Compania de Minas Buenaventura Announces Fourth Quarter 2007 Results

LIMA, Peru, Feb. 28 /PRNewswire-FirstCall/ -- Compania 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, announced today its results for the fourth quarter 2007. All figures have been prepared according to Peruvian GAAP and are stated in U.S. dollars (US$).

Comments from the Chief Executive Officer:

Mr. Roque Benavides, Chief Executive Officer of Buenaventura, stated: "Net income in 4Q07 reached US$123.7 million, or US$0.97 per ADS, which represents a 54% increase when compared to 4Q06. This was driven by increased revenues from our direct operations, as well as the contribution of Cerro Verde and Yanacocha.

EBITDA from Buenaventura's direct operations was US$136.0 million, 32% higher than the figured reported in 4Q06.

Operating income was US$105.7 million, 3% lower than the figure reached in 4Q06.

With this our operating results fully reflect Buenaventura's de-hedging efforts."

Operating Revenue

In 4Q07, net sales were US$226.5 million, a 26% increase when compared to the US$179.3 million reported in 4Q06, mainly due to higher volumes of gold and zinc sold, as well as an increase in the realized prices of gold, silver and lead.

Royalty income during 4Q07 totaled US$11.7 million, a 26% increase when compared to the US$9.2 million reported in 4Q06. This was due to higher sales at Yanacocha.

Accumulated net sales for 2007 were US$747.0 million, a 36% increase compared to 2006 (US$548.1 million). Accumulated royalty income was US$34.0 million, a 30% decrease when compared to US$48.5 million in 2006.

Production and Operating Costs

Buenaventura's equity production(1) during 4Q07 was 109,132 ounces of gold, 9% higher than the 100,394 ounces reported in 4Q06; and 4,198,027 ounces of silver, a 1% increase when compared to the 4,156,784 ounces reported in 4Q06.

Equity production(1) for the accumulated twelve-month period was 404,166 ounces of gold and 14,765,694 ounces of silver. This represented a similar figure in gold production (405,383 ounces in 2006), and a 4% decrease in silver production compared to 2006 (15,450,953 ounces).

At Orcopampa (100%), total gold production in 4Q07 was 69,146 ounces, a 5% increase when compared to the 65,624 ounces reported in 4Q06 mainly due to higher grade and ore mined. Accumulated gold production was 267,935 ounces, a 5% increase when compared to 2006 (254,631 ounces).

Cash operating cost during 4Q07 was US$186/oz, 20% higher when compared to 4Q06 (US$155/oz). This was best explained by an increase in exploration works in the Prometida area (38% in diamond drilling and 30% in drifting), which increased labor and contractor expenses, supplies for support activities and energy consumption, as well as the revaluation of the PEN(2). Cash operating cost in 2007 was US$164/Oz, 14% higher than the figure reported in 2006 (US$145/Oz).

Total royalties paid to the government at Orcopampa in 4Q07 were US$2.5 million. For 2007, royalties totaled US$5.7 million.

At Uchucchacua (100%), total silver production during 4Q07 was 2,986,989 ounces, a 21% increase when compared to 4Q06 (2,458,477 ounces) mainly due to higher grades (17.1 Oz/ST in 4Q07 versus 15.2 Oz/ST in 4Q06), as well as higher ore mined and increased recovery rates. Accumulated silver production was 9,873,771 ounces, a 2% increase when compared to 2006 (9,692,300 ounces).

Cash operating cost decreased 40% from $5.55/oz in 4Q06 to US$3.32/oz in 4Q07. This was best explained by the previously mentioned increase in production, and the higher zinc and lead by-product contribution despite the PEN revaluation. Cash operating cost for 2007 was US$4.62/Oz, 3% higher than the figure reported in 2006 (US$4.50/Oz).

Total royalties paid to the government at Uchucchacua in 4Q07 were US$1.2 million. For 2007, royalties totaled US$3.5 million.

At Antapite (100%), total production in 4Q07 was 18,627 ounces of gold, a decrease of 24% when compared to 4Q06 (24,444 ounces), mainly due to a 23% decrease in the gold grade from 0.56 Oz/ST to 0.43 Oz/ST. Accumulated gold production was 72,171 ounces, a 30% decrease when compared to 2006 production (103,370 ounces).

