Earnings Call Transcript
BUENAVENTURA MINING CO INC (BVN)
Earnings Call Transcript - BVN Q3 2023
Operator, Operator
Good day, ladies and gentlemen. And welcome to the Compania de Minas Buenaventura Third 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. At this time, I would like to introduce your host for today’s call, Mr. Gabriel Salas, Investor Relations. Mr. Salas, you may begin.
Gabriel Salas, Investor Relations
Good morning, everyone, and thank you for joining us today to discuss our third quarter 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 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. Juan Carlos Salazar, Geology and Exploration Manager; 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’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 October 30, 2023. Let me now turn the call to Mr. Leandro Garcia.
Leandro Garcia, CEO
Thank you, Gabriel, and good morning to all, and thank you for joining us today to discuss the quarterly results of the company. On Slide 2 is our cautionary statement, the important information that I encourage you to read. We assume that you have already read the results reported yesterday. Moving on to the next slide. Our presentation will cover the five main topics shown here, and we will be followed by our Q&A session, where our team will be happy to answer your questions. Let’s begin with some overview of the key highlights for the first nine months of 2023. Our EBITDA from direct operations for the first nine months of 2023 has witnessed a 27% increase compared to the same period of the previous year. It is worth mentioning that the figures do not include the $300 million obtained last year from the sale of our stake in Yanacocha. Our cash position remains strong in the third quarter of 2023 due to a strong performance at El Brocal. We are pleased to share that our dividends received from Cerro Verde during the quarter have contributed to $49 million, strengthening our overall financial performance. It is important to note that Cerro Verde has a record in copper production during the third quarter of 2023 of 430,000 tons per day, representing 255 million pounds of copper. After completing the processing plant operational readiness, we have successfully resumed operations at Uchucchacua on October 29, and also received approval for the Yumpag project’s Environmental Impact Assessment on September 7, enabling Buenaventura to perform metallurgical tests for up to 125,000 tons of ore from Yumpag’s pilot scope. We are determined with our commitment to sustainability and responsible mining practices while fostering production. Although operations at El Boral, specifically, the Colquijirca Tajo Norte mine, have temporarily been suspended until the approval of the Environmental Impact Assessment. We are able to continue focusing on increasing underground production to 12,000 tons per day as planned for the next two years. Our consolidated production for copper, silver, and gold across all the last three quarters has had the following results: 44,000 tons of fine copper, thanks to the record production at El Brocal. We are on track to achieve the upper range of the guidance; 4.9 million ounces of silver, being El Brocal its main contributor during the fourth quarter of 2023, while Uchucchacua and Yumpag will contribute almost 2.8 million ounces to reach the full year guidance; 411,000 ounces of gold with steady production from El Brocal. Moving on to our cost structure in Slide 5, you can see that our all-in sustaining costs have increased by 34% compared to the nine-month period of last year. This is primarily explained by the production decrease at La Zanja, Tambomayo, and Coimolache. However, it is important to mention that these figures do not include El Brocal and Cerro Verde, which performed excellently in terms of costs during the third quarter of 2023. Moving on to costs applicable to sales trends. As you can see, the prioritization of copper ore at El Brocal with better operating margins is translating into a 10% cost reduction in the last quarter. Silver costs applicable to sales have increased 29% year-over-year, primarily driven by lower head grades at Julcani and Tambomayo. However, we expect to reduce costs during the fourth quarter of 2023 with the contribution from Uchucchacua and Yumpag silver houses. Gold costs applicable to sales have remained relatively flat year-over-year, despite the reserve depletion at La Zanja and lower production at Tambomayo. On the next slide, we are showing the free cash flow generation. During the third quarter of 2023, we have increased our cash position by $20 million, thanks to the excellent performance from El Brocal and the dividends received from Cerro Verde. The EBITDA to free cash flow reconciliation is explained by the following breakdown of the inflows and outlook. El Brocal, Tambomayo, and Orcopampa have been the main contributors for the period of nine months of 2023. While La Zanja, Julcani, and Uchucchacua had a negative EBITDA due to lower production for the first two assets, we expect to have a positive EBITDA for the fourth quarter, thanks to the resumption of Uchucchacua and the contribution of Yumpag. As we have mentioned before, Buenaventura is going through a growth phase with expected CapEx related to Yumpag and San Gabriel. This has been partially offset by income taxes and the dividends received from Cerro Verde. Moving on to Slide 