Q1 2021 Compania de Minas Buenaventura SAA Earnings Call

[music].

Good day, ladies and gentlemen, and welcome to the companion de Minas Buenaventura first quarter 2021 earnings conference call.

At this time all participants are in a listen only mode. Please also note today's event is being recorded.

At this time I'd like to introduce your host for today's call. Mr. Rodrigo Escobar Investor Relations. Mr. It took apart you may begin.

Thank you.

Good morning, everyone and thank you for joining us today to discuss our first quarter 'twenty 'twenty 'twenty. One results today's discussion will be led by Mr. Lambda S E T.

Also joining our call today.

Now for your questions.

Let me guess CFO, Mr. Hong Carlos on fees like especially on the operations.

Martha Vice President of operations that you bet limit on promotion.

The sum total mall shop by strength.

They know that.

And so market.

For your money.

And also I may know Westwood our.

Mr Chairman.

Sure.

Yes.

Board member.

This conference call will include forward looking statements, which are subject to volume risk.

In fact D piece that.

Our actual results to differ materially from these statements.

Any such statements should be considered in conjunction with cautionary statements, we see our agencies and these factors discussions.

Colors for you to read the full disclosure concerning what wasn't moving statements. We see that press release, we filed April 29 2021.

In addition, it is important to note that these statements include expectations and assumptions, which will be shared related to the impact of COVID-19 pandemic.

As seen on slide two our forward looking statements.

So provides information on risk factors, including the effects related to going and doing.

That could affect our financial results.

In particular.

There is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means we're now into that he sold could change at any time and impact and the impact of COVID-19 on the company results and outlook is a best estimate basis based on.

Information available as of today's date.

Please note that in the interest of safety, where again utilizing a more beautiful approach in exercising social distancing.

This call this quarter.

This quarter, we will ask you.

So please bear that in mind in light of any potential technological difficulties, which would put you at this moment, let me turn the call over to Mr. Linda Garcia. Please go ahead.

Thank you Rodrigo.

Morning tool and thank you for attending this conference call.

Before we start the presentation, we would like to wish you your family and friends health and wellbeing.

Yeah.

We are pleased to present the results for the first quarter of 2020, one vocal but yeah in Minas Buenaventura.

We have prepared a powerpoint presentation, which is available in our webpage.

Before we go further please.

Take a moment to review the cautionary statement shown on slide two.

Let's consider gaucher related to that.

COVID-19.

Moving on to slide three.

Lights were as follows.

EBITDA from direct operations reached 30 382 million in first quarter 'twenty one.

For two near that $6 7 million reported.

First quarter 'twenty.

Third quarter for new one adjusted EBITDA, including US as a company reached 182 for 90 million compared to $31 million in the last quarter for you.

Last year in Brazil for.

Third quarter, two one net income.

Dean for compared to a net loss.

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$6 million for the same period in 2012.

First quarter 'twenty one exploration.

And.

Operating units increased to $9 3 million compared to 6 million third quarter last year.

This increase was due to an internal policy change to boost exploration activities by COVID-19 for as I noticed victim at some of our range.

Third quarter 'twenty, one capital expenditures were $13 1 million compared to $10 7 million for the same period is plenty for us.

For non intuitive cash position reached $225 4 million for the first for good for in 'twenty one.

Moving onto slide for financial highlights total revenues during the first quarter were 185 for $9 million, which shows a 62% increase comparing to.

Total revenues in the first quarter of 2012 increased commodity prices, excluding it supported that mix the net sales for years, despite reduced volume sold.

EBITDA from our direct operations in the third quarter of this year was $38 2 million or less income bartizan to negative <unk> 7 million dollar for the first quarter of joining from.

And we've been growing our IP rates in the quarter was $182 $9 million, which is significantly higher than the figure for this quarter. In 2020. This increase mainly comes from bedroom results from several revenue.

And the net income in this quarter was $18 $1 million compared to a net loss of eight.

One $4 million per year.

The Capex has increased to $13 1 million dollar in the third quarter of dwindling for anyone compared to $10 $7 million in the third for the tried and true.

The free cash flow in the first quarter of this year west.

$8.1 million compared to $22 $3 million of free cash flow in the first quarter 'twenty.

Moving on to slide five and six due to low production.

