Breakwater Resources Ltd.'s Third Quarter 2010 Financial and Operating Results
01.11.2010 | Marketwire
Net Earnings Strong as Metal Prices Continue to ImproveTORONTO, ONTARIO -- (Marketwire) -- 11/01/10 -- Breakwater Resources Ltd. (TSX: BWR)(TSX: BWR.WT.A) realized net earnings of $19.6 million or $0.28 per share in the third quarter of 2010 compared with net earnings of $6.5 million or $0.10 per share in the third quarter of 2009.
Revenues Higher, Costs Higher
Gross sales revenue was 30% higher at $93.3 million primarily due to significantly higher metal prices and more concentrate sold partially offset by a stronger C$ and higher price protection losses. Concentrate produced in the third quarter of 2010 decreased 11% to 48,819 tonnes compared with the third quarter of 2009 due to 13%, 15% and 6% decreases at Myra Falls, Toqui and Mochito respectively.
Direct operating costs were 24% higher in the third quarter of 2010 at $41.9 million compared with $33.9 million in the third quarter of 2009. The increased costs were primarily due to 8% higher quantity of concentrate sold and higher costs at Toqui and Myra Falls. On a cost per tonne of concentrate sold basis, direct operating costs increased to $709 in the third quarter of 2010 from $620 in 2009 primarily due to the factors noted above.
Cash
Cash and cash equivalents increased by $12.5 million in the third quarter of 2010 to $88.5 million at September 30, 2010.
Net Cash Provided By Operating Activities
Net cash provided by operating activities was $30.0 million for the three month period ended September 30, 2010 compared with $6.3 million in the same period in 2010.
Capital Expenditures
The Company invested $45.9 million in mineral properties and fixed assets in first nine months of 2010. At mining operations, $15.1 million, $21.6 million, $5.2 million and $3.7 million were spent at Mochito, Toqui, Myra Falls and Langlois respectively. Corporate capital expenditures were $0.3 million primarily related to joint venture exploration payments.
Operations
Mochito
-- Rehabilitation of the 2100 level, which will improve the movement of
personnel and materials, is on time and budget with completion expected
in the fourth quarter of 2010
Toqui
-- The paste backfill facility, which will allow for paste tailings
deposition and enhanced ore extraction through greater recovery of
current and future pillars, is expected to be completed in the fourth
quarter of 2010. Currently, the construction program is approximately
ten weeks behind schedule due to various issues, including those related
to the movement of materials and the availability of skilled people
following the February 2010 earthquake in Chile; inclement weather
throughout the construction period; and the seven day strike
-- The installation of a primary ball mill will allow 15% greater
throughput and is proceeding according to plan with an expected
completion date in the fourth quarter of 2010
Myra Falls
-- Work continues to improve metallurgical recoveries in the mill with
favourable preliminary results
-- Development necessary to properly delineate the Marshall deposit is
advancing well with the first drill station expected to be established
by the end of the fourth quarter of 2010
-- Tailings disposal facility seismic berm upgrade is on schedule and is
expected to be completed in the fourth quarter of 2010
Langlois
-- Development plans continue at Langlois for the balance of 2010 which
include, advancing two ramps - one from surface to the top of zone 4 and
one internal to zone 3 and selective development of production headings
-- The Company plans to increase the rate of mine development as it moves
towards a production restart, currently planned for the first quarter of
2012, and has arranged to purchase a new development jumbo drill and
conduct additional work, which will result in capital expenditures for
2010 being approximately $1.7 million higher than previously disclosed
David M. Petroff, President and Chief Executive Officer, stated that, 'We are pleased to have posted another solid quarter. Our balance sheet was further strengthened during this quarter while we continued to protect revenues on the downside. That said we were not without our challenges. Across the company, we expect to spend an additional $8.0 million on capital expenditures for 2010 due to an expansion of the capital program at Langlois and approximately $9.7 million of cost overruns in the paste plant and ball mill at Toqui combined with the impact of a stronger Chilean peso partially offset by lower capital expenditures at Myra Falls. Operating costs per tonne milled (on a production basis) and production of zinc, copper, and gold for the first nine months of 2010 are in line with 2010 guidance. Due largely to Mochito, we expect to produce 16,000 tonnes of lead and 2.4 million ounces of silver in concentrate.'
