Q2 2022 Compania de Minas Buenaventura SAA Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the company Company Demeanour Buenaventura second quarter 2022 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 Solar Investor Relations Mr. <unk>.
You may begin.
Good morning, everyone and thank you for joining us today to discuss our chip and partner so it didn't improve results there.
Today's discussion will be led by Mr. Leandro Garcia Chief Executive Officer.
Also joining our call today and available to your question Army Stare, Daniel Domingos, Chief Financial Officer, Mr. Juan Carlos Ortiz, Vice President of operations, Mr. Arun Nayar.
They are Mr. Juan Carlos Aliphatic geology, and exploration spend are Mr. Barry <unk>, Chairman and Mr. Robert <unk> director.
Before I hand over call over let me first touch on a few items.
I'm wondering the rest website you will find our press release that was posted yesterday after market close.
Please note that today's remarks include forward looking statements that are based on management's current views and assumption well.
While management believes that its.
Assumptions expectations and breakthroughs that are reasonable in the 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 with within the press release, we filed on your license extended and it lets.
Let me now turn the call to Mr. Landa.
Thank you Jody.
GUL and thank you for attending this conference call.
Before we start the presentation, we would like to wish you your family and friends salesmen will be in a typical right.
We are pleased to present the results of the second quarter. When you do some company I mean that was one of them.
We have prepared a powerpoint presentation, which is available you know what.
Before we go further please take a moment to review the cautionary statement shown on the slide.
Moving on to slide three.
Were as follows.
Second quarter 'twenty two at least.
From direct operations was.
They've got deep $19 1 million compared to 68 5 million reported in the second quarter.
When he told me one second.
Second quarter 22, operating cash flow reached $72 7 million compared to 100 to 100 or one 7 million so going forward for the last the last year.
Second quarter 22, net loss was $39 9 million.
234, 57 5 million net income for the same period.
'twenty one.
Second quarter, two when you do exploration.
Operating units increased to 18, 9% compared to 14 5 million in the second quarter 2021.
This increase is part of the company's revised strategy to increase its focus on exploration in order to extend life of mine.
Second quarter, 22 capital expenditures were $35 million or burden.
And the one for $4 million for the same period in 2021.
Second quarter topics include.
$11 million related to the sudden there'll be a budget and 63 million.
Related to that.
The company continues strategy frozen easily reduce fixed cost.
Jaguar mine to improve the cost structure efficiency window production restarts.
Well the related expenses were reduced from 19 1 million in the second quarter.
It's a one to $1 9 million reported in the second quarter 'twenty.
[laughter].
We're not in Buda cash position reached $326 3 million at June 32 of nutrition.
Net debt was reduced to $416 $4 million with another that's maturity of three eight.
Yes.
2.2 years or last quarter of 'twenty one.
When does it go to a furniture only one story or in April .
For the nine.
This year sort of where they paid a total of $150 million.
Whenever intuitive that received $29 4 million umbrella.
In total though.
Once a score and that amounts to $90 million with a coupon rate of five.
Oh, 5% right.
Stable.
2007.
We learned to slide four.
Our ESG and corporate strategy.
Here you can find some key indicators regarding our ESG a surface dirt.
In the second quarter of join me today do we.
Our carbon footprint measurement are we conducted our human rights due diligence.
Aligned with our ESG strategy during the second quarter, we will apply to the Dow Jones.
I really do.
Yeah.
Moving on to slide five financial highlights.
Total revenues during the second quarter were $150 million reduced 38% lower.
The reason for the second quarter of 'twenty.
The first half of the year total revenues decreased to $383 million compared to the first half of 2021.
As we mentioned before where it would be there from direct operations for second quarter.
Yes.
Negative $19 million in comparison to $69 million during the second quarter of 2021.
EBITDA from our direct operations for the six months.
Of 2022 increased to $413 million.
It isn't $108 million during the first six months 2002.
The increase is mainly due to the <unk>.
Good job satisfaction.
Also.
Well it did.
As a company for the second quarter of 'twenty two.
$52 million in comparison below $181 million during the same period in 2021.
Is that in doing our affiliates for the first of the year was $630 million compared with 345 44 for the same period from when they want it.
They got fixed increase to $31 million in the second quarter, though.
Of this year compared to $21 million in the second quarter of 2000, and so that one.
The first six months of the year Capex totaled $49 million.
