Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

November 17, 2010 16:30 ET

Iberian Minerals Reports Third Quarter 2010 Results

TORONTO, ONTARIO--(Marketwire - Nov. 17, 2010) - Iberian Minerals Corp. (TSX VENTURE:IZN) today announced financial and operating results for the third quarter ended September 30, 2010, with comparative figures for the third quarter ended September 30, 2009. The Q3 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 loss of $97.7 million for Q3 2010, representing $0.29 per share, and net loss of $17.1 million for the nine months ended September 30, 2010.

Summarized results for the three and nine months ended September 30, 2010:

Financial:

Three months ended September 30, 2010
  • Recorded net loss of $97.68 million or $0.29 per registered share which included:

    • Sales of $57.48 million and gross margin of $(2.58) million;

    • A realized loss of $24.31 million on commodity hedges in the period (included in sales);

    • An unrealized non-cash loss of $97.86 million on derivative financial instruments outstanding, as a result of the increase in metal prices over the period.

  • Cash flow provided by operations before changes in non-cash working capital was $12.10 million. Cash flow provided by operations after changes in non-cash working capital was $16.20 million.

Nine months ended September 30, 2010
  • Recorded net loss of $17.07 million or $0.05 per registered share which included:

    • Sales of $164.98 million and gross margin of $(23.57) million;

    • A realized loss of $69.38 million on commodity hedges in the period (included in sales);

    • An unrealized non-cash gain of $21.09 million on derivative financial instruments outstanding.

  • Cash flow provided by operations before changes in non-cash working capital was $24.66 million. Cash flow provided by operations after changes in non-cash working capital was $0.43 million.

Operational – CMC:  
 
Three months ended September 30, 2010
  • Condestable Mine continued to process copper ore at budgeted rates. The copper ore grade was 1.21% in the third quarter versus 1.21% in the third quarter of 2009. The copper ore grade has continued to improve quarter by quarter during 2010 – up from 1.10% in the first quarter and 1.18% in the second quarter.

  • CMC processed 564,541 tonnes of ore in the period versus 550,626 tonnes for the same period of the prior year (increase of 3%).

  • Copper concentrate production in the period was 24,544 DMT versus 23,841 DMT in the prior year (increase of 3%).

  • Contained copper production in the period was 6,088 tonnes versus 6,100 tonnes in the prior year.

  • The Cash Operating Cost (non-GAAP measure; refer to section 5) for the period was $0.99 per payable pound of copper versus prior year of $0.96. This was an improvement from the second quarter 2010 Cash Operating Cost of $1.02.

Nine months ended September 30, 2010
  • Copper ore grade was lower than expected at 1.16% versus 1.22% in 2009.

  • CMC processed 1,666,932 tonnes of ore in the period versus 1,615,465 tonnes for the same period of the prior year (increase of 3%).

  • Copper concentrate production in the period was 68,840 DMT versus 72,490 DMT in the prior year (decrease of 5%).

  • Contained copper production in the period was 17,252 tonnes versus 18,186 tonnes in the prior year (decrease of 5%).

  • The Cash Operating Cost for the period was $1.02 per payable pound of copper versus prior year of $0.89.

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.

Operational – MATSA (no comparables for the same period in 2009):
 
Three months ended September 30, 2010
  • MATSA processed 460,999 tonnes of ore in the period; the highest quarterly volume achieved since commercial production was declared.

  • Produced 26,754 DMT of copper concentrate and 5,968 DMT of zinc concentrate. Contained metal production was 5,767 tonnes of copper and 2,834 tonnes of zinc.

  • The Cash Operating Cost was $2.06 per payable pound of copper. This represented a 13% improvement over the second quarter Cash Operating Cost of $2.38 per payable pound of copper. In the period the production rate in the processing plant was 8% above the original 1.7Mtpa design capacity. The 30% planned expansion of the copper ore processing circuit was completed in August 2010 and thus allowed this circuit to operate at a higher throughput rate for the month of September 2010.

Nine months ended September 30, 2010
  • MATSA processed 1,200,355 tonnes of ore in the period.

  • Produced 66,817 DMT of copper concentrate and 21,645 DMT of zinc concentrate. Contained metal was 15,399 tonnes of copper and 10,400 tonnes of zinc.

  • The Cash Operating Cost was $2.24 per payable pound of copper. It was higher than anticipated for steady state as the production rate in the period was below pre-expansion design capacity of 1.7 Mtpa at 94%.

Other
  • In the third quarter of 2010, MATSA made significant progress towards completion of the planned 30% expansion of the processing plant to 2.2 Mtpa. The major capital item, being a second deep cone thickener was completed, tested and put into operation. The expansion of the copper ore processing circuit was completed in early September such that this circuit operated at a rate of 3,000 tpd for most of that month. Subsequent to the end of the third quarter and as announced in a press release dated October 18, 2010, MATSA completed the expansion of the poly-metallic ore processing circuit such that it too is now able to process ore at a rate of 3,000 tpd for a combined and fully expanded processing rate of 6,000 tpd or the equivalent of 2.2 Mtpa.

  • Completed the closing of a $50.00 million senior secured, revolving debt facility.

  • 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

The following table presents a summarized Statement of Operations for the three and nine months ended September 30, 2010 with comparatives for the three and nine months ended September 30, 2009.

Effective April 1, 2010, the Company's functional currency became U.S. dollars. The Company also converted its reporting currency to U.S. dollars. In accordance with GAAP, the Company restated all amounts presented for comparative purposes into U.S. dollars.