7, we are focusing our pipeline on the projects that have more than 10 years of life of mine. We also have a diversified portfolio of projects in each stage of the viability cycle, enabling Buenaventura to continuously deliver new projects in the following years. The following slides illustrate our main two projects, Yumpag and San Gabriel. We are relaunching a new Uchucchacua with the Yumpag mine, almost 6 kilometers away from the current mine. This recent restart will extend the life of the mine by around 15 years. Yumpag has successfully obtained its environmental permit and has submitted the financial authorization for the deposit depletion. In November, we will start processing ore from Camila with a permit that allows us to treat up to 125,000 tons of ore from the pilot scope. Moving on to Slide 10, in the next year, Buenaventura will be focusing most of its efforts on the San Gabriel project because it will be a relevant contributor to the company’s value. It will add more than 14 years of life of mine to the company. In this slide, you can see the progress of the project quarter-by-quarter. By the following quarter, we expect to start field work with the underground contract. On the next slide, we show the earth movement activities for the processing plant facility. On Slide 11, you can see the layout of the future plan for the San Gabriel project, with its crushing equipment on the left of the picture, going through the milling and grinding area to finally reach the carbon leach area. We expect to complete 100% of this facility by the first half of 2025. On the next slide, we show a couple of pictures of other components of the project that are processing and planned, such as the mine pond and water treatment plant on the top left. Also, the San Gabriel definitive campsite and the waste dump facility. At the bottom of the slide is the underground portal with its ventilation system. Finally, I would like to finish the presentation with a couple of closing remarks. San Gabriel construction will progress faster as the main contractors are already on the project. Total CapEx for the project remains unchanged, and the start of commercial production for the second half of 2025 is maintained. Uchucchacua was successfully restarted after two years of care and maintenance. Yumpag’s impact environmental permit was approved, and production will start in November. El Brocal has a record production of copper this year. Despite the open pit temporary suspension for the nine months of 2023, El Brocal has consistently reduced copper cash costs by 10%, confirming Buenaventura’s effort to optimize costs. Thank you for your attention. I will hand the call back to the operator to open the line for questions.
Operator, Operator
Our first question today comes from Carlos De Alba from Morgan Stanley. Please go ahead with your question.
Carlos De Alba, Analyst
So first question is regarding Tambomayo. In the explanation of the production performance, it is noted that in order to reach the mine’s upper zone, you were required to do more rehabilitation, and then you will be able to access this high-grade ore. When would you be in a position to reach this high-grade zone and how much expenses - or capitalized expenses will you have to incur in order to do so?
Leandro Garcia, CEO
Thank you, Carlos, for your question. Actually, yes, that ore is in the upper part of the mine. But I will let Juan Ortiz give more explanation of the timeline to reach that core. Please, Juan Carlos.
Juan Carlos Ortiz, Vice President of Operations
Thank you, Carlos, for the question. In the upper part of Tambomayo, we are already there. We are mining that area. We expect this year to mine at a certain pace, but due to the rock condition and the ground condition, we need to slow down the rate of extraction from this area. We need to do more reworks on the ground support and ancillary accesses for the area to have more flexibility to mine the upper area of the mine. So we are already there. We don’t need extra CapEx to add this area into production. The only difference is the production rate is lower than we expected. So we are carrying this production from 2023 into 2024, and the production in that area, or the grade in that area is primarily silver. It is around five to seven ounces of silver, two to three grams of gold. So it is a substantial production of silver coming from this area, and now we are offsetting this production with other areas of Tambomayo that are more on the gold value than the silver. That is the difference that you see in our guidance for the rest of the year 2023.
Carlos De Alba, Analyst
Another question is on Julcani. Clearly, the mine is losing money, cash cost to sales of 26% in the third quarter. But it is mentioned that there is a new zone of gold and copper that will begin production during the fourth quarter. Would this - I mean can you talk a little bit more about this zone? And what the implications would be for cost and production? Is this going to allow the mine to turn to the black and make money?
Leandro Garcia, CEO
Yes, of course, Carlos. Actually, the difference against our budgeted production is the reconciliation of the grades - the actual grade will reach this quarter and during 2023. However, we have - we are working on this new area called Rosario. And well, Juan Carlos will give you a broader perspective of what we are finding there. Please, Juan Carlos.
