BENGUET Announces Second Quarter 1999 Results

August 24, 1999 PSE CIRCULAR FOR BROKERS NO. 2097-99 BENGUET ANNOUNCES SECOND QUARTER 1999 RESULTS Manila, Philippines, August 24, 1999 Benguet Corporation today announced a consolidated net loss of P49,400,000 (US$1,300,000) or P0.43 (US$0.011) per share for the quarter ended June 30, 1999, significantly lower than the loss of P262,400,000 (US$6,234,000) or P2.30 (US$0.055) per share in, the same quarter of 1998. Losses for the quarter were primarily due to costs incurred with the caretakership of suspended operations and to accrued interest expense. For the first half period, consolidated net loss amounted to P156,500,000 (US$4,116,000) or P1.37 (US$0.036) compared P345,000,000 (US$8,197,000) or P3.02 (US$0.072) per share in the same period last year. Operating revenues totaled P69,500,000 (US$1,828,000) for the quarter and P122,700,000 (US$3,227,000) for the first six months of the year compared to revenues of P131,700,000 (US$3,129,000) and P258,300,000 (US$6,137,000) for the same respective periods in 1998. Debt Repayment Plan On June 11, 1999, Benguet reached an agreement with its creditor banks on a repayment plan for its outstanding loans, thus firmly placing the Company on the road to recovery. In the short to medium term, Benguet has identified very specific directions which it will take such as the disposition of non-performing projects. For the longer term, the Company is laying the foundation for its new revenue earning projects. Benguet signed a Term Sheet in the form of a letter-agreement prepared by the Agent Bank of the consortium of creditor banks. The Term Sheet is subject to ratification by the respective boards and approving authorities of the parties and will be formalized in a Memorandum of Agreement (MOA) to be signed by all secured and unsecured-bank creditors. It basically extends the maturity of Benguet's loan up to June 30, 2000, with automatic renewal every anniversary date up to the year 2002, upon payment of annual interest and subject to the Company's compliance with the MOA. A major provision in the agreement concerns the sale of Benguet's non-performing assets to pay off its debts. The other terms of the agreement include providing additional collateral. Benguet's loans subject to the repayment plan amount to P1.363 billion (US$34 million) plus interest, and are secured by a Mortgage Trust Indenture. 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. In addition, the exploration team will cover areas controlled by Pantukan Mineral Corporation (PMC) with whom Benguet Pantukan Gold Corporation (BPGC), a 100% owned subsidiary of Benguet, has an operating agreement for 5,485.74 hectares. BPGC is awaiting approval of a government permit to explore this particular claim. During the first quarter, a confidentiality agreement was signed with an interested foreign company and additional economic studies were pursued on the Kingking copper-gold project. In the Baguio District, Benguet continues to review with potential partners a possible option agreement on the Ampucao copper-gold prospect south of the Acupan mine. The Company is also continuing preliminary talks with investors on the Acupan bulk gold prospect which has a resource potential of 10.1 million tonnes of ore averaging 2.37 grams of gold per tonne. Benguet's nickel property in Sta. Cruz, Zambales has been the subject of a due diligence study by a foreign company. Additionally, the Company will be sending a team to review its limestone properties in Alaminos, Pangasinan and Sta. Cruz, Zambales for local and foreign markets. cd Mining Operations The Benguet Antamok Gold Operation (BAGO) continues to be suspended as pit development will be adversely affected if recommenced during the projected heavy rainfall of La Nia. Additionally, the Company is awaiting some positive development on the price of gold. The Masinloc Chromite Operation (MCO) remains suspended. However, the Company continues to market its chrome ore inventory and conduct periodic review to determine if market conditions warrant the resumption of the mine operation. The prospect for resumption, however, is favorable. MCO reported a net loss of P3,900,000 (US$102,000) this quarter compared to earnings of P6,500,000 ((US$155,000) for the same quarter in 1998. For the first half period, losses amounted to P4,700,000 (US$124,000), compared with earnings of P10,700,000 in 1998. Shipment volume for the quarter and for the six-month period aggregated 5,978 tonnes and 9,784 tonnes, respectively, this year, lower than the 10,171 tonnes and 14,669 tonnes shipped for the same respective periods in 1998. Other Projects BC Property Management Inc. (BCPM) continues to consolidate Benguet's mineral and non-mineral properties in the Baguio District in preparation for future development or joint venture into other land uses. The Calhorr and Kelly properties are being re-packaged for possible joint venture development. cdta Benguet Parkland Development Corporation (BPDC) is presently constructing additional amenities at the Villaluna Resort including a spa, a fishing area, a water slide and hot water