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 nine months ended September 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 nine months ended September 30, 2010).

  Three months ended   Nine months ended  
  September 30,   September 30,  
  2010   2009   2010   2009  
  $   $   $   $  
Sales 57,482   26,705   164,976   77,286  
Costs and expenses of mining operations 42,074   15,893   132,759   41,828  
Mine site amortization 17,987   5,986   55,786   18,213  
Gross margin (2,579 ) 4,826   (23,569 ) 17,245  
   
Expenses                
Administrative expenses and other 3,581   5,692   11,286   10,952  
Foreign exchange (gain)/loss 319   (6,121 ) (6,903 ) (9,075 )
Unrealized loss (gain) on derivative financial instruments 97,862   77,115   (21,093 ) 205,490  
Total expenses 101,762   76,686   (16,710 ) 207,367  
                 
Net income (loss) before income taxes (104,341 ) (71,860 ) (6,859 ) (190,122 )
   
Non-controlling interest (46 ) (265 ) 46   (950 )
                 
Income tax expense 2,933   2,548   5,611   8,600  
Future income tax recovery (9,545 ) (3,740 ) 4,555   (40,421 )
Net income (loss) (97,683 ) (70,403 ) (17,071 ) (157,351 )
   
Basic earnings (loss) per share ($) (0.29 ) (0.21 ) (0.05 ) (0.53 )
                 
Diluted earnings (loss) per share ($) (0.29 ) (0.21 ) (0.05 ) (0.53 )
 
 
Key operating statistics
 
Condestable:
 
    Three months Nine months
Periods ended September 30, Unit 2010 2009 2010 2009
 
Ore mined t   550,346   583,095   1,654,379   1,641,305
Ore processed t   564,541   550,626   1,666,932   1,615,465
 
Copper ore grade %   1.21   1.21   1.16   1.22
Concentrate grade %   25   26   25   25
Copper recovery rate %   90   91   89   92
 
Copper concentrate DMT   24,544   23,841   68,840   72,490
 
Copper contained in concentrate t   6,088   6,100   17,252   18,186
Gold contained in concentrate oz   3,382   4,422   10,660   13,521
Silver contained in concentrate oz   76,216   61,496   207,925   181,484
 
Payable copper contained in concentrate t   5,823   5,814   16,491   17,322
Payable gold contained in concentrate oz   3,065   3,991   9,334   12,181
Payable silver contained in concentrate oz   68,363   54,904   191,329   163,110
 
Cash Operating Cost per lb of payable copper USD $ 0.99 $ 0.96 $ 1.02 $ 0.89
 
 
MATSA:
 
MATSA operating statistics
 
    Three months Nine months
Periods ended September 30, Unit 2010 2010
 
Copper ore        
Ore mined t 348,691 927,636
Ore processed t 362,290 920,555
 
Copper ore grade % 1.82 1.83
Concentrate grade % 22 22
Copper recovery rate % 82 83
 
Copper concentrate DMT 24,908 62,633
 
Copper contained in concentrate t 5,393 13,881
Silver contained in concentrate oz 77,105 199,913
 
Payable copper contained in concentrate t 5,144 13,275
Payable silver contained in concentrate oz 53,411 139,830
 
Polymetallic ore        
Ore mined t 104,843 281,397
Ore processed t 98,709 279,800
 
Copper ore grade % 1.08 1.26
Copper concentrate grade % 20 21
Copper recovery rate % 38 40
 
Zinc ore grade % 4.91 6.19
Zinc concentrate grade % 47 48
Zinc recovery rate % 61 61
 
Copper concentrate DMT 1,846 4,184
Copper/lead bulk concentrate DMT - 6,071
Zinc concentrate DMT 5,968 21,645
 
Copper contained in concentrate t 374 1,518
Zinc contained in concentrate t 2,834 10,400
Silver contained in concentrate oz 104,873 316,575
 
Payable copper contained in concentrate t 355 1,415
Payable zinc contained in concentrate t 2,357 8,427
Payable silver contained in concentrate oz 20,799 177,466
 
Cash Operating Cost per lb of payable copper USD 2.06 2.24

Outlook

CMC

Consistent with previous guidance issued, the Company expects that CMC will process 2.2 million tonnes of ore in 2010. The projected contained copper production for 2010 is expected to be 23,500 t. 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 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. The increase reflects lower than expected copper production and higher operating costs realized during the year.

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.

MATSA

At MATSA, having completed the 30% plant expansion the immediate priority in Q4 will be to continue optimizing the metallurgical performance of the poly-metallic circuit with the copper circuit having already consistently achieved target concentrate grades and recoveries. 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). With 3,000 tpd being processed in each of the copper and poly-metallic circuits. With the recent implementation of a pilot plant MATSA continues to work towards production of a lead concentrate of saleable quality. To that end the Company anticipates that it will be able to produce a saleable lead concentrate by the beginning of Q2 in 2011 but that no assurances can be given as to exact timing in this regard.

MATSA expects to be in the range of previously issued production guidance in August 2010 with the exception that current forecast zinc production may be approximately 20% below this guidance for 2010. This was primarily due to an operational decision to process copper ores through both circuits for a period of four weeks in September and early October.

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 2.2 million tonnes per year underground mine and concentrator that produces copper, zinc and lead concentrates that also contain gold and silver.

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