Buenaventura Mining Company Inc.

Good morning, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura second quarter 2025 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 second 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 Maza, 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, and Mr. Raul Benavides, Director. Before I hand the call over, let me second 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, you are cautioned not to place any reliance on these forward-looking statements. I encourage you to read the full disclosure concerning the forward-looking statements within the earnings result press release issued on July 24, 2025. Let me now turn the call over 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 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 second quarter of 2025, highlighting key achievements and strategies moving forward. After the presentation, we will be able for our Q&A session where our team will be happy and eager to answer your questions. Continue with the next slide, please. I would like to highlight a few key areas that contribute to our strong second quarter 2025 results. Our EBITDA in the second quarter 2025 from direct operations was $130 million, compared to $107 million reported in the second quarter of 2024. Our net income in the second quarter of 2025 was $91 million compared to the $71 million in the net income in the second quarter of 2024. In the second quarter of 2025, silver production reached 3.6 million ounces, 11% lower compared to the 4 million ounces produced during the same period in last year, mainly due to lower production at Yumpac Tambomayo, and Huicani. Copper production increased 28% year over year, primarily due to halted operations at the Brocal in the second quarter of 2024, and it was related to the impact on copper ore processing during the period. Gold production was 27,345 ounces compared to 33,810 819 ounces produced in the second quarter of 2024, primarily due to decreased production at Tambomayo and Orcopampa, and partially offset by the increased production at La Zanja and El Brocal. In the second quarter of 2025, Buenaventura initiated the sale of part of the Cerro Verde's copper concentrate, approximately 20,000 meter tons have been sold by the quarter's end, out of a total of approximately 40,000 metric tons expected for the full year 2025. Cerro Verde announced a new dividend distribution of $59 million on July 24, corresponding to Buenaventura's equity share. These dividends will be distributed in August, resulting in a total of $108 The total capex for the quarter amounted to $107 million, with $82 million allocated to the San Gabriel project. The second quarter ended with a cash position of $589 million and a total debt of $860 million, resulting in a leverage ratio of 0.56 times. Finally, on July 23rd, when Aventura redeemed the remaining $149 million of its 2026 bond. Moving on to our cost structure in slide four, the all-in sustaining cost expressed in terms of copper for the second quarter of 2025 increased by 63% compared to the same period in the previous year. It is important to highlight that year-over-year increase in All sustaining cost was primarily driven by lower by-products credit. Moving on to the cost applicable to sales trend, as you can see, copper cash increased mainly due to slightly lower grades. Silver cash increased in line with the expectantials due to lower production at Hulcani, Tambomayo, and Yumpa compared to the previous year. Gold cash has increased. primarily driven by lower volumes and rates at Ambomayo and Orcopump. On the next slide, we will present the free cash flow generation. The second quarter 2025 cash position decreased during the quarter, mainly driven by net cash outflows from investing activities and dividends paid to our shareholders. The $49 million in dividends received from Cerro Verde are reflected in the operating cash flow. This dividend was received in April. In addition to these drivers, the bid to free cash flow reconciliation reflects Buenaventura's significant capex investments related to San Gabriel. Moving on to slide six, this slide shows San Gabriel cumulative progress, reaching 88% overall completion by the second quarter of 2025. primarily driven by finishing the engineering and the procurement, as well as the construction, as it is at 86% of advance. Second quarter 2025 CAPEX related to San Gabriel was $82 million. As of March 2025, San Gabriel's, as of June, sorry, 2025, San Gabriel's total CAPEX has reached $588 million. 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, these milestones remain subject to the timely approval to the necessary permits. On the next slide, we are showing the processing plant's progress. Currently, the primary pressure mechanical works are at 100%. The sack and bowls mechanical works are at 100% also. And finally, the seal tanks mechanical works are at 98%. Moving on, we can see the progress of the main components of the plant. Moving on to slide 9, we are showing the progress at the filter tailings plant that currently is at 87%. To conclude the presentation, I would like to share a few final thoughts. First, we are committed to our strategy. Stable and continuous production are our flagships. We are making progress with optimization efforts to increase throughput and are continuously evaluating our operating portfolio. Exploration is part of our DNA. We are fully committed to extending the life of mine of our assets through continuous exploration effort. Third, we maintain our financial stability. Consistent with our commitment to the market, we redeem the remaining 2026 notes. And finally, San Gabriel project achieved at 88% overall progress. Meeting our planned targets, we remain on schedule to deliver our first gold bar by the fourth quarter of 2025. 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.

