Compañía de Minas Buenaventura S.A.A. Q2 2023 Earnings Call Transcript

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July 27, 2023

There are 3 speakers on the call.

Operator

Good day, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura Second Quarter 2023 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.

Operator

Gabriel Salas of Investor Relations. Mr. Salas, you may begin.

Speaker 1

Good morning, everyone, and thank you for joining us today to discuss our Q2 2023 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 Daniel Dominguez, Chief Financial Officer Mr. Juan Carlos Ortiz, Vice President of Operations Mr.

Speaker 1

Alejandro Hermoza, Vice President of Sustainability Mr. Renzo Maher, Vice President of Projects Mr. Juan Carlos Salazar, Geology and Exploration Manager and Mr. Raul Benares, Director. Before I hand our call over, let me first touch on a few items.

Speaker 1

On Buenaventura's website, you will find our press release that was posted yesterday after 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 the view of the currently available information, We are cautioned not to place undue 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 July 26, 2023. Let me now turn the call to Mr.

Speaker 1

Landro Garcia.

Speaker 2

Thank you, Gabriel. Good morning to all and thank you for attending this conference. We are pleased to present the results of the Q2 2023 from Compania Aeminas Guadalaju. We have prepared a PowerPoint presentation, which is available on our web page. Before we go further, please take a moment to review the cautionary statement shown on Slide 2.

Speaker 2

Moving on to Slide 3. Highlights were as follows. 2nd quarter 2023 EBITDA from direct operations was $17,100,000 compared to U. S. Dollars negative 12,900,000 reported in the Q2 2022.

Speaker 2

The 6 months the 1st semester EBITDA from direct operations reached $68,700,000 compared with the $74,000,000 reported in the 1st semester of 2022. 2022 EBITDA does not include $300,000,000 resulting from the sale of Buenaventura stake in Yanacocha. Q2 2023 net loss reached $5,400,000 compared to a $44,600,000 net loss for the same period in 2022. The 3rd 1st month of 2023 net income was 50 $7,500,000 compared to $570,100,000 net income for the 6 months of 2022. The 6 months the 1st 6 months 2022 result includes a $480,000,000 net income from discounted operations, primarily due to the reclassification of Buenaventura's interest in Yanacocha.

Speaker 2

The company recorded a $9,800,000 provisional price adjustment for the accumulated 1st 6 months of 2023. This is comprised of negative $13,700,000 in fair value of accounts receivable and a positive $3,900,000 in adjustment prior period liquidations. This compares to a 35,000,000 dollars loss for the accumulated for 1st 6 months of 2022. Buenaventura 6 months the 1st 6 months 2023 consolidated copper production increased 23% year on year. Seam production decreased by 68%, lead decreased by 60%, silver decreased by 28% year on year.

Speaker 2

And gold decreased by 11% year on year. El Brocal's underground mine production increased to 9,300 tons per day during the Q2 of 2023 compared to the 8,150 tons per day in the Q2 of 2022. The El Brocal ramp up remains on target to reach 10,000 tons per day by year end of 2020. Buenaventura's cash position reached $202,400,000 and our net debt decreased to $520,900,000 with an average maturity of 2.9 years by quarter end June 30, 2020. 2nd quarter 23 capital expenditures were 49 $700,000 compared to the $36,100,000 for the same period in 2022.

Speaker 2

The first half of twenty twenty three capital expenditures reached 85 point $9,000,000 compared to $56,000,000 in the same period of 2022 and includes $24,000,000 related to the San Gabriel project and $19,200,000 related to the Juniper Buenaventura looks forward to permitting approval of Uchucchacua, Junpaca, El Brocal and Coimolache. The company continues to work with the Peruvian Environmental Authority, CENASE, on its final review. We expect permits for Uchucchacua and Yumpa to be approved during 2020 the Q3 of 2023. Cerro Verde paid a total dividend of $250,000,000 on April 28, 2023. Unaijuntura received $49,000,000 relative to its stake in Sabovelve.

Speaker 2

Sabovelve will pay a second dividend on August 3, 2023, from which Buenaventura will receive an additional 49 $1,000,000 Moving on to Slide 4, financial highlights. Total revenues during the Q2 were $173,000,000 which is 15% higher in comparison to the Q2 of 2022. In the first half of the year, total revenues decreased to $359,000,000 compared to the first half of twenty twenty two. As we mentioned before, our EBITDA from direct operations for the Q2 of 2023 was $17,000,000 in comparison to a loss of $13,000,000 during the Q2 of 2022. EBITDA from direct operations for the 6 months strike of 2023 decreased to $69,000,000 in comparison to $74,000,000 during the 1st 6 months of 2022.

