Q2 2021 Compania de Minas Buenaventura SAA Earnings Call
[music].
Good day, ladies and gentlemen, welcome to the company or opinion on it.
And I've been sort of a second quarter 2021 earnings 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. Mr. Thomas you may begin.
Good morning, everyone and thank you for joining us today and discuss our second quarter 2021results.
Today's discussion will be led by Mr. Leandro Garcia Chief Executive Officer.
And so young in our call today and available for your questions Arent and Eastern Danielle Domingos, Chief Financial Officer, Mr. Juan Carlos Ortiz, Vice President of operations and Houston, Although myself my spreadsheet on business development and commercial.
And on the Pandora, Malta, Vice president of sustainability.
And so on and corporate.
Corporate money here.
And Mr opinion are you on.
And our chairman.
This conference call will include forward looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.
Any such statements should be considered in conjunction with cautionary statement with and our earnings release and risk factor discussions.
And I encourage you to read the full disclosure concerning forward looking statements within the press released and we filed on August 2 and different day 1.
In addition, it is important to note that these statements include expectations and assumptions, which will be share related to the impact of COVID-19 and Amy.
As seen on slide 2 our forward looking statement also provides.
Information on risk factors and gleaned effects related to COVID-19 that could affect our financial results. In particular, there is continued uncertainty about these and region and contemplate the impact of the COVID-19 pandemic.
This means and when I enjoy the results could change at any time and the impact of COVID-19 on the company's business results and.
Outlook is our best estimate based on the information and Belo assets do they stick.
At this time, let me now turn the call over to Mr. Leandro Garcia Chief Executive Officer. Please go ahead.
Thank you Robert.
Good morning, and thank you for attending this conference call.
Before we start this presentation, we would like to wish you your family and friends built and will be at this difficult time.
We are pleased to present the results from the circle and floor through 2021.
And that's 1 of them.
We have prepared a powerpoint presentation, which is on.
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With beach.
Please.
Before we go further.
At the moment to review the cautionary statement shown on a day.
And I too.
Please consider the disclosure related to the growth.
19 and baby.
Moving on to slide 3.
Right.
As follows.
And for 'twenty, 1 EBITDA from direct operations reached 66, 4 and 9 million compared to <unk>.
<unk> 6.4 million reported in Q4 growth.
Okay.
Second quarter, 2 and the 1 adjusted EBITDA and doing it.
And so as a company.
And our reach to a need to and the $9.7 million compared to 84, and 5 million and the second word choice.
Great.
Second quarter to a new 1 net income reached 37.
$5 million compared to 15, 615, 4 and 6 million net loss for the same period of 2020.
Second quarter, 2 and the 1 exploration and auto grade units increased to 14.
$5 million compared to you is to Boeing and 5 million and the second quarter 2020.
This increase was part of the company's revised strategy to increase exploration activities.
Second quarter from day 1.
Capital expenditures were 21.
$5 million compared to 11.6 million for the same view 2012.
The 6 months the first 6 months 21 goes up and go look to sales has been impacted by $38 million due to additional COVID-19 expenses and need and it is expected to decrease and the third and the third quarter and Fort worth it with increased oxygenated workforce.
We're not including cash flow seizure reached $255.2 million as of June 32, and 21.
On April 21 day.
Between 9 and 2021 and so we're a little bit day, a total dividend of 200 million whenever intruder received $39.2 million relative to a state to state and federal level.
On July 23.
Turning to and you want the company issued senior unsecured notes we're on.
Aggregate demand by fraud around $50 million with a coupon rate book by 5% per annum due to.
202006.
And the net proceeds.
From the wound up being used on July 30 <unk>.
Last Friday to poorly paid this will net disputes.
Moving on to slide 4 financial highlights total revenues during the second quarter were $249 million.
146% higher and comparison to the second quarter of 2000 and.
And the first of the year total revenues increased to $427 million compared to the first growth of 2020.
Is eaten up from our direct operations in Mexico and for group 2021.
$67 million and comparison to $18 million and they're still going forward through 2000 and trend.
And these are from direct operations for the 6 months of 'twenty, 'twenty, 1 and increased to $105 million and comparison to $20 million. During the first 6 months of joining <unk>.
And beta and <unk>.
Moving our affiliates and the in this second quarter were $230 million reduced 172% higher and comparison to the second quarter of 2000 and swim.
And the visa, including older IP rates for the first half book, a year was $413 million compared.
115 for the same period and 2020.
The capex increased to $22 million and the second quarter of 2021 compared to $12 million and 2020.