Thank you. We will now begin the question and answer session. To ask a question, dial in by phone and press star, then 1 on your telephone keypad. Make sure your mute function is turned off. And if you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. And the first question comes from the line of Carlos de Alba with Morgan Stanley. Please go ahead.

Yeah, good morning, everyone. Thank you very much. A few questions on San Gabriel. First one is, can you provide a little bit more color on the pending permits And where are you in the process? I mean, we're already in the third quarter. Have you had any conversations with the authorities? Do you believe you're going to get them on time to have the first bar produced in the fourth quarter? So, yeah, more details would really help. The second point or question on San Gabriel is, just on CapEx, how much more investment is required in the second half of 2025? And what is the expected, if any, disbursement in 2026? And then finally, can you comment on the pace of the expected ramp up with first metal hopefully being produced in the fourth quarter? When do you expect to get to full capacity? Thank you.

Thank you, Carlos. Thank you for your questions. For the first, your question asking for permits, we actually have invited the authorities to visit the plant around September. We are going in advance with this because there is only a very simple permit that is the actual permit permit to begin the throughput, the production there. We don't foresee a greater risk in that permit. We have to consider that for the countries, the only project that is going to be beginning production will be inaugurated in this year, and I think it is important to show that good news for the country. In terms of capex, maybe it's the total capex we still in the same level we announced in our last conference. We have not increased any additional capex. It will end around $720 and $750 million. And maybe Daniel will give you more color on that. And finally, the ramp-up. The ramp-up will take all the 2026, and we should stabilize after the ramp-up in the production. We have announced that we will be between 100,000 ounces and 120 ounces. I don't know, Daniel, if you can take the answer.

Yes, Leandro, thank you. Carlos, basically the total amount of the capex for San Gabriel will be in the order of 720 to 750, and we have already disbursed close to $600 million in as of June 2025. So what we expect is to disburse between $130 and $160 million for the construction as the end of the year.

Maybe Juan Carlos Ortiz can give us more call or more ideas around about the ramp-up that you asked, Carlos.

Hi, Carlos. Yes. We are planning the detailed run path in connection with the mine, the processing plant, and the dry stacking facility for holding the tailings. The mine is running okay. We have most of the equipment on the underground of the underground mine already in Peru. We have two out of four fleets already delivered to the site. We will complete the fleet by April by November. So, we are okay with the production and mine development. The processing plan is progressing. You see in the presentation how it's progressing. But in October, we will start the wet conditioning with solarium. So, it's part of the process. Any natural project will need to pass these steps. So, we don't anticipate any major problems. no more than the usual ones to run a new facility of this process, that kind of processing. Next year, after the wet season, in Peru the wet season is between January to March, April, we will start the activity of filtering and drying the tailings and placing these tailings in horizontal layers inside the Probably that's the activity that we will need to put a lot of emphasis because it's something new for San Gabriel. It took a while, a few months, to fine-tune this process in Tambo Mayo. So probably we need to be more cautious and more conservative about the amount of telling that we can dry and compact in the dry staking facility, particularly because it's a V-shaped valley. We need to start from the bottom of the valley, so the available area at the bottom is smaller, so it's going to be tricky to start ramping up production at the bottom of the valley. So we are taking care of the commissioning and the detail for the initial ramp-up of San Gabriel operations.

Thank you, Carlos. Just one follow-up maybe on that. Have you started mining already, or when do you expect to start mining? Would you accumulate some inventories ahead of starting the plant?

We already have around 100,000 tons of ore in the surface of about three grams. That would be the first material to be fed into the processing plant for the wet commissioning process. We already have in the order of 100,000 tons of ore in the surface, right next to the processing plant. All right, thank you.

Again, if you have a question, please press star and then one. And your next question today will come from Cesar Perez-Novoa with BTG Pactual. Please go ahead.

