Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

March 30, 2010 18:23 ET

Iberian Reports 2009 Financial Results

TORONTO, ONTARIO--(Marketwire - March 30, 2010) - Iberian Minerals Corp. (TSX VENTURE:IZN) today announced financial and operating results for the year ending December 31, 2009, with comparative figures for the year ending December 31, 2008. The 2009 audited consolidated financials statements and related notes, and Management Discussion and Analysis may be found on www.sedar.com. The Company reported a net loss of $ 249.6 million for fiscal 2009, representing $0.81 per share.

In addition, the Company has filed an Annual Information Form for the year ended December 31, 2009.

Highlights for the Year Ended December 31, 2009

Financial:

Year ended December 31, 2009

  • Net loss was $249.64 million or $0.81 per share for the year, compared with net income of $47.79 million or $0.19 per share in 2008. The loss in 2009 was primarily due to an unrealized loss on derivative financial instruments of $360.79 million compared to a $255.62 million unrealized gain on derivative financial instruments and a $280.15 million realized gain on derivative financial instruments in the prior year. The prior year's realized and unrealized gains on derivative financial instruments were offset by impairment of mining interests and goodwill of $394.18 million.

  • Before the impact of unrealized gain or loss on derivative financial instruments net income before income taxes was $28.03 million or $0.09 per share, compared with a net loss before income taxes of $155.26 million or $0.62 per share in 2008. The unrealized loss on commodity derivative contracts must be recorded in accordance with GAAP. Future loss (or gain) to be realized upon settlement of the commodity derivative contracts may differ materially.

  • Sales in the year were $161.13 million compared to $97.87 million in 2008.

  • Cash flow from operations before changes in non-cash working capital was $35.44 million compared with $285.69 million in 2008. Cash flow from operations after changes in non-cash working capital was $9.58 million compared with $201.48 million in 2008.

Three months ended December 31, 2009

  • Net loss was $68.34 million or $0.20 per share for the fourth quarter, compared with net loss of $16.15 million or $0.06 per share in the fourth quarter of 2008. The loss in 2009 was primarily due to an unrealized loss on derivative financial instruments of $122.09 million compared to a $148.60 million unrealized gain on derivative financial instruments and a $280.15 million realized gain on derivative financial instruments in the prior year period. The prior year period realized and unrealized gains on derivative financial instruments were offset by impairment of mining interests and goodwill of $394.18 million. 

  • Before the impact of unrealized gain or loss on derivative financial instruments net income before income taxes was $10.24 million or $0.03 per share, compared with a net loss before income taxes of $142.89 million or $0.56 per share in the fourth quarter of 2008. The unrealized loss on commodity derivative contracts must be recorded in accordance with GAAP. Future loss (or gain) to be realized upon settlement of the commodity derivative contracts may differ materially. 

  • Sales in the period were $70.84 million compared to $22.40 million in 2008.

  • Cash flow from operations before changes in non-cash working capital was $12.63 million compared with $264.40 million in 2008. Cash flow used in operations after changes in non-cash working capital was $2.90 million compared with cash provided by operations of $183.72 million in the fourth quarter of 2008.

Operational – CMC:

Twelve months ended December 31, 2009 versus eleven months ended December 31, 2008

  • Operations at the Condestable Mine remained in a steady state.

  • CMC processed 2,159,549 tonnes of ore in the period versus 2,028,022 tonnes in the prior year.

  • Copper concentrate shipments in the period were 95,339 tonnes versus 94,425 tonnes in the prior year.

  • Contained copper production in the period was 23,832 tonnes versus 23,228 tonnes in the prior year.

  • Operating costs for the period (C1 and C3) were US$ 0.90 and US$ 1.24 per payable pound of copper versus prior year C1 and C3 of US$ 0.96 and US$ 1.42 respectively.

Three months ended December 31, 2009 versus 2008

  • CMC processed 544,084 tonnes of ore in the period versus 554,838 tonnes in the prior year.

  • Copper concentrate shipments in the period were 23,429 tonnes versus 26,744 tonnes in the prior year.

  • Contained copper production in the period was 5,879 tonnes versus 6,390 tonnes in the prior year.

  • Operating costs for the period (C1 and C3) were US$ 0.94 and US$ 1.38 per payable pound of copper versus prior year C1 and C3 of US$ 0.98 and US$ 1.44 respectively.

