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Buenaventura Announces First Quarter 2012 Results

Stocks in this article: BVN

Production and Operating Costs

Buenaventura’s equity production 1 in 1Q12 was 117,852 ounces of gold, in-line with the figures reported in 1Q11. Silver production in 1Q12 was 4.0 million ounces, a 14% increase when compared to the figure reported in 1Q11 (3.5 million oz) mainly due to higher production from Uchucchacua.

Equity Production 1    
        1Q12       1Q11       Var%  
Gold (oz)       117,852       116,270       1%  
Gold (oz) inc. Yanacocha       277,798       242,076       15%  
Silver (oz)       4,013,509       3,533,975       14%  
Lead ( MT)       4,907       3,092       59%  
Zinc ( MT)       7,735       2,608       197%  
Copper (MT) inc. Cerro Verde       15,338       18,760       -18%  

Orcopampa’s (100% owned by Buenaventura) production from the Chipmo mine in 1Q12 was 62,358 ounces, 15% lower than the 73,570 ounces reported in 1Q11 due to a lower tonnage treated and ore grade declines (See Appendix 2). The old tailings treatment produced 6,907 gold ounces (compared to 4,043 ounces in 1Q11). As a consequence, total gold production in 1Q12 was 69,265 ounces, 11% lower than the 77,614 ounces reported in 1Q11.

Cash operating cost in 1Q12 was US$463/oz, 24% higher when compared to 1Q11 (US$373/oz). This was mainly explained by:

    1.   The 12% decrease in gold ounces produced due to lower ore grades
2. A 20% increase in supply expenses: reagents (cyanide) and diesel
3. Contractor costs increased approximately 50% due to the 27% increase in drilling (7,803m vs. 6,765m) and the 13% increase in drifting work (5,518m vs. 4,879m).
4. These factors were partially offset by an increase in the by-product credit contribution explained by higher silver production and prices.

At Poracota, gold production in 1Q12 was 11,320 ounces, a 6% decrease when compared to 1Q11 (12,101 ounces) due to lower ore grade and a decrease in the recovery rate (See Appendix 2). Cash operating cost was US$1,257/oz, 28% higher than the figure reported in 1Q11 (US$982/oz), mainly explained by:

    1.   Contractor costs increased approximately 21% due to the increase of drifting work (19% higher vs. 1Q11).
2. A 62% increase in commercial deductions due to a temporary increase of arsenic content in the mine concentrate.

At Uchucchacua (100% owned by Buenaventura), total silver production in 1Q12 was 2.7 million ounces, a 10% increase when compared to 2.5 million ounces in 1Q11 due to higher tonnage treated, and an increase in the silver grade & recovery rate (See Appendix). Zinc production in 1Q12 was 2,439 MT, 28% higher than the figure reported in 1Q11 (1,902MT). In addition, lead production increased 11% (2,193 MT in 1Q12 vs. 1,974 MT in 1Q11).

__________________ 1 Production includes 100% of Buenaventura’s operating units, 100% of CEDIMIN, 53.06% of La Zanja and 53.78% of El Brocal.

Cash operating cost in 1Q12 was US$17.91/oz, a 20% increase compared to US$14.98/oz in 1Q11. This increase was primarily due to a:

    1.   23% increase in contractor expenses explained by higher wages and one-time bonuses for closing negotiations with unions. Last year, the effect of this expense was reflected in 2Q11.
2. Labor and supply expenses increased 13% and 14%, respectively.
3. An increase in commercial terms due to higher silver refining charges, as well as lower by-product credit contribution due to lower lead and zinc prices

At Julcani (100% owned by Buenaventura), total production in 1Q12 was 631,628 ounces of silver, an increase of 4% compared to 1Q11 (606,288 ounces), mainly due to a 3% increase in tonnage treated.

Silver cash operating cost in 1Q12 was US$12.77/oz, 15% higher than 1Q11 (US$11.10/oz), mainly explained by a 13% increase in contractors costs due to higher prices and drifting work increases.

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