Iberian Minerals Corp. (TSX VENTURE:IZN) today announced financial and operating
results for the second quarter ended June 30, 2010, with comparative figures for
the second quarter ended June 30, 2009. The Q2 2010 interim consolidated
financial statements and related notes, and Management Discussion and Analysis
may be found on www.sedar.com. Unless stated otherwise, all reported figures are
in U.S. dollars. The Company reported net income of $90.5 million for Q2 2010,
representing $0.27 per share, and net income of $80.6 million for the six months
ended June 30, 2010.
Effective April 1, 2010, Iberian changed its reporting currency to U.S. dollars.
All comparative figures have been re-stated from Canadian dollars to U.S.
dollars using prevailing exchange rates in the comparative periods.
Summarized results for the three and six months ended June 30, 2010:
Financial:
Three months ended June 30, 2010
- Recorded net income of $90.52 million or $0.27 per registered share which
included:
- Sales of $51.70 million and gross margin of $(13.72) million;
- A realized loss of $24.39 million on commodity hedges in the period
(included in sales);
- An unrealized non-cash gain of $131.11 million on derivative financial
instruments outstanding, as a result of the reduction of metal prices
over the period.
- Cash flow provided by operations before changes in non-cash working
capital was $1.49 million. Cash flow used in operations after changes in
non-cash working capital was $16.59 million.
Six months ended June 30, 2010
- Recorded net income of $80.61 million or $0.24 per registered share which
included:
- Sales of $107.49 million and gross margin of $(20.99) million;
- A realized loss of $45.23 million on commodity hedges in the period
(included in sales);
- An unrealized non-cash gain of $118.96 million on derivative financial
instruments outstanding, as a result of the reduction of metal prices
over the period.
- Cash flow from operations before changes in non-cash working capital was
$12.56 million. Cash flow used in operations after changes in non-cash
working capital was $15.77 million.
Operational - CMC:
Three months ended June 30, 2010
- Condestable Mine continued to process copper ore at budgeted rates. The
copper ore grade was slightly lower than expected at 1.18% versus 1.23% in
the second quarter of 2009. The copper ore grade of 1.18% in the second
quarter of 2010 improved from the first quarter 2010 copper ore grade of
1.10%.
- CMC processed 550,708 tonnes of ore in the period versus 530,201 tonnes
for the same period of the prior year (increase of 4%).
- Copper concentrate shipments in the period were 23,014 DMT versus 24,309
DMT in the prior year (decrease of 5%).
- Contained copper production in the period was 5,829 tonnes versus 5,973
tonnes in the prior year (decrease of 2%).
- The Cash Operating Cost (non-GAAP measure; see Note 1) for the period was
$1.02 per payable pound of copper versus prior year of $0.90. This was an
improvement from the first quarter 2010 Cash Operating Cost of $1.06.
Six months ended June 30, 2010
- Copper ore grade was lower than expected at 1.14% versus 1.23% in 2009.
- CMC processed 1,102,391 tonnes of ore in the period versus 1,064,839
tonnes for the same period of the prior year (increase of 4%).
- Copper concentrate shipments in the period were 44,296 DMT versus 48,649
DMT in the prior year (decrease of 9%).
- Contained copper production in the period was 11,164 tonnes versus 12,087
tonnes in the prior year (decrease of 8%).
- The Cash Operating Cost for the period was $1.04 per payable pound of
copper versus prior year of $0.85.
Other
- 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 $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.
- Completed the closing of a $55.00 million senior secured debt facility
which ultimately funded the Raul Transaction (the "CMC Facility").
Operational - MATSA (no comparables for the same period in 2009):
Three months ended June 30, 2010
- MATSA processed 381,795 tonnes of ore in the period.
- Produced 20,659 DMT of copper concentrate and 9,718 DMT of zinc
concentrate. Contained metal was 4,465 tonnes of copper and 4,633 tonnes
of zinc.
- The Cash Operating Cost was $2.38 per payable pound of copper. It was
higher than anticipated for steady state as the production rate in the
period was below current design capacity of 1.7 Mtpa at an average of 90%.
The copper circuit operated on target while the poly-metallic circuit
realized improvements and produced a separate copper concentrate in the
second quarter.
Six months ended June 30, 2010
- MATSA processed 739,357 tonnes of ore in the period.
