Compañía de Minas Buenaventura

Good day, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura second quarter 2021 earnings call. At this time, all participants are in a 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. Gabriel Salas, Investor Relations. Mr. Salas, you may begin.

Good morning, everyone, and thank you for joining us today to discuss our second quarter 2021 results. Today's discussion will be led by Mr. Leandro Garcia, Chief Executive Officer. Also joining our call today and available for your questions are Mr. Daniel Dominguez, Chief Financial Officer, Mr. Juan Carlos Ortiz, Vice President of Operations, Mr. Aldo Massa, Vice President of Business Development and Commercial, Mr. Alejandro Hermosa, Vice President of Sustainability, Mr. Renzo Maher, Corporate Project Manager, and Mr. Roque Benavides, our chairman. This conference call will include forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from this statement. Any such statement should be considered in conjunction with cautionary statements within our earnings release and risk factor discussion. I encourage you to read the full disclosure concerning forward-looking statements within the press release we filed on August 2, 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 statement also provides information on risk factors, including the effects related to COVID-19 that could affect our financial results. In particular, there is continued uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means results could change at any time, and the impact of COVID-19 on the company's business results. And outlook is a best estimate based on the information available as of today's date. At this time, let me now turn the call over to Mr. Leandro Garcia, Chief Executive Officer. Leandro, please go ahead.

Thank you, Gabriel. 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 this difficult time. We are pleased to present the results from the second quarter of 2021 from Compania de Minas Buenaventura. We have prepared a PowerPoint presentation which is available in our webpage. Please, before we go further, 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. Second quarter 21 EBITDA from direct operations reached 66.9 million compared to 26.4 million reported in two-quarter trends. To second quarter 21 adjusted EBITDA included, as I said, companies reached 29.7 million compared to 84.5 million in the second quarter of year 20. Second quarter 21, net income reached 37.5 million compared to a 15.6 million net loss for the same period of 2020. Second quarter 21, exploration and operating units increased to 14.5 million compared to U.S. 2.5 million in the second quarter of 2020. This increased was part of the company's revised strategy to increase exploration activities. Second quarter 21 capital expenditures were 21.5 million compared to 11.6 million for the same period 2020. The first six months 21 cost applicable to sales has been impacted by 30.8 million due to additional COVID-19 expenses, and it is expected to decrease in the third quarter and fourth quarter with the increase of vaccinated workforce. Buenaventura's cash position reached 255.2 million as of June 30, 2021. On April 21, or April 29, 2021, Cerro Verde paid a total dividend of $200 million Buenaventura received $39.2 million relative to its stake in Cerro Verde. On July 23, 2021, the company issued senior unsecured notes for an aggregate amount of $550 million with a coupon rate of 5.5% per annum due 2026. The net proceeds from the bond have been used on July 30, last Friday, to fully pay the Sunat dispute. Moving on to slide four, financial highlights. Total revenues during the second quarter were $240.9 million, which is 146% higher in comparison to the second quarter of 2001. In the first half of the year, total revenues increased to $427 million compared to the first half of 2020. EBITDA from our direct operations in the second quarter of 2021 was $67 million in comparison to $18 million in the second quarter of 2020. EBITDA from direct operations for the six months of 2021 increased to $105 million in comparison to $20 million during the first six months of 2020. EBITDA, including our affiliates in this second quarter, was $230 million, which is 172% higher in comparison to the second quarter of 2020. EBITDA, including our affiliates for the first half of the year, was $413 million compared to 115 for the same period in 2020. The capex increased to $22 million in the second quarter of 2021, compared to $12 million in 2020. In the first six months of the year, capex totaled $35 million, a 55% increase in comparison to the first half of 2020. As you can appreciate from the graphs shown in this slide, we are returning to the pre-pandemic levels and even achieving greater results than the first semester of 2019. Moving on to slide five and six, attributable production. Total gold attributable production in the second quarter of 2020 was 73,000 ounces which is 18% higher than the figure reported on the same quarter of the previous year. The first semester of 2021, total gold attributable at production was 136,000 ounces, 10% lower than the same period in 2020. This decrease was mainly explained by lower production in Yanacocha. Silver attributable production for this quarter was 3.5 million ounces, which shows an increase of 76% compared to the figure reported on the first quarter of 2020. During the first half of 2021, fever at the root of production was 7 million ounces, 21% higher than the first semester of 2020. In the second quarter of 2021, 12,000 metric tons of zinc were produced, a significant increase compared to the second quarter in 2020. The first semester of the year, sin production increased to 21,000 metric tons, 26% higher than the same period in 2020. In the case of lead, equity production was 6,000 metric tons in the second quarter of 2021, which is 91% higher in comparison to the second quarter of 2020. The first half of 2021 lead production increased to approximately 11 metric tons, thousand metric tons in comparison to the thousand metric tons in 2020. Finally, our copper attributable production for the second quarter of the year was 25,000 metric tons. During the first half of 2021, Cooperative total production was 49,000 metric tons, an 18% increase compared to the same period of 2020. Moving on to slide seven, all in-sustaining costs and costs applicable to sales. The all-in-sustaining costs from our direct operations in the first semester of 2021 decreased by 18%, 2%. $1,493 per ounce of gold. The costs applicable to sales for the first semester of 2021 were as follows. For gold, $1,262 per ounce, which is 12% higher than a year ago. For silver, $19.65 per ounce, which is 25% higher than a year ago. For lead, $1,320 per metric ton, which is 2% higher than a year ago. For copper, $5,949 per metric ton, which is 13% higher in comparison to a year ago. Finally, in the case of zinc, the cost applied to sales was $2,091 per metric ton. which is 19 higher than a year ago. As we mentioned before, cost applicable to sales has been impacted by approximately $31 million of expenses related to COVID-19. Moving on to slide eight, pipeline of project updates. Here we are presenting in one snapshot the current development level for each one of our projects. Moving on to slide nine, San Gabriel. We have to mention that we have obtained the water dam construction permit. We are working with authority in extension of the environmental area validity as it will expire by the first quarter of 2020. The Minem advanced the consulta previa. process to dialogue stage. Moving on to slide 10, Trapiche. We are finishing the chloride leaching pre-feasibility level testing and expect to complete the trade-off study by September. We are advancing cooperation agreements with communal authorities to support the second AEF workshop by the end of August. Finally, we are finishing a cooperation agreement with Antabamba Moyoco for the final access flow, and we are working with Moyobamba's community for an alternative one. Moving on to slide 11, Rinoseco, we finished testing activities to improve silver and gold residue value. Also, we submitted the first batch of AES observations and we are currently working on the second batch. We have confirmed the project's water and power viability with authority. Moving on to slide 12, Tantawatai Soil Files. Coimbatore's board approved viability stage. The infield drilling is expected to begin in this third quarter 2021. Thank you for your attention, and I will hand the call back to the operator to open the line for questions. Operator, please go ahead.