Compañía de Minas Buenaventura

Good day, ladies and gentlemen. Welcome to the Compania de Minas Buena Ventura Second Quarter 2024 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. And please note that the call is being recorded. I would now like to introduce your host for today's call, Mr. Sebastian Valencia, Investor Relations Analyst. Mr. Valencia, you may begin.

Good morning, everyone, and thank you for joining us today to discuss our second quarter 2024 results. Today, 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 Geology and Explorations, 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 these assumptions, expectations, and projections are reasonable in view of the current available information, we are cautioned 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 earnings results per release issued on July 25, 2024. Let me now turn to Mr. Leandro Garcia.

Thank you, Sebastián. Good morning to all, and thank you for joining us today to discuss the quarterly results of the Compact. On slide two is our cautionary statement. important information that I encourage you to read. Today, we will be discussing our performance for the second quarter of 2024, highlighting key achievements and strategies moving forward. After the presentation, we will be available for our Q&A session when our team will be happy to answer your questions. The next slide, please. I would like to highlight a few key areas that contributed to our strong second quarter 24 results. Our EBITDA from direct operations for the second quarter has increased $85 million compared to the previous year, primarily driven by the great results coming from EMPAC and El Volcal. Despite the El Volcal processing plant was voluntarily suspended for 16 days, as a response to a protest by nearby communities, as announced on May 22, 2024. This is also reflected in a higher EBITDA margin of 39% compared to 13% from previous years. Our net income in the second quarter of 2024 reached $74 million compared to last year's net loss of $5 million. Copper production decreased 22% year-over-year, mainly due to the bogus voluntary suspension previously mentioned. In the second quarter, 2024, silver production reached 4 million ounces, a significant increase compared to the 1.7 million ounces produced during the same period last year. Of these, a total of 2.9 million ounces came from Uchukchakwa and Yuma. Gold production decreased 9% year-over-year, reaching 33.8 thousand ounces since we are now mining lower grades at Orpo Pampa and Tambo Maya mines. We are pleased to share that Cerro Verde announced a new dividend of $300 million on July 24, of which $59 will be distributed to Buena Venta. This dividend, expected to be paid by the end of August, will contribute to strengthening our overall financial performance. Buenaventura's CAPEX in the second quarter of this year totaled $84 million, which includes $70 million allocated to the San Gabriel project, primarily directed towards the completion of waste dumps and main substation platform. Our cash position reached $172 million with a total debt of $682 million. We continue leveraging the company, reaching a net debt EBITDA ratio of 1.4 times, lowest in years and within our targeted range. Moving on to our cost structure in the slide four, second quarter all-in sustaining costs have been reduced by 91% year over year. This reduction is primarily attributed to the increased silver contribution from Uchukchakwa and Yumpac, as well as the decreased production at Delborcal. Moving on, the cost applicable to sales strength. As you can see, copper gas has also increased mainly due to Delborcal's voluntary suspension that was previously mentioned. Silver gas has decreased year over year, primarily driven by higher contribution of Uchukchakwa Both cash has increased year-over-year, primarily driven by lower rates of Campo Mayo and . On the next slide, we will present the free cash flow generation. Second quarter, 2024 cash position was in line with the first quarter of this year. The CAPEX from San Gabriel and the Libyan space were upset by the cash generated by the operations and dividends received from Zerobelde that were $29 million in April. The bid to free cash flow reconciliation is explained by the following breakdown of inflows and upflows. El Brocal and Yumpac have been the main contributors for the second quarter of 2024. As we have mentioned before, Buenaventura is going through a growth phase with an intensive capex related to San Gabriel. The additional deviance declared by Cerro Verde, $59 million, will be reported in the third quarter of 2024. Moving on to slide six, we have that in the next months, Buenaventura will be focusing most of its efforts in the San Gabriel project. On this slide, you can see the project's cumulative progress reaching a 57% overall progress by the second quarter of 2024, primarily driven by the completion of waste dams and the main substation platform. The key milestone we are closely monitoring for the next quarter is the start of the high voltage power line construction and the start of the electrical intermutation construction works. On the next slide, we are showing the processing plant progress that will operate at 3,000 tons per day. Currently, the foundations are at 80 percent progress. The sac and bolts mechanical works are at 60 percent. The primary crusher mechanical works are at 40 percent. And finally, the sealed tanks mechanical works are at 30 percent. Moving on to slide eight, We are showing the water dam foundation and filtering plant civil works. Finally, I would like to finish the presentation with a couple of closing remarks. First, in its first full quarter of operations, Uchukchagua and UNPAC have made a remarkable impact delivering 2.9 million ounces of silver. We are actively working at El Brocal to recover the production that is aligned with our guidance, with a strong focus on reaching 11 tons per day by the end of this year. Third, the San Gabriel project has achieved 57% overall progress, meeting our planned targets. We remain on track to reach our goal of producing our first gold bar by the second half of 2025. Cerro Verde continues to generate robust cash flow, leading to increased dividends. For fiscal year 2024, we estimate dividends of between $120 and $150 million attributable to Buenaventura's equity. In the second quarter, 2024, our leverage ratio stands at 1.4 times, reflecting our growing EBITDA and effective debt management strategies. 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.