43% increase in comparison to the first half of 2021.
Moving on to slide six and seven our attributable production.
Total gold attributable production in the second quarter of 2022 was 48000 ounces, which is 3% higher than the year reported on the same quarter of the previous year.
This increase is mainly explained by the 81% year over year higher volume for <unk> Oh go.
Bump.
It was partially upset by the 18 degrees in the global electrical great and a 30% decrease in nor is profiled on the leach pad.
In the first semester of 2022 total gold attributable production was 97000 pounds.
15% higher than the same period in 'twenty one.
These are attributable production for this quarter was one 6 million ounces, which shows a decrease of 51% compared to the figure reported on the second quarter of 2021.
During the first half of 'twenty do silver production.
Only $4 million.
48% lower than the first semester of 2010.
This decrease was mainly explained primarily due to this inspection suspension of Youtube Douglas operation on the West.
<unk> previously announced and that change of the mine planning sequence Elba.
And is it going into the quarter of 22 seven.
7000 metric tons, so seeing of zinc were produced a decrease compared to the second quarter in 2021.
First semester of the year seeing production reached 15000 metric tons.
28% lower than the same period in 2000 to anymore.
In the case of lead equity production was 4000 metric tons in the second quarter of 2022, which is 41% lower in comparison to the second quarter of 'twenty two.
The first half of 2022.
Lead production was approximately 8000 metric tons in comparison to 11000 metric tons in 2020.
Sure.
Finally, our corporate.
Corporate attributable production for the second quarter over the year was 28000 metric tons during the first half of 'twenty two.
Attributable production was 55 Thompson metric.
On a 13% increase compared to the same period joining.
Okay.
Moving on to slide eight all in sustaining cost and cost applicable to sales yes.
All in sustaining cost from our direct operations over the first semester of 2020.
Decreased by 6%.
1400.
1450 <unk>.
There is no loss, but bonds.
It goes applicable to sales for the first semester of 2022, whereas follows.
Although for gold 1128 U S dollars per ounce, which is 11% lower than a year ago.
Silver at $17 65 years dollar per ounce, which is 10% lower than a year ago.
For led.
1341 U S dollar per metric ton reduced 2% higher than a year.
Well see.
<unk>.
885 U S dollar, but maybe if we.
Which is <unk> 16 higher in comparison to a year ago.
Finally, <unk> seen the cost applied to sales was.
$3167 per metric ton.
Which is 51% higher than a year ago.
Moving on to slide nine pipeline approach.
Our.
Okay.
Yeah.
Here, we are present in one snapshot the current development level for each one of our budget.
Moving on to slide 10.
Yes.
The construction is delayed due to social matters are being <unk>, we are expecting to resume activities on the following weeks.
The engineering and the procurement work packages are underway engineering at 40% completion procurement at 61% completion.
Forward line Board meeting to start.
And the 93%.
The power line.
Lance are secure.
Three five we are left.
Three five kilometers.
Hugo.
And moving on to slide 11, the beach.
We are finishing for on site metallurgical column testing.
200 days.
Primary Legion.
Korlym competitively and flow rate control help confirm the signs of recovery.
We have completed or chloride leaching best in Lima by now report new grocers.
We have successfully completed.
The new seat.
I ate workshop.
We have signed cooperation agreements with two out of five communities remaining wound healing process.
We've got to start that power line nine agreements with the community.
Access road nine agreements with Euro assumed operating agreements are finalized.
Moving on to slide 12.
Although a di sulfate quite more latches board approved the development of our Sweeny K pre feasibility study.
It's really a plan to increase reserves certainty.
In fact, I'm, not just land acquisition and progress.
That's all thank you for your attention.
I will hand, the call back to the operator to open the line for questions.
Please go ahead.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Yeah.
And the first question will come from James Spicer with Morgan Stanley . Please go ahead.
Yes, Thank you for taking my call.
First question is on on a broker on the Caf that you reported it was the same cath was four points.
$1000 per ton, which is <unk>.
The current spot price and the copper Cas with I think 272, which is close to the current spot price. So just want to know what the strategy there is going forward.
If you are considering.
Stopping operations or what is going on with the cost that youre currently experiencing thank you.
Yeah.
Thank you James for your for your question. This second.
Order for Brookdale after.
Let's go there.
The landscape that we have.
The last days of March.
And maybe more complex hardware operation however.