GROSS SALES REVENUE - THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
A breakdown of gross sales revenue for the three month periods ended September 30, 2010 and 2009 is set forth in the following table.
Third Quarter 2010
----------------------------------------------------------------------------
Concentrate Realized Gross sales
sold Payable price(1) revenue
(tonnes) metal(1) (US$) ($000's)
----------------------------------------------------------------------------
Zinc 36,921 16,243 2,007 32,595
Copper 9,449 2,091 7,230 15,117
Lead 9,830 6,054 2,120 12,836
Gold(2) 2,903 15,309 1,218 18,648
Silver n.a. 698,903 19.07 13,327
Price protection loss (3) n.a. (2,728)
Other(4) n.a. n.a.
------------ -------------
59,103
------------
Gross sales revenue in US$ 89,795
Exchange rate 1.0388
-------------
Gross sales revenue in C$ 93,276
-------------
Third Quarter 2009
----------------------------------------------------------------------------
Concentrate Realized Gross sales
sold Payable price(1) revenue
(tonnes) metal(1) (US$) ($000's)
----------------------------------------------------------------------------
Zinc 40,354 17,613 1,678 29,549
Copper 5,140 1,203 5,115 6,153
Lead 6,798 4,034 2,037 8,216
Gold(2) 2,298 10,981 957 10,511
Silver n.a. 847,480 14.57 12,352
Price protection loss (3) n.a. (1,476)
Other(4) n.a. 122
------------ -------------
54,590
------------
Gross sales revenue in US$ 65,427
Exchange rate 1.0947
-------------
Gross sales revenue in C$ 71,622
-------------
(1) Payable metal and realized prices for zinc, copper and lead are per
tonne and for gold and silver are per ounce.
(2) Gold concentrate sales are principally from Toqui while payable gold is
from all operations except Mochito.
(3) Price protection losses for zinc, copper, lead, gold and silver were:
US$802,000; US$955,000; US$252,000; US$314,000; and, US$404,000
respectively in the third quarter of 2010.
(4) Other gross sales revenue represents revaluations of prior period
concentrate receivables.
A breakdown of gross sales revenue for the nine month periods ended September 30, 2010 and 2009 is set forth in the following table.
First Nine Months 2010
----------------------------------------------------------------------------
Concentrate Realized Gross sales
sold Payable price(1) revenue
(tonnes) metal(1) (US$) ($000's)
----------------------------------------------------------------------------
Zinc 140,542 60,715 2,140 129,908
Copper 19,036 4,266 7,161 30,547
Lead 26,665 16,426 2,145 35,240
Gold(2) 7,354 44,086 1,170 51,571
Silver n.a. 1,923,052 18.22 35,043
Price protection loss (3) n.a. (1,095)
Other(4) n.a. (437)
------------ -------------
193,597
------------
Gross sales revenue in US$ 280,777
Exchange rate 1.0357
-------------
Gross sales revenue in C$ 290,796
-------------
First Nine Months 2009
----------------------------------------------------------------------------
Concentrate Realized Gross sales
sold Payable price(1) revenue
(tonnes) metal(1) (US$) ($000's)
----------------------------------------------------------------------------
Zinc 126,668 55,588 1,394 77,497
Copper 14,696 3,165 4,201 13,297
Lead 17,630 10,798 1,569 16,943
Gold(2) 5,318 28,995 922 26,746
Silver n.a. 1,513,886 13.56 20,533
Price protection loss (3) n.a. (2,537)
Other(4) n.a. (441)
------------ -------------
164,312
------------
Gross sales revenue in US$ 152,038
Exchange rate 1.1621
-------------
Gross sales revenue in C$ 176,694
-------------
(1) Payable metal and realized prices for zinc, copper and lead are per
tonne and for gold and silver are per ounce.
(2) Gold concentrate sales are principally from Toqui while payable gold is
from all operations except Mochito.
(3) Price protection (gains) losses for zinc, copper, lead, gold and silver
were: (US$1,416,000); US$1,170,000; US$252,000; US$404,000; and,
US$686,000 respectively in the first nine months of 2010.
(4) Other gross sales revenue represents revaluations of prior period
concentrate receivables.