And the first 6 months of the year Capex total.
$35 million or 55% increase in comparison to the first half of 'twenty.
Okay.
And you kind of per se on the growth shown in this slide we are returning to pre pandemic levels, and even achieving greater vessels and the person that girl and 19.
Moving on to.
Slide slide 5 and 6.
Total production.
Total gold attributable production in the second quarter of 'twenty, and 'twenty was $33.73000 ounces, which is 18% higher and there are fewer reported on the same quarter of the previous year.
The first semester of 2021 total gold attributable production was 136 tonnes and ounces, 10% lower let's say and the same period in 2020.
This decrease was mainly explained by lower production and chemicals.
Total production for this quarter was $3.5 million loans with shows an increase of 76 per person.
Compared to a figure reported on the first quarter of 2020.
And during their burst go 'twenty 'twenty 1.
Good day Rudow for luxury was 7 million on.
21% higher on their first and Mr 2020.
And the second quarter of 'twenty 'twenty 1.
12000 metric tons of zinc were produced and.
A significant increase compared to the second quarter and 23.
The first semester per year zinc production increased to 21000 metric tons, 26% higher and the same period in 2000 and train.
Case of lead equity production was 6000 metric tons and the second quarter of 2021 reduced 91% higher and comparison to the second quarter on 2000 and train.
The first half of 2021 led production increased to approximately 11 metric tons.
<unk> thousand metric tons and comparison to the towns and metric tons and 22.
Finally, our copper attributable production for the second quarter of the year was 25000 metric tons. During the first half 2021 corporate attributable production was 49000 metric tons and 18 per cent increase compared to the same.
<unk> 2012.
Moving on to slide 7.
All in sustaining and growth and cost applicable to sales.
Bill and sustaining costs from our direct operations in the first semester of 2021 decreased by 18% to.
1493 U S dollar per and onshore.
The goals of legal to sales for the first semester of 2021, whereas follows.
<unk> $1262 per ounce, which is 12% higher on a year ago.
Core sales were $19.55 per ounce, which is 25% higher on a year ago.
And for lift 1300, and put in the U S dollar per metric ton, which is 2% higher on a year ago.
For Copa.
<unk> thousand 949 U S dollar permitted.
Which is 13 high.
Higher and comparison to a year ago.
Finally in the case of the growth applied to sales to us.
And and 91 U S dollar per metric ton reduced 19 higher than a year ago.
And we've mentioned before cost applicable to sales has been impacted by approximately $31 million of expenses related to COVID-19.
Moving on to slide 8 pipeline project upbeat.
Here, we are presenting and 1 is snapshot if current development level for each 1 of our projects.
Moving on to slide 9 and nobody else.
We have to mention that we have obtained the water dam construction and thirdly, we are working with operating in extension of the environmental.
And.
Yes.
And a validity.
Will expire.
The first quarter of jointed.
And the name advanced the consumer behavior.
Says to dialog to stage.
Moving on to slide 10, and a pizza.
We are.
Finishing the chloride leaching pre feasibility level and.
And expect to complete and 3 of those society by system.
We are advancing cooperation agreements with communal authorities to support second a work trip.
By the end of August.
Finally, we are finishing and cooperation agreement with on demand Memorial book for the final excess flow and we are working with Maria landmass community.
And that viewpoint.
Moving on to slide 11 cycle.
We finished testing activities to improve silver and gold residue value.
Also we submitted the first batch book.
Observation and we are.
Currently working on the second batch.
We have confirmed the projects we're on by whereby a reality with FRE.
Moving on to a slight growth and or die full price.
<unk> board approved by ability to stage.
The infill drilling is expected to be.
And in this third quarter 2021.
Thank you for your attention.
And I will hand, the call back to the operator to open the line for questions. Operator. Please go ahead.
Thank you we will now begin the question and answer session to ask a question. Please press Star then 1 on your Touchtone phone, if you're using a speaker phone and we ask that you. Please pickup your handset before pressing the keys so.
And so much on your question. Please press Star then 2.
Today's first question comes from Carlos de Alba with Morgan Stanley. Please go ahead.
Yes, good morning.
Okay.
Just a few question if I may firstly.
Can you maybe you could provide a bit more color on how youre thinking about growth.
And for such projects going forward given the recent situation with the new debt as well as debt payment in 2 days from that.
And second if you can give us.
And maybe an idea of how do you see cost trending and particularly for our compound patent to Chaco, which saw cost increase and the cask increased quite shy and Fortunately in the last shot and the last quarter and then finally, if I may squeeze a question on dividends and so we saw that you received 40 million.
