Q3 2021 Compania de Minas Buenaventura SAA Earnings Call
[music].
Good morning, ladies and gentlemen.
Welcome to the companion <unk> de Minas Buenaventura third quarter 2021 earnings conference call.
At this time, all participants will be in a listen only mode.
Please note that this call is being recorded.
I would now like to introduce your host for today's call. Mr. Gabriel It's a lot of Investor Relations. Mr. <unk> you may begin.
Good morning, everyone and thank you for joining us today to discuss our third quarter results.
This discussion will be led by Mr. Leandro Garcia Chief Executive Officer.
Also joining our call today and available for your questions Armitstead and Aneel Domingues, Chief Financial Officer.
Tableau for Peace Vice President of operations, Mr. Aldo Mysore, Vice President of business development and commercial Mr. Alejandro <unk>, Vice president of sustainability and he's got it okay and that is 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 within our earnings release and risk factors described.
I encourage you to read the full disclosure concerning forward looking statements within the press release, we filed on October 28, and they've been doing.
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 funding.
As seen on slide two our forward looking statement also provides information on risk factors, including the effects related to COVID-19 that could affect our financial results.
In particular, there is continued uncertainty about the duration and contemplated impact of the COVID-19.
Sunday.
This means when I endorse results could change at any time and the impact of COVID-19.
And on the company's business results and outlook is a best estimate based on the information available at any level as of today's date.
At this time, let me now turn the call over to Mr. Leandro Garcia Chief Executive Officer.
Please go ahead.
Thank you.
Good morning, and thank you for attending this conference call.
Before we start the presentation, we would like to wish you well.
B.
We are pleased to present the results from the third quarter 2021.
Baird.
Our presentation would you say.
Before we go further please take a moment to review the cautionary statement shown on slide two.
Please consider the disclosure related to the COVID-19.
Moving on to slide three.
We are as follows.
Third quarter to a new one of EBITDA from direct operations reached $39 5 million compared to 68 point.
Hi, Nathan.
Reported third quarter 2020.
Nine months.
The first nine months.
We want to be definitely direct operations reached you.
<unk>.
41 6 million.
In Greece.
88 $1 million from the ninth multiple 2020.
Third quarter, adjusted EBITDA, including US as a company reached 183 7 million compared to $183 9 million in third quarter of 2020.
Nine move 'twenty, one 2021 adjusted it.
<unk>.
Reach 50, $593 3 million a.
Significant increase as compared to U S dollars.
298 5 million for the third.
Nine months.
Third quarter net loss reached $91 million compared to $14 9 million net income for the same period in 2020.
The first nine months of 2001.
Net loss was $39 $3 million compared to $68 nine net loss nine month 2012.
It is important note that the middle school in the third quarter 'twenty, one and the nine months.
The new one.
Goodbye.
Six 4 million.
We're responding to BB and equity ownership position.
Aligned with the company's strategy to focus primarily on exploration.
Quarter to a new one exploration and operating units.
$71 million.
Compared to seven 6 million in third quarter.
Dave.
First nine months 2021 exploration at the Ada in June increased to $40 $49 million compared to 16.
One 1 million.
Nine months of 2012.
The third quarter 2021 capital expenditures were $24 million compared to $12 9 million for the same period in 2012.
Nine months 21 capital expenditures reached $58 5 million compared to $35 2 million.
The first nine months of training right.
Both vehicles sales guys for.
For the first nine months of 2000.
One reflect a 43.8 million due.
Due to COVID-19 related expense.
We're now into the cash.
Cash position reached 287 $9 million as of September 32021.
Mining and processing activities were suspended chunghwa.
Jaguar mine in line, we wouldnt have endured a strategy to reduce costs and become gosh now.
The company to focus on underwriting exploration I'm, not optimize that golar and resurface provisions sequence with a grubhub corporations, we use that.
Moving on to slide four ESG corporate strategy.
Our company has always been committed to help local communities tend to comp responsible practices with environment.
