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spk08: Good day, ladies and gentlemen, and welcome to the Compania de Minas Buenaventura third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode, and please note that this 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.
spk11: Good morning, everyone, and thank you for joining us today to discuss our third quarter 2023 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, Vice President of Projects, 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 Buenaventura's website, you will find our press release that was posted yesterday after the 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 view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. I encourage you to read the full disclosure concerning forward-looking statements within the earnings results press release issued on October 30th, 2023. Let me now turn the call to Mr. Leandro Garcia.
spk13: Thank you, Gabriel, and good morning to all, and thank you for joining us for today to discuss the quarterly results of the company. On slide two is our cautionary statement, important information that I encourage you to read. We assume that you have already read the results reported yesterday. Moving on to the next slide, our presentation will cover the five main topics shown here, and we will be followed by our Q&A session, where our team will be happy to answer your questions. Let's begin with some overview of the key highlights for the first nine months of 2023. Our EBITDA from direct operations for the first nine months of 2023 has witnessed a 27% increase as compared to the same period of the previous year. It is worth mentioning that the figures do not include the $300 million obtained last year from the sale of our stake in Yanagotchi. Our cash position remains strong in third quarter 2023. due to a strong performance at El Brocal. We are pleased to share that our dividends received from Cerro Verde during the quarter have contributed to $49 million, strengthening our overall financial performance. It is important to note that Cerro Verde has a record in copper production during the third quarter 23 of 430,000 tons per day representing 255 million pounds of copper. After completing the processing plant operational readiness, we have successfully resumed operations at Uchukchakwa on October the 29th, and also received approval for the UNPAC project's environmental impact assessment on September the 7th, enabling Buenaventura to perform metallurgical tests for up to 125,000 tons of ore from Yunpac's pilot stove. We are determined with our commitment to sustainability and responsible mining practices while fostering production. Although operations at El Brocal, specifically the Colquihil-Catajonorte mine, have temporarily been suspended until the approval of the environmental impact assessment, we are able to continue focusing on increasing the underground production to 12,000 tons per day as planned for the following two years. Our consolidated production for copper, silver, and gold across the last three quarters has had the following results. 44,000 tons of fine copper thanks to the record production at El Brocal. We are on track to achieve the upper range of their guidance. 4.9 million ounces of silver, being El Brocal its main contributor. During the fourth quarter 2023, Uchukchakwa and Yumpac will continue almost with 2.8 million ounces to reach the full year guidance. 111,000 ounces of gold with the steady production from Corcovam. Moving on to our cost structure in slide five, you can see that our all-in sustaining costs have increased by 34% compared to the nine-month period of last year. This is primarily explained by the gold production decrease at La Sanja, Tambomayo, and Comolache. However, it is important to mention that these figures does not include El Brocal and Cerro Verde with excellent cost performance during the third quarter of 2023. Moving on the costs applicable to sales trend, as you can see, the prioritization of copper ore at El Brocal with better operating margins is translating into a 10% cost reduction in the last quarter. Silver cost applicable to sales has increased 29% year-over-year, primarily driven by lower head rates of the Julcani and Tambomayo. However, we expect to reduce costs during the fourth quarter of 2023 with the contribution of Chacua and Yumpac silver houses. Gold cost applicable to sales has remained relatively flat year-over-year, despite the reserve depletion at La Zanja and lower production at Tambo Maya. On the next slide, we are showing the free cash flow generation. During the third quarter of 2023, we have increased our cash position in $20 million, thanks to the excellent performance from El Vocal and the dividends received from Cerro Verde. Free cash flow reconciliation is explained by the following breakdown of the inflows and upflows. El Brocal, Tambomayo, and Orcopampa have been the main contributors for the period of nine months of 2023, while La Zanja, Hulcania, and Uchukchacua had a negative EBITDA due to lower production for the first two assets, Kerala and Kerala Mantenis, and the indigested Uchukchacua mines. However, we expect to have a positive EBITDA for the fourth quarter. Thank you. Thanks to the resumption