We have a plan in more detail on Carlos gun gun.
I'm sorry your question please Juan Carlos.
Sure. Thank you rather unsecured James' question regarding zinc even broke out during this quarter, we absolutely landslide that we had to compete where we produce.
Fundamentally court.
We have to supply the processing plant.
<unk> filed a low grade stockpiles that we have.
From previous years.
That's the reason, we see low grades through the processing plant or low grade <unk>.
Lower and pretty easily obtain metallurgical recoveries and that's the reason we have this.
Increased costs for leasing production will continue with these expediencies materially into the processing plant alone this quarter.
Revenue patient worried senior VP scrubbers.
By the last quarter of this year.
We will reach the production ignore my terms from the open pit.
In the case of copper we have to.
Components, working together and bringing this impacted us two in this quarter.
Number one what inflation mainly.
Mainly detail.
Contractors, we need to.
Radial shape.
Sure.
Because of these services from the contract or Stat operating the underground mine, where we use it all the corporate to the processing plant.
And the second impact that we have is that we are ramping up the production.
The underground mine. So we are investing more meters of development underground.
We are now.
Most stable production of 8000 tonnes per day from previously.
7500 tonnes per day now we are at 8000 Boes per day, and we expect to be close to 85.
100 tonnes per day by the end of the year.
Now in this second quarter, we invest more.
Meters and developing more infrastructure in order to allow the ramp up of production from the underground mine that's missing.
The second impact that we have for copper cost in the second quarter.
Okay. So 800000 tonnes per day versus how much did you say it and when was that lower.
Comparison of last year or last quarter, the beginning of the year at the beginning of the year, we were around 7500 tonnes per day.
Now we are 8000.
We expect to be 8500 tons per day by day this year.
Okay perfect.
And if I may make a follow up question just any color on several validate the results were not not very good as well, where they also impacted by provisional pricing and along those lines just to confirm the provisional pricing impact for you was at around $30 million that's correct.
Yes.
Okay Alright.
Hi.
I mean the.
The impact for one on in Pune, India.
Arthur.
40 million.
$40 million okay.
Yes.
And by the way in the reconciliation.
There you saw $30 million that is adding up to the two the two.
The loss the 50 million loss.
That is not should be.
$40 million, we will correct.
And in this call.
Okay, perfect and then any color there on what's going on are they also having experiencing higher costs or is it mainly provisional prices.
Dr Javier.
Are experiencing.
Higher costs.
Due to inflation basically this would be in the order of 5% to 8%.
However, we feel.
Very comprehensive.
They will come.
Container industry room distributing dividends we were not.
Victims higher dividends for the second quarter.
There were approved on the $30 million, but for the second half of the year, we do expect higher dividends.
But should add up.
For the entire year to at least $100 million to $120 million sorry Amanda.
If I may add.
Also the embedded derivative portfolio corporate price.
The provisional invoices effective.
Sales and revenues for sort of that right.
Okay perfect great. Thanks, so much.
Thank you Jim.
Again, if you have a question. Please press Star then one our next question will come from Tanya Jakku Kodak with Scotia Bank. Please go ahead.
Hey, great. Good morning, everyone can you hear me.
Hello, Yes, yes, just ended yes, good good morning.
I'm just going to ask some very quick questions for modeling.
Just wanted to come back to three for modeling and.
And the royalty income you hadn't done this quarter is this something that we should think about that youre not going to get anything going forward.
What happened with the royalty income.
The royalty.
Yes.
Realty income come from.
The income we used to receive.
<unk>.
And our courtyard.
Through.
The outerwear and companion.
Hello.
And we issued it.
Continue receiving.
This revenue in that in a lower rate.
Last year's because we have.
<unk> reduced our participation in that will be okay.
Oh I'm on Ali Ali arrangements with Newmont, we slipped below okay.
Yes.
Okay, and then if I might if I may Okay go ahead.
Yes, finally, that's alright.
You can see in the current line of royalties, we have zero, yes, we have reclassified these on the other.
Your line.
We are we continue expecting.
Our entire year around.
$8 million to $10 million, but we are reclassifying these and others.
Okay got it.
Thank you.
And then Daniel can I also ask two other modeling questions. One has to do with Capex. It looks like you've done 50 million.
Six months in previous guidance had been one language to $10 million and overall and then you'll have that separately.
