Minera Escondida

Copper Price
During the January-September period in 2009, the average price per pound of copper in the London Metals Exchange (LME) was US$ 2.11, which is 41.5 % lower than the average US$ 3.61 recorded for the same period in 2008.

Production
Copper production at Minera Escondida for the period January-September 2009 was 788,126 metric tons composed by 540,740 metric tons of copper contained in concentrate and 247,386 tons of cathodes. This production is 21 % lower compared to the 997,001 mt produced during the same period in 2008 (812,605 mt of copper contained in concentrate and 184,396 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 to the failure in the Laguna Seca SAG mill concentrator that required it to operate at a lower than design capacity. In July 2009 the SAG mill underwent major repair work that required its full stoppage for 32 days. The repair work was successfully performed and the mill is now operating normally. Conversely, 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$ 7,687.7 million in the period January-September 2008 to US$ 4,118.8 million for the same period in 2009, which represents a decrease of 46.4 %. This is mainly due to a lower price per pound of copper and the lower production of copper compared to the same period in 2008.
The level of physical sales decreased by 23.4%.

Operational Results and Profits
For the reasons explained above, the company’s operational result decreased from US$ 5,757.9 million in 2008 to US$ 2,373.4 million for the same period in 2009, representing a decrease of 58.8 %. Consequently, net profit also decreased from US$ 4,342.4 million in the period January-September 2008 to US$1,873.8 million in the same period in 2009, which represents a decrease of 56.8 %.

Taxes
Minera Escondida’s Income Tax and Specific Tax on Mining Activities (Royalty) provision through September 2009 amounts to US$ 529,1 million. This represents a 53% decrease compared to the same period through September 2008 when it reached US$ 1,113.0.

Costs
As a consequence of the lower production, the effective C1 unit cost of exploitation per pound of copper sold (payable) increased from 75.6 c/US$ in year 2008 to 79.6 c/US$ in the same period in 2009. The C1 cost includes credits for by-products gold and silver that in this period reached an amount of US$ 121.1 million, which represented 7.8 c/US$ credit to unit cost.




Minera Escondida is an open pit mine 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%) y 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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