Buenaventura Mining Company Inc.

Good morning, ladies and gentlemen. Welcome to the Compañía de Menaos Buenaventura First Quarter 2025 Earnings Results Conference call. At this time, all participants are in 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. Sebastiano Valencia, head of Investor Relations. Mr. Valencia, you may begin.

Good morning, and thank you for joining us today to discuss our first quarter 2025 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 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 handle the 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, and they are based on management current views and assumptions. While management believes that these assumptions, expectations, and projections are reasonable in view of the current available information, you 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 earlier press release, issued on April 30, 2025. Let me now turn the call to Mr. Leandro Garcia.

Thank you, Sebastian. Good morning 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 first quarter of 2025, highlighting key achievements and 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. Next slide, please. I would like to highlight a few key areas that contribute to our strong first quarter 2025 results. Our first quarter 2025 EBITDA from direct operations was $126 million, compared to $95 million reported in the first quarter of 2024. This performance is also reflected in a higher EBITDA margin of 41% compared to 38% in the previous year. First quarter 2025 net income was $140 million, compared to $61 million in net income for the first quarter of last year. The year ended with a cash position of $648 million and a total debt of $862 million, resulting in a net leverage ratio of 0.46%. Next, we will talk about the debt times. This debt level increased against the previous quarter, as it includes Buenaventura 2032 notes. It also considers only the outstanding amount of our 2026 notes. The total capex for the quarter amounted to $36 million, with $22 million allocated to the San Gabriel project. On April 23, 2025, Buenaventura received 49 million in dividends related to its stake in Cerro Verde. In the first quarter of 2025, silver production reached 3.7 million ounces, 20% higher compared to the 3.1 million ounces producing during the same period of last year. Of this total, 2.2 million ounces came from Jumpec, due to full-scale operation. Copper production decreased 21% year over year, primarily due to the remaining El Brocalo PMP inventories, which were processed in the first quarter of 2024. Gold production was 27,988 ounces compared to 36,593 ounces produced in the first quarter of 2024. Primarily due to the decreased production at Tambomaio and Oro Pampa, and partially offset by increased production at La Sanca. Finally, consolidated reserves have been updated as of the end of 2024. Gold reserves have increased by 482,000 ounces. Silver reserves have increased by 61 million ounces, and copper reserves have increased by 253,000 tons. Moving on to our cost structure in slide four, the all-in sustaining costs for the first quarter of 2025 decreased by 83% compared to the same period in the previous year. It is important to highlight that the year over year decrease in all-in sustaining costs was primarily driven by lower commercial deductions and higher by-product credits. Moving on the cost applicable to sales trend. As you can see, copper, cash, cost applicable to sales, increased year over year mainly due to lower by-product credit contributions at El Coro Cal. Silver, cash, has increased year over year but was consistent with the expectations for this quarter. Gold, cash, has increased year over year primarily driven by lower volumes in grades at Tambomaio and Oro Pampa. On the next slide, we will present free cash flow generation. The first quarter 2025 cash position increased during the quarter, mainly driven by net cash inflows from financial activities. An additional 100 million was raised through the bond issues issued in February 25, and the remaining amount of the 2026 bond. In addition to these drivers, the bid to free cash flow reconciliation reflects when Aventura significant capex investment related to San Gabriel. Moving on to slide six, this slide shows San Gabriel's cumulative progress, reaching 79% overall completion by the first quarter 2025. Primarily driven by finishing the engineering and procurement, as well as the construction as it has 75% of advance. As March 2025, San Gabriel's total capex has reached $505 million. The guidance for the full year 2025 has been revised to the range of $220, $250 million. The construction timeline remains on a 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 to the necessary permits. On the next slide, we are showing the processing plans programs that will operate at 3,000 tons per day. Currently, the primary crusher mechanical works are at 100%. The sack and bolt mechanical works are at 98%. And finally, the seal tanks mechanical works are at 97%. Moving on, we can see the progress of the main components of the plant. Moving on to slide nine, we are showing the progress at the filter tailings plant that currently is at 74%. To conclude the presentation, I would like to share a few final thoughts. San Gabriel continues to advance steadily with 79% overall progress and on track to produce its first gold bar in the fourth quarter of 2025. Jumpec is proving to be a key growth driver delivering 2.3 million ounces of silver in the first quarter and generating a strong cashflow. We are also driving growth by increasing our gold, silver and copper reserves led by the strength of our flagship operations. And finally, our focus strategy remains unchanged. We are committed to our corporate guidelines prioritizing reserve growth, a bid that maximization and cost efficiency at our flagship mines and in our strong pipeline of projects. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator, please go ahead.

