Toronto, Canada - April 29, 2010 - (TSX - BWR, BWR.WT.A) Breakwater Resources Ltd. realized net earnings of $24.8 million or $0.04 per share in the first quarter of 2010 compared with a net loss of $6.5 million or $0.01 per share in the first quarter of 2009.
The main items affecting the movement to net earnings were:
- $41.6 million (US$50.6 million) or 65% higher gross sales revenue primarily due to significantly higher metal prices and higher concentrate sold partially offset by a stronger C$
- 12% lower treatment and marketing costs primarily due to a stronger C$ and more favourable smelter terms and freight rates
- $5.2 million or 16% higher direct operating costs primarily due to 7% higher concentrate sales and higher costs at Toqui partially offset by the impact of a stronger C$
- $2.3 million write-down of mineral properties and fixed assets primarily due to the termination of earn-in option agreements on certain exploration properties
- $3.3 million or 115% higher income and mining tax provision primarily due to higher earnings before tax at all operations partially offset by a $2.0 million tax expense in 2009 which did not recur in 2010
David M. Petroff, President and Chief Executive Officer, stated that, "Strong metal prices have put us well along the road to recovery and I'm pleased to report, in addition to first quarter earnings of $25 million, we had over $65 million in cash at the end of March. Recognizing that our exploration programs at each site were conservative, the planned exploration budget is being increased to $6.9 million with $2.5 million to be spent at Mochito, $2.1 million at Toqui and $2.3 million in the Province of Quebec."
Mr. Petroff went on to say, "We also plan to accelerate certain development and drilling at Myra Falls resulting in $5.3 million of additional capital expenditures bringing the total to $15.3 million for Myra Falls and $54.8 million for the Company. Otherwise, the capital programs are progressing well, on time and on budget. From a risk management perspective, zinc price protection will be maintained, either by way of the purchase of put options or some other form of hedging to protect our shareholders."
Finally, Mr. Petroff noted, "Our focus of maintaining profitable low cost base metal operations in Honduras and Chile and maximizing output at Myra Falls while maintaining strict cost controls is succeeding. We have hit our targets for zinc and copper production while exceeding our targets for lead, silver and gold. As well, our operating costs per tonne milled are substantially on plan. At Langlois, the development work is progressing well and we continue to monitor the markets with the intention of making a formal decision to reopen that mine when the time is optimal. "
Gross Sales Revenue
A breakdown of gross sales revenue is set forth in the following table.
|
|
First Quarter 2010 |
First Quarter 2009 |
|
|
Concentrate
sold
(tonnes) |
Payable
metal(1) |
Realized
price(1) (US$) |
Gross sales
revenue
($000's) |
Concentrate
sold
(tonnes) |
Payable
metal(1) |
Realized
price(1) (US$) |
Gross sales
revenue
($000's) |
|
Zinc |
52,040 |
21,979 |
2,197 |
48,296 |
50,110 |
22,174 |
1,156 |
25,629 |
|
Copper |
6,768 |
1,502 |
7,163 |
10,760 |
9,556 |
2,032 |
3,635 |
7,389 |
|
Lead |
8,889 |
5,502 |
2,248 |
12,369 |
5,467 |
3,471 |
1,202 |
4,172 |
|
Gold(2) |
3,084 |
16,547 |
1,116 |
18,459 |
918 |
9,217 |
873 |
8,044 |
|
Silver |
n.a. |
713,947 |
17.23 |
12,303 |
n.a. |
546,820 |
12.22 |
6,680 |
|
Price protection gain |
n.a. |
|
|
240 |
n.a. |
|
|
n.a. |
|
Other(3) |
n.a. |
|
|
(485) |
n.a. |
|
|
(604) |
|
|
70,781 |
|
|
|
66,051 |
|
|
|
|
Gross sales revenue in US$ |
|
101,942 |
|
|
|
51,310 |
|
Exchange rate |
|
1.0370 |
|
|
|
1.2499 |
|
Gross sales revenue in C$ |
|
105,711 |
|
|
|
64,130 |
(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) Other gross sales revenue represents revaluations of prior period concentrate receivables. |
Concentrate Sales Breakdown by Mine
Concentrate Sold |
First Quarter |
First Quarter |
(tonnes) |
2010 |
2009(1) |
|
Zinc: |
|
|
|
Mochito |
18,313 |
13,886 |
|
Toqui |
13,754 |
16,022 |
|
Myra Falls |
19,973 |
16,584 |
|
Langlois |
- |
3,618 |
|
|
52,040 |
50,110 |
|
Copper: |
|
|
|
Myra Falls |
6,768 |
9,235 |
|
Langlois |
- |
321 |
|
|
6,768 |
9,556 |
|
Lead: |
|
|
|
Mochito |
8,423 |
5,467 |
|
Toqui |
466 |
- |
|
|
8,889 |
5,467 |
|
Gold: |
|
|
|
Toqui |
3,075 |
917 |
|
Myra Falls |
9 |
1 |
|
|
3,084 |
918 |
|
All Metals |
70,781 |
66,051 |
(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.
