Compañía de Minas Buenaventura

Good day, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode, and please note that today's call is being recorded. At this time, I'd 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 fourth quarter and full year 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, Projects Manager, Mr. Juan Carlos Salazar, Geology and Explorations Manager, Mr. Roque Benahides, our Chairman, and Mr. Raul Benahides, Director. 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 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 25, 2022. 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 defects related to COVID-19 that could affect our financial results. In particular, there is continued uncertainty about the duration and contemplated impact of COVID-19 pandemic. This means when our interest results could change at any time and impact of COVID-19 on the company's business results, and outlook is the best estimate based on the information available 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. And 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 time. We are pleased to present the results of fourth quarter and full year 2021 from . We have prepared a PowerPoint presentation which is available in our webpage. 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. Four quarter 21 EBITDA from direct operations reached 62.8 million U.S. dollars compared to 59.1 million dollars reported in four quarter 2020. Full year 21 EBITDA from direct operations reached 204.4 million dollars, a 39% increase of as compared to compare it to 147.4 million for the full year 2020. Four quarter 21 EBITDA including associate companies reached 210.2 million compared to 171.7 million in four quarter 2020. Full year 21 EBITDA including associates reached $719 million, a significant increase as compared to $403 million for the full year 2020. Aligned with the company's strategy to focus primarily on exploration, four-quarter 21 exploration operating units increased to $15.5 million compared to $12 million in four-quarter 2020. Full year 21, exploration and operating units increased to 56.4 million compared to 28 million in last year. Four quarter 2021 capital expenditures were 32.2 million compared to 38 million for the same period in 2020. Full year 2021 capital expenditures reached $90.7 million compared to $73.2 million in full year 2020. The full year 2021 capital expenditure mainly driven by growth cap at San Gabriel, $13.9 million. Sustaining cap of UMPAC, $10.2 million. And Ebrocal, $19.5 million. Post applicable to sales for the full year 2021, reflect a 67.7 million impact due to COVID-19 related expenses compared to the $30.5 million reported in 2020. Buenaventura plans to significantly reduce these expenses by updating its COVID-19 protocols aligned with the increase of vaccinated workforce. Buenaventura's cash position reached $377 million as of December 31, 2021, reflecting $137 million in dividends received from Cerro Verde in the year 2021. Moving on to slide four. Aligned with Buenaventura's commitment with its shareholders, the board has proposed a dividend payment of US $0.073 per share. The company expects a total capex between $190 and $210 million during 2022. The sustaining capex will reach between $90 and $100 million, and the growth capex mainly driven by San Gabriel will be around $100 and $110 million. The company's portfolio of greenfield project continue progressing well during the work. San Gabriel project concluded the prior consultation processes in both direct and influence communities, Corire and Oyoio. Construction permits expected by second quarter of 22, followed by the full funding decision. Yumpa project, which will add close to 30 million ounces of silver to Chagua Life of Mine keeps progressing according to the plan with the EIA Environmental Impact Assessment and Detailed Engineering of Construction Perm. Exploration of Tomasa vein continues with positive results, which will contribute another 30 million ounces of silver to the reserves. This will allow the company to increase silver production beginning 2024 on top of Chagua once the latter resumes operations. Buenaventura sold its total stake in Yanacocha for $300 million and continued payments of up to $100 million tied to future increases in metal prices. Additionally, Newmont transferred its ownership interest in the La Sanja joint venture to Buenaventura in exchange for royalties on any future production and also contributed to with $45 million to cover future closure costs. The net proceeds of the Guanacocha sale in a combination with the deviance received from Cerro Delve during the fourth quarter of 2021 will allow Buenaventura to fully repay the $275 million of the syndicate loan and partially fund the San Gabriel project. This decision is aligned with Buenaventura's commitment to deliver the company an improved balance. Buenaventura finished the ESG materiality assessment as a roadmap to its sustainability strategy. During 2022, Buenaventura will focus in measuring KPI, such as carbon emissions, water footprint, human rights, among others. Moving on to slide five, ESG corporate strategy. During 2021, with the help of our stakeholders, we completed the materiality matrix