Juan Carlos Salazar, Geology and Exploration Manager
Yes. In Julcani, you see the footprint of how it looks like. We have a core area at the center of the deposit, where we have the main, I would say, from a geological point of view, the hotter area, and it is surrounded by a ring, where we have all the lead silver mineralization. We are producing right now - and historically, we have been producing most of our recent silver production from the ring. In that mine, we are hitting now lower-than-expected grades in the stock that we had planned for 2023. The Rosario area is at the center of the deposit, so it is not far, maybe 500 to 400 meters from the existing installs in the area. So we share a lot of infrastructure with the area. This area was originally mined many years ago in the upper levels. Now we are accessing this area below at the 16th level, and we've hit the same vein that we have some evidence in surface where we have thickness with a higher copper and gold grade than we had in the past in the upper area. Several of them are in the range of five grams of gold, and three to four percent copper. We believe, based on the development of this area and the evidence we are observing, this area will become a significant contributor for Julcani in the coming two years. We need to continue exploration and development in this new area between 2024 and 2025 to have a substantial production asset value from this area. So we have continuous operation from the silver areas, where we are trying to catch the high-grade areas and develop in parallel the Rosario area. Altogether contributes to the same cost basis. That is the reason the cost of Julcani is a little bit higher because we are putting everything that we do as expense development in the Rosario area in the same basket as the mine.
Carlos De Alba, Analyst
Okay. So Juan Carlos, cost will increase, but ultimately, this new area will make the mine profitable?
Juan Carlos Salazar, Geology and Exploration Manager
Yes, that area - the area. This year and next year, we will invest in developing this area. It will take at least 12 to 18 months to develop and put this area into full production. To be a substantial part, maybe 25% to 30% of the contribution in production in Julcani will come from this area. Of course, we need to complete all the tests and be sure that everything goes fine in the site, along with assuming high grade for the mine - historical mine. So for the next 12 to 18 months, we will have a kind of higher-than-expected costs, and then we will deliver the additional production from Rosario mine.
Operator, Operator
Our next question comes from Cesar Perez-Novoa from BTG Pactual.
Cesar Perez-Novoa, Analyst
I have two questions. The first would be on Yumpag. Buenaventura kept the fourth quarter 2023 target date for start-up production unchanged. Is there a commercial volume that we should consider from this asset in the final quarter of the year? And if so, at what cost should we assume for modeling? And my second question relates to the Marcapunta underground mine. You’re increasing production from 10,000 tons per day this year to 12,000 tons per day over the next two years. Could you fine-tune the date for this capacity increase and perhaps guide on the potential copper volume that we should anticipate from the asset in the future?
Leandro Garcia, CEO
Thank you for your questions. Please, Juan Carlos.
Juan Carlos Salazar, Geology and Exploration Manager
Yes. On the first question about Yumpag, we are starting a campaign of about 120,000 tons of ore as a part of the final stage of the exploration permit. We have licensed to process around 120,000 tons of ore into our Uchucchacua processing plant. So we have already started doing this test. This is a very high-grade ore of over 20 to 25 ounces of silver. So the idea is to produce, as we put in our guidance, in the order of almost two million ounces of silver in the last quarter that we put in our guidance coming from this area. The production cost for this production in Yumpag is in the range of $11 to $12 per ounce of silver. So this relates to Yumpag. When we have the operational license, we will continue mining the same ore body from 2024 and move forward at a rate of 1,000 tons per day, with an average rate of around 20 to 22 ounces of silver per ton. So this is a substantial asset for us. It is a very low cost for the combination of the Yumpag and Uchucchacua mine. Regarding the El Brocal mine, we are now at a production rate close to 11,000 tons per day. In 2024, our target is to stabilize the production at the rate of 11,000 tons per day and keep developing the mine to increase the throughput in 2025 to around 12,000 tons per day. The target is to reach 12,000 tons per day by the middle of 2025. That is the target from the throughput point of view. Regarding copper production, our bottom part is going to have a historic evolution in the rate of 50,000 tons of fine copper. We are looking for opportunities to go over that by increasing not only the throughput but also the recovery opportunity that we have basically on the cost side. As you see, we are reducing the producing cost from the mine, and that is our main target.
Leandro Garcia, CEO
If I may add, there is no need for any CapEx to the plan. We have plant capacity enough to treat the 12,000 tons per day. All the efforts are in the mine site to extract the 12,000 tons per day from the mine.
Cesar Perez-Novoa, Analyst
Okay. And just to be very clear, my connection is not very stable. But if I heard you correctly, you will be hitting a stable production of around throughput rates of 11,000 in 2024. In the middle of 2025, you will be hitting 12,000 tons per day, and your minimum copper production would be in the range or at minimum 50,000 tons, right?