Thank you, sir. If you would like to ask a question, please press star then one on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then two. Once again, that's star then one if you have a question. Today's first question comes from Carlos D'Alba with Morgan Stanley. Please go ahead.

Yeah, thank you. Good morning, everyone. So on San Gabriel, maybe I'll group some together. So the CAPEX increase in 2025, does this represent an increase on the overall CAPEX of the project or just shifting maybe from what you would expect to invest in 2026 and maybe you're investing it now in 2025? If you could clarify that, it would be great. And given the CAPEX that we're discussing now going up, what is the new expected return on this investment that you see as you get closer to completion? And what permits are pending that may prevent you from starting production this year? But assuming that you get those permits, what would be the range of production that you see for 2025 and maybe 2026 out of San Gabriel? And my second question is if you could maybe give us a reminder of the, of the exploration budget, the exploration expense that you spent to run through your P&L and both for operating units and non-operating units in 2025. And you can also comment on the general and administrative expenses. They came a little bit higher in the first quarter. How do you see that line also for the year as well as the S&A? Thank you.

Thank you, Carlo, for your question. Regarding San Gabriel, is the CAPEX to be executed in 2025? There are some geotechnical and hydraulic issues that Renzo will explain you further. In terms of the return, remember that this project was decided to go on with prices of 1600. So it will maintain the same profitability for the company. In terms of the permits, we are referring to the construction authorization, sorry, the operation authorization that will be granted once we finish the construction. Renzo, I don't know if you want to go further with it. Maybe,

Leandro, can you remind us what exactly is the return or the profitability that you are seeing for San Gabriel? And just to clarify, what is now the total CAPEX for the project that you see after the increase in 2025?

The total CAPEX should be between 720 and $750 million. Okay, thank

you. And the IRR of the project or the net present value of the project?

It's around 12%, 13%. Great, thank you, Leandro.

Thank you. And as a reminder, if you would like to ask a question. Sorry. Oh, I apologize. Sorry,

there are, yes, there are a couple of questions and the answer from Renzo. And also there are a couple of questions, exploration expenses and the GNA. We can begin with Renzo?

Yes, so in regards to the problems we have with geotech and hydrogeology, as well as some excess inadequate material beyond our confidence level. Those problems have been resolved, but we require some additional work in the form of slope reinforcement, additional layers of grouting in the water dam. To find a place to temporarily place these excess inadequate inventory and add some excess query production to compensate. So all those things have been already done or in the process of being completed. And that was the, where are we gonna be spending all this money besides these excess works? We have like $45 million in finishing the electrical and mechanical and commissioning of the plant, the tailing storage facility, another $25 million, the mine development, another $35 million, and the power line, another $50 million. We are maintaining our committed date for the first water in the fourth quarter at this point.

Now we can, thank you, Renzo. We can continue with the exploration expenses and investment.

Yes, Leandro. This is Daniel, thank you, Carlos, for your question. In terms of exploration, we can divide it into two kinds of explorations. The first one is the explorations in the operating unit. This is basically for infill drilling to convert the resources into reserves. The normalized amount for the quarters, the next quarter is in the order of 10 to $12 million. For the overall year 2025, we are in the order of 40 to $45 million. In addition to this, we have the non-operating areas of explorations, which will be in the order of $4 to $5 million each quarter or for the entire 2025, we should be in the order of $20 million. One of the most important activities here is the exploration in El Brocal within the areas of Unich and Bojorques. Regarding the administrative expenses, yes, as you mentioned, they are a little bit higher than we were expecting, but this is basically due to the higher workers' participation that we are registering because of the higher profits that we report from our direct operations. The amount of administrative expenses for each quarter this year will be in the order of $15 to $17 million. For the entire year, we expect around $60 to $65 million.

Thank you very much, Daniel, Renzo, and Leandro.