And in dividends and this past quarter from federal rare day, what is the idea and dairy scale too.
Hey, dad part of that too.
1 of them and put our shareholders in the coming months. Thank you very much.
Thank you Carlos.
However, it will in the case of the of your.
Your question, though and the growth mothers.
And.
As you know we and.
And are still evaluating.
And sale.
And that's it right.
Net sales we present to them.
The our syndicate loans that will allow us to reduce our leverage level. So.
And lever it also on free.
And also.
And all aware.
Our lines of credit so with those.
And.
Auctions.
And we will be and shape to begin.
San Gabriel on.
And.
The and the development of <unk> and also we are big.
Of course.
The cash coming from our own operations with debt wheel and.
And.
Get better results, we expect of course, and we are positive.
The results and the following months and.
On the other.
That will also affect more dividends from from several other in the following year.
So that is the source that we expect to develop our growth.
And support our growth and <unk>.
Total cost growth maybe.
And.
And we gave you.
And Carlos.
Microphone 2.
2 other.
I'm sorry, the question, but.
Moving to the first.
And who is leaving us well and several other than we are going to if we are willing to pay.
Pay some dividends 2 and on Florida.
On a non discussing.
With another 2.
Day.
We are not planning to and the short term.
And.
A deviation from what I'll do it on our first goal is to reduce our leverage and.
And with the bond issuance, we have some compromises on and we are going through.
On the labor that compromises and therefore.
Following months.
Carlos Thank you.
Thank you your loan book.
Sure.
Regarding on for Bob.
We're ramping up the production or little bit behind this cable and we are ramping up production effectively and.
The reported the Gulf will be reduced based on the increased scope.
Gold production, so we expect to reduce the goals and in coming quarters to a bump up.
And <unk> Shukla.
Is.
There is a local work to be dogs and local work volume.
And you can really move the other work for mine development.
On this winter will.
And will increase their returns with increasing production months of term debt. So.
And we expect it still to be with high cost you Chuck offering coming 2 quarters.
Start to decline to reduce it goes in and coming here.
Thank you Juan Carlos and Andrew maybe Landry, if I may and so so what are the covenants our debt requirement is that came together with the book.
Bond issuance and that may not allow you to pay dividends.
Thank you Carlos for your question.
Here with US is Danielle Dominus. Please on the Oh go ahead.
Hi, Carlos how are you.
Basically we have to meet 2 components. The first 1 is.
And to have a net debt.
On a ratio leverage ratio of.
Below 3 and.
3.5 times and the fixed charge coverage ratio of over 2 times loans are basically the 2.
Most important our ratios in order to talk to you.
And thank you and yet.
So and the EBITDA is consolidated.
Consolidated EBITDA our day.
And EBITDA, including debt.
Your participation and that and affiliates.
Consolidated EBITDA and Carlos.
Thank you very much.
And ladies and gentlemen, and as a reminder, if you would like to ask a question. Please press Star then 1.
Today's next question comes from Tanya Jokers connect with Scotiabank. Please go ahead.
Oh, great. Good morning, everybody and thank you for taking on.
My and car I have a few questions if I caught on.
And then to start just on the asset side first and.
Just on it we'll chit chat plus can you give us an idea on when we are going to get the mine backup technology capacity.
And then the second thing on which a chatbot can you give me an idea on what is happening and you preview you highlighted and.
And new mine plan is underway and do you have.
Having issues on the ground.
Canada and meeting the block model can you just let me know what's happening there. Thank you.
Hi, Danielle and thank you for your question.
And Carlos please.
And vehicle.
Thank you Leandro and thank you for your question.
And we've been shown in the previous quarter or this quarter, well, we are facing difficulties and delays on the mix and really and in day.
Developing our new areas that we are executing right now the strategy is focusing now on activities.
And actually the carbon and want the higher minds into day, which chunghwa underground and the city.
And these 2 mines having minus.
And the bus and we are getting back into these areas.
We are.
And taking longer on expected day rehabilitation process.
And in some cases and slash other recycled Mcdonald's to fit with Lager fleet.
Are you able to date, they've installation and separate.
Some of the intellectual rights, but we have need to be in some cases.
And we need to make parallel.
Right just to complete and installations.
And in some areas that we expect it to have access to some blocks. It just taking longer because we need to put more.
Roof reinforcement, though which makes it so it's taking longer.
Not only because we have more work, but also because we still don't have hunkered per cent over head count upsides. So we are at a lower base and inspected and win more work than expected.