Juan Carlos Salazar, Geology and Exploration Manager
That is correct.
Operator, Operator
Our next question comes from Omar Avellaneda from Prima AFP.
Unidentified Analyst, Analyst
I have a couple of questions regarding Cerro Verde. Do you expect to receive dividends during this last quarter of the year? Do you have any information regarding the tax dispute between Freeport and the Peruvian government related to these royalties?
Leandro Garcia, CEO
Thank you, Omar, for your question. I will answer the first regarding the dividend. We know and it is known by everybody that Cerro Verde has an excellent performance. There is some room for dividends, but the decision has not been taken yet. So we expect, of course, some dividends, but there is no 100% confirmation. With respect to the trial in CIE, we expect news in May next year regarding some confirmation or communication from CIE about the results of this trial.
Unidentified Analyst, Analyst
Okay. And if I may, an additional question. Do you have any news regarding this consulta player process in Yumpag?
Leandro Garcia, CEO
Yes. We are working very closely with the Minister of Mines. But maybe here with us is Alejandro Hermoza that can give us more color to your answer.
Alejandro Hermoza, Vice President of Sustainability
Yes, this process is currently under evaluation from the social office of the Ministry of Mines. They’re assessing all the processes that we have had in the past in that operation, and we should have some results from them or some instruction from them in the following weeks.
Operator, Operator
Our next question comes from Joshlin Jensen from Bluecore.
Unidentified Analyst, Analyst
Okay. I want to ask about CapEx. If you can provide us more color regarding the CapEx expected for 2024 for the growth projects and also for total and how much CapEx do you expect for Perapice and when do you expect to start building this project and how do you expect to fund that CapEx? We have seen that, in this quarter, you have reduced leverage. But do you expect to take more debt or which are the available credit lines that you already have?
Leandro Garcia, CEO
Thank you. Thank you very much for your questions. It is a relevant issue. Well, the CapEx for 2024 will be mainly - all the efforts will be for San Gabriel. For the sustaining CapEx, normally, when Buenaventura plans a budget of $80 million, it will be around 20 to 30 million, but maybe Daniel can help us with more exact figures that we are managing at the moment.
Daniel Dominguez, CFO
Leandro, thanks for the question. For the year 2024, we are expecting a total CapEx of around $300 million. From this, San Gabriel will require between $180 million to $200 million. For Yumpag, we will disburse around $25 million. For Perapice, during 2024, we expect to disburse around $15 million. Going to the second part of your question, how are we going to fund these cash requirements - these short-term cash requirements? We count on cash that we are generating, which is around $200 million of EBITDA. We also have a cash position of also $200 million. We count on the dividends from Cerro Verde. If there is a gap that we estimate could be around $100 million or $150 million for a short period of time, we are very close to obtaining committed revolving facilities with local banks in the order of $150 million. We already have $50 million for a committed line. So that will be the liquidity that we need for the funding of, basically, San Gabriel, Yumpag, and our maintenance CapEx.
Unidentified Analyst, Analyst
Okay. If I understand correctly, then you said that you already have $50 million in committed credit lines. And do you expect to increase it up to $150 million?
Daniel Dominguez, CFO
Yes, that is correct.
Operator, Operator
Our next question comes from Tanya Jakusconek from Scotiabank.
Tanya Jakusconek, Analyst
Great. Sorry, I fell off the line and had to dial back in. So I really apologize if you’ve already answered these questions. But I just wanted to know on San Gabriel, where are we on the power line permit? I thought we were going to get it in Q4 of 2023. I just wonder where we are? Did we get it yet? Or are we expecting it?
Leandro Garcia, CEO
Thank you, Tanya, for your question. Renzo is with us. He can give you more detail on the process.
Renzo Macher, Vice President of Projects
Sure. We finished all the workshops with the communities. In November, we should have the public assembly. So probably in December, we should have better news. Well, no news. Work is fine so far.
Tanya Jakusconek, Analyst
Okay. And then maybe, Daniel, again, I apologize if you talked about the Cerro Verde dividend. I think you had given guidance for about $120 million for this year and next. Is this something that we still should be thinking about? Or are we getting anything else from Cerro Verde this year?
