Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

May 19, 2010 17:46 ET

Iberian Minerals Reports First Quarter 2010 Results

TORONTO, ONTARIO--(Marketwire - May 19, 2010) - 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).

Three months ended March 31,     2010     2009  
      $     $  
Sales     58,037     31,238  
Costs and expenses of mining operations     46,043     15,563  
Mine site amortization     19,558     7,590  
               
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  
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 )
Net loss     (10,006 )   (60,490 )
   
Basic (loss) income per share ($)     (0.03 )   (0.24 )
   
Diluted (loss) income per share ($)     (0.03 )   (0.24 )
   
   
Key operating statistics              
   
Condestable:              
   
      Three months  
Three months ended March 31, Unit   2010     2009  
   
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  
           
           
MATSA:          
           
Three months ended, Unit   March 31, 2010   December 31, 2009
 
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
 
C1 cost per lb of payable copper USD $ 2.23 $ 2.61
C3 cost per lb of payable copper USD $ 3.18 $ 3.34

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.

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