Gold cash operating cost in 4Q07 was US$401/Oz, a 38% increase when compared to US$291/Oz in 4Q06. This increase was due to:

1. The lower gold content due to lower grades
2. A 70% increase in exploration expenses (diamond drilling)

Cash operating cost in 2007 was US$383/Oz, 56% higher than the figure reported in 2006 (US$246/Oz).

Total royalties paid to the government at Antapite in 4Q07 were US$0.3 million. For 2007, royalties totaled US$0.9 million.

At Colquijirca (34.29%), total zinc production was 24,467 MT in 4Q07, a 29% increase when compared to the 18,906 MT reported in 4Q06, mainly due to an increase in the tonnage treated, as well as a 24% increase in the zinc grade (7.14% in 4Q07 vs. 5.76% in 4Q06). Total silver production during 4Q07 was 1,770,039 ounces, a 41% decrease when compared to the 3,044,927 ounces reported in 4Q06, mainly due to a significant decrease in ore grade, based on the average grade of the mine, despite a higher volume of ore treated.

For 2007, total zinc production was 87,151 MT, a 33% increase when compared to the same period of 2006 (65,700 MT). In the case of silver, total production decreased 31% from 10,269,511 ounces in 2006, to 7,071,856 ounces in 2007.

Zinc cash operating costs for 4Q07 totaled US$143 per MT, higher than 4Q06 due to the reduction in silver contribution. For 2007, cash operating cost was US$126 per MT, a 46% decrease when compared to the US$233 per MT reported in 2006.

Total royalties paid to the government at Colquijirca in 4Q07 were US$1.9 million. For 2007, royalties totaled US$6.1 million.

Operating Expenses

General and administrative expenses for 4Q07 were US$23.9 million, a 116% increase when compared to the US$11.1 million reported in 4Q06. This was mainly due to an increase in the non-cash long term compensation provision. Accumulated general and administrative expenses for 2007 were US$59.2 million, a 62% increase when compared to the US$36.6 million reported in 2006.

Exploration Costs in Non-operational Mining Sites

Exploration costs in non-operating areas during 4Q07 were US$15.1 million, a 26% increase compared to the US$11.9 million reported in 4Q06. The main efforts were focused at the Breapampa (US$1.4 million), El Milagro (US$2.9 million), Trapiche (US$0.6 million) and Mallay (US$1.3 million) projects. Accumulated exploration costs in non-operating areas during 2007 were US$46.4 million, a 28% increase when compared to 2006 (US$36.2 million).

Operating Income

Operating income in 4Q07 was US$105.7 million, in-line with the US$108.7 million reported in 4Q06. For 2007, operating income before hedge book unwinding expenses was US$366.6 million, a 16% increase when compared to the US$317.3 million reported in 2006 due to the 22% increase in operating revenues. However, when considering the expenses associated with the unwinding of the hedge book, operating income totaled US$180.7 million.

Share in Affiliated Companies

Buenaventura's income from non-consolidated affiliates was US$78.0 million in 4Q07, an increase of 81% when compared to the US$43.0 million reported in 4Q06. This increase is explained by the higher contribution from Cerro Verde (US$29.5 million) and Yanacocha (US$47.4 million). For 2007, income from non- consolidated affiliates was US$249.6 million, a decrease of 20% compared to the US$313.2 million reported in 2006.

At Yanacocha (43.65%), 4Q07 gold production was 469,760 ounces of gold, an increase of 3% when compared to 4Q06 (456,032 ounces). Gold production in 2007 was 1,563,670 ounces, a decrease of 40% when compared to the 2,612,200 ounces reported in 2006.

Cash cost at Yanacocha during 4Q07 was US$305/oz, which represented a 17% increase compared to a cash cost of US$261/oz in 4Q06. This increase was primarily due to higher labor, diesel, and other commodity prices, as well as higher worker's participation bonuses and royalties due to increased gold prices, and the revaluation of the PEN. For 2007, cash cost was US$356/oz, a 67% increase when compared to 2006.