Total Golar will go for lunch in the first quarter of 2021, plus 662, 9000 ounces, which is 29% lower than the fee who reported on this for reported from the same quarter of the previous year. These degrees was mainly explained by lower production.

Yes.

These are attributable production for this quarter was three 5 million pounds with Jason line compared to the figure reported on the button here. This is mainly due to less production.

The first quarter of 2020, 193000 metric tons of zinc work for abuse at $20 or 27% decrease compared to the first quarter in 2000 for them. This is mainly due to a 47% decreasing production of.

And our tech what month.

In the case of blend equity production was for over 4000 metric tons in the first quarter of 'twenty for the one which is 37% lower in comparison to the first quarter of 2012.

Finally, our copper.

Total production for this quarter was 24000 metric tons in line with the figure reported in the first quarter of total trend.

Moving on to slide seven all in sustaining growth and cost applicable to sales.

The all in sustaining growth from our direct operations in the first quarter of 2021 decreased by 21%.

Who.

$1631 per ounce.

The cost applicable per sales for the first quarter of 2021 warehouse for for.

For both.

1295 years has gone up per ounce, which is 14% lower than a year ago for.

For silver 19 volume 39 U S dollar per ounce, which is 17% higher than a year ago for led.

1321 U S dollars per metric ton.

<unk> <unk> six per cent lower than a year ago.

For Copa.

5590 of for you is known for.

Metric zone reduced 8% higher in comparison to a year ago.

Finally, a subsea post applied to.

The sales was 2059 U S dollars per zone.

Which is 8% higher than the.

Moving onto slide eight pipeline project.

Here, we are presenting in one is not should the government development level for each one of our growth.

Moving onto slide nine San Guardian.

We are working with therapies to resume the Consulta Previa law.

Amy at completion by second half 'twenty 'twenty. One. Additionally, we are currently working to obtain the construction partners.

<unk> already submitted that water dumped construction.

Moving onto slide 10 per feature we are working with the community on their finding Belo mineral opportunities.

For the second and.

Environmental.

Assessment workshop, migraine and three quarter or for anyone.

We continue with a chloride leaching dose obtaining good results.

We are awaiting its inclusion in the <unk>.

Sure.

Moving on to slide 11.

Okay.

We are executing sold Linux section this to increase.

Gold and silver residue volume also we are currently working on responding EIA issued observation for us.

Moving on to slide 12, and our Disulfite for more latches board approved by a religious stage.

We are current in defining a drilling constructor to Greece for sort of surgery.

Thank you for your attention I will hand, the goes back to the operator to open the line for growth.

Please go ahead.

Ladies and gentlemen, we will now begin the question and answer session.

Ask a question dialed in by phone and press Star and then one on your telephone keypad.

If you are using a speakerphone. Please pick up your handset before pressing the keys to ensure the best sound quality.

So it's all your question you May press Star two.

Once again that its star and then one to ask a question.

Rod momentarily to assemble the roster.

And our first question today comes from Carlos de Alba from Morgan Stanley. Please go ahead with your question.

Thank you very much and good morning, everyone.

Well.

Have a few questions. If I may the first one is that if you could elaborate a little bit more on the final round of 15 million.

Debt.

Or bond debt.

The board of directors approved under the shareholders are going to be volume upon.

If you could maybe provide a little bit of a background and color and confirm if.

This is related with the tax dispute.

And you are right now facing in Peru, and if you could provide an update or debt that dispute that'd be appreciated.

My second question it.

Has to do with the Capex outlook for Buenaventura. If you can confirm that the number of your strength for this year, maybe you have already sort of a view for for.

For next year.

And how does the Yannick, let just sulfide project, which may be approved.

Few months.

Placing to that how is that credit you're going to be finding financing.

In the release.

<unk> nature of it could be a $2 billion I assume that the autoclave is that route that is most likely to the cash.

He will follow so how will the prey finance that that'd be great.

And then finally if any.

Comments that you would like to make.

Addressing the uncertainty that we're facing in Peru.

Alright.

Okay.

Sort of what are what are the second piece that the company the mining companies and distraction for companies in Peru have in the event that one.

One of the candidates.

Becomes precedent and carries on with them with a comment about maybe.

Claiming a little bit more of the world that the mineral resources and Peru generate thank you.

Thank you Carlos.

Your first question was from our leading lifetime.

500.

Volume.

No.

