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spk05: 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.
spk02: 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.
spk07: 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.
spk05: We will now begin the question and answer section. To ask a question, you may press star then one 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 and then two. Our first question comes from Carlos de Alba with Morgan Stanley. Please go ahead.
spk03: Yeah, thank you. Good morning, everyone. So I have a few questions. So on dividends in Cerro Verde, I want to see what you expect to receive in the fourth quarter. There's already a dividend announced for August. But for the fourth quarter, what is the outlook there? given how relevant it is for the cash flow generation of the company. And then on San Gabriel, do you have any update on the CAPEX figure? And clearly you are well into the project and we don't yet have a revised estimate for the CAPEX. So I think we all would like to get some new information. And then finally, We saw a significant increase in the cost of some of your gold mines. You had some production issues, oil grades declining. So there are explanations in the release, but I would like to understand how do you see things going forward in the coming quarters?
spk07: Okay, Aldo. Thank you. Thank you for your questions. First, As you know, the answer from Cerro Verde will depend on the level of prices, the level of production, that we think there will not be any major change. So our expectations, as I told before, is still between $120 and $150 million for the 2024 year, corresponding to this fiscal year. In terms of San Gabriel project, this semester we have expended the entire semester $108 million. We expect to invest during 2024 a total of 280, and the investment in the 2025 will be around $200 million. I think maybe Renzo can go a little bit more further about the explanation. Please, Renzo.
spk08: Hi. Yes, the total project cost will be updated into $650 million. This additional $180 million is mainly based on escalating prices beyond our original estimation, which was 3% to 4% year-over-year. And we have been having changes in the project sequence and expediting costs to mitigate the 18-month delay that we had on 2021-2022 to secure our first gold bar by the end of the third quarter of 2025. So construction work is going as expected, as can be seen in the picture, and we're advancing that plan. And the last big contractor, which is the electrical signal, we will be starting next month. So Now we have all the prices ready.
spk03: Sorry. So the $280 million is the capex not for San Gabriel, but overall in 2024? No.
spk07: That's for San Gabriel. That's for San Gabriel.
spk03: Okay. $280 is just for San Gabriel in 2024. And the total capex for the project is now $650 million.
spk07: Yes, it's correct.
spk08: All right, thank you.
spk07: Yes. We will continue with a margin EBITDA of the project, 50%, and we expect to give more details in OPEX and the MPV, the new MPV, in the third quarter of this year, in the third quarter conference call. Regarding your third question about cost and grades, as you can see, as you can read in our press release, our grades in Orcopampa and Tambomayo are declining, and that is the main reason. Maybe Juan Carlos Ortiz can...
spk06: And the next question comes from Cesar Perez Nova.
spk05: with BTG Paxual. Please go ahead.
spk01: Yes. Good morning to everyone. I have three questions from my end, if I may. Could you please comment on how we should see Buenaventura's inflows and outflows of capital for this year, and the possible breakdown on what you expect to receive on the potential sale of Chaupiloma II, the Yanacocha royalties? Your dividends at Cerro Verde, where FCX already made a $300 million dividend announcement, and your CapEx commitment budget for this year. If you could reiterate that, I would appreciate it. Then at El Borocal, how will costs evolve in the second half of the year, noting that they increased 14% in the second quarter, and whether this – copper ore that you have on inventory to support the plant's resumption will have some impact or benefit once you hit a processing rate of 15,000 tons per day. And finally, at Coimolache, I understand that Buenaventura received a construction permit to increase leach pad capacity. Could you please comment on next steps and when will the expansion be completed? Thank you very much, gentlemen.
spk07: Thank you, Cesar. Regarding the sale of Chaupiloma, we have sent information to the Superintendencia Mercado Valores, restricted information, and we cannot give many details about the operation. But we expect during the following weeks, we should comment to the market the results of this. In terms of Cerro Verde dividends, as you know, it's important for the cash inflows in Buenaventura. We maintain our expectations to receive during the year between $120 and $150. In terms of Colmolache, we have received the environmental permit, and we are today working with the permitting of the construction, the construction permit. And we expect to receive it on the final quarter of this year. I don't know, Daniel, if you want more details in the inflows and outflows?
spk04: Yes, Leandro. Thank you, Cesar, for your question. Getting a little bit into the details regarding the inflows and the outflows, we are going to generate an EBITDA for this year of around $300 to $320 million, considering a copper price of $9,000.00. Then, as Leandro mentioned, we should be receiving dividends from Soroverde in the order of $120 and $150 million. And regarding an asset sale, and I don't mean specifically Chaupiroma, as you know and as we have been mentioning this in the past, we have a a portfolio of non-core assets that we are going to sell during the following months. We expect to receive this year between $150 and $180 million. Regarding the outflows, the total capex for this year should be in the order of $380 to $400 million. This includes the $280 million that we have disclosed for San Gabriel. And finally, between interest and the amortization of our loans, we will disburse around $70 million. Regarding the second question, Cesar, about the costs of El Brocal, as we reported, the costs were... over $7,100 per ton. This was specifically due to the events of the paralyzation that we had in May. But for the following quarters, third quarter and fourth quarter of this year, we should come back to the level that we have been operating in the last months, focusing on the under one month, which will be between $5,300 per ton and $5,500 per ton. Finally, the inventory that we have, the 210,000 tons of copper concentrate in El Brocal should be valued at an EBITDA of between $5 and $6 million, which will be executed or realized between July and August of this year. Mm-hmm.