of Lucho Chacua and the contribution of YUMPA. As we have mentioned before, Buenaventura is going through a growth phase with an extensive capex related to YUMPA and San Gabriel. This has been partially offset by the income taxes and the dividends received from Cerro Val. Moving on to slide 7, we are focusing the pipeline on the projects that have more than 10 years of life of mine. Also, we have a diversified portfolio of projects in each stage of the viability cycle, enabling Buenaventura to continuously deliver new projects in the following years. In the following slides, I would like to illustrate our main two projects. Yumpac and San Gabriel. We are relaunching a new Utuk Chakwa with the Yumpac mine, almost six kilometers away from the current mine. This recent restart will extend the life of mine by around 15 years. Yumpac have successfully obtained its environmental permit and have submitted the financial authorization for the deposit of provision. However, in November, we are going to start processing ore from the Camila Bank with a permit that allowed us to treat up to 125,000 tons of ore from the pilot scope. Moving on to slide 10. In the next years, Buenaventura will be focusing most of its efforts in the San Gabriel project because it will be a relevant contributor to the company's value. It will add more than 14 years of life of mine to the company. In this slide, you can see the progress of the project quarter by quarter. By the following quarter, we expect to start the field work with the underground contractor. On the next slide, we are showing the air movement activities for the processing plant facility. On slide 11, you can see the layout of the future plant of the San Gabriel project. with its crushing equipment on the left of the picture going through the miling and the grinding area to finally reach the carboning leach area. We expect to complete 100% of this facility by the first half of year 2025. On the next slide, we show a couple of pictures of other components of the project that are processing and planned. such as the mine, pond, and water treatment plant on the top left. Also, the San Gabriel definite campsite and the waste dump facility. On the bottom of the slide is the underground mine portal with its ventilation system. Finally, I would like to finish the presentation with a couple of closing remarks. San Gabriel construction will progress faster as the main contractors are already on the project. Total capex for the project remains unchanged and the start of commercial production for the second half of 2025 is maintained. Uchukchakwa was successfully restarted after two years of care and maintenance. UNPAC's environmental permit was approved. and production will start in November. El Brocal have a record production of copper this year. Despite the open pit temporary suspension for the 9th month of 2023, El Brocal have reduced consistently copper cash by 10%, confirming Buenaventura's effort to optimize costs. Thank you for your attention. I will handle the call back to the operator to open for the line for questions. Operator, please go ahead.
spk08: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one on a touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Please also note you may you may present your questions through the webcast by typing and hitting submit. At this time, we'll pause momentarily to assemble our roster. Our first question today comes from Carlos de Alba from Morgan Stanley. Please go ahead with your question.
spk04: Yeah, good morning, gentlemen. So first question is regarding Tambo Mayo. In the explanation of the production performance, it is noted that in order to reach the mine's upper zone, you will require to do more rehabilitation and then you will be able to access the sky grade ore. When would you be in a position to reach the sky grade zone and how much expenses or capitalized expenses will you have to incur in order to do so?
spk13: Thank you, Carlos, for your question. Actually, yes, that or is in the upper part of the mind, but I will let Juan Carlos Ortiz to give more explanation and the timeline to reach that or. Please, Juan Carlos. Sure, Leandro.
spk15: Thank you, Carlos, for the question. In the upper part of Tambo Mayo, we are already there. We are mining that area. We expect this year to mine at a certain pace, but due to the rock condition, the ground condition, we need to slow down the rate of extraction from this area. We need to do more reworks on the ground support, do auxiliary accesses for the area in order to have more flexibility to mine the upper area of the mine. So we're already there. We don't need extra capex to add this area into production. We're already there. The only difference is the production rate is lower than we expected. So we are carrying on this production from 2023 into 2024. And the production in that area or the grade in that area is basically silver. It's around five to seven ounces of silver, two, three grams of gold. So it's a substantial production of silver coming from this area. And now we are offsetting this production with other areas of Tamamo Mayo that are more on the gold value than the silver. That's the difference that you see in our guidance for the rest of the year, 2023.