    Other

  • On December 23, 2009 the Company announced that an agreement has been entered into with Corianta S.A., a subsidiary of Cementos Pacasmayo S.A.A., member of Hochschilds Group to purchase all remaining interest in the Raul Mine, which forms part of the Condestable operation. The purchase price is US$ 28.00 million, and is to close by March 31, 2010.

Development and operational - MATSA:

  • The Company continued the ramp-up of production at MATSA, with commercial production declared during the fourth quarter of 2009 with effect from October 1, 2009.

  • During the development and ramp up phase for the nine months ended September 30, 2009, MATSA processed 488,557 tonnes of ore and produced 20,571 tonnes of copper concentrate, 10,742 tonnes of zinc concentrate, 6,937 tonnes of copper-lead bulk concentrate, and 913 tonnes of lead concentrate for revenues of US$ 27.90 million. As this revenue was generated prior to declaration of commercial production it was capitalized for accounting purposes.

  • In the fourth quarter MATSA processed 360,458 tonnes of ore.

  • Shipments in the fourth quarter were 20,398 tonnes of copper concentrate, 2,473 tonnes of zinc concentrate and 2,368 tonnes of copper-lead bulk concentrate. Contained metal was 5,074 tonnes of copper and 1,218 tonnes of zinc.

  • Operating costs for the fourth quarter (C1 and C3) were US$ 2.61 and US$ 3.34 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 85%. In addition, grade and recovery were below targets.    

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 and were capitalized in property, plant and equipment until such time that MATSA achieved commercial production. Commercial production at MATSA was declared with effect from October 1, 2009. As such sales and costs of expenses of mining operations for MATSA were recognized in the operating statement of the Company in the fourth quarter of 2009.

Year ended December 31, 2009   2008  
  $   $  
Sales 161,133   97,866  
Costs and expenses of mining operations 133,674   105,363  
         
Gross margin 27,459   (7,497 )
   
Expenses        
Administrative expenses and other 18,144   9,675  
Foreign exchange (gain)/loss (18,711 ) 23,029  
Unrealized (gain)/loss on derivative financial        
  instruments 360,789   (255,616 )
Realized gain on derivative financial instruments -   (280,150 )
Impairment of investments -   1,026  
Impairment of mining interests and goodwill -   394,183  
Total expenses (other income) 360,222   (107,853 )
         
Net income (loss) before income taxes (332,763 ) 100,356  
   
Non-controlling interest (1,063 ) 4,685  
Income tax expense 14,130   7,355  
Future income tax recovery (96,189 ) 40,522  
Net (loss) income (249,641 ) 47,794  
   
Basic (loss) income per share ($) (0.81 ) 0.19  
Diluted (loss) income per share ($) (0.81 ) 0.18  

Key Operating Statistics

CMC operating statistics 
      Three months   Twelve months (i)
Periods ended December 31, Unit   2009   2008   2009   2008
 
Ore mined t   590,493   571,815   2,231,798   2,052,081
Ore processed t   544,084   554,838   2,159,549   2,028,022
 
Copper ore grade %   1.21   1.24   1.22   1.24
Concentrate grade %   25   24   25   25
Copper recovery rate %   90   93   91   93
 
Copper concentrate DMT   23,429   26,744   95,339   94,425
 
Copper contained in concentrate t   5,879   6,390   23,832   23,228
Gold contained in concentrate oz   3,952   4,790   17,361   16,091
Silver contained in concentrate oz   70,472   72,015   250,504   259,676
 
Payable copper contained in concentrate t   5,630   6,074   22,952   22,105
Payable gold contained in concentrate oz   3,586   4,324   15,764   14,527
Payable silver contained in concentrate oz   63,254   64,295   226,357   231,848
 
C1 cost per lb of payable copper USD $ 0.94 $ 0.98 $ 0.90 $ 0.96
C3 cost per lb of payable copper USD $ 1.38 $ 1.44 $ 1.24 $ 1.42
(i) in 2008 the period was for eleven months ended December 31, 2008.

