Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

August 26, 2010 16:45 ET

Iberian Minerals Reports Second Quarter 2010 Results and Updates 2010 Guidance

TORONTO, ONTARIO--(Marketwire - Aug. 26, 2010) - 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 €10.09 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 30,   Six months ended June 30,  
  2010   2009   2010   2009  
  $   $   $   $  
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  
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  
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 )
Net income (loss) 90,516   (39,283 ) 80,612   (86,948 )
   
Basic earnings (loss) per share ($) 0.27   (0.13 ) 0.24   (0.31 )
Diluted earnings (loss) per share ($) 0.22   (0.13 ) 0.20   (0.31 )

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
                   
Cash Operating Cost per lb of payable copper USD $ 1.02 $ 0.90 $ 1.04 $ 0.85

MATSA:

MATSA operating statistics
    Three months Six months
Periods ended June 30, Unit 2010 2010
 
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
       
Cash Operating Cost per lb of payable copper USD 2.38 2.30

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:

  Unit Year Q4
 
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
       

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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Iberian Minerals Corp.
    Laura Sandilands
    Investor Relations and Corporate Communications
    416-815-8558