Iberian Minerals Corp. (TSX VENTURE:IZN) today announced financial and operating
results for the first quarter ended March 31, 2010, with comparative figures for
the first quarter ended March 31, 2008. The Q1 2010 interim consolidated
financial statements and related notes, and Management Discussion and Analysis
may be found on www.sedar.com. The Company reported a net loss of $10.01 million
for Q1 2010, representing $0.03 per share.
Summarized results for the period ended March 31, 2010:
Financial:
-- Net loss was $10.01 million or $0.03 per share, compared with $60.49
million or $0.24 per share for the same period of 2009. The loss in 2010
was primarily due to an unrealized loss on derivative financial
instruments of $12.35 and a gross margin of $(7.56) million partially
off-set by a foreign exchange gain of $13.60 million.
-- Sales in the period were $58.04 million compared to $31.24 million for
the same period of 2009.
-- Cash flow from operations before changes in non-cash working capital was
$11.83 million compared with $12.52 million for the same period of 2009.
Cash flow from operations after changes in non-cash working capital was
$0.17 million compared with $3.01 million for the same period of 2009.
Operational - Condestable:
-- Operations at the Condestable Mine remained in a steady state however
the copper ore grade was lower than expected at 1.10% versus 1.23% in
the first quarter of 2009.
-- CMC processed 551,683 tonnes of ore in the period versus 534,638 tonnes
for the same period of the prior year (increase of 3%).
-- Copper concentrate shipments in the period were 21,283 tonnes versus
24,339 tonnes in the prior year (decrease of 13%).
-- Contained copper production in the period was 5,335 tonnes versus 6,114
tonnes in the prior year (decrease of 13%).
-- Operating costs for the period, C1 and C3, were US$ 1.06 and US$ 1.59
per payable pound of copper versus prior year C1 and C3 of US$ 0.81 and
US$ 1.04 respectively.
Other
-- CMC completed the previously announced purchase from Corianta S.A. of
all remaining interest in the Raul Mine, which forms part of the
Condestable operation (the "Raul Transaction"). The purchase price was
US$ 28.00 million. As such, CMC is no longer obligated to make royalty
payments that it was previously required to pay in connection with the
lease of the Raul Mine.
-- CMC completed the closing of a US$ 55 million senior secured debt
facility which ultimately funded the Raul Transaction.
Operational - MATSA (no comparables for the same period in 2009):
-- MATSA processed 285,212 tonnes of ore in the period.
-- Shipments in the first quarter were 19,403 tonnes of copper concentrate,
5,959 tonnes of zinc concentrate and 6,071 tonnes of copper-lead bulk
concentrate. Contained metal was 4,538 tonnes of copper and 2,933 tonnes
of zinc.
-- Operating costs for the first quarter, C1 and C3, were US$ 2.23 and US$
3.18 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 84%. The copper circuit
operated on target while the poly-metallic circuit was below target on
throughput and zinc recovery; however improvement in the poly-metallic
circuit was realized in the quarter versus the fourth quarter of 2009 as
throughput and zinc recovery increased by 97% and 25% respectively.
Other
-- 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 been
received on site and the bulk copper/lead separation circuit started in
early April.
-- Subsequent to the end of the first quarter, MATSA completed the closing
of a US$ 50.00 million senior secured, revolving debt facility which has
resolved the previously announced funding shortfall.
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 for the
comparative period (three months ended March 31, 2009). Commercial production at
MATSA was declared with effect from October 1, 2009. Sales and costs of expenses
of mining operations for MATSA have been recognized in the operating statement
of the Company in the current period (three months ended March 31, 2010).