It wasn't all in Asia that we mentioned in our press release.

We are asking for approval.

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For the shareholders.

In order to be prepared for the.

Good day.

Our obligations for some that we've got.

We are looking for that approval.

Making now for Barry.

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Or is it a blend.

Complete plant two.

Hum.

And for the governance information from that England Buda.

And we will.

We were expecting debt that approval and we will continue a win for them, which will be the.

The weighted.

We are following.

And.

We will announce in the market.

In terms of Capex. There is no significant change in our view for the guidance for this year, we continue we would be.

Capex.

For them.

In the beginning of the year.

Yeah.

And then a quarter.

For the sulfide project.

And as you as you as you know the decision will be made.

Yeah.

In the second half of 2021.

We have not discussed how to finance these things.

Project.

Newmont.

Well, we are working together reviewing all of the project.

When whenever the decision was made with BMO.

And finally within the allotted for big political situation.

Yes.

Now it's official.

For leap because of minimum volume.

As in the country.

However.

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We are.

Sure.

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All three will be the people in Peru.

Tim will begin.

For homebuilding will be how.

How are we going to be.

Their vote.

The same day I think they will prefer.

The trend for.

Oh.

Development.

And in the meantime, as the company will use alone.

Any anybody there's no political.

Issues or any comment about that we continue with that.

Our work with <unk>.

All the sustainability, we recast for.

With our people and the communities that are in and out in our in our area. So we are expecting there.

To continue and deadly and I don't know what it is.

You want to make an additional comment on that.

Thank you for Endo.

I don't know why they call on me always for political.

Comments that anyway.

I think the.

The elections.

Has have shown that day no majority leader in Peru.

Between the two candidates they obtain less than 30 per cent of total votes between these two debt weighted towards the run off so the problem Dean is Congress in fact, it's a country that has a number of political party, if I'm correct and different.

Political parties that are part of the Congress and that is going to make it difficult to pass some loss.

Our impression is that debt.

Does the elections should show that they do continuous in the Nic trained dose.

Of development, but obviously, we are not sure what it's going to happen we think.

They do have shown to be a.

Reliable country.

In economic terms.

The Central Bank is very respected and we hope but.

And in most of the of the parties that are in Congress will support that position from from.

The central bank and debt that should give us some assurance difficult to say.

Five weeks to go until they run off and I don't think there is a clear winner yet.

Thank you Amanda or okay.

Once again, if he would like to ask a question. Please press star and then one to withdraw yourself from the question queue, you May press star and two.

Okay.

And our next question comes from Tanya.

For the Sonic from Scotiabank. Please go ahead with your question.

Yes. Good morning, everybody. Thank you for taking my question Rocco, maybe if I could just continue and I know you're the expert from the.

Political situation in Peru.

Just any thoughts that you might have.

What you're hearing.

Mining laws and taxation in Peru.

Hello wins the presidential election.

Well again I go back to what I said in Congress. There is no maturity group. So whatever comes out of Congress whatever law is given in Peru will require the consensus of a number of political party.

It is funny I am no expert debt tenure is certain.

Yeah.

Politics in Peru is something that is very difficult to understand that.

That essentially we can and can't be day say that they are going to do such and such but at the end of the day. They would have to discuss these matters with the other political parties and then and I hope that the right analysis is made in the things debt.

What we need is laws that attract more investment in order to develop our resources and other activities now in Peru. So.

I think the.

Mr. Katz CEO is the window, which I E.

I think that the.

There is no clear winner at this point in time.

He will have to do.

Get to consensus with other with other groups.

Great. Thank you so much traffic for that for that color.

Appreciate that all the wells, obviously looking for at the senior now what comes out of Korea.

Sharp shot Wow, if I can.

Could move off from there.

Maybe just to move to the financing plan.

Can I just confirm that you know you your debt is sort of the route that you are going or are asset sales still.

An option for you.

Thank you Daniele for your question. Maybe then you can make more comments about this.

For your for your question.

Yes.

Thanks for your question.

Jim.

We do debt.

We are planning to but we are evaluating these.

True.

Hey, hungry for some of the controversy that we have as you know starting in July and we should start beginning to this would not be the.

The initial amount and then continue with the other installments so.

These.

This with this liquidity, we should based on the percentage of our.

Our controversy, which for now.

And we are still evaluating.

The asset sales.

