This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: Good morning. The Compañia de Mena's Buenaventura Conference Call will start momentarily. I repeat, the Compañia de Mena's Buenaventura Conference Call will start momentarily. Thank you for your patience. Thank you for your patience. Thank you for your patience. Thank you for your patience. Good day, ladies and gentlemen, and welcome to the Compañia de Mena's Buenaventura First Quarter 2024 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 Officer. Mr. Salas, you may begin.
spk06: Good morning, everyone, and thank you for joining us today to discuss our first quarter 2024 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 Masa, Vice President of Business Development and Commercial, Mr. Alejandro Hermosa, Vice President of Sustainability, Mr. Renzo Mager, Vice President of Projects, Mr. Roque Benadides, Chairman, and Mr. Raúl Benadides, 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 April 29, 2024. Let me now turn the call to Mr. Leandro Garcia.
spk09: Thank you, Gabriel. Good morning to all and thank you for joining us today to discuss the quarterly results of Compañía Mina Buenaventura. On slide two, it's our portionary statement, important information that I encourage you to read. Today we will be discussing our performance for the first quarter, 2024, highlighting key achievements and the strategies moving forward. After the presentation, we will be available for our Q&A session, where our team will be happy to answer your questions. The next slide, please. I would like to highlight a few key areas that contribute to our strong first quarter 2024 results. Our EBITDA from direct operations for the first quarter has increased 83% compared to the previous year, primarily driven by improved performance of the local and Jumpe. This is also reflected in a higher EBITDA margin of 38% compared to 28% from the previous year. First quarter, 24 operating income reached $46.9 million compared to the last year's $12.6 million. Copper production increased 26% year over year, driven by a steady production rate at El Grogal, which surpassed 10,500 tons per day in the underground mine. Cereal production reached 3.1 million ounces, a significant increase compared to the 1.3 million ounces produced last year for the same period. From these 1.5 million ounces come from Uchukchakwa and Jumpe, where we got approval of the final mining operating permit area and expected. Oil production decreased 4% year over year, reaching 36.5 thousand ounces since we are now mining lower rates of Ogepampa and Tambomae. We are pleased to inform that the dividends from Cerro Verde were received on April 26, last Friday. These dividends will strengthen our overall financial standard. On Aventura's capex in first quarter 2024, totaled $58 million, which includes $38 million allocated to the San Gabriel project. Our cash position reached $174 million, with a total debt of $699 million. We continue deliberating the company, reaching a net debt eviction ratio of 1.78 times, lowest in two years and within our target range. Moving on to our cost structure in slide 4, please. First quarter, all in sustaining costs have reduced by 58% year over year. This reduction is primarily attributed to the copper production at El Bocal and silver contribution from Jumpe. Normalized all in sustaining costs should be around $3,600 per ton of copper, still below than the previous year. Moving on the cost applicable to sales strength. As you can see, the prioritization of copper ore at El Bocal and the ramp up in the underground mine is translating into a continuous cost reduction trend. Silver cash has decreased year over year, primarily driven by higher contribution of to chakwa and Jumpe silver ounces. Normalized cash, including Jumpe cost is expected to be between $17 and $18 per ounce. Gold cash has decreased year over year and even quarter over quarter, primarily driven by higher grades at North, middle and El Bocal and the underground mine, despite lower grades at Tambomaio and Porcopao. On the next slide, we will be presenting the free cash flow generation. During the first quarter 2024, we reduced our cash position by $46 million primarily due to the intensive capital expenditures campaign which includes San Gabriel. The evidence to free cash flow reconciliation is explained by the following breakdown of inflows and outflows. El Bocal, Jumpe and Orcopampa have been the main contributors for the first quarter 2024. As we have mentioned before, when Aventura is going through a growth-based phase with an intensive capex related to San Gabriel. The previously reported evidence from Cerro Verde will be registered in the second quarter of 2024. Moving on to slide six, in the next years when Aventura will be focusing most of its efforts in the San Gabriel project. On this slide, you can see the projects from new levy programs reaching a 47% overall progress by the first quarter 2024. Primarily driven by the full installation and operation of the concrete plan. The key milestone we are closely monitoring for the next quarter is the start of the mine development tunneling and the start of the SAC NEO assembly. On the next slide, we are showing the completion of the definite campsite that is fully operational since Friday. We have more than 2000 sleeping beds installed considering the definite and organic campsite. Water treatment plant offices and dining areas are fully operational. On the next slide, we are showing the progress in the processing plant platform. Here is the milling