Yes, good morning to everyone and congratulations for your results. I have two questions on my end. While silver production increased in the quarter, the mine encountered a decrease in silver-graced acid shifted extraction towards polymetallic stops. Has this already stabilized in the third quarter, or are we going to see some shift later in the year towards bottom-level stops? And would it be reasonable to assume that that cost will improve in the second half? And then my second question relates to El Brocal. The company mined higher ore in the second quarter. Is this strategically continuing for the rest of the year, conditioning, of course, on high copper prices? And how should we think about cost? And maybe you could tie that up with the commercialization of the Cerro Verde concentrate, and if that is improving the overall for your entire copper baskets. Those would be my questions. Thank you.

Thank you, Cesar. Thank you very much for your questions. Well, the answer for Chaco and Brocal can be given by Juan Carlos, and the part of the commercialization of the concentrates, maybe Aldo can give us more color. Please, Juan Carlos.

Sure. Regarding Uchukchakwa, as we mentioned in the comments of Uchukchakwa in the quarter, we have a monitoring system for seismic events in the mine. So we detect some seismic activity near our current operation area at the bottom of the mine. So we will be cautious about that. So we took all the people out of the area. We bring a consultant people aboard to analyze all the data, and they recommend to do some additional backfilling, particularly with wet tailings, slurry tailings, backfilling. So we're bringing all the pipelines, extend the network of pipelines to bring the wet tailings down to the bottom of the mine. That will be done in this quarter, the third quarter. And we will monitor what the effect of this backfilling in that area. by the fourth quarter. If everything is stable, we will resume mining in the bottom part of the mine by the fourth quarter. It's important to mention that the bottom part of the mine only contributes with around 20% of the total contribution, total production of Ushuaia. So it's not a very sensitive area. It's a high grade, but it's kind of small in proportion to the rest of the mine. We will continue ramping up production in other areas of Chacoa, so we expect to reach 2,000 tons per day throughput by the end of the year. Right now, we are close to 1,700 tons per day. In doing that, moving from 1,700 to 2,000 tons per day, we expect to keep reducing operating costs in the area of 10% by the end of the year, and this continues. ramp-up will continue in 2026. So the idea is to get closer to 25,000, 3,000 tons per day. So that's pretty much the strategy in Chaco. Regarding El Brocal, we mine slightly higher grades in the second quarter. We will continue to do that in the third and fourth quarter, but still in the order of 1.45% copper. That's going to be our target copper production. But what we are doing right now is trying to give a higher priority to the mining blocks or the areas with high gold and silver content. So we are shifting a little bit more pressure on developing the blocks that have 1.45% copper, but at the same time have higher gold and silver production. That will continue also for the rest of the year. That's pretty much what the...

Okay, I would assume that if you... Sorry, go ahead.

No, no, I'm going to add the part of the concentrate of Cerro Verde. As we have announced, we started on the sensation of 40,000 tons of copper concentrates of Cerro Verde. And as everybody knows, the market is very tight for this kind of material. It's a very clean concentrate. And, of course, for us, it's a leverage to sell this concentrate with the other materials of Buena Ventura. We already have received some improved terms to some of our concentrates, and the idea is to keep selling those concentrates in the next years in order to have better terms for our own materials.

All right. Thank you very much for the statement. And just coming back, if you're tapping 1.45% grade in copper and you're also maximizing the gold and silver content at El Brocal, I would assume that this is going to positively impact costs for the second half of the year. Am I making the correct assumption here?

Yeah, on a cash basis and also in a cash cost basis, we have larger credits coming from gold and silver. The remaining cost of copper will be diluted or reduced. Yes, we agree on that. I don't have a particular number of what target it could be, but as a general concept, it will be positively impacting the cost on a copper basis.

All right, thank you very much for the detailed explanations, gentlemen. Thank you.

And your next question today will come from Tanya Jakunskonek with Scotiabank. Please go ahead.

Oh, great. Good morning, everybody, and thank you so much for taking my three questions. So my first question is on Sierra Verde. So I'm just trying to understand, Daniel, maybe you can help me on this one. This copper concentrate that you are purchasing, which is above and beyond the production that you get from Cerro Verde, how should I be thinking about this? Should I just be putting 20,000 tons through your revenue line for the second half of the year, adjusted for treatment charges? Is that how I should be thinking about it? I just don't know how I should be modeling this. sort of new production, you know, this material.