In order to increase our liquidity and also to improve our.

Debt ratios.

Yeah I was just got it back for what you think is an appropriate leverage ratio for buenaventura.

We think that between two five and three times.

Net debt ratio is.

It's a good ratio for went onto it.

Okay, and can I ask where we stand on me.

As you know we've got to obviously send somebody out capital.

For coming for I guess, we want to build that mine, we obviously have the <unk> sulphide.

<unk> of the capital that can I ask just maybe your strategy on funding.

And whether it does the share of that growth dividend.

Dan.

Thank you Linda.

As you know we have.

A variety of investments to wave I believe.

We as you know.

Also we are working on.

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Group for.

Total assets that we will lose sales we are.

Evaluating all the alternatives.

And with that we issued.

Okay.

Current debt, we have with it seems you could be debt.

We did with debt.

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Before we.

We get for you.

Oh.

Goldman Unsung, we can expand our line of credit in order to finance.

As you know Joe.

Where most of the work on project for the day that you signed up for you.

So we are working on debt.

And we.

We feel that we can continue with this investment.

On this on our project.

Yeah.

I don't know if <unk> wants to make some comments about our.

Our <unk> project original Goldman's cash.

For example.

Yeah.

For more than that kind of thing what it would.

<unk> been asked for them starting construction.

For <unk>.

Yeah.

And mainly the social part of it that has been we have been working with a bummer overdubs permits for the last two and a half years or so.

And.

We have been impacted by the recent electric community and for every day.

But we see from all the discussions with the with the with the government debt, there's an interest income.

<unk> got real for one.

Because he's going to help a lot into.

We are finding that they were going to constantly.

Social seats for social distancing measurement has not playing in our favor lately.

So our best guess is that we're gonna have the construction permit in the second half of this year.

Stated in the press release.

You mean, why we're we're continuing our banking in January to mitigate any placebo would be possibly will be leased with the price.

Yeah.

Okay. So my understanding I think you said, you're looking to financing jeopardy out.

From your credit facility once you're able to alleviate some of the covenants.

Is that correct.

Sorry, sorry, I wasn't there, yes, that's correct okay.

And what about our channel that's a dividend.

That would be coming anytime soon and that cannot be used for organic culture sulfides portion of your capex there.

Well.

As you know we are about to receive.

Given.

These days.

I think between today.

Monday, we received.

The first day event we.

With the prices we have for them.

The copper today, the current prices, we are expecting more dividends in the future and although.

This is not.

Already defined.

With our partners from several world So.

<unk>, yes.

More dividends, but.

I'm on for Ken.

In a way to finance our own projects.

Okay, I think there's my name's within the joint venture at the asset level that could help finance some some yeah and a culture right.

Excuse me.

Excuse me I didn't get your question yeah.

Yeah, So I'm just trying to understand.

Two things one how big is this channel that they did it and that's what we're going to GAAP and number two how much money is in that debt the co chair of joint venture.

That can be used to pay for it for this project.

Okay.

The current cash.

<unk>.

<unk> seen.

Their balance sheet is around $800 million.

So.

816, I think.

<unk>.

That is roughly the amount.

If we see the EV.

The capex and debt.

It's baked in for the total portfolio, it's around $2 billion.

We also think that you had a courtyard by itself.

In finance.

By zone.

The rest of the money.

The money they need to build the project.

So for me, it's one tool.

I know for maybe.

You can ask for some warranty from from their partners.

Moving that they are capable to financed by by itself.

Okay, and maybe just lastly, what five of dividends are we expecting from Seattle that day.

The union from Timberland.

This is.

And the last one is 1000 $200 million so our bodies 39 megawatts.

Our per share no.

Okay.

So we're expecting something in that order.

Yeah.

Right.

Okay I really appreciate it. Thank you so much and good luck with the financing options.

Thank you for vendor.

And ladies and gentlemen, with that we'll conclude today's question and answer session.

At this time I'd like to turn the conference call back over to Mr. Garcia for any closing remarks.

Sorry, I was on mute.

Thank you for.

Before we finish today's conference call. Thank you very much for making your time to be here and.

We wish you a wonderful day and please be safe and this molecule for them. Thank you.

Ladies and gentlemen that concludes point of interest first quarter 2021 results conference call.

I'd like to thank you again for your participation you may now disconnect your lines.