Thank you, Carlos.

Thank you. And as a reminder, please press star the one to ask a question. Our next question today, Councilman Tonya Jackowskonic with Scotiabank. Please go ahead.

Great. Good morning, everybody. Thank you so much for taking my questions. Maybe, Daniel, I'm just gonna finish off with you just on some of the forecasting. Can you remind me now what your capital expenditure is going to be for this year? Previously, we had $330 to $355 million. I'm just wondering if that is still valid with this movement in the San Gabriel capital.

Daniel, we expect an increase in the capital, as Renzo mentioned. San Gabriel will add some additional capital for the construction of San Gabriel. We expect for this year in total around $400 to $420 million. From this, we have already spent more than $80 million.

Okay. And maybe just so I understand the Delta, I think it's come in $50 million more than in San Gabriel. $50 million or there about more than we expected. I'm from the original budget of Q4. Can you just remind me that $50 million, what was the overrun?

All right, okay. So the overrun of, it was based on this inadequate material and the hydrogeological underneath the water dam basically. So we have to move a lot more inadequate material to the new storage area. We need to do several additional layers of grouting. And obviously this scrambles a little bit the coordination between the contractors. So we're in that process of accelerating certain activities to maintain the date of the first overrun. That's kind of what was out of the scope.

Okay, so maybe just for myself to understand, when you talk about inadequate material, are you talking about waste rock?

No, no, no. I'm talking about like queries, queries that were supposed to have like good filling material. We found some layers of inadequate material.

Okay, and so you have to move this facility to another place. Is that the correct understanding? No,

no, no. We need to remove all that inadequate material in order to reach the foundation level. And we need to expand our existing inadequate material deposit to hold these additional quantities. Okay.

And is this a water storage facility? I'm just trying to understand what's gonna be placed on top of that.

Oh, no, no. This is where the filtration plan is. The water storage facility has a different issue. Yes, the water storage facility has some infiltration problems. So initially we expected to do kind of a couple of layers of grouting, but we ended up putting like seven layers of grouting. That took some time. And we're gonna be reinforcing the size of the water dam as well.

At this

point, the dam is kind of 35% of its total height so far. We already finished the rainy season, so we're starting to see some increases speed in that.

Okay, so it's two different things, the filtration plant and the water dam. Okay, I got it. Okay.

Yes.

Thank you for the explanation on that. Can I then ask what we are going to, you talked a lot about the open, what's happening on surface at San Gabriel. So I've talked a lot about the mill. Can we go to the underground? So where are we now on the underground with respect to number one, the training of the underground miners? Number two, where are we with respect to soap development, i.e. getting them ready for production? And number three, where are we on the stockpile on surface? And are we still on target to be at that 300,000 ton by October? So just those three on San Gabriel.

Thank you, Barbara. Maybe Juan Carlos can help us with the answers.

Sure, Alejandro. Well, regarding training, we are hiring the new crews for Buena Ventura in order to be ready by the end of July that we worked our first delivery of equipment, underground equipment. So APROC is going to deliver our first crew on an escape route, July, August, September, and the last crew, the last fleet, October. So we have hired the first crew, and the second is on the process of being hired, and we are training them. We have the Tambo Mayo mine using these mining methods right now. So we are bringing the executive, the engineers, the supervisors to Tambo Mayo. They are being trained there in order to know all the details about the mining method, the underground field. So it's part of the process. We are on track of knowing that. Regarding the stop development, we are opening, according to the plan, the galleries across the old body. We have right now in order of 60,000 tons of material or on surface. So it's according to the plan. Right now, we have the contractor, Matt Erasuriz, with three fleets on site with the capabilities on doing between 600 meters to 800 meters per month. It depends what kind of ground we need to cross each month. So we need to put like steel reinforcements. Probably more close to the 600 meters per month. And if we have another month where we only can advance with short-grid, probably closer to the 800 meter per month. So depending on the schedule of each month, we are in that range. With the contractor. And in July, we will have our first crew of Buenaventura on site.

So it looks like everything's going to plan. And I know we talked about the ground conditions in your previous conference call that, you know, you were requiring concrete cement required and obviously reinforcement and little water. So you didn't have water underground. Are you still seeing similar ground conditions? Nothing worse?