spk04: All right. Thank you, Juan Carlos. I appreciate that. Another question is on Hulcani. Clearly, the mine is losing money, a cash to sales of 26 in the third quarter. But it is mentioned that there is a new zone of gold and copper that will begin production during the fourth quarter. would this i mean can you talk a little bit more about about this this zone and what the implications would be for for cost and production is this going to allow the mind to turn to the black and make money um yes of course carlos um actually the the different and the difference against our budgeted production is
spk13: because the reconciliation of the grades, the actual grades we could reach this quarter and during 2023. However, we are working on this new area called Rosario. And, well, Juan Carlos will give you another big picture of what are we finding there. Please, Juan Carlos. Sure, Leandro. Yes.
spk15: In Julcani, you see a footprint, how it looks like. We have a core area at the center of the deposit where we have the main, let's say, from a geological point of view, is the hotter area. And it's surrounded by a ring where we have all the lead and silver vinylization. We are producing right now, and historically, we have been producing most of our recent silver production from the surrounding ring. That's the Achilla mine. In that mine is where we are hitting now lower than expected grades in the stock that we have planned for 2023. Rosario area is at the center of the deposit. So it's not far, maybe 500, 400 meters from the existing stocks in the Achilla area. So we share a lot of infrastructure with Achilla. This area was Originally mining many, many years ago in the upper levels, and now we are accessing this area down below at the sixth level. We hit the same veins that we have seen evidenced in surface where we have thicker thickness with a higher copper and gold grade than we had in the past in the upper area. We have a long set of veins. Several of them are in the range of five grams of gold, three, four percent copper. So now it's something new for us regarding the historical position in the last 10 years, and we are developing this new area. We have, by the developing of this area, around a small campaign of 2,000 tons of ore that we are passing in the last quarter, in the last month of the year, maybe in December, we will process this. After finishing all the pilot tests in the lab, we will do an industrial test with this material. It's an ore... with a value in the order of $350 to $400 per tonne of value. And we believe, we're confident by the evidence that we're having so far in the exploration and development, that this area will become a significant player for vulcani in the coming two years. We need to continue the exploration and develop this new area between 2024 and 2025 in order to have substantial production as a value So when we have continuous operation from the silver areas, we are trying to catch the high-grade, high-silver-grade areas and develop in parallel the area of Rosario. Altogether goes to the same cost basis. That's the reason the cost of Holcan is going a little bit higher because we are putting everything that we do as expense development in the Rosario area in the same basket as the Achilla mine.
spk04: Okay, so cost will increase, but ultimately this new area will make the mine profitable?
spk15: Yes, that's the idea. This year and the next year we will invest in developing this area. It will take like at least 12, 18 months to develop and put this area into full production to be a substantial part, maybe 25 to 30% of the contribution and production in Kunkani will come from this area. Of course, we need to complete all the tests and be sure that everything goes fine along with the high rate for the Achilla mine, the historical mine. For the next 12 to 18 months, we'll have a higher than expected cost and then we'll deliver the additional production for Rosario mine.
spk04: Okay. All right. Thank you. I'll get back to the queue. for a couple of more questions. Thank you very much.
spk00: You're welcome.
spk08: Our next question comes from Cesar Perez Navoa from BTG Pactual. Please go ahead with your question.
spk09: Yes, thank you and good morning to all. I have two questions. The first would be on Yumpag. Buenaventura kept the fourth quarter 23 target date for start-up production unchanged. Is there a commercial volume that we should consider from this asset in the final quarter of the year? And if so, at what cost should we assume this for modeling? And my second question relates to the Marcapunta underground mine. You're increasing production from 10,000 tons per day this year to 12,000 tons per day over the next two years. Could you fine-tune the date for this capacity increase and perhaps guide on the potential copper volume that we should anticipate from the acid in the future? Thank you.
