Compañía de Minas Buenaventura

Welcome to the Compania de Minas Buenaventura Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in listen-only mode, and please note that this call is being recorded. I would now like to introduce your host for today's call, Mr. Rodrigo Echecopar, Investor Relations. Mr. Echecopar, you may begin.

Thank you. Good morning. Good morning, everyone, and thank you for joining us today to discuss our four-quarter 2020 results. Today's discussion will be led by Mr. Leandro Garcia, CEO. Also joining our call today and available for your questions are Daniel Dominguez, CFO, Mr. Juan Carlos Ortiz, Vice President of Operations, Mr. Aldo Maza, our new Vice President of Business Development and Commercial, Alejandro Hermosa, Vice President of Sustainability, and Renzo Maher, the Corporate Project Manager. Also available for your questions will be Roque Benavides, our chairman. This conference call will include forward-looking statements, which are subject to various risks and uncertainties. That would cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements within our earnings release and risk factor discussions. I encourage you to read the full disclosure concerning forward-looking statements within the press release we filed on February 25th, 2021. In addition, it is important to note that these statements include expectations and assumptions which will be shared related to the impact of COVID-19 pandemic. As seen on slide two, our forward-looking statements also provides information on risk factors, including defects related to COVID-19 that could affect our financial results. In particular, there is significant uncertainty about the duration and completed impact of the COVID-19 pandemic. When our results would change at any time and the impact of COVID-19 on the company's business results, an outlook is a best estimate based on the information available as of today's date. Please note that in the interest of safety, we're utilizing a more virtual approach in exercising social distances while conducting this call this quarter. we would ask you to please bear that in mind in light of any potential technological difficulties which could occur. At this moment, let me now turn the call over to Leandro Garcia. Leandro, please go ahead.