Yes, it's what is expected. It's what we call rock mass category four. It's poor ground. Yeah. It needs to be supported with steel arches. In some cases, we have a little bit better rock. It's called category three B that can be developed only with short-grid and bolts.

Okay. Well, thank you so much for that. And then just my final question, if I can ask on Komalache. I know we were expecting permits in Q1. So we could start construction in Q2 and resume fresh or leaching in Q3. Do we know where we are? Have we gotten the permits and have we started construction?

Yes. Okay. Leandro, you'll allow me? Yes. Yeah. We were granted the construction permit in March. We start construction in April. We are starting construction right now of the expansion of the path. While at the same time, we are asking for a stock piling fresh ore on top of the existing stock and on the existing path. So we have two permits running in parallel, one for the lateral expansion of the path and one for the piling more ore on top of the existing one. So we are according to the plan with respect to the piling fresh ore on top of the path by August this year. So after we put the ore in there, probably you need to wait 60 days in order to allow the solution to came all the way down to the geomembrane and report to the extraction facility. So we start placing ore in August, will be September, October, late October, early November that we will start seeing an increase in gold production in Coimelache.

Okay. Thank you so much for that and good luck on both Camelache and San Gabriel.

Thank you. Thank you.

Thank you. Our next question today comes from Alex Hacking with Citi. Please go ahead.

Yes. Good morning. I just wanted to clarify on San Gabriel. I apologize. When you talk about the water dam, is that the TSS? Is that where the tailings are being deposited? Thank you.

No. The water dam is where we're going to be storing fresh water to use in the plant. The tailing storage facility, it's a different compound and it's going to be dry stocked.

Okay. Thank you. So I just want to clarify that. So when you talk about the geotechnical and hydraulic issues, those are exclusively in the CAPEX overrun, is it exclusively related to that water dam or there are other issues as well? Thanks.

Yes. The water dam has some, the infiltration that we found underneath the foundation was not according to what our original study meant. So we have to do a lot more of grouting. We thought that two to three layers of grouting will be enough. We ended up with seven layers of grouting and we reach the infiltration rate, the design infiltration rate. That's one problem. The other problem, it's a query that was supposed to have enough material for filling, didn't have enough material, it was inadequate material. So we need to move it to reach the foundation level of that query and then replace it with another query. So that causes some scrambling of the constructor, of the construction sequence that we are currently aligning again.

Okay. Thank you. Thanks for the clarification. That's helpful. And then I guess it's the follow-up question, I guess, around the transition to operating yourself at Bute Chacua, Yumpac, Brokal, I guess any update on how that process is going. Thank you.

Leandro, you're allowed to answer that part of the question? Yes. Yes. We already assigned the contract, the purchase order for Chacua, Yumpac, and Brokal to Sandvik. We have a schedule for bringing all the equipment on board. In the case of Chacua and Yumpac, because our midsize equipment, they are going to be delivered earlier, basically in the quarter of the year. Only a small fraction of the equipment will be delivered early on 2026. We will replace all equipment. We will return any rental equipment that we have on the ground. So to give more continuity of operations on the ground. We will have also full service of Sandvik on site from day zero. In the case of Brokal, most of the equipment will be delivered on 2026 because this is a very large size of equipment, large loaders and large production drills. So most of the equipment will be delivered by early 2026 in the first and second quarter. Again, the strategy there is to save costs by doing the work by ourselves at a larger size. We have right now with the contractor loaders that are only 10 tons capacity. And we're moving into different size of equipment, more close to between 14 for development, 14 tons loader for development and 17 tons for production to extract the oil from the stoves. So that's the reason we're doing that in Brokal. And again, it's going to be with Sandvik with the same strategy, with the full maintenance from day zero on site.

Okay, perfect. Very helpful. Thank you.

Thank you. That concludes the question and answer session of today's conference call. I would now like to turn it back over to Leandro Garcia for closing remarks.

Thank you, brother. Before we conclude today's conference call, I would like to thank you for the time and effort dedicated to joining us. Your participation and input are greatly appreciated. Thank you very much and have a wonderful day.

Ladies and gentlemen, that concludes Bueno Venturos first quarter 2025 earnings results conference call. We would like to thank you again for your participation.