Daniel Dominguez, CFO
We are very optimistic about the cash generation of Cerro Verde. They are generating $2 billion of EBITDA. They have already distributed a total of $100 million. And of course, we expect an additional dividend if the results come in the fourth quarter as we expect.
Tanya Jakusconek, Analyst
Okay. And then can I just ask one final question, just on the Investor Day that you’re hosting in New York on December 4. I’m just trying to understand - because it is at the end of the year, and I’m just trying to understand at that Investor Day on December 4, are - besides the updates on the assets like you’re giving us and obviously, the development pipeline, will we be getting updated reserves and resources on December 4?
Leandro Garcia, CEO
Yes, Tanya. We will have news on that day. That is one of the reasons that we postponed the Buenaventura Day to the last month of this year. So we will have news for you.
Tanya Jakusconek, Analyst
Okay. So we will have updated year-end 2023 reserves and resources for the company?
Leandro Garcia, CEO
Yes, correct.
Tanya Jakusconek, Analyst
Yes. Okay. And then one other thing, will you be providing us 2024 and longer-term guidance as well at the Investor Day?
Leandro Garcia, CEO
Yes. Yes. We will be preparing to give you those numbers.
Tanya Jakusconek, Analyst
Okay. Is it just - I’m just trying to understand, is it 2024 or is it more years than 2024?
Leandro Garcia, CEO
2024 and 2025.
Tanya Jakusconek, Analyst
2025, Okay. And then yes. Just I guess my final question for you is just any updates on - just geopolitically, what is happening in Peru for us that are far away and just read what is on CNN? So maybe we could have someone who actually lives in Peru, give us an insight on what is happening. And again, the protests that we keep reading about, et cetera. So maybe it would be really nice if someone can provide some insight into what is happening in Peru from a geopolitical standpoint, for investment, and also for anti-mining and protests.
Leandro Garcia, CEO
Yes, Tanya. Well, things are still - the political situation is steady. The government, the current administration is trying to make all the efforts to move more investment, more private investment. The President, Boluarte, is having some trouble, but yesterday, the Congress authorized her to go to the United States to promote our investment in Peru. Given the situation and the opportunities we have as a country, there is an effort from the Minister of the Economy to maintain investment despite this difficult economic situation due to the lack of investment we have had in the last two or three years due to political instability. But we are optimistic that the country is going in the right direction. We think that Otarola, the Prime Minister, is managing the situation and the different needs that the country has. We feel that we are much better than we were one year ago. So we are very optimistic.
Roque Benavides, Chairman
Well, if I may say, the fact of having the Prime Minister support the industry is helping the industry to develop projects. The recession requires far more investment. Mining is the main source of revenue for the country.
Leandro Garcia, CEO
Thank you, Roque.
Tanya Jakusconek, Analyst
Okay. So Roque, you think that we are going to see a much more pro-investment environment for investment in Peru going forward because of the recession and the current administration's actions?
Roque Benavides, Chairman
There is no doubt about that. I think the president's travels to Germany and the United States show the interest to attract more investments.
Operator, Operator
Our next question is a follow-up from Carlos De Alba from Morgan Stanley.
Carlos De Alba, Analyst
Yes. On El Brocal, just - apparently, costs will be increasing in the fourth quarter as the company recognizes the deferred shipping costs associated with the lead and zinc inventory. Can you provide a little bit more color on costs that were somewhat elevated in the third quarter? So it would be very interesting to know what the implications will be on this comment that you made.
Leandro Garcia, CEO
Juan Carlos, please?
Juan Carlos Salazar, Geology and Exploration Manager
Yes, we have a price-stripping account deferred receiving in our books. That accounts for about $51 million. Because we finished mining the current phase of the open pit, we are speeding up the amortization of this amount into - up to the end of this year. So it is going to be accelerated amortization because the open pit penalized, not only the mining but also the processing of the ore that we broke up to September this year. All the stockpiles are going to be processed up to December of lead and zinc. Based on that processing rate, we will be doing the amortization of the $51 million that we have in the deferred stripping account in the El Brocal mine. This is pretty much the main impact on cost because it is a substantial amount in the coming months. It started in the third quarter, and it is going to follow the same rate of amortization in this fourth quarter of this year.
Operator, Operator
Our next question comes from Rodrigo Marietta from AFP Integra.
Unidentified Analyst, Analyst
One question. What are the actions you’re currently taking to start San Gabriel in the second half of 2025?
Leandro Garcia, CEO
Sorry, Rodrigo, I didn’t hear the question as well as I wanted. Can you repeat it?