PRICE PROTECTION STRATEGY
As at November 1, 2010 the Company's hedge position consisted of:
Puts Bought:
Type Quantity Average Price (US$) Maturity
----------------------------------------------------------------------------
Zinc 12,000 tonnes $2,039 per tonne January 2011 - June 2011
Copper 1,000 tonnes $6,448 per tonne December 2010
Silver 460,000 ounces $16 per ounce November 2010 - December 2010
Gold 8,800 ounces $1,100 per ounce November 2010 - December 2010
----------------------------------------------------------------------------
As at November 1, 2010, the Company had locked in pricing for payable zinc of 7,450 tonnes with certain customers for the fourth quarter of 2010 at a weighted average price of US$2,214 per tonne.
CONCENTRATE SALES - BREAKDOWN BY MINE
Third Quarter First Nine Months
Concentrate Sold (tonnes) 2010 2009 2010 2009
----------------------------------------------------------------------------
Zinc
Mochito 18,345 18,661 55,023 46,407
Toqui 6,372 10,048 33,810 37,055
Myra Falls 12,204 11,645 51,709 39,588
Langlois(1) - - - 3,618
----------------------------------------------------------------------------
36,921 40,354 140,542 126,668
----------------------------------------------------------------------------
Copper
Myra Falls 9,449 5,140 19,036 14,375
Langlois(1) - - - 321
----------------------------------------------------------------------------
9,449 5,140 19,036 14,696
----------------------------------------------------------------------------
Lead
Mochito 9,460 6,101 25,411 16,510
Toqui 370 697 1,254 1,120
----------------------------------------------------------------------------
9,830 6,798 26,665 17,630
----------------------------------------------------------------------------
Gold
Toqui 2,903 2,298 7,354 5,309
Myra Falls - - - 9
----------------------------------------------------------------------------
2,903 2,298 7,354 5,318
----------------------------------------------------------------------------
All Metals 59,103 54,590 193,597 164,312
----------------------------------------------------------------------------
(1) Due to the Company's revenue recognition policy, certain concentrate
produced prior to the temporary suspension of Langlois on November 2,
2008 was not recognized in revenue until the first quarter of 2009.
PRODUCTION RESULTS
The table below summarizes, on a production basis, the Company's metal contained in concentrate, before smelting deductions, for the periods presented.
Metal in
Concentrate Third Quarter First Nine Months
2010 2009 % 2010 2009 %
-------------------------------------------------------------------
Zinc (tonnes)
Mochito 7,652 9,284 -17.6% 25,584 25,686 -0.4%
Toqui 4,448 5,077 -12.4% 15,760 14,820 6.3%
Myra Falls 6,455 8,475 -23.8% 25,842 21,788 18.6%
------------------- ----------------------
18,555 22,836 -18.7% 67,186 62,294 7.9%
------------------- ----------------------
Copper (tonnes)
Myra Falls 1,085 789 37.5% 3,947 2,457 60.6%
------------------- ----------------------
1,085 789 37.5% 3,947 2,457 60.6%
------------------- ----------------------
Lead (tonnes)
Mochito 4,254 3,146 35.2% 13,374 9,673 38.3%
Toqui 28 223 -87.4% 415 853 -51.3%
------------------- ----------------------
4,282 3,369 27.1% 13,789 10,526 31.0%
------------------- ----------------------
Gold (ounces)
Toqui 9,911 10,191 -2.7% 27,241 30,977 -12.1%
Myra Falls 3,924 4,019 -2.4% 15,638 9,652 62.0%
------------------- ----------------------
13,835 14,210 -2.6% 42,879 40,629 5.5%
------------------- ----------------------
Silver (ounces)
Mochito 452,060 462,024 -2.2% 1,428,095 1,314,046 8.7%
Toqui 20,851 51,325 -59.4% 94,273 181,912 -48.2%
Myra Falls 124,859 156,443 -20.2% 548,873 355,699 54.3%
------------------- ----------------------
597,770 669,792 -10.8% 2,071,241 1,851,657 11.9%
------------------- ----------------------
The complete unaudited consolidated interim financial statements for the periods ended September 30, 2010, with the comparative figures for the periods ended September 30, 2009, the related notes, and management's discussion and analysis of the financial and operating results have been filed on www.sedar.com. Additionally, the documents have been made available on our website at http://www.breakwater.ca/Investors/AnnualandQuarterlyReports/default.aspx.
Contacts:
Breakwater Resources Ltd.
Ann Wilkinson, Vice-President, Investor Relations
(416) 363-4798 Ext. 277