Net income at Yanacocha during 4Q07 was US$97.9 million, a 69% increase when compared to the US$58.1 million in 4Q06. For 2007, net income was US$221.5 million, a decrease of 58% when compared to US$525.4 million in 2006.

In 4Q07, EBITDA was US$174.2 million, an increase of 53% compared to 4Q06 (US$113.6 million). This increase was due to the higher volume of gold sold, as well as a higher realized gold prices, which increased from US$614/oz in 4Q06 to US$783/oz in 4Q07. Accumulated EBITDA for 2007 was US$475.0 million, a decrease of 49% when compared to the US$930.2 million reported in 2006.

CAPEX for 4Q07 was US$69.1 million, a 21% decrease when compared to the US$87.9 reported in 4Q06.

At Cerro Verde (18.50%), 4Q07 copper production was 76,534 MT, a 157% increase when compared to 4Q06 (29,736 MT). For 2007, copper production totaled 269,537 MT, 168% higher than the figured reported in 2006 (100,573 MT).

Net sales at Cerro Verde increased 133% from US$181.1 million in 4Q06 to US$422.7 million in 4Q07. Accumulated net sales for 2007 were US$1,794.6 million, an increase of 169% compared to 4Q06 (US$667.7 million) mainly due to the previously mentioned increase in production.

In 4Q07, net income reached US$165.0 million, a 62% increase compared to 4Q06 (US$102.0 million), best explained by higher production. For 2007, net income was US$804.7 million, an 81% increase compared to 2006 (US$444.6 million).

CAPEX for 4Q07 totaled US$27.9 million, and US$100.0 million for 2007.

Net Income

This quarter, Buenaventura's net income reached US$123.7 million, representing US$0.97 per ADS, a 54% increase when compared to the US$80.5 million reported (US$0.63 per ADS) in 4Q06. This was mainly due to higher direct operations revenues, as well as an increase in the contribution from Cerro Verde and Yanacocha, as previously explained.

Accumulated net income for 2007 was US$274.8 million (US$2.16 per ADS), a decrease of 36% when compared to the US$428.1 million (US$3.36 per ADS) reported in 2006, best explained by the expenses associated with the unwinding of the hedge book.

Hedging Operations

Per a filing with the SEC in February 2008, the Company completely unwound its gold hedge book.

Explorations Update
TANTAHUATAY

Buenaventura is in the process of improving its relationship with the surrounding communities, as well as increasing the mineable resources at Tantahuatay 2, Cienaga Norte and El Mirador. Total resources were 25 million MT, with 0.8 g/MT of gold in oxides measured and indicated by diamond drilling with a 0.2 g/MT of cut off. The feasibility study has demonstrated the technical and economical viability of an open pit heap leaching. An environmental impact study is almost completed, and will be presented to the mining authorities in order to work on permitting.

TRAPICHE

After 20,000 meters of diamond drilling, Buenaventura has delineated an important copper deposit. A geo-statistic model, developed by AMEC, found inferred resources of 315 million MT, with 0.48% copper, 0.02% molybdenum, and over a 0.2% copper cut off. Metallurgical testing has found good results for the flotation of the basic mineralization types to produce clean concentrates. For 2008, the Company estimates a 30,000 meter diamond drilling campaign.

UCHUCCHACUA
The deepening of the Carmen and Socorro mines includes:

Carmen Mine: The deepening of the Master Shaft reached level 3990 during 4Q07 as scheduled, while the extension of the deepening program to reach level 3920 is currently in progress and expected to be completed in March 2008. The development at level 3990, which involves drifting 2,394 meters, is 34% complete and is expected to be completed by 3Q08.

Socorro Mine: The construction of ramp 626 is currently 68% complete, and is expected to be completed by 3Q08. The development at level 3990, which began in 3Q07 is 14% complete, and is expected to be finished by the end of 2008. The deepening of the Luz Shaft to reach level 3990 is now scheduled to begin in 3Q08 and be completed in 4Q09.

During 2007, total investment was US$3.7 million (accumulated US$6.8 million) of a budgeted US$10.3 million.