- Produced 40,062 DMT of copper concentrate and 15,677 DMT of zinc
concentrate. Contained metal was 9,631 tonnes of copper and 7,566 tonnes
of zinc.
- The Cash Operating Cost was $2.30 per payable pound of copper. It was
higher than anticipated for steady state as the production rate in the
period was below current design capacity of 1.7 Mtpa at 87%.
Other
- 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.
- Completed the closing of a $50.00 million senior secured, revolving debt
facility which has resolved the previously announced funding shortfall.
- Received the EUR10.09 million grant from Junta de Andalucia in Spain (the
"Grant"). The Grant, which was finalized in February this year, relates to
the "Programa de Incentivos para el Fomento de la Innovacion y el
Desarollo Empresarial en Andalucia" (Incentive Program for the Promotion
of Innovation and Business Development in Andalucia) and was awarded based
on satisfying certain employment and financial conditions, which Iberian
has completed.
Summarized Financial Results
For accounting purposes, to September 30, 2009, MATSA was in a pre-production
phase. As such, sales and costs and expenses of mining operations incurred in
this phase were not recognized in the operating statement for the comparative
periods (three and six months ended June 30, 2009). Commercial production at
MATSA was declared with effect from October 1, 2009. Sales and costs of expenses
of mining operations for MATSA have been recognized in the operating statement
of the Company in the current periods (three and six months ended June 30,
2010).
Three months ended June Six months ended June
30, 30,
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2010 2009 2010 2009
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$ $ $ $
Sales 51,695 25,482 107,494 50,581
Costs and expenses of mining
operations 46,411 13,432 90,685 25,936
Mine site amortization 19,002 6,128 37,799 12,227
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Gross margin (13,718) 5,922 (20,990) 12,418
Expenses
Administrative expenses and
other 3,832 2,710 7,705 5,260
Foreign exchange (gain)/loss 5,856 (4,117) (7,222) (2,954)
Unrealized loss (gain) on
derivative financial
instruments (131,114) 58,890 (118,955) 128,374
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Total expenses (121,426) 57,483 (118,472) 130,680
Net income (loss) before
income taxes 107,708 (51,561) 97,482 (118,262)
Non-controlling interest 92 (345) 92 (685)
Income tax expense 1,256 2,732 2,678 6,052
Future income tax recovery 15,844 (14,665) 14,100 (36,681)
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Net income (loss) 90,516 (39,283) 80,612 (86,948)
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Basic earnings (loss) per
share ($) 0.27 (0.13) 0.24 (0.31)
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Diluted earnings (loss) per
share ($) 0.22 (0.13) 0.20 (0.31)
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Key operating statistics
Condestable:
CMC operating statistics
Three months Six months
Periods ended June 30, Unit 2010 2009 2010 2009
----------------------------------------------------------------------------
Ore mined t 552,706 530,883 1,104,033 1,058,210
Ore processed t 550,708 530,201 1,102,391 1,064,839
Copper ore grade % 1.18 1.23 1.14 1.23
Concentrate grade % 25 25 25 25
Copper recovery rate % 90 91 89 92
Copper concentrate DMT 23,014 24,309 44,296 48,649
Copper contained in
concentrate t 5,829 5,973 11,164 12,087
Gold contained in
concentrate oz 4,020 4,414 7,279 9,100
Silver contained in
concentrate oz 65,662 59,502 131,708 119,988
Payable copper contained
in concentrate t 5,571 5,684 10,668 11,507
Payable gold contained in
concentrate oz 3,318 3,984 6,269 8,189
Payable silver contained
in concentrate oz 63,821 53,123 122,966 108,206
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Cash Operating Cost per lb
of payable copper USD $ 1.02 $ 0.90 $ 1.04 $ 0.85
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MATSA:
MATSA operating statistics
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Three months Six months
Periods ended June 30, Unit 2010 2010
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Copper ore
----------
Ore mined t 293,732 578,944
Ore processed t 276,580 558,266
Copper ore grade % 1.79 1.84
Concentrate grade % 21 22
Copper recovery rate % 82 84
Copper concentrate DMT 18,322 37,725
Copper contained in concentrate t 3,949 8,487
Silver contained in concentrate oz 58,337 122,808
Payable copper contained in concentrate t 3,766 8,110
Payable silver contained in concentrate oz 40,664 86,420
Polymetallic ore
----------------
Ore mined t 114,392 176,051
Ore processed t 105,215 181,091
Copper ore grade % 1.38 1.30
Copper concentrate grade % 22 22
Copper recovery rate % 41 41
Zinc ore grade % 7.02 6.68
Zinc concentrate grade % 48 48
Zinc recovery rate % 60 62
Copper concentrate DMT 2,337 2,337
Copper/lead bulk concentrate DMT - 6,071
Zinc concentrate DMT 9,718 15,677
Copper contained in concentrate t 516 1,144
Zinc contained in concentrate t 4,633 7,566
Silver contained in concentrate oz 138,607 211,702
Payable copper contained in concentrate t 502 1,070
Payable zinc contained in concentrate t 3,856 6,312
Payable silver contained in concentrate oz 71,088 125,999
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Cash Operating Cost per lb of payable
copper USD 2.38 2.30
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Outlook and updated 2010 guidance
CMC
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 provides Iberian with greater control over the mining
operation at CMC and eliminates the Raul royalty payments. In connection with
the completion of the Raul Transaction, CMC successfully completed the CMC
Facility. The second priority was to improve reliability of the mining
operations by investing approximately $3.30 million in capital costs to improve
the secondary crushing. This project is progressing on target, with secondary
crushing expected to be operational in Q2 2011.