Unidentified Analyst, Analyst
Yes, of course. So we - can you explain more maybe on the actions you are taking to start the production of San Gabriel in the second half of 2025, because the construction percentage of the CapEx you have already deployed is at 14%. And you changed your guidance. So maybe if you can give a little more on where the actions you are doing right now? And if you don’t expect any issues with communities? For example, what actions are you taking with communities so that CapEx could be deployed efficiently or not?
Leandro Garcia, CEO
Okay. Thank you for your question, Rodrigo. Renzo, maybe you can talk about that.
Renzo Macher, Vice President of Projects
Sure. Thanks for the question. This year has been a year where we focused on all the preconstruction services so we can receive the main construction teams on-site. By the end of this year, we should have the contractors confirmed for the mine work - or we are assigning the S&P contract and the concrete installation in November. We are going to be focusing on full construction activities during all of 2024. In parallel, we started our operation readiness group. A year from now, we will have all the manuals and we are going to start training our people so we can initiate commissioning in the first or second quarter of 2025. Socially, we have a good relationship with the communities. No major problems there. We keep working with them. We have about 30% of our people from within the region, and we have a good working relationship with the communities.
Unidentified Analyst, Analyst
Okay. And as of now, do you have an estimation of how much you would spend to alleviate any circumstances due to this phenomenon? Or do you currently have any estimations?
Leandro Garcia, CEO
Well, we are primarily reviewing our capacity to have the stock and concentrate inventories. We are also reviewing the alternative routes we have to access our mines. So we are focusing on both main issues, all the inflow of material we need and how we are going to get out with our concentrate. We are planning which routes we can use to establish how good and prepared our current routes are and the capacity of how much stock we will have for our concentrates.
Operator, Operator
Our next question comes from Juan Cruz from Morgan Stanley.
Unidentified Analyst, Analyst
In light of the CapEx and the projects that you have planned for the next few years, can you tell us what is the minimum cash level that you feel comfortable holding, given where we are in the cycle? And also, how are you guys thinking about the bond maturity in 2026? Understanding that there’s still enough time to figure out a plan, but given where we are in the rates environment, how much does that cost you now? And what would the potential refinancing costs be? How are you thinking about that, if you are?
Leandro Garcia, CEO
Thank you for your question. Daniel can provide the answer.
Daniel Dominguez, CFO
Thanks for the question. For the minimum cash that we consider, we normally estimate two months of OpEx, which is around $50 million. So that would be our minimum cash. The second question regarding your second question is that we have a plan for the bond maturity, which is in 2026 in July. We are considering starting the renewal process at the beginning of 2025. We should count on a facility or a bond renewal plan executed by July 2025. We are evaluating the interest rates. As of now, they are at a very high level, but we expect that in 2025, they should have substantially decreased.
Unidentified Analyst, Analyst
Okay. And just as a follow-up, given where your cash balance is, which is a healthy one right now at $220-something million, at least as of September, should we expect that you come close to your minimum at any point? Or is that not in the cards?
Daniel Dominguez, CFO
No. If we are getting close to our minimum, we will exercise our liquidity that we have with the local banks.
Unidentified Analyst, Analyst
And those facilities are committed?
Daniel Dominguez, CFO
We have one which is committed. And the other ones, we are looking to be committed as well.
Operator, Operator
And our next question comes from Joslin Jensen.
Unidentified Analyst, Analyst
Okay. Just regarding production and the strategy you have going forward. And your expectations for this year in Uchucchacua and Yumpag will produce around, well, up to 2.8 million tons just in the - you’re assuming that, that will be just in the fourth quarter?
Leandro Garcia, CEO
Joslin, million ounces, no?
Unidentified Analyst, Analyst
Yes. Yes. Sorry. Million ounces of silver.
Leandro Garcia, CEO
Juan Carlos, please go ahead.
Juan Carlos Salazar, Geology and Exploration Manager
Yes, this is our guidance. As I mentioned, Yumpag is going to be processing this year around 100,000 tons, 90,000 to 100,000 tons of ore, with a grade over 25 ounces of silver per ton this year. Uchucchacua will be processing also around the same figure, around 90,000 to 100,000 tons of ore in the area of 10 ounces of silver per ton equivalent because it is a combination of polymetallic - basically polymetallic gold with silver, lead, and zinc. That equivalent grade of that material is in the order of 10 ounces of silver equivalent. So the combination of both that will be processed in campaigns - in batches in the Uchucchacua processing plant will bring us to the order of 2.5 million, 2.8 million ounces of silver by this last quarter of the year.