Measure some indicators as you can see and this is like for.
For example, we achieved a 94% weather recirculation in our open pit operations and 88% of our Andrew page.
We have done a special effort to improve our ESG reporting practices following international standards like the <unk>.
Sure.
AEP Dow Jones sustainability index, and the net didn't nation rollout.
Moving onto slide five continuing.
<unk> corporate strategy for several months, we have been working with our stakeholders local communities investments directly work et cetera in order to start implementing a better ESG reporting system and after all the effort, we have been able to bill and Matt.
<unk> that we presented on this slide.
Here you can see the most important subjects, which are located on the right part of it.
And belonged to the high material period.
In this area, we have determined that the health and safety the responsible use of what the value generation for its stakeholders are the three most important focus to work.
On the 14th <unk> report.
Moving on to slide six financial highlights.
Total revenues during the third quarter.
$224 million, which is 3% lower in comparison to the third quarter of 2020.
This and the first nine months of the year total revenues increased to $647 million compared to the nine month period of 2020, where total revenues were $445 million.
EBITDA from our direct operations in the third quarter.
Q1 was $40 million in comparison to $69 million in the third quarter.
EBITDA from the property.
<unk> for the nine months 21 increased to $142 million in comparison to $88 million during the first nine months 2012.
EBITDA, including our affiliates in this quarter was $184 million reducing in line.
That generated the third quarter of 2012.
EBITDA, including our affiliates for the first nine months over the year was $593 million compared with 299 for the same period in two.
<unk>.
The capex increase to $84 million in the third quarter of 2021 compared to 13 <unk>.
In 2020.
In the first nine months of the year Capex for both.
<unk>.
<unk> 9 million, a 66% increase in comparison to the first nine months of 2000.
As you can appreciate on the graph shown this slide we have returned to pre pandemic levels and even achieving greater receipts.
The first nine months of 2019.
Moving on to slide seven we took Douglas.
The COVID-19 pandemic.
<unk> impacted mine preparation of exploration at Youtube Chunghwa.
Consequently, we are working with narrower veins and lower silver.
This expansion enables us to achieve the most significant cash preservation, while derisking future negative free cash flow generation through the formula.
Workforce optimization in order to reduce fixed costs from $2 million to $5 million per year.
Greece, COVID-19 related expenses from 12 to 15 months in 2022.
Evaluation of it.
<unk> contracts to renewables reconcile and streamline the company's contractual base from.
7 million to $9 million per year.
This strategy will be implemented during the period 2021 'twenty two 'twenty three.
I grew up with our groundwater and efficient with BELBUCA variations one related.
Being achieved.
We are revising exploration over expression extraction to increase reserves in the long term.
Importantly, this is benjamin will not affect the brokerage related our high grade <unk> project expected to begin production in Italy.
24.
Moving on to slide eight and nine attributable production.
Total gold attributable production in third quarter of 2021 eight.
<unk> thousand ounces, which is 2% lower than the few reported from the same quarter.
The previous year.
In the first nine months of 2021 total gold attributable production was 270000 ounces, 7% lower than the same period in 2000.
Okay.
This was mainly explained by lower production in general.
Either attributable production for this quarter was three 6 million ounces, which shows an increase of 20% compared to if you reported on the third quarter of 2020.
During the first nine months of 2001 silver attributable production was 11 million pounds, 20% higher than the first nine months of 2020.
In the third quarter of 2021, 11000 metric tons of seats of zinc were produced a significant decrease compared to the third quarter and 23 in the first nine months of the year.
The production decreased to 32000 metric tons, 2% lower than the same period in 2000.
At Gainesville Blade equity production was 6000 metric tons in the third quarter 2021, which is 23% lower in comparison to the third quarter of 2020.
And the first nine months of 2021.
The production increased to approximately 60000 metric tons in comparison to 18.
Tons from 2012.
Finally, our Cobra <unk> production for the third quarter of this year. It was 26000 metric tons. During the first nine months of 2021 copper and gold.
