Good day, ladies and gentlemen, and welcome to the Compañía de Minas Buenaventura First Quarter 2024 Earnings Results Conference Call. Please note that this call is being recorded.

Good morning, everyone, and thank you for joining us today to discuss our first quarter 2021 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 Hermoza, Vice President of Sustainability; Mr. Renzo Macher, Vice President of Projects; Mr. Roque Benavides, Chairman; and Mr. Raul Benavides, Director. Before I hand 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 close. 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 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 April 29, 2024. Let me now turn the call to Mr. Leandro Garcia.

Thank you, Gabriel. Good morning to everyone, and thank you for being with us today to review the quarterly results of Compañía de Minas Buenaventura. On Slide 2, you'll find our cautionary statement, which contains important information I urge you to read given the current circumstances. Today, we will focus on our performance for the first quarter of 2024, highlighting key achievements and strategies moving forward. After the presentation, we will hold a Q&A session, and our team will be ready to address your questions. The next slide, please. I want to draw attention to a few key areas that contributed to our strong results in the first quarter of 2024. Our EBITDA from direct operations has risen by 83% compared to the previous year, mainly thanks to improved performance at El Brocal and Yumpag. This is also evident in a higher EBITDA margin of 38%, up from 28% last year. Operating income for the first quarter of 2024 reached $46.9 million, compared to $12.6 million in the previous year. Copper production increased by 26% year-over-year, supported by a steady production rate at El Brocal, which exceeded 10,500 tons per day in the underground mine. Silver production was 3.1 million ounces, significantly up from 1.3 million ounces in the same period last year. Out of this, 1.5 million ounces were from Uchucchacua and Yumpag, where we received the final mining operating permit sooner than anticipated. Ore production decreased by 4% year-over-year, totaling 36,500 ounces as we are now mining at lower rates in Orcopampa and Tambomayo. We are pleased to report that the dividends from Cerro Verde were received on April 26, which will bolster our overall financial standing. Buenaventura's capital expenditures in the first quarter of 2024 totaled $58 million, including $38 million allocated to the San Gabriel Project. Our cash position stands at $174 million, and our total debt is $699 million. We are continuing to reduce the company's debt, achieving a net debt to EBITDA ratio of 1.78x, the lowest in two years, and within our target range. Moving on to our cost structure on Slide 4, the all-in sustaining costs for the first quarter of 2024 have dropped by 58% year-over-year, mainly due to copper production at El Brocal and silver contributions from Yumpag. However, it's worth mentioning that some Yumpag costs are classified as capital expenditures. The normalized all-in sustaining cost is expected to be around USD 3,600 per ton of copper, still lower than last year. Regarding costs applied to sales, the focus on copper at El Brocal and the ramp-up of the underground mine is leading to a trend of continuous cost reductions. Silver costs have decreased year-over-year, primarily due to higher contributions from Uchucchacua and Yumpag. The normalized cash cost for silver, including Yumpag, is anticipated to be between $17 and $18 per ounce. The costs associated with gold have also decreased on both a year-over-year and quarter-over-quarter basis, mainly driven by higher grades and lower milling costs at El Brocal underground mines, despite lower grades at Tambomayo and Orcopampa. On the next slide, we will discuss free cash flow generation. In the first quarter of 2024, we reduced our cash position by $46 million, primarily due to significant capital expenditures, particularly for San Gabriel. The reconciliation of EBITDA to free cash flow is explained by the inflows and outflows related to El Brocal, Yumpag, and Orcopampa. As previously stated, Buenaventura is in a growth phase characterized by intensive capital expenditures associated with San Gabriel. The previously reported dividends from San Gabriel will be recorded in the second quarter of 2024. Moving to Slide 6, next year, Buenaventura will concentrate its efforts on the San Gabriel project. This slide shows the project's recent progress, now at 47% overall advancement as of the first quarter of 2024, primarily due to the full installation and operational concrete plan. A key milestone we are monitoring for the next quarter is the initiation of mine development tunneling and the commencement of SAG mill assembly. On the following slide, we display the completion of the definitive campsite, which has been fully operational since [indiscernible]. We have installed over 2,000 sleeping beds, considering both the definitive and organic concepts, alongside fully operational water treatment plants, offices, and dining areas. The next slide shows our progress on the processing platform, specifically the milling area where we plan to start assembling the SAG mill in the next quarter. In the subsequent slide, you can see the installation of the thickeners. In closing, I would like to make a couple of remarks. First, encouraging production resources at Yumpag are a clear indication of our success in delivering mining products. With final mine permits secured, we are now focused on achieving a stable and efficient production rate of 1,000 tons per day, which should lead to a considerable revenue increase in the coming quarter. The excellent performance at El Brocal aligns with our goal of reaching 11 tons per day by year-end, supported by a favorable trend in copper prices. Lastly, we are proud to report significant progress at the San Gabriel project, currently at an impressive 47% completion, keeping us on track to achieve our first gold bar in the second half of 2025. We are currently assessing the project capital expenditures to ensure accurate total costs while identifying opportunities to optimize the cost structure. We continue to work on transforming our mining operations into assets with over 10 years of mine life, focusing on optimizing them for greater cost efficiency. Thank you for your attention, and I will now hand the call back to the operator to open the line for questions.

