Minera Escondida

Price of Copper

During the first quarter of 2009, the average price per pound of copper on the London Metals Exchange (LME) was US$ 1.56, which is 55.8 % lower than the average US$ 3.52 recorded for the same period in 2008.

Production

During the first quarter of 2009 copper production at Minera Escondida was 234,229 metric tons composed by 155,956 metric tons of copper contained in concentrate and 78,273 tons of cathodes.
In 2008, production was of 997,491 metric tons of copper contained in concentrate and 257,528 tons of cathodes.

This production is 30% lower compared to the 334,652 mt produced during the same period in 2008 (282,220 mt of copper contained in concentrate and 52,432 mt of cathodes).

The lower production of concentrate is explained by the combined effect of a lower ore head grade, increased hardness of the ore treated (resulting in lower copper recovery at the concentrator plants), and production problems associated to the failure in the Laguna Seca SAG mill concentrator that require it to operate at a lower than design capacity.

On the other hand, the increased cathode production is explained by an improved recovery and an increase in the level of activity and ore accumulation in the process stockpiles.

Sales

Total sales decreased from US$ 3,150.1 million in 2008 to US$ 1.018,0 million in the first quarter of 2009, which represents a decrease of 67.7 %. This is due to a lower production of copper and a lower price of copper in the first quarter compared to the same period of the previous year.

The level of physical sales decreased by 26.8%.

Operational results and profits

The company’s operational result decreased from US$ 2,582.3 million in 2008 to US$ 440.0 million in 2009, representing a decrease of  83.0 %.

Net profits also decreased from US$ 1.923,0 million in 2008 to US$ 394.0 million in 2009, which represents a decrease of  79.5 %.

Taxes

Minera Escondida’s Income Tax and Specific Tax on Mining Activities (Royalty) provision through March 2009 amounts to US$ 102.6 million. This represents lower tax payments by 79% compared to the same period through March 2008.

Costs

The effective C1 unit cost of exploitation per pound of copper sold (payable) increased from 68.6 c/US$ in the first quarter of 2008 to 84.1 c/US$ in the same period in 2009. For the 2009 period the C1 cost includes credits for by-products gold and silver for an amount of US$ 45.5 million, which represented  8.6c/US$ credit to unit cost.

The increase in the C1 unit cost is explained mainly by the lower production for the period and similar fixed costs for both periods.

Minera Escondida is an operation located 170 km southeast of Antofagasta, at 3,100 meters above sea level. Its owners are BHP Billiton (57.5%), Rio Tinto (30%), JECO Corporation (10%) and International Finance Corporation (2.5%). It is operated by BHP Billiton.

www.escondida.cl
www.bhpbilliton.com
www.fme.cl
www.ceim-fee.cl


 

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