spk13: Thank you for your question. Please, Juan Carlos. Yes. On the first one, on JUPAC,
spk15: We are starting a campaign of about 120,000 tons of ore. It's the final stage of the exploration permit. We have a license to process around 120,000 tons of ore into our Uchukchakwa processing plant. So we will start right now. Actually, we started yesterday doing this test. It's a very high grade ore. It's over 20, 25 ounces of silver. So the idea is to produce, as we put in our guidance, in the order of almost two million ounces of silver in the last quarter, as we put in our guidance, coming from this area. The cost for this production in JunPAC is in the order of $11, $12 per ounce of silver. So this is regarding JunPAC. And once we have the operational license, We will continue mining the same ore body from 2024 in advance at a rate of 1,000 tons per day with an average rate in the order of 20 ounces, 22 ounces of silver per ton. So it's a substantial asset for us. It's a very low cost for the combination of jute, baga, wood, jute chapel mining. Regarding Ebrocal mine, we are now at a production rate in the underground mine in the order of 12, sorry, 10.5, almost close to 11,000 tons per day in some peaks. So next year, in 2024, our target is to stabilize the production in the area of 11,000 tons per day, 2024. and keep developing the mine in order to increase the throughput in 2025 to around 12,000 tons per day. So the target is to reach 12,000 tons per day by middle 2025. That's the target for the throughput point of view. Regarding copper production, because the underground mine is a purely copper player, we will be Our bottom part, of course, is going to be historical pollution in the area of 50,000 tons of fine copper, but we are looking for opportunities to go over that, increasing not only the throughput, but also the recovery. Other opportunities that we have, basically, on the cost side. As you see, we are reducing the cost, the producing cost of the underground mine, and that's our main target. The main target is not necessarily to increase production, but to decrease the cash cost of the underground mine.
spk13: If I may add, there is no need to any capex to the plant. We have plant capacity enough to treat the 12,000 tons per day. All the efforts are in the mine site to extract the 12,000 tons per day from the mine.
spk09: Okay. And just to be very clear, my connection is not very stable, but if I heard you correctly, you'll be hitting a stable production of around throughput rates of 11,000 in 24. In the middle of 25, you'll be hitting 12,000 tons per day, and your minimum copper production would be in the range or at minimum 50,000 tons, right?
spk15: That's correct. All right.
spk09: Okay. Thank you very much, gentlemen.
spk08: Our next question comes from Omar Avaloneta from Prima AFP. Please go ahead with your question.
spk05: Hello, thank you very much for the call. I have a couple of questions regarding Cerro Verde. Do you expect to receive dividends during this last quarter of the year? Do you have any information regarding the tax dispute between Freeport and the Peruvian government related to these royalties? Thanks.
spk13: Thank you, Omar, for your question. I will answer the first regarding the dividends. We know and it's known by everybody that Cerro Verde has an excellent performance. There is some room for dividends, but the decision has not been taken until yet. So we expect, of course, but there is no 100% confirmation. With respect of the trial in the CIA, we expect news for May next year, some confirmation or some communication from the CIA of the results of this trial.
spk05: Okay, thanks. And if I may, an additional question. Do you have any news regarding this consulta previa process in UNPAC?
spk13: Yes. Well, we are working very close with the Minister of Mines, but maybe here with us is Alejandro that can give us more color for the answer.
spk12: Yes, this process is currently under evaluation from the social office of the Ministry of Mines. They're evaluating all the processes that we have had in the past in that operation, and we should have some results from them instruction from them in the following weeks.
spk05: Okay. Thank you very much.
spk08: Our next question comes from Jocelyn Jensen from Leucor. Please go ahead with your question.
spk10: Hello. Thank you very much for taking my question. Do you hear me?
spk00: Yes. Okay.
spk10: I want to ask about CAPEX if you could provide us more color regarding the CAPEX expected for 2024 for the growth project and also for total and how much CAPEX do you expect for Perpiche and when do you expect to start building this project and how do you expect to fund that CAPEX We have seen that in this quarter you have reduced leverage, but do you expect to take more debt, or which are the available credit lines that you already have?