area where we are planning to start the SAC NEO assembly during the next quarter. And on the next slide, you can see the installation of the fecal. Finally, I would like to finish the presentation with a couple of closing remarks. First, encouraging production resources at Jumpec are a clear reflection of our success delivering mining products. With final mining permit secured, we are now focusing on achieving a stable and efficient production rate at 1000 tons per day. This will be reflected in a significant increase in revenues in the following quarter. Excellent performance at the Volcan in line with plans to reach 11 tons per day by the end of this year supported by a positive trend in copper prices. Third, we are proud to announce that we have achieved a significant product of Changaulria project, now standing at an impressive 47% overall completion. We are now on track as we aim of our first gold bar by the second half of 2025. Currently, we are assessing the project capex to ensure an accurate total cost while identifying opportunities to optimize the construction. We continue our efforts to transform our mining operation into assets with plus 10 years of life of mine and focus on optimizing them to achieve greater cost efficiency. Thank you for your attention and I will hand the call back to the operator to open the line for questions. Operator, please go ahead.
spk03: 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. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Cesar Perez-Nuevoa with BTG Pactual. Please go ahead.
spk04: Thank you. Good morning, everyone. If I may, I have three questions. The first one relates to your guidance. Essentially, we have seen a meteoric rise in basin precious metals. And given the implications that it has for revenues and byproduct credits, is management looking to review the volumes, the revenue inevitable that you outlined in the previous call for this year? My second question relates to costs. There was an important 71% drop in cash, in gold cash at Colonial Molache to $1,000. Is this due to higher volume or specific initiatives? I believe you mentioned in the press release that the company could not place fresh ore in the pads, which makes me think that, you know, there may be some room for improvement. And finally, at El Brocal, costs went down too and wanted to understand if this was due to efficiencies attained in the first quarter or if the company used stockpiled mined inventories to dilute the costs. Those would be my questions, gentlemen. Thank you.
spk09: Thank you, Cesar, for your question. In terms of if we can change the guidance, we are evaluating all the operations daily. We maybe can change the guidance at the end of the second quarter if things are as we are thinking that will be. In terms of Coimbolache, remember that last year we didn't produce any ounces in Coimbolache. So this is a comparison this quarter to the last quarter, to the first quarter of the last year. The information you have with respect, we are not allowed to put more ore in production. It's true. We are just waiting the permit to construct, to build the new platform to put more ore. And we expect any moment that permit, but the production will begin in the first quarter of the production of ore. We will begin in the next quarter of the following year. So we should expect increase the production of gold ounces in the second quarter of 2025. And in Brocao, actually we are making
spk02: many
spk09: airports to be more efficient. I pass the microphone to Juan Carlos. Maybe he can give more color of your question.
spk10: Thank
spk09: you Leandro.
spk10: Thank you for the question. Yes, with this increasing price of color, it's a lot of incentives to increase the production. We are reviewing our mining plans, but at this moment we are looking more to be the upper range of our guidance. We have an advanced work in 2023. That's the reason we have the ounces of gold in 2024. But part of the cost was done, was incurred during the last quarter of 2023. So that's the reason we have a good look in the cost of corn mulachi. But as Leandro mentioned, we stopped the production of fresh ore in February this year. We will be waiting for the permits and the construction of the new areas in the path. Probably the permits by the end of the year and construction at the same time. The operation of new, the breaking of fresh ore will be in the first quarter of next year. And probably the ounces of gold start coming down from the path in the second quarter of 2025. So probably in the incoming quarters, the cost of corn mulachi, the cost of corn mulachi will be coming slightly up because we are not putting more fresh ore and production of gold will start to decrease in the incoming quarters. And the year that we will resume the placing of fresh ore. And regarding Brocow, yes, there was a lot of improvements in the operation. We are close to 10.5 kilotons per day in production. We are looking forward to reach 11,000 tons per day by the end of each year. We are well tracked on that purpose. And we are reducing costs. We have been done this increasing production without any additional people or any additional scoop cram or track. It's just a matter of improvement. We put on the ground this patch system that we're helping a lot to increase the productivity of our equipment. And we are ripping off the results of that investment in the previous quarter. So just more on the improvement and operational expertise that we are ripping off the benefits and getting these low-cost in the Brocow.
