Compañía de Minas Buenaventura

Good day, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura Third 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.

Good morning, everyone, and thank you for joining us today to discuss our third 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 Massa, Vice President of Business Development and Commercial, Mr. Alejandro Hermosa, Vice President of Sustainability. Mr. Renzo Majer, 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 its assumptions, expectations, and projections are reasonable in view of the currently 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 press release issued on October 30th, 2024. Let me now turn the call to Mr. Leandro Garcia.

Thank you, Gabriel. Good morning to all, and thank you for joining us today to discuss the quarterly results of Compañía de Minas-Buenaventura. is our cautionary statement, important information that I encourage you to read. Today, we will be discussing our performance for the third quarter of 2024, highlighting key achievements and strategies moving forward. After the presentation, we will be available for our question and answer session, where our team will be happy to answer your questions. The next slide, please. This slide, I would like to highlight a few key areas that contributed to our strong third quarter 2024 results. Our EBITDA from direct operations for the third quarter has increased to $132 million compared to the previous year, primarily driven by strong results from Jumpac and El Brocal. This performance is also reflected in a higher EBITDA margin of 40%. compared to 25 percent in the previous year. Third quarter 2024, net income, including the sale of Chaupiloma Yoroi Healthy Company, reached $237 million, compared to 28 million net loss for the same period in 2023. Copper production decreased 9 percent year over year. In third quarter 2023, copper production at El Brocal had increased due to higher estimated copper content mine from the open pit transitional ore. In the third quarter of 2024, silver production reached 4.4 million ounces, a significant increase compared to the 1.9 million ounces produced during the same period last year. Of this total, 3.2 million ounces came from Uchukchakwa and Yuma. Oil production increased 7% year over year, mainly explaining to you to increase output at Hurtani and La Santa. We are pleased to share that Buenaventura completed the sale of its Chaupiloma Royalty Company to Franco Nevada for 210 million dollars during third quarter 2024. Buenaventura's capex is in third quarter 2024, totaled $98 million, which includes $77 million allocated to the San Gabriel project, primarily allocated to the Mines Water Dump and to power line construction. Buenaventura's credit rating was upgraded by Moody's to B1 with a positive outlook. Moody's cited Buenaventura's operational improvements driven by increased production from its Brokal, Yumpak, and Uchukchagua mines, as well as efficiency in cost reduction, cash flow generation, and conservative liquidity management as key factors. Our cash position reached $458 million, with a total debt of $675 million. We continue the leveraging the company reaching a net debt EBITDA ratio of 0.5 times, lowest in years and within our targeted range. Moving on to our cost structure in slide four, the third quarter 2024 all-in sustaining costs have been reduced by 69% year over year. This reduction is primarily attributed to the increased silver contribution from Uchukchakwa and Yuma. Moving on, the cost applicable to sales trend. As you can see, copper cash decreased in the quarter mainly due to an increase in volume process during the quarter, resulting from a stockpile ore process. The cash is in line with the third quarter 2023 figure. Silver cash has decreased year over year, primarily driven by the higher contribution of silver ounces from Uchukchagua and Yumpa. However, it has increased quarter over quarter due to higher exploration expenses and increased costs at Uchukchagua and Yumpa related to ground support works. Gold cash has increased year over year, primarily driven by lower rates at Tambomayo and Orcopapa. On the next slide, we will present our free cash flow generation. The third quarter 2024 cash position increased during the quarter, driven mainly by the strong performance of El Brocal, Uchuchaco, and Yumpac, the sale of Chaupiloma for 220, and dividends received from Cerro Verde. In addition to these drivers, the bid to the free cash flow reconciliation reflects Buenaventura's current growth phase, with significant capex investment related to San Gabriel. Moving on to the slide six, this slide shows the San Gabriel project's cumulative progress, reaching 65% overall completion by the third quarter of 2024, primarily driven by the advancement in the water dam and the power line construction. A key milestone we are closely monitoring for the next quarter is the completion of the pipeline works. Out of the 650 million total CAPEX, we have already executed 350 and committed close to 230, allowing us to reach the project completion at any cost and any cost increase. 100% of the structural steel is now on site. A major contract for plant and infrastructure has been awarded. On the next slide, we are showing the processing plant's progress that will operate at 3,000 tons per day. Currently, the sack and balls mechanical works are at 60%. The primary crusher mechanical works are at 90%. And finally, the shield tanks mechanical works are at 65%. Moving on to slide eight, we present the progress at various facilities essential for the underground mine development, including the north ramp portal, fine installations, and the short-grid plant. Moving on to slide nine, we are showing the progress at various infrastructure of the project. Or you can say the filter daily plan, the water dam, the power line, and the campsite 100% completed. Finally, to our closing remarks, I would like to finish with a presentation with these comments. First, Uchukchakwa exceeded expectations, reaching an average throughput of 1,500 tons per day earlier than expected. while UNPAC maintained a steady production of 1,000 tons per day, delivering 3.2 million ounces of silver in the third quarter. Second, at Del Brocal, we successfully processed 100% of the stockpiled ore, enabling us to meet our production target for the first nine months of 2024. The underground mine reached a record average throughput of approximately 12,000 tons per day during the quarter. Third, the San Gabriel project achieved a 65% overall progress meeting our planned targets. Buenaventura continues the risk in the project by completing engineering and procurement. And lastly, I am pleased to report a record low leverage ratio of 0.5 times for the quarter, driven by a strong EBITDA growth the sale of non-core assets, and effective debt management. 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.