spk13: Thank you. Thank you very much for your question. It's a relevant issue. Well, the CAPEX for 2024, will be mainly, all the efforts will be for San Gabriel. For the sustaining CAPEX, normally, Buenaventura has a budget of $80 million. Trapiche will be around 20, between 20 and 30, but maybe Daniel can help us with more exact figures. that we are managing as today.
spk07: Thank you, Leandro, and thanks for the question. For year 2024, we are expecting a total capex of around $300 million. From this, Sangha Real will require between $180 to $200 million. And for Eumpac, we will disburse around $25 million. For Trapiche, during 2024, we expect to disburse around $15 million. Going to the second part of your question, how are we going to fund these cash requirements, these short-term cash requirements? We count with the cash that we are generating. It's around $200 million of EBITDA. We also count with a cash position of also $200 million. We count with the dividends from Cerro Verde. And if there is a gap that we estimate that it could be around $100 or $150 million for a short period of time, we are very close to obtain committed revolving facilities with local banks in the order of $150 million. We already count with $50 million for a committed line, so that will be the liquidity that we need for the funding of basically San Gabriel, Yulpak, and our maintenance capex.
spk10: Okay, thank you very much. If I understand correctly, then you said that you already have $50 million in committed credit lines, and do you expect to increase it up to $150 million?
spk07: Yes, that's correct.
spk10: Okay, thank you very much.
spk08: Our next question comes from Tanya Jakuskanik from Scotiabank. Please go ahead with your question.
spk01: Great. Good morning, everybody. Sorry, I fell off the line and had to dial back in, so I really apologize if you've already answered these questions. But I just wanted to know, on San Gabriel, where are we on the power line permit? I thought we were going to get it in Q4 of 2023. I just wonder where we are. Did we get it yet, or are we expecting it?
spk13: Thank you, Tanya. Thank you, Tanya, for your question. Renzo is with us. He can give you more detail of the process. Sure.
spk14: We finish all the workshops with the communities, and in November we should have the public assembly. So probably in December we should have better news. Not better news, but news. Everything should work fine so far.
spk01: Okay. And then maybe, Daniel, again, I apologize if you talked about the Sierra Verde dividend. You know, I think you had given guidance for about $120 million for this year and next. Is this something that we still should be thinking about, or are we getting anything else from Sierra Verde this year?
spk07: We are very optimistic of the cash generation of Sierra Verde. They are generating $2 billion of EBITDA. They have already distributed $200 million. And, of course, we expect an additional dividend if the results come in the fourth quarter as we expect.
spk01: Okay. And then can I just ask one final question just on the investor day that you're hosting in New York on December 4th? I'm just trying to understand because it's at the end of the year, and I'm just trying to understand that that investor day on December 4th are, you know, besides the updates on the assets like you're giving us and obviously the development pipeline, will we be getting updated reserves and resources on December 4th?
spk13: Yes, Tanya. We will have news in that date. And that is one of the reasons that we postponed the Buena Ventura Day for the last month of this year. So we will have news for you.
spk01: Okay, so we will have updated year-end 2023 reserves and resources for the company?
spk08: Yes, correct.
spk01: Yeah, okay. And then one other thing, will you be providing us 2024 and longer-term guidance as well at the Investor Day?
spk13: Yes. Yes, we will be prepared for giving you those numbers. Okay.
spk01: I'm just trying to understand, is it 2024 or is it more years than 2024? 2024 and 2025. Okay. And then, yeah, and then just I guess my final question for you is just any updates on just geopolitically what's happening in Peru for us that are far away and just read what's on CNN. So maybe, you know, you know, we could have someone who actually lives in Peru give us an insight in what's happening. And again, from the protests that we keep reading about, et cetera. So maybe it would be really nice if someone can provide some insight into what's happening in Peru from a geopolitical standpoint for investment and also for anti-mining and protests. Yeah. Thank you.