In their development capital of 100 to one Ken can you give us an idea if that 190 to two tenants still valid because you've got a lot to spend in the second half.
We.
We expect to produce.
This year.
I was hanging out in due to the delays around why don't be putting one on.
<unk> hundred five.
No.
Okay. So 100 completed.
As far as that for all Capex or is that just signed up yet.
This is Jeff Asanga ramp satcom for our CE Mark for our sustaining capex, including <unk>, we expect the $90 million that you mentioned.
So 190 <unk>.
Total.
Alright, let's go put all the Capex together, you still expect the 190 million, including the development Capex.
Yes.
Okay.
For that and just lastly on the modeling question before my last two questions on the FX.
Just the revenue when I looked at the revenue line and I looked at your volumes and your sales.
Sales in your realized pricing it still was much lower than I had expected. So I'm just trying to understand how going forward can we.
I thought with the provisional pricing I would've captured all of that but it was much slower again, so I'm just wondering if there's any clarity.
From you guys on that milestone.
So much slower.
The embedded derivative on the provisional pricing at an impactful $40 million and the partner.
We.
The price.
We closed when we solve these.
Constantly watching the order of $200.
And the provisional price, it's already at $9200 and the power of the end of the quarter was our own CPT or there's a big gap there.
We expect these two to revert.
Following important.
Or should I be thinking that $52 million is coming back in the next two quarters.
Hello.
As events.
It's both but it's not that big.
So we will after the final to be that we will have been nowhere.
Salesman alright.
Okay, Alright, thank you I'll make a stab at that maybe just on the on Sanghat Woody Allen can I just get an update on what are the social issues that have come about.
And what are they and why do you think they will be resolved quickly in the next few weeks and then where is the project.
Where are we on some of the other items I know you mentioned the procurement and the power line, but we've got some other critical path.
Get through this year or next so maybe just an update from me on that.
Sure sure Sanjay and thank you for.
With you and allow us to verify this accretion will turn.
Here, we are with Greensville market nowhere.
And then a year.
Perfect.
He will give you more color.
The current situation with <unk>. Please go ahead.
Yes, Hi, Dan.
So I guess the first the first thing to come in is that we're not blocked but we have had is two events.
The first one happened in mid June that both of them last less than six hours.
It was.
Communities or are people from outside of our direct area of pinpoints.
Requiring to reconsider the rest part of influence.
Yeah.
One of the highlights to mention is that our relationship with our two communities that are part of the actual <unk> are still intact.
And we keep working with them to develop it for you. What we're doing is we're working with the authorities to open this discussion with each one of these community in a separate table.
Meanwhile, we are keeping our fuel operations at a minimum that's how our decision until we find.
So we don't exacerbate. This initial problem you can actually go to the preexisting that's not a it's not blocked.
We don't foresee a major impact at this point.
At the beginning of the project most of the activities are still engineering and procurement that patent those activities have not stopped.
And kind of the main construction will start.
In the second.
Second part of next year so what.
What we are seeing today.
Minor delays on Preconstruction activities.
And on the Preconstruction activities anything credit call to get to that.
Second part of next year construction.
Nothing that we cannot accommodate.
I guess the Cam side for example, it is currently being built at the factory.
Okay.
Yes.
At first.
Modules of the temporary camp.
It's still under construction on the factories, maybe some delays on when to place them on sites.
Nothing that cannot be accommodated at this point.
Okay. So just thinking.
It's just that the critical path to get that in place. So that you can start construction in the second half of next year.
Yes actually preparing the the.
<unk> four that come to replace on Douglas.
Again, we have one year to kind of mix and match things and try to minimize the impact.
Okay. So it's just too.
Two events from.
Communities.
So your two communities that you are area of influence or find other people out of these communities want something from you and that fluff coffee.
<unk>.
Correct understood Okay.
That's correct that's correct.
I guess the main point is it is not blocked you can actually walk through the project.
It has been like two visits.
Okay Alright.
Alright. Thank you for that and then just can I ask one which aqua.
I read that you've been doing your underground development and you're increasing your development right and you want to do with startup of this restart the line.
Q4 of 2023 can you just remind me from now until Q4 of 2023, what needs to be done at Gucci chocolate to bring the mine back up.
Yeah.
Sure Tanya.
Remember that we are focusing on Chaco and <unk> brands.
<unk> as a whole.
In this business the seafood works that we're doing on Jaguar I pace.