Speaker 2

2022 EBITDA does not include the U. S. Dollar $300,000,000 resulting from the sale of Buenaventura's stake in Yanagocha. Also, our net loss from continuing operations for the Q2 of 2023 was $5,000,000 in comparison to the net loss from continuing operations of $44,000,000 during the same period in 2020. Net profit from direct operations for the 6 1st months of 2023 decreased to $67,000,000 in comparison to $90,000,000 during the 1st 6 months of 2022.

Speaker 2

The CapEx increased to $50,000,000 in the Q2 of 2023 compared to the $36,000,000 in the Q2 of 2022. The 1st 6 months of the year, CapEx totaled $86,000,000 a 53% increase in comparison to the first half of twenty twenty two. Moving on to Slide 5, please, attributable production. Total gold attributable production in the Q2 of 2023 was 39,000 ounces, 17% lower than the figure reported in the same quarter of the previous year. This decrease is mainly explained by La Zanja Mining Operations Station since the Q4 of 2022 and lower production at Coimolache.

Speaker 2

In the 1st semester of 2023, total gold attributable production was 78,000 ounces, 19% lower than the same period in 2022. Silver attributable production for this quarter was 1,400,000 ounces, which shows a decrease of 12% compared to the previous reported in the Q2 of 2022. This decrease in production was primarily due to Jultani and El Volcan performance. During the first half of twenty twenty three, silver attributable production was 2,500,000 ounces, 25% lower than the 1st semester of 2022. Finally, our copper attributable production for the Q2 of the year was close to 31,000 metric tons, a 11% increase compared to the same period in 2022.

Speaker 2

During the first half of twenty twenty three, copper attributable production was 60,000 metric tons, a 9% compared to the same period of 2022. Moving on to Slide 6, our all in sustaining cost and cost applicable to sales. The all in sustaining cost from our direct operations in the 1st semester of 2023 increased by 30% to 18 $75 per ounce of load. The all in sustaining cost for the 1st semester of 2023 has increased compared to the previous year due to lower production levels at the Jultani, La San Juan, Monolache. However, we anticipate it will decrease in the upcoming quarters as production meets our guidance.

Speaker 2

This calculation only takes into account our ownership in Buenaventura Direct Operations, La Zanja and Combolache. El Brocal has been excluded from this figure as it primarily produces copper. The costs applicable to sales for 1st semester of 2023 were as follows: for gold, US1131 dollars per ounce, which is almost equal to a year ago for silver US21.79 dollars per ounce, which is 25% higher than a year ago for lead, dollars 12.29 per metric ton, which is 7% lower than a year ago. For copper, dollars 6,475 per metric ton, which is 3% lower in comparison to a year ago. Finally, in the case of zinc, the cost applicable to sales was US1884 dollars per metric ton, which is 39% lower than a year ago.

Speaker 2

Moving on to Slide 7. Here we show where we are presenting in one snapshot the current development level of for each of our projects. Moving on to Slide 8. Our projects in the case of Yumpak, our brownfield project in our mine development is around 2,100 meters during the Q2 of 2023. Processing plant will resume operations during the Q3 of 2023 in a short batch campaign that will help to identify and correct any potential mechanical problem.

Speaker 2

Environmental permit for mining expected on August 2023 due to delays in Cenas' approval process. In the case of San Gabriel, our greenfield project, CapEx related to earthworks and construction related water dam escalation, authority admitted our PowerLine environmental impact assessment, for out of pipe workshops have been completed by the end of the Q2 of 2023. And a final public hearing has been scheduled for the Q3 of 2023. 2023 CapEx guidance has been revised to between $140,000,000 $160,000,000 This does not affect project total CapEx nor target production starting the second half of twenty twenty five. Thank you for your attention, and I will hand the call back to the operator to open the line for questions.

Speaker 2

Operator, please go ahead.

Operator

Thank you. We will now begin the question and answer session. There are no questions in the queue. I'll hand the call back over to Mr. Garcia for closing remarks.

Speaker 2

Well, before we finish today's conference call, thank you very much for making the time to join us today. Additionally, I would like to invite you to our Buenaventura's Day that will be held on December 4 in New York, and the invitations will be released today. Thank you again and have a wonderful day.

Operator

Ladies and gentlemen, that concludes Buena Ventures' Q2 2023 earnings results conference call. We would like to thank you again for your participation. You may now disconnect.

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Compañía de Minas Buenaventura S.A.A. Q2 2023
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