spk13: Yeah, Tanya. Well, things are quite still. The political situation is steady. the government, the current administration is trying to make all the efforts to invoke more investment, more private investment. The president, Boluarte, is having some trouble, some trips to Alemania. Yesterday, the Congress authorized her to go to the United States to convoke and to call for investment in Peru, given the situation and given all the opportunities we have as a country. And there is an effort from the Ministry of Economy to maintain and to pass this difficult economic situation because the lack of investment we have had in the last two or three years due to the political instability. But we are optimistic that the country is going in the right way. We think that the prime minister is trying to politically manage the situation, all the different needs that the country has, but we feel that we are much better than we were one year ago. So we are very optimistic. I don't know if here with us is, of course, our chairman, Roque Benavides. I don't know, Roque, if you want to add some ideas.
spk03: Well, if I may say, the fact of having the prime minister, the minister of mine, a body language, if I may say, which gave a lot of support to the industry. I think there is a help in the industry to develop the project. And then, obviously, the recession that we are living through requires far more investment, and mining is the main source, if I may say. Thank you, Rocky.
spk01: Okay. So, Rocky, you think that then we are going to see a much more pro-investment support for, you know, investment in Peru going forward because of the recession and things that the current... administration is doing?
spk03: There is no doubt about that. There is no doubt. I think the president traveling to Germany, traveling to the States in the next few days also shows the interest to attract more investment.
spk01: Okay, great. Thank you so much. Nice to hear from you.
spk08: Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question is a follow-up from Carlos de Alba from Morgan Stanley. Please go ahead with your follow-up.
spk04: Yeah, great. Thanks. It's on El Brocal. Apparently, costs will be increasing in the fourth quarter. as the company recognized the deferred shipping costs associated with the lead and zinc inventory. Can you provide a little bit more color? Costs were somewhat elevated in the third quarter, so it would be very interesting to know what the implications would be of this comment made personally.
spk13: Carlos, please.
spk15: Yeah, we have a pre-stripping account, deferred pre-stripping in our books that accounts for about $51 billion. Because we finished the mining of the current phase of the open pit, we are speeding up the amortization of this amount of money up to the end of this year. So it's going to be an accelerated amortization because the open pit finalized not only the mining but also the processing of the ore that we broke up to September this year. so all the stockpiles are going to be processed up to December of latency and based on that processing rate we'll be doing the amortization of the 51 million dollars that we have in the deferred stripping account in AeroCal mine this is pretty much what the main impact on cost because it's uh of amortization in this fourth quarter of this year.
spk04: All right. Okay. Thank you very much.
spk08: Our next question comes from Rodrigo Moriarty from ASP Integra. Please go ahead with your question. Hello, how are you?
spk06: Thank you for taking my call. One question. What are the actions you're actually taking to start San Gabriel in the second half of 2025?
spk13: Sorry. Sorry, Rodrigo. I didn't hear your question as well as I want.
spk06: Oh, can you hear me now?
spk00: Can you repeat it?
spk06: Yes. Of course. So can you explain more maybe on the actions you are taking to start production of San Gabriel in the second half of 2025? the construction percentage of the CAPEX you've already been deploying is, I think, 14%, and you've changed your guidance, so maybe if you can develop more on what are the actions you are doing right now, and if you don't expect any issues with communities, for example, what are the current actions with communities so CAPEX could be deployed efficiently or not?
spk13: Thank you for your question, Rodrigo. Renzo, maybe you can help us with the answer. Sure.
spk14: Thanks for the question. This year has been a year where we focus on all the pre-construction services so we can receive the main construction teams on site. By the end of this year, you should have The campsite pretty much terminated. The contractors on the field for the mine work. We are assigning the SMP contract and the concrete installation on November. So we're going to be focusing on full construction activities during the whole 2024. In parallel, we started our operation readiness group. So we're going to start a year from now we're going to have all the manuals and we're going to start training our people so we can initiate commissioning the first quarter, second quarter of 2025. And in the social aspect, I think we're in good forms with the communities. No major problems in there. We keep working with them. We have like 30% of our people are from within the region. And so we have a good relationship, contract relationship, work relationship with the community.
