Compañía de Minas Buenaventura

Good day, ladies and gentlemen, and welcome to the Compania de Mina Bueno Ventura second quarter 2022 earnings conference call. At this time, all participants will be in a listen-only mode. 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 2022 results. Today's discussion will be led by Mr. Leandro Garcia, Chief Executive Officer. Also joining our call today and available to your question are Mr. Daniel Dominguez, Chief Financial Officer, Mr. Juan Carlos Ortiz, Vice President of Operations, Mr. Renzo Mager, Projects Manager, Mr. Juan Carlos Salazar, Geology and Explorations Manager, Mr. Roque Benavides, Chairman, and Mr. Raul Benavides, Director. Before I hand our call over, let me first touch on a few items. On Buena Ventura's website, you will find our press release that was posted yesterday after market closed. Please note that today's remarks include forward-looking statements that are based on management's current views and assumptions, while management believes that its assumptions, expectations, and predictions are reasonable in the view of the currently available information. We are cautioned not to place and view reliance on these forward-looking statements. I encourage you to read the full disclosure concerning forward-looking statements within the press release we filed on July 26, 2022. Let me now turn the call to Mr. Leandro Garcia.

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 of the second quarter 2022 from Compania de Minas, Guadalajara. 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. Moving on to slide three, the highlights were as follows. Second quarter 22 EBITDA from direct operations was negative 19.1 million compared to 68.5 million reported in the second quarter of 2021. Second quarter 22 operating cash flow reached 72.7 million compared to 101.7 million in second quarter the last year. Second quarter 22 net loss was 39.9 million compared to a 37.5 million net income for the same period in 2021. The second quarter 22 exploration at operating units increased to 18.9 compared to 14.5 million in the second quarter 2021. This increase is part of the company's revised strategy to increase its focus on exploration in order to extend life of mine. Second quarter 22 capital expenditures were $30.5 million compared to $21.4 million for the same period in 2021. Second quarter CAPEX includes $11 million related to the San Gabriel project and $60.3 million related to the Yumbot project. The company continues strategy of progressively reducing fixed costs at the Uchukchagua mine to improve the cost structure efficiency when the operation restarts. COVID-related expenses were reduced from $19.1 million in the second quarter of 2021 to $1.9 million reported in the second quarter of 2020. Buenaventura's cash position reached $326.3 million as of June 30, 2022. Net debt was reduced to $416.4 million with an average maturity of 3.8%. versus 2.2 years of last quarter of 2021. On the second quarter of 2021, sorry. On April 29, this year, Cerro Verde paid a total dividend of $150 million, when Aventura of that received $29.4 million relative to its stake in Cerro Verde. Once a score in debt amounts to $90 million with a coupon rate of 5.05% per annum, payable until 2027. Moving on to slide four, our ESG corporate strategy. Here you can find some key indicators regarding our ESG strategy. During the second quarter of 2022, we start our carbon footprint measurement, and we conducted our human rights due diligence. In line with our ESG strategy, during the second quarter, we will apply to the Dow Jones Sustainability Index. Moving on to slide five, financial highlights. Total revenues during the second quarter were $150 million, which is 38 percent lower in comparison to the second quarter of 2021. The first half of the year, total revenues decreased to $383 million compared to the first half of 2021. As we mentioned before, our EBITDA from direct operations for second quarter of 2022 was negative $19 million in comparison to $69 million during the second quarter of 2021. EBITDA from our direct operations for the six months of 2022 increased to $413 million, in comparison to $108 million during the first six months of 2021. The increase is mainly due to the Janacocha transaction. Also, our EBITDA, including associated companies for the second quarter of 2022, which are $52 million in comparison to $181 million during the same period in 2021. The figure including our affiliates for the first half of the year was $630 million compared to $344 million for the same period in 2021. The capex increased to $31 million in the second quarter of this year compared to $21 million in the second quarter of 2021. In the first six months of the year, APEX totaled $49 million, a 43% increase in comparison to the first half of 2021. Moving on to slide six and seven, our attributable production. Total gold attributable production in the second quarter of 2022 was 48,000 ounces, which is 3% higher than the year reported on the same quarter of the previous year. This increase is mainly explained by the 81% year-over-year higher volume or treated at all copampas. It was partially upset by the 18% decrease in the convalescent gold grade and the 30% decrease in ore stockpile on the leach bacteria. In the first semester of 2022, total gold attributable production was 97,000 ounces, 15% higher than the same period in 2021. Silver attributable production for this quarter was 1.6 million ounces, which shows a decrease of 51% compared to the figure reported on the second quarter of 2021. During the first half of 2022, silver attributable production was 3.4 million ounces, 48% lower than the first semester of 2021. This decrease was mainly explained primarily due to the suspension of Utujaqua's operation, as was previously announced, and a change of the mine plan sequence at El Broca. In the second quarter of 2022, metric tons of zinc were produced, a decrease compared to the second quarter in 2021. In the first semester of the year, zinc production reached 15,000 metric tons, 28% lower than the same period in 2021. In the case of lead, equity production was 4,000 metric tons in the second quarter of 2022, which is 41% lower in comparison to the second quarter of 2020. The first half of 2022 lead production was approximately 8,000 metric tons in comparison to 11,000 metric tons in 2021. Finally, our copper attributable production for the second quarter over the year was 28,000 metric tons. During the first half of 2022, copper attributable production was 55,000 metric tons and 13% increase compared to the same period of 2021. Moving on to slide eight, all-in sustaining cost and cost applicable to sales, cash. The all-in sustaining cost from our direct operations of the first semester of 2022 decreased by 6% to 1,450 U.S. dollars per ounce of gold. The costs applicable to sales for the first semester of 2022 were as follows. For gold, $1,128 per ounce, which is 11% lower than a year ago. For silver, $17.65 per ounce, which is 10% lower than a year ago. For lead, $1,341 per metric ton, which is 2% higher than a year ago. Of copper, $6,885 per metric ton, which is 16% higher in comparison to a year ago. Finally, in the case of zinc, the cost applied to sale was $3,167 per metric ton, which is 51% higher than a year ago. Moving on to slide nine, pipeline of projects. Here we are presenting one snapshot, the current development level for each one of our projects. Moving on to slide 10, San Gabriel. The construction is delayed due to social matters that are being addressed. We are expecting to resume activities on the following weeks. The engineering and the procurement work packages are underway. Engineering at 40% completion, procurement at 61% completion. Power line boot dealing starts when 93% of the power line lands are secured. We are left in 3.5 kilometers to go. Moving on to slide 11, Trapiche. We are finishing first on-site metallurgical column testing after 200 days of primary leaching. Column comparison and flow rate control help confirm design recovery. We have completed all chloride leaching tests in Lima. Final report in process. We have successfully completed completed the mission IPIA workshop. We have signed cooperation agreements with two out of five communities, remaining one is still in process. We have started power line land agreements with three communities. Access road land agreements to be resumed after cooperation agreements are finalized. Moving on to slide 12. So far, Coimbatore's board approved the development of a 20K pre-feasibility study. The drilling plan to increase resource certainty and Takamachi's land acquisition are in progress. That's all. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.