Between what's in 75000 metric tons of built in Greece compare a 12% increase compared to the same period 2020.
Sorry.
Moving on to slide 10.
In sustaining cost in both of the government debates.
Building sustaining cost from our direct operations in the first nine months of 2021 increased by 16%.
1488 U S dollar also.
The ghost applicable to sales for the first nine months of 2021, whereas volumes for both 1224 years' low like their loans, which is 18% higher than a year ago.
For silver 1954 U S dollars per loans, which is 15% higher than a year ago.
<unk> 1460, $3 million per metric ton reduced 30% higher than a year ago for Copa 6295 years demand for medical which is 25% higher nickel buyers into a year ago.
Finally in the case of <unk> the cost applicable to sales.
2000, 102007, USD extra mythical.
Is 19% higher than a year.
As we mentioned before I believe Golar <unk> sales has been impacted by approximately 44 million of expenses related to COVID-19.
Moving on to slide 11.
<unk> project update.
Here, we are presenting.
One is snapshot the current development level for each one of our projects.
Moving onto slide 12, San Gabriel.
We finished geometric nuomi diluted testing and confirm the sizable recovery 85.
33%.
The EIA by GDP extension will be achieved by starting ordered them for iridium in early next year.
We reached an agreement with Cordelia community between the license, we got great oil community, which is still in process.
Construction works are expected to start after both communities ratified an agreement with Union.
Mr <unk>.
<unk>.
Moving on to slide 13, the Beecher.
With that.
Onsite metallurgy at volume testing and we finish go right leaching tradeoff as society devaluation on primary or is the Nexus six.
We agreed with tenacity to hold a second.
AIA workshop.
By late November for low light EIA submission early 'twenty two.
The project access Road agreement was released one dilemma.
Yoko community support approval.
Moving onto slide 14, and our dice holdings.
<unk> Board approved liability stage as informing the previous.
Conference call.
We've been drilling.
It is currently at 24%.
Thank you for your attention I will hand, the call back to the April to open the line for questions.
Please go ahead.
Ladies and gentlemen at this time, we will begin the question and answer session to ask a question you May Press Star and then one using a touchtone telephone to withdraw your question you May Press Star two.
If you are using a speaker phone, we do ask that you. Please pick up the handset before pressing the keys to ensure the best sound quality.
Once again that is star and then one to ask a question.
We will pause momentarily to assemble the roster.
Once again, if you would like to ask a question. Please press star and then one.
And our first question today comes from <unk>.
Yes.
<unk> <unk> from Scotiabank. Please go ahead with your question.
Great Good morning, and happy Friday, everyone.
Thank you for taking my questions I had two that I would like to ask two different assets.
Let's start off with chat, but I just want to try and understand as you go through this whole evaluation.
This asset is it fair to assume that this asset will be down.
From the rest of 2021 and all through 2022.
Okay, Daniel Thank you for your.
For your question.
Well as you know we have been struggling with.
No no.
Programs and to Chunghwa.
As we have informed in the last four.
Prince call, we have been doing our best efforts to.
To stop production.
And finally, we have decided.
This whole portfolio.
Output.
In order to make more efficiently.
Yeah.
Fine to go forward there with all the awards would be helpful.
The geology is duration.
And reminder foundation.
In.
Actually we will expect to have two of.
This mine.
Stop by at least one year.
We will we will.
Evaluating.
This resume operations during Q.
2022.
Listen I'll comment maybe on catalogs and give us some more volume alone.
Thank you Daniele for your question, Yes, we will plan to.
Continuing with exploration working underwhelm developing finally diamond drilling along 2022.
Based upon the results we will review our decision on where do we started operation in 2023.
We don't have the conditions of the time and we would prefer to continue with exploration group probably extend that.
Strategy alone.
Open trading.
Okay, and given you stopped the mine.
Should I be thinking that this current maintenance now is going to have a cost for us to have and if so what is the cost of care and maintenance fast either per quarter or per year, whatever is easier for you.