spk06: Okay, thank you. And one additional question. Do you have concerns about the El Niño phenomenon for next year? Do your communities have told you something? What are your current conversations about that topic?
spk13: Thank you, Rodrigo. Yes, this is an important issue that we have been discussing since April this year. We are working very closely with our operations. We are defining all the critical aspects of how the Niño effect can affect us, and we have a plan to alleviate all the damage that can be done by this phenomenon. We are working with our manager of safety and internally we are coordinating with all the areas to be prepared for this plan.
spk06: Okay. And as now, do you have any estimation of how much would you spend to alleviate any circumstances due to this phenomenon or do you have any estimations nowadays?
spk13: Yeah, primarily we are reviewing our capacity to have the inventories of our concentrates. We are viewing also, we are reviewing the alternative routes, the ways we have to access our mines. we are focusing in the two main issues, all the inflow of material we need and how we are going to get out with our concentrate. So we are planning which are the roads that we can use to establish how good and how prepared are the alternative routes that we have today and also the capacity of how much stock we will have for our concentrates and how we need increase, if any, of all our parts and equipment and material we need to continue production.
spk06: Okay. Thank you very much, Leandro.
spk08: Our next question comes from Juan Cruz from Morgan Stanley. Please go ahead with your question.
spk02: Hi. Good morning, everybody. Can you hear me okay?
spk00: Yes.
spk02: Excellent. In light of the CAPEX and the projects that you have planned for the next few years, can you tell us what is the minimum cash level that you feel comfortable holding, given where we are in the cycle? And also, how are you guys thinking about the bond maturity in 2026, understanding that there's still enough time to figure out a plan? Given where we are in the rates environment, how much that costs you now and what the potential refinancing costs could be, how are you thinking about that if you are?
spk13: Thank you, Juan, for your question. Daniel can help us with the answer.
spk07: Thanks for the question. For the minimum cash that we consider, we normally estimate two months of OPEX which is around 50 million dollars so that would be our minimum cash that's the first question the second question is the second answer for the for your second question is uh of course we are we have a plan for the for the bond maturity which is in 2026 in july we are considering starting the the renewal process at the beginning of year 2025 So we should count with a facility or a bond renewal plan executed by July 2025. We are evaluating, of course, the interest rates. As of now, they are in a very high level, but we expect that in year 2025, by mid-year, they should have decreased substantially.
spk02: Okay, thank you. And just as a follow-up, given where your cash balance is, which is a healthy one right now at 220-something million, at least as of September, should we expect that you come close to your minimum at any point, or that's not in the cards?
spk07: No, if we are getting close to our minimum, we will exercise the liquidity that we have with the local banks.
spk02: And those facilities are committed?
spk07: We have one which is committed, and the other ones we are looking to be committed as well.
spk02: Okay, so that's ideally up to $150 million.
spk13: Exactly.
spk02: Thank you.
spk08: And our next question comes from Jocelyn Jensen. As a follow-up, please go ahead with your question.
spk10: Yes, thank you. Just regarding production and the strategy you have going forward, in your Expectations for this year, Uchichagua and Yumbac will produce around, well, up to 2.8 million tons. You're assuming that that will be just in the fourth quarter?
spk13: Thank you. You're telling me million ounces, no?
spk10: Yes, yes, sorry, million ounces of silver. Go ahead. Mm-hmm.
spk15: yeah yeah yes this is our guidance uh as i mentioned uh you pack is going to be processing this year around 100 000 tons 90 to 100 000 tons of pork with a grade over 25 ounces of super proton this year and we can check what we'll be processing also around same figure around 90 000 to 100 000 tons of four in the order of 10 ounces of silver per ton equivalent because it's a combination of uh basically polymetallic gold with silver lead and zinc but the equivalent grade of that material is in the order of 10 ounces of silver equivalent so the combination of both that will be processed in campaigns in batches in the Chukcha processing plant will bring us into the order of 2.5, 2.8 million ounces of silver by this last quarter of the year.