spk04: All right, guys. Thank you very much for your detailed information.
spk09: Yes. Okay, Cesar. Daniel, I think there's a couple of additional comments to you, Cesar.
spk07: Good morning, Cesar. Okay, thank you. Just to put some numbers to your question regarding the EBITDA. At the beginning of the year, we considered the metal prices of 8,500 tons per day. For copper, 1,900 for gold and $23 for silver. And our EBITDA was an estimated EBITDA of between $250 and $270 million. Today we have higher prices and considering $9,000 for copper, 21,004 for gold and 25 for silver, in addition to the production from Jumbo that is coming along since March, we are estimating a consolidated EBITDA of between $300 million and $320 million. That would be the improvement of the additional EBITDA that we expect.
spk04: Okay, thank you very much, Daniel. So it's a large $50 million swing at the EBITDA level. Very clear. Thank you all, gentlemen, for your detailed questions. Thank you.
spk03: The next question will come from Carlos D'Alba with Morgan Stanley. Please go ahead.
spk05: Thank you very much and good morning, everyone. A couple of questions. First one, can you please quantify what the impact was of not having, not taking the cost of YomPak through the P&L and since they were capitalized according to the expiration permit. Definitely that was a positive surprise, but I just wanted to understand how much of EBITDA impact that represented the fact that it was not run through cost but taken to CAPEX. And second, any comments on Cerro Verde? We saw that Cerro Verde paid $29.4 million for the second quarter dividends. That is down from the 41 level or so that the company had paid in the last three years. Can you provide any color? Is there expectation that this is the new range that we will see in the coming quarters or do you think that there is upside to increase them? But not what you think, but more like what Freeport has said they will do. Thank you.
spk09: Thank you, Carlos. Thank you for your question. The impact of the cost assigned to the CAPEX instead of the operating cost is kind of difficult to calculate, but we expect that the cost of YomPak will be around $16 per ounce, between 16 and 17 ounces per ounce. And from beginning the second quarter, we will have the exact calculation revealed in our financial estate. In the case of Cerro Verde, the dividends, actually we were not expecting any dividends in this quarter coming from the profit from the NARIA. For us it was a surprise, but still we maintained the expectation to have in the total of the year, total dividends between 120 and 150. We believe that with this level of prices, that figure can be completed at the end of the year. I don't know, maybe Juan Carlos or Daniel want to add some comment. Regarding the
spk10: YomPak, we have a total CAPEX total in the area of $8 million in the first quarter. That was not only part of the operation, but the whole package of construction was breaking the order and transportation of the order into the Chuchaco facility. So as Leandro mentioned, it's kind of a bulk number, but probably more linked to the production not only from the quarter, but for at least the whole year. So it's a number that needs to be taken with caution, because it doesn't match exactly the amount of ounces of silver that we produce in the quarter. It's a combination of properly CAPEX and part of the effort dedicated to breaking the order and transporting the order from YomPak into the Chuchaco processing facility. Maybe Daniel has some comment on this.
spk07: I would like to comment about Ceroverde's question. At this level of prices, Ceroverde should be generating an EBITDA of around $1.8 billion. The working capital that we expect is around $0.7 to $0.8 billion, with very small CAPEX, around $300 to $350 million, which gives us a free cash flow of $1.8 billion. This is a flow of around $750 million. These are at a level of prices of close to $9,000. Having the minimum cash already in their balance, they should be distributing dividends in the order of $750 million, which gives us the $150 million that Leandro mentioned at the beginning.
spk05: Great. That would be great news. Just to follow up on that, Daniel, has this been approved by Ceroverde's board, or is it just an expectation at this stage? These are numbers that
spk07: were shared by Ceroverde. Of course, at lower price of copper, we have adjusted them internally. As you know, there is no dividend policy, but what they normally do is to pay dividends in excess of the cash flow. In the case of the minimum cash that they have, which is $500 million. Thank you. Thank you very much.
spk03: Again, if you have a question, please press star, then 1. Our next question will come from Tonya Jakuskonik with Scotiabank. Please go ahead.