And the first question will come from Cesar Perez-Novoa with BTG Pactual.

If I may, I have 3 questions. The first one relates to your guidance. Essentially, we have seen a meteoric rise in base and precious metals. And given the implications that it has for revenues and by-product credits, is management looking to review the volumes, the revenue, and EBITDA that you outlined in the previous call for this year? My second question relates to cost. There was an important 71% drop CAS in gold CAS at Coimolache to $1,000. Is this due to higher volume or specific initiatives? I believe you mentioned in the press release that the company could not place fresh ore in the pads, which makes me think that there may be some room for improvement. And finally, at El Brocal costs went down too and wanted to understand if this was due to efficiencies attained in the first quarter or if the company used stockpiled mined inventories to dilute the costs. Those would be my questions, gentlemen.

Thank you, Cesar, for your question. In terms of if we can change the guidance, we are evaluating all the operations daily. We may be able to change the guidance at the end of the second quarter if things are as we are thinking they will be. In terms of Coimolache, remember that last year, we didn't produce any ounces at Coimolache. So this is a comparison this quarter to the last quarter of the first quarter of last year. The information you have, with respect, we are not allowed to put more ore in production. It's true. We are just waiting for the permit to construct, to build the new platform to put more ore, and we expect that permit any moment. But the production will begin in the first quarter of the following year. So we should expect to increased production of gold ounces in the second quarter of 2025. And El Brocal actually, we are making many efforts to be more efficient. I pass the microphone to Juan Carlos; maybe he can provide more context on your question.

Thank you, Leandro, for the question. With the increase in the price of gold, there are many incentives to boost production. We are currently reviewing our mining plans and aim to operate closer to the upper range of our annual guidance. Any formal updates, as Leandro mentioned, will likely be shared during the next conference call. Regarding Coimolache, we took advantage of a favorable weather window at the end of December last year, which allowed us to place almost 200,000 tons of ore on the pad in the last few days of 2023. This contributed to our gold output in 2024 since that part of the operation was completed in the last quarter of 2023. Consequently, we have a positive outlook on Coimolache's costs. However, as Leandro noted, we halted the production of fresh ore in February this year. We are currently waiting for permits and the construction of new areas on the pad, and we expect the permit by the end of the year along with the construction. We anticipate that operations for breaking fresh ore will commence in the first quarter of next year, with gold ounces beginning to come from the pad in the second quarter of 2025. Therefore, in the next few quarters, Coimolache's costs will likely rise slightly since we are not processing additional fresh ore, and gold production is expected to decrease until we resume fresh ore production.

And regarding El Brocal, yes, there were a lot of improvements in the operation; we are close to 10.5 kilotons per day in production. We are looking forward to reach 11,000 tons per day by the end of the year. We are well on track for that purpose, and we are reducing costs. We have achieved this increase in production without any additional people or any expanded scope or track. It's just a matter of improvement. We put in an underground dispatch system that is helping a lot to increase the productivity of our equipment, and we are reaping the results of that investment from the previous quarter. So just more about the improvement and operational expertise that we are working on and the benefits we are realizing from that. Daniel, I think has a couple of additional comments for you, Cesar.

Good morning, Cesar. Just to put some numbers to your question regarding EBITDA. At the beginning of the year, we considered the metal prices of $8,500 for copper, $1,900 for gold, and $23 for silver. Our estimated EBITDA was between $250 million and $270 million. Today, we have higher prices, and considering $9,000 for copper, $2,100 for gold, and $2,500 for silver, in addition to the production from Yumpag that is coming along since March, we are estimating a consolidated EBITDA of between $300 million and $320 million. That would be the improvement of the additional EBITDA that we expect.

Okay. Daniel, so it's a large $50 million increase at the EBITDA level.

The next question will come from Carlos De Alba with Morgan Stanley.

I have a couple of questions. First, could you quantify the impact of not accounting for the costs of Yumpag in the P&L since they were capitalized according to the exploration permit? That was a pleasant surprise, but I would like to know how much of an EBITDA impact that represented since it was taken to CapEx instead of being recorded as a cost. Secondly, do you have any comments on Cerro Verde? We noticed that Cerro Verde paid $29.4 million in dividends for the second quarter, which is a decrease from the $41 million paid previously. Can you provide some insights on this? Should we expect this to be the new range moving forward, or do you anticipate an increase, similar to what Freeport has indicated?