spk01: All right, Daniel, very detailed. Thank you. Thank you very much. And also, Leandro, thank you.
spk05: And the next question comes from Tanya Jekiconic with Scotiabank. Please go ahead.
spk00: Good morning, everyone. Thank you so much for taking my questions. Just, Daniel, just want to confirm, on the last conference call, you mentioned that you had put in place a revolving credit facility with three banks of $200 million, which could also help you with the financing of San Gabriel as well, which you were going to draw down in Q2, Q3. Is that still in place for us above and beyond everything else you mentioned?
spk04: We still have the $200 million revolving facility and road, and we expect not to use it during this year.
spk00: so maybe for 2025?
spk04: Possibly, but remember that next year we will count with the proceeds from UNPAC, the full year, and we also expect some dividends from Cerro Verde, so if copper price continues at these levels of over $9,000 per ton, we probably will not use this revolving facility. Of course, adding what we expect to receive from the asset sale from our portfolio.
spk00: Yeah, no, no, fair enough. There's a buffer on top of everything else. Okay, can I just go back to San Gabriel? I appreciate that. Thank you very much for the capital number. I know we have talked about it in the past. It has increased as expected, and we await for you on guidance on the costing side on the Q3 call. Can I ask now that you've got your major contracts in place, so you have a good handle on the capital side, can I just ask about your development? I saw that you developed 2.2%. kilometers of the underground. I'm just trying to understand, one, your advance rate. How is that going? The ground conditions, number two. I'd like to understand your cost per meter of advancement. And just trying to get an understanding of productivity as you go into the underground before we can actually get to a still for mining. If someone can help me on that, that would be great.
spk07: Sure, Tanya. Here, Rezo, please.
spk08: Go ahead. Yes, hi. Okay, so in the under one, we have finished the second sprint of OPEX calculation, and it includes we're focusing our development in an under one risk and feel mining method because of the rock type for A and B. That's mainly where we are. Now, we're going to be hitting the top of the deposit compared to our previous plan, which was to hit the bottom and then going up. We're going to hit the top one and going down. So we're going to have access earlier in the process. Currently, we are developing the crossing between the two ramps and probably 50 meters below the the ID and at a rate of 3 to $4,000 per ton. Well, it depends. We're crossing a difficult, difficult part to them. But we just decided we have like 200 meters, 400 meters of of advancing so far.
spk07: Okay. And yeah, we we have also on Carlos Ortiz that can add some comments of the Thank you, Leandro.
spk06: Yes, we have, as mentioned by Renzo, one crew developing tunnels at a rate of about 200 meters per month in background. All the ground in San Gabriel requires heavy support, short repeat, and steel reinforcement. In late August, we will have the second crew coming on board. We have a second front open, the northern ramp. So we have two crew working in parallel. Probably in a couple of months, that second crew also will reach the 200 meters per month rate. So we'll be developing in the fourth quarter, the two crews will be running at a combined rate of 400 meters per month. The average cost right now is in the order of $4,000 per meter. All codes included, you know, escalation, macro removal, the short reading, all the reinforcement. We expect by the last quarter of this year, start developing into the old body. We are very close right now, but we expect to be doing more work in, in the last quarter of this year. It started building up a stockpiling surface in the first quarter of next year. So we will be getting there and producing more at that time from the first quarter of this year.
spk00: Thank you so much. Look forward one day, hopefully, to see this asset if you guys have a mind tour. Would love to see it. Heard so much about it when it was within goldfields as well. Maybe, Daniel, can you just help me out on the capital Just the $280 million that needs to be spent this year at San Gabriel and then $200 million next, can you give me the big ticket items, like maybe what's the underground, what's infrastructure, like a surface? Just some of the big ticket items so I understand what I'm spending on.
spk07: There you go.
spk08: Yes. So we are in our air moving contract. It's 70% complete. So there's a piece of that, mainly for the water gun. As you can see in the picture, we finished the foundation. So now it's about raising it. Then all the concrete, steel, mechanical, and piping contract has a couple of months on the way. So there's like eight months to go and the electrical contractor is gonna start and then we move into commissioning. So it is mainly that, we're advancing at like a 10% per quarter. So pretty much by the first quarter, early second quarter of next year, you're gonna finish all the construction and what is remaining is just the commissioning activities.
spk00: Okay, so of the 280, million this year, how much would be the mill and how much is the underground? Just a rough estimate. And then finishing next year is all the, I'm assuming, underground. I'm just trying to understand the surface from the underground. Do we have an idea of what that would be?
spk08: I think it's like $50 million for the underground around that decision year.
spk00: So $50 million for the underground this year, 5-0?
spk08: Well, no, between now and, I don't have the number in months, but between now and September next year, like one year, over the next one year.
spk00: Okay, so one year, $50 million is in the underground. The remaining of the $380 million is all surface infrastructure and other.
spk08: Yes. Okay.
spk00: Okay. That's great. Thank you so much for helping me understand.
spk05: 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 Sebastian Valencia, Investor Relations Analyst, for any webcast questions.
spk02: Thank you, Operator. At this time, there are no further questions. I would like to turn to Leandro Garcia.
spk07: Thank you, Sebastian. And before we finish today's conference call, again, thank you very much for making the time to join us today, and have a wonderful day. Thank you very much.
spk05: Ladies and gentlemen, that concludes Buena Ventura's second quarter 2024 earnings results conference call. We would like to thank you again for your participation. You may now disconnect.
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