Treatment and Marketing Costs
Treatment and marketing costs decreased 12% to $20.8 million in the first quarter of 2010 from $23.7 million in the first quarter of 2009 primarily due to lower freight rates, the mix of concentrates sold and more favourable smelter terms despite the tonnes of concentrate sold increasing by 7%. Treatment and marketing costs for the first quarter of 2010 were 20% of gross revenue compared with 37% in 2009. As a percentage of gross sales revenue, the decrease was primarily due to higher metal prices and the factors noted above.
Direct Operating Costs
Direct operating costs were 16% higher in the first quarter of 2010 at $38.6 million compared with $33.3 million in the first quarter of 2009. The increased costs were primarily due to higher concentrate sales and higher costs at Toqui. On a cost per tonne of concentrate sold basis, direct operating costs increased to $545 in the first quarter of 2010 from $505 in 2009 primarily due to the factors noted above.
Write-down of Mineral Properties and Fixed Assets
In the first quarter of 2010, the Company elected not to participate further in the Trieste and Gayot projects and wrote-down $1.6 million. Additionally, $0.7 million was written-off relating to exploration properties which were deemed not commercially viable.
Income and Mining Tax Provision
In the first quarter of 2010, income and mining tax provision increased by $3.3 million compared with the respective 2009 period primarily due to higher earnings before tax at all operations partially offset by a $2.0 million Quebec mining duties tax provision in 2009 which did not recur in 2010.
Working Capital
Working capital at March 31, 2010 was $89.0 million compared with $70.7 million at December 31, 2009, an increase of $18.3 million.
Net Cash Provided By (Used In) Operating Activities
Net cash provided by operating activities was $38.5 million for the period ended March 31, 2010 compared with cash used of $10.0 million in the same period in 2010.
Capital Expenditures
The Company invested $12.2 million in mineral properties and fixed assets in the first quarter of 2010. At mining operations, $3.9 million, $6.7 million, $0.9 million and $0.5 million were spent at Mochito, Toqui, Myra Falls and Langlois respectively. Corporate capital expenditures were $0.2 million.
The complete unaudited consolidated financial statements for the period ended March 31, 2010, with the comparative figures for the period ended March 31, 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 or from the following link:
First Quarter Report 2010
I'd also like to remind you that we will be holding our conference call tomorrow Friday, April 30, 2010, commencing at 10:00 a.m. (ET) to discuss these results. David Petroff, President and Chief Executive Officer will host the call which will also be accessible via a live webcast.
Phone: 1-800-319-4610 (Canada and USA) or +1-604-638-5340 (outside of Canada and USA)
Webcast: http://services.choruscall.com/links/breakwater100430.html
After the broadcast, an archive of the webcast will be available at the above URL.
The scheduled speakers on the conference call will be David Petroff, President and Chief Executive Officer; Dave Langille, Vice-President, Finance and Chief Financial Officer; and Steve Hayes, Chief Commercial Officer.
For further information please contact:
Breakwater Resources Ltd.
Ann Wilkinson
Vice-President, Investor Relations
(416) 363-4798 Ext. 277