facilities. This is in line with the Company's objective to attract new and return visitors to its eco-tourism project which also include the Balatoc Mines Tour, Crosby Park and the Balatoc Lake. Agua de Oro Ventures (AOV) plans to introduce smaller-sized bottled water products for the mass market, consolidate its Baguio market share and establish distributorships in major towns and cities along the backhaul route to Metro Manila of its sister company, Arrow Freight Corporation. Recently. AOV signed a memorandum of agreement with TEXINS Multipurpose Cooperative for the supply of Danum five-gallon products to the latter's membership. Benguet continues with its bid to supply bulk water to Baguio City and neighboring towns. It is actively pursuing the perfection of its water rights and its application for a Certificate of Public Convenience and Necessity (CPCN) with the National Water Resources Board (NWRB). The Company is in constant dialogue with the City of Baguio, the Baguio Water District, the Municipality of Itogon and its barangays, on their water requirements, and has on-going talks with various international water system and treatment companies for possible partnerships. Subsidiaries and Affiliate Companies BMC Forestry Corporation (BFC) landed an P8.2 million contract for erosion control and revegetation at the San Roque Multipurpose Project (SRMP) in San Miguel, Pangasinan. The contract involves the Construction of wattling structures and the planting of covercrops, vetiver grass and various fast growing tree species. The SRMP is one of the Philippine government's major Build-Operate-Transfer projects in Northern Luzon intending to benefit the surrounding communities by way of flood control, irrigation, water quality improvement and additional electric power. This contract is Benguet's first project after it opened up its reforestation department to cater to the outside market. BFC likewise formally turned over in a ribbon-cutting ceremony 40 house-and-lot units to TEXINS Multipurpose Cooperative (TMPC) representing Phase 1 of the Woodsdale Subdivision Project in Virac, Itogon, Benguet. In March 1998, BFC and TMPC entered into a memorandum of agreement reserving at least 83 out of the total 105 Woodsdale units for TMPC members. Phase 2 of the project, representing the next 43 units, is scheduled to be completed by the fourth quarter of 1999. Outlook Benguet's agreement on debt repayment with its creditor banks is a major step towards the Company's recovery. This was achieved through the resolute efforts of management and staff to formulate a viable solution to eliminate Benguet's debt. Management recognizes that this is only the beginning of the long road towards Benguet's return to profitability. This recovery can be achieved in the short term through the Company's successes in its various business activities. In the long term, Benguet will exploit the bright opportunities available to the Company with its potential projects in water and land resource development and technical services, alongside its core business of mining. BENGUET CORPORATION and Subsidiaries Consolidated Results of Operations In Thousands (Except Per Share Data) (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 PHILIPPINE PESOS 1999 1998 1999 1998 Operating Revenue P69,500 P131,700 P122,700 P258,300 Operating Profit (Loss) (26,000) (27,600) (59,100) (54,400) Other Income (Expenses) Net (23,400) (124,600) (97,400) (180,400) Net Income (Loss) Before Other Items (49,400) (152,200) (156,500) (234,800) Other items (a) - (110,200) - (110,200) Net Income (Loss) (b) (P49,400) (P262,400) (P156,500) (P345,000) Earnings (Loss) Per Share (c) (P0.43) (P2.30) (P1.37) (P3.02) US DOLLARS (d) Operating Revenue $1,828 $3,129 $3,227 $6,137 Operating Profit (Loss) (684) (656) (1,555) (1,292) Other Income (Expenses) Net (616) (2,960) (2,561) (4,286) Net Income (Loss) Before Other items (1,300) (3,616) (4,116) (5,578) Other Items (a) - (2,618) - (2,618) Net Income (Loss) (b) ($1,300) ($6,234) ($4,116) ($8,197) Earnings (Loss) Per Share (c) ($0.011) ($0.055) (50.036) ($0.072) (a) Consist of nonrecurring loss from the sale of shareholdings in Petrofields Corporation. (b) Under Philippine generally accepted accounting principles, unrealized foreign exchange losses are deferred and amortized to coincide with the actual repayment of outstanding foreign currency obligations; while pension costs are actuarially computed and are funded as accrued. The effect of these methods is nil for the second quarter but to increase net loss by P2,100,000 (US$54,900) for the first six months in 1999; and to decrease net loss by P900,000 (US$20,000) for the second quarter but to increase net loss by P33,000,000 (US$781,000) for the first six months in 1998. (c) Earnings per share are based on the weighted average number of common shares outstanding of 114,110,662 in 1999 and 1998. (d) Benguet is a Philippine corporation and its books of accounts are kept in Philippine pesos. U.S. dollar figures are shown purely for convenience and were computed based on the interbank guiding rate at June 30 of P38.019 to US$1.00 in 1999 (P42.091 to US$1.00 in 1998).