Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) Q1 2024 Earnings Call Transcript April 30, 2024

Compañía de Minas Buenaventura S.A.A. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day ladies and gentlemen and welcome to the Compañía de Minas Buenaventura First Quarter 2024 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. Gabriel Salas Investor Relations Officer. Mr. Salas you may begin.

Gabriel Salas: Good morning everyone and thank you for joining us today to discuss our first quarter 2024 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. Raúl 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 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 29th, 2024. Let me now turn the call to Mr. Leandro Garcia.

Leandro Garcia: Thank you, Xavier. Good morning to all and thank you for joining us today to discuss the quarterly results of Compañía de Minas Buenaventura. On Slide 2, it's our cautionary statement, important information that we encouraged you to read because a couple of certainties severities. Today, we will be discussing our performance for the first quarter 2024, highlighting key achievements and strategies moving forward. After the presentation, we will be available for our Q&A session, where our team will be happy to answer your questions. The next slide please. I would like to highlight a few key areas that contribute to our strong first quarter 2024 results. Our EBITDA from direct operations for the first quarter has increased 83% compared to the previous year, primarily driven by improved performance at El Brocal and Yumpag.

This is also reflected in a higher EBITDA margin of 38% compared to 28% from the previous year. Third quarter 2024 operating income reached $46.9 million compared to the last year's $12.6 million. Copper production increasing 26% year-over-year, driven by steady provision rate at El Brocal, which surpassed 10,500 tons per day in the underground mine. Silver production reached 3.1 million ounces, a significant increase compared to the 1.3 million ounces produced last year for the same period. From this 1.5 million ounces come from Uchucchacua and Yumpag where we got approval of the final mining operating permit earlier than expected. Oil production decreased 4% year-over-year, reaching 36,500 ounces since we are now mining lower rates of Orcopampa and Tambomayo.

We are pleased to inform that the dividends from Cerro Verde were received on April 26 last Friday. These dividends will strengthen our overall financial standard. Buenaventura's CapEx in first quarter 2024 total $58 million, which includes $38 million allocated to the San Gabriel Project . Our cash position reached $174 million with a total debt of $699 million. We continued deleveraging the company reaching a net debt EBITDA ratio of 1.78 times, lowest in the two years -- in two years and within our target range. Moving on to our cost structure in Slide 4, please. First quarter 2024 all-in sustaining costs are reduced by 58% year-over-year, this reduction is primarily attributed to the copper production at El Brocal and see the contribution from June.

However, it is important to mention that part of the Uchucchacua, have been considered to be CapEx. Normalized all-in sustaining cost should be around US$3,600 per ton of copper, still below than the previous year. Moving on the cost applicable to sales strength. As you can see the prioritization of copper ore at El Brocal and the ramp-up in the underground mine is translating into a continuous cost reduction trend. Silver CAS has decreased year-over-year, primarily driven by higher contribution of to Uchucchacua and Yumpag Silver ounces, normalized cash including Yumpag cost is expected to be between $17 and $18 per ounce. Gold CAS has decreased year-over-year and even quarter-over-quarter primarily driven by higher grades and ore nil at El Brocal underground mine, despite lower grades at Tambomayo and Orcopampa.

On the next slide, we will be presenting the free cash flow generation. During the first quarter of 2024, we reduced our cash position by $46 million, primarily due to the intensive capital expenditures campaign which includes San Gabriel. The EBITDA to free cash flow reconciliation is explained by the following breakdown of inflows and outlets. El Brocal, Yumpag and Orcopampa have been the main contributor for the first quarter 2024. As we have mentioned before, Buenaventura is going through a growth based placed with an intensive CapEx related to San Gabriel. The previously reported dividend from San Gabriel will be registered in the second quarter of 2024. Moving on to Slide 6. In the next year Buenaventura, we will be focusing most of its efforts in the San Gabriel Project.

On this slide, you can see the projects, the Buenaventura progress reaching a 47% overall progress by the first quarter 2024, primarily driven by the full installation and operational concrete plan. The key milestone, we are closely monitoring for the next quarter is the start of the mine development tunnelling and the start of the SAG Mill assembly. On the next slide, we are showing the competition of the Definite Campsite that is fully operational since February. We have more than 2,000 sleeping beds, installed considering the definite and organic Campsite. Water treatment plant, offices and dining areas are fully operational. On the next slide we are showing the progress the processing platform. Here is the Milling area where we are planning to start the SAG Mill assembly during the next quarter.

And on the next slide, you can see the installation of the Thickener. Finally, I would like to finish the presentation with a couple of closing remarks, first, encouraging production resource at Yumpag a clear reflection of our success delivering mining products. With final mining permit approved, we are now focusing on achieving a stable and efficient production rate at 1,000 tons per day. This will be reflected in a significant increase in revenues in the following quarter. Excellent performance at El Brocal, in line with plan to reach 11 tons per day by the end of the year, supported by a positive trend in copper prices. Third, we are proud to announce that we have achieved a significant progress at The San Gabriel project. Now, standing at an impressive 47% overall completion.

On track as we aim of our first gold bar by the second half of 2025. Currently reassessing the project's CAPEX to ensure an accurate total cost while identifying opportunities to optimize the construction. We continue our efforts to transform our mining operations into assets with plus 10 years of Life of mine and focus on optimization them to achieve greater cost efficiency. Thank you for your attention and I will hand the call back to the operator to open the line for question. Operator, please go ahead.

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