During the main gathering all the.
All the areas that we are going to stop here.
Carlos can give you more detail of that.
Thank you Andrew and thank you Tanya for the question, Yes, we have been promising as plan clients alone. These.
Initial two quarters of 2022.
For exploration and most of the economy has been done.
Prepare new areas for exploration as was the original strategy now.
Now we have reached the level of 700 meters per month that the developing capacity that we already have in place.
100%.
When I went to our resources, we only have constructive for diamond drilling now.
With this 700 meters per month capacity now.
August and September when we start to step out of that.
Volume of meters.
Into exploration.
<unk> increased the percentage of those 700 years into mine development.
Mine preparation.
Ed.
Similarly in two new areas that we have.
Two exploration along the last six months and more agile.
One of them.
We will prepare for that area.
Our focus on developing would be in that area.
Im also a.
We have access.
Some areas in the Permian mine.
The impact of our reserve we are doing the consumer mentioned drilling there. We are re rehabilitation work on the right Road.
<unk>.
Scintillation older facility that we need to to required for future mining.
And Thats basically the agenda forward in coming quarters.
Developing <unk> as a new area for mining next year.
<unk> patients in the coming months.
Sure.
A cost reduction we have mentioned before we are reducing our.
Size company operation in Tampa.
At the same time the same team the same management team.
Sure.
Available.
Mainstream pet projects remember June before it is only three kilometers of straight line for <unk>.
The June back so the same thing will take care of these tools.
Two mines to operations book.
Together, we see into the future <unk> processing plant.
The last quarter of next year so.
Of our effort now to try to speed it up that's great.
Lee.
We advanced that delivery time ahead of the fourth quarter of next year as much as we can into the third quarter over the next year. So it's a big agenda that we have.
At the same at the same.
Same.
Yeah.
At the same time, we used to operation, which will chunghwa reputation.
Dean is an area in June back.
Mine development and all the perspective from maiden flight information.
Okay.
Okay offices.
<unk> warehouse to drove that also will be delivered by the second quarter.
As a group wide off next year.
And will you with all of this development that you're doing and it looks like youre going to be development in ore in some spots, where you have a big stockpile.
The processing facility when you are ready to go in Q4.
Our next year, yes that doesn't breadth advantaged to right.
And right now this year 2022, most of the development will be in waste.
Developing.
<unk> from the acquisition next year.
By March according to the plan, we will start developing deepwater.
March so between March 10.
September next year gradually more developing will be.
Along the base on the ore bodies.
So connect which do you have a targeted stockpile size that you will have ready to feed the mill.
When you are ready.
Well, we will look to have between 10 days 12, they will be enough. So thats part of the tradeoff that we're making to speed up.
Resume operation of the processing plant, we won't have like 90 days of the stockpile. Once we have stay in 15 days on a sustaining basis, probably would be the right time to turn on the processing.
So ultimately so I understand correctly, you will have 90 day stockpile.
99 zero days to two to start the amount no no no in area will be to be 15 days 10 to 15 days of Sabine and surface right next to the processing plant, yes, so if we reach that level sustainable.
Again with a sustainable level, a bunch of product they combined probably Doug youre going to be the time for resumed operation a proxy right now we're conservative with that.
For the last quarter of next year.
Probably we will reach that delivering.
Somewhere in the third quarter next year.
Okay perfect. Thank you I will stop asking questions I mean, it to somebody else, but thank you so much for the insight.
Thank you Danielle.
So I just wanted to add that is not only in regards to some guardian.
The communities for Ya <unk>.
Our relationship is not only impact they are very proactive in basin send letters to the ministry, stating that support for the project.
Yes. It just appears that is just outsiders that just want.
Something a piece of something from you and the communities within your space of influence of where youre going to be operating and support.
So it's just a matter of how do you deal with them and you said you have the authorities in place helping you in and then obviously hopefully some resolution will be quickly with them.
Thank you. Thank you.
Yes.
Again, if you have a question. Please press Star then one.
This concludes our question and answer session of today's conference call I would now like to turn the conference back over to Mr. Leandro Garcia for any closing remarks. Please go ahead Sir.
Thank you Sir before.
Before we finish today.
This conference call.
I want to thank you very much for making for making the time to join with us.
Cheryl.
Our April .
Thank you and Hello.
Wonderful day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Yes.
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Thanks, Greg.
Thanks.
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