spk01: Good morning, everyone. Thank you so much for taking my questions. Daniel, I just have some very simple modeling questions for you, and then I have some other questions on the assets. So can I just start on the simple modeling questions? Can I just your D DNA was kind of low at 42 million in Q1, as was your DNA at 10, and as was the capex at 58 million. Can you review with me what you are expecting for those three numbers for the year?
spk07: Yes, Sandhya. For the DNA, as you know, in the last two quarters of last year, we recognized the first stripping that we had in the asset for El Brocal reserves. So in the first quarter, it was a minimum of 5.5 million that we recognized of related to this to the deferred stripping in the third and the fourth quarter. This amortization was over 23, 20, 23 million. So what we expect for the following quarters is something about $35 million from depreciation amortization.
spk01: So 35 million a quarter for the next three.
spk07: Yes, for quarter for DNA. Okay.
spk01: And then DNA? Okay.
spk07: DNA, as you know, we have sold contacto, and there is a decrease in the DNA from that we are not considering anymore the contacto figures, and we have been doing also other adjustments to our expenses. For example, we have reduced the size of our location, our headquarters. So we expect per quarter around $12 million of DNA.
spk01: Okay, perfect. And then the capex, which I think was originally guided around $300 million for the year. It looks like you would have only done $58 million in Q1. So is that $300 million still viable?
spk07: Yes, Sangaville should be catching up the rate of expenditures. So we still believe that the total capex for this year should be between $300 million and $320 million.
spk01: Okay. All right. That's perfect. Thank you. Those are the easy ones. Maybe still to you, Daniel, because this does impact the balance sheet. Can you just give me an update? I know on Q4 call I asked about the sale of the Yanacocha royalty. I thought we mentioned it would be done in April. Can we just talk about the balance sheet? Yes, we are going to get monies coming from the Sierra Verde dividend, which is great. But can you talk to me about what else are you seeing in terms of sources of cash, besides your operating cash flow that's coming from your mind, but other sources of cash from sales and or banks and lending?
spk07: Okay. Yes. Apart from operating or our AVID generated by our operations, we do expect the sale of one asset. We should be receiving this year between $180 and $200 million from that sale. Then we expect the Sierra Verde dividend, which could be between $120 and $150 million. And in addition to that, we have already compromised three RCF revolving facilities with three local banks. And these three facilities had up to $200 million. Currently, they are un-drawn, but probably we will use them between the third and fourth quarter in order to fund any requirements for San Gabriel.
spk01: Okay. And the one asset sale, is that an asset or a royalty? There's a difference. One is an asset and one is a royalty.
spk07: It's a royalty.
spk01: A royalty. Okay. That's helpful. Thank you. And then if I could ask one more question, I am very interested in San Gabriel and what is happening there. And I see from the slides that you've done quite a bit. You've got the bag that you've got to assemble. You've got the underground tunneling, the development of the underground ramp, and I guess it's ramp and additional declines and levels. Can someone just walk me through, you know, the second half of this year into 2025 again, what needs to be done? And then Daniel, for you, the last capital I remember on this mine was $450 to $470 million. Can you let me know how much we have spent to date and when we're getting this new PAPEX number? Thank you.
spk09: Of course, Tanya. Here with us is Renzo Maha. He can explain to you all your questions in San Gabriel.
spk01: Thank you. Hi,
spk09: Tanya.
spk02: Hi, Tanya. Hello. What's coming in? Hi. As you can see the pictures, and there's great progress in earth moving. It's out of the way of the critical path. And we have started with all the concrete placement. And we have the mechanical steel and piping contractor on site. So you're going to see a lot of advance in that area. The underground contractor for development of the mine is already on site. So we're going to see the first, in the next quarter, we're going to see the first mine development advancing. And the electrical and signal contractor, we shall be closing that contract towards end of May, beginning of June. So you're going to see all those three main contractors, which is pretty much all of them, the remaining big contracts fully on board producing. That's the idea. Again, we have this 98% of the engineering and procurement. So it's about managing this advantage in favor of the project.
spk01: Okay, so these three contracts are going to be placed, it looks like in Q2. So the concrete steel, the underground development and the electrical, right? These three are going to be placed in or awarded in Q2. Then you're going to have all of that work, obviously done Q2 onwards. And then when do we actually expect the mill to start to turn wet commissioning, dry commissioning? When are we expecting that?