The plant expansion from 2,500 STPD to 3,000 STPD, to treat additional Lead/Zinc materials from lower levels of the mine, includes the acquisition of a grinding mill 13'x20', flotation cells, a thickener and 2 press filters for a total investment of US$5.3 million. This expansion is expected to be completed in 3Q08.

ORCOPAMPA

By the end of 2007 the Nazareno Shaft reached level 3290. During 2008, the deepening of the Nazareno Shaft is scheduled to reach level 3170 from level 3290 for an estimated investment of US$4.5 million.

As of December 2007 the Prometida Shaft reached level 3440 from level 3590, for a total investment of US$1.0 million, and is expected to reach level 3290 by 2Q09.

The expansion of tailing dam number 4 to increase capacity to 1.3 million DST was completed in December for a total investment of US$5.6 million.

The construction of the facilities to treat the old flotation tailings includes six 40x40 foot cyanidation tanks, a thickener and a holding tank. This project will permit the recovery of approximately 53,000 ounces of gold in 2008 and 2009 for a total investment of US$9.2 million.

At the Board of Director's meeting, held February 28, 2007, the Board passed the following resolutions:

To call for the Annual Shareholders Meeting to be held March 28, 2008 to:
-- Approve the financial statements as of December 31, 2007.
-- Approve the 2007 Annual Report.
-- Approve a cash dividend of US$0.22 per share or ADS to be paid in U.S.
currency.
-- Approve the capitalization of accumulated income and modify the stock
face value.
-- Approve a stock split.

Company Description

Compania 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, silver and other metals via wholly owned mines as well as through its participation in joint exploration projects.

Buenaventura currently operates six mines in Peru and also has controlling interests in two mining companies, as well as a minority interest in several other mining companies in Peru. The Company owns 43.65% in Minera Yanacocha S.R.L. (a partnership with Newmont Mining Corporation), which is one of the most important precious metal producers in the world and 18.50% in Sociedad Minera Cerro Verde S.A.A, an important copper Peruvian Company.

Note on Forward-Looking Statements

This press release may contain forward-looking information (as defined in the U.S. Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including those concerning the Company's, Yanacocha and Cerro Verde's costs and expenses, results of exploration, the continued improving efficiency of operations, prevailing market prices of gold, silver, copper and other metals mined, the success of joint ventures, estimates of future explorations, development and production, subsidiaries' plans for capital expenditures, estimates of reserves and Peruvian political, economical, social and legal developments. These forward-looking statements reflect the Company's view with respect to the Company and Yanacocha's future financial performance. Actual results could differ materially from those projected in the forward-looking statements as a result of a variety of factors discussed elsewhere in this Press Release.

(1) Production includes 100% of operating units, 100% of CEDIMIN and
34.29% of El Brocal.
(2) The quarterly revaluation of the Peruvian Nuevo Sol versus the U.S.
dollar was 7%. This directly affected labor and contractor expenses.

For the full version of this press release, please visit the Company's web site at http://www.buenaventura.com/

Contacts in Lima:
Roque Benavides / Carlos Galvez
Compania de Minas Buenaventura S.A.A.
Tel: (511) 419-2538 / 419-2540
Investors Relations: Daniel Dominguez
Tel: (511) 419-2536
Email: ddominguez@buenaventura.com.pe

Contacts in New York:
Maria Barona / Peter Majeski
i-advize Corporate Communications, Inc.
Tel: (212) 406-3690
Email: buenaventura@i-advize.com

First Call Analyst:
FCMN Contact: pmajeski@i-advize.com

Source: Compania de Minas Buenaventura S. A. A.

CONTACT: Lima, Roque Benavides, +011-511-419-2538, or Carlos Galvez,
+011-511-419-2540, or Investors, Daniel Dominguez, +011-511-419-2536,
ddominguez@buenaventura.com.pe, all of Compania de Minas Buenaventura S.A.A.;
New York, Maria Barona or Peter Majeski, both of i-advize Corporate
Communications, +1-212-406-3690, buenaventura@i-advize.com

Web site: http://www.buenaventura.com/

2008-02-28 18:09:53 0301321 PRNEWSWIRE