If you believe that we are facing there regarding day rates is that.
It seems really is way behind our Florida, we changed the constructor for Youtube and others.
And on truckload, though we have 4.
Also in the mine.
And we changed the constructor in the first quarter and it's taking longer on expected to reach.
The previous level of production really from the new contract.
So the difficulty in getting that information for the short term planning against the loans are planning is what the ceiling on some.
Negative reconciliation and the grades and get volume so far but we are taking from some of those blocks.
So altogether, we have some delays on getting their property information.
And.
Chief our plans are to read if cable our plan and we.
We are delayed we are having some delays and achieving those blocks on those areas.
At this time.
<unk> and this quarter was spec to be back on track with debt.
The rate of about 7000 meters per month on drilling in and around.
Now on drilling.
We expect to get to a level of about 3000 meters of mine development, and therefore quarter, so it's going to be travel and ramp up.
Based on the current.
And base of sales that we are moving on.
We expect to be having.
Having news about the.
And scheduled to get back to the previous production on a new level of production that we will face once it goes on 22 in the previous quarter and the next and the total required.
So this is particularly with what's going on and Chaco.
Count issue also.
17 day, we are attending now de vaccination is starting now around the mine. So we state that in the next 2 quarters, we have a big a larger percentage of our workforce or fully vaccinated and tried to reduce debt impact.
And.
Tracing generally things and if you could do for operation on purpose and Richard Chunghwa solo and <unk>.
And with the effect will be reduces respect and we are reducing the other income in 2 quarters of 2021.
Yeah. That's that's good news on the vaccination and.
And can I just move on now too and you.
And you mentioned that you are going to be selling an asset and and I'll just take that money. So that you can re apply those funds to the sudden Gabrielle and development.
And when you look at your assets for sale.
How does the Gannett co chair sulfide interest and that 1 how does it rank up in assets for sale.
Well, we are and things and we have fewer religion.
<unk>.
The best answer for the risk return and I think we have.
And you know that we have here.
Our shares treasury share through coffee, our participation as emerging and a quarter.
And also.
And count on them.
And I presume is that although there we have different alternatives.
We are evaluating we see live on it.
And.
Yeah on a quarter.
And it's.
The total project is still isn't on funding will be decided and.
On December this year. So so we are also in that process.
Yeah.
Would you consider your equity stakes and instead of that debt and yeah, and our culture and 2 possibilities for sale and addition to all of your other assets I'm just trying to understand if that was our effect and also.
Yes, we are.
Evaluating all the alternatives which room.
Perfect.
Yes.
Future cash flow that is the object.
Okay, and then can I ask and.
I have been noting on many conference calls.
Talking about inflationary pressures, both on and operating costs and capital costs can you talk to us about what inflationary pressures you are seeing and Peru and.
Labour can stand on Poles and out there. Thank you.
Well you know.
And.
There are some some pressures and costs.
And.
However.
And mainly these are forced by by the exchange rate.
However, as neuro or our income.
100% of our.
Revenues are in dollars. So we are not feeling as.
Judy great.
And.
A great vision and inflation.
And maybe there will be on.
And additional demand from Covid.
From our communities.
With the current political situation, but that's what.
And whether we do not.
And.
And too much book.
From the standpoint of inflation and economic replenishment.
Okay and then my last question could be for Rocky and if he is on and I would love to hear and his thoughts about Tom and new leadership, and Peru and that what are you expecting to see from that and the impact on buenaventura. Thank you.
Let me tell you that.
We are leaving.
A difficult circumstances.
It is not easy to deal with the people like the government debt has been elected.
But this is the situation that we have to deal with I think debt in the next 30 days or 60 day.
We are going to see some changes in the government. Let me, yes share with you and Tanja debt out of the 19 ministers.
There are only 2 woman to woman.
This has never happened in the last few governments.
There is a lot of people that have question.
In terms of their.
There are.
I dunno integrity in terms of the ministers, and you and Mr. Castillo and <unk> neither of the political party.
Liberty is question.
Bye bye the bye depressed so I think we have to wait and see but.
This is a.
This is going to change and I believe that it will change for the better.
Okay, and what we're looking and we all are looking forward to saying that for per rep. Thank you very much. Thank you.
Thank you ladies and gentlemen. This concludes today's question and answer session and I'd like to turn the conference back over to Mr. Garcia for final remarks.
Great.
Hello.
Before we finish today's conference call. Thank you very much for making the time to join us.
Thank you Dana.
Wonderful day.
Great.
Okay. Thank you.
Uh huh.