Compañía de Minas Buenaventura

Good day, ladies and gentlemen, and welcome to the Compania de Minas Buenaventura third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode, and please note that this event is being recorded. I would now like to introduce your host for today's call, Mr. Gabriel Salas, Investor Relations. Mr. Salas, please be in.

Good morning, everyone, and thank you for joining us today to discuss our third 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. Alejandro Hermosa, Vice President of Sustainability, Mr. Renzo Maher, Projects Manager, Mr. Juan Carlos Alazar, 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 Bonaventura'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 projections are reasonable in the view of the currently available information, your caution not to place a new 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 October 27, 2022. Let me now turn the call to Mr. Orlando Garcia.

Thank you, Gabriel. Good morning to all, and thank you again for attending to this conference. We are pleased to present the results of World Corporate 2022 from Compania de Minas Gerais. As always, 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 the slide. Moving on to slide three, the highlights of this quarter were as follows. Third quarter 2022 EBITDA from direct operations was US$22.2 million compared with US$39.5 million reported in the third quarter 2021. Third quarter 2022 operating cash flow reached US$16.1 million compared minus $464.3 million in the third quarter of 2021. The third quarter 2021 operating cash flow figures include U.S. dollars $544.2 million payment to Sunac, the Peruvian tax authority. Third quarter 2022 net loss was $19.8 million compared to a 91.9 million net loss for the same period in 2021. Third quarter 2022 Exploration Act operating units increased to $20.7 million compared to U.S. dollars $17.1 million in the third quarter 2021. This increase is aligned with the company's review strategy to increase its focus on exploration in order to extend our life of mine. The results of the exploration campaign in June part are very encouraging. We are outlining a high silver grade deposit and we believe there is a potential resource that will allow us to at least double the amount of silver ounces we have reported up to now. Buenaventura's cash position reached $288 million as of September 30, 2022. Medbet decreased to $448.1 million with an average maturity of 3.6 years. Third quarter 2022 capital expenditures were $37.2 million compared to $23.9 million for the same period in 2021. Third quarter 2022 CAPEX includes $5.2 million related to the San Gabriel project and $7.3 million related to the June park project. activities at San Gabriel are gradually and progressively resuming. Bonaventura has therefore updated its capital guidance for San Gabriel and now expects this to reach approximately $65 million by the year end 2020. Moving on to slide number four, our ESG corporate strategy. we will find some key indicators regarding our ESG strategy. We have completed our carbon footprint measurement in all units, as we announced in last quarter. With these two, we know now how much CO2 we generate, and our next step is to develop a plan to reduce these emissions. The full report can be found in our website. Moving on to slide five, our financial highlights. Total revenues during the third quarter were $195 million, which is 11% lower in comparison to the third quarter of 2021. In the nine months of the year, total revenues decreased to $578 million compared to $647 million during the nine months of 2021. As we mentioned before, our EBITDA from direct operations for the third quarter 2022 was $22 million in comparison to $39 million during the third quarter of 2021. EBITDA from direct operations for the nine months of 2022 decreased to $96 million in comparison to $145 million during the first nine months of 2021. These few years exclude the Anacocha transaction effect. Also, our net loss for the third quarter of 2022 was $22 million in comparison to a net loss of $94 million during the same period in 2021. Net income for the first nine months of the year reached $534 million. compared to a net loss of $41 million for the same period in 2021. The increase is explained by the Yanacocha transaction. The capex increased to $37 million in the third quarter of 2022 compared to the $24 million in the third quarter of 2021. The first nine months of the year, capex total $93 million, a 60% increase in comparison to the first nine months of 2021. Moving on to slide six and seven, our attributable production. Total gold attributable production in the third quarter of 2022 was 56,000 ounces, which is 2% higher than the figure reported for the same quarter of the previous year. This increase is mainly explained by the stable production from the Pucara vein and at Orcopanta, but partially offset by lower production at Tainilachi. In the first nine months of 2022, total gold attributable production was 153,000 ounces, 10% higher than the same period in 2021. Silver attributable production for this quarter was 1.7 million ounces, which shows a decrease of 50% compared to the figure reported in the third quarter of 2021. During the first nine months of 2022, silver attributable production was 5 million ounces, 49% lower than the first nine months of 2021. This decrease was mainly explained primarily due to the suspension of Uchichagua's operations as we previously announced, and a change of the mine plan sequence at El Brocal. In the third quarter of 2022, 7,000 metric tons of zinc were produced, a decrease compared to the third quarter in 2021. In the first nine months of the year, zinc production reached metric tons, 30 percent lower than the same period in 2021. In the case of lead, equity production was around 4,000 metric tons in the third quarter of 2022, which is 28 percent lower in comparison to the third quarter of 2021. In the nine months of 2022, lead production was approximately 12,000 metric tons. three to four constant metric tons, a 13% increase compared to the same period of 2021. Moving on to slide eight, all-in sustaining costs and costs applicable to sales. The all-in sustaining costs from our direct operations in the first nine months of 2022 decreased by 12% to US$1,424 per ounce of gold. The costs applicable to sales for the first nine months of 2022 were as follows. For gold, US$1,126 per ounce, which is 8% lower than a year ago. For silver, 17.65 US dollars per ounce, which is 10% lower than a year ago. For lead, 1,282 US dollars per metric ton, which is 12% lower than a year ago. For copper, 6,675 US dollars per metric ton, which is 6% higher in comparison to a year ago. And finally, in the case of zinc, the cost applicable to sales was $3,037 per metric ton, which is 43% higher than a year ago. Moving on to slide 9, our pipeline of projects. This is an update. Here, we are presenting in one snapshot the current development level for each one of our projects. Moving on to slide 10, San Gabriel. Engineering and procurement work offsite activities progress as planned by significant 45% and 77% respectively relative to total target for the project completion. This thereby reduces overall project uncertainty and potentially enables the recovery of a portion of time lost related to this project relative to its targeted completion. We estimate to have commercial production from San Gabriel during the third quarter of 2015. Moving on to slide 11, Trabiche. We have finished the first set of one-site polymetallurgical testing. The second set of column testing will aim to improving copper recovery and controlling acid consumption. Environmental impact assessment and social engagement view work progressing as planned. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.