spk02: So we already have from those three contracts you mentioned, the concrete mechanical piping steel, it's already signed and it's running now. Underground is signed and it will be producing now. And remember, electrical and signal is the one that we need to, we're at the final stage of the bidding process, so it should be finished on May and awarded on May. Now in the pictures you can see that we are constructing the mill already. The foundation has been put. We're going to be finishing construction towards the early second quarter of next year and that's kind of when commissioning is going to start.
spk01: Okay, and how long do you think commissioning will take? Is it like 60% of capacity for 30 days in terms of getting to commercial production?
spk02: I think we're towards early fourth quarter, which will be.
spk01: Okay, so Q4, so it's going to take you two quarters to go commercial.
spk02: Yes, I mean, we're very advancing. We're going to be very advanced in construction, so we can start commissioning earlier for sure.
spk01: Okay, okay. Yeah, I should start thinking commercial in Q4. That's when we start taking this through the income through revenue. Okay, and Daniel, just for you, can I just get an update on the capex number? Like, 450 to 470 was the last number I had. Maybe you can give me a little bit of an idea when a new one is coming and where are you seeing changes in this capex number, positive and negative?
spk07: We're still evaluating the total capex. We will have a better figure for the next quarter conference call, but we expect from the initial capex of 470, we expect around 10 to 15% increase. And currently we have already disbursed since 2022 until the end of last quarter, $220 million for San Gabriel.
spk01: Okay, that's great. And then I guess in Q2, someone can give me an idea about when you're doing your development, how the development is coming in terms of costing for the underground as well. Thank you so much for helping me.
spk09: Tanya, if I may pass the microphone to Aldo, he wants to give you a little more color about the sale of the Choclova variant. Yes,
spk08: hi Tanya. Sorry, I want to clarify a little bit. I want to clarify a little bit that the time for the sale of the royalty of the Anacocha. We have time until July 15. If we don't reach the target price, we can go to the second phase and ask for a lower price first to Newmont and then to the interested in that royalty. But the idea is to try to finish that sale during this year. But in the first stage, we have time until July 15.
spk01: Okay, so if I understand correctly, you have until July 15 in this first phase. If you do not get the price you want, then you go to a second phase. And how does this second phase differ from the first phase? Is it just different? Only a lower
spk08: price. Only a lower price.
spk01: Okay, so what about then, can you go back to Newmont because Newmont I think has the right of first refusal on it?
spk08: It's a right of first offer. It's a little bit different, but we have to ask for a price for Newmont. If they don't accept to buy at that price, we also can go to the market again. Okay,
spk01: got it. Okay. All right. So if we don't get anything by July 15, then we're going to phase two.
spk08: Yes,
spk01: exactly. Okay, great. Thank you for the clarification. I really appreciate it.
spk03: Thank you. Ladies and gentlemen, with that, we will be concluding today's audio question and answer session. I would like to turn the floor back over to Gabriel Salas, Investor Relations Officer, for any webcast questions. Please go ahead.
spk06: Thank you, operator. The first question comes from Orlando Barriga from Credicorp Capital. Can you please comment on commercial deductions? They decreased in a per ton of units sold basis, so I would appreciate some color in that.
spk08: Yes, Gabriel. No. Okay, sorry. Sorry, Orlando. Yes. Thank you for the question. It happened two things in the market. The first one is that the commercial direction has gone lower a lot. We have better commercial terms for this year. That's why one of the reasons why the commercial terms is going down. And the second one was that we sold 13 dry metric tons of concentrate during the first Q with no wars in Brocani. And that gives us, of course, better terms and lower deductions. That was the two main reasons why the direction was so low in this quarter.
spk06: Thank you, Aldo. At this time, there are no further questions. I would like to turn the call over to the operator.
spk03: Thank you. That concludes the question and answer session for today. I would like to turn it back over to management for any closing remarks.
spk09: Thank you, operator. Before we finish today's conference call, I want to thank you very much for making the time to join us. Thank you again and have a wonderful day.
spk03: Ladies and gentlemen, that concludes today's conference call. We would like to thank you again for your participation. You may now disconnect.
Disclaimer