shown in this presentation. This enables Buenaventura to focus on those items which are identified as highly material. The results and action plan is shown in the next slide. Moving on to slide six, here you can find some key indicators regarding our ESG strategy. For example, on the environmental pilot, Buenaventura is committed to a responsible water management, achieving a 98% of freight circulation at our open-peat operations and 83% at underground operations. Also, in 2021, we have used 74% percent of renewable energy, primarily from our hydroelectric plant. And this year, we will focus on measuring our carbon footprint. Regarding the social pilot, as we have always mentioned, taking care of our workers' health is our top priority, and we will continue working on this. We have achieved a 92 percent fulfillment of social commitment. Also, we have leveraged over $10 million on infrastructure projects that directly benefit the communities developed. Finally, regarding the governance pilot, we will focus on optimizing EBITDA and the construction of our San Gabriel and Jumper projects, which are key value generators. Moving on to slide seven, financial highlights. Total revenues during the fourth quarter were $203. which is 7% higher in comparison to the fourth quarter of 2020. In 2021, total revenues increased to $901 million compared to 2020 where total revenues were $677 million. As we mentioned before, our EBITDA from direct operations for 2021 increased to $204 million in comparison to $147 million during 2020. Also, our EBITDA, including associated companies for 2021, reached $719 million in comparison to $403 million during 2020. The CAPEX decreased to $32 million in the fourth quarter of 2021, compared to $38 million in 2020. In 2021, CAPEX reached $91 million, a 24 increase in comparison to 2020. As you can appreciate on the graph shown in this slide, we are returning to pre-pandemic levels and even achieving greater results than 2019. Moving on to slide eight and nine, attributable production. Total goal, attributable production in the fourth quarter of 2021 was 59,000 ounces, which is 15% higher than the figure reported on the same quarter of the previous year. In 2021, total gold attributable production was 198,000 ounces higher than the same period of 2020. Further attributable production for this quarter was 2.5 million ounces, which shows a decrease of 27% compared to the figure reported on the fourth quarter of 2020. This is a direct result of the suspension of operations at chart. However, during 2021, silver attributable production was 13 million ounces, 13% higher than production in 2020, mainly driven by higher silver production at El Brocado. In the fourth quarter of 2021, 9,000 metric tons of steam were produced significant decrease compared to the fourth quarter in 2020. In 2021, zinc production decreased to 41,000 metric tons, 6% lower than the same period in 2020. In the case of lead, equity production was 5,000 metric tons in the fourth quarter of 2021, which is 32% lower in comparison to the fourth quarter of 2020. In 2021, lead production increased to approximately 21,000 metric tons in comparison to the 24,000 metric tons in 2020. Finally, our copper attributable production for the fourth quarter of the year was 28,000 metric tons. During 2021, copper attributable production was 102,000 metric tons, an 11% increase compared to the same period of 2020. Moving on to slide 10, all-in sustaining costs are cost applicable to sales. The all-in sustaining costs from our direct operations in 2020 increased by 8% to $1,406 per ounce of gold. The costs applicable to sales for 2021 were as follows. For gold, $1,206 per ounce. which is 10% higher than a year ago. For silver, $18.81 per ounce, which is 3% higher than a year ago. For lead, $1,483 per metric ton, which is 26% higher than a year ago. For copper, $6,584 per metric ton, which is 28% higher in comparison to a year ago. Finally, In the case of zinc, the cost applicable to sales was $2,274 U.S. dollars per metric ton, which is 18% higher than a year ago. As we mentioned before, cost applicable to sales has been impacted by approximately $67.7 million of expenses related to COVID-19. Moving on to slide 11, pipeline technology. Here, we are presenting in one snapshot the current development level for each one of our projects. Moving on to slide 12, San Gabriel. We are glad to announce that we finished the prior consultation in both communities and expect construction permits by the end of two quarters of 2022, followed by the full funding decisions. We are working with AUSENCO to finish the construction management agreement by the end of first quarter 2020. Moving on to slide 13, Trapiche, we have completed one of two environmental impact assessment workshops in the field, and we are missing one to be held by the end of the first quarter of 2020. The cooperation agreements with four out of five communities are on its final stages. We finished update report on power line land access with power results. Moving on to slide 14, Tantawatai's salt project. Hormone Access Board approved viability stage. Finished in 2021 in-field drilling program confirming high-grade salt. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.