Unidentified Analyst, Analyst
And it will be correct, like to multiply it by 4 to get to that 2024 number more or less or not?
Juan Carlos Salazar, Geology and Exploration Manager
In the case of Uchucchacua, yes. In the case of Yumpag, probably we will be getting closer to the average grade of the deposit, more in the range of 20 to 22 ounces is the average of the mine, instead of 25 ounces that we are putting ahead of time for production for 2023. So it will be a little bit less production from Yumpag next year.
Unidentified Analyst, Analyst
Okay. And going forward, I saw in your presentation from Q2 that you are expecting to reduce the operating units. Could you give us more color about it, which operating units are you thinking to close?
Daniel Dominguez, CFO
This is in our presentation of the second quarter. Yes. Well, we don’t foresee any current operations to close. It is known by the market that we are struggling with reserves in Orcopampa and Tambomayo due to different reasons, but it is - maybe that is the reference you have, but however...
Unidentified Analyst, Analyst
Well, it says like - what - whether it is in the percentage is that you will have - that you actually have seven operations, and then you will reduce to five operations in 2026 and to - between three and five by 2030?
Daniel Dominguez, CFO
Well, we are concentrated in units that have more than 10 years of life of mine. All the efforts are to increase the loan of our mines. The strategy is to concentrate on those types of mines. Over time, if any of the mines do not have that characteristic, at that moment, we will decide to either sell or not continue working in that mine. Our strategy is to focus on mines that have more than 10 years of life of mine. That is the message.
Unidentified Analyst, Analyst
Okay. And the revenue mix will still be 50-50 between base metals and precious metals?
Leandro Garcia, CEO
We foresee a little change. We are going to be more concentrated in sales coming from copper. It could be around 55% to 60% of our revenue coming from copper in the following year due to the increase in El Brocal and support from Cerro Verde, while the decrease in production we expect from Orcopampa and Tambomayo will be offset, of course, by our new project of San Gabriel in terms of precious metals where we are supported by San Gabriel and Yumpag and Uchucchacua.
Operator, Operator
And 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 management for any offline questions.
Gabriel Salas, Investor Relations
Thank you, operator. The first question comes from Lei Munoz from Forte Capital. What is the level of engineering of San Gabriel, detailed engineering at what percentage? And does the CapEx for San Gabriel include the working capital of the ramp-up?
Leandro Garcia, CEO
Thank you, Lenny. Renzo can give us more color for that question.
Renzo Macher, Vice President of Projects
Sure. We are currently at 90% completion of the engineering. At this point, this indicates that we have enough engineering to place all the purchase orders and service orders. The remaining 10% is usually field engineering, supporting changes during the construction. Yes, it does include the working capital, everything we need until we move to commercial construction.
Gabriel Salas, Investor Relations
Thanks, Renzo. The second question comes from Tim Lambert from Lumi Sales. What is the timeline for the resumption of mining at Tajo Norte?
Juan Carlos Salazar, Geology and Exploration Manager
We are planning to resume operations of the open pit depending on the permits and the timeline for getting all the permits done. But our target is to be receiving - stripping by 2026 and production from the open pit of the processing plant by the end of 2026 or early 2027.
Gabriel Salas, Investor Relations
Thanks, Juan Carlos. The third question comes from Javier de Romania from Nicolas Partners. What guarantees does the company have for the credit lines?
Daniel Dominguez, CFO
These credit lines are unsecured. We don’t foresee any guarantees related to these credit lines or any revolving facility that we can obtain for the following years.
Gabriel Salas, Investor Relations
Thanks, Daniel. At this time, there are no further questions. I would like to turn the call over to the operator.
Operator, Operator
Thank you. At this time, we will close today’s question-and-answer session for both audio and offline questions. I would like to turn the floor back over to Mr. Garcia for any closing remarks.
Leandro Garcia, CEO
Thank you, operator. Before we finish today with our conference call, I would like to thank you all very much for making the time to be with us. I would also like to remind everyone that we are organizing our Investor Day on December 4 in New York, and you are cordially invited. Thank you again. Thank you very much.
Operator, Operator
Ladies and gentlemen, that concludes Buenaventura’s Third Quarter 2023 Earnings Results Conference Call. We would like to thank you again for your participation. You may now disconnect your lines.