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spk01: 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.
spk04: 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.
spk06: 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.
spk01: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Carlos De Alba from Morgan Stanley. Please go ahead.
spk03: Good morning, gentlemen. Hopefully you're doing fine. First question is if you could give us a little more color on El Brocal, what has led to the revised mining plan, and what would be the impact besides the production that you gave on cost for that operation? And if there is any other meaningful, probably not, but I'll just ask, is there any other meaningful changes to the production of the other metals at that operation? And then you also could comment on the discrepancy between EBITDA and cash flow generation. Cash flow operation was negative. EBITDA was really strong. I think that it has to do potentially with the discontinued operations, the results of discontinued operations. How much taxes, cash taxes did you guys pay on the profits that you book from these continuing operations. Thank you.
spk06: Thank you, Carlos. With respect to your question of the production of Ocal, this is a consequence of the event we have in March that was advised to the market, and we have to change the mining plan. but more color should Juan Carlos will give you. And the other question about the bead, the reconciliation with the cash generation, of course, here is Daniel. So first, we can begin with the question of local. Please, Juan Carlos, go ahead. Thank you, Carlos, for the question.
spk08: Yes, the landslide happens or occurs in the west flank of the open bead. So in that area, we have a remediation plan that is in place right now and probably will take between three to four months to remediate that area, to remove all the loose material and to shallow the slope in order to have safe condition for that particular area of the mine. We will continue with the mining of the south section of the open pit and also remaining area in the north. In addition to that, we will supply ore to fit ore to the processing plant from the polymetallic stockpiles that we have right next to the main crusher. So the consequences will be a delay on the production or a reschedule of the production of certain areas of the open pit due to this accident. The impact on this year will be in the range of 1.1, 1.5 million ounces of silver this production will be delayed from 2022 probably going into 2023 we're still looking for opportunities to review this schedule but we really will be done rich also in by reviewing this uh a plan probably will be a catch sign opportunity captures and opportunities in order to reduce the gap in silver and increase a little bit of sink and lead but we are on a conservative side so far until we have more information from the studies and more progress on the works that have been done regarding the cost due to this accident uh still being assessed but we believe it will be in the range of three to four million dollars of additional expenses on the open bit due to the additional removal of material to shallow the slopes, the slopes of the wet side of the open pit.
spk03: Thank you, Juan Carlos.
spk06: Daniel, please.
spk05: Thank you, Leandro. Good morning, Carlos. Yes, the discrepancy between the EBITDA from direct operations and the operating free cash flow that we reported is due for two reasons. One is the taxes that you mentioned. In February, we sold the asset, the Anacocha asset, and the taxes related to this asset sale were paid in March, and this was in the order of $50 million. And this is under Condesa, which consolidates in our results. This is the explanation for the increase in taxes. And the increase in working capital, which is around $30 million, is explained by three main factors. First is due to the parallelization with Uchakwa, remember that in December we provisioned between $17 and $20 million for contract cuts and also the headcount that we adjusted at the end of the year. So these bills were paid in January and February. The provision was made in December, so you saw this effect in December in our costs, but the disbursement, the cash, went out between January and February. The same for El Brocal. We had some claims that were provisioned at the end of last year and paid in the first quarter. This was around $6 million. And also in December, we had the renewal of the property insurance. This is in the order of $10 to $11 million. In December, we made the provision and the payments were executed between January and February. This is a $10 to $11 million effect. That's why there is a discrepancy between the EBITDA and the free cash flow of around $70 million.
spk03: Thank you, Daniel.
spk01: Again, if you have a question, please press star, then one. Our next question comes from Tanya Jakuskanik from Scotiabank. Please go ahead.
spk02: Yes, good morning, everyone. Thank you so much for taking my call. I have three questions. The first question comes back to El Broquel. So I just wanted to check with you why there was no adjustment to either the copper, to the base metal aspects of the mine. You lowered the guidance for silver, but nothing on the base metal products. Can you explain to me why that's the case?
spk06: Sure, Sanja. Remember that we have two products operations in Androcal. One is the open pit and the other is the underground mine. But more detail should give you Juan Carlos. Please, Juan Carlos, go ahead.
spk08: Yes, Leandro, and thank you for the question, Tanja. Yes, as Leandro was mentioned, the guidance for copper was not changed because we don't have any impact on the underground mine that is 95% of the production of copper for this year. In regard of the lead and zinc production, As I mentioned, the south wall of the open pit and the northern wall of open pit were not impacted by the accident. So we have to put extra fleet to remove additional material, but we will supply that production as expected. So probably, as I mentioned, we will review that in order to see if we can reduce the gap in silver. an increase or affect a little bit of the lead and zinc but at this time we believe the main impact will be on silver or the equivalent in money on income later on with a little bit of reduction on zinc and lead that will be uh shared with the market in our next conference call when we have more information for stability and the progress on the remediation works
spk02: So what I'm understanding from you is that you've got to take the trucks away from the portion of the pit that's working on the zinc and lead and move it to where we've had the mudslide and sort of clean up. It's going to be additional clean up. And then hopefully you're able to push on zinc and lead when you bring the trucks back. Is that what I'm understanding?