It is expected that CMC will process 2.2 million tonnes of ore in 2010, in line
with Iberian's 2010 guidance. The projected contained copper production for 2010
is now expected to be 23,500 t, approximately 5% lower than prior 2010 guidance
of 24,500 t, primarily due to lower than expected copper ore grade realized in
the first quarter. It is expected, for the balance of 2010, that CMC will have
access to higher copper ore grades from the Karina vein and will thus achieve an
average copper ore grade for the second half of 2010 of 1.20%. The forecast
copper ore grade for 2010 is now expected to be approximately 1.17%. Cash
Operating cost guidance for 2010 is forecast to be $1.03 per payable pound of
copper for 2010 as compared to guidance previously issued of $0.85. The increase
reflects lower than expected copper production and higher operating costs
realized during the year.
MATSA
At MATSA, having successfully dealt with financing needs in the second quarter,
the immediate priority is the completion of the 30% plant expansion. It is
expected that the expansion will be completed by the end of Q3 2010. The Company
expects that MATSA will operate at the expanded production rate in Q4 of 6,000
tpd of processed ore (equivalent of 2.2 Mtpa of processed ore). The expansion
required the presentation of a revised Study and Unified Environmental Report to
local Spanish authorities. This was presented in April 2010. It is expected that
the local authorities will complete the review and authorization process in time
for the planned start-up in Q3. While the Company does not anticipate any issues
obtaining such authorization from local authorities, the impact of any negative
developments in this regard would be a delay in the ability to operate the
processing plant at the forecasted expanded rate.
As previously reported, the copper/lead bulk separation circuit was started in
early April following completion of enhancements and after receiving permits for
the use of six new reagents for the operation of the new modular copper/lead
flotation separation circuit at the Aguas Tenidas Mine. As a result of the
enhancements MATSA has been able to produce copper concentrate and low quality
lead concentrate from the poly-metallic circuit. Due to lead concentrate quality
issues, the lead concentrate produced was not saleable. MATSA has undertaken
further enhancements as part of the plant expansion project with the expectation
that the lead concentrate will be commercially saleable by the end of 2010.
However, for purposes of the revised 2010 guidance issued below, the Company is
not expecting any credit for such lead concentrate.
The Company issues the following updated 2010 guidance for MATSA:
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Unit Year Q4
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Ore processed MT 1.7 to 1.8 million 550,000
Copper concentrate DMT 92,000 26,000
Zinc concentrate DMT 52,000 25,000
Lead concentrate DMT - -
Contained copper t 21,000 5,500
Contained zinc t 25,000 12,000
Contained lead t - -
Fine silver oz 580,000 100,000
Cash Operating Cost $ per lb of payable copper 2.05 1.70
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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.
Note 1 - The Cash Operating Cost per pound of payable copper is a non-GAAP
performance measure. It includes cash operating costs, including treatment and
refining charges ("TC/RC"), freight and distribution costs, and is net of
by-product metal credits (zinc, gold and silver). The Cash Operating Cost per
pound of payable copper indicator is consistent with the widely accepted
industry standard established by Brook Hunt and is also known as the C1 cash
cost.
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 March
29, 2010. 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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