Peoles’ Q1 profits soar (May 02, 2006)

Vancouver – World’s top silver producer Industrias Peoles (IPOAF-O) more than doubled its 2006 first quarter profits, versus the previous year’s corresponding period, due to soaring metal prices and a large asset sale.

The company posted three-month profits of US$104.7 million ($1.14 billion Mexican pesos), up 101% from Q1-2005. Besides reaping the benefit of silver’s surge, the sale of its Pinos Altos gold project to Agnico-Eagle Mines (AEM-T, AEM-N) netted about US$87 million ($949.8 million pesos) in cash and shares for the Mexican-based company. However, a stronger peso versus the dollar offset some of the earning gains.

Peoles’ mining operations include:

• The Fresnillo underground silver mine in Zacatecas State, the world’s richest, producing about 34 million oz. of silver annually plus about 30,000 oz. of gold, 22 million pounds (10,000 tonnes) of lead and over 32 million pounds (15,000 tonnes) of zinc;
• Mexico’s largest gold mine, the La Herradura open pit gold operation in Sonora State. The 56%-44% joint venture with Newmont Mining (NMC-T, NEM-N) produces about 180,000 oz. of gold and 33,000 oz. of silver per year;
• The highest-grade gold mine in Mexico, La Cinega in Durango State, which produces about 145,000 oz. of gold, 1.8 million oz. of silver, 22 million pounds (9,800 tonnes) of lead and 24 million pounds (11,000 tonnes) of zinc annually;
• Francisco I. Madero, the country’s largest zinc mine, with annual output of about 145 million pounds (66,000 tonnes) of zinc, 20 million pounds (9,000 tonnes) of lead and 1.4 million oz. of silver in addition to minor copper;
• The Sabinas base metal-silver mine in Zacatecas annually produces over 3.5 million oz. of silver, 70 million pounds (32,000 tonnes) of zinc, 17 million pounds (7,800 tonnes) of copper and 11 million pounds (5,000 tonnes) of lead;
• Mexico’s largest and richest lead mine, Naica in Chihuahua State, posts output of 50 million pounds (23,000 tonnes) of lead, 39 million pounds (18,000 tonnes) of zinc and about 3 million oz. of silver per year plus minor copper and gold;
• Tizipa, a joint venture with Dowa Mining (39%) and Sumitomo (10%), annually produces about 3.4 million oz. of silver, 56 million pounds (25,000 tonnes) of zinc, 12 million pounds (5,000 tonnes) of lead in addition to amounts of copper and gold;
• The Bismark zinc mine in Chihuahua produces about 100 million pounds (45,000 tonnes) of zinc, 3 million pounds (1,300 tonnes) of copper and 380,000 oz of silver per year.

Peoles also owns Met-Mex, the world’s fourth largest metallurgical-smelting-refining complex, which is the top producer of refined silver and metallic bismuth. Additionally, its Qumica del Rey chemical facility is the world’s largest sodium sulfate producing plant.

Listed on the Mexican Stock Exchange, shares of Peoles have risen more than 75% in 2006. The silver-giant posts a market capitalization of about US$3.5 billion.