It's a combination of bookings.
One is going to be overly determined payments per se.
It's about.
Fixed costs in a row.
$1 $5 million per month.
Payroll glass all the ancillary services bump in water treatment.
And on top of that we would have.
Donnelley for exploration to get new access to different areas or diamond drilling.
And that amount still under review with our people we are working on all of our annual budget our November.
Okay. So I guess, you will give us some sort of guidance next year, but at least one five per month upholding cost.
This is down.
And just on the.
Hi.
You mentioned <unk>, what youre seeing and youre, putting the effort into to do this exploration.
As you go into narrower vein or usually you have to kind of change our mining method, because you know you're going to have to be more selective mining which are more expensive.
So I'm just wondering how you mentioned that you don't really see much impact to your reserves and resources with this being down but just because.
The veins are narrower I guess I'm trying to understand how it could not have an impact.
Yes.
Yes.
I think that right now we have.
We don't have isolated base initially became flagging a package several base altogether.
We need to fill the gaps in between in order to have an idea of how many beta we really have altogether closer to each other.
Optimize the design of the mining facilities to mind that area right now we're mining a certain things and sometimes we duplicate infrastructure like an admission that Rob part of that issue now installation infrastructure for band added solely.
E 80 meters.
So now I'll go through this out.
So we need to have time to explore the other base.
All information altogether, Indonesia to the existing base that we already booked in our reserve.
We have all that information.
We located the ramps in our infrastructure to serve more tonnage.
Then we are doing right now is that the reason we need time for exploration to include all of those veins that we have now with our potential.
<unk> potential resources in order to have an optimized design. The other reason we need some time for continued exploration near existing reserve blocks in doing so we expect to dilute the etc, golf and getting back into production with pretty much.
The same.
Operating golf course.
Proof of operating cost.
From the underground mine.
Okay.
From what I'm hearing.
Appears to me and maybe I'm wrong that maybe you haven't done any.
Detailed tighter space drilling to really understand.
And maybe someone can tell me what you drill spacing has been on your mine planning, but it appears if youre not able to connect all of these events together you kind of have to do more tighter space drilling is that a correct assumption.
Well not in the in the blocks that we already have a reserve.
In some areas, but we need to go forward.
Maybe 22 meters to 15 meters of spacing.
According to the new guidelines and updated.
Yes statistics, we need probably to make shorter distance vehicles or four Barbara execute reserve so that would be part of a migration to the escape tripping hazards thunder, but what eventual west structures are veins.
A link to the existing ones.
20 meters 60 meters 80 meters to the north or south of the existing ones. So we will add those potential resources into our mining plan, that's what the strategy and we will focus on in the world.
Core reserve programs.
To that of course explore potential areas, where in the past we had.
Our bodies.
The larger degree on a higher grade.
So we have defied basically most of them we are understanding better in June, but we're bringing that in.
Experience for exploration infrastructure combined we didn't define several targets.
Thank you much in the anticline note of.
Could you check so it will be to set the strategy working for looking for motor structure more veins and <unk> to reserve.
Yes.
Opening new areas of duration near the minus 680 meter productivity facilities in depth anticlinal sector.
Particular.
<unk> limestone.
Much followed the same model and we were very successful right now exploring June so we're bringing that controls that would be the logical controllers integer chunghwa in depth client sectors to look for automotive high grade.
That we had in the box has any vessel, we're connecting the dots in that fight.
Mir mine areas.
Okay.
As I understand it theres some pilot tighter space drilling to be done within your reserve blocks plus step out to try and target. Some of these veins close by to bring them in.
Separately.
And then my last question if I can just think MD out you mentioned the validity of the.
AIA.
Extension to be achieved.
Are you, saying that youre going to be getting the EIA by putting in less water than next year or what is it that you still need to do to just get the EIA approved.
Thank you Sanjay with that also is greenfield.
Our project manager and he will explain a little bit more along our growth our processing times audience.
Okay. Thank you.