Thank you, Carlos. Thank you for your question. Well, the impact of the cost assigned to the CapEx instead of the operating cost is kind of difficult to calculate, but we expect the cost of Yumpag will be around $16 per ounce—between $16 and $17 per ounce. Beginning with the second quarter, we will have the exact calculation reflected in our financial state. In the case of Cerro Verde, the dividends, actually, we were not expecting any dividends this quarter coming from the profit from them, which for us was a surprise. But still, we maintain the expectation to have a total of yearly dividends between $120 million and $150 million. We believe that with this level of prices, that figure can be fulfilled at the end of the year. I don't know, maybe Juan Carlos or Daniel want to add some comments.

Yes, regarding the Yumpag, we have a total CapEx of $8 million in the first quarter. That was not only part of the operation, but it's the whole package of construction, which includes breaking the ore and transportation of ore into the Uchucchacua facility. So as Leandro mentioned, it's kind of a bulk number, but probably more linked to the production, not only from the quarter, but for the entire year. So it's a number that needs to be taken with caution because it didn't match exactly the amount of ounces of silver that we produced in the quarter. It's a combination of proper CapEx and part of the effort dedicated to creating the ore and transporting the ore from Yumpag into the Uchucchacua processing facility. Maybe Daniel has some color or the specifics.

I would like to comment on Carlos's question regarding Cerro Verde. At this level of prices, Cerro Verde should be generating an EBITDA of around $1.8 billion. The working capital we expect is around $0.7 billion to $0.8 billion, with very small CapEx around $300 million to $350 million, which gives us a free cash flow of around $750 million. These numbers are based on copper prices close to $9,000. Having the minimum cash already in their balance, they should be distributing dividends of around $750 million, which gives us the $150 million that Leandro mentioned at the beginning.

Great. That would be great news. Just to follow up on that, Daniel. Is this—has this been approved by Cerro Verde's Board? Or is this just an expectation at this stage?

These are numbers—sorry.

No. Go on, sorry.

These are numbers that were shared by Cerro Verde, of course, at lower price of copper. We have adjusted them internally. But there is no—as you know, there is no dividend policy, but what they normally do is to pay dividends in excess of the cash that they have—over the minimum cash that they have, which is $500 million.

Our next question will come from Tanya Jakusconek with Scotiabank.

Daniel, I just have some very simple modeling questions for you, and then I have some other questions on the assets. So can I just start on the simple modeling questions? Can I just—your D&A was kind of low at $42 million in Q1, as was your G&A at $10 million and as was the CapEx at $58 million. Can you review with me what you're expecting for those 3 numbers for the year?

For the D&A, as you know, we—in the last 2 quarters of last year, we recognized the first stripping that we had in the asset for El Brocal reserves. So in the first quarter, it was a minimum of $5.5 million that we recognized related to the deferred stripping. In the third and fourth quarter, this amortization was over $20 million to $23 million. So what we expect for the following quarters is something about $35 million from depreciation and amortization.

$35 million a quarter for the next 3.

Yes, for quarter for D&A.

Okay. And then G&A?

G&A. As you know, we have sold Contacto; there is a decrease in G&A from that. We are not considering any more the Contacto figures. We have also done other adjustments to our expenses. For example, we have reduced the size of our location, our headquarters. So we expect around $12 million of G&A per quarter.

Okay. Perfect. And then the CapEx, which I think was originally guided around $300 million for the year, it looks like you would have only done $58 million in Q1. So is that $300 million still viable?

Yes. San Gabriel should be catching up the rate of expenditures. So we still believe that the total CapEx for this year should be between $300 million and $320 million.

Okay. All right. That's perfect. Those are the easy ones. Maybe still to you, Daniel, because this does impact the balance sheet. Can you just give me an update? I know on the Q4 call, I asked about the sale of the Yanacocha royalty. I thought we mentioned it would be done in April. Can we just talk about the balance sheet? Yes, we are going to get monies coming from the Cerro Verde dividend, which is great. But can you talk to me about what else are you seeing in terms of sources of cash besides your operating cash flow that's coming from your mine, but other sources of cash from sales and/or banks and lending?

Yes, apart from our operating or EBITDA generated by our operations, we expect the sale of one asset. We should be receiving this year between $180 million and $200 million from that sale. Then we expect the Cerro Verde dividends, which could be between $120 million and $150 million. In addition to that, we have already secured 3 revolving credit facilities with 3 local banks. These facilities are up to $200 million. Currently, they are undrawn, but we will probably use them between the third and fourth quarter to fund any requirement for San Gabriel.

Okay. And the one asset sale, is that an asset or a royalty? There's a difference; one is an asset and one is the royalty.

It's a royalty.