spk08: Not exactly. It's that the southern wall is like 100 meters away from the landslide, the landslide that we suffer. So the southern wall will continue with the work. We have a hold of pretty much two weeks, and now we are putting additional cracks to catch up with the schedule work in the southern wall. The southern wall is 150 meters away from the landslide. So we will continue with the work in that area. The northern wall of the open pit, the northern face, is about one kilometer to the north of the landslide. So we don't have any interference there. So only we stop works there. a couple of weeks well we are receiving the words right now so we believe we will continue with the plan we can catch up with these two weeks delay that we had during the accident but we are looking for ways of reducing the gap in silver production that was in the landslide and that might have a trade-off between zinc and lead production, but not really substantially in terms of dollars. You know, we trade the income of zinc and lead with a little bit more income from silver. Probably we will do that along the year.
spk02: Okay. And so $3 million to $4 million is really just the cost, and we should just put additional costs in for that operation this year? Yes. And in terms of an updated mine plan on Uchachacua, Will we be getting that this year, or is it next year?
spk06: Thank you for your question. As you and the market, of course, worry about when we are going to resume the initial work in Tuk Tuk, we are working very hard. We are trying to shorten the schedule, but we think Finally, the next year will be, I expect the date to expect Uchachacoa back again.
spk02: I remember it was the second half of the year or towards the end of the year, Uchachacoa next year?
spk06: The second half.
spk02: Second half, okay. Sorry, then my next question had to do with San Gabriel. Congratulations on getting the permits and starting construction there. Can you just maybe... someone give me some of the milestones that we need to get from here to 2025 when we see production?
spk06: Sure, and I take the opportunity to congratulate all the team that have made this possible. Permission has been a very tough homework to make and we did it. With us is Renzo Mager, our project manager and he can give you details and the correct answer.
spk02: Perfect. Thank you.
spk07: Thank you very much. What we have authorization is to start with the earthworks and releasing the orders for equipment and the pre-construction work as well as maintaining the the current main infrastructure that has been inactive for a couple of years. So that's what we're going to start today. The idea is that we're going to be finishing construction towards the end of 2004 and aiming at the first bar towards the end of the first half of 2025. That will be commercial production.
spk02: Commercial production in 2025. Second half. But are there anything within the construction that are critical milestones for us to watch for?
spk07: Well, during 2020, during 2021, we have been working on engineering. So we have 33% advanced in engineering. I think we're going to be reviewing kind of the last uncertainty of the project is to reach the foundation of the plant, the foundation of the water dam. And we expect that we're going to have more information on that towards the end of 2022. I guess that will be the first milestone of the project is to reach the foundation. And then the campsite should be ready somewhere in the second quarter of 2024. And that's when another milestone that will signify the beginning of the heavy construction.
spk02: Okay, so as I understood it, so you're going to be putting down the plant foundation by the end of 2022, and then the campsite by Q2 of 2024 in place, and then you have, you know, bit of construction, heavy construction from Q2 2024 till the time you pour, you know, gold in the second half of 2025. Is that a correct understanding?
spk07: Yes. I will just make sure that the first statement was reaching the foundation level, not pulling the foundation, just reaching the foundation, confirming all our models about where the foundation is. Oh, yes.
spk02: Okay. Okay, got it. So the prep work for that. So the technical side. Okay, thank you for that. And then my last question, maybe for Daniel, just an update on the Sierra Verde dividends. You know, we're expecting some in 2022. So maybe an update on, you know, what are you seeing or are you expecting a dividend in Q2?
spk05: Yes, Tanya, good morning. We are receiving today close to $30 million. These are dividends related to 2021 results. We also expect, and this is something that Cerro Verde is evaluating, we expect additional dividends for the second half of the year, but we don't have yet any figure to But they are evaluating an additional dividend by second half.
spk02: Okay. Okay. Well, congratulations on the additional $30 million. That's good news. Thank you. Have a great weekend, everyone.
spk06: Thank you. You too.
spk01: Again, if you have a question, please press star, then 1. There are no more questions in the queue. That concludes our question-answer portion of today's conference call. I would like to turn it back to Leandro Garcia for closing remarks.
spk06: Thank you. Before we finish today's conference call, thank you again, and thank you very much for making the time to join us today. We would like to invite you to our 2022 Investor Day, which will be held in New York on June 6th then Easter time. Thank you again and have a wonderful day.
spk01: Ladies and gentlemen, that concludes one of Ventura's first quarter 2022 earnings results conference call. We would like to thank you again for your participation. You may now disconnect.
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