Well the EAA is already approved.
These instruments have.
Shelf life of five years, so because of the Kobe.
We haven't been able to start construction and it is getting to the end of that shelf life.
The order to extend that shelf like we need to start something and we have all the working permits to start a watered down so.
So if we started the early process of the water and we're gonna be initiating the execution and therefore, the environmental impact assessment shelf life is going to continue that's just trading okay and then when you've done this water dam like one off doing consultation with the community.
To finalize.
Yes.
That process.
Once we've done that you've been ready to make a decision for construction.
So.
The construction permit.
Has already been submitted on a year on something ago.
And.
There is no more technical questions about it we're ready to start the only thing that is missing a step.
To finish the Consulta previa with a community that has been impacted by the COVID-19 activities.
So we have some advantage in the last quarter one of those being.
We have been able to have public assemblies with the community.
And that was one of the main.
Obstacles to which a women's with them.
On the community.
The directors have been finally assigned they have all the paperwork ready to make decisions. That's another big step and third the government have been.
Hoping us sending the write letters to the community. However, they have changed so the new officers in the Ministry are new and we are working with them to kind of know each other again.
But we are.
Are you expecting to start construction for construction.
By the end of the rainy season that is March 2020, that's how our best.
Holding with that in mind.
Okay, great. Thank you so much for the clarity.
Once again, if you would like to ask a question. Please press star and then one to withdraw your question you May Press Star two.
Again that is star and then one particularly in the question queue.
Once again that is star and then one to join the question queue. Our next question comes from James <unk> from Morgan Stanley. Please go ahead with your question.
Hello, and thank you for taking the questions I just wanted to ask how much do you expect to get from us.
Dividends from federal way out of it next year.
And also for us to model that.
Going.
In further years.
What payout ratio are you expecting et.
Federal revenue to have a couple of years and if I can do a follow up question.
I just wanted to ask if you have any sense of.
How much the government might increase.
The mining taxes because.
Obviously, they haven't given any details about specific rate, but I was just wondering if you have got.
Any sense of that thank you.
Hi, gentlemen, thank you for.
For your question and the screen and the first question.
Ill detail around it even.
You'll have seen the results.
No.
Third quarter gold silver lead and.
The operation is going very well.
Cores.
We expect an additional dividend.
For the.
And as part of the year, we we are we have not.
Speak with.
Report, but.
Im sure.
The oldest headquarters is big.
David.
Before the end of 'twenty one.
The payout rate.
Hope to talk with them.
I think the.
The future years.
We do not have any investment.
This man.
<unk>.
Glen.
Yes, so the Capex is limited.
On a year thoughtfully Jerome.
My agenda around 300 $400 million.
All the cash with these prices.
It generates the relentless.
Sure.
Course Wil.
In finishing some comparable dividends for shareholders.
Regarding your frequent working alone.
We.
We are not sure.
How will be the final number.
Recently.
Thanks.
Port Miami.
And we.
We have received some message from the minister.
Probably.
Our vision is that we will.
Hum.
The increase for the higher.
In brokerage.
Margins were the companies that.
Parent brokerage grades and the higher level of the brokerage margin for companies located on then.
However, he has been very clear.
Okay.
Jason on only.
In all the credentials.
He will.
The vigilant.
He will.
Somehow.
The.
Yes.
Okay.
He will preserve.
The competitiveness of the mining industry.
That is.
And the message.
That we have received from them. So so we expect.
These are known.
Thanks.
For royalties.
And an increase in the higher level.
Broker margin so well.
We will see it in the following weeks.
The final number.
Okay. Thank.
Thank you Linda.
And.
Ladies and gentlemen at this time.
We would like to conclude today's conference call and I would like to turn the floor back over to Mr. Garcia for any closing remarks.
Well. Thank you for attending this conference call and.
The.
Rebate and be safe. Thank you very much.
Ladies and gentlemen that does conclude today's conference. We do thank you for attending you may now disconnect your lines.
Goodbye.