Compañía de Minas Buenaventura

Good day, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode, and please note that this call is being recorded. I'd 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 first quarter 2022 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 Benavides, chairman, and Mr. Raul Benavides, 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 this statement. Any such statement 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 April 28, 2022. With that, 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 difficult time. We are pleased to present the results of first quarter 2022 from Compania Aminas 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. Moving on to slide three. Highlights were as follows. First quarter 22 EBITDA from direct operations reached $431.9 million U.S. dollar compared to $39.7 million reported in first quarter 21, reflecting $300 million resulting from the sale of Buenaventura State in Yanacocha, and $45 million from Newmont's contribution to La Sanja's future closure costs. First quarter, 22 EBITDA, including adjusted company, reached $578.7 million, compared to U.S. dollars, $168.8 million in first quarter 2021. First quarter, 22, net income reached U.S. dollar compared to 16.4 million U.S. dollar for the same period in 2021. First quarter 22 exploration at operating units increased to 14 million dollars. from $9.3 million in the same period than last year, aligned with the company's strategy to focus primarily on exploration. First quarter capital expenditures were $19.9 million compared to 13 in the same period for 2021. First quarter 22 CAPEX includes 2.8 million in CAPEX related to the San Gabriel project and 4.2 in capex related to the impact work. The company continues its strategy of progressively reducing fixed costs at the Uchukchaco mine to improve the cost structure efficiency when the operation restarts. First quarter, 22 COVID-related expenses were $5.3 million compared to the 11.7 million reported in the first quarter, 21. 2022 COVID-related expenses estimates are between 12 and 14 million dollars. Buenaventura's cash position reached 337.4 million as of March 31st, 2022. Net debt was reduced to 771 million, achieving 1.71 times net debt to be done ratio aligned with the company's commitment to deliver regime on March 22 when Aventura fully paid its Syndicate loan amounting to 275 million US dollars on March 18 the company cancelled also 50 million dollars of its revolving facilities on March 30 The San Gabriel mine project received the government of Peru's approval of all requirements that require permits, enable the company to immediately commence mining project construction, development, and exploration. 2022 production guidance will be updated in the second quarter of 2022 due to a new mine plan in progress for El Brocal resulted in an expected 1 to 1.5 million ounce decrease in cereal production for the full year 2020. Moving on to slide four, ESG corporate strategy. As presented before, here you will find our materiality metrics. This year, we will start working on the closing of gaps on topics like standards in the supply chain, climate change, and energy use. The results of the progress made on this first quarter is shown in the next slide. Moving on to slide five, here you can find some key indicators regarding our ESG strategy. For example, on the environment pilar, Buenaventura is committed to responsible water management, achieving a 99% of the circulation at our open peak operation and 83% at our underground operations. Also, in the first quarter of 2022, we have used 74% 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% fulfillment of our social commitments. Also, we have made more than $120 million in local purchases. Finally, regarding the government's pilot, we will focus on optimizing EBITDA and the construction of our San Gabriel and YUPAC projects which are key value generators. Moving on to slide six, financial highlights. Total revenues during the first quarter were $233 million, which is 27% higher in comparison to the first quarter of 2021. As we mentioned before, our EBITDA from direct operations for the first quarter increased to $432 million in comparison to $14 million during the first quarter of last year. Also, our bid, including associate company for the first quarter of 2022, reached $579 million in comparison to $163 million in the same period. The capex increased to $20 million in the first quarter of 2022 compared to $13 million in the same quarter last year. Moving on to slide seven and eight, attributable production. Total gold attributable production in the first quarter of 2022 was 49,000 ounces, which is 31% higher than the figure reported in the same quarter of the previous year. The silver production of this quarter was 2 million ounces, which shows a decrease of 42% compared to the figure reported on the first quarter of 2021. This is a direct result of the suspension of operations that took charge. In the first quarter of 2022, 9,000 metric tons of zinc were produced, a slight decrease compared to the first quarter of last year. In the case of lead, equity production was 4,000 metric tons in the first quarter of 2022, which is 3% lower in comparison to the first quarter of 2021. Finally, our copper attributable production for the fourth quarter of the year was 27,000 metric tons, an increase of 13% when we compare with the same period in 2021. Moving on to slide nine, all-in sustaining cost and cost applicable to sales, cash. The all-in sustaining cost from our direct operations in this quarter decreased by 34% to $1,131 per ounce per gold. The cost applicable to sales for the first quarter of 2022 were as follows. For gold, $1,126 per ounce, which is 13% lower than a year ago. For silver, 15.21 U.S. dollars per ounce, which is 22% lower than a year ago. For lead, 1,375 U.S. dollars per metric ton, which is 4% higher than a year ago. For copper, 6,631 U.S. dollars per metric ton, which is 19 higher in comparison to a year ago. Finally, in the case of zinc, the cost applicable to sales was $2,838 per metric ton, which is 38% higher than a year ago. Moving on to slide 10, our pipeline of projects. Here we are presenting, in this slide, the current development level for each of our projects. In slide 11, San Gabriel, we obtained the approval of all required permits. This enabled us to immediately commence the construction and the early works. We are currently starting to release purchase and service orders for the construction. Moving on to slide 12, Trapiche, on-site metallurgical column testing is in progress. We are completing one of two environmental assessment workshops in the field, and we are only missing one to be held by the second quarter of 2020. The cooperation agreement with four out of five communities are on their final stages. We finish update report and power line land access with favorable results. Moving on to slide 13, Cantawatai Sofa Project. Paul Molache's board approved viability stage. Finish 2021 infield drilling program confirming high grade soil. Thank you for your attention. And we'll hand the call back to the operator to open the line for questions. Operator, please go ahead.