It's a royalty. Okay. That's helpful. And then if I could ask one more question. I am very interested in San Gabriel and what is happening there. From the slides, it seems that you have done quite a bit. You have the SAG that you have to assemble; you have the underground tunneling—the development of the underground ramp. And I assume it's ramp on additional declines and levels. Can someone just walk me through the second half of this year into 2025, again, what needs to be done? Daniel, for you, the last capital, I remember on this mine was $450 million to $470 million. Can you let me know how much we have spent to date and when we're getting this new CapEx number?

Of course Tanya. Here with us is Renzo Macher. He can explain to you all your questions regarding San Gabriel.

Hi, Tanya. We are making significant progress in San Gabriel, as shown in the pictures. Earth moving is no longer a concern for our timeline. We have begun placing concrete, and our mechanical steel and piping contractor is on site, so we anticipate substantial advancements in that area. The underground contractor for mine development is also on site, and we will soon see the initial stages of mine development. The electrical and signal contractor is expected to finalize their contract by late May or early June. Therefore, you can expect to see all three major contracts in operation, which encompass nearly all of them, with the larger contracts fully engaged and producing. Additionally, we have completed 98% of engineering and procurement, so our focus is on managing these advantages for the benefit of the project.

Okay. So these 3 contracts are going to be placed, looks like in Q2. So the concrete, steel, the underground development, and the electrical, right? These 3 are going to be placed in—or awarded in Q2. Then you're going to have all of that work done from Q2 onwards. And then when do we actually expect the mill to start to turn—wet commissioning, dry commissioning? When are we expecting that?

We already have, from those 3 contracts you mentioned—the concrete, mechanical pipe, and steel—it's already signed and it's running now. Underground is fine and we’ll be producing now. The electrical and signal is the one that we need to finalize the bidding process. It should be finished in May and awarded in May. Now in the pictures, you can see that we are constructing the mill already. The first foundations have been laid. We’re going to be finishing construction towards the early second quarter of next year, and that's when the commissioning will start.

Okay. And how long do you think commissioning will take? Is it like 60% of capacity for 30 days in terms of getting to commercial production?

Towards early fourth quarter, we shall be producing.

Okay. So Q4, it's going to take you 2 quarters to go to commercial.

Yes. I mean we are very advanced in construction, so we can start commissioning earlier, for sure.

Okay. Okay. So that commercial, I should—yes, I should start thinking commercial in Q4. That’s when we start taking this through the income—through revenue.

Yes, Tanya. We are still evaluating the total CapEx. We will have a better figure for the next quarter conference call. But we expect—from the initial CapEx of $470 million, we expect around a 10% to 15% increase. We have already disbursed, since 2022 until the end of last quarter, $220 million for San Gabriel.

Okay. That's great. And then I guess, in Q2, can someone give me an idea about when you're doing your development, how the development is coming in terms of costing for the underground as well?

Tanya, if I may pass the microphone to Aldo, we want to provide a little more color about the sale of Yanacocha.

Yes, Tanya. I want to clarify a little bit the timeline for the sale of the Yanacocha royalty. We have time until July 15. If we don't reach the target price, we can go to the second phase and ask for a lower price, first to the new one and then to the interested in that royalty. But the idea is to try to finalize that sale during this year. But in the first stage, we have time until July 15.

Okay. So if I understand correctly, you have until July 15 in this first phase. If you do not get the price you want, then you go to a second phase. And how does the second phase differ from the first phase? Is it just different parties?

Only a lower price. Only a lower price.

Only a lower price, okay? So what about then—can you go back to Newmont? Because Newmont, I think, has the right of first refusal on it?

It's a right of first offer. It's a little bit different, but we have to ask for a price from Newmont. If they don't accept to buy at that price, we also can go to the market again. This is our deal.

Okay. Got it. Okay. All right. So if we don't get anything by July 15, then we're going to phase 2.

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 Gabriel Salas, Investor Relations Officer, for any webcast questions.

Thank you, operator. The first question comes from Orlando Barriga from CrediCorp Capital. Can you please comment on commercial deductions? They decreased on a per ton of unit sold basis, so I would appreciate some color on that.

Thank you for the question. It happened because two things in the market. The first one is that the commercial deductions have gone down considerably. We have better commercial terms for this year. That's one of the reasons why the commercial terms are decreasing. And the second one was that we sold 13 dry metric tons of concentrate during the first Q with no worse in Brocal. That gives us, of course, better terms and lower deductions. Those were the two main reasons why the deduction was so low in this quarter.

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

That concludes the question-and-answer session for today. I would like to turn it back over to management for any closing remarks.

Thank you, operator. Before we finish today's conference call, I want to express my gratitude for making the time to join us and for your interest in our company. Thank you again, and have a wonderful day.

Ladies and gentlemen, that concludes today's conference call. We would like to thank you again for your participation. You may now disconnect.