Compañía de Minas Buenaventura

Welcome to the Compania de Minas Buena Ventura Fourth Quarter 2023 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. And 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 fourth 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, Vice President of Explorations, Mr. Roque Benadidez, Chairman, and Mr. Raul Benadidez, 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 February 29, 2024. Let me now turn the call to Mr. Leandro Garcia.

Thank you, Gabriel. Good morning, and thank you for joining us today to discuss the quarterly results of the compact. On the slide two is our cautionary statement, important information that I encourage you to read, please. We assume that you have already read the full year 2023 results reported yesterday. Moving on to the next slide, our presentation will cover the five main topics shown on this agenda and will be followed by our Q&A session where our team and myself will be happy to answer your questions. Let's begin with some overview of the key highlights of the 2023. Our EBITDA from direct operations for the 2023 has increased 38% compared to 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 Yanacoche. Our cash position remains strong in the fourth quarter of last year. due to a strong performance at Del Brocal, resulting in a leverage rate of 205 times the lowest in two years and within our target range. Full year 2023 net income was $33 million, negatively impacted by $113 U.S. million non-cash provision related to former Sunat disputes. Capital expenditures in 2023 total $239 million, including $94 million allocated to the San Gabriel project. Additionally, Buenaventura made an extra investment of $33 million in advance payments for the San Gabriel project. When taking into account both aspects, the total disbursement for San Gabriel project amounted to $127 million. We are pleased to share that our dividends received from Cerro Verde during the quarter have contributed up to $49 million, strengthening our overall financial performance. The company received a total of U.S. dollars 147 million in dividends for the full year 2023. Production from Junpac's pilot stove began in November 2023. producing 2.3 million ounces of silver by year end. UNPAC continued processing ore from the pilot stop through January 2024, after which mineral processing was suspended until definite operating permits are obtained, expected by the end of the first quarter of this year. UNPAC is therefore expected to relish mineral processing in the second quarter of this year. Record 2023 copper production resulted from successful migration to massive underground metal enabling El Brocal to ultimately achieve an average of 10,800 tons per day during the fourth quarter 2023, surpassing its targeted 10,000 tons per day underground mine exploration rate. Our consolidated production of copper, silver, and gold throughput 2023 has yielded the following results. 58,000 tons of fine copper attributed to the exceptional production of the Dorcal, meeting the upper range of the guidance. 9.2 million ounces of silver achieving the full year guidance. During the fourth quarter of 2023, Uchukchakwa and Yumpak contributed to with 2.6 million ounces. 155,000 ounces of gold with consistent production of porcopampa. This production enables us to surpass the upper range of the guidance. Moving on to our cost structure in slide 5, aligned with our strategy to increase our copper exposure, we are showing the all-in sustaining cost figures as copper and gold equivalent. Here you can see that our 2023 all-in sustaining costs have reduced by 8% and 27% respectively year over year. This reduction is primarily attributed to the copper production at the Procal and silver production at Yumpac. However, it is important to mention that both figures are a consolidated basis and include 100% of Buenaventura, La Sanja and El Brocal. Moving on the cost applicable to sales strength. As you can see, the prioritization of copper ore at El Brocal and the ramp up in the underground mine is translating into a 10% cost reduction year over year. Silver cash has decreased 3% year over year, primarily driven by lower costs during the fourth quarter of 2023, with the contribution of Uchukchakwa and Yumpak . Gold cash has remained relatively flat year over year, despite the resource depletion at La Zanja and lower production income of maize. On the next slide, we will be presenting the free cash flow generation during 2023 we reduced our cash position by $34 million, primarily due to the intensive capital expansion campaign, which includes San Gabriel. The bid to free cash flow reconciliation is explained by the following breakdown of inflows and upflows. The brocados, Corcovampa and Tambo Mayo, have been the main contributors for the 2020 period, while La Sanja, Culcana and Uchuchacua had a negative EBITDA due to the lower production for the first two assets and current maintenance at Uchukchakwa for the first nine months. However, we recorded a positive EBITDA for the fourth quarter of 2023 thanks to the resumption of Uchukchakwa 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. It has been partially offset by the dividends received from Cerro Bel. In the following slides, I would like to illustrate our main four flagships. First, EUNPAC producing at full potential once the definite operating permits have been obtained, expected by the end of the first quarter of 2024. Second, El Brocal underground mine expansion at 12 tons per day in the following two years. Third, San Gabriel ramp-up and the first gold bar during the year 2025. And the fourth, Cerro Verde dividend distribution for approximately between $120 and $150 million in the following year. As you can see, our flexion mines offer over 10 years of uninterrupted research and resource extraction. we have updated our resource and reserve values, showing in copper, we have 1.9 million tons of reserves, along with an additional 3.1 million tons of resources. In silver, we have 128 million ounces of reserves, with UPAC making a significant contribution. Additionally, we have 199 million of resources. Lastly, In gold, we have 2.8 million ounces of reserves, with San Gabriel being our primary future gold production source. Additionally, we have 3.5 million ounces of resources. Moving forward to our 2024 guidance, as evident, the prioritization of copper ore at Del Borcal and the ramp up in the underground mine will enable us to maintain an annual copper production in 2024 between 55,000 tons and 60,000 tons per year. Silver production will see a 65% year-over-year increase primarily due to the contributions of Uchukchakwa and Yumpak silver also. Gold production will decrease by 12% year-over-year primarily due to the reduce contribution of Cambomayo gold aust. Lastly, it is also relevant that in 2024, we estimate executing between 300 and 320 million dollars of CAPEX, with approximately 220 allocated to development of San Gabriel. The total CAPEX estimates for the project are being reviewed due to some delays and escalation costs. we are continuously looking for optimization and efficiencies in the project to control the capex as much as possible. Moving on to slide 10, in the next year, Buenaventura will be focusing most of its efforts in 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. and another 14 years if we consider the resources. On this slide, you can see the project's progress quarter by quarter. In the upcoming quarter, we will complete the installation of the concrete plant and the construction of the campus. On the next slide, we are showing the earth movement activities for the processing plant facility. On slide 11, you can see the progress of the construction until the end of the third quarter 2023. While in slide 12, we can see an update on the construction towards the end of the fourth quarter of 2023. By 2023 year end, we have filled over 80,000 cubic meters of material and cut over 250,000 cubic meters. On the next slide, we show a couple of photographs of other components of the project along with their updates as of the end of the fourth quarter of 2023. At the top, you can see the San Gabriel definite campsite with a 98% of progress and over 1,000 beds already installed. The photograph at the bottom shows the progress of the main storage area where we already have 40% of the equipment on site. 30% of the equipment have already arrived to Peru, but are pending to be transported to the site. Finally, I would like to finish the presentation with a couple of closing remarks. First, San Gabriel will allow us to stabilize our boat production at 130 to 150 thousand ounces yearly in the mid-term. We are on track as we aim for our first gold bar by the second half of 2025. The ongoing success of Yunpeng confirms its status as a world-class asset marked by constantly high silver grades. As we have mentioned, the definite operating permits are expected by March 2024. El Brocal is strategically focusing on the copper underground mine, maximizing margins and gearing up for a robust ramp-up to 12,000 tons per day in the mid-chart. We are ensuring full funding for our growth projects and sustaining capital expenses. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.