 

MATSA operating statistics      
       
Three months ended December 31, Unit   2009
 
Copper ore      
Ore mined t   322,275
Ore processed t   321,951
 
Copper ore grade %   1.84
Concentrate grade %   23
Copper recovery rate %   81
 
Copper concentrate DMT   20,398
 
Copper contained in concentrate t   4,800
Silver contained in concentrate oz   51,536
 
Payable copper contained in concentrate t   4,596
Payable silver contained in concentrate oz   31,862
 
Polymetallic ore      
Ore mined t   56,881
Ore processed t   38,507
 
Copper ore grade %   1.20
Copper/lead bulk concentrate grade %   12
Copper recovery rate %   62
 
Zinc ore grade %   6.57
Zinc concentrate grade %   49
Zinc recovery rate %   51
 
Copper/lead bulk concentrate DMT   2,368
Zinc concentrate DMT   2,473
 
Copper contained in concentrate t   274
Zinc contained in concentrate t   1,218
Silver contained in concentrate oz   20,605
 
Payable copper contained in concentrate t   250
Payable zinc contained in concentrate t   1,020
Payable silver contained in concentrate oz   18,321
 
       
C1 cost per lb of payable copper USD $ 2.61
C3 cost per lb of payable copper USD $ 3.34
       

Outlook

Following the conclusion of a tumultuous year in 2009, which commenced with the carry-over effect of a severe global recession from late 2008, global economies have moved towards recovery. Iberian expects that this recent recovery will continue in 2010. However, it remains unclear at what pace this will occur.

The medium term outlook for commodities appears to remain positive. It is expected that industrializing countries, especially China, will continue to focus on growing domestic infrastructures and this will continue to stimulate the demand for commodities. As a base metals producer of copper, zinc and lead, Iberian's operations are subject to the demand for, and fluctuations in the market prices of these commodities. The Company considers itself well-positioned for the future.

The outlook for CMC is positive in that it will continue to produce copper concentrate at similar levels to 2009. It is expected that CMC will process 2.2 million tonnes of ore in 2010. In addition to maintaining steady state production, CMC has set two priorities for 2010. The first priority is to complete the US$ 28.00 million purchase of the Raul mine lease and royalty which will generally allow for greater control over the mining operation and eliminate the Raul mine lease and royalty payments. In connection with this CMC must successfully complete the previously announced financing by way of an amended senior, secured debt facility, in the expected amount of US$ 55.00 million. There can be no assurance that this or any other financing will be finalized, or the terms on which any financing will be obtained. The potential consequence of not successfully completing this or any other financing is to solely frustrate the purchase of the Raul mine lease and royalty. The second priority is to improve reliability of the operation by investing US$ 3.30 million in improvement of secondary crushing.

MATSA achieved a significant milestone when the Company declared commercial production in October 2009. Both circuits at the processing plant are operational, and processing results continue to improve. With further enhancements to the polymetallic circuit that are currently underway to produce separate copper and lead concentrates, rather than a bulk concentrate, and the planned process plant expansion to increase capacity to the equivalent of 2.2 million tonnes per annum, 2010 will be a pivotal year in the further growth and maturation of the Aguas Tenidas Mine.

In 2010, the Company must address four significant short term priorities.

First a projected funding shortfall at MATSA was identified in 2009. This cash shortfall arose mainly due to the acquisition of the Insersa underground contractor and pending receipt of the approved government grant. In addition, delays in production due to modifications to the polymetallic circuit, together with on-going ramp-up issues affected the financial condition at MATSA. The Company quantified the extent of MATSA's projected 2010 cash shortfall between approximately US$ 40 and US$ 45 million. It is expected that the Company will address this funding requirement through completion of a proposed US$ 50 million senior, secured debt facility which the Company now expects to be completed by mid-April.

Second, the Company currently projects that its corporate operations are under-funded by approximately $3 to $4 million for 2010. The Company is evaluating options to address its corporate requirements.

Third, MATSA must successfully complete and implement the current enhancements to the polymetallic circuit. The modular installation is complete 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 reagents have now been received on site and the bulk separation circuit will start up in early April in line with the planned processing of polymetallic ores during the month.

Finally, during 2010, MATSA must 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 third quarter of 2010. The capital cost estimate for the expansion is expected to be between US$ 13.00 million and 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 a 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.

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 bulk copper/lead concentrates that also contain gold and silver.

C1 costs are cash costs including mining, processing, site administration, and refining and treatment charges, net of by product credits, and C3 costs are total costs being C1 costs plus depreciation and amortization charges, royalties, interest costs and financing charges.

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 April 30, 2009. 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