Benguet Announces First Quarter 1999 Results

May 25, 1999 PSE CIRCULAR FOR BROKERS NO. 1186-99 BENGUET ANNOUNCES FIRST QUARTER 1999 RESULTS Manila, Philippines, May 24, 1999 Benguet Corporation today announced a consolidated net loss of P106,500,000 (US$2,747,000) or P0.93 (US$0.024) per share for the quarter ended March 31, 1999, compared to a loss of P82,600,000 (US$2,227,000) or P0.72 (US$0.019) per share in the same quarter of 1998. Operating revenues for the quarter totaled P53,200,000 (US$1,373,000) compared to revenues of P126,600,000 (US$3,414,000) for the same period in 1998. Financial Rehabilitation and Restructuring Plan Benguet finalized and presented its financial rehabilitation plan to the Company's creditor banks on March 22, 1999, and received an initial favorable reaction. Conceptually, the plan focuses in the short to medium term on the generation of cash through the sale of various non-performing assets and the realization of certain extraordinary receipts. The cash generated will be used for operating expenses, debt servicing and capital requirements. Given the uncertainty of the timing of the sale of some assets and the resulting proceeds, Benguet has proposed to restructure its bank debt over three years, where only interest will be paid during the three years. At the end of the third year, a balloon payment will be made on the principal. Benguet anticipates that an agreement will be reached with the banks in the next few months. cdlex Exploration Projects At Kingking (Pantukan, Compostela Valley), a 50-man exploration team was mobilized to further test outcrops in Binutaan and the vicinity outside of the Kingking copper porphyry orebody. It is projected that the area may contain mineralization amenable for gold operations. A confidentiality agreement was signed with an interested foreign company and additional economic studies on the Kingking copper-gold deposit were conducted this quarter. In the Baguio District, negotiations continue with a major mining company for a possible option agreement on the Ampucao copper-gold prospect south of the Acupan mine. Preliminary talks with investors are underway on the Acupan bulk gold prospect, which has a resource potential of 10.1 million tonnes of ore averaging 3.27 grams of gold per tonne. Mining Operations The Benguet Antamok Gold Operations (BAGO) continues to be suspended as pit development will be adversely affected if recommenced during the projected heavy rainfall of La Nia. The Masinloc Chromite Operation (MCO) incurred a net loss of P2,000,000 (US$51,000) for the first quarter of 1999 compared with earnings of P4,200,000 for the same period in 1998. Shipment volume was 3,806 tonnes this quarter compared with the 4,498 tonnes shipped in 1998. Other Projects BC Property Management Inc. (BCPM) has completed aerial photography of Benguet's real estate properties in the Itogon area as well as a preliminary social feasibility study on various communities within. These activities are in line with the Company's plan to initiate development projects in the area. LLcd Benguet Parkland Development Corporation (BPDC) has hired a tourism consultant to assist the Company in further developing the area's potential for eco-tourism. BPDC currently operates the Balatoc Mines Tour, Crosby Park, the Villaluna Resort and Balatoc Lake, which continue to attract 5,000 tourists per month. Independent studies propose including a golf driving range and a cutflower plantation among others. After the successful launching in December 1998 of its five-gallon bottled water product, Agua de Oro Ventures (AOV) is strengthening its marketing and promotional efforts for Danum and is further penetrating the lucrative bottled water market. AOV is currently preparing the near-term introduction of its smaller three gallon, one-liter, 500-ml and 250-ml bottled products. Benguet is preparing to enter the bulk water supply and distribution business in Benguet Province, particularly the municipality of Itogon and Baguio City. The Company continues to meet with potential joint venture partners and is preparing for participation in a 45,000 cubic meter per day project to be bid out by the Baguio Water District early in the third quarter of this year. prLL Value-Added Tax Claims The Bureau of Internal Revenue and Department of Finance favorably granted Benguet tax credit certificates of P67.7 million for the quarter. The aggregate amount of tax credits so far granted to the Company now totals P334.8 million for direct export shipments and gold sold to Bangko Sentral ng Pilipinas (BSP). As of March 31, 1999, the balance of claims for tax credit under judicial review is P301.2 million for direct exports and P203.1 million for gold sold to BSP. Private Placement The Tripartite Agreement entered into by Benguet with Palm Avenue Realty and Development Corporation and Palm Avenue Holdings Company, Inc. and the Presidential Commission on Good Government (PCGG) for the private placement of a major block of Benguet's shares is still pending approval by the Court (Sandiganbayan). In March 1999, the Palm Avenue companies indicated their commitment to infuse more capital into Benguet over and above the P275 million that is already subject to the approval of the appropriate government agencies and judicial bodies. LibLex Outlook With the initial positive reaction of the creditor banks to Benguet's financial rehabilitation plan, the Company is optimistic that a debt restructuring agreement will soon be reached. As leverage is eased, Benguet can focus on maximizing the value of its non-performing and under-performing assets through anticipated sales and joint ventures. Additionally, while awaiting positive events in the Philippine mining industry. the Company will continue to strengthen and market its various products and services in engineering and construction, drilling, reforestation, eco-tourism and bottled water, among others, as stable revenue earners. The gradual resolution of Benguet's pending value-added tax claims, the approval of the private placement of the Company's shares of stock and the renewed confidence shown by its creditor banks will also all contribute to Benguet's recovery. cdll BENGUET CORPORATION and Subsidiaries Consolidated Results of Operations In Thousands (Except Per Share Data)0 (Unaudited) THREE MONTHS ENDED MARCH 31 PHILIPPINE PESOS 1999 1998 Operating Revenue P53,200 P126,600 Operating Profit (loss) (33,100) (26,800) Other Income (Expenses) Net (73,400) (55,800) Net Income (Loss) (a) (P106,500) (P82,600) Earnings (Loss) Per Share (b) (P0.93) (P0.72) US DOLLARS (c) Operating Revenue $1,373 $3,414 Operating Profit (loss) (855) (724) Other Income (Expenses) Net (1,892) (1,503) Net Income (Loss) (a) ($2,747) ($2,227) Earnings (Loss) Per Share (b) ($0.024) ($0.019) (a) Under Philippine generally accepted accounting principles, unrealized foreign exchange losses are deferred and amortized to coincide with the actual repayment of outstanding foreign currency obligation, while pension costs are actuarially computed and are funded as accrued. The effect of these methods is to increase net loss by P2,100,000 (US$54,000) in 1999 and P33,700,000 (US$909,000) in 1998. (b) Earnings per share are based on the weighted average number of common shares outstanding of 114,110,662 in 1999 and 1998. LLpr (c) Benguet is a Philippine corporation and its books of accounts are kept in Philippine pesos. US dollar figures are shown purely for convenience and were computed based on the interbank guiding rate at March 31 of P38.766 to US$1.00 in 1999 (P37.081 to US$ P1.00 in 1998).