Yes. Yes, Tanya. Hi. Thank you for attending our conference and for your question. This copper of Cerro Verde, it's a back-to-back almost. Aldo, maybe you can help us with the color.

Yes, Tanya, we already have sold 20,000 tons of dry metric tons of copper concentrate in the first half, and our idea is to sell 20,000 tons more in the second half. We bought from Freeport, Cerro Verde, at Benchmark, and the idea is to have some margins when we sell into the market, into the spot market. But talking about prices and QP, we are selling back-to-back. We don't have any issues or any risk in our sales to the final consumer.

The margin we can expect for this tonnage, it's around $2.4 or $2.6 million. This gives us volume sales, but It's not a big margin. You can model with $1.2 million each, 10,000 tons approximately.

If I may add, Tanya, the sales of these concentrates go to our revenues line, and the purchase goes to the cost of sales. Of course, the sales have this margin of, in this case, was $1.4 million. We expect something like that for the second half of the year as well. This margin will be seen at the sales level, at the revenue level.

Okay. I got that. And should I just be thinking, I mean, I know this is, I don't know how to model, like, but 2025 is okay? Yes. but is this a process that you're going to be continuing? Should I be thinking that this continues into 2026 as well?

We already have a contract for the next two years until the year 2027, but we have to weigh a little bit how will be the market for the next years. This year, the difference between the benchmark and the spot was very high. We're not sure how big will be the next two years. Of course, the idea is that we will have a margin, but we are not sure.

Okay. Okay, no, that's helpful. Thank you so much. And then my second question is understanding Trapiche. We haven't heard about this one for a while. I know that we were waiting for environmental permits in the second half of 25, and we were targeting a feasibility study for mid-26. Can you review with me the timing of some of these parameters, and what exactly is happening at this asset?

Sure. Exactly, Tanya. We are in the process of concluding the questions, additional questions we have received from the authorities for the environmental study impact. And actually, the feasibility study will be finished in the third quarter, half of the 2026. Maybe Alejandro can give us more color about the permitting and Renzo for the feasibility. Please go ahead.

Yes, Leandro, yes. environmental impact study, it's coming on track. You mentioned we are solving the final observations and we're still on target to having this approved by the end of the year. We should not have any delays on that. That's in terms of the permission. Of course, we're also working on the continuation of any other exploration activities, environmental permits related with that.

And in regards to the feasibility study, we just finished unloading the last 10 columns. Let's remember that this is a secondary sulfate leaching process, so it takes like 180 to 200 days. So we are currently processing that information and updating our geochemical models to have more clarity into acid consumption. before starting to close the study, the feasibility designs, and then start proceeding with the study estimates about how much can this cost to build and operate.

Okay. All right. And then I know you said the end of feasibility Q3 of 26, and obviously you will file that to the market so we can see the feasibility studies.

Yes, we, the brief feasibility studies in the market, so as soon as we update, as soon as we reach feasibility level, we will be updating it again.

Okay, perfect. Look forward to getting that next year. And then my final question, of course, is on San Gabriel. So thank you so much, and I'm looking at your timeline on your slide six. I see that you still have the tailings to do. the water dam, filter plant, yes, of course, power line connection, and obviously the first gold pour. So all of that's from Q3 into Q4. I have a question for you. Number one, the stockpile, we were supposed to reach 300,000 tons by October of 25, grading 4.5 to 5. Is this still a target? Because you just mentioned you only have 100,000. million tons, sorry, 100,000 tons. Is that still correct?

Yeah, well, there is a ramp-up coming. Juan Carlos can give you more detail about what we are thinking today.

Yeah, we have 100,000 tons as of today by the end of June. the target we are reviewing that target we are developing the mind we're putting more effort on driving the tunnels like the rounds and the main galleries not necessarily investing too much money on building up a large stockpile we have the opportunity to do so but we are reviewing that in order to put more effort on deepening down the mind development instead of building a large stockpile on surface So we have everything in place, as I mentioned earlier, in order to put more pressure and try to bring more ore to the surface. But we believe that number probably will be smaller than that and start with maybe 200,000 in that order of magnitude. That will be the equivalent of two months of the stockpile. in advance before starting the running on a continuous way the processing plan. So two months of the stockpile is kind of enough for a sure stockpiling of the early start of the commissioning process.