spk10: And it will be correct to multiply it by four to get to that 2024 number, more or less, or not?
spk15: In the case of Chuchagua, yes. In the case of Chupac, probably we're getting closer to the average grade of the deposit is more or less on the range of 20 to 22 ounces is the average of Chupac mine instead of 25 ounces that we are putting ahead of time, speeding up production for 2023. So it will not be a little bit less production from Chupac next year.
spk10: Going forward, I saw in your presentation from Q2 that you are expecting to reduce the operating units. Could you give us more color about it? Which operating units are you thinking to close?
spk13: this is happening in our presentation of the second quarter yes well we don't see any current operations to close and it is known by the market that we are struggling with reserves in morco pampa and and Tambo Mayo due to different reasons, but maybe it's that, the reference you have. Okay, what there is in the presentation is that you actually have seven
spk10: operations and then you will reduce to five operations in 2026 and to between three and five by 2030.
spk13: Well, we are concentrating in units that we can support for at least We are concentrating in operations in mines that have more than 10 years of life of mine. All the efforts are to increase the long of our mines. And the strategy is to concentrate in those type of mines. So in the time, if any of the current mines doesn't have that characteristic, In that moment, we will decide to close, to sell, to not continue working in that mine. But our strategy is to focus on mines that have more than 10 years of life of mine. That is the message.
spk10: Okay. And the revenue mix, will still be 50-50 between base metals and precious metals?
spk13: We foresee a little change. We were going to be more concentrated in sales coming from copper. It will be around 55%, 60% of our revenue coming from copper in the following years due to the increasing in Brocal, the support of Cerro Verde, and also the decreased production that we expect for Copan Pantamo Mayo, somehow upset, of course, by our new project of San Gabriel. of precious metals that were supported by San Gabriel and Yumpac and Chacua.
spk08: And ladies and gentlemen, with that, we'll be concluding today's audio question and answer session. I'd like to turn the floor back over to management for any offline questions.
spk11: Thank you, operator. The first question comes from Lenin Munoz from For Sale Capital. What is the level of engineering of San Gabriel? Detailed engineering at what percentage? And the capex for San Gabriel includes the working capital of the ramp-up?
spk13: Thank you, Lenin. Renzo can give us more color for that question.
spk14: Sure. So we're currently at 90% completion of the of the engineering at this point kind of indicates that we have enough engineering to place all the purchase orders and service orders, and the remaining 10% is usually field engineering, so support of changes during the construction. And to the second question, yes, it does include the working capital, everything it needs until we move to commercial construction.
spk11: Thanks, Renzo. The second question comes from Tim Lambert from Lumi Sales. What is the timeline for the resumption of mining at Tajo Norte?
spk15: We are planning to resume operations in the open bid depending on the permits and the timeline for getting all the permits done. But our target is to be receiving a street bid by 2026 and production from the open pit into the processing plant by the end of 2026, early 2027.
spk11: Thanks, Juan Carlos. The third question comes from Javier de Romagna from Niklas Partners. What guarantees the company has given against the credit lines?
spk07: Danny? These credit lines are unsecured. we don't foresee any guarantees related to these credit lines or any revolving facility that we can obtain for the following years.
spk11: Thanks, Daniel. At this time, there are no further questions. I would like to turn the call over to the operator.
spk08: Thank you. At this time, we'll close today's question and answer session for both audio and offline questions. And I'd like to turn the floor back over to Mr. Garcia for any closing remarks.
spk13: Thank you, Fraser. Before we finish today with our conference call, I would like to thank you all very much for making the time to be with us. I would also like to remind everyone that we are organizing our investor day on December the 4th in New York, and you are cordially invited. Thank you again. Thank you very much.
spk08: Ladies and gentlemen, that concludes Buenaventura's third quarter 2023 earnings results conference call. We would like to thank you again for your participation. You may now disconnect your lines.
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