Compañía de Minas Buenaventura

Good day, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura fourth 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. Sebastian Valencia, head of investor relations. Mr. Valencia, you may begin.

Good morning, everyone, and thank you for joining us today to discuss our four-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 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 current views and assumptions. While management believes that these assumptions, expectations, and projections are reasonable in view of the currently available information, we are cautioned not to place any 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 in February 20, 2025. Let me now turn the call to Mr. Leandro Garcia.

Thank you, Sebastian. Good morning to all, and thank you for joining us today to discuss the quarterly results of the company. On slide two is our cautionary statement, important information that I encourage you to read. Today, we will be discussing our performance for the fourth quarter of 2024, highlighting key achievements and strategies moving forward. After the presentation, we will be available for Q&A session, where our team will be happy to answer your questions. Next slide, please. I would like to highlight a few key areas that contribute to our strong four-quarter 2024 results. Full year EBITDA 2024 – our EBITDA 2024 from direct operations excluding the sale of Chaupiloma's royalty company, reached $431 million, compared to $199 million reported in full year 2023, excluding the sale of contact. This performance is also reflected in a higher EBITDA margin of 37%, compared to the 24% in the previous year. Full year 2024 net income, including the August 2024 sale of Chapiloma Royalty Company, was $402.7 million, compared to $19.9 million in net income for the full year of 2023, including the sale of Contact. The year ended with a cash position of $478 million and a total debt of $627 million, resulting in a leverage ratio of 0.34 times. On February 4, 2025, Buenaventura issued senior unsecured notes for $650 million, maturing in 2032 with a 6.8 annual interest rate coupon. The proceeds will be used to refinance its award. 5.5% senior note due 2026 and for general corporate purposes. Simultaneously, Buenaventura completed a tender offer for the purchase of any and all of its bonds maturity in 2026, successfully repurchasing $401 million or 72.98% of the total outstanding bonds. On December 12, 2024, Buenaventura received 78.3 million in dividends related to its stake in Cerro Verde and received a total of 166.5 million in dividends for the full year 2024. The total CAPEX for the year 2024 amounted 378 million dollars with 291 million allocated to the San Gabriel project. In the full year 2024, silver production reached 15.5 million ounces, 69% higher compared to the 9.2 million ounces produced during the same period last year. Of this total, 10.5 million ounces came from Uchukchakwa and Yumpac Complex. Finally, Buenaventura's Board of Directors has proposed a dividend payment of U.S. 0.2922 per share. We have resumed dividend payments policy, reaffirming our commitment to delivering returns to our investors. Moving forward to our 2025 guidance. in the next slide. We anticipate a stable copper and silver production at both El Brocal and Uchuchagua Yumpa, maintaining consistent output level. Regarding gold production, our primary focus will be on the San Gabriel project, which is expected to become our main gold producing asset in the coming years, playing a key role in our long-term growth strategy. Moving on to our cost structure in slide five, the all-in sustaining cost for the fourth quarter of 2024 increased by 26% compared to the same period in the previous year. This rise is primarily driven by increased exploration activities aimed at supporting the company's long-term growth and resource development strategy. It is also important to highlight that the year-over-year decrease in all-in sustaining cost was primarily driven by lower commercial deductions and high by-product credits, mainly from Jumper. Moving on the cost-apricot-to-sales trend, as you can see, copper cash increased in the quarter, mainly due to lower by-product credit contributions at Del Brocal. Silver cost applicable to sales has increased year over year, but was consistent with the expectations for this quarter. Gold cost applicable to sales has increased year over year, primarily driven by lower grades at Tambomayo and Orcopa. On the next slide, we will present free cash flow generation. The four-quarter 2024 cash position increased during the quarter, driven mainly by the strong performance of El Brocal, Uchuchacua, and Yumpa, and dividends, of course, received from Cerro Verde. Despite the investment made in San Gabriel and the fact that we fully paid the outstanding debt at El Brocal, around 50 million dollars. In addition to these drivers, the EBITDA to free cash flow reconciliation reflects Buenaventura's growth pace, with significant capex investment related to San Gabriel and El Borcal's debt payment. Moving on to slide 7, this slide shows San Gabriel's cumulative progress. reaching 71 overall completion by fourth quarter 2024, primarily driven by finishing the engineering and procurement. The construction timeline remains on the schedule. We anticipate commencing the ramp-up phase in the third quarter of 2025, followed by the production of the first gold bar in the fourth quarter of 2025. However, this milestone remains subject to the timely approval of the necessary permits. On the next slide, we are showing the processing plant's progress that will operate at 3,000 tons per day. Currently, the primary crusher mechanical works are at 97 percent. The sag and bulge mechanical works are at 75 percent. the CIL tanks mechanical works are at 87%. Moving on to slide nine, we can see the progress of the main components of the plant. In slide number 10, we are showing the progress at the filter tailings plant at that currently is at 55%. As we move to the slide 11, I would like to highlight our progress with implementation of the UDF mining method, which aims to optimize ore recovery and reduce dilution. Our structure implementation program includes three key initiatives. First, engaging dedicated experts with over 15 years of experience in this mining method. Conducting a trial mine at Cambomayo to evaluate and refine its application, carrying out benchmarking visits to four mines in Nevada, USA to gather best practices and insights. This will ensure a successful and efficient integration of the UDF method. To conclude the presentation, I would like to share a few final thoughts. we have strengthened our balance sheet through successful bond issuance. This has improved our financial position, providing us with greater liquidity and flexibility to support future growth. Second, the year 2025 will be a significant transition for us, as the commencement and ramp-up of production at San Gabriel will mark an important milestone in our growth strategy and set the stage for long-term success. Third, we are seeing stable copper and silver production with consistent performance from our flagship assets, El Brocal, Uchukchakwa, and Yumpa. We are maintaining a steady output and operational stability. Finally, we are committed to returning value to our shareholders. We have resumed dividend payments by affirming our commitment to delivering returns and creating value for our investors. This reflects our dedication to sustainable growth and should hold it back. Thank you for your attention. I will hold the call to the operator to open the line for questions. Operator, please go ahead.