Thank you, Rodrigo. Good morning to all, and thank you for attending this conference call. Before we start this presentation, we would like to wish you, your family and friends, health and well-being at these difficult times. We are pleased to present the results of the fourth quarter of 2020 from Compania de Minas, Buenaventura. We have prepared a PowerPoint presentation, which is available in our web page. Before we go further, please take a moment to review the cautionary statement shown on slide two. Please consider the disclosure related to the COVID-19 pandemic. Moving on to slide three, highlights were as follows. EBITDA from direct operations reached 59.1 million in fourth quarter 20, compared to 73.9 million US dollars reported in fourth quarter 19. Fourth quarter 20 adjusted EBITDA, including associated companies, 192.4 million dollars compared to 183.7 million dollars in fall quarter 19. Capital expenditures in fall quarter 2020 were 38 million dollars compared to 39.6 million for the same period in 2019. Fall quarter 20 net loss was 60 million compared to a net loss of $53.7 million for the same period in 2019. The company's Devo-Dolmaking program continued to progress at a reduced level during the fourth quarter of 2020. The program focused primarily on Buenaventuras, Tambomayo, Uchuchagua, and El Boca Mines during 2020. Buenaventuras' cash position reached $235 million for the fourth quarter 2020. The company had no mine-related fatalities during the full year 2020. Moving on to slide four, financial highlights. Total revenues during the fourth quarter were $236.1 million, which is in line with the fourth quarter of 2019. Increased commodity prices, excluding debt, support the fourth quarter 2020 net sales previous despite reduced volume sold due to the adverse effects of COVID-19. Evidence from our direct operations in fourth quarter of 2020 was $59.1 million in comparison to $33.9 million in the fourth quarter of 2019. This was mainly due to the lower production coming from Uchuchagua, as we have not achieved full capacity during the quarter as previously announced. Also, lower production from Tambomayo negatively affected the EBITDA. The EBITDA including our affiliates in this quarter was $192.4 million, which is 5% higher in comparison to the fourth quarter of 2019. This increase mainly comes from better results from Cerro Valdez. The net loss in this quarter was $60 million compared to a net loss of $53.7 million a year ago. This result considered a deferred stripping cost of $11.6 million from El Brocal, originated by a variation in the technical and economic parameters of the research. Additionally, it considered a cost of $110 million. $24.8 million from Yanacocha related to an update in the mine closure plan. The capex has decreased to $38 million in the fourth quarter of 2020 compared to $39.6 million in 2019. The free cash flow in the fourth quarter of 2020 was negative $14 million compared to negative $65.9 million of free cash flow in the fourth quarter of 2018. Moving on to slide five and six, attributable production. Total gold attributable production in the fourth quarter of 2020 was 79.5 thousand ounces, which is 31% lower than the figure reported on the same quarter of the previous year. This decrease was mainly explained by lower production in Tambo Mayo Silver attributable production for this quarter was 3.7 million ounces, which shows a decrease of 35% compared to the figure reported on the fourth quarter of 2018. This is mainly due to less production in our Chukchakwa mine. In the fourth quarter of 2020, 11.5 thousand metric tons of zinc were produced. a 16 percent decrease compared of the fourth quarter in 2019. This is mainly due to a 64 decrease in production of zinc at our Ocho Chaco line. In the case of lead, equity production was 6.8 thousand metric tons in the fourth quarter of 2020, which is 34 percent lower in comparison to the fourth quarter of 2019. Our copper attributable production for the fourth quarter of the year was 25.4 metric tons. This reduction is mainly explained by a 24% decrease in production at El Brocal and 18% decrease of production in Cerro Verde. Moving on to slide seven, oil and sustaining costs and costs applicable to SAIT. The oil and sustaining costs from our direct operations in 2020 increased to $1,374 per ounce of gold, mainly due to lower gold ounces sold in the period. The cost applicable to sales for 2020 were as follows. For gold, $1,097 per ounce, which is 10% higher than a year ago. For silver, $18.29 per ounce, which is 52% higher than a year ago. For lead, $1,174 per metric ton, which is 5% lower than a year ago. For copper, $5,133 per metric ton, which is 4% lower in comparison to a year ago. Finally, in the case of zinc, the cost applied to say was $1,935 US dollars per metric ton, which is 5% lower than a year ago. Moving on to slide eight, debacle-making program for quarter 2020. As a result of the company's debacle-making program, we are gaining mining cost efficiency that's partially offset by lower production output. As you can see, results for the fourth quarter were positive, generating $8.1 million of additional EBITDA. Moving on to slide 9, pipeline of projects update, here we present in one snapshot the current development level for each one of our projects. On slide 10, San Gabriel, we completed feasibility study by AUSENCO. We completed geological confirmation drills with no major impact on tonnage or grade. The construction permit is delayed until the second half of 2021 due to the Ministry of Mining and Energy difficulties in re-initiating the consulta previa or prior consultation process due to COVID second wave and current political situation. Moving on to slide 11, Trapiche, previous Ability Study has been updated with a new component arrangement by M3. We are currently working with the community to start column test activities by April 2021. Additionally, we are performing chloride leaching tests with excellent results and evaluating its inclusion in the AEA study. environmental assessment. Moving on to slide 12, Rio Seco, we complete the feasibility study by summer. The area public assembly was successfully executed, and we are waiting for authorities' revision and comments. Moving on to slide 13, Santa Huatay sulfites, we have updated and confirmed scoping study by entry for a 6,000 tons per day copper concentrate plant. We are starting the five-year viability phase. In this moment, we would like to share our guidelines, our main financial guidelines for 2021. In terms of sales, we will be in the range of 800 $850 million to $950 million. These sales assumes metal prices of gold of $1,800, silver $23 per ounce, lead $1,850 per ton, copper $7,250 per ton, and zinc $2,300. We are expecting to have EBITDA from our direct operations in the range of $160 million to $180 million, and including our affiliates will be $560 million to $600 million. In terms of CAPEX, our sustaining CAPEX will be between $50 million to $60 million, and our projects, including part of San Gabriel but not the construction, will be between $30 and $35 million. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.