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Three months ended March 31, 2010 2009
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$ $
Sales 58,037 31,238
Costs and expenses of mining operations 46,043 15,563
Mine site amortization 19,558 7,590
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Gross margin (7,564) 8,085
Expenses
Administrative expenses and other 4,027 3,176
Foreign exchange (gain)/loss (13,602) 1,445
Unrealized loss on derivative financial
instruments 12,352 87,646
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Total expenses 2,777 92,267
Net loss before income taxes (10,341) (84,182)
Non-controlling interest - (424)
Income tax expense 1,479 4,132
Future income tax recovery (1,814) (27,400)
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Net loss (10,006) (60,490)
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Basic (loss) income per share ($) (0.03) (0.24)
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Diluted (loss) income per share ($) (0.03) (0.24)
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Key operating statistics
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Condestable:
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Three months
Three months ended March 31, Unit 2010 2009
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Ore mined t 551,326 527,327
Ore processed t 551,683 534,638
Copper ore grade % 1.10 1.23
Concentrate grade % 25 25
Copper recovery rate % 88 93
Copper concentrate DMT 21,283 24,339
Copper contained in concentrate t 5,335 6,114
Gold contained in concentrate oz 3,259 4,686
Silver contained in concentrate oz 66,046 60,487
Payable copper contained in concentrate t 5,097 5,824
Payable gold contained in concentrate oz 2,951 4,205
Payable silver contained in concentrate oz 59,144 55,083
C1 cost per lb of payable copper USD $ 1.06 $ 0.81
C3 cost per lb of payable copper USD $ 1.59 $ 1.04
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MATSA:
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March 31, December
Three months ended, Unit 2010 31, 2009
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Copper ore
---------------------------------------------
Ore mined t 285,212 322,275
Ore processed t 281,685 321,951
Copper ore grade % 1.88 1.84
Concentrate grade % 23 23
Copper recovery rate % 86 81
Copper concentrate DMT 19,403 20,398
Copper contained in concentrate t 4,538 4,800
Silver contained in concentrate oz 64,471 51,536
Payable copper contained in concentrate t 4,344 4,596
Payable silver contained in concentrate oz 45,756 31,862
Polymetallic ore
---------------------------------------------
Ore mined t 61,659 56,881
Ore processed t 75,875 38,507
Copper ore grade % 1.27 1.20
Copper/lead bulk concentrate grade % 10 12
Copper recovery rate % 66 62
Zinc ore grade % 6.11 6.57
Zinc concentrate grade % 49 49
Zinc recovery rate % 64 51
Copper/lead bulk concentrate DMT 6,071 2,368
Zinc concentrate DMT 5,959 2,473
Copper contained in concentrate t 629 274
Zinc contained in concentrate t 2,933 1,218
Silver contained in concentrate oz 73,095 20,605
Payable copper contained in concentrate t 568 250
Payable zinc contained in concentrate t 2,456 1,020
Payable silver contained in concentrate oz 54,911 18,321
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C1 cost per lb of payable copper USD $ 2.23 $ 2.61
C3 cost per lb of payable copper USD $ 3.18 $ 3.34
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Outlook
The outlook for CMC is positive in that it will continue to produce copper
concentrate at similar levels to 2009. CMC set two priorities entering 2010. The
first priority was to complete the Raul Transaction, which occurred on March 31,
2010. The purchase of the Raul mine lease and royalty generally allows for
greater control over the mining operation and eliminates the Raul royalty
payments. In connection with this, CMC successfully completed the CMC Facility.
The second priority is to improve reliability of the operation by investing US$
3.30 million in improvement of secondary crushing. This project is progressing
on target.
It is expected that CMC will process 2.2 million tonnes of ore in 2010, in line
with 2010 guidance. The projected contained copper production for 2010 is now
expected to be 24,000 t or 2% lower than prior 2010 guidance issued, primarily
due to lower than expected copper ore grade realized in the first quarter. It is
expected, for the balance of 2010, CMC will have access to higher copper ore
grades from the Karina vein.
At MATSA both circuits at the processing plant are operational and processing
results continue to improve as evidenced by the first quarter operating results.
Enhancements to the poly-metallic circuit were concluded in the first quarter of
2010 which have allowed production of a separate copper concentrate and low
quality lead concentrate, rather than a bulk concentrate, since early April
2010. The planned process plant expansion to increase capacity to the equivalent
of 2.2 million tonnes per annum is underway and is on target for expected
completion in August 2010 with the anticipated increase in production of 30%
expected to commence in September 2010.
At the outset of 2010, MATSA set three significant short term priorities.
First, a projected funding shortfall for 2010 of between approximately US$ 40.00
million and US$ 45.00 million was identified. MATSA successfully addressed this
funding requirement through the closing of the US$ 50.00 million Senior Facility
which was completed in April 2010.
Second, MATSA sought to successfully complete and implement the current
enhancements to the poly-metallic circuit. The modular installation was
completed 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 bulk
separation circuit was started in early April and MATSA is now achieving
separation and is producing a copper concentrate and a low quality lead
concentrate from the poly-metallic circuit, although further optimization is
being undertaken.
Finally, during 2010, MATSA seeks to 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 end of the third quarter of 2010. The
capital cost estimate for the expansion is expected to be approximately 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 an end of 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.
The Company projects that MATSA is now on track to process between 1.8 million
and 1.9 million tons of ore for 2010 versus 2010 guidance previously issued of
1.9 million to 2.0 million, or a reduction of approximately 5%.
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 lead concentrates that also contain gold and silver.
Plans are underway for a plant expansion resulting in a capacity of 2.2 Mtpa at
Aguas Tenidas.
The C1 cash cost per pound of payable copper includes cash operating costs,
including treatment and refining charges ("TC/RC"), freight and distribution
costs, and is net of by-product metal credits.
The C3 cost per pound of payable copper includes C1 and additional costs such as
site amortization, royalties and interest costs.
C1 and C3 indicators are consistent with the widely accepted industry standard
established by Brook Hunt. Prior C1 and C3 figures have been restated where
necessary to conform to this standard.
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", "except", "project", "intend", "believe",
"anticipate", "estimate", and other similar words, or statements that certain
events or conditions "may" or "will" occur. 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.
Assumptions upon which such forward-looking statements are based included that
all required third party regulatory and governmental approvals will be obtained.
Many of these assumptions are based on factors and events that are not within
the control of Iberian 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 annual
Management's Discussion and Analysis and Annual Information Form for Iberian
filed with the applicable securities regulatory authorities and available at
www.sedar.com. Although Iberian 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. Iberian 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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