Ore mined t 56,881
Ore processed t 38,507
Copper ore grade % 1.20
Copper/lead bulk concentrate grade % 12
Copper recovery rate % 62
Zinc ore grade % 6.57
Zinc concentrate grade % 49
Zinc recovery rate % 51
Copper/lead bulk concentrate DMT 2,368
Zinc concentrate DMT 2,473
Copper contained in concentrate t 274
Zinc contained in concentrate t 1,218
Silver contained in concentrate oz 20,605
Payable copper contained in concentrate t 250
Payable zinc contained in concentrate t 1,020
Payable silver contained in concentrate oz 18,321
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C1 cost per lb of payable copper USD $ 2.61
C3 cost per lb of payable copper USD $ 3.34
----------------------------------------------------------------------------
Outlook
Following the conclusion of a tumultuous year in 2009, which commenced with the
carry-over effect of a severe global recession from late 2008, global economies
have moved towards recovery. Iberian expects that this recent recovery will
continue in 2010. However, it remains unclear at what pace this will occur.
The medium term outlook for commodities appears to remain positive. It is
expected that industrializing countries, especially China, will continue to
focus on growing domestic infrastructures and this will continue to stimulate
the demand for commodities. As a base metals producer of copper, zinc and lead,
Iberian's operations are subject to the demand for, and fluctuations in the
market prices of these commodities. The Company considers itself well-positioned
for the future.
The outlook for CMC is positive in that it will continue to produce copper
concentrate at similar levels to 2009. It is expected that CMC will process 2.2
million tonnes of ore in 2010. In addition to maintaining steady state
production, CMC has set two priorities for 2010. The first priority is to
complete the US$ 28.00 million purchase of the Raul mine lease and royalty which
will generally allow for greater control over the mining operation and eliminate
the Raul mine lease and royalty payments. In connection with this CMC must
successfully complete the previously announced financing by way of an amended
senior, secured debt facility, in the expected amount of US$ 55.00 million.
There can be no assurance that this or any other financing will be finalized, or
the terms on which any financing will be obtained. The potential consequence of
not successfully completing this or any other financing is to solely frustrate
the purchase of the Raul mine lease and royalty. The second priority is to
improve reliability of the operation by investing US$ 3.30 million in
improvement of secondary crushing.
MATSA achieved a significant milestone when the Company declared commercial
production in October 2009. Both circuits at the processing plant are
operational, and processing results continue to improve. With further
enhancements to the polymetallic circuit that are currently underway to produce
separate copper and lead concentrates, rather than a bulk concentrate, and the
planned process plant expansion to increase capacity to the equivalent of 2.2
million tonnes per annum, 2010 will be a pivotal year in the further growth and
maturation of the Aguas Tenidas Mine.
In 2010, the Company must address four significant short term priorities.
First a projected funding shortfall at MATSA was identified in 2009. This cash
shortfall arose mainly due to the acquisition of the Insersa underground
contractor and pending receipt of the approved government grant. In addition,
delays in production due to modifications to the polymetallic circuit, together
with on-going ramp-up issues affected the financial condition at MATSA. The
Company quantified the extent of MATSA's projected 2010 cash shortfall between
approximately US$ 40 and US$ 45 million. It is expected that the Company will
address this funding requirement through completion of a proposed US$ 50 million
senior, secured debt facility which the Company now expects to be completed by
mid-April.
Second, the Company currently projects that its corporate operations are
under-funded by approximately $3 to $4 million for 2010. The Company is
evaluating options to address its corporate requirements.
Third, MATSA must successfully complete and implement the current enhancements
to the polymetallic circuit. The modular installation is complete and
commissioned in Q1 2010. The effective use of this circuit is dependent on
additional reagents being used. MATSA received from the relevant authority of
the Junta de Andalucia, in Spain, the environmental authorization which permits
the use of six new reagents for the operation of the new modular copper/lead
flotation separation circuit at the Aguas Tenidas Mine. The reagents have now
been received on site and the bulk separation circuit will start up in early
April in line with the planned processing of polymetallic ores during the month.
Finally, during 2010, MATSA must successfully complete and implement the planned
processing plant expansion. Currently, the Company is on track to be operating
at the 2.2 Mtpa level by the third quarter of 2010. The capital cost estimate
for the expansion is expected to be between US$ 13.00 million and US$ 15.00
million and consists of mine and processing equipment that is comparable in
nature to that currently employed in the operations. The ability to operate at
the increased level will depend on added employment, successful completion of
certain labour arrangements, and applications to the government authorities for
the necessary permits to allow operations at the increased level of 2.2 Mtpa.
There can be no assurance as to the fact or timing of, or conditions attached to
any government permits or authorizations. While the Company does not anticipate
any issues relating to a Q3 operation at 2.2 Mtpa, the impact of any negative
developments in this regard would be the inability to expand the processing
plant, either in whole or in part.
About Iberian Minerals Corp.
Iberian Minerals Corp. is a Canadian listed global base metals company with
interests in Spain and Peru. The Condestable Mine, located in Peru approximately
90 km south of Lima operates at 2.2 million tonnes per year producing copper,
and associated silver and gold in a concentrate. The Aguas Tenidas Mine is in
the Andalucia region of Spain approximately 110 km north-west of Seville and
operates a 1.7 million tonnes per year underground mine and concentrator that
produces copper, zinc and bulk copper/lead concentrates that also contain gold
and silver.
C1 costs are cash costs including mining, processing, site administration, and
refining and treatment charges, net of by product credits, and C3 costs are
total costs being C1 costs plus depreciation and amortization charges,
royalties, interest costs and financing charges.
FORWARD LOOKING STATEMENTS:
This news release contains certain "forward-looking statements" and
"forward-looking information" under applicable securities laws. Except for
statements of historical fact, certain information contained herein constitutes
forward-looking statements. Forward-looking statements are frequently
characterized by words such as "plan", "expect", "project", "intend", "believe",
"anticipate", "estimate", and other similar words, or statements that certain
events or conditions "may" or "will" occur. Forward looking information may
include, but is not limited to, statements with respect to the future financial
or operating performances of the Corporation, its subsidiaries and their
respective projects, the timing and amount of estimated future production,
estimated costs of future production, capital, operating and exploration
expenditures, the future price of copper, gold and zinc, the estimation of
mineral reserves and resources, the realization of mineral reserve estimates,
the costs and timing of future exploration, requirements for additional capital,
government regulation of exploration, development and mining operations,
environmental risks, reclamation and rehabilitation expenses, title disputes or
claims, and limitations of insurance coverage. Forward-looking statements are
based on the opinions and estimates of management at the date the statements are
made, and are based on a number of assumptions and subject to a variety of risks
and uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. Many
of these assumptions are based on factors and events that are not within the
control of the Corporation and there is no assurance they will prove to be
correct. Factors that could cause actual results to vary materially from results
anticipated by such forward-looking statements include changes in market
conditions and other risk factors discussed or referred to in the section
entitled "Risk Factors" in the Corporation's annual information form dated April
30, 2009. Although the Corporation has attempted to identify important factors
that could cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other factors that
cause actions, events or results not to be anticipated, estimated or intended.
There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from those
anticipated in such statements. The Corporation undertakes no obligation to
update forward-looking statements if circumstances or management's estimates or
opinions should change except as required by applicable securities laws. The
reader is cautioned not to place undue reliance on forward-looking statements.
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