Okay. And then you have a very, very tight, you know, pour to commercial production. I think it's like a month or so. maybe two months, I don't know. Can you remind me your definition of commercial production? Is it, you know, 30 days at 60% of the milk capacity? What is your definition so I understand how you're going to be able to do this quickly?

Yeah. We understand that the project is is finished when we are working 20 days continuously and we produce two ore bars.

Okay.

Two gold bars.

Okay. So two gold bars, 20 days continuous production. Okay. I don't know.

Ernesto, do you want to?

At 65 capacity.

Sorry. Exactly. 65 capacity. Yes.

Okay, all right. And then, so that gets me my commercial production. And then my understanding is that it's going to take you one year to ramp up a very small operation. Can someone explain to me why it would take so long for such a small mine to ramp up?

No, during 2026, we are not going to take one year. No, during 2026,

Okay, so how long will it take to get to steady state? So we pour the gold bars in Q4 in December. We're ramping up in 2026. When do we get to steady state?

Well, the tailings, Juan Carlos explained the tailings, all the work that we have to make with the tailings, we have to work on having a process, a continuous process, and we estimate maybe in the second half of 2026 we can reach the the target of 3,000 tons per day. I don't know, Juan Carlos, maybe you can give us more detail.

Juan Carlos Rodríguez- There are three main components of San Gabriel, the mine, the processing plant, and the tailing facility. So the ramp up for the mine and the ramp up from the processing plant, as Leandro said, is going to be achieved probably the first half of 2026. The earlier, the better. We're pushing to do it faster. And the last component, because they are in series, the last one is the compaction of the dry tailings in the dry stacking facility. The reservoir that we design and we build is a valley that is in a V shape. So the bottom part of the valley is very narrow. So, even if we have 3,000 tons per day in the mine and 3,000 tons per day processing capacity at the plant, we need to place 3,000 tons per day at the bottom of the valley, and the areas are very limited in there. So, it's kind of tricky at the beginning to place all the tailings at that rate in that narrow area. As long as you are placing tailings, the area is growing layer by layer. It's making every layer you place, the area gets bigger because it's wider. The valley, 10, 5 meters, 15 meters on top of the previous horizon. So it's something that we are going to gain layer by layer. So it's not a problem on the long term. It's kind of the main restriction that we have on the short term. until the point that we have reached a certain area in which we can install and place dry tailings at the same rate of the mine and the processing plant.

Okay, so for some reason I was under the impression some of those tailings were going back underground as pace fell. I guess that's not.

It was an option in the past, but because it's a tank with a smaller cyanide content, we believe it's not safe to bring that tank back in the underground mine that has slightly acidic water and might generate a risk for people working on the ground.

Okay. All right. That's where I think I lost my connection. I thought some of it was coming back. Okay, so it's really a constraint by the valley for tailings. And once you get through a certain height, right, I guess, you know, you've got to get through that very narrow area. You build it up to a certain height. Once it's a certain height, it should be easier then for you to go. So sometime in the second half, right, we are going to be at steady state. That's correct. Okay, thank you so much for taking my questions. Very interesting and look forward to seeing this line up and running.

Thank you. 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, Head of Investor Relations, for any webcast questions.

Thank you, Operator. The first question comes from Omar Arianeda of B&G Compass. Can you comment on the impact of the road blockades in the mining ops and particularly when operations? And regarding Cerro Verde, yesterday the company announced a $300 million dividend. Do you have established the use of those proceeds?

Thank you. Thank you, Omar. Well, we actually have no major problems in the blockage of roads in our operations. We have been working continuously. And regarding the Cerro Verde dividend, well, it comes along with all our cash generation, and we should use these resources for continuous capex investing in our explorations, and why not evaluate a possible dividend for our shareholders?

At this time, there are no further questions. I would like to turn the call over to the operator.

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

Well, thank you very much for the time and effort dedicated to joining us today. Your participation and your inputs are greatly appreciated. Thank you again, and have a wonderful day. Thank you.

Ladies and gentlemen, that concludes Buena Vendetta's second quarter 2025